NETGRAVITY INC, S-1/A, 1998-05-01

NETGRAVITY INC
S-1/A, 1998-05-01
PREPACKAGED SOFTWARE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998

REGISTRATION NO. 333-51007

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NETGRAVITY, INC.

(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 77-0410283
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
</TABLE>

NETGRAVITY, INC.
1700 S. AMPHLETT BLVD., SUITE 350
SAN MATEO, CA 94402
(650) 655-4777
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------

JOHN W. DANNER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NETGRAVITY, INC.
1700 S. AMPHLETT BLVD., SUITE 350
SAN MATEO, CA 94402
(650) 655-4777
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

COPIES TO:

LARRY W. SONSINI, ESQ. SCOTT C. DETTMER, ESQ.
JAMES N. STRAWBRIDGE, ESQ. CARLA S. NEWELL, ESQ.
JON C. GONZALES, ESQ. WILLIAM E. GROWNEY, JR., ESQ.
CHRISTOPHER G. NICHOLSON, ESQ. KIRIL DOBROVOLSKY, ESQ.
WILSON SONSINI GOODRICH & ROSATI GUNDERSON DETTMER STOUGH VILLENEUVE
PROFESSIONAL CORPORATION FRANKLIN & HACHIGIAN, LLP
650 PAGE MILL ROAD 155 CONSTITUTION AVE.
PALO ALTO, CA 94304 MENLO PARK, CA 94025
(650) 493-9300 (650) 321-2400

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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 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(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,
please check the following box. / /

--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

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<PAGE>

SUBJECT TO COMPLETION, DATED MAY 1, 1998

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[LOGO]

SHARES
COMMON STOCK

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All of the shares of Common Stock offered hereby are being sold by
NetGravity, Inc. ("NetGravity" or the "Company"). Prior to this offering, there
has been no public market for the Common Stock of the Company. It is currently
estimated that the initial public offering price will be between $ and
$ per share. See "Underwriting" for information relating to the method
of determining the initial public offering price. The Company has applied to
have the Common Stock approved for quotation on the Nasdaq National Market under
the symbol "NETG."

------------------------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(2).................................. $ $ $
</TABLE>

(1) Before deducting expenses of the offering payable by the Company, estimated
at $ .

(2) The Company and certain of the Company's stockholders (the "Selling
Stockholders") have granted to the Underwriters a 30-day option to purchase
up to an additional and shares of Common Stock,
respectively, solely to cover over-allotments, if any. See "Principal and
Selling Stockholders" and "Underwriting." If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions,
Proceeds to Company and Proceeds to Selling Stockholders will be $ ,
$ , $ and $ , respectively.

------------------------------

The Common Stock is offered by the Underwriters as stated herein, subject to
receipt and acceptance by them and subject to their right to reject any order in
whole or in part. It is expected that delivery of such shares will be made
through the offices of BancAmerica Robertson Stephens, San Francisco,
California, on or about , 1998.

BANCAMERICA ROBERTSON STEPHENS

NATIONSBANC MONTGOMERY SECURITIES LLC

FIRST ALBANY CORPORATION

THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE>
EDGAR COLORWORK DESCRIPTIONS:

INSIDE FRONT COVER OF PROSPECTUS:

TITLE: Software solutions for online advertising and direct marketing

INTRO PARAGRAPH: NetGravity is the leading provider of online advertising
and direct marketing software solutions. At the core of NetGravity's
mission-critical solutions is its AdServer product family, which is designed
to enable customers to improve response rates by targeting advertisements to
individual users and to increase efficiency by automating certain
advertising and direct marketing business processes. These features are
designed to enhance the customers' ability to generate revenue from sales of
advertising space and from direct marketing campaigns.

GRAPHIC DEPICTING FUNCTIONS OF ADSERVER

CAPTION 1:

1) MANAGE AND SCHEDULE ADVERTISING AND DIRECT MARKETING OFFERS. NetGravity
solutions analyze historical data, forecast advertising inventory
capacities, and deliver up-to-date availability reports.

CAPTION 2:

2) DELIVER THE RIGHT MESSAGE TO THE RIGHT PERSON. AdServer is designed to
enhance the customer's ability to generate revenue through capabilities
such as targeting advertisements to individual users and groups of
users.

CAPTION 3:

3) TEST, TRACK AND FINE-TUNE MESSAGES. Report-generating functions reveal
important information about how an online advertisement, group of
advertisements, or direct marketing message is performing.

INSIDE GATEFOLD:

TITLE: NetGravity helps businesses build online relationships with
consumers.

INTRO PARAGRAPH:

The competitive nature of the global marketplace requires merchants to
continually seek out and obtain new customers while preserving their
relationships with current customers. To help build these relationships
online, NetGravity markets and supports three solutions, AdServer
Enterprise, AdServer Network and AdCenter, designed to support the needs of
companies in the online advertising and direct marketing industry.

NetGravity's solutions, together with its broad range of professional
services and support capabilities, are designed to enhance the effectiveness
and efficiency of the entire online advertising and direct marketing supply
chain: merchants (vendors of products and services), advertising agencies,
and content publishers (including advertising networks).

UPPER RIGHT-HAND CORNER CAPTIONS:
- Manage and schedule advertising and direct marketing offers.
- Deliver the right message to the right person.
- Test, track and fine-tune messages.

GRAPHIC INTRO: How NetGravity AdServer solutions can be used to facilitate
Internet business.

GRAPHIC DEPICTING ADSERVER'S ROLE IN ONLINE ADVERTISING AND DIRECT MARKETING

CAPTIONS 1-7:

1) An individual consumer surfs the Web.

2) The consumer encounters a site that piques interest.

3) A targeted advertisement is delivered to the consumer in real-time by
NetGravity AdServer.

4) The consumer clicks on the advertisement.

5) By means of a link, the consumer is sent to the merchant's site.

6) NetGravity AdServer delivers a targeted direct marketing offer to the
consumer.

7) NetGravity AdServer assists the merchant in collecting data for
future use.

INSIDE BACK COVER OF PROSPECTUS:

TITLE: A Few of Our Customers

INTRO PARAGRAPH:

NetGravity provides mission-critical online advertising and direct marketing
software solutions for merchants, advertising agencies and content
publishers.

CONTENT: 10 branded logos above a textual list of ~ 100 customer names.

Company logos for this sheet:

Netscape Communications

J. Walter Thompson

CNN Interactive

Time Inc. New Media

WhoWhere?

E*TRADE

Real Cities (Knight-Ridder New Media)

ONSALE

Virgin Net

@Home Network

NetGravity is a trademark of NetGravity, Inc. This Prospectus also contains
additional trademarks and tradenames of NetGravity and of other companies.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, BY ANY SELLING STOCKHOLDER OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary................................................................... 4
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 21
Dividend Policy........................................................... 21
Capitalization............................................................ 22
Dilution.................................................................. 23
Selected Consolidated Financial Data...................................... 24
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 25
Business.................................................................. 35
Management................................................................ 53
Certain Transactions...................................................... 64
Principal and Selling Stockholders........................................ 67
Description of Capital Stock.............................................. 69
Shares Eligible for Future Sale........................................... 72
Underwriting.............................................................. 74
Legal Matters............................................................. 76
Experts................................................................... 76
Additional Information.................................................... 76
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and to make available
quarterly reports containing unaudited summary financial information for the
first three fiscal quarters of each fiscal year.

The Company was incorporated in Delaware in September 1995. The Company's
principal executive offices are located at 1700 S. Amphlett Blvd., Suite 350,
San Mateo, California 94402 and its telephone number at that address is (650)
655-4777.

3
<PAGE>
SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE INVESTORS
SHOULD CONSIDER CAREFULLY THE INFORMATION DISCUSSED UNDER "RISK FACTORS." THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS
THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS AND THE
TIMING OF CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET
FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

NetGravity is the leading provider of online advertising and direct
marketing software solutions. A pioneer in the online advertising management
software market, the Company believes that it was the first company to provide
such commercial software to major online content publishers and has recently
expanded into the market for online direct marketing software solutions. The
Company develops, markets and supports its mission-critical AdServer family of
software products which, together with its full range of professional services
and support capabilities, are designed to enhance the effectiveness and
efficiency of each constituent in the online advertising and direct marketing
supply chain: merchants (vendors of products and services), advertising
agencies, and content publishers (including advertising networks). The Company
markets and sells its products and services primarily through its field sales
and telesales organizations and maintains sales and support operations in North
America, Europe and Asia Pacific. To date, the Company has sold its software and
services to over 225 customers, including 37 of the content publishers listed in
CMR's Interwatch (formerly Jupiter's AdSpend) list of the top 100 revenue-
generating online content publishers for the eight months ended August 31, 1997.
The Company's customers include @Home Network, CNN Interactive, E*TRADE, J.
Walter Thompson, Netscape Communications, ONSALE, Real Cities (Knight-Ridder New
Media), Time Inc. New Media, Virgin Net and WhoWhere?.

The dramatic growth of the Internet in recent years has led, and continues
to lead, merchants, advertising agencies and content publishers to devote
increasing resources toward developing and improving their utilization of the
Internet as a medium for advertising and direct marketing. The Web provides
advertisers with the opportunity to cost-effectively reach global audiences and
to target their advertising based on consumers' demographic characteristics,
specific interests and geographic location. IDC has estimated that online
advertising in the United States would increase from $551 million in 1997 to
$4.0 billion in 2001. Similarly, the Internet has the potential to enable direct
marketers to increase response rates and reduce cost-per-transaction by
targeting and delivering direct marketing campaigns to consumers based on their
specific demographics, characteristics and interests. Jupiter Communications
estimates that expenditures on online direct marketing will exceed $1.3 billion
in 2002.

As merchants, advertising agencies and content publishers increase their
online presence, they require comprehensive, reliable and scalable software
solutions to allow them to effectively and efficiently leverage the power of the
Internet for advertising and direct marketing. To address this need, the
NetGravity AdServer family of software products is designed to enable customers
to increase their revenue from online advertising and direct marketing by
improving response rates through consumer targeting and to enable customers to
reduce their administrative expenses by automating certain advertising and
direct marketing business processes. In addition, as the Company's software
delivers advertisements, it gathers consumer viewing and response data. This
data is retained by the Company's customers and can be used to more precisely
target future advertisements. NetGravity's solutions, which include AdServer
Enterprise, AdServer Network and the AdCenter service, are designed to be
extensible and robust systems for deploying advertising and direct marketing
management solutions on the Internet. The NetGravity AdServer family of software
products utilize a common fault-tolerant, scalable architecture for real-time
delivery of targeted advertisements, a management system for tracking
advertising inventory and a customizable reporting and analysis system allowing
AdServer users to better understand their customers.

To complement its software solutions, the Company offers worldwide
consulting, technical support and training to its customers through its
professional services organization. To help customers develop strong online
advertising and direct marketing businesses, the Company has built a consulting
organization capable of offering technical and business expertise to implement
customer solutions. These services consist of implementation, system extension
and migration services as well as other advanced services. The Company also
provides its customers with an extensive array of ongoing support services,
including software updates, telephone support and product and Internet
advertising education.

The Company's objective is to extend its leadership position in the online
advertising and direct marketing industry by establishing AdServer as the
standard customer acquisition and retention solution for online merchants,
advertising agencies and content publishers. The Company is seeking to meet its
objective by extending its leadership in online advertising solutions,
establishing leadership in online direct marketing solutions, maximizing
customer value, enabling efficient advertising buying on the Internet, expanding
and leveraging alliances with key business and technology partners and expanding
its international presence.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered.............................. shares

Common Stock to be outstanding after the
offering........................................ shares(1)

Use of proceeds................................... For repayment of certain indebtedness, working
capital and general corporate purposes. See
"Use of Proceeds."

Proposed Nasdaq National Market symbol............ NETG
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, 1998
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<S> <C> <C>
ACTUAL AS ADJUSTED(3)
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BALANCE SHEET DATA:
Cash and cash equivalents.......................................................................... $ 6,318
Working capital.................................................................................... 2,682
Total assets....................................................................................... 11,832
Notes payable...................................................................................... 1,745
Stockholders' equity............................................................................... 3,559
</TABLE>

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(1) Based on shares outstanding as of March 31, 1998. Excludes, as of March 31,
1998, (i) 1,329,408 shares of Common Stock issuable upon exercise of options
outstanding under the Company's 1995 Stock Option Plan at a weighted average
exercise price of $0.27 per share and 189,298 shares of Common Stock
reserved for future issuance thereunder and (ii) 27,650 shares of Common
Stock issuable upon exercise of outstanding warrants at a weighted average
exercise price of $0.22 per share. Also excludes an aggregate of 2.4 million
shares of Common Stock reserved for future issuance after March 31, 1998
under the Company's 1998 Stock Plan, 1998 Employee Stock Purchase Plan and
1998 Director Option Plan. See "Management--Employee Benefit Plans" and Note
5 of Notes to Consolidated Financial Statements.

(2) See Note 1 of Notes to Consolidated Financial Statements for the
determination of shares used in computing basic and diluted net loss per
share.

(3) Adjusted to reflect the sale of shares of Common Stock by the
Company at the assumed initial public offering price of $ per share
and the application of the estimated net proceeds therefrom.

------------------------------

EXCEPT AS OTHERWISE INDICATED HEREIN, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED. SEE
"PRINCIPAL AND SELLING STOCKHOLDERS" AND "UNDERWRITING." EXCEPT AS OTHERWISE
NOTED, ALL INFORMATION IN THIS PROSPECTUS (I) HAS BEEN ADJUSTED TO GIVE EFFECT
TO A 1-FOR-2.2 REVERSE SPLIT OF THE COMPANY'S COMMON STOCK TO BE EFFECTED PRIOR
TO THE DATE OF THIS PROSPECTUS; (II) REFLECTS THE CONVERSION OF ALL OUTSTANDING
SHARES OF PREFERRED STOCK IMMEDIATELY PRIOR TO THE CLOSING OF THE OFFERING, AND
(III) REFLECTS THE FILING OF AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION WHICH, AMONG OTHER THINGS, WILL INCREASE THE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK TO 50,000,000 AND WILL AUTHORIZE
5,000,000 SHARES OF UNDESIGNATED PREFERRED STOCK. SEE "DESCRIPTION OF CAPITAL
STOCK" AND NOTE 5 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. UNLESS
OTHERWISE INDICATED, REFERENCES IN THIS PROSPECTUS TO THE "COMPANY" OR TO
"NETGRAVITY" REFER TO NETGRAVITY, INC., A DELAWARE CORPORATION, TOGETHER WITH
ITS WHOLLY-OWNED SUBSIDIARIES, NETGRAVITY EUROPE LIMITED AND NETGRAVITY ASIA
PACIFIC K.K.

5
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING SHARES OF THE COMMON STOCK OFFERED HEREBY.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE
SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND
ELSEWHERE IN THIS PROSPECTUS.

LIMITED OPERATING HISTORY; HISTORY OF LOSSES; ANTICIPATED CONTINUED LOSSES

The Company was incorporated in September 1995 and therefore has a limited
operating history upon which an evaluation of the Company and its prospects can
be based. The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stage of development, particularly companies in new and rapidly evolving
markets, such as the markets for online advertising and direct marketing
solutions. To address these risks, the Company must, among other things,
effectively develop new relationships and maintain existing relationships with
its customers, business and technology partners and other third parties, develop
and upgrade its technology, improve its technical support and service, respond
to competitive developments, implement and improve operational, financial and
managerial information systems and attract, retain and motivate qualified
personnel. There can be no assurance that the Company will succeed in addressing
such risks, and the failure to do so could have a material adverse effect on the
Company's business, results of operations or financial condition. Additionally,
the limited operating history of the Company makes the prediction of future
operating results difficult or impossible, and there can be no assurance that
the Company's revenues will increase or even continue at their current level or
that the Company will achieve or maintain profitability or generate cash from
operations in future periods. Since inception, the Company has incurred
significant operating and net losses and, as of March 31, 1998, had an
accumulated deficit of $14.5 million. The Company anticipates that its operating
expenses will increase substantially in the foreseeable future as it exploits
new market opportunities for its products and services, funds greater levels of
research and development, increases its sales and marketing operations, develops
new distribution channels, improves its operational and financial systems and
broadens its customer support capabilities. Accordingly, the Company expects to
incur additional losses and continued negative cash flow from operations for the
foreseeable future, and such losses are anticipated to increase significantly
from current levels, which in turn will increase the Company's accumulated
deficit. Additionally, although the Company has experienced revenue growth in
recent periods, due to the Company's limited operating history, such results are
not necessarily meaningful and should not be relied upon as an indication of
future performance. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY; POSSIBLE
PRICE EROSION

As a result of the Company's limited operating history, the Company does not
have relevant historical financial data for a significant number of periods on
which to base planned operating expenses. Accordingly, the Company's expense
levels are based in part on the Company's expectations as to future revenues.
Since the Company's expenses are to a large extent fixed in the short term, the
Company may be unable to, or may elect not to, adjust spending in a timely
manner to compensate for any unexpected revenue shortfall. Therefore, any
significant shortfall in revenues in relation to the Company's expectations
would have an immediate material adverse effect on the Company's business,
results of operations and financial condition and net losses in a given quarter
would be even greater than expected.

6
<PAGE>

transactions, (vii) the sales and implementation cycles of the Company's
customers, (viii) the addition or loss of customers, (ix) the mix between
software licenses, software upgrades and consulting and support revenues, (x)
the mix between domestic and international revenues, (xi) the amount of
advertising budgets committed to online advertising and direct marketing
activities by the Company's current and prospective customers, (xii) price
changes or changes in pricing models by the Company or its competitors, (xiii)
the mix of distribution channels through which the Company's products are sold,
(xiv) increasing complexity of the Company's products resulting in higher costs
to develop and maintain, which may not be recouped by increased prices, (xv) the
loss of key employees and the time required to train new hires, particularly
sales, consulting and customer support personnel, (xvi) the ability to penetrate
markets outside of North America, (xvii) the incurrence of costs relating to
possible acquisitions of technology or businesses, (xviii) seasonality related
to slower European sales in the third quarter and a shorter implementation
period in the fourth quarter, (xix) the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's
operations, and (xx) general economic conditions.

Historically, a significant portion of the Company's revenue for a given
quarter has been recognized in the last month of that quarter, and the Company
expects this trend to continue. In particular, because the Company's revenue
recognition policy requires that the implementation of AdServer be substantially
completed before recognition of software license revenue, any delay in the
implementation of the Company's products at the end of a quarter could
materially adversely affect operating results for that quarter. The Company's
revenues are also likely to fluctuate due to factors that impact prospective
customers of the Company's products. Expenditures by these customers tend to
vary in cycles that reflect overall economic conditions and budgeting and buying
patterns. The Company's business could be materially adversely affected by a
decline in the economic prospects of its customers or the economy generally,
which could alter current or prospective customers' spending priorities or
budget cycles or extend the Company's sales cycle with respect to certain
customers. In addition, the Company plans to increase its operating expenses to
exploit new market opportunities for its products and services, fund greater
levels of research and development, increase its sales and marketing operations,
develop new distribution channels, improve its operational and financial systems
and broaden its customer support capabilities. To the extent that such expenses
precede or do not correspond with increased revenues, the Company's business,
results of operations or financial condition could be materially adversely
affected and net losses in a given quarter would be even greater than expected.

Since the markets for online advertising and direct marketing are in the
early stages of development, there can be no assurance that the Company's model
for pricing of its products and services will remain an acceptable pricing
model. If pricing or gross margins on the Company's products and services
decline because a new pricing model develops or the Company's competitors offer
products and services at lower prices than the Company, the Company's business,
results of operations or financial condition could be materially adversely
effected. The terms of the Company's agreement with its customers typically
contain a perpetual license, a one-year renewable subscription for product
upgrades and a one-year renewable support agreement. If the Company's customers
do not renew their subscription and support agreements, the Company's business,
results of operations and financial condition would be materially adversely
effected.

Due to all of the foregoing factors, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Furthermore it is possible that in some future quarters the Company's results of
operations may fall below the expectations of securities analysts and investors.
In such event, the trading price of the Company's Common Stock will likely be
materially and adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Results of Operations."

RISKS ASSOCIATED WITH EMERGING MARKETS

The market for online advertising and direct marketing has only recently
begun to develop, is rapidly evolving and is characterized by an increasing
number of market entrants. As is typical in the case of a new and rapidly
evolving industry, demand and market acceptance for recently introduced products
and services are subject to a high level of uncertainty. Since the Company
expects to derive substantially all of its revenues in the foreseeable

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future from sales of its online advertising and direct marketing software
solutions, the Company is highly dependent on the continued use of the Internet
for information, entertainment and other purposes and, in particular, on the
increased use of the Internet as an advertising and direct marketing medium.

ONLINE ADVERTISING. The Internet as an advertising medium has not been
available for a sufficient period of time to gauge its effectiveness as compared
with traditional advertising media (such as print, television and radio). Many
advertisers have limited or no experience using the Internet as an advertising
medium, have not devoted a significant portion of their advertising expenditures
to online advertising and may not find online advertising to be effective for
promoting their products and services relative to advertising using traditional
media. The adoption of online advertising, particularly by those entities that
have historically relied upon traditional media for advertising, requires the
acceptance of a new way of conducting business and exchanging information.
Advertisers that have historically relied on traditional media for advertising
may be particularly reluctant or slow to adopt online advertising. In addition,
most of the Company's current and potential Web publisher customers have limited
or no experience in generating revenues from the sale of advertising space on
their Web sites. Further, advertisers and advertising agencies that have
invested substantial resources in traditional methods of advertising may be
reluctant to reallocate their media buying resources to online advertising. The
Internet must therefore compete for a share of advertisers' total advertising
budgets with traditional advertising media. Additionally, there are no widely
accepted standards for the measurement of the effectiveness of online
advertising, and there can be no assurance that such standards will develop
sufficiently to support online advertising as a significant advertising medium.
To the extent that the Internet is perceived to be a limited or ineffective
advertising medium, advertisers may be reluctant to devote a significant portion
of their advertising budget to online advertising, which could limit the growth
of online advertising and would have a material adverse effect on the Company's
business, results of operations and financial condition. Because initial growth
of online advertising was driven by a limited number of early adopters, there
can be no assurance that the market for online advertising will continue to
emerge or become sustainable. To the extent the market does not attain
widespread acceptance or develops more slowly than expected, the Company's
business, results of operations or financial condition could be materially and
adversely affected.

Further, there can be no assurance that advertisers will determine that
banner advertising, the delivery method which currently comprises substantially
all of the advertising delivered via the Company's products, is an effective or
attractive advertising medium, and there can be no assurance that the Company
will effectively transition to any other forms of online advertising should they
develop and achieve market acceptance. Moreover, "filter" software programs that
limit or prevent advertising from being delivered to a Web user's computer are
available. Widespread adoption of such filter software by users could have a
material adverse effect upon the commercial viability of online advertising,
which would have a material adverse effect on the Company's business, results of
operations and financial condition.

Additionally, if the outsourced service model increases in popularity for
the Company's targeted markets, the Company will be required to devote
additional resources to keep its own outsourcing solution competitive. Any
failure by the Company to successfully design, develop and market an advanced
outsourced solution under such circumstances would have a material adverse
effect on the Company's business, results of operations and financial condition.

ONLINE DIRECT MARKETING. Adoption of online direct marketing, particularly
by those entities that have historically relied upon traditional means of direct
marketing (such as telemarketing and direct mail), requires the broad acceptance
of a new and substantially different approach to direct marketing. As with
online advertising and other new markets, intensive marketing and sales efforts
may be necessary to educate prospective customers regarding the uses and
benefits of the Company's products and services in order to generate demand for
the Company's solutions. Enterprises that have already invested substantial
resources in other methods of conducting business may be reluctant or slow to
adopt a new approach that may replace, limit or compete with their existing
systems. In addition, since online direct marketing is emerging as a new and
distinct market apart from online advertising, potential adoptees of online
direct marketing solutions will increasingly demand functionality tailored to
their specific requirements.

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Additionally, online direct marketers may delay adoption of any direct
marketing solutions offered by the Company until the market for online
advertising has reached a broader level of acceptance. Although AdServer's
largely advertising-oriented features can be deployed for online direct
marketing, the Company has not yet developed products with the custom features
required by online direct marketers and there can be no assurance that the
Company will develop any such products, or if such products are developed, that
they will achieve a satisfactory level of market acceptance.

NEW PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE

The market in which the Company competes is characterized by: rapidly
changing technology; evolving industry standards; frequent new product and
service announcements, introductions and enhancements; and changing customer
demands. These market characteristics are exacerbated by the emerging nature of
the Web, in general, and online advertising and direct marketing in particular.
Accordingly, the Company is dependent upon its ability to adapt to rapidly
changing technologies, its ability to adapt its solutions to meet evolving
industry standards and its ability to continually improve the performance,
features and reliability of its solutions in response to both changing customer
demands and competitive product and service offerings. The failure of the
Company to successfully adapt to such changes in a timely manner could have a
material adverse effect on the Company's business, results of operations or
financial condition.

If the Company is unable, for technological or other reasons, to develop on
a timely basis the next release of AdServer or other new software products,
enhancements to existing products or corrections to errors or defects or
performance problems in products, or if such new products or enhancements do not
achieve a significant degree of market acceptance or if such products, in order
to be released on a timely basis, contain material defects or errors or
performance problems, the Company's business, results of operations and
financial condition would be materially adversely affected. In addition, there
can be no assurance that the introduction or announcement of new product
offerings by the Company or one or more of its competitors will not cause
customers to decline or defer licensing of existing Company products. Any
decline or deferral of purchases could have a material adverse effect on the
Company's business, results of operations or financial condition. Further, if
the Company's current or future products do not meet the scalability
requirements of its customers due to vastly increased use of the Internet, the
Company would have to incur substantial expenditures and resources to address
such issue, and there can be no assurance that the Company would be successful
in scaling the capabilities of its products to such level.

Although the Company sells products to each of the constituents in the
online advertising and direct marketing supply chain (merchants, advertising
agencies and content publishers), it does not currently offer products
automating the online advertising purchasing process among such constituents. If
demand for a comprehensive solution develops and the Company fails to develop
such a solution on a timely basis, or at all, it could have a material adverse
effect on the Company's business, results of operations or financial condition.
In addition, as more customers demand online advertising and direct marketing
solutions, the Company must tailor its products to the specific requirements of
both online advertisers and direct marketers and provide a solution for
supplying demographic and behavioral data. Specifically, the online direct
marketing market will require more narrowly targeted advertisements than the
online advertising market and will be even more reliant on demographic data than
the online advertising market. Although AdServer's largely advertising-oriented
features can be used for online direct marketing, the Company has not yet
developed products with the custom features required by online direct marketers.
If the Company does not develop a satisfactory product to address the online
direct marketing market, future growth of the Company could be impaired, and the
Company could lose customers to competitors with more comprehensive solutions.
The occurrence of any such event could have a material adverse effect on the
Company's business, results of operations or financial condition. See "--Risks
Associated with Emerging Markets" and "Business--Competition."

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particularly Microsoft and Sun, by vendors of relational database software,
particularly Oracle and Microsoft, and browsers, particularly Netscape and
Microsoft could materially adversely impact the Company's business, results of
operations or financial condition. See "Business--Technology."

COMPETITION

The market for online advertising and direct marketing is relatively new,
intensely competitive, rapidly evolving and subject to rapid technological
change. The Company expects competition to continue to increase both from
existing competitors and new market entrants. There are no substantial barriers
to entry in these markets, and the Company believes that its ability to compete
is dependent upon many factors within and beyond its control, including the
timing and market acceptance of new solutions and enhancements to existing
solutions developed by the Company and its competitors, customer service and
support, sales and marketing efforts and the ease of use, performance, features,
price and reliability of the Company's solutions.

Historically, participants in the online advertising and direct marketing
supply chain have used internally developed systems to manage their own online
advertising and direct marketing functions. However, the Company believes that
its primary competition will increasingly come from vendors that provide online
advertising and direct marketing software or service solutions. In the online
advertising market, the Company competes directly with DoubleClick, CMG (through
its Engage/Accipiter unit) and Excite (through its MatchLogic unit), and a
variety of other online advertising service providers. Some of these companies
(such as DoubleClick) have adopted a business model focused on outsourcing of
advertising and direct marketing management. If this model increases in
popularity for the Company's targeted markets, the Company will be required to
devote additional resources to keep its own outsourcing solution competitive.
Any failure by the Company to successfully design, develop and market an
advanced outsourced solution under such circumstances would have a material
adverse effect on the Company's business, results of operations and financial
condition. In the online direct marketing market, the Company expects to face
indirect competition from the vendors of electronic commerce systems, including
BroadVision, Interworld and Open Market, among others. Additionally, providers
of electronic commerce could build online direct marketing solutions that would
obviate the need for any current or future products of the Company targeted to
the online direct marketing industry. The Company also encounters competition
from Netscape and Microsoft, which build or bundle advertising management
products with their Internet commerce solutions. Both Netscape and Microsoft
have significantly greater resources than the Company, and due to their control
of the browser market, if either of them were to offer online advertising and
direct marketing management solutions with features comparable to those offered
by the Company, there can be no assurance that the Company would be able to
compete effectively against any such product offerings.

Many of the Company's current and potential competitors have longer
operating histories and significantly greater financial, technical, marketing
and other resources than the Company and thus may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. Also, many current and potential competitors have greater name
recognition, more extensive customer bases and larger proprietary consumer
databases that could be leveraged, thereby gaining market share to the Company's
detriment. Such competitors may be able to undertake more extensive promotional
activities, adopt more aggressive pricing policies, or offer more attractive
terms to purchasers than the Company. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to enhance their products. Accordingly, it is
possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share.

Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any one of which could have a material adverse
effect on the Company's business, results of operations or financial condition.
There can be no assurance that the Company will be able to compete successfully
against existing or potential competitors or that competitive pressures will not
have a material adverse effect on the Company's business, results of operations
or financial condition.

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DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL QUALIFIED PERSONNEL

The Company is dependent, to a significant extent, upon members of senior
management, product development personnel, the Company's sales and marketing and
customer support staff, and other key employees. Given the Company's early stage
of development, the loss of one or more key employees could have a material
adverse effect on the business, results of operations or financial condition of
the Company. The Company does not have employment agreements with its executive
officers requiring their service for any particular term and does not carry key
person life insurance covering such persons. In addition, the Company is
dependent upon its ability to attract, hire, train and retain a substantial
number of highly skilled technical, managerial, finance, sales and marketing and
support personnel, especially experienced consulting and customer support
personnel. The Company must also recruit, and plans to recruit, senior
executives with industry expertise in online advertising and direct marketing.
Competition for personnel in the Company's industry is very intense, and the
Company has at times experienced and continues to experience difficulty in
recruiting qualified personnel and there can be no assurance that the Company
will be successful at attracting, hiring, training or retaining such personnel.
The failure of the Company to attract, hire, train or retain such personnel
could have a material adverse effect on the Company's business, results of
operations or financial condition.

In addition, the Company plans to expand its sales and marketing and
customer support organizations both domestically and internationally. Based on
the Company's experience, it takes at least six months, if not longer, for a
salesperson to become fully productive. There can be no assurance that the
Company will be successful in increasing the productivity of its sales
personnel, and the failure to do so could have a material adverse effect on the
Company's business, results of operations or financial condition. Additionally,
as the Company continues to expand internationally, it will require the services
of individuals in the countries in which it conducts operations. The Company has
had limited experience hiring foreign personnel. There can be no assurance that
the Company will be successful in attracting, hiring, training and retaining
such foreign personnel, and the failure to do so could have a material adverse
effect on the Company's business, results of operations or financial condition.
See "Business-- Professional Services."

MANAGEMENT OF GROWTH; RISKS OF POTENTIAL FUTURE ACQUISITIONS

The Company has recently experienced a period of rapid growth and expansion
that has placed and continues to place a significant strain upon the Company's
management, systems and resources. The Company has grown from 10 employees as of
December 31, 1995 to 94 employees as of March 31, 1998 and currently plans to
expand its staff both domestically and internationally. See "--Dependence on Key
Personnel; Need for Additional Qualified Personnel." The Company's ability to
compete effectively and manage future growth, if any, will require the Company
to continue to implement and improve operational, financial and management
information systems on a timely basis and to attract, hire, train and retain
additional technical, managerial, finance, sales and marketing and support
personnel. Any failure to implement and improve the Company's operational,
financial and management systems or to attract, hire, train or retain employees
could have a material adverse effect on the Company's business, results of
operations or financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Employees."

As part of its growth strategy, the Company may in the future pursue
acquisitions of product lines, technologies or businesses. Future acquisitions
by the Company may result in the use of significant amounts of cash, potentially
dilutive issuances of equity securities, incurrence of debt, or amortization
expenses related to goodwill and other intangible assets, any of which could
materially adversely affect the Company's business, results of operations or
financial condition. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of the operations, technologies, products and
personnel of the acquired company, the diversion of management's attention from
other business concerns, risks of entering markets in which the Company has no
or limited direct prior experience, and the potential loss of key employees of
the acquired company. From time to time, the Company has engaged in discussions
with third parties concerning potential acquisitions of product lines,

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technologies and businesses. However, there are currently no active
negotiations, commitments or agreements with respect to any such acquisition. In
the event that such an acquisition does occur, however, there can be no
assurance that the Company's business, results of operations or financial
condition will not be materially adversely effected.

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

A significant component of the Company's strategy is to aggressively expand
its international operations and international sales and marketing efforts.
Through its two subsidiaries, NetGravity Europe Limited and NetGravity Asia
Pacific K.K., the Company has recently commenced operations in a number of
markets in Europe and Asia Pacific. International revenues comprised
approximately 7.7% of the Company's total revenues in 1997 and are expected to
comprise a significant portion of the Company's total revenues in 1998. Although
the Company believes that localized versions of its products will be extremely
important for the Company to achieve any significant international growth, to
date, the Company has not developed localized versions of its products (which
will likely involve a significant amount of the Company's resources) and has
limited experience in marketing, selling and distributing its products and
services internationally. Additionally, international markets for online
advertising and direct marketing are in earlier stages of development than in
the United States, and there can be no assurance that the market for, and use,
of online advertising and direct marketing in international markets will be
significant in the future. Factors that may further account for slower growth in
the online advertising and direct marketing markets in Europe and Asia include:
slower growth in the number of individuals using the Internet internationally;
privacy concerns; a lower rate of advertising spending internationally than in
the United States; and a greater reluctance internationally to use the Internet
for advertising and direct marketing. Further, any future success of the Company
in selling its products and services internationally may be conditioned on the
Company delivering improved versions of its products (including localized
versions of its products) and having additional international personnel
available for service and support. Due to all of the foregoing, there can be no
assurance that the Company will be able to successfully market, sell and deliver
its products and services in these markets. In addition, there are certain risks
and challenges inherent in doing business in international markets, such as
difficulties in collecting accounts receivable and longer collection periods,
multiple and continual changes in regulatory requirements, conflicting
regulatory requirements (for example, Germany has imposed laws limiting the use
of "cookies," and there can be no assurance that other countries will not also
place limitations on the use of "cookies"), potentially adverse tax
consequences, export restrictions, export controls relating to encryption
technology, tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, political instability, fluctuations in currency
exchange rates, seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world, and the impact of local
economic conditions and practices, any of which could have a material adverse
effect on the success of the Company's international operations and,
consequently, on the Company's business, results of operations or financial
condition.

The Company currently invoices its European customers in local currencies
and its customers in Asia Pacific in U.S. currency. The Company expects to
eventually invoice all of its international customers in local currencies.
Although the Company pays certain of the expenses of its European operations in
local currencies, the Company has not engaged in foreign currency hedging
activities, and international revenues are currently subject to currency
exchange fluctuation rates. To the extent that international revenues increase
as a percentage of total revenues in the future, foreign currency fluctuation
exposure may also increase. Additionally, recent weakness in many of the Asian
economies as well as weakness in the Japanese yen may result in the Company's
products being too expensive for customers in Japan and other countries in Asia
Pacific resulting in decreased sales and profitability in such countries. There
can be no assurance that one or more of the factors discussed above will not
have a material adverse effect on the Company's future international operations
and, consequently, on the Company's business, results of operations or financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Strategy."

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LENGTHY SALES AND IMPLEMENTATION CYCLES

Sales of the Company's software products generally require the Company to
engage in a lengthy sales effort, including significant education of prospective
customers regarding the use and benefits of the Company's products. As a result,
the sales cycle for the Company's products is long, currently averaging
approximately four months. In particular, the sales cycle for the Company's
online direct marketing solutions is likely to be comparatively longer than the
sales cycle for the online advertising solutions, since online direct marketing
is less established and will require more education of the Company's potential
customers. In addition, the implementation of the Company's products often
involves a significant commitment of resources by customers and/or the Company's
consultants over an extended period of time. The Company's sales and customer
implementation cycles are subject to a number of potential delays. These include
delays related to product defects or errors as well as delays over which the
Company has little or no control, including customers' budgetary constraints,
internal acceptance reviews and the complexity of customers' online advertising
or direct marketing needs. To the extent the use of the Internet becomes a more
widely accepted means of conducting advertising campaigns and targeting
potential customers, the Company believes that the average sales size of its
transactions may increase. An increase in the average sales size of transactions
would also likely result in a longer sales cycle as the license of the Company's
software products becomes more of an enterprise-wide decision by prospective
customers requiring a significant commitment of resources. Delays due to lengthy
sales cycles or delays in customer deployment of a product could have a material
adverse effect on the Company's business, results of operations or financial
condition. For example, due to errors contained in early versions of AdServer
3.0 and the complexity involved in its implementation, deployment of the product
required a significant amount of time and resources on the part of the Company
and its customers. Partly as a result, the Company's license revenue declined in
the fourth quarter of 1997 from the prior quarter due to the delay in revenue
recognition and greater than anticipated utilization of the Company's personnel
and other resources in deploying such products. See "--Potential Fluctuations in
Quarterly Operating Results; Seasonality; Possible Price Erosion," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Sales and Marketing."

PRODUCT CONCENTRATION

To date, the Company has generated all of its revenues from the license and
related upgrade, consulting and support of its AdServer family of software
products. The Company believes that its current AdServer family of software
products and software products in development, together with the related
consulting and support services, will continue to account for substantially all
of its revenues for the foreseeable future. The Company's future financial
performance is dependent, in significant part, upon the successful development,
introduction and customer acceptance of new and enhanced versions of AdServer
and of new products and services that the Company may develop. There can be no
assurance that the Company will be successful in upgrading and continuing to
market AdServer or that the Company will successfully develop new products and
services or that any new product or service will achieve market acceptance.
Consequently, factors affecting the pricing of and demand for AdServer, such as
competition, technological changes, failure of the market for online advertising
and direct marketing solutions to develop as the Company anticipates or lack of
customer acceptance of AdServer could have a material adverse effect on the
Company's business, results of operations or financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET

The Company's future success is largely dependent upon the widespread
acceptance and continued use of the Internet as an advertising and direct
marketing medium. The Internet may not be accepted as a viable commercial medium
for a number of reasons, including potentially inadequate development of the
necessary network infrastructure, failure of enabling technologies to be
developed in a timely manner or insufficient commercial support of online
advertising and direct marketing. To the extent that the Internet continues to
experience an increase in users, an increase in frequency of use or an increase
in the bandwidth requirements of users, there can be no assurance that the
Internet infrastructure will be able to support the demands placed upon it. In
addition, the

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Internet could lose its viability as a commercial medium due to the delays in
the development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased government
regulation. Changes in, or insufficient availability of, telecommunications
services to support the Internet also could result in slower response times and
could adversely affect use of the Internet generally. If use of the Internet
does not continue to grow or grows more slowly than expected, or if the Internet
infrastructure, standards, protocols or complementary products, services or
facilities do not effectively support any growth that may occur, the Company's
business, results of operations and financial condition would be materially
adversely affected. See "Business--Industry Background." Even if the required
infrastructure, standards, protocols or complementary products, services or
facilities are developed, there can be no assurance that the Company will not be
required to incur substantial expenditures in order to adapt its solutions to
changing or emerging technologies. The occurrence of any such event could have a
material adverse effect on the Company's business, results of operations or
financial condition. Moreover, critical issues concerning the commercial use and
government regulation of the Internet (including security, cost, ease of use and
access, intellectual property ownership and other legal liability issues) remain
unresolved and could materially and adversely impact both the growth of the
Internet and the Company's business, results of operations or financial
condition.

RELIANCE ON THIRD PARTIES AND THIRD PARTY SOFTWARE PLATFORMS

The Company's products are designed to operate on a variety of hardware and
software platforms employed by its customers in their networks. The Company must
continually modify and enhance its products to keep pace with changes in
hardware and software platforms and database technology. As a result,
uncertainties related to the timing and nature of new product announcements,
introductions or modifications by vendors of operating systems, particularly
Microsoft and Sun, by vendors of relational database management software,
particularly Oracle and Microsoft, and by vendors of browsers, particularly
Netscape and Microsoft, could materially adversely impact the Company's
business, results of operations or financial condition. The failure of the
Company's products to operate effectively across the various existing and
evolving versions of hardware and software platforms and database environments
employed by customers could have a material adverse effect on the Company's
business, results of operations or financial condition. The Company also relies
upon the licensing of certain software from third parties, including database
access technology and other tools from Rogue Wave, and there can be no assurance
that the Company's third-party technology licenses will continue to be available
to the Company on commercially reasonable terms, if at all. The loss or
inability to maintain any of these technology licenses could result in delays in
the sale of the Company's products and services until equivalent technology, if
available, is identified, licensed, and integrated, which could have a material
adverse effect on the Company's business, results of operations or financial
condition.

In order for the Company to provide adequate demographic data (which is
essential for more narrowly targeted advertising and direct marketing) for its
customers without their own demographic data or without access to their
demographic data, the Company will need to partner with companies offering such
demographic data. The failure of the Company to form such partnerships could
have a material adverse effect on the business, results of operations or
financial condition of the Company.

EVOLVING DISTRIBUTION CHANNELS

The Company has historically sold its products and services primarily
through its field sales and telesales organization, but its future success will
depend in part upon its ability to increase sales of its products through
Internet systems integrators, Web hosting organizations and value added
resellers (collectively, "Resellers"). The Company expects that any material
increase in sales through Resellers as a percentage of total revenues will
adversely affect the Company's gross margins due to discounts offered to
Resellers. Another potential adverse consequence of the Company's focus on
increasing sales through Resellers is the diversion of management resources and
attention from field sales and telesales, which could adversely affect field
sales and telesales revenue. Moreover, there can be no assurance that the
Company will be able to attract and retain Resellers that will be able to market
the products effectively, particularly due to the sophisticated nature of the
Company's products, and that will

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be qualified to provide timely and cost-effective customer support and service.
In the event that a Reseller provides inadequate support and service to the
Company's customers, the Company's future revenues could be negatively impacted
and the Company's reputation could be seriously damaged. The occurrence of any
of such events could have a material adverse effect on the Company's business,
results of operations or financial condition.

PRIVACY CONCERNS; DEPENDENCE ON COOKIES FOR AD TARGETING; SECURITY

The Company's software uses "cookies" to deliver targeted advertising, to
help compile demographic information, and to limit the frequency with which an
advertisement is shown to the user. Cookies are bits of information keyed to a
specific server, file pathway or directory location that are stored on a user's
hard drive and passed to a Web site's server through the user's browser
software. Cookies are placed on the user's hard drive without the user's
knowledge or consent. Due to privacy concerns, some Internet commentators,
advocates and governmental bodies have suggested that the use of cookies be
limited or eliminated. In addition, certain currently available Internet
browsers allow a user to delete cookies or prevent cookies from being stored on
the user's hard drive. Germany has imposed laws limiting the use of cookies, and
there can be no assurance that other countries will not also place limitations
on the use of cookies. See "--Risks Associated with International Expansion."
Any significant reduction or limitation in the use of cookies would likely
require the Company to switch to other technology allowing the gathering of
information for ad targeting. Switching to other technology could require
significant reengineering time and resources, and there can be no assurance that
the Company would be able to switch to such technology on a timely basis, if at
all. The failure to do so could have a material adverse effect on the Company's
business, results of operations or financial condition.

The Company has included basic security features in certain of its products
that are intended to protect the privacy and integrity of customer data.
However, in the Company's AdServer product, passwords for certain operations are
not encrypted and therefore are susceptible to hacker interception, break-ins
and disruption. Such computer break-ins and other disruptions may jeopardize the
security of information stored in and transmitted through the computer systems
of the Company's customers. Alleviating problems caused by third parties may
require significant expenditures of capital and resources by the Company which
may have a material adverse effect on the Company's business, results of
operations or financial condition. Additionally, as e-commerce becomes more
prevalent (and consequently the focus of the Company's development of direct
marketing products), security concerns will become of increasing concern to
consumers and the Company's customers. If not addressed, these security concerns
could limit or slow the development of e-commerce and, consequently, the
development of online direct marketing. If the Company does not add sufficient
security features to future product releases, the Company's products may not
achieve an acceptable level of market acceptance, or if purchased by customers,
may result in liability for damages. The occurrence of any of the foregoing
could have a material adverse effect on the Company's business, results of
operations or financial condition.

RISK OF PRODUCT DEFECTS; PRODUCT LIABILITY

Software products as complex as AdServer frequently contain errors or
defects or performance problems, especially when first introduced or when new
versions or enhancements are released. Despite extensive product testing by the
Company prior to introduction, the Company's products have in the past contained
software errors that were discovered after commercial introduction. For example,
AdServer 3.0, although functional when released, had a number of software errors
that affected the product's performance, reliability and compatibility with
certain operating environments. As a result of such errors, the Company had to
allocate significant customer support resources to addressing such errors. There
can be no assurance that, despite testing by the Company and by current and
potential customers, serious defects and errors or performance problems will not
be found in new versions or enhancements of the Company's current products after
commencement of commercial shipments. Any future software defects or errors or
performance problems discovered after delivery of the Company's products could
result in the re-allocation of valuable resources away from customer service and
product development or lost revenues or delays in customer acceptance of the
Company's products and would be detrimental to the Company's market reputation,
which, in each case, could have a material adverse effect on the Company's
business, results of

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<PAGE>

operations or financial condition. The Company's customers and potential
customers may be particularly sensitive to any such software defects or errors
or performance problems given that a failure of a Web site's advertising
management and delivery system often immediately and directly results in lost or
reduced advertising revenue during such failure.

Since the Company's products are used by its customers for advertising
management, errors or defects or performance problems in the Company's products,
misuse of the Company's products or other potential problems within or out of
the Company's control that may arise from the use of the Company's products
could result in financial or other damages to the Company's customers. Such
customers could seek damages from the Company for any such losses, which, if
successful, could have a material adverse effect on the Company's business,
results of operations or financial condition. Additionally, although the
Company's license agreements with its customers typically contain provisions
designed to limit the Company's exposure to potential claims as well as any
liabilities arising from such claims, such provisions may not effectively
protect the Company against such claims and the liability and costs associated
therewith as a result of existing or future federal, state or local laws or
ordinances or unfavorable judicial decisions. Although the Company has not
experienced any product liability claims to date, there can be no assurance that
the Company will not be subject to such claims in the future. Because the
Company's software products are used in business-critical applications, a
successful product liability claim brought against the Company could have a
material adverse effect on the Company's business, results of operations or
financial condition. Moreover, defending such a suit, regardless of its merits,
could entail substantial expense and require the time and attention of key
management personnel, either of which could have a material adverse effect on
the Company's business, results of operations or financial condition.

DEPENDENCE ON PROPRIETARY RIGHTS; RISK OF INFRINGEMENT

The Company's success and ability to compete are dependent in part upon its
proprietary technology. The Company relies on trademark, trade secret and
copyright law to protect its technology. Legal standards relating to the
validity, enforceability and scope of protection of certain proprietary rights
in Internet-related industries are uncertain and still evolving, and no
assurance can be given as to the future viability or value of any proprietary
rights of the Company or other companies within the industry. Furthermore, the
Company believes that factors such as the technological and creative skills of
its personnel, new product developments, product enhancements, name recognition
and reliable product maintenance are more essential to establishing and
maintaining its technology leadership position than the legal protection of its
technology. There can be no assurance that others will not develop technologies
that are similar or superior to the Company's technology.

The Company generally provides its products to end users under nonexclusive,
nontransferable licenses during the term of the agreement, which is usually in
perpetuity. Under the general terms and conditions of the Company's standard
license agreements, the licensed software may be used pursuant to NetGravity's
published licensing practices. The source code for the Company's proprietary
software is protected both as a trade secret and as a copyrighted work. In
addition, some of the Company's agreements with its customers contain provisions
requiring release of source code for limited, non-exclusive use by the customer
in the event that the Company ceases to do business or the Company fails to
support its products. This release of source code may increase the likelihood of
misappropriation by third parties. The Company's policy is to enter into
confidentiality and intellectual property assignment agreements with its
employees, consultants, and vendors and generally to control access to and
distribution of its software, documentation, and other proprietary information.
Notwithstanding these precautions, it may be possible for a third party to copy
or otherwise obtain and use the Company's software or other proprietary
information without authorization or to develop similar software independently.
Policing unauthorized use of the Company's products is difficult, particularly
because the global nature of the Internet makes it difficult to control the
ultimate destination or security of software or other data transmitted. The laws
of other countries may afford the Company little or no effective protection of
its intellectual property. There can be no assurance that the steps taken by the
Company will prevent misappropriation of its technology or that agreements
entered into for that purpose will be enforceable. In addition, litigation may
be necessary in the future to enforce the Company's intellectual property
rights, to protect the Company's trade secrets, to determine the validity and
scope of the proprietary rights

16
<PAGE>
of others, or to defend against claims of infringement or invalidity. Such
litigation, whether successful or unsuccessful, could result in substantial
costs and diversions of resources, either of which could have a material adverse
effect on the Company's business, results of operations or financial condition.

