<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1999
REGISTRATION NO. 333-90563
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
VIANT CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7371 77-0427302
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Number)
</TABLE>
VIANT CORPORATION
89 SOUTH STREET
BOSTON, MA 02111
(617) 531-3700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
ROBERT L. GETT
PRESIDENT
VIANT CORPORATION
89 SOUTH STREET
BOSTON, MA 02111
(617) 531-3700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
ISSAC J. VAUGHN, ESQ. MARK G. BORDEN, ESQ.
JASON ALTIERI, ESQ. JEFFREY A. STEIN, ESQ.
WILSON SONSINI GOODRICH & ROSATI Hale and Dorr LLP
650 Page Mill Road 60 State Street
Palo Alto, California 94304 Boston, Massachusetts 02109
(650) 493-9300 (617) 526-6000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------------
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock ($0.001 par
value)...................... 2,629,360(1) $109.00(2) $286,600,240(1)(2) $87,118.25(3)
</TABLE>
(1) Includes 342,960 shares which the Underwriters have the option to
purchase to cover over-allotments of shares. See "Underwriting".
(2) Estimated solely for the purpose of calculating the amount of the
Registration Fee in accordance with Rule 457(c) under the
Securities Act of 1933 and based upon the average high and low
sales prices on November 4, 1999 as reported on the Nasdaq
National Market.
(3) Registration Fee paid with previous filing.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION. DATED NOVEMBER 24, 1999.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
2,286,400 Shares
[LOGO]
Common Stock
-------------
Viant Corporation is offering 1,000,000 of the shares to be sold in the
offering. The selling stockholders identified in this prospectus are offering an
additional 1,286,400 shares. Viant will not receive any of the proceeds from the
sale of shares being sold by the selling stockholders.
The common stock is quoted on the Nasdaq National Market under the symbol
"VIAN". The last reported sale price of the common stock on November 23, 1999
was $82.25 per share.
SEE "RISK FACTORS" ON PAGE 4 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF THE COMMON STOCK.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial price to public..................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Viant......................... $ $
Proceeds, before expenses, to the selling stockholders...... $ $
</TABLE>
To the extent that the underwriters sell more than 2,286,400 shares of
common stock, the underwriters have the option to purchase up to an additional
342,960 shares from Viant at the initial price to public less the underwriting
discount.
------------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
ROBERTSON STEPHENS
LEHMAN BROTHERS
------------------
Prospectus dated , 1999.
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING US AND OUR COMMON STOCK BEING SOLD IN THIS OFFERING AND
OUR FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS APPEARING ELSEWHERE
IN THIS PROSPECTUS.
OUR BUSINESS
We are a leading Internet professional services firm helping companies to
capitalize on the Internet. Our service approach combines strategic consulting,
creative design and technology services. Some of the services that we provide
for our clients include the design and development of:
- Internet strategies that help integrate a client's Internet projects and
investments with its broader corporate strategies and business practices;
- electronic commerce, or e-commerce, solutions that enable a company to
attract new customers, and sell goods and services over a website;
- business partner solutions, or extranets, that allow companies to share
information and communicate efficiently with one another;
- internal information solutions, or intranets, that improve a company's
ability to capture, store, and distribute helpful information to its
employees; and
- new business ventures exclusively for the Internet.
We focus on Internet initiatives that are critical to our clients' business.
We have provided services to Global 1000 and other large companies including
American Express Company, BankBoston Corporation, CMGI, Inc., Compaq Computer
Corporation, Deutsche Bank AG, General Motors Corporation, Hewlett-Packard
Company, Kinko's Corporation, Lucent Technologies Inc., LVMH Moet Hennessy Louis
Vuitton, Polo/Ralph Lauren Corporation, RadioShack, Sears, Roebuck & Co. and
Sony Pictures Entertainment.
OUR MARKET OPPORTUNITY
Explosive growth in the Internet has created numerous opportunities for
companies seeking revenue growth and increased operating efficiencies. Few
companies, however, possess the necessary skills to take advantage of these
opportunities. As a result, a growing number of companies are turning to
Internet professional service firms to design and implement their Internet and
e-commerce solutions. According to Forrester Research, the market for such
Internet and e-commerce services in the United States is projected to grow from
$10.6 billion as of November 1999 to $64.8 billion in 2003, representing a
compound annual growth rate of more than 59%.
OUR SERVICE MODEL
We deliver our services through the Viant Service Model, which organizes and
addresses the broad-ranging and complex needs of clients seeking to transform
their businesses through the Internet. This service model integrates our three
areas of expertise -- strategic consulting, creative design and technology
services -- and accelerates the design, development and launch of an Internet
initiative. We provide our services on a fixed-price, fixed-time basis. This
approach enables our clients to more accurately manage their project costs and
aligns our interests with theirs.
1
<PAGE>
OUR STRATEGY
Our goal is to strengthen our position as a leading provider of Internet
professional services. To achieve this goal, we plan to:
- expand existing client relationships and attract new clients;
- grow primarily through effective recruiting and new office openings;
- attract and retain the highest quality employees;
- enhance our team-based employee culture;
- utilize our company-wide knowledge to improve operating margins;
- expand geographically to service clients locally;
- continue to refine our operating sytems and processes to support future
growth; and
- continue to invest in research and development to enhance our expertise.
OUR OFFICES
Our executive offices are located at Lincoln Plaza, 89 South Street, Boston,
MA 02111. Our telephone number is (617) 531-3700 and our Internet address is
WWW.VIANT.COM. This reference to our website does not constitute incorporation
by reference of the information contained at our site.
THE OFFERING
<TABLE>
<S> <C>
Shares offered by Viant...................... 1,000,000 shares
Shares offered by the selling stockholders... 1,286,400 shares
Shares to be outstanding after this 22,472,981 shares
offering(1)................................
Nasdaq National Market symbol................ "VIAN"
Use of proceeds.............................. General corporate purposes, including working
capital, capital expenditures, and if
appropriate opportunities arise, the
acquisition of, or investment in, businesses.
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of October 1, 1999. Excludes: 5,521,206
shares of common stock issuable upon the exercise of outstanding options
with a weighted average exercise price of $6.40 per share, 3,430,362 shares
reserved for issuance under our benefit plans and 35,986 shares of common
stock issuable upon exercise of an outstanding warrant at an exercise price
of $3.625 per share.
------------------------------
Except as otherwise indicated, we have presented information in this
prospectus based on the assumption that the underwriters do not exercise the
option granted by us to purchase additional shares in this offering. See
"Underwriting."
THE VIANT LOGO IS A REGISTERED TRADEMARK OF VIANT. ALL OTHER BRAND NAMES AND
TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR RESPECTIVE
HOLDERS.
2
<PAGE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED (1) NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $ 642 $ 8,808 $20,043 $13,907 $37,625
Loss from operations................ (1,750) (4,178) (6,325) (3,232) (3,034)
Net loss............................ (1,659) (4,080) (6,487) (3,294) (2,312)
Net loss per share:
Basic and diluted............... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Weighted average shares, basic
and diluted................... 3,981 3,468 3,681 3,664 10,845
Pro forma net loss per share (2):
Basic and diluted............... $ (0.46) $ (0.12)
Weighted average shares, basic
and diluted................... 14,084 18,904
</TABLE>
<TABLE>
<CAPTION>
AT OCTOBER 1, 1999
--------------------------
ACTUAL AS ADJUSTED (3)
-------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $62,876 $140,754
Working capital............................................. 64,000 141,878
Total assets................................................ 83,906 161,784
Capital lease obligations, net of current portion........... 1,690 1,690
Total stockholders' equity.................................. 68,285 146,163
</TABLE>
- ------------------------------
(1) During 1998, we changed our fiscal year to the 52-week period ending on the
Friday closest to December 31. Prior to this, our fiscal year corresponded
to the calendar year.
(2) Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 is computed using the weighted
average number of common shares outstanding, adjusted to include the pro
forma effects of the conversion of preferred stock to common stock as if
such conversion had occurred on January 1, 1998 for the year ended
January 1, 1999 and on January 2, 1999 for the nine months ended October 1,
1999, or at the date of original issuance, if later.
(3) As adjusted to reflect the sale of 1,000,000 shares of common stock by us in
this offering at the assumed initial price to the public of $82.25 after
deducting the estimated underwriting discount and offering expenses payable
by us.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
OUR LIMITED OPERATING HISTORY IN THE NEW AND EXPANDING INTERNET PROFESSIONAL
SERVICES MARKET INCREASES THE POSSIBILITY THAT THE VALUE OF YOUR INVESTMENT WILL
DECLINE
We were formed in 1996. Our limited operating history in the new and
expanding Internet professional services market makes it difficult to evaluate
our business. The uncertainty of our future performance and the uncertainties
regarding the Internet, such as taxation, technical limitations and competition,
increase the risk that the value of your investment will decline. Our failure to
accurately address the issues facing our business could cause our business
results to significantly decline.
TO SUCCEED IN OUR LABOR INTENSIVE BUSINESS, WE MUST RECRUIT AND RETAIN QUALIFIED
PROFESSIONALS, WHO ARE CURRENTLY IN HIGH DEMAND
The labor-intensive Internet professional services industry currently faces
a shortage of qualified personnel, which is expected to continue. We compete
intensely with other companies to recruit and hire from this limited pool. If we
cannot hire and retain qualified personnel or if a significant number of our
current employees leave, we may be unable to complete or retain existing
projects or bid for new projects of similar scope and revenue. Any inability to
hire and retain employees would cause our business results to suffer.
OUR BUSINESS MAY BE NEGATIVELY IMPACTED IF WE FAIL TO ACCURATELY ESTIMATE THE
TIME AND RESOURCES NECESSARY FOR THE PERFORMANCE OF OUR SERVICES
A key element of our strategy is to enter into fixed-price, fixed-time
contracts, rather than contracts in which the client pays us on a time and
materials basis. If we fail to accurately estimate the resources required for a
project or fail to satisfy our contractual obligations in a manner consistent
with the project plan, then our costs to complete the project could increase
substantially. We have occasionally had to commit unanticipated additional
resources to complete projects, and we may have to take similar action in the
future.
IF CLIENTS DO NOT REHIRE US FOR NEW PROJECTS, OR THEY TERMINATE OR REDUCE THE
SCOPE OF EXISTING PROJECTS OUR REVENUES MAY DECLINE
Substantially all of our revenues are derived from fixed-price, fixed-time
contracts for discrete client engagements. These engagements vary in size and
scope. If clients do not retain us for subsequent engagements, then our revenues
could decline. In addition, while our service model is designed as an integrated
approach, each sequential phase of that process represents a separate
contractual commitment. The client may elect not to proceed to the next phase of
a project. The decision of clients not to proceed to the next phase of a project
could impair our revenues.
Most of our contracts cannot be terminated by a client unless we have
materially breached the contract. However, a client may nevertheless attempt to
cancel or reduce the scope of a project. It is possible that we may agree to the
cancellation or reduction in scope, or that in the event of a dispute over
whether it has the right to cancel or reduce the scope of a project, the client
may prevail. The cancellation, or reduction in scope, of a project could have a
negative impact on our revenues.
4
<PAGE>
OUR REVENUES COULD BE NEGATIVELY AFFECTED BY THE LOSS OF A MAJOR CLIENT
We derive a significant portion of our revenues from large projects for a
limited number of clients. The loss of any major client could dramatically
reduce our revenues. In 1998, our five largest clients accounted for
approximately 59% of our revenues. During such period Kinko's Corporation,
Lucent Technologies Inc. and Compaq Computer Corporation each accounted for more
than 10% of our revenues and four other clients each accounted for more than 5%
of our revenues. In the first nine months of 1999, our five largest clients
accounted for approximately 55% of our revenues. During such period Compaq and
BankBoston each accounted for more than 10% of our revenues and three other
clients each accounted for more than 5% of our revenues.
FLUCTUATIONS IN OUR QUARTERLY REVENUES AND OPERATING RESULTS MAY LEAD TO REDUCED
PRICES FOR OUR STOCK
We believe that period-to-period comparisons of our operating results are
not necessarily meaningful. These comparisons cannot be relied upon as
indicators of future performance. However, if our operating results in any
future period fall below the expectations of securities analysts and investors,
the market price of our securities would likely decline.
Factors that have caused our results to fluctuate in the past and which are
likely to affect us in the future include the following:
- variability in market demand for the Internet and for Internet
professional services;
- length of the sales cycle associated with our service offerings;
- the number, size and scope of our projects; and
- the efficiency with which we utilize our employees, including our ability
to transition employees from completed engagements to new engagements.
In addition, other factors may also affect us, including:
- the introduction of new services by our competitors;
- changes in pricing policies by our competitors; and
- our ability to attract and retain clients.
Some of these factors are within our control and others are outside our control.
OUR INTERNAL SYSTEMS, PROCEDURES AND CONTROLS MAY BE INADEQUATE TO HANDLE OUR
GROWTH
To manage our growth, we must continue to improve our internal systems,
procedures and controls. We cannot assure you that we will successfully do so.
If our internal systems, procedures and controls are inadequate, our business
will be harmed.
IF WE ARE NOT SUCCESSFUL IN OPENING AND GROWING NEW OFFICES OUR FINANCIAL
RESULTS MAY SUFFER
A key component of our growth strategy is to open offices in new geographic
locations. Once we select a new location, we typically devote substantial
financial and management resources to launch and grow that office. We cannot
assure you that we will select appropriate markets to enter, open new offices
efficiently or manage new offices profitably. Our failure to accurately assess
these issues could negatively impact our business.
5
<PAGE>
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.
THE RAISING OF ANY ADDITIONAL CAPITAL MAY DILUTE YOUR OWNERSHIP IN US
We may need to raise additional funds through public or private debt or
equity financings in order to:
- take advantage of opportunities, including more rapid expansion or
acquisitions of, or investments in, businesses or technologies;
- develop new services; or
- respond to competitive pressures.
Any additional capital raised through the sale of equity may dilute your
ownership percentage in us. Furthermore, we cannot assure you that any
additional financing we may need will be available on terms favorable to us, or
at all. In such case, our business results would suffer.
THE INTERNET PROFESSIONAL SERVICES MARKET IS HIGHLY COMPETITIVE AND HAS LOW
BARRIERS TO ENTRY. IF WE CANNOT EFFECTIVELY COMPETE, OUR REVENUES MAY DECLINE
The Internet professional services market is relatively new and intensely
competitive. We expect competition to intensify even further as this market
evolves. Many of our competitors have longer operating histories, more clients,
longer relationships with their clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than we do. As a result, our competitors may be in a stronger position
to respond quickly to new or emerging technologies and changes in client
requirements. They may also develop and promote their products and services more
effectively than we do.
There are relatively low barriers to entry into the Internet professional
services market. In addition, we do not own any patented technology that stops
competitors from entering the Internet professional services market or from
providing services similar to ours. As a result, new and unknown market entrants
pose a threat to our business. Current or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could significantly decrease our revenues and the value of your investment.
OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF WE DO NOT KEEP UP WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS AND CHANGING
CLIENT REQUIREMENTS
The Internet professional services market is characterized by rapidly
changing technology, evolving industry standards and changing client needs.
Accordingly, our future success will depend, in part, on our ability to meet
these challenges. Among the most important challenges facing us are the need to:
- effectively use leading technologies;
- continue to develop our strategic and technical expertise;
- influence and respond to emerging industry standards and other
technological changes;
- enhance our current services;
- develop new services that meet changing customer needs; and
- advertise and market our services.
All of these challenges must be met in a timely and cost-effective manner.
We cannot assure you that we will succeed in effectively meeting these
challenges and our failure to do so could harm our business results.
6
<PAGE>
OUR REVENUES MAY DECREASE IF GROWTH IN THE USE OF THE INTERNET DECLINES
Our business is dependent upon continued growth in the use of the Internet
by our clients, prospective clients and their customers and suppliers. Published
reports indicate that capacity constraints caused by growth in Internet usage
may, unless resolved, impede further growth in Internet use. If the number of
users on the Internet does not increase and commerce over the Internet does not
become more accepted and widespread, demand for our services may decrease and,
as a result, our revenues would decline causing the value of your investment
also to decline. The factors that may affect Internet usage or electronic
commerce adoption include:
- actual or perceived lack of security of information;
- lack of access and ease of use;
- congestion of Internet traffic;
- inconsistent quality of service;
- increases in access costs to the Internet;
- excessive governmental regulation;
- uncertainty regarding intellectual property ownership;
- reluctance to adopt new business methods; and
- costs associated with the obsolescence of existing infrastructure.
CONCENTRATION OF OWNERSHIP MAY LIMIT YOUR ABILITY TO INFLUENCE CORPORATE MATTERS
Immediately following this offering, the officers, directors and significant
stockholders set forth below, and the funds for whom they act as general
partner, collectively will own approximately 45.40% of the outstanding shares of
our common stock and will own individually the percentage set forth opposite
their respective names:
<TABLE>
<CAPTION>
OFFICERS, DIRECTORS AND/OR SIGNIFICANT STOCKHOLDERS OWNERSHIP PERCENTAGE
- --------------------------------------------------- --------------------
<S> <C>
William H. Davidow (Mohr, Davidow Ventures) 15.09%
Kleiner Perkins Caufield & Byers 13.90
Trident Capital Management 7.37
Robert L. Gett 9.04
</TABLE>
If the stockholders listed above choose to act or vote together, they will
have the power to influence the election of our directors, and the approval of
any other action requiring the approval of our stockholders, including any
amendments to our certificate of incorporation and mergers or sales of all or
substantially all of our assets. In addition, without the consent of these
stockholders, we could be prevented from entering into transactions that could
be beneficial to us. Also, third parties could be discouraged from making a
tender offer or bid to acquire our company at a price per share that is above
the then-current market price.
WE MAY FACE INTELLECTUAL PROPERTY CLAIMS THAT MAY BE COSTLY TO RESOLVE OR LIMIT
OUR ABILITY TO USE INTELLECTUAL PROPERTY IN THE FUTURE
We are obligated under some agreements to indemnify other parties as a
result of claims that we infringe on the proprietary rights of third parties.
Although we do not believe that the solutions that we develop for clients
infringe on any third-party proprietary rights, we cannot assure you that third
parties will not assert infringement claims against us in the future or that
these claims will not be successful. We could incur substantial costs and
diversion of management resources to defend any claims relating to proprietary
rights. These costs and diversions could cause our business results to suffer.
If any party asserts a claim against us relating to proprietary technology or
information, we may need to obtain licenses to the disputed intellectual
property. We cannot assure
7
<PAGE>
you, however, that we will be able to obtain these licenses on commercially
reasonable terms or that we will be able to obtain any licenses at all. The
failure to obtain necessary licenses or other rights could cause our business
results to suffer.
Our business often involves the development of software applications for
specific client engagements. We generally retain the right to use any
intellectual property that is developed during a client engagement that is of
general applicability and is not specific to the client's project. We also
develop software applications for our own internal use and we retain ownership
of these applications. There can be no assurance that clients will not demand
assignment of ownership or restrictions on our use of the work that we produce
for clients in the future. Issues relating to the ownership of and rights to use
software can be complicated and there can be no assurance that disputes will not
arise that affect our ability to reuse this software which could harm our
business results.
MANAGEMENT MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH
YOU MAY NOT AGREE
Management intends to use the proceeds from this offering for general
corporate purposes. Because of the number and variability of factors that
determine our use of the net proceeds from this offering, we cannot assure you
that you will agree with our use of the proceeds. Pending their use, we intend
to invest the net proceeds from this offering in short-term interest bearing
investment grade and U.S. government securities.
THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AFTER THIS
OFFERING THAT COULD CAUSE OUR STOCK PRICE TO FALL
Our common stock began trading on the Nasdaq National Market on June 18,
1999; however, to date there have been a limited number of shares trading in the
public market. This offering will result in additional shares of our common
stock being available on the open market. In addition, our current stockholders
hold a substantial number of shares, which they will be able to sell in the
public market in the near future. Sales of a substantial number of shares of our
common stock in this offering and thereafter could cause our stock price to
fall. In addition, the sale of shares by our stockholders could impair our
ability to raise capital through the sale of additional stock. See
"Underwriting" and "Shares Eligible for Future Sale."
PROVISIONS OF OUR CHARTER AND BY-LAWS MAY DELAY OR PREVENT TRANSACTIONS THAT ARE
IN YOUR BEST INTERESTS
Our certificate of incorporation and bylaws state that any action that can
be taken by stockholders must be done at an annual or special meeting and may
not be done by written consent, and require reasonable advance notice of a
stockholder proposal or director nomination. The chairman of the board, the
chief executive officer, the president or the board of directors are the only
ones who may call a special meeting. The amended and restated certificate of
incorporation and amended and restated bylaws also provide for a classified
board of directors, and provide that members of the board of directors may be
removed by the vote of the holders of at least a majority of the shares entitled
to vote for that director. In addition, the board of directors has the
authority, without further action by the stockholders, to fix the rights and
preferences of and issue 5,000,000 shares of preferred stock. These provisions
may have the effect of deterring hostile takeovers or delaying or preventing
changes in control of management, including transactions in which you might
otherwise receive a premium for your shares. In addition, these provisions may
limit your ability to approve other transactions that you find to be in your
best interests. See "Description of Capital Stock -- Preferred Stock" and
" -- Effect of the Certificate of Incorporation and Bylaws and the Delaware
Anti-Takeover Statute."
8
<PAGE>
DIFFICULTIES PRESENTED BY INTERNATIONAL FACTORS COULD NEGATIVELY AFFECT OUR
BUSINESS
One component of our strategy is to expand into international markets, as
evidenced by the opening of our London office. We believe that we will face
certain risks in doing business abroad that we do not face domestically. Among
the international risks we believe are most likely to affect us are:
- difficulties in staffing and managing international operations;
- longer payment cycles;
- problems in collecting accounts receivable;
- international currency issues, including fluctuations in currency exchange
rates and the conversion to the euro by all countries of the European
Union by year end 2003; and
- restrictions on the import and export of sensitive U.S. technologies, such
as data security and encryption technologies that we may wish to use in
solutions we develop for customers.
Any of these factors or other factors not enumerated here could damage our
business results.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found in
the material set forth under "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" as well as in the
prospectus generally. We used words such as "believes," "intends," "expects,"
"anticipates," "plans," and similar expressions to identify forward-looking
statements. This prospectus also contains third party estimates regarding the
size and growth of the Internet professional services market and Internet usage
in general. You should not place undue reliance on these forward-looking
statements which apply only as of the date of this prospectus. Our actual
results could differ materially from those anticipated in the forward-looking
statements for many reasons, including the risks described above and elsewhere
in this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus to conform these
statements to actual results or to changes in our expectations.
USE OF PROCEEDS
The net proceeds to Viant from the sale of the 1,000,000 shares of common
stock are estimated to be approximately $77,878,000 at an assumed initial price
to public of $82.25 per share (approximately $104,747,000 if the underwriters'
over-allotment option is exercised in full), after deducting the underwriting
discounts and estimated offering expenses payable by us.
Viant is conducting this offering primarily to increase its equity capital,
to create a larger public float for its common stock, to facilitate future
access by Viant to public equity markets and to allow for the orderly
liquidation of the investments made by certain stockholders. Viant intends to
use the net proceeds of the offering for general corporate purposes, including
working capital, capital expenditures, and if appropriate opportunities arise,
the acquisition of, or investment in, businesses. However, Viant is not
currently discussing any such potential acquisition or investment with any third
party. Pending such uses, Viant will invest the net proceeds in investment
grade, short-term interest-bearing securities and U.S. Government Securities.
Viant will not receive any of the proceeds from the sale of common stock by the
selling stockholders. See "Principal and Selling Stockholders."
9
<PAGE>
PRICE RANGE OF COMMON STOCK
Our common stock has been quoted on the Nasdaq National Market under the
symbol "VIAN" since June 18, 1999. Prior to that time, there was no public
market for the common stock. The following table sets forth, for the periods
indicated, the high and low closing prices per share of the common stock as
reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------------------------- ------------------------
<S> <C> <C>
Second Quarter (since June 18, 1999)........................ $ 35.00 $ 21.88
Third Quarter............................................... 52.13 24.75
Fourth Quarter (through November 23, 1999).................. 116.63 46.00
</TABLE>
On November 23, 1999 the reported last sale price of the common stock on the
Nasdaq National Market was $82.25. As of October 1, 1999 there were
approximately 148 stockholders of record.
DIVIDEND POLICY
Viant has never paid cash dividends on its common stock or any other
securities. Viant anticipates that it will retain all of its future earnings, if
any, for use in the expansion and operation of its business and does not
anticipate paying cash dividends in the foreseeable future.
10
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of October 1, 1999:
- on an actual basis;
- on an as adjusted basis to reflect the sale of 1,000,000 shares of common
stock offered by us at an assumed initial price to public of $82.25 per
share, after deducting the underwriting discounts and estimated offering
expenses.
This information should be read in conjunction with Viant's financial
statements and related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
OCTOBER 1, 1999
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, net of current portion........... $ 1,690 $ 1,690
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares
authorized, actual and as adjusted; no shares issued and
outstanding, actual and as adjusted..................... --
Common Stock, $0.001 par value, 50,000,000 shares
authorized, actual and as adjusted; 21,472,981 shares
issued and outstanding, actual; 22,472,981 shares issued
and outstanding, as adjusted(1)......................... 21 22
Additional paid-in capital................................ 83,501 161,378
Cumulative translation adjustment......................... (20) (20)
Accumulated deficit....................................... (15,217) (15,217)
-------- --------
Total stockholders' equity............................ 68,285 146,163
-------- --------
Total capitalization................................ $ 69,975 $147,853
======== ========
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of October 1, 1999. Excludes: 5,521,206
shares of common stock issuable upon the exercise of outstanding options
with a weighted average exercise price of $6.40 per share, 3,430,362 shares
reserved for issuance under our benefit plans and 35,986 shares of common
stock issuable upon exercise of an outstanding warrant at an exercise price
of $3.625 per share. See "Management -- Employee Benefit Plans."
