<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1999
REGISTRATION NO. 333-[ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
DOUBLECLICK INC.
(Exact Name of Registrant as Specified in its Charter)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7319 13-3870996
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code) Identification Number)
</TABLE>
41 MADISON AVENUE, 32ND FLOOR
NEW YORK, NEW YORK 10010
(212) 683-0001
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
------------------------
KEVIN J. O'CONNOR
CHIEF EXECUTIVE OFFICER
DOUBLECLICK INC.
41 MADISON AVENUE, 32ND FLOOR
NEW YORK, NEW YORK 10010
(212) 683-0001
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALEXANDER D. LYNCH, ESQ. LARRY W. SONSINI, ESQ.
SCOTT L. KAUFMAN, ESQ. CHRISTOPHER G. NICHOLSON, ESQ.
ELIZABETH H. LEFEVER, ESQ. PABLO L. CHAVEZ, ESQ.
BROBECK, PHLEGER & HARRISON LLP WILSON SONSINI GOODRICH & ROSATI
1633 BROADWAY, 47TH FLOOR 650 PAGE MILL ROAD
NEW YORK, NEW YORK 10019 PALO ALTO, CALIFORNIA 94304
(212) 581-1600 (650) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the
Effective Time of the Merger of a wholly-owned subsidiary of the Registrant with
and into NetGravity, Inc., which shall occur as soon as practicable after the
Effective Date of this Registration Statement, and the satisfaction or waiver of
all conditions to the closing of such Merger.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share.......... 5,174,052 $107.19 $554,606,634 $154,181
</TABLE>
(1) Based upon the maximum number of shares of the Registrant's common stock
expected to be issued in connection with the merger described herein to
holders of common stock of NetGravity, Inc.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rules 457(c) and 457(f) of the Securities Act of 1933, as
amended based upon the average of the high and low sale prices of the Common
Stock as reported on the Nasdaq National Market on September 16, 1999.
(3) Pursuant to Rule 457(b), under the Securities Act, $89,039 of the
registration fee is offset by the filing fee previously paid by the
Registrant in accordance with Rule 0-11(a) of the Securities Exchange Act of
1934, as amended, in connection with the filing of preliminary proxy
materials on Schedule 14A on September 3, 1999.
------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
September 24, 1999
Dear NetGravity Stockholders:
I am writing to you today about our proposed merger with DoubleClick Inc.
This merger will create a combined company offering a broad set of solutions for
Internet advertising and direct marketing.
In the merger, each share of NetGravity common stock will be exchanged for
0.28 shares of DoubleClick common stock. DoubleClick expects to issue
approximately 6 million shares of its common stock in the merger. DoubleClick
common stock is traded on the Nasdaq National Market under the trading symbol
"DCLK," and closed at $108.50 per share on September 21, 1999. The merger is
described more fully in this proxy statement/prospectus.
You will be asked to vote upon the merger at a special meeting of NetGravity
stockholders to be held on Tuesday, October 26, 1999 at 8:00 a.m., local time,
at the Residence Inn By Marriott, 2000 Winward Way, San Mateo, California 94404.
The merger cannot be consummated unless the holders of a majority of the shares
of NetGravity common stock approve the merger. Only stockholders who hold shares
of NetGravity common stock at the close of business on September 20, 1999 will
be entitled to vote at the special meeting.
We are very excited by the opportunities we envision for the combined
company. YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS AND CONDITIONS OF
THE MERGER ARE FAIR TO YOU AND IN YOUR BEST INTERESTS, AND HAS UNANIMOUSLY
RECOMMENDED THAT YOU APPROVE THE MERGER AGREEMENT AND THE MERGER.
This proxy statement/prospectus provides detailed information about
DoubleClick and the merger. Please give all of this information your careful
attention. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION IN THE
SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 15 OF THIS PROXY
STATEMENT/PROSPECTUS.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. To
vote your shares, you may use the enclosed proxy card or attend the special
stockholders meeting in person. To approve the merger agreement and the merger,
you MUST vote "FOR" the proposal by following the instructions stated on the
enclosed proxy card. If you do not vote at all, your non-vote will, in effect,
count as a vote against the merger agreement and the merger. We urge you to vote
FOR this proposal. The approval of this proposal is a necessary step in the
merger of NetGravity and DoubleClick.
Sincerely,
/s/ Eric W. Spivey
Eric W. Spivey
CHIEF EXECUTIVE OFFICER
This proxy statement/prospectus is being furnished to NetGravity
stockholders in connection with the solicitation of proxies by NetGravity's
management for use at the special meeting of NetGravity stockholders to be held
at 8:00 a.m., local time, on Tuesday, October 26, 1999, at the Residence Inn By
Marriott, 2000 Winward Way, San Mateo, California 94404, and at any adjournment
or postponement of the special meeting.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of this transaction or the DoubleClick
common stock to be issued in the merger, or determined that this proxy
statement/prospectus is accurate or complete. Any representation to the contrary
is a criminal offense.
This proxy statement/prospectus is dated September 24, 1999, and was first
mailed to NetGravity stockholders on or about September 27, 1999.
- --------------------------------------------------------------------------------
<PAGE>
REFERENCE TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about DoubleClick, NetGravity, and Abacus Direct
Corporation from documents that are not included in or delivered with this proxy
statement/prospectus. This information is available to you without charge upon
your written or oral request. You can obtain documents incorporated by reference
in this proxy statement/prospectus by requesting them in writing or by telephone
from DoubleClick or NetGravity at the following addresses and telephone numbers:
<TABLE>
<S> <C>
DoubleClick Inc. NetGravity, Inc.
Investor Relations Investor Relations
41 Madison Avenue, 32nd Floor 1900 S. Norfolk Street,
New York, New York 10010 Suite 150
(212) 683-0001 San Mateo, California 94403-1151
(650) 425-5960
</TABLE>
If you would like to request documents, please do so by October 19, 1999 in
order to receive them before the special meeting. We have included information
about Abacus because DoubleClick has also agreed to acquire Abacus.
See "Where You Can Find More Information" on page 69.
<PAGE>
NETGRAVITY, INC.
1900 S. NORFOLK STREET, SUITE 150
SAN MATEO, CA 94403-1151
(650) 425-6000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, OCTOBER 26, 1999
We will hold a special meeting of stockholders of NetGravity, Inc. at 8:00
a.m., local time, on Tuesday, October 26, 1999 at the Residence Inn By Marriott,
2000 Winward Way, San Mateo, California 94404:
1. To consider and vote upon a proposal to approve and adopt the merger
agreement among DoubleClick Inc., NetGravity and NJ Merger Corporation,
under which each outstanding share of NetGravity common stock will be
converted into the right to receive 0.28 shares of DoubleClick common stock,
and NetGravity will be merged into DoubleClick, and to approve this merger;
2. To grant the NetGravity board of directors discretionary authority to
adjourn the special meeting to solicit additional votes for approval of the
merger agreement and the merger; and
3. To transact other business properly brought before the special
meeting or any adjournment or postponement of the special meeting.
Only NetGravity stockholders of record at the close of business on September
20, 1999 are entitled to notice of and to vote at the special meeting or any
adjournment or postponement of the special meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO ENSURE
THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, WE URGE YOU TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING IN PERSON. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THIS
PROXY STATEMENT/ PROSPECTUS AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE SPECIAL
MEETING. YOU MAY VOTE IN PERSON AT THE SPECIAL MEETING EVEN IF YOU HAVE RETURNED
A PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ STEPHEN E. RECHT
Stephen E. Recht
CHIEF FINANCIAL OFFICER AND SECRETARY
San Mateo, California
September 24, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................................... iii
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS.................................................................. 1
RISK FACTORS............................................................................................... 15
THE SPECIAL MEETING........................................................................................ 20
Date, Time and Place..................................................................................... 20
Matters to be Considered at the Special Meeting.......................................................... 20
Record Date.............................................................................................. 20
Voting and Revocation of Proxies......................................................................... 20
Vote Required............................................................................................ 21
Quorum; Abstentions and Broker Non-Votes................................................................. 21
Solicitation of Proxies and Expenses..................................................................... 21
Board Recommendation..................................................................................... 22
THE MERGER................................................................................................. 23
Background of the Merger................................................................................. 23
Reasons for the Merger; Recommendations of Boards of Directors........................................... 26
Opinion of NetGravity's Financial Advisor................................................................ 30
Interests of NetGravity Officers and Directors in the Merger............................................. 38
Applicable Waiting Periods and Regulatory Approvals...................................................... 39
Material Federal Income Tax Considerations............................................................... 39
Anticipated Accounting Treatment......................................................................... 41
No Appraisal Rights...................................................................................... 41
Delisting and Deregistration of NetGravity's Common Stock Following the Merger........................... 41
Restrictions on Sale of Shares by Affiliates of DoubleClick and NetGravity............................... 42
Operations Following the Merger.......................................................................... 42
THE MERGER AGREEMENT AND RELATED AGREEMENTS................................................................ 43
The Merger............................................................................................... 43
Effective Time........................................................................................... 43
Conversion of NetGravity Shares in the Merger............................................................ 43
NetGravity Stock Option and Stock Incentive Plans........................................................ 43
No Fractional Shares..................................................................................... 44
The Exchange Agent....................................................................................... 44
Exchange of NetGravity Stock Certificates for DoubleClick Stock Certificates............................. 44
Distributions with Respect to Unexchanged Shares......................................................... 44
Representations and Warranties........................................................................... 44
NetGravity's Conduct of Business Before Completion of the Merger......................................... 46
No Solicitation of Transactions.......................................................................... 48
Director and Officer Indemnification and Insurance....................................................... 49
Conditions to the Merger................................................................................. 49
Termination of the Merger Agreement...................................................................... 50
Payment of Fees and Expenses............................................................................. 51
Extension, Waiver and Amendment of the Merger Agreement.................................................. 52
Related Agreements....................................................................................... 52
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS.......................................................... 54
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
COMPARISON OF THE RIGHTS OF HOLDERS OF NETGRAVITY COMMON STOCK AND DOUBLECLICK COMMON STOCK................ 63
Classes of Common Stock of NetGravity and DoubleClick; Voting Rights..................................... 63
Classified Board of Directors............................................................................ 63
Number of Directors...................................................................................... 63
Removal of Directors..................................................................................... 63
Filling Vacancies on the Board of Directors.............................................................. 64
Ability to Call Special Meetings......................................................................... 64
Advance Notice Provisions for Stockholder Nominations and Proposals...................................... 64
Amendment of Certificate of Incorporation................................................................ 67
Amendment of Bylaws...................................................................................... 67
Indemnification of Directors and Officers................................................................ 67
EXPERTS.................................................................................................... 68
LEGAL MATTERS.............................................................................................. 68
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 69
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 70
APPENDICES
A--Agreement and Plan of Merger and Reorganization
B--Form of Stockholder Agreement
C-- Opinion of BancBoston Robertson Stephens, Financial Advisor to NetGravity
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE THE COMPANIES PROPOSING THE MERGER?
A: We believe that NetGravity's strengths and capabilities complement
DoubleClick's business. The merger is designed to create a company capable of
offering Web publishers, advertisers and merchants a complete spectrum of
Internet advertising solutions. It is expected that the combined company will
be able to provide its customers with Internet advertising, database
marketing, e-commerce, packaged software, consulting service and media sales
solutions.
Q: WHAT WILL NETGRAVITY STOCKHOLDERS RECEIVE IN THE MERGER?
A: If the merger is completed, NetGravity stockholders will receive 0.28 shares
of DoubleClick common stock for each share of NetGravity common stock they
own. DoubleClick will not issue fractional shares of common stock. Instead of
a fractional share, NetGravity stockholders will receive cash based on the
closing price of DoubleClick common stock on the first business day after the
merger is completed.
Q: DOUBLECLICK HAS ALSO ANNOUNCED THAT IT IS ACQUIRING ABACUS DIRECT
CORPORATION. HOW WILL THAT AFFECT ITS PROPOSED TRANSACTION WITH NETGRAVITY?
A: On June 13, 1999, DoubleClick entered into an agreement to acquire Abacus
Direct Corporation, a provider of information products and marketing research
services to the direct marketing industry. Consummation of the Abacus merger
is NOT a condition to the consummation of DoubleClick's merger with
NetGravity. The proposed transaction with Abacus will not affect the
consummation of the proposed transaction with NetGravity.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working to complete the merger in the fall of 1999. Because the merger
is subject to governmental and other regulatory approvals, however, we cannot
predict the exact timing.
Q: SHOULD NETGRAVITY STOCKHOLDERS SEND IN THEIR STOCK CERTIFICATES NOW?
A: No. After we complete the merger, DoubleClick will send instructions to
NetGravity stockholders explaining how to exchange their shares of NetGravity
common stock for the appropriate number of shares of DoubleClick common
stock.
Q: HOW DO I VOTE?
A: Mail your signed proxy card in the enclosed postage-paid return envelope as
soon as possible so that your shares may be represented at the special
stockholders' meeting. You may also attend the meeting in person instead of
submitting a proxy. If your shares are held in "street name" by your broker,
your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
Q: CAN I CHANGE MY VOTE AFTER MAILING MY PROXY?
A: Yes. You may change your vote by delivering a signed notice of revocation or
a later-dated, signed proxy card to the corporate secretary of NetGravity
before the special stockholders' meeting, or by attending the special
stockholders' meeting and voting in person.
Q: ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE MERGER?
A: Yes. We have set out under the heading "Risk Factors" beginning on page 15 of
this
iii
<PAGE>
proxy statement/prospectus a number of risk factors that you should consider.
Q: WHO CAN I CONTACT WITH QUESTIONS?
A: Please call or e-mail NetGravity Investor Relations at (650) 425-5960 or
[email protected].
iv
<PAGE>
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS ENTIRE PROXY
STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES, AND THE OTHER DOCUMENTS WE REFER
TO FOR A MORE COMPLETE UNDERSTANDING OF THE MERGER.
THE COMPANIES
DOUBLECLICK INC.
41 Madison Avenue, 32nd Floor
New York, New York 10010
www.doubleclick.net
(212) 683-0001
DoubleClick Inc. is a leading provider of comprehensive global Internet
advertising solutions for advertisers and Web publishers. DoubleClick delivers
Internet advertising to Web sites for advertisers and ad agencies in a targeted,
measurable and cost-effective manner through its DART-TM- technology. All of
DoubleClick's service offerings are powered by its DART technology, which offers
customers the ability to target, deliver, measure and analyze Internet marketing
campaigns on a real-time basis. DoubleClick has two principal service offerings:
the DoubleClick Network-TM- and DART Service. For Web publishers of the popular
Web sites that are in the DoubleClick Network, DoubleClick's in-house sales
force sells the advertising inventory available on those Web sites to
advertisers. Through the DART Service, DoubleClick serves as a service bureau
for clients of its DART for Publishers Services, consisting of Web publishers
that have their own sales staff, and also for clients of its Closed Loop
Marketing Solutions-TM- family of products, consisting of advertisers and their
ad agencies that wish to use the DART technology to deliver advertising to Web
sites of their choosing.
NETGRAVITY, INC.
1900 S. Norfolk Street, Suite 150
San Mateo, California 94403-1151
www.netgravity.com
(650) 425-6000
NetGravity, Inc. is a leading provider of solutions for online interactive
marketing, which includes online advertising and online direct marketing.
NetGravity's solutions are designed to help its customers increase their
revenues by automating online interactive marketing and by improving response
rates through better consumer targeting. NetGravity sells its solutions to each
of the three participants in the interactive marketing supply chain: vendors
selling goods and services over the Internet, advertising agencies and content
publishers. NetGravity's core product, AdServer, is a software solution targeted
to large, sophisticated e-commerce merchants and content publishers. AdServer
manages the process of placing advertisements, promotions and other offers on
Web pages that are tailored for and targeted to specific customers. NetGravity
recently began offering transaction-based services, including AdCenter for
Publishers, an outsourced version of AdServer. In addition, NetGravity recently
began offering its Global Profile Service to its AdServer and AdCenter
customers. Global Profile Service is a transaction-based data service that gives
NetGravity's customers access to a database of anonymous consumer profiles for
use in targeting online advertisements, promotions and other offers. The first
release of Global Profile Service allows for targeting based on geographic
location. NetGravity is developing future releases of Global Profile Service to
enable reporting and analysis targeting based on other demographic and
behavioral characteristics.
1
<PAGE>
THE MERGER (SEE PAGE 23)
NetGravity and DoubleClick have entered into a merger agreement that
provides for the merger of NetGravity and a newly formed subsidiary of
DoubleClick. As a result, NetGravity will become a wholly owned subsidiary of
DoubleClick that, following the merger, will be merged into DoubleClick.
Stockholders of NetGravity will become stockholders of DoubleClick following the
merger, and each share of NetGravity common stock will be exchanged for 0.28
shares of DoubleClick common stock. We urge you to read the merger agreement,
which is attached as APPENDIX A to this proxy statement/ prospectus, carefully
and in its entirety.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 39)
The merger has been structured as a tax-free reorganization for United
States federal income tax purposes. If the merger qualifies as a tax-free
reorganization, NetGravity stockholders will not recognize gain or loss for
United States federal income tax purposes in the merger, except for taxes
payable because of cash they receive instead of fractional shares. It is a
condition to completion of the merger that DoubleClick and NetGravity receive
legal opinions from outside counsel that the merger constitutes a
"reorganization" within the meaning of the Internal Revenue Code.
ABILITY TO SELL DOUBLECLICK STOCK AFTER THE MERGER (SEE PAGE 42)
All shares of DoubleClick common stock that NetGravity stockholders receive
in connection with the merger will be freely transferable unless the holder is
considered an "affiliate" of either DoubleClick or NetGravity for purposes of
the Securities Act of 1933. Shares of DoubleClick common stock held by these
affiliates may be sold only pursuant to a registration statement or an exemption
under the Securities Act.
NO DISSENTERS' OR APPRAISAL RIGHTS (SEE PAGE 41)
Under Delaware law, stockholders of NetGravity are not entitled to
dissenters' or appraisal rights in the merger.
OPINION OF NETGRAVITY'S FINANCIAL ADVISOR (SEE PAGE 30)
In deciding to approve the merger, the NetGravity board of directors
considered the opinion of its financial advisor, BancBoston Robertson Stephens,
that, as of July 12, 1999, the share exchange ratio was fair from a financial
point of view to NetGravity stockholders. The full text of the written opinion
of BancBoston Robertson Stephens, dated July 12, 1999, is attached as APPENDIX C
to this proxy statement/prospectus. You should read this opinion in its
entirety.
RECOMMENDATION OF NETGRAVITY'S BOARD OF DIRECTORS (SEE PAGE 27)
The NetGravity board of directors has determined that the terms and
conditions of the merger are fair to, and in the best interests of, NetGravity
and its stockholders. The NetGravity board has unanimously recommended that
NetGravity stockholders vote FOR approval of the merger agreement and the
merger.
STOCKHOLDER APPROVAL (SEE PAGE 21)
The holders of a majority of the outstanding shares of NetGravity common
stock must approve the merger. You are entitled to cast one vote per share of
NetGravity common stock owned by you at the close of business on September 20,
1999. On this date, 17,956,893 shares of NetGravity common stock were
outstanding and entitled to vote. As of August 31, 1999, the directors and
executive officers of NetGravity and their affiliates owned an aggregate of
2,870,463 shares (excluding any shares issuable
2
<PAGE>
upon exercise of options) or approximately 16% of NetGravity common stock
outstanding on that date. Under stockholder agreements in the form attached as
APPENDIX B to this proxy statement/prospectus, those stockholders have agreed to
vote all of their shares of NetGravity common stock for approval of the merger
agreement and the merger.
INTERESTS OF NETGRAVITY'S OFFICERS AND DIRECTORS IN THE MERGER (SEE PAGE 38)
When considering the recommendation of the NetGravity board, NetGravity
stockholders should be aware that some directors and officers of NetGravity have
the following interests in the merger that are different from, or in addition
to, those of other NetGravity stockholders:
- As of August 31, 1999, Eric Spivey, the Chief Executive Officer and a
director of NetGravity, owned options to purchase an aggregate of
1,200,000 shares of NetGravity common stock, of which 179,167 were vested
as of September 20, 1999. However, per the terms of Mr. Spivey's
employment agreement with NetGravity, a portion of Mr. Spivey's options
accelerate upon completion of the merger. For example, if the merger is
completed by October 31, 1999, a total of 893,750 of those shares, which
have a weighted average exercise price of approximately $27.38 per share,
will be vested and immediately exercisable;
- Mr. Spivey is entitled to a severance payment of approximately $975,000
and other NetGravity senior executives are entitled to severance payments
of approximately $1 million in the aggregate under their employment
agreements with NetGravity if their employment is terminated upon or
following NetGravity's change of control, as is the case with the merger;
- Upon completion of the merger, DoubleClick and NetGravity intend to enter
into employment agreements with at least five senior executives of
NetGravity from a list of ten senior executives, which includes both Eric
Spivey and John Danner, NetGravity's Chairman, though neither of them is
expected to continue his employment with the combined company after the
merger; and
- As of August 31, 1999, the outside directors of NetGravity held options to
purchase an aggregate of 147,500 shares of NetGravity common stock, of
which 129,204 shares were unvested. If the merger is completed, all of
those options will become fully vested and immediately exercisable as a
result of the termination of these directors' services to the combined
company.
As a result, these directors and officers may have been more likely to
approve the merger than NetGravity stockholders generally.
CONDITIONS TO COMPLETION OF THE MERGER (SEE PAGE 49)
DoubleClick and NetGravity will complete the merger only if DoubleClick and
NetGravity satisfy or waive several conditions, some of which are:
- the merger agreement must be approved by the holders of a majority of the
outstanding shares of NetGravity common stock;
- no court of competent jurisdiction or governmental entity shall have
issued or entered any order, writ, injunction or decree making the merger
illegal or otherwise preventing its completion;
- all necessary consents, approvals and authorizations from governmental
entities must be obtained except where a failure to obtain these consents,
approvals or authorizations could not be reasonably expected to have a
material adverse effect on DoubleClick or NetGravity;
- DoubleClick and NetGravity must each receive an opinion from DoubleClick's
or NetGravity's tax counsel stating that the merger will qualify as a
tax-free reorganization;
3
<PAGE>
- no event, change, condition or effect that is or is reasonably likely to
be materially adverse to DoubleClick or NetGravity occurs prior to
completion of the merger;
- DoubleClick must receive a letter from its independent auditors and
NetGravity must receive a letter from its independent auditors regarding
the auditors' concurrence with DoubleClick's management and NetGravity's
management as to the appropriateness of pooling of interest accounting for
the merger;
- NetGravity must obtain the consent or approval of those persons whose
consent or approval is required in connection with the merger under its
material contracts; and
- at least five senior executives of NetGravity from a list of ten senior
executives must have accepted employment with DoubleClick and entered into
new employment agreements with DoubleClick. Eric Spivey and John Danner,
NetGravity's Chairman, are both included on the list but are not expected
to continue their employment with the combined company after the merger.
If either DoubleClick or NetGravity waives any condition, NetGravity will
consider the facts and circumstances at that time and determine whether
completion of the merger requires a resolicitation of proxies from stockholders.
RESTRICTIONS ON ALTERNATE TRANSACTIONS (SEE PAGE 48)
The merger agreement prohibits NetGravity from soliciting or participating
in discussions with third parties about transactions alternative to the merger
of NetGravity with DoubleClick.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 50)
DoubleClick and NetGravity may mutually agree to terminate the merger
agreement at any time before the merger is completed. The merger agreement may
also be terminated under any of the following circumstances:
- if the conditions to completion of the merger would not be satisfied
because of either (A) a breach of an agreement in the merger agreement by
the other party or (B) a breach of a representation or warranty in the
merger agreement by the other party, if the breaching party does not take
reasonable steps to cure the breach;
- if a final court or governmental order prohibiting the merger is issued
and is not appealable; or
- if the NetGravity stockholders do not approve the merger agreement and the
merger at the NetGravity special meeting.
Furthermore, the merger agreement may be terminated by DoubleClick if any of
the following occurs:
- NetGravity's board withdraws, modifies or changes in a manner adverse to
DoubleClick its recommendation as to the merger agreement or the merger;
- NetGravity's board recommends a transaction alternative to the merger;
- NetGravity's board fails to recommend against a transaction alternative to
the merger, fails to reconfirm its approval and recommendation of the
merger or recommends a transaction alternative to the merger;
- NetGravity fails to comply with the nonsolicitation provisions of the
merger agreement, which are discussed in more detail on page 48;
- NetGravity fails to hold a stockholders' meeting to approve the merger; or
4
<PAGE>
- NetGravity's board resolves to take any of the actions described above.
TERMINATION FEE AND EXPENSES (SEE PAGE 51)
NetGravity may be required to pay DoubleClick a $30 million termination fee
following the termination of the merger, including a termination under the
circumstances described in the immediately preceding paragraph.
Under circumstances not involving the payment of the termination fee,
NetGravity may be required to pay DoubleClick's out-of-pocket expenses incurred
in connection with the merger of the two companies.
ANTICIPATED ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 41)
We expect the merger to qualify as a pooling of interests for financial
accounting purposes in accordance with United States generally accepted
accounting principles and the accounting standards of the Commission. It is a
condition to completion of the merger that DoubleClick receive a letter from its
independent auditors regarding their concurrence with DoubleClick management's
conclusions as to the appropriateness of pooling-of-interests accounting for the
merger and that NetGravity receive a letter from its independent auditors
regarding their concurrence with NetGravity's management that NetGravity is not
precluded from being a party to a merger accounted for as a pooling of
interests. DoubleClick may waive this condition. Under the pooling-of-interests
method of accounting, each of the parties' historical recorded assets and
liabilities will be carried forward to the combined company at their recorded
amounts. In addition, the operating results of the combined company will include
both parties' operating results for the entire fiscal year in which the merger
is completed, and the parties' historical reported operating results for prior
periods will be combined and restated as the operating results of the combined
company.
COMPLIANCE WITH ANTITRUST LAWS (SEE PAGE 39)
The merger is subject to United States antitrust laws. We have made the
required filings with the Department of Justice and Federal Trade Commission and
the applicable waiting period has expired. However, the Department of Justice or
the Federal Trade Commission, as well as a state or private person, may
challenge the merger at any time before or after its completion.
RECENT DEVELOPMENTS
On June 13, 1999, DoubleClick entered into an agreement to acquire Abacus
Direct Corporation in a stock-for-stock merger. The following sets forth certain
pertinent information relating to the proposed transaction.
BUSINESS OF ABACUS DIRECT CORPORATION
Abacus Direct Corporation is a leading provider of information products and
marketing research services to the direct marketing industry. Abacus has created
a comprehensive database of information on purchasing behavior by forming the
Abacus Alliance. The Abacus Alliance is a cooperative arrangement through which
direct marketers contribute their customers' purchasing histories to Abacus's
database in exchange for access to Abacus's information products and marketing
research services. This database, which includes purchasing data from over 1,300
catalog companies and other direct marketing companies, is a comprehensive
source of predictive information regarding consumer purchasing behavior. Abacus
uses this database and its advanced statistical modeling technology to provide
direct marketers information and analysis that allows them to increase response
rates and profits from their marketing campaigns.
5
<PAGE>
TERMS OF THE ABACUS MERGER
Under the terms of the merger agreement with Abacus, DoubleClick will issue
1.05 shares of DoubleClick common stock for each outstanding share of Abacus
common stock. In addition, all outstanding options to acquire shares of Abacus
common stock will be assumed by DoubleClick and converted at the same exchange
ratio into options to purchase DoubleClick common stock. In the acquisition,
DoubleClick will exchange approximately 10.4 million shares of DoubleClick
common stock for all the issued and outstanding capital stock of Abacus.
Following the merger, Abacus will become a wholly-owned subsidiary of
DoubleClick. DoubleClick and Abacus expect the merger will qualify to be
accounted for as a pooling-of-interests, and will qualify as a tax-free
reorganization. The merger is subject to a number of conditions, including
regulatory approval and approval by DoubleClick and Abacus stockholders.
DoubleClick anticipates that the Abacus merger will be consummated in the fall
of 1999.
EFFECT OF ABACUS ACQUISITION UPON NETGRAVITY STOCKHOLDERS
The primary effects of DoubleClick's merger with Abacus on NetGravity
stockholders will be dilution to their share ownership of DoubleClick,
consolidation of Abacus profits by DoubleClick in its statements of operations
and increased costs to effect the integration into DoubleClick on a prospective
basis. The proposed acquisition of Abacus will result in dilution to DoubleClick
stockholders, including NetGravity stockholders who will become DoubleClick
stockholders as a result of the merger. Immediately after the acquisition of
NetGravity, assuming the Abacus merger has not yet been completed, and further
assuming the exercise of all outstanding DoubleClick and NetGravity options,
NetGravity stockholders would own approximately 11.5% of DoubleClick. After the
acquisition of NetGravity, and, assuming the Abacus merger has also been
completed, and further assuming the exercise of all outstanding DoubleClick,
NetGravity and Abacus options, NetGravity stockholders would own approximately
9.4% of DoubleClick. It is expected that the combined company's operating
expenses will increase following the Abacus acquisition. This increase will
result from the integration of Abacus into DoubleClick. In addition, the
combined company intends to expand its sales and marketing operations, fund
greater levels of product development and acquire complementary businesses, all
of which will increase operating expenses. If these expenses are not more than
offset by increased revenues over time, there may be an adverse impact on
DoubleClick's financial results. For additional information regarding the effect
of the Abacus acquisition on the historical financial results of DoubleClick,
see "Unaudited Pro Forma Condensed Combined Financial Statements" on page 54.