Although the Company believes that its products do not infringe the
proprietary rights of third parties, there can be no assurance that the
Company's products or business activities will not infringe upon the patent or
other proprietary rights of others, or that other parties will not assert or
prosecute infringement or invalidity claims (or claims for indemnification
resulting from infringement claims) against the Company or that any such
assertions or prosecutions will not materially adversely affect the Company's
business, results of operations or financial condition. From time to time the
Company has been, and expects to continue to be, subject to claims in the
ordinary course of its business, including claims of alleged infringement of the
copyrights, trade secrets and other intellectual property rights of third
parties by the Company. Although such claims have not resulted in litigation or
had a material adverse effect on the Company's business, results of operations
or financial condition, such claims and any resultant litigation, should they
occur, could subject the Company to significant liability for damages and could
result in invalidation of the Company's proprietary rights and, even if not
meritorious, could be time-consuming and expensive to defend, and could result
in the diversion of management time and attention, any of which could have a
material adverse effect on the Company's business, results of operations or
financial condition. If any such claims or actions are asserted against the
Company, the Company may seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that under
such circumstances, a license would be available on reasonable terms or at all.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

Due to concerns arising in connection with the increasing popularity and use
of the Web, a number of laws and regulations may be adopted covering issues such
as user privacy, pricing, characteristics, acceptable content, taxation and
quality of products and services. Such legislation could dampen the growth in
use of the Web generally and decrease the acceptance of the Web as a
communications and commercial medium, which could have a material adverse effect
on the Company's business, results of operations or financial condition. In
addition, because the growing popularity and use of the Web has burdened the
existing telecommunications infrastructure, many areas with high Web use have
begun to experience interruptions in phone service. Certain local telephone
carriers have petitioned governmental bodies to regulate Internet service
providers ("ISPs") and online service providers ("OSPs") in a manner similar to
long distance telephone carriers and to impose access fees on ISPs and OSPs. If
any of these petitions or the relief sought therein is granted, the costs of
communicating on the Web could increase substantially, potentially adversely
affecting the growth in use of the Web which could in turn decrease the demand
for the Company's products or otherwise have a material adverse effect on the
Company's business, results of operations or financial condition. Further, due
to the global nature of the Web, it is possible that multiple federal, states or
foreign jurisdictions might attempt to concurrently and inconsistently regulate
the transmissions of the Company or its customers or levy sales or other taxes
relating to the Company's activities. There can be no assurance that violations
of local laws will not be alleged or charged by state or foreign governments,
that the Company might not unintentionally violate such laws or that such laws
will not be modified, or new laws enacted, in the future. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, libel and personal privacy is uncertain. Any of the foregoing
developments could have a material adverse effect on the Company's business,
results of operations or financial condition. See "Privacy Concerns; Dependence
on Cookies for Ad Targeting; Security."

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four digit entries in order to
distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer systems and/ or software used by many companies will
need to be upgraded to comply with "Year 2000" requirements. Significant
uncertainty exists in the software industry concerning the potential effects
associated with such

17
<PAGE>

compliance issues. A number of code fields in the user interface portion of
Company's AdServer products are currently programmed to accept only two digit
entries and, as a result, the Company's AdServer family of software products is
not yet fully Year 2000 compliant. While the Company believes that date code
fields in other components of its products are Year 2000 compliant, there can be
no assurance that all or any of such date fields are Year 2000 compliant. The
Company is currently taking steps to make its products Year 2000 compliant.
However, there can be no assurance that the Company will be successful in making
its products Year 2000 compliant. Any failure by the Company to make its
products Year 2000 compliant could result in a decrease in sales of the
Company's products, an increase in the allocation of resources to address Year
2000 problems of the Company's customers without additional revenue commensurate
with such dedication of resources, or an increase in litigation costs relating
to losses suffered by the Company's customers due to such Year 2000 problems.
The occurrence of any such event could have a material adverse effect on the
Company's business, results of operations or financial condition. In addition,
the Company believes that the purchasing patterns of customers and potential
customers may be impacted by Year 2000 issues. Further, many companies are
expending significant resources to correct or patch their current software
systems. These expenditures of funds may result in reduced funds available to
purchase software products such as those offered by the Company. Any of the
foregoing could have a material adverse effect on the Company's business,
results of operations or financial condition.

UNCERTAIN NEED AND AVAILABILITY OF ADDITIONAL FUNDING

Although the Company believes that, following the offering, its cash
reserves and cash flows from operations will be adequate to fund the Company's
operations for at least the next 12 months, there can be no assurance that such
sources will be adequate or that additional funds will not be required either
during or after such 12 month period. No assurance can be given that additional
financing will be available or that, if available, it will be available on terms
favorable to the Company or its stockholders. If additional funds are raised
through the issuance of equity securities, the percentage ownership of the then
current stockholders of the Company will be reduced and such equity securities
may have rights, preferences or privileges senior to those of the holders of the
Company's Common Stock. If adequate funds are not available to satisfy either
short or long-term capital requirements, the Company may be required to limit
its operations significantly. The Company's capital requirements are dependent
upon many factors, including, but not limited to, the rate at which the Company
develops and introduces its products, the market acceptance and competitive
position of such products, the level of promotion and advertising required to
market such products and attain a competitive position in the marketplace, and
the response of competitors to the Company's products. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Description of Capital
Stock--Preferred Stock."

CONCENTRATION OF STOCK OWNERSHIP

Immediately after the closing of this offering, % of the outstanding
Common Stock ( % if the Underwriter's over-allotment option is exercised in
full) will be beneficially owned by the directors and executive officers of the
Company, together with certain entities affiliated with them. As a result, these
stockholders, if acting together, will be able to exercise significant influence
over all matters requiring approval by the stockholders of the Company,
including the election of all directors and approval of significant corporate
transactions. See "Principal and Selling Stockholders."

ANTITAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS, BYLAWS AND DELAWARE LAW

Pursuant to the terms of the Company's Amended and Restated Certificate of
Incorporation, as amended, the Board of Directors has the authority to issue up
to 5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the Company's stockholders. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future (including, but not limited to, preferences by the Preferred Stock
with respect to the payment of dividends and upon liquidation, dissolution or
winding up). The issuance of Preferred Stock, while providing desirable
flexibility in connection

18
<PAGE>
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plans to
issue shares of Preferred Stock. Further, certain provisions of the Company's
Amended and Restated Certificate of Incorporation, as amended, and of the
Amended and Restated Bylaws and of Delaware law could delay or make difficult a
merger, tender offer or proxy contest involving the Company. See "Description of
Capital Stock-- Preferred Stock" and "--Antitakeover Effects of Provisions of
Certificate of Incorporation, Bylaws and Delaware Law."

Section 203 of the General Corporation Law of the State of Delaware, which
is applicable to the Company, prohibits certain business combinations with
certain stockholders for a period of three years after they acquire 15% or more
of the outstanding voting stock of a corporation. See "Description of Capital
Stock--Effect of Delaware Antitakeover Statute."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of significant amounts of Common Stock in the public market after the
offering or the perception that such sales will occur could materially and
adversely affect the market price of the Common Stock or the future ability of
the Company to raise capital through an offering of its equity securities. Of
the shares of Common Stock to be outstanding upon the closing of the
offering, the shares offered hereby will be eligible for immediate sale in
the public market without restriction unless the shares are purchased by
"affiliates" of the Company within the meaning of Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The remaining
shares of Common Stock held by existing stockholders upon the closing of the
offering are "restricted securities" as that term is defined in Rule 144 under
the Securities Act. Restricted securities may be sold in the public market only
if registered or if they qualify for an exemption from registration under Rules
144, 144(k) or 701 promulgated under the Securities Act. The Company's directors
and officers and certain of its stockholders have agreed that they will not
sell, directly or indirectly, any Common Stock without the prior consent of the
representatives of the Underwriters for a period of 180 days from the date of
this Prospectus. Subject to these lock-up agreements and the provisions of Rules
144, 144(k) and 701, additional shares will be available for sale in the public
market (subject in the case of shares held by affiliates to compliance with
certain volume restrictions) as follows: (i) shares will be eligible for
sale prior to 180 days after the date of this Prospectus, (ii) shares will
be eligible for sale upon the expiration of lock-up agreements 180 days after
the date of this Prospectus and (iii) thereafter, shares will be eligible
for sale (in some cases, subject to volume limitations) from time to time after
the one-year holding period required by Rule 144 has elapsed. In addition, there
are outstanding options to purchase shares of Common Stock which will be
eligible for sale in the public market from time to time subject to vesting and
the expiration of lock-up agreements. In addition, certain stockholders,
representing approximately 9,305,070 shares of Common Stock, and certain
optionholders, with respect to an aggregate of 114 shares of Common Stock
issuable upon the exercise of stock options, have the right, subject to certain
conditions, to include their shares in future registration statements relating
to the Company's securities and/or to cause the Company to register certain
shares of Common Stock owned by them.

After the date of this Prospectus, the Company intends to file a Form S-8
registration statement under the Securities Act to register all shares of Common
Stock issuable under the Company's 1995 Stock Option Plan, 1998 Stock Plan, 1998
Employee Stock Purchase Plan and 1998 Directors' Option Plan. Such registration
statement is expected to become effective immediately upon filing, and shares
covered by that registration statement will thereupon be eligible for sale in
the public markets, subject to certain lock-up agreements and, in the case of
affiliates of the Company, Rule 144 volume limitations. See
"Management--Employee Benefit Plans," "Description of Capital
Stock--Registration Rights," "Shares Eligible for Future Sale" and
"Underwriting."

NO PRIOR PUBLIC MARKET; POSSIBLE STOCK PRICE VOLATILITY

Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for the
Common Stock will develop or be sustained after this offering. The initial
public offering price will be determined by negotiations among the Company and
the representatives of the

19
<PAGE>
Underwriters based on several factors and may not be indicative of the future
market price of the Common Stock after this offering. The market price of the
Company's Common Stock is likely to be highly volatile and may be subject to
significant fluctuations in response to actual or anticipated variations in
quarterly operating results and other factors, such as announcements of
technological innovations, new products or new contracts by the Company or its
competitors, conditions and trends in the software and other technology
industries, adoption of new accounting standards affecting the software
industry, changes in earning estimates or recommendations by securities
analysts, general market conditions or other events. In addition, the stock
market has also experienced extreme volatility that has particularly affected
the market prices of equity securities of many high technology companies and
that has often been unrelated or disproportionate to the operating performance
of such companies. Broad market fluctuations, as well as economic conditions
generally and in the software industry specifically, may result in a substantial
decline in the market price of the Company's Common Stock. There can be no
assurance that the market price for the Company's Common Stock will not decline
below the initial public offering price. In the past, following periods of
volatility in the market price of a particular company's securities, securities
class action litigation has often been brought against that company. There can
be no assurance that such litigation will not occur in the future with respect
to the Company. Such litigation could result in substantial costs and a
diversion of management's attention and resources, which could have a material
adverse effect upon the Company's business, operating results or financial
condition. See "Underwriting."

DILUTION; DIVIDEND POLICY

Investors participating in this offering will incur immediate and
substantial dilution of net tangible book value per share of $ from the
initial public offering price and may incur additional dilution upon the
exercise of outstanding stock options. See "Dilution."

The Company has never paid or declared any cash dividends on the Common
Stock or other securities and intends to retain any future earnings to finance
the development and expansion of its business. The Company does not anticipate
paying any cash dividends on its Common Stock in the foreseeable future.
Additionally, the Company's debt facilities contain covenants that restrict the
Company's ability to pay cash dividends. See "Dividend Policy."

20
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of
Common Stock offered hereby are estimated to be approximately $
(approximately $ if the Underwriters' over-allotment option is exercised in
full) assuming an initial public offering price of $ per share and after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company.

The primary purposes of this offering are to create a public market for the
Common Stock, to facilitate future access to public markets and to obtain
additional working capital. The Company expects to use the net proceeds of this
offering for working capital and other general corporate purposes, including the
repayment of outstanding notes payable which totaled $1,745,000 at March 31,
1998. A portion of the net proceeds may also be used for the acquisition of
businesses, products and technologies that are complementary to those of the
Company. The Company has no present plans, agreements or commitments and is not
currently engaged in any negotiations with respect to any such transactions.
Pending such uses, the net proceeds of this offering will be invested in
investment-grade, interest-bearing securities. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

In the event that the Underwriters' over-allotment option is exercised, the
Company will not receive any proceeds from the sale of the shares of Common
Stock offered by the Selling Stockholders.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock.
The Company currently expects to retain future earnings, if any, for use in the
operation and expansion of its business and does not anticipate paying any cash
dividends in the foreseeable future. The Company's debt facilities contain
restrictive covenants that limit the Company's ability to pay cash dividends or
make stock repurchases without the prior written consent of the lender. See
Notes 3 and 5 of Notes to Consolidated Financial Statements.

21
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1998, (i) on an actual basis, (ii) on a pro forma basis to reflect (A) the
filing of an amendment to the Company's Amended and Restated Certificate of
Incorporation to provide for authorized capital stock of 50,000,000 shares of
Common Stock and 5,000,000 shares of undesignated Preferred Stock and (B) the
conversion of all outstanding shares of Preferred Stock into 6,219,568 shares of
Common Stock immediately prior to the closing of this offering, and (iii) on
such pro forma basis as adjusted to reflect the sale by the Company of
shares of Common Stock offered hereby at an assumed initial public offering
price of $ per share and the application by the Company of the estimated net
proceeds therefrom, after deducting estimated underwriting discounts and
commissions and estimated offering expenses. See "Use of Proceeds." The
capitalization information set forth in the table below is qualified by the more
detailed Consolidated Financial Statements and Notes thereto included elsewhere
in this Prospectus and should be read in conjunction with such Consolidated
Financial Statements and Notes.

<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------
<S> <C> <C> <C>
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................................... $ 6,318 $ 6,318 $
---------- ----------- -----------
---------- ----------- -----------
Notes payable, less current portion......................................... 606 606
Stockholder's equity (1):
Convertible preferred stock, $0.001 par value; 26,540,194 shares
authorized; 12,600,525 shares issued and outstanding, actual; 5,000,000
shares authorized, no shares issued and outstanding, pro forma and pro
forma as adjusted........................................................ 13 -- --
Common stock, $0.001 par value; 35,000,000 shares authorized, 4,042,182
shares issued and outstanding, actual; 50,000,000 shares authorized,
10,261,750 shares outstanding, pro forma; 50,000,000 shares authorized,
shares issued and outstanding, pro forma as adjusted............ 4 10
Additional paid-in capital.................................................. 19,859 19,866
Deferred stock compensation................................................. (1,813) (1,813)
Accumulated deficit......................................................... (14,504) (14,504)
---------- ----------- -----------
Total stockholders' equity.............................................. 3,559 3,559
---------- ----------- -----------
Total capitalization.................................................. $ 4,165 $ 4,165 $
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

- ------------

(1) Excludes as of March 31, 1998: (i) 1,329,408 shares of Common Stock issuable
upon exercise of options outstanding under the Company's 1995 Stock Option
Plan at a weighted average exercise price of $0.27 per share and 189,298
shares of Common Stock reserved for future issuance thereunder and (ii)
27,650 shares of Common Stock issuable upon exercise of outstanding warrants
at a weighted average exercise price of $0.22 per share. Also excludes an
aggregate of 2.4 million shares of Common Stock reserved for future issuance
after March 31, 1998 under the Company's 1998 Stock Plan, 1998 Employee
Stock Purchase Plan and 1998 Director Option Plan. See "Management--
Employee Benefit Plans" and Note 5 of Notes to Consolidated Financial
Statements.

22
<PAGE>
DILUTION

The pro forma net tangible book value of the Company as of March 31, 1998,
after giving effect to the conversion of all outstanding shares of Preferred
Stock into Common Stock, was $3,559,000 or $0.35 per share of Common Stock. Pro
forma net tangible book value per share represents the Company's total tangible
assets less total liabilities, divided by the number of outstanding shares of
Common Stock on a pro forma basis. After giving effect to the sale of
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $ per share and the application by the Company of
the estimated net proceeds therefrom, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses, the Company's pro
forma net tangible book value at March 31, 1998 would have been $ or $ per
share of Common Stock. This represents an immediate increase in pro forma net
tangible book value of $ per share to existing stockholders and an immediate
dilution in pro forma net tangible book value of $ per share to new investors
purchasing shares of Common Stock in this offering. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $
Pro forma net tangible book value per share as of March 31, 1998........... $ 0.35
Increase in pro forma net tangible book value per share attributable to new
investors.................................................................
---------
Pro forma net tangible book value per share after offering...................
---------
Dilution per share to new investors.......................................... $
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1998,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by new investors purchasing shares in this offering
(at an assumed initial public offering price of $ per share and before
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........................... 10,261,750 % $ 17,540,000 % $ 1.71
New investors......................................
------------ ----- ------------- -----
Total.......................................... 100.0% $ 100.0%
------------ ----- ------------- -----
------------ ----- ------------- -----
</TABLE>

The foregoing computations assume no exercise of the Underwriters'
over-allotment option or of any outstanding stock options after March 31, 1998.
As of March 31, 1998, there were (i) 1,329,408 shares of Common Stock issuable
upon exercise of options outstanding under the Company's 1995 Stock Option Plan
at a weighted average exercise price of $0.27 per share and 189,298 shares of
Common Stock reserved for future issuance thereunder and (ii) 27,650 shares of
Common Stock issuable upon exercise of outstanding warrants at a weighted
average exercise price of $0.22 per share. Also excludes an aggregate of 2.4
million shares of Common Stock reserved for future issuance after March 31, 1998
under the Company's 1998 Stock Plan, 1998 Employee Stock Purchase Plan and 1998
Director Option Plan. To the extent that any shares are issued upon exercise of
options, warrants or rights that are presently outstanding or to be granted in
the future, or reserved for future issuance under the Company's stock plans,
there will be further dilution to new investors. See "Management--Employee
Benefit Plans" and Note 5 of Notes to Consolidated Financial Statements.

- ---------

(1) If the Underwriters' over-allotment option is exercised in full, sales by
the Selling Stockholders in this offering will reduce the number of shares
of Common Stock held by existing stockholders to or approximately %
of the total shares of Common Stock outstanding after this offering and will
increase the number of shares held by new investors to or approximately
% of the total shares of Common Stock outstanding after this offering.
See "Principal and Selling Stockholders."

23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for the period from
September 5, 1995 (inception) through December 31, 1995 and for, and as of the
end of, each of the years in the two-year period ended December 31, 1997, are
derived from the consolidated financial statements of NetGravity, Inc. and its
subsidiary, which consolidated financial statements have been audited by KPMG
Peat Marwick LLP, independent certified public accountants, and are included
elsewhere in this Prospectus. The consolidated balance sheet data as of December
31, 1995 is derived from audited consolidated financial statements of the
Company that are not included herein. The consolidated statements of operations
data for the three-month periods ended March 31, 1997 and 1998 and the
consolidated balance sheet data at March 31, 1998 are derived from unaudited
consolidated financial statements included elsewhere in this Prospectus. In the
opinion of management, the unaudited consolidated financial statements have been
prepared on the same basis as the audited consolidated financial statements and
contain all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the Company's results of operations for
such periods and financial condition at such dates. The results of operations
for the three months ended March 31, 1998 are not necessarily indicative of the
results to be expected for the full year or future periods. The selected
consolidated financial data set forth below is qualified in its entirety by, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED DECEMBER THREE MONTHS ENDED
SEPTEMBER 5, 1995 31, MARCH 31,
(INCEPTION) TO -------------------- --------------------
DECEMBER 31, 1995 1996 1997 1997 1998
----------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Software licenses................................... $ -- $ 1,262 2,901 $ 710 $ 775
Software upgrades................................... -- 107 1,123 185 402
Consulting and support.............................. -- 570 2,334 458 826
------- --------- --------- --------- ---------
Total revenues.................................... -- 1,939 6,358 1,353 2,003
------- --------- --------- --------- ---------
Cost of revenues:
Cost of software licenses........................... -- -- 76 7 15
Cost of consulting and support...................... -- 702 2,496 240 1,158
------- --------- --------- --------- ---------
Total cost of revenues............................ -- 702 2,572 247 1,173
------- --------- --------- --------- ---------
Gross profit...................................... -- 1,237 3,786 1,106 830
Operating costs and expenses:
Research and development............................ 39 1,764 3,033 678 996
Selling and marketing............................... 21 2,839 6,073 1,341 1,956
General and adminstrative........................... 131 1,315 1,552 241 708
------- --------- --------- --------- ---------
Total operating costs and expenses................ 191 5,918 10,658 2,260 3,660
------- --------- --------- --------- ---------
Loss from operations.............................. (191) (4,681) (6,872) (1,154) (2,830)
Other income (expense), net........................... (4) 54 (10) (6) 30
------- --------- --------- --------- ---------
Net loss.......................................... $ (195) $ (4,627) $ (6,882) $ (1,160) $ (2,800)
------- --------- --------- --------- ---------
------- --------- --------- --------- ---------
Basic and diluted net loss per share.................. $ (0.19) $ (2.19) $ (2.46) $ (0.55) $ (0.93)
Shares used in per share calculation(1)............... 1,006 2,111 2,799 2,121 3,025
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------- MARCH 31,
1995 1996 1997 1998
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)............................................ $ (69) $ (221) $ 2,222 $ 2,682
Total assets......................................................... 486 3,159 9,887 11,832
Notes payable, less current portion.................................. -- 682 727 606
Accumulated deficit.................................................. (195) (4,822) (11,704) (14,504)
Total stockholders' equity (deficit)................................. (12) (164) 2,851 3,559
</TABLE>

- ---------

(1) See Note 1 of Notes to Consolidated Financial Statements.

24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY CONTAINS FORWARD-LOOKING
STATEMENTS RELATING TO THE FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF
THE COMPANY, WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE
SET FORTH UNDER "RISK FACTORS," "BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

NetGravity, Inc. is the leading provider of online advertising and direct
marketing software solutions. The Company develops, markets and supports its
mission-critical AdServer family of software products, which together with its
extensive consulting and support capabilities, are designed to enhance the
effectiveness and efficiency of the entire advertising and direct marketing
supply chain. From inception (September 5, 1995) to December 31, 1995 (the
"Inception Period"), the Company was in the development stage, and its
activities primarily related to raising capital, recruiting personnel,
conducting research and development activities, purchasing operating assets, and
building the NetGravity identity. From January 1996 through March 31, 1998, the
Company began shipping products, built a consulting and support organization,
continued to invest in research and development, built domestic and
international sales organizations, expanded its marketing activities and
developed its general and administrative infrastructure.

To date, the Company has generated all of its revenues from the license and
related upgrade, consulting and support of its AdServer family of software
products. In March 1996, the Company's initial release, AdServer 1.0, became
generally available. Subsequently, the Company has had two major releases of its
AdServer products: AdServer 2.0 in October 1996 and AdServer 3.0 in June 1997.
The Company believes that its current AdServer family of software products and
software products in development, together with the related consulting and
support services, will continue to account for substantially all of its revenues
for the foreseeable future.

The Company records an account receivable and deferred revenue upon shipment
and invoicing of a software license to a customer. The Company recognizes
software license revenue upon completion of the product installation provided
that no significant vendor obligations exist, which the Company's management has
generally determined to occur at the point in time at which the customers begin
"serving ads" utilizing the Company's products. This methodology has been
applied consistently for all software license revenue since the inception of the
Company. A portion of the initial software product license fee is attributed to
the customer's right to receive at no additional charge significant software
upgrades released during the subsequent twelve months. Revenues attributable to
significant software upgrades are deferred and recognized ratably over the
period covered by the software license agreement, which is generally one year.
Revenue from consulting services are recognized as the services are performed.
Customer support revenue is deferred and recognized ratably over the period
covered by the customer support agreement, which is generally one year. In
October 1997, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") No. 97-2, SOFTWARE REVENUE RECOGNITION, which the
Company adopted, effective January 1, 1998. Such adoption had no material effect
on the Company's methods of recognizing revenue from its software licenses,
software upgrades, and consulting and support activities. See Note 1 of Notes to
Consolidated Financial Statements.

Pricing for AdServer products is based on the number of copies licensed to
the customer, scaled to provide discounts based on the overall size of the
system being licensed. Initial license sales include a one-year subscription
entitling the licensee to free upgrades of major releases of the product. The
software upgrade revenue is broken out separately for every license in
accordance with SOP 97-2, based on vendor specific objective evidence for the
upgrade element, and the revenue allocated to the upgrade element is recognized
over the agreement term. For subsequent years, customers subscribe on an annual
basis for the right to receive major product upgrades. The cost to subscribe to
the upgrade program is based on a percentage of the list price of software the
customer has licensed. Annual support contracts, which are generally purchased
in conjunction with the licensing of a product, are sold

25
<PAGE>
separately from the initial license for a fee, which is also based on a
percentage of the list price of the software. Support packages typically include
non-major product releases, on-line support and telephone support. Consulting
revenues consist of implementation services and training. Consulting is charged
at a per diem rate or on a fixed fee basis for a package of services.

The Company sells its products and services primarily through its direct
sales force and telesales organizations and maintains sales and support
organizations in North America, Europe and Asia Pacific. Indirect sales
channels, including resellers and web hosting providers, also sell the Company's
products. Indirect channels generally provide less revenue per license to the
Company since the channel partner usually receives discounts. Through March 31,
1998, revenues through indirect channels have not been material.

The Company's business has grown from inception through March 31, 1998, with
total revenues increasing from $1.9 million in the year ended December 31, 1996
to $6.4 million in the year ended December 31, 1997 and $2.0 million in the
three months ended March 31, 1998. However the Company has experienced net
losses over this entire period, and as of March 31, 1998 had an accumulated
deficit of $14.5 million. These losses resulted from significant costs incurred
in the development and sale of the Company's products and services. During this
period, the number of Company employees increased from 10 at December 31, 1995
to 94 at March 31, 1998. The Company currently expects to expand its sales and
marketing operations, to continue international expansion, to increase its
investment in product development, to further expand its consulting and support
organizations and to improve its internal operating and financial infrastructure
in support of the Company's business plan, all of which will increase operating
expenses. As a result, the Company expects to incur additional losses and
continued negative cash flow from operations for the foreseeable future, and
such losses are anticipated to increase significantly from current levels.

The Company has recorded deferred stock compensation expense of $1,784,000
for the year ended December 31, 1997 and $390,000 for the three months ended
March 31, 1998 as a result of stock options granted during 1997 and the first
three months of 1998. Amortization of deferred stock compensation expense of
approximately $115,000 was recognized in 1997, and $246,000 was recognized in
the three months ended March 31, 1998. Amortization of deferred stock
compensation expense is allocated to costs of consulting and support and to all
operating expense lines identified on the statement of operations. Deferred
stock compensation expense is amortized over the life of the options, generally
four years. As a result, amortization of deferred stock compensation expense
will adversely impact the Company's operating results for the next four years.

The Company believes that period-to-period comparisons of its operating
results are not meaningful and should not be relied upon as predictive of future
performance. The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in the early stage
of development, particularly companies in new and rapidly evolving markets.
There can be no assurance that the Company will be successful in addressing such
risks and difficulties. In addition, although NetGravity has experienced
significant revenue growth recently, there can be no assurance that the Company
will increase or even sustain its current level of revenues or that the Company
will achieve profitability in the future. See "Risk Factors--Limited Operating
History; History of Losses; Anticipated Continued Losses," "--Potential
Fluctuations in Quarterly Operating Results; Seasonality; Possible Price
Erosion" and "--Management of Growth; Risks of Potential Future Acquisitions."

26
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth consolidated statement of operations data for
the periods indicated as a percentage of total revenues:

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
---------------- ----------------
1996 1997 1997 1998
------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues:
Software licenses......................................... 65.1% 45.6% 52.5% 38.7%
Software upgrades......................................... 5.5 17.7 13.7 20.1
Consulting and support.................................... 29.4 36.7 33.8 41.2
------- ------- ------- -------
Total revenues.......................................... 100.0 100.0 100.0 100.0
------- ------- ------- -------
Cost of revenues(1):
Cost of software licenses(2).............................. -- 1.2 0.5 0.8
Cost of consulting and support(3)......................... 36.2 39.3 17.7 57.8
------- ------- ------- -------
Total cost of revenues.................................. 36.2 40.5 18.2 58.6
------- ------- ------- -------
Gross margin............................................ 63.8 59.5 81.7 41.4
Operating costs and expenses:
Research and development.................................. 91.0 47.7 50.1 49.7
Selling and marketing..................................... 146.4 95.5 99.1 97.7
General and administrative................................ 67.8 24.4 17.8 35.3
------- ------- ------- -------
Total operating costs and expenses...................... 305.2 167.6 167.0 182.7
------- ------- ------- -------
Loss from operations.................................... (241.4) (108.1) (85.3) (141.3)
Other income (expense), net................................. 2.8 (0.2) (0.4) 1.5
------- ------- ------- -------
Net loss................................................ (238.6)% (108.2)% (85.7)% (139.8)%
------- ------- ------- -------
------- ------- ------- -------
</TABLE>

- ---------

(1) There are no material costs of revenues associated with software upgrades.

(2) As a percentage of software licenses revenues, cost of software licenses was
0.0%, 2.6%, 1.0% and 1.9% in the years ended December 31, 1996 and 1997 and
the three months ended March 31, 1997 and 1998, respectively.

(3) As a percentage of consulting and support revenues, cost of consulting and
support was 123.2%, 106.9%, 52.4% and 140.2% in the years ended December 31,
1996 and 1997 and the three months ended March 31, 1997 and 1998,
respectively.

REVENUES

The Company's total revenues increased from $1.4 million in the three months
ended March 31, 1997 to $2.0 million in the three months ended March 31, 1998.
Total revenues increased from $1.9 million in 1996 to $6.4 million in 1997. The
Company had no revenues in the Inception Period. International revenues,
primarily comprised of export revenues, as a percentage of total revenues were
0% and 29.3% in the three months ended March 31, 1997 and March 31, 1998,
respectively; and 0% and 7.7% in 1996 and 1997, respectively. Growth in
international revenues in all periods was attributable to expanded sales and
marketing efforts overseas and the opening of a European regional office in
April 1997. The increase in international revenues in the last three months of
1997 and the first three months of 1998 more than offset a decline in North
American revenues in each of those quarters. The decline in North American
revenues in those periods was primarily attributable to increased focus on
international revenues, dedication of resources in North America to
implementation issues associated with the

27
<PAGE>
release of AdServer 3.0 and insufficient North American sales personnel. No
customer accounted for more than 10% of total revenues in the three months ended
March 31, 1997 or 1998 or in the years ended December 31, 1996 or 1997.

SOFTWARE LICENSES. Software licenses revenues increased from $710,000 in
the three months ended March 31, 1997 to $775,000 in the three months ended
March 31, 1998, and increased from $1.3 million in 1996 to $2.9 million in 1997.
The increase in each period was attributable to an increase in the number of
AdServer Enterprise licenses sold and the introduction of AdServer Network in
March 1997. The Company anticipates that revenues attributable to licenses of
its AdServer Network product will increase as a percentage of total software
licenses revenues in future periods. The percentage of the Company's total
revenues attributable to software licenses revenues decreased from 52.5% in the
three months ended March 31, 1997 to 38.7% in the three months ended March 31,
1998, and decreased from 65.1% in 1996 to 45.6% in 1997. The decrease in each
period as a percentage of total revenues was primarily a result of increased
demand for consulting services and the increased number of customers
participating in software upgrade and support plans. Because software upgrades
revenues and consulting and support revenues are, to a large extent, a function
of software licenses revenues, the Company's future operating results will be
substantially dependent on growth of software licenses revenues, and the failure
to increase software licenses revenues would likely have a material adverse
effect on the Company's business, results of operations and financial condition.

SOFTWARE UPGRADES. Software upgrades revenues increased from $185,000 in
the three months ended March 31, 1997 to $402,000 in the three months ended
March 31, 1998, and increased from $107,000 in 1996 to $1.1 million in 1997. The
increase in each period was a result of software upgrades being provided to a
larger installed customer base, which more than offset reductions in software
upgrades pricing during these periods. The percentage of the Company's total
revenues attributable to software upgrades revenues increased from 13.7% in the
three months ended March 31, 1997 to 20.1% in the three months ended March 31,
1998, and from 5.5% in 1996 to 17.7% in 1997.

CONSULTING AND SUPPORT. Consulting and support revenues increased from
$458,000 for the three months ended March 31, 1997 to $826,000 for the three
months ended March 31, 1998, and increased from $570,000 in 1996 to $2.3 million
in 1997. The increase in each period was primarily as a result of the increased
demand for consulting services, expansion into Europe and Asia, the larger
installed customer base, and customers electing to renew their support program.
The percentage of the Company's total revenues attributable to consulting and
support revenues increased from 33.8% for the three months ended March 31, 1997
to 41.2% for the three months ended March 31, 1998, and increased from 29% in
1996 to 37% in 1997.

COST OF REVENUES

Gross margins decreased from 81.7% in the three months ended March 31, 1997
to 41.5% in the three months ended March 31, 1998 as a result of the increase in
consulting and support revenues as a percentage of total revenues and the
increased staffing levels in the consulting and support organizations. Gross
margins decreased from 63.8% in 1996 to 59.5% in 1997. There were no costs of
revenues in 1995. There are no material costs of revenues associated with
software upgrades revenues.

COST OF SOFTWARE LICENSES. Cost of software licenses consists of royalties
paid to third parties for licensed technology. Cost of software licenses was
$7,000 and $15,000 in the three months ended March 31, 1997 and 1998,
respectively, and $0 and $76,000 in 1996 and 1997, respectively. As a percentage
of software licenses revenues, cost of software licenses was 1.0% and 1.9% in
the three months ended March 31, 1997 and 1998, respectively, and 0.0% and 2.6%
in 1996 and 1997, respectively.

COST OF CONSULTING AND SUPPORT. Cost of consulting and support consists
primarily of personnel-related costs incurred in providing consulting, support
and training to customers. The cost of consulting and support increased from
$240,000 in the three months ended March 31, 1997 to $1.2 million in the three
months ended March 31, 1998, and increased from $702,000 in 1996 to $2.5 million
in 1997. The increase in each period was primarily due

28
<PAGE>

to an increase in personnel as the Company increased staff to meet customer
demand and due to travel costs associated with the increased volume of service
provided by the consulting and support organizations. The Company expects that
the cost of consulting and support will continue to increase in absolute dollar
amounts in future periods as the Company continues to hire additional
consulting, training and customer support personnel. Cost of consulting and
support increased as a percentage of consulting and support revenues from 52.4%
in the three months ended March 31, 1997 to 140.2% in the three months ended
March 31, 1998 due to a significant increase in consulting and support
personnel. Cost of consulting and support as a percentage of consulting and
support revenues decreased from 123.2% in 1996 to 106.8% in 1997, primarily due
to better utilization of consulting and support personnel associated with an
increased customer base.

Gross margins may be impacted by the mix of products sold by the Company,
the mix of software licenses revenues, software upgrades revenues and consulting
and support revenues, the mix of international and North American revenues, and
the mix of distribution channels used by the Company. The Company typically
realizes higher gross margins on software upgrades revenues than on software
licenses revenues, substantially higher gross margins on software licenses
revenues than on consulting and support revenues, and higher gross margins on
direct sales than on indirect sales. Shifts in mix towards lower margin revenues
or sales through indirect channels would adversely impact the Company's overall
gross margin and could materially adversely impact the Company's operating
results.

RESEARCH AND DEVELOPMENT

Research and development expenses consist primarily of compensation and
consulting expenses and related equipment. To date, the Company has not
capitalized any such development costs under Statement of Financial Accounting
Standards ("SFAS") No. 86; all research and development costs have been expensed
as incurred. Research and development expenses increased from $678,000 in the
three months ended March 31, 1997 to $996,000 in the three months ended March
31, 1998, and increased from $39,000 in the Inception Period to $1.8 million in
1996 to $3.0 million in 1997. The increase in absolute dollars in all periods
was primarily due to the increased personnel and related costs associated with
enhancements of existing products and development of new products. Research and
development costs decreased as a percentage of total revenues from 50.1% in the
three months ended March 31, 1997 to 49.7% in the three months ended March 31,
1998, and decreased from 91.0% in 1996 to 47.7% in 1997. The Company believes
that continued investment in research and development is critical to attaining
its strategic objectives and, as a result, expects research and development
expenses to increase significantly in absolute dollars in future periods.

SELLING AND MARKETING

Selling and marketing expenses consist primarily of salaries, commissions,
advertising expenses, trade show expenses, seminars and costs of marketing
materials. Selling and marketing expenses increased from $1.3 million in the
three months ended March 31, 1997 to $2.0 million in the three months ended
March 31, 1998, and increased from $21,000 in the Inception Period to $2.8
million in 1996 to $6.1 million in 1997. The increase in absolute dollars in
each period was due primarily to the increase in sales personnel and commissions
and costs related to the continued development and implementation of the
Company's marketing and branding campaigns. Selling and marketing expenses
decreased as a percentage of total revenues from 99.1% in the three months ended
March 31, 1997 to 97.7% in the three months ended March 31, 1998, and decreased
from 146.4% in 1996 to 95.5% in 1997. The Company expects selling and marketing
expenses to increase significantly in absolute dollars in future periods, as the
Company hires additional personnel, expands into new markets and continues to
promote the NetGravity brand.

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of salaries and
related costs for the Company's executive, administrative, finance and human
resources personnel, support services and professional services fees. General
and administrative expenses increased from $241,000 in the three months ended
March 31, 1997 to

29
<PAGE>

$708,000 in the three months ended March 31, 1998, and increased from $131,000
in the Inception Period to $1.3 million in 1996 to $1.6 million in 1997. The
increase in absolute dollars in each period was primarily a result of increased
personnel, professional service fees and facility expenses necessary to support
the Company's increased scale of operations. General and administrative expenses
as a percentage of total revenues increased from 17.8% in the three months ended
March 31, 1997 to 35.3% in the three months ended March 31, 1998, primarily as a
result of expansion of international operations. General and administrative
expenses decreased as a percentage of total revenues from 67.8% in 1996 to 24.4%
in 1997. The Company expects general and administrative expenses to increase in
absolute dollars in future periods as the Company expands its staff, incurs
additional costs related to expansion of its operations, and is subject to the
requirements of being a publicly traded company.

INCOME TAXES

As of December 31, 1997, the Company had a net operating loss carryforward
for federal and state income tax purposes of approximately $9.8 million. In
addition, the Company had federal and state research and development credit
carryforwards of approximately $145,000 and $120,000, respectively. The
Company's federal net operating loss and research and development credit
carryforwards will expire in the years 2010 through 2012, if not utilized. The
Company's state net operating loss carryforwards will expire in the year 2003.
The state research and development credit can be carried forward indefinitely.

As of December 31, 1997, NetGravity Europe Limited had a net operating loss
carryforward in the United Kingdom of approximately $600,000, which can be used
to offset NetGravity Europe Limited's future income. The United Kingdom net
operating loss carryforward can be carried forward indefinitely.

Federal and state tax laws impose substantial restrictions on the
utilization of net operating loss and tax credit carryforwards in the event of
an "ownership change" as defined in Section 382 of the Internal Revenue Code of
1986, as amended. The Company has not yet determined whether such an ownership
change has occurred.

The Company has not recognized any benefit from the future use of such loss
carryforwards because management's evaluation of all the available evidence in
assessing the realizability of the tax benefits of such loss carryforwards
indicates that the underlying assumptions of future profitable operations
contain risks that do not provide sufficient assurance to recognize such tax
benefits currently. See Note 4 of Notes to Consolidated Financial Statements.

30
<PAGE>

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited consolidated statement of
operations data for each of the nine quarters ended March 31, 1998, as well as
such data expressed as a percentage of the Company's total revenues for the
periods indicated. In the opinion of management, this information has been
prepared substantially on the same basis as the audited consolidated financial
statements appearing elsewhere in this Prospectus, and all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the unaudited consolidated
quarterly results of operations data. The consolidated quarterly data should be
read in conjunction with the audited Consolidated Financial Statements of the
Company and the Notes thereto appearing elsewhere in this Prospectus. The
operating results for any quarter should not be considered indicative of results
of any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
MAR. 31 JUNE 30 SEP. 30 DEC. 31
1996 1996 1996 1996
-------- ------- ------- -------
(IN THOUSANDS, EXCEPT AS A
PERCENTAGE OF TOTAL REVENUES)
<S> <C> <C> <C> <C>
Revenues:
Software licenses............................. $ -- $ 172 $ 597 $ 493
Software upgrades............................. -- 1 16 90
Consulting and support........................ 11 60 155 344
-------- ------- ------- -------
Total revenues.............................. 11 233 768 927
-------- ------- ------- -------
Costs of revenues(1):
Cost of software licenses..................... -- -- -- --
Cost of consulting and support................ -- 217 274 211
-------- ------- ------- -------
Total cost of revenues...................... -- 217 274 211
-------- ------- ------- -------
Gross profit................................ 11 16 494 716
Operating costs and expenses:
Research and development...................... 261 333 521 649
Selling and marketing......................... 103 568 925 1,243
General and adminstrative..................... 270 181 254 610
-------- ------- ------- -------
Total operating costs and expenses.......... 634 1,082 1,700 2,502
-------- ------- ------- -------
Loss from operations........................ (623 ) (1,066 ) (1,206 ) (1,786)
Other income (expense), net..................... 17 24 16 (2)
-------- ------- ------- -------
Net loss.................................... $ (606 ) $(1,042) $(1,190) $(1,788)
-------- ------- ------- -------
-------- ------- ------- -------

Revenues:
Software licenses............................. -- 73.8% 77.7% 53.2%
Software upgrades............................. -- 0.4 2.1 9.7
Consulting and support........................ 100.0% 25.8 20.2 37.1
-------- ------- ------- -------
Total revenues.............................. 100.0 100.0 100.0 100.0
-------- ------- ------- -------
Cost of revenues(1):
Cost of software licenses(2).................. -- -- -- --
Cost of consulting and support(3)............. -- 93.1 35.7 22.8
-------- ------- ------- -------
Total cost of revenues...................... -- 93.1 35.7 22.8
-------- ------- ------- -------
Gross profit................................ 100.0 6.9 64.3 77.2
Operating costs and expenses:
Research and development...................... 2,372.7 142.9 67.8 70.0
Selling and marketing......................... 936.4 243.8 120.4 134.1
General and administrative.................... 2,454.5 77.7 33.1 65.8
-------- ------- ------- -------
Total operating costs and expenses.......... 5,763.6 464.4 221.3 269.9
-------- ------- ------- -------
Loss from operations........................ (5,663.6) (457.5 ) (157.0 ) (192.7)
Other income (expense), net..................... 154.5 10.3 2.0 (0.2)
-------- ------- ------- -------
Net loss.................................... (5,509.1)% (447.2 )% (155.0 )% (192.9)%
-------- ------- ------- -------
-------- ------- ------- -------

MAR. 31 JUNE 30 SEP. 30 DEC. 31 MAR. 31
1997 1997 1997 1997 1998
------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses............................. $ 710 $ 665 $ 824 $ 702 $ 775
Software upgrades............................. 185 266 303 369 402
Consulting and support........................ 458 470 614 792 826
------- ------- ------- ------- -------
Total revenues.............................. 1,353 1,401 1,741 1,863 2,003
------- ------- ------- ------- -------
Costs of revenues(1):
Cost of software licenses..................... 7 21 7 41 15
Cost of consulting and support................ 240 513 728 1,015 1,158
------- ------- ------- ------- -------
Total cost of revenues...................... 247 534 735 1,056 1,173
------- ------- ------- ------- -------
Gross profit................................ 1,106 867 1,006 807 830
Operating costs and expenses:
Research and development...................... 678 782 677 896 996
Selling and marketing......................... 1,341 1,410 1,558 1,764 1,956
General and adminstrative..................... 241 353 310 648 708
------- ------- ------- ------- -------
Total operating costs and expenses.......... 2,260 2,545 2,545 3,308 3,660
------- ------- ------- ------- -------
Loss from operations........................ (1,154 ) (1,678 ) (1,539 ) (2,501 ) (2,830 )
Other income (expense), net..................... (6 ) (8 ) (27 ) 31 30
------- ------- ------- ------- -------
Net loss.................................... $(1,160) $(1,686) $(1,566) $(2,470) $(2,800)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Revenues:
Software licenses............................. 52.5% 47.5% 47.3% 37.7% 38.7%
Software upgrades............................. 13.7 19.0 17.4 19.8 20.1
Consulting and support........................ 33.8 33.5 35.3 42.5 41.2
------- ------- ------- ------- -------
Total revenues.............................. 100.0 100.0 100.0 100.0 100.0
------- ------- ------- ------- -------
Cost of revenues(1):
Cost of software licenses(2).................. 0.5 1.5 0.4 2.2 0.7
Cost of consulting and support(3)............. 17.7 36.6 41.8 54.5 57.8
------- ------- ------- ------- -------
Total cost of revenues...................... 18.2 38.1 42.2 56.7 58.5
------- ------- ------- ------- -------
Gross profit................................ 81.7 61.9 57.8 43.3 41.5
Operating costs and expenses:
Research and development...................... 50.1 55.8 38.9 48.1 49.7
Selling and marketing......................... 99.1 100.6 89.5 94.7 97.7
General and administrative.................... 17.8 25.2 17.8 34.8 35.3
------- ------- ------- ------- -------
Total operating costs and expenses.......... 167.0 181.6 146.2 177.6 182.7
------- ------- ------- ------- -------
Loss from operations........................ (85.3 ) (119.7 ) (88.4 ) (134.3 ) (141.2 )
Other income (expense), net..................... (0.4 ) (0.6 ) (1.6 ) 1.7 1.5
------- ------- ------- ------- -------
Net loss.................................... (85.7 )% (120.3 )% (90.0 )% (132.6 )% (139.7 )%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

- ------------

(1) There are no material costs of revenues associated with software upgrades
revenues.

(2) As a percentage of software licenses revenues, costs of software licenses
have been 0.0%, 0.0%, 0.0%, 0.0%, 1.0%, 3.2%, 0.8%, 5.8% and 1.9%,
respective to the quarters presented chronologically above.

(3) As a percentage of consulting and support revenues, costs of consulting and
support have been 0.0%, 361.7%, 176.8%, 61.3%, 52.4%, 109.1%, 118.6%, 128.2%
and 140.2%, respective to the quarters presented chronologically above.

31
<PAGE>

The Company's total revenues have increased in each quarter presented. The
increases have been generally due to increased acceptance of the Company's
AdServer family of products, expansion of the Company's direct sales force, the
introduction of AdServer Network in April 1997 and increased software upgrades
and consulting and support revenues as the installed customer base has grown.
Total costs of revenues have generally increased in absolute dollars over the
quarters presented due to the Company's increased staffing in customer support,
consulting and training. Cost of revenues as a percentage of total revenues has
increased every quarter since the three months ended March 31, 1997 to the three
months ended March 31, 1998 as a result of the increased percentage of
consulting and support revenues over this period of time. Total operating
expenses have generally increased in absolute dollar amounts over the quarters
shown due to the Company's increased staffing in research and development, sales
and marketing and general and administrative functions.

FACTORS AFFECTING OPERATING RESULTS

The Company's results of operations may fluctuate significantly in the
future as a result of a variety of factors, many of which are beyond the
Company's control. These factors include: (i) varying demand for the Company's
products and services, (ii) the Company's success in addressing new and related
market opportunities, (iii) the introduction of new or enhanced online
advertising or direct marketing solutions by the Company or its competitors,
(iv) changes in the market demand for online advertising and direct marketing
software, (v) market acceptance of new products and services offered by the
Company, (vi) the timing and size of individual license transactions, (vii) the
sales and implementation cycles of the Company's customers, (viii) the addition
or loss of customers, (ix) the mix between software licenses, software upgrades
and consulting and support revenues, (x) the mix between domestic and
international revenues, (xi) the amount of advertising budgets committed to
online advertising and direct marketing activities by the Company's current and
prospective customers, (xii) price changes or changes in pricing models by the
Company or its competitors, (xiii) the mix of distribution channels through
which the Company's products are sold, (xiv) increasing complexity of the
Company's products resulting in higher costs to develop and maintain, which may
not be recouped by increased prices, (xv) the loss of key employees and the time
required to train new hires, particularly sales, consulting and customer support
personnel, (xvi) the ability to penetrate markets outside of North America,
(xvii) the incurrence of costs relating to possible acquisitions of technology
or businesses, (xviii) seasonality related to slower European sales in the third
quarter and a shorter implementation period in the fourth quarter, (xix) the
amount and timing of capital expenditures and other costs relating to the
expansion of the Company's operations, and (xx) general economic conditions.

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<PAGE>

research and development, increase its sales and marketing operations, develop
new distribution channels, improve its operational and financial systems and
broaden its customer support capabilities. To the extent that such expenses
precede or do not correspond with increased revenues, the Company's business,
results of operations or financial condition could be materially adversely
affected and net losses in a given quarter would be even greater than expected.

Due to all of the foregoing factors, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Furthermore it is possible that in some future quarters the Company's results of
operations may fall below the expectations of securities analysts and investors.
In such event, the trading price of the Company's Common Stock will likely be
materially and adversely affected. See "Risk Factors--Potential Fluctuations in
Quarterly Operating Results; Seasonality; Possible Price Erosion."

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations primarily
through the private sale of equity securities and, to a lesser extent, bank and
investor borrowings. As of March 31, 1998, the Company had approximately $6.3
million of cash and cash equivalents.

The Company has a revolving credit facility with a bank in the amount of
$1.0 million which bears interest at the prime rate (8.50% as of December 31,
1997) plus 0.75%, and expires in May 1998. Borrowings are limited to the lesser
of $1.0 million or 70% of the net amount of eligible accounts receivable and are
secured by the Company's accounts receivable. As of December 31, 1997 and March
31, 1998, borrowings under this credit facility were $655,000 and $655,000,
respectively. The Company has an equipment line of credit with the same bank
that provides up to $1.0 million, bears interest at the prime rate, and expires
in June 2000. The line of credit is secured by the Company's fixed assets. As of
December 31, 1996 and 1997, and March 31, 1998, $682,000, $584,000 and $524,000,
respectively, had been advanced under this agreement with the principal amount
due in 30 monthly installments of $19,467 beginning December 31, 1997. The
Company also has a second equipment line of credit with the same bank that
provides up to $1.2 million, bears interest at the prime rate, and expires in
June 2000. The line of credit is secured by the Company's fixed assets. As of
December 31, 1997 and March 31, 1998, $628,000 and $566,000, respectively, had
been advanced under this agreement with the principal amount due in 30 monthly
installments of $20,933 beginning December 31, 1997. As of December 31, 1997 and
March 31, 1998, the Company was not in compliance with certain financial
covenants on all of the aforementioned credit facilities, and the Company has
received a waiver of such non-compliance.