11
<PAGE>
DILUTION
Our net tangible book value as of October 1, 1999 was $68,285,000, or $3.18
per share of common stock. Net tangible book value per share represents the
amount of our total tangible assets reduced by the amount of our total
liabilities and divided by the total number of shares of common stock
outstanding. Without taking into account any other change in our net tangible
book value after October 1, 1999, other than to give effect to the sale of
1,000,000 shares of common stock offered by us at an assumed initial price to
public of $82.25 per share and receipt of the estimated net proceeds therefrom,
our net tangible book value as of October 1, 1999 would have been $146,163,000
or $6.50 per share. This represents an immediate increase in such net tangible
book value of $3.32 per share to existing stockholders and an immediate dilution
of $75.75 per share to the new investors. If the assumed initial price to public
is higher or lower, the dilution to new investors will be, respectively, greater
or less. The following table illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed public offering price per share..................... $82.25
Net tangible book value per share as of October 1, 1999,
before this offering...................................... $3.18
Increase per share attributable to new investors............ 3.32
-----
Net tangible book value per share after this offering....... 6.50
------
Dilution per share to new investors......................... $75.75
======
</TABLE>
12
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with Viant's financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this prospectus. Selected financial data as of and for each of the
three fiscal years ended December 31, 1996, December 31, 1997 and January 1,
1999 have been derived from Viant's financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent accountants. Financial data
as of October 1, 1999 and for the nine months ended September 30, 1998 and
October 1, 1999 have been derived from unaudited financial statements appearing
elsewhere in this prospectus and, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, that Viant
considers necessary for a fair presentation of its financial position and
results of operations for such periods. The historical results are not
necessarily indicative of the operating results to be expected in the future.
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
-------------- ------------ ---------- ------------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......................... $ 642 $ 8,808 $20,043 $ 13,907 $37,625
------- ------- ------- -------- -------
Operating expenses:
Professional services............... 516 4,530 11,250 7,598 18,542
Sales and marketing................. 461 1,577 3,324 2,022 4,647
General and administrative.......... 1,077 6,298 10,365 6,667 14,998
Research and development............ 338 581 1,429 852 2,472
------- ------- ------- -------- -------
Total operating expenses........ 2,392 12,986 26,368 17,139 40,659
------- ------- ------- -------- -------
Loss from operations.................. (1,750) (4,178) (6,325) (3,232) (3,034)
Interest and other income (expense),
net................................. 91 98 (162) (62) 722
------- ------- ------- -------- -------
Net loss.............................. $(1,659) $(4,080) $(6,487) $ (3,294) $(2,312)
======= ======= ======= ======== =======
Net loss per share:
Basic and diluted................... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Basic and diluted weighted average
common shares outstanding......... 3,981 3,468 3,681 3,664 10,845
Pro forma net loss per share (1):
Basic and diluted................... $ (0.46) $ (0.12)
Weighted average shares, basic and
diluted........................... 14,084 18,904
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JANUARY 1, OCTOBER 1,
1996 1997 1999 1999
------------ ------------ ---------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments................................. $ 2,145 $ 6,174 $18,811 $62,876
Working capital............................... 2,179 4,517 17,622 64,000
Total assets.................................. 2,806 10,318 29,753 83,906
Capital lease obligations, net of current
portion..................................... -- 670 2,237 1,690
Total stockholders' equity.................... 2,394 6,006 19,665 68,285
</TABLE>
- ------------------------
(1) Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 is computed using the weighted
average number of common shares outstanding, adjusted to include the pro
forma effects of the conversion of preferred stock to common stock as if
such conversion had occurred on January 1, 1998 for the year ended
January 1, 1999 and on January 2, 1999 for the nine months ended October 1,
1999, or at the date of original issuance, if later.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF VIANT SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA"
AND VIANT'S FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED
HEREIN, THE DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS SUCH AS STATEMENTS OF VIANT'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE
IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. VIANT'S
ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED BELOW. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.
OVERVIEW
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions.
Viant derives substantially all of its revenues from services performed on a
fixed-price, fixed-time basis. Viant generally enters into a Master Services
Agreement with its clients which establishes the legal and general business
terms of the relationship. As specific engagements are identified, the Company
and the client then enter into separate statements of work which outline the
time frame and fees applicable to the specific engagement. Typically these
engagements are of a short predetermined time frame, generally lasting three to
six months. To determine the proposed fixed price for an engagement, Viant uses
an estimation process which takes into account the type and overall complexity
of the project, the anticipated number of consultants needed and their
associated billing rates, and the estimated duration of and risks associated
with the engagement. All fixed-price proposals are approved by a member of
Viant's senior management team. Revenues from fixed-price engagements are
recognized using the percentage of completion method (based on the ratio of
costs incurred to the total estimated project costs). Project costs are based on
the direct payroll and associated fringe benefits of the consultants on the
engagement. Additionally, the finance department personnel meet regularly with
project managers to ensure that the budgeted costs to complete, which are used
to calculate revenue recognition, reflect the actual status of the project and
the anticipated costs to complete. Provisions for estimated losses on contracts
are made during the period in which such losses become probable and can be
reasonably estimated. To date, such losses have not been significant. Viant
reports revenue net of reimbursable expenses.
Viant's revenues and earnings may fluctuate from quarter to quarter based on
such factors within and outside its control, including: the variability in
market demand for the Internet and for Internet professional services, the
length of the sales cycle associated with our service offerings, the number,
size and scope of our projects, and the efficiency with which we utilize our
employees. See "Risk Factors -- Fluctuations in our quarterly revenues and
operating results may lead to reduced prices for our stock." Viant does not
track backlog information. Any information regarding anticipated future revenue
from clients would not be meaningful and potentially misleading to investors.
The number of Viant employees increased from 119 as of December 31, 1997 to
328 as of October 1, 1999. Personnel compensation and facilities costs represent
a high percentage of Viant's operating expenses and are relatively fixed in
advance of each quarter. Accordingly, if revenues do not increase at a rate
equal to expenses, Viant's business, financial condition or results of
operations could be materially and adversely affected. In addition, Viant's
liquidity may also be adversely affected if revenues do not increase at a rate
equal to these additional expenses, to the extent Viant is unable to reduce
operating expenses.
14
<PAGE>
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. All references below to the results
of operations for 1998 are the actual operating results for the fiscal year
ended January 1, 1999.
RESULTS OF OPERATIONS
The following table sets forth the percentage of net revenues of certain
items included in Viant's statement of operations for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
------------------------------------------------------------------------------
PERIOD FROM APRIL 10, NINE MONTHS ENDED
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Net revenues............. 100% 100% 100% 100% 100%
---- ---- ---- ---- ----
Operating expenses:
Professional
services............. 80 51 56 55 49
Sales and marketing.... 72 18 16 14 12
General and
administrative....... 168 71 52 48 40
Research and
development.......... 52 7 7 6 7
---- ---- ---- ---- ----
Total operating
expenses........... 372 147 131 123 108
---- ---- ---- ---- ----
Loss from operations..... (272) (47) (31) (23) (8)
Interest and other income
(expense), net......... 14 1 (1) (1) 2
---- ---- ---- ---- ----
Net loss................. (258)% (46)% (32)% (24)% (6)%
==== ==== ==== ==== ====
</TABLE>
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND OCTOBER 1, 1999
NET REVENUES. Revenues increased 171% from $13.9 million for the first nine
months of 1998 to $37.6 million for the first nine months of 1999. The increase
in net revenues reflected growing demand for Internet professional services and
increases in both the size and number of Viant's client engagements. Revenues
derived from Viant's three largest clients, as a percentage of total net
revenues, decreased slightly from 47% for the first nine months of 1998 to 44%
for the first nine months of 1999.
PROFESSIONAL SERVICES. Professional services expenses consist primarily of
compensation and benefits for employees engaged in the delivery of Internet
professional services and non-reimbursable expenses related to client projects.
Professional services expenses increased 144% from $7.6 million for the first
nine months of 1998 to $18.5 million for the first nine months of 1999. These
increases were primarily due to the hiring of additional professionals during
these periods. Professional services expenses decreased as a percentage of
revenues from 55% for the first nine months of 1998 to 49% for the first nine
months of 1999. This decrease is primarily the result of increased utilization
of the professional staff and better planning and execution on client
engagements.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
compensation, benefits and travel costs for employees in the sales and marketing
groups, marketing program costs and an allocation of facilities costs. Sales and
marketing expenses increased $2.6 million or 130% for the first nine months of
1999 versus the first nine months of 1998. Sales and marketing expenses
decreased as a percentage of revenues from 14% for the first nine months of 1998
to 12% for the first nine months of 1999. Sales and marketing expense increases
were primarily
15
<PAGE>
attributable to an increase in the number of sales personnel and an overall
increase in Viant's marketing and branding efforts. Viant expects that the
dollar amount of sales and marketing expenses will continue to increase due to
increases in advertising and promotional activities. The decrease as a
percentage of revenues is due to higher revenues generated per sales employee
and the significant increase in revenues for the first nine months of 1999
versus the same period in 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation, benefits and travel costs for employees in Viant's
management, human resources, finance and administration groups, and facilities
costs not allocated to sales and marketing or research and development. General
and administrative expenses increased $8.3 million or 125% for the first nine
months of 1999 versus the first nine months of 1998. These increases were the
result of increased personnel and facilities costs in connection with the
opening of additional offices. General and administrative expenses decreased as
a percentage of revenues from 48% for the first nine months of 1998 to 40% for
the first nine months of 1999. This decrease was the result of higher revenue
growth versus infrastructure support costs and more efficient operations.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation, benefits and an allocation of facilities costs for
employees associated with Viant's innovation groups. The innovation groups
enhance the knowledge and expertise of the strategic consulting, creative design
and technology disciplines. Research and development expenses increased
$1.6 million or 190% for the first nine months of 1999 versus the first nine
months of 1998. Research and development expenses increased as a percentage of
revenue from 6% for the first nine months of 1998 to 7% for the first nine
months of 1999. This increase was primarily the result of the addition of two
innovation groups after the first quarter of 1998 and additional personnel for
these innovation groups.
COMPARISON OF FISCAL YEARS 1996, 1997 AND 1998
NET REVENUES. Net revenues were $20.0 million in 1998, representing an
increase of 128% over 1997 revenues of $8.8 million. The increase in net
revenues reflected growing demand for Internet professional services and
increases in both the size and number of Viant's client engagements. Net
revenues increased from $642,000 for the period from April 10, 1996 to
December 31, 1996 to $8.8 million in the full year ended December 31, 1997. The
$8.2 million increase reflected increases in both the size and number of client
engagements as well as a full year of operations in 1997. Revenues derived from
Viant's three largest clients, as a percentage of total net revenues, decreased
from 71% in 1996, to 68% in 1997 and to 42% in 1998, reflecting an increase in
business from other clients.
Billings in advance of services performed are recorded as deferred revenues.
Viant had $99,000 in deferred revenues at December 31, 1996, $931,000 at
December 31, 1997 and $1.1 million at January 1, 1999. The increase in deferred
revenues from year to year reflects new client engagements as well as
contractual terms that allow Viant to bill clients in advance of performing
services. During 1997 and 1998, substantially all of Viant's revenues were
derived from fixed-price, fixed-time contracts. In 1996, substantially all of
Viant's revenues were derived from time and materials based contracts.
PROFESSIONAL SERVICES. Professional services expenses represented 80% of
total net revenues in 1996, 51% in 1997 and 56% in 1998. The increase in
professional services expenses as a percentage of net revenues in 1998 compared
to 1997 was primarily due to Viant's strategy of increased hiring in
anticipation of future growth as well as higher salaries. The decrease in
professional services expenses as a percentage of net revenues in 1997 compared
to 1996 reflects the higher revenues generated in 1997 as compared to 1996.
Professional services expenses increased by $4.0 million from 1996 to 1997 and
$6.7 million from 1997 to 1998. These increases were primarily due to the hiring
of additional professionals.
16
<PAGE>
SALES AND MARKETING. Sales and marketing expenses represented 72% of total
net revenues in 1996, 18% in 1997 and 16% in 1998. The decrease in sales and
marketing expenses as a percentage of revenues from 1997 to 1998 was primarily
due to higher revenues generated per sales employee and revenue growth. The
decrease in sales and marketing expenses as a percentage of revenues from 1996
to 1997 was primarily due to revenue growth. Sales and marketing expenses
increased by $1.1 million from 1996 to 1997 and $1.7 million from 1997 to 1998.
The increase in sales and marketing expenses from 1996 to 1997 was attributable
to the initiation of sales and marketing activities. The increase from 1997 to
1998 was attributable to the increase in the number of sales personnel and an
overall increase in Viant's marketing and branding efforts.
GENERAL AND ADMINISTRATIVE. General and administrative expenses represented
168% of total net revenues in 1996, 71% in 1997 and 52% in 1998. General and
administrative expenses increased by $5.2 million from 1996 to 1997 and
$4.1 million from 1997 to 1998. These increases were due primarily to an
increase in lease expenditures in connection with the opening of additional
offices and the hiring of additional employees. Also included in these increases
are additions of $294,000 in 1997 and $612,000 in 1998 to the allowance for
doubtful accounts, reflecting Viant's increasing revenues and receivables,
including a provision of $400,000 in 1998 related to one client. After
adjustment to exclude non-recurring 1997 severance expenses of $1.5 million
related to an agreement between Viant and a former employee, general and
administrative expenses represented 54% of total net revenues in 1997.
RESEARCH AND DEVELOPMENT. Research and development expenses represented 52%
of total net revenues in 1996, 7% in 1997 and 7% in 1998. Research and
development expenses increased $848,000 from 1997 to 1998 because of the
addition of two innovation groups. The decrease in research and development
expenses as a percentage of total net revenues from 1996 to 1997 was primarily
due to revenue growth.
QUARTERLY RESULTS OF OPERATIONS. The following table sets forth a summary
of Viant's unaudited quarterly operating results for each of the seven quarters
in the period ended October 1, 1999. This data has been derived from our
unaudited interim financial statements which, in our opinion, have been prepared
on substantially the same basis as the audited financial statements contained
elsewhere in this prospectus and include all normal recurring adjustments
necessary for a fair presentation of the financial information for the periods
presented. These unaudited quarterly results should be read in conjunction with
Viant's financial statements and notes thereto included elsewhere in this
prospectus. The operating results in any quarter are not necessarily indicative
of the results that may be expected for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, JAN. 1, APR. 2, JULY 2, OCT. 1,
1998 1998 1998 1999 1999 1999 1999
-------- -------- --------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 4,093 $ 4,512 $ 5,302 $ 6,136 $ 7,883 $ 10,991 $ 18,751
------- ------- ------- ------- ------- -------- --------
Operating expenses:
Professional services................... 2,237 2,362 2,999 3,652 4,511 5,591 8,440
Sales and marketing..................... 586 631 805 1,302 1,216 1,661 1,770
General and administrative.............. 1,809 2,118 2,740 3,698 3,518 4,779 6,701
Research and development................ 168 295 389 577 690 850 932
------- ------- ------- ------- ------- -------- --------
Total operating expenses.............. 4,800 5,406 6,933 9,229 9,935 12,881 17,843
------- ------- ------- ------- ------- -------- --------
Income (loss) from operations............. (707) (894) (1,631) (3,093) (2,052) (1,890) 908
Interest and other income (expense),
net..................................... 27 (10) (79) (100) 11 51 660
------- ------- ------- ------- ------- -------- --------
Net income (loss)......................... $ (680) $ (904) $(1,710) $(3,193) $(2,041) $ (1,839) $ 1,568
======= ======= ======= ======= ======= ======== ========
</TABLE>
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, Viant has funded its operations and investments in property
and equipment through private and public equity financings, bank borrowings and
capital lease financing arrangements. Viant's cash and cash equivalents
increased from $18.2 million at the end of 1998 to $61.5 million as of the end
of the third quarter of 1999. This increase is primarily from the net proceeds
of $50.2 million from the issuance of 3,450,000 shares of common stock in
Viant's initial public offering on June 18, 1999. These proceeds were offset
primarily by cash used for operating activities of $600,000 and for investing
activities of $3.4 million. The cash used for operating activities of $600,000
is principally made up of $2.3 million in net loss for the first nine months of
1999 and an $8.1 million increase in accounts receivable primarily due to
increased revenue, offset by a $7.9 million increase in accounts payable and
accrued expenses. Additionally, the cash used for investing activities primarily
reflects Viant's purchases of $2.6 million in property and equipment.
Viant had a revolving line of credit with a bank which provided for
borrowings of up to $5.0 million. Borrowings under this line of credit, which
expired on July 3, 1999, bore interest at the bank's prime rate plus 0.5% (8.25%
at January 1, 1999). Under the same bank agreement, Viant also had an equipment
line of credit which provided for borrowings of up to $1,250,000, bore interest
at the bank's prime rate plus 1.0% (8.75% at January 1, 1999) and was repayable
in 36 equal monthly installments. Borrowings under the bank lines of credit
could be prepaid in whole or in part without penalty and were secured by
substantially all of Viant's assets. This revolving line of credit and equipment
line were repaid in full and terminated on July 1, 1999. These lines of credit
required compliance with financial covenants including the maintenance of
financial ratios, including a ratio of total liabilities to tangible net worth
of 1.0 and a limitation on maximum quarterly net losses. Viant was in default on
a financial covenant at January 1, 1999, for which Viant received a waiver from
the bank. In April 1999, Viant extended this credit facility to July 3, 1999 and
renegotiated the financial covenants. The financial covenant for which the
Company was in default was amended such that the Company could not have incurred
a loss exceeding $2,500,000 for each of the fiscal quarters ending April 2, 1999
and July 2, 1999. In addition, the total liabilities to tangible net worth ratio
covenant was amended such that the Company must have maintained as of the last
day of each fiscal month a ratio of total liabilities to tangible net worth of
not more than 1.25 to 1. Viant was in compliance with all its financial
covenants during the first six months of 1999. Viant also has a capital lease
facility with a leasing company for total availability of $3.2 million secured
by the capital assets purchased with the borrowings. Outstanding borrowings
under the above credit facility totaled $2.3 million as of October 1, 1999.
Viant believes that its current cash, cash equivalents and short-term
investments and the net proceeds from this offering will be sufficient to meet
Viant's working capital and capital expenditure requirements for at least the
next 24 months. However, there can be no assurance that Viant will not require
additional financings within this time frame or that such additional financing,
if needed, will be available on terms acceptable to Viant, if at all.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products worldwide
are coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between the year 1900
and the year 2000. Accordingly, many companies, including Viant and Viant's
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable Year 2000 requirements.
Because Viant and its clients are dependent, to a very substantial degree,
upon the proper functioning of computer systems, a failure of these systems to
correctly recognize dates beyond January 1, 2000 would disrupt operations. We
may experience operational difficulties caused by undetected errors or defects
in our internal systems. Purchasing patterns of our clients and potential
clients may be affected by Year 2000 issues as companies expend significant
resources to
18
<PAGE>
correct their current systems for Year 2000 compliance and may therefore defer
new initiatives until they do so. We may become involved in disputes regarding
Year 2000 problems occurring in solutions we have developed or implemented or
arising from the interactions of our Internet solutions with other software
applications. Year 2000 problems could require us to incur delays in providing
our services to clients and unanticipated expenses.
To address these issues, Viant formed a Year 2000 assessment and contingency
planning committee, called the Y2K Committee, to review both its information
technology systems and its non-information technology systems, and where
necessary, to plan for and supervise the remediation of those systems. The Y2K
Committee is headed by Viant's Chief Technology Officer. Viant has assessed the
Year 2000 readiness of its critical hardware and software systems. The providers
of these systems have either confirmed to Viant that these systems are Year 2000
compliant or provided the information necessary for Viant to plan and implement
upgrades to make them Year 2000 compliant. Viant has begun to implement upgrades
and test these systems as part of its Year 2000 efforts. Based on the
information received to date from these vendors, Viant believes this process
should be completed by the end of November 1999.
Viant has initiated communication with other significant vendors to
determine the extent to which they are vulnerable to Year 2000 issues. Viant has
completed discussions with these vendors regarding their Year 2000 remediation
plans. Based on discussions to date, Viant believes that the Year 2000 problem
will not materially impact the operations of our significant clients or their
plans to purchase our services.
Based on work done to date, Viant believes that the cost of work and
materials to complete its Year 2000 program will be approximately $120,000, of
which approximately $90,000 has been spent as of October 1, 1999. This includes
the cost of material upgrades, software modifications and related consulting
fees.
Viant's standard master services agreement does not warrant Year 2000
compliance other than the warranties provided by vendors of the software used in
its solutions. Viant has reviewed significant non-standard client contracts to
determine its exposure for failure to provide Year 2000 compliant solutions.
Viant believes these contracts do not provide express warranties for Year 2000
compliance for its solutions. Nevertheless under either contractual arrangement,
Viant may become involved in disputes regarding Year 2000 problems occurring in
solutions it has developed or implemented or arising from the interactions of
its Internet solutions with other software applications. Viant has tested for or
received assurances of Year 2000 compliance for the major software components
used in its client applications. Viant believes that its exposure for failure to
provide Year 2000 compliant products would not have a material impact on its
business or operations.
Viant has developed contingency plans for critical individual information
technology systems and non-information technology systems to address Year 2000
risks not fully resolved by Viant's Year 2000 program. To the extent that our
assessment has not identified any material noncompliant information technology
systems operated by us or by our vendors, Viant feels the most reasonably likely
worst case Year 2000 scenario is a temporary telecommunications failure which
would impair communications among our offices. Viant currently has contingency
plans in place to address such a disruption in its telecommunications systems
and believes that such a disruption would not have a material effect on our
operations. However, a prolonged telecommunications failure beyond our control
could have a material adverse effect on our business, results of operations and
financial condition.
Viant believes that the Year 2000 risk will not present significant
operational problems for Viant. However, there can be no assurance that our Year
2000 program will prevent any material adverse effect on our operations,
financial condition or customer relations.
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BUSINESS
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions. Viant accomplishes this value creation
through a business model that emphasizes multi-disciplinary teams, an integrated
service model, organic growth that reinforces the firm's culture and continuous
innovation.
Viant believes it has gained considerable experience and market presence
from completing significant engagements for Global 1000 and other large
companies such as American Express, BankBoston, CMGI, Compaq, Deutsche Bank,
General Motors, Hewlett-Packard, Kinko's, Lucent Technologies, Polo/Ralph
Lauren, LVMH, RadioShack, Sears Roebuck & Co. and Sony Pictures Entertainment.
The Company was originally incorporated in April 1996, as a California
corporation. The Company changed its name from Genuine Internet to Silicon
Valley Internet Partners on June 14, 1996. On April 3, 1998, we changed our name
to Viant Corporation, and on March 12, 1999, we reincorporated in the State of
Delaware.
INDUSTRY BACKGROUND -- INTERNET GROWTH AND OPPORTUNITIES
Over the past several years the number of Internet users worldwide has grown
rapidly. Increasing numbers of individuals and companies now use the Internet to
search for information, communicate with others, conduct business and seek
entertainment. According to International Data Corporation, the estimated number
of Internet users worldwide was 142 million at the end of 1998, and is projected
to grow to over 500 million users by the end of 2003.
The broad acceptance of the Internet has created numerous opportunities for
companies that are seeking growth and are challenged by highly competitive and
rapidly changing markets, geographically dispersed operations and demands for
increased efficiencies. As a result, many senior executives now rank their
company's Internet strategy among their highest corporate priorities.
Internet solutions permit companies to acquire new customers, conduct
electronic commerce and consistently manage customer relationships. These
solutions can also dramatically improve a company's ability to access, analyze
and distribute important information to suppliers, business partners, employees
and customers. A manager can, for example, check suppliers' inventories for the
availability, pricing and estimated delivery time for important parts needed to
fulfill orders. A sales person can perform research on her company's corporate
database even though she is thousands of miles from corporate headquarters.
Employees worldwide can verify their retirement account balances simply by
checking their company's website. A consumer can comparison shop and purchase an
item from the comfort of her own home. These examples translate into revenue
growth and improved operating efficiencies.
While there are numerous benefits that may be gained by utilizing the
Internet, the analysis, design and implementation of an effective Internet
solution requires a range of skills and expertise which few businesses possess.
The successful design of Internet solutions requires careful analysis and
definition of the strategic implications of the Internet for a business, the
creative possibilities for brand, content and user experience and the technology
required to support the solution. The rapid development and launch of Internet
solutions further requires substantial expertise to develop and integrate new
business processes with existing capabilities, to design and execute Internet
marketing communications plans and to evaluate, select and implement the
appropriate technologies for the Internet solution.
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The current supply of high quality, experienced Internet professionals is
relatively limited, making the market extremely competitive for these
individuals. Furthermore, it is costly and inefficient for companies seeking to
implement their own Internet solutions to hire, train and retain these
professionals. As a result, an increasing number of businesses, from start-ups
to Global 1000 companies, engage Internet professional services firms to help
them design and implement Internet solutions. The market for Internet and
e-commerce services is projected to grow dramatically. Forrester Research
estimates that this market will grow from $10.6 billion as of November 1999 to
$64.8 billion in 2003, representing a compound annual growth rate of 59%.
The rapidly growing demand for Internet professional services has attracted
many firms to this market. Viant believes that many of these firms suffer from
one or more of the following limitations:
- Strength in only one or two of the core competencies of strategic
consulting, creative design and technology. Many of these firms have
expertise in only one or two of these critical disciplines and therefore
must partner with other firms to deliver a complete Internet solution. As
a result, separate teams or firms with differing approaches, skill sets
and cultures work on the same project. This separation often results in
project delays, increased costs and other inefficiencies.
- A time and materials business model. Service providers who utilize a time
and materials model typically bill their clients for the time spent on a
project. As a result, these service providers have a reduced incentive to
complete a project early or on time as they will continue to be paid even
if a project takes longer than planned. Clients, therefore, generally
perceive that the time and materials model fails to align the service
provider's goals with the client's, namely the rapid, efficient delivery
of a working Internet solution.
- Dependence on acquisitions to add competencies and geographic reach.
Certain Internet professional services firms grow primarily through
acquisitions of other firms in order to gain expertise in core disciplines
or to expand geographically. The mere acquisition of these additional
disciplines may not necessarily result in the creation of an integrated
service approach. In addition, the integration of an acquired firm's
employees and business systems is often difficult and time-consuming,
resulting in inconsistent and inefficient delivery of services and
solutions to the client.
Accordingly, Viant believes that companies seeking to effectively capitalize
on the Internet require and seek a firm with expertise in strategic consulting,
creative design and technology to provide an integrated, seamless delivery of
Internet solutions.