6
<PAGE>
DOUBLECLICK INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected historical consolidated financial information should
be read in conjunction with DoubleClick's consolidated financial statements and
related notes and DoubleClick's "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which we incorporate by reference
in this proxy statement/prospectus. The consolidated statement of operations
information for each of the two years ended December 31, 1998, and for the
period from January 23, 1996 (inception) through December 31, 1996 and the
consolidated balance sheet data at December 31, 1998 and 1997, are derived from
the consolidated financial statements of DoubleClick which have been audited by
PricewaterhouseCoopers LLP, independent accountants, and are incorporated by
reference in this proxy statement/prospectus. The selected financial data for
the six month periods ended June 30, 1999 and 1998 and as of June 30, 1999 and
1998 have been derived from DoubleClick's unaudited financial statements and in
the opinion of DoubleClick's management include all adjustments (consisting only
of normal recurring adjustments) which are necessary to present fairly the
results of operations and financial position of DoubleClick for those periods in
accordance with generally accepted accounting principles. Historical results are
not necessarily indicative of the results to be expected in the future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER FOR THE PERIOD FROM
JUNE 30, 31, JANUARY 23, 1996
--------------------- --------------------- (INCEPTION) THROUGH
1999 1998 1998 1997 DECEMBER 31, 1996
---------- --------- ---------- --------- -------------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ 53,079 $ 30,297 $ 80,188 $ 30,597 $ 6,514
Cost of revenues............................. 25,038 20,569 53,964 20,628 3,780
---------- --------- ---------- --------- ------
Gross profit................................. 28,041 9,728 26,224 9,969 2,734
Operating expenses........................... 43,632 20,057 47,152 18,434 5,842
---------- --------- ---------- --------- ------
Loss from operations......................... (15,591) (10,329) (20,928) (8,465) (3,108)
---------- --------- ---------- --------- ------
---------- --------- ---------- --------- ------
Net loss..................................... $ (12,536) $ (9,101) $ (18,172) $ (8,356) (3,192)
---------- --------- ---------- --------- ------
---------- --------- ---------- --------- ------
Basic and diluted net loss per share(1)...... $ (0.32) $ (0.34) $ (0.60) $ (0.61) $ (0.18)
Weighted average shares used in basic and
diluted net loss per share calculation..... 39,435 27,101 30,440 13,718 18,118
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF DECEMBER 31,
--------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996
---------- --------- ---------- --------- ---------
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.......... $ 372,988 $ 56,566 $ 136,814 $ 8,546 $ --
Working capital (deficit).................................. 360,491 56,973 134,118 7,512 (3,038)
Total assets............................................... 422,341 83,999 183,620 21,162 4,526
Convertible subordinated notes and other long term
obligations.............................................. 250,295 559 375 463 --
Stockholders' equity (deficit)............................. 137,165 63,207 148,338 9,400 (2,592)
</TABLE>
- ------------------------
(1) Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding during the period, including the number
of shares of common stock issued upon the conversion of convertible
preferred stock, as of the date of conversion. Diluted net loss per share is
based on the potential dilution that would occur on exercise or conversion
of securities into common stock. Outstanding options to purchase shares of
common stock that could potentially dilute basic earnings per share in the
future were not included in the computation of diluted net loss per share
because to do so would have had an antidilutive effect for the periods
presented. Similarly, the computation of diluted net loss per share excludes
the effect of shares issuable upon the conversion of convertible preferred
stock since their inclusion would have had an antidilutive effect. As a
result, the basic and diluted per share amounts are identical for all
periods presented.
7
<PAGE>
NETGRAVITY, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected historical consolidated financial data should be read
in conjunction with NetGravity's consolidated financial statements and related
notes and NetGravity's "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in NetGravity's Quarterly Reports
on Form 10-Q for the quarters ended March 31 and June 30, 1999 filed with the
Commission on May 17, 1999 and August 2, 1999, and NetGravity's Annual Report on
Form 10-K for the year ended December 31, 1998 filed with the Commission on
March 25, 1999, all of which we incorporate by reference in this proxy
statement/prospectus. The consolidated statement of operations data for each of
the years in the three-year period ended December 31, 1998, and the consolidated
balance sheet data at December 31, 1998 and 1997, are derived from the
consolidated financial statements of NetGravity and its subsidiaries, which have
been audited by KPMG LLP, independent certified public accountants, and are
incorporated by reference in this proxy statement/prospectus. The consolidated
statement of operations data for the period from September 5, 1995 (inception)
through December 31, 1995, and the balance sheet data as at December 31, 1996
and 1995, are derived from financial statements of NetGravity, which have been
audited by KPMG LLP and are not included or incorporated by reference in this
proxy statement/prospectus. The selected financial data for the six month
periods ended June 30, 1999 and 1998 and as of June 30, 1999 and 1998 have been
derived from NetGravity's unaudited consolidated financial statements and in the
opinion of NetGravity's management include all adjustments (consisting only of
normal recurring adjustments) which are necessary to present fairly the results
of operations and financial position of NetGravity for those periods in
accordance with United States generally accepted accounting principles.
Historical results are not necessarily indicative of the results to be expected
in the future.
<TABLE>
<CAPTION>
FOR PERIOD
FROM
SEPTEMBER 5,
1995
(INCEPTION)
SIX MONTHS ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------- -------------------------- ------------
1999 1998 1998 1997 1996 1995
------- ------- -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues........................... $10,221 $ 4,335 $ 11,557 $ 6,358 $ 1,939 $ --
Cost of revenue.................... 4,796 2,285 5,228 2,572 702 --
------- ------- -------- ------- ------- ------
Gross profit....................... 5,425 2,050 6,329 3,786 1,237 --
Operating expenses................. 12,892 7,916 18,162 10,658 5,918 191
------- ------- -------- ------- ------- ------
Loss from operations............... (7,467) (5,866) (11,833) (6,872) (4,681) (191)
------- ------- -------- ------- ------- ------
Net loss........................... $(5,852) $(5,810) $(11,293) $(6,882) $(4,627) $ (195)
------- ------- -------- ------- ------- ------
------- ------- -------- ------- ------- ------
Basic and diluted net loss per
share(1)......................... $ (0.38) $ (1.42) $ (1.28) $ (2.46) $ (2.19) $(0.19)
Weighted average shares used in
basic and diluted per share
calculation...................... 15,572 4,079 8,823 2,799 2,111 1,006
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF DECEMBER 31,
----------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996 1995
-------- ------- ------- ------ ------ ----
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......... $125,043 $28,027 $20,799 $5,637 $1,020 $425
Working capital (deficit).......... 123,499 22,992 17,705 2,222 (221) (69)
Total assets....................... 143,708 34,902 33,420 9,887 3,159 486
Long-term obligations.............. -- 484 1,109 727 682 --
Stockholders' equity (deficit)..... 131,024 24,742 22,128 2,851 (164) (12)
</TABLE>
- ------------------------
(1) Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding during the period, including the number
of shares of common stock issued upon the conversion of convertible
preferred stock, as of the date of conversion. Diluted net loss per share is
based on the potential dilution that would occur on exercise or conversion
of securities into common stock. Outstanding options to purchase shares of
common stock that could potentially dilute basic earnings per share in the
future were not included in the computation of diluted net loss per share
because to do so would have had an antidilutive effect for the periods
presented. Similarly, the computation of diluted net loss per share excludes
the effect of shares issuable upon the conversion of convertible preferred
stock since their inclusion would have had an antidilutive effect. As a
result, the basic and diluted per share amounts are identical for all
periods presented.
9
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
In the table below, we provide you selected unaudited pro forma combined
financial data to give effect to the proposed merger of DoubleClick and
NetGravity as if the merger had been completed on January 1, 1996 for statement
of operations purposes and on June 30, 1999 for balance sheet purposes. This
selected unaudited pro forma combined financial data should be read in
conjunction with the separate historical financial statements and accompanying
notes of DoubleClick and of NetGravity, which are incorporated by reference in
this proxy statement/prospectus. It is also important that you read the
DoubleClick 1998 Annual Report on Form 10-K, as amended by annual report on Form
10-K/ A, which we incorporate by reference. See "Where You Can Find More
Information." You should not rely on the selected unaudited pro forma combined
financial information as an indication of the results of operations or financial
position that would have been achieved if the transaction with NetGravity had
taken place earlier or of the results of operations or financial position of
DoubleClick after the completion of these transactions.
The selected unaudited pro forma combined financial information gives effect
to the proposed merger of DoubleClick and NetGravity on a pooling of interests
basis. The DoubleClick and NetGravity unaudited pro forma combined balance sheet
data assume that the merger of DoubleClick and NetGravity took place on June 30,
1999, and combines the DoubleClick historical consolidated balance sheet with
NetGravity's historical consolidated balance sheet as of this date. The
DoubleClick and NetGravity unaudited pro forma combined statements of operations
data assume that the merger of DoubleClick and NetGravity took place as of the
beginning of the periods presented and combine DoubleClick's historical
consolidated statements of operations data for the years ended December 31, 1998
and 1997 and for the period from January 23, 1996 (inception) through December
31, 1996, and for the six months ended June 30, 1999 and 1998 with NetGravity's
historical consolidated statements of operations data for the years ended
December 31, 1998, 1997 and 1996, and for the six months ended June 30, 1999 and
1998. This presentation is consistent with the periods expected to be combined
after the date of the closing of the merger.
On June 13, 1999, DoubleClick entered into an agreement to merge with Abacus
Direct Corporation in a transaction expected to be accounted for as a pooling of
interests. See "--Recent Developments." The DoubleClick, NetGravity and Abacus
Direct Corporation unaudited combined financial data are based on the historical
consolidated financial statements and related notes of DoubleClick, NetGravity
and Abacus. This presentation is on the same basis as the DoubleClick,
NetGravity and Abacus unaudited pro forma combined financial data described
above and is consistent with the years expected to be combined after the closing
dates of the mergers with NetGravity and Abacus.
The selected unaudited pro forma combined financial data are presented for
illustrative purposes only and are not necessarily indicative of the combined
financial position or results of operations of future periods or the results
that actually would have been realized had the entities been a single entity
during these periods. Note also that the consummation of the merger of
DoubleClick and Abacus is NOT a condition to the merger of DoubleClick and
NetGravity. The selected unaudited pro forma combined financial data as of June
30, 1999 and for each of the periods ended December 31, 1998, 1997, and 1996,
and for the six months ended June 30, 1999 and 1998, are derived from the
unaudited pro forma condensed combined financial statements included elsewhere
in this proxy statement/prospectus and should be read in conjunction with those
statements and the related notes. See "Unaudited Pro Forma Condensed Combined
Financial Statements."
10
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
DOUBLECLICK INC. AND NETGRAVITY, INC.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
---------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996(1)
---------- ---------- ---------- ---------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS DATA:
Revenues............................................... $ 63,300 $ 34,632 $ 91,745 $ 36,955 $ 8,453
Gross profit........................................... 33,466 11,778 32,553 13,755 3,971
Total operating expenses............................... 56,524 27,973 65,314 29,092 11,760
Net loss applicable to common stockholders............. $ (18,388) $ (14,911) $ (29,465) $ (15,238) $ (7,819)
Net loss per share--basic and diluted.................. $ (0.42) $ (0.53) $ (0.90) $ (1.05) $ (0.42)
Weighted average shares used in per share
calculation--basic and diluted....................... 43,795 28,243 32,911 14,501 18,709
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1999
--------------
<S> <C>
(IN THOUSANDS)
UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments................................................. $ 498,031
Working capital................................................................................... 473,240
Total assets...................................................................................... 566,049
Convertible subordinated notes and other long term obligations.................................... 250,295
Stockholders' equity.............................................................................. 257,439
</TABLE>
- ------------------------
(1) Period from January 23, 1996 (inception) through December 31, 1996 regarding
DoubleClick.
11
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
DOUBLECLICK INC., NETGRAVITY, INC. AND ABACUS DIRECT CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE YEAR ENDED
30, DECEMBER 31,
---------------------- ----------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996(1)
---------- ---------- ---------- ---------- ----------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
DATA:
Revenues.............................................. $ 89,268 $ 53,081 $ 138,724 $ 67,926 $ 25,985
Gross profit.......................................... 52,971 26,000 69,951 38,784 17,752
Total operating expenses.............................. 68,690 37,004 84,921 42,612 19,171
Net loss applicable to common stockholders............ (13,811) (11,421) (18,039) (7,741) (3,954)
Net loss per share--basic and diluted................. $ (0.25) $ (0.30) $ (0.42) $ (0.32) $ (0.14)
Weighted average shares used in per share
calculation--basic and diluted...................... 54,167 38,420 43,124 24,524 28,258
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1999
--------------
<S> <C>
(IN THOUSANDS)
UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Cash, cash equivalents and investments............................................................ $ 521,594
Working capital................................................................................... 493,205
Total assets...................................................................................... 615,030
Convertible subordinated notes and other long term obligations.................................... 250,742
Stockholders' equity.............................................................................. 284,217
</TABLE>
- ------------------------
(1) Period from January 23, 1996 (inception) through December 31, 1996 regarding
DoubleClick.
12
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables reflect (a) the historical net loss and book value per
share of DoubleClick common stock, the historical net loss and book value per
share of NetGravity common stock and the historical net income and book value
per share of Abacus Direct Corporation common stock in comparison with the
unaudited pro forma net loss and book value per share after giving effect to the
proposed merger of DoubleClick with NetGravity and DoubleClick and NetGravity
with Abacus on a "pooling of interests" basis and (b) the equivalent historical
net loss and book value per share attributable to 0.28 shares of DoubleClick
common stock that will be received for each share of NetGravity common stock in
the merger and 1.05 shares of DoubleClick common stock that will be received for
each share of Abacus common stock in that merger. The information presented in
the following tables should be read in conjunction with the unaudited pro forma
condensed combined financial statements included in this proxy
statement/prospectus and the historical consolidated financial statements and
related notes of DoubleClick and the historical consolidated financial
statements and related notes of DoubleClick, NetGravity and Abacus which are
incorporated by reference in this proxy statement/prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996(4)
--------- --------- --------- --------- -----------
DOUBLECLICK HISTORICAL PER COMMON SHARE:
Net loss per common share--basic and diluted (2)........................ $ (0.32) $ (0.34) $ (0.60) $ (0.61) $ (0.18)
Book value per share (1)................................................ $ 3.45 $ 3.79
NETGRAVITY HISTORICAL PER COMMON SHARE:
Net loss per common share--basic and diluted (2)........................ $ (0.38) $ (1.42) $ (1.28) $ (2.46) $ (2.19)
Book value per share (1)................................................ $ 7.38 $ 1.63
DOUBLECLICK AND NETGRAVITY PRO FORMA COMBINED PER COMMON SHARE:
Net loss per DoubleClick share--basic and diluted (2)................... $ (0.42) $ (0.53) $ (0.90) $ (1.05) $ (0.42)
Net loss per equivalent NetGravity share--basic and diluted (3)......... $ (0.12) $ (0.15) $ (0.25) $ (0.29) $ (0.12)
Book value per DoubleClick share (1).................................... $ 5.76 $ 3.72
Book value per equivalent NetGravity share (3).......................... $ 1.61 $ 1.04
ABACUS HISTORICAL PER COMMON SHARE:
Net income per common share--basic (2).................................. $ 0.46 $ 0.36 $ 1.17 $ 0.78 $ 0.43
Net income per common share--diluted (2)................................ $ 0.44 $ 0.34 $ 1.12 $ 0.74 $ 0.40
Book value per share (1)................................................ $ 4.32 $ 3.68
DOUBLECLICK, NETGRAVITY AND ABACUS PRO FORMA COMBINED PER COMMON SHARE:
Net loss per DoubleClick share--basic and diluted (2)................... $ (0.25) $ (0.30) $ (0.42) $ (0.32) $ (0.14)
Net loss per equivalent NetGravity share--basic and diluted (3)......... $ (0.07) $ (0.08) $ (0.12) $ (0.09) $ (0.04)
Book value per DoubleClick share (1).................................... $ 5.16 $ 3.38
Book value per equivalent NetGravity share (3).......................... $ 1.44 $ 0.95
</TABLE>
- ------------------------------
(1) The historical book value per share is computed by dividing stockholders'
equity by the number of shares of common stock outstanding at June 30, 1999
and December 31, 1998. The pro forma combined book value per share is
computed by dividing pro forma stockholders' equity by the pro forma number
of shares of DoubleClick common stock outstanding as of June 30, 1999 and
December 31, 1998, assuming the mergers had occurred as of those dates.
(2) Basic net income (loss) per share is computed using the weighted average
number of shares of common stock outstanding during the period. Diluted net
income (loss) per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period. Common
equivalent shares consist of the incremental common shares issuable upon
conversion of the convertible preferred stock (using the if-converted
method) and shares issuable upon the exercise of stock options (using the
treasury stock method). Common equivalent shares are excluded from the
computations if their effect is antidilutive.
(3) The equivalent pro forma combined per NetGravity share is calculated by
multiplying the pro forma combined share amounts by the exchange ratio of
0.28 shares of DoubleClick common stock for each share of NetGravity common
stock.
(4) Period from January 23, 1996 (inception) through December 31, 1996 regarding
DoubleClick.
13
<PAGE>
MARKET PRICE INFORMATION
DOUBLECLICK MARKET PRICE DATA
DoubleClick's common stock has traded on the Nasdaq National Market under
the symbol "DCLK" since February 20, 1998. The following table sets forth the
range of high and low sales prices reported on the Nasdaq National Market for
DoubleClick common stock for the periods indicated, adjusted to reflect a
two-for-one stock split effected in the form of a dividend which became
effective on April 5, 1999.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL 1998
First Quarter (since February 20, 1998)...................................................... $ 18.50 $ 13.81
Second Quarter............................................................................... 24.88 15.44
Third Quarter................................................................................ 38.56 9.09
Fourth Quarter............................................................................... 29.00 6.75
FISCAL 1999
First Quarter................................................................................ $ 100.00 $ 22.00
Second Quarter............................................................................... 176.00 67.50
Third Quarter (through September 22, 1999)................................................... 125.25 60.50
</TABLE>
NETGRAVITY MARKET PRICE DATA
NetGravity's common stock has traded on the Nasdaq National Market under the
symbol "NETG" since June 12, 1998. The following table sets forth the range of
high and low sales prices reported on the Nasdaq National Market for NetGravity
common stock for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL 1998
Second Quarter (Since June 12, 1998)........................................................... 14.125 9.75
Third Quarter.................................................................................. 27.00 7.75
Fourth Quarter................................................................................. 26.00 6.875
FISCAL 1999
First Quarter.................................................................................. $ 43.31 $ 15.13
Second Quarter................................................................................. 66.88 15.81
Third Quarter (through September 22, 1999)..................................................... 34.25 16.00
</TABLE>
RECENT CLOSING PRICES
As of July 12, 1999, the last trading day before announcement of the
proposed merger, the closing prices per share on the Nasdaq National Market of
DoubleClick common stock was $94.00 and of NetGravity common stock was $27.50.
On September 22, 1999, the latest practicable trading day before the printing of
this proxy statement/prospectus, the closing prices per share of DoubleClick
common stock and NetGravity common stock on the Nasdaq National Market were
$118.88 and $32.50, respectively.
Because the market price of DoubleClick common stock is subject to
fluctuation, the market value of the shares of DoubleClick common stock that
holders of NetGravity common stock will receive in the merger may increase or
decrease prior to and following the merger. WE URGE STOCKHOLDERS TO OBTAIN
CURRENT MARKET QUOTATIONS FOR DOUBLECLICK COMMON STOCK AND NETGRAVITY COMMON
STOCK. WE CANNOT ASSURE YOU AS TO THE FUTURE PRICES OR MARKETS FOR DOUBLECLICK
COMMON STOCK OR NETGRAVITY COMMON STOCK.
14
<PAGE>
RISK FACTORS
BY VOTING IN FAVOR OF THE MERGER, NETGRAVITY STOCKHOLDERS WILL BE CHOOSING
TO INVEST IN DOUBLECLICK COMMON STOCK. AN INVESTMENT IN DOUBLECLICK COMMON STOCK
INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED
IN OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT/PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN DECIDING WHETHER TO VOTE FOR
THE MERGER. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THE BUSINESS AND
PROSPECTS OF NETGRAVITY OR DOUBLECLICK MAY BE SERIOUSLY HARMED. IN THAT CASE,
THE TRADING PRICE OF DOUBLECLICK COMMON STOCK MAY DECLINE, AND YOU MAY LOSE ALL
OR PART OF YOUR INVESTMENT.
RISKS RELATED TO THE MERGER
NETGRAVITY STOCKHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF DOUBLECLICK
COMMON STOCK AND, AS A RESULT, THEY WILL BEAR THE MARKET RISK OF A DECREASE IN
THE VALUE OF DOUBLECLICK SHARES ISSUED IN THE MERGER.
Upon the merger's completion, each share of NetGravity common stock will be
exchanged for 0.28 shares of DoubleClick common stock. There will be no
adjustment for changes in the market price of either NetGravity common stock or
DoubleClick common stock. In addition, neither NetGravity nor DoubleClick may
terminate the merger agreement or "walk away" from the merger and NetGravity may
not resolicit the vote of its stockholders solely because of changes in the
market price of DoubleClick common stock. Accordingly, the specific dollar value
of DoubleClick common stock that NetGravity stockholders will receive upon the
merger's completion will depend on the market value of DoubleClick common stock
when the merger is completed and may decrease from the date you submit your
proxy. The price of DoubleClick common stock is by nature subject to the general
price fluctuations in the market for publicly traded equity securities and has
experienced significant volatility. We urge you to obtain recent market
quotations for DoubleClick common stock and NetGravity common stock. We cannot
predict or give any assurances as to the market price of DoubleClick common
stock at any time before or after the completion of the merger.
IF WE DO NOT SUCCESSFULLY INTEGRATE NETGRAVITY'S OPERATIONS AND PERSONNEL OR
EFFECTIVELY MANAGE THE COMBINED COMPANY, WE MAY NOT ACHIEVE THE BENEFITS OF THE
MERGER AND MAY LOSE KEY PERSONNEL AND CUSTOMERS.
We entered into the merger agreement with the expectation that the merger
will result in significant benefits to NetGravity, DoubleClick and the
companies' stockholders. Achieving the benefits of the merger depends on the
timely, efficient and successful execution of a number of post-merger events,
including integrating the operations and personnel of the two companies. We will
need to overcome significant issues, however, in order to realize any benefits
or synergies from the merger. The successful execution of these post-merger
events will involve considerable risk and may not be successful. NetGravity is a
provider of online interactive marketing solutions. NetGravity's business model
has principally been to license software designed to enable its customers to
directly manage their online interactive marketing activities. DoubleClick is a
provider of advertising solutions for advertisers and Web publishers.
DoubleClick provides outsourced, service-based solutions to customers who choose
not to directly manage their online interactive marketing activities.
DoubleClick has little direct experience with NetGravity's primary business
model. Furthermore, NetGravity's principal offices are located in San Mateo,
California, while DoubleClick's principal offices are located in New York, New
York. There are currently no plans to relocate either of these principal
offices. In order for the merger to be successful, we must successfully
integrate NetGravity's operations and personnel with DoubleClick's operations
and personnel. Our failure to complete the integration successfully could result
in the loss of key personnel and customers.
15
<PAGE>
IF WE FAIL TO SUCCESSFULLY INTEGRATE OUR ADVERTISING SOLUTIONS OR DEVELOP
NEW PRODUCTS, WE WILL NOT INCREASE OR MAINTAIN OUR CUSTOMER BASE OR OUR
REVENUES.
We intend to initially incorporate the most advanced features and
functionality of each company's advertising solutions into the other company's
advertising solutions. We cannot assure you that either of our customers will
have any interest in our enhanced advertising solutions. If these enhancement
efforts fail, the benefits realized by this merger will diminish.
In addition, we intend after the merger to develop new products and services
that combine the knowledge and resources of the DoubleClick and NetGravity
businesses. We cannot assure you that these products or services will be
successful or that we can successfully integrate or realize the anticipated
benefits of the merger. As a result, we may not be able to increase or maintain
our customer base. To date, the companies have not thoroughly investigated the
obstacles, technological, market-driven or otherwise, to developing and
marketing these new products and services in a timely and efficient way. We
cannot assure you that DoubleClick will be able to overcome the obstacles in
developing new products and services, or that there will be a market for the new
products or services developed by DoubleClick after the merger. A failure or
inability like this could have a material adverse effect on the combined
company's business, financial condition and operating results or could result in
the loss of key personnel. In addition, the attention and effort devoted to the
integration of the two companies will significantly divert management's
attention from other important issues, and could seriously harm the combined
company.
IF THE COSTS ASSOCIATED WITH THE MERGER EXCEED THE BENEFITS REALIZED,
DOUBLECLICK MAY EXPERIENCE INCREASED LOSSES.
DoubleClick expects to incur a one-time charge of approximately $10.8
million related to the merger. If the benefits of the merger do not exceed the
costs associated with the merger, including any dilution to DoubleClick's
stockholders resulting from the issuance of shares in connection with the
merger, DoubleClick's financial results could be adversely affected, including
increased losses.
IF DOUBLECLICK DOES NOT SUCCESSFULLY INTEGRATE NETGRAVITY OR THE MERGER'S
BENEFITS DO NOT MEET THE EXPECTATIONS OF FINANCIAL OR INDUSTRY ANALYSTS, THE
MARKET PRICE OF DOUBLECLICK COMMON STOCK MAY DECLINE.
The market price of DoubleClick common stock may decline as a result of the
merger if:
- the integration of DoubleClick and NetGravity is unsuccessful;
- DoubleClick does not achieve the perceived benefits of the merger as
rapidly or to the extent anticipated by financial or industry analysts; or
- the effect of the merger on DoubleClick's financial results is not
consistent with the expectations of financial or industry analysts.
IF THE MERGER FAILS TO QUALIFY AS A POOLING OF INTERESTS BUT WE STILL
CONSUMMATE THE MERGER, DOUBLECLICK WOULD BE REQUIRED TO TAKE CHARGES AGAINST
EARNINGS IN FUTURE PERIODS, WHICH WOULD INCREASE THE AMOUNT OF ITS LOSSES.
If DoubleClick cannot account for the merger as a pooling of interests but
we still consummate the merger, a significant portion of the purchase price for
NetGravity will be allocated to goodwill and other intangible assets, which
would be amortized by DoubleClick over their estimated useful lives. As a
result, DoubleClick would take charges against its results for these periods,
which would materially and adversely affect DoubleClick's reported financial
results and, likely, the price of DoubleClick's common stock.
The availability of pooling of interests accounting treatment for the merger
depends upon circumstances and events occurring both before and after the
merger's completion. For example, no
16
<PAGE>
significant changes in the business of the combined company may occur, including
significant dispositions of assets, for a period of two years following the
effective time of the merger. Further, affiliates of DoubleClick and NetGravity
must not sell any shares of either DoubleClick or NetGravity capital stock for a
period beginning before the merger and ending on the day that DoubleClick
publicly announces financial results covering at least 30 days of combined
operations of DoubleClick and NetGravity after the merger. We do not expect that
30 days of combined financial results would be published sooner than January
2000. If affiliates of DoubleClick or NetGravity sell their shares of
DoubleClick common stock prior to that time, despite a contractual obligation
restricting this sale, the merger may not qualify for accounting as a pooling of
interests for financial reporting purposes.
NETGRAVITY'S OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY
INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER.
The directors and officers of NetGravity participate in arrangements and
have continuing indemnification against liabilities that provide them with
interests in the merger that are different from, or in addition to, yours. The
directors and officers of NetGravity may therefore have been more likely to vote
to approve the merger agreement and the merger than if they did not hold these
interests. NetGravity stockholders should consider whether these interests may
have influenced these directors and officers to support or recommend the merger.
See "The Merger--Interests of NetGravity's Officers and Directors in the
Merger."
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT NETGRAVITY'S STOCK
PRICE AND OPERATING RESULTS.
If the merger is not completed for any reason, NetGravity may be subject to
a number of material risks, including the following:
- NetGravity may be required to pay DoubleClick a termination fee of $30
million and/or reimburse DoubleClick for expenses;
- the price of NetGravity common stock may decline to the extent that the
current market price of NetGravity common stock reflects a market
assumption that the merger will be completed; and
- costs related to the merger, such as legal and accounting fees, must be
paid even if the merger is not completed.
If the merger is terminated and NetGravity's board of directors determines
to seek another merger or business combination, there can be no assurance that
NetGravity will be able to find a partner willing to pay an equivalent or more
attractive price than the price to be paid in the merger. In addition, while the
merger agreement is in effect, NetGravity is prohibited from soliciting,
initiating or encouraging or entering into certain extraordinary transactions,
such as a merger, sale of assets or other business combination, with any party
other than DoubleClick. As a result of this prohibition, NetGravity may lose an
opportunity for a transaction with another potential partner at a favorable
price.