Net cash used in operating activities was $1.1 million and $2.1 million in
the three months ended March 31, 1997 and 1998, respectively, and was $146,000,
$3.3 million and $5.1 million in the Inception Period and in 1996 and 1997,
respectively. In each period, cash used by operating activities was primarily a
result of a net loss.

Net cash used in investing activities was $2.7 million and $358,000 in the
three months ended March 31, 1997 and 1998, respectively, and was $62,000,
$854,000 and $1.2 million in the Inception Period and in 1996 and 1997,
respectively. Cash used in investing activities in each period was primarily
related to purchases of property and equipment, except for the three months
ended March 31, 1997, in which cash used in investing activities related
primarily to short-term investments.

Net cash provided by financing activities of $4.5 million and $3.1 million
in the three months ended March 31, 1997 and 1998, respectively, was primarily
attributable in each period to net proceeds from the issuance of Preferred
Stock. Net cash provided by financing activities of $633,000 for the Inception
Period consisted primarily of $450,000 in bank borrowings and $183,000 from the
issuance of Common Stock. Net cash provided by financing activities of $4.7
million for the year ended December 31, 1996 primarily consisted of net proceeds
of $4.4 million from the issuance of Preferred Stock. Net cash provided by
financing activities of $10.8 million for the year ended December 31, 1997
primarily consisted of net proceeds of $9.7 million from the issuance of
Preferred Stock and bank borrowings of $1.2 million on an equipment line of
credit and an accounts receivable line.

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<PAGE>

The Company's deferred revenue balance includes deferred software licenses
revenues and revenues attributable to uncompleted consulting engagements, as
well as the unamortized portion of the revenues from software upgrades and
support contracts. The Company records an accounts receivable and deferred
revenue upon shipment and invoicing of a software license to a customer. The
Company's accounts receivable balance is relatively large in comparison to
quarterly and annual revenues because the Company generally recognizes revenue
from the licensing of software later than shipment and invoicing. Further, the
Company's deferred revenue balance or changes therein may not be indicative of
changes in the ordering patterns of customers or the Company's backlog.

Although the Company has no other material commitments other than its
facilities leases (see Note 6 of Notes to Consolidated Financial Statements),
management anticipates that it will experience an increase in its capital
expenditures and lease commitments consistent with its anticipated growth in
operations, infrastructure and personnel. The Company expects that capital
expenditures for 1998 will be at least $2.0 million. In particular, the Company
anticipates incurring capital expenditures in connection with its expansion of
its California, New York and Asia facilities in 1998, and its Europe facilities
in 1999. The Company currently anticipates that it will continue to experience
significant growth in its operating expenses for the foreseeable future and that
its operating expenses will be a material use of the Company's cash resources.
The Company believes that the net proceeds of the offering, together with its
existing cash and cash equivalents and available bank borrowings, will be
sufficient to meet its anticipated cash needs for working capital and capital
expenditures for at least the next twelve months.

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<PAGE>
BUSINESS

THE FOLLOWING DISCUSSION OF THE COMPANY'S BUSINESS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE
SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

NetGravity is the leading provider of online advertising and direct
marketing software solutions. A pioneer in the online advertising management
software market, the Company believes that it was the first company to provide
such commercial software to major online content publishers and has recently
expanded into the market for online direct marketing software solutions. The
Company develops, markets and supports its mission-critical AdServer family of
software products which, together with its full range of professional services
and support capabilities, are designed to enhance the effectiveness and
efficiency of each constituent in the online advertising and direct marketing
supply chain: merchants (vendors of products and services), advertising agencies
and content publishers (including advertising networks). In particular, AdServer
is designed to enable customers to increase their revenue from online
advertising and direct marketing by improving response rates through consumer
targeting and to enable customers to reduce their administrative expenses by
automating certain advertising and direct marketing business processes. The
Company markets and sells its products and services primarily through its field
sales and telesales organizations and maintains sales and support operations in
North America, Europe and Asia Pacific. To date, the Company has sold its
software and services to over 225 customers, including 37 of the content
publishers listed in CMR's Interwatch (formerly Jupiter's AdSpend) list of the
top 100 revenue-generating online content publishers for the eight months ended
August 31, 1997. The Company's customers include @Home Network, CNN Interactive,
E*TRADE, J. Walter Thompson, Netscape Communications, ONSALE, Real Cities
(Knight-Ridder New Media), Time Inc. New Media, Virgin Net and WhoWhere?.

INDUSTRY BACKGROUND

The competitive nature of the global marketplace requires merchants to
continually seek out and obtain new customers while preserving their
relationships with existing customers. Historically, merchants have communicated
with consumers through advertising in traditional media (such as print,
television and radio) and through traditional direct marketing channels (such as
telemarketing and direct mail) to establish and maintain their brand identities,
introduce new products, announce improved product features and target offers to
potential and current customers. International Data Corporation ("IDC") has
estimated that $175 billion would be spent on traditional media advertising in
the United States during 1997. The Direct Marketing Association has estimated
that $153 billion would be spent on direct marketing in the United States during
1997.

ADVERTISING AND DIRECT MARKETING SUPPLY CHAIN. The traditional advertising
and direct marketing industries together can be viewed as a supply chain with
three primary constituents: merchants (vendors of products and services),
advertising agencies and content publishers (including advertising networks). As
the driving force in the supply chain, merchants seek to increase their sales
and brand awareness by targeting advertisements and offers to current and
prospective consumers of their products and services. To build relationships
with new and existing customers, merchants work with advertising agencies to
purchase advertising space targeted at the types of consumers that the merchants
desire. Advertising agencies, in turn, identify and secure advertising space
from content publishers that meets the merchants' criteria. Content publishers,
such as magazines, newspapers, radio stations and television programs, attract
audiences of consumers by offering them compelling entertainment and information
and deliver these audiences to merchants. Established, larger content publishers
generally work directly with advertising agencies in order to retain greater
control over their advertising inventories, which, in turn, allows them to
maintain and enhance the long-term value of their advertising space to
advertising agencies and merchants. Smaller, less established content publishers
generally work with advertising agencies through advertising representatives or
networks, which provide these content publishers with an outsourced sales force
for their

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<PAGE>
advertising space. As depicted below, advertising and direct marketing
expenditures flow down the supply chain from merchants to advertising agencies
and then to content publishers. In turn, audiences of consumers attracted by
content publishers flow up to merchants as prospective customers.

ADVERTISING AND DIRECT MARKETING SUPPLY CHAIN

[GRAPHIC: SUPPLY CHAIN]

GROWTH OF THE WEB AND WEB COMMERCE. IDC estimates that by the end of 1998
there will be over 51 million users of the World Wide Web (the "Web") in the
United States and over 97 million users worldwide. IDC projects that, by the end
of 2001, the number of Web users will increase to over 106 million in the United
States and over 227 million worldwide. The Company believes that the number of
Web users and the amount of time users spend on the Web will continue to
increase as Internet access becomes more widely available, as Internet bandwidth
and reliability are enhanced and as Internet content improves and becomes more
multimedia intensive.

Because online transactions can be faster, less expensive and more
convenient than transactions conducted via traditional means, a growing number
of consumers are transacting business over the Web. Examples of such
transactions include buying consumer goods, trading securities, purchasing
airline tickets and paying bills. Jupiter Communications has estimated that 27%
of adult Web users made online purchases in 1997 and that 50% of adult Web users
will make online purchases in 2000. IDC estimates that purchases of goods and
services over the Internet will increase from $32.4 billion in 1998 to $237.2
billion in 2001. The Company believes that as electronic commerce expands,
advertisers and direct marketers will increasingly seek to use the Web to locate
customers, advertise their products and services and facilitate transactions.

ONLINE ADVERTISING AND DIRECT MARKETING. The Web continues to emerge as a
promising new medium for advertisers due to the growth in the number of Web
users, the attractive demographic profiles of Web users, the ability to quickly
gather response data and other feedback, the interactive nature of the Web, the
potential for reduced costs-per-transaction, the Web's global reach and a
variety of other factors. The Web provides advertisers with the opportunity to
cost-effectively reach broad, global audiences and to target their advertising
based on

36
<PAGE>

consumers' demographic characteristics, specific interests and geographic
location. Online advertising also has the potential to allow advertisers to
measure, in real time, the number of times that a particular advertisement has
been viewed, the responses to the advertisement and certain characteristics of
the viewers of the advertisement. In addition, the interactive nature of the Web
gives advertisers the potential to establish dialogues and one-on-one
relationships with consumers, to receive direct feedback on their advertising
and to quickly refine their advertising based on such feedback. Accordingly, the
Company believes that the Web has the potential to become a more effective and
efficient means for advertisers and direct marketers to reach their target
audiences as compared to traditional media.

The unique characteristics of online advertising, combined with the growth
in the number of Internet users and their attractive demographic profiles, have
led to a significant increase in online advertising. IDC has estimated that
online advertising in the United States would increase from $551 million in 1997
to $4.0 billion in 2001, representing a 64% compounded annual growth rate.
Historically, the leading online advertisers have generally been technology
companies, Internet search engines and Web content publishers. However, many of
the largest advertisers on traditional media, including mass marketers such as
consumer products companies and automobile manufacturers, have recently expanded
their use of online advertising. The Company believes that online advertising
will become an increasing component of such merchants' advertising budgets and
that this trend will drive demand for sophisticated online advertising and
direct marketing solutions.

Because highly targeted product offers can be made to consumers at their
personal computers, the Company believes that the Internet represents an
attractive new medium for direct marketing, which has traditionally been
conducted through direct mail and telemarketing. The success of a direct
marketing campaign is generally measured by either an increase in response rate
(e.g., number of leads, sales or other transactions as a percentage of
impressions viewed) or a reduction in cost-per-transaction. The Internet has the
potential to enable direct marketers to increase response rates and reduce
cost-per-transaction by targeting and delivering direct marketing campaigns to
consumers based on their specific demographics, characteristics and interests.
Jupiter Communications
estimates that expenditures on online direct marketing will exceed $1.3 billion
in 2002.

SUPPLY CHAIN CONSTITUENTS REQUIRE ENABLING TECHNOLOGY. As the constituents
of the advertising and direct marketing supply chain increase their online
presence, they seek technologies and solutions to allow them to exploit the
attractive demographics, highly-targeted messages, real-time feedback, business
process efficiencies and other potential advantages of online advertising and
direct marketing. Merchants, advertising agencies and content publishers require
comprehensive, reliable and scalable solutions to allow them to effectively and
efficiently leverage the power of the Internet for advertising and direct
marketing. In particular, the Company believes that larger, more established
content publishers will generally require solutions that allow them to continue
to closely control their advertising inventory. Moreover, because the process of
directly managing the sale and delivery of online advertisements can generate
valuable consumer profile and behavioral data, the Company believes that the
desirability of maintaining direct control over consumer data may be even
greater than with respect to traditional media.

NETGRAVITY SOLUTION

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<PAGE>

automating certain advertising and direct marketing business processes. In
addition, as the Company's software delivers advertisements, it gathers consumer
viewing and response data which is retained by the Company's customers and can
be used to more precisely target future advertisements.

The Company's AdServer products provide benefits to each of the three
primary constituents in the online advertising and direct marketing supply
chain:

MERCHANTS. Merchants with an online presence are focused on attracting
consumers to their Web sites and on maximizing revenue per customer. The
Company's products are designed to allow merchants to gather consumer behavior
data on their sites and correlate this information with other information, such
as purchase history, to build detailed customer-profile databases using third
party technology. Merchants can then use AdServer to target advertisements
promoting new or complementary products to particular consumers based on their
profiles. Merchants can also use AdServer to centrally manage advertising
campaigns and place targeted advertisements on other Web sites in order to drive
interested consumers back to the merchant's Web site. For such campaigns,
AdServer can be used to track purchases made by consumers responding to
particular advertisements and thereby determine the cost-per-transaction for
each campaign.

ADVERTISING AGENCIES. Advertising agencies seek to maximize the impact of
their clients' online campaigns to promote brand awareness or to solicit
transactions. AdServer is designed to enable advertising agencies to manage
their clients' online campaigns, to make changes to campaigns in real-time and
to collect information about consumer behavior that can be mined to create
sophisticated profiles. These profiles can be used to improve targeting for both
current and future campaigns.

CONTENT PUBLISHERS. Content publishers seek to attract consumers to their
Web sites to maximize the value of their advertising space and/or to solicit
transactions. Using AdServer, content publishers can maintain control of their
own advertising inventory, consumer data, mission-critical advertising business
processes and relationships with advertisers and advertising agencies. AdServer
is designed to allow content publishers to predict inventory available for sale,
to deliver targeted advertisements to consumers, and to provide reports and
analysis to advertisers. Additionally, AdServer can be integrated with content
management, billing and commerce systems.

The Company's software is designed to be fault tolerant, scalable,
extensible and platform independent to meet the needs of even its largest
customers. For example, Netscape, which operates one of the most visited Web
sites on the Internet, has served up to 33 million impressions per day with the
Company's software. The Company's software also supports industry standard
operating environments including popular Unix systems, Microsoft Windows NT,
standard relational databases, Web servers from Netscape and Microsoft and
Java-enabled Web browsers.

STRATEGY

EXTEND LEADERSHIP IN ONLINE ADVERTISING SOLUTIONS. The Company intends to
extend its leadership position in the market for online advertising solutions by
continuing to enhance its technology through investment in research and
development activities and by incorporating industry-leading components into its
products. The Company believes that maintaining and enhancing its products and
services is critical to its ability to solidify its market leadership,
strengthen its relationships with current customers and enable it to acquire new
customers.

ESTABLISH LEADERSHIP IN ONLINE DIRECT MARKETING SOLUTIONS. The Company
seeks to foster the growth of the emerging market for online direct marketing
and to establish leadership in this market. Recognizing the potential of the Web
as a direct marketing channel, many of the Company's customers are leveraging
AdServer's largely advertising-oriented features to deploy online direct
marketing systems. The Company believes that online direct marketing is emerging
as a distinct market from online advertising and that customers focusing on
online direct

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<PAGE>
marketing will increasingly demand functionality tailored to their specific
requirements. Therefore, the Company intends to continue to add features to
AdServer designed to meet the specific requirements of direct marketers as well
as to enhance its sales, marketing, professional services and support
capabilities to promote these new features. The Company believes that this
strategy will allow it to address the needs of its direct marketing customers,
to help foster the development of the overall market for online direct marketing
solutions and to establish itself as a leader in this emerging market.

MAXIMIZE CUSTOMER VALUE. The Company seeks to continuously increase the
value of its solutions to its customers by offering customers additional and
improved products and services. In pursuit of this strategy, the Company intends
to enhance and extend AdServer to improve functionality through feature
refinement and through the addition of complementary product modules coupled
with value-added professional services. The Company believes its close
relationships with its customers will allow the Company to determine the
functionality its customers require. The Company believes that its focus on
delivering compelling, high-value solutions to customers will enhance its
opportunity to sell additional products and services to existing and future
customers, particularly as the requirements of these customers grow and evolve.

ENABLE EFFICIENT ADVERTISING BUYING ON THE INTERNET. The Company intends in
the future to develop products to link together its merchant, advertising agency
and content publisher customers to allow them to automate the process of buying
and selling online advertising space. One of the key limitations of the Internet
as compared to other media is the difficulty merchants and advertising agencies
experience when trying to create and manage a campaign across many selected
content publishers. Because online audiences tend to be less concentrated than
those in traditional media, advertisers seeking a given number of impressions
for a particular campaign will generally need to purchase advertising space from
comparatively more content publishers for online campaigns. By developing
technology to enable the Company's customers from each of the constituents of
the advertising and direct marketing supply chain to network with each other to
automate the buying and selling of advertising, the Company believes that
advertising agencies will be able to purchase online advertising as efficiently
as advertising on traditional media. The Company believes that its relationships
with existing customers will assist it in designing and developing such
technology.

EXPAND AND LEVERAGE ALLIANCES WITH KEY BUSINESS AND TECHNOLOGY
PARTNERS. The Company continues to develop cooperative alliances with leading
Internet systems integrators, Web hosting organizations and technology vendors
in order to accelerate the acceptance of the Company's products and to increase
operating leverage. The Company believes that these alliances will provide
additional marketing and sales channels for the Company's products and allow the
Company to leverage its professional services capacity by utilizing these third
parties to assist with AdServer deployment and support.

EXPAND INTERNATIONAL PRESENCE. The Company plans to aggressively expand its
international operations to address the global adoption of the Internet and the
international demand for online advertising and direct marketing solutions. The
Company believes that there are multiple international opportunities for its
AdServer products and has established sales and support operations in Europe and
Asia Pacific with regional headquarters in London and Tokyo. As part of this
expansion, the Company intends to create reselling and systems integration
relationships in Europe and Asia Pacific to leverage its sales and consulting
forces in these regions. The Company also intends to develop localized versions
of its product. The Company believes that an early presence in these markets
will enhance its long-term competitive position in these regions.

PRODUCTS

The Company develops, markets and supports its AdServer family of online
advertising and direct marketing management software solutions and offers
associated services. The following illustrates the role of AdServer in a typical
consumer interaction with a customer's Web site.

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<PAGE>
[GRAPHIC: CONSUMER INTERACTION WITH WEB SITE THAT USES NETGRAVITY ADSERVER]

CAPTIONS:

1) CONSUMER VISITS WEB SITE THAT USES NETGRAVITY ADSERVER SOLUTION.

2) BROWSER REQUESTS PAGE FROM WEB SITE.

3) NETGRAVITY ADSERVER LOOKS UP CONSUMER PROFILE, AND CHOOSES MOST
APPROPRIATE ADVERTISEMENTS.

4) CONTENT PAGE WITH TARGETED ADVERTISEMENTS DELIVERED TO CONSUMER'S
BROWSER.

5) NETGRAVITY ADSERVER LOGS DELIVERY AND RESULTS FOR FUTURE ANALYSIS AND
REPORTING.

- SITE ADMINISTRATORS USE NETGRAVITY ADSERVER TO MANAGE FORECASTING, AD
INVENTORY, SCHEDULING, AND RESULTS ANALYSIS.

NetGravity markets three primary solutions to support the needs of companies in
the online advertising and direct marketing industry: AdServer Enterprise,
AdServer Network and AdCenter. The Company's solutions are designed to be
extensible and robust systems for deploying advertising and direct marketing
management solutions on the Internet. The AdServer solutions utilize a common
fault-tolerant, scalable architecture for real-time delivery of targeted
advertisements, a management system for tracking advertising inventory and a
customizable reporting and analysis system allowing AdServer users to better
understand their customers.

ADSERVER ENTERPRISE. AdServer Enterprise is designed to manage advertising
and direct marketing on individual Web sites. It allows tracking of consumer
action and movement on a Web site and captures consumer responses to
advertisements. AdServer Enterprise is designed to be integrated with other
systems, such as customer databases, to create rich consumer profiles for more
effective targeting. AdServer Enterprise comes pre-configured to address many
common targeting requirements and can be extended to perform more specific
targeting. AdServer Enterprise's scalable architecture allows Web sites to
reliably serve high volumes of targeted advertisements. AdServer Enterprise also
collects and summarizes user interaction data to allow detailed analysis and
reporting to advertisers and direct marketers.

ADSERVER NETWORK. AdServer Network is an enhanced version of AdServer
Enterprise designed to manage multi-site advertising and direct marketing.
AdServer Network is designed to allow central management of advertising
inventories of multiple Web sites, delivery of targeted advertisements to
multiple remote Web sites based on centralized targeting data, centralized
collection and analysis of user information and targeting of advertisements to
consumers on remote Web sites. These features make AdServer Network an
attractive solution for a variety of applications. For example, AdServer Network
can be used by content publishers to deliver targeted advertisements to a set of
affiliated Web sites or by advertising agencies to manage campaigns for their
clients across all of the Web sites in the campaign.

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<PAGE>

ADCENTER. AdCenter is a service designed to allow customers to outsource
certain advertising management functions to the Company. NetGravity works with
Web hosting organizations to manage a centralized solution for customers who do
not wish to hire a technical staff or to maintain their Internet systems.

<TABLE>
<S> <C> <C> <C>
PRODUCT MARKET BENEFITS INTRODUCTION DATES
AdServer SINGLE-SITE Provides single-site Version 1.0: March 1996
Enterprise merchants and management of user Version 2.0: September
content publishers information, targeting 1996
of advertisements, and Version 2.1: March 1997
analysis and reporting Version 3.0: June 1997
capabilities.
AdServer Network MULTI-SITE Provides the capability Version 2.1: March 1997
merchants, to target Version 3.0: June 1997
advertising advertisements to
agencies, content consumers on remote Web
publishers and sites, while
advertising aggregating all
networks consumer information
and providing
centralized management
capabilities.
AdCenter SINGLE AND Provides a service to Version 1.0: April 1998
MULTI-SITE allow customers to
merchants, outsource advertising
advertising management to the
agencies, content Company.
publishers and
advertising
networks
</TABLE>

PROFESSIONAL SERVICES

The Company's professional services organization as of March 31, 1998
consisted of 29 individuals, including 14 consultants, who provide the following
range of services:

CONSULTING. The Company offers consulting services to customers that
address each of the activities its customers require for the initial
implementation and long-term operation of their NetGravity products. NetGravity
offers: implementation services to assist its customers in deploying AdServer;
system extension services that enable customers to extend NetGravity's products
to meet their specific business needs or technical requirements; and migration
services that enable customers to migrate to NetGravity's current products from
earlier versions of NetGravity's products or from their in-house systems. A
typical AdServer implementation requires up to 10 days of professional services.
The Company also offers other consulting services, including project management,
requirements definition, business process re-engineering, system and solutions
design, technical architecture design, systems integration design, custom
reporting and software development.

TECHNICAL SUPPORT. The Company provides product support services, including
telephone support and upgrade rights to new minor releases, under its standard
maintenance agreements. All of the Company's license customers have entered into
standard maintenance agreements. The annual maintenance fee for these services
is payable in advance and is based upon a percentage of the then-current list
price for the licensed software. A dedicated team of engineers trained to answer
questions on the installation and usage of AdServer products provides telephone
support from 6:30 a.m. to 4:30 p.m., Pacific time, Monday through Friday, from
the Company's corporate offices in San Mateo, California. The Company also
offers telephone support 24 hours a day, seven days a week through a call-back
procedure to certain customers who pay an additional fee for this service. The
Company

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<PAGE>
believes that providing high quality customer service and technical support is
necessary to achieve rapid product implementation which, in turn, is essential
to customer satisfaction and revenue growth. Accordingly, the Company is
committed to continued recruiting and maintenance of a high-quality technical
support team.

EDUCATION. NetGravity provides training for both the users of AdServer and
the technical staffs who maintain AdServer. The Company also offers training in
advertising on the Internet, managing advertising sales with AdServer, and
administering AdServer. NetGravity will soon be offering training in developing
custom extensions to the AdServer product line. All training is made available
at either the customer's location or at NetGravity's facilities in San Mateo,
California or New York, New York.

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TECHNOLOGY

NetGravity's AdServer is designed to be a robust architecture for customers
to implement flexible, scalable and reliable online advertising and direct
marketing solutions, as well as to integrate these solutions with external
systems such as electronic commerce and dynamic content generation systems. The
AdServer architecture is also extensible through documented application
programming interfaces ("APIs") and adheres to numerous industry standards. In
addition, the Company believes that the AdServer system architecture is flexible
enough to serve as the foundation for related future products.

[GRAPHIC: ADSERVER SYSTEM MODULES]

CAPTIONS:

- ADMANAGER PROVIDES FORECASTING, INVENTORY MANAGEMENT, AND SCHEDULING.

- ADINSIGHT PROVIDES AUTOMATIC REPORT GENERATION AND PUBLISHING.

- ADCONSOLE PROVIDES SYSTEM STATUS AND CONTROL.

- SITE AND CONSUMER DATA IS USED FOR REPORTING AND ANALYSIS.

PRIMARY ADSERVER SUBSYSTEMS

ADSERVER ADVERTISING DELIVERY ENGINE. The Company's AdServer advertising
delivery engine performs the actual content delivery function for the AdServer
System. The AdServer engine was designed to deliver highly targeted messages
with low latency to Web browsers, Web servers and proprietary content delivery
systems. The AdServer delivery engine architecture is designed to be highly
scalable, reliable and extensible. The Company has also incorporated several
performance and reliability enhancing technologies into the AdServer engine,
including built-in load balancing, automatic fail-over, automatic restart and
monitoring tools that notify technicians in the event of system failure.

ADMANAGER BUSINESS PROCESS MANAGEMENT APPLICATION. AdManager is a
three-tier application (comprised of user interface, application server and
database tiers) designed to allow customers to manage certain online advertising
and direct marketing business processes and associated data. In particular,
AdManager utilizes proprietary software to automate certain inventory
management, scheduling and availability functions that enable more efficient use
of available inventory.

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ADINSIGHT ADVERTISING PERFORMANCE AND REPORTING SYSTEM. The Company
believes that the information resulting from online advertising and direct
marketing placements and consumer response is extremely valuable for
understanding consumer behavior and measuring return on investment. The
AdInsight measurement and reporting system has been designed to permit detailed
reporting and analysis for Web sites and networks. Because of the volume of data
gathered from high-traffic sites and networks, AdInsight offers customizable
summarization and reporting functions to reduce database size and storage
requirements. AdInsight also implements a scheduling system to generate reports
for automatic delivery to advertisers and others directly over the Internet.

ADCONSOLE SYSTEM MANAGEMENT APPLICATION. AdConsole is designed to simplify
the process of maintaining and administering the entire AdServer System by
providing system administrators with a user interface for common system
management tasks. For example, AdConsole permits centralized starting, stopping,
monitoring and administering of multiple AdServer engines. AdConsole allows
system administrators to schedule routine tasks and monitor and administer
AdServer engines across multiple CPUs which increases the reliability of the
entire system by reducing opportunities for administration or configuration
errors.

OPEN ARCHITECTURE AND EXTENSIBILITY

The Company designed the AdServer System with numerous extensibility
features to allow integration into existing systems and creation of new
functionality. The Company's open targeting architecture allows customers to
augment AdServer's standard targeting functionality through the addition of
external targeting capabilities. The Company's advertising delivery API allows
integration into custom electronic commerce systems, dynamic content delivery
systems and other kinds of advertising delivery mechanisms. In addition,
AdServer stores business process data, including advertisements, targeting
information, delivery statistics and reporting data in a standard relational
database management system (RDBMS) in documented data structures, allowing
industry standard reporting and query tools to be used to view and manipulate
this data. These open extensibility features allow AdServer to be integrated
with customers' legacy systems and/or third-party systems, such as sophisticated
targeting engines, content delivery systems and customized data mining and
analysis tools.

INDUSTRY STANDARDS

The Company uses many widely accepted standards in developing its products,
including SQL for accessing RDBMSs, HTTP for Internet access, NSAPI (Netscape
Application Programming Interface) for access to Netscape's Internet servers,
ISAPI (Internet Server Application Programming Interface) for access to
Microsoft's Internet servers and HTML for formatting advertisements. Most of the
Company's software is written in C++, a widely accepted standard programming
language for developing object-oriented applications. Adherence to industry
standards provides compatibility with existing applications, enables ease of
modification, and reduces the need for software to be rewritten, thus protecting
the customer's investment. In addition, the Company is active in formulating
standards for advertising measurement on the Internet. For example, an officer
of the Company serves on the Board of Directors of the Internet Advertising
Bureau, a standards setting body for Web publishers.

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CUSTOMERS AND MARKETS

As of March 31, 1998, NetGravity had over 225 customers. The Company
licenses its AdServer products to merchants, advertising agencies, content
publishers and advertising networks. The following is a partial list of the
Company's customers:

MERCHANTS:

Cendant

Commercial Dynamics

Corbis Corporation

Didax Online

DIRECTV, Inc.

eOutlet

E*TRADE Group, Inc.

Ingram Micro, Inc.

International Billing Systems

Internet Travel Network

N2K Inc.

ONSALE

Planet Direct Corporation

Sallie Mae

SRDS

Ticketmaster Corporation

TUCOWS Interactive Limited

West Group

ADVERTISING AGENCIES:

Dentsu Inc. (CCI)

J. Walter Thompson

CONTENT PUBLISHERS:

Advanta (GoodCompany)

Alexa

Asahi Shimbun

Associated Media Base (Electronic Telegraph)

Associated Press

Big Network

Bloomberg

Blue Window

British Telecommunications

Cinetic GmbH

CondeNet

Continental Internet Services

Detroit Newspaper

Family Education Company

Forbes

Fujitsu

General Internet, Inc.

Geosystems (Map Quest)

GolfWeb

Hachette Filipacchi Interactions SA

Harris Publishing Systems Corporation

Healthgate Data Corp.

Hearst New Media and Technology

Hitachi Business International

Hollywood Online Inc.

Hollywood Stock Exchange

HotWired

Houston Chronicle

Inc. Online

InfoBeat

InfoSeek

IVI Publishing, Inc.

iVillage

Knight Ridder New Media

La Tribune Interactive

Las Vegas Review-Journal

Los Angeles Times

LiveWorld Productions

Matrix

Macroview Communications

MCA/Universal Studios

McGraw Hill (Business Week)

Medscape, Inc.

Merrill Lynch

Miller Freeman PLC

Minneapolis Star Tribune Interactive

Mirror Group

Motorola (audioSENSE)

Mpath Interactive

MTV Interactive

Netscape Communications Corporation

Nettavisen

New Media Publisher

News Corporation (TVgen)

Newsday

NewTimes, Inc.

Nihon Keizai Shimbun

Nikkei Business Publications, Inc.

Northern Telecom (Nortel)

Online Career Center

PC World Communications

Planet Internet

Quote.com, Inc.

Red Herring

relationships.com, Inc.

Reuters Ltd. (Europe)

Rodale Press

Scientific American Inc.

Straylight

Streamix Corporation

Telecom New Zealand

The AmerUS Group Inc.

The Boston Globe

The Weather Channel

Third Age Media, Inc.

Time Inc. New Media

Toronto Morning Star

Toshiba Corporation

Travel Channel

TriCast Media

Turner Broadcasting (CNN Interactive)

USA.NET

USA Today

U S West (Dex)

U S West (IRG)

ViewCall Canada Inc.

Wire Networks

Virgin Net

Warner Bros. Online

Worldview Systems

ADVERTISING NETWORKS:

Active Agent

@Home Network

AudioNet, Inc.

Canadian Broadcasting Company

Canoe, Canadian Online Explorer

CDA Investment Technology

China Internet Corp.

Clickthrough Canada

Cyberfirst, Inc.

Digital Skies

EMC(2)

GoGlobal.net

GTE Gov't Sys. Corp.

HongKong Telecom IMS

Interealty Corp.

MediaLinx

Nippon Telegraph and Telephone Corporation

Overseas Connections

Riks New Media

Scandinavia Online

StarMedia Network, Inc.

Tele Danmark

Telstra Corporation Ltd.

WhoWhere?

www.yellowpages.com inc.

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SELECTED CUSTOMER CASE STUDIES

CNN INTERACTIVE. Since August 1995, Cable News Network, Inc. has operated
CNN Interactive, a family of Web sites which now includes CNN.com, CNNfn,
CNN-Time All Politics, CNN enEspanol, CNN emPortugues and CNN-Sports
Illustrated. CNN Interactive is consistently ranked as one of the most visited
families of sites on the Web, and currently averages over 75 million page views
per week. CNN Interactive initially relied on an internally developed system to
manage its online advertising. Daily advertisement rotations were done manually
by CNN Interactive personnel using spreadsheets to track advertising inventory.
As user traffic and advertising inventory grew dramatically, CNN Interactive
concluded that it needed to automate and streamline its online advertising
management activities to keep pace with such growth. CNN Interactive turned to
NetGravity and, in December 1996, deployed AdServer Enterprise to replace its
internal advertising management system. AdServer Enterprise now performs
automatic, real-time impression-based advertisement rotation on the CNN
Interactive sites. In addition, CNN Interactive uses AdServer's reporting
features to generate individualized weekly reports for each of its more than 150
advertisers.

KNIGHT RIDDER REAL CITIES. Knight Ridder, a major domestic newspaper
publisher, through its Knight Ridder New Media division, manages Real Cities, a
network of approximately 40 Web sites, each of which is affiliated with a local
newspaper. Real Cities sites include MercuryCenter.com from the San Jose Mercury
News, Freep.com from the Detroit Free Press and PhillyNews.com from the
Philadelphia Inquirer and Philadelphia Daily News. Together, the Real Cities
sites receive an average of more than 12.5 million page views per week. Knight
Ridder sells local advertising space on individual Real Cities sites and
national advertising space on multiple Real Cities sites. Knight Ridder
initially attempted to manage these multiple inventories manually. As the number
of Real Cities sites increased and as user traffic at each site grew, their
system began to fail. Unable to precisely and quickly determine the aggregate
impressions delivered for an advertisement across all Real Cities sites, Knight
Ridder often over-delivered advertisements, thereby effectively reducing salable
inventory. Using both AdServer Network and AdServer Enterprise, Knight Ridder is
now able to more precisely and efficiently manage national campaigns while at
the same time allowing local control over individual Real Cities sites. The
impression-based scheduling and other controls provided by AdServer have allowed
Knight Ridder to significantly increase salable inventory while at the same time
reducing the resources dedicated to advertising management. In addition, Knight
Ridder has a long-term strategy of increasing the value of its advertising
inventory through the use of AdServer's targeting capabilities.

NETNOIR ONLINE. NetNoir Online offers a variety of Afrocentric content on
its Web site designed to promote black cultural values and to create an
interactive online black "community." Initially, NetNoir attempted to manually
manage advertising placement and rotation for its site, which, at the time,
served approximately 100,000 advertisement impressions per month. This method
was time-consuming, prone to human error and did not allow dynamic targeting of
advertisements. NetNoir attempted to outsource tracking and reporting functions
to reduce the administrative burden of advertising management but was
unsatisfied with the infrequency of the monthly reports that the tracking and
reporting firm was providing it. As NetNoir prepared for anticipated growth, it
engaged a leading Web hosting organization to host the NetNoir site and to
assist NetNoir in upgrading its advertising management capabilities. Through
NetGravity's AdHost program, the Web hosting organization purchased an AdServer
Enterprise license from the Company, installed and configured the software at
the hosting organization's facilities and allowed NetNoir to pay for the use of
AdServer through a monthly fee based on number of advertisements served. This
arrangement allowed NetNoir to access the sophisticated features of AdServer
Enterprise without a significant initial investment and without the need to hire
additional technical personnel to maintain its Internet systems. AdServer has
significantly reduced the administrative burdens of advertising placement,
rotation, tracking and reporting for NetNoir and has scaled smoothly with
NetNoir's rapid growth. NetNoir has also begun to use AdServer's targeting
features and expects to increase its use of targeting for advertisements and
other content in the future.

SALES AND MARKETING

The Company markets and sells its products and services primarily through
its field sales and telesales organizations and maintains sales and support
operations in North America, Europe and Asia Pacific. On

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March 31, 1998, the Company's sales organization consisted of 21 individuals.
The Company has sales and support offices in San Mateo, California, New York,
New York, London and Tokyo. The Company sells its products in Europe and Asia
Pacific through its subsidiaries in the United Kingdom and Japan. The Company
intends to broaden its presence in international markets by aggressively
expanding its international sales force and by entering into distribution
agreements with foreign distributors. See "Risk Factors--Dependence on Key
Personnel; Need for Additional Qualified Personnel" and "--Risks Associated with
International Expansion."

The Company's sales process begins with the generation of sales leads. Sales
leads are obtained primarily from telesales, customer referrals, the Company's
Web site, responses to the Company's public relations and marketing efforts and
through trade shows. The majority of the Company's sales leads to date have come
from content publishers seeking online advertising management software. Initial
sales activity normally includes a product demonstration of AdServer directly
over the Internet to the prospective customer. This demonstration is followed by
one or more technical discussions where the customer's issues and concerns are
addressed. For interested accounts, a field sales representative and a sales
engineer make an on-site visit where the needs of such customer are assessed.
Soon thereafter, a proposal is generated containing a statement of work for
NetGravity consulting and training services and a quote for the package of
software license and services to be delivered. In addition, the Company has
developed pre-configured packages suitable for many common customer
applications.

The Company uses a variety of marketing programs to: stimulate demand for
its products; build market awareness through the press and industry analysts;
produce and maintain marketing information and sales tools; generate and develop
customer leads; and establish and manage marketing alliances. As of March 31,
1998, eight employees were engaged in a variety of marketing activities,
including: preparing marketing research and collateral marketing materials;
product planning; managing press coverage and other public relations;
identifying potential customers; attending trade shows, seminars and
conferences; establishing and maintaining close relationships with recognized
industry analysts; and maintaining the Company's Web site.

Sales of the Company's software products generally require the Company to
engage in a lengthy sales effort including significant education of prospective
customers regarding the use and benefits of the Company's products. As a result,
the sales cycle for the Company's products is long, currently averaging
approximately four months. In particular, the sales cycle for the Company's
online direct marketing solutions is likely to be comparatively longer than the
sales cycle for the online advertising solutions, since online direct marketing
is less established and will require more education of the Company's potential
customers. In addition, the implementation of the Company's products often
involves a significant commitment of resources by customers and/or the Company's
consultants over an extended period of time. The Company's sales and customer
implementation cycles are subject to a number of potential delays. These include
delays related to product defects or errors as well as delays over which the
Company has little or no control, including customers' budgetary constraints,
internal acceptance reviews and the complexity of customers' online advertising
or direct marketing needs. See "Risk Factors--Lengthy Sales and Implementation
Cycles."

MARKETING ALLIANCES

An important element of the Company's sales strategy is to form business
alliances to assist the Company in marketing and selling its products and
developing customer applications. This approach is intended to increase the
resources available to perform application design and development services for
the Company's customers and to enhance the Company's market credibility,
potential for lead generation and access to large accounts. Additionally,
business partners can provide online advertising and direct marketing expertise
in solving the business problems of the Company's customers. The Company has
relationships with the following organizations:

WEB HOSTING ORGANIZATIONS. Web hosting organizations centrally house and
maintain Internet connectivity equipment, server hardware and software for their
customers. Many Web sites utilize the services of hosting organizations and rely
on their advice and recommendations in selecting Internet software solutions.
Because of their influence in the market, the Company strives to maintain good
business relationships with these organizations. The following Web hosting
organizations have provided hosting services to NetGravity customers: ANS

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Communications, BBN Corporation, Digex Incorporated, EUnet International B.V.,
Exodus Communications, Inc., Frontier GlobalCenter, Inc., Proxicom, Inc. and TCG
CERFnet, the data and Internet service business unit of Teleport Communications
Group Inc.

INTERNET SYSTEMS INTEGRATORS. Internet systems integrators assist online
content publishers and merchants in the design, procurement and deployment of
their Web sites. These Internet systems integrators often recommend advertising
management and other Internet solutions to their clients. The following Internet
systems integrators have worked with NetGravity customers: CKS--Enterprise, a
systems integration and consulting organization within CKS Group, Inc., Fort
Point Partners, Horizon Technologies, Organic Inc. and Poppe Tyson Interactive.

PRODUCT DEVELOPMENT

The Company believes that its future success will depend in large part on
its ability to enhance the AdServer System, develop new products, maintain
technological leadership, and satisfy an evolving range of customer requirements
for large scale online advertising and direct marketing applications. The
Company's product development organization is responsible for product
architecture, core technology, product testing and quality assurance, writing
user documentation, and expanding the ability of NetGravity products to operate
with the leading hardware platforms, operating systems, database management
systems, content management systems and electronic commerce systems. Since
inception, the Company has made substantial investments in product development
and related activities. In addition, certain technologies have been acquired and
integrated into NetGravity products through licensing arrangements. As of March
31, 1998, there were 23 employees in the Company's product development
organization. The Company's research and development expenses were $39,000, $1.8
million, and $3.0 million in the period ended December 31, 1995 and the years
ended December 31, 1996 and 1997, respectively. To date, the Company has not
capitalized any software development costs. The Company expects to continue to
devote substantial resources to its product development activities. The Company
plans to release its next major version of AdServer in 1999. The Company may
also release one or more less significant updates prior to the release of the
next major version.

If the Company is unable, for technological or other reasons, to develop on
a timely basis the next release of AdServer or other new software products,
enhancements to existing products or corrections to errors or defects or
performance problems in products, or if such new products or enhancements do not
achieve a significant degree of market acceptance or if such products, in order
to be released on a timely basis, contain material defects or errors or
performance problems, the Company's business, results of operations and
financial condition would be materially adversely affected. In addition, there
can be no assurance that the introduction or announcement of new product
offerings by the Company or one or more of its competitors will not cause
customers to decline or defer licensing of existing Company products. Any
decline or deferral of purchases could have a material adverse effect on the
Company's business, results of operations or financial condition. Further, if
the Company's current or future products do not meet the scalability
requirements of its customers due to vastly increased use of the Internet, the
Company would have to incur substantial expenditures and resources to address
such issue and there can be no assurance that the Company would be successful in
scaling the capabilities of its products to such level.

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<PAGE>

automating the online advertising purchasing process among such constituents. If
demand for a comprehensive solution develops and the Company fails to develop
such a solution on a timely basis, or at all, it could have a material adverse
effect on the Company's business, results of operations or financial condition.
In addition, as more customers demand online advertising and direct marketing
solutions, the Company must tailor its products to the specific requirements of
both online advertisers and direct marketers and provide a solution for
supplying demographic and behavioral data. Specifically, the online direct
marketing market will require more narrowly targeted advertisements than the
online advertising market and will be even more reliant on demographic data than
the online advertising market. Although AdServer's largely advertising-oriented
features can be used for online direct marketing, the Company has not yet
developed products with the custom features required by online direct marketers.
If the Company does not develop a satisfactory product to address the online
direct marketing market, future growth of the Company could be impaired and the
Company could lose customers to competitors with more comprehensive solutions.
The occurrence of any such event could have a material adverse effect on the
Company's business, results of operations or financial condition.

The Company's products are designed to operate on a variety of hardware and
software platforms employed by its customers in their individual networks. The
Company must continually modify and enhance its products to keep pace with
changes in hardware and software platforms and database technology. As a result,
uncertainties related to the timing and nature of new product announcements,
introductions or modifications by operating systems vendors, particularly
Microsoft and Sun, by vendors of relational database software, particularly
Oracle and Microsoft, and browsers, particularly Netscape and Microsoft could
materially adversely impact the Company's business, results of operations or
financial condition.

COMPETITION

Historically, participants in the online advertising and direct marketing
supply chain have used internally developed systems to manage their own online
advertising and direct marketing functions. However, the Company believes that
its primary competition will increasingly come from vendors that provide online
advertising and direct marketing software or service solutions or service
solutions. In the online advertising market, the Company competes directly with
DoubleClick, CMG (through its Engage/Accipiter unit) and Excite (through its
MatchLogic unit), and a variety of other online advertising service providers.
Some of these companies (such as DoubleClick) have adopted a business model
focused on outsourcing of advertising and direct marketing management. If this
model increases in popularity for the Company's targeted markets, the Company
will be required to devote additional resources to keep its own outsourcing
solution competitive. Any failure by the Company to successfully design, develop
and market an advanced outsourced solution under such circumstances would have a
material adverse effect on the Company's business, results of operations and
financial condition. In the online direct marketing market, the Company expects
to face indirect competition from the vendors of electronic commerce systems,
including BroadVision, Interworld and Open Market, among others. Additionally,
providers of electronic commerce could build online direct marketing solutions
that would obviate the need for any current or future products of the Company
targeted to the online direct marketing industry. The Company also encounters
competition from Netscape and Microsoft, which build or bundle advertising
management products with their Internet commerce solutions. Both Netscape and
Microsoft have significantly greater resources than the Company, and due to
their control of the browser market, if either of them were to offer online
advertising and direct marketing management solutions with features comparable
to those offered by the Company, there can be no assurance that the Company
would be able to compete effectively against any such product offerings.

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The principal competitive factors affecting the market for the Company's
products are depth and breadth of functionality offered, ease of deployment,
expense of maintenance relative to service offerings, outsourcing capability,
control over consumer profile data, product quality, price, and consulting and
customer support. The Company believes it presently competes favorably with
respect to each of these factors. However, the Company's market is still
evolving, and there can be no assurance that the Company will be able to compete
successfully with current or future competitors, or that competitive pressures
faced by the Company will not have a material adverse effect on the Company's
business, results of operations or financial condition.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

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will be enforceable. In addition, litigation may be necessary in the future to
enforce the Company's intellectual property rights, to protect the Company's
trade secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation, whether successful or unsuccessful, could result in substantial
costs and diversions of resources, either of which could have a material adverse
effect on the Company's business, results of operations or financial condition.

EMPLOYEES

As of March 31, 1998, the Company had 94 employees, including 29 in sales
and marketing, 23 in research and development, 29 in professional services,
customer support and education, and 13 in finance and administration. Of these,
five are located in Asia, nine are located in Europe and the remainder are
located in North America. None of the Company's employees is represented by a
labor union. The Company has experienced no work stoppages and believes its
relationship with its employees is good.

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FACILITIES

The Company is headquartered in San Mateo, California where it leases
approximately 13,000 square feet pursuant to a term lease that expires on May
31, 1998. The Company is seeking to lease a larger facility in the San Mateo
area for its headquaters and expects to occupy its current San Mateo facility on
a month-to-month basis until a new facility is leased and prepared for
occupancy. In the event the Company's month-to-month lease is terminated on
short notice, there can be no assurance that the Company will be able to find
alternate facilities on a timely basis or at reasonable cost. In addition, the
Company maintains a regional office in New York, New York where it leases
approximately 3,000 square feet of office space pursuant to a lease that expires
in 2003. The Company also leases space in London and Tokyo to support its
international operations. See Note 6 of Notes to Consolidated Financial
Statements.

LEGAL PROCEEDINGS

The Company is not currently subject to any material legal proceedings. The
Company may from time to time become a party to various legal proceedings
arising in the ordinary course of its business.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company, and their ages as of
March 31, 1998, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
John W. Danner..................................... 31 Chairman of the Board and Chief Executive Officer
Stephen E. Recht................................... 46 Chief Financial Officer and Secretary
Susan Atherton..................................... 41 Vice President of Sales
Rick E. D. Jackson IV.............................. 37 Vice President of Marketing
Douglas S. Kaplan.................................. 32 Vice President and General Manager of Asia Pacific
Martin G. Lane-Smith............................... 50 Vice President of Engineering
Thomas A. Shields.................................. 30 Vice President, Chief Technology Officer
Jitendra Valera(1)................................. 40 Vice President and General Manager of Europe
Larry C. Wear...................................... 32 Vice President of Support and Service
John D. D. Kohler(2)............................... 44 Director
Jonathan D. Lazarus(3)............................. 47 Director
Alexander R. Slusky(2)(3).......................... 30 Director
</TABLE>

- ----------

(1) Mr. Valera is an employee of Protege Software (Holdings) Limited, a
consulting firm providing management services to NetGravity Europe Ltd., and
is not directly employed by the Company or by NetGravity Europe Ltd. See
"Certain Transactions."

(2) Member of Audit Committee.

(3) Member of Compensation Committee.

JOHN W. DANNER co-founded the Company in 1995, served as its President from
inception until April 1998, and has served as Chief Executive Officer and
Director since inception. In April 1998, Mr. Danner was elected Chairman of the
Board. From 1994 to 1995, Mr. Danner was a technical lead/architect for Silicon
Graphics, Inc. ("Silicon Graphics"), where he architected the set-top and server
side of a component of Silicon Graphics' interactive television system. From
1990 to 1994, Mr. Danner was a development manager at Oracle Corporation
("Oracle"), where he oversaw product development for Oracle Book, a multimedia
browser. Since January 1998, Mr. Danner has served on the Board of Directors of
the Internet Advertising Bureau, an online advertising advocacy group and
standards-setting body for online content publishers. Mr. Danner received
B.S.E.E. and M.S.E.E. degrees from Stanford University.

STEPHEN E. RECHT has served as the Chief Financial Officer and Secretary of
the Company since 1996. From 1995 to 1996, Mr. Recht was the Chief Financial
Officer of AuraVision Corporation, a fabless, multimedia semiconductor company,
where Mr. Recht was responsible for all financial operations, investor
relations, contract administration, human resources and facilities. From 1992 to
1995, Mr. Recht was the Vice President, Finance and Administration and the Chief
Financial Officer of ViewStar Corporation, a client/server, business process
automation software company, where Mr. Recht directed all financial operations
and investor relations. Mr. Recht received a B.A. degree in Economics from
Stanford University and an M.B.A. degree from the Wharton School at the
University of Pennsylvania.

SUSAN ATHERTON has served as the Company's Vice President of Sales since
April 1998. From 1996 to 1998, Ms. Atherton was the Vice President, Worldwide
Sales, of Datamind Corporation, a developer of data mining client/server and
Web-enhanced products, where Ms. Atherton managed the company's direct and
indirect channels sales organization worldwide and helped develop key strategic
relationships with several technology companies. From 1995 to 1996, Ms. Atherton
was the Vice President, Worldwide Sales, of Red Pepper Software, a supply chain
management software developer, where Ms. Atherton managed the company's direct
and indirect channels sales organization worldwide. From 1993 to 1995, Ms.
Atherton was the Area Vice President of Ross Systems, Inc., a

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provider of supply chain management solutions and client/server business
software for enterprise resource planning, where Ms. Atherton helped manage the
company's Western U.S. sales force. Ms. Atherton received a B.S. degree in
Economics from the University of California, Riverside.

RICK E. D. JACKSON IV has served as the Company's Vice President of
Marketing since 1997. From 1996 to 1997, Mr. Jackson was the Vice President,
Marketing for mFactory, Inc., an advanced multimedia authoring tool company,
where Mr. Jackson assembled and led a team of professionals responsible for all
aspects of product and corporate marketing. From 1994 to 1996, Mr. Jackson was
the Director of Product Marketing for Taligent, Inc. ("Taligent"), a software
company, where Mr. Jackson managed the marketing organization responsible for
various Taligent products. From 1990 to 1994, Mr. Jackson was the Director of
Product Marketing for NeXT Computer, Inc., a desktop computer and software
manufacturer, where Mr. Jackson assembled, managed and led the company's product
marketing team. Mr. Jackson received a B.S. degree in Computer Science from
California State University, Northridge.