THE VIANT SOLUTION
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the opportunities presented by the Internet. Viant has experienced
increased demand for its services. Viant's revenues have grown from $640,000 in
1996 to $8.8 million in 1997, $20.0 million in 1998 and $37.6 million in the
first nine months of 1999. Key elements of the Viant solution are:
INTEGRATED APPROACH
Viant combines three core disciplines -- strategic consulting, creative
design and technology -- to help clients reevaluate their strategies and
transform their businesses to take advantage of the Internet. Viant delivers its
services for each project through a multi-disciplinary team of strategists,
creative designers and information technologists who typically work with key
client representatives in a local Viant office. Viant believes that this
integrated approach enables it to deliver comprehensive Internet solutions which
can be implemented seamlessly and quickly. This
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approach also reduces costs, miscommunications and delays which can occur when
the strategic consulting, creative design and technology disciplines are handled
by different teams or firms.
VIANT SERVICE MODEL
We created the Viant Service Model to organize and address the broad-ranging
and complex needs of clients hoping to utilize the Internet effectively. The
service model divides each engagement into three well-defined phases --
Envision, Experience, and Launch -- which provide our consultants with a
consistent yet flexible service approach. The Viant Service Model takes a client
efficiently from strategy all the way through implementation. Our approach
identifies and prioritizes initiatives, rapidly delivers them to market,
captures valuable market experience and feedback, and immediately applies this
feedback to refine the solution. Viant executes this approach through an
iterative process, which results in Internet solutions that are better suited to
today's fast-changing market environment than solutions based on a traditional,
lengthy and non-iterative approach. The service model also allows us to
identify, capture, and reuse valuable Internet frameworks, designs, processes
and techniques which we develop in our client projects.
FIXED-PRICE AND FIXED-TIME
In substantially all of its engagements, Viant charges a fixed price for its
services and provides the client with a substantive deliverable within a short,
predetermined timeframe. Viant believes that clients favor fixed-price,
fixed-time contracts because they focus on clearly defined deliverables and
permit the client to more accurately manage project costs. These contracts also
create incentives for Viant to finish within budgeted timeframes, thereby more
closely aligning Viant's interests with the client's. Furthermore, this model
creates the opportunity for Viant to achieve higher margins by delivering its
solutions more efficiently.
STRATEGIC BUSINESS FOCUS
Viant works with clients to reevaluate and transform their strategic
business processes and operations to take advantage of the Internet. Viant's
focus on initiatives that are critical to a client's strategy, operations and
organization enables Viant to work with a client's most senior executives. Viant
believes that its participation in and development of these critical initiatives
results in the opportunity to provide premium value services.
ORGANIC GROWTH MODEL
Viant believes its organic growth model is essential to its ability to
maintain quality while increasing revenues. To date, Viant has built its
business entirely through the training and assimilation of new employees, as
opposed to adding employees and disciplines through mergers or acquisitions. A
principal element of this training and assimilation is the QuickStart program,
an intensive three-week program of activities and instruction attended by all
new employees.
In order to open new offices effectively and quickly, Viant staffs new
locations with employees who have relocated from other offices. This process
allows Viant to bring new offices on-line quickly, ready to service local
clients. Additionally, Viant believes this process maintains consistent
firm-wide quality and culture, and an ongoing entrepreneurial environment.
VIANT CULTURE
Viant's culture is founded on professional growth, rapid learning and
enterprise-wide knowledge-sharing. Employees are evaluated not only on their
individual performance, but also on how well they teach other employees and
share knowledge. Viant believes that its integrated team
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approach and policy of servicing clients from local offices has reduced travel
time and allowed Viant managers to allocate work efficiently.
VIANT'S STRATEGY
Viant's goal is to build upon its position as a leading provider of Internet
professional services. To achieve this goal, Viant is pursuing the following
strategies:
EXPAND EXISTING CLIENT RELATIONSHIPS AND ATTRACT NEW CLIENTS
Viant continues to focus on delivering high quality solutions to help its
clients redefine and transform their businesses in order to capitalize on the
Internet. Viant believes this focus improves client satisfaction and results in
two distinct benefits: follow-on engagements with existing, satisfied clients
and referrals for engagements with new clients. Viant also plans to continue to
build its brand recognition, grow its sales efforts and expand its skill set to
acquire new clients seeking comprehensive Internet solutions.
CONTINUE ENHANCEMENT OF CORE DISCIPLINES
To enhance its knowledge and thought leadership in the core disciplines --
strategic consulting, creative design and technology -- Viant has established
the following research and innovation groups:
THE VIANT INSTITUTE, which is comprised of dedicated internal personnel
and outside advisors whose efforts are focused on thought-leading research
and writings on Internet-related issues. Viant uses this research
internally to enhance its knowledge and service offerings, and also
distributes this research to clients and prospective clients as a means of
increasing Viant's visibility in the marketplace.
THE DESIGN STUDIO, which has a dedicated staff that supports the creative
discipline. This group develops new ideas in creative design and user
experience, giving our clients innovative ways to attract and strengthen
relationships with customers over the Internet.
THE TECHNOLOGY CENTER, which is comprised of a dedicated team that
evaluates and tests new and emerging Internet technologies. This team
synthesizes new technologies in order to formulate innovative Internet
architectures. These activities benefit our clients by allowing them to
rapidly incorporate thoroughly-tested, leading edge technologies into
their Internet solutions.
In addition, Viant has established an advisory board which will provide
Viant's client executives and senior management with insights associated with
designing, building and sustaining business models to compete in the new digital
economy. The members of the Advisory Board are W. Brian Arthur, John Seely
Brown, Paul Saffo, N. Venkatraman and Richard J. Chavez, Viant's Chief Strategy
Officer.
Viant believes that the combination of new intellectual capital from its
innovation groups and advisory board with its project-based experience will
allow it to remain on the leading edge of strategic consulting, creative design
and Internet technologies.
ATTRACT AND RETAIN THE HIGHEST QUALITY EMPLOYEES
Viant seeks to hire high quality employees with a broad range of experience
and knowledge. Consistent with its organic growth plan, Viant recruits a
substantial number of its new employees through an employee referral program.
This program rewards employees for new hires referred by them. The QuickStart
training and orientation program accelerates the dissemination of knowledge
among new employees and instills an understanding of Viant's culture and shared
values. Viant's
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culture provides long-term appeal for its employees by providing extensive
client contact and allowing them to pursue mastery of one discipline or gain a
broad exposure across two or more disciplines. Viant also encourages its
employees to pursue entrepreneurial opportunities by helping to launch new
offices. Viant believes that equity ownership is an important component of
employee compensation. As a result, all Viant employees are granted options to
purchase Viant stock upon commencement of employment. In addition, as a further
incentive to attract and retain the highest quality employees, Viant has begun
to explore investment vehicles through which it could invest in Internet-related
businesses. Although Viant has not decided which vehicle, if any, is most
appropriate, Viant may pass along to its employees a portion of the potential
gains associated with any of these investments. Viant may use a portion of the
net proceeds from this offering for making these investments.
LEVERAGE COMPANY-WIDE KNOWLEDGE
Viant's multi-disciplinary teams gain valuable experience and knowledge
through client engagements. Viant's culture, systems and processes promote the
sharing of this knowledge throughout the company. Viant has developed a unique,
proprietary knowledge sharing and collaboration system, consisting of electronic
documents and shared workspaces, called FOCUS. During every client engagement,
Viant project teams seek to expand Viant's knowledge base by identifying
innovative processes, techniques and analyses that they believe will be valuable
to other project teams. The FOCUS system enables the:
- efficient distribution of company-wide knowledge and experience;
- reuse of processes and knowledge from past projects;
- acceleration and enhancement of professional development; and
- close collaboration and knowledge sharing with clients during projects.
The client benefits from Viant's FOCUS system which gives it access to a
broad array of proven assets, methods and project experience. Viant benefits
from this knowledge sharing strategy through the reuse of processes, components
and methodologies. This strategy accelerates the delivery of Internet solutions
and over time could result in improved operating margins.
CONTINUE TO REFINE OUR OPERATING SYSTEMS AND PROCESSES
Viant has built and continues to refine its management processes and
supporting systems in order to streamline and standardize operations. These
include systems and processes for:
- revenue forecasting;
- recruiting;
- project financial management;
- relationship management;
- career management;
- knowledge sharing;
- project staffing; and
- accounting.
Viant believes that the evolution of its infrastructure has allowed and will
continue to allow it to scale its operations and compete effectively.
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EXPAND GEOGRAPHICALLY
Viant believes that significant revenue growth opportunities exist from
expansion into new geographic markets. To date, Viant has opened offices in six
cities in the United States and an office in London and has established a
presence in two additional U.S. cities. Viant has plans to expand to additional
domestic and international markets. Through its organic growth model, each
office is initially staffed with experienced employees from other Viant offices
and then with new employees from the local geographic area. Viant believes this
expansion strategy provides ongoing entrepreneurial opportunities for employees
and closer relationships with clients.
EXTEND SERVICE OFFERING
Viant believes that additional growth opportunities may also exist through
strategic alliances with complementary service providers. As an example, Viant
has entered into an alliance with Hewlett-Packard Company and Technology
Crossover Ventures, called "NetSpinoff.com," as a means of offering additional
services to meet new market demands. The alliance's planned service offerings
include, among others: venture capital, digital brand strategy, digital
organization design, web development, legacy-system integration and application
hosting. NetSpinoff.com will target these services at Fortune 1000 corporations
who are looking to create or spin-off Internet business.
PROVIDE SERVICES ACROSS A BROAD RANGE OF INDUSTRIES
Viant focuses on building knowledge of and skills relating to the design and
development of Internet solutions to help companies redefine and transform their
businesses. Viant believes the broad-based business knowledge and Internet
expertise it attains from its client engagements is scalable across a wide range
of industries. Clients have effectively utilized this expertise in a broad range
of industries which, to date, have included:
- financial services;
- retail;
- music and entertainment;
- pharmaceutical;
- media and publishing;
- high technology;
- utilities;
- distribution; and
- telecommunications.
VIANT SERVICES
Viant has focused on developing substantial expertise in five major service
areas. These service areas include:
INTERNET STRATEGY SOLUTIONS
Companies often pursue multiple Internet initiatives in an isolated and
uncoordinated manner, ignoring the opportunities to integrate these initiatives
with broader corporate strategy and business practices. Viant works closely with
a client to better understand its existing business strategy, processes and
needs in order to design a comprehensive and complementary Internet strategy.
Viant also works with a client to redesign its organizational structure and
processes to fully capitalize on the new, Internet-inclusive business strategy.
Viant then helps the client to focus,
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define, and prioritize its Internet investments to ensure that they represent a
unified strategy closely tied to the client's overall business objectives and
operations.
ELECTRONIC COMMERCE SOLUTIONS
As increasing numbers of people research and purchase goods and services
directly over the Internet, many companies have rushed to create their own
Internet storefront in what they view simplistically as a new distribution
channel. Viant helps clients move beyond this approach by focusing them on
critically important issues such as customer segmentation, online customer
behavior, the design and creation of positive user experiences, customer
information capture and analyses, and effective online customer service. This
focus helps clients to create electronic commerce solutions that attract,
satisfy and retain loyal customers through the Internet.
BUSINESS PARTNER SOLUTIONS
Historically, business partners have largely interacted via multiple and
sometimes inefficient methods including faxed correspondence, telephone sales
and support, paper-based orders, invoicing and payment. Business partners can
greatly improve the efficiency of this process by using secure Internet-based
transactions and correspondence systems, often called extranets. Viant has
gained substantial knowledge and expertise in rapidly analyzing complex business
operations and partner interaction systems, redesigning business partner
interactions around extranet solutions, designing effective user interfaces and
functionality, and integrating extranet solutions with disparate hardware and
software systems.
INTERNAL INFORMATION SOLUTIONS
As companies grow in headcount and geographic breadth, managers often face
the difficult and costly question of how to share information with large numbers
of employees, often in numerous geographic locations. For example, an updated
brochure or handbook that needs to be sent to 850 locations worldwide requires a
significant amount of time and resources. Viant helps clients to develop
corporate Internet solutions, often called intranets, which allow the secure
capture, storage, and distribution of information by and to a client's
authorized employees. Viant designs and deploys intranet solutions, for example,
that enable a global company to post documents, audio or video clips on a
website for access by all employees worldwide. Viant's intranet solutions allow
clients to communicate important information to those who need it in a cost and
time efficient manner.
INTERNET-ONLY BUSINESS SOLUTIONS
The dramatic growth in Internet use has also given rise to a new class of
businesses which are designed specifically for the Internet. Viant works with
clients and managers to design and deploy the business strategy, operations, and
systems for these new Internet enterprises. Because market conditions shift
extremely quickly for Internet-based businesses -- for example with the entrance
of new competitors, regulations or technologies -- clients value Viant's ability
to help them rapidly and effectively analyze conditions, anticipate and respond
to changes, and refine their business strategies and systems.
VIANT SERVICE MODEL
The Viant Service Model is comprised of three distinct, customizable and
iterative phases, which facilitate the rapid delivery of Internet solutions.
Viant works with the client to understand its specific business needs and
determine the most appropriate activities within each phase of the service
model. Each phase takes approximately 60-90 days, is provided on a fixed-price,
fixed-time basis and involves all three core disciplines. These three phases may
be repeated as required to
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refine and deliver an Internet solution. The Viant Service Model can be
illustrated graphically as follows:
(DIAGRAM DEPICTS VIANT SERVICE MODEL)
(A triangle with the words Strategy, Technology, and Creative, and three
boxes, labeled, "Envision: Explore and Develop the Internet Strategy";
"Experience: Design Prototypes to Test Approaches"; and "Launch: Build and
Deploy the Internet Solution". The words Ideas/Option, Blueprint/Market Tests
and Build/Refine will appear under the boxes)
ENVISION
During the first phase, ENVISION, project teams examine the client's
marketplace, including competitors, customer needs and brand identity. Viant
interprets the client's core value proposition and business practices for the
Internet environment based on Viant's integrated perspective of customer
behavior and needs, competitive dynamics and technology trends and issues. Viant
works with the client to establish a focused objective -- for example, increased
customer value, strengthened partner relationships or improved operating
efficiencies -- and a comprehensive set of business options to achieve this
objective.
Once this set of options is developed and articulated, Viant works with the
client to further analyze and prioritize the potential options by:
- defining the decision framework and criteria to select near-term and
long-term Internet investments;
- developing a profile of the client's capabilities and comparing those
capabilities against the requirements of the solution;
- performing a rigorous business case analysis to determine which option to
pursue; and
- creating a conceptual design to help visualize the options.
At the end of this phase, Viant delivers an action plan that is understood
and supported by key managers throughout the client organization and is grounded
in the client's business strategy. The action plan outlines specific Internet
solutions and their expected benefits. The plan also identifies the work needed
to determine the solution's requirements.
EXPERIENCE
In the second phase, EXPERIENCE, the project team utilizes the action plan
from Envision and carefully investigates the Internet solutions through market
tests. The project team creates an initial layout and subsequent prototypes of
the Internet solution. These prototypes can then be tested with the client's
existing and potential customers. The testing process allows clients to
incorporate customer feedback into the Internet solution.
Another important aspect of the Experience phase is the continued assessment
of prototypes against the client's broad business strategy, internal operations
and processes, marketing initiatives and technology systems. Viant helps the
client refine its initial strategy and action plan into a better defined
Internet solution and launch plan.
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LAUNCH
In the third phase, LAUNCH, activities center on creating the capabilities
needed not only to implement an Internet solution, but also to establish that
Internet solution as an ongoing and integrated dimension of the client's
business operations. Project teams build and deploy Internet solutions through
incremental releases. Project teams perform rigorous testing on each release to
ensure proper functioning and reliability. Viant trains the client throughout
the Launch phase enabling the client to manage ongoing maintenance once the
Internet solution is complete. Activities in this phase include:
- development of Internet software applications;
- integration between the Internet solution and the client's existing
technology systems;
- refinement of the client's business and Internet strategy, based on
operational needs and ongoing customer feedback;
- management of changes in work processes;
- rigorous testing of an Internet solution to ensure reliability and proper
functionality;
- transitioning the Internet solution to client personnel for ongoing
maintenance and revision; and
- execution of the integrated marketing strategy.
The Viant Service Model's iterative build and release process provides a high
degree of flexibility to meet changing client needs and ensures a high-quality
solution.
BENEFITS OF THE VIANT SERVICE MODEL
The Viant Service Model provides us with considerable benefits and
advantages including:
- A consistent approach for the rapid, effective delivery of all of Viant's
services. This approach is taught to all Viant consultants through the
QuickStart program and subsequent training programs;
- Standard methods to identify and capture valuable reusable assets
developed in client projects. These reusable assets include proprietary
Internet frameworks, designs, tools, processes, techniques and software;
and
- A powerful means to facilitate sales forecasting and resource management.
Viant also believes that the service model provides benefits to clients,
which include:
- COMPLETENESS. The Viant Service Model incorporates all the elements needed
to design and implement an effective Internet solution, including the
creation of the business strategy, development of the marketing plan,
design of a business organization, layout of the technical architecture,
implementation of the Internet solution and the introduction of the
redesigned business. The Viant Service Model provides clients with an
integrated set of activities that effectively move them from analysis
through execution.
- SPEED. The Viant Service Model takes a client efficiently from strategy
all the way through implementation, avoiding costly hand-offs that
typically occur when a client uses one consulting team or firm for
strategy and operations, another for creative design and marketing, and a
third for systems development and integration. Clients utilizing the Viant
Service Model gain a benefit by rapidly getting the right Internet
initiative to market.
- INNOVATION. The Viant Service Model draws on multi-disciplinary teams of
strategic consulting, creative design and technology experts. Clients
benefit by having innovative ideas formed from three, distinct
disciplinary perspectives, and from having these perspectives integrated
early and throughout all phases of the engagement.
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- ALIGNMENT. The Viant Service Model draws on key representatives from
various functional areas within the client's organization, including
marketing, information technology, strategy and operations. As a result,
the Internet strategy and execution receives deep and broad support across
the client organization. This organizational support helps to ensure that
Internet initiatives and investments are aligned with the client's
business goals and operations.
- UNIQUENESS. The Viant Service Model is highly flexible and can incorporate
a client's prior Internet work and investments as well as its unique
brand, organization and technology requirements. As a result, each client
gets a unique work plan that is most efficient for its operations and
organization, as well as unique Internet initiatives to specifically
address that client's needs.
- RISK MITIGATION. The Viant Service Model relies on proven frameworks,
techniques and processes. As a result, clients benefit from reliable
mechanisms that can be used to identify and manage project risk and to
ensure the quality delivery of Internet initiatives, on time and within
budget.
We seek to protect the software applications, methods and internal business
processes that comprise the Viant Service Model through a combination of
copyright and trade secret laws. We use all reasonable efforts to protect the
proprietary and confidential aspects of the service model by requiring any party
having access to them to execute a nondisclosure agreement or an employee
confidentiality agreement.
SALES AND MARKETING
Viant markets its Internet professional services through sales professionals
and consultants located in Boston, Chicago, Dallas, Houston, London, Los
Angeles, New York, and San Francisco. Viant believes that this regional sales
focus combined with our local service approach allows Viant to develop strong
market presence and name recognition in each of our local markets. Viant's sales
professionals operate through a coordinated and structured process to evaluate
large numbers of prospective clients, target qualified prospects and secure new
engagements.
Viant primarily markets its services to Global 1000 corporations. In
addition, Viant markets its services to early stage companies whose businesses
are designed and built around the Internet. Viant believes that the
opportunities and issues created by the Internet, including new brand
enhancement possibilities and dramatic shifts in product distribution
strategies, span a broad range of industries.
Our sales efforts are supplemented by marketing and communications
activities which we pursue to further build Viant's brand name and recognition
in the marketplace. These activities include direct mail campaigns targeting
corporate executives, public speaking opportunities, attendance at industry
conferences and business events, a public relations program, sales and marketing
materials and our own focused Internet brand initiative.
SIGNIFICANT CLIENTS
Our clients include the following companies:
American Express Company
BankBoston Corporation
BlueTape, LLC
CMGI, Inc.
Compaq Computer Corporation
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Della & James, Inc.
Deutsche Bank AG
Dreyfus Brokerage Services
Fortunoff Incorporated
General Motors Corporation
Hewlett-Packard Company
Informix Software
J. Crew Group, Inc.
Kinko's Corporation
Lucent Technologies Inc.
LVMH
Oncology Therapeutics Network, Corp., a subsidiary of Bristol-Myers
Squibb Co.
Polo/Ralph Lauren Corporation
RadioShack
Sears, Roebuck & Co.
Sony Pictures Entertainment
Unum Corporation
We derive a significant portion of our revenues from large projects for a
limited number of clients. In 1998, our five largest clients accounted for
approximately 59% of our revenues. During this period, Kinko's Corporation,
Lucent Technologies Inc. and Compaq Computer Corporation each accounted for more
than 10% of our revenues. In the first nine months of 1999, our five largest
clients accounted for approximately 55% of our revenues. During this period,
Compaq and BankBoston each accounted for more than 10% of our revenues.
COMPETITION
Viant competes in the Internet professional services market, which is
relatively new and intensely competitive. Viant expects competition to intensify
as the market evolves. Viant believes that the competitors fall into several
categories, including the following:
- Internet service firms, such as AGENCY.COM, iXL, Organic Online, Proxicom,
Razorfish and USWeb/CKS;
- technology integrators, such as Andersen Consulting, Cambridge Technology
Partners, EDS, IBM, Sapient and Scient; and
- strategic consulting firms, such as Bain, Booz-Allen & Hamilton, Boston
Consulting Group, Diamond Technology Partners and McKinsey.
Many of Viant's competitors have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than Viant. Viant believes that only a few of these competitors offer
an integrated package of professional Internet services. Several competitors,
however, have announced their intention to offer a broader range of services
than they currently provide.
Viant believes that the principal competitive factors in the Internet
professional services market are: the provision of an integrated services,
breadth of service offerings, cost certainty and a referenceable customer base.
Viant believes that its service model allows it to compete favorably in all of
the above areas.
There are relatively low barriers to entry into the Internet professional
services market. As a result, new market entrants pose a threat to Viant's
business. Existing or future competitors may
30
<PAGE>
develop or offer services that are comparable or superior to ours at a lower
price, which could have a material adverse effect on our business, financial
condition and results of operations.
LEGAL PROCEEDINGS
From time to time, Viant may be involved in litigation incidental to the
conduct of its business. Viant is not currently party to any material legal
proceedings.
The Company has received a number of letters from Eric Greenberg, a founder
and former employee of the Company and currently the Chairman of the Board of
Scient Corporation. Mr. Greenberg owns 863,383 shares of the Company's capital
stock. Mr. Greenberg contends that the Company has breached contractual
obligations and fiduciary duties owed to him, and further contends that his
shares are not subject to the lock-up provisions in his contracts with the
Company and are freely tradable. The Company denies Mr. Greenberg's allegations,
believes they are without merit and if a lawsuit is initiated, intends to defend
such lawsuit vigorously.
PEOPLE AND CULTURE
Viant had 27 employees at the end of 1996, 119 at the end of 1997, 213 at
the end of 1998 and 328 employees as of October 1, 1999. None of Viant's
employees is represented by a labor union and Viant believes its employee
relations are excellent. Although Viant has experienced rapid growth, it
continues to grow organically and to introduce every new employee into the Viant
culture via its intensive three-week QuickStart training program. Viant believes
that this shared introductory experience is critical to its corporate culture
and service quality.
Viant recognizes that its employees are key to its future success. This
future success is based on the following factors:
- an effective recruiting program that attracts bright, creative and
entrepreneurial candidates;
- a strong corporate culture reinforced through our organic growth model;
- ongoing training and development; and
- equity ownership for all employees.
PHILOSOPHY
Viant's personnel and culture philosophy is simple: to provide every
employee with an environment for professional growth and development. Viant
believes that intelligent and motivated individuals achieve their fullest
potential by collaborating with high-caliber professionals in a work environment
charged with creativity and innovation. Viant also believes that individual
learning is accelerated when the firm's collective knowledge and experience is
shared in a team environment that is stimulating, challenging and fun.
RECRUITING
Viant dedicates significant resources to its recruiting efforts. A
substantial number of Viant's new hires come from referrals by current
employees. Viant believes that its existing employees are an excellent
recruiting resource and rewards employees that bring new people into the
organization. Viant believes that the success of its employee referral program
is a direct reflection of current employee satisfaction. Viant also actively
recruits from many of the country's leading graduate and undergraduate programs
and through professional search firms.
TRAINING AND DEVELOPMENT
Viant's training and professional development programs advance the skills of
its employees and enable Viant to deliver high-quality services to its clients.
A principal element of this training is
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Viant's QuickStart program. QuickStart is an intensive three-week program
attended by all new employees. In the program, new employees learn about the
culture and values of the firm, meet other new employees from across the firm
and gain first-hand experience with Viant's Service Model. Additionally, Viant
continues to develop programs that ensure each consulting professional has the
opportunity to develop skills in each of Viant's core disciplines.
COMPENSATION
Viant's compensation program has been structured to attract and retain
highly skilled professionals by offering competitive base salaries with annual
cash bonus opportunities. Each Viant employee receives stock options upon
commencement of employment and may receive additional options based upon
performance.