UNCERTAINTIES ASSOCIATED WITH THE MERGER MAY CAUSE NETGRAVITY CUSTOMERS TO
DELAY OR DEFER DECISIONS CONCERNING NETGRAVITY OR MAY CAUSE NETGRAVITY TO LOSE
CUSTOMERS.
NetGravity customers may, in response to the announcement of the merger,
delay or defer decisions concerning NetGravity. For example, existing customers,
uncertain about the future support available for NetGravity's products and
services, may elect to postpone or cancel contemplated upgrades. For similar
reasons, prospective customers may decide against selecting NetGravity's
products and services prior to the consummation of the merger. In both cases,
NetGravity could experience a decrease in expected revenue and possibly a loss
of stature in the marketplace, as a consequence of the uncertainties associated
with the merger.
17
<PAGE>
UNCERTAINTIES ASSOCIATED WITH THE MERGER MAY CAUSE NETGRAVITY TO LOSE KEY
PERSONNEL.
Current and prospective NetGravity employees may experience uncertainty
about their future roles with DoubleClick until DoubleClick's strategies with
regard to NetGravity are announced or executed. Any uncertainty may adversely
affect NetGravity's ability to attract and retain key management, sales,
marketing and technical personnel.
IF DOUBLECLICK DOES NOT MANAGE THE INTEGRATION OF OTHER ACQUIRED COMPANIES
SUCCESSFULLY, IT MAY BE UNABLE TO ACHIEVE DESIRED RESULTS.
As a part of its business strategy, DoubleClick expects to enter into
additional business combinations and acquisitions, including the recently
proposed acquisition of Abacus. Acquisition transactions are accompanied by a
number of risks, including:
- the difficulty of assimilating the operations and personnel of the
acquired companies;
- the potential disruption of its ongoing business and distraction of
management;
- the difficulty of incorporating acquired technology and rights into
DoubleClick's products and services;
- unanticipated expenses related to technology integration;
- the maintenance of uniform standards, controls, procedures and policies;
- the impairment of relationships with employees and customers as a result
of any integration of new management personnel; and
- potential unknown liabilities associated with acquired businesses.
The combined company may not succeed in addressing these risks or any other
problems encountered in connection with these potential business combinations
and acquisitions, which could disrupt DoubleClick's business and cause increased
losses.
RISK RELATED TO DOUBLECLICK AND NETGRAVITY
In addition to the risks discussed above, DoubleClick and NetGravity are
subject to their own specific risks, including risks relating to their
respective business models, strategies, markets and legal and regulatory
environments. For a detailed discussion of these risks, please see the risk
factors included in each of DoubleClick's and NetGravity's reports filed with
the Commission under the Securities Exchange Act of 1934, which reports are
incorporated by reference into this proxy statement/ prospectus.
18
<PAGE>
FORWARD-LOOKING STATEMENTS IN THIS PROXY STATEMENT/PROSPECTUS
This proxy statement/prospectus and the documents incorporated by reference
into this proxy statement/prospectus contain forward-looking statements within
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 with respect to DoubleClick's and NetGravity's financial condition, results
of operations and business and the expected impact of the merger on
DoubleClick's financial performance. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions
indicate forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to differ materially from the results contemplated by
the forward-looking statements. In evaluating the merger, you should carefully
consider the discussion of risks and uncertainties in the section entitled "Risk
Factors" and in the documents incorporated by reference into this proxy
statement/prospectus.
19
<PAGE>
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to holders of NetGravity
common stock in connection with the solicitation of proxies by the NetGravity
board of directors for use at the special meeting of stockholders of NetGravity
to be held on Tuesday, October 26, 1999, and any adjournment or postponement of
the meeting.
This proxy statement/prospectus is first being furnished to stockholders of
NetGravity on or about September 24, 1999. This proxy statement/prospectus is
also furnished to NetGravity stockholders as a prospectus in connection with the
issuance by DoubleClick of shares of DoubleClick common stock as contemplated by
the merger agreement.
DATE, TIME AND PLACE
The special meeting will be held on Tuesday, October 26, 1999 at 8:00 a.m.,
local time, at the Residence Inn By Marriott, 2000 Winward Way, San Mateo,
California, 94404.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the special stockholders' meeting and any adjournment or postponement of
the special meeting, NetGravity stockholders will be asked:
- to consider and vote upon the adoption of the merger agreement and the
approval of the merger;
- to grant the NetGravity board of directors discretionary authority to
adjourn the special meeting to solicit additional votes for approval of
the merger agreement and the merger; and
- to transact such other business as may properly come before the special
meeting.
RECORD DATE
Only stockholders of record of NetGravity common stock at the close of
business September 20, 1999 are entitled to notice of and to vote at the special
meeting.
VOTING AND REVOCATION OF PROXIES
We request that NetGravity stockholders complete, date and sign the
accompanying proxy and promptly return it in the accompanying postage-paid
envelope or otherwise mail it to NetGravity. Brokers holding shares in "street
name" may vote the shares only if the beneficial stockholder provides
instructions on how to vote. Brokers will provide beneficial owners instructions
on how to direct the brokers to vote the shares. All properly executed proxies
that NetGravity receives prior to the vote at the special meeting, and that are
not revoked, will be voted in accordance with the instructions indicated on the
proxies. If no direction is indicated, the proxies will be voted to approve the
merger agreement and the merger. NetGravity's board does not currently intend to
bring any other business before the special meeting and, so far as NetGravity's
board knows, no other matters are to be brought before the special meeting. If
other business properly comes before the special meeting or any postponement or
adjournment, the proxies will vote in accordance with NetGravity's management's
own judgment.
Stockholders may revoke their proxies at any time prior to its use
- by delivering to the Secretary of NetGravity a signed notice of revocation
or a later-dated, signed proxy; or
20
<PAGE>
- by attending the special meeting and voting in person.
Attendance at the special meeting does not in itself constitute the
revocation of a proxy.
VOTE REQUIRED
As of the close of business on September 20, 1999, the record date, there
were 17,956,893 shares of NetGravity common stock outstanding and entitled to
vote. The holders of a majority of the outstanding shares of NetGravity common
stock must approve the merger agreement and the merger. The holders of a
majority of the shares of NetGravity common stock entitled to vote and that are
present or represented by proxy at the NetGravity meeting must approve the grant
to the NetGravity board of discretionary authority to adjourn the special
meeting to solicit additional votes. NetGravity stockholders have one vote per
share of NetGravity common stock owned on the record date.
As of August 31, 1999, the directors and executive officers of NetGravity
and their affiliates beneficially owned an aggregate of 2,870,463 shares of
NetGravity common stock (excluding any shares issuable upon the exercise of
options) or approximately 16% of the shares of NetGravity common stock
outstanding on that date. Under stockholder agreements in the form attached as
APPENDIX B to this proxy statement/prospectus, those stockholders have agreed to
vote all of their shares of NetGravity common stock for approval of the merger
agreement and the merger. As of August 31, 1999, directors and executive
officers of DoubleClick did not own any shares of NetGravity common stock. See
"The Merger--Interests of NetGravity's Officers and Directors in the Merger."
QUORUM; ABSTENTIONS AND BROKER NON-VOTES
The required quorum for the transaction of business at the special meeting
is a majority of the shares of NetGravity common stock issued and outstanding on
the record date. Abstentions and broker non-votes each will be included in
determining the number of shares present and voting at the meeting for the
purpose of determining the presence of a quorum. Because approval of the merger
agreement and the consummation of the merger requires the affirmative vote of a
majority of the outstanding shares of NetGravity common stock entitled to vote,
abstentions and broker non-votes will have the same effect as votes against the
merger agreement and the consummation of the merger. In addition, the failure of
a NetGravity stockholder to return a proxy or vote in person will have the
effect of a vote against the approval of the merger agreement and the merger.
Broker non-votes will not be included in the vote totals and will have no effect
on the outcome of the votes on the proposal to grant the NetGravity board
discretionary authority to adjourn the special meeting. Abstentions, however,
will have the same effect as a vote against these proposals. Brokers holding
shares for beneficial owners cannot vote on the actions proposed in this proxy
statement/prospectus without the beneficial owners' specific instructions.
Accordingly, NetGravity stockholders are urged to return the enclosed proxy card
marked to indicate their vote.
SOLICITATION OF PROXIES AND EXPENSES
NetGravity has retained the services of D.F. King & Co., Inc. to assist in
the solicitation of proxies from its stockholders. The fees to be paid to D.F.
King & Co. for its services by NetGravity are expected to be $4,000, plus D.F.
King & Co.'s expenses. NetGravity will bear its own expenses in connection with
the solicitation of proxies for its special meeting of stockholders, except that
DoubleClick and NetGravity each will pay one-half of all printing and filing
costs and expenses incurred in connection with the registration statement and
this proxy statement/prospectus and all fees required to be paid under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.
In addition to solicitation by mail, the directors, officers and employees
of NetGravity may solicit proxies from its stockholders by telephone, facsimile,
e-mail or in person. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward soliciting materials to beneficial
owners
21
<PAGE>
and will be reimbursed for their reasonable expenses incurred in sending proxy
materials to beneficial owners.
BOARD RECOMMENDATION
THE NETGRAVITY BOARD HAS DETERMINED THAT THE MERGER AGREEMENT AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, NETGRAVITY AND ITS STOCKHOLDERS.
ACCORDINGLY, THE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND HAS
UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT AND THE MERGER. In considering NetGravity board's recommendation,
NetGravity stockholders should be aware that NetGravity's directors and officers
have interests in the merger that are different from, or in addition to, those
of NetGravity's other stockholders, and that DoubleClick has agreed to provide
employment, severance and/or indemnification arrangements to the directors and
senior officers of NetGravity. See "The Merger--Interests of NetGravity's
Officers and Directors in the Merger."
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF NETGRAVITY. ACCORDINGLY, NETGRAVITY STOCKHOLDERS ARE
URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
NETGRAVITY STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. A transmittal form with instructions for the surrender of
NetGravity common stock certificates will be mailed to NetGravity stockholders
promptly after completion of the merger. For more information regarding the
procedures for exchanging NetGravity stock certificates for DoubleClick stock
certificates, see "The Merger Agreement and Related Agreements--Exchange of
NetGravity Stock Certificates for DoubleClick Stock Certificates."
22
<PAGE>
THE MERGER
THIS SECTION OF THE PROXY STATEMENT/PROSPECTUS DESCRIBES ASPECTS OF THE
PROPOSED MERGER THAT WE CONSIDER IMPORTANT, INCLUDING THE MERGER AGREEMENT.
WHILE WE BELIEVE THAT THE DESCRIPTION COVERS THE MATERIAL TERMS OF THE MERGER
AND THE RELATED TRANSACTIONS, THIS SUMMARY MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO NETGRAVITY STOCKHOLDERS. STOCKHOLDERS SHOULD
READ THE MERGER AGREEMENT AND THE OTHER DOCUMENTS WE REFER TO CAREFULLY AND IN
THEIR ENTIRETY FOR A MORE COMPLETE UNDERSTANDING OF THE MERGER.
BACKGROUND OF THE MERGER
DoubleClick and NetGravity have been familiar with each other for a number
of years. As participants and competitors in a new industry, Kevin O'Connor,
DoubleClick's Chief Executive Officer, and John Danner, NetGravity's Chairman of
the Board and then Chief Executive Officer, occasionally called each other in
the normal course of business over the years of the two companies' separate
development.
In late January 1999, Mr. O'Connor called Mr. Danner to set up a meeting for
early February to discuss a possible business combination.
On February 3, 1999, Mr. O'Connor, along with Kevin Ryan, DoubleClick's
President and Chief Operating Officer, Jeff Epstein, DoubleClick's Executive
Vice President, and Jennifer Haggerty, DoubleClick's Director of Strategic
Development, together with a representative of Goldman Sachs, DoubleClick's
financial advisor, met with Mr. Danner and Stephen Recht, NetGravity's Chief
Financial Officer and Secretary, Rick Jackson, then NetGravity's Vice President
of Marketing, and representatives of BancBoston Robertson Stephens, NetGravity's
financial advisor, at a hotel near NetGravity's San Mateo offices. At this
meeting, the parties provided overviews of their companies and discussed
potential business opportunities, including the concept of a merger.
On February 5, 1999 at a regularly scheduled DoubleClick board meeting,
members of senior management, together with representatives of Goldman Sachs,
presented to the board a list of several companies, including NetGravity, to
approach for joint business opportunities and potential strategic partnerships.
The board did not take any formal action on the matters discussed at the board
meeting.
Several calls took place between Goldman Sachs and BancBoston Robertson
Stephens over the few weeks after February 5, 1999, primarily to discuss the
terms of a potential proposal.
On February 17, 1999, the NetGravity board held a special meeting to review
and discuss negotiations between NetGravity and DoubleClick regarding a
potential merger of the two companies. Directors Danner, John Kohler, Jonathan
Lazarus and Alexander Slusky participated in the meeting by telephone. The
meeting was also attended by Mr. Recht, representatives of BancBoston Robertson
Stephens and representatives of Wilson Sonsini Goodrich & Rosati, outside legal
counsel to NetGravity. At the meeting the NetGravity board authorized and
directed Mr. Danner to continue to negotiate with DoubleClick, but did not
authorize Mr. Danner to agree to a merger with DoubleClick without the
NetGravity board's approval.
On February 18, 1999, Goldman Sachs submitted a written proposal on behalf
of DoubleClick to BancBoston Robertson Stephens, outlining the principal terms
under which DoubleClick was prepared to enter into a definitive merger agreement
to acquire NetGravity.
On February 19, 1999, the NetGravity board held a special meeting attended
by directors Danner, Kohler, Lazarus and Slusky. Also present at the meeting
were Mr. Recht, representatives of BancBoston Robertson Stephens and
representatives of Wilson Sonsini Goodrich & Rosati. At the meeting, the
NetGravity board discussed a term sheet delivered by DoubleClick to NetGravity
containing DoubleClick's proposed terms of a merger of the two companies. The
NetGravity board
23
<PAGE>
authorized and directed Mr. Danner to continue to negotiate with DoubleClick,
but did not authorize Mr. Danner to agree to a merger with DoubleClick without
the NetGravity board's approval.
On February 20, 1999, Messrs. O'Connor and Danner had a telephone call to
discuss the proposed business combination and to clarify the terms of
DoubleClick's proposal.
On February 21, 1999, the NetGravity board held a special meeting attended
by directors Danner, Kohler, Lazarus, Slusky and Amnon Landan. Also present at
the meeting were Messrs. Jackson and Recht, representatives of BancBoston
Robertson Stephens and representatives of Wilson Sonsini Goodrich & Rosati. At
the meeting, the NetGravity board discussed, reviewed and proposed responses to
a term sheet delivered by DoubleClick to NetGravity containing the proposed
terms of a merger of the two companies. The NetGravity board also reviewed the
potential strategic and economic benefits of a merger with DoubleClick. The
NetGravity board authorized and directed Mr. Danner to continue to negotiate
with DoubleClick within the parameters set by the NetGravity board at the
meeting.
On February 23, 1999, NetGravity, through BancBoston Robertson Stephens,
verbally countered DoubleClick's February 18th proposal.
In late February 1999 DoubleClick informed NetGravity, through Goldman
Sachs, that DoubleClick was not willing to change its initial proposal and,
therefore, the discussions were terminated.
DoubleClick and NetGravity subsequently, and independently, decided to raise
additional capital. In March 1999 DoubleClick raised $250 million through the
public sale of 4.75% Convertible Subordinated Notes. In April 1999, NetGravity
and certain stockholders of NetGravity sold approximately 4.7 million shares of
common stock, raising $114 million for NetGravity and $26 million for the
selling stockholders.
During the week of June 7, 1999, Mr. Ryan called Eric Spivey, the new Chief
Executive Officer of NetGravity, to set up an introductory meeting for the
following week, when Mr. Ryan would be on the West Coast for other business.
On June 18, 1999, Messrs. Ryan and Spivey met at a hotel near NetGravity's
San Mateo offices. They spent most of the meeting becoming acquainted with one
another, and also discussed Mr. Spivey's plans to aggressively explore a variety
of strategic alliances for NetGravity.
On June 24, 1999, Mr. Spivey and Mr. Ryan spoke by telephone. During the
conversation, they agreed that another meeting would be necessary only if
DoubleClick had serious intentions concerning any potential merger discussions
with NetGravity.
Under a letter agreement dated June 30, 1999, NetGravity engaged BancBoston
Robertson Stephens to act as its financial advisor in connection with possible
business combinations with several companies, including DoubleClick.
On July 1, 1999, Mr. Ryan called Mr. Spivey to indicate that DoubleClick was
interested in possibly meeting again in California the following week.
On July 2, 1999, Mr. Ryan called Mr. Spivey to confirm a meeting between the
companies on July 7, 1999 in California.
On July 7, 1999, Messrs. Ryan and Epstein, Dwight Merriman, DoubleClick's
Chief Technical Officer and a director of DoubleClick, and William Mills,
DoubleClick's Senior Director of Corporate Development, met with Messrs. Spivey
and Recht and Larry Wear, NetGravity's Vice President of Global Services, and a
representative of BancBoston Robertson Stephens at a hotel near NetGravity's San
Mateo offices. Prior to the meeting, the companies entered into a mutual
nondisclosure agreement pursuant to which, among other things, the companies
agreed to keep confidential any confidential information exchanged by and
between the companies. At this meeting, the parties provided updates of
24
<PAGE>
their companies' business operations and discussed whether there was an interest
in merging the companies.
On July 8, 1999, the parties re-convened to continue the prior day's
discussions. DoubleClick proposed terms under which it would be willing to
consider a merger. The terms included DoubleClick acquiring NetGravity in a
stock-for-stock merger to be treated as a pooling of interests for accounting
purposes. The parties discussed the business combination proposal throughout the
day and by mid-afternoon, had determined that the stage of their discussions
justified commencing mutual due diligence and negotiating definitive
documentation, all subject to the approval of each company's board of directors.
The parties also agreed that NetGravity would enter into a limited duration
exclusivity agreement with DoubleClick.
On July 9, 1999, the NetGravity board held a special meeting with all
directors participating by telephone. The meeting was also attended by Mr.
Recht, representatives of BancBoston Robertson Stephens and representatives of
Wilson Sonsini Goodrich & Rosati. The NetGravity board reviewed the business
condition of NetGravity and the material terms of the proposed merger as
presented to the NetGravity board by Mr. Spivey and by representatives of
BancBoston Robertson Stephens. Representatives of BancBoston Robertson Stephens
also made a presentation to the NetGravity board, which included historical
analyses of the proposed 0.28 exchange ratio, an analysis of the estimated
versus the actual performances of NetGravity's and DoubleClick's businesses, an
accretion/dilution analysis, an analysis of the trading price per share of
comparable public companies and comparable recent acquisitions, a comparison of
the premium per share offered by DoubleClick to comparable premiums paid per
share in selected comparable merger transactions and a review of possible
alternative partners with which NetGravity might pursue a business combination
or other strategic transaction. After noting Mr. Spivey's potential conflict of
interest resulting from certain provisions contained in Mr. Spivey's employment
agreement with NetGravity, as amended, under which Mr. Spivey's options to
purchase NetGravity common stock would accelerate upon consummation of the
merger and Mr. Spivey would receive cash severance payments, the NetGravity
board unanimously approved going forward with the negotiation of the merger
agreement.
On July 9, 1999, DoubleClick and NetGravity entered into an exclusivity
agreement pursuant to which NetGravity was precluded from discussing a potential
merger with any third party until July 14, 1999. On July 9, 1999, DoubleClick
retained Goldman Sachs to act as its financial advisor in connection with the
acquisition of NetGravity.
Also on July 9, 1999, Brobeck, Phleger & Harrison LLP, outside legal counsel
to DoubleClick, delivered to NetGravity a draft merger agreement and related
documents, including voting agreements with NetGravity's management and other
affiliates. From July 9, 1999 through July 12, 1999, representatives of
DoubleClick and NetGravity, together with their financial and legal advisors,
held numerous meetings to discuss business, legal and financial due diligence
issues, and to negotiate the terms and conditions of the merger agreement and
various other legal and financial issues. The terms of the legal agreements were
finalized on July 12, 1999.
On July 12, 1999, the board of directors of DoubleClick held a special
meeting. DoubleClick's management presented an update of the NetGravity business
operations and terms and rationale for the proposed merger. In addition, members
of DoubleClick's management and DoubleClick's legal advisors reported on the
results of their due diligence reviews of NetGravity. Brobeck, Phleger &
Harrison LLP outlined the directors' legal duties and responsibilities in
connection with considering the merger and reviewed the principal terms of the
merger agreement and related agreements. At this meeting, Goldman Sachs reviewed
the financial terms of the transaction. A representative of
PricewaterhouseCoopers LLP, DoubleClick's independent auditors, then discussed
the accounting treatment of the proposed merger. During and following these
presentations, DoubleClick's board engaged in a full discussion of the terms of
the proposed merger, including the strategic benefits of the
25
<PAGE>
combination. Following the discussion, the DoubleClick board members present at
the meeting unanimously approved the terms of the merger agreement and related
agreements, and the issuance of DoubleClick common stock in the merger.
On July 12, 1999, the NetGravity board held a special meeting with all
directors participating by telephone. The meeting was also attended by Mr.
Recht, representatives of BancBoston Robertson Stephens, representatives of
Wilson Sonsini Goodrich & Rosati and a representative of KPMG LLP, NetGravity's
independent auditors. The NetGravity board considered the status of the
negotiations between NetGravity and DoubleClick regarding the merger and Mr.
Spivey provided a detailed overview of the negotiations between the companies
during the previous four days and the material terms of the proposed merger
agreement and related agreements. In addition, Mr. Spivey reviewed with the
NetGravity board financial matters and the circumstances under which, pursuant
to the terms of the merger agreement, NetGravity could choose to merge with a
company other than DoubleClick after signing the merger agreement and the
implications of this decision. Representatives of Wilson Sonsini Goodrich &
Rosati then discussed with the NetGravity board the board's fiduciary
obligations to the NetGravity's stockholders in connection with the merger, as
well as the mechanics of the "no shop" provision contained in the merger
agreement. Representatives of BancBoston Robertson Stephens reviewed and updated
the analyses previously presented to the NetGravity board and orally stated its
opinion, which was later confirmed in writing, that the 0.28 exchange ratio was
fair to the NetGravity stockholders from a financial point of view. Following a
discussion, the NetGravity board unanimously approved the final terms of the
merger agreement and related agreements and determined to recommend to the
stockholders of NetGravity that they approve the merger agreement and the
merger.
The merger agreement and related transaction documents were signed by the
parties late in the evening of July 12, 1999. DoubleClick and NetGravity issued
a press release announcing the merger on the morning of July 13, 1999.
REASONS FOR THE MERGER; RECOMMENDATIONS OF BOARDS OF DIRECTORS
DOUBLECLICK'S REASONS FOR THE MERGER
The DoubleClick board unanimously concluded that the merger was fair to, and
in the best interests, of DoubleClick and its stockholders.
The decision by DoubleClick's board was based on several potential benefits
of the merger that it believes will contribute to the success of the combined
company. These potential benefits include:
- combining leading global Internet advertising companies to offer Internet
advertisers a complete spectrum of Internet advertising solutions;
- enhancing the functionality and performance of DoubleClick's Internet
advertising products with NetGravity's technology;
- increasing DoubleClick's customer base to include Time Warner, Excite@Home
and E*Trade;
- expanding DoubleClick's geographical reach into Asia, South America and
Europe;
- providing software and consulting and support services in order to enhance
highly efficient, targeted and measurable marketing and advertising
solutions through the Internet and other media;
- accelerating DoubleClick's growth rate;
- potentially shortening the period of operating at a loss; and
26
<PAGE>
- positioning DoubleClick to benefit from the expanding e-commerce market
and the emergence of broadband Internet services.
DoubleClick's board reviewed a number of factors in evaluating the merger,
including, but not limited to, the following:
- historical information concerning DoubleClick's and NetGravity's
respective businesses, financial performance and condition, operations,
technology and management;
- DoubleClick management's view of the financial condition, results of
operations and businesses of DoubleClick and NetGravity before and after
giving effect to the merger and the DoubleClick board's determination of
the merger's effect on stockholder value;
- current financial market conditions and historical stock market prices,
volatility and trading information;
- the determination of members of NetGravity's senior management to enter
new employment agreements and non-competition and non-disclosure
agreements to be effective upon consummation of the merger;
- the consideration NetGravity stockholders will receive in the merger in
light of comparable merger transactions;
- the belief that the terms of the merger agreement are reasonable;
- the impact of the merger on DoubleClick's customers and employees;
- results of the due diligence investigation conducted by DoubleClick's
management, accountants and counsel of NetGravity; and
- the expectation that the merger will be accounted for as a pooling of
interests.
The DoubleClick board also identified and considered a number of potentially
negative factors in its deliberations concerning the merger including the
following:
- the risk that the potential benefits of the merger may not be realized;
- the possibility that the merger may not be consummated, even if approved
by NetGravity's stockholders;
- the risk of management and employee disruption associated with the merger,
including the risk that despite the efforts of the combined company, key
technical, sales and management personnel might not remain employed by the
combined company; and
- other applicable risks described in this proxy statement/prospectus under
"Risk Factors."
DoubleClick's board concluded, however, that, on balance, the merger's
potential benefits to DoubleClick and its stockholders outweighed the associated
risks. The discussion of the information and factors considered by DoubleClick's
board is not intended to be exhaustive. In view of the variety of factors
considered in connection with its evaluation of the merger, DoubleClick's board
did not find it practicable to, and did not quantify or otherwise assign
relative weight to, the specific factors considered in reaching its
determination.
NETGRAVITY'S REASONS FOR THE MERGER
The NetGravity board has determined that the merger is fair to, and in the
best interests of, NetGravity and its stockholders and has determined to
recommend that the stockholders approve the merger agreement and the merger.
27
<PAGE>
The decision by NetGravity's board was based on several potential benefits
of the merger including:
- combining leading global Internet advertising companies to offer Internet
advertisers, publishers and vendors a broad spectrum of Internet software
and service solutions;
- enhancing the opportunities to offer NetGravity's solutions to a larger,
more diverse and more geographically dispersed customer base;
- significantly expanding a New York and East Coast presence in terms of
local senior executives, sales force and customer support personnel;
- becoming part of a significantly larger organization with greater
resources, scope of operations and access to capital on attractive terms;
- broadening access to transaction-based data services, thus potentially
enhancing the value of NetGravity's software and service solutions to its
customers;
- accelerating new product development and features for current and future
e-commerce solutions;
- accelerating the introduction and improving the scalability of
NetGravity's future service bureau offerings; and
- allowing NetGravity stockholders the opportunity to participate in the
potential growth of the combined company after the merger.
The decision of the NetGravity board was the result of its careful
consideration of a range of strategic alternatives, including potential business
combinations and relationships with DoubleClick and other companies in the
pursuit of a long-term business strategy for NetGravity.
The NetGravity board's primary consideration was to identify and secure the
alternative that would provide the best strategic fit for NetGravity and to
provide long-term stockholder value to NetGravity stockholders. In this regard,
the NetGravity board concluded that the merger with DoubleClick represents the
best transaction among several alternatives considered by the NetGravity board.
In reaching this determination, the NetGravity board considered a number of
factors including:
- the exchange ratio in the merger and implied per share price, which
compares favorably according to a number of applicable valuation
methodologies, including an analysis of companies comparable to NetGravity
and transactions comparable to the merger;
- the opinion of BancBoston Robertson Stephens, delivered orally on July 12,
1999, and later confirmed in writing and more fully described in "Opinion
of NetGravity's Financial Advisor," that as of such date, and subject to
assumptions made, matters considered and limitations on the review set
forth in its opinion, the share exchange ratio in the merger is fair to
NetGravity stockholders from a financial point of view.
- historical information concerning DoubleClick's and NetGravity's
respective businesses, financial performance and condition, operations,
technology and management;
- NetGravity management's view of the financial condition, results of
operations and businesses of DoubleClick and NetGravity before and after
giving effect to the merger and the NetGravity board's determination of
the merger's effect on stockholder value;
- current financial market conditions and historical stock market prices,
volatility and trading information;
- the consideration NetGravity stockholders will receive in the merger in
light of comparable merger transactions;
- the belief that the terms of the merger agreement are reasonable;
28
<PAGE>
- the impact of the merger on NetGravity's customers and employees;
- results of the due diligence investigation of DoubleClick conducted by
NetGravity's management, accountants and counsel; and
- the expectation that the merger will be accounted for as a pooling of
interests.
In reviewing its alternatives and making its determination, the NetGravity
board also reviewed:
- possible synergistic and expansion opportunities for the combined company;
- the current and prospective business environment in which NetGravity
operates; and
- the competitive environment for online advertising and interactive
marketing companies generally and the trend of such companies toward
offering a complete spectrum of Internet advertising solutions.