DOUGLAS S. KAPLAN has served as the Company's Vice President and General
Manager of Asia Pacific since 1997. From 1995 to 1997, Mr. Kaplan was the Vice
President of Nikkei BP BizTech Inc. ("Nikkei"), a Japanese business and
technology publisher, which Mr. Kaplan founded. At Nikkei, Mr. Kaplan defined
the company's business plan and developed Nikkei as a consulting and research
company. From 1990 to 1995, Mr. Kaplan was a Representative Director and a
co-founder of CMP Japan, the Japanese subsidiary of CMP Media, Inc., a
technology publisher. At CMP Japan, Mr. Kaplan developed the company's business
plan and implemented the business of consulting with U.S. technology companies
interested in conducting business in Japan. Mr. Kaplan received a B.A. degree in
Asian Studies and Economics from the University of California, Berkeley.

MARTIN G. LANE-SMITH has served as the Company's Vice President of
Engineering since 1997. From 1991 to 1997, Mr. Lane-Smith was the Vice
President, Engineering of Edify Corporation, a provider of software solutions
for interactive online services, where Mr. Lane-Smith was responsible for all
aspects of product development, product support and the management of the
company's engineering team. Mr. Lane-Smith received a B.A. degree and an M.S.
degree, each in Natural Sciences (Math and Physics), from the University of
Cambridge.

THOMAS A. SHIELDS co-founded the Company in 1995 and served as the Company's
Vice President of Engineering and Secretary until 1996. Since 1996 Mr. Shields
has served as the Company's Vice President, Chief Technology Officer. From 1992
to 1995, Mr. Shields was a Development Manager and a Project Lead for Oracle,
where he led the Oracle Book project through two release cycles and designed the
entire feature set of Oracle Book version 2. Mr. Shields received a A.B. degree
in Computer Science from Harvard University.

JITENDRA VALERA, a non-employee consultant to the Company, has served as its
Vice President and General Manager of Europe since 1997. Mr. Valera is an
employee of Protege Software (Holdings) Limited, a consulting firm providing
management services to NetGravity Europe Ltd. From 1994 to 1996, Mr. Valera was
the Managing Director of Applix (UK) Ltd., the United Kingdom subsidiary of
Applix Inc., a producer and marketer of enterprise software, where Mr. Valera
was responsible for management of the company. From 1989 to 1993, Mr. Valera
held various positions with Data Logic Ltd. ("Data Logic"), a computer services
company, including most recently, Director of Sales, Professional Services
Division (International Territory) and Director, International Sales and
Marketing, Professional Services Division. Among Mr. Valera's responsibilities
at Data Logic was establishing sales groups and strategies. Mr. Valera received
a Business Studies degree from Havering Technical College and an HND degree in
Business Studies from Hatfield Polytechnic.

LARRY C. WEAR has served as the Company's Vice President of Support and
Service since 1995. From 1994 to 1995, Mr. Wear was the Director of Customer
Support for Mercury Interactive Corporation, an automated client/ server testing
software company, where Mr. Wear was responsible for all customer support,
training, consulting and pre-sales engineering in North America. From 1992 to
1993, Mr. Wear was the Vice President of Software Development for XALT Software
Corporation, a producer of personal and group productivity tools, where he
oversaw the design, development, testing, porting and release of a suite of
products. Mr. Wear received a B.S.E.E. degree from the University of California,
Davis, and an M.S.E.E. degree from Stanford University.

54
<PAGE>

JOHN D. D. KOHLER has served as a Director of the Company since inception.
In 1996, Mr. Kohler founded Redleaf Venture Management, L.L.C., a venture
management firm, of which he is currently a Managing Member. From 1994 to 1995,
Mr. Kohler was Vice President and General Manager, Customer Solutions, at
Netscape Communications Corporation. From 1991 to 1993, Mr. Kohler was a Vice
President and General Manager at Silicon Graphics. Over the previous 15 years,
Mr. Kohler held executive positions at Hewlett Packard Company, Convergent
Technologies and Unisys Corporation. Mr. Kohler received a B.A. degree in
International Relations and Economics from the University of California, Los
Angeles.

JONATHAN D. LAZARUS has served as a Director of the Company since 1996. From
1985 to 1996, Mr. Lazarus worked at Microsoft Corporation ("Microsoft"), where
he served most recently as Vice President, Strategic Relations. Mr. Lazarus is
an advisor to Microsoft, the Universal Studios New Media Group and ZDTV. Mr.
Lazarus currently serves on the boards of directors of Ziff-Davis, Inc. and
several private companies. Mr. Lazarus received a B.S. degree in Communications
from Temple University.

ALEXANDER R. SLUSKY has served as a Director of the Company since March
1997. Since April 1998, Mr. Slusky has been the Managing Member of Vector
Capital Partners, L.L.C., the General Partner of Vector Capital, L.P. ("Vector
Capital"), a technology equity fund affiliated with Ziff Brothers Investments
("ZBI"). Since 1995, Mr. Slusky has been a Principal of ZBI and from 1996 to
April 1998 was a General Partner of Vector Capital. From 1992 to 1995, Mr.
Slusky was an Associate at New Enterprise Associates ("NEA"), a venture capital
fund, and from 1993 until 1995 a Special Limited Partner of NEA VI, an entity
affiliated with NEA. Mr. Slusky serves on the boards of directors of several
private companies. Mr. Slusky received an A.B. degree in Economics from Harvard
University and an M.B.A. from the Harvard Business School.

BOARD COMMITTEES

The Board of Directors has a Compensation Committee and an Audit Committee.

COMPENSATION COMMITTEE. The Compensation Committee of the Board of
Directors reviews and makes recommendations to the Board regarding all forms of
compensation provided to the executive officers and directors of the Company and
its subsidiaries including stock compensation and loans. In addition, the
Compensation Committee reviews and makes recommendations on bonus and stock
compensation arrangements for all employees of the Company. As part of the
foregoing, the Compensation Committee also administers the Company's 1995 Stock
Option Plan, 1998 Stock Plan and 1998 Employee Stock Purchase Plan. The current
members of the Compensation Committee are Messrs. Lazarus and Slusky.

AUDIT COMMITTEE. The Audit Committee of the Board of Directors reviews and
monitors the corporate financial reporting and the internal and external audits
of the Company and its subsidiaries, including, among other things, the
Company's internal audit and control functions, the results and scope of the
annual audit and other services provided by the Company's independent auditors
and the Company's compliance with legal matters that have a significant impact
on the Company's financial reports. The Audit Committee also consults with the
Company's management and the Company's independent auditors prior to the
presentation of financial statements to stockholders and, as appropriate,
initiates inquiries into aspects of the Company's financial affairs. In
addition, the Audit Committee has the responsibility to consider and recommend
the appointment of, and to review fee arrangements with, the Company's
independent auditors. The current members of the Audit Committee are Messrs.
Kohler and Slusky.

DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS

Directors of the Company do not receive cash compensation for their service
as directors. Each non-employee director will automatically receive an option to
purchase 25,000 shares of Common Stock upon joining the Board of Directors. Each
incumbent director will automatically be granted an option to purchase an
additional 5,000 shares of Common Stock annually. See "Management--Employee
Benefit Plans."

55
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors currently consists of
Messrs. Lazarus and Slusky. No interlocking relationship exists between any
member of the Company's Board of Directors or the Company's Compensation
Committee and any member of the board of directors or compensation committee of
any other company, and no such interlocking relationship has existed in the
past.

EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS

Pursuant to the Founder's Stock Purchase Agreements entered into in
September 1995 between the Company and each of John W. Danner, the Company's
Chairman of the Board and Chief Executive Officer, and Thomas A. Shields, the
Company's Vice President, Chief Technology Officer, the vesting of the stock
purchased under such agreements will accelerate upon certain changes of control
of the Company. See "Certain Transactions-- Employment and Severance
Agreements."

In March 1998, Stephen E. Recht, the Company's Chief Financial Officer and
Secretary, entered into an employment and severance agreement with the Company
that provides Mr. Recht with certain benefits upon Mr. Recht's involuntary
termination by the Company in connection with a change of control of the
Company. See "Certain Transactions--Employment and Severance Agreements."

In April 1998, Susan Atherton, the Company's Vice President of Sales,
entered into an employment agreement with the Company that provides Ms. Atherton
with certain benefits upon the termination of Ms. Atherton's employment with the
Company under certain circumstances. See "Certain Transactions--Employment and
Severance Agreements."

EXECUTIVE COMPENSATION

The following table sets forth in summary form information concerning the
compensation awarded to, earned by or paid for services rendered to the Company
in all capacities during fiscal 1997 by (i) the Company's Chief Executive
Officer; (ii) the Company's four other most highly compensated executive
officers whose salary and bonus for such year exceeded $100,000, including one
former officer; and (iii) two other executive officers whose salary and bonus
for fiscal 1997 would have exceeded $100,000, had they served as officers during
the entire fiscal 1997 (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
FISCAL 1997
-------------
LONG-TERM
COMPENSATION
-------------
FISCAL 1997
--------------------- AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#)
- ---------------------------------------------------------------------------- ---------- --------- -------------
<S> <C> <C> <C>
John W. Danner, Chairman of the Board and Chief Executive Officer........... $ 124,280 $ -- --
Stephen E. Recht, Chief Financial Officer and Secretary..................... 154,517 -- 78,408
Rick E. D. Jackson IV, Vice President of Marketing (1)...................... 78,462 -- 150,000
Martin G. Lane-Smith, Vice President of Engineering (2)..................... 21,346 25,000 214,603
Thomas A. Shields, Vice President, Chief Technology Officer................. 100,500 -- --
Larry C. Wear, Vice President of Support and Service........................ 137,922 -- 81,817
Stephen Reade, former Vice President of Sales (3)........................... 104,000 149,876 79,545
</TABLE>

- ----------
(1) Mr. Jackson joined the Company in June 1997; his annualized base salary for
fiscal 1997 was $150,000.

(2) Mr. Lane-Smith joined the Company in November 1997; his annualized base
salary for fiscal 1997 was $185,000.

(3) Mr. Reade resigned as an employee of the Company in January 1998 and has
been retained by the Company as a consultant since that time. See "Certain
Transactions."

56
<PAGE>
OPTION GRANTS IN FISCAL 1997

The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the fiscal year ended December
31, 1997. All such options were awarded under the Company's 1995 Stock Option
Plan. No stock appreciation rights were granted to these individuals during such
year.

<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------
NAME GRANTED(#) FISCAL 1997(%) SHARE($)(2)(3) DATE(4) 5%($) 10%($)
- ---------------------------------- ----------- ----------------- --------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John W. Danner, Chairman of the
Board and Chief Executive
Officer......................... -- -- -- -- -- --

Stephen E. Recht, Chief Financial
Officer and Secretary........... 72,727 5.5% $ 0.22 3/20/2007 $ 10,062 $ 25,500

5,681 0.4 0.22 11/20/2007 786 1,992

Rick E. D. Jackson IV, Vice
President of Marketing.......... 150,000 11.4 0.22 6/16/2007 20,754 52,594

Martin G. Lane-Smith, Vice
President of Engineering........ 214,603 16.3 0.22 11/3/2007 29,692 75,245

Thomas A. Shields, Vice President,
Chief Technology Officer........ -- -- -- -- -- --

Larry C. Wear, Vice President of
Support and Service............. 34,090 2.6 0.22 3/20/2007 4,717 11,953

47,727 3.6 0.22 11/20/2007 6,603 16,734

Stephen Reade, former Vice
President of Sales (5).......... 79,545 6.0 0.22 3/20/2007 11,006 27,890
</TABLE>

- ----------
(1) The 5% and 10% assumed rates of appreciation are prescribed by the rules and
regulations of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of the future trading prices of its
Common Stock. There can be no assurance that any of the values reflected in
this table will be achieved. Actual gains, if any, on stock option exercises
are dependent on numerous factors, including the future performance of the
Company, overall market conditions and the option holder's continued
employment with the Company throughout the entire vesting period and option
term, which factors are not reflected in this table.

(2) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by the Board of Directors on the
date of grant.

(3) Exercise price may be paid in (i) cash, (ii) check, (iii) promissory note,
(iv) by delivery of already-owned shares of the Company's Common Stock
subject to certain conditions, (v) by delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds required
to pay the exercise price or (vi) any combination of the foregoing methods
of payment under applicable law.

(4) Twenty-five percent (25%) of the shares issuable upon exercise of options
granted under the Company's 1995 Stock Option Plan become vested on the
first anniversary of the vesting commencement date and the balance vests at
the rate of 1/48th of such shares for each month thereafter.

(5) Mr. Reade resigned as an employee of the Company in January 1998 and has
been retained by the Company as a consultant since that time. See "Certain
Transactions."

57
<PAGE>
AGGREGATE OPTION EXERCISES IN FISCAL 1997 AND DECEMBER 31, 1997 OPTION VALUES

The following table provides information with respect to the Named Executive
Officers concerning unexercised options held as of December 31, 1997. No options
were exercised by the Named Executive Officers during the last fiscal year.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997(#) DECEMBER 31, 1997($)(1)
-------------------------------- ------------------------------
NAME EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ------------- ----------------- ----------- -----------------

<S> <C> <C> <C> <C>
John W. Danner, Chairman of the Board and Chief Executive
Officer.................................................. -- -- -- --

Stephen E. Recht, Chief Financial Officer and Secretary.... 187,498 -- $ 61,874 --

Rick E. D. Jackson IV, Vice President of Marketing......... 150,000 -- 49,500 --

Martin G. Lane-Smith, Vice President of Engineering........ 214,603 -- 70,819 --

Thomas A. Shields, Vice President, Chief Technology
Officer.................................................. -- -- -- --

Larry C. Wear, Vice President of Support and Service....... 81,817 -- 27,000 --

Stephen Reade, former Vice President of Sales (3).......... 79,545 -- 26,250 --
</TABLE>

- ----------
(1) Represents the difference between the fair market value of the shares of
Common Stock underlying the options at December 31, 1997 ($0.55 per share,
as determined by the Board of Directors) less the exercise price of such
options ($0.22 per share).

(2) The option shares are immediately exercisable, subject to the Company's
repurchase option at the original exercise price upon the optionee's
cessation of service prior to vesting in such option shares. The repurchase
option lapses or the option shares become vested as follows: 25% of the
option shares vest upon the completion of one year of service from the
vesting commencement date and an additional 1/48th of such shares become
exercisable each month thereafter.

(3) Mr. Reade resigned as an employee from the Company in January 1998 and has
been retained by the Company as a consultant since such time. See "Certain
Transactions."

EMPLOYEE BENEFIT PLANS

1995 STOCK OPTION PLAN. The Company's 1995 Stock Option Plan (the "1995
Plan") was adopted by the Board of Directors in September 1995 and was approved
by the Company's stockholders in October 1995. At March 31, 1998, a total of
2,727,570 shares of Common Stock had been reserved for issuance under the 1995
Plan. The 1995 Plan provides for grants of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to employees (including officers and employee directors) and
nonstatutory stock options to employees (including officers and employee
directors) and consultants of the Company. Directors who are not also employees
are not eligible to receive grants under the 1995 Plan once the Company
registers any class of any equity security pursuant to the Exchange Act. The
purposes of the 1995 Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive to
employees and consultants of the Company and its subsidiaries and to promote the
success of the Company's business. The 1995 Plan is administered by the Board of
Directors or by a committee appointed by the Board which identifies optionees
and determines the terms of options granted, including the exercise price,
number of shares subject to the option and the exercisability thereof.

The terms of options granted under the 1995 Plan may not exceed ten years.
The term of all incentive stock options granted to an optionee who, at the time
of grant, owns stock representing more than 10% of the voting power of all
classes of stock of the Company or a parent or subsidiary of the Company (a "Ten
Percent Stockholder"), may not exceed five years, however. Generally, options
granted under the 1995 Plan vest and

58
<PAGE>
become exercisable starting one year after the date of grant, with 25% of the
shares subject to the option becoming exercisable at that time and an additional
1/48th of such shares becoming exercisable each month thereafter. Holders of
options granted under the 1995 Plan may exercise their options prior to complete
vesting of shares, provided that such holders enter into a restricted stock
purchase agreement granting the Company an option to repurchase any unvested
shares at a price per share equal to the original exercise price per share for
the option in the event of a termination of the optionee's employment or
consulting relationship. The exercise price of incentive stock options granted
to an employee under the 1995 Plan must be at least equal to the fair market
value of the shares on the date of grant. The exercise price of any incentive
stock option granted to a Ten Percent Stockholder must equal at least 110% of
the fair market value of the Common Stock on the date of grant. The exercise
price of nonstatutory stock options granted to a Ten Percent Stockholder under
the 1995 Plan must be no less than 110% of the fair market value of the Common
Stock on the date of grant. The exercise price of nonstatutory stock options
granted to a non-Ten Percent Stockholder may be no less than 85% of the fair
market value of the Common Stock on the date of grant for non-Ten Percent
Stockholder employees and consultants. The consideration for exercising any
incentive stock option or any nonstatutory stock option is determined by the
Board of Directors and may consist of (i) cash, (ii) check, (iii) promissory
note, (iv) delivery of already-owned shares of the Company's Common Stock
subject to certain conditions, (v) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale or loan proceeds required to pay the exercise
price or (vi) any combination of the foregoing methods of payment under
applicable law.

No option granted under the 1995 Plan may be transferred by the optionee
other than by will or the laws of descent or distribution, and each option may
be exercised, during the lifetime of the optionee, only by such optionee. An
optionee whose relationship with the Company or any related corporation ceases
for any reason (other than death or permanent and total disability) may exercise
options in the three-month period following such cessation (unless such options
terminate or expire sooner by their terms). In the event of a proposed sale of
all or substantially all of the Company's assets or merger of the Company with
or into another corporation, all outstanding options may either be assumed or an
equivalent option may be substituted by the surviving entity. If such options
are not assumed or substituted, each optionee may exercise options as to all of
the shares subject to the option agreement, including shares as to which such
options would not otherwise be exercisable and the options become fully vested,
or to the extent such options have been exercised and unvested shares remain
subject to a restricted stock purchase agreement, the Company's repurchase
option will lapse entirely. In the event that the options become fully vested in
connection with a sale of assets or merger of the Company, the optionees will be
notified that the options are fully vested for a period of fifteen (15) days
from the date of such notice, and that the options will terminate upon the
expiration of such period.

As of March 31, 1998, 1,208,865 shares of Common Stock had been issued upon
exercise of options outstanding under the 1995 Plan. Options to purchase
1,329,408 shares of Common Stock at a weighted average exercise price of $0.27
were also outstanding.

1998 STOCK PLAN. The Company's 1998 Stock Plan (the "1998 Plan") was
adopted by the Board of Directors on April 23, 1998, subject to stockholder
approval. As of the date of this Prospectus, no shares had been issued and no
stock options had been granted under the 1998 Plan.

The 1998 Plan provides for the grant of incentive stock options, within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, (the
"Code") to employees (including officers and employee directors) and for the
grant of nonstatutory stock options and stock purchase rights ("SPRs") to
employees, directors and consultants. A total of 2,000,000 shares of Common
Stock, plus annual increases equal to the lesser of (i) 1,000,000 shares, (ii)
5% of the outstanding shares, or (iii) a lesser amount determined by the Board
of Directors, are currently reserved for issuance pursuant to the 1998 Plan.
Unless terminated sooner, the 1998 Plan will terminate automatically in April
2008.

The 1998 Plan may be administered by the Board of Directors or a committee
of the Board (as applicable, the "Administrator"). The Administrator has the
power to determine the terms of the options or SPRs granted, including the
exercise price of the option or SPR, the number of shares subject to each option
or SPR, the

59
<PAGE>
exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the Administrator has the authority to amend, suspend or
terminate the 1998 Plan, provided that no such action may affect any share of
Common Stock previously issued and sold or any option previously granted under
the 1998 Plan.

Options and SPRs granted under the 1998 Plan are generally not transferable
by the optionee, and each option and SPR is exercisable during the lifetime of
the optionee only by such optionee. Options granted under the 1998 Plan must
generally be exercised within three months after the end of optionee's status as
an employee, director or consultant of the Company, 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 term.

In the case of SPRs, unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship with the Company for any reason (including
death or disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

The exercise price of all incentive stock options granted under the 1998
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 and SPRs granted
under the 1998 Plan is determined by the Administrator, 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 be at least 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 the Company's outstanding capital
stock, the exercise price of any incentive stock option granted must at least
equal 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 1998 Plan may not exceed ten years.

The 1998 Plan provides that in the event of a merger of the Company with or
into another corporation, or a sale of substantially all of the Company's
assets, each option and SPR shall be assumed or an equivalent option substituted
for by the successor corporation. If the outstanding options and SPRs are not
assumed or substituted for by the successor corporation, the Administrator shall
provide for the optionee to have the right to exercise the option or SPR as to
all of the optioned stock, including shares as to which it would not otherwise
be exercisable. If an option or SPR becomes exercisable in full in connection
with a merger or sale of assets, the Administrator shall notify the optionee
that the option or SPR shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the option or SPR will terminate upon the
expiration of such period.

1998 EMPLOYEE STOCK PURCHASE PLAN. The Company's 1998 Employee Stock
Purchase Plan (the "1998 Purchase Plan") was adopted by the Board of Directors
on April 23, 1998, subject to stockholder approval. A total of 200,000 shares of
Common Stock have been reserved for issuance under the 1998 Purchase Plan, plus
annual increases equal to the lesser of (i) 750,000 shares, (ii) 4% of the
outstanding shares on such dates or (iii) a lesser amount determined by the
Board.

The 1998 Purchase Plan, which is intended to qualify under Section 423 of
the Code, contains consecutive, overlapping, twenty-four month offering periods.
Each offering period includes four six-month purchase periods. The offering
periods generally start on the first trading day on or after February 1 and
August 1 of each year, except for the first such offering period which commences
on the first trading day on or after the effective date of this Offering and
ends on the last trading day on or before July 31, 2000.

Employees are eligible to participate if they are customarily employed by
the Company or any participating subsidiary for at least 20 hours per week and
more than five months in any calendar year. However, any employee who (i)
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 the Company, or
(ii) whose rights to purchase stock under all employee stock purchase plans of
the Company accrues at a rate which exceeds $25,000 worth of stock for each
calendar year may not be granted an option to purchase stock under the 1998
Purchase Plan. The 1998 Purchase Plan permits

60
<PAGE>
participants to purchase Common Stock through payroll deductions of up to 10% of
the participant's "compensation." Compensation is defined as the participant's
base straight time gross earnings and commissions but excludes payments for
overtime, shift premium, incentive compensation, incentive payments, bonuses and
other compensation. The maximum number of shares a participant may purchase
during a single purchase period is 5,000 shares.

Amounts deducted and accumulated by the participant are used to purchase
shares of Common Stock at the end of each purchase period. The price of stock
purchased under the 1998 Purchase Plan is 85% of the lower of the fair market
value of the Common Stock (i) at the beginning of the offering period or (ii) at
the end of the purchase period; provided, however, that under certain
circumstances, the purchase price may be adjusted to a price not less than 85%
of the lower of the fair market value on the Common Stock on (i) the date the
Company's stockholders approve an increase in shares reserved for issuance under
the 1998 Purchase Plan or (ii) at the end of the purchase period. In the event
the fair market value at the end of a purchase period is less than the fair
market value at the beginning of the offering period, the participants will be
withdrawn from the current offering period following exercise and automatically
re-enrolled in a new offering period. The new offering period will use the lower
fair market value as of the first date of the new offering period to determine
the purchase price for future purchase periods. 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 the Company.

Rights granted under the 1998 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the 1998 Purchase Plan. The 1998 Purchase Plan provides
that, in the event of a merger of the Company with or into another corporation
or a sale of substantially all of the Company'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 that is before the date of the Company's proposed sale or merger. The
1998 Purchase Plan will terminate in April 2008. The Board of Directors has the
authority to amend or terminate the 1998 Purchase Plan, except that no such
action may adversely affect any outstanding options under the 1998 Purchase
Plan.

1998 DIRECTOR OPTION PLAN. The 1998 Director Option Plan (the "Director
Plan") was adopted by the Board of Directors on April 23, 1998, subject to
stockholder approval. The Director Plan provides for the grant of nonstatutory
stock options to non-employee directors. The Director Plan has a term of ten
years, unless terminated sooner by the Board. A total of 200,000 shares of
Common Stock have initially been reserved for issuance under the Director Plan.
In addition, the Director Plan provides for annual increases equal to the lesser
of (i) the number of shares needed to restore the maximum aggregate number of
shares available for sale under the Director Plan to 200,000 shares or (ii) a
lesser number of shares determined by the Board.

The Director Plan provides that each non-employee director shall
automatically be granted an option to purchase 25,000 shares of Common Stock
(the "First Option") on the later of (i) the effective date of the Director Plan
or (ii) the date which such person first becomes a non-employee director. In
addition to the First Option, each non-employee director shall automatically be
granted an option to purchase 5,000 shares (a "Subsequent Option") on the date
of each of the Company's annual meeting of stockholders, if on such date he or
she shall have served on the Board for at least six months. Each First Option
and Subsequent Option shall have a term of 10 years. The shares subject to the
First Option and Subsequent Option shall vest as to 25% of the optioned stock
one year from the date of grant, and 1/48 of the optioned stock shall vest each
month thereafter, provided the person continues to serve as a director on such
dates. Holders of options granted under the Director Plan may exercise their
options prior to complete vesting of shares, subject to such holders entering
into restricted stock purchase agreements granting the Company an option to
repurchase, any unvested shares at a price per share equal to the original
exercise price per share for the option in the event of a termination of the
optionee's directorship. The exercise price of each First Option and each
Subsequent Option shall be 100% of the fair market value per share of the Common
Stock on the date of grant.

61
<PAGE>

In the event of a merger of the Company or the sale of substantially all of
the assets of the Company, each option may be assumed or an equivalent option
substituted for by the successor corporation. If an option is assumed or
substituted for by the successor corporation, it shall continue to vest as
provided in the Director Plan. However, if a non-employee director's status as a
director of the Company or the successor corporation, as applicable, is
terminated other than upon a voluntary resignation by the non-employee director,
each option granted to such non-employee director shall become fully vested and
exercisable upon such termination date. If the successor corporation does not
agree to assume or substitute for the option, each option shall become fully
vested and exercisable for a period of fifteen days from the date the Board
notifies the optionee of the option's full exercisability, after which period
the option shall terminate. Options granted under the Director Plan must be
exercised within three months of the end of the optionee's tenure as a director
of the Company, or within twelve months after such director's termination by
death or disability, but in no event later than the expiration of the option's
ten-year term. Options granted under the Director Plan are generally not
transferable by the optionee other than by will or the laws of descent and
distribution, and each option is exercisable, during the lifetime of the
optionee, only by such optionee.

401(K) PLAN. The Company participates in a tax-qualified employee savings
and retirement plan (the "401(k) Plan") which covers all of the Company's
full-time employees who are at least 21 years of age. Pursuant to the 401(k)
Plan, eligible employees may defer up to 20% of their pre-tax earnings, subject
to the Internal Revenue Service's annual contribution limit. The 401(k) Plan
permits additional discretionary matching contributions by the Company on behalf
of all participants in the 401(k) Plan in such a percentage amount as may be
determined annually by the Board of Directors. To date, the Company has made no
such matching contributions. The 401(k) Plan is intended to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended, so that
contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in any of a
number of investment options.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Amended and Restated Certificate of Incorporation, as amended,
limits the liability of directors to the maximum extent not prohibited by
Delaware law. Delaware law provides that a corporation's certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director for monetary damages for breach of their fiduciary
duties as directors, except for liability (i) for any breach of their duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law
or (iv) for any transaction from which the director derived an improper personal
benefit.

The Company's Amended and Restated Bylaws provide that the Company shall
indemnify its directors, officers and employee benefit plan fiduciaries, and may
indemnify its employees and agents to the fullest extent permitted by law. The
Company believes that indemnification under its Amended and Restated Bylaws
covers at least negligence and gross negligence on the part of indemnified
parties. The Company's Amended and Restated Bylaws also permit the Company to
advance expenses incurred by an indemnified director or officer in connection
with the defense of any action or proceeding arising out of such director's or
officer's status or service as a director or officer of the Company upon an
undertaking by such director or officer to repay such advances if it is
ultimately determined that such director or officer is not entitled to such
indemnification.

The Company has entered into agreements to indemnify its directors and
officers, in addition to the indemnification provided for in the Company's
Amended and Restated Bylaws. These agreements, among other things, indemnify the
Company's directors and officers for certain expenses (including attorneys' fees
and associated legal expenses), judgments, fines and amounts paid in settlement
amounts if such settlement is approved in advance by the Company, which approval
shall not be unreasonably withheld, actually and reasonably incurred by any such
person in any action, suit, proceeding or alternative dispute resolution
mechanism arising out of such

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person's services as a director or officer of the Company, any subsidiary of the
Company or any other company or enterprise to which the person provides services
at the request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain qualified directors and officers.

At present, there is no pending litigation or proceeding involving any
director, officer, employee benefit plan fiduciary, employee or agent of the
Company where indemnification will be required or permitted. The Company is not
aware of any threatened litigation or proceeding that might result in a claim
for such indemnification.

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CERTAIN TRANSACTIONS

Since the Company's inception in September 1995, there has not been any
transaction or series of similar transactions to which the Company was or is a
party in which the amount involved exceeded or exceeds $60,000 and in which any
Director, executive officer, holder of more than 5% of any class of the
Company's voting securities or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material interest, other
than the transactions described below.

EQUITY AND CONVERTIBLE DEBT FINANCINGS

INITIAL SALES OF COMMON STOCK TO FOUNDERS. On September 29, 1995, the
Company issued and sold 1,636,363 shares of Common Stock to John W. Danner, the
Company's Chairman of the Board and Chief Executive Officer, and 818,181 shares
of Common Stock to Thomas A. Shields, the Company's Vice President, Chief
Technology Officer, for an aggregate purchase price of $150,000 or approximately
$0.06 per share. Such shares are subject to pro-rata monthly vesting over the
four-year period commencing on the purchase date. This vesting will accelerate
in full upon certain changes of control of the Company. On February 20, 1997,
the Company repurchased 89,212 and 356,850 shares of such Common Stock from
Messrs. Danner and Shields, respectively, at a price of $0.22 per share.

COMMON STOCK AND BRIDGE NOTE FINANCING. From September through November
1995, the Company issued and sold an aggregate of 818,181 shares of Common Stock
for an aggregate purchase price of $49,999.98, or approximately $0.06 per share,
and issued bridge notes in the aggregate amount of $450,000, the principal and
interest of which were convertible into Preferred Stock (the "Common Stock and
Bridge Note Financing"). The investors in the Common Stock and Bridge Note
Financing included, among others, (1) a trust controlled by Alden E. and Ann
Danner, parents of John W. Danner, which trust purchased 163,636 shares of
Common Stock and lent the Company $90,000 at an annual simple interest rate of
5.91%, the principal and interest on which converted into Series A Preferred
Stock in the Company's Series A Preferred Stock financing (the "Series A
Preferred Stock Financing"); (2) Thomas A. Shields, Sr., the father of the
Company's Vice President, Chief Technology Officer, who purchased 81,818 shares
of Common Stock and lent to the Company $45,000 at an annual simple interest
rate of 5.91%, which principal and interest converted into Series A Preferred
Stock in the Series A Preferred Stock Financing; and (3) a trust controlled by
John D. D. Kohler, a Director of the Company, which trust purchased 163,636
shares of Common Stock and lent the Company $90,000 at an annual simple interest
rate of 5.91%, which principal and interest converted into Series A Preferred
Stock in the Series A Preferred Stock Financing.

SERIES A PREFERRED STOCK FINANCING. In January and April 1996, the Company
issued and sold an aggregate of 4,404,578 shares of Series A Preferred Stock for
an aggregate purchase price of $4,448,623.78, or $1.01 per share. The investors
in such shares included, among others, (1) Vector Capital, L.P. ("Vector
Capital"), a general partner of which is Vector Capital Partners, L.L.C., of
which Alexander R. Slusky, a Director of the Company, is the Managing Member,
which limited partnership purchased 500,000 shares of Series A Preferred Stock;
(2) a trust controlled by Alden E. and Ann Danner, parents of John W. Danner,
which trust purchased 90,623 shares of Series A Preferred Stock; (3) a trust
controlled by Thomas A. Shields, Sr., which trust purchased 45,117 shares of
Series A Preferred Stock; (4) a trust controlled by John D. D. Kohler, which
trust purchased 90,609 shares of Series A Preferred Stock; (5) Larry C. Wear,
Vice President of Support and Services, who purchased 49,504 shares of Series A
Preferred Stock; and (6) certain entities affiliated with an institutional
investor that was a holder of more than 5% of the Company's securities and that
held a seat on the Board of Directors of the Company until March 1998, which
entities purchased 3,073,738 shares of Series A Preferred Stock, all of which
stock was sold by such investor and its affiliated entities in March 1998 to
other institutional investors in the Company for an aggregate selling price of
approximately $3,688,485. Upon consummation of this offering, the outstanding
shares of Series A Preferred Stock will automatically convert into an aggregate
of 2,494,148 shares of Common Stock.

SERIES B PREFERRED STOCK FINANCING. In March 1997, the Company issued and
sold an aggregate of 4,307,969 shares of Series B Preferred Stock at an
aggregate purchase price of $4,299,999.24, or approximately $1.00 per share. The
investors in such shares included, among others, (1) Vector Capital which
purchased 3,506,487 shares of Series B Preferred Stock; (2) Redleaf Venture I,
L.P. and Redleaf Associates I, L.P. (together, "Redleaf"), the

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general partner of which is Redleaf Venture Management, L.L.C. of which John D.
D. Kohler, a Director of the Company, is a Managing Member, which limited
partnerships purchased an aggregate of 300,556 shares of Series B Preferred
Stock; (3) Jonathan D. Lazarus, a Director of the Company, who purchased 75,139
shares of Series B Preferred Stock; and (4) certain entities affiliated with an
institutional investor that was a holder of more than 5% of the Company's
securities and that held a seat on the Board of Directors of the Company until
March 1998, which entities purchased 400,741 shares of Series B Preferred Stock,
all of which stock was sold by such investor and its affiliated entities in
March 1998 to other institutional investors in the Company for an aggregate
selling price of approximately $480,889. Upon consummation of this offering, the
outstanding shares of Series B Preferred Stock will automatically convert into
an aggregate of 1,958,159 shares of Common Stock.

SERIES C PREFERRED STOCK FINANCING. In November 1997 and March 1998, the
Company issued and sold an aggregate of 3,887,978 shares of Series C Preferred
Stock for aggregate net proceeds to the Company of $8,710,003, or approximately
$2.24 per share. The investors in such shares included, among others, (1) London
Pacific Life & Annuity Company, an owner of more than 5% of the Company's Common
Stock, which purchased 2,437,241 shares of Series C Preferred Stock and (2)
Vector Capital, which purchased 669,571 shares of Series C Preferred Stock. Upon
consummation of this offering, the outstanding shares of Series C Preferred
Stock will automatically convert into an aggregate of 1,767,261 shares of Common
Stock.

REGISTRATION RIGHTS AGREEMENT

Certain holders of Preferred Stock have certain registration rights with
respect to their shares of Common Stock issuable upon conversion of their
Preferred Stock. See "Description of Capital Stock--Registration Rights."

EMPLOYMENT AND SEVERANCE AGREEMENTS

SUSAN ATHERTON EMPLOYMENT AGREEMENT. In April 1998, the Company and Ms.
Atherton, the Company's Vice President of Sales, entered into an employment
agreement under which Ms. Atherton is entitled to receive severance benefits
under certain circumstances. Pursuant to her employment agreement, Ms. Atherton
was granted an option to purchase up to 176,802 shares of the Company's Common
Stock, subject to the Company's standard vesting provisions. In the event that
Ms. Atherton's employment with the Company is involuntarily terminated by the
Company without cause prior to October 23, 1998, such option would become
immediately vested as to 22,100 shares of Common Stock. In the event Ms.
Atherton is involuntarily terminated by the Company or a successor company
without cause within 12 months of a Change of Control, defined to include (i)
the acquisition of the Company, (ii) the merger or consolidation of the Company
with any other corporation or (iii) a sale of all or substantially all of the
Company's assets, Ms. Atherton would be entitled to a lump sum payment equal to
18 months of Ms. Atherton's base salary as in effect immediately prior to the
Change of Control, which lump sum payment would equal approximately $225,000,
based on Ms. Atherton's current base salary.

STEPHEN E. RECHT EMPLOYMENT AND SEVERANCE AGREEMENT. In March 1998, the
Company and Mr. Recht, Chief Financial Officer and Secretary of the Company,
entered into an employment and severance agreement under which Mr. Recht is
entitled to receive certain benefits generally in the event Mr. Recht is
involuntarily terminated by the Company or a successor company without cause (i)
upon the acquisition of the Company, (ii) upon the merger or consolidation of
the Company with any other corporation, (iii) upon a sale of all or
substantially all of the Company's assets (each a "Change of Control") or (iv)
within 12 months of a Change of Control. Upon such a termination, Mr. Recht
would be entitled to (i) a total of 18 monthly payments equal to Mr. Recht's
monthly base salary as in effect immediately prior to the Change of Control,
currently $13,750 per month, and (ii) reimbursements for a period of 18 months
for the cost of Mr. Recht's group health and dental plan coverage.

STEPHEN READE SEPARATION AGREEMENT. In March 1998, the Company and Mr.
Reade, the Company's former Vice President of Sales, entered into a separation
agreement and release of all claims with the Company. Pursuant to such
agreement, Mr. Reade agreed to provide consulting services to the Company for a
six-month period following his resignation date (the "Consulting Period"), to
continue to be subject to certain competitive restrictions during

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the Consulting Period and to release the Company from all claims related to his
employment. The Company also agreed to pay Mr. Reade $50,000 for his consulting
services, to allow the continued vesting of his outstanding stock options during
the Consulting Period and to release Mr. Reade from all claims related to his
employment.

MARTIN LANE-SMITH EMPLOYMENT AGREEMENT. In October 1997, the Company and
Mr. Lane-Smith, the Company's Vice President of Engineering, entered into an
employment agreement under which Mr. Lane-Smith was granted an option covering
an aggregate of 214,603 shares of Common Stock. The employment agreement, as
amended, also provides for the grant of an additional option to purchase up to
78,021 additional shares of the Company's Common Stock, which option will be
granted in October 1998 in the event Mr. Lane-Smith meets certain performance
criteria established by the Company.

The Company also has granted options to certain of its executive officers
pursuant to at-will employment agreements. Such options are described further in
the Management section under "Executive Compensation" and "Option Grants in
Fiscal 1997."

PROTEGE SOFTWARE PROFESSIONAL SERVICES AGREEMENT. In March 1997, the
Company and Protege Software (Holdings) Limited ("Protege") entered into a
professional services agreement (the "Professional Services Agreement") under
which Protege agreed to act as general manager for the Company in Europe. In
addition, Protege agreed to perform certain professional services for the
Company. In connection with the Professional Services Agreement, Jitendra
Valera, an employee of Protege, serves as the Company's Vice President and
General Manager of Europe. See "Management--Executive Officers and Directors."

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1998 and as adjusted to
reflect the sale of the shares of Common Stock offered hereby by (i)
each person or entity who is known by the Company to own beneficially 5% or more
of the Company's outstanding Common Stock, (ii) each director of the Company,
(iii) each of the Named Executive Officers and (iv) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED(1)
SHARES ------------------------
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OWNED(1) OFFERING OFFERING
- -------------------------------------------------------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Vector Capital, L.P.(2) ........................................................ 3,449,504 33.6%
c/o Ziff Brothers Investments
153 East 53rd Street, 43rd Floor
New York, NY 10022
London Pacific Life & Annuity Company .......................................... 1,377,461 13.4
3109 Poplarwood Court, Suite 108
Raleigh, NC 27604
John W. Danner(3)(8)............................................................ 1,545,809 15.1
John D. D. Kohler(4)............................................................ 621,183 6.1
Alexander R. Slusky(2).......................................................... 3,449,504 33.6
Jonathan D. Lazarus(5).......................................................... 52,335 *
Stephen E. Recht(6)............................................................. 187,613 1.8
Rick E. D. Jackson IV(7)........................................................ 150,114 1.5
Thomas A. Shields(3)(8)......................................................... 461,444 4.5
Martin G. Lane-Smith(9)......................................................... 214,717 2.0
Larry C. Wear(10)............................................................... 172,482 1.7
All directors and executive officers as a group (11 people)(11)................. 6,889,403 63.2
</TABLE>

- ----------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.

(1) Applicable percentage ownership is based on 10,261,750 shares of Common
Stock and Preferred Stock (on an as converted to Common Stock basis)
outstanding as of March 31, 1998 and shares immediately following
the completion of this offering (assuming no exercise of the Underwriters'
over-allotment option). Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities, subject to
community property laws, where applicable. Shares of Common Stock subject to
options or warrants that are presently exercisable or exercisable within 60
days of March 31, 1998 are deemed to be beneficially owned by the person
holding such options or warrants for the purpose of computing the percentage
ownership of such person but are not treated as outstanding for the purpose
of computing the percentage ownership of any other person.

(2) Includes all shares held by Vector Capital, L.P. Vector Capital Partners,
L.L.C. is the General Partner of Vector Capital, L.P. Mr. Slusky, a Director
of the Company, is the Managing Member of Vector Capital Partners, L.L.C.
Mr. Slusky disclaims beneficial ownership of the shares held by Vector
Capital, L.P. except to the extent of his pecuniary interests therein from
his membership interest in Vector Capital Partners, L.L.C.

(3) Messrs. Danner and Shields, and certain other stockholders of the Company
have granted the Underwriters an over-allotment option, exercisable not
later than 30 days after the date of this Prospectus, to purchase an
aggregate of shares of Common Stock at the public offering price set
forth on the cover page of this Propectus, less underwriting discounts and
commissions. See "Underwriting." If the Underwriters exercise the
over-allotment option in full, Mr. Danner will sell shares of Common
Stock, resulting in his ownership of shares ( %), Mr. Shields
will sell shares of Common Stock, resulting in his ownership of
shares ( %), and all directors and executive

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<PAGE>

officers as a group will sell shares of Common Stock, resulting in
ownership of shares ( %) after the closing of the offering.
Additionally, in the event of exercise of the Underwriters' over-allotment
option in full, will sell shares resulting in his ownership of
shares ( %) after the offering.

(4) Includes 163,636 shares held by the Kohler Family Trust, of which Mr. Kohler
is a trustee. Also includes 3,933 shares held by Redleaf Associates I, L.P.
and 453,614 shares held by Redleaf Venture I, L.P. (collectively, the
"Redleaf Limited Partnerships"). Mr. Kohler, a Director of the Company, is
the Managing Member of Redleaf Venture Management, L.L.C., the General
Partner of the Redleaf Limited Partnerships. Mr. Kohler disclaims beneficial
ownership of the shares held by the Redleaf Limited Partnerships except to
the extent of his pecuniary interest therein.

(5) Consists of 52,335 shares held by Lazarus Family Investments LLC, of which
Mr. Lazarus is a Managing Member.

(6) Includes 187,500 shares issuable upon the exercise of stock options
exercisable within 60 days of March 31, 1998.

(7) Consists of 150,114 shares of Common Stock issuable upon the exercise of
stock options exercisable within 60 days of March 31, 1998.

(8) Includes 113 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 31, 1998.

(9) Consists of 214,717 shares of Common Stock issuable upon the exercise of
stock options exercisable within 60 days of March 31, 1998.

(10) Includes 81,931 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 31, 1998.

(11) Includes 634,489 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 31, 1998.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the completion of this offering, the Company will be authorized to
issue 50,000,000 shares of Common Stock, $0.001 par value, and 5,000,000 shares
of undesignated Preferred Stock, $0.001 par value. Immediately after the
completion of this offering and assuming no exercise of the Underwriters'
over-allotment option, there will be an aggregate of shares of Common
Stock outstanding, shares of Common Stock will be issuable upon exercise
of outstanding options and no shares of Preferred Stock will be issued and
outstanding.

The following description of the Company's capital stock and certain
provisions of the Company's Amended and Restated Certificate of Incorporation,
as amended, and Amended and Restated Bylaws does not purport to be complete and
is subject to and qualified in its entirety by the Company's Amended and
Restated Certificate of Incorporation and Bylaws, which are included as exhibits
to the Registration Statement of which this Prospectus forms a part, and by
applicable provisions of Delaware law.

COMMON STOCK

As of March 31, 1998, there were 4,042,182 shares of Common Stock
outstanding that were held of record by approximately 77 stockholders. There
will be shares of Common Stock outstanding (assuming no exercise of the
Underwriters' over-allotment option and no exercise of options then outstanding)
after giving effect to the sale of Common Stock offered to the public hereby.
The holders of Common Stock are entitled to one vote per share held of record on
all matters submitted to a vote of stockholders. Holders of Common Stock do not
have cumulative voting rights, and, therefore, holders of a majority of the
shares voting for the election of directors can elect all of the directors. In
such event, the holders of the remaining shares will not be able to elect any
directors.

Holders of the Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between the Company and its debtholders. The Company has never declared or paid
cash dividends on its capital stock, expects to retain future earnings, if any,
for use in the operation and expansion of its business, and does not anticipate
paying any cash dividends in the foreseeable future. In addition, the Company's
bank line of credit agreement contains a restrictive covenant that limits the
Company's ability to pay cash dividends or make stock repurchases without the
prior written consent of the lender. See "Dividend Policy." In the event of the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets legally available for
distribution after payment of all debts and other liabilities and subject to the
prior rights of holders of Preferred Stock then outstanding, if any.

PREFERRED STOCK

Effective upon the closing of this offering, the Company will be authorized
to issue 5,000,000 shares of undesignated Preferred Stock. The Board of
Directors has the authority to issue the Preferred Stock in one or more series
and to fix the price, rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting a series or the designation of such series, without any
further vote or action by the Company's stockholders. The issuance of Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the stockholders and may adversely affect the market price of, and the
voting and other rights of, the holders of Common Stock. The issuance of
Preferred Stock with voting and conversion rights may adversely affect the
voting power of the holders of Common Stock, including the loss of voting
control to others. The Company has no current plans to issue any shares of
Preferred Stock.

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ANTITAKEOVER EFFECTS OF PROVISIONS OF CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW

The Company's Amended and Restated Certificate of Incorporation, as amended
(the "Certificate") provides that all stockholder actions must be effected at a
duly called annual or special meeting and may not be effected by written
consent. The Company's Amended and Restated Bylaws provide that, except as
otherwise required by law, special meetings of the stockholders can only be
called pursuant to a resolution adopted by a majority of the Board of Directors
or by the chief executive officer of the Company. In addition, the Amended and
Restated Bylaws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders, including proposed
nominations of persons for election to the Board. Stockholders at an annual
meeting may only consider proposals or nominations specified in the notice of
meeting or brought before the meeting by or at the direction of the Board of
Directors or by a stockholder who was a stockholder of record on the record date
for the meeting, who is entitled to vote at the meeting and who has delivered
timely written notice in proper form to the Company's Secretary of the
stockholder's intention to bring such business before the meeting. The
Certificate and the Amended and Restated Bylaws provide that the affirmative
vote of holders of at least a majority of the total votes eligible to be cast in
the election of directors is required to amend, alter, change or repeal certain
of their provisions.

The foregoing provisions of the Company's Certificate and Amended and
Restated Bylaws are intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors and to discourage certain types of
transactions which may involve an actual or threatened change of control of the
Company. Such provisions are designed to reduce the vulnerability of the Company
to an unsolicited acquisition proposal and, accordingly, could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. Such provisions are also intended to discourage certain tactics
that may be used in proxy fights but could, however, have the effect of
discouraging others from making tender offers for the Company's shares and,
consequently, may also inhibit fluctuations in the market price of the Company's
shares that could result from actual or rumored takeover attempts. These
provisions may also have the effect of preventing changes in the management of
the Company. See "Risk Factors--Antitakeover Effects of Certain Charter
Provisions, Bylaws and Delaware Law."

EFFECT OF DELAWARE ANTITAKEOVER STATUTE

The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) 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; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at 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 (x) by persons who are directors and also
officers and (y) by the 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 (iii) 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.

Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition involving the interested stockholder
of 10% or more of the assets of the corporation; (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,

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pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person. See "Risk Factors--Anti-Takeover Effects of
Certain Charter Provisions, Bylaws and Delaware Law."

REGISTRATION RIGHTS

After this offering, the holders of 9,305,070 shares of Common Stock will be
entitled upon expiration of lock-up agreements with the Underwriters to certain
rights with respect to the registration of such shares under the Securities Act.
Under the terms of the agreement between the Company and the holders of such
registrable securities, if the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other securities holders exercising registration rights, such holders
are entitled to notice of such registration and are entitled to include shares
of such Common Stock therein. Holders of registration rights may also require
the Company to file a registration statement under the Securities Act at the
Company's expense with respect to their shares of Common Stock, and the Company
is required to use its best efforts to effect such registration. Further,
holders may require the Company to file registration statements on Form S-3 at
the Company's expense when such form becomes available for use to the Company.
All such registration rights are subject to certain conditions and limitations,
including the right of the underwriters of an offering to limit the number of
shares to be included in such registration.

TRANSFER AGENT

The Transfer Agent and Registrar for the Common Stock is . Its
address is , and its telephone number at this location is .

LISTING

The Company has applied to have the Common Stock approved for quotation on
the Nasdaq National Market under the trading symbol "NETG."

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Common Stock of the
Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain contractual and legal
restrictions on resale (as described below), sales of substantial amounts of
Common Stock of the Company in the public market after the restrictions lapse
could adversely affect the prevailing market price and the ability of the
Company to raise equity capital in the future.

Upon completion of this offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options. Of
these shares, the shares sold in this offering will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"), unless such shares are purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act (the "Affiliates"). The remaining shares of Common Stock
held by existing stockholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rules 144, 144(k) or 701 promulgated
under the Securities Act, which rules are summarized below. As a result of the
contractual restrictions described below and the provisions of Rules 144, 144(k)
and 701, additional shares will be available for sale in the public market as
follows: (i) shares will be eligible for immediate sale on the date of
this Prospectus, (ii) shares will be eligible for sale upon expiration
of the lock-up agreements 180 days after the date of this Prospectus and (iii)
shares will be eligible for sale upon expiration of their respective
one-year holding periods, subject to the volume limitations described below, if
applicable.