FACILITIES
Viant's headquarters are located in 20,000 square feet of leased office
space in Boston, Massachusetts. This facility is used by Viant's senior
management, administrative, human resources and training personnel as well as
the Boston business unit consultants. The lease term extends to March 31, 2003
with a five-year renewal at the option of Viant. Additionally, Viant leases
25,000 square feet in New York, 23,466 square feet in San Francisco and 17,576
square feet in Dallas and 5,177 square feet in Chicago. The New York lease term
extends to July 28, 2007 with a ten-year renewal at the option of Viant. The San
Francisco lease term extends to August 30, 2003 with a five-year renewal at the
option of Viant. The Dallas lease was amended effective August 15, 1999 such
that the lease term extends to September 30, 2004 with a five-year renewal at
the option of Viant. The Chicago lease term is from September 1, 1999 through
February 29, 2000, after which the lease will continue on a month-to-month basis
terminable upon 30 days notice by either party. Viant has also entered into
short term leases for professional office space in Los Angeles and London.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers as of November 1, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH VIANT
- ---- -------- -------------------
<S> <C> <C>
Robert L. Gett 49 President and Chief Executive Officer, and Director
M. Dwayne Nesmith 37 Vice President and Chief Financial Officer
Richard J. Chavez 34 Vice President and Chief Strategy Officer
Timothy A. Andrews 42 Vice President and Chief Technology Officer
Christopher Newell 48 Vice President and Chief Knowledge Officer
Diane M. Hall 36 Vice President and Chief People Officer
Mark G. Leiter 34 Vice President and Chief Marketing Officer
Sherwin A. Uretsky 41 Vice President, Worldwide Sales
Michael J. Tubridy 44 Vice President of Finance and Treasurer
Robbie O. Vann-Adibe 37 Vice President and Co-General Manager, London
Edward J. Mello 41 Vice President of Strategic Development
Chirag V. Patel 30 Vice President and General Manager, Boston
Lance L. Trebesch 34 Vice President and General Manager, Los Angeles
Paul R. Michaud 35 Vice President and General Manager, New York
Michael B. McFarland 35 Vice President and General Manager, Dallas
Xavier Zang 34 Vice President and General Manager, San Francisco
Michael A. Keany 39 Vice President and Co-General Manager, London
William H. Davidow(1),(2) 64 Chairman of the Board of Directors
Kevin W. English 46 Director
Venetia Kontogouris(1),(2) 48 Director
William E. Kelvie 51 Director
</TABLE>
- ------------------------
(1) Member of the audit committee
(2) Member of the compensation committee
ROBERT L. GETT has served as President and Chief Executive Officer and
director of Viant since November 1996. From August 1990 to October 1996,
Mr. Gett was the President-North America and was on the board of directors for
Cambridge Technology Partners (Massachusetts), Inc., a technology consulting and
systems integration firm. From April 1988 to July 1990, Mr. Gett was President
of Fidelity Software Development Company, a subsidiary of Fidelity Investments,
a financial services company. From January 1982 to March 1988, Mr. Gett served
as Managing Director and Chief Information Officer of Smith Barney, Inc., a
financial services company. Mr. Gett currently serves on the board of directors
of Optika, Inc., an imaging and document management software company. Mr. Gett
holds a BS in Mathematics from Indiana University of Pennsylvania and an MS in
Technology Management from American University.
M. DWAYNE NESMITH has served as Vice President and Chief Financial Officer
of Viant since March 1999. From December 1996 to March 1999, Mr. Nesmith served
as Viant's Vice President of Operations and Planning, and from May 1996 to
June 1998, Mr. Nesmith served as Viant's Vice President of Product Marketing.
From January 1992 to April 1996, Mr. Nesmith was a product manager for Compuware
Corporation, a technology consulting and software development company. From
August 1989 to December 1991, Mr. Nesmith was a product marketing manager for
Oracle Corporation, a database and technology company. From July 1984 to May
1987, Mr. Nesmith was a consultant for Arthur Andersen, an audit, tax and
consulting firm. Mr. Nesmith holds a BS in
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<PAGE>
Computer Science from the University of Mississippi and an MBA from the Harvard
Business School.
RICHARD J. CHAVEZ has served as Vice President and Chief Strategy Officer of
Viant since February 1997. From January 1995 to January 1997, Mr. Chavez was a
Principal for CSC Index, a management consulting firm. From August 1994 to
December 1994, Mr. Chavez was a Senior Client Partner and Manager for Cambridge
Technology Partners (Massachusetts), Inc., a technology consulting and systems
integration firm. From January 1989 to June 1994, Mr. Chavez was the Chief
Operating Officer and President of Marble Associates, Inc., a technology
consulting and systems integration firm. Mr. Chavez holds an AB degree in
Political Science from Harvard College.
TIMOTHY A. ANDREWS has served as Chief Technical Officer of Viant since
August 1998. The Chief Technical Officer is responsible for overseeing all
aspects of engineering, software development and technical implementation
activities. From July 1996 to July 1998, Mr. Andrews was a partner at Diamond
Technology Partners, Inc., a strategic management consulting firm. From
July 1994 to July 1996, Mr. Andrews was the Vice President of Technology for the
consulting and systems integration unit of Computer Sciences Corporation, a
consulting and systems integration firm. From January 1986 to February 1994,
Mr. Andrews was the Chief Technical Officer of ONTOS, Inc., a software company.
Mr. Andrews holds an AB in Engineering Science from Dartmouth College and an MS
in Computer Science and Electrical Engineering from Worcester Polytechnic
University.
CHRISTOPHER NEWELL has served as Vice President and Chief Knowledge Officer
of Viant since April 1999. The Chief Knowledge Officer is responsible for
overseeing the systems and processes that capture and distribute the experience
gained in client engagements. From January 1994 to March 1999, Mr. Newell
founded and served as Executive Director for, the Lotus Institute, the research
and executive education division of Lotus Development Corporation, a software
company. From October 1988 to January 1994, Mr. Newell served as Director of
Organizational Development and Training for Lotus Development Corporation. Since
October 1998, Mr. Newell has served as the Co-Director of the IBM Institute for
Knowledge Management. Mr. Newell holds a BA in Psychology from Wheeling Jesuit
College, an MS in Counseling Education from Suffolk University, and a PhD in
Psychology from Massachusetts School of Professional Psychology.
DIANE M. HALL has served as Vice President and Chief People Officer of Viant
since April 1999. From January 1998 to April 1999, she served as Viant's Vice
President and Chief People and Knowledge Officer, and from March 1997 to
January 1998, she served as Viant's Vice President and Chief Knowledge Officer.
From March 1996 to March 1997, Ms. Hall was an independent business and
technology consultant. From August 1993 to March 1996, Ms. Hall was a Senior
Director at Cambridge Technology Partners (Massachusetts), Inc. Ms. Hall holds a
BS in Computer Science from the University of Massachusetts -- Lowell.
MARK G. LEITER has served as Vice President and Chief Marketing Officer of
Viant since June 1999. The Chief Marketing Officer is responsible for shaping
growth strategies for Viant, as well as building the Viant brand across
worldwide markets. From November 1993 to October 1996, Mr. Leiter was employed
as an Engagement Consultant by McKinsey & Company, Inc., and from November 1996
to June 1999 Mr. Leiter was employed as a Senior Engagement Manager and co-
leader of the North American Marketing Practice for McKinsey. While at McKinsey,
Mr. Leiter founded and was the co-leader of the firm's Branding Strategy
practice. Mr. Leiter holds an AM in Sociology from Harvard University and a BA
in Sociology from the State University of New York at Albany.
SHERWIN A. URETSKY has served as Vice President, Worldwide Sales of Viant
since August 1997. From February 1992 to August 1997, Mr. Uretsky was a Senior
Vice President for Technology Solutions Company, a systems consulting firm.
Mr. Uretsky holds a BS degree in Computer Science from the State University of
New York and an MBA from New York University.
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<PAGE>
MICHAEL J. TUBRIDY, CPA has served as Vice President of Finance and
Treasurer since March 1999. From December 1997 to March 1999, Mr. Tubridy served
as Viant's Chief Financial Officer and Vice President of Finance and
Administration. Prior to that, he served as a consultant to Physiometrix, Inc.,
a medical device company, from September to December 1997, and as Physiometrix's
Chief Financial Officer and Vice President of Finance and Administration from
November 1994 to September 1997. Mr. Tubridy served as Chief Financial Officer
and Vice President of Finance and Administration for Open Data Corp., a software
company, from June 1993 to November 1994. Mr. Tubridy holds a BS in Engineering
from the University of Rhode Island and an MS in Accounting from Northeastern
University.
ROBBIE O. VANN-ADIBE has served as Vice President and Co-General Manager,
London of Viant since April 1999. From January 1997 to May 1999, Mr. Vann-Adibe
served as Vice President and General Manager, San Francisco of Viant. From April
1996 to January 1997, Mr. Vann-Adibe served as the Senior Vice President of
Financial Services of Viant. From June 1995 to March 1996, Mr. Vann-Adibe served
as Vice President of Product Marketing at Illustra Information Technologies, a
software product company. From September 1992 to June 1995, Mr. Vann-Adibe
worked at Oracle Corporation where he last served as a Director of Oracle
Industries. Mr. Vann-Adibe holds a BSc in Mathematical Economics and
Econometrics from The London School of Economics and an MSc in Management
Science and Operational Research from The University of Warwick.
EDWARD J. MELLO has served as Vice President of Strategic Development of
Viant since June 1999. From January 1998 to June 1999, Mr. Mello served as Vice
President and General Manager, Dallas of Viant. From August 1988 to
November 1997, Mr. Mello was a Vice President and Managing Partner of the
consulting and systems integration division of Computer Sciences Corporation, a
management and information systems consulting firm. Mr. Mello began his career
at Electronic Data Systems after serving as an officer in the United States
Corps of Engineers. Mr. Mello holds a BA in Classics from the University of
Notre Dame.
CHIRAG V. PATEL has served as Vice President and General Manager, Boston of
Viant since March 1998. From October 1996 to March 1998, Mr. Patel was a
consultant for Viant. From January 1995 to October 1996, Mr. Patel was a
Principal at Oracle Corporation, a database and technology company. From
January 1992 to January 1995, Mr. Patel was an Assistant Vice President at
Merrill Lynch & Co., Inc., a financial services firm. Mr. Patel holds a BS in
Computer Science from Fairleigh Dickinson University.
LANCE L. TREBESCH has served as Vice President and General Manager, Los
Angeles of Viant since September 1998. From November 1997 to September 1998,
Mr. Trebesch was an employee of Viant. From March 1996 to June 1997,
Mr. Trebesch was the Head of Strategic Alliances for Dimension X, Inc., a
software company. From June 1989 to February 1996, Mr. Trebesch was the Director
of Information Technology for APL Limited, a shipping company. Mr. Trebesch
holds a joint BA in History and Economics from the University of Washington.
PAUL R. MICHAUD has served as Vice President and General Manager, New York
of Viant since March 1999. From July 1996 to March 1999, Mr. Michaud was an
employee of Viant. From October 1994 to July 1996, Mr. Michaud was the Director
of Consulting for Seer Technologies, Inc., a software consulting firm, and from
June 1990 through October 1994, Mr. Michaud was a Senior Consultant at Seer
Technologies, Inc. Mr. Michaud is the brother-in-law of Michael A. Keany.
Mr. Michaud holds a BS in Computer Science from the Massachusetts Institute of
Technology.
MICHAEL B. MCFARLAND has served as Vice President and General Manager,
Dallas since June 1999. From May 1998 to June 1999, Mr. McFarland was an
employee of Viant. From April 1997 to April 1998 Mr. McFarland was the Community
Leader of the Dallas CSC Index office in charge of that office's operations.
From April 1995 to April 1997, Mr. McFarland was a Principal at CSC Index. From
August 1991 to April 1995, Mr. McFarland held positions of Associate, Senior
Associate and
35
<PAGE>
Managing Associate at CSC Index. Mr. McFarland holds a BS in Management Science
and Computer Systems from Oklahoma State University and a MS in Management from
Northwestern University.
XAVIER ZANG has served as Vice President and General Manager, San Francisco
of Viant since April 1999. From September 1996 to April 1999, Mr. Zang was an
employee of Viant. From September 1993 through July 1996, Mr. Zang was an
Associate with the general management consulting firm McKinsey & Company in San
Francisco. Mr. Zang holds an MBA from the University of California at Berkeley's
Walter A. Haas School of Business and a BA in Economics and German Literature
from the University of Notre Dame.
MICHAEL A. KEANY has served as a Vice-President and Co-General Manager,
London of Viant since April 1999. From July 1996 to March 1999, Mr. Keany was an
employee of Viant. From December 1994 to July 1996, Mr. Keany was an associate
with the management consulting firm of Booz, Allen & Hamilton. From
December 1990 to December 1994, Mr. Keany held a variety of roles at Seer
Technologies, a software consulting firm, including Senior Consultant, and
General and Consulting Manager. Mr. Keany is the brother-in-law of Paul R.
Michaud, Vice President and General Manager, New York. Mr. Keany holds a BSc.
Hons. in Environmental Studies from the University of Sunderland.
WILLIAM H. DAVIDOW has served as the Chairman of Viant's board of directors
since July 1997. From May 1985 to the present, he has served as a General
Partner of Mohr, Davidow Ventures, a venture capital firm. Mr. Davidow is
currently serving on the board of directors of Rambus, Inc., Power Integrations,
Inc., and The Vantive Corporation. Mr. Davidow holds a BS and MS in electrical
engineering from Dartmouth College and a PhD in electrical engineering from
Stanford University.
KEVIN W. ENGLISH has served on Viant's board of directors since April 1999.
From October 1998 to November 1999, Mr. English has served as Chief Executive
Officer and President of TheStreet.com. Mr. English was chairman of the board of
TheStreet.com from December 1998 to November 1999. Before joining TheStreet.com,
Mr. English served as Vice President and General Manager of the Nexis Enterprise
Group, a division of Lexis-Nexis, from February 1998 to October 1998. From
September 1997 to February 1998, Mr. English directed an advertiser remediation
and recompense program for the Reed Travel Group, a wholly-owned subsidiary of
ReedElsevier, and reported to the chairman of ReedElsevier, the parent company
of Lexis-Nexis. Mr. English served as Vice President of Sales and Marketing of
Lexis-Nexis from May 1995 to September 1997 and as a Senior Director from 1994
to May 1995. Mr. English holds a BA in history from Stonehill College.
VENETIA KONTOGOURIS has served on Viant's board of directors since
June 1996. From November 1999 Ms. Kontogouris has served as the Managing
Director of Trident Capital, a venture capital firm and since July 1997, has
served as the President of Enterprise Associates, LLC, the venture capital unit
of IMS Health, an information solutions provider to the pharmaceutical and
healthcare industries. From July 1997 to present, Ms. Kontogouris has also
served as a Senior Vice President of Cognizant Corporation, a venture capital
interest. From 1992 to July 1997, Ms. Kontogouris was a Senior Vice President
with The Dun & Bradstreet Corporation, a business services company.
Ms. Kontogouris serves on the board of directors of Cognizant Technology
Solutions Corporation, an information technology consulting company and several
private companies. Ms. Kontogouris holds a BA from Northeastern University and
an MBA from the University of Chicago.
WILLIAM E. KELVIE has served on Viant's board of directors since June 1999.
Mr. Kelvie is also a director of HomeStore since August 1998. He is Executive
Vice President and Chief Information Officer responsible for information
technology systems at Fannie Mae, including its technology business and its
internal systems. Mr. Kelvie joined Fannie Mae in November 1990 as Senior Vice
President and Chief Information Officer and became Executive Vice President in
November 1992.
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Prior to his tenure at Fannie Mae, Mr. Kelvie was a partner with Nolan, Norton &
Company, a management consulting company specializing in information technology
strategies and plans and served in various capacities with The Dexter
Corporation, a specialized manufacturing company, and The Travelers, an
insurance and financial services company. Mr. Kelvie received a B.S. in English
literature from Tufts University and an M.S. in English literature from Trinity
College.
BOARD COMPOSITION
Viant currently has authorized five directors. In accordance with the terms
of Viant's amended and restated certificate of incorporation, the terms of
office of the members of the board of directors are divided into three classes:
Class I, whose term will expire at the annual meeting of stockholders to be held
in 2000, Class II, whose term will expire at the annual meeting of stockholders
to be held in 2001, and Class III, whose term will expire at the annual meeting
of stockholders to be held in 2002. The Class I director is Venetia Kontogouris,
the Class II directors are William H. Davidow and Kevin W. English, and the
Class III directors are Robert L. Gett and William E. Kelvie. At each annual
meeting of stockholders after the initial classification, the successors to
directors whose term will then expire will be elected to serve from the time of
election and qualification until the third annual meeting following election. In
addition, Viant's amended and restated bylaws provide that the authorized number
of directors may be changed only by resolution of the board of directors or its
stockholders. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of one-third of the total number of
directors. This classification of the board of directors may have the effect of
delaying or preventing changes in control or management of Viant.
Each officer is elected by, and serves at the discretion of, the board of
directors. Each of Viant's officers and directors, other than non-employee
directors, devotes full time to the affairs of Viant. Viant's non-employee
directors devote such time to the affairs of Viant as is necessary to discharge
their duties. Except for the relationship between Messrs. Keany and Michaud,
there are no family relationships among any of the directors, officers or key
employees of Viant.
BOARD COMMITTEES
The audit committee reviews Viant's audited financial statements and
accounting practices, and considers and recommends the employment of, and
approves the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services. The current members of
the audit committee are William H. Davidow and Venetia Kontogouris.
The compensation committee reviews and approves the compensation and
benefits for our key executive officers, administers our employee benefit plans
and makes recommendations to the board of directors regarding grants of stock
options and any other incentive compensation arrangements. The current members
of the compensation committee are William H. Davidow and Venetia Kontogouris.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION INTERLOCKS
None of the members of the compensation committee of the board of directors
has at any time since the formation of Viant been an officer or employee of
Viant. No executive officer of Viant serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving on Viant's board of directors or compensation committee.
DIRECTOR COMPENSATION
The directors do not receive any compensation for their service as
directors, other than reimbursement of all reasonable out-of-pocket expenses for
attendance at board meetings.
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CHANGE OF CONTROL ARRANGEMENTS
Shares subject to options granted under Viant's 1996 and 1999 Stock Option
Plans will generally vest over four years, with 25% of the shares vesting after
one year and the remaining shares vesting in installments based on full calendar
quarters over the next 36 months. Viant has granted an option to Robert L. Gett
that provides for accelerated vesting of option shares upon a "change of
control", which, in general terms, would occur upon the closing of either
(i) an acquisition in which the Company is not the continuing or surviving
entity after the acquisition or (ii) a transaction or series of transactions or
issuance or series of issuances in which ownership of more than 50% of the
voting shares are transferred, except for the issuance of shares in the
Company's initial public offering.
ADVISORY BOARD
Viant has established an advisory board to provide Viant's client executives
and senior management with insights associated with designing, building and
sustaining business models to compete in the new digital economy. The members of
the Advisory Board are as follows:
W. BRIAN ARTHUR
Mr. Arthur is a professor at the Santa Fe Institute and former professor at
Stanford University. Mr. Arthur has a Ph.D from UC Berkeley in operations
research and graduate degrees in economics, engineering and mathematics.
Mr. Arthur is the author of "Increasing Returns and Path Dependence in the
Economy."
JOHN SEELY BROWN
Mr. Brown is Chief Scientist of Xerox Corporation and Director of Xerox's
Palo Alto Research Center. Mr. Brown's research interests include digital
culture, ubiquitous computing, user-centering design, organizational and
individual learning, and the management of radical innovation. Mr. Brown is a
member of the National Academy of Education and a Fellow of the American
Association for Artificial Intelligence.
PAUL SAFFO
Mr. Saffo is Director and member of the Board of Trustees of the Institute
for the Future, which is based in Silicon Valley. Mr. Saffo has degrees from
Harvard, Cambridge University and Stanford University. Mr. Saffo is the author
of "Dreams in Silicon Valley" and essays in a wide range of publications
including HARVARD BUSINESS REVIEW, WIRED MAGAZINE, THE NEW YORK TIMES, THE LOS
ANGELES TIMES and FORTUNE.
N. VENKATRAMAN
Mr. Venkatraman is a Professor of Management of the Information Systems
Department at Boston University's School of Management. Mr. Venkatraman has a
Ph.D in Business Administration from the University of Pittsburgh and an MBA and
Bachelor of Technology from the Indian Institute of Technology. Mr. Venkatraman
has carried out research in the areas of electronic integration and IT-enabled
business transformation in a wide-range of industries including automotive,
airline, and textbook publishing.
RICHARD CHAVEZ
Mr. Chavez is the Vice President and Chief Strategy Officer of Viant.
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EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation paid to
Viant's named executive officers, who are our Chief Executive Officer and each
of our four other most highly compensated executive officers, during the fiscal
year ended January 1, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL --------------
COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
- --------------------------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Robert L. Gett, President and Chief Executive Officer, and
Director................................................ $123,077 $100,000 --
Edward J. Mello, Vice President and General Manager,
Dallas(1)............................................... 195,408 55,576 95,000
Richard J. Chavez, Vice President and Chief Strategy
Officer................................................. 210,073 51,282 -- $ 35,000(2)
Sherwin A. Uretsky, Vice President, Worldwide Sales....... 158,538 49,683 10,000
Robbie O. Vann-Adibe, Vice President and General Manager,
San Francisco(3)........................................ 164,260 43,344 --
</TABLE>
- ------------------------------
(1) Currently Vice President of Strategic Development.
(2) Represents a relocation bonus paid in March 1998.
(3) Currently co-manager of the London office.
On November 4, 1996, Viant and Robert L. Gett entered into a Key Employee
Agreement. Under the terms of Viant's Key Employee Agreement, Mr. Gett's
employment with Viant shall last until the earlier of (i) Mr. Gett's death,
(ii) disability lasting 270 days, (iii) 30 days after written notice from Mr.
Gett terminating the Agreement or (iv) 30 days after written notice by Viant,
with or without cause, terminating the Agreement. Mr. Gett's base salary as of
the date of the Agreement is $10,416.67 per month. As of June 30, 1997,
Mr. Gett was eligible to receive a performance bonus determined by the board of
directors, targeted between $100,000 and $200,000. Mr. Gett is eligible to
receive deferred bonus, pension, group medical insurance, profit sharing and
other benefits in place from time to time. If Mr. Gett's employment is
terminated by Viant without cause, Viant has agreed to continue to pay
Mr. Gett's salary for a period of one year from the date of such termination.
Mr. Gett will also continue to receive the same employee benefits which he had
as an employee until the earlier of: (1) one year from the date of such
termination, and (2) the date on which Mr. Gett is re-employed.
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The following table sets forth information with respect to stock options
granted during the fiscal year ended January 1, 1999 to each of the named
executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
NUMBER OF GRANTED EXERCISE OR OPTION TERM(2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED (1) IN FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ----------- ------------------ ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Gett, President and -- -- -- -- -- --
Chief Executive Officer, and
Director.....................
Edward J. Mello, Vice President 95,000 7.36% $1.50 2/12/08 $89,617 $227,108
and General Manager,
Dallas(3)....................
Richard J. Chavez, Vice -- -- -- -- -- --
President and Chief Strategy
Officer......................
Sherwin A. Uretsky, Vice 10,000 0.77% 1.50 2/12/08 9,433 23,906
President, Worldwide Sales...
Robbie O. Vann-Adibe, Vice -- -- -- -- -- --
President and General
Manager, San Francisco(4)....
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Options
granted under the Plan vest over a four-year period with 25% vesting at the
first anniversary date of the vest date and the remaining shares vesting in
installments based on full calendar quarters over the next 36 months. The
board retains discretion to modify the terms, including the price of
outstanding options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% annual rates of stock price appreciation from the date of grant
to the end of the option term are provided in accordance with rules of the
SEC and do not represent our estimate or projection of the future common
stock price. Actual gains, if any, on stock option exercises are dependent
on the future performance of the common stock, overall market conditions and
the option holders' continued employment through the vesting period. This
table does not take into account any actual appreciation in the price of the
common stock from the date of grant to the present.
(3) Currently Vice President of Strategic Development.
(4) Currently co-manager of the London office.
40
<PAGE>
The following table sets forth certain information regarding exercised stock
options during the fiscal year ended January 1, 1999 and unexercised options
held as of January 1, 1999 by each of the named executive officers:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END(1) YEAR-END(2)
----------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Robert L. Gett, President and Chief Executive Officer,
and Director(3)....................................... 740,000 0 $ 2,960,000 $ 0
Edward J. Mello, Vice President and General Manager,
Dallas(4)............................................. 0 95,000 0 261,250
Richard J. Chavez, Vice President and Chief Strategy
Officer............................................... 70,000 90,000 280,000 360,000
Sherwin A. Uretsky, Vice President, Worldwide Sales..... 31,625 71,875 101,031 228,594
Robbie O. Vann-Adibe, Vice President and General
Manager, San Francisco(5)............................. 390,625 234,375 1,640,625 984,375
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Unless stated
otherwise, options granted under the Plan vest over a four-year period with
25% vesting at the first anniversary date of the vest date and the remaining
shares vesting in installments based on full calendar quarters over the next
36 months. The board of directors retains discretion to modify the terms,
including the price of outstanding options.
(2) Calculated on the basis of the fair market value of the underlying
securities as of January 1, 1999 of $4.25 per share, minus the per share
exercise price, multiplied by the number of shares underlying the option.
(3) These options are immediately exercisable in full at the date of grant, but
shares purchased on exercise of unvested options are subject to a repurchase
right in favor of Viant that entitles us to repurchase unvested shares at
their original exercise price on termination of the employee's services with
Viant. The repurchase right lapses as to 25% of the shares subject to the
option on November 4, 1996, 25% on November 4, 1997 and the balance, ratably
by calendar quarter, over the next three years. As of January 1, 1999,
options to purchase 506,667 shares of common stock, with an average original
issue price of $0.25 per share, were subject to repurchase.
(4) Currently Vice President of Strategic Development.
(5) Currently co-manager of the London office.
EMPLOYEE BENEFIT PLANS
1996 STOCK OPTION PLAN
In June 1996 the board of directors adopted, and in July 1996 Viant's
stockholders approved, the 1996 Stock Option Plan. At that time, 2,771,876
shares of common stock were reserved for issuance under the 1996 Plan, which
number was increased to 4,291,876 in November 1996, and to 5,991,876 in
November 1997. As of October 1, 1999, options to purchase 2,094,362 shares of
common stock had been exercised and options to purchase 2,845,390 shares of
common stock were outstanding under the 1996 Plan with an average exercise price
of $1.13, and 1,052,124 shares were available for future grants. As of
November 17, 1998, no further options were granted under the 1996 Plan. Options
granted under the 1996 Plan prior to its termination will remain outstanding
according to their terms. In general, options vest over a four-year period.
Options under the 1996 Plan are subject to terms substantially similar to those
described below with respect to options to be granted under the 1999 Stock
Option Plan.
41
<PAGE>
1999 STOCK OPTION PLAN
Viant's 1999 Stock Option Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees, directors
and consultants of nonstatutory stock options. The 1999 Plan was approved by the
board of directors in January 1999 and by the stockholders in April 1999 with
certain amendments being approved in June 1999. Unless terminated sooner, the
1999 Plan will terminate automatically in 2009. A total of 4,868,929 shares of
common stock is currently reserved for issuance pursuant to the 1999 Plan, plus
annual increases equal to the lesser of: 1,000,000 shares, 4% of the outstanding
shares on such date or an amount determined by the board of directors. As of
October 1, 1999, options to purchase 2,675,816 shares of common stock were
outstanding under the 1999 Plan, with an average exercise price of $12.01, and
2,178,238 shares were available for future grants.