The NetGravity board also reviewed with its legal advisors:
- the terms and conditions of the merger agreement;
- voting agreements;
- the events triggering payment of the termination fee; and
- the limitations on the ability of NetGravity to negotiate with other
companies regarding an alternative transaction, and the potential effect
these provisions would have on NetGravity's receipt of alternative
proposals that could be superior to the merger with DoubleClick.
The NetGravity board also considered a number of potentially negative
factors in its deliberations concerning the merger, including:
- the risk that because the exchange ratio will not be adjusted for changes
in the market price of either DoubleClick common stock or NetGravity
common stock, the per share value of the consideration to be received by
NetGravity stockholders might be significantly less than the price per
share implied by the exchange ratio immediately prior to the announcement
of the merger;
- the relative volatility of the market value of DoubleClick common stock
compared to the securities of other companies with whom NetGravity was
considering a business combination transaction and other companies that
are similar to DoubleClick;
- the risk that the merger might not be consummated;
- the potential loss of revenues and business opportunities for NetGravity
as a result of confusion in the marketplace as a result of the
announcement of the merger, and the possible exploitation of such
confusion by NetGravity's and DoubleClick's competitors;
- the possibility of management disruption associated with the merger and
the integration of the companies' operations, and the risk that, despite
the efforts of the combined company, key management and technical
personnel of NetGravity might not continue with the combined company;
- the risk that the benefits sought to be achieved by the merger will not be
realized; and
- other applicable risks described in this proxy statement/prospectus under
"Risk Factors."
NetGravity's board concluded, however, that, on balance, the merger's
potential benefits to NetGravity and its stockholders outweighed the associated
risks. The discussion of the information and factors considered by NetGravity's
board is not intended to be exhaustive. In view of the variety of factors
considered in connection with its evaluation of the merger, NetGravity's board
did not find it
29
<PAGE>
practicable to, and did not quantify or otherwise assign relative weight to, the
specific factors considered in reaching its determination.
FOR THE REASONS DISCUSSED ABOVE, NETGRAVITY'S BOARD HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND HAS DETERMINED THAT THE MERGER IS ADVISABLE AND FAIR
TO, AND IN THE BEST INTERESTS OF, NETGRAVITY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT NETGRAVITY STOCKHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE MERGER.
In considering the recommendation of NetGravity's board with respect to the
merger agreement, NetGravity stockholders should be aware that directors and
officers of NetGravity have interests in the merger that are different from, or
are in addition to, the interests of NetGravity stockholders generally. Please
see "--Interests of NetGravity's Officers and Directors in the Merger."
OPINION OF NETGRAVITY'S FINANCIAL ADVISOR (SEE APPENDIX C FOR A COPY OF
BANCBOSTON ROBERTSON STEPHENS' FULL OPINION)
Under a letter agreement dated June 30, 1999, NetGravity engaged BancBoston
Robertson Stephens to act as its financial advisor in connection with a possible
business combination with specified companies, and to render an opinion as to
the fairness of a transaction, from a financial point of view, to holders of
shares of NetGravity common stock (other than DoubleClick or any of its
affiliates).
On July 12, 1999, at a meeting of the NetGravity board held to evaluate the
proposed merger BancBoston Robertson Stephens delivered to NetGravity's board
its oral opinion that, as of July 12, 1999 and based on the matters considered
and the limitations on the review undertaken described in the opinion, the 0.28
exchange ratio was fair from a financial point of view to holders of shares of
NetGravity common stock (other than DoubleClick or any of its affiliates) and
approved the merger. Shortly thereafter, BancBoston Robertson Stephens delivered
a written opinion, dated July 12, 1999 to the same effect. BancBoston Robertson
Stephens has consented to the use of its opinion in this proxy
statement/prospectus and the full text of this opinion is reprinted as APPENDIX
C to this proxy statement/prospectus. No limitations were imposed by
NetGravity's board on BancBoston Robertson Stephens with respect to the
investigations made or procedures followed by it in furnishing its opinion. The
0.28 exchange ratio was determined through negotiations between the management
of Netgravity and DoubleClick. Although BancBoston Robertson Stephens did assist
the management of NetGravity in those negotiations, it was not asked by, and did
not recommend to, NetGravity that any specific exchange ratio constituted the
appropriate exchange ratio for the merger.
You should consider the following when reading the discussion of the opinion
of NetGravity's financial advisor in this document:
- We urge you to read carefully the entire opinion of BancBoston Robertson
Stephens, which is set forth in APPENDIX C to this proxy
statement/prospectus and is incorporated by reference.
- The following description of the BancBoston Robertson Stephens Opinion is
qualified by reference to the full opinion located in APPENDIX C to this
proxy statement/prospectus. The full opinion sets forth, among other
things, the assumptions by BancBoston Robertson Stephens, the matters it
considered and the limitations on the review undertaken.
- The BancBoston Robertson Stephens opinion was prepared for the benefit and
use of the NetGravity board in its consideration of the merger and does
not constitute a recommendation to stockholders of NetGravity as to how
they should vote at the special meeting, or take any other action, in
connection with the merger.
- The BancBoston Robertson Stephens opinion does not address the relative
merits of the merger and any other transactions or business strategies
discussed by the NetGravity board as
30
<PAGE>
alternatives to the merger agreement or the underlying business decision
of the NetGravity board to proceed with or effect the merger.
Although developments following the date of the BancBoston Robertson
Stephens opinion may affect the opinion, BancBoston Robertson Stephens assumed
no obligation to update, revise or reaffirm its opinion. The BancBoston
Robertson Stephens opinion is necessarily based upon market, economic and other
conditions that were in effect on, and information made available to BancBoston
Robertson Stephens as of, the date of the opinion. You should understand that
subsequent developments may affect the conclusion expressed in the BancBoston
Robertson Stephens opinion, and that BancBoston Robertson Stephens disclaims any
undertaking or obligation to advise any person of any change in any fact or
matter affecting its opinion. The BancBoston Robertson Stephens opinion is
limited to the fairness, from a financial point of view and as of the date
thereof, of the 0.28 exchange ratio to the holders of shares of NetGravity
common stock (other than DoubleClick or any of its affiliates).
OPINION AND ANALYSIS OF BANCBOSTON ROBERTSON STEPHENS
In connection with the preparation of the BancBoston Robertson Stephens
opinion, BancBoston Robertson Stephens:
- reviewed certain publicly available statements and other business and
financial information of NetGravity and DoubleClick, respectively;
- reviewed certain internal financial statements and other financial and
operating data concerning NetGravity prepared by NetGravity's management;
- reviewed certain financial forecasts and other forward looking financial
information relating to NetGravity prepared by the management of
NetGravity;
- reviewed with DoubleClick the publicly available estimates of research
analyses relating to it;
- held discussions with the respective managements of NetGravity and
DoubleClick concerning the businesses, past and current operations,
financial condition and future prospects of both NetGravity and
DoubleClick, independently and combined, including discussions with the
managements of NetGravity and DoubleClick concerning their views regarding
the strategic rationale for the merger;
- reviewed the financial terms and conditions set forth in the draft merger
agreement;
- reviewed the stock price and trading history of NetGravity and
DoubleClick;
- compared the financial performance of NetGravity and DoubleClick and the
prices and trading activity of NetGravity's common stock and DoubleClick's
common stock with that of certain other publicly traded companies
comparable with NetGravity and DoubleClick, respectively;
- compared the financial terms of the merger with the financial terms, to
the extent publicly available, of other transactions that BancBoston
Robertson Stephens deemed relevant;
- reviewed the pro forma impact of the merger on DoubleClick's revenues per
share;
- reviewed and considered in the analysis, information prepared by members
of management of NetGravity and DoubleClick relating to the relative
contributions of NetGravity and DoubleClick to the combined company;
- participated in discussions and negotiations among representatives of
NetGravity and DoubleClick and their financial and legal advisors; and
- made other studies and inquiries, and reviewed other data, as it deemed
relevant.
31
<PAGE>
In its review and analysis, and in arriving at its opinion, BancBoston
Robertson Stephens assumed and relied upon the accuracy and completeness of all
the financial and other information provided to it (including information
furnished to it orally by management of NetGravity and DoubleClick) or publicly
available and neither attempted independently to verify, nor assumed
responsibility for verifying, any of such information. BancBoston Robertson
Stephens relied upon the assurances of the managements of NetGravity and
DoubleClick that they were not aware of any facts that would make the
information inaccurate or misleading. Furthermore, BancBoston Robertson Stephens
did not obtain or make, or assume responsibility for obtaining or making, any
independent evaluation or appraisal of the properties or assets and liabilities
(contingent or otherwise) of NetGravity or DoubleClick, nor was it furnished
with any such evaluations or appraisals.
With respect to the financial forecasts and projections (and the assumptions
and bases therefor) for each of NetGravity and DoubleClick that BancBoston
Robertson Stephens reviewed, upon the advice of the managements of NetGravity
and DoubleClick, BancBoston Robertson Stephens assumed that:
- these forecasts and projections were reasonably prepared in good faith on
the basis of reasonable assumptions;
- these forecasts and projections reflected the best currently available
estimates and judgments as to the future financial condition and
performance of NetGravity and DoubleClick; and
- these projections and forecasts would be realized in the amounts and in
the time periods currently estimated.
In this regard, BancBoston Robertson Stephens noted that each of NetGravity
and DoubleClick faces exposure to the Year 2000 problem. BancBoston Robertson
Stephens did not undertake any independent analysis to evaluate the reliability
or accuracy of the assumptions made by the managements of NetGravity and
DoubleClick with respect to the potential effect that the Year 2000 problem
might have on their forecasts.
In addition, BancBoston Robertson Stephens assumed that:
- the merger will be consummated upon the terms set forth in the draft
merger agreement made available to it without material alteration,
including, among other things, that the merger will be accounted for as a
"pooling-of-interests" business combination in accordance with U.S.
generally accepted accounting principles;
- the merger will be treated as a tax-free "reorganization" as defined in
the Internal Revenue Code of 1986, as amended; and
- the historical financial statements of each of NetGravity and DoubleClick
reviewed by it were prepared and fairly presented in accordance with U.S.
generally accepted accounting principles consistently applied.
BancBoston Robertson Stephens relied as to all legal matters relevant to
rendering its opinion on the advice of its legal counsel.
BancBoston Robertson Stephens expressed no opinion as to:
- the value of any employee arrangements or other arrangements entered into
in connection with the merger;
- any tax or other consequences that may result from the merger; or
- the value of the DoubleClick common stock when issued to Netgravity's
stockholders in connection with the merger or the price at which the
shares of DoubleClick common stock that are issued in connection with the
merger will be traded in the future.
32
<PAGE>
The following is a summary of the material financial analyses performed by
BancBoston Robertson Stephens in connection with rendering its opinion. The
summary of the financial analyses is not a complete description of all of the
analyses performed by BancBoston Robertson Stephens. Certain of the information
in this section is presented in tabular form. IN ORDER TO BETTER UNDERSTAND THE
FINANCIAL ANALYSES PERFORMED BY BANCBOSTON ROBERTSON STEPHENS, THESE TABLES MUST
BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE BANCBOSTON ROBERTSON
STEPHENS OPINION IS BASED ON THE TOTALITY OF THE VARIOUS ANALYSES WHICH IT
PERFORMED, AND NO PARTICULAR PORTION OF THE ANALYSIS HAS ANY MERIT STANDING
ALONE.
COMPARABLE COMPANY ANALYSIS. Using publicly available information,
BancBoston Robertson Stephens analyzed, among other things, the trading
multiples of NetGravity and the following selected publicly traded companies in
the Internet advertising/marketing serving segment:
- 24/7 Media
- AdForce
- Broadvision
- DoubleClick
- Flycast
- Net Perceptions
- Vignette
- WebTrends
REVENUES. As set forth in the following table, applying a range of
multiples for these companies for calendar years 1999 and 2000 to corresponding
revenue data for NetGravity resulted in the following range of implied exchange
ratios and equity values for calendar years 1999 and 2000.
<TABLE>
<CAPTION>
IMPLIED
NETGRAVITY
RANGE OF IMPLIED EQUITY VALUE
CALENDAR YEAR MULTIPLES EXCHANGE RATIO PER SHARE
- -------------------------------------- --------------- ---------------- -----------------
<S> <C> <C> <C>
1999.................................. 20.0x to 30.0x 0.316x--0.441x $32.57--$45.44
2000.................................. 9.0x to 17.0.x 0.268x--0.447x $27.55--$45.98
Mean: 0.368
</TABLE>
REVENUE GROWTH RATE DISPARITY. BancBoston Robertson Stephens also analyzed
similar trading multiples for NetGravity and the comparable companies by
applying a discount factor to the multiples to reflect lower revenue growth for
NetGravity compared to the comparable companies. As set forth in the following
table, BancBoston Robertson Stephens applied a discount factor of 0.75 to the
selected
33
<PAGE>
multiples for each period. Applying these multiples, adjusted for the discount
factor, for these companies to NetGravity's estimated net revenues for calendar
1999 and 2000 resulted in the following range of implied exchange ratios for
1999 and 2000.
<TABLE>
<CAPTION>
IMPLIED
NETGRAVITY
RANGE OF DISCOUNT IMPLIED EQUITY VALUE
CALENDAR YEAR MULTIPLES FACTOR EXCHANGE RATIO PER SHARE
- ---------------------------- --------------- --------- ---------------- -----------------
<S> <C> <C> <C> <C>
1999........................ 20.0x to 30.0x 0.75 0.254x--0.348x $26.13--$35.79
2000........................ 9.0x to 17.0x 0.75 0.217x--0.352x $22.37--$36.19
Mean: 0.293x
</TABLE>
PRECEDENT TRANSACTION ANALYSIS. BancBoston Robertson Stephens analyzed the
aggregate value and implied transaction value multiples paid or proposed to be
paid in selected precedent transactions in the Internet content and service
industry, including:
Abacus Direct/DoubleClick (June 14, 1999)
TeleB@nc Financial/E*Trade (June 1, 1999)
WebMD, Inc./Healtheon (May 20, 1999)
Broadcast.com/Yahoo! (April 1, 1999)
Zip2/Compaq (Alta Vista) (February 16, 1999)
Shopping.com/Compaq (Alta Vista) (February 16, 1999)
MovieFone/AOL (February 1, 1999)
Geocities/Yahoo! (January 28, 1999)
Excite/At Home (January 19, 1999)
Netscape/AOL (November 24, 1998)
LinkExchange/Microsoft (November 5, 1998)
N2K/CDnow (October 22, 1998)
Wired Digital/Lycos (October 5, 1998)
WebLogic, Inc./BEA Systems Inc. (September 28, 1998)
CitySearch/USA Networks (September 20, 1998)
CKS Group, Inc./USWeb Corporation (September 20, 1998)
C2B Technologies/Inktomi Corporation (September 1, 1998)
WhoWhere?/Lycos, Inc. (August 11, 1998)
Reel.com/Hollywood Entertainment (July 30, 1998)
NetDynamics/Sun Microsystems (July 1, 1998)
Infoseek/Disney (June 18, 1998)
Fire Fly Network/Microsoft (April 13, 1998)
Tripod, Inc./Lycos, Inc. (February 3, 1998)
Hotmail/Microsoft (January 14, 1998)
Software Artistry/Tivoli Systems (December 18, 1997)
34
<PAGE>
Kiva Software/Netscape Communications (November 24, 1997)
Web TV Networks/Microsoft (April 7, 1997)
BancBoston Robertson Stephens compared, among other things, the aggregate
value in these transactions as a multiple of the preceding twelve months'
revenues ("LTM"), the following 12 months' revenues ("NTM") and projected
calendar year 2000 revenues. Applying these multiples to similar revenue figures
for NetGravity resulted in the following range of implied exchange ratios.
<TABLE>
<CAPTION>
IMPLIED
NETGRAVITY
RANGE OF IMPLIED EQUITY VALUE
REVENUES MULTIPLES EXCHANGE RATIO PER SHARE
- -------------------------------------- --------------- ---------------- -----------------
<S> <C> <C> <C>
LTM................................... 10.0x to 25.0x .136x--.242x $14.05--$24.90
NTM................................... 6.0x to 15.0x .155x--.289x $15.97--$29.70
Calendar Year 2000.................... 5.0x to 12.0x .178x--.335x $18.34--$34.46
Premium to Market..................... 40% to 60% .296x--.338x $30.45--$34.80
Mean: 0.246x
</TABLE>
No company, transaction or business used in the COMPARABLE COMPANY ANALYSIS
or the SELECTED PRECEDENT TRANSACTION ANALYSIS as a comparison is identical to
NetGravity, DoubleClick or the merger. Accordingly, an analysis of the results
of the foregoing is not entirely mathematical; rather it involves complex
considerations and judgments concerning differences in financial and operating
characteristics and other factors that could affect the acquisition, public
trading and other values of the comparable companies or the business segment,
company or transactions to which they are compared.
EXCHANGE RATIO AND IMPLIED PREMIUM ANALYSIS. BancBoston Robertson Stephens
reviewed and analyzed historical ratios of the daily per share closing prices of
NetGravity common stock and DoubleClick common stock over various periods ending
July 9, 1999. BancBoston Robertson Stephens noted that NetGravity's share price
rose significantly since July 1, 1999 on speculation of a possible merger with
DoubleClick. The following table sets forth the average ratios of closing prices
for the two companies for various periods ending July 9, 1999 and the implied
premium (discount) of the exchange ratios to the closing prices:
<TABLE>
<CAPTION>
RATIO OF CLOSING PRICES OF PREMIUM (DISCOUNT) OF
NETGRAVITY COMMON STOCK TO EXCHANGE RATIO TO CLOSING
TIME PERIOD DOUBLECLICK COMMON STOCK PRICE RATIO
- ---------------------------------------- --------------------------- ---------------------------
<S> <C> <C>
On July 9, 1999......................... 0.288 (2.7)%
Last 10 days............................ 0.252 11.3%
Last 20 days............................ 0.237 18.2%
Last 30 days............................ 0.229 22.2%
Last 60 days............................ 0.241 16.0%
Last 90 days............................ 0.274 2.2%
Last 254 days........................... 0.596 (53.0)%
</TABLE>
CONTRIBUTION ANALYSIS. BancBoston Robertson Stephens analyzed the
respective contributions of NetGravity and DoubleClick to the estimated revenues
of the combined company for fiscal years 1999 and 2000. The contribution
analysis assumed consummation of the acquisition by DoubleClick of
35
<PAGE>
Abacus Direct. The actual results achieved by the combined company may vary from
projected results and the variations may be material.
<TABLE>
<CAPTION>
DOUBLECLICK'S
NETGRAVITY'S CONTRIBUTIONS IMPLIED
CONTRIBUTIONS TO TO COMBINED IMPLIED NETGRAVITY
COMBINED COMPANY'S NETGRAVITY EQUITY IMPLIED
COMPANY'S ESTIMATED EQUITY VALUE PER EXCHANGE
FISCAL YEAR ESTIMATED REVENUE REVENUES VALUATION SHARE RATIO
- -------------------------------------------- ----------------- --------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1999........................................ 8.8% 91.2% $ 679 million $ 34.88 0.339
2000........................................ 8.3% 91.7% $ 647 million $ 33.24 0.323
</TABLE>
INTERNET MARKET LEADERS VS. MARKET FOLLOWERS DISPARITY. Based on the above
contribution analysis, BancBoston Robertson Stephens adjusted the implied equity
value of NetGravity to reflect the mean revenue multiple disparity of 3.9x
between firms that it considered Internet market "leaders" and Internet market
"followers." Applying this multiple adjustment to NetGravity's estimated implied
equity value for calendar 1999 and 2000 resulted in the following implied
exchange ratios for 1999 and 2000.
<TABLE>
<CAPTION>
IMPLIED
IMPLIED NETGRAVITY
NETGRAVITY EQUITY VALUE PER IMPLIED
FISCAL YEAR EQUITY VALUATION SHARE EXCHANGE RATIO
- --------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
1999................................... $ 274 million $ 14.02 0.136
2000................................... $ 266 million $ 13.60 0.132
</TABLE>
GROWTH RATE DISPARITY. Based on the above contribution analysis, BancBoston
Robertson Stephens adjusted the implied equity value of NetGravity to reflect a
lower revenue growth rate for NetGravity as compared to the industry mean.
Applying this adjustment to NetGravity's estimated implied aggregate value for
calendar 1999 and 2000 resulted in the following implied exchange ratios for
1999 and 2000.
<TABLE>
<CAPTION>
IMPLIED
IMPLIED NETGRAVITY
NETGRAVITY EQUITY VALUE PER IMPLIED
FISCAL YEAR EQUITY VALUATION SHARE EXCHANGE RATIO
- --------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
1999................................... $ 542 million $ 27.76 0.270
2000................................... $ 518 million $ 26.54 0.258
</TABLE>
PRO FORMA MERGER ANALYSIS. BancBoston Robertson Stephens analyzed the
impact of the merger on the revenues of the combined company for fiscal years
1999 and 2000 based on publicly available research for NetGravity and
DoubleClick. Without taking into account certain cost savings that the combined
company may realize in its operations, the results of this analysis suggested
that the merger accretive in fiscal year 1999 and would be dilutive in fiscal
year 2000. The following table summarizes the results of this analysis:
<TABLE>
<S> <C>
Fiscal year 1999 estimated net revenue per share accretion......... 0.3%
Fiscal year 2000 estimated net revenue per share (dilution)........ (0.2)%
</TABLE>
The actual results achieved by the combined company may vary from projected
results and such variations may be material.
OTHER FACTORS. While the foregoing summary describes the analysis and
factors that BancBoston Robertson Stephens deemed material in its presentation
to the NetGravity board, it is not a comprehensive description of all analysis
and factors considered by BancBoston Robertson Stephens. The preparation of a
fairness opinion is a complex process that involves various determinations as to
the most appropriate and relevant methods of financial analysis and the
application of these methods
36
<PAGE>
to the particular circumstances. Therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, BancBoston Robertson Stephens did not attribute any particular weight
to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, BancBoston Robertson Stephens believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create a misleading or incomplete view of the evaluation process underlying its
opinion. Several analytical methodologies were employed and no one method of
analysis should be regarded as critical to the overall conclusion reached by
BancBoston Robertson Stephens. Each analytical technique has inherent strengths
and weaknesses, and the nature of the available information may further affect
the value of particular techniques. The conclusion reached by BancBoston
Robertson Stephens is based on all analyses and factors taken as a whole and
also on application of BancBoston Robertson Stephens' own experience and
judgment. This conclusion may involve significant elements of subjective
judgment and qualitative analysis. BancBoston Robertson Stephens therefore gives
no opinion as to the value or merit standing alone of any one or more parts of
the analysis it performed. In performing its analyses, BancBoston Robertson
Stephens made numerous assumptions with respect to industry performance, general
business and other conditions and matters many of which are beyond the control
of NetGravity or BancBoston Robertson Stephens. Any estimates contained in these
analyses are not necessarily indicative of actual values or predicative of
future results or values, which may be significantly more or less favorable than
those suggested by these analyses. Accordingly, analyses relating to the value
of businesses do not purport to be appraisals or to reflect the prices at which
these businesses actually may be sold in the future, and these estimates are
inherently subject to uncertainty. Furthermore, no opinion is being expressed as
to the prices at which shares of NetGravity common stock or DoubleClick common
stock may be traded at any future time.
NetGravity engaged BancBoston Robertson Stephens under a letter agreement
dated June 30, 1999. The agreement provides that, for its services, BancBoston
Robertson Stephens is entitled to receive a transaction fee based on an agreed
formula. Assuming under the formula a per share price of DoubleClick common
stock on the last trading day prior to the consummation of the merger of $108.50
(which was the closing price on September 21, 1999) the transaction fee would be
approximately $7.5 million. BancBoston Robertson Stephens is also entitled to be
paid $250,000 on the date of the delivery of its opinion, which will be credited
against the transaction fee. NetGravity has also agreed to reimburse BancBoston
Robertson Stephens for its out-of-pocket expenses and to indemnify and hold
harmless BancBoston Robertson Stephens and its affiliates and any other person,
director, employee or agent of BancBoston Robertson Stephens or any of its
affiliates, or any person controlling BancBoston Robertson Stephens or its
affiliates, for certain losses, claims, damages, expenses and liabilities
relating to or arising out of services provided by BancBoston Robertson Stephens
as financial advisor to NetGravity. The terms of the fee arrangement with
BancBoston Robertson Stephens, which NetGravity and BancBoston Robertson
Stephens believe are customary in transactions of this nature, were negotiated
at arm's length between NetGravity and BancBoston Robertson Stephens, and the
NetGravity board was aware of these fee arrangements. BancBoston Robertson
Stephens was retained based on BancBoston Robertson Stephens' experience as a
financial advisor in connection with mergers and acquisitions and in securities
valuations generally, as well as BancBoston Robertson Stephens' investment
banking relationship and familiarity with NetGravity. BancBoston Robertson
Stephens has provided financial advisory and investment banking services to
NetGravity from time to time, including acting as lead managing underwriter for
NetGravity's initial public offering and for its recent secondary offering in
March 1999. BancBoston Robertson Stephens may actively trade the equity of
NetGravity for its own account and for the account of its customers and,
accordingly, may at any time hold a long or short position in these securities.
BancBoston Robertson Stephens is an internationally recognized investment
banking firm. As part of its investment banking business, BancBoston Robertson
Stephens is frequently engaged in the
37
<PAGE>
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and other purposes.
INTERESTS OF NETGRAVITY'S OFFICERS AND DIRECTORS IN THE MERGER
When considering the recommendation of the NetGravity board, NetGravity
stockholders should be aware that the officers and directors of NetGravity have
interests in the merger that differ from, or are in addition to, those of
NetGravity stockholders. The NetGravity board was aware of these potential
conflicts and considered them in reaching its decision to approve the merger
agreement and recommend that NetGravity's stockholders vote for approval of the
merger agreement and the merger.
STOCK OPTIONS ACCELERATED UPON MERGER AND ON TERMINATION
As of August 31, 1999, NetGravity's executive officers and directors held
options to purchase a total of 2,353,995 shares of NetGravity common stock, at
exercise prices ranging from $0.22 to $30.375 per share, of which 2,018,629
shares were unvested.
The options granted to Eric Spivey, the Chief Executive Officer and a
director of NetGravity, provide for automatic accelerated vesting upon the
merger. Of the 1,200,000 options held by Mr. Spivey, 179,167 were vested as of
September 20, 1999. However, per the terms of Mr. Spivey's employment agreement
with NetGravity, a portion of Mr. Spivey's options accelerate upon completion of
the merger. For example, if the merger is completed by October 31, 1999, a total
of 893,750 shares, which have exercise prices ranging from $17.00 to $30.375 per
share and a weighted average exercise price per share of approximately $27.38,
will vest and be immediately exercisable. 200,000 of those shares have an
exercise price per share of $17.00. In addition, if at any time before or after
the merger Mr. Spivey is terminated without cause or constructively terminated
by either NetGravity or DoubleClick, then all of Mr. Spivey's remaining options
that are unvested at that time will become fully vested and will be exercisable
for an additional 24 months beyond NetGravity's standard three month
post-termination option exercise period. Also, if Mr. Spivey remains employed by
DoubleClick for one year after the merger, then all of Mr. Spivey's options will
become vested.
As of August 31, 1999, the outside directors of NetGravity held options to
purchase an aggregate of 147,500 shares of NetGravity common stock, of which
129,204 shares were unvested. If the merger is completed, all of those shares
will become vested and immediately exercisable as a result of the termination of
these directors' services to the combined company.
SEVERANCE ARRANGEMENTS
Upon the involuntary termination of employment following completion of the
merger, the following officers of NetGravity will be entitled to the following
severance payments:
<TABLE>
<CAPTION>
NAME POSITION WITH NETGRAVITY SEVERANCE PAYMENT
- --------------------------------------- ----------------------------------------------------- -----------------
<S> <C> <C>
Eric W. Spivey......................... President and Chief Executive Officer $ 975,000
Stephen E. Recht....................... Chief Financial Officer and Secretary $ 268,280
Susan Atherton......................... Vice President of Worldwide Sales $ 288,680
Jitendra Valera........................ Vice President and General Manager of Europe $ 253,125
John Lloyd............................. Vice President of Data Services $ 270,000
</TABLE>
In addition, upon involuntary termination, Mr. Spivey will continue to
receive health and other welfare benefits from DoubleClick for 24 months and Mr.
Recht will continue to receive those benefits for 18 months.
38
<PAGE>
The acceleration of the vesting of options upon the merger for Mr. Spivey,
together with any other payments contingent upon or made in connection with the
merger to Mr. Spivey may result in "excess parachute payments" as defined in
Section 280G of the Internal Revenue Code. Pursuant to Mr. Spivey's employment
agreement with NetGravity, NetGravity must generally pay any taxes payable by
Mr. Spivey that result from any excess parachute payments. Excess parachute
payments are not deductible in accordance with Section 280G. As a result,
DoubleClick will not be entitled to a tax deduction for the amounts determined
to be excess parachute payments. The amount of the potential lost deduction will
depend upon the value of the shares at the time of the merger and the number of
option shares being accelerated.
Upon completion of the merger, DoubleClick and NetGravity intend to enter
into employment agreements with at least five senior executives of NetGravity
from a list of ten senior executives. Eric Spivey, NetGravity's Chief Executive
Officer, and John Danner, NetGravity's Chairman, are both included on the list
but are not expected to continue their employment with the combined company
after the merger. See "The Merger Agreement and Related Agreements--Related
Agreements."