Upon completion of this offering, the holders of shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. See "Description of
Capital Stock--Registration Rights." Registration of such shares under the
Securities Act would result in such shares becoming freely tradeable without
restriction under the Securities Act (except for shares purchased by Affiliates)
immediately upon the effectiveness of such resignation.

All officers and directors, and stockholders and option
holders of the Company have agreed not to sell, make any short sale of, grant
any option for the purchase of, or otherwise transfer or dispose of, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days after the date of this
Prospectus, without the prior written consent of BancAmerica Robertson Stephens.
BancAmerica Robertson Stephens currently has no plans to release any portion of
the securities subject to lock-up agreements. When determining whether or not to
release shares from the lock-up agreements, BancAmerica Robertson Stephens will
consider, among other factors, the stockholder's reasons for requesting the
release, the number of shares for which the release is being requested and
market conditions at the time.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner except an Affiliate) would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of: (i) one percent of the number of shares of Common Stock then
outstanding (which will equal approximately shares immediately after this
offering); or (ii) the average weekly trading volume of 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 also
subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an Affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years (including the holding period of any
prior owner except an Affiliate), is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144; therefore, unless otherwise restricted, "144(k)
shares" may be sold immediately upon the completion

72
<PAGE>
of this offering. In general, under Rule 701 of the Securities Act as currently
in effect, any employee, consultant or advisor of the Company who purchased
shares from the Company in connection with a compensatory stock or option plan
or other written agreement is eligible to resell such shares 90 days after the
effective date of this offering in reliance on Rule 144, but without compliance
with certain restrictions, including the holding period, contained in Rule 144.

The Company intends to file a registration statement on Form S-8 under the
Securities Act covering shares of Common Stock reserved for issuance under the
Company's 1995 Plan, 1998 Plan, 1998 Director Plan and 1998 Purchase Plan. Based
on the number of options outstanding and options and shares reserved for
issuance at March 31, 1998 under the 1995 Plan, such registration statement
would cover approximately shares. Such registration statement is expected
to be filed and become effective as soon as practicable after the effective date
of this offering. Accordingly, shares registered under such registration
statement will, subject to Rule 144 volume limitations applicable to Affiliates,
be available for sale in the open market, unless such shares are subject to
vesting restrictions with the Company or the lock-up agreements described above.
As of March 31, 1998, options to purchase 1,329,408 shares of Common Stock were
issued and outstanding under the 1995 Plan, and no options to purchase shares
had been granted under the Company's 1998 Plan, 1998 Director Plan, and 1998
Purchase Plan. See "Management--Employee Benefit Plans."

73
<PAGE>
UNDERWRITING

The Underwriters named below, acting through their representatives,
BancAmerica Robertson Stephens, NationsBanc Montgomery Securities LLC and First
Albany Corporation (the "Representatives"), have severally agreed, subject to
the terms and conditions of the Underwriting Agreement, to purchase from the
Company the numbers of shares of Common Stock set forth opposite their
respective names below. The Underwriters are committed to purchase and pay for
all such shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
BancAmerica Robertson Stephens....................................................
NationsBanc Montgomery Securities LLC.............................................
First Albany Corporation..........................................................

-----------
Total.........................................................................
-----------
-----------
</TABLE>

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the price to the public set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession of not more than $ per share, of which $ may be reallowed
to other dealers. After the public offering, the public offering price,
concession and reallowance to dealers may be reduced by the Representatives. No
such reduction shall change the amount of proceeds to be received by the Company
as set forth on the cover page of this Prospectus.

The Company and the Selling Stockholders have granted to the Underwriters an
option, exercisable during the 30-day period after the date of this Prospectus,
to purchase up to an aggregate of additional shares of Common Stock at
the initial public offering price per share set forth on the cover of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares that the number of shares of Common Stock
to be purchased by it shown in the above table represents as a percentage of the
total number of shares offered hereby. If purchased, such additional shares will
be sold by the Underwriters on the same terms as those on which the shares
offered hereby are being sold.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholders against certain civil
liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the
Underwriting Agreement.

Pursuant to the terms of lock-up agreements, the holders of shares of
the Company's Common Stock (including 6,219,568 shares of Common Stock issuable
upon conversion of outstanding Preferred Stock), have agreed, for a period of up
to 180 days after the date of this Prospectus, that, subject to certain
exceptions, they will not contract to sell or otherwise dispose of any shares of
Common Stock, any options or warrants to purchase shares of Common Stock or any
securities convertible into, or exchangeable for, shares of Common Stock, owned
directly by such holders or with respect to which they have the power of
disposition, without the prior written consent of BancAmerica Robertson
Stephens. BancAmerica Robertson Stephens may, in its sole discretion, and at any
time without notice, release all or any portion of the securities subject to the
lock-up agreements. All of the shares of Common Stock subject to the lock-up
agreements will be eligible for sale in the public market upon the expiration of
the lock-up agreements, subject in the case of any restricted shares to Rule
144.

74
<PAGE>
In addition, the Company has agreed that until 180 days after the date of
this Prospectus, the Company will not, without the prior written consent of
BancAmerica Robertson Stephens, subject to certain exceptions, offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock, any options
or warrants to purchase any shares of Common Stock or any securities convertible
into, exercisable for or exchangeable for shares of Common Stock other than the
Company's sale of shares in this offering, the issuance of shares of Common
Stock upon the exercise of outstanding options and warrants and the conversion
of shares of preferred stock and the grant of options to purchase shares of
Common Stock under existing employee stock option or stock purchase plans. See
"Shares Eligible for Future Sale."

Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock offered hereby was determined through negotiations among the Company and
the Representatives. Among the factors considered in such negotiations were
prevailing market conditions, certain financial information of the Company,
market valuations of other companies that the Company and the Representatives
believe to be comparable to the Company, estimates of the business potential of
the Company, the present state of the Company's development and other factors
deemed relevant.

The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. A "stabilizing bid" is a
bid for or the purchase of the Common Stock on behalf of the Underwriters for
the purpose of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is the bid for or the purchase of the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the Representatives in a syndicate covering transaction and has
therefore not been effectively placed by such Underwriter or syndicate member.
The Representatives have advised the Company that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

75
<PAGE>
LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
Menlo Park, California, is acting as counsel for the Underwriters in connection
with certain legal matters relating to the shares of Common Stock offered
hereby. Certain members of Wilson Sonsini Goodrich & Rosati beneficially own an
aggregate of 14,016 shares of Common Stock through an investment trust. In
addition, a member of Wilson Sonsini Goodrich & Rosati beneficially owns an
additional 164,485 shares which were issued to the spouse of such member in
connection with such spouse's former employment with the Company. If the
Underwriters' over-allotment is exercised in full, of such shares will be
sold in the offering.

EXPERTS

The consolidated financial statements and related schedule of NetGravity,
Inc. and subsidiary as of December 31, 1996 and 1997 and for the period from
September 5, 1995 (inception) to December 31, 1995 and each of the years in the
two-year period ended December 31, 1997, have been included herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and the exhibits and schedules filed as a part
thereof. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete. In each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, and each such statement is qualified in
all respects by such reference. The Registration Statement, including exhibits
and schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates,
and through the National Association of Securities Dealers, Inc. located at 1735
K Street, N.W., Washington, D.C. 20006. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is http://www.sec.gov.

76
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-2

Consolidated Balance Sheets as of December 31, 1996 and 1997 and March 31, 1998 (unaudited)................ F-3

Consolidated Statements of Operations for the Period from September 5, 1995 (Inception) to December 31,
1995, and the Years ended December 31, 1996 and 1997, and Three Months ended March 31, 1997 and 1998
(unaudited).............................................................................................. F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the Period from September 5, 1995 (Inception)
to December 31, 1995, and the Years ended December 31, 1996 and 1997, and Three Months ended March 31,
1998 (unaudited)......................................................................................... F-5

Consolidated Statements of Cash Flows for the Period from September 5, 1995 (Inception) to December 31,
1995, and the Years ended December 31, 1996 and 1997, and Three Months ended March 31, 1997 and 1998
(unaudited).............................................................................................. F-6

Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>

F-1
<PAGE>
The Board of Directors and Stockholders
NetGravity, Inc.:

When the reverse stock split referred to in Note 8 of the Notes to
Consolidated Financial Statements has been consummated, we will be in a position
to render the following report.

KPMG PEAT MARWICK LLP

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
NetGravity, Inc.:

We have audited the accompanying consolidated balance sheets of NetGravity,
Inc. and subsidiary as of December 31, 1996 and 1997, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for the period from September 5, 1995 (inception) to December 31, 1995 and
each of the years in the two-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
NetGravity, Inc. and subsidiary as of December 31, 1996 and 1997, and the
results of their operations and their cash flows for the period from September
5, 1995 (inception) to December 31, 1995 and for each of the years in the
two-year period ended December 31, 1997, in conformity with generally accepted
accounting principles.

San Francisco, California,
April 17, 1998, except as to Note 8,
which is as of May , 1998

F-2
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
-------------------- ----------------------
1996 1997 ACTUAL PRO FORMA
--------- --------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 1,020 $ 5,637 $ 6,318 $ 6,318
Accounts receivable, net of allowances of $169, $223 and $137 at
December 31, 1996 and 1997, and as of March 31, 1998,
respectively....................................................... 1,218 2,739 3,812 3,812
Prepaid expenses and other current assets........................... 182 155 219 219
--------- --------- --------- -----------
Total current assets.............................................. 2,420 8,531 10,349 10,349
Property and equipment, net........................................... 695 1,356 1,483 1,483
Other assets.......................................................... 44 -- -- --
--------- --------- --------- -----------
$ 3,159 $ 9,887 $ 11,832 $ 11,832
--------- --------- --------- -----------
--------- --------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of notes payable.................................... $ -- $ 1,140 $ 1,139 $ 1,139
Accounts payable.................................................... 257 305 289 289
Accrued liabilities................................................. 666 1,344 1,612 1,612
Deferred revenue.................................................... 1,718 3,520 4,627 4,627
--------- --------- --------- -----------
Total current liabilities......................................... 2,641 6,309 7,667 7,667
Notes payable, less current portion................................... 682 727 606 606

Commitments

Stockholders' equity (deficit):
Convertible preferred stock; $0.001 par value; 26,540,194 shares
authorized; 4,404,578, 11,149,788 and 12,600,525 shares issued and
outstanding at December 31, 1996 and 1997, and as of March 31,
1998, respectively; aggregate liquidation preference of $14,216 as
of December 31, 1997; 5,000,000 shares authorized, none outstanding
on a pro forma basis as of March 31, 1998.......................... 4 11 13 --
Common stock, $0.001 par value; 35,000,000 shares authorized;
4,234,511, 3,979,125 and 4,042,182 shares issued and outstanding at
December 31, 1996, 1997, and March 31, 1998, respectively;
50,000,000 shares authorized; 10,261,842 shares issued and
outstanding on a pro forma basis as of March 31, 1998.............. 4 4 4 10
Additional paid-in capital.......................................... 4,650 16,209 19,859 19,866
Deferred stock compensation......................................... -- (1,669) (1,813) (1,813)
Accumulated deficit................................................. (4,822) (11,704) (14,504) (14,504)
--------- --------- --------- -----------
Total stockholders' equity (deficit).............................. (164) 2,851 3,559 3,559
--------- --------- --------- -----------
$ 3,159 $ 9,887 $ 11,832 $ 11,832
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------------- ------------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
--------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for cash.............................. -- $ -- 3,822 $ 4 $ 146
Issuance of common stock upon exercise of stock options........ -- -- 542 1 32
Net loss....................................................... -- -- -- -- --
--------- --- ----- --- -------------
Balances as of December 31, 1995............................... -- -- 4,364 5 178
Issuance of common stock upon exercise of stock options........ -- -- 310 -- 62
Repurchases of common stock.................................... -- -- (439) (1) (27)
Compensation expense related to non-employee option grants..... -- -- -- -- 8
Issuance of Series A preferred stock, net of issuance costs of
$15.......................................................... 4,405 4 -- -- 4,429
Net loss....................................................... -- -- -- -- --
--------- --- ----- --- -------------
Balances as of December 31, 1996............................... 4,405 4 4,235 4 4,650
Issuance of common stock for cash.............................. -- -- 17 -- 4
Issuance of common stock upon exercise of stock options........ -- -- 301 -- 67
Compensation expense related to non-employee option grants..... -- -- -- -- 120
Deferred compensation related to grants of stock options....... -- -- -- -- 1,784
Amortization of deferred compensation.......................... -- -- -- -- --
Repurchases of common stock in connection with revaluation..... -- -- (446) -- (98)
Repurchases of common stock.................................... -- -- (126) -- (26)
Issuance of Series B preferred stock, net of issuance costs of
$18.......................................................... 4,308 4 -- -- 4,277
Issuance of Series C preferred stock, net of issuance costs of
$566......................................................... 2,437 3 -- -- 5,431
Net loss....................................................... -- -- -- -- --
--------- --- ----- --- -------------
Balances as of December 31, 1997............................... 11,150 $ 11 3,979 $ 4 $ 16,209
Issuance of common stock for cash (unaudited).................. -- -- 11 -- 2
Issuance of common stock upon exercise of stock options
(unaudited).................................................. -- -- 56 -- 12
Repurchases of common stock (unaudited)........................ -- -- (4) -- (1)
Issuance of Series C preferred stock, net of issuance costs of
$1 (unaudited)............................................... 1,451 2 -- -- 3,247
Deferred compensation related to grants of stock options
(unaudited).................................................. -- -- -- -- 390
Amortization of deferred stock compensation (unaudited)........ -- -- -- -- --
Net loss (unaudited)........................................... -- -- --
--------- --- ----- --- -------------
Balances as of March 31, 1998 (unaudited)...................... 12,601 $ 13 4,042 $ 4 $ 19,859
--------- --- ----- --- -------------
--------- --- ----- --- -------------

<CAPTION>
TOTAL
DEFERRED STOCKHOLDERS'
STOCK ACCUMULATED EQUITY
COMPENSATION DEFICIT (DEFICIT)
------------- ------------ --------------
<S> <C> <C> <C>
Issuance of common stock for cash.............................. $ -- $ -- $ 150
Issuance of common stock upon exercise of stock options........ -- -- 33
Net loss....................................................... -- (195) (195)
------------- ------------ -------
Balances as of December 31, 1995............................... -- (195) (12)
Issuance of common stock upon exercise of stock options........ -- -- 62
Repurchases of common stock.................................... -- -- (28)
Compensation expense related to non-employee option grants..... -- -- 8
Issuance of Series A preferred stock, net of issuance costs of
$15.......................................................... -- -- 4,433
Net loss....................................................... -- (4,627) (4,627)
------------- ------------ -------
Balances as of December 31, 1996............................... -- (4,822) (164)
Issuance of common stock for cash.............................. -- -- 4
Issuance of common stock upon exercise of stock options........ -- -- 67
Compensation expense related to non-employee option grants..... -- -- 120
Deferred compensation related to grants of stock options....... (1,784) -- --
Amortization of deferred compensation.......................... 115 -- 115
Repurchases of common stock in connection with revaluation..... -- -- (98)
Repurchases of common stock.................................... -- -- (26)
Issuance of Series B preferred stock, net of issuance costs of
$18.......................................................... -- -- 4,281
Issuance of Series C preferred stock, net of issuance costs of
$566......................................................... -- -- 5,434
Net loss....................................................... -- (6,882) (6,882)
------------- ------------ -------
Balances as of December 31, 1997............................... $ (1,669) $ (11,704) $ 2,851
Issuance of common stock for cash (unaudited).................. -- -- 2
Issuance of common stock upon exercise of stock options
(unaudited).................................................. -- -- 12
Repurchases of common stock (unaudited)........................ -- -- (1)
Issuance of Series C preferred stock, net of issuance costs of
$1 (unaudited)............................................... -- -- 3,249
Deferred compensation related to grants of stock options
(unaudited).................................................. (390) -- --
Amortization of deferred stock compensation (unaudited)........ 246 -- 246
Net loss (unaudited)........................................... -- (2,800) (2,800)
------------- ------------ -------
Balances as of March 31, 1998 (unaudited)...................... $ (1,813) $ (14,504) $ 3,559
------------- ------------ -------
------------- ------------ -------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 5, 1995 YEAR ENDED DECEMBER THREE MONTHS ENDED
(INCEPTION) TO 31, MARCH 31,
DECEMBER 31, -------------------- --------------------
1995 1996 1997 1997 1998
------------------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss...................................................... $ (195) $ (4,627) $ (6,882) $ (1,160) $ (2,800)
Adjustments to reconcile net loss to net cash used in
operating activities:........................................
Depreciation................................................ 5 172 540 86 231
Amortization of deferred stock compensation................. -- -- 115 -- 246
Compensation from grant of non-employee stock options....... -- 8 120 -- --
Changes in operating assets and liabilities:
Accounts receivable, net.................................. -- (1,218) (1,521) (897) (1,073)
Prepaid expenses and other assets......................... (4) (178) 27 135 (64)
Accounts payable.......................................... 18 239 48 (94) (16)
Accrued liabilities....................................... 30 635 678 114 268
Deferred revenue.......................................... -- 1,718 1,802 718 1,107
----- --------- --------- --------- ---------
Net cash used in operating activities................... (146) (3,251) (5,073) (1,098) (2,101)
----- --------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures.......................................... (62) (810) (1,201) (261) (358)
Purchases of short-term investments........................... -- (2,705) (2,466) (2,466) --
Proceeds from maturities of short-term investments............ -- 2,705 2,466 -- --
Other assets.................................................. -- (44) 44 -- --
----- --------- --------- --------- ---------
Net cash used in investing activities................... (62) (854) (1,157) (2,727) (358)
----- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from notes payable................................... 450 233 1,185 173 (122)
Proceeds from issuance of preferred stock, net................ -- 4,433 9,715 4,281 3,249
Proceeds from issuance of common stock........................ 183 62 71 -- 14
Repurchases of common stock................................... -- (28) (124) -- (1)
----- --------- --------- --------- ---------
Net cash provided by financing activities............... 633 4,700 10,847 4,454 3,140
----- --------- --------- --------- ---------
Net increase in cash and cash equivalents....................... 425 595 4,617 629 681
Cash and cash equivalents at beginning of year/period........... -- 425 1,020 1,020 5,637
----- --------- --------- --------- ---------
Cash and cash equivalents at end of year/period................. $ 425 $ 1,020 $ 5,637 $ 1,649 $ 6,318
----- --------- --------- --------- ---------
----- --------- --------- --------- ---------
Supplemental disclosures of cash flow information:
Cash paid for interest........................................ $ -- $ 18 $ 91 $ 15 $ 41
----- --------- --------- --------- ---------
----- --------- --------- --------- ---------
Non-cash financing activities:
Deferred compensation cost on employee stock option
grants..................................................... $ -- $ -- $ 1,784 $ -- $ 390
----- --------- --------- --------- ---------
----- --------- --------- --------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

NetGravity, Inc. (the Company), a Delaware corporation, was incorporated in
September 1995. The Company is the leading provider of online advertising and
direct marketing software solutions. The Company maintains its US headquarters
in California and incorporated a subsidiary in the UK in April 1997 for its
European operations. The Company incorporated a subsidiary in Japan in April
1998 for its Asia Pacific operations.

LIQUIDITY

The Company has experienced operating losses and negative cash flows from
operating activities since inception. The Company currently expects that it will
have sufficient cash and investments and available credit facilities to fund its
projected operations through at least December 31, 1998; however, if the Company
is unable to achieve projected operating results and/or obtain sufficient
financing, management will be required to curtail growth plans and implement
cost controls. Management believes that achievement of the Company's growth
goals beyond December 31, 1998 will require additional financing. No assurances
can be given that the Company will be successful in maintaining its available
credit facilities or raising additional financing.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its subsidiary. All significant intercompany balances and
transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

Cash equivalents are highly liquid investments with remaining maturities of
three months or less at the date of purchase.

INVESTMENTS

The Company has adopted Statement of Financial Accounting Standards ("SFAS")
No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. SFAS
No. 115 requires entities to classify investments in debt and equity securities
with readily determined fair values as "held-to-maturity," "available-for-sale"
or "trading" and establishes accounting and reporting requirements for each
classification. The Company generally has classified its investment securities
as available-for-sale and accounts for them at estimated fair value. Realized
and unrealized gains and losses were not significant for all periods presented.
As of December 31, 1996 and 1997, the Company did not hold any marketable
securities.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation of property and equipment is provided over the estimated useful
lives of the respective assets, estimated to be three years on a straight-line
method.

F-7
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
SOFTWARE DEVELOPMENT COSTS

In accordance with SFAS No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED, development costs related to
the software products are expensed as incurred until the technological
feasibility of the product has been established. Technological feasibility in
the Company's circumstances occurs when a working model is completed. The
Company believes its process for developing software is essentially completed
concurrent with the establishment of technological feasibility, and,
accordingly, no research and development costs have been capitalized to date.

REVENUE RECOGNITION

In October 1997, the American Institute of Certified Public Accountants
issued Statement of Position 97-2, SOFTWARE REVENUE RECOGNITION (SOP 97-2).
Effective January 1, 1998, the Company adopted SOP 97-2. SOP 97-2 generally
requires revenue earned on software arrangements involving multiple elements
such as software products, upgrades, enhancements, post-contract customer
support, installation and training to be allocated to each element based on the
relative fair values of the elements. The fair value of an element must be based
on evidence which is specific to the vendor. The revenue allocated to software
products, including specified upgrades or enhancements, generally is recognized
upon delivery of the products. The revenue allocated to unspecified upgrades and
updates and post contract customer support generally is recognized as the
services are performed. If evidence of the fair value for all elements of the
arrangement do not exist, all revenue from the arrangement is deferred until
such evidence exists or until all elements are delivered. There was no material
change to the Company's accounting for revenues as a result of the adoption of
SOP 97-2.

INCOME TAXES

The Company uses the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

F-8
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
CONCENTRATION OF CREDIT RISK

Accounts receivable potentially subject the Company to concentrations of
credit risk. The Company performs ongoing credit evaluations of its customers'
financial condition and generally does not require collateral for accounts
receivable. When required, the Company maintains allowances for credit losses,
and to date such losses have been within management's expectations.

ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of their carrying amount or fair value less cost to
sell.

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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation arrangements using the
intrinsic-value method pursuant to APB Opinion No. 25. As such, compensation
expense is recorded when on the date of grant the fair value of the underlying
common stock exceeds the exercise price for stock options or the purchase price
for issuance or sales of common stock. Pursuant to SFAS No. 123, the Company
discloses the pro forma effects of using the fair value method of accounting for
stock-based compensation arrangements.

ADVERTISING EXPENSE

The cost of advertising is generally expensed as incurred. Such costs are
included in selling and marketing expense and totalled approximately $37,000,
$783,000, $494,000, $225,000 and $266,000 during the period from September 5,
1995 (inception) to December 31, 1995, for the years ended December 31, 1996 and
1997, and for the three-month periods ended March 31, 1997 and 1998,
respectively.

FOREIGN CURRENCY TRANSACTIONS

The functional currency of the Company's UK subsidiary is the US dollar.
Resulting foreign exchange gains and losses are included in operating results
and have not been significant to the Company's consolidated operating results in
any period.

F-9
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
COMPREHENSIVE INCOME

In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME,
which establishes standards for reporting and disclosure of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997 and requires reclassification of financial
statements for earlier periods to be provided for comparative purposes. The
Company has not determined the manner in which it will present the information
required by SFAS No. 130 in its annual financial statements for the year ending
December 31, 1998. The Company's total comprehensive income (loss) for all
periods presented herein would not have differed from those amounts reported as
net loss in the consolidated statements of operations.

PER SHARE INFORMATION

Basic and diluted net loss per share are computed using the weighted average
number of outstanding shares of common stock. Pursuant to SEC Staff Accounting
Bulletin No. 98, common stock and convertible preferred stock issued for nominal
consideration, prior to the anticipated effective date of the IPO, are included
in the calculation of basic and diluted net loss per share as if they were
outstanding for all periods presented. To date, the Company has not had any
issuances or grants for nominal consideration.

Net loss per share for the year ended December 31, 1997 does not include the
effect of approximately 11,150,000 (5,563,000 on an as-if converted basis)
shares of convertible preferred stock outstanding, 1,312,399 stock options with
a weighted average exercise price of $0.22 per share, 15,908 common stock
warrants with a weighted average exercise price of $0.22 per share, or 1,171,546
shares of common stock issued and subject to repurchase by the Company at a
weighted average price of $0.22 per share, because their effects are
anti-dilutive.

Net loss per share for the quarter ended March 31, 1998 does not include the
effect of approximately 12,601,000 (6,220,000 on an as-if converted basis)
shares of convertible preferred stock outstanding, 1,329,408 stock options with
a weighted average exercise price of $0.27 per share, 27,650 common stock
warrants with a weighted average exercise price of $0.22 per share, or 1,017,229
shares of common stock issued and subject to repurchase by the Company at a
weighted average price of $0.22 per share, because their effects are
anti-dilutive.

Unaudited pro forma basic and diluted net loss per share is presented below
to reflect per share data assuming the conversion of all outstanding shares of
convertible preferred stock into common stock as if the conversion had taken
place at the beginning of 1997 or at the date of issuance, if later.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, 1997 MARCH 31, 1998
------------------- ---------------------
<S> <C> <C>
Pro forma basic and diluted net loss per share....... $ (1.00) $ (0.32)
------ ------
------ ------
Shares used in pro forma per share calculation (in
thousands)......................................... 6,856 8,807
------ ------
------ ------
</TABLE>

F-10
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The following table sets forth the reconciliation of shares used in
calculating basic and diluted, and pro forma basic and diluted net loss per
share (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, 1997 MARCH 31, 1998
------------------- ---------------------
<S> <C> <C>
Shares used in basic and diluted per share
calculation........................................ 2,799 3,025
Conversion of preferred stock--weighted average (pro
forma)............................................. 4,057 5,782
------ ------
Shares used in pro forma basic and diluted per share
calculation........................................ 6,856 8,807
------ ------
------ ------
</TABLE>

UNAUDITED INTERIM FINANCIAL INFORMATION

The consolidated financial information as of March 31, 1998 and for the
three months ended March 31, 1997 and 1998 is unaudited, but includes all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for fair presentation of the financial position at such
dates and the operations and cash flows for the periods then ended. Operating
results for the three months ended March 31, 1998 are not necessarily indicative
of results that may be expected for the entire year.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 establishes standards for the
way public business enterprises report information about operating segments in
annual financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports issued to
stockholders. SFAS No. 131 is effective for financial statements for periods
beginning after December 31, 1997. The Company has not yet determined the manner
in which it will present the information required by SFAS No. 131.

(2) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31, 1996
and 1997 (in thousands):

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Computer equipment and software............................................. $ 817 $ 1,837
Furniture and fixtures...................................................... 55 236
--------- ---------
872 2,073
Accumulated depreciation.................................................... (177) (717)
--------- ---------
Property and equipment, net............................................... $ 695 $ 1,356
--------- ---------
--------- ---------
</TABLE>

F-11
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(3) NOTES PAYABLE

The Company has a revolving credit facility with a bank in the amount of
$1,000,000 which bears interest at the prime rate (8.50% as of December 31,
1997) plus 0.75%, and expires in May 1998. Borrowings are limited to the lesser
of $1,000,000 or 70% of the net amount of eligible accounts receivable and are
secured by the Company's accounts receivable. As of December 31, 1997 and March
31, 1998, borrowings under this credit facility were $655,000 and $655,000,
respectively.

The Company has an equipment line of credit with the same bank that provides
up to $1,000,000, bears interest at the prime rate, and expires in June 2000.
The line of credit is secured by the Company's fixed assets. As of December 31,
1996 and 1997, and March 31, 1998, $682,000, $584,000 and $524,000,
respectively, had been advanced under this agreement with the principal amount
due in 30 monthly installments of $19,467 beginning December 31, 1997.

The Company also has a second equipment line of credit with the same bank
that provides up to $1,200,000, bears interest at the prime rate, and expires in
June 2000. The line of credit is secured by the Company's fixed assets. As of
December 31, 1997 and March 31, 1998, $628,000 and $566,000, respectively, had
been advanced under this agreement with the principal amount due in 30 monthly
installments of $20,933 beginning December 31, 1997.

As of December 31, 1997 and March 31, 1998, the Company was not in
compliance with certain financial covenants on all of the aforementioned credit
facilities. The Company has received a waiver of such non-compliance from the
bank.

The aggregate maturities of long-term debt for each of the years in the
three-year period subsequent to December 31, 1997 are as follows: 1998,
$1,140,000; 1999, $485,000; and 2000, $242,000.

(4) INCOME TAXES

The domestic and foreign components of loss before income taxes are as
follows (in thousands):

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED DECEMBER
SEPTEMBER 5, 1995 31,
(INCEPTION) TO --------------------
DECEMBER 31, 1995 1996 1997
------------------- --------- ---------
<S> <C> <C> <C>
Domestic............................................. $ (195) $ (4,627) $ (6,244)
Foreign.............................................. -- -- (638)
----- --------- ---------
Loss before income taxes......................... $ (195) $ (4,627) $ (6,882)
----- --------- ---------
----- --------- ---------
</TABLE>

The difference between the amount of income tax benefit recorded and the
amount of income tax benefit calculated using the U.S. federal statutory rate of
34% is due to net operating losses not being benefited.

F-12
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(4) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets as of December 31, 1996 and 1997 are
presented below (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Various accruals and reserves not deductible for tax purposes............ $ 113 $ 229
Property and equipment................................................... 34 134
Capitalized start-up expenditures........................................ 117 89
Net operating loss carryforward.......................................... 1,855 4,446
Research and development credit carryforward............................. 86 265
--------- ---------
Total deferred tax assets............................................ 2,205 5,163
Valuation allowance...................................................... (2,205) (5,163)
--------- ---------
Net deferred tax assets.............................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>

As of December 31, 1997, NetGravity Europe Limited had net operating loss
carryforwards in the UK of approximately $600,000, which can be used to offset
NetGravity Europe Limited's future income. The UK net operating loss can be
carried forward indefinitely.

As of December 31, 1997, the Company has a net operating loss carryforward
for federal and state income tax purposes of approximately $9,800,000. In
addition, the Company had federal and state research and development credit
carryforwards of approximately $145,000 and $120,000, respectively. The
Company's federal net operating loss and research and development credit
carryforwards will expire in the years 2010 through 2012, if not utilized. The
Company's state net operating loss carryforwards will expire in the year 2003.
The state research and development credit can be carried forward indefinitely.

Federal and state tax laws impose substantial restrictions on the
utilization of net operating loss and tax credit carryforwards in the event of
an "ownership change" as defined in Section 382 of the Internal Revenue Code.
The Company has not yet determined whether an ownership change has occurred.

(5) STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

As of December 31, 1997, the Company had authorized 8,809,156, 8,615,938 and
4,874,482 shares of Series A, B and C convertible preferred stock, respectively.
On March 13, 1998, the Company increased the authorized shares of Series C
convertible preferred stock to 9,115,100.

F-13
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(5) STOCKHOLDERS' EQUITY (CONTINUED)
Convertible preferred stock outstanding consisted of the following numbers
of shares (in thousands):

<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------
PRO FORMA NUMBER
DECEMBER 31, OF COMMON SHARES
-------------------- ISSUABLE UPON
SERIES 1996 1997 ACTUAL CONVERSION
- ------------------------------------------------ --------- --------- --------- -----------------
<S> <C> <C> <C> <C>
A............................................... 4,405 4,405 4,405 2,495
B............................................... -- 4,308 4,308 1,958
C............................................... -- 2,437 3,888 1,767
--------- --------- --------- -----
4,405 11,150 12,601 6,220
--------- --------- --------- -----
--------- --------- --------- -----
</TABLE>

The rights, preferences and privileges of the holders of preferred stock are
as follows:

- The holders of Series A, B and C convertible preferred stock are entitled
to non-cumulative dividends, if and when declared by the Board of
Directors, of $0.08, $0.08 and $0.18 per share, respectively.

- Shares of convertible preferred stock are convertible to common stock at
any time at the conversion prices of $1.78, $2.20 and $4.93 per share, for
Series A, B and C convertible preferred stock, respectively (as adjusted
for the reverse stock split) (See Note 8). The preferred stock
automatically converts to common stock upon the closing of an underwritten
public offering of the Company's common stock at a per share price of not
less than $8.78 per share and gross proceeds of not less than $10,000,000.

- The holders of convertible preferred stock are protected by certain
anti-dilutive provisions.

- Shares of Series A, B and C convertible preferred stock have a liquidation
preference of $1.01, $1.00 and $2.24 per share, respectively, plus any
declared and unpaid dividends.

- The convertible preferred stock votes equally with shares of common stock
on an "as if converted" basis.

No dividends have been declared or paid on the convertible preferred stock
or common stock since inception of the Company.

COMMON STOCK

In connection with the Board of Directors' revaluation of the Company's fair
value in March 1997, the Company repurchased and retired approximately 446,000
shares of common stock previously held by two of the Company's founders, at an
average purchase price of $0.22 per share. Additionally, the Company adjusted
the conversion price of Series A convertible preferred stock to $1.78 per share
of common stock; previously the conversion price was $2.22 per share of common
stock. The fair value of the additional shares of common stock that would be
issued to the holders of Series A convertible preferred stock upon conversion,
due to the reduction in the conversion price, was not significant.

Common stock issued to certain individuals is subject to repurchase at the
option of the Company, at the original issuance price, in the event an
individual ceases to be employed by the Company. Such shares are subject to
repurchase on a pro rata basis over a four-year period from the date of
issuance. As of December 31, 1996 and 1997

F-14
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(5) STOCKHOLDERS' EQUITY (CONTINUED)
and March 31, 1998, there were approximately 1,688,000, 628,000 and 524,000
shares, respectively, subject to repurchase, at a weighted average price of
$0.07 per share. During 1996 and 1997, and the three months ended March 31,
1998, approximately 439,000, 126,000 and 4,000 shares, respectively, were
repurchased.

As of December 31, 1997, a total of 2,727,570 shares of common stock were
authorized for issuance under the 1995 Stock Option Plan (the Plan). Options may
be granted at an exercise price not less than 100% of the fair market value, as
determined by the Board of Directors, for incentive stock options and 85% of
fair market value for nonqualified stock options at the grant date. All options
are granted at the discretion of the Company's Board of Directors and have a
term not greater than 10 years from the date of grant. Options issued are
generally immediately exercisable and generally vest 25% on the first
anniversary date and 1/48th of the shares each month thereafter, so that all the
shares are vested 48 months after the vesting commencement date.

As of December 31, 1996 and 1997 and March 31, 1998, approximately 155,000,
569,000, and 742,000, shares, respectively, with weighted-average exercise
prices of $0.22 per share, were fully vested.

A summary of the status of the Company's options under the Plan is as
follows:

<TABLE>
<CAPTION>
PERIOD FROM SEPTEMBER
5, 1995 (INCEPTION) TO YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
DECEMBER 31, 1995 1996 1997 MARCH 31, 1998
----------------------- ----------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
period..................... -- $ -- 5,000 $ -- 456,509 $ 0.22 1,312,399 $ 0.22
Granted at market value...... 547,426 0.07 833,418 0.22 475,193 0.22 17,045 6.60
Granted at less than market
value...................... -- -- -- -- 845,092 0.22 88,750 0.51
Exercised.................... (542,426) 0.07 (309,418) 0.22 (301,009) 0.22 (56,011) 0.22
Canceled..................... -- -- (72,491) -- (163,386) 0.22 (32,775) 0.22
---------- ---------- ---------- ----------
Options at end of period..... 5,000 0.07 456,509 0.22 1,312,399 0.22 1,329,408 0.27
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Options vested at
period-end................. -- 154,540 569,086 741,953
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted-average fair value
of options granted during
the period with exercise
prices equal to market
value at date of grant..... $ 0.02 $ 0.07 $ 0.07 $ 1.78
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted-average fair value
of options granted during
the period with exercise
prices less than market
value at date of grant..... -- -- $ 2.05 $ 4.55
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

F-15
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(5) STOCKHOLDERS' EQUITY (CONTINUED)
The following table summarizes information about stock options outstanding
as of December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- -----------------------------------------------
WEIGHTED-AVERAGE
REMAINING
CONTRACTUAL LIFE OPTIONS
EXERCISE PRICE NUMBER (YEARS) VESTED
- -------------- ---------- ------------------- -------------
<S> <C> <C> <C>
$0.22 1,311,717 9.36 569,086
$0.55 682 9.92 --
- -------------- ---------- -------------
$0.22 - $0.55 1,312,399 569,086
- -------------- ---------- -------------
- -------------- ---------- -------------
</TABLE>

The Company uses the intrinsic value-based method to account for all its
employee stock-based compensation arrangements. Accordingly, no compensation
cost has been recognized for its stock options in the accompanying consolidated
financial statements because the fair value of the underlying common stock
equals or exceeds the exercise price of the stock options at the date of grant,
except with respect to certain options granted in 1997 and during the first
three months of 1998. The Company has recorded deferred stock compensation
expense of $1,784,000 and $390,000 for the difference at the grant date between
the exercise price and the fair value of the common stock underlying the options
granted in 1997 and the first three months of 1998, respectively. Amortization
of deferred compensation of approximately $115,000 and $246,000 was recognized
in 1997 and the first three months of 1998, respectively.

Had compensation cost for the Company's stock-based compensation plans been
determined consistent with the fair value approach set forth in SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, the Company's net losses for the period
from September 5, 1995 (inception) to December 31, 1995 and the years ended
December 31, 1996 and 1997, would have been as follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED DECEMBER
SEPTEMBER 5, 1995 31,
(INCEPTION) TO --------------------
DECEMBER 31, 1995 1996 1997
------------------- --------- ---------
<S> <C> <C> <C>
Net loss--as reported........................................... $ (195) $ (4,627) $ (6,882)
Net loss--pro forma............................................. $ (195) $ (4,635) $ (6,883)
Basic and diluted net loss per share--as reported............... $ (0.19) $ (2.19) $ (2.46)
Basic and diluted net loss per share--pro forma................. $ (0.19) $ (2.20) $ (2.46)
</TABLE>

The fair value of options granted during the period from September 5, 1995
(inception) to December 31, 1995 and the years ended December 31, 1996 and 1997
is estimated on the date of grant using the minimum value method with the
following weighted-average assumptions: no dividend yield, risk-free interest
rates of 5.6%, 6.0% and 6.1%, respectively, and expected lives of 5 years.

F-16
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(5) STOCKHOLDERS' EQUITY (CONTINUED)
WARRANTS

In March 1997, in connection with a lease termination agreement, the Company
issued the building landlord a warrant to purchase 6,818 shares of common stock
at a purchase price of $0.22 per share. The warrant expires upon the earlier of
(i) five years from the date of issuance or (ii) the closing of an IPO by the
Company. The value of the warrant was not significant at the date of grant.

In October 1997, in connection with certain consulting activities, the
Company committed to deliver a warrant to purchase 9,090 shares of common stock
at a purchase price of $0.22 per share. The value of the warrant was not
significant at the date of grant.

In January 1998, in connection with a non-employee compensation matter, the
Company committed to deliver a warrant to purchase 11,742 shares of common stock
at a purchase price of $0.22 per share. The value of the warrant was not
significant at the date of grant.

(6) COMMITMENTS

The Company leases its facilities under various operating lease agreements
that expire on various dates through May 1998. As of December 31, 1997, the
remaining future minimum payments for these facilities total $147,000. Total
rent expense, including month to month arrangements, was $13,000, $149,000 and
$313,000 for the period from September 5, 1995 (inception) to December 31, 1995
and for the years ended December 31, 1996 and 1997, respectively.

F-17
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(7) GEOGRAPHIC AND SEGMENT INFORMATION

The Company licenses and markets its products primarily from its operations
in the United States, and operates in a single industry segment. Information
regarding operations in different geographic regions is as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Export sales to customers located in:
Europe................................................................. $ -- $ 250
Asia................................................................... -- 237
--------- ---------
Total................................................................ $ -- $ 487
--------- ---------
--------- ---------
Loss from operations:
United States.......................................................... $ (4,681) $ (6,072)
Europe................................................................. -- (800)
--------- ---------
Total................................................................ $ (4,681) $ (6,872)
--------- ---------
--------- ---------
Identifiable assets:
United States.......................................................... $ 3,159 $ 9,139
Europe................................................................. -- 748
--------- ---------
Total................................................................ $ 3,159 $ 9,887
--------- ---------
--------- ---------
</TABLE>

For the period from September 5, 1995 (inception) to December 31, 1995,
there were no significant export sales or operations in Europe or Asia. The
Company began operations in Japan in April 1998.

No single customer accounted for greater than 10% of revenues in any period
reported.

(8) SUBSEQUENT EVENTS

On April 23, 1998, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission (SEC)
permitting the Company to sell shares of the Company's common stock in
connection with a proposed initial public offering (IPO). If the offering is
consummated under the terms presently anticipated, all currently outstanding
shares of preferred stock will automatically convert into approximately
6,220,000 shares of common stock upon the closing of the proposed IPO. The
conversion of the preferred stock has been reflected in the pro forma balance
sheet as of March 31, 1998. Effective upon the closing of the IPO, the Company
will be authorized to issue 5,000,000 shares of undesignated preferred stock.

The Company's Board of Directors approved a 1-for-2.2 reverse split of the
Company's common stock (subject to stockholder approval) to be effected at or
prior to the effectiveness of the IPO. All common share amounts in the
accompanying consolidated financial statements have been adjusted retroactively.

The Company's Board of Directors adopted the 1998 Stock Plan (the "1998
Plan") on April 23, 1998 (subject to stockholder approval). The 1998 Plan
provides for the grant of incentive and nonstatutory stock options and stock

F-18
<PAGE>
NETGRAVITY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

(INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS

ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(8) SUBSEQUENT EVENTS (CONTINUED)
purchase rights to employees, directors and consultants. A total of 2,000,000
shares of common stock, plus annual increases equal to the lesser of (i)
1,000,000 shares, (ii) 5% of the outstanding shares, or (iii) a lesser amount
determined by the Board of Directors, are proposed to be reserved for issuance
pursuant to the 1998 Plan.

The Company's Board of Directors adopted the 1998 Employee Stock Purchase
Plan (the "1998 Purchase Plan") on April 23, 1998 (subject to stockholder
approval). A total of 200,000 shares of common stock are proposed to be reserved
for issuance under the 1998 Purchase Plan, plus annual increases equal to the
lesser of (i) 750,000 shares, (ii) 4% of the outstanding shares on such date, or
(iii) a lesser amount determined by the Board of Directors.

The Company's Board of Directors also adopted the 1998 Director Option Plan
(the "Director Plan") on April 23, 1998 (subject to stockholder approval). The
Director Plan provides for the grant of nonstatutory stock options to
non-employee directors of the Company or affiliates thereof. A total of 200,000
shares of common stock have been proposed to be reserved for issuance under the
Director Plan plus annual increases to maintain 200,000 shares of common stock
reserved for additional option grants.

F-19
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable by
the Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.

<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 11,196
NASD Filing Fee.................................................... 4,295
Nasdaq National Market Listing Fee................................. *
Printing Fees and Expenses......................................... *
Legal Fees and Expenses............................................ *
Accounting Fees and Expenses....................................... *
Blue Sky Fees and Expenses......................................... *
Transfer Agent and Registrar Fees.................................. *
Miscellaneous...................................................... *
---------
Total.......................................................... $ *
---------
---------
</TABLE>

- ---------

* To be disclosed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

Article Nine of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors, officers or
employee benefit plan fiduciaries, to the fullest extent not prohibited by
Delaware law.

Article VI of the Registrant's Bylaws provides for the indemnification of
directors and officers if such person acted in good faith and in a manner
reasonably believed to be in and not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, the
indemnified party had no reasonable cause to believe his conduct was unlawful.
Article VI also permits the Company to advance expenses incurred by indemnified
directors or officers in connection with the defense of any action or proceeding
arising out of such directors' or officers' status or service as directors or
officers of the Company upon an undertaking by such directors or officers to
repay such advances if it is ultimately determined that such directors or
officers are not entitled to such indemnification.

The Registrant has entered into agreements to indemnify its directors and
officers, in addition to the indemnification provided for in the Registrant's
Amended and Restated Bylaws. These agreements, among other things, indemnify the
Registrant's directors and officers for certain expenses (including attorneys'
fees and associated legal expenses), judgments, fines and amounts paid in
settlement amounts if such settlement is approved in advance by the Registrant,
which approval shall not be unreasonably withheld, actually and reasonably
incurred by any such person in any action, suit, proceeding or alternative
dispute resolution mechanism arising out of such person's services as a director
or officer of the Registrant, any subsidiary of the Registrant or any other
company or enterprise to which the person provides services at the request of
the Registrant.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

1. In September 1995 the Registrant issued and sold an aggregate of
2,454,545 shares of Common Stock to two founders of the Registrant at a purchase
price of approximately $0.06 per share for an aggregate purchase price of
$149,580. In October 1995 the Registrant issued 548,590 shares of Common Stock
to another founder in consideration of such founder accepting employment with
the Registrant.

2. In September 1995 the Registrant issued and sold an aggregate of 818,181
shares of Common Stock at a purchase price of approximately $0.06 per share for
an aggregate purchase price of $49,860 and issued promissory notes for an
aggregate amount of $450,000.

3. Between January 1996 and April 1996 the Registrant issued and sold an
aggregate of 4,404,578 shares of Series A Preferred Stock convertible into
2,494,148 shares of Common Stock for consideration consisting of cash in the
aggregate amount of $3,556,348.37 and the cancellation of Promissory Notes
referred to above.

4. In March 1997 the Registrant issued and sold an aggregate of 4,307,969
shares of Series B Preferred Stock convertible into 1,958,159 shares of Common
Stock at a purchase price of $0.9982 per share for an aggregate purchase price
of $4,299,999.24.

5. In October 1997 the Registrant issued 11,362 shares of Common Stock to
consultants in consideration for services rendered.

6. In November 1997 and March 1998 the Registrant issued and sold an
aggregate of 3,887,978 shares of Series C Preferred Stock convertible into
1,767,261 shares of Common Stock for aggregate net proceeds to the Registrant of
$8,710,003, or approximately $2.24 per share.

7. In November 1997 the Registrant issued 15,909 shares of Common Stock to
a former employee in connection with the termination of such employee's
employment with the Registrant.

8. From September 1995 through March 31, 1998 the Registrant granted
options under the 1995 Stock Plan to purchase an aggregate of 2,806,924 shares
of the Registrant's Common Stock at exercise prices ranging from $0.06 to $0.55
to 140 employees, directors and consultants.

9. From September 1995 through March 31, 1998 an aggregate of 1,208,865
shares of Common Stock were issued pursuant to option exercises at exercise
prices ranging from $0.0277 to $0.22 to 61 employees, directors and consultants.

10. From September 1995 through March 31, 1998, the Registrant issued
warrants exercisable for an aggregate of 27,650 shares of Common Stock at an
exercise price of $0.22 per share.

The sales of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act, or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving a public
offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided under such Rule 701. 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 warrants issued in such transactions. All recipients had
adequate access, through their relationships with the Company, to information
about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following exhibits are attached hereto and incorporated herein by
reference.

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
+3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Certificate of Amendment to Amended and Restated Certificate of
Incorporation.
3.3 Amended and Restated Bylaws of the Registrant.
</TABLE>

II-2
<PAGE>

<TABLE>
<C> <S>
*4.1 Specimen certificate representing shares of Common Stock of the
Registrant.
+4.2 Second Amended and Restated Registration and Information Rights Agreement.
*5.1 Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Form of Indemnification Agreement for Directors and Officers of the
Registrant.
10.2 1995 Stock Option Plan.
10.3 1998 Stock Option Plan, together with form of Stock Option Agreement and
form of Stock Issuance Agreement.
10.4 1998 Employee Stock Purchase Plan.
10.5 1998 Director Option Plan.
+10.6 Lease dated September 29, 1995 for the Registrant's headquarters in San
Mateo, CA.
+10.7 Lease dated March 2, 1998 for the Registrant's offices in New York, NY.
+10.8 Employment and Severance Agreement dated March 31, 1998 by and between the
Registrant and Stephen E. Recht.
+10.9 Professional Services Agreement dated March 27, 1997 between the
Registrant and Protege Software (Holdings) Limited.
+10.10 Common Stock Repurchase Agreement and Clarification of Founder's Stock
Purchase Agreement dated March 12, 1997 by and between the Registrant
and John W. Danner.
+10.11 Common Stock Repurchase Agreement and Clarification of Founder's Stock
Purchase Agreement dated March 12, 1997 by and between the Registrant
and Thomas A. Shields.
+10.12 Employment Agreement dated April 22, 1998 by and between the Registrant
and Susan Atherton.
+11.1 Statement Regarding Computation of Earnings Per Share (contained in Note 1
of the Notes to Financial Statements).
+21.1 List of Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.
*23.2 Consent of Counsel (included in Exhibit 5.1).
+24.1 Power of Attorney.
+27.1 Financial Data Schedule (Fiscal 1997).
+27.2 Financial Data Schedule (First Quarter 1998)
</TABLE>

- ---------

* To be filed by amendment.

+ Previously filed.

(b) Financial Statement Schedules

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 Securities and Exchange 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

II-3
<PAGE>
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:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereto which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Mateo, State of California, on the 30th day of April, 1998.

<TABLE>
<S> <C> <C>
NETGRAVITY, INC.