The board of directors or a committee of the board of directors may serve as
administrator of the 1999 Plan. In the case of options intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the 1999 Plan must be administered by at least two or more "outside
directors" within the meaning of Section 162(m) of the Code. The administrator
has the power to determine the terms of the options granted, including the
exercise price, the number of shares subject to each option, the exercisability
thereof, and the form of consideration payable upon such exercise. The board of
directors has the authority to amend, suspend or terminate the 1999 Plan,
provided that no such action may affect any share of common stock previously
issued and sold or any option previously granted under the 1999 Plan.
Options granted under the 1999 Plan are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the 1999 Plan must generally be
exercised within three months of the optionee's separation of service from
Viant, or within twelve months after such optionee's termination by death or
disability, but in no event later than the expiration of the option's ten year
term. The exercise price of all incentive stock options granted under the 1999
Plan must be at least equal to the fair market value of the common stock on the
date of grant. The exercise price of nonstatutory stock options granted under
the 1999 Plan must be at least 85% of the fair market value, but with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must at least be equal to the fair market value of the common stock on the
date of grant. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of Viant's outstanding capital
stock, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the term of such
incentive stock option must not exceed five years. The term of all other options
granted under the 1999 Plan may not exceed ten years.
The 1999 Plan provides that in the event of a merger of Viant with or into
another corporation or a sale of substantially all of Viant's assets, each
option shall be assumed or an equivalent option substituted by the successor
corporation. If the outstanding options are not assumed or substituted as
described in the preceding sentence, the administrator shall notify the optionee
that he or she will have the right to exercise the option as to all of the
optioned stock, including shares as to which he or she would not otherwise be
exercisable, for a period of 15 days from the date of such notice. The option
will terminate upon expiration of such period.
1999 EMPLOYEE STOCK PURCHASE PLAN
A total of 200,000 shares of common stock have been reserved for issuance
under Viant's 1999 Employee Stock Purchase Plan, plus annual increases equal to
the lesser of: (1) 200,000 shares, (2) 2% of the outstanding shares on such
date, or (3) an amount determined by the board
42
<PAGE>
of directors. As of the date of this prospectus, no shares have been issued
under the 1999 Purchase Plan.
The 1999 Purchase Plan, which is intended to qualify under Section 423 of
the Code contains successive six-month offering periods. The offering periods
generally start on the first trading day on or after May 15 and November 15 of
each year, except for the first such offering period which commenced on June 18,
1999 and ends on the last trading day on or before May 14, 2000.
Employees are eligible to participate if they are customarily employed by
Viant or any participating subsidiary for at least twenty hours per week and
more than five months in any calendar year. However, any employee who:
(1) immediately after grant owns stock possessing 5% or more of the total
combined voting power or value of all classes of the capital stock of Viant, or
(2) whose rights to purchase stock under all employee stock purchase plans of
Viant accrues at a rate which exceeds $25,000 worth of stock for each calendar
year may be not be granted an option to purchase stock under the 1999 Purchase
Plan. The 1999 Purchase Plan permits participants to purchase common stock
through payroll deductions of up to 15% of the participant's compensation.
Compensation is defined as the participant's base straight time gross earnings,
commissions, incentive compensation and bonuses, but exclusive of payments for
overtime, profit sharing payments, shift premium payments and incentive
payments. The maximum number of shares a participant may purchase during a
single offering period is 1,250 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of stock
purchased under the 1999 Purchase Plan is 85% of the lower of the fair market
value of the common stock at the beginning or end of the offering period.
Participants may end their participation at any time during an offering period,
and they will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with Viant.
Rights granted under the 1999 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the 1999 Purchase Plan. The 1999 Purchase Plan provides
that, in the event of a merger of Viant with or into another corporation or a
sale of substantially all of Viant's assets, each outstanding option may be
assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set. The 1999 Purchase Plan will terminate in 2009. The board of directors
has the authority to amend or terminate the 1999 Purchase Plan, except that no
such action may adversely affect any outstanding rights to purchase stock under
the 1999 Purchase Plan.
401(K) RETIREMENT/SAVINGS PLAN
Viant's 401(k) plan covers its full-time employees located in the United
States. The 401(k) plan is intended to qualify under Section 401(k) of the Code.
Consequently, contributions to the 401(k) plan by employees or by Viant, and the
investment earnings thereon, are not taxable to employees until withdrawn from
the 401(k) plan. Further, contributions by Viant, if any, will be deductible by
Viant when made. Employees may elect to contribute up to 15% of their current
compensation to the 401(k), plan up to the statutorily prescribed annual limit,
which was $10,000 in 1998. The 401(k) plan permits, but does not require,
additional matching contributions to the 401(k) plan by Viant on behalf of all
participants in the 401(k) plan. To date, Viant has not made any contributions
to the 401(k) plan.
43
<PAGE>
UNITED KINGDOM PENSION PLAN
Viant's pension plan covers its full-time employees located in the United
Kingdom. Contributions to the plan by employees or by Viant, and the investment
earnings thereon, are not taxable to employees until withdrawn from the plan.
Further, contributions by Viant, if any, will be deductible by Viant when made.
Employees may elect to contribute to certain statutory limitations. The plan
permits, but does not require, additional matching contributions to the plan by
Viant on behalf of all participants in the plan. To date, Viant contributes an
additional 5% on behalf of each participant.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Viant's amended and restated certificate of incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for: (1) breach of their duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) unlawful payments of
dividends or unlawful stock repurchases or redemptions, or (4) any transaction
from which the director derived an improper personal benefit. Such limitation of
liability does not apply to liabilities arising under the federal or state
securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.
Viant's bylaws provide that Viant shall indemnify its directors, officers,
employees and other agents to the fullest extent permitted by law. Viant
believes that indemnification under its bylaws covers at least negligence and
gross negligence on the part of indemnified parties. Viant's bylaws also permit
it to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in such capacity,
regardless of whether the bylaws permit such indemnification.
Viant has entered into agreements to indemnify its directors and executive
officers, in addition to the indemnification provided for in its bylaws. These
agreements, among other things, indemnify Viant's directors and executive
officers for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of Viant arising out of such person's
services as a director, officer, employee, agent or fiduciary of Viant, any
subsidiary of Viant or any other company or enterprise to which the person
provides services at the request of Viant. Viant believes that these provisions
and agreements are necessary to attract and retain qualified persons as
directors and executive officers.
At present, there is no pending litigation or proceeding involving a
director or officer of Viant in which indemnification is required or permitted,
and, other than the allegations by Eric Greenberg, Viant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
44
<PAGE>
CERTAIN TRANSACTIONS
On May 16, 1996, Viant sold an aggregate of 5,746,874 shares of Series A
preferred stock at a price of $0.5333 per share. On June 19, 1996 Viant sold an
aggregate of 1,499,925 shares of Series B preferred stock at a price of $0.6667
per share. On June 4, 1997 and October 10, 1997, Viant sold an aggregate of
2,759,591 shares of Series C preferred stock at a price of $2.8995 per share.
Between the dates of November 4, 1998 and February 1, 1999 Viant sold an
aggregate of 3,168,704 shares of Series D preferred stock at a price of $6.39
per share. The following directors, executive officers, holders of more than 5%
of a class of voting securities and members of such person's immediate families
purchased shares of Series A, Series B, Series C and Series D preferred stock:
<TABLE>
<CAPTION>
SHARES OF SHARES OF SHARES OF SHARES OF
SHARES OF SERIES A SERIES B SERIES C SERIES D
COMMON PREFERRED PREFERRED PREFERRED PREFERRED
PURCHASER (1) STOCK STOCK STOCK STOCK STOCK
- ------------- ------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Mohr, Davidow Ventures (2),(3).... 3,562,500 907,869 283,328
Trident Capital Management
(2),(4)......................... 75,000 1,499,925 479,645 312,989
Robert L. Gett (2)................ 1,676,665 172,443
M. Dwayne Nesmith................. 110,000 2,500
Sherwin A. Uretsky................ 10,000
Michael J. Tubridy................ 42,500
Robbie O. Vann-Adibe.............. 187,500
Edward J. Mello................... 23,750
Chirag V. Patel................... 5,000 7,000
Kleiner Perkins Caufield & Byers
(2)............................. 1,875,000 1,062,164 186,155
Technology Crossover Ventures
(2)............................. 375,000 938,968
CKS Group, Inc. (2)............... 693,750
William Davidow................... 10,000
Diane Hall........................ 45,000
Michael A. Keany.................. 13,750 5,207 101
Xavier Zang....................... 11,625
</TABLE>
- ------------------------
(1) See notes to table of beneficial ownership in "Principal Stockholders" for
information relating to the beneficial ownership of such shares.
(2) A holder of more than 5% of a class of Viant's voting securities.
(3) Entity affiliated with William H. Davidow, Chairman of Viant's board of
directors. The shares listed are owned by Mohr, Davidow Ventures IV.
Mr. Davidow is a General Partner of Fourth MDV Partners, the General Partner
of Mohr, Davidow Ventures IV. Mr. Davidow disclaims beneficial ownership of
the shares listed except with respect to his proportionate partnership
interest in them.
(4) Entity affiliated with Venetia Kontogouris, a member of Viant's board of
directors. Ms. Kontogouris is President of Enterprise Associates, LLC, a
Limited Partner of Trident Capital Management. Ms. Kontogouris disclaims
beneficial ownership of the shares listed.
In March 1998, at the request of Viant, Richard J. Chavez, Vice President
and Chief Strategy Officer, relocated to the Boston office. In connection with
Mr. Chavez's agreement to relocate, he was granted the following: (1) a
relocation bonus of $35,000, (2) reimbursement of all reasonable expenses
associated with the relocation of his family to the Boston area, (3) a housing
loan in the principal amount of $50,000, and (4) an employee loan in the amount
of $40,000. Interest on both of the loans accrues annually at the prime rate (as
of the loan execution date). Interest payments
45
<PAGE>
only are due on the housing loan for the first four years; upon commencement of
the fifth year, repayment of principal and interest on the loan must be made in
accordance with a monthly repayment schedule in which principal and interest
will be repaid and amortized over a two year period. The housing loan becomes
immediately due and payable if Mr. Chavez: (1) ceases to be employed by Viant
for any reason, (2) fails to perform any of his obligations under the loan
agreement, or (3) files for bankruptcy or otherwise becomes insolvent, or upon
the occurrence of the sixth anniversary of the loan agreement. The housing loan
is secured by Mr. Chavez's option to purchase 30,000 shares of Viant common
stock, or the stock itself if the option is exercised. Viant will forgive 25% of
Mr. Chavez's employee loan annually commencing on the first anniversary of the
loan and for the next three anniversaries thereafter. The remaining principal
balance of the employee loan will become immediately due and payable if
Mr. Chavez: (1) ceases to be employed by Viant for any reason, (2) fails to
perform any of his obligations under the loan agreement, or (3) files for
bankruptcy or otherwise becomes insolvent. The employee loan is secured by
Mr. Chavez's option to purchase 30,000 shares of Viant common stock, or the
stock itself if the option is exercised. This stock collateral is separate from
and in addition to the collateral for the housing loan.
On November 4, 1996, Viant and Robert L. Gett entered into a Key Employee
Agreement. Under the terms of Viant's Key Employee Agreement, Mr. Gett's
employment with Viant shall last until the earlier of (i) Mr. Gett's death,
(ii) disability lasting 270 days, (iii) 30 days after written notice from Mr.
Gett terminating the Agreement or (iv) 30 days after written notice by Viant,
with or without cause, terminating the Agreement. Mr. Gett's base salary as of
the date of the Agreement is $10,416.67 per month. As of June 30, 1997,
Mr. Gett was eligible to receive a performance bonus determined by the board of
directors, targeted between $100,000 and $200,000. Mr. Gett is eligible to
receive deferred bonus, pension, group medical insurance, profit sharing and
other benefits in place from time to time. If Mr. Gett's employment is
terminated by Viant without cause, Viant has agreed to continue to pay
Mr. Gett's salary for a period of one year from the date of such termination.
Mr. Gett will also continue to receive the same employee benefits which he had
as an employee until the earlier of: (1) one year from the date of such
termination, and (2) the date on which Mr. Gett is re-employed.
Viant has entered into indemnification agreements with each of its directors
and officers. Such indemnification agreements require us to indemnify such
individuals to the fullest extent possible under Delaware law.
We believe that all transactions between Viant and its officers, directors,
principal stockholders and other affiliates have been and will be on terms no
less favorable to us than could be obtained from unaffiliated third parties.
46
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock
as of October 1, 1999, and as adjusted to reflect the sale of the shares offered
by this prospectus by:
- each person who is known by us to beneficially own more than 5% of our
common stock;
- each of the Named Executive Officers and each of Viant's Directors; and
- all of our officers and directors as a group.
Percentage of ownership is based on 21,472,981 shares outstanding as of
October 1, 1999 and 22,472,981 shares outstanding after this offering assuming
no exercise of the underwriters' over-allotment option. Beneficial ownership is
calculated based on SEC requirements. The columns entitled "Options" consist of
shares of common stock subject to options currently exercisable or exercisable
within 60 days after October 1, 1999, which are deemed to be outstanding for the
purpose of computing the percentage of ownership of the person holding such
options, but are not deemed to be outstanding for computing the percentage of
ownership of any other person. The percentage calculated for each beneficial
owner is based upon the sum of the "Stock" and "Options" column. Unless
otherwise indicated below, each stockholder named in the table has sole voting
and investment power with respect to all shares beneficially owned, subject to
applicable community property laws.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY TO BE SHARES TO BE BENEFICIALLY
OWNED PRIOR TO OFFERING SOLD OWNED AFTER OFFERING
-------------------------------- -------- --------------------------------
NUMBER PERCENT NUMBER PERCENT
BENEFICIAL OWNER --------------------- -------- --------------------- --------
- ---------------- STOCK OPTIONS STOCK OPTIONS
FIVE PERCENT STOCKHOLDERS --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Mohr, Davidow Ventures(1)... 3,327,589 -- 15.5% -- 3,327,589 -- 14.8%
Kleiner Perkins Caufield &
Byers(2).................. 3,123,319 -- 14.6% -- 3,123,319 -- 13.9%
Trident Capital
Management(3)............. 1,657,291 -- 7.7% -- 1,657,291 -- 7.4%
Robert L. Gett.............. 1,849,108 443,335 10.5% 220,000 1,629,108 443,355 9.0%
NAMED EXECUTIVE OFFICERS AND
DIRECTORS
William H. Davidow(4)....... 3,415,738 -- 15.9% 25,000 3,390,738 -- 15.1%
Venetia Kontogouris(5)...... -- 10,000 * -- -- 10,000 *
Kevin W. English............ -- 10,000 * -- -- -- *
Robert L. Gett.............. 1,849,108 443,335 10.5% 220,000 1,629,108 443,335 9.0%
Richard J. Chavez........... 10,000 90,000 * 10,000 -- 90,000 *
Sherwin A. Uretsky.......... 21,500 42,250 * -- 21,500 42,250 *
Robbie O. Vann-Adibe........ 287,500 407,812 3.2% 73,400 214,100 407,812 2.7%
Edward J. Mello............. 23,750 11,875 * 12,500 11,250 11,875 *
William E. Kelvie........... -- 10,000 * -- -- -- *
All directors and executive
officers as a group (21
persons).................. 5,905,085 1,186,358 31.3% 5,488,329 1,186,358 28.2%
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY TO BE SHARES TO BE BENEFICIALLY
OWNED PRIOR TO OFFERING SOLD OWNED AFTER OFFERING
-------------------------------- -------- --------------------------------
NUMBER PERCENT NUMBER PERCENT
BENEFICIAL OWNER --------------------- -------- --------------------- --------
- ---------------- STOCK OPTIONS STOCK OPTIONS
SELLING STOCKHOLDERS --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
USWeb/CKS................... 696,432 -- 3.2% 300,000 396,432 -- 1.8%
Ramsey Bierne Associates.... 187,500 -- * 56,250 131,250 -- *
WS Investment Co............ 48,294 -- * 15,515 32,779 -- *
Philippe Khan............... 469,484 -- 2.2 469,484 -- -- *
Michael J. Tubridy.......... 42,500 38,750 * 30,000 12,500 38,750 *
M. Dwayne Nesmith........... 112,500 6,000 * 11,500 101,000 6,000 *
Mavis Chin.................. 30,874 -- * 10,000 20,874 -- *
Michael A. Keany............ 22,183 7,125 * 9,200 12,983 7,125 *
Paul R. Michaud............. 7,500 15,750 * 7,500 -- 15,750 *
Rich Homich................. 7,200 21,550 * 7,200 -- 21,550 *
Xavier Zang................. 18,375 2,750 * 6,750 11,625 2,750 *
Timothy A. Andrews.......... 6,250 43,750 * 6,250 -- 43,750 *
Andrew Frank................ 14,500 1,562 * 5,000 9,500 1,562 *
Denise Conway............... 4,688 3,712 * 2,000 2,688 3,712 *
Leif Knudsen................ 4,250 3,000 * 1,000 3,250 3,000 *
Minna Rhee.................. 1,500 3,625 * 600 900 3,625 *
Charles Marshall............ 4,039 -- * 4,039 -- -- *
Bruno Ventures.............. 1,212 -- * 1,212 -- -- *
Martin Massner.............. 2,000 -- * 2,000 -- -- *
</TABLE>
- ------------------------
* Less than 1% of Viant's outstanding common stock.
(1) Consists of 3,186,147 shares held of record by Mohr, Davidow Ventures IV,
L.P. and 141,442 shares held of records by MDV IV Entrepreneurs' Network
Fund, L.P., affiliated funds of Mohr, Davidow Ventures. William Davidow,
Jonathan Feiber, Nancy Schoendorf, George Zachary and Lawrence Mohr, are
General Partners of Mohr Davidow Ventures and all parties disclaim
beneficial ownership of the 3,327,589 shares held by Mohr, Davidow Ventures
except to the extent of each parties respective pecuniary interest therein.
The address of Mohr, Davidow Ventures is 2775 Sand Hill Road, Suite 240,
Menlo Park, California 94025.
(2) Consists of 2,288,628 shares held of record by Kleiner Perkins Caufield &
Byers VIII, 624,162 shares held of record by KPCB Java Fund and 132,448
shares held of record by KPCB VIII Founders Fund, affiliated funds of KPCB
VIII Associates, L.P., and 78,081 shares held of record by KPCB Information
Sciences Zaibatsu Fund II an affiliated fund of KPCB VII Associates, L.P.
Vinod Khosla, Brook Byers, Kevin Compton, John Doerr, William Hearst III,
Joseph Lacob and Douglas Mackenzie each are General Partners of each of KPCB
VIII Associates, L.P. and KPCB VII Associates, L.P. All of the above named
individuals disclaim beneficial ownership of the shares held by these funds
except to the extent of each parties respective pecuniary interest therein.
The address for Kleiner Perkins Caufield & Byers is 2750 Sand Hill Road,
Menlo Park, California 94025.
(3) Consists of 1,612,295 shares held of record by Information Associates, L.P.
and 44,996 shares held of record by Information Associates, C.V. Trident
Capital Management is a general partner of the Information Associates funds.
Stephen Hall is a Managing Director of Trident Capital Management. Mr. Hall
disclaims beneficial ownership of the shares held by these funds except to
the extent of his pecuniary interests therein. The address for Trident
Capital Management is 2480 Sand Hill Road, Suite 100, Menlo Park, California
94025.
(4) Consists of 10,781 shares held by Mr. Davidow, 49,611 shares held by the
Chachagua Partnership, of which Mr. Davidow is a partner, and of which
25,000 shares are being sold in this offering, 27,757 shares held by the
Davidow Trust, over which Mr. Davidow has dispositive control and 3,327,589
48
<PAGE>
shares held by Mohr, Davidow Ventures and its affiliated funds, 2775 Sand
Hill Road, Suite 240, Menlo Park, California 94025. William Davidow, is a
General Partner of Mohr Davidow Ventures and disclaims beneficial ownership
of the 3,327,589 shares held by Mohr, Davidow Ventures except to the extent
of his pecuniary interest therein.
(5) Venetia Kontogouris is President of Enterprise Associates, LLC a limited
partner of Trident Capital Management. Ms. Kontogouris possesses no
investment or voting power over the 1,657,291 shares held by the affiliated
funds of Trident Capital Management. The address for Ms. Kontogouris is c/o
Enterprise Associates, LLC, 200 Nyala Farms, Westport, Connecticut 06880.
49
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Viant's amended and restated certificate of incorporation authorizes the
issuance of up to 50.0 million shares of common stock, par value $0.001 per
share, and 5.0 million shares of preferred stock, par value $0.001 per share,
the rights and preferences of which may be established from time to time by
Viant's board of directors. As of October 1, 1999, 21,472,981 shares of common
stock were outstanding. As of October 1, 1999, Viant had 148 stockholders of
record.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of preferred stock issued after
the sale of the common stock offered hereby may be entitled, holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available
therefor. Please see "Dividend Policy." In the event of a liquidation,
dissolution or winding up of Viant, holders of common stock would be entitled to
share in Viant's assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted to the holders of any
outstanding shares of preferred stock. Holders of common stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are, and the shares of common stock offered
by Viant in this offering, when issued and paid for, will be, fully paid and
nonassessable. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by the rights of the holders
of shares of any series of preferred stock, which Viant may designate in the
future.
PREFERRED STOCK
The board of directors has the authority, without stockholder approval, to
issue up to an aggregate of 5.0 million shares of preferred stock, $0.001 par
value per share, in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
board of directors. The rights of the holders of common stock will be subject
to, and may be adversely affected by, the rights of holders of any preferred
stock that may be issued in the future. Issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of Viant. Viant has no
present plans to issue any shares of preferred stock.
WARRANTS
As of October 1, 1999, Viant had outstanding a warrant to purchase 35,986
shares of common stock at an exercise price of $3.625 per share. The warrant has
a net exercise provision under which the holder may, in lieu of payment of the
exercise price in cash, surrender the warrant and receive a net amount of
shares, based on the fair market value of Viant's stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price. The
warrant will expire on June 17, 2004.
50
<PAGE>
REGISTRATION RIGHTS
Pursuant to the Amended and Restated Shareholders' Rights Agreement, dated
November 13, 1998, the holders of approximately 14,933,260 shares of common
stock have the right to register those shares under the Securities Act of 1933.
If Viant registers any of its common stock for its own account or for the
account of other security holders, the parties to the Rights Agreement are
entitled to include their shares of common stock in the registration, subject to
the ability of the underwriters to limit the number of shares included in the
offering. In addition, subject to limitations in the Rights Agreement, some of
the holders, whose shares total 13,704,877, may require, on one occasion at
least six months after June 17, 1999, that Viant use its best efforts to
register such shares for public resale, provided that the holders of at least
30% of those shares make the request. Furthermore, these holders of the
14,510,347 shares may require Viant to register all or a portion of their
registrable securities on Form S-3 when Viant is eligible to use such form,
provided, among other limitations, that the proposed aggregate price to the
public is at least $1,000,000. Viant will bear all fees, costs and expenses of
such registration, other than underwriting discounts and commissions. Upon the
effectiveness of any registration statement filed to register our common stock,
such shares would become freely tradable, without any restrictions imposed by
the Securities Act.
EFFECT OF THE CERTIFICATE OF INCORPORATION AND BYLAWS AND THE DELAWARE
ANTI-TAKEOVER STATUTE
Viant's amended and restated certificate of incorporation, its bylaws and
the Delaware General Corporation Law may have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of Viant.
Viant's amended and restated certificate of incorporation provides that the
board of directors will be divided into three classes of directors with each
class serving a staggered three-year term. The classification system of electing
directors may tend to discourage a third party from making a tender offer or
otherwise attempting to obtain control of Viant and may maintain the incumbency
of the board of directors, as the classification of the board of directors
generally increases the difficulty of replacing a majority of the directors.
Viant's amended and restated certificate of incorporation has eliminated the
right of stockholders to act by written consent without a meeting, and Viant's
bylaws eliminate the right of stockholders to call special meetings of
stockholders. The amended and restated certificate of incorporation and bylaws
do not provide for cumulative voting in the election of directors. Viant's
amended and restated certificate of incorporation also authorizes undesignated
preferred stock. The authorization of undesignated preferred stock makes it
possible for the board of directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of Viant. Any amendment of the provisions of the certificate of
incorporation regarding the ability of stockholders to act by written consent,
amend the bylaws, provide for cumulative voting or affect the location of a
meeting would require approval by holders of at least 66 2/3% of the outstanding
common stock. The following provisions of our Bylaws can only be amended with
the approval of at least 66 2/3% of the outstanding common stock: the number of
authorized directors, the calling of a Special Meeting, stockholder notice
requirements, voting, or the ability of stockholders to act by written consent.
In addition, Viant is subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder, unless: (1) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (2) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at
51
<PAGE>
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by persons who are directors and also
officers and by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (3) on or subsequent to such
date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is BankBoston, N.A.
The Transfer Agent's address is 150 Royall Street, Canton, MA and its telephone
number is (781) 575-2000.
52
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding an aggregate of
22,472,981 shares of common stock, assuming the issuance of 1,000,000 shares of
common stock offered by us and no exercise of options after October 1, 1999 and
assuming no exercise of the underwriters' over-allotment option. All of the
2,286,400 shares sold in this offering, as well as the 3,450,000 shares sold in
our initial public offering and 4,746,711 shares released from lock-up
agreements on or about November 15, 1999, will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by "Affiliates" of Viant as that term is defined in Rule 144
under the Securities Act (whose sales would be subject to certain limitations
and restrictions described below).
All of our officers and directors, as well as the selling stockholders and
certain other stockholders, who together in the aggregate hold 10,747,793 shares
of our common stock, have agreed not to sell or otherwise dispose of any of
their shares for the 90 day period following this offering. In addition,
stockholders collectively holding an additional 2,528,477 shares of our common
stock entered into lock-up agreements at the time of our initial public offering
with the underwriters that provide that these shares will become eligible for
sale on December 15, 1999. Goldman, Sachs & Co., however, may in its sole
discretion, at any time without notice, release all or any portion of the shares
subject to lock-up agreements. The number of shares which become eligible for
sale at various dates are subject in most cases to the limitations of Rule 144.