The merger agreement provides that, from and after the effective time,
DoubleClick will cause NetGravity to indemnify the present and former officers,
directors and employees and agents of NetGravity and each of its subsidiaries in
respect of acts or omissions occurring on or prior to the effective time. This
indemnity will apply to the full extent permitted or mandated under the
NetGravity certificate of incorporation, the NetGravity bylaws and contractual
arrangements, in each case as in effect on the date of the merger agreement, for
a period of six years. See "The Merger Agreement and Related Agreements Director
and Officer Indemnification and Insurance."
As a result, these directors and executive officers may have been more
likely to approve the merger than NetGravity stockholders generally.
APPLICABLE WAITING PERIODS AND REGULATORY APPROVALS
The merger is subject to U.S. antitrust laws. We have made the required
filings with the Department of Justice and the Federal Trade Commission. We are
not permitted to complete the merger until the applicable waiting period has
expired or terminated. The applicable waiting period expired at 11:59 p.m on
August 28, 1999. However, the Department of Justice or the Federal Trade
Commission, as well as a state or private person, may challenge the merger at
any time before or after its completion.
Neither NetGravity nor DoubleClick is aware of any other material
governmental or regulatory approval required for completion of the merger, other
than compliance with applicable corporate law of Delaware.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
Wilson Sonsini Goodrich & Rosati, outside legal counsel to NetGravity, and
Brobeck, Phleger & Harrison LLP, counsel to DoubleClick, are of the opinion that
the following discussion describes the material United States federal income tax
considerations relevant to the exchange of shares of NetGravity common stock for
DoubleClick common stock in the merger that are generally applicable to holders
of NetGravity common stock. This discussion is based on currently existing
provisions of the Internal Revenue Code, existing and proposed treasury
regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change. Any change, which may or may not be
retroactive, could alter the tax consequences to NetGravity stockholders as
described below.
39
<PAGE>
NetGravity stockholders should be aware that this discussion does not deal
with all federal income tax considerations that may be relevant to particular
NetGravity stockholders in light of their particular circumstances, such as
stockholders who:
- are dealers in securities;
- are subject to the alternative minimum tax provisions of the Internal
Revenue Code;
- are foreign persons;
- do not hold their NetGravity common stock as capital assets; or
- acquired their shares in connection with stock option or stock purchase
plans or in other compensatory transactions.
In addition, the following discussion does not address:
- the tax consequences of the merger under foreign, state or local tax laws,
or
- the tax consequences of the assumption by DoubleClick of NetGravity stock
options or the tax consequences of the receipt of rights to acquire
DoubleClick common stock. ACCORDINGLY, NETGRAVITY STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO
THEM OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES.
The merger is intended to constitute a "reorganization" as defined in the
Internal Revenue Code. If the merger does qualify as a reorganization, then,
subject to the limitations and qualifications referred to in this discussion on
material tax considerations, the merger will generally result in the following
federal income tax consequences to NetGravity stockholders:
- NetGravity stockholders will not recognize any gain or loss solely upon
their receiving DoubleClick common stock in exchange for NetGravity common
stock in the merger (except to the extent they receive cash in lieu of a
fractional share of DoubleClick common stock).
- The aggregate tax basis of the DoubleClick common stock that NetGravity
stockholders receive in the merger (reduced by any tax basis attributable
to fractional shares they are deemed to have disposed of) will be the same
as the aggregate tax basis of the NetGravity common stock surrendered in
exchange for DoubleClick common stock.
- The holding period of the DoubleClick common stock that each NetGravity
stockholder receives in the merger will include the period for which the
NetGravity common stock surrendered in exchange for DoubleClick common
stock was considered to be held, if the surrendered NetGravity common
stock is held as a capital asset at the time of the merger.
- Cash payments that NetGravity stockholders receive in lieu of a fractional
share will be treated as if the fractional share of DoubleClick common
stock had been issued in the merger and then redeemed by DoubleClick. A
NetGravity stockholder receiving cash will recognize gain or loss, upon
payment, measured by any difference between the amount of cash received
and the basis in the fractional share.
The parties are not requesting and will not request a ruling from the
Internal Revenue Service as to the tax consequences of the merger. The
consummation of the merger is conditioned on DoubleClick's receipt of an opinion
from Brobeck, Phleger & Harrison LLP and NetGravity's receipt of an opinion from
Wilson Sonsini Goodrich & Rosati to the effect that the merger will constitute a
"reorganization" within the meaning of the Internal Revenue Code. NetGravity
stockholders should be aware that the tax opinions do not bind the IRS. The IRS
may therefore successfully assert a contrary opinion. The tax opinions will be
subject to assumptions and qualifications, including but not limited to the
truth and accuracy of representations made by DoubleClick and NetGravity.
40
<PAGE>
A successful IRS challenge to the reorganization status of the merger would
result in NetGravity stockholders recognizing taxable gain or loss with respect
to each share of NetGravity common stock surrendered equal to the difference
between (A) each stockholder's basis in the share and (B) the fair market value,
as of the effective time, of the DoubleClick common stock received in exchange.
In this event, a stockholder's aggregate basis in the DoubleClick common stock
received would equal its fair market value as of the closing date of the merger,
and the stockholder's holding period for DoubleClick common stock would begin
the day after the merger.
ANTICIPATED ACCOUNTING TREATMENT
We intend to account for the merger as a pooling of interests for financial
reporting purposes in accordance with generally accepted accounting principles,
which means that NetGravity and DoubleClick will be treated as if they had
previously been combined for accounting and financial reporting purposes. It is
a condition to completion of the merger that PricewaterhouseCoopers LLP, the
independent auditors for DoubleClick, and KPMG LLP, the independent auditors for
NetGravity, concur with DoubleClick management's conclusions as to the
appropriateness of pooling of interests accounting for the merger and NetGravity
management's conclusions that NetGravity is not precluded from being a party to
a merger accounted for as a pooling of interests, under APB No. 16, and the
related interpretations of the American Institute of Certified Public
Accountants, the Financial Accounting Standards Board and the rules and
regulations of the Commission. Under the pooling-of-interests method of
accounting, each of the parties' historical recorded assets and liabilities will
be carried forward to the combined company at their recorded amounts. In
addition, the operating results of the combined company will include both
parties' operating results for the entire fiscal year in which the merger is
completed and the parties' historical reported operating results for prior
periods will be combined and restated as the operating results of the combined
company.
NO APPRAISAL RIGHTS
Delaware law provides appraisal rights to stockholders of Delaware
corporations in certain situations. However, those appraisal rights are not
available to stockholders of a corporation such as NetGravity:
- the securities of which are listed on a national securities exchange or
are designated as a national market security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.; and
- the stockholders of which are not required to accept in exchange for their
stock anything other than (A) stock in another corporation listed on a
national securities exchange or an interdealer quotation system by the
NASD, and (B) cash in lieu of fractional shares.
Due to the following factors, stockholders of NetGravity will not have
appraisal rights with respect to the merger:
- NetGravity common stock is traded on The Nasdaq National Market;
- NetGravity's stockholders are being offered stock of DoubleClick, which is
also traded on The Nasdaq National Market; and
- NetGravity's stockholders are being offered cash in lieu of fractional
shares.
DELISTING AND DEREGISTRATION OF NETGRAVITY'S COMMON STOCK FOLLOWING THE MERGER
If the merger is consummated, NetGravity's common stock will be delisted
from The Nasdaq National Market and will be deregistered under the Securities
Exchange Act of 1934.
41
<PAGE>
RESTRICTIONS ON SALE OF SHARES BY AFFILIATES OF DOUBLECLICK AND NETGRAVITY
The shares of DoubleClick common stock to be issued in connection with the
merger will be registered under the Securities Act and will be freely
transferable under the Securities Act, except for shares of DoubleClick common
stock issued to any person who is deemed to be an affiliate of NetGravity at the
time of the special meeting or an affiliate of DoubleClick after the merger.
Persons who may be deemed to be affiliates include individuals or entities
that control, are controlled by or are under common control of either
DoubleClick or NetGravity and may include some of the officers, directors or
principal stockholders of DoubleClick or NetGravity. Affiliates may not sell
their shares of DoubleClick common stock acquired in connection with the merger
except under:
- an effective registration statement under the Securities Act covering the
resale of those shares;
- an exemption under paragraph (d) of Rule 145 under the Securities Act; or
- another applicable exemption under the Securities Act.
DoubleClick's registration statement on Form S-4, of which this proxy
statement/prospectus forms a part, does not cover the resale of shares of
DoubleClick common stock to be received by affiliates in the merger.
OPERATIONS FOLLOWING THE MERGER
Following the merger, NetGravity will be merged into DoubleClick. The
stockholders of NetGravity will become stockholders of DoubleClick, and their
rights as stockholders will be governed by DoubleClick's certificate of
incorporation, DoubleClick's bylaws and the laws of the State of Delaware.
42
<PAGE>
THE MERGER AGREEMENT AND RELATED AGREEMENTS
THE FOLLOWING IS A BRIEF SUMMARY OF THE MATERIAL PROVISIONS OF THE MERGER
AGREEMENT, A COPY OF WHICH IS ATTACHED AS Appendix A TO THIS PROXY
STATEMENT/PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS. WE URGE YOU TO READ THE MERGER AGREEMENT IN ITS ENTIRETY
FOR A MORE COMPLETE DESCRIPTION OF THE MERGER. IN THE EVENT OF ANY DISCREPANCY
BETWEEN THE TERMS OF THE MERGER AGREEMENT OR OTHER AGREEMENTS AND THE FOLLOWING
SUMMARY, THE APPLICABLE AGREEMENT WILL CONTROL.
THE MERGER
NetGravity will merge with NJ Merger Corporation, a wholly owned subsidiary
of DoubleClick, following
- the approval and adoption of the merger agreement and the merger by the
NetGravity stockholders; and
- the satisfaction or waiver of the other conditions to the merger.
NetGravity will be the surviving corporation and will be merged into
DoubleClick following the merger.
EFFECTIVE TIME
As soon as practicable on or after the closing of the merger, the parties
will cause the merger to become effective by filing a certificate of merger with
the Secretary of State of the State of Delaware. DoubleClick and NetGravity are
working toward completing the merger as soon as possible and hope to complete
the merger in the fall of 1999. However, we cannot predict the exact timing.
CONVERSION OF NETGRAVITY SHARES IN THE MERGER
At the effective time, each outstanding share of NetGravity common stock
will automatically be converted into the right to receive 0.28 shares of
DoubleClick common stock. The number of shares of DoubleClick common stock
issuable in the merger will be proportionately adjusted as appropriate
- for any stock split, stock dividend or similar event with respect to
NetGravity common stock or DoubleClick common stock effected between the
date of this proxy statement/prospectus and the completion of the merger;
or
- if, prior to the completion of the merger, the number of shares of
NetGravity common stock on a fully diluted basis exceeds the number
disclosed by NetGravity to DoubleClick in the merger agreement.
NETGRAVITY STOCK OPTION AND STOCK INCENTIVE PLANS
At the effective time, each outstanding option to purchase shares of
NetGravity common stock issued under NetGravity's 1995 Stock Option Plan, 1998
Stock Plan, 1998 Employee Stock Purchase Plan and 1998 Director Option Plan will
be assumed by DoubleClick regardless of whether the options are exercisable.
Each NetGravity stock option by DoubleClick will continue to have the same
terms, and be subject to the same conditions, that were applicable to the option
immediately prior to the effective time, except that:
- each NetGravity stock option will be exercisable for shares of DoubleClick
common stock;
- the number of shares of DoubleClick common stock issuable upon exercise of
any given option will be determined by multiplying 0.28 by the number of
shares of NetGravity common stock underlying such option, rounded down to
the nearest whole number; and
43
<PAGE>
- the per share exercise price of any given option will be determined by
dividing the exercise price of the option immediately prior to the
effective time by 0.28, rounded up to the nearest whole cent.
The parties intend for the NetGravity stock options assumed by DoubleClick
to qualify as incentive stock options to the extent the stock options qualified
as incentive stock options prior to the effective time.
NO FRACTIONAL SHARES
No fractional shares of DoubleClick common stock will be issued in
connection with the merger. Instead NetGravity stockholders will receive an
amount of cash, in lieu of a fraction of a share of DoubleClick common stock,
equal to the product (A) of this fraction multiplied by (B) the closing price
for a share of DoubleClick common stock on The Nasdaq National Market on the
first business day immediately following the effective time.
THE EXCHANGE AGENT
DoubleClick is required to deposit with a bank or trust company promptly
after the effective time certificates representing the shares of DoubleClick
common stock to be exchanged for shares of NetGravity common stock and cash to
pay for fractional shares that holders of NetGravity common stock may be
entitled to receive under the merger agreement.
EXCHANGE OF NETGRAVITY STOCK CERTIFICATES FOR DOUBLECLICK STOCK CERTIFICATES
Promptly after the effective time, the exchange agent will mail to
NetGravity stockholders a letter of transmittal and instructions for
surrendering their NetGravity stock certificates in exchange for DoubleClick
stock certificates and cash in lieu of fractional shares.
NETGRAVITY STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR
EXCHANGE UNTIL THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL AND INSTRUCTIONS
REFERRED TO ABOVE.
DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES
DoubleClick will issue a DoubleClick stock certificate or a check in lieu of
a fractional share in a name other than the name registered for the surrendered
NetGravity stock certificate ONLY if the exchange agent is given all documents
required
- to show and effect the unrecorded transfer of ownership; and
- to show that any applicable stock transfer taxes have been paid.
NetGravity stockholders are not entitled to receive any dividends or other
distributions on DoubleClick common stock with a record date after the merger is
completed until they have surrendered their NetGravity stock certificates in
exchange for DoubleClick stock certificates.
If there is any dividend or other distribution on DoubleClick common stock
with a record date after the merger, former NetGravity stockholders will
receive, only following surrender of their NetGravity stock certificates, the
dividend or other distribution payable with respect to the whole shares of
DoubleClick common stock issued in exchange for their NetGravity stock
certificates.
REPRESENTATIONS AND WARRANTIES
DoubleClick and NetGravity each made a number of representations and
warranties in the merger agreement about their authority to enter into the
merger agreement and to consummate the other
44
<PAGE>
transactions contemplated by the merger agreement and about aspects of their
business, financial condition, structure and other facts pertinent to the
merger.
NetGravity made representations about the following topics:
- NetGravity's and its subsidiaries' organization, qualification to do
business and good standing;
- Validity of NetGravity's organizational documents;
- NetGravity's capitalization;
- NetGravity's corporate power to enter into and its authorization of the
merger agreement and the transactions contemplated by the merger
agreement;
- the effect of the merger agreement and the merger on obligations of
NetGravity;
- NetGravity's possession of consents and permits required in connection
with the merger agreement and transactions contemplated by the merger
agreement;
- possession of and compliance with permits required to conduct NetGravity's
business;
- NetGravity's compliance with applicable laws, rules and regulations of
governmental entities;
- NetGravity's filings and reports with the Securities and Exchange
Commission;
- NetGravity's financial statements;
- absence of changes in NetGravity's business since December 31, 1998;
- NetGravity's employee benefit plans;
- matters relating to NetGravity's employees;
- the treatment of the merger as a pooling of interests and as a tax-free
reorganization;
- NetGravity's material contracts and obligations;
- litigation involving NetGravity;
- environmental laws that apply to NetGravity;
- intellectual property used or owned by NetGravity;
- the effect of the Year 2000 on NetGravity's business, products and
services;
- NetGravity's taxes;
- NetGravity's insurance;
- NetGravity's title to the properties it owns and leases;
- NetGravity's affiliates;
- NetGravity's financial advisors;
- NetGravity's brokers' and finders' fees in connection with the merger;
- NetGravity's political contributions;
- the inapplicability of the Delaware anti-takeover statute to the merger;
and
- restrictions on NetGravity's business.
45
<PAGE>
DoubleClick made representations about the following topics:
- DoubleClick's organization, qualification to do business and good
standing;
- validity of DoubleClick's organizational documents;
- DoubleClick's capitalization;
- DoubleClick's corporate power to enter into and its authorization of the
merger agreement and the transactions contemplated by the merger
agreement;
- the effect of the merger agreement and the merger on obligations of
DoubleClick;
- DoubleClick's possession of consents and permits required in connection
with the merger agreement and transactions contemplated by the merger
agreement;
- DoubleClick's filings and reports with the Securities and Exchange
Commission;
- DoubleClick's financial statements;
- the treatment of the merger as a pooling of interests and a tax-free
reorganization;
- DoubleClick's financial advisor;
- DoubleClick's brokers' and finders' fees in connection with the merger;
and
- DoubleClick's affiliates.
The representations and warranties in the merger agreement are complicated
and not easily summarized. We urge stockholders to read carefully the articles
in the merger agreement entitled "Representations and Warranties of Company" and
"Representations and Warranties of Parent."
NETGRAVITY'S CONDUCT OF BUSINESS BEFORE COMPLETION OF THE MERGER
NetGravity has agreed that, until the completion of the merger or unless
DoubleClick consents in writing, NetGravity and its subsidiaries will conduct
their businesses in the ordinary course of business consistent with past
practices and shall use reasonable efforts:
- to keep available the services of their current officers, significant
employees and consultants; and
- to preserve their relationships with corporate partners, customers,
suppliers and other persons with which they have significant business
relations in order to preserve substantially intact their business
organizations.
NetGravity has also agreed that, until the completion of the merger or
unless DoubleClick consents in writing, NetGravity and its subsidiaries will
conduct their business in compliance with specific restrictions relating to the
following:
- the modification of NetGravity's certificate of incorporation or bylaws;
- the issuance, sale, pledge or encumbrance of shares of NetGravity capital
stock or securities convertible into NetGravity capital stock, except for
(a) limited issuances of securities in connection with stock options or
warrants already outstanding, (b) the exercise of outstanding stock
options under NetGravity's stock option plans, or (c) the issuance in the
ordinary course of business consistent with past practices of up to
500,000 shares of NetGravity common stock, reserved for issuance under
NetGravity's stock plans;
- the disposition of any properties or assets other than in the ordinary
course of business consistent with past practice;
- the acquisition of interests in other entities;
46
<PAGE>
- the incurrence of any significant indebtedness;
- the issuance of any debt securities;
- the assumption of any material indebtedness of any person;
- the entrance into or modification or termination of material contracts;
- the making or authorization of material capital expenditures;
- the declaration, setting aside or issuance of dividends or other
distributions, except by NetGravity's subsidiaries to NetGravity or other
subsidiaries;
- the reclassification or other modification of any of its capital stock;
- the modification of any stock options or authorization of cash payments in
exchange for stock options;
- the amendment, repurchase or redemption of any securities by NetGravity's
subsidiaries;
- the increase of compensation payable to directors, officers, consultants
or employees, other than those made in the ordinary course of business and
previously disclosed to DoubleClick;
- the grant of any severance arrangements or entrance into of any agreement
providing benefits upon a change of control that would be triggered by the
merger;
- the establishment, adoption, entrance into or amendment of any plan,
agreement, policy or arrangement for the benefit of any director, officer,
consultant or employee except to the extent required by applicable law or
an existing collective bargaining agreement;
- the entrance into or amendment of any contract, commitment or arrangement
with any of NetGravity's directors, officers, consultants or employees;
- the payment of indebtedness other than in the ordinary course consistent
with past practice or reserved against on NetGravity's consolidated
balance sheet;
- the modification of any accounting policies and procedures;
- the making of material tax elections, settlements or compromises; and
- the authorization of or taking any action that would make untrue any of
the representations or warranties of NetGravity in the merger agreement.
NetGravity has also agreed to provide tax information to DoubleClick, and
DoubleClick has agreed not to take any action that would have the principal
purpose of and would reasonably be likely to result in delaying or interfering
with the consummation of the merger. Each of NetGravity and DoubleClick has also
agreed:
- to notify the other promptly of material events affecting the merger or
the parties' rights under the merger agreement;
- to provide reasonable access to the other to its facilities and records;
- to use its reasonable efforts to cause the merger to qualify as a
reorganization and to be treated as a pooling of interests;
- to make all necessary filings and obtain any consents and approvals as may
be required in connection with the merger agreement and the merger; and
- to provide the other copies of its filings with the Commission.
47
<PAGE>
The agreements related to the conduct of NetGravity's business in the merger
agreement are complicated and not easily summarized. We urge stockholders to
carefully read the article in the merger agreement entitled "Conduct of Business
by Company Pending Closing."
NO SOLICITATION OF TRANSACTIONS
Until the merger agreement is terminated or as otherwise provided in the
merger agreement, NetGravity has agreed not to take any of the following
actions, directly or indirectly, and shall cause its representatives not to,
directly or indirectly:
- solicit, initiate or encourage any inquiries or the making of any proposal
or offer that constitutes, or may reasonably be expected to lead to, any
"competing transaction"; or
- enter into or maintain or continue discussions or negotiate with any
person in furtherance of such inquiries; or
- obtain a competing transaction, or agree to or endorse any competing
transaction; or authorize or permit any of NetGravity's representatives or
subsidiaries, or any representative retained by NetGravity's subsidiaries,
to take any such action.
A "competing transaction" means any of the following involving NetGravity,
other than the merger with DoubleClick:
- any merger, consolidation, share exchange, business combination or other
similar transaction;
- any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of 20% or more of the assets of NetGravity and its subsidiaries, taken as
a whole, in a single transaction or series of related transactions;
- any tender offer or exchange offer for 20% or more of the outstanding
voting securities of NetGravity or the filing of a registration statement
under the Securities Act in connection therewith;
- any person having acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group," as such term is defined under
Section 13(d) of the Exchange Act, having been formed that beneficially
owns, or has the right to acquire beneficial ownership of, 20% or more of
the outstanding voting securities of NetGravity;
- any solicitation in opposition to the approval of the merger agreement by
the stockholders of NetGravity; or
- any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of foregoing.
The NetGravity board is not prohibited, however, from taking and disclosing
to NetGravity's stockholders a position with respect to a tender or exchange
offer under Rules 14d-9 and 14e-2(a) under the Exchange Act not made in
violation of the merger agreement.
NetGravity has agreed to provide DoubleClick prompt notice and detailed
information of any extraordinary transaction proposal it receives. NetGravity
may, however, engage in any of the foregoing actions, other than solicitation,
initiation or encouragement of any competing transaction proposal, if:
- the NetGravity board concludes in good faith, based in part on the advice
from outside legal counsel that this action is necessary to prevent the
board from violating its fiduciary duties under applicable law;
48
<PAGE>
- any cash consideration is involved, and this consideration is not subject
to a financing contingency, and the NetGravity board determines, based in
part upon advice of its independent financial advisors, in the exercise of
its fiduciary duties that the acquiring party is capable of consummating
the competing transaction as proposed; and
- the NetGravity board has determined in the exercise of its fiduciary
duties that the competing ordinary transaction provides greater value,
based in part on a written opinion from its financial advisors, that the
competing transaction is superior from a financial point of view to
NetGravity stockholders than the merger.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
The merger agreement provides that, after the completion of the merger, all
rights of indemnification, advancement of expenses, exculpation, limitation of
liability and similar rights existing in favor of present and former officers,
directors, employees and agents of NetGravity shall survive the merger and shall
continue for six years from the effective time. The merger agreement also
provides that, for three years after the completion of the merger, DoubleClick
will either:
- maintain the directors' and officers' liability insurance currently
maintained by NetGravity; or
- if not available, maintain directors' and officers' liability insurance
with coverage and terms substantially as favorable to the directors and
officers as the NetGravity directors' and officers' liability insurance
policy in effect on the date of the merger agreement.
DoubleClick is not required to pay premiums in excess of 150% of the annual
amount NetGravity currently paid for this insurance.
CONDITIONS TO THE MERGER
DoubleClick's and NetGravity's obligations to complete the merger and the
related transactions are subject to the satisfaction or waiver of each of the
following conditions before completion of the merger:
- the registration statement relating to the issuance of shares of
DoubleClick common stock as contemplated by the merger agreement must be
declared effective by the Commission;
- the merger agreement must be approved by the holders of a majority of the
outstanding shares of NetGravity common stock;
- no order, writ, injunction or decree issued or entered by any court or
governmental entity of competent jurisdiction exists that makes the merger
illegal or otherwise prohibits completion of the merger;
- any waiting period under the U.S. antitrust laws that applies to the
consummation of the merger must have expired or been terminated; and
- all consents, approvals and authorization legally required to consummate
the merger must have been obtained from all governmental entities, except
where no material adverse effect could reasonably be expected to occur.
NetGravity's obligations to complete the merger and the other transactions
contemplated by the merger agreement are subject to the satisfaction or waiver
of each of the following additional conditions before completion of the merger:
- DoubleClick's representations and warranties must be true and correct when
made and as of the closing of the merger, except where failures to be true
and correct would not have a material adverse effect on DoubleClick;
49
<PAGE>
- DoubleClick must have complied in all material respects with all of its
covenants in the merger agreement;
- NetGravity must have received the opinion of its legal counsel, Wilson
Sonsini Goodrich & Rosati, Professional Corporation, or, alternatively,
Brobeck, Phleger & Harrison LLP, legal counsel to DoubleClick, to the
effect that the merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code; and
- no change in or effect on the business of DoubleClick exists, that
individually or in the aggregate, is or is reasonably likely to be
materially adverse to the business, assets, liabilities, financial
condition or results of operations of DoubleClick.
DoubleClick's obligations to complete the merger and the other transactions
contemplated by the merger agreement are subject to the satisfaction or waiver
of each of the following additional conditions before completion of the merger:
- NetGravity's representations and warranties must be true and correct when
made and as of the closing of the merger, except where failures to be true
and correct would not have a material adverse effect on NetGravity;
- NetGravity must have complied in all material respects with all of its
covenants in the merger agreement;
- DoubleClick must have received the opinion of its legal counsel, Brobeck,
Phleger & Harrison LLP, or, alternatively, Wilson Sonsini Goodrich &
Rosati, Professional Corporation, legal counsel to NetGravity, to the
effect that the merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code;
- DoubleClick must be advised in writing by PricewaterhouseCoopers LLP
regarding their concurrence with DoubleClick's management as to the
appropriateness of pooling of interests accounting for the merger in
accordance with U.S. generally accepted accounting procedures and the
accounting standards of the Securities Exchange Commission;
- NetGravity must be advised in writing by KPMG LLP regarding their
concurrence with NetGravity's management that no conditions exist that
would preclude NetGravity from being a party to a business combination
accounted for as pooling of interests;
- no change in or effect on the business of NetGravity and its subsidiaries
exists that, individually or in the aggregate, is or is reasonably likely
to be materially adverse to the business, assets, liabilities, financial
condition or results of operations of NetGravity and its subsidiaries,
taken as a whole;
- all third-party consents required under any material contract of
NetGravity as a result of the merger must be obtained; and
- at least five of ten specifically named employees of NetGravity must
accept employment with DoubleClick and must enter into employment and
non-competition agreements substantially in the forms attached to the
merger agreement. Eric Spivey, NetGravity's Chief Executive Officer, and
John Danner, NetGravity's Chairman, are both included on the list but are
not expected to continue their employment with the combined company after
the merger.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time before the completion of
the merger, as summarized below:
- the merger agreement may be terminated by DoubleClick's and NetGravity's
mutual consent; or
50
<PAGE>
- the merger agreement may also be terminated by either of DoubleClick or
NetGravity if the conditions to completion of the merger would not be
satisfied because of either (A) a breach of an agreement in the merger
agreement by the other party or (B) a breach of a representation or
warranty of the other party in the merger agreement, and the breaching
party does not take reasonable steps to cure the breach.
In addition, the merger agreement may be terminated by either of DoubleClick
or NetGravity under any of the following circumstances:
- if the merger is not completed, without the fault of the terminating
party, by January 31, 2000;
- if a final court or governmental order prohibiting the merger is issued
and is not appealable; or
- if the NetGravity stockholders do not approve the merger agreement and the
merger at the NetGravity special meeting.
Furthermore, the merger agreement may be terminated by DoubleClick if any of
the following occur:
- NetGravity's board withdraws or modifies in a manner adverse to
DoubleClick its recommendation as to the merger agreement or the merger,
or resolves to do so;
- NetGravity fails to comply with the nonsolicitation provisions contained
in the merger agreement, which are discussed in more detail in "No
Solicitation of Transactions" on page 48;
- NetGravity fails to hold a stockholders meeting to approve the merger; or
- with respect to an extraordinary transaction as described in more detail
in "No Solicitation of Transactions" on page 48, NetGravity's board
recommends one of these transactions to its stockholders, fails to
recommend against its acceptance by its stockholders, fails to reconfirm
its approval and recommendation of the merger with DoubleClick or
determines that this extraordinary transaction is superior and takes
actions in furtherance of the transaction, or resolves to do any of these.
PAYMENT OF FEES AND EXPENSES
Whether or not the merger is consummated, all costs and expenses incurred in
connection with the merger agreement and the merger will be paid by the party
incurring the expense, except that expenses incurred in connection with
printing, filing and mailing the proxy statement/prospectus and the registration
statement, other than attorney's and accountant's fees and expenses, shall be
shared equally.