By: /s/ JOHN W. DANNER
-----------------------------------------
John W. Danner
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
</TABLE>

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED:

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

Chairman of the Board and
/s/ JOHN W. DANNER Chief Executive Officer
- ------------------------------ (principal executive April 30, 1998
John W. Danner officer)

Chief Financial Officer
/s/ STEPHEN E. RECHT and Secretary (principal
- ------------------------------ financial and accounting April 30, 1998
Stephen E. Recht officer)

JOHN D. D. KOHLER*
- ------------------------------ Director April 30, 1998
John D. D. Kohler

JONATHAN D. LAZARUS*
- ------------------------------ Director April 30, 1998
Jonathan D. Lazarus

ALEXANDER R. SLUSKY*
- ------------------------------ Director April 30, 1998
Alexander R. Slusky

*By: /s/ STEPHEN E.
RECHT
--------------------------
Stephen E.
Recht
ATTORNEY-IN-FACT

II-5
<PAGE>
The Board of Directors and Stockholders
NetGravity, Inc.:

When the reverse stock split referred to in Note 8 of the Notes to
Consolidated Financial Statements has been consummated, we will be in a position
to render the following report.

KPMG PEAT MARWICK LLP

INDEPENDENT AUDITOR'S REPORT ON SCHEDULE

The Board of Directors and Stockholders
NetGravity, Inc.:

Under date of April 17, 1998, except as to Note 8, which is as of May , 1998,
we reported on the consolidated balance sheets of NetGravity, Inc. and
subsidiary as of December 31, 1997, and 1996, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
period from September 5, 1995 (inception) through December 31, 1995 and for each
of the years in the two-year period ended December 31, 1997, as contained in the
Registration Statement. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedule as listed in the accompanying index. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

San Francisco, California
April 17, 1998

S-1
<PAGE>
SCHEDULE II

NETGRAVITY, INC.
VALUATION AND QUALIFYING ACCOUNTS--
ALLOWANCE FOR DOUBTFUL ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT BEGINNING CHARGED TO BALANCE AT END
OF PERIOD EXPENSE DEDUCTIONS OF PERIOD
--------------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995 $ -- $ -- $ -- $ --
Year ended December 31, 1996 -- 197 28 169
Year ended December 31, 1997 169 67 13 223
</TABLE>

S-2
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<C> <S>
1.1 Form of Underwriting Agreement.
+3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Certificate of Amendment to Amended and Restated Certificate of
Incorporation.
3.3 Amended and Restated Bylaws of the Registrant.
*4.1 Specimen certificate representing shares of Common Stock of the
Registrant.
+4.2 Second Amended and Restated Registration and Information Rights Agreement.
*5.1 Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Form of Indemnification Agreement for Directors and Officers of the
Registrant.
10.2 1995 Stock Option Plan.
10.3 1998 Stock Option Plan, together with form of Stock Option Agreement and
form of Stock Issuance Agreement.
10.4 1998 Employee Stock Purchase Plan.
10.5 1998 Director Option Plan.
+10.6 Lease dated September 29, 1995 for the Registrant's headquarters in San
Mateo, CA.
+10.7 Lease dated March 2, 1998 for the Registrant's offices in New York, NY.
+10.8 Employment and Severance Agreement dated March 31, 1998 by and between the
Registrant and Stephen E. Recht.
+10.9 Professional Services Agreement dated March 27, 1997 between the
Registrant and Protege Software (Holdings) Limited.
+10.10 Common Stock Repurchase Agreement and Clarification of Founder's Stock
Purchase Agreement dated March 12, 1997 by and between the Registrant
and John W. Danner.
+10.11 Common Stock Repurchase Agreement and Clarification of Founder's Stock
Purchase Agreement dated March 12, 1997 by and between the Registrant
and Thomas A. Shields.
+10.12 Employment Agreement dated April 22, 1998 by and between the Registrant
and Susan Atherton.
+11.1 Statement Regarding Computation of Earnings Per Share (contained in Note 1
of the Notes to Financial Statements).
+21.1 List of Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.
*23.2 Consent of Counsel (included in Exhibit 5.1).
+24.1 Power of Attorney.
+27.1 Financial Data Schedule (Fiscal 1997).
+27.2 Financial Data Schedule (First Quarter 1998).
</TABLE>

- ---------

* To be filed by amendment.

+ Previously filed.

<PAGE>

DRAFT

UPDATED AS OF
APRIL 1998

____________ SHARES (1)

NETGRAVITY, INC.

COMMON STOCK

UNDERWRITING AGREEMENT

____________, 1998

BANCAMERICA ROBERTSON STEPHENS
NATIONSBANC MONTGOMERY SECURITIES LLC
FIRST ALBANY CORPORATION
As Representatives of the several Underwriters
c/o BancAmerica Robertson Stephens
555 California Street
Suite 2600
San Francisco, California 94104

Ladies/Gentlemen:

NetGravity, Inc., a Delaware corporation (the "Company"), and
certain stockholders of the Company named in Schedule B hereto (hereafter
called the "Selling Stockholders") address you as the Representatives of each
of the persons, firms and corporations listed in Schedule A hereto (herein
collectively called the "Underwriters") and hereby confirm their respective
agreements with the several Underwriters as follows:

1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
_________ shares of its authorized and unissued Common Stock, par value
$0.001 per share, to the several Underwriters. The _________ shares of
Common Stock, par value $0.001 per share, of the Company to be sold by the
Company are hereinafter called the "Firm Shares." The Company and certain
Selling Stockholders also propose to grant, severally and not jointly, to the
Underwriters an option to purchase up to ________ additional shares of the
Company's Common Stock, par value $0.001 per share, (the "Option Shares"), as
provided in Section 7 hereof. As used in this Agreement, the term "Shares"
shall include the Firm Shares and the Option Shares. All shares of Common
Stock, par value $0.001 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby, including the Shares, are
hereinafter referred to as "Common Stock."

- ---------------
(1) Plus an option to purchase up to _________ additional shares from the
Company and certain stockholders of the Company to cover
over-allotments.

<PAGE>

2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE SELLING STOCKHOLDERS.

I. The Company hereby represents and warrants to and agrees with
each Underwriter that:

(a) A registration statement on Form S-1 (File No.
333-51007) with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
applicable rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act and has
been filed with the Commission; such amendments to such registration
statement, such amended prospectuses subject to completion and such
abbreviated registration statements pursuant to Rule 462(b) of the Rules and
Regulations as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file
such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration
statements as may hereafter be required. Copies of such registration
statement and amendments, of each related prospectus subject to completion
(the "Preliminary Prospectuses") and of any abbreviated registration
statement pursuant to Rule 462(b) of the Rules and Regulations have been
delivered to you.

If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare
and promptly file with the Commission the information omitted from the
registration statement pursuant to Rule 430A(a) or, if BancAmerica Robertson
Stephens, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information
required to be included in any term sheet filed pursuant to Rule 434(b) or
(c), as applicable, of the Rules and Regulations pursuant to subparagraph
(1), (4) or (7) of Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to the registration statement (including a final
form of prospectus). If the registration statement relating to the Shares
has not been declared effective under the Act by the Commission, the Company
will prepare and promptly file an amendment to the registration statement,
including a final form of prospectus, or, if BancAmerica Robertson Stephens,
on behalf of the several Underwriters, shall agree to the utilization of Rule
434 of the Rules and Regulations, the information required to be included in
any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the
Rules and Regulations. The term "Registration Statement" as used in this
Agreement shall mean such registration statement, including financial
statements, schedules and exhibits, in the form in which it became or
becomes, as the case may be, effective (including, if the Company omitted
information from the registration statement pursuant to Rule 430A(a) or files
a term sheet pursuant to Rule 434 of the Rules and Regulations, the
information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and
Regulations) and, in the event of any amendment thereto or the filing of any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations relating thereto after the effective date of such registration
statement, shall also mean (from and after the effectiveness of such
amendment or the filing of such abbreviated registration statement) such
registration statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this Agreement
shall mean the prospectus relating to the Shares as included in such
Registration Statement at the time it becomes effective (including, if the
Company omitted information from the Registration Statement pursuant to Rule
430A(a) of the Rules and Regulations, the information deemed to be a part of
the Registration Statement at the time it became effective pursuant to Rule
430A(b) of the Rules and Regulations); PROVIDED, HOWEVER, that if in reliance
on Rule 434 of the Rules and Regulations and with the consent of BancAmerica
Robertson Stephens, on behalf of the several Underwriters, the Company shall
have provided to the Underwriters a term sheet pursuant to Rule 434(b) or
(c), as applicable, prior to the time that a confirmation is sent or given
for purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall mean
the "prospectus subject to completion" (as defined in Rule 434(g) of the
Rules and Regulations) last provided to the Underwriters by the Company and
circulated by the Underwriters to all prospective purchasers of the Shares
(including the information deemed to be a part of the Registration Statement
at the time it became effective pursuant to Rule 434(d) of the Rules and
Regulations). Notwithstanding the foregoing, if any revised prospectus

2
<PAGE>

shall be provided to the Underwriters by the Company for use in connection
with the offering of the Shares that differs from the prospectus referred to
in the immediately preceding sentence (whether or not such revised prospectus
is required to be filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Underwriters
for such use. If in reliance on Rule 434 of the Rules and Regulations and
with the consent of BancAmerica Robertson Stephens, on behalf of the several
Underwriters, the Company shall have provided to the Underwriters a term
sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time that a
confirmation is sent or given for purposes of Section 2(10)(a) of the Act,
the Prospectus and the term sheet, together, will not be materially different
from the prospectus in the Registration Statement.

(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings
for that purpose, and each such Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent thereto up
to and on the Closing Date (hereinafter defined) and on any later date on
which Option Shares are to be purchased, (i) the Registration Statement and
the Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the Act
and the Rules and Regulations and will in all material respects conform to
the requirements of the Act and the Rules and Regulations, (ii) the
Registration Statement, and any amendments or supplements thereto, did not
and will not include any 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, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that none of the
representations and warranties contained in this subparagraph (b) shall apply
to information contained in or omitted from the Registration Statement or
Prospectus, or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information relating to any Underwriter furnished to
the Company by such Underwriter specifically for use in the preparation
thereof.

(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation with full power and
authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus; the Company owns all of
the outstanding capital stock of its subsidiaries free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest;
each of the Company and its subsidiaries is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified or
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise;
no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power
and authority or qualification; each of the Company and its subsidiaries is
in possession of and operating in compliance with all authorizations,
licenses, certificates, consents, orders and permits from state, federal and
other regulatory authorities which are material to the conduct of its
business, all of which are valid and in full force and effect; neither the
Company nor any of its subsidiaries is in violation of its respective charter
or bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness, or in any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or their
respective properties may be bound; and neither the Company nor any of its
subsidiaries is in material violation of any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having

3
<PAGE>

jurisdiction over the Company or any of its subsidiaries or over their
respective properties of which it has knowledge. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than NetGravity Europe Limited and NetGravity Asia Pacific K.K.

(d) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; the performance of this
Agreement and the consummation of the transactions herein contemplated will
not result in a material breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any bond, debenture, note
or other evidence of indebtedness, or under any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of its subsidiaries or their respective properties may be
bound, (ii) the charter or bylaws of the Company or any of its subsidiaries,
or (iii) any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or
over their respective properties. No consent, approval, authorization or
order of or qualification with any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or over their respective properties is required for the
execution and delivery of this Agreement and the consummation by the Company
or any of its subsidiaries of the transactions herein contemplated, except
such as may be required under the Act, or under state or other securities or
Blue Sky laws, all of which requirements have been satisfied in all material
respects.

(e) There is not any pending or, to the best of the
Company's knowledge, threatened action, suit, claim or proceeding against the
Company, any of its subsidiaries or any of their respective officers or any
of their respective properties, assets or rights before any court, government
or governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of its subsidiaries or over their respective officers or
properties or otherwise which (i) might result in any material adverse change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise or might materially and adversely affect their properties, assets
or rights, (ii) might prevent consummation of the transactions contemplated
hereby or (iii) is required to be disclosed in the Registration Statement or
Prospectus and is not so disclosed; and there are no agreements, contracts,
leases or documents of the Company or any of its subsidiaries of a character
required to be described or referred to in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement by the
Act or the Rules and Regulations which have not been accurately described in
all material respects in the Registration Statement or Prospectus or filed as
exhibits to the Registration Statement.

4
<PAGE>

(f) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company is as set forth in
the Prospectus under the caption "Capitalization" and conforms in all
material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company); the Firm Shares and the Option Shares to be purchased from the
Company hereunder have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued and fully paid and nonassessable,
and will be sold free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest; and no preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Firm Shares or Option Shares
to be purchased from the Company hereunder or the issuance and sale thereof
other than those that have been expressly waived prior to the date hereof and
those that will automatically expire upon and will not apply to the
consummation of the transactions contemplated on the Closing Date. No further
approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale or transfer of the
Shares except as may be required under the Act or under state or other
securities or Blue Sky laws. All issued and outstanding shares of capital
stock of each subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and were not issued in violation
of or subject to any preemptive right, or other rights to subscribe for or
purchase shares and are owned by the Company free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest. Except as
disclosed in the Prospectus and the financial statements of the Company, and
the related notes thereto, included in the Prospectus, neither the Company
nor any subsidiary has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights.

(g) KPMG Peat Marwick, LLP, which has examined the
consolidated financial statements of the Company, together with the related
schedules and notes, as of December 31, 1996 and 1997 and the three-month
period ended March 31, 1997, and for the period from September 5, 1995
(Inception) through December 31, 1995, the years ended December 31, 1996 and
1997, and the three-month periods ended March 31, 1997 and 1998 filed with
the Commission as a part of the Registration Statement, which are included in
the Prospectus, are independent accountants within the meaning of the Act and
the Rules and Regulations; the audited consolidated financial statements of
the Company, together with the related schedules and notes, and the unaudited
consolidated financial information, forming part of the Registration
Statement and Prospectus, fairly present the financial position and the
results of operations of the Company and its subsidiaries at the respective
dates and for the respective periods to which they apply; and all audited
consolidated financial statements of the Company, together with the related
schedules and notes, and the unaudited consolidated financial information,
filed with the Commission as part of the Registration Statement, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and statistical
data included in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.

(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has
not been (i) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries

5
<PAGE>

considered as one enterprise, (ii) any transaction that is material to the
Company and its subsidiaries considered as one enterprise, except
transactions entered into in the ordinary course of business, (iii) any
obligation, direct or contingent, that is material to the Company and its
subsidiaries considered as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries considered as one enterprise, (v) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company or any
of its subsidiaries, or (vi) any loss or damage (whether or not insured) to
the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise.

(i) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and
marketable title to all properties and assets described in the Registration
Statement and Prospectus as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, other than such
as would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise, (ii) the
agreements to which the Company or any of its subsidiaries is a party
described in the Registration Statement and Prospectus are valid agreements,
enforceable by the Company and its subsidiaries (as applicable), except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles and, to the
best of the Company's knowledge, the other contracting party or parties
thereto are not in material breach or material default under any of such
agreements, and (iii) each of the Company and its subsidiaries has valid and
enforceable leases for all properties described in the Registration Statement
and Prospectus as leased by it, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration
Statement and Prospectus, the Company owns or leases all such properties as
are necessary to its operations as now conducted or as proposed to be
conducted.

(j) The Company and its subsidiaries have timely filed all
necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown thereon as due, and there is no tax deficiency that
has been or, to the best of the Company's knowledge, might be asserted
against the Company or any of its subsidiaries that might have a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise; and all tax liabilities are
adequately provided for on the books of the Company and its subsidiaries.

(k) The Company and its subsidiaries maintain insurance with
insurers of recognized financial responsibility of the types and in the amounts
generally deemed adequate for their respective businesses and consistent with
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company or its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect; neither the Company nor any
such subsidiary has been refused any insurance coverage sought or applied for;
and neither the Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries considered as
one enterprise.

(l) To the best of Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries exists
or is imminent; and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers, value
added resellers, subcontractors, authorized dealers or international
distributors that might be expected to result in a material

6
<PAGE>

adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise. No collective bargaining
agreement exists with any of the Company's employees and, to the best of the
Company's knowledge, no such agreement is imminent.

(m) Each of the Company and its subsidiaries owns or
possesses adequate rights to use all patents, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names and
copyrights which are necessary to conduct its businesses as described in the
Registration Statement and Prospectus; the expiration of any patents, patent
rights, trade secrets, trademarks, service marks, trade names or copyrights
would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise; the Company has
not received any notice of, and has no knowledge of, any infringement of or
conflict with asserted rights of the Company by others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights; and the Company has not received
any notice of, and has no knowledge of, any infringement of or conflict with
asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names
or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise.

(n) The Common Stock has been approved for quotation on The
Nasdaq National Market, subject to official notice of issuance.

(o) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" or a company "controlled" by an "investment
company" within the meaning of the 1940 Act and such rules and regulations.

(p) The Company has not distributed and will not distribute
prior to the later of (i) the Closing Date, or any date on which Option
Shares are to be purchased, as the case may be, and (ii) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted
by the Act.

(q) Neither the Company nor any of its subsidiaries has at
any time during the last five (5) years (i) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws
of the United States or any jurisdiction thereof.

(r) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

(s) Each officer and director of the Company, each Selling
Stockholder and each beneficial owner of __________ or more shares of Common
Stock has agreed in writing that such person will not, for a period of 180
days from the date that the Registration Statement is declared effective by
the Commission (the "Lock-up Period"), offer to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities convertible
into or exchangeable for shares of Common Stock (collectively, "Securities")
now owned or hereafter acquired directly by such person or with respect to
which such person has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide

7
<PAGE>

gift or gifts, provided the donee or donees thereof agree in writing to be
bound by this restriction, (ii) as a distribution to partners, stockholders
or affiliates of such person, provided that the distributees thereof agree in
writing to be bound by the terms of this restriction, or (iii) with the prior
written consent of BancAmerica Robertson Stephens. The foregoing restriction
has been expressly agreed to preclude the holder of the Securities from
engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or
not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value
from Securities. Furthermore, such person has also agreed and consented to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by such person except in
compliance with this restriction. The Company has provided to counsel for the
Underwriters a complete and accurate list of all securityholders of the
Company and the number and type of securities held by each securityholder.
The Company has provided to counsel for the Underwriters true, accurate and
complete copies of all of the agreements pursuant to which its officers,
directors and stockholders have agreed to such or similar restrictions (the
"Lock-up Agreements") presently in effect or effected hereby. The Company
hereby represents and warrants that it will not release any of its officers,
directors or other stockholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of
BancAmerica Robertson Stephens.

(t) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business, (ii) the Company has received no notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the
Registration Statement and the Prospectus, (iii) the Company will not be
required to make future material capital expenditures to comply with
Environmental Laws and (iv) no property which is owned, leased or occupied by
the Company has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Section 9601, ET SEQ.), or otherwise designated as a contaminated
site under applicable state or local law.

(u) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(v) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.

(w) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba.

II. Each Selling Stockholder, severally and not jointly,
represents and warrants to and agrees with each Underwriter and the Company
that:

8
<PAGE>

(a) Such Selling Stockholder now has and on the Closing
Date, and on any later date on which Option Shares are purchased, will have
valid marketable title to the Shares to be sold by such Selling Stockholder,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than pursuant to this Agreement; and upon delivery
of such Shares hereunder and payment of the purchase price as herein
contemplated, each of the Underwriters will obtain valid marketable title to
the Shares purchased by it from such Selling Stockholder, free and clear of
any pledge, lien, security interest pertaining to such Selling Stockholder or
such Selling Stockholder's property, encumbrance, claim or equitable
interest, including any liability for estate or inheritance taxes, or any
liability to or claims of any creditor, devisee, legatee or beneficiary of
such Selling Stockholder.

(b) Such Selling Stockholder has duly authorized (if
applicable), executed and delivered, in the form heretofore furnished to the
Representatives, an irrevocable Power of Attorney (the "Power of Attorney")
appointing _______________ and _____________ as attorneys-in-fact
(collectively, the "Attorneys" and individually, an "Attorney") and a Letter
of Transmittal and Custody Agreement (the "Custody Agreement") with the
Company, as custodian (the "Custodian"); each of the Power of Attorney and
the Custody Agreement constitutes a valid and binding agreement on the part
of such Selling Stockholder, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles; and
each of such Selling Stockholder's Attorneys, acting alone, is authorized to
execute and deliver this Agreement and the certificate referred to in Section
6(h) hereof on behalf of such Selling Stockholder, to determine the purchase
price to be paid by the several Underwriters to such Selling Stockholder as
provided in Section 3 hereof, to authorize the delivery of the Option Shares
to be sold by such Selling Stockholder under this Agreement and to duly
endorse (in blank or otherwise) the certificate or certificates representing
such Shares or a stock power or powers with respect thereto, to accept
payment therefor, and otherwise to act on behalf of such Selling Stockholder
in connection with this Agreement.

(c) All consents, approvals, authorizations and orders
required for the execution and delivery by such Selling Stockholder of the
Power of Attorney and the Custody Agreement, the execution and delivery by or
on behalf of such Selling Stockholder of this Agreement and the sale and
delivery of the Option Shares to be sold by such Selling Stockholder under
this Agreement (other than, at the time of the execution hereof (if the
Registration Statement has not yet been declared effective by the
Commission), the issuance of the order of the Commission declaring the
Registration Statement effective and such consents, approvals, authorizations
or orders as may be necessary under state or other securities or Blue Sky
laws) have been obtained and are in full force and effect; such Selling
Stockholder, if other than a natural person, has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization as the type of entity that it purports to be; and such Selling
Stockholder has full legal right, power and authority to enter into and
perform its obligations under this Agreement and such Power of Attorney and
Custody Agreement, and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder under this Agreement.

(d) Such Selling Stockholder will not, during the Lock-up
Period, effect the Disposition of any Securities now owned or hereafter
acquired directly by such Selling Stockholder or with respect to which such
Selling Stockholder has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction, (ii) as a
distribution to partners, stockholders or affiliates of such Selling
Stockholder, provided that the distributees thereof agree in writing to be
bound by the terms of this restriction, or (iii) with the prior written
consent of BancAmerica Robertson Stephens. The foregoing restriction is
expressly agreed to preclude the holder of the Securities from engaging in
any hedging or other transaction which is designed to or reasonably expected
to lead to or result in a Disposition of Securities during the Lock-up
Period, even if such Securities would be disposed of by someone other than
the Selling Stockholder. Such prohibited hedging or other transactions would
including, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part

9
<PAGE>

of its value from Securities. Such Selling Stockholder also agrees and
consents to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the securities held by such Selling
Stockholder except in compliance with this restriction.

(e) Certificates in negotiable form for all Shares to be
sold by such Selling Stockholder under this Agreement, together with a stock
power or powers duly endorsed in blank by such Selling Stockholder, have been
placed in custody with the Custodian for the purpose of effecting delivery
hereunder.

(f) This Agreement has been duly authorized by each Selling
Stockholder that is not a natural person and has been duly executed and
delivered by or on behalf of such Selling Stockholder and is a valid and
binding agreement of such Selling Stockholder, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles; and the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation of
any of the terms and provisions of or constitute a default under any bond,
debenture, note or other evidence of indebtedness, or under any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture
or other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder, or any Option Shares to be sold by such
Selling Stockholder hereunder, may be bound or, to the best of such Selling
Stockholders' knowledge, result in any violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over
such Selling Stockholder or over the properties of such Selling Stockholder,
or, if such Selling Stockholder is other than a natural person, result in any
violation of any provisions of the charter, bylaws or other organizational
documents of such Selling Stockholder.

(g) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares.

(h) Such Selling Stockholder has not distributed and will
not distribute any prospectus or other offering material in connection with
the offering and sale of the Shares.

(i) All information furnished by or on behalf of such
Selling Stockholder relating to such Selling Stockholder and the Option
Shares that is contained in the representations and warranties of such
Selling Stockholder in such Selling Stockholder's Power of Attorney or set
forth in the Registration Statement or the Prospectus is, and at the time the
Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date, and on any
later date on which Option Shares are to be purchased, was or will be, true,
correct and complete, and does not, and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date (hereinafter defined),and on
any later date on which Option Shares are to be purchased, will not, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make such information not
misleading.

(j) Such Selling Stockholder will review the Prospectus and
will comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the
Closing Date, or any later date on which Option Shares are to be purchased,
as the case may be, and will advise one of its Attorneys and BancAmerica
Robertson Stephens prior to the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, if any statement to be
made on behalf of such Selling Stockholder in the certificate contemplated by
Section 6(h) would be inaccurate if made as of the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be.

10
<PAGE>

(k) Such Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of
first refusal or other similar right to purchase any of the Shares that are
to be sold by the Company or any of the other Selling Stockholders to the
Underwriters pursuant to this Agreement; such Selling Stockholder does not
have, or has waived prior to the date hereof, any registration right or other
similar right to participate in the offering made by the Prospectus, other
than such rights of participation as have been satisfied by the participation
of such Selling Stockholder in the transactions to which this Agreement
relates in accordance with the terms of this Agreement; and such Selling
Stockholder does not own any warrants, options or similar rights to acquire,
and does not have any right or arrangement to acquire, any capital stock,
rights, warrants, options or other securities from the Company, other than
those described in the Registration Statement and the Prospectus.

(l) Such Selling Stockholder is not aware (without having
conducted any investigation or inquiry) that any of the representations and
warranties of the Company set forth in Section 2.I. above is untrue or
inaccurate in any material respect.

3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agree, to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $_____ per share, the
number of Firm Shares as hereinafter set forth opposite the Company's name on
Schedule B hereto. The obligation of each Underwriter to the Company shall
be to purchase from the Company that number of Firm Shares, as the case may
be, which (as nearly as practicable, as determined by you) is in the same
proportion to the number of Firm Shares set forth opposite the name of the
Company in Schedule B hereto as the number of Firm Shares which is set forth
opposite the name of such Underwriter in Schedule A hereto (subject to
adjustment as provided in Section 10) is to the total number of Firm Shares
to be purchased by all the Underwriters under this Agreement.

Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made
against payment of the purchase price therefor by the several Underwriters by
certified or official bank check or checks drawn in next-day funds, payable
to the order of the Company with regard to the Firm Shares being purchased
from the Company (and the Company agrees not to deposit any such check in the
bank on which it is drawn, and not to take any other action with the purpose
or effect of receiving immediately available funds, until the business day
following the date of its delivery to the Company and, in the event of any
breach of the foregoing, the Company shall reimburse the Underwriters for the
interest lost and any other expenses borne by them by reason of such breach),
at the offices of Wilson Sonsini Goodrich & Rosati Professional Corporation,
650 Page Mill Road, Palo Alto, CA 94304 (or at such other place as may be
agreed upon among the Representatives and the Company), at 7:00 A.M., San
Francisco time (a) on the third (3rd) full business day following the first
day that Shares are traded, (b) if this Agreement is executed and delivered
after 1:30 P.M., San Francisco time, the fourth (4th) full business day
following the day that this Agreement is executed and delivered or (c) at
such other time and date not later than seven (7) full business days
following the first day that Shares are traded as the Representatives and the
Company may determine (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 10 hereof), such time and date
of payment and delivery being herein called the "Closing Date;" PROVIDED,
HOWEVER, that if the Company has not made available to the Representatives
copies of the Prospectus within the time provided in Section 4(d) hereof, the
Representatives may, in their sole discretion, postpone the Closing Date
until no later than two (2) full business days following delivery of copies
of the Prospectus to the Representatives. The certificates for the Firm
Shares to be so delivered will be made available to you at such office or
such other location including, without limitation, in New York City, as you
may reasonably request for checking at least one (1) full business day prior
to the Closing Date and will be in such names and denominations as you may
request, such request to be made at least two (2) full business days prior to
the Closing Date. If the Representatives so elect, delivery of the Firm
Shares may be made by credit through full fast transfer to the accounts at
The Depository Trust Company designated by the Representatives.

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<PAGE>

It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior
to the Closing Date for the Firm Shares to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder.

After the Registration Statement becomes effective, the several
Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public
offering price of $_____ per share. After the initial public offering, the
several Underwriters may, in their discretion, vary the public offering price.

The information set forth in the last paragraph on the front cover
page (insofar as such information relates to the Underwriters), on the inside
front cover concerning stabilization and over-allotment by the Underwriters,
and under the _____ and _____ paragraphs under the caption "Underwriting" in
any Preliminary Prospectus and in the Prospectus constitutes the only
information furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement, and
you, on behalf of the respective Underwriters, represent and warrant to the
Company and the Selling Stockholders that the statements made therein do not
include any 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.

4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters that:

(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective as promptly as possible; the Company will use its
best efforts to cause any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations as may be required subsequent to the date
the Registration Statement is declared effective to become effective as
promptly as possible; the Company will notify you, promptly after it shall
receive notice thereof, of the time when the Registration Statement, any
subsequent amendment to the Registration Statement or any abbreviated
registration statement has become effective or any supplement to the
Prospectus has been filed; if the Company omitted information from the
Registration Statement at the time it was originally declared effective in
reliance upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules
and Regulations or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by the
Commission; if the Company files a term sheet pursuant to Rule 434 of the
Rules and Regulations, the Company will provide evidence satisfactory to you
that the Prospectus and term sheet meeting the requirements of Rule 434(b) or
(c), as applicable, of the Rules and Regulations, have been filed, within the
time period prescribed, with the Commission pursuant to subparagraph (7) of
Rule 424(b) of the Rules and Regulations; if for any reason the filing of the
final form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the
time period prescribed; it will notify you promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; promptly upon your request, it
will prepare and file with the Commission any amendments or supplements to
the Registration Statement or Prospectus which, in the opinion of counsel for
the several Underwriters ("Underwriters' Counsel"), may be necessary or
advisable in connection with the distribution of the Shares by the
Underwriters; it will promptly prepare and file with the Commission, and
promptly notify you of the filing of, any amendments or supplements to the
Registration Statement or Prospectus which may be necessary to correct any
statements or omissions, if, at any time when a prospectus relating to the
Shares is required to be delivered under the Act, any event shall have
occurred as a result of which the Prospectus or any other prospectus relating
to the Shares as then in effect would include any untrue statement of a
material fact or omit to

12
<PAGE>

state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale
of the Shares, it will prepare promptly upon request, but at the expense of
such Underwriter, such amendment or amendments to the Registration Statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus which
shall not previously have been submitted to you a reasonable time prior to
the proposed filing thereof or to which you shall reasonably object in
writing, subject, however, to compliance with the Act and the Rules and
Regulations and the provisions of this Agreement.

(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order
should be issued.

(c) The Company will use its best efforts to qualify the
Shares for offering and sale under the securities laws of such jurisdictions
as you may designate and to continue such qualifications in effect for so
long as may be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection therewith or as a
condition thereof to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction in which it is not
otherwise required to be so qualified or to so execute a general consent to
service of process. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such statements
and reports in each year as are or may be required by the laws of such
jurisdiction.

(d) The Company will furnish to you, as soon as available,
and, in the case of the Prospectus and any term sheet or abbreviated term
sheet under Rule 434, in no event later than the first (1st) full business
day following the first day that Shares are traded, copies of the
Registration Statement (three of which will be signed and which will include
all exhibits), each Preliminary Prospectus, the Prospectus and any amendments
or supplements to such documents, including any prospectus prepared to permit
compliance with Section 10(a)(3) of the Act, all in such quantities as you
may from time to time reasonably request. Notwithstanding the foregoing, if
BancAmerica Robertson Stephens, on behalf of the several Underwriters, shall
agree to the utilization of Rule 434 of the Rules and Regulations, the
Company shall provide to you copies of a Preliminary Prospectus updated in
all respects through the date specified by you in such quantities as you may
from time to time reasonably request.

(e) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the
Registration Statement, an earnings statement (which will be in reasonable
detail but need not be audited) complying with the provisions of Section
11(a) of the Act and covering a twelve (12) month period beginning after the
effective date of the Registration Statement.

(f) During a period of five (5) years after the date
hereof, the Company will furnish to its stockholders as soon as practicable
after the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and will furnish to you and the other several Underwriters
hereunder, upon request (i) concurrently with furnishing such reports to its
stockholders, statements of operations of the Company for each of the first
three (3) quarters in the form furnished to the Company's stockholders, (ii)
concurrently with furnishing to its stockholders, a balance sheet of the
Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity, and of cash flows of the Company for
such fiscal year, accompanied by a copy of the certificate or report thereon
of independent certified public accountants, (iii) as soon as they are
available, copies of all reports (financial or other) mailed to stockholders,

13
<PAGE>

(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, any securities exchange
or the National Association of Securities Dealers, Inc. ("NASD"), (v) every
material press release and every material news item or article in respect of
the Company or its affairs which was generally released to stockholders or
prepared by the Company or any of its subsidiaries, and (vi) any additional
information of a public nature concerning the Company or its subsidiaries, or
its business which you may reasonably request. During such five (5) year
period, if the Company shall have active subsidiaries, the foregoing
financial statements shall be on a consolidated basis to the extent that the
accounts of the Company and its subsidiaries are consolidated, and shall be
accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.

(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.

(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.

(i) The Company will file Form SR in conformity with the
requirements of the Act and the Rules and Regulations.

(j) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company or any Selling Stockholder to perform any agreement on its their
respective parts to be performed hereunder or to fulfill any condition of the
Underwriters' obligations hereunder, or if the Company shall terminate this
Agreement pursuant to Section 11(a) hereof, or if the Underwriters shall
terminate this Agreement pursuant to Section 11(b)(i), the Company will
reimburse the several Underwriters for all out-of-pocket expenses (including
fees and disbursements of Underwriters' Counsel) incurred by the Underwriters
in investigating or preparing to market or marketing the Shares.

(k) If at any time during the ninety (90) day period after
the Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you concerning the substance of
and disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication
or event.

(l) During the Lock-up Period, the Company will not,
without the prior written consent of BancAmerica Robertson Stephens, effect
the Disposition of, directly or indirectly, any Securities other than the
sale of the Firm Shares and the Option Shares to be sold by the Company
hereunder and the Company's issuance of options or Common Stock under the
Company's presently authorized 1998 Stock Option Plan (the "Option Plan").

(m) During a period of ninety (90) days from the effective
date of the Registration Statement, the Company will not file a registration
statement registering shares under the Option Plan or other employee benefit
plan.

5. EXPENSES.

(a) The Company and the Selling Stockholders agree with
each Underwriter that:

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<PAGE>

(i) The Company will pay and bear all costs and
expenses in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and
exhibits), Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto; the printing of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky Survey
and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire and
Power of Attorney, and any instruments related to any of the foregoing; the
issuance and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, the cost of all certificates representing
the Shares and transfer agents' and registrars' fees; the fees and
disbursements of counsel for the Company; all fees and other charges of the
Company's independent certified public accountants; the cost of furnishing to
the several Underwriters copies of the Registration Statement (including
appropriate exhibits), Preliminary Prospectus and the Prospectus, and any
amendments or supplements to any of the foregoing; NASD filing fees and the
cost of qualifying the Shares under the laws of such jurisdictions as you may
designate (including filing fees and fees and disbursements of Underwriters'
Counsel in connection with such NASD filings and Blue Sky qualifications);
and all other expenses directly incurred by the Company and the Selling
Stockholders in connection with the performance of their obligations
hereunder. Any additional expenses incurred as a result of the sale of the
Shares by the Selling Stockholders will be borne collectively by the Company
and the Selling Stockholders. The provisions of this Section 5(a)(i) are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Selling Stockholders and the Company hereby agree to pay, but
shall not affect any agreement which the Selling Stockholders and the Company
may make, or may have made, for the sharing of any of such expenses and
costs. Such agreements shall not impair the obligations of the Company and
the Selling Stockholders hereunder to the several Underwriters.

(ii) In addition to its other obligations under
Section 8(a) hereof, the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(a) hereof, it will reimburse the Underwriters on a
monthly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) listed
from time to time in The Wall Street Journal which represents the base rate
on corporate loans posted by a substantial majority of the nation's thirty
(30) largest banks (the "Prime Rate"). Any such interim reimbursement
payments which are not made to the Underwriters within thirty (30) days of a
request for reimbursement shall bear interest at the Prime Rate from the date
of such request.

(iii) In addition to their other obligations under
Section 8(b) hereof, each Selling Stockholder agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 8(b) hereof relating to such Selling
Stockholder, it will reimburse the Underwriters on a monthly basis for all
reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of such Selling Stockholder's obligation to
reimburse the Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Underwriters shall promptly return such
payment to the Selling Stockholders, together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Underwriters within thirty
(30) days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request.

15
<PAGE>

(b) In addition to their other obligations under Section
8(c) hereof, the Underwriters severally and not jointly agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 8(c) hereof, they will
reimburse the Company and each Selling Stockholder on a monthly basis for all
reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Underwriters' obligation to reimburse the
Company and each such Selling Stockholder for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company and each
such Selling Stockholder shall promptly return such payment to the
Underwriters together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are
not made to the Company and each such Selling Stockholder within thirty (30)
days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request.

(c) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
5(a)(ii), 5(a)(iii) and 5(b) hereof, including the amounts of any requested
reimbursement payments, the method of determining such amounts and the basis
on which such amounts shall be apportioned among the reimbursing parties,
shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the NASD.
Any such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does
not make such designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to
do so. Any such arbitration will be limited to the operation of the interim
reimbursement provisions contained in Sections 5(a)(ii), 5(a)(iii) and 5(b)
hereof and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses which is created by the provisions of
Sections 8(a), 8(b) and 8(c) hereof or the obligation to contribute to
expenses which is created by the provisions of Section 8(e) hereof.

6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the accuracy, as of the date hereof and the Closing Date
and any later date on which Option Shares are to be purchased, as the case
may be, of the representations and warranties of the Company and the Selling
Stockholders herein, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:

(a) The Registration Statement shall have become effective
not later than 2:00 P.M., San Francisco time, on the date following the date
of this Agreement, or such later date as shall be consented to in writing by
you; and no stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been initiated or, to
the knowledge of the Company, any Selling Stockholder or any Underwriter,
threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
Underwriters' Counsel.

(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of
the Shares, shall have been reasonably satisfactory to Underwriters' Counsel,
and such counsel shall have been furnished with such papers and information
as they may reasonably have requested to enable them to pass upon the matters
referred to in this Section.

(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, or any later date on which Option
Shares are to be purchased, as the case may be, there shall not have been any
change in the condition (financial or otherwise), earnings, operations,
business or business prospects of

16
<PAGE>

the Company and its subsidiaries considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus.

(d) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
the following opinion of counsel for the Company and the Selling
Stockholders, dated the Closing Date or such later date on which Option
Shares are to be purchased addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters, to the
effect that:

(i) The Company and each of NetGravity Europe Limited
and NetGravity Asia Pacific, K.K. has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation;

(ii) The Company and each of NetGravity Europe Limited
and NetGravity Asia Pacific, K.K. has the corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus;

(iii) The Company and each of NetGravity Europe Limited
and NetGravity Asia Pacific, K.K. is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in
good standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations or
business of the Company and its subsidiaries considered as one
enterprise. To such counsel's knowledge, the Company does not own
or control, directly or indirectly, any corporation, association or
other entity other than NetGravity Europe Limited and NetGravity
Asia Pacific, K.K.;

(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under the
caption "Capitalization" as of the dates stated therein, the issued
and outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable, and,
to such counsel's knowledge, will not have been issued in violation
of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right;

(v) All issued and outstanding shares of capital
stock of each of NetGravity Europe Limited and NetGravity
Asia Pacific, K.K. have been duly authorized and validly issued and
are fully paid and nonassessable, and, to such counsel's knowledge,
have not been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first refusal or
other similar right and are owned by the Company free and clear of
any pledge, lien, security interest, encumbrance, claim or
equitable interest;

(vi) The Firm Shares or the Option Shares, as the
case may be, to be issued by the Company pursuant to the terms of
this Agreement have been duly authorized and, upon issuance and
delivery against payment therefor in accordance with the terms
hereof, will be duly and validly issued and fully paid and
nonassessable, and will not have been issued in violation of or
subject to any preemptive right, co-sale right, registration right,
right of first refusal or other similar right.

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<PAGE>

(vii) The Company has the corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold by it
hereunder;

(viii) This Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been
duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, is a valid and
binding agreement of the Company, enforceable in accordance with
its terms, except insofar as indemnification provisions may be
limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally
or by general equitable principles;

(ix) The Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are pending or threatened under the Act;

(x) The Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the financial
statements (including supporting schedules) and financial data
derived therefrom as to which such counsel need express no
opinion), as of the effective date of the Registration Statement,
complied as to form in all material respects with the requirements
of the Act and the applicable Rules and Regulations;

(xi) The information in the Prospectus under the
caption "Description of Capital Stock," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed
by such counsel and is a fair summary of such matters and
conclusions; and the forms of certificates evidencing the Common
Stock and filed as exhibits to the Registration Statement comply
with Delaware law;

(xii) The description in the Registration Statement
and the Prospectus of the charter and bylaws of the Company and of
statutes are accurate and fairly present the information required
to be presented by the Act and the applicable Rules and Regulations;

(xiii) To such counsel's knowledge, there are no
agreements, contracts, leases or documents to which the Company is
a party of a character required to be described or referred to in
the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which are not described or
referred to therein or filed as required;

(xiv) The performance of this Agreement and the
consummation of the transactions herein contemplated (other than
performance of the Company's indemnification obligations hereunder,
concerning which no opinion need be expressed) will not (a) result
in any violation of the Company's charter or bylaws or (b) to such
counsel's knowledge, result in a material breach or violation of
any of the terms and provisions of, or constitute a default under,
any bond, debenture, note or other evidence of indebtedness, or any
lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument known to
such counsel to which the Company is a party or by which its
properties are bound, or any applicable statute, rule or regulation
known to such counsel or, to such counsel's knowledge, any order,
writ or decree of any court, government or governmental agency or
body having jurisdiction over the Company or any of its
subsidiaries, or over any of their properties or operations;

(xv) No consent, approval, authorization or order of
or qualification with any court, government or governmental agency
or body having jurisdiction over the Company or any

18
<PAGE>

of its subsidiaries, or over any of their properties or operations
is necessary in connection with the consummation by the Company of
the transactions herein contemplated, except such as have been
obtained under the Act or such as may be required under state or
other securities or Blue Sky laws in connection with the purchase
and the distribution of the Shares by the Underwriters;

(xvi) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened against the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement or the Prospectus by the
Act or the Rules and Regulations, other than those described
therein;

(xvii) To such counsel's knowledge, neither the
Company nor any of its subsidiaries is presently (a) in material
violation of its respective charter or bylaws, or (b) in material
breach of any applicable statute, rule or regulation known to such
counsel or, to such counsel's knowledge, any order, writ or decree
of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries, or over any of their
properties or operations;

(xviii) To such counsel's knowledge, except as set
forth in the Registration Statement and Prospectus, no holders of
Common Stock or other securities of the Company have registration
rights with respect to securities of the Company and, except as set
forth in the Registration Statement and Prospectus, all holders of
securities of the Company having rights known to such counsel to
registration of such shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company
have, with respect to the offering contemplated thereby, waived
such rights or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the
Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in full
satisfaction of such rights;

(xix) Each Selling Stockholder which is not a natural
person has full right, power and authority to enter into and to
perform its obligations under the Power of Attorney and Custody
Agreement to be executed and delivered by it in connection with the
transactions contemplated herein; the Power of Attorney and Custody
Agreement of each Selling Stockholder that is not a natural person
has been duly authorized by such Selling Stockholder; the Power of
Attorney and Custody Agreement of each Selling Stockholder has been
duly executed and delivered by or on behalf of such Selling
Stockholder; and the Power of Attorney and Custody Agreement of
each Selling Stockholder constitutes the valid and binding
agreement of such Selling Stockholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles;

(xx) Each of the Selling Stockholders has full
right, power and authority to enter into and to perform its
obligations under this Agreement and to sell, transfer, assign and
deliver the Option Shares to be sold by such Selling Stockholder
hereunder;

(xxi) This Agreement has been duly authorized by each
Selling Stockholder that is not a natural person and has been duly
executed and delivered by or on behalf of each Selling Stockholder;
and

(xxii) Upon the delivery of and payment for the Option
Shares as contemplated in this Agreement, each of the Underwriters
will receive valid marketable title to the Option Shares purchased
by it from such Selling Stockholder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest.
In rendering such opinion, such counsel may assume

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<PAGE>

that the Underwriters are without notice of any defect in the title
of the Option Shares being purchased from the Selling Stockholders.

In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters
were discussed, and although they have not verified the accuracy or
completeness of the statements contained in the Registration Statement or the
Prospectus, nothing has come to the attention of such counsel which leads
them to believe that, at the time the Registration Statement became effective
and at all times subsequent thereto up to and on the Closing Date and on any
later date on which Option Shares are to be purchased, the Registration
Statement and any amendment or supplement thereto (other than the financial
statements including supporting schedules and other financial and statistical
information derived therefrom, as to which such counsel need express no
comment) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the Closing Date or any later date
on which the Option Shares are to be purchased, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement
thereto (except as aforesaid) contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

Counsel rendering the foregoing opinion may rely as to
questions of law not involving the laws of the United States or the States of
California and Delaware upon opinions of local counsel, and as to questions
of fact upon representations or certificates of officers of the Company, the
Selling Stockholders or officers of the Selling Stockholders (when the
Selling Stockholder is not a natural person), and of government officials, in
which case their opinion is to state that they are so relying and that they
have no knowledge of any material misstatement or inaccuracy in any such
opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.

(e) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be, an
opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, in
form and substance satisfactory to you, with respect to the sufficiency of
all such corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents
as they may have requested for the purpose of enabling them to pass upon such
matters.

(f) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be, a
letter from KPMG Peat Marwick, LLP, addressed to the Underwriters, dated the
Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations and based upon the procedures
described in such letter delivered to you concurrently with the execution of
this Agreement (herein called the "Original Letter"), but carried out to a
date not more than five (5) business days prior to the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter since the date of
such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse and that makes it, in
your sole judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. The Original
Letter from KPMG Peat

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<PAGE>

Marwick, LLP, shall be addressed to or for the use of the Underwriters in
form and substance satisfactory to the Underwriters and shall (i) represent,
to the extent true, that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with respect to
their examination of the consolidated balance sheet of the Company as of
December 31, 1996 and December 31, 1997 and related consolidated statements
of operations, stockholders' equity, and cash flows for the period from
September 5, 1995 (Inception) through December 31, 1995, for the years ended
December 31, 1996 and 1997, and for the three-month period ended March 31,
1998, (iii) state that KPMG Peat Marwick, LLP, has performed the procedures
set out in Statement on Auditing Standards No. 71 ("SAS 71") for a review of
interim financial information and providing the report of KPMG Peat Marwick,
LLP, as described in SAS 71 on the financial statements for the three-month
period ended March 31, 1997 (the "Quarterly Financial Statements"), (iv)
state that in the course of such review, nothing came to their attention that
leads them to believe that any material modifications need to be made to the
Quarterly Financial Statements in order for them to be in compliance with
generally accepted accounting principles consistently applied across the
period presented, and (v) address other matters agreed upon by KPMG Peat
Marwick, LLP and you. In addition, you shall have received from KPMG Peat
Marwick, LLP a letter addressed to the Company and made available to you for
the use of the Underwriters stating that their review of the Company's system
of internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's consolidated
financial statements as of March 31, 1996, did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.

(g) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be, a
certificate of the Company, dated the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to the
effect that, and you shall be satisfied that:

(i) The representations and warranties of the
Company in this Agreement are true and correct, as
if made on and as of the Closing Date or any later date on which
Option Shares are to be purchased, as the case may be, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
the Closing Date or any later date on which Option Shares are to be
purchased, as the case may be;

(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or threatened
under the Act;

(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of
such certificate, the Registration Statement and the Prospectus,
and any amendments or supplements thereto, contained all material
information required to be included therein by the Act and the
Rules and Regulations and in all material respects conformed to the
requirements of the Act and the Rules and Regulations, the
Registration Statement, and any amendment or supplement thereto,
did not and does not include any 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, the
Prospectus, and any amendment or supplement thereto, did not and
does not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set
forth; and

(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any material adverse change in the

21
<PAGE>

condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries
considered as one enterprise, (b) any transaction that is material
to the Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is
material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d) any
change in the capital stock or outstanding indebtedness of the
Company or any of its subsidiaries that is material to the Company
and its subsidiaries considered as one enterprise, (e) any dividend
or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its subsidiaries, or (f) any loss or
damage (whether or not insured) to the property of the Company or
any of its subsidiaries which has been sustained or will have been
sustained which has a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered
as one enterprise.

(h) You shall be satisfied that, and you shall have received a
certificate, dated the Closing Date, or any later date on which Option Shares
are to be purchased, as the case may be, from the Attorneys for each Selling
Stockholder to the effect that, as of the Closing Date, or any later date on
which Option Shares are to be purchased, as the case may be, they have not
been informed that:

(i) The representations and warranties made by such
Selling Stockholder herein are not true or correct in any material
respect on the Closing Date or on any later date on which Option
Shares are to be purchased, as the case may be; or

(ii) Such Selling Stockholder has not complied with
any obligation or satisfied any condition which is required to be
performed or satisfied on the part of such Selling Stockholder at
or prior to the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be.

(i) The Company shall have obtained and delivered to you an
agreement from each officer and director of the Company, each Selling
Stockholder and each beneficial owner of ________ or more shares of Common
Stock in writing prior to the date hereof that such person will not, during
the Lock-up Period, effect the Disposition of any Securities now owned or
hereafter acquired directly by such person or with respect to which such
person has or hereafter acquires the power of disposition, otherwise than (i)
as a bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction, (ii) as a distribution to partners,
stockholders or affiliates of such person, provided that the distributees
thereof agree in writing to be bound by the terms of this restriction, or
(iii) with the prior written consent of BancAmerica Robertson Stephens. The
foregoing restriction shall have been expressly agreed to preclude the holder
of the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be
disposed of by someone other than the such holder. Such prohibited hedging
or other transactions would including, without limitation, any short sale
(whether or not against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any
Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from Securities. Furthermore, such person will have also agreed and
consented to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by such person
except in compliance with this restriction.

(j) The Company and the Selling Stockholders shall have
furnished to you such further certificates and documents as you shall
reasonably request (including certificates of officers of the Company, the
Selling Stockholders or officers of the Selling Stockholders (when the
Selling Stockholder is not a natural person) as to the accuracy of the
representations and warranties of the Company and the Selling Stockholders as
to the performance by the Company and the Selling Stockholders

22
<PAGE>

herein, of their respective obligations hereunder and as to the other
conditions concurrent and precedent to the obligations of the Underwriters
hereunder.