<TABLE>
<CAPTION>
SHARES ELIGIBLE
RELEVANT DATES FOR SALE COMMENT
- ---------------------------- --------------- -------------------------------------------------------
<S> <C> <C>
June 18, 1999............... 3,450,000 Initial public offering
November 15, 1999........... 4,746,711 Partial release of initial public offering lock-up
Upon Effectiveness.......... 2,286,400 Shares sold in the offering
December 15, 1999........... 2,528,477 Expiration of initial public offering lock-up
90 days after effective date
and thereafter............ 10,747,793 All shares subject to lock-up released
</TABLE>
As of October 1, 1999 there were a total of 5,521,206 shares of common stock
subject to outstanding options under our 1996 Stock Option Plan and 1999 Stock
Option Plan, approximately 1,639,180 of which were vested and exercisable.
However, all of these shares are subject to lock-up agreements.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of our initial public offering, a person who has beneficially owned
shares of our common stock for at least one year would be entitled to sell in
"broker's transactions" or to market makers, within any three-month period, a
number of shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding (which will
equal approximately 224,730 shares immediately after this offering); or
- the average weekly trading volume in the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are generally subject to the availability of current
public information about Viant.
53
<PAGE>
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been an affiliate of
Viant at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, is
entitled to sell such shares without having to comply with the manner of sale,
public information, volume limitation or notice filing provisions of Rule 144.
Therefore, unless otherwise restricted, "144(k) shares" may be sold immediately
upon the completion of this offering.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement entered into before
the effective date of our initial public offering is entitled to sell such
shares 90 days after the effective date of the initial public offering in
reliance on Rule 144, without having to comply with the holding period and
notice filing requirements of Rule 144 and, in the case of non-affiliates,
without having to comply with the public information, volume limitation or
notice filing provisions of Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, may be sold by
persons other than "affiliates" (as defined in Rule 144) subject only to the
manner of sale provisions of Rule 144 and by "affiliates" under Rule 144 without
compliance with its one year minimum holding period requirements.
54
<PAGE>
UNDERWRITING
Viant, the selling stockholders and the underwriters for the offering named
below have entered into an underwriting agreement with respect to the shares
being offered. Subject to certain conditions, each underwriter has severally
agreed to purchase the number of shares indicated in the following table.
Goldman, Sachs & Co., Credit Suisse First Boston Corporation, BancBoston
Robertson Stephens Inc. and Lehman Brothers Inc. are the representatives of the
underwriters.
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ------
<S> <C>
Goldman, Sachs & Co.........................................
Credit Suisse First Boston Corporation......................
BancBoston Robertson Stephens Inc...........................
Lehman Brothers Inc.........................................
-----------
Total.....................................................
===========
</TABLE>
------------------
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional 342,960
shares from Viant to cover such sales. They may exercise that option for
30 days. If any shares are purchased pursuant to this option, the underwriters
will severally purchase shares in approximately the same proportion as set forth
in the table above.
The following tables show the per share and total underwriting discounts and
commissions to be paid to the underwriters by Viant and the selling
stockholders. Such amounts are shown assuming both no exercise and full exercise
of the underwriters' option to purchase additional shares.
<TABLE>
<CAPTION>
Paid by Viant
-------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ $
Total.............................................. $ $
</TABLE>
<TABLE>
<CAPTION>
Paid by the Selling
Stockholders
------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ $
Total.............................................. $ $
</TABLE>
Shares sold by the underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the underwriters to certain other
brokers or dealers at a discount of up to $ per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling terms.
55
<PAGE>
Viant, its officers, directors, the selling stockholders and certain other
stockholders who hold % or more beneficial interest in Viant's common stock
have agreed with the underwriters not to dispose of or hedge any of their shares
of common stock or securities convertible into or exchangeable for shares of
common stock during the period from the date of this prospectus continuing
through the date 90 days after the date of this prospectus, except with the
prior written consent of the representatives. This agreement does not apply to
any existing employee benefit plans. See "Shares Eligible for Future Sale" for a
discussion of certain transfer restrictions.
In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock while
the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
Viant estimates that the total expenses of the offering payable by Viant,
excluding underwriting discounts and commissions, will be approximately
$465,000.
Viant and the selling stockholders have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
56
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Viant by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California. Certain
legal matters will be passed upon for the underwriters by Hale and Dorr LLP,
Boston, Massachusetts. As of the date of this prospectus, WS Investment Company
96A and 97A, investment partnerships composed of certain current and former
members of and persons associated with Wilson Sonsini Goodrich & Rosati, P.C.,
beneficially own an aggregate of 48,294 shares of Viant stock.
EXPERTS
Viant's financial statements as of December 31, 1997 and January 1, 1999 and
for the period from April 10, 1996 (inception) through December 31, 1996 and for
the years ended December 31, 1997 and January 1, 1999 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Viant has filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules) under the Securities
Act, with respect to the shares to be sold in this offering. This prospectus
does not contain all of the information set forth in the registration statement.
For further information with respect to Viant and the common stock offered in
this prospectus, reference is made to the registration statement, including the
exhibits thereto, and the financial statements and notes filed as a part
thereof. With respect to each such document filed with the SEC as an exhibit to
the registration statement, reference is made to the exhibit for a more complete
description of the matter involved.
We file quarterly and annual reports, proxy statements and other information
with the SEC. You may read and copy any document that we file at the public
reference facilities of the SEC in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's website at
http://www.sec.gov.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Accountants........................... F-2
Statement of Operations for the Period Ended December 31,
1996, the Years Ended December 31, 1997 and January 1,
1999 and the Nine Months Ended September 30, 1998 and
October 1, 1999 (unaudited)............................... F-3
Balance Sheet as of December 31, 1997, January 1, 1999 and
October 1, 1999 (unaudited)............................... F-4
Statement of Cash Flows for the Period Ended December 31,
1996, the Years Ended December 31, 1997 and January 1,
1999 and the Nine Months Ended September 30, 1998 and
October 1, 1999 (unaudited)............................... F-5
Statement of Stockholders' Equity for the Period Ended
December 31, 1996, the Years Ended December 31, 1997 and
January 1, 1999 and the Nine Months Ended October 1, 1999
(unaudited)............................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Viant Corporation
In our opinion, the accompanying balance sheet and the related statements of
operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Viant Corporation at January 1,
1999 and December 31, 1997, and the results of its operations and its cash flows
for each of the years ended January 1, 1999 and December 31, 1997 and the period
from April 10, 1996 (Inception) to December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of Viant's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 1999
F-2
<PAGE>
VIANT CORPORATION
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------- ------------ ---------- ------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues............... $ 642 $ 8,808 $20,043 $13,907 $37,625
------- ------- ------- ------- -------
Operating expenses:
Professional services.... 516 4,530 11,250 7,598 18,542
Sales and marketing...... 461 1,577 3,324 2,022 4,647
General and
administrative......... 1,077 6,298 10,365 6,667 14,998
Research and
development............ 338 581 1,429 852 2,472
------- ------- ------- ------- -------
Total operating
expenses............. 2,392 12,986 26,368 17,139 40,659
------- ------- ------- ------- -------
Loss from operations... (1,750) (4,178) (6,325) (3,232) (3,034)
Interest income............ 91 160 234 103 1,064
Interest expense........... -- (25) (371) (148) (362)
Other expense, net......... -- (37) (25) (17) 20
------- ------- ------- ------- -------
Net loss............... $(1,659) $(4,080) $(6,487) $(3,294) $(2,312)
======= ======= ======= ======= =======
Basic and diluted net
loss per share....... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Share used in computing
basic and diluted net
loss per share....... 3,981 3,468 3,681 3,664 10,845
Unaudited pro forma
basic and diluted net
loss per share....... $ (0.46) $ (0.12)
Shares used in
computing unaudited
pro forma basic and
diluted net loss per
share................ 14,084 18,904
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
VIANT CORPORATION
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1, OCTOBER 1,
1997 1999 1999
------------ ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,559 $ 18,209 $ 61,500
Short-term investments.................................... 615 602 1,376
Accounts receivable, net.................................. 1,820 5,472 13,614
Prepaid expenses and other current assets................. 165 1,190 1,441
------- -------- --------
Total current assets.................................... 8,159 25,473 77,931
Property and equipment, net................................. 2,011 4,048 5,736
Other assets................................................ 148 232 239
------- -------- --------
Total assets............................................ $10,318 $ 29,753 $ 83,906
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................... $ 349 $ 2,850 $ --
Current portion of capital lease obligation............... -- 416 591
Accounts payable.......................................... 1,165 626 3,347
Accrued expenses.......................................... 1,197 2,907 8,038
Deferred revenues......................................... 931 1,052 1,955
------- -------- --------
Total current liabilities............................... 3,642 7,851 13,931
Long-term debt, less current portion........................ 670 603 --
Capital lease obligations, less current portion............. -- 1,634 1,690
------- -------- --------
Total liabilities....................................... 4,312 10,088 15,621
------- -------- --------
Commitments (Note 6)........................................ -- -- --
Stockholders' equity:
Convertible preferred stock:
Series D: no par value; 3,240,000, 3,240,000 and 0
shares authorized, respectively; 0, 3,167,100 and 0
shares issued and outstanding, respectively........... -- 20,125 --
Series A: no par value; 5,746,874, 5,746,874 and 0
shares authorized, respectively; 5,746,874, 5,746,874
and 0 shares issued and outstanding, respectively..... 3,047 3,047 --
Series B: no par value; 1,499,925, 1,499,925 and 0
shares authorized, respectively; 1,499,925, 1,499,925
and 0 shares issued and outstanding, respectively..... 987 987 --
Series C: no par value; 2,830,408, 2,830,408 and 0
shares authorized, respectively; 2,759,625, 2,759,625
and 0 shares issued and outstanding, respectively..... 7,977 7,977 --
Preferred stock, $0.001 par value; 0, 0 and 5,000,000
shares authorized, respectively; no shares issued and
outstanding............................................. -- -- --
Common stock; $0.001 par value; 25,000,000, 25,000,000 and
50,000,000 shares authorized, respectively; 3,556,258,
4,294,236 and 21,472,981 shares issued and outstanding,
respectively............................................ 4 4 21
Additional paid-in capital................................ 409 430 83,501
Cummulative translation adjustment........................ -- -- (20)
Accumulated deficit....................................... (6,418) (12,905) (15,217)
------- -------- --------
Total stockholders' equity.............................. 6,006 19,665 68,285
------- -------- --------
Total liabilities and stockholders' equity.............. $10,318 $ 29,753 $ 83,906
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
VIANT CORPORATION
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO -------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
-------------- ------------- ---------- -------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................... $(1,659) $(4,080) $ (6,487) $(3,294) $(2,312)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............. 49 205 1,065 702 1,352
Compensation expense on employee
arrangement............................. -- 200 -- -- --
Changes in operating assets and
liabilities:
Accounts receivable, net................ (384) (1,436) (3,652) (1,384) (8,142)
Prepaid expenses and other assets....... (62) (251) (1,109) (1,086) (258)
Accounts payable........................ 86 1,079 (539) (878) 2,721
Accrued expenses........................ 227 970 1,710 960 5,131
Deferred revenues....................... 99 832 121 (355) 903
------- ------- -------- ------- -------
Net cash used in operating
activities.......................... (1,644) (2,481) (8,891) (5,335) (605)
------- ------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments......... -- (615) (602) (4,940) (4,888)
Maturities of short-term investments........ -- -- 615 4,953 4,114
Purchases of property and equipment......... (264) (2,001) (901) (252) (2,601)
------- ------- -------- ------- -------
Net cash used in investing
activities.......................... (264) (2,616) (888) (239) (3,375)
------- ------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes
payable................................... 500 -- -- -- --
Proceeds from issuance of convertible
preferred stock, net...................... 3,534 7,977 20,125 -- 75
Proceeds from issuance of common stock,
net....................................... 19 195 21 -- 50,155
Proceeds from exercise of stock options..... -- -- -- -- 722
Proceeds from borrowings on lines of
credit.................................... -- 1,046 2,749 -- --
Principal payments on borrowings on lines of
credit.................................... -- (27) (315) (79) (3,453)
Principal payments on capital lease
obligations............................... -- -- (151) (154) (208)
Repurchase of common stock.................. -- (680) -- -- --
------- ------- -------- ------- -------
Net cash provided by financing
activities.......................... 4,053 8,511 22,429 1,642 47,291
------- ------- -------- ------- -------
Effect of exchange rate changes on cash and
cash equivalents............................ -- -- -- -- (20)
Net increase (decrease) in cash and cash
equivalents................................. 2,145 3,414 12,650 (3,932) 43,291
Cash and cash equivalents at beginning of
period...................................... -- 2,145 5,559 5,559 18,209
------- ------- -------- ------- -------
Cash and cash equivalents at end of period.... $ 2,145 $ 5,559 $ 18,209 $ 1,627 $61,500
======= ======= ======== ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest...................... $ -- $ 22 $ 371 $ 149 $ 362
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable into preferred
stock..................................... $ 500 $ -- $ -- $ -- $ --
Equipment acquired under capital lease
obligations............................... $ -- $ -- $ 2,201 $ 2,173 $ 439
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
VIANT CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL CUMULATIVE
---------------------- ---------------------- PAID-IN TRANSLATION ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT DEFICIT
----------- -------- ----------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock.... 3,981,250 $ 4 $ 15
Issuance of Series A
preferred stock, net of
issuance costs of $16..... 4,809,369 $ 2,547
Issuance of Series A
preferred stock upon
conversion of notes
payable................... 937,505 500
Issuance of Series B
preferred stock, net of
issuance costs of $13..... 1,499,925 987
Net loss for the period from
April 10, 1996 (Inception)
to December 31, 1996...... $ (1,659)
----------- -------- ----------- ---- -------- ------ --------
Balance at December 31,
1996...................... 7,246,799 4,034 3,981,250 4 15 (1,659)
Issuance of common stock
upon exercise of stock
options................... 823,125 1 194
Issuance of Series C
preferred stock, net of
issuance costs of $25..... 2,759,625 7,977
Common stock repurchased and
retired................... (1,248,117) (1) (679)
Compensation expense on
employee severance
arrangement............... 200
Net loss.................... (4,080)
----------- -------- ----------- ---- -------- ------ --------
Balance at December 31,
1997...................... 10,006,424 12,011 3,556,258 4 409 (6,418)
Issuance of common stock
upon exercise of stock
options................... 206,032 21
Issuance of Series D
preferred stock, net of
issuance costs of $68..... 3,160,043 20,125
Net loss.................... (6,487)
----------- -------- ----------- ---- -------- ------ --------
Balance at January 1, 1999.. 13,166,467 32,136 3,762,290 4 430 (12,905)
Issuance of common stock
upon exercise of stock
options (unaudited)....... 1,080,046 1 721
Issuance of Series C
preferred stock upon
exercise of warrants
(unaudited)............... 5,517 20
Issuance of Series D
preferred stock
(unaudited)............... 8,661 55
Conversion of preferred
stock into common stock
(unaudited)............... (13,180,645) (32,211) 13,180,645 13 32,198
Initial public offering of
common stock (unaudited).. 3,450,000 3 50,152
Cumulative translation
adjustment (unaudited).... $ (20) --
Net loss (unaudited)........ (2,312)
----------- -------- ----------- ---- -------- ------ --------
Balance at October 1, 1999
(unaudited)............... -- -- 21,472,981 $ 21 $ 83,501 (20) $(15,217)
=========== ======== =========== ==== ======== ====== ========
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Issuance of common stock.... $ 19
Issuance of Series A
preferred stock, net of
issuance costs of $16..... 2,547
Issuance of Series A
preferred stock upon
conversion of notes
payable................... 500
Issuance of Series B
preferred stock, net of
issuance costs of $13..... 987
Net loss for the period from
April 10, 1996 (Inception)
to December 31, 1996...... (1,659)
-------
Balance at December 31,
1996...................... 2,394
Issuance of common stock
upon exercise of stock
options................... 195
Issuance of Series C
preferred stock, net of
issuance costs of $25..... 7,977
Common stock repurchased and
retired................... (680)
Compensation expense on
employee severance
arrangement............... 200
Net loss.................... (4,080)
-------
Balance at December 31,
1997...................... 6,006
Issuance of common stock
upon exercise of stock
options................... 21
Issuance of Series D
preferred stock, net of
issuance costs of $68..... 20,125
Net loss.................... (6,487)
-------
Balance at January 1, 1999.. 19,665
Issuance of common stock
upon exercise of stock
options (unaudited)....... 722
Issuance of Series C
preferred stock upon
exercise of warrants
(unaudited)............... 20
Issuance of Series D
preferred stock
(unaudited)............... 55
Conversion of preferred
stock into common stock
(unaudited)............... --
Initial public offering of
common stock (unaudited).. 50,155
Cumulative translation
adjustment (unaudited).... $ (20)
Net loss (unaudited)........ (2,312)
-------
Balance at October 1, 1999
(unaudited)............... $68,285
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Viant Corporation ("Viant") is a leading Internet professional services firm
providing strategic consulting, creative design and technology services to
companies seeking to capitalize on the Internet. Viant's current customers are
based in the United States and Europe and include primarily Fortune 1000
companies.
FISCAL YEAR
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest to the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. Viant's fiscal year 1998 ended on
January 1, 1999.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Viant considers all highly liquid instruments with an original maturity of
three months or less to be cash equivalents. At December 31, 1997 and
January 1, 1999, Viant's short-term investments consisted primarily of
certificates of deposit and money market funds secured by U.S. Government-
backed securities and commercial paper with maturities of 60 to 201 days.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject Viant to concentrations of
credit risk consist primarily of cash equivalents, short-term investments and
accounts receivable. Substantially all of Viant's cash equivalents and
short-term investments are held at high credit quality financial institutions.
Accounts receivable are typically unsecured and are derived from revenue earned
from clients primarily located in the United States. Viant performs ongoing
credit evaluations of its clients' financial condition and maintains reserves
for potential credit losses based upon the expected collectibility of total
accounts receivable. To date, losses resulting from uncollected receivables have
not exceeded management's expectations.
At December 31, 1997 and January 1, 1999, three clients and two clients
accounted for 56% and 39% of total accounts receivable, respectively. Three
clients accounted for 43%, 16% and 12% of total net revenues in the period from
April 10, 1996 (Inception) to December 31, 1996. Three clients accounted for
30%, 27% and 11% of total net revenues in 1997. Three clients accounted for 15%,
14% and 13% of total net revenues in 1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
are carried in the financial statements at amounts that approximate fair value
and include cash and cash equivalents, short-term investments, accounts
receivable, accounts payable, capital lease obligations and other credit
facilities. Fair values are based on quoted market prices and assumptions
concerning the amount and timing of estimated future cash flows and assumed
discount rates reflecting varying degrees of perceived risk.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets, generally 3-5 years.
F-7
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Equipment under capital leases is amortized over the shorter of the useful life
of the equipment or the lease term. Leasehold improvements are amortized over
the shorter of the lease period or the useful life of the improvement.
UNAUDITED INTERIM FINANCIAL STATEMENTS
Financial information as of October 1, 1999 and for the nine months ended
September 30, 1998 and October 1, 1999 is unaudited. In the opinion of Viant's
management, the September 30, 1998 and October 1, 1999 unaudited interim
financial statements include all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial position and
results of operations for those periods. The results of operations for the
quarter ended October 1, 1999 are not necessarily indicative of the results of
operations to be expected in the future.
UNAUDITED PRO FORMA NET LOSS PER SHARE
Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 included in the statement of
operations is computed using the weighted average number of common shares
outstanding, adjusted to include the pro forma effects of the conversion of
preferred stock to common stock as if such conversion had occurred on
January 1, 1998 for the year ended January 1, 1999 and on January 2, 1999 for
the nine months ended October 1, 1999, or at the date of original issuance, if
later.
REVENUE RECOGNITION
Substantially all of Viant's revenues are derived from professional services
which are generally provided to clients on a fixed-price, fixed-time basis.
Revenues on fixed-price engagements are recognized using the percentage of
completion method (based on the ratio of costs incurred to the total estimated
project cost at completion). Unbilled receivables represent revenue recognized
in advance of amounts billed. Billings received in advance of services performed
are recorded as deferred revenues. Provisions for estimated losses on contracts
are made during the period in which such losses become probable and can be
reasonably estimated. To date, such losses have not been significant. Viant
reports revenues net of reimbursable expenses which are billed to and collected
from clients.
PROFESSIONAL SERVICES
Professional services expenses consist primarily of compensation and
benefits costs for employees engaged in the delivery of professional services
and non-reimbursable expenses related to client projects.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of compensation,
benefits and travel costs for employees in Viant's management, human resources,
finance and administration groups and facilities costs not allocated to sales
and marketing or research and development.
F-8
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
RESEARCH AND DEVELOPMENT
Viant's research and development efforts focus on evaluating and testing
technologies to be deployed to clients. Accordingly, all research and
development costs are charged to expense as incurred.
STOCK-BASED COMPENSATION
Viant accounts for stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, no compensation expense is recorded for options issued to employees
in fixed amounts and with fixed exercise prices at least equal to the fair
market value of Viant's common stock at date of grant. Viant follows the
disclosure requirements of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation" (Note 10). All stock-based
awards to non-employees are accounted for at their fair value in accordance with
SFAS No. 123.
NET LOSS PER SHARE
Viant computes net loss per share in accordance with SFAS No. 128, "Earnings
Per Share." Net loss per share is computed using the weighted average number of
common shares outstanding during the period. Basic and diluted net loss per
share were the same for all periods since the potential dilutive common stock
equivalents were anti-dilutive due to the losses. For all periods presented, the
assumed exercise of stock options and warrants is anti-dilutive and has been
excluded from the calculation.
COMPREHENSIVE INCOME
Viant adopted SFAS No. 130, "Reporting Comprehensive Income" during 1999.
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components. The adoption of SFAS No. 130 had no
impact on Viant's net loss or stockholders' equity.
(Unaudited)--Total comprehensive income (loss), which was comprised of net
loss and foreign currency translation adjustments, was $(2,332,000) for the nine
months ended October 1, 1999.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates.
F-9
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTS RECEIVABLE
Accounts receivable consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Billed.......................................... $1,788 $5,116
Unbilled........................................ 345 1,265
Allowance for doubtful accounts................. (313) (909)
------ ------
$1,820 $5,472
====== ======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Computer equipment and software................. $1,064 $2,319
Furniture and equipment......................... 366 936
Leasehold improvements.......................... 835 2,112
------ ------
2,265 5,367
Less: accumulated depreciation and
amortization.................................. (254) (1,319)
------ ------
$2,011 $4,048
====== ======
</TABLE>
Depreciation expense for the period ended December 31, 1996 and for the
years ended December 31, 1997 and January 1, 1999 was $49,000, $205,000 and
$1,065,000, respectively.
Included in the above is equipment and leasehold improvements acquired under
capital leases of $0 and $2,201,000 at December 31, 1997 and January 1, 1999,
respectively. Accumulated amortization on equipment and leasehold improvements
acquired under capital lease was $0 and $456,000 at December 31, 1997 and
January 1, 1999, respectively.
4. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Payroll and related............................. $ 473 $2,238
Professional services........................... 267 137
Other........................................... 457 532
------ ------
$1,197 $2,907
====== ======
</TABLE>
5. CREDIT FACILITIES
In September 1996, Viant secured a revolving line of credit with a bank
which provided for borrowings of up to $1,250,000. In July 1997, the revolving
line of credit was increased to $3,000,000. In March 1998, Viant amended the
revolving line of credit to provide for borrowings up to $5,000,000 including a
$2,000,000 letter of credit facility. Borrowings under the revolving line of
credit were limited to 80% of eligible accounts receivable plus $1,000,000.
Borrowings under the
F-10
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS
revolving line of credit bore interest at the bank's prime rate plus 0.5% (8.25%
at January 1, 1999). The revolving line of credit was secured by substantially
all of Viant's assets. Warrants to purchase 5,517 shares of Series C preferred
stock at $3.625 per share were issued as part of the agreement. The value
ascribed to these warrants was not material to Viant's financial position or
results of operations. The line of credit agreement, as amended, required Viant
to comply with certain financial covenants, including the maintenance of
specified minimum ratios. Viant was in default on a certain financial covenant
at January 1, 1999, for which Viant received a waiver from the bank. The
financial covenant for which the Company was in default was amended such that
the Company must not have incurred a loss exceeding $2,500,000 for each of the
fiscal quarters ended April 2, 1999 and July 2, 1999. In addition, the total
liabilities to tangible net worth ratio covenant was amended such that the
Company must have maintained, as of the last day of each fiscal month, a ratio
of total liabilities to tangible net worth of not more than 1.25 to 1. At
January 1, 1999, $2,434,000 was outstanding under the revolving line of credit
and letters of credit totaling $1,500,000 were guaranteed under the revolving
line of credit. The letters of credit expired periodically through July 3, 1999.
At January 1, 1999, $1,066,000 remained available under the revolving line of
credit.
(Unaudited) -- The revolving line of credit was repaid in full on July 1,
1999. The warrants to purchase 5,517 shares of Series C preferred stock were
exercised during 1999.
In September 1996, under the same bank agreement, Viant also secured an
equipment line of credit which provided for borrowings of up to $750,000. In
July 1997, the equipment line of credit was amended to provide for borrowings up
to $1,250,000. Borrowings under the equipment line of credit are based on actual
capital expenditures, subject to a maximum of $250,000 in purchased software,
and bore interest at the bank's prime rate plus 1.0% (8.75% at January 1, 1999).
The equipment line of credit was also secured by substantially all of Viant's
assets. At January 1, 1999, $1,019,000 was outstanding under the equipment line
of credit. Borrowings were payable in 36 equal monthly installments of
principal, plus accrued interest. Principal amounts outstanding at January 1,
1999 were due as follows: $416,000 in 1999; $389,000 in 2000; and $214,000 in
2001.
(Unaudited) -- The equipment line of credit was repaid in full on July 1,
1999.
6. LEASE COMMITMENTS
Viant leases office facilities and certain equipment under operating and
capital leases, respectively. Viant entered into lease agreements for facilities
in Boston, San Francisco, New York and Dallas which expire in 2003, 2003, 2007
and 2004, respectively. Rent expense under operating leases for the period ended
December 31, 1996 and for the years ended December 31, 1997 and January 1, 1999
was $67,000, $535,000 and $1,718,000, respectively. Viant is party to letters of
credit in support of their minimum future lease payments under leases for
permanent office space amounting to $1,500,000 as of January 1, 1999, declining
annually.