NetGravity has agreed to pay DoubleClick a cash termination fee of $30
million in the following circumstances:
- DoubleClick terminates the merger agreement as a result of NetGravity
board's withdrawing, modifying or changing its recommendation in favor of
the merger in a manner adverse to DoubleClick, unless prior to the
termination there was no existing or proposed competing extraordinary
transaction;
- DoubleClick terminates the merger agreement as a result of NetGravity's
board's recommendation of a competing extraordinary transaction;
- DoubleClick terminates the merger agreement as a result of NetGravity's
failure to comply in all material respects with the prohibitions on
solicitations of transactions, as more fully described in "No Solicitation
of Transactions" on page 48;
51
<PAGE>
- DoubleClick terminates the merger agreement as a result of a competing
extraordinary transaction's being publicly announced or otherwise publicly
known and the NetGravity board either:
-- fails to recommend against the competing extraordinary transaction;
-- fails to reconfirm its approval and recommendation of the merger
agreement and the transactions contemplated by the merger agreement
within five days of DoubleClick's written request to do so;
-- determines that the competing extraordinary transaction is a superior
proposal and provides information in connection with or negotiates
the competing extraordinary transaction; or
-- resolves to take any of the actions described above;
- DoubleClick or NetGravity terminates the merger agreement as a result of
the effective time not occurring on or before January 31, 2000 and (A) at
or prior to the termination, a competing extraordinary transaction existed
and (B) within 12 months after the termination, NetGravity enters into a
definitive agreement with respect to a competing extraordinary transaction
or consummates any competing extraordinary transaction; and
- DoubleClick or NetGravity terminates the merger agreement as a result of
the merger agreement and the merger not receiving the requisite votes for
approval by NetGravity's stockholders and (A) at or prior to the
termination, a competing extraordinary transaction existed and (B) within
12 months after the termination, NetGravity enters into a definitive
agreement with respect to a competing extraordinary transaction or
consummates any competing extraordinary transaction.
NetGravity would be required to pay DoubleClick's out-of-pocket expenses if
DoubleClick terminates the merger agreement as a result of NetGravity's breach
of any representation, warranty, covenant or agreement in the merger agreement
or as a result of any of NetGravity's representations or warranties becoming
untrue, incomplete or incorrect, where NetGravity would thereby fail to meet its
closing obligations, unless the condition is curable within 20 days and
NetGravity applies reasonable efforts to cure the condition. If NetGravity
subsequently enters into a definitive agreement with respect to any competing
extraordinary transaction or consummates any competing extraordinary transaction
within 12 months of the termination, NetGravity must also pay DoubleClick the
$30 million termination fee less any out of pocket expenses previously paid.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
DoubleClick and NetGravity may amend the merger agreement before completion
of the merger; provided, however, after the NetGravity stockholders adopt the
merger agreement, no change may be made to the amount or type of consideration
into which NetGravity common stock will be converted.
Either DoubleClick or NetGravity may, in writing, extend the other's time
for the performance of any of the obligations or other acts under the merger
agreement, waive any inaccuracies in the other's representations and warranties
and waive compliance by the other with any of the agreements or conditions
contained in the merger agreement.
RELATED AGREEMENTS
STOCKHOLDER AGREEMENTS
In connection with the merger, each of NetGravity's directors and executive
officers has entered into a stockholder agreement with DoubleClick. A copy of a
form of the stockholder agreement is
52
<PAGE>
attached as APPENDIX B to this proxy statement/prospectus and is incorporated by
reference in this proxy statement/prospectus. The terms of the stockholder
agreement provide that the stockholders will vote all shares of NetGravity
common stock beneficially owned by them, or any new shares of NetGravity stock
they may acquire, in favor of the approval of the merger agreement and the
merger. In connection with the stockholder agreements, each of the stockholders
has executed an irrevocable proxy to vote their shares in favor of the approval
of the merger agreement and the merger. As of August 31, 1999, the NetGravity
stockholders who entered into the stockholder agreement collectively held
approximately 2,870,463 shares of NetGravity common stock which represented
approximately 16% of the outstanding NetGravity common stock. None of the
stockholders who are parties to the stockholder agreement was paid additional
consideration in connection with the stockholder agreement.
EMPLOYMENT AGREEMENTS
Concurrently with the effectiveness of the merger, DoubleClick and
NetGravity will enter into employment and non-competition agreements with
certain employees of NetGravity. These agreements are expected to contain terms
similar to those summarized below.
If DoubleClick terminates an employee "without cause" or if an employee
resigns such employee's employment for "good reason" prior to one (1) year after
the closing of the merger, then such employee may elect to receive the greater
of the following: (i) DoubleClick will pay such employee's base salary, less all
applicable deductions, as a severance payment until one (1) year after the
closing of the merger together with the value of all unused paid time off earned
through the date of termination and medical coverage at such employee's own
expense to the extent provided for by COBRA, or (ii) DoubleClick will pay such
employee severance payments as set forth in such employee's written employment
agreement with NetGravity, if any, in effect prior to the date of the merger.
Such employee would be allowed to exercise vested options during the time period
set forth in and in accordance with such employee's option agreement.
DoubleClick shall have at least twenty (20) business days in which to correct
the circumstances prompting a resignation for "good reason."
If an employee resigns "without good reason" or such employee's employment
were to be terminated for "cause," then such employee would be paid all salary
and benefits, as well as the value of unused paid time off, through the date of
termination of employment.
"Cause" shall mean a termination for any of the following reasons: (i)
employee's continued failure to perform the duties of employee's position after
receipt of a written warning; (ii) an intentional act constituting misconduct;
(iii) being convicted of a crime that DoubleClick reasonably believes will have
a detrimental effect on its reputation or business; (iv) committing an act of
fraud against, or the misappropriation of property belonging to, DoubleClick; or
(v) material breach by the employee of the employment agreement or any
confidentiality or proprietary information agreement between the employee and
DoubleClick.
"Good Reason" shall mean the employee's resignation of employment within
thirty (30) days after the occurrence of any of the following events: (1) any
reduction in employee's base salary as specified herein the employment
agreement, unless such reduction is pursuant to a change in DoubleClick's
compensation policies generally with respect to employees having duties,
positions or responsibilities commensurate with employee's; (2) a requirement by
DoubleClick that the employee relocate to an office more than a fifty (50) mile
radius from employee's current office; or (3) a material reduction in the job
duties, position or responsibilities assigned to employee after the closing of
the merger.
The non-competition provisions of the agreements require the employee,
during his employment and for a one-year period following his termination not to
engage, individually or on behalf of other persons, in the business of managing
and delivering online advertisements.
53
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On July 12, 1999, DoubleClick entered into an agreement to merge with
NetGravity in a transaction expected to be accounted for as a pooling of
interests. Under the terms of the agreement, each issued and outstanding share
of NetGravity common stock will be exchanged for 0.28 shares of DoubleClick
common stock. Additionally, DoubleClick will convert approximately 3.4 million
NetGravity stock options into approximately 945,000 DoubleClick stock options.
On June 13, 1999, DoubleClick entered into an agreement to merge with Abacus
in a transaction expected to be accounted for as a pooling of interests. Under
the terms of the agreement, each issued and outstanding share of Abacus common
stock will be exchanged for 1.05 shares of DoubleClick common stock.
Additionally, DoubleClick will convert approximately 1.4 million Abacus stock
options into approximately 1.5 million DoubleClick stock options.
The following unaudited pro forma condensed combined financial statements
present the effect of the proposed merger between DoubleClick and NetGravity and
between DoubleClick, NetGravity and Abacus expected to be accounted for as
pooling of interests. The unaudited pro forma condensed combined balance sheet
presents the combined financial position of DoubleClick and NetGravity and
between DoubleClick, NetGravity and Abacus as of June 30, 1999 assuming that the
proposed mergers had occurred as of June 30, 1999. This pro forma information is
based upon the historical consolidated balance sheet data of DoubleClick,
NetGravity and Abacus as of that date. The unaudited pro forma condensed
combined statements of operations give effect to the proposed mergers of
DoubleClick and NetGravity and of DoubleClick, NetGravity and Abacus by
combining the results of operations of DoubleClick for the six months ended June
30, 1999 and 1998, for each of the two years in the period ended December 31,
1998, and for the period from January 23, 1996 (inception) through December 31,
1996, with the historical results of operations of NetGravity for the six months
ended June 30, 1999 and 1998, and each of the three years ended December 1998,
and by combining the unaudited pro forma condensed combined results of
operations of DoubleClick and NetGravity for the six months ended June 30, 1999
and 1998, and each of the three years ended December 31, 1998, with the
historical results of operations of Abacus for the six months ended June 30,
1999 and 1998, and each of the three years ended December 31, 1998,
respectively, on a pooling of interests basis.
The unaudited pro forma condensed combined financial statements are based on
the estimates and assumptions set forth in the notes to such statements, which
are preliminary and have been made solely for purposes of developing this pro
forma information. The unaudited pro forma condensed combined financial
statements are not necessarily an indication of the results that would have been
achieved had these transactions been consummated as of the dates indicated or
that may be achieved in the future.
DoubleClick and NetGravity estimate that they will incur direct transaction
costs of approximately $10.8 million in connection with the proposed merger, and
approximately $16.0 million for the proposed merger with Abacus, which will be
charged to operations in the quarter in which the mergers are consummated. The
transaction costs consist of fees for investment bankers, attorneys,
accountants, financial printing and other related charges. There can be no
assurance that DoubleClick will not incur additional charges in subsequent
quarters to reflect costs associated with the proposed mergers.
These unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical consolidated financial statements and
related notes thereto and other financial information pertaining to DoubleClick,
NetGravity and Abacus including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" incorporated
by reference.
54
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
DOUBLECLICK /
DOUBLECLICK/ NETGRAVITY NETGRAVITY / ABACUS
HISTORICAL PRO FORMA PRO FORMA
------------------------ ----------------------- HISTORICAL -----------------------
DOUBLECLICK NETGRAVITY ADJUSTMENTS COMBINED ABACUS ADJUSTMENTS COMBINED
----------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments........... $ 372,988 $ 125,043 $ 498,031 $ 23,563 $ 521,594
Accounts receivable, net........... 20,351 9,231 29,582 14,857 44,439
Prepaid expenses and other current
assets........................... 2,033 1,909 3,942 3,301 7,243
----------- ----------- ---------- ----------- ----------
Total current assets............. 395,372 136,183 531,555 41,721 573,276
Property and equipment, net........ 21,168 5,870 27,038 7,114 34,152
Investments and other assets....... 5,801 1,655 7,456 146 7,602
----------- ----------- ---------- ----------- ----------
Total assets..................... $ 422,341 $ 143,708 $ 566,049 $ 48,981 $ 615,030
----------- ----------- ---------- ----------- ----------
----------- ----------- ---------- ----------- ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses......................... $ 28,055 $ 4,893 $ 10,750 $ 43,698 $ 5,756 $ 16,000 $ 65,454
Deferred revenues.................. 6,482 7,791 14,273 14,273
Deferred license and service
fees............................. 344 -- 344 -- 344
----------- ----------- ----------- ---------- ----------- ----------- ----------
Total current liabilities........ 34,881 12,684 $ 10,750 58,315 5,756 16,000 80,071
Convertible subordinated notes..... 250,000 -- 250,000 -- 250,000
Other liabilities.................. 295 -- 295 447 742
Stockholders' equity:
Common stock....................... 40 18 (13) 45 10 55
Additional paid-in capital......... 205,221 161,121 13 366,355 14,499 380,854
Retained earnings (accumulated
deficit)......................... (67,253) (28,849) (10,750) (106,852) 28,269 (16,000) (94,583)
Deferred compensation.............. (265) (1,266) (1,531) -- (1,531)
Other comprehensive loss........... (578) -- (578) -- (578)
----------- ----------- ----------- ---------- ----------- ----------- ----------
Total stockholders' equity......... 137,165 131,024 (10,750) 257,439 42,778 (16,000) 284,217
----------- ----------- ----------- ---------- ----------- ----------- ----------
Total liabilities and stockholders'
equity........................... $ 422,341 $ 143,708 $ -- $ 566,049 $ 48,981 $ $ 615,030
----------- ----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ----------- ---------- ----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
55
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DOUBLECLICK/
DOUBLECLICK/ NETGRAVITY/
NETGRAVITY/ ABACUS
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------------------ ------------ ----------- ------------
DOUBLECLICK NETGRAVITY COMBINED ABACUS COMBINED
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 53,079 $ 10,221 $ 63,300 $ 25,968 $ 89,268
Cost of revenues................................ 25,038 4,796 29,834 6,463 36,297
----------- ----------- ------------ ----------- ------------
Gross profit.................................. 28,041 5,425 33,466 19,505 52,971
Operating expenses:
Sales and marketing........................... 25,059 6,898 31,957 8,142 40,099
General and administrative.................... 8,750 2,417 11,167 2,643 13,810
Product development........................... 7,691 3,577 11,268 1,381 12,649
Facility relocation & other................... 2,132 -- 2,132 -- 2,132
----------- ----------- ------------ ----------- ------------
Total operating expenses.................. 43,632 12,892 56,524 12,166 68,690
----------- ----------- ------------ ----------- ------------
Income (loss) from operations................... (15,591) (7,467) (23,058) 7,339 (15,719)
Equity in losses of joint venture............... -- -- -- (365) (365)
Interest and other, net......................... 3,055 1,615 4,670 567 5,237
----------- ----------- ------------ ----------- ------------
Income (loss) before income taxes............... (12,536) (5,852) (18,388) 7,541 (10,847)
Provision for income taxes...................... -- -- -- 2,964 2,964
----------- ----------- ------------ ----------- ------------
Net income (loss)............................... $ (12,536) $ (5,852) $ (18,388) $ 4,577 $ (13,811)
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
Net income (loss) per share--basic.............. $ (0.32) $ (0.38) $ (0.42) $ 0.46 $ (0.25)
Net income (loss) per share--diluted............ $ (0.32) $ (0.38) $ (0.42) $ 0.44 $ (0.25)
Weighted average shares used in basic per share
calculation................................... 39,435 15,572 43,795 9,878 54,167
Weighted average shares used in diluted per
share calculation............................. 39,435 15,572 43,795 10,475 54,167
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
56
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DOUBLECLICK /
DOUBLECLICK/ NETGRAVITY/
HISTORICAL NETGRAVITY ABACUS
------------------------ PRO FORMA HISTORICAL PRO FORMA
DOUBLECLICK NETGRAVITY COMBINED ABACUS COMBINED
----------- ---------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenues........................... $ 30,297 $ 4,335 $ 34,632 $18,449 $ 53,081
Cost of revenues................... 20,569 2,285 22,854 4,227 27,081
----------- ---------- --------- ------------ -------------
Gross profit..................... 9,728 2,050 11,778 14,222 26,000
Operating expenses:
Sales and marketing.............. 12,508 4,395 16,903 5,936 22,839
General and administrative....... 4,970 1,462 6,432 2,244 8,676
Product development.............. 2,579 2,059 4,638 851 5,489
----------- ---------- --------- ------------ -------------
Total operating expenses..... 20,057 7,916 27,973 9,031 37,004
----------- ---------- --------- ------------ -------------
Income (loss) from operations...... (10,329) (5,866) (16,195) 5,191 (11,004)
Interest and other, net............ 1,228 56 1,284 305 1,589
----------- ---------- --------- ------------ -------------
Income (loss) before income
taxes............................ (9,101) (5,810) (14,911) 5,496 (9,415)
Provision for income taxes......... -- -- -- 2,006 2,006
----------- ---------- --------- ------------ -------------
Net income (loss).................. $ (9,101) $(5,810) $(14,911) $ 3,490 $(11,421)
----------- ---------- --------- ------------ -------------
----------- ---------- --------- ------------ -------------
Net income (loss) per
share--basic..................... $ (0.34) $ (1.42) $ (0.53) $ 0.36 $ (0.30)
Net income (loss) per
share--diluted................... $ (0.34) $ (1.42) $ (0.53) $ 0.34 $ (0.30)
Weighted average shares used in
basic per share calculation...... 27,101 4,079 28,243 9,692 38,420
Weighted average shares used in
diluted per share calculation.... 27,101 4,079 28,243 10,202 38,420
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
57
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DOUBLECLICK/
DOUBLECLICK/ NETGRAVITY/
HISTORICAL NETGRAVITY ABACUS
------------------------ PRO FORMA HISTORICAL PRO FORMA
DOUBLECLICK NETGRAVITY COMBINED ABACUS COMBINED
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 80,188 $ 11,557 $ 91,745 $ 46,979 $ 138,724
Cost of revenues................................ 53,964 5,228 59,192 9,581 68,773
----------- ----------- ------------ ----------- ------------
Gross profit.................................. 26,224 6,329 32,553 37,398 69,951
----------- ----------- ------------ ----------- ------------
Operating expenses:
Sales and marketing........................... 29,180 10,351 39,531 12,628 52,159
General and administrative.................... 11,288 3,172 14,460 4,928 19,388
Product development........................... 6,684 4,639 11,323 1,691 13,014
Facility relocation & other................... -- -- -- 360 360
----------- ----------- ------------ ----------- ------------
Total operating expenses.................. 47,152 18,162 65,314 19,607 84,921
----------- ----------- ------------ ----------- ------------
Income (loss) from operations................... (20,928) (11,833) (32,761) 17,791 (14,970)
Equity in losses of joint venture............... -- -- -- (53) (53)
Interest and other, net......................... 2,756 540 3,296 754 4,050
----------- ----------- ------------ ----------- ------------
Income (loss) before income taxes............... (18,172) (11,293) (29,465) 18,492 (10,973)
Provision for income taxes...................... -- -- -- 7,066 7,066
----------- ----------- ------------ ----------- ------------
Net income (loss)............................... $ (18,172) $ (11,293) $ (29,465) $ 11,426 $ (18,039)
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
Net income (loss) per share--basic.............. $ (0.60) $ (1.28) $ (0.90) $ 1.17 $ (0.42)
Net income (loss) per share--diluted............ $ (0.60) $ (1.28) $ (0.90) $ 1.12 $ (0.42)
Weighted average shares used in basic per share
calculation................................... 30,440 8,823 32,911 9,727 43,124
Weighted average shares used in diluted per
share calculation............................. 30,440 8,823 32,911 10,216 43,124
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
58
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DOUBLECLICK/
DOUBLECLICK/ NETGRAVITY/
HISTORICAL NETGRAVITY ABACUS
------------------------ PRO FORMA HISTORICAL PRO FORMA
DOUBLECLICK NETGRAVITY COMBINED ABACUS COMBINED
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 30,597 $ 6,358 $ 36,955 $ 30,971 $ 67,926
Cost of revenues................................ 20,628 2,572 23,200 5,942 29,142
----------- ----------- ------------ ----------- ------------
Gross profit.................................. 9,969 3,786 13,755 25,029 38,784
----------- ----------- ------------ ----------- ------------
Operating expenses:
Sales and marketing........................... 10,710 6,073 16,783 8,000 24,783
General and administrative.................... 6,326 1,552 7,878 3,911 11,789
Product development........................... 1,398 3,033 4,431 1,507 5,938
Facility relocation & other................... -- -- -- 102 102
----------- ----------- ------------ ----------- ------------
Total operating expenses.................. 18,434 10,658 29,092 13,520 42,612
----------- ----------- ------------ ----------- ------------
Income (loss) from operations................... (8,465) (6,872) (15,337) 11,509 (3,828)
Interest and other, net......................... 109 (10) 99 297 396
----------- ----------- ------------ ----------- ------------
Income (loss) before income taxes............... (8,356) (6,882) (15,238) 11,806 (3,432)
Provision for income taxes...................... -- -- -- 4,309 4,309
----------- ----------- ------------ ----------- ------------
Net income (loss)............................... $ (8,356) $ (6,882) $ (15,238) $ 7,497 $ (7,741)
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
Net income (loss) per share--basic.............. $ (0.61) $ (2.46) $ (1.05) $ 0.78 $ (0.32)
Net income (loss) per share--diluted............ $ (0.61) $ (2.46) $ (1.05) $ 0.74 $ (0.32)
Weighted average shares used in basic per share
calculation................................... 13,718 2,799 14,501 9,546 24,524
Weighted average shares used in diluted per
share calculation............................. 13,718 2,799 14,501 10,058 24,524
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
59
<PAGE>
DOUBLECLICK INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DOUBLECLICK/
DOUBLECLICK/ NETGRAVITY/
HISTORICAL NETGRAVITY ABACUS
--------------------------- PRO FORMA HISTORICAL PRO FORMA
DOUBLECLICK(1) NETGRAVITY COMBINED ABACUS COMBINED
-------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues...................................... $ 6,514 $ 1,939 $ 8,453 $ 17,532 $ 25,985
Cost of revenues.............................. 3,780 702 4,482 3,751 8,233
------- ----------- ------------ ----------- ------------
Gross profit................................ 2,734 1,237 3,971 13,781 17,752
------- ----------- ------------ ----------- ------------
Operating expenses:
Sales and marketing......................... 3,079 2,839 5,918 4,294 10,212
General and administrative.................. 2,145 1,315 3,460 2,204 5,664
Product development......................... 618 1,764 2,382 913 3,295
------- ----------- ------------ ----------- ------------
Total operating expenses................ 5,842 5,918 11,760 7,411 19,171
------- ----------- ------------ ----------- ------------
Income (loss) from operations................. (3,108) (4,681) (7,789) 6,370 (1,419)
Interest and other, net....................... (84) 54 (30) (116) (146)
------- ----------- ------------ ----------- ------------
Income (loss) before income taxes............. (3,192) (4,627) (7,819) 6,254 (1,565)
Provision for income taxes.................... -- -- -- 2,389 2,389
------- ----------- ------------ ----------- ------------
Net income (loss)............................. $ (3,192) $ (4,627) $ (7,819) $ 3,865 $ (3,954)
------- ----------- ------------ ----------- ------------
------- ----------- ------------ ----------- ------------
Net income (loss) per share--basic............ $ (0.18) $ (2.19) $ (0.42) $ 0.43 $ (0.14)
Net income (loss) per share--diluted.......... $ (0.18) $ (2.19) $ (0.42) $ 0.40 $ (0.14)
Weighted average shares used in basic per
share calculation........................... 18,118 2,111 18,709 9,094 28,258
Weighted average shares used in diluted per
share calculation........................... 18,118 2,111 18,709 9,614 28,258
</TABLE>
(1) Period from January 23, 1996 (inception) through December 31, 1996
The accompanying notes are an integral part of these unaudited
pro forma condensed combined financial statements.
60
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1
The unaudited pro forma condensed combined financial statements of
DoubleClick and NetGravity give retroactive effect to the proposed merger of
DoubleClick and NetGravity, which is expected to be accounted for as a pooling
of interests and, as a result, the unaudited pro forma condensed combined
balance sheet and statements of operations are presented as if DoubleClick and
NetGravity had been combined for all periods presented. On June 13, 1999,
DoubleClick entered into an agreement to merge with Abacus. The unaudited pro
forma condensed combined financial statements of DoubleClick and NetGravity
reflect the proposed merger with Abacus, which is expected to be accounted for
as a pooling of interests and, as a result, the unaudited pro forma condensed
combined balance sheet and statements of operations are presented as if
DoubleClick, NetGravity and Abacus had been combined for all periods presented.
The unaudited pro forma condensed combined financial statements, including
the related notes thereto, should be read in conjunction with the historical
consolidated financial statements and related notes of DoubleClick, NetGravity
and Abacus incorporated by reference in this proxy statement/ prospectus.
Amounts from the NetGravity and Abacus historical consolidated financial
statements have been reclassified in the unaudited pro forma combined financial
statements to conform with DoubleClick historical classifications.
All share numbers in these unaudited pro forma condensed combined financial
statements for all periods presented have been adjusted to reflect the
DoubleClick 2-for-1 stock split that occurred in April 1999.
NOTE 2
Basic net income (loss) per share is computed using the weighed average
number of common shares outstanding during the period. Diluted net income (loss)
per share is computed using the weighed average number of common and dilutive
common equivalent shares outstanding during the period. Dilutive common
equivalent shares consist of the incremental common shares issuable upon
conversion of convertible preferred stock, convertible notes (using the
if-converted method), and shares issuable upon exercise of stock options (using
the treasury stock method). Common equivalent shares or shares issuable upon
conversion of potentially dilutive securities are excluded from the computations
if their effect is anti-dilutive. Pro forma net loss per share is computed by
adding DoubleClick historical weighted average shares outstanding to NetGravity
and Abacus historical weighted average shares outstanding converted to give
effect to the exchange ratio of .28 and 1.05, respectively.
NOTE 3
The provision for income taxes does not reflect the benefit of DoubleClick's
or NetGravity's net losses due to limitations and uncertainty surrounding
realization.
NOTE 4
It is anticipated that the combined company will incur estimated direct
transaction charges of $10.8 million related to the proposed merger of
DoubleClick with NetGravity and an additional $16 million for the Abacus merger,
in the quarter in which the proposed mergers are consummated. This pro forma
adjustment is based upon preliminary estimates and assumptions made by
management
61
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
for purposes of preparing the unaudited pro forma condensed combined financial
statements. These charges include factually supportable direct transaction costs
including estimated investment banking and financial advisory fees of
approximately $7.3 million and $12.5 million for the NetGravity and Abacus
merger, respectively, and other estimated merger related expenses totaling $3.5
million for each of the Abacus and NetGravity mergers consisting primarily of
other professional services and estimated registration expenses based upon
discussions and arrangements with vendors. The estimated charge is reflected in
the unaudited pro forma condensed combined balance sheet data, but is not
reflected in the unaudited pro forma condensed combined statement of operations
data, however, this amount will be charged to the statement of operations in the
period the transaction is consummated. This charge is a preliminary estimate
only and is subject to change. Actual amounts ultimately incurred could differ
from the estimated amounts. Additionally, the amounts presented do not include
amounts which are not factually supportable or integration costs which may be
incurred. Neither DoubleClick nor NetGravity has estimated the amount or nature
of integration costs.
62
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF
NETGRAVITY COMMON STOCK AND
DOUBLECLICK COMMON STOCK
This section of the proxy statement/prospectus describes certain differences
between the rights of NetGravity stockholders and DoubleClick stockholders.
While we believe that the description covers the material differences between
the two companies, this summary may not contain all of the information that is
important to you. You should carefully read this entire document and the other
documents we refer to for a more complete understanding of the differences
between being a stockholder of NetGravity and being a stockholder of
DoubleClick.
The rights of the stockholders of NetGravity are governed by NetGravity's
Amended and Restated Certificate of Incorporation, and its Amended and Restated
Bylaws. After completion of the merger, NetGravity stockholders will become
stockholders of DoubleClick and their rights will be governed by DoubleClick's
Amended and Restated Certificate of Incorporation and its Amended and Restated
Bylaws. Both companies are incorporated under the laws of the State of Delaware
and, accordingly, NetGravity stockholders' rights will continue to be governed
by the Delaware General Corporation Law after completion of the merger.
CLASSES OF COMMON STOCK OF NETGRAVITY AND DOUBLECLICK; VOTING RIGHTS
Both DoubleClick and NetGravity have one class of common stock issued and
outstanding. Holders of DoubleClick common stock and NetGravity common stock are
each entitled to one vote for each share held.
CLASSIFIED BOARD OF DIRECTORS
Delaware law provides that a corporation's board of directors may be divided
into various classes with staggered terms of office. DoubleClick's board of
directors is divided into three classes, as nearly equal in size as possible,
with one class being elected annually for a three-year term. DoubleClick
directors are elected for a term of three years and until their successors are
elected and qualified.
NetGravity's directors are all elected at the annual meeting of the
stockholders and hold office until their successors are elected and qualified.
NUMBER OF DIRECTORS
DoubleClick's board of directors may consist of not fewer than five nor more
than fifteen directors and currently consists of seven directors. The range of
directors on DoubleClick's board may be changed only by a vote of 66.67% of the
outstanding shares of the capital stock of DoubleClick at a special meeting of
the stockholders called for that purpose.
NetGravity's board of directors may consist of not fewer than three nor more
than nine directors, and currently consists of seven directors. The number of
directors can be altered by an amended bylaw adopted by the NetGravity board or
by its stockholders.
REMOVAL OF DIRECTORS
DoubleClick directors, or the entire DoubleClick board, may be removed, at
any time, but only for cause and only by the affirmative vote of the holders of
at least 66.67% of the outstanding shares of capital stock of DoubleClick
entitled to vote generally in the election of directors, voting together as a
single class, cast at a special meeting of the stockholders called for that
purpose.
NetGravity directors, or the entire NetGravity board, may be removed, at any
time, with or without cause, by the affirmative vote of the holders of a
majority of NetGravity's common stock.
63
<PAGE>
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Any newly created directorships in DoubleClick's board resulting from any
increase in the number of authorized directors or any vacancies, may be filled
by 66.67% of the directors then in office, though less then a quorum, or by a
sole remaining director.
Any vacancy on NetGravity's board occurring for any reason, including newly
created directorships, may be filled by a majority of the remaining members of
the board of directors, even though less than a quorum.