All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to Underwriters' Counsel. The Company and the Selling
Stockholders will furnish you with such number of conformed copies of such
opinions, certificates, letters and documents as you shall reasonably request.

7. OPTION SHARES.

(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders, severally and not
jointly, hereby grant to the several Underwriters, for the purpose of
covering over-allotments in connection with the distribution and sale of the
Firm Shares only, a nontransferable option to purchase up to an aggregate of
________ Option Shares at the purchase price per share for the Firm Shares
set forth in Section 3 hereof. Such option may be exercised by the
Representatives on behalf of the several Underwriters on one (1) or more
occasions in whole or in part during the period of thirty (30) days after the
date on which the Firm Shares are initially offered to the public, by giving
written notice to the Company and the Selling Stockholders. The number of
Option Shares to be purchased by each Underwriter upon the exercise of such
option shall be the same proportion of the total number of Option Shares to
be purchased by the several Underwriters pursuant to the exercise of such
option as the number of Firm Shares purchased by such Underwriter (set forth
in Schedule A hereto) bears to the total number of Firm Shares purchased by
the several Underwriters (set forth in Schedule A hereto), adjusted by the
Representatives in such manner as to avoid fractional shares. If the
Underwriters elect to purchase less than the total number of Option Shares,
the number of Option Shares to be purchased from the Company and each of the
Selling Stockholders shall be the same percentage of the total number of
Option Shares to be sold by the Company and the Selling Stockholders as the
Company and each of the Selling Stockholders offers to sell of the Option
Shares, as adjusted by BancAmerica Robertson Stephens in such manner as
BancAmerica Robertson Stephens deems advisable to avoid fractional shares.

Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the
option granted by this Section 7 shall be made against payment of the
purchase price therefor by the several Underwriters by certified or official
bank check or checks drawn in next-day funds, payable to the order of the
Company with regard to the Option Shares being purchased from the Company,
and to the order of the Custodian for the respective accounts of the Selling
Stockholders with regard to the Option Shares being purchased from such
Selling Stockholders (and the Company and such Selling Stockholders agree not
to deposit and to cause the Custodian not to deposit any such check in the
bank on which it is drawn, and not to take any other action with the purpose
or effect of receiving immediately available funds, until the business day
following the date of its delivery to the Company or the Custodian, as the
case may be, and, in the event of any breach of the foregoing, the Company or
the Selling Stockholders, as the case may be, shall reimburse the
Underwriters for the interest lost and any other expenses borne by them by
reason of such breach. Such delivery and payment shall take place at the
offices of Wilson Sonsini Goodrich & Rosati Professional Corporation, 650
Page Mill Road, Palo Alto, CA 94304 or at such other place as may be agreed
upon among the Representatives and the Company (i) on the Closing Date, if
written notice of the exercise of such option is received by the Company at
least two (2) full business days prior to the Closing Date, or (ii) on a date
which shall not be later than the third (3rd) full business day following the
date the Company receives written notice of the exercise of such option, if
such notice is received by the Company less than two (2) full business days
prior to the Closing Date.

The certificates for the Option Shares to be so delivered will
be made available to you at such office or such other location including,
without limitation, in New York City, as you may reasonably request for
checking at least one (1) full business day prior to the date of payment and
delivery and will be in such names and denominations as you may request, such
request to be made at least two (2) full business days

23
<PAGE>

prior to such date of payment and delivery. If the Representatives so elect,
delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives.

It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior
to the date of payment and delivery for the Option Shares to be purchased by
such Underwriter or Underwriters. Any such payment by you shall not relieve
any such Underwriter or Underwriters of any of its or their obligations
hereunder.

(b) Upon exercise of any option provided for in Section
7(a) hereof, the obligations of the several Underwriters to purchase such
Option Shares will be subject (as of the date hereof and as of the date of
payment and delivery for such Option Shares) to the accuracy of and
compliance with the representations, warranties and agreements of the
Company and the Selling Stockholders herein, to the accuracy of the
statements of the Company, the Selling Stockholders and officers of the
Company made pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of their respective obligations
hereunder, to the conditions set forth in Section 6 hereof, and to the
condition that all proceedings taken at or prior to the payment date in
connection with the sale and transfer of such Option Shares shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and
you shall have been furnished with all such documents, certificates and
opinions as you may request in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants or agreements of the Company and the
Selling Stockholders or the satisfaction of any of the conditions herein
contained.

8. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter or as a "qualified independent
underwriter" within the meaning of Schedule E of the Bylaws of the NASD),
under the Act, the Exchange Act or otherwise, specifically including, but not
limited to, losses, claims, damages or liabilities (or actions in respect
thereof) arising out of or based upon (i) any breach of any representation,
warranty, agreement or covenant of the Company herein contained, (ii) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment or supplement thereto, or 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, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein 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, and agree to reimburse each Underwriter for any legal
or other expenses reasonably incurred by it in connection with investigating
or defending any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, or any such amendment or supplement thereto, in
reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter, directly or through
you, specifically for use in the preparation thereof and, PROVIDED FURTHER,
that the indemnity agreement provided in this Section 8(a) with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any losses, claims, damages, liabilities or
actions based upon any untrue statement or alleged untrue statement of
material fact or omission or alleged omission to state therein a material
fact purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or

24
<PAGE>

omission or alleged omission was corrected had not been sent or given to
such person within the time required by the Act and the Rules and
Regulations, unless such failure is the result of noncompliance by the
Company with Section 4(d) hereof.

The indemnity agreement in this Section 8(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.

(b) Each Selling Stockholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter
may become subject (including, without limitation, in its capacity as an
Underwriter or as a "qualified independent underwriter" within the meaning of
Schedule E or the Bylaws of the NASD) under the Act, the Exchange Act or
otherwise, specifically including, but not limited to, losses, claims,
damages or liabilities (or actions in respect thereof) arising out of or
based upon (i) any breach of any representation, warranty, agreement or
covenant of such Selling Stockholder herein contained, (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment or supplement thereto, or 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, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 8(b) to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or such Underwriter by such
Selling Stockholder, directly or through such Selling Stockholder's
representatives, specifically for use in the preparation thereof, and agrees
to reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the indemnity
agreement provided in this Section 8(b) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, damages, liabilities or actions based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state therein a material fact purchased
Shares, if a copy of the Prospectus in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected had not been
sent or given to such person within the time required by the Act and the
Rules and Regulations, unless such failure is the result of noncompliance by
the Company with Section 4(d) hereof.

The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which such Selling Stockholder may otherwise have.

(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each Selling Stockholder against
any losses, claims, damages or liabilities, joint or several, to which the
Company or such Selling Stockholder may become subject under the Act or
otherwise, specifically including, but not limited to, losses, claims,
damages or liabilities (or actions in respect thereof) arising out of or
based upon (i) any breach of any representation, warranty, agreement or
covenant of such Underwriter herein contained, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or 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, or (iii) any untrue
statement or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were

25
<PAGE>

made, not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 8(c) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter, directly or through you, specifically for
use in the preparation thereof, and agrees to reimburse the Company and each
such Selling Stockholder for any legal or other expenses reasonably incurred
by the Company and each such Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or action.

The indemnity agreement in this Section 8(c) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each officer
of the Company who signed the Registration Statement and each director of the
Company, each Selling Stockholder and each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Act or the
Exchange Act. This indemnity agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.

(d) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 8. In case any
such action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section
8(a), 8(b) or 8(c) hereof who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. In no event shall any indemnifying party
be liable in respect of any amounts paid in settlement of any action unless
the indemnifying party shall have approved the terms of such settlement;
PROVIDED that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnification could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on all claims that are the
subject matter of such proceeding.

(e) In order to provide for just and equitable contribution
in any action in which a claim for indemnification is made pursuant to this
Section 8 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 8
provides for indemnification in such case, all the parties hereto shall
contribute to the aggregate losses,

26
<PAGE>

claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that, except as set forth in
Section 8(f) hereof, the Underwriters severally and not jointly are
responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company and the Selling Stockholders are responsible for the remaining
portion, PROVIDED, HOWEVER, that (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the underwriting
discount applicable to the Shares purchased by such Underwriter exceeds the
amount of damages which such Underwriter has otherwise required to pay and
(ii) no person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. The
contribution agreement in this Section 8(e) shall extend upon the same terms
and conditions to, and shall inure to the benefit of, each person, if any,
who controls any Underwriter, the Company or any Selling Stockholder within
the meaning of the Act or the Exchange Act and each officer of the Company
who signed the Registration Statement and each director of the Company.

(f) The liability of each Selling Stockholder under the
representations, warranties and agreements contained herein and under the
indemnity agreements contained in the provisions of this Section 8 shall be
limited to an amount equal to the initial public offering price of the
Selling Stockholder Shares sold by such Selling Stockholder to the
Underwriters minus the amount of the underwriting discount paid thereon to
the Underwriters by such Selling Stockholder. The Company and such Selling
Stockholders may agree, as among themselves and without limiting the rights
of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.

(g) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 8, and are fully informed
regarding said provisions. They further acknowledge that the provisions of
this Section 8 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Act and the Exchange Act.

9. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company, the Selling Stockholders and the Underwriters herein or in
certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter within the meaning of
the Act or the Exchange Act, or by or on behalf of the Company or any Selling
Stockholder, or any of their officers, directors or controlling persons
within the meaning of the Act or the Exchange Act, and shall survive the
delivery of the Shares to the several Underwriters hereunder or termination
of this Agreement.

10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such
Firm Shares in accordance with the terms hereof, and if the aggregate number
of Firm Shares which such defaulting Underwriter or Underwriters so agreed
but failed to purchase does not exceed 10% of the Firm Shares, the remaining
Underwriters shall be obligated, severally in proportion to their respective
commitments hereunder, to take up and pay for the Firm Shares of such
defaulting Underwriter or Underwriters.

If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters
agreed but failed to take up and pay for exceeds 10% of the Firm Shares, the
remaining Underwriters shall have the right, but shall not be obligated, to
take up and pay for (in such proportions as may be agreed upon among them)
the Firm Shares which the defaulting Underwriter or Underwriters so agreed
but failed to purchase. If such remaining Underwriters do not, at the
Closing Date, take up and pay for the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase, the Closing
Date shall be postponed for twenty-four (24) hours to allow the several
Underwriters the

27
<PAGE>

privilege of substituting within twenty-four (24) hours (including
non-business hours) another underwriter or underwriters (which may include
any nondefaulting Underwriter) satisfactory to the Company. If no such
underwriter or underwriters shall have been substituted as aforesaid by such
postponed Closing Date, the Closing Date may, at the option of the Company,
be postponed for a further twenty-four (24) hours, if necessary, to allow the
Company the privilege of finding another underwriter or underwriters,
satisfactory to you, to purchase the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase. If it shall be
arranged for the remaining Underwriters or substituted underwriter or
underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section 10, (i) the Company shall have the
right to postpone the time of delivery for a period of not more than seven
(7) full business 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 promptly to file any
amendments to the Registration Statement, supplements to the Prospectus or
other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining
Underwriters and substituted underwriter or underwriters shall be taken as
the basis of their underwriting obligation. If the remaining Underwriters
shall not take up and pay for all such Firm Shares so agreed to be purchased
by the defaulting Underwriter or Underwriters or substitute another
underwriter or underwriters as aforesaid and the Company shall not find or
shall not elect to seek another underwriter or underwriters for such Firm
Shares as aforesaid, then this Agreement shall terminate.

In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, neither the Company nor any Selling
Stockholder shall be liable to any Underwriter (except as provided in
Sections 5 and 8 hereof) nor shall any Underwriter (other than an Underwriter
who shall have failed, otherwise than for some reason permitted under this
Agreement, to purchase the number of Firm Shares agreed by such Underwriter
to be purchased hereunder, which Underwriter shall remain liable to the
Company, the Selling Stockholders and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company or any Selling
Stockholder (except to the extent provided in Sections 5 and 8 hereof).

The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.

11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.

(a) This Agreement shall become effective at the earlier of
(i) 6:30 A.M., San Francisco time, on the first full business day following
the effective date of the Registration Statement, or (ii) the time of the
initial public offering of any of the Shares by the Underwriters after the
Registration Statement becomes effective. The time of the initial public
offering shall mean the time of the release by you, for publication, of the
first newspaper advertisement relating to the Shares, or the time at which
the Shares are first generally offered by the Underwriters to the public by
letter, telephone, telegram or telecopy, whichever shall first occur. By
giving notice as set forth in Section 12 before the time this Agreement
becomes effective, you, as Representatives of the several Underwriters, or
the Company, may prevent this Agreement from becoming effective without
liability of any party to any other party, except as provided in Sections
4(j), 5 and 8 hereof.

(b) You, as Representatives of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or on or
prior to any later date on which Option Shares are to be purchased, as the
case may be, (i) if the Company or any Selling Stockholder shall
have failed, refused or been unable to perform any agreement on its part to
be performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including, without
limitation, any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse, or (ii) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices
shall have

28
<PAGE>

been generally established on the New York Stock Exchange or on the American
Stock Exchange or in the over the counter market by the NASD, or trading in
securities generally shall have been suspended on either such exchange or in
the over the counter market by the NASD, or if a banking moratorium shall
have been declared by federal, New York or California authorities, or (iii)
if the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured, or (iv) if
there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your reasonable judgment makes
it inadvisable or impracticable to proceed with the offering, sale and
delivery of the Shares, or (v) if there shall have been an outbreak or
escalation of hostilities or of any other insurrection or armed conflict or
the declaration by the United States of a national emergency which, in the
reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. In the event of termination pursuant to subparagraph (i)
above, the Company shall remain obligated to pay costs and expenses pursuant
to Sections 4(j), 5 and 8 hereof. Any termination pursuant to any of
subparagraphs (ii) through (v) above shall be without liability of any party
to any other party except as provided in Sections 5 and 8 hereof.

If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone, telecopy or telegram, in each case
confirmed by letter. If the Company shall elect to prevent this Agreement
from becoming effective, the Company shall promptly notify you by telephone,
telecopy or telegram, in each case, confirmed by letter.

11. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall
be mailed, delivered, telegraphed (and confirmed by letter) or telecopied
(and confirmed by letter) to you c/o BancAmerica Robertson Stephens, 555
California Street, Suite 2600, San Francisco, California 94104, telecopier
number (415) 781-0278, Attention: General Counsel; if sent to the Company,
such notice shall be mailed, delivered, telegraphed (and confirmed by letter)
or telecopied (and confirmed by letter) to 1700 S. Amphett Blvd., Suite 350,
San Mateo, CA 94402, telecopier number (650) 655-4777, Attention: John W.
Danner, Chief Executive Officer; if sent to one or more of the Selling
Stockholders, such notice shall be sent mailed, delivered, telegraphed (and
confirmed by letter) or telecopied (and confirmed by letter) to ____________,
as Attorney-in-Fact for the Selling Stockholders, at 1700 S. Amphett
Blvd., Suite 350, San Mateo, CA 94402, telecopier number (650) 655-4777.

12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and the Selling
Stockholders and their respective executors, administrators, successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person or entity, other than the parties
hereto and their respective executors, administrators, successors and
assigns, and the controlling persons within the meaning of the Act or the
Exchange Act, officers and directors referred to in Section 8 hereof, any
legal or equitable right, remedy or claim in respect of this Agreement or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of
the parties hereto and their respective executors, administrators, successors
and assigns and said controlling persons and said officers and directors, and
for the benefit of no other person or entity. No purchaser of any of the
Shares from any Underwriter shall be construed a successor or assign by
reason merely of such purchase.

In all dealings with the Company and the Selling Stockholders under
this Agreement, you shall act on behalf of each of the several Underwriters,
and the Company and the Selling Stockholders shall be entitled to act and
rely upon any statement, request, notice or agreement made or given by you
jointly or by BancAmerica Robertson Stephens on behalf of you.

13. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.

29
<PAGE>

14. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.

30
<PAGE>

If the foregoing correctly sets forth the understanding among the Company,
the Selling Stockholders and the several Underwriters, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the Company, the Selling Stockholders
and the several Underwriters.

Very truly yours,

NETGRAVITY, INC.

By _________________________________

SELLING STOCKHOLDERS

By _________________________________
Attorney-in-Fact for the Selling
Stockholders named in Schedule B
hereto

Accepted as of the date first above written:

BANCAMERICA ROBERTSON STEPHENS
NATIONSBANC MONTGOMERY SECURITIES LLC
FIRST ALBANY CORPORATION

On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.

By BANCAMERICA ROBERTSON STEPHENS

By __________________________________
Authorized Signatory

<PAGE>

SCHEDULE A

<TABLE>
<CAPTION>
Underwriters Number of
- ---------------------------------- Firm Shares
To Be
Purchased
-----------

<S> <C>
BancAmerica Robertson Stephens
NationsBanc Montgomery Securities LLC
First Albany Corporation

--------

Total . . . . . . . . . . . . . . . . . . . . . . . . . .
--------
--------
</TABLE>

<PAGE>
SCHEDULE B

<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
COMPANY TO BE SOLD
- ------- ----------
<S> <C>
NetGravity, Inc. . . . . . . . . . . . . . . . . . .
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF OPTION
NAME OF SELLING STOCKHOLDER SHARES TO BE SOLD
- --------------------------- -----------------
<S> <C>
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE>

CERTIFICATE OF AMENDMENT OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF NETGRAVITY, INC.

(PURSUANT TO SECTION 242 OF THE
DELAWARE GENERAL CORPORATION LAW)

John W. Danner and Stephen E. Recht certify that:

1. They are the President and Secretary, respectively, of NetGravity, Inc., a
Delaware corporation.

2. The first paragraph of Article Four of the Amended and Restated Certificate
of Incorporation of this corporation is restated as two paragraphs and
amended in its entirety to read as follows:

"This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares of Common Stock that the corporation is authorized to
issued is 50,000,000, with a par value of $0.001 per share. The total
number of shares of Preferred Stock that the corporation is authorized to
issue is 30,201,050, with a par value of $0.001 per share, of which
4,404,578 are designated "Series A Preferred Stock," 4,404,578 are
designated "Series A-1 Preferred Stock," 4,307,969 are designated "Series B
Preferred Stock," 4,307,969 are designated "Series B-1 Preferred Stock,"
3,887,978 are designated "Series C Preferred Stock," 3,887,978 are
designated "Series C-1 Preferred Stock," and 5,000,000 of which shall be
undesignated. Effective upon the conversion of all outstanding shares of
the corporation's Preferred Stock in connection with the closing of a firm
commitment underwritten public offering of the corporation's Common Stock
pursuant to a Registration Statement on Form S-1 under the Securities Act
of 1933, as amended, the total number of shares of Preferred Stock that the
corporation shall be authorized to issue shall be 5,000,000, with a par
value of $0.001 per share, all of which shall be undesignated. Upon the
filing of this Certificate of Amendment of the Restated Certificate of
Incorporation, every [2.2] shares of Common Stock of the corporation
outstanding immediately prior to such filing shall be reconstituted as and
converted into one share of Common Stock.

The Board of Directors of the corporation is authorized to determine or
alter the powers, preferences and rights and the qualifications,
limitations or restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, and within the limitations or restrictions
stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, to increase
or decrease (but not below the number of shares of any such series then
outstanding) the number of shares of any such series, to determine the
designation of any series, and to

<PAGE>

fix the number of shares of any series. In case the number of shares of
any series shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series."

3. The Amended and Restated Certificate of Incorporation of the corporation
shall be amended to add the following new Article TEN:

"ARTICLE TEN

Effective upon the closing of a firm commitment underwritten public
offering of the corporation's Common Stock pursuant to a Registration
Statement on Form S-1 under the Securities Act of 1933, as amended,
the stockholders of the corporation may not take action by written
consent without a meeting but must take any such actions at a duly
called annual or special meeting of stockholders."

4. This Certificate of Amendment of the Amended and Restated Certificate of
Incorporation (the "Certificate of Amendment") has been duly approved by
the Board of Directors in accordance with Section 242 of the Delaware
General Corporation Law (the "DGCL").

5. This Certificate of Amendment has been duly approved by the written consent
of a majority of the stockholders in accordance with Sections 228 and 242
of the DGCL and notice has been given to all those stockholders who have
not consented in writing in accordance with Section 228(d) of the DGCL.
The total number of outstanding shares of Common Stock and Preferred Stock
of the corporation entitled to act by written consent upon the Certificate
of Amendment were 8,834,347 and 13,683,126, respectively. The number of
shares consenting to the Certificate of Amendment equaled or exceeded
consent required. The percentage consent required was more than 50% of the
outstanding Common Stock and more than two-thirds of the outstanding
Preferred Stock (voting on an as-converted to Common Stock basis),
consenting as separate classes.

-2-
<PAGE>

We hereby further declare and certify under penalty of perjury under the
laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this Certificate
of Amendment is our act and deed.

Executed at _________________________, this _____ day of ______, 1998.

--------------------------------------------
John W. Danner
President and Chief Executive Officer

--------------------------------------------
Stephen E. Recht
Secretary

-3-

<PAGE>

AMENDED AND RESTATED BYLAWS

NETGRAVITY, INC.
(A DELAWARE CORPORATION)

<PAGE>

BYLAWS OF
NETGRAVITY, INC.
(A DELAWARE CORPORATION)

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>
ARTICLE I - CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1.1 REGISTERED OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE II - MEETINGS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . .1

2.1 PLACE OF MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.3 SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS. . . . . . . . . . . . . . . . . . .2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS . . .2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. . . . . . . . . . . . .2
2.7 QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.8 ADJOURNED MEETING; NOTICE . . . . . . . . . . . . . . . . . . . . . .3
2.9 VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . .3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING. . . . . . . . . . . . . .4
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.13 ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE . . . . . . . . . . . . . . . .4

ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

3.1 POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.2 NUMBER OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. . . . . . . . . . . . . . .5
3.4 RESIGNATION AND VACANCIES . . . . . . . . . . . . . . . . . . . . . .6
3.5 REMOVAL OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . .7
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. . . . . . . . . . . . . . .7
3.7 FIRST MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.8 REGULAR MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.9 SPECIAL MEETINGS; NOTICE. . . . . . . . . . . . . . . . . . . . . . .7
3.10 QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.11 WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.12 ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.13 NOTICE OF ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . .8

-i-
<PAGE>
TABLE OF CONTENTS

(Continued)

Page

3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . .8
3.15 FEES AND COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . . .9
3.16 APPROVAL OF LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . .9
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION. . . . . . . .9
3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL
MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

ARTICLE IV - COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.1 COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 11
4.2 MEETINGS AND ACTION OF COMMITTEES . . . . . . . . . . . . . . . . . 11
4.3 COMMITTEE MINUTES . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.1 OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 ELECTION OF OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 SUBORDINATE OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 REMOVAL AND RESIGNATION OF OFFICERS . . . . . . . . . . . . . . . . 12
5.5 VACANCIES IN OFFICES. . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . . 14
5.11 ASSISTANT SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . 14
5.12 ADMINISTRATIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . 14
5.13 AUTHORITY AND DUTIES OF OFFICERS. . . . . . . . . . . . . . . . . . 15

ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS . . 15

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . 15
6.2 INDEMNIFICATION OF OTHERS . . . . . . . . . . . . . . . . . . . . . 16
6.3 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VII - RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . 16

7.1 MAINTENANCE AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . 16
7.2 INSPECTION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 17
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. . . . . . . . . . . 17

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TABLE OF CONTENTS

(Continued)

Page

7.4 CERTIFICATION AND INSPECTION OF BYLAWS. . . . . . . . . . . . . . . 17

ARTICLE VIII - GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 17

8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING . . . . . . . 17
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS . . . . . . . . . . . . . 18
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. . . . . . . . . 18
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES. . . . . . . . . . 18
8.5 SPECIAL DESIGNATION ON CERTIFICATES . . . . . . . . . . . . . . . . 19
8.6 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 TRANSFER AGENTS AND REGISTRARS. . . . . . . . . . . . . . . . . . . 19
8.8 CONSTRUCTION; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IX - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

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BYLAWS

NETGRAVITY, INC.
(A DELAWARE CORPORATION)

ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

The registered office of the corporation shall be fixed in the certificate
of incorporation of the corporation.

1.2 OTHER OFFICES

The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

Meetings of stockholders shall be held at any place within or outside the
State of Delaware designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.

2.2 ANNUAL MEETING

The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Friday in June in each year at 3:00 p.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.

2.3 SPECIAL MEETING

A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president.

<PAGE>

2.4 NOTICE OF STOCKHOLDERS' MEETINGS

All notices of meetings of stockholders shall be sent or otherwise given in
accordance with Section 2.5 of these bylaws not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (i) in the case of a special meeting,
the purpose or purposes for which the meeting is called (no business other than
that specified in the notice may be transacted) or (ii) in the case of the
annual meeting, those matters which the board of directors, at the time of
giving the notice, intends to present for action by the stockholders (but any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.

2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS

To be properly brought before an annual meeting or special meeting,
nominations for the election of directors or other business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board of directors, (b) otherwise properly brought before
the meeting by or at the direction of the board of directors or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder, such stockholder must have given timely notice and in proper form
of his or her intent to bring such business before such meeting in accordance
with Section 3.18 of these bylaws.

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.

An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.

2.7 QUORUM

The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.8 of these bylaws.

When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the

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certificate of incorporation or these bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of the
question.

If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.

2.8 ADJOURNED MEETING; NOTICE

When a meeting is adjourned to another time and place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

2.9 VOTING

The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).

Except as may be otherwise provided in the certificate of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.

2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing setting forth the action so
taken shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Such consents shall be delivered to the corporation by delivery
to its registered office in the state of Delaware, its principal place of
business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.

Effective upon the closing of a firm commitment underwritten initial public
offering of any of the corporation's securities pursuant to a registration
statement on Form S-1 filed under the Securities Act of 1933, as amended, the
stockholders of the corporation may not take action by written consent without a
meeting but must take any such actions at a duly called annual or special
meeting.

2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING

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For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.

If the board of directors does not so fix a record date, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.

A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.

The record date for any other purpose shall be as provided in Section 8.1
of these bylaws.

2.12 PROXIES

Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware (relating to the irrevocability of proxies).

2.13 ORGANIZATION

The president, or in the absence of the president, the chairman of the
board, shall call the meeting of the stockholders to order, and shall act as
chairman of the meeting. In the absence of the president, the chairman of the
board, and all of the vice presidents, the stockholders shall appoint a chairman
for such meeting. The chairman of any meeting of stockholders shall determine
the order of business and the procedures at the meeting, including such matters
as the regulation of the manner of voting and the conduct of business. The
secretary of the corporation shall act as secretary of all meetings of the
stockholders, but in the absence of the secretary at any meeting of the
stockholders, the chairman of the meeting may appoint any person to act as
secretary of the meeting.

2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE

The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior

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to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the General Corporation Law of Delaware and to
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.

3.2 NUMBER OF DIRECTORS

The number of directors of the corporation shall be not less than three
(3) nor more than nine (9). The exact number of directors shall be four (4)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the stockholders.
The indefinite number of directors may be changed, or a definite number may
be fixed without provision for an indefinite number, by a duly adopted
amendment to the Certificate of Incorporation or by an amendment to this
bylaw duly adopted by the board of directors or by the stockholders.

3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS

Except as provided in Section 3.4 of these bylaws, directors shall hold
office until the expiration of the term for which elected and until a successor
has been elected and qualified; except that if any such election shall not be so
held, such election shall take place at a stockholders' meeting called and held
in accordance with the Delaware General Corporation Law.

3.4 RESIGNATION AND VACANCIES

Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Each director so elected shall hold office until the expiration of the term of
office of the director whom he has replaced and until a successor has been
elected and qualified.

Effective upon the closing of a firm commitment underwritten public
offering of any of the corporation's securities pursuant to a registration
statement on Form S-1 under the Securities Act of 1933, as amended, vacancies
occurring on the Board of Directors for any reason and newly created
directorships resulting from an increase in the authorized number of directors
may be filled only by vote of a majority of the remaining members of the Board
of Directors, although less than a quorum, at any meeting of the Board of

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<PAGE>

Directors. A person so elected by the Board of Directors to fill a vacancy or
newly created directorship shall hold office until the next election of the
Class for which such director shall have been chosen and until his or her
successor shall have been duly elected and qualified.

Unless otherwise provided in the certificate of incorporation or these
bylaws (including, without limitation, the certificate of incorporation and
bylaws as amended effective upon the closing of a firm commitment underwritten
public offering of any of the corporation's securities pursuant to a
registration statement on Form S-1 under the Securities Act of 1933, as amended:

(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.

(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware (relating to meetings
of shareholders).

If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware (relating to meetings of shareholders) as far as
applicable.

3.5 REMOVAL OF DIRECTORS

Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however, that, if and so
long as stockholders of the corporation are entitled to cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire board of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the certificate of incorporation, this Section 3.5 shall apply, in
respect to the removal without cause of a director or directors so elected, to
the vote of the holders of the outstanding shares of that class or series and
not to the vote of the outstanding shares as a whole.

Effective upon the closing of a firm commitment underwritten public
offering of any of the

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corporation's securities pursuant to a registration statement on Form S-1 under
the Securities Act of 1933, as amended, any director may be removed from office
by the stockholders of the corporation only for cause.

3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

Regular meetings of the board of directors may be held at any place within
or outside the State of Delaware that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.

Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.

3.7 FIRST MEETINGS

The first meeting of each newly elected board of directors shall be held at
such time and place as shall be fixed by the vote of the stockholders at the
annual meeting. In the event of the failure of the stockholders to fix the time
or place of such first meeting of the newly elected board of directors, or in
the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.

3.8 REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice at
such time as shall from time to time be determined by the board of directors.
If any regular meeting day shall fall on a legal holiday, then the meeting shall
be held at the same time and place on the next succeeding full business day.

3.9 SPECIAL MEETINGS; NOTICE

Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.

Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.

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3.10 QUORUM

A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 3.12
of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and applicable law.

A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the quorum for that meeting.

3.11 WAIVER OF NOTICE

Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.

3.12 ADJOURNMENT

A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting of the board to another time and place.

3.13 NOTICE OF ADJOURNMENT

Notice of the time and place of holding an adjourned meeting of the board
need not be given unless the meeting is adjourned for more than twenty-four (24)
hours. If the meeting is adjourned for more than twenty-four (24) hours, then
notice of the time and place of the adjourned meeting shall be given before the
adjourned meeting takes place, in the manner specified in Section 3.9 of these
bylaws, to the directors who were not present at the time of the adjournment.

3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board of directors.

3.15 FEES AND COMPENSATION OF DIRECTORS

Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.

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3.16 APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION

In the event only one director is required by these bylaws or the
certificate of incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the directors
shall be deemed to refer to such notice, waiver, etc., by such sole director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to the board of directors.

3.18 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS

Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the board of directors
or any nominating committee appointed by the board of directors or by any
stockholder entitled to vote in the election of directors generally. However, a
stockholder generally entitled to vote in the election of directors may nominate
one or more persons for election as directors at a meeting only if written
notice of such stockholder's intent to make such nomination or nominations has
been given, either by personal delivery or by U.S. mail, postage prepaid, to the
secretary of the corporation not later than (i) with respect to an election to
be held at an annual meeting of stockholders, 60 days in advance of such meeting
and (ii) with respect to an election to be held at a special meeting of
stockholders for the election of directors, the close of business on the seventh
day following the date on which notice of such meeting is first given to
stockholders. Each such notice shall set forth the following information:
(a) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder, each nominee or any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the board of directors of the corporation; and (e)
the consent of each nominee to serve as a director of the corporation if so
elected. At the request of the board of directors, any person properly
nominated by the board of directors for election as a director shall furnish to
the secretary of the corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth herein. A majority of the board of
directors may reject any nomination by a stockholder not timely made or
otherwise not in

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accordance with the terms of this Section 3.18. If a majority of the board of
directors reasonably determines that the information provided in a stockholder's
notice does not satisfy the informational requirements of this Section 3.18 in
any material respect, the secretary of the corporation shall promptly notify
such stockholder of the deficiency in writing. The stockholder shall have an
opportunity to cure the deficiency by providing additional information to the
secretary within such period of time, not to exceed ten days from the date such
deficiency notice is given to the stockholder, as a majority of the board of
directors shall reasonably determine. If the deficiency is not cured within
such period, or if a majority of the board of directors reasonably determines
that the additional information provided by the stockholder, together with the
information previously provided, does not satisfy the requirements of this
Section 3.18 in any material respect, then a majority of the board of directors
may reject such stockholder's nomination. The secretary of the corporation
shall notify a stockholder in writing whether the stockholder's nomination has
been made in accordance with the time and information requirements of this
Section 3.18.

At an annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the chairman of the meeting or (ii) by any stockholder of the
corporation who complies with the notice procedures set forth in this Section
3.18. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than 60 days prior to the meeting; provided, however, that
in the event that less than 70 days notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. A stockholder's
notice to the secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting the following information: (a) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder and (d) any material
direct or indirect interest, financial or otherwise of the stockholder or its
affiliates or associates in such business. The board of directors may reject
any stockholder proposal not timely made in accordance with this Section 3.18.
If the board of directors determines that the information provided in a
stockholder's notice does not satisfy the informational requirements hereof, the
secretary of the corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall then have an opportunity to
cure the deficiency by providing additional information to the secretary within
such period of time, not to exceed ten days from the date such deficiency notice
is given to the stockholder, as the board of directors shall determine. If the
deficiency is not cured within such period, or if the board of directors
determines that the additional information provided by the stockholder, together
with the information previously provided, does not satisfy the requirements of
this Section 3.18, then the board of directors may reject such stockholder's
proposal. The secretary of the corporation shall notify a stockholder in
writing whether the stockholder's proposal has been made in accordance with the
time and information requirements hereof.

This provision shall not prevent the consideration and approval or
disapproval at an annual meeting of reports of officers, directors and
committees of the board of directors, but in connection therewith no new
business shall be acted upon at any such meeting unless stated, filed and
received as herein provided. Notwithstanding anything in these bylaws to the
contrary, no business brought before a meeting by a stockholder shall be
conducted at an annual meeting except in accordance with procedures set forth in
this Section 3.18.

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ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of one or more directors, to serve at the pleasure of the board. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware (relating to mergers and consolidations of domestic and foreign
corporations), (iii) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's property and assets,
(iv) recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution or (v) amend the bylaws of the corporation; and,
unless the board resolution establishing the committee, the bylaws or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of Delaware (relating to mergers of parent and
subsidiary corporations).

4.2 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the following provisions of Article III of these bylaws:
Section 3.6 (place of meetings; meetings by telephone), Section 3.8 (regular
meetings), Section 3.9 (special meetings; notice), Section 3.10 (quorum),
Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section 3.13
(notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.

4.3 COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.

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ARTICLE V

OFFICERS

5.1 OFFICERS

The Corporate Officers of the corporation shall be a president, a secretary
and a chief financial officer. The corporation may also have, at the discretion
of the board of directors, a chairman of the board, one or more vice presidents
(however denominated), one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.

In addition to the Corporate Officers of the Company described above, there
may also be such Administrative Officers of the corporation as may be designated
and appointed from time to time by the president of the corporation in
accordance with the provisions of Section 5.12 of these bylaws.

5.2 ELECTION OF OFFICERS

The Corporate Officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.

5.3 SUBORDINATE OFFICERS

The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.

The president may from time to time designate and appoint Administrative
Officers of the corporation in accordance with the provisions of Section 5.12 of
these bylaws.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of a Corporate Officer under any contract of
employment, any Corporate Officer may be removed, either with or without cause,
by the board of directors at any regular or special meeting of the board or,
except in case of a Corporate Officer chosen by the board of directors, by any
Corporate Officer upon whom such power of removal may be conferred by the board
of directors.

Any Corporate Officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of the receipt
of that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.

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Any Administrative Officer designated and appointed by the president may be
removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.

5.5 VACANCIES IN OFFICES

A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.

5.6 CHAIRMAN OF THE BOARD

The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.

5.7 PRESIDENT

Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He
or she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.

5.8 VICE PRESIDENTS

In the absence or disability of the president, and if there is no chairman
of the board, the vice presidents, if any, in order of their rank as fixed by
the board of directors or, if not ranked, a vice president designated by the
board of directors, shall perform all the duties of the president and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the board of directors, these bylaws, the president or the
chairman of the board.

5.9 SECRETARY

The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of the board of directors,
committees of directors and stockholders. The minutes shall show the time and
place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a

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share register or a duplicate share register, showing the names of all
stockholders and their addresses, the number and classes of shares held by each,
the number and date of certificates evidencing such shares and the number and
date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.

5.10 CHIEF FINANCIAL OFFICER

The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable
times be open to inspection by any director for a purpose reasonably related to
his position as a director.

The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He or she shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.

5.11 ASSISTANT SECRETARY

The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.

5.12 ADMINISTRATIVE OFFICERS

In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.

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5.13 AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing powers, authority and duties, all officers of
the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware as the same now exists or may hereafter
be amended, indemnify any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding in which such person was or is a party or is threatened to be made
a party by reason of the fact that such person is or was a director or officer
of the corporation. For purposes of this Section 6.1, a "director" or "officer"
of the corporation shall mean any person (i) who is or was a director or officer
of the corporation, (ii) who is or was serving at the request of the corporation
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.

The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of Directors of the corporation.

The corporation shall pay the expenses (including attorney's fees) incurred
by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 6.1 or otherwise.

The rights conferred on any person by this Article shall not be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, provision of the corporation's Certificate of Incorporation, these
bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.

Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.

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6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.

6.3 INSURANCE

The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.

Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

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7.2 INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director.

7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairman of the board, if any, the president, any vice president, the
chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.

7.4 CERTIFICATION AND INSPECTION OF BYLAWS

The original or a copy of these bylaws, as amended or otherwise altered to
date, certified by the secretary, shall be kept at the corporation's principal
executive office and shall be open to inspection by the stockholders of the
corporation, at all reasonable times during office hours.

ARTICLE VIII

GENERAL MATTERS

8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

For purposes of determining the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.

If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board of directors adopts the applicable
resolution.

8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness

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that are issued in the name of or payable to the corporation, and only the
persons so authorized shall sign or endorse those instruments.

8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED

The board of directors, except as otherwise provided in these bylaws, may
authorize and empower any officer or officers, or agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.

8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES

The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the board
of directors, every holder of stock represented by certificates and, upon
request, every holder of uncertificated shares, shall be entitled to have a
certificate signed by, or in the name of the corporation by, the chairman or
vice-chairman of the board of directors, or the president or vice-president, and
by the chief financial officer or an assistant treasurer, or the secretary or an
assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.

Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; and, if the shares be assessable, or,
if assessments are collectible by personal action, a plain statement of such
facts.

Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.

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8.5 SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware (relating to transfers of stock, stock certificates and uncertificated
stock), in lieu of the foregoing requirements there may be set forth on the face
or back of the certificate that the corporation shall issue to represent such
class or series of stock a statement that the corporation will furnish without
charge to each stockholder who so requests the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.

8.6 LOST CERTIFICATES

Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.

8.7 TRANSFER AGENTS AND REGISTRARS

The board of directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, each of which shall be an incorporated bank
or trust company -- either domestic or foreign, who shall be appointed at such
times and places as the requirements of the corporation may necessitate and the
board of directors may designate.

8.8 CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of
this provision, as used in these bylaws, the singular number includes the
plural, the plural number includes the singular, and the term "person" includes
both an entity and a natural person.

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ARTICLE IX

AMENDMENTS

The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.

Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.

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NETGRAVITY, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("AGREEMENT") is effective as of, _________
by and between NetGravity, Inc., a Delaware corporation (the "COMPANY"), and
_____ ("INDEMNITEE").

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and its related
entities;

WHEREAS, in order to induce Indemnitee to continue to provide services to
the Company, the Company wishes to provide for the indemnification of, and the
advancement of expenses to, Indemnitee to the maximum extent permitted by law;

WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company's directors, officers, employees,
agents and fiduciaries, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and

WHEREAS, in view of the considerations set forth above, the Company desires
that Indemnitee shall be indemnified and advanced expenses by the Company as set
forth herein;

NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.

1. CERTAIN DEFINITIONS.

(a) "CHANGE IN CONTROL" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding Voting Securities (as
defined below), (ii) during any period of two consecutive years, individuals who
at the beginning

<PAGE>

of such period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for election by
the Company's stockholders was approved by a vote of at least two thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of the
Company's assets.

(b) "CLAIM" shall mean with respect to a Covered Event (as defined
below): any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.

(c) References to the "COMPANY" shall include, in addition to
NetGravity, Inc., any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which NetGravity, Inc. (or
any of its wholly owned subsidiaries) is a party which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, agents or fiduciaries, so that if Indemnitee is
or was a director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.

(d) "COVERED EVENT" shall mean any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or any subsidiary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action or inaction on the part of Indemnitee while serving in
such capacity.

(e) "EXPENSES" shall mean any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, to be a witness in or to participate in, any
action, suit, proceeding, alternative dispute resolution mechanism, hearing,

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<PAGE>

inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld), actually and reasonably incurred,
of any Claim and any federal, state, local or foreign taxes imposed on the
Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement.

(f) "EXPENSE ADVANCE" shall mean a payment to Indemnitee pursuant to
Section 3 of Expenses in advance of the settlement of or final judgement in any
action, suit, proceeding or alternative dispute resolution mechanism, hearing,
inquiry or investigation which constitutes a Claim.

(g) "INDEPENDENT LEGAL COUNSEL" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).

(h) References to "OTHER ENTERPRISES" shall include employee benefit
plans; references to "FINES" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "SERVING
AT THE REQUEST OF THE COMPANY" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "NOT OPPOSED TO THE
BEST INTERESTS OF THE COMPANY" as referred to in this Agreement.

(i) "REVIEWING PARTY" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.

(j) "SECTION" refers to a section of this Agreement unless otherwise
indicated.

(k) "VOTING SECURITIES" shall mean any securities of the Company that
vote generally in the election of directors.

2. INDEMNIFICATION.

(a) INDEMNIFICATION OF EXPENSES. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be

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<PAGE>

made a party to or witness or other participant in, any Claim (whether by reason
of or arising in part out of a Covered Event), including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses.

(b) REVIEW OF INDEMNIFICATION OBLIGATIONS. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid in indemnifying Indemnitee; PROVIDED, HOWEVER, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee is entitled to
be indemnified hereunder under applicable law, any determination made by any
Reviewing Party that Indemnitee is not entitled to be indemnified hereunder
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expenses theretofore paid in indemnifying
Indemnitee until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for any Expenses shall be
unsecured and no interest shall be charged thereon.

(c) INDEMNITEE RIGHTS ON UNFAVORABLE DETERMINATION; BINDING EFFECT.
If any Reviewing Party determines that Indemnitee substantively is not entitled
to be indemnified hereunder in whole or in part under applicable law, Indemnitee
shall have the right to commence litigation seeking an initial determination by
the court or challenging any such determination by such Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and, subject to
the provisions of Section 15, the Company hereby consents to service of process
and to appear in any such proceeding. Absent such litigation, any determination
by any Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.

(d) SELECTION OF REVIEWING PARTY; CHANGE IN CONTROL. If there has
not been a Change in Control, any Reviewing Party shall be selected by the Board
of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's certificate of incorporation or
bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating

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<PAGE>

to this Agreement or its engagement pursuant hereto. Notwithstanding any other
provision of this Agreement, the Company shall not be required to pay Expenses
of more than one Independent Legal Counsel in connection with all matters
concerning a single Indemnitee, and such Independent Legal Counsel shall be the
Independent Legal Counsel for any or all other Indemnitees unless (i) the
Company otherwise determines or (ii) any Indemnitee shall provide a written
statement setting forth in detail a reasonable objection to such Independent
Legal Counsel representing other Indemnitees.

(e) MANDATORY PAYMENT OF EXPENSES. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.

3. EXPENSE ADVANCES.

(a) OBLIGATION TO MAKE EXPENSE ADVANCES. The Company shall make
Expense Advances to Indemnitee upon receipt of a written undertaking by or on
behalf of the Indemnitee to repay such amounts if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified therefor by the
Company.

(b) FORM OF UNDERTAKING. Any written undertaking by the Indemnitee
to repay any Expense Advances hereunder shall be unsecured and no interest shall
be charged thereon.

(c) DETERMINATION OF REASONABLE EXPENSE ADVANCES. The parties agree
that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.

4. PROCEDURES FOR INDEMNIFICATION AND EXPENSE ADVANCES.

(a) TIMING OF PAYMENTS. All payments of Expenses (including without
limitation Expense Advances) by the Company to the Indemnitee pursuant to this
Agreement shall be made to the fullest extent permitted by law as soon as
practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than forty-five (45) business days after such
written demand by Indemnitee is presented to the Company, except in the case of
Expense Advances, which shall be made no later than twenty (20) business days
after such written demand by Indemnitee is presented to the Company.

(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the

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<PAGE>

Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.

(c) NO PRESUMPTIONS; BURDEN OF PROOF. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of NOLO
CONTENDERE, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement or applicable law, shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.

(d) NOTICE TO INSURERS. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.

(e) SELECTION OF COUNSEL. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently employed by
or on behalf of Indemnitee with respect to the same Claim; PROVIDED, HOWEVER,
that (i) Indemnitee shall have the right to employ Indemnitee's separate counsel
in any such Claim at Indemnitee's expense and (ii) if (A) the employment of
separate counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to

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<PAGE>

defend such Claim, then the fees and expenses of Indemnitee's separate counsel
shall be Expenses for which Indemnitee may receive indemnification or Expense
Advances hereunder.

5. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

(a) SCOPE. The Company hereby agrees to indemnify the Indemnitee to
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company's certificate of incorporation, the Company's bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify a
member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its board of directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 10(a) hereof.

(b) NONEXCLUSIVITY. The indemnification and the payment of Expense
Advances provided by this Agreement shall be in addition to any rights to which
Indemnitee may be entitled under the Company's certificate of incorporation, its
bylaws, any other agreement, any vote of stockholders or disinterested
directors, the General Corporation Law of the State of Delaware, or otherwise.
The indemnification and the payment of Expense Advances provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.

6. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's certificate of
incorporation, bylaws or otherwise) of the amounts otherwise payable hereunder.

7. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

8. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of

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<PAGE>

indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

9. LIABILITY INSURANCE. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

10. EXCEPTIONS. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:

(a) EXCLUDED ACTION OR OMISSIONS. To indemnify Indemnitee for
Expenses resulting from acts, omissions or transactions for which Indemnitee is
prohibited from receiving indemnification under this Agreement or applicable
law; PROVIDED, HOWEVER, that notwithstanding any limitation set forth in this
Section 10(a) regarding the Company's obligation to provide indemnification,
Indemnitee shall be entitled under Section 3 to receive Expense Advances
hereunder with respect to any such Claim unless and until a court having
jurisdiction over the Claim shall have made a final judicial determination (as
to which all rights of appeal therefrom have been exhausted or lapsed) that
Indemnitee has engaged in acts, omissions or transactions for which Indemnitee
is prohibited from receiving indemnification under this Agreement or applicable
law.

(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or make Expense
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or crossclaim, except
(i) with respect to actions or proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other agreement or
insurance policy or under the Company's certificate of incorporation or bylaws
now or hereafter in effect relating to Claims for Covered Events, (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Delaware
General Corporation Law (relating to indemnification of officers, directors,
employees and agents; and insurance), regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification or insurance
recovery, as the case may be.

(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any Expenses
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.

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<PAGE>

(d) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute; PROVIDED, HOWEVER, that
notwithstanding any limitation set forth in this Section 10(d) regarding the
Company's obligation to provide indemnification, Indemnitee shall be entitled
under Section 3 to receive Expense Advances hereunder with respect to any such
Claim unless and until a court having jurisdiction over the Claim shall have
made a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that Indemnitee has violated said statute.

11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.

13. EXPENSES INCURRED IN ACTION RELATING TO ENFORCEMENT OR INTERPRETATION.
In the event that any action is instituted by Indemnitee under this Agreement or
under any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee with respect to such action
(including without limitation attorneys' fees), regardless of whether Indemnitee
is ultimately successful in such action, unless as a part of such action a court
having jurisdiction over such action makes a final judicial determination (as to
which all rights of appeal therefrom have been exhausted or lapsed) that each of
the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous; PROVIDED, HOWEVER, that until such
final judicial determination is made, Indemnitee shall be entitled under
Section 3 to receive payment of Expense Advances hereunder with respect to such
action. In the event of an action instituted by or in the name of the Company
under this Agreement to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be indemnified for all Expenses incurred by
Indemnitee in defense of such action (including without limitation costs and
expenses incurred with respect to Indemnitee's counterclaims and cross-claims
made in such action), unless as a part of such action a court having
jurisdiction over such action makes a final judicial determination (as to which
all rights of appeal therefrom have been exhausted or lapsed) that each of the
material defenses asserted by Indemnitee in such action was made in bad faith or
was frivolous; PROVIDED, HOWEVER, that until such

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<PAGE>

final judicial determination is made, Indemnitee shall be entitled under
Section 3 to receive payment of Expense Advances hereunder with respect to
such action.

14. NOTICE. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement
or as subsequently modified by written notice.

15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.

16. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

17. CHOICE OF LAW. This Agreement, and all rights, remedies, liabilities,
powers and duties of the parties to this Agreement, shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws.

18. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

19. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.

20. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations,

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<PAGE>

commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.

21. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.

NETGRAVITY, INC.

By:
-------------------

Name:
-----------------

Title:
----------------

Address: NetGravity, Inc.
1700 S. Amphlett Blvd.
Suite 350
San Mateo, CA 94402
Mountain View, CA 94043

AGREED TO AND ACCEPTED BY:

INDEMNITEE

----------------------------------
(signature)

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<PAGE>

NETGRAVITY, INC.

1995 STOCK OPTION PLAN
(as amended through November 20, 1995)

1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive
stock options (as defined under Section 422 of the Code) or nonstatutory
stock options, as determined by the Administrator at the time of grant of an
option and subject to the applicable provisions of Section 422 of the Code,
as amended, and the regulations promulgated thereunder.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.

(e) "COMMON STOCK" means the Common Stock of the Company.

(f) "COMPANY" means NetGravity, Inc., a Delaware corporation.

(g) "CONSULTANT" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company
registers any class of any equity security pursuant to the Exchange Act, the
term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the
Company.