In March 1998, Viant entered into an agreement with a leasing company which
provides for capital lease borrowings related to equipment purchases up to
$3,250,000, and which expires in March 2000. Pursuant to the agreement, Viant
issued warrants to purchase 35,986 shares of Series C preferred stock at $3.625
per share which expires five years from the date of an underwritten initial
public offering of common stock. The value ascribed to these warrants was not
material to Viant's financial position or results of operations.
F-11
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Minimum future lease commitments under noncancelable capital and operating
leases at January 1, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
-------- ----------
<S> <C> <C>
1999................................................... $ 629 $ 1,916
2000................................................... 629 2,079
2001................................................... 629 2,124
2002................................................... 607 2,168
2003................................................... -- 1,534
Thereafter............................................. -- 3,600
------ -------
Total minimum lease payments........................... 2,494 $13,421
=======
Less amount representing interest...................... 444
------
Present value of minimum capital lease payments........ $2,050
======
</TABLE>
7. RELATED PARTY TRANSACTIONS
In March 1998, Viant entered into two agreements with one of its executives
for a housing loan of $50,000 and a personal loan of $40,000. Interest on both
loans accrue annually at 8.5%. Interest payments only are due on the housing
loan for the first four years. Upon commencement of the fifth year, repayment of
principal and interest on the housing loan will be made in accordance with a
monthly repayment schedule in which principal and interest will be repaid and
amortized over a two-year period. Viant will forgive 25% of the personal loan
principal and accrued interest annually commencing on the first anniversary of
the loan and for the next three anniversaries thereafter. The housing loan
becomes immediately due and payable and the remaining principal balance of the
personal loan will become immediately due and payable if the employee ceases to
be employed by Viant for any reason, fails to perform any of their obligations
under the loan agreements, or files for bankruptcy or otherwise becomes
insolvent.
During 1996, Viant provided consulting services to a holder of approximately
19% of Viant's common stock at December 31, 1996. All services rendered were
billed on a nondiscounted basis and Viant recognized revenue on this project of
$23,000 during the period ended December 31, 1996.
8. CONVERTIBLE PREFERRED STOCK
As of January 1, 1999, Viant's Articles of Incorporation, as amended, had
authorized Viant to issue 13,317,207 shares of preferred stock, no par value, of
which 5,746,874, 1,499,925, 2,830,408 and 3,240,000 shares were designated as
Series A, B, C and D preferred stock, respectively.
In May 1996, Viant issued 5,746,874 shares of Series A preferred stock
("Series A") for net cash proceeds of $2,547,000 and the conversion of a
$500,000 note payable to a third party investor. In June 1996, Viant issued
1,499,925 shares of Series B preferred stock ("Series B") for net cash proceeds
of $987,000. In May and September 1997, Viant issued a total of 2,759,625 shares
of Series C preferred stock ("Series C") for net cash proceeds of $7,977,000. In
November 1998, Viant issued a total of 3,160,043 shares of Series D preferred
stock ("Series D") for net cash proceeds of $20,125,000.
F-12
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited) -- In June 1999, in connection with Viant's initial public
offering, all shares of preferred stock were converted into common stock. As of
October 1, 1999, there were no outstanding shares of preferred stock.
The rights with respect to the Series A, B, C and D preferred stock were as
follows:
VOTING RIGHTS
Each share of Series A, B, C and D preferred stock had voting rights equal
to an equivalent number of shares of common stock into which it was convertible
and votes together as one class with common stock.
As long as 3,000,000 and 750,000 shares of Series A and Series B preferred
stock were outstanding, respectively, the holders of the shares of Series A and
Series B preferred stock were each entitled to elect one director. The holders
of shares of common stock, voting as one class, were also entitled to elect one
director and the remaining directors were to be elected by the holders of
preferred and common stock voting together as a single class. The rights of the
preferred stockholders to elect directors expired upon the closing of the
initial public offering of Viant's common stock.
Additionally, as long as any preferred stock was outstanding, Viant must
have obtained approval from the holders of a majority of the outstanding shares
of Series A, B, C and D preferred stock in order to alter the Articles of
Incorporation as related to preferred stock, change the authorized number of
shares of preferred stock, declare or pay any dividends on common stock other
than dividends payable in common stock, redeem or purchase shares of common
stock unless resulting from employment termination, or effect a merger,
consolidation or sale of assets where the existing stockholders retain less than
50% of the voting stock of the surviving entity.
DIVIDENDS
Holders of Series A, B, C and D preferred stock were entitled to receive
noncumulative dividends at the per annum rate of $0.0533, $0.0667, $0.289958 and
$0.639 per share, respectively, when and if declared by the Board of Directors.
Viant was to have made no distribution to holders of common stock until
Series A, B, C and D preferred stock dividends have been paid. No dividends had
declared by the Board of Directors through January 1, 1999.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of Viant,
including a consolidation, reorganization or merger of Viant where the
beneficial owners of Viant's common stock and preferred stock own less than 51%
of the resulting voting power of the surviving entity, the Series A, B, C and D
preferred stockholders were entitled to receive $0.533333, $0.666667, $2.899499
and $6.39 per share, respectively, plus any declared but unpaid dividends prior
to and in preference to any distribution to the holders of common stock. The
remaining assets, if any, were to have been distributed ratably among the
holders of the common stock.
CONVERSION
Each share of Series A, B, C and D preferred stock was convertible into
common stock, at the option of the holder, according to a conversion ratio,
subject to adjustment for dilution, and which was at one-for-one through Viant's
initial public offering. Each share of preferred stock would
F-13
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
automatically convert into common stock at the then effective conversion ratio
prior to the closing of an initial public offering with an offering price of at
least $10.00 per share and gross proceeds of at least $20,000,000, or upon the
vote of the holders of a majority of the outstanding shares of preferred stock.
At January 1, 1999, Viant reserved 5,746,874, 1,499,925, 2,830,408 and 3,240,000
shares of common stock for the conversion of Series A, B, C and D preferred
stock, respectively.
9. COMMON STOCK
During 1996, Viant sold 3,981,250 shares of common stock to an employee of
Viant and other nonrelated parties. The 2,500,000 shares sold to the employee
were subject to a right of repurchase by Viant subject to a specified vesting
schedule.
In June 1997, under a severance agreement, Viant paid to this employee
$1,766,000 in cash, which included $680,000 for the repurchase of 1,248,117
shares of vested and unvested shares of common stock. Viant also agreed to pay
one year's salary as severance, on a monthly basis, for a total amount of
$175,000. In addition, Viant extended the vesting of an additional 200,000
shares of common stock, ratably over four quarters, which would have otherwise
been subject to repurchase. Accordingly, Viant recognized compensation expense
of $200,000 as the estimated fair value of such shares. With respect to all of
these arrangements, Viant recognized total severance related expenses of
$1,461,000 in the year ended December 31, 1997.
10. STOCK OPTIONS
In June 1996, the Board of Directors and stockholders adopted the 1996 Stock
Option Plan (the "Plan") which provides for granting incentive stock options
("ISOs") and nonqualified stock options ("NSOs") for up to 4,291,876 shares of
common stock to employees and consultants of Viant. In November 1997, the Plan
was amended to authorize options for up to 5,991,876 shares. The amended Plan
also provides for early exercise of options for certain employees, the stock for
which is subject to the same vesting and repurchase terms under the Plan. In
accordance with the Plan, the stated exercise price shall not be less than 100%
of the fair market value of common stock on the date of grant for ISOs and shall
be at least 85% of the fair market value for NSOs. The Plan provides that the
options shall be exercisable over a period not to exceed ten years. Options
generally vest 25% after one year of service and quarterly for the three years
thereafter.
F-14
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Activity under the Plan is summarized as follows:
<TABLE>
<CAPTION>
PERIOD FROM APRIL 10,
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 JANUARY 1, 1999
----------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTION EXERCISE OPTION EXERCISE OPTION EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period............... -- $ -- 2,931,000 $0.15 3,296,250 $0.37
Granted................... 2,931,000 0.15 1,292,250 0.74 1,290,350 2.48
Exercised................. -- -- (823,125) 0.24 (206,032) 0.10
Cancelled................. -- -- (103,875) 0.10 (149,713) 0.75
---------- ---------- ----------
Outstanding at end of
year.................... 2,931,000 $0.15 3,296,250 $0.37 4,230,855 $1.01
========== ========== ==========
Options exercisable at end
of year................. 380,000 $0.25 415,563 $0.07 1,254,812 $0.33
Weighted-average fair
value of options granted
during the year......... $ 0.03 $ 0.16 $ 0.45
Options available for
future grant............ 1,360,876 1,872,501 731,864
</TABLE>
The following summarizes information about Viant's stock options outstanding
at January 1, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- ------------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING LIFE (IN YEARS) PRICE EXERCISABLE PRICE
- --------------------- ------------ ------------------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
$0.05-0.99 2,736,880 7.91 $0.28 1,175,837 $0.24
1.00-1.99 651,175 9.02 1.55 76,975 1.50
2.00-2.99 537,000 9.46 2.40 1,500 2.46
3.00-3.99 136,000 9.67 3.50 250 3.50
4.00-4.99 169,800 9.83 4.25 250 4.25
--------- ----------
4,230,855 8.41 $1.01 1,254,812 $0.33
========= ==========
</TABLE>
In accordance with the provisions of Accounting Principles Board Opinion
No. 25, Viant has recognized no compensation expense for options granted under
the Plan as the exercise prices of all options granted were equal to the
estimated fair market value of the common stock at the date of grant. Viant's
board of directors, in assessing the fair market value of Viant's common stock,
considers factors relevant at the time, including recent issuances and sales of
Viant's securities, significant customer wins, composition of management team,
recent hiring results, Viant's financial condition and operating results and the
lack of a public market for Viant's common stock. Had compensation expense been
determined based on the fair value at the grant dates, consistent with
F-15
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the methodology prescribed under SFAS No. 123, Viant's pro forma net loss would
have been as follows:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10,
1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- ----------
<S> <C> <C> <C>
Net loss (in thousands):
As reported................................... $(1,659) $(4,080) $(6,487)
Pro forma..................................... (1,670) (4,128) (6,632)
Net loss per share:
As reported................................... (0.42) (1.18) (1.76)
Pro forma..................................... $ (0.42) $ (1.19) $ (1.80)
</TABLE>
The following assumptions were used by Viant to determine the fair value of
stock options granted under the Black-Scholes options-pricing model for all
periods presented: expected volatility of 0%, average expected option life of
4 years, and dividend yield of 0%; and risk free interest rate of 6.0%, 6.1% and
5.2% for the period ended December 31, 1996 and for the years ended
December 31, 1997 and January 1, 1999, respectively.
Because additional stock options are expected to be granted each year and
the pro forma net loss only includes the effect of options granted in 1996, 1997
and 1998, the above pro forma disclosures are not representative of the pro
forma effects on reported financial results for future years.
In January 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Stock Option Plan which provides for the granting of ISOs to
employees, and for the granting of NSOs and stock purchase rights to employees,
directors and consultants of Viant. A total of 4,868,929 shares of common stock
are authorized for issuance pursuant to the 1999 Stock Option Plan.
In March 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Employee Stock Purchase Plan, which provides for the issuance
of a maximum of 200,000 shares of common stock.
11. EMPLOYEE SAVINGS PLAN
Viant's Retirement/Savings Plan (the "401(k) Plan") under Section 401(k) of
the Internal Revenue Code covers all full-time employees. The 401(k) Plan allows
eligible employees to make contributions up to a specified annual maximum
contribution, as defined. Under the 401(k) Plan, Viant may, but is not obligated
to, match a portion of the employee contributions up to a defined maximum. Viant
did not contribute to the 401(k) Plan in 1997 or 1998.
F-16
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. INCOME TAXES
Because Viant has incurred net operating losses since inception, no
provisions have been made for current or deferred income taxes through
January 1, 1999. Deferred tax assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 125 $ 364
Accrued expenses.......................................... 224 52
Loss carryforwards........................................ 1,866 4,539
Other..................................................... 31 --
------- -------
Gross deferred tax assets................................. 2,246 4,955
Deferred tax asset valuation allowance.................... (2,246) (4,735)
------- -------
Total deferred tax assets............................... -- 220
------- -------
Deferred tax liabilities:
Property and equipment.................................... -- 220
------- -------
Total deferred tax liabilities.......................... -- 220
------- -------
Net deferred tax asset...................................... $ -- $ --
======= =======
</TABLE>
Realization of deferred tax assets is contingent upon the generation of
future taxable income. Due to the uncertainty of realization of these tax
benefits, Viant has provided a valuation allowance for the full amount of its
net deferred tax asset.
At January 1, 1999, Viant had net operating loss carryforwards of
approximately $11,348,000 available for federal purposes to reduce future
taxable income. If not utilized, these carryforwards will expire at various
dates ranging from 2011 to 2018. Under the provisions of the Internal Revenue
Code, certain substantial changes in Viant's ownership may have limited, or may
limit in the future, the amount of net operating loss carryforwards which could
be utilized annually to offset future taxable income. The amount of any annual
limitation is determined based upon Viant's value prior to an ownership change.
Income taxes computed using the federal statutory income tax rate differs
from Viant's effective tax rate as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- ----------
<S> <C> <C> <C>
U.S. federal statutory rate..................... $(564) $(1,387) $(2,206)
State income tax, net of federal income tax
effect........................................ (96) (237) (373)
Change in valuation allowance................... 629 1,617 2,489
Other........................................... 31 7 90
----- ------- -------
Provision for income taxes...................... $ -- $ -- $ --
===== ======= =======
</TABLE>
F-17
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. SUBSEQUENT EVENT (UNAUDITED)
On June 18, 1999, Viant closed its initial public offering of common stock
at a public offering price of $16 per share. The net proceeds to Viant from the
offering were approximately $50.2 million, net of underwriting discounts and
offering costs.
F-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................... 1
Risk Factors................................ 4
Cautionary Note Regarding Forward-Looking
Statements................................ 9
Use of Proceeds............................. 9
Price Range of Common Stock................. 10
Dividend Policy............................. 10
Capitalization.............................. 11
Dilution.................................... 12
Selected Financial Data..................... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 14
Business.................................... 20
Management.................................. 33
Certain Transactions........................ 45
Principal and Selling Stockholders.......... 47
Description of Capital Stock................ 50
Shares Eligible for Future Sale............. 53
Underwriting................................ 55
Legal Matters............................... 57
Experts..................................... 57
Where You Can Find More Information......... 57
Index to Financial Statements............... F-1
</TABLE>
2,286,400 Shares
[LOGO]
Common Stock
-------------
PROSPECTUS
-------------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
ROBERTSON STEPHENS
LEHMAN BROTHERS
Representatives of the Underwriters
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses to be paid by the Registrant,
other than the underwriting discounts and commissions payable by the Registrant
in connection with the sale of the common stock being registered. All amounts
shown are estimates except for the registration fee and the NASD filing fee.
None of these expenses will be borne by the selling stockholders.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
Registration fee.............................. $ 87,118.25
NASD filing fee............................... 30,500.00
Nasdaq National Market........................ 17,500.00
Blue sky qualification fees and expenses...... 5,000.00
Printing and engraving expenses............... 70,000.00
Legal fees and expenses....................... 125,000.00
Accounting fees and expenses.................. 65,000.00
Transfer agent and registrar fees............. 10,000.00
Miscellaneous expenses........................ 54,881.75
-----------
Total..................................... $465,000.00
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Certificate of
Incorporation and Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant has entered into separate indemnification agreements with its
directors, officers and certain employees which would require the Registrant,
among other things, to indemnify them against certain liabilities which may
arise by reason of their status or service (other than liabilities arising from
willful misconduct of a culpable nature). The Registrant also maintains director
and officer liability insurance, if available on reasonable terms.
These indemnification provisions and the indemnification agreement entered
into between the Registrant and its officers and directors may be sufficiently
broad to permit indemnification of the Registrant's officers and directors for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.
The Registrant has obtained a policy of directors' and officers' liability
insurance that insures the Registrant's directors and officers against the cost
of defense, settlement or payment of a judgment under certain circumstances.
The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since our incorporation in April 1996, we have sold and issued the following
securities:
(1) On April 15, 1996 we issued 5,509,391 shares of common stock to one
founder for an aggregate consideration of $550.94. On May 16, 1996 we issued
1,293,750 shares of common stock to one investor for an aggregate consideration
of $129.38.
II-1
<PAGE>
(2) On May 16, 1996 we issued 5,746,874 shares of Series A preferred stock
to ten investors for an aggregate consideration of $3,064,997.55.
(3) On June 19, 1996 we issued 1,499,925 shares of Series B preferred stock
to two investors for an aggregate consideration of $1,000,000.00.
(4) On June 4, 1997 we issued 2,080,103 shares of Series C preferred stock
to 32 investors for an aggregate consideration of $6,031,258.61. On October 10,
1997 we also issued 679,488 shares of Series C preferred stock to 32 investors
and employees for an aggregate consideration of $1,970,174.91.
(5) On December 11, 1997 we issued 187,500 shares of common stock to one
investor for an aggregate consideration of $18,750.00.
(6) On March 25, 1998 we issued a warrant for 35,986 shares of Series C
preferred stock to an equipment lessor in connection with an equipment lease
agreement. This warrant has an exercise price of $3.625 per share and currently
remains outstanding in full. On March 26, 1998 we issued a warrant for 5,517
shares of Series C preferred stock to another equipment lessor in connection
with an equipment lease agreement. Such warrant had an exercise price of $3.625
per share and was exercised in June 1999.
(7) From November 4, 1998 to February 1, 1999 we issued 3,168,704 shares of
Series D preferred stock to 31 investors and employees for an aggregate
consideration of $20,248,018.56.
(8) Since our incorporation and as of October 1, 1999, we have issued
options to purchase an aggregate of 8,386,405 shares of common stock with
exercise prices ranging from $0.05 to $47.3125 per share. Since our
incorporation and as of October 1, 1999, options to purchase 2,109,237 shares of
common stock have been exercised for an aggregate consideration of $949,391.00.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
The issuances of securities described in Items 15(1) through 15(7) were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act as transactions by an issuer not involving a
public offering. The issuances of securities described in Item 15(8) were deemed
to be exempt from registration under the Securities Act in reliance on
Section 4(2) or Rule 701 promulgated thereunder as transactions pursuant to
compensatory benefit plans and contracts relating to compensation. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates and other instruments issued in such transactions. All
recipients either received adequate information about the Registrant or had
access, through employment or other relationships, to such information.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
1.1 Form of Underwriting Agreement
3.1** Amended and Restated Articles of Incorporation
3.2** Certificate of Incorporation of Viant Delaware, including an
amendment dated March 25, 1999
3.3** Amended and Restated Certificate of Incorporation, as
currently in effect
3.4** Bylaws of Viant California, private company
3.5** Bylaws of Viant Delaware, private company
3.6** Bylaws of Registrant, as currently in effect
4.1** Form of Specimen Stock Certificate
4.2** Amended and Restated Shareholder Rights Agreement, dated as
of November 13, 1998
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding legality of the securities being
issued
10.1** [Intentionally omitted]
10.2** Form of Master Services Agreement
10.3*** Master Services Agreement with BlueTape LLC, dated as of
June 21, 1998
10.4*** License Agreement, including attachments, with BlueTape LLC,
dated as of February 15, 1999
10.5** Key Employee Agreement with Robert Gett, dated as of
November 4, 1996; Confidential Information and Invention
Assignment Agreement with Robert Gett, dated as of
November 4, 1996
10.6** Relocation Agreement and Employee Loan Agreement with
Richard Chavez, dated March 31, 1998
10.7** Form of Indemnification Agreement
10.8** 1996 Stock Option Plan
10.9** 1999 Amended and Restated Stock Option Plan
10.10** 1999 Employee Stock Purchase Plan
10.11** Sublandlord's Consent to Assignment of Sublease, for
property located at 520 Madison Avenue, New York, New York
dated as of March 6, 1997
10.12** Lease Agreement with Chelsea Green Associates, L.P., for
property located at 625 Avenue of the Americas, New York,
New York, dated July 28, 1997
10.13** Subordination, Nondisturbance and Attornment Agreement with
Lehman Brothers Holdings, Inc., for property located at 625
Avenue of the Americas, New York, New York dated August 26,
1997
10.14** First Amendment of Lease with Chelsea Green Associates,
L.P., for property located at 625 Avenue of the Americas,
New York, New York dated November 1997
10.15** Instruction Letter for Rental Payments, for 625 Avenue of
the Americas, New York, New York dated November 18, 1997
10.16** Standard Form Commercial Lease with Lincoln Plaza Limited
Partnership, for property located at 89 South Street,
Boston, Massachusetts, dated May 2, 1997
10.17** Notice of Lease with Lincoln Plaza Limited Partnership, for
property located at 89 South Street, Boston, Massachusetts,
dated May 2, 1997
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
10.18** Subordination, Nondisturbance and Attornment Agreement with
Lincoln Plaza Limited Partnership and BHF-BANK
Aktiengesellschaft, for property located at 89 South Street,
Boston, Massachusetts, dated September 23, 1997
10.19** First Amendment to Lease with Lincoln Plaza Limited
Partnership, for property located at 89 South Street,
Boston, Massachusetts, dated as of October 1, 1998
10.20** Lease Agreement with Williams Worldwide for property located
at 3130 Wilshire Boulevard, Santa Monica, California dated
March 1, 1999
10.21** Lease Agreement with CENTRUM G.S. LTD, for property located
at 3102 Oak Lawn, Dallas, Texas, dated August 15, 1998
10.22** Lease Agreement with Zoro, LLC for property located at 699
Eighth Street, San Francisco, California, dated April 8,
1997
10.23** First Addendum to Lease with Zoro, LLC for property located
at 699 Eighth Street, San Francisco, California, dated
April 1997
10.24** Month-to-Month Lease Agreement with Zoro, LLC for property
located at 699 Eighth Street, San Francisco, California,
dated June 5, 1997
10.25** Office Lease with Zoro, LLC for property located at 699
Eighth Street, San Francisco, California, dated June 26,
1997
10.26** First Amendment to Office Lease with Zoro, LLC for property
located at 699 Eighth Street, San Francisco, California,
dated October 14, 1997
10.27** Amendment to Lease with Zoro, LLC for property located at
699 Eighth Street, San Francisco, California, dated
January 29, 1998
10.28** Subordination Agreement; Acknowledgment Of Lease Assignment,
Estoppel, Attornment and Non-Disturbance Agreement with
Zoro, LLC and Wells Fargo Bank, National Association, for
property located at 699 Eighth Street, San Francisco,
California, dated August 21, 1998
10.29** Summary Plan Description of Registrant's 401(k)
Retirement/Savings Plan
10.30** Master Lease Agreement and Addendum with Comdisco, Inc.,
dated March 25, 1998
10.31** Amended and Restated Loan and Security Agreement with
Venture Banking Group, dated as of March 25, 1998
10.32** First Amendment to Amended and Restated Loan and Security
Agreement with Venture Banking Group, dated as of April 7,
1999
10.33** Lease Agreement with Regus UK Ltd. for property located at
upper ground floor (Room 29), Covent Garden, London WC2E
9RA, dated March 24, 1999
10.34** Lease Agreement with Regus UK Ltd. for property located at
upper ground floor (Room 31), Covent Garden, London WC2E
9RA, dated March 24, 1999
10.35** Revocable License with OmniOffices, Inc. (Chicago-Loop) for
property located at 10 South Riverside Plaza - 18th Floor,
Chicago, Illinois, dated March 18, 1999
10.36* First Amendment to Office Building Lease Agreement with
CENTRUM G.S. LTD, effective as of August 15, 1999
10.37* Temporary Lease Agreement with River East Plaza, L.L.C. for
property located at River East Plaza (Suite 650), dated
August 30, 1999
11.1 Statement of Computation of Earnings per Share (This exhibit
has been omitted because the information is shown in the
financial statements or notes thereto.)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (contained in Exhibit 5.1)
24.1* Power of Attorney.
27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ To be filed by amendment
* Previously filed
** Incorporated by reference to the Registration Statement on Form S-1 and all
amendments thereto filed with the Securities and Exchange Commission on
April 9, 1999 and declared effective on June 17, 1999.
*** Confidential treatment requested and received as to certain portions. These
exhibits are incorporated by reference to the Registration Statement on
Form S-1 and all amendments thereto filed with the Securities and Exchange
Commission on April 9, 1999 and declared effective on June 17, 1999.
(B) FINANCIAL STATEMENT SCHEDULE.
Report of Independent Accountants
Schedule II-Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the Offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Boston, Massachusetts, on the 24th
day of November 1999.