In the case of DoubleClick, any director chosen in this manner to fill a
vacancy holds office until the annual meeting of stockholders at which the term
of the class to which that director has been chosen expires and until that
director's successor is elected and qualified. In the case of NetGravity, any
director chosen in this manner to fill a vacancy holds office until the next
annual election of directors and until that director's successor is elected and
qualified.
ABILITY TO CALL SPECIAL MEETINGS
Special meetings of stockholders of DoubleClick may be called by the
president and shall be called by the president or secretary at the request in
writing of two-thirds of the board of directors upon not fewer than 10 or more
than 60 days' written notice prior to the meeting.
Special meetings of NetGravity stockholders may be called at any time but
only by the president, the NetGravity board, or the chairman of the board.
Written notice of the meeting must be given not less than 10 nor more than 60
days before the date of the meeting.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
At an annual meeting of DoubleClick's stockholders, only business as has
been properly brought before the meeting will be conducted. To be properly
brought before an annual meeting of DoubleClick, business must be:
- provided in DoubleClick's notice of meeting;
- otherwise properly brought before the meeting by or at the direction of
the board, or
- otherwise properly brought before the meeting by a stockholder
For business to be properly brought before an annual DoubleClick meeting by
a stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary of DoubleClick. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
DoubleClick not later than the close of business on the 120(th) day or earlier
than the close of business on the 150(th) day prior to the first anniversary of
the proxy statement delivered to stockholders in connection with the preceding
year's annual meeting; provided, however, that if either (A) the date of the
annual meeting is more than 30 days before or more than 60 days after this
anniversary date or (B) no proxy statement was delivered to stockholders in
connection with the preceding year's annual meeting, notice by the stockholder,
to be timely, must be delivered not earlier than the close of business on the
90(th) day prior to the annual meeting and not later than the close of business
on the later of the 60(th) day prior to the annual meeting or the close of
business on the tenth day following the day on which public announcement of the
date of the meeting is first made by DoubleClick.
If, however, the number of directors to be elected to the DoubleClick board
is increased and there is no public announcement by DoubleClick naming all of
the nominees for director or specifying the size of the increased Board at least
70 days prior to the first anniversary of the preceding year's annual meeting
(or, if the annual meeting is held more than 30 days before or 60 days after the
anniversary date, at least 70 days prior to the annual meeting), notice by the
stockholder will be considered timely
64
<PAGE>
(but only with respect to nominees for any new positions created by the increase
in number of the Board of Directors) if it is delivered no later than the close
of business on the tenth day following the day on which public announcement of
the date of the meeting is first made by DoubleClick.
A stockholder's notice to the Secretary must set forth:
- as to each person whom the stockholder proposes to nominate for election
or reelection as a director, all information relating to the person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case under Regulation 14A
under the Exchange Act (including the person's written consent to being
named in the proxy statement as a nominee and to serving as a director it
elected);
- as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting this business at the meeting and
any material interest in the business of the stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and
- as to the stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (A) the name and
address of the stockholder, as they appear on DoubleClick's books, and of
the beneficial owner and (B) the class and number of shares of capital
stock of DoubleClick that are owned beneficially and held of record by the
stockholder and the beneficial owner.
Nominations of persons for election to the DoubleClick board may be made at
a meeting of stockholders at which directors are to be elected in accordance
with DoubleClick's notice of meeting, (A) by or at the direction of the board or
(B) provided that the board has determined that directors will be elected at the
meeting, by any stockholder of the corporation entitled to vote in the election
of directors at the meeting who complies with DoubleClick's notice procedures.
These nominations, other than those made by or at the direction of the board,
must be made with timely notice in writing to the Secretary of DoubleClick. If
DoubleClick calls a special meeting of stockholders for the purpose of electing
one or more directors to the board, any stockholder may nominate a person or
persons, for election to the position(s) as specified in DoubleClick's notice of
meeting, if the stockholder's notice is delivered to the Secretary not earlier
than the 90(th) day prior to the special meeting and not later than the later of
(i) the close of business of the 60(th) day prior to the special meeting or (ii)
the close of business of the 10(th) day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board to be elected at the meeting.
NetGravity stockholders 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 NetGravity not later than
- 60 days in advance of the meeting with respect to an election to be held
at an annual meeting of stockholders; and
- the close of business on the seventh day following the date on which
notice of such meeting is first given to stockholders with respect to an
election to be held at a special meeting of stockholders for the election
of directors.
Each such notice shall set forth the following information:
- the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated;
65
<PAGE>
- a representation that the stockholder is a holder of record of NetGravity
stock 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
- 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;
- such other information regarding each nominee proposed by such stockholder
required to be included in a proxy statement filed pursuant to the proxy
rules of the Commission for a nominee nominated, or intended to be
nominated, by the NetGravity board; and
- the consent of each nominee to serve as a director of NetGravity if so
elected.
If a majority of the NetGravity board reasonably determines that the
information provided in the nominating stockholder's notice does not satisfy the
informational requirements set forth above in any material respect, the
Secretary of NetGravity 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.
At an annual meeting of the stockholders, only business that properly has
been brought before the meeting may be conducted. For business to be properly
brought before an annual meeting by a NetGravity stockholder, the stockholder
must have given timely notice of the matter in writing to the Secretary of
NetGravity. To be timely, a NetGravity stockholder's notice must be delivered to
or mailed and received at the principal executive offices of NetGravity not less
than 60 days prior to the meeting. However, 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 the annual meeting notice 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 brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting;
- the name and address, as they appear on NetGravity's books, of the
stockholder proposing such business;
- the class and number of shares of NetGravity which are beneficially owned
by the stockholder; and
- any material direct or indirect interest, financial or otherwise of the
stockholder or its affiliates or associates in such business.
The NetGravity board may reject any stockholder proposal not timely made. If
the NetGravity board determines that the information provided in a stockholder's
notice does not satisfy the informational requirements listed above, the
Secretary of NetGravity 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.
Both NetGravity and DoubleClick are subject to the same stockholder
nomination and proposal requirements imposed on public companies by Federal
securities laws. Such laws require the stockholder proposals to be submitted to
companies not less than 120 days before the date of the annual proxy statement
released to stockholders in connection with the previous year's annual meeting.
66
<PAGE>
AMENDMENT OF CERTIFICATE OF INCORPORATION
Under Delaware law, a certificate of incorporation of a Delaware corporation
may be amended by approval of the board of directors of the corporation and the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote for the amendment, unless a higher vote is required by the corporation's
certificate of incorporation.
DoubleClick's certificate of incorporation provides that the affirmative
vote of the holders of at least 66.67% of the outstanding shares of capital
stock of DoubleClick entitled to vote generally in the election of directors,
voting together as a single class, are required to alter, change, amend, repeal
or adopt any provision inconsistent with the provisions of DoubleClick's
certificate of incorporation that deal with the following:
- matters relating to the board of directors, including the number of
members, board classification, vacancies and removal;
- the manner in which stockholder action may be effected;
- limitation of the liability of DoubleClick's directors;
- indemnification of DoubleClick's directors and officers;
- amendments to DoubleClick's bylaws; and
- amendments to DoubleClick's certificate of incorporation.
NetGravity's Certificate of Incorporation may be amended by the holders of a
majority of NetGravity shares then entitled to vote on the matter and with the
approval of the board in accordance with the Delaware General Corporation Law.
AMENDMENT OF BYLAWS
Under Delaware law, stockholders entitled to vote have the power to adopt,
amend or repeal bylaws. In addition, a corporation may, in its certificate of
incorporation, confer this power upon the board of directors. The stockholders
always have the power to adopt, amend or repeal bylaws, even though the board
may also be delegated this power.
The DoubleClick Bylaws may be altered, amended, or repealed, or new bylaws
may be adopted, by the affirmative vote of at least (A) 66.67% of the board or
(B) the holders of at least 66.67% of the outstanding shares of capital stock of
DoubleClick entitled to vote generally in the election of directors, voting
together as a single class, which votes are cast at a special meeting of the
stockholders called for that purpose.
The NetGravity Bylaws may be adopted, amended or repealed, or new bylaws may
be adopted, by the NetGravity board or by the holders of a majority of
NetGravity shares then entitled to vote on the matter.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law permits a corporation to indemnify
officers and directors for actions taken in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal action that they had no reasonable
cause to believe was unlawful.
Each of DoubleClick's and NetGravity's certificate of incorporation and
bylaws provide that any person who was or is a party or is threatened to be a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative, because that person is or was a
director or officer, or is or was serving at the request of the relevant company
as a director, officer,
67
<PAGE>
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, will be indemnified against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement reasonably
incurred by the indemnified person or on his behalf in connection with the
action, suit or proceeding and any appeal therefrom, and held harmless by the
relevant company to the fullest extent permitted by the Delaware General
Corporation Law. The indemnification rights conferred by DoubleClick and
NetGravity are not exclusive of any other right to which persons seeking
indemnification may be entitled under any statute, our respective certificates
of incorporation or bylaws, any agreement, vote of stockholders or disinterested
directors or otherwise.
Additionally, DoubleClick and NetGravity are obligated to pay expenses
incurred by their directors or officers in defending a civil or criminal action,
suit or proceeding because that person is a director or officer, in advance of
the final disposition of that action, suit or proceeding. These payments will be
made however only if DoubleClick or NetGravity receive an undertaking by or on
behalf of that director or officer to repay all amounts advanced if it is
ultimately determined that he or she is not entitled to be indemnified by
DoubleClick or NetGravity, as authorized by the Delaware General Corporation
Law.
EXPERTS
The consolidated balance sheets of DoubleClick Inc. as of December 31, 1998
and 1997 and the consolidated statements of operations, shareholders' equity,
and cash flows for each of the two years in the period ended December 31, 1998,
and for the period from January 23, 1996 (inception) through December 31, 1996,
incorporated in this proxy statement/prospectus, by reference to the Annual
Report on Form 10-K of DoubleClick Inc., as amended on April 27, 1999, for the
year ended December 31, 1998, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The consolidated financial statements of NetGravity, Inc. as of December 31,
1998 and 1997 and for each of the years in the three-year period ended December
31, 1998, have been incorporated by reference in reliance upon the report of
KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Abacus Direct Corporation as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998, incorporated in this proxy statement/prospectus by reference
to the Annual Report on Form 10-K of Abacus Direct Corporation for the year
ended December 31, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the shares of DoubleClick common stock offered by this proxy
statement/prospectus and the federal income tax consequences in connection with
the merger will be passed upon for DoubleClick by Brobeck, Phleger & Harrison
LLP, New York, New York. Legal matters pertaining to federal income tax
consequences in connection with the merger will be passed upon for NetGravity by
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
68
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
DoubleClick, NetGravity and Abacus file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission. Stockholders may read and copy any reports, statements or other
information filed by DoubleClick, NetGravity or Abacus at the Commission's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. DoubleClick's, NetGravity's and Abacus's filings
with the Commission are also available to the public from commercial
document-retrieval services and at the Web site maintained by the Commission at
http://www.sec.gov. DoubleClick's common stock, NetGravity's common stock and
Abacus's common stock are quoted on the Nasdaq National Market under the symbols
"DCLK," "NETG," and "ABDR", respectively. Annual, quarterly and special reports,
proxy statements and other information concerning DoubleClick, NetGravity and
Abacus may also be inspected at the offices of the National Association of
Securities Dealers, Inc., Market Listing Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
This proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of DoubleClick in addition to being a proxy statement
of NetGravity for use at its special meeting.
As allowed by the Commission's rules, this proxy statement/prospectus does
not contain all of the information relating to DoubleClick, NetGravity and
Abacus included in the registration statement or the exhibits to the
registration statement. Some of the important business and financial information
relating to DoubleClick, NetGravity and Abacus that may be important in deciding
how to vote is not included in this proxy statement/prospectus, but rather is
"incorporated by reference" to documents that have been previously filed by
DoubleClick, NetGravity and Abacus with the Commission. The information
incorporated by reference is deemed to be a part of this proxy
statement/prospectus, except for any information superseded by information
contained directly in this proxy statement/prospectus. See "Incorporation of
Certain Documents by Reference."
DoubleClick has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to DoubleClick, and
NetGravity has supplied all information contained or incorporated by reference
in this proxy statement/prospectus relating to NetGravity.
Stockholders can obtain any of the documents incorporated by reference
through DoubleClick, NetGravity or the Commission. Documents incorporated by
reference are available from DoubleClick or NetGravity without charge, excluding
all exhibits. Stockholders may obtain documents incorporated by reference in
this proxy statement/prospectus by requesting them orally or in writing to the
following addresses or by telephone:
<TABLE>
<S> <C>
DoubleClick Inc. NetGravity, Inc.
Investor Relations Investor Relations
41 Madison Avenue, 32nd Floor 1900 S. Norfolk Street,
New York, New York 10010 Suite 150
(212) 683-0001 San Mateo, California 94403-1151
(650) 425-5960
</TABLE>
If you would like to request documents, please do so by October 19, 1999 in
order to receive them before the NetGravity special meeting.
NETGRAVITY STOCKHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE ON THE
MERGER AGREEMENT AND THE MERGER. NEITHER DOUBLECLICK NOR NETGRAVITY HAS
AUTHORIZED ANYONE TO PROVIDE INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN PROXY STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS
DATED SEPTEMBER 24, 1999. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT/
69
<PAGE>
PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE, AND NEITHER THE MAILING OF THIS
PROXY STATEMENT/PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF DOUBLECLICK
COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE CONTRARY.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this proxy statement/prospectus, and later information
filed with the Commission will update and supersede this information. This proxy
statement/prospectus incorporates by reference the documents set forth below
that DoubleClick, NetGravity and Abacus have previously filed with the
Commission. The documents contain important information about DoubleClick,
NetGravity and Abacus and their finances.
We incorporate by reference DoubleClick's:
- Annual Report on Form 10-K, as amended by Annual Report on Form 10-K/A,
for the year ended December 31, 1998;
- Quarterly Reports on Form 10-Q, as amended for the quarters ended March
31, 1999 and June 30, 1999;
- Reports on Form 8-K dated February 3, 1999, March 15, 1999, March 15,
1999, June 17, 1999 and July 21, 1999; and
- The description of DoubleClick's common stock contained in DoubleClick's
Registration Statement on Form 8-A dated November 30, 1998 registering the
DoubleClick common stock under Section 12(g) of the Securities Exchange
Act of 1933, as amended.
In addition, all of DoubleClick's filings with the Commission after the date
of this proxy statement/ prospectus under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act shall be deemed to be incorporated by reference
until the merger becomes effective.
We also incorporate by reference NetGravity's:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- Quarterly report on Form 10-Q, as amended by the quarterly report on Form
10-Q/A, for the quarter ended June 30, 1999;
- Report on Form 8-K filed with the Commission on July 21, 1999; and
- The description of NetGravity's common stock contained in NetGravity's
Registration Statement on Form 8-A filed with the Commission on May 15,
1998 registering the NetGravity common stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended.
In addition, all of NetGravity's filings with the Commission after the date
of this proxy statement/ prospectus under Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act of 1934, as amended, shall be deemed to be incorporated by
reference until the merger of NetGravity and DoubleClick becomes effective.
We also incorporate by reference:
- Item 6 and Item 8 of Part I of Abacus's Annual Report on Form 10-K for the
year ended December 31, 1998; and
70
<PAGE>
- Item 1 of Part I of Abacus's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999.
In addition, all of the financial information contained in Abacus's filings
with the Commission after the date of this proxy statement/prospectus under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, shall
be deemed to be incorporated by reference until the merger of DoubleClick and
Abacus becomes effective.
Any statement contained in this proxy statement/prospectus or in a document
incorporated or deemed to be incorporated by reference in this proxy
statement/prospectus shall be deemed to be modified or superseded for purposes
of this proxy statement/prospectus to the extent that a statement contained in
this or in any other later filed document that also is or is deemed to be
incorporated by reference modifies or supersedes the statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this proxy statement/prospectus.
71
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
DOUBLECLICK INC.,
NJ MERGER CORPORATION
and
NETGRAVITY, INC.
Dated as of July 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
ARTICLE I DEFINITIONS...................................................................................... A-1
SECTION 1.01 Certain Defined Terms............................................................. A-4
ARTICLE II THE MERGER...................................................................................... A-4
SECTION 2.01 The Merger........................................................................ A-4
SECTION 2.02 Closing........................................................................... A-4
SECTION 2.03 Effective Time.................................................................... A-5
SECTION 2.04 Effect of the Merger.............................................................. A-5
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and Officers of Surviving A-5
Corporation.......................................................................
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............................................. A-5
SECTION 3.01 Conversion of Shares.............................................................. A-5
SECTION 3.02 Exchange of Shares Other than Treasury Shares..................................... A-6
SECTION 3.03 Stock Transfer Books.............................................................. A-7
SECTION 3.04 No Fractional Share Certificates.................................................. A-8
SECTION 3.05 Options to Purchase Company Common Stock.......................................... A-8
SECTION 3.06 Unvested Stock.................................................................... A-9
SECTION 3.07 Employee Stock Purchase Plan...................................................... A-9
SECTION 3.08 Certain Adjustments............................................................... A-9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY....................................................... A-10
SECTION 4.01 Organization and Qualification; Subsidiaries...................................... A-10
SECTION 4.02 Certificate of Incorporation and Bylaws........................................... A-10
SECTION 4.03 Capitalization.................................................................... A-10
SECTION 4.04 Authority Relative to This Agreement.............................................. A-11
SECTION 4.05 No Conflict; Required Filings and Consents........................................ A-11
SECTION 4.06 Permits; Compliance with Laws..................................................... A-12
SECTION 4.07 SEC Filings; Financial Statements................................................. A-12
SECTION 4.08 Absence of Certain Changes or Events.............................................. A-13
SECTION 4.09 Employee Benefit Plans; Labor Matters............................................. A-13
SECTION 4.10 Pooling; Certain Tax Matters...................................................... A-15
SECTION 4.11 Contracts......................................................................... A-16
SECTION 4.12 Litigation........................................................................ A-16
SECTION 4.13 Environmental Matters............................................................. A-16
SECTION 4.14 Intellectual Property............................................................. A-16
SECTION 4.15 Taxes............................................................................. A-18
SECTION 4.16 Insurance......................................................................... A-19
SECTION 4.17 Properties........................................................................ A-19
SECTION 4.18 Affiliates........................................................................ A-20
SECTION 4.19 Opinion of Financial Advisor...................................................... A-20
SECTION 4.20 Brokers........................................................................... A-20
SECTION 4.21 Certain Business Practices........................................................ A-20
SECTION 4.22 Section 203 of the DGCL Not Applicable............................................ A-20
SECTION 4.23 Business Activity Restriction..................................................... A-20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT......................................................... A-21
SECTION 5.01 Organization and Qualification; Subsidiaries...................................... A-21
SECTION 5.02 Certificate of Incorporation and Bylaws........................................... A-21
SECTION 5.03 Capitalization.................................................................... A-21
SECTION 5.04 Authority Relative to this Agreement.............................................. A-22
SECTION 5.05 No Conflict; Required Filings and Consents........................................ A-22
SECTION 5.06 SEC Filings; Financial Statements................................................. A-23
SECTION 5.07 Pooling; Certain Tax Matters...................................................... A-23
SECTION 5.08 Opinion of Financial Advisor...................................................... A-23
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
SECTION 5.09 Brokers........................................................................... A-24
SECTION 5.10 Affiliates........................................................................ A-24
ARTICLE VI COVENANTS....................................................................................... A-24
SECTION 6.01 Conduct of Business by Company Pending the Closing................................ A-24
SECTION 6.02 Notices of Certain Events......................................................... A-26
SECTION 6.03 Access to Information; Confidentiality............................................ A-26
SECTION 6.04 No Solicitation of Transactions................................................... A-27
SECTION 6.05 Tax-Free Transaction; Pooling..................................................... A-27
SECTION 6.06 Control of Operations............................................................. A-27
SECTION 6.07 Further Action; Consents; Filings................................................. A-28
SECTION 6.08 Additional Reports................................................................ A-28
SECTION 6.09 Tax Information................................................................... A-28
SECTION 6.10 Conduct of Business by Parent..................................................... A-29
ARTICLE VII ADDITIONAL AGREEMENTS.......................................................................... A-29
SECTION 7.01 Registration Statement; Proxy Statement........................................... A-29
SECTION 7.02 Stockholders' Meeting............................................................. A-30
SECTION 7.03 Affiliates........................................................................ A-31
SECTION 7.04 Directors' and Officers' Indemnification and Insurance............................ A-31
SECTION 7.05 No Shelf Registration............................................................. A-32
SECTION 7.06 Public Announcements.............................................................. A-32
SECTION 7.07 NNM Listing....................................................................... A-32
SECTION 7.08 Blue Sky.......................................................................... A-32
SECTION 7.09 Employee Benefit Matters.......................................................... A-32
SECTION 7.10 Registration Statement Form S-8................................................... A-32
ARTICLE VIII CONDITIONS TO THE MERGER...................................................................... A-33
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate the Merger.............. A-33
SECTION 8.02 Conditions to the Obligations of Company.......................................... A-33
SECTION 8.03 Conditions to the Obligations of Parent........................................... A-34
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER............................................................... A-35
SECTION 9.01 Termination....................................................................... A-35
SECTION 9.02 Effect of Termination............................................................. A-36
SECTION 9.03 Amendment......................................................................... A-36
SECTION 9.04 Waiver............................................................................ A-36
SECTION 9.05 Termination Fee; Expenses......................................................... A-36
ARTICLE X GENERAL PROVISIONS............................................................................... A-37
SECTION 10.01 Non-Survival of Representations and Warranties.................................... A-37
SECTION 10.02 Notices........................................................................... A-37
SECTION 10.03 Severability...................................................................... A-38
SECTION 10.04 Assignment; Binding Effect; Benefit............................................... A-38
SECTION 10.05 Incorporation of Exhibits......................................................... A-38
SECTION 10.06 Governing Law..................................................................... A-39
SECTION 10.07 Waiver of Jury Trial.............................................................. A-39
SECTION 10.08 Headings; Interpretation.......................................................... A-39
SECTION 10.09 Counterparts...................................................................... A-39
SECTION 10.10 Entire Agreement.................................................................. A-39
</TABLE>
ANNEXES
<TABLE>
<CAPTION>
<S> <C> <C>
ANNEX A Form of Stockholder Agreement
ANNEX B Form of Company Affiliate Agreement
ANNEX C Form of Parent Affiliate Agreement
ANNEX D Form of Employment Agreement
</TABLE>
A-ii
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of July 12, 1999
(as amended, supplemented or otherwise modified from time to time, this
"AGREEMENT"), among DOUBLECLICK INC., a Delaware corporation ("PARENT"),
NETGRAVITY, INC., a Delaware corporation ("COMPANY"), and NJ MERGER CORPORATION,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("MERGER
SUB"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have determined that
it is advisable and in the best interests of their respective companies and
stockholders to enter into a business combination by means of the merger of
Merger Sub with and into Company (the "MERGER") and have approved and adopted
this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of
Company have entered into a stockholder agreement (each, a "STOCKHOLDER
AGREEMENT") in the form attached hereto as Annex A;
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Parent will acquire all of the common stock of Company through the
merger of Merger Sub with and into Company;
WHEREAS, for financial reporting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under United States generally accepted
accounting principles ("U.S. GAAP") and the accounting standards of the United
States Securities and Exchange Commission (the "SEC"); and
WHEREAS, for United States Federal income tax purposes, it is intended that
the Merger shall qualify as a tax-free reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "CODE"), and that this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS
Unless the context otherwise requires, the following terms, when used in
this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"AFFILIATE" shall mean, with respect to any person, any other person that
controls, is controlled by or is under common control with the first person.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized by law or executive order to close in New York.
A-1
<PAGE>
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule delivered
by Company to Parent prior to the execution of this Agreement and forming a part
hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect on the
business of Company and the Company Subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, liabilities,
financial condition or results of operations of Company and the Company
Subsidiaries, taken as a whole, except to the extent any such change or effect
results from or is attributable to (i) changes in general economic conditions or
changes affecting the industry generally in which Company operates (provided
that such changes do not affect Company in a materially disproportionate
manner), or (ii) any litigation or loss of current or prospective customers,
employees or revenues that Company successfully bears the burden of proving
arose from Company entering into this Agreement or (iii) any matter described in
Section 1.01 of the Company Disclosure Schedule; PROVIDED, HOWEVER, that in no
event shall a decrease in the trading price of Company Common Stock or
litigation relating thereto be considered a Company Material Adverse Effect.
"COMPANY STOCK PLANS" shall mean Company's 1995 Stock Option Plan, 1998
Stock Plan, Company Stock Purchase Plan and 1998 Director Option Plan.
"COMPANY STOCK PURCHASE PLAN" shall mean Company's 1998 Employee Stock
Purchase Plan.
"COMPETING TRANSACTION" shall mean any of the following involving Company
(other than the Merger):
(i) any merger, consolidation, share exchange, business combination or
other similar transaction (other than, for the purpose of Section
9.05(b)(ii)(B) and 9.05(c), such a transaction in which Company acquires
another Person and the shares of Company Common Stock issued to the
equityholders of such other Person constitute less than 50% of the capital
stock of the successor company in such transaction);
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets (excluding, for the purpose of
Section 9.05(b)(ii)(B) and 9.05(c), cash or cash equivalents) of Company and
its subsidiaries, taken as a whole, in a single transaction or series of
related transactions;
(iii) any tender offer or exchange offer for 20% or more of the
outstanding voting securities of Company or the filing of a registration
statement under the Securities Act in connection therewith; or
(iv) any person having acquired beneficial ownership or the right to
acquire beneficial ownership of, or any "group" (as such term is defined
under Section 13(d) of the Exchange Act) having been formed that
beneficially owns or has the right to acquire beneficial ownership of, 20%
or more of the outstanding voting securities of Company;
(v) other than for the purpose of Section 9.05(b)(ii)(B) and 9.05(c),
any solicitation in opposition to the approval of this Agreement by the
stockholders of Company; or
(vi) other than for the purpose of Section 9.05(b)(ii)(B) and 9.05(c),
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement, dated
as of July 6, 1999 between Parent and Company.
"$" shall mean United States Dollars.
A-2
<PAGE>
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by such party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Merger, the preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement, the solicitation of stockholder approvals,
the filing of HSR Act notice, if any, and all other matters related to the
transactions contemplated hereby and the closing of the Merger.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or local
or any foreign governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, together with the rules and regulations promulgated thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule delivered by
Parent to Company prior to the execution of this Agreement and forming a part
hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect on the
business of Parent and the Parent Subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, liabilities,
financial condition or results of operations of Parent and the Parent
Subsidiaries, taken as a whole, except to the extent any such change or effect
results from or is attributable to (i) changes in general economic conditions or
changes affecting the industry generally in which Parent operates (provided that
such changes do not affect Parent in a materially disproportionate manner) or
(ii) any litigation or loss of current or prospective customers, employees or
revenues that Parent successfully bears the burden of proving arose from Parent
entering into this Agreement; PROVIDED, HOWEVER, that in no event shall a
decrease in the trading price of Parent Common Stock or litigation relating
thereto be considered a Parent Material Adverse Effect.
A-3
<PAGE>
"PARENT STOCK PLANS" shall mean Parent's 1997 Stock Incentive Plan and 1996
Stock Option Plan.
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary of such person) owns,
directly or indirectly, a majority of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges; (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, combined, consolidated or
unitary group for any Taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any person or as a result of an express or
implied obligation to indemnify any person.
"TAX RETURN" shall mean any return, statement or form (including, without
limitation, any estimated tax reports or return, withholding tax reports or
return and information report or return) required to be filed with respect to
any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the DGCL, at the Effective Time (as defined in Section
2.03), Merger Sub shall be merged with and into Company. As a result of the
Merger, the separate corporate existence of Merger Sub shall cease and Company
shall continue as the surviving corporation of the Merger as a wholly owned
subsidiary of Parent (the "SURVIVING CORPORATION").
SECTION 2.02 CLOSING
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to Section 9.01 and subject to
the satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VIII, at a closing (the "CLOSING") to be held at
the offices of Brobeck, Phleger & Harrison LLP, Spear Street Tower, One Market,
San Francisco, California 94105 unless another date, time or place is agreed to
by Parent and Company.
A-4
<PAGE>
SECTION 2.03 EFFECTIVE TIME
At and after the time of the Closing, the parties shall cause the Merger to
be consummated by filing a certificate of merger (the "CERTIFICATE OF MERGER")
with the Secretary of State of the State of Delaware in such form as required
by, and executed in accordance with the relevant provisions of, the DGCL (the
date and time of such filing, or such later date and time as may be set forth
therein, being the "EFFECTIVE TIME").
SECTION 2.04 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
Company and Merger Sub shall vest in Company as the Surviving Corporation, and
all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of Company as the Surviving Corporation.