(h) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that
the employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of (i)
any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary,
or any successor. A leave of absence approved by the Company shall include
sick leave, military leave, or any other personal leave approved by an
authorized representative of the

<PAGE>

Company. For purposes of Incentive Stock Options, no such leave may exceed
90 days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract, including Company policies. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option.

(i) "EMPLOYEE" means any person, including Officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(k) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in THE WALL STREET
JOURNAL or such other source as the Administrator deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the Nasdaq National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for
the Common Stock on the last market trading day prior to the day of
determination, or;

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

(n) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

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<PAGE>

(o) "OPTION" means a stock option granted pursuant to the Plan.

(p) "OPTIONED STOCK" means the Common Stock subject to an Option.

(q) "OPTIONEE" means an Employee or Consultant who receives an
Option.

(r) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(s) "PLAN" means this 1995 Stock Option Plan.

(t) "SECTION 16(B)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.

(u) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.

(v) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,520,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); PROVIDED,
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if unvested Shares are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.

4. ADMINISTRATION OF THE PLAN.

(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.

(b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT.

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<PAGE>

(i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Employees who are also Officers or
directors of the Company, the Plan shall be administered by (A) the Board if the
Board may administer the Plan in compliance with the rules under Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3")
relating to the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of equity securities
are to be made, or (B) a Committee designated by the Board to administer the
Plan, which Committee shall be constituted to comply with the rules under Rule
16b-3 relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan, all to
the extent permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.

(ii) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
directors, non-director Officers and Employees who are neither directors nor
Officers.

(iii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Options to Employees or Consultants who
are neither directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of California and Delaware corporate and securities laws, of the Code, and
of any applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:

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<PAGE>

(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(k) of the Plan;

(ii) to select the Consultants and Employees to whom Options
may from time to time be granted hereunder;

(iii) to determine whether and to what extent Options are
granted hereunder;

(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions of any award
granted hereunder;

(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;

(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted; and

(ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.

(d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

5. ELIGIBILITY.

(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options

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<PAGE>

shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

(d) Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options to
Employees:

(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 1,800,000 Shares.

(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 1,800,000 Shares
which shall not count against the limit set forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.

(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 11), the cancelled Option will be counted against the limit
set forth in subsection (i) above. For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company, as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. However, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option

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<PAGE>

shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.

8. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a person who, at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant.

(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.

(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to

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<PAGE>

accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5)
years from the date the Option is granted.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant with the Company (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive
Stock Option shall automatically convert to a Nonstatutory Stock Option on
the date three (3) months and one day from the date of such change of status)
or from Consultant to Employee), such Optionee may, but only within such
period of time as is determined by the Administrator, of at least thirty (30)
days, with such determination in the case of an Incentive Stock Option not
exceeding three (3) months after the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the

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<PAGE>

date of such termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall
terminate.

(c) DISABILITY OF OPTIONEE. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3)
of the Code, in the case of an Incentive Stock Option such Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the day
three months and one day following such termination. To the extent that
Optionee is not entitled to exercise the Option at the date of termination,
or if Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.

(d) DEATH OF OPTIONEE. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following
the date of death (but in no event later than the expiration of the term of
such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert
to the Plan. If, after death, the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or inheritance does not exercise
the Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

(e) RULE 16B-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

(f) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

10. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than
by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.

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<PAGE>

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.

(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Options
have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed action.

(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the
assets of the Company:

(i) OPTIONS. Each Option shall be assumed or an equivalent
option substituted by the successor corporation (including as a "successor"
any purchaser of substantially all of the assets of the Company) or a parent
or subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee
shall have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If an
Option is exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that
the Option shall be fully exercisable for a period of fifteen (15) days from
the date of such notice, and the Option shall terminate upon the expiration
of such period. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the

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<PAGE>

outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.

(ii) SHARES SUBJECT TO REPURCHASE OPTION. Any Shares
subject to a repurchase option of the Company shall be exchanged for the
consideration (whether stock, cash, or other securities or property) received
in the merger or asset sale by the holders of Common Stock for each Share
held on the effective date of the transaction, as described in the preceding
paragraph. If in such exchange the Optionee receives shares of stock of the
successor corporation or a parent or subsidiary of such successor
corporation, and if the successor corporation has agreed to assume or
substitute for Options as provided in the preceding paragraph, such exchanged
shares shall continue to be subject to a repurchase option as provided in the
Optionee's restricted stock purchase agreement. If, as provided in the
preceding paragraph, the Optionee shall have the right to exercise an Option
as to all of the Optioned Stock covered thereby, all Shares that are subject
to a repurchase option of the Company shall be released from such repurchase
option and shall be fully vested.

12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by
the Board. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

13. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent.
In addition, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain stockholder approval of
any Plan amendment in such a manner and to such a degree as required.

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company.

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<PAGE>

14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.

15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.

The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

16. AGREEMENTS. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

17. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under applicable state and federal
law and the rules of any stock exchange upon which the Common Stock is listed.

18. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall provide
to each Optionee, not less frequently than annually, copies of annual
financial statements. The Company shall also provide such statements to each
individual who acquires Shares pursuant to the Plan while such individual
owns such Shares. The Company shall not be required to provide such
statements to key employees whose duties in connection with the Company
assure their access to equivalent information.

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<PAGE>

NETGRAVITY, INC.

1995 STOCK OPTION PLAN
NOTICE OF GRANT -- EARLY EXERCISE

Unless otherwise defined herein, the terms defined in the Company's 1995
Stock Option Plan (the "Plan") shall have the same defined meanings in this
Stock Option Agreement.

Optionee
------------------------
Address
------------------------

------------------------

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option
Agreement, as follows:

Grant Number
----------------------------------
Date of Grant
----------------------------------
Vesting Commencement Date
----------------------------------
Exercise Price per Share
----------------------------------
Total Number of Shares Granted
----------------------------------
Total Exercise Price
----------------------------------
Type of Option: Incentive Stock Option
----
Nonstatutory Stock Option
----

Term/Expiration Date:
----------------------------------

EXERCISE AND VESTING SCHEDULE:

This Option is exercisable immediately, in whole or in part, conditioned
upon Optionee entering into a Restricted Stock Purchase Agreement with
respect to any unvested Option Shares. The Shares subject to this Option
shall vest and/or be released from the Company's repurchase option, as set
forth in the Restricted Stock Purchase Agreement, according to the following
schedule:

25% of the Shares subject to the Option shall vest one year after the
Vesting Commencement Date, and 1/48th of the Shares subject to the Option
shall vest each month thereafter, so that all of the Shares shall be vested
48 months after the Vesting Commencement Date.

TERMINATION PERIOD:

This Option may be exercised, to the extent vested, for three months
after termination of Optionee's employment or consulting relationship, or
such longer period as may be applicable upon death or disability of Optionee
as provided in the Plan, but in no event later than the Term/Expiration Date
as provided above.

<PAGE>

NETGRAVITY, INC.

1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT -- EARLY EXERCISE

1. GRANT OF OPTION. NetGravity, Inc. (fomerly Netvertiser, Inc.), a
Delaware corporation (the "Company"), hereby grants to the Optionee named in
the Notice of Grant (the "Optionee"), an option (the "Option") to purchase
the total number of shares of Common Stock (the "Shares") set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of
Grant (the "Exercise Price") subject to the terms, definitions and provisions
of the 1995 Stock Option Plan (the "Plan") adopted by the Company, which is
incorporated herein by reference.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an ISO as defined in Section
422 of the Code. However, if this Option is intended to be an ISO, to the
extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be
treated as a Nonstatutory Stock Option ("NSO").

2. EXERCISE OF OPTION. This Option shall be exercisable during its
term in accordance with the provisions of Section 9 of the Plan as follows:

(a) RIGHT TO EXERCISE.

(i) Subject to subsections 2(a)(ii) through 2(a)(v) below,
this Option shall be exercisable cumulatively according to the vesting
schedule set out in the Notice of Grant. Alternatively, at the election of
the Optionee, this option may be exercised in whole or in part at any time as
to Shares which have not yet vested. For purposes of this Stock Option
Agreement, Shares subject to Option shall vest based on continued employment
of Optionee with the Company. Vested Shares shall not be subject to the
Company's repurchase right (as set forth in the Restricted Stock Purchase
Agreement, attached hereto as Exhibit C-1).

(ii) As a condition to exercising this Option for unvested
Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

(iii) This Option may not be exercised for a fraction of a
Share.

(iv) In the event of Optionee's death, disability or other
termination of the employment or consulting relationship, the exercisability
of the Option is governed by Sections 6, 7 and 8 below, subject to the
limitation contained in subsection 2(a)(v).

(v) In no event may this Option be exercised after the date
of expiration of the term of this Option as set forth in the Notice of Grant.

<PAGE>

(b) METHOD OF EXERCISE. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan, including, without limitation, a
right of first refusal in favor of the Company or its assigns with respect to
such shares of Common Stock. Such written notice shall be signed by the
Optionee and, together with an executed copy of the Restricted Stock Purchase
Agreement, if applicable, shall be delivered in person or by certified mail
to the Secretary of the Company. The written notice and Restricted Stock
Purchase Agreement shall be accompanied by payment of the Exercise Price.
This Option shall be deemed to be exercised upon receipt by the Company of
such written notice and Restricted Stock Purchase Agreement accompanied by
the Exercise Price.

No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.

3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B,
and shall read the applicable rules of the Commissioner of Corporations
attached to such Investment Representation Statement.

4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee:

(a) cash; or

(b) check; or

(c) surrender of other shares of Common Stock of the Company which
(A) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by the Optionee for more than six (6) months on the
date of surrender, and (B) have a Fair Market Value on the date of surrender
equal to the Exercise Price of the Shares as to which the Option is being
exercised; or

(d) to the extent permitted by the Administrator, delivery of a
properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale or loan
proceeds required to pay the Exercise Price.

-2-

<PAGE>

5. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the Company,
or if the issuance of such Shares upon such exercise or the method of payment
of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including
any rule under Part 207 of Title 12 of the Code of Federal Regulations
("Regulation G") as promulgated by the Federal Reserve Board. As a condition
to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any
applicable law or regulation.

6. TERMINATION OF RELATIONSHIP. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent
the Option was vested at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the
Notice of Grant. To the extent that Optionee was not vested in this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
6 above, in the event of termination of an Optionee's consulting relationship
or Continuous Status as an Employee as a result of his or her disability,
Optionee may, but only within twelve (12) months from the date of such
termination (and in no event later than the expiration date of the term of
such Option as set forth in the Stock Option Agreement), exercise the Option
to the extent the Option was vested at the date of such termination;
provided, however, that if such disability is not a "disability" as such term
is defined in Section 22(e)(3) of the Code, in the case of an ISO such ISO
shall cease to be treated as an ISO and shall be treated for tax purposes as
an NSO on the ninety-first (91st) day following such termination. To the
extent that Optionee is not vested in the Option at the date of termination,
or if Optionee does not exercise such Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

8. DEATH OF OPTIONEE. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 10 below), by
Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance, but only to the extent the Option was
vested at the date of death. To the extent that Optionee is not vested in
the Option at the date of death, or if the Option is not exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

9. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

-3-

<PAGE>

10. TERM OF OPTION. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set
out in Section 7 of the Plan regarding Options designated as ISOs and Options
granted to more than ten percent (10%) stockholders shall apply to this
Option.

11. TAX CONSEQUENCES. Set forth below is a brief summary as of the
date of this Option of some of the federal and state tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.

(a) EXERCISE OF ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or state income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price
will be treated as an adjustment to the alternative minimum tax for federal
tax purposes and may subject the Optionee to the alternative minimum tax in
the year of exercise.

(b) EXERCISE OF ISO FOLLOWING DISABILITY. If the Optionee's
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within 90 days of such termination for the ISO
to be qualified as an ISO.

(c) EXERCISE OF NSO. There may be a regular federal income tax
liability and state income tax liability upon the exercise of an NSO. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price. If
Optionee is an Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation
income at the time of exercise. If the Optionee is subject to Section 16 of
the Securities Act of 1934, as amended, the date of income recognition may be
deferred for up to six months.

(d) DISPOSITION OF SHARES. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal and state income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the
Option are held for at least one year after exercise and are disposed of at
least two years after the Date of Grant, any gain realized on disposition of
the Shares will also be treated as long-term capital gain for federal and
state income tax purposes. If Shares purchased under an ISO are disposed of
within such one-year period or within two years after the Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income

-4-

<PAGE>

rates) to the extent of the difference between the Exercise Price and the
lesser of (1) the Fair Market Value of the Shares on the date of exercise, or
(2) the sale price of the Shares.

(e) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2)
the date one year after the date of exercise, the Optionee shall immediately
notify the Company in writing of such disposition. Optionee agrees that
Optionee may be subject to income tax withholding by the Company on the
compensation income recognized by the Optionee.

(f) SECTION 83(b) ELECTION FOR UNVESTED SHARES PURCHASED PURSUANT
TO NONQUALIFIED STOCK OPTIONS. With respect to the exercise of a
nonqualified stock option for unvested Shares, an election may be filed by
the Optionee with the Internal Revenue Service and, if necessary, the proper
state taxing authorities, WITHIN 30 DAYS of the purchase of the Shares,
electing pursuant to Section 83(b) of the Code (and similar state tax
provisions if applicable) to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of
purchase. This will result in a recognition of taxable income to the
Optionee on the date of exercise, measured by the excess, if any, of the fair
market value of the Shares, at the time the Option is exercised over the
purchase price for the Shares. Absent such an election, taxable income will
be measured and recognized by Optionee at the time or times on which the
Company's Repurchase Option lapses. Optionee is strongly encouraged to seek
the advice of his or her own tax consultants in connection with the purchase
of the Shares and the advisability of filing of the Election under Section
83(b) and similar tax provisions. A form of Election under Section 83(b) is
attached hereto as Exhibit C-5 for reference.

(g) SECTION 83(b) ELECTION FOR UNVESTED SHARES PURCHASED PURSUANT
TO INCENTIVE STOCK OPTIONS. With respect to the exercise of an incentive
stock option for unvested Shares, an election may be filed by the Optionee
with the Internal Revenue Service and, if necessary, the proper state taxing
authorities, WITHIN 30 DAYS of the purchase of the Shares, electing pursuant
to Section 83(b) of the Code (and similar state tax provisions if applicable)
to be taxed currently on any difference between the purchase price of the
Shares and their Fair Market Value on the date of purchase for alternative
minimum tax purposes. This will result in a recognition of income to the
Optionee on the date of exercise, for alternative minimum tax purposes,
measured by the excess, if any, of the fair market value of the Shares, at
the time the option is exercised, over the purchase price for the Shares.
Absent such an election, alternative minimum taxable income will be measured
and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. Optionee is strongly encouraged to seek the advice
of his or her tax consultants in connection with the purchase of the Shares
and the advisability of filing of the Election under Section 83(b) and
similar tax provisions. A form of Election under Section 83(b) for
alternative minimum tax purposes is attached hereto as Exhibit C-6 for
reference.

OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b),

-5-

<PAGE>

EVEN IF OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS
FILING ON OPTIONEE'S BEHALF.

12. LOCKUP AGREEMENT. Optionee hereby agrees that if so requested by
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell
or otherwise transfer any Shares or other securities of the Company during
the 180-day period (or such longer period of time as may be requested in
writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however,
that such restriction shall only apply to the first registration statement of
the Company to become effective under the Securities Act which include
securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.

NetGravity, Inc.

By:
------------------------------------

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES
AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION
PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE
ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY
TIME, WITH OR WITHOUT CAUSE.

-6-

<PAGE>

Optionee acknowledges receipt of a copy of the Plan and represents that
he is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the
residence address indicated below.

Dated:
------------------------ ---------------------------------------
Optionee

Residence Address:

---------------------------------------

CONSENT OF SPOUSE

The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration
of the Company's granting his or her spouse the right to purchase Shares as
set forth in the Plan and this Option Agreement, the undersigned hereby
agrees to be irrevocably bound by the terms and conditions of the Plan and
this Option Agreement and further agrees that any community property interest
shall be similarly bound. The undersigned hereby appoints the undersigned's
spouse as attorney-in-fact for the undersigned with respect to any amendment
or exercise of rights under the Plan or this Option Agreement.

---------------------------------------
Spouse of Optionee

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<PAGE>

EXHIBIT A

NETGRAVITY, INC.
1995 STOCK OPTION PLAN

EXERCISE NOTICE

NetGravity, Inc.
1670 S. Amphlett Blvd., Suite 314
San Mateo, CA 94402

Attention: Secretary

1. EXERCISE OF OPTION. Effective as of today, ___________, 19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of NetGravity, Inc. (the
"Company") under and pursuant to the Company's 1995 Stock Option Plan, as
amended (the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option
Agreement dated ________, 19 (the "Option Agreement").

2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

3. RIGHTS AS STOCKHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.

Optionee shall enjoy rights as a stockholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.

4. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise

<PAGE>

transferred (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Shares on
the terms and conditions set forth in this Section (the "Right of First
Refusal").

(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

(c) PURCHASE PRICE. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

(d) PAYMENT. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

-2-

<PAGE>

(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or
all of the Shares during the Optionee's lifetime or on the Optionee's death
by will or intestacy to the Optionee's immediate family or a trust for the
benefit of the Optionee's immediate family shall be exempt from the
provisions of this Section. "Immediate Family" as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister.
In such case, the transferee or other recipient shall receive and hold the
Shares so transferred subject to the provisions of this Section, and there
shall be no further transfer of such Shares except in accordance with the
terms of this Section.

(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal shall terminate as to any Shares 90 days after the first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended.

5. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

(a) LEGENDS. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS
AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

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<PAGE>

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP PERIOD
OF 180-DAYS (OR SUCH LONGER PERIOD AS MAY BE REQUESTED BY THE MANAGING
UNDERWRITER AND AGREED TO BY THE COMPANY) FOLLOWING THE COMPANY'S INITIAL
PUBLIC OFFERING AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND
THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCKUP PERIOD IS BINDING ON
TRANSFEREES OF THESE SHARES.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.

Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy of which is attached to Exhibit B, the Investment Representation Statement.

(b) STOP-TRANSFER NOTICES. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

(c) REFUSAL TO TRANSFER. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

7. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.

8. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.

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<PAGE>

9. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

10. NOTICES. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

12. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full Exercise Price for the Shares.

13. ENTIRE AGREEMENT. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement, the Restricted Stock Purchase Agreement, and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof.

Submitted by: Accepted by:

OPTIONEE: NetGravity, Inc.

By:
-------------------------------

Its:
------------------------------

- ------------------------------
(Signature)

ADDRESS: ADDRESS:
- ------- --------
1670 S. Amphlett Blvd., Suite 314
- ------------------------------ San Mateo, CA 94402

- ------------------------------

-5-

<PAGE>

-6-

<PAGE>

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE :

COMPANY : NetGravity, Inc.

SECURITY : COMMON STOCK

AMOUNT :

DATE :

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

1. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

2. Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and any other legend required under applicable
state securities laws.

3. Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of

<PAGE>

"restricted securities" acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at
the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability
of certain public information about the Company, (3) the amount of Securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), and (4) the timely filing of a Form 144, if
applicable.

In the event that the Company does not qualify under Rule 701 at
the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
the resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by
an affiliate of the Company, within the meaning of Rule 144; and, in the case
of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of
the conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.

4. Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters (the "Managing Underwriter") in connection
with any registration of the offering of any securities of the Company under
the Securities Act, Optionee shall not sell or otherwise transfer any Shares
or other securities of the Company during the 180-day period (or such longer
period of time as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to
the first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company
to the public in an underwritten public offering under the Securities Act.
The Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such Market Standoff
Period.

5. Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and
otherwise than pursuant to Rules 144 or 701 will have a substantial burden of
proof in establishing that an exemption from registration is

-2-
<PAGE>

available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own
risk. Optionee understands that no assurances can be given that any such
other registration exemption will be available in such event.

6. Optionee understands that the certificate evidencing the Securities
will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with
respect to such restriction, a copy of which is attached.

Signature of Optionee:

-------------------------------------

Date:__________________________, 19__

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<PAGE>
EXHIBIT C-1

1995 STOCK OPTION PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made between ____________________________________ (the
"Purchaser") and NetGravity, Inc. (the "Company") as of __________________,
199__.

RECITALS

A. Pursuant to the exercise of the stock option (grant number ____)
granted to Purchaser under the Company's 1995 Stock Option Plan and pursuant to
the Stock Option Agreement (the "Option Agreement") dated ___________ by and
between the Company and Purchaser with respect to such grant, which Option
Agreement is hereby incorporated by reference, Purchaser has elected to purchase
_________ of those shares which have not become vested under the vesting
schedule set forth in the Option Agreement ("Unvested Shares"). The Unvested
Shares and the shares subject to the Option Agreement which have become vested
are sometimes collectively referred to herein as the "Shares".

B. As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Restricted Stock
Purchase Agreement, which sets forth the rights and obligations of the parties
with respect to Shares acquired upon exercise of the Option.

1. REPURCHASE OPTION.

(a) If Purchaser's employment or consulting relationship with the
Company is terminated for any reason, including for cause, death, and
disability, the Company shall have the right and option to purchase from
Purchaser, or Purchaser's personal representative, as the case may be, all of
the Purchaser's Unvested Shares as of the date of such termination at the price
paid by the Purchaser for such Shares (the "Repurchase Option").

(b) Upon the occurrence of a termination, the Company may exercise
its Repurchase Option by delivering personally or by registered mail, to
Purchaser (or his transferee or legal representative, as the case may be),
within ninety (90) days of the termination, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than thirty (30) days from the mailing of such notice. The
closing shall take place at the Company's office. At the closing, the holder of
the certificates for the Unvested Shares being transferred shall deliver the
stock certificate or certificates evidencing the Unvested Shares, and the
Company shall deliver the purchase price therefor.

<PAGE>

(c) At its option, the Company may elect to make payment for the
Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.

(d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.

2. TRANSFERABILITY OF THE SHARES; ESCROW.

(a) Purchaser hereby authorizes and directs the secretary of the
Company, or such other person designated by the Company, to transfer the
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

(b) To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the secretary, or any other person
designated by the Company as escrow agent, as its attorney-in-fact to sell,
assign and transfer unto the Company, such Unvested Shares, if any, repurchased
by the Company pursuant to the Repurchase Option and shall, upon execution of
this Agreement, deliver and deposit with the secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall
be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of
the Company and Purchaser attached as Exhibit C-3 hereto, until the Company
exercises its purchase right as provided in Section 1, until such Unvested
Shares are vested, or until such time as this Agreement no longer is in effect.
As a further condition to the Company's obligations under this Agreement, the
spouse of the Purchaser, if any, shall execute and deliver to the Company the
Consent of Spouse attached hereto as Exhibit C-4. Upon vesting of the Unvested
Shares, the escrow agent shall promptly deliver to the Purchaser the certificate
or certificates representing such Shares in the escrow agent's possession
belonging to the Purchaser, and the escrow agent shall be discharged of all
further obligations hereunder; provided, however, that the escrow agent shall
nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.

(c) The Company, or its designee, shall not be liable for any act it
may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.

(d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser

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<PAGE>

with respect to any Unvested Shares purchased by Purchaser and shall
acknowledge the same by signing a copy of this Agreement.

3. OWNERSHIP, VOTING RIGHTS, DUTIES. This Agreement shall not affect in
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.

4. LEGENDS. The share certificate(s) evidencing the Shares issued
hereunder shall be endorsed with such legends as may be required (i) by the
Stock Option Agreement and Exercise Notice, (ii) under applicable state or
federal securities laws, and (iii) if not otherwise required, a legend providing
substantially as follows:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.

5. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

6. NOTICES. Notices required hereunder shall be given in person or by
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.

7. SURVIVAL OF TERMS. This Agreement shall apply to and bind Purchaser
and the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

8. SECTION 83(b) ELECTIONS.

(a) ELECTION FOR UNVESTED SHARES PURCHASED PURSUANT TO NONQUALIFIED
STOCK OPTIONS. Purchaser hereby acknowledges that he or she has been informed
that, with respect to the exercise of a nonqualified stock option for Unvested
Shares, that unless an election is filed by the Purchaser with the Internal
Revenue Service and, if necessary, the proper state taxing authorities, WITHIN
30 DAYS of the purchase of the Shares, electing pursuant to Section 83(b) of the
Code (and similar state tax provisions if applicable) to be taxed currently on
any difference between the purchase price of the Shares and their Fair Market
Value on the date of purchase, there will be a recognition of taxable income to
the Optionee, measured by the excess, if any, of the fair market value of the
Shares, at the time the Company's Repurchase Option lapses over the purchase
price for the Shares. Optionee represents that Optionee has consulted any tax
consultant(s) Optionee deems advisable in connection with the purchase of

-3-
<PAGE>

the Shares or the filing of the Election under Section 83(b) and similar tax
provisions. A form of Election under Section 83(b) is attached hereto as
Exhibit C-5 for reference.

(b) ELECTION FOR UNVESTED SHARES PURCHASED PURSUANT TO INCENTIVE
STOCK OPTIONS. Purchaser hereby acknowledges that he or she has been informed
that, with respect to the exercise of an incentive stock option for Unvested
Shares, that unless an election is filed by the Purchaser with the Internal
Revenue Service and, if necessary, the proper state taxing authorities, WITHIN
30 DAYS of the purchase of the Shares, electing pursuant to Section 83(b) of the
Code (and similar state tax provisions if applicable) to be taxed currently on
any difference between the purchase price of the Shares and their Fair Market
Value on the date of purchase, there will be a recognition of income to the
Optionee, for alternative minimum tax purposes, measured by the excess, if any,
of the fair market value of the Shares, at the time the Company's Repurchase
Option lapses over the purchase price for the Shares. Optionee represents that
Optionee has consulted any tax consultant(s) Optionee deems advisable in
connection with the purchase of the Shares or the filing of the Election under
Section 83(b) and similar tax provisions. A form of Election under Section
83(b) for alternative minimum tax purposes is attached hereto as Exhibit C-6 for
reference.

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

9. REPRESENTATIONS. Purchaser has reviewed with his own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. Purchaser is relying solely on
such advisors and not on any statements or representations of the Company or any
of its agents. Purchaser understands that he (and not the Company) shall be
responsible for his own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.

10. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with applicable state laws.

Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.

-4-
<PAGE>

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.

"COMPANY"

NetGravity, Inc.

By:
--------------------------------

Title:
-----------------------------

"PURCHASER"

-----------------------------------

Address:
---------------------------

-----------------------------------

Soc. Sec. No.:
---------------------

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<PAGE>

EXHIBIT C-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto __________________________________________________
(__________) shares of the Common Stock of NetGravity, Inc. standing
in my name of the books of said corporation represented by Certificate
No. _____ herewith and do hereby irrevocably constitute and appoint
____________________________ to transfer the said stock on the books of the
within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between NetGravity, Inc. and the undersigned dated
______________, 19__.

Dated: _______________, 19__

Signature:______________________________

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.

<PAGE>

EXHIBIT C-3

JOINT ESCROW INSTRUCTIONS

_________ , 19__

NetGravity, Inc.
1670 S. Amphlett Blvd., Suite 314
San Mateo, CA 94402

Attention: Secretary

As Escrow Agent for both NetGravity, Inc. (the "Company"), and the
undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Purchase Agreement ("Agreement") between
the Company and the undersigned, in accordance with the following instructions:

1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.

2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this

<PAGE>

paragraph 3, Purchaser shall exercise all rights and privileges of a
stockholder of the Company while the stock is held by you.

4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.

6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree, you shall
not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

-2-
<PAGE>

11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.

13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

COMPANY: NetGravity, Inc.
1670 S. Amphlett Blvd., Suite 314
San Mateo, CA 94402

Attention: Secretary

PURCHASER:
--------------------------------------------------

--------------------------------------------------

ESCROW AGENT: Corporate Secretary of
NetGravity, Inc.

-3-
<PAGE>

16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.

NetGravity, Inc.

By:
-------------------------------------------

Title:
-------------------------------------------

Purchaser:
-------------------------------------------
(Signature)

-------------------------------------------
(Typed or Printed Name)

Escrow Agent:

-------------------------------------------
Corporate Secretary

-4-
<PAGE>

EXHIBIT C-4

CONSENT OF SPOUSE

I, ____________________, spouse of ___________________, have read and
approve the foregoing Agreement. In consideration of granting of the right to
my spouse to purchase shares of NetGravity, Inc., as set forth in the Agreement,
I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.

Dated: _______________, 19

______________________________

<PAGE>

EXHIBIT C-5

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Tax Code, to include in taxpayer's gross income for the current taxable year,
the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

NAME : TAXPAYER: SPOUSE:

ADDRESS: :

IDENTIFICATION NO. : TAXPAYER: SPOUSE:

TAXABLE YEAR:

2. The property with respect to which the election is made is described as
follows: _________ shares (the "Shares") of the Common Stock of
NetGravity, Inc. (the "Company").

3. The date on which the property was transferred is: _____________, 19__.

4. The property is subject to the following restrictions:

The Shares may be repurchased by the Company, or its assignee, on certain
events. This right lapses with regard to a portion of the Shares based on
the continued performance of services by the taxpayer over time.

5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is:
$_______________.

6. The amount (if any) paid for such property is:

$_______________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.

Dated: ___________________, 19__ _______________________________________
_____________________________, Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ___________________, 19__ _______________________________________

<PAGE>
EXHIBIT C-6

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to the provisions of Sections
55-56 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in
taxpayer's alternative minimum taxable income for the current taxable year, as
compensation for services, the excess, if any, of the fair market value of the
property described below at the time of transfer over the amount paid for such
property.

1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

NAME: TAXPAYER: SPOUSE:

ADDRESS:

IDENTIFICATION NO.: TAXPAYER: SPOUSE:

TAXABLE YEAR:

2. The property with respect to which the election is made is described as
follows: ________ shares (the "Shares") of the Common Stock of
NetGravity, Inc. (the "Company").

3. The date on which the property was transferred is:___________________.

4. The property is subject to the following restrictions:

The Shares may be repurchased by the Company, or its assignee, at its
original purchase price, on certain events. This right lapses with regard
to a portion of the Shares over time.

5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is:

$_______________

6. The amount paid for such property is:

$_______________

THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.

Dated: _________________________, Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ___________________, 19__ ___________________________________

<PAGE>
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations

260.141.11: RESTRICTION ON TRANSFER. (a) The issuer of any security upon
which a restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.

(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

(1) to the issuer;

(2) pursuant to the order or process of any court;

(3) to any person described in Subdivision (i) of Section 25102 of
the Code or Section 260.105.14 of these rules;

(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or
custodian for the account of the transferee or the transferee's ancestors,
descendants or spouse;

(5) to holders of securities of the same class of the same issuer;

(6) by way of gift or donation inter vivos or on death;

(7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state, territory
or country who is neither domiciled in this state to the knowledge of the
broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;

(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;

(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not
required;

(10) by way of a sale qualified under Sections 25111, 25112, 25113 or
25121 of the Code, of the securities to be transferred, provided that no
order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;

(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;

(12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;

(13) between residents of foreign states, territories or countries who
are neither domiciled nor actually present in this state;

(14) to the State Controller pursuant to the Unclaimed Property Law or
to the administrator of the unclaimed property law of another state; or

(15) by the State Controller pursuant to the Unclaimed Property Law or
by the administrator of the unclaimed property law of another state if, in
either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;

(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;

(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by
subdivision (f) of Section 25102; provided that any such transfer is on the
condition that any certificate evidencing the security issued to such
transferee shall contain the legend required by this section.

<PAGE>

(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:

"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES."

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<PAGE>

NETGRAVITY, INC.

1998 STOCK OPTION PLAN

1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:

- to attract and retain the best available personnel for positions
of substantial responsibility,

- to provide additional incentive to Employees, Directors and
Consultants, and

- to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

(d) "CODE" means the Internal Revenue Code of 1986, as amended.

(e) "COMMITTEE" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

(f) "COMMON STOCK" means the common stock of the Company.

<PAGE>

(g) "COMPANY" means NetGravity, Inc., a Delaware corporation.

(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

(i) "DIRECTOR" means a member of the Board.

(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;

(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

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<PAGE>

(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

(p) "NOTICE OF GRANT" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

(q) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(r) "OPTION" means a stock option granted pursuant to the Plan.

(s) "OPTION AGREEMENT" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

(t) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

(u) "OPTIONED STOCK" means the Common Stock subject to an Option or
Stock Purchase Right.

(v) "OPTIONEE" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

(w) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(x) "PLAN" means this 1998 Stock Plan.

(y) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 of the Plan.

(z) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

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<PAGE>

(aa) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

(bb) "SECTION 16(b)" means Section 16(b) of the Exchange Act.

(cc) "SERVICE PROVIDER" means an Employee, Director or Consultant.

(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,000,000 Shares, plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 1999 equal to the lesser of
(i) 1,000,000 Shares, (ii) 5% of the outstanding Shares on such date or (iii)
a lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE.

(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.

(ii) SECTION 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the

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<PAGE>

meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of Section
162(m) of the Code.

(iii) RULE 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv) OTHER ADMINISTRATION. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;

(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;

(vii) to institute an Option Exchange Program;

(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

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<PAGE>

(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;

(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

6. LIMITATIONS.

(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with

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<PAGE>

the Company, nor shall they interfere in any way with the Optionee's right or
the Company's right to terminate such relationship at any time, with or without
cause.

(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 2,000,000 Shares.

(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 2,000,000
Shares which shall not count against the limit set forth in subsection (i)
above.

(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall
become effective upon the date of the Company's initial public offering of
its equity securities registered on Form S-1 with the Securities and Exchange
Commission. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 15 of the Plan.

8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

9. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) EXERCISE PRICE. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of

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<PAGE>

stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of
grant.

(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.

(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

(i) cash;

(ii) check;

(iii) promissory note;

(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

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<PAGE>

(vii) any combination of the foregoing methods of payment; or

(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

10. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

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<PAGE>

(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

11. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted

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<PAGE>

Stock Purchase Agreement shall be the original price paid by the purchaser and
may be paid by cancellation of any indebtedness of the purchaser to the Company.
The repurchase option shall lapse at a rate determined by the Administrator.

(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.

12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

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<PAGE>

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.

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<PAGE>

15. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.

(b) STOCKHOLDER APPROVAL. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

16. CONDITIONS UPON ISSUANCE OF SHARES.

(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

17. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

19. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

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<PAGE>

NETGRAVITY, INC.

1998 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number _________________________

Date of Grant _________________________

Vesting Commencement Date _________________________

Exercise Price per Share $________________________

Total Number of Shares Granted _________________________

Total Exercise Price $_________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: _________________________

VESTING SCHEDULE:

This Option may be exercised, in whole or in part, in accordance with the
following schedule:

25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter, subject to the Optionee continuing to be a Service
Provider on such dates.

<PAGE>

TERMINATION PERIOD:

This Option may be exercised for three months after Optionee ceases to be a
Service Provider. Upon the death or Disability of the Optionee, this Option may
be exercised for one year after Optionee ceases to be a Service Provider. In no
event shall this Option be exercised later than the Term/Expiration Date as
provided above.

II. AGREEMENT

1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "OPTIONEE") an option (the "OPTION") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "EXERCISE PRICE"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

2. EXERCISE OF OPTION.

(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "EXERCISE NOTICE"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "EXERCISED SHARES"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.

No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

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<PAGE>

3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

(a) cash; or

(b) check; or

(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or

(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

6. TAX CONSEQUENCES. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.

(a) EXERCISING THE OPTION.

(i) NONSTATUTORY STOCK OPTION. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to
withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

-3-

<PAGE>

(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.

(b) DISPOSITION OF SHARES.

(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.

(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.

8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING

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<PAGE>

SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL
OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION
OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE: NETGRAVITY, INC.

- ------------------------------------ ---------------------------------------
Signature By

- ------------------------------------ ---------------------------------------
Print Name Title

- ------------------------------------
Residence Address

- ------------------------------------

-5-
<PAGE>

EXHIBIT A

1998 STOCK PLAN

EXERCISE NOTICE

NetGravity, Inc.
1700 S. Amphlett Blvd., Suite 350
San Mateo, CA 94402

Attention: Secretary

1. EXERCISE OF OPTION. Effective as of today, ________________, 199__,
the undersigned ("PURCHASER") hereby elects to purchase ______________ shares
(the "SHARES") of the Common Stock of NetGravity, Inc. (the "COMPANY") under and
pursuant to the 1998 Stock Plan (the "PLAN") and the Stock Option Agreement
dated ________, 19___ (the "OPTION AGREEMENT"). The purchase price for the
Shares shall be $___________, as required by the Option Agreement.

2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.

3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

4. RIGHTS AS STOCKHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.

5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing

<PAGE>

signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of California.

Submitted by: Accepted by:

PURCHASER: NETGRAVITY, INC.

- ------------------------------------ ---------------------------------------
Signature By

- ------------------------------------ ---------------------------------------
Print Name Its

ADDRESS: ADDRESS:

- ----------------------------------- 1700 S. Amphlett Blvd., Suite 350
San Mateo, CA 94402
- -----------------------------------

---------------------------------------
Date Received

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<PAGE>

NETGRAVITY, INC.

1998 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 1998 Employee Stock Purchase
Plan of NetGravity, Inc.

1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. DEFINITIONS.

(a) "BOARD" shall mean the Board of Directors of the Company.

(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

(d) "COMPANY" shall mean NetGravity, Inc. and any Designated of the
Company.

(e) "COMPENSATION" shall mean all base straight time gross earnings
and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.

(f) "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

(g) "EMPLOYEE" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave

<PAGE>

of absence approved by the Company. Where the period of leave exceeds 90 days
and the individual's right to reemployment is not guaranteed either by statute
or by contract, the employment relationship shall be deemed to have terminated
on the 91st day of such leave.

(h) "ENROLLMENT DATE" shall mean the first day of each Offering
Period.

(i) "EXERCISE DATE" shall mean the last Trading Day of each Purchase
Period.

(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of
Common Stock determined as follows:

(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day on the date of such determination, as reported in
THE WALL STREET JOURNAL or such other source as the Board deems reliable, or;

(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in THE WALL STREET JOURNAL or such
other source as the Board deems reliable, or;

(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board, or;

(4) For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "REGISTRATION
STATEMENT").

(k) "OFFERING PERIODS" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after February 1 and
August 1 of each year and terminating on the last Trading Day in the periods
ending twenty-four months later; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
July 31, 2000. The duration and timing of Offering Periods may be changed
pursuant to Section 4 of this Plan.

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<PAGE>

(l) "PLAN" shall mean this Employee Stock Purchase Plan.

(m) "PURCHASE PRICE" shall mean 85% of the Fair Market Value of a
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that, in the event (i) the Company's stockholders
approve an increase in the number of shares available for issuance under the
Plan, (ii) all or a portion of such additional shares are to be issued with
respect to one or more Offering Periods that are underway at the time of such
stockholder approval ("NEW SHARES"), and (iii) the Fair Market Value of a share
of Common Stock on the date of such approval (the "AUTHORIZATION DATE FMV") is
higher than the Fair Market Value on the Enrollment Date for any such Offering
Period, the Purchase Price with respect to New Shares shall be 85% of the
Authorization Date FMV or the Fair Market Value of a share of Common Stock on
the Exercise Date, whichever is lower.

(n) "PURCHASE PERIOD" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period any Offering Period shall commence on the
Enrollment Date and end with the next Exercise Date; provided, however, that the
first Purchase Period under the Plan shall commence with the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and shall end on the last Trading
Day on or before January 31, 1999.

(o) "RESERVES" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.

(p) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

(q) "TRADING DAY" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.

3. ELIGIBILITY.

(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.

(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d)

-3-

<PAGE>

of the Code) would own capital stock of the Company and/or hold outstanding
options to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.

4. OFFERING PERIODS. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after February 1 and August 1 of each year, or on such other
date as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
July 31, 2000. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.

5. PARTICIPATION.

(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.

(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

6. PAYROLL DEDUCTIONS.

(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.

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<PAGE>

(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.

(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may decrease the rate of his or her
payroll deductions to 0% once during each Offering Period by completing or
filing with the Company a new subscription agreement authorizing such change
in payroll deduction rate. The Board may, in its discretion, increase or
decrease the number of participation rate changes during any Offering Period.
The change in rate shall be effective with the first full payroll period
following five (5) business days after the Company's receipt of the new
subscription agreement unless the Company elects to process a given change in
participation more quickly. A participant's subscription agreement shall
remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.

7. GRANT OF OPTION. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted
an option to purchase on each Exercise Date during such Offering Period (at
the applicable Purchase Price) up to a number of shares of the Company's
Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided
that in no event shall an Employee be permitted to purchase during each
Purchase Period more than 5,000 shares of the Company's Common Stock (subject
to any adjustment pursuant to Section 19), and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and
12 hereof. Exercise of the option shall occur

-5-
<PAGE>

as provided in Section 8 hereof, unless the participant has withdrawn pursuant
to Section 10 hereof. The option shall expire on the last day of the Offering
Period.

8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.

9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

10. WITHDRAWAL.

(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.

(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

11. TERMINATION OF EMPLOYMENT.

Upon a participant's ceasing to be an Employee, for any reason, he or
she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such

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<PAGE>

participant's account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 15 hereof, and
such participant's option shall be automatically terminated. The preceding
sentence notwithstanding, a participant who receives payment in lieu of notice
of termination of employment shall be treated as continuing to be an Employee
for the participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu of
notice.

12. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.

13. STOCK.

(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 200,000 shares, plus an annual increase to be added on the first day
of the Company's fiscal year beginning in 1999 equal to the lesser of (i)
750,000 shares, (ii) 4% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a
pro rata allocation of the shares remaining available for purchase in as
uniform a manner as shall be practicable and as it shall determine to be
equitable.

(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

14. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

15. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such partici-

-7-

<PAGE>

pant's death subsequent to an Exercise Date on which the option is exercised but
prior to delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

16. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

17. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

18. REPORTS. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER OR ASSET SALE.

(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification

-8-
<PAGE>

of the Common Stock, or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "NEW EXERCISE DATE"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least
ten (10) business days prior to the New Exercise Date, that the Exercise Date
for the participant's option has been changed to the New Exercise Date and that
the participant's option shall be exercised automatically on the New Exercise
Date, unless prior to such date the participant has withdrawn from the Offering
Period as provided in Section 10 hereof.

(c) MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "NEW
EXERCISE DATE") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.

20. AMENDMENT OR TERMINATION.

(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in Section 19
hereof, no

-9-
<PAGE>

amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any other
applicable law, regulation or stock exchange rule), the Company shall obtain
stockholder approval in such a manner and to such a degree as required.

(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

21. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23. TERM OF PLAN. The Plan shall become effective upon the date of the
Company's initial public offering of its equity securities registered on Form
S-1 with the Securities and Exchange Commission. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 20 hereof.

-10-
<PAGE>

24. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.

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<PAGE>

EXHIBIT A

NETGRAVITY, INC.

1998 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. _____________________________________________________ hereby elects to
participate in the NetGravity, Inc. 1998 Employee Stock Purchase Plan (the
"EMPLOYEE STOCK PURCHASE PLAN") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement and
the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (not to exceed 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.

4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to stockholder approval of the Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only): ________
___________________________.

6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes

<PAGE>

as having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for the
shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS
AFTER THE DATE OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE
PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY,
WHICH ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The Company may, but
will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions
or benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time of
such disposition, and that such income will be taxed as ordinary income
only to the extent of an amount equal to the lesser of (1) the excess of
the fair market value of the shares at the time of such disposition over
the purchase price which I paid for the shares, or (2) 15% of the fair
market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be taxed
as capital gain.

7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.

8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:

NAME: (Please print)______________________________________________
(First) (Middle) (Last)

- ----------------------------------- ---------------------------------------
Relationship

---------------------------------------
(Address)

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<PAGE>

Employee's Social
Security Number:
--------------------------------------------

Employee's Address:
---------------------------------------------

---------------------------------------------

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:
------------------------- --------------------------------------------
Signature of Employee

----------------------------------------
Spouse's Signature (If beneficiary other than
spouse)

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<PAGE>

EXHIBIT B

NETGRAVITY, INC.

1998 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the NetGravity, Inc.
1998 Employee Stock Purchase Plan which began on ____________, 19____ (the
"ENROLLMENT DATE") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.

Name and Address of Participant:

---------------------------------------------

Signature:

---------------------------------------------

Date:
----------------------------------------

<PAGE>

NETGRAVITY, INC.

1998 DIRECTOR OPTION PLAN

1. PURPOSES OF THE PLAN. The purposes of this 1998 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "BOARD" means the Board of Directors of the Company.

(b) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMPANY" means NetGravity, Inc., a Delaware corporation.

(e) "DIRECTOR" means a member of the Board.

(f) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

(g) "EMPLOYEE" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(i) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;

<PAGE>

(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or

(iv) For purposes of Options granted pursuant to Section 4(b)(i)
only, the Fair Market Value shall be the initial price to the public as set
forth in the final prospectus included within the registration statement in
Form S-1 filed with the Securities and Exchange Commission for the initial
public offering of the Company's Common Stock (the "REGISTRATION STATEMENT").

(j) "INSIDE DIRECTOR" means a Director who is an Employee.

(k) "OPTION" means a stock option granted pursuant to the Plan.

(l) "OPTIONED STOCK" means the Common Stock subject to an Option.

(m) "OPTIONEE" means a Director who holds an Option.

(n) "OUTSIDE DIRECTOR" means a Director who is not an Employee.

(o) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(p) "PLAN" means this 1998 Director Option Plan.

(q) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.

(r) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 200,000 Shares, plus an annual increase to be added on
the first day of the Company's fiscal year (beginning in 1999) equal to the
lesser of (i) the number of Shares needed to restore the maximum aggregate
number of Shares available for sale under the Plan to 200,000 Shares, or
(ii) a lesser amount determined by the Board (the "Pool"). The Shares may
be authorized, but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

-2-
<PAGE>

4. ADMINISTRATION AND GRANTS OF OPTIONS UNDER THE PLAN. All grants of
Options to Outside Directors under this Plan shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following
provisions:

(a) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.

(b) Each Outside Director shall be automatically granted an Option to
purchase 25,000 Shares (the "FIRST OPTION") on the date on which the later of
the following events occurs: (i) the effective date of this Plan, as determined
in accordance with Section 6 hereof, or (ii) the date on which such person first
becomes an Outside Director, whether through election by the stockholders of the
Company or appointment by the Board to fill a vacancy; provided, however, that
an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a First Option.

(c) Each Outside Director shall be automatically granted an Option to
purchase 5,000 Shares (a "SUBSEQUENT OPTION") on the date of the annual meeting
of the stockholders of each year provided he or she is then an Outside Director
and if as of such date, he or she shall have served on the Board for at least
the preceding six (6) months.

(d) Notwithstanding the provisions of subsections (b) and (c) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 18 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan.

(e) The terms of a First Option granted hereunder shall be as
follows:

(i) the term of the First Option shall be ten (10) years.

(ii) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.

(iv) subject to Section 10 hereof, the First Option shall be
exercisable immediately, in whole or in part, conditioned upon Optionee
entering into a restricted stock purchase agreement with respect to any
unvested Shares. The First Option shall vest as to twenty-five percent (25%)
of the Shares subject to the First Option on the first anniversary of its
date of grant, and 1/48 of the Shares subject to the First Option at the end
of each full month thereafter, provided that the Optionee continues to serve
as a Director on such dates.

(f) The terms of a Subsequent Option granted hereunder shall be as
follows:

(i) the term of the Subsequent Option shall be ten (10)
years.

(ii) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth
in Sections 8 and 10 hereof.

(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.

(iv) subject to Section 10 hereof, the Subsequent Option
shall be exercisable immediately, in whole or in part, conditioned upon
Optionee entering into a restricted stock purchase agreement with respect to
any unvested Shares. The Subsequent Option shall vest as to twenty-five
percent (25%) of the Shares subject to the Subsequent Option on the first
anniversary of its date of grant, and 1/48 of the Shares subject to the
Subsequent Option at the end of each full month thereafter, provided that the
Optionee continues to serve as a Director on such dates.

(g) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made
until such time, if any, as additional Shares become available for grant
under the Plan through action of the Board or the stockholders to increase
the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.

5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

-3-
<PAGE>

6. TERM OF PLAN. The Plan shall become effective upon the date of the
Company's initial public offering of its equity securities registered on Form
S-1 with the Securities Exchange Commission. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 15 of the Plan

7. FORM OF CONSIDERATION. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment,
shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the
case of Shares acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (y) have
a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised, (iv)
consideration received by the Company under a cashless exercise program

-4-
<PAGE>

implemented by the Company in connection with the Plan, or (v) any combination
of the foregoing methods of payment.

8. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other

-5-
<PAGE>

right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 10 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.

(c) DISABILITY OF OPTIONEE. In the event Optionee's status as a
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

(d) DEATH OF OPTIONEE. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

9. NON-TRANSFERABILITY OF OPTIONS. Unless provided otherwise by the
Administrator, the Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

-6-
<PAGE>

(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the
assets of the Company, outstanding Options may be assumed or equivalent
options may be substituted by the successor corporation or a Parent or
Subsidiary thereof (the "SUCCESSOR CORPORATION"). If an Option is assumed or
substituted for, the Option or equivalent option shall continue to vest and
be exercisable as provided in Section 4 hereof for so long as the Optionee
serves as a Director or a director of the Successor Corporation. Following
such assumption or substitution, if the Optionee's status as a Director or
director of the Successor Corporation, as applicable, is terminated other
than upon a voluntary resignation by the Optionee, the Option, option or
Shares subject to a restricted stock purchase agreement shall become fully
vested, including as to Shares for which it would not otherwise be vested.
Thereafter, the Option or option shall remain exercisable in accordance with
Sections 8(b) through (d) above.

If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.

For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and

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if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares). If such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

11. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.

13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

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<PAGE>

14. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

16. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.

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<PAGE>
The Board of Directors and Stockholders
NetGravity, Inc.:

When the reverse stock split referred to in Note 8 of the Notes to
Consolidated Financial Statements has been consummated, we will be in a position
to render the following consent.

KPMG PEAT MARWICK LLP

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
NetGravity, Inc.:

We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

San Francisco, California
April 30, 1998