<TABLE>
<S> <C> <C>
VIANT CORPORATION
By: /s/ ROBERT L. GETT
-----------------------------------------
Robert L. Gett
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President and Chief
/s/ ROBERT L. GETT Executive Officer, and
------------------------------------------- Director (PRINCIPAL November 24, 1999
Robert L. Gett EXECUTIVE OFFICER)
Vice President and Chief
/s/ M. DWAYNE NESMITH Financial Officer
------------------------------------------- (PRINCIPAL FINANCIAL November 24, 1999
M. Dwayne Nesmith AND ACCOUNTING OFFICER)
/s/ WILLIAM H. DAVIDOW*
------------------------------------------- Director November 24, 1999
William H. Davidow
/s/ KEVIN W. ENGLISH*
------------------------------------------- Director November 24, 1999
Kevin W. English
/s/ VENETIA KONTOGOURIS*
------------------------------------------- Director November 24, 1999
Venetia Kontogouris
/s/ WILLIAM E. KELVIE*
------------------------------------------- Director November 24, 1999
William E. Kelvie
</TABLE>
<TABLE>
<S> <C> <C> <C>
By: /s/ M. DWAYNE NESMITH
--------------------------------------
M. Dwayne Nesmith
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Viant Corporation
In connection with our audits of the financial statements of Viant
Corporation at January 1, 1999 and December 31, 1997, and for each of the years
ended January 1, 1999 and December 31, 1997 and the period from April 10, 1996
(Inception) to December 31, 1996, which financial statements are included in the
prospectus, we have also audited the financial statement schedule listed in
Item 16(b) herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 1999
S-1
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
VIANT CORPORATION
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF CHARGED TO BALANCE AT
DESCRIPTION PERIOD OPERATIONS DEDUCTIONS(1) END OF PERIOD
- ----------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Period from April 10, 1996 (Inception) to
December 31, 1996
Reserves and allowances deducted from
asset accounts
Allowance for doubtful accounts........ $ -- 75,000 -- $ 75,000
Year ended December 31, 1997
Reserves and allowances deducted from
asset accounts
Allowance for doubtful accounts........ $ 75,000 294,000 56,000 $313,000
Year ended January 1, 1999
Reserves and allowances deducted from
asset accounts
Allowance for doubtful accounts........ $313,000 612,000 16,000 $909,000
</TABLE>
- ------------------------
(1) Doubtful accounts written off, net of recoveries
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
1.1 Form of Underwriting Agreement
3.1** Amended and Restated Articles of Incorporation
3.2** Certificate of Incorporation of Viant Delaware, including an
amendment dated March 25, 1999
3.3** Amended and Restated Certificate of Incorporation, as
currently in effect
3.4** Bylaws of Viant California, private company
3.5** Bylaws of Viant Delaware, private company
3.6** Bylaws of Registrant, as currently in effect
4.1** Form of Specimen Stock Certificate
4.2** Amended and Restated Shareholder Rights Agreement, dated as
of November 13, 1998
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding legality of the securities being
issued
10.1** [Intentionally omitted]
10.2** Form of Master Services Agreement
10.3*** Master Services Agreement with BlueTape LLC, dated as of
June 21, 1998
10.4*** License Agreement, including attachments, with BlueTape LLC,
dated as of February 15, 1999
10.5** Key Employee Agreement with Robert Gett, dated as of
November 4, 1996; Confidential Information and Invention
Assignment Agreement with Robert Gett, dated as of
November 4, 1996
10.6** Relocation Agreement and Employee Loan Agreement with
Richard Chavez, dated March 31, 1998
10.7** Form of Indemnification Agreement
10.8** 1996 Stock Option Plan
10.9** 1999 Amended and Restated Stock Option Plan
10.10** 1999 Employee Stock Purchase Plan
10.11** Sublandlord's Consent to Assignment of Sublease, for
property located at 520 Madison Avenue, New York, New York
dated as of March 6, 1997
10.12** Lease Agreement with Chelsea Green Associates, L.P., for
property located at 625 Avenue of the Americas, New York,
New York, dated July 28, 1997
10.13** Subordination, Nondisturbance and Attornment Agreement with
Lehman Brothers Holdings, Inc., for property located at 625
Avenue of the Americas, New York, New York dated August 26,
1997
10.14** First Amendment of Lease with Chelsea Green Associates,
L.P., for property located at 625 Avenue of the Americas,
New York, New York dated November 1997
10.15** Instruction Letter for Rental Payments, for 625 Avenue of
the Americas, New York, New York dated November 18, 1997
10.16** Standard Form Commercial Lease with Lincoln Plaza Limited
Partnership, for property located at 89 South Street,
Boston, Massachusetts, dated May 2, 1997
10.17** Notice of Lease with Lincoln Plaza Limited Partnership, for
property located at 89 South Street, Boston, Massachusetts,
dated May 2, 1997
10.18** Subordination, Nondisturbance and Attornment Agreement with
Lincoln Plaza Limited Partnership and BHF-BANK
Aktiengesellschaft, for property located at 89 South Street,
Boston, Massachusetts, dated September 23, 1997
10.19** First Amendment to Lease with Lincoln Plaza Limited
Partnership, for property located at 89 South Street,
Boston, Massachusetts, dated as of October 1, 1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
10.20** Lease Agreement with Williams Worldwide for property located
at 3130 Wilshire Boulevard, Santa Monica, California dated
March 1, 1999
10.21** Lease Agreement with CENTRUM G.S. LTD, for property located
at 3102 Oak Lawn, Dallas, Texas, dated August 15, 1998
10.22** Lease Agreement with Zoro, LLC for property located at 699
Eighth Street, San Francisco, California, dated April 8,
1997
10.23** First Addendum to Lease with Zoro, LLC for property located
at 699 Eighth Street, San Francisco, California, dated
April 1997
10.24** Month-to-Month Lease Agreement with Zoro, LLC for property
located at 699 Eighth Street, San Francisco, California,
dated June 5, 1997
10.25** Office Lease with Zoro, LLC for property located at 699
Eighth Street, San Francisco, California, dated June 26,
1997
10.26** First Amendment to Office Lease with Zoro, LLC for property
located at 699 Eighth Street, San Francisco, California,
dated October 14, 1997
10.27** Amendment to Lease with Zoro, LLC for property located at
699 Eighth Street, San Francisco, California, dated
January 29, 1998
10.28** Subordination Agreement; Acknowledgment Of Lease Assignment,
Estoppel, Attornment and Non-Disturbance Agreement with
Zoro, LLC and Wells Fargo Bank, National Association, for
property located at 699 Eighth Street, San Francisco,
California, dated August 21, 1998
10.29** Summary Plan Description of Registrant's 401(k)
Retirement/Savings Plan
10.30** Master Lease Agreement and Addendum with Comdisco, Inc.,
dated March 25, 1998
10.31** Amended and Restated Loan and Security Agreement with
Venture Banking Group, dated as of March 25, 1998
10.32** First Amendment to Amended and Restated Loan and Security
Agreement with Venture Banking Group, dated as of April 7,
1999
10.33** Lease Agreement with Regus UK Ltd. for property located at
upper ground floor (Room 29), Covent Garden, London WC2E
9RA, dated March 24, 1999
10.34** Lease Agreement with Regus UK Ltd. for property located at
upper ground floor (Room 31), Covent Garden, London WC2E
9RA, dated March 24, 1999
10.35** Revocable License with OmniOffices, Inc. (Chicago-Loop) for
property located at 10 South Riverside Plaza - 18th Floor,
Chicago, Illinois, dated March 18, 1999
10.36* First Amendment to Office Building Lease Agreement with
CENTRUM G.S. LTD, effective as of August 15, 1999
10.37* Temporary Lease Agreement with River East Plaza, L.L.C. for
property located at River East Plaza (Suite 650), dated
August 30, 1999
11.1 Statement of Computation of Earnings per Share (This exhibit
has been omitted because the information is shown in the
financial statements or notes thereto.)
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (contained in Exhibit 5.1)
24.1* Power of Attorney.
27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ To be filed by amendment
* Previously filed
** Incorporated by reference to the Registration Statement on Form S-1 and all
amendments thereto filed with the Securities and Exchange Commission on
April 9, 1999 and declared effective on June 17, 1999.
<PAGE>
*** Confidential treatment requested and received as to certain portions. These
exhibits are incorporated by reference to the Registration Statement on
Form S-1 and all amendments thereto filed with the Securities and Exchange
Commission on April 9, 1999 and declared effective on June 17, 1999.
<PAGE>
Exhibit 1.1
DRAFT OF NOVEMBER 23, 1999
VIANT CORPORATION
COMMON STOCK $0.001 PAR VALUE
-----------------
UNDERWRITING AGREEMENT
----------------------
December __, 1999
Goldman, Sachs & Co.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Viant Corporation, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
1,000,000 shares and, at the election of the Underwriters, up to 342,960
additional shares of Common Stock, $0.001 par value per share (the "Stock") of
the Company and the stockholders of the Company named in Schedule II hereto (the
"Selling Stockholders") propose, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of 1,286,400 shares. The
aggregate of 2,286,400 shares to be sold by the Company and the Selling
Stockholders is herein called the "Firm Shares" and the aggregate of 1,000,000
additional shares to be sold by the Company is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
1. (a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-90563)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission; and no stop order suspending the effectiveness of
the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if
<PAGE>
DRAFT OF NOVEMBER 23, 1999
any, has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective, each as
amended at the time such part of the Initial Registration Statement
became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein or
by a Selling Stockholder expressly for use in the preparation of the
answers therein to Items 7 and 11(l) of Form S-1;
(iii) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein or by a Selling
Stockholder expressly for use in the preparation of the answers therein
to Items 7 and 11(l) of Form S-1;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its
2
<PAGE>
DRAFT OF NOVEMBER 23, 1999
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus;
(v) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation;
(vii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(viii) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus;
(ix) The issue and sale of the Shares to be sold by the Company
and the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of
3
<PAGE>
DRAFT OF NOVEMBER 23, 1999
the Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound;
(xi) The statements set forth in the Prospectus under the caption
Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and
fair;
(xii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and, to the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(xiii) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company",
as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(xiv) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(xv) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(xvi) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to
which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a material adverse effect
on the general affairs, management, the current or future
4
<PAGE>
DRAFT OF NOVEMBER 23, 1999
consolidated financial position, business prospects, stockholders'
equity or results of operations of the Company and its subsidiaries or
result in any material loss or interference with the Company's business
or operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000; and
(xvii) The Company has sufficient interests in all patents,
trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes (collectively, the
"Intellectual Property") necessary for its business as now conducted
and has no reason to believe after reasonable inquiry that the conduct
of its business will conflict with or infringe the interests of others,
except as would not have a material adverse effect on its business as
now conducted, and has taken reasonable steps to secure from third
parties interests in such Intellectual Property as is necessary for its
business as described in the Prospectus; the Company is not aware of
outstanding options, licenses or agreements of any kind relating to the
Intellectual Property, except as set forth in the Prospectus or in the
written agreements pursuant to which the Company provides its services
to its clients and except such as would not have a material adverse
effect on the financial position, stockholders' equity or results of
operations of the Company; none of the technology employed by the
Company has been obtained or is being used by the Company in violation
of any contractual or fiduciary obligation binding on the Company, its
directors or executive officers or any of its employees or consultants
or otherwise in violation of the rights of any person; neither the
Company nor any of its employees has received any written or, to the
Company's knowledge, oral communications alleging that the Company has
violated or, by conducting its business, would violate any of the
Intellectual Property of any other person or entity; the operation of
the Company's business by the employees of the Company will not result
in a breach or violation of the terms, conditions or provisions of, or
constitute a default under, any material contract, covenant or
instrument under which any of such employees is now obligated; and the
Company has taken and will maintain reasonable measures to prevent the
unauthorized dissemination or publication of its confidential
information or the confidential information of third parties in its
possession.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement and the Power of Attorney and the Custody Agreement
hereinafter referred to, and for the sale and delivery of the Shares to
be sold by such Selling Stockholder hereunder, have been obtained; and
such Selling Stockholder has full right, power and authority to enter
into this Agreement, the Power-of-Attorney and the Custody Agreement
and to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder;
5
<PAGE>
DRAFT OF NOVEMBER 23, 1999
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney and
the Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any applicable statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of such
Selling Stockholder if such Selling Stockholder is a corporation, the
Partnership Agreement or Operating Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership or limited
liability company or any applicable statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) Such Selling Stockholder has, and immediately prior to each
Time of Delivery (as defined in Section 4 hereof) such Selling
Stockholder will have, good and valid title to the Shares to be sold by
such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date ninety (90) days after the date of
the Prospectus, not to offer, sell contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially
similar securities (other than pursuant to employee stock option plans
existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement),
without your prior written consent;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading;
6
<PAGE>
DRAFT OF NOVEMBER 23, 1999
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the first Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of the
Shares to be sold by such Selling Stockholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore
furnished to you (the "Custody Agreement"), duly executed and delivered
by such Selling Stockholder to [BankBoston, N.A.], as custodian (the
"Custodian"), and such Selling Stockholder has duly executed and
delivered a Power of Attorney, in the form heretofore furnished to you
(the "Power of Attorney"), appointing the persons indicated in Schedule
II hereto, and each of them, as such Selling Stockholder's
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute
and deliver this Agreement on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the
Selling Stockholders as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Stockholder hereunder
and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement and the
Custody Agreement; and
(ix) The Shares represented by the certificates held in custody
for such Selling Stockholder under the Custody Agreement are subject to
the interests of the Underwriters hereunder; the arrangements made by
such Selling Stockholder for such custody, and the appointment by such
Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney,
are to that extent irrevocable; the obligations of the Selling
Stockholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling
Stockholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of
any other event; if any individual Selling Stockholder or any such
executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should
occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the
Selling Stockholders in accordance with the terms and conditions of
this Agreement and of the Custody Agreements; and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid
as if such death, incapacity, termination, dissolution or other event
had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Stockholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Stockholders, at a purchase price per share of $.............., the number of
Firm Shares (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number
7
<PAGE>
DRAFT OF NOVEMBER 23, 1999
of Shares to be sold by the Company and each of the Selling Stockholders as set
forth opposite their respective names in Schedule II hereto by a fraction, the
numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all of the Underwriters from the Company and all of the Selling
Stockholders hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
the purchase price per share set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 342,960 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering sales of
shares in excess of the number of Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Goldman, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company and the Custodian, as their interests may
appear, to Goldman, Sachs & Co. at least forty-eight hours in advance. The
Company and the Custodian will cause the certificates representing the Shares to
be made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
DTC or its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
New York time, on December __, 1999 or such other time and date as Goldman,
Sachs & Co., the Company and the Selling Stockholders may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Goldman, Sachs & Co., the Company and the Selling
8
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Stockholders may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at 2:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
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DRAFT OF NOVEMBER 23, 1999
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date ninety (90) days after the date of
the Prospectus, not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially
similar securities (other than pursuant to employee stock option plans
existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement),
without your prior written consent;
(f) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), to make available to its stockholders consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
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DRAFT OF NOVEMBER 23, 1999
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ"); and
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
6. The Company and each of the Selling Stockholders covenant and agree
with one another and with the several Underwriters that (a) the Company and such
Selling Stockholder will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
and (v) the filing fees incident to, and the fees and disbursements of counsel
for the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Shares; (b) the Company will pay or cause to be paid: (i) the cost of preparing
stock certificates; (ii) the cost and charges of any transfer agent or registrar
and (iii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section and (c) such Selling Stockholder will pay or cause to be paid all costs
and expenses incident to the performance of such Selling Stockholder's
obligations hereunder which are not otherwise specifically provided for in this
Section, including (i) any fees and expenses of counsel for such Selling
Stockholder, (ii) such Selling Stockholder's pro rata share of the fees and
expenses of the Attorneys-in-Fact and the Custodian, and
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DRAFT OF NOVEMBER 23, 1999
(iii) all expenses and taxes incident to the sale and delivery of the Shares to
be sold by such Selling Stockholder to the Underwriters hereunder. In connection
with clause (c)(iii) of the preceding sentence, Goldman, Sachs & Co. agrees to
pay New York State stock transfer tax, and the Selling Stockholder agrees to
reimburse Goldman, Sachs & Co. for associated carrying costs if such tax payment
is not rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the Selling
Stockholders shall not be required to pay or to reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement, and that, except as provided in this Section,
and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Hale and Dorr LLP, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each such
opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii),
(vii), (xi) and (xiii) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Wilson Sonsini Goodrich & Rosati, P.C., counsel for the
Company, shall have furnished to you their written opinion (a draft of
such opinion is attached as Annex II(b) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Prospectus;
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DRAFT OF NOVEMBER 23, 1999
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the Shares being delivered at
such Time of Delivery) have been duly and validly authorized and
issued and are fully paid and non-assessable; and the Shares
conform to the description of the Stock contained in the
Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material
liability or disability by reason of failure to be so qualified
in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state
that they believe that both you and they are justified in relying
upon such opinions and certificates);
(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; and
all of the issued shares of capital stock of each such subsidiary
have been duly and validly authorized and issued, are fully paid
and non-assessable, and (except as otherwise set forth in the
Prospectus) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims (such
counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters
of fact upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(v) Any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid and
subsisting leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries;
(vi) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect
on the consolidated financial position stockholders' equity or
results of operations of the Company and its subsidiaries; and,
to such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by
others;
(vii) This Agreement has been duly authorized, executed
and delivered by the Company;
(viii) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not
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DRAFT OF NOVEMBER 23, 1999
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any
violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any
order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the
Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is in
violation of its Amended and Restated Certificate of
Incorporation or By-laws or, to such counsel's knowledge, in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, or lease or
agreement or other instrument to which it is a party or by which
it or any of its properties may be bound;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport
to constitute a summary of the terms of the Stock, under the
captions "Underwriting" and "Management Employee Benefit Plans",
insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate, complete and
fair;
(xii) The Company is not an "investment company", as such
term is defined in the Investment Company Act; and
(xiii) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules and financial data therein, as
to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and the
rules and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus, except for those referred to in the opinion in
subsection (xi) of this Section 7(c), they have no reason to
believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules and financial data therein, as
to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a
material fact
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DRAFT OF NOVEMBER 23, 1999
required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules and financial data
therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading or that, as of such Time of Delivery,
either the Registration Statement or the Prospectus or any
further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) contains an untrue statement
of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading; and they do not
know of any amendment to the Registration Statement required
to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed
or described as required;
(d) The respective counsel for each of the Selling Stockholders,
as indicated in Schedule II hereto, each shall have furnished to you
their written opinion with respect to each of the Selling Stockholders
for whom they are acting as counsel (a draft of each such opinion is
attached as Annex II(c) hereto), dated the First Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) A Power-of-Attorney and a Custody Agreement have been
duly executed and delivered by such Selling Stockholder and
constitute valid and binding agreements of such Selling
Stockholder in accordance with their terms;
(ii) This Agreement has been duly executed and delivered
by or on behalf of such Selling Stockholder; and the sale of the
Shares to be sold by such Selling Stockholder hereunder and the
compliance by such Selling Stockholder with all of the provisions
of this Agreement, the Power-of-Attorney and the Custody
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach
or violation of any terms or provisions of, or constitute a
default under, any applicable statute, indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known
to such counsel to which such Selling Stockholder is a party or
by which such Selling Stockholder is bound or to which any of the
property or assets of such Selling Stockholder is subject, nor
will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of such Selling
Stockholder if such Selling Stockholder is a corporation, the
Partnership Agreement of such Selling Stockholder if such Selling
Stockholder is a partnership or any applicable statute, order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder;
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DRAFT OF NOVEMBER 23, 1999
(iii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement
in connection with the Shares to be sold by such Selling
Stockholder hereunder, except [name any such consent, approval,
authorization or order] which has been duly obtained and is in
full force and effect, such as have been obtained under the Act
and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of such
Shares by the Underwriters;
(iv) Immediately prior to the First Time of Delivery, such
Selling Stockholder had good and valid title to the Shares to be
sold at the First Time of Delivery by such Selling Stockholder
under this Agreement, free and clear of all liens, encumbrances,
equities or claims, and full right, power and authority to sell,
assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder; and
(v) Good and valid title to such Shares, free and clear of
all liens, encumbrances, equities or claims, has been transferred
to each of the several Underwriters who have purchased such
Shares.
In rendering the opinion in paragraph (iv), such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers shall have furnished to
you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered
prior to the execution of this Agreement is attached as Annex I(a)
hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public
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DRAFT OF NOVEMBER 23, 1999
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii)
a suspension or material limitation in trading in the Company's
securities on NASDAQ (iii) a general moratorium on commercial banking
activities declared by either Federal or New York or Massachusetts
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(i) The Shares at such Time of Delivery shall have been duly
listed for quotation on NASDAQ;
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each person listed on Schedule III
attached hereto, substantially to the effect set forth in Subsection
1(b)(iv) hereof in form and substance satisfactory to you;
(k) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(l) The Company and the Selling Stockholders shall have furnished
or caused to be furnished to you at such Time of Delivery certificates
of officers of the Company and of the Selling Stockholders,
respectively, satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholders, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections
(a) and (f) of this Section.
8. (a) The Company and each of the Selling Stockholders named on
Schedule IV-1 attached hereto, jointly and severally, will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect
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DRAFT OF NOVEMBER 23, 1999
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state a material fact that in the case of the Registration Statement is required
to be stated therein or necessary to make the statements therein not misleading,
and in the case of any Preliminary Prospectus or the Prospectus, that is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company and the Selling
Stockholders shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. expressly for use therein"; and PROVIDED, FURTHER, that the liability of the
Selling Stockholders pursuant to this subsection (a) shall not exceed the
product of the number of Shares sold by such Selling Stockholder and the initial
public offering price of the Shares as set forth in the Prospectus. .
(b) Each of the Selling Stockholders named in Schedule IV-2 attached
hereto, will, severally and not jointly, indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder expressly for use therein; and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that such Selling Stockholder shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Goldman, Sachs & Co.
expressly for use therein and PROVIDED, FURTHER, that the liability of the
Selling Stockholders pursuant to this subsection (b) shall not exceed the
product of the number of Shares sold by such Selling Stockholder and the initial
public offering price of the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling
18
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Stockholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Goldman, Sachs & Co. expressly for use therein; and will reimburse the
Company and each Selling Stockholder for any legal or other expenses reasonably
incurred by the Company or such Selling Stockholder in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
19
<PAGE>
DRAFT OF NOVEMBER 23, 1999
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Selling Stockholders on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, each of the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
PRO RATA allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 8 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase
20
<PAGE>
DRAFT OF NOVEMBER 23, 1999
such Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Stockholders that you have so
arranged for the purchase of such Shares, or the Company and the Selling
Stockholders notify you that they have so arranged for the purchase of such
Shares, you or the Company the Selling Stockholders shall have the right to
postpone a Time of Delivery for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except for the expenses
to be borne by the Company and the Selling Stockholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Stockholder, and shall survive delivery of and payment for the
Shares.
21
<PAGE>
DRAFT OF NOVEMBER 23, 1999
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company and each of
the Selling Stockholders will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company and the Selling Stockholders shall then be under no further
liability to any Underwriter in respect of the Shares not so delivered except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, Attention: Registration
Department; if to any Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
22
<PAGE>
DRAFT OF NOVEMBER 23, 1999
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Stockholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and the Selling Stockholders for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
23
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power-of-Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
Viant Corporation
By:
-------------------------------
Name:
Title:
The Selling Stockholders listed on
Schedule II hereto
By:
-------------------------------
Name:
Title:
As Attorney-in-Fact acting on behalf of each
of the Selling Stockholders named in
Schedule II to this Agreement.
Accepted as of the date hereof
at New York, New York
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
BancBoston Robertson Stephens Inc.
Lehman Brothers Inc.
By:
-------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
24
<PAGE>
DRAFT OF NOVEMBER 23, 1999
SCHEDULE I
<TABLE>
<CAPTION>
Number of Optional
Total Number of Shares to be
Firm Shares to be Purchased if Maximum Option
Underwriter Purchased Exercised
----------- --------- ---------
<S> <C> <C>
Goldman, Sachs & Co.................................................
Credit Suisse First Boston Corporation
BancBoston Robertson Stephens Inc.
Lehman Brothers Inc.
[Names of other Underwriters].......................................
--------- --------
Total...................................................... 2,286,400 342,960
========= ========
</TABLE>
25
<PAGE>
DRAFT OF NOVEMBER 23, 1999
SCHEDULE II
<TABLE>
<CAPTION>
Number of Optional
Total Number of Shares to be Sold if
Firm Shares to be Maximum Option
Sold Exercised
---- ---------
<S> <C> <C>
The Company........................................................ 1,000,000 342,960
The Selling Stockholder(s):...................................
Robert L. Gett (a).................................... 220,000
Chachagua Partnership (b)............................. 25,000
Richard J. Chavez (c)................................. 10,000
Robbie O. Vann-Adibe (d).............................. 73,400
Edward J. Mello (e)................................... 12,500
USWeb/CKS (f)......................................... 300,000
Ramsey Bierne Associates (g) 56,250
WS Investment Co. (h)................................. 15,515
Philippe Khan (i) .................................... 469,484
Michael J. Tubridy (j................................. 30,000
M. Dwayne Nesmith (k) ................................ 11,500
Mavis Chin (l)........................................ 10,000
Michael A. Keany (m).................................. 9,200
Paul R. Michaud (n)................................... 7,500
Rich Homich (o)....................................... 7,200
Xavier Zang (p)....................................... 6,750
Timothy A. Andrews (q)................................ 6,250
26
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Andrew Frank (r) ..................................... 5,000
Denise Conway (s)..................................... 2,000
Leif Knudson (t)...................................... 1,000
Minna Rhee (u)........................................ 600
Charles Marshall (v).................................. 4,039
Bruno Ventures (w).................................... 1,212
Martin Massner (x).................................... 2,000
--------- -------
Total.................................................... 2,286,400 342,960
========= =======
</TABLE>
- -------------
(a) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(b) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(c) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(d) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(e) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(f) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(g) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(h) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
27
<PAGE>
DRAFT OF NOVEMBER 23, 1999
(i) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(j) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(k) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(l) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(m) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(n) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(o) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(p) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(q) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(r) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(s) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(t) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(u) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
28
<PAGE>
DRAFT OF NOVEMBER 23, 1999
(v) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(w) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(x) This Selling Stockholder is represented by [Name and Address of Counsel] and
has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
29
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Schedule III
Persons subject to lock-up agreements
All Selling Stockholders and all persons named in the Prospectus
as a director or an executive officer
30
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Schedule IV-1
Robert L. Gett
Chachagua Partnership
Richard J. Chavez
Robbie O. Vann-Adibe
Edward J. Mello
Michael J. Tubridy
M. Dwayne Nesmith
Michael A. Keany
Paul R. Michaud
Xavier Zang
Timothy A. Andrews
31
<PAGE>
DRAFT OF NOVEMBER 23, 1999
Schedule IV-2
USWeb/CKS
Ramsey Bierne Associates
WS Investment Co.
Philippe Khan
Mavis Chin
Rich Homich
Andrew Frank
Denise Conway
Leif Knudson
Minna Rhee
Charles Marshall
Bruno Ventures
Martin Massner
32
<PAGE>
DRAFT OF NOVEMBER 23, 1999
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been separately furnished to the representatives of the Underwriters
(the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to the Representatives and on
the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with
33
<PAGE>
DRAFT OF NOVEMBER 23, 1999
the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in clause (B)
were not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements included
in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries, or
34
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DRAFT OF NOVEMBER 23, 1999
any decreases in consolidated net current assets or
stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified
by the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period
of corresponding length specified by the Representatives, except
in each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1
of our report dated March 16, 1999, relating to the financial statements and
Financial Statement Schedule of Viant Corporation, which appears in such
Registration Statement. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Registration
Statement. However, it should be noted that PricewaterhouseCoopers LLP has
not prepared or certified such "Selected Financial Data."
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
November 23, 1999