SECTION 2.05 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION
Unless otherwise agreed by Parent and Company before the Effective Time, at
the Effective Time:
(a) the Certificate of Incorporation and the Bylaws of Merger Sub in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation, until thereafter
amended as provided by Law and such Certificate of Incorporation or Bylaws;
PROVIDED, HOWEVER, that Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is NetGravity, Inc.";
(b) the officers of Merger Sub immediately prior to the Effective Time
shall serve in their respective offices of the Surviving Corporation from
and after the Effective Time, in each case until their successors are
elected or appointed and qualified or until their resignation or removal;
and
(c) the directors of Merger Sub immediately prior to the Effective Time
shall serve as the directors of the Surviving Corporation from and after the
Effective Time, in each case until their successors are elected or appointed
and qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 CONVERSION OF SHARES
At the Effective time, by virtue of the Merger, and without any action on
the part of Parent, Merger Sub, Company or the holders of any of the following
securities:
(a) each share of Common Stock, $.001 par value, of Company ("COMPANY
COMMON STOCK") issued and outstanding immediately before the Effective Time
(excluding those held in the treasury of Company and those owned by any
wholly owned subsidiary of Company) and all rights in respect thereof,
shall, forthwith cease to exist and be converted into and become
exchangeable for .28 shares (the "EXCHANGE RATIO") of common stock, $.001
par value, of Parent ("PARENT COMMON STOCK");
(b) each share of Company Common Stock held in the treasury of Company
or owned by any wholly owned subsidiary of Company immediately prior to the
Effective Time shall be canceled and retired and no shares of stock or other
securities of Parent, the Surviving Corporation or any
A-5
<PAGE>
other corporation shall be issuable, and no payment of other consideration
shall be made, with respect thereto; and
(c) each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
SECTION 3.02 EXCHANGE OF SHARES OTHER THAN TREASURY SHARES
(a) EXCHANGE AGENT. As of the Effective Time, Parent shall enter into an
agreement with a bank or trust company to act as exchange agent for the
Merger (the "EXCHANGE AGENT") as may be designated by Parent and shall be
reasonably acceptable to Company.
(b) PARENT TO PROVIDE COMMON STOCK AND CASH. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holder of Company Common Stock: (i) Certificates of Parent
Common Stock ("PARENT CERTIFICATES") representing the number of whole shares
of Parent Common Stock issuable pursuant to Section 3.01(a) in exchange for
shares of Company Common Stock outstanding immediately prior to the
Effective Time; and (ii) sufficient funds to permit payment in lieu of
fractional shares pursuant to Section 3.04.
(c) EXCHANGE PROCEDURES. The Exchange Agent shall mail to each holder of
record of certificates of Company Common Stock ("COMPANY CERTIFICATES"),
whose shares were converted into the right to receive shares of Parent
Common Stock (and cash in lieu of fractional shares) pursuant to Section
3.04) promptly after the Effective Time (and in any event no later than
three business days after the later to occur of the Effective Time and
receipt by Parent of a complete list from Company of the names and addresses
of its holders of record): (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon receipt of the Company Certificates by
the Exchange Agent, and shall be in such form and have such other provisions
as Parent may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Company Certificates in exchange for Parent
Certificates (and cash in lieu of fractional shares). Upon surrender of a
Company Certificate for cancellation to the Exchange Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed, and such other documents
as may be reasonably required by the Exchange Agent, the holder of such
Company Certificate shall be entitled to receive in exchange therefor a
Parent Certificate representing the number of whole shares of Parent Common
Stock that such holder has the right to receive pursuant to this Article III
and payment of cash in lieu of fractional shares which such holder has the
right to receive pursuant to Section 3.04, and the Company Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each
outstanding Company Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes other than the payment of
dividends and distributions, to evidence the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section
3.04. Notwithstanding any other provision of this Agreement, no interest
will be paid or will accrue on any cash payable to holders of Company
Certificates pursuant to the provisions of this Article III.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Parent Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Company Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Company Certificate
shall surrender such Company Certificate. Subject to the effect of
applicable escheat or similar laws, following surrender of any such Company
Certificate, there shall be paid to the record holder of the Parent
Certificates issued in exchange therefor, without interest, at the time of
such surrender, the
A-6
<PAGE>
amount of any such dividends or other distributions with a record date after
the Effective Time theretofore payable (but for the provisions of this
Section 3.02(d) with respect to such shares of Parent Common Stock.
(e) TRANSFER OF OWNERSHIP. If any Parent Certificate is to be issued in
a name other than that in which the Company Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the Company Certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by
it any transfer or other taxes required by reason of the issuance of a
Parent Certificate for shares of Parent Common Stock in any name other than
that of the registered holder of the Company Certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) TERMINATION OF EXCHANGE AGENT FUNDING. Any portion of funds
(including any interest earned thereon) or Parent Certificates held by the
Exchange Agent which have not been delivered to holders of Company
Certificates pursuant to this Article III within six months after the
Effective Time shall promptly be paid or delivered, as appropriate, to
Parent, and thereafter holders of Company Certificates who have not
theretofore complied with the exchange procedures outlined in and
contemplated by this Section 3.02 shall thereafter look only to Parent
(subject to abandoned property, escheat and similar laws) only as general
creditors thereof for their claim for shares of Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock and any dividends
or distributions (with a record date after the Effective Time) with respect
to Parent Common Stock to which they are entitled.
(g) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any person in respect of any shares of
Parent Common Stock or cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) LOST, STOLEN OR DESTROYED COMPANY CERTIFICATES. In the event any
Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, a Parent Certificate representing such shares of Parent Common
Stock (and cash in lieu of fractional shares) as may be required pursuant to
this Article III; provided, however, that Parent may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Company Certificates to indemnify Parent against
any claim that may be made against Parent, the Surviving Corporation or the
Exchange Agent with respect to the Company Certificates alleged to have been
lost, stolen or destroyed.
SECTION 3.03 STOCK TRANSFER BOOKS
At the Effective Time, the stock transfer books of Company shall each be
closed, and there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of any such stock transfer books.
In the event of a transfer of ownership of shares of Company Common Stock that
is not registered in the stock transfer records of Company at the Effective
Time, a certificate or certificates representing the number of full shares of
Parent Common Stock into which such shares of Company Common Stock shall have
been converted shall be issued to the transferee together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 3.04 hereof, and a
cash payment in the amount of dividends, if any, in accordance with Section
3.02(d) hereof, if the certificate or certificates representing such shares of
Company Common Stock is or are surrendered as provided in Section 3.02(c)
hereof, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
A-7
<PAGE>
SECTION 3.04 NO FRACTIONAL SHARE CERTIFICATES
No scrip or fractional share Parent Certificate shall be issued upon the
surrender for exchange of Company Certificates, and an outstanding fractional
share interest shall not entitle the owner thereof to vote, to receive dividends
or to any rights of a stockholder of Parent or of Surviving Corporation with
respect to such fractional share interest. As promptly as practicable following
the Effective Time, Parent shall deposit with the Exchange Agent an amount in
cash sufficient for the Exchange Agent to pay each holder of Company Common
Stock an amount in cash equal to the product obtained by multiplying (i) the
fractional share interest to which such holder would otherwise be entitled
(after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) by (ii) the closing price for a share of Parent
Common Stock on the Nasdaq National Market (the "NNM") on the first business day
immediately following the Effective Time. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts, net of any required withholding Taxes, to
such holders of Company Common Stock, subject to and in accordance with the
terms of Section 3.02 hereof.
SECTION 3.05 OPTIONS TO PURCHASE COMPANY COMMON STOCK
At the Effective Time, each option or warrant granted by Company to purchase
shares of Company Common Stock ("COMPANY STOCK OPTIONS"), which is outstanding
and unexercised immediately prior to the Effective Time, and the Company Stock
Plans shall be assumed by Parent, and the Company Stock Options shall be
converted into an option or warrant, as the case may be, to purchase shares of
Parent Common Stock in such number and at such exercise price as provided below
and otherwise having the same terms and conditions as in effect immediately
prior to the Effective Time (except to the extent that such terms, conditions
and restrictions may be altered in accordance with their terms as a result of
the Merger contemplated hereby and except that all references in each such
Company Stock Option to Company shall be deemed to refer to Parent):
(a) the number of shares of Parent Common Stock to be subject to the new
option or warrant, as the case may be, shall be equal to the product of (x)
the number of shares of Company Common Stock subject to the original Company
Stock Option immediately prior to the Effective Time and (y) the Exchange
Ratio;
(b) the exercise price per share of Parent Common Stock under the new
option or warrant shall be equal to (x) the exercise price per share of
Company Common Stock in effect under the original Company Stock Option
immediately prior to the Effective Time divided by (y) the Exchange Ratio;
and
(c) in effecting such assumption and conversion, the aggregate number of
shares of Parent Common Stock to be subject to each assumed Company Stock
Option will be rounded down, if necessary, to the next whole share and the
aggregate exercise price shall be rounded up, if necessary, to the next
whole cent while preserving the aggregate intrinsic value.
The adjustments provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code so as to retain their character as incentive stock options. The assumption
of the outstanding Company Stock Options in the Merger and their conversion into
options for Parent Common Stock will not result in any accelerated vesting of
those options or the shares purchasable thereunder other than as contemplated in
currently existing agreements to which Company is a party, copies of which
agreements have been provided to Parent, and the vesting schedule in effect for
each Company Stock Option immediately prior to the Effective Time shall remain
in full force after the assumption thereof by Parent.
A-8
<PAGE>
SECTION 3.06 UNVESTED STOCK
At the Effective Time, any unvested shares of Company Common Stock awarded
to employees, directors or consultants pursuant to any of the Company's plans or
arrangements and outstanding immediately prior to the Effective Time shall be
converted into unvested shares of Parent Common Stock in accordance with the
Exchange Ratio and shall remain subject to the same terms, restrictions and
vesting schedule as in effect immediately prior to the Effective Time, except to
the extent by their terms such unvested shares of Company Common Stock vest at
the Effective Time and copies of the relevant agreements governing such vesting
have been provided to Parent. All outstanding rights which Company may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock shall be assigned to the Parent in the Merger and shall thereafter
be exercisable by Parent upon the same terms and conditions in effect
immediately prior to the Effective Time, except that the shares purchasable
pursuant to such rights and the purchase price payable per share shall be
adjusted to reflect the Exchange Ratio.
SECTION 3.07 EMPLOYEE STOCK PURCHASE PLAN
At the Effective Time, the Company Stock Purchase Plan and each outstanding
purchase right under the Company Stock Purchase Plan shall be assumed by Parent.
Within five business days of the date hereof, Company shall deliver a schedule
that sets forth a true and complete list as of the date hereof of all holders of
outstanding purchase rights under the Company Stock Purchase Plan, including the
payroll deduction amount elected by each holder and the price per share of
Company Common Stock at the start of the current purchase periods. On the
Closing Date, Company shall deliver to Parent an updated version of such
schedule, current as of such date. Each such purchase right so assumed by Parent
under this Agreement shall continue to have, and be subject to, the terms and
conditions set forth in the Company Stock Purchase Plan and the documents
governing the outstanding purchase rights under the Company Stock Purchase Plan
immediately prior to the Effective Time, except that the purchase price of
shares of Parent Common Stock and the number of shares of Parent Common Stock to
be issued upon the exercise of each such purchase right shall be adjusted in
accordance with the Exchange Ratio (with the number of shares rounded down to
the nearest whole share and the purchase price rounded up to the nearest whole
cent). The assumed outstanding purchase rights under the Company Stock Purchase
Plan shall be exercised at such times following the Effective Time as set forth
in the Company Stock Purchase Plan, and each participant shall, accordingly, be
issued shares of Parent Common Stock at such times. The Company Stock Purchase
Plan, and all outstanding purchase rights thereunder, shall terminate with the
exercise of the last assumed purchase right, and no additional purchase rights
shall be granted under the Company Stock Purchase Plan following the Effective
Time.
SECTION 3.08 CERTAIN ADJUSTMENTS
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or the number of shares of Company Common Stock on a
fully diluted basis is in excess of that specified in Section 4.03 and disclosed
in Section 4.03 of the Company Disclosure Schedule (regardless of whether such
excess is a result of an additional issuance of capital stock or a correction to
such Sections), then the Exchange Ratio established pursuant to the provisions
of Section 3.01 shall be adjusted accordingly to provide to Parent the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange, dividend or
increase.
A-9
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the exceptions
specifically disclosed in writing in the Company Disclosure Schedule, all such
exceptions to be referenced to a specific representation set forth in this
Article IV or to otherwise be clearly applicable to representations hereof not
specifically referenced, that:
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Company and each directly and indirectly owned subsidiary of Company
(the "COMPANY SUBSIDIARIES") has been duly organized and is validly existing and
in good standing (to the extent applicable) under the laws of the jurisdiction
of its incorporation or organization, as the case may be, and has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Company and each Company
Subsidiary is duly qualified or licensed to do business, and is in good standing
(to the extent applicable), in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that could not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets forth, as of the
date of this Agreement, a true and complete list of each Company Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Company Subsidiary and the percentage of each Company Subsidiary's outstanding
capital stock or other equity interests owned by Company or another Company
Subsidiary and (ii) an indication of whether each Company Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 4.01 of the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity.
SECTION 4.02 CERTIFICATE OF INCORPORATION AND BYLAWS
The copies of Company's certificate of incorporation and bylaws previously
provided to Parent by Company are true, complete and correct copies thereof.
Such certificate of incorporation and bylaws are in full force and effect.
Company is not in violation of any of the provisions of its certificate of
incorporation or bylaws.
SECTION 4.03 CAPITALIZATION
The authorized capital stock of Company consists of 50,000,000 shares of
Company Common Stock and 5,000,000 shares of preferred stock ("COMPANY PREFERRED
STOCK"). As of the date hereof, (i) 17,822,448 shares of Company Common Stock
are issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of Company Common Stock are held in the treasury
of Company, (iii) no shares of Company Common Stock are held by Company
Subsidiaries, (iv) 4,586,903 shares of Company Common Stock are reserved for
future issuance pursuant to Company Stock Options, of which 3,489,904 shares of
Company Common Stock are reserved for future issuance pursuant to unvested,
outstanding and vested, outstanding, unexercised Company Stock Options
(excluding the Company Stock Purchase Plan), (v) 665,224 shares of Company
Common Stock are reserved for issuance under the Company Stock Purchase Plan and
(vi) no shares of Company Preferred Stock are outstanding. The name of each
holder of a company Stock Option as of the date hereof, the grant date of each
Company Stock Option, and the number of shares of Company Common Stock for which
each Company Stock Option is exercisable and the exercise price of each Company
Stock Option are set forth in Section 4.03 of the Company Disclosure Schedule.
Except for shares of Company Common Stock issuable pursuant to Company Stock
Plans, there are no options, warrants or
A-10
<PAGE>
other rights, agreements, arrangements or commitments of any character to which
Company is a party or by which Company is bound relating to the issued or
unissued capital stock of Company or any Company Subsidiary or obligating
Company or any Company Subsidiary to issue or sell any shares of capital stock
of, or other equity interests in, Company or any Company Subsidiary. All shares
of Company Common Stock subject to issuance as aforesaid, upon issuance prior to
the Effective Time on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. There are no outstanding contractual obligations
of Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or any capital stock of any Company
Subsidiary. Each outstanding share of capital stock of each Company Subsidiary
is duly authorized, validly issued, fully paid and nonassessable and each such
share owned by Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Company's or such other Company Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. There are no
material outstanding contractual obligations of Company or any Company
Subsidiary to provide funds to, or make any material investment (in the form of
a loan, capital contribution or otherwise) in, any Company Subsidiary or any
other person.
SECTION 4.04 AUTHORITY RELATIVE TO THIS AGREEMENT
Company has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Company and the consummation by Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval of
this Agreement by the holders of a majority of the outstanding shares of Company
Common Stock entitled to vote with respect thereto at the Company Stockholders'
Meeting (as defined in Section 7.01), and the filing and recordation of the
Certificate of Merger as required by the DGCL). This Agreement has been duly
executed and delivered by Company and, assuming the due authorization, execution
and delivery by the other parties hereto, constitutes legal, valid and binding
obligations of Company, enforceable against Company in accordance with its
terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of remedies (whether in a proceeding at law or
in equity).
SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Company do not, and the
performance by Company of its obligations hereunder and the consummation of the
Merger will not, (i) conflict with or violate any provision of the certificate
of incorporation or bylaws of Company or any equivalent organizational documents
of any Company Subsidiary, (ii) assuming that all filings and notifications
described in Section 4.05(b) have been made, conflict with or violate any Law
applicable to Company or any Company Subsidiary or by which any property or
asset of Company or any Company Subsidiary is bound or affected or (iii) result
in any material breach of or constitute a material default (or an event which
with the giving of notice or lapse of time or both could reasonably be expected
to become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any material property or asset of Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by Company do not, and the
performance by Company of its obligations hereunder and the consummation of the
Merger will not, require any consent, approval, authorization or permit of, or
filing by Company with or notification by Company to,
A-11
<PAGE>
any Governmental Entity, except pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the rules and regulations of
the NNM, state takeover laws, the premerger notification requirements of the HSR
Act, and the filing and recordation of the Certificate of Merger as required by
the DGCL.
SECTION 4.06 PERMITS; COMPLIANCE WITH LAWS
Company and the Company Subsidiaries are in possession of all material
franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders of
any Governmental Entity necessary for Company or any Company Subsidiary to carry
on its business as it is now being conducted (collectively, the "Company
Permits"), and, as of the date of this Agreement, none of the material Company
Permits has been suspended or cancelled nor is any such suspension or
cancellation pending or, to the knowledge of Company, threatened. Except with
respect to Environmental Permits that are addressed in Section 4.13 hereof,
neither Company nor any Company Subsidiary is in conflict in any material
respect with, or in material default or violation of, (i) any Law applicable to
Company or any Company Subsidiary or by which any property or asset of Company
or any Company Subsidiary is bound or affected or (ii) any Company Permits.
Section 4.06 of the Company Disclosure Schedule sets forth, as of the date of
this Agreement, all actions, proceedings, investigations or surveys pending or,
to the knowledge of Company, threatened against Company or any Company
Subsidiary that could reasonably be expected to result in the suspension or
cancellation of any other Company Permit. Since March 1, 1996, neither Company
nor any Company Subsidiary has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws.
SECTION 4.07 SEC FILINGS; FINANCIAL STATEMENTS
(a) Company has timely filed all forms, reports, statements and documents
required to be filed by it (A) with the SEC since June 11, 1998 (collectively,
together with any such forms, reports, statements and documents Company may file
subsequent to the date hereof until the Closing, the "COMPANY REPORTS") and (B)
with any other Governmental Entities. Each Company Report (i) was prepared in
all material respects in accordance with the requirements of the Securities Act,
the Exchange Act or the rules and regulations of the NNM, as the case may be,
and (ii) did not at the time it was filed (or, in the case of registration
statements filed under the Securities Act, at the time of effectiveness) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each material form, report, statement and document referred to in
clause (B) of this paragraph was prepared in all material respects in accordance
with the requirements of applicable Law. No Company Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or required to file any
form, report or other document with the SEC, the NNM, any other stock exchange
or any other comparable Governmental Entity.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company Reports was prepared in accordance
with U.S. GAAP (except as may be permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of Company and the consolidated
Company Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as reported
in the Company Reports, including the notes thereto, none of Company or any
Company Subsidiary has any liabilities or obligations of any nature
A-12
<PAGE>
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for immaterial liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December 31,
1998.
SECTION 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since December 31, 1998, Company and the Company Subsidiaries have conducted
their businesses in all material respects only in the ordinary course consistent
with past practice and, since such date, there has not been (i) any Company
Material Adverse Effect, (ii) any event that could reasonably be expected to
prevent or materially delay the performance of Company's obligations pursuant to
this Agreement and the consummation of the Merger by Company, (iii) any material
change by Company in its accounting methods, principles or practices, (iv) any
declaration, setting aside or payment of any dividend or distribution in respect
of the shares of Company Common Stock or any redemption, purchase or other
acquisition of any of Company's securities, (v) except for changes in the
ordinary course of business consistent with past practice that only affect
non-officer employees of the Company, any increase in the compensation or
benefits or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any employees, officers, consultants or directors of Company or any
Company Subsidiary, (vi) any issuance or sale of any stock, notes, bonds or
other securities other than pursuant to offerings registered under the
Securities Act or pursuant to the exercise of outstanding securities, or
entering into any agreement with respect thereto, (vii) any amendment to the
Company's certificate of incorporation or bylaws, (viii) other than in the
ordinary course of business consistent with past practice, any (x) purchase,
sale, assignment or transfer of any material assets, (y) mortgage, pledge or
existence of any lien, encumbrance or charge on any material assets or
properties, tangible or intangible, except for liens for Taxes not yet
delinquent and such other liens, encumbrances or charges which do not,
individually or in the aggregate, have a Company Material Adverse Effect, or (z)
waiver of any rights of material value or cancellation or any material debts or
claims, (ix) any incurrence of any material liability (absolute or contingent),
except for current liabilities and obligations incurred in the ordinary course
of business consistent with past practice, (x) any incurrence of any damage,
destruction or similar loss, whether or not covered by insurance, materially
affecting the business or properties of Company or any Company Subsidiary, or
(xi) any entering into any transaction of a material nature other than in the
ordinary course of business, consistent with past practice.
SECTION 4.09 EMPLOYEE BENEFIT PLANS; LABOR MATTERS
(a) The Company Disclosure Schedule lists each employee benefit fund, plan,
program, arrangement and contract (including, without limitation, any "pension"
plan, fund or program, as defined in Section 3(2) of ERISA, and any "employee
benefit plan," as defined in Section 3(3) of ERISA and any plan, program,
arrangement or contract providing for severance; medical, dental or vision
benefits; life insurance or death benefits; disability benefits, sick pay or
other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits), whether written or not
("BENEFIT PLANS"), maintained, sponsored or contributed to or required to be
contributed to by Company or any Company Subsidiary (the "COMPANY BENEFIT
PLANS"). With respect to each Company Benefit Plan, Company has delivered or
made available to Parent a true, complete and correct copy of (i) such Company
Benefit Plan (of, if not written, a written summary of its material terms) and
the most recent summary plan description, if any, related to such Company
Benefit Plan, (ii) each trust agreement or other funding arrangement, if any,
relating to such Company Benefit Plan, (iii) the most recent annual report (Form
5500), if any, filed with the IRS with respect to such Company Benefit Plan
A-13
<PAGE>
(and, if the most recent annual report is a Form 5500R, the most recent Form
5500C filed with respect to such Company Benefit Plan), (iv) the most recent
actuarial report or financial statement, if any, relating to such Company
Benefit Plan and (v) the most recent determination, notification, advisory or
opinion letter, issued by the IRS with respect to such Company Benefit Plan and
any pending request for such a determination letter. Neither Company nor any
Company Subsidiary nor, to the knowledge of Company, any other person or entity,
has any express or implied commitment, whether legally enforceable or not, to
modify, change or terminate any Company Benefit Plan, other than with respect to
a modification, change or termination required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all material respects
in accordance with its terms and all applicable laws, including ERISA and the
Code, and all material contributions required to be made under the terms of any
of the Company Benefit Plans as of the date of this Agreement have been timely
made or, if not yet due, have been properly reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. With respect to the Company Benefit
Plans, no event has occurred and, to the knowledge of Company, there exists no
condition or set of circumstances in connection with which Company or any
Company Subsidiary could be subject to any material liability (other than for
routine benefit liabilities) under the terms of, or with respect to, such
Company Benefit Plans, ERISA, the Code or any other applicable Law.
(c) Company on behalf of itself and each Company ERISA Affiliate (as defined
below) hereby represents that: (i) each Company Benefit Plan which is intended
to qualify under Section 401(a), Section 401(k), Section 401(m) or Section
4975(e)(6) of the Code has received a favorable determination, notification,
advisory or opinion letter from the IRS as to its qualified status, and each
trust established in connection with any Company which is intended to be exempt
from federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and to Company's
knowledge no fact or event has occurred that is reasonably likely to adversely
affect the qualified status of any such Company Benefit Plan or the exempt
status of any such trust; (ii) to Company's knowledge there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code and other than a transaction that is exempt under a statutory
or administrative exemption) with respect to any Company Plan that could result
in liability to the Company or a Company Subsidiary and (iii) each Company
Benefit Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability (other than (A)
liability for ordinary administrative expenses typically incurred in a
termination event or (B) if the Company Benefit Plan is pension benefit plan
subject to Part 2 of Title I of ERISA, liability for the accrued benefits as of
the date of such termination (if and to the extent required by ERISA) to the
extent that either there are sufficient assets set aside in a trust or insurance
contract to satisfy such liability or such liability is reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Company Reports prior to the date of this Agreement. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
Company is threatened, against or with respect to any such Company Benefit Plan,
including any audit or inquiry by the IRS or United States Department of Labor
(other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan (as defined in
Section 3(37) of ERISA) or other pension plan subject to Title IV of Part 3 of
Title I of ERISA or Section 412 of the Code and neither the Company, any Company
Subsidiary nor any other trade or business (whether or not incorporated) that is
under "common control" with Company or a Company Subsidiary (within the meaning
of ERISA Section 4001) or with respect to which Company or any Company
Subsidiary could otherwise incur liability under Title IV of ERISA (a "COMPANY
ERISA AFFILIATE") has sponsored or contributed to or been required to contribute
to a multiemployer pension plan or other pension plan subject to Title IV of
ERISA. No material liability under Title IV of ERISA has been incurred by
Company, any Company Subsidiary or any Company ERISA Affiliate that has not been
satisfied in full,
A-14
<PAGE>
and no condition exists that presents a material risk to Company or any Company
Subsidiary of incurring or being subject (whether primarily, jointly or
secondarily) to a material liability thereunder. None of the assets of Company
or any Company Subsidiary is, or may reasonably be expected to become, the
subject of any lien arising under ERISA or Section 412(n) of the Code.
(e) Company has made available to Parent copies of (i) all employment
agreements with officers and all consulting agreements of Company and each
Company Subsidiary providing for annual compensation in excess of $100,000, (ii)
all severance plans, agreements, programs and policies of Company and each
Company Subsidiary with or relating to their respective employees, directors or
consultants, and (iii) all plans, programs, agreements and other arrangements of
Company and each Company Subsidiary with or relating to their respective
employees, directors or consultants which contain "change of control"
provisions. No payment or benefit which may be required to be made by Company or
any Company Subsidiary or which otherwise may be required to be made under the
terms of any Company Benefit Plan or other arrangement will constitute a
parachute payment under Code Section 280(G)(1), and the consummation of the
transactions contemplated by this Agreement will not, alone or in conjunction
with any other possible event (including termination of employment), (i) entitle
any current or former employee or other service provider of Company or any
Company Subsidiary to severance benefits or any other payment, compensation or
benefit (including forgiveness of indebtedness), except as expressly provided by
this Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation or benefit due any such employee or service provider.
(f) Neither Company nor any Company Subsidiary is a party to, or has any
obligations under or with respect to, any collective bargaining or other labor
union contract applicable to persons employed by Company or any Company
Subsidiary and no collective bargaining agreement is being negotiated by Company
or any Company Subsidiary or any person or entity that may obligate the Company
or any Company Subsidiary thereunder. As of the date of this Agreement, there is
no labor dispute, strike or work stoppage against Company or any Company
Subsidiary pending or, to the knowledge of Company, threatened which may
materially interfere with the respective business activities of Company or any
Company Subsidiary. As of the date of this Agreement, to the knowledge of
Company, none of Company, any Company Subsidiary, or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective businesses of Company or any
Company Subsidiary, and there is no charge or complaint against Company or any
Company Subsidiary by the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing.
(g) Except as required by Law, no Company Benefit Plan provides any of the
following retiree or post-employment benefits to any person: medical, disability
or life insurance benefits. To Company's knowledge, Company and the Company
ERISA Affiliates are in compliance in all material respects with (i) the
requirements of the applicable health care continuation and notice provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
and the regulations (including proposed regulations) thereunder and (ii) the
applicable requirements of the Health Insurance Portability and Accountability
Act of 1996, as amended, and the regulations (including the proposed
regulations) thereunder.
SECTION 4.10 POOLING; CERTAIN TAX MATTERS
Neither Company nor, to the knowledge of Company, any of its affiliates has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected to prevent (a) the Merger from being treated
for accounting purposes as a "pooling of interests" in accordance with U.S. GAAP
and the accounting standards of the SEC or (b) the Merger from constituting a
"reorganization" under Section 368 of the Code. Company is not aware of any
agreement or plan to which Company or any of its affiliates is a party or other
circumstances relating to Company or any of
A-15
<PAGE>
its affiliates that could reasonably be expected to prevent the Merger from
being so treated as a "pooling of interests" or from so qualifying as a
reorganization under Section 368 of the Code.
SECTION 4.11 CONTRACTS
Section 4.11 of the Company Disclosure Schedule sets forth a list of each
contract or agreement that is material to the business, assets, liabilities,
financial condition or results of operations of Company and Company
Subsidiaries, taken as a whole (each, a "MATERIAL CONTRACT"). Neither Company
nor any Company Subsidiary is in material violation of or in material default
under (nor does there exist any condition which with the passage of time or the
giving of notice could reasonably be expected to cause such a material violation
of or material default under) any Material Contract. Each Material Contract is
in full force and effect and is a legal, valid and binding obligation of Company
or a Company Subsidiary and, to the knowledge of Company, each of the other
parties thereto, enforceable in accordance with its terms.
SECTION 4.12 LITIGATION
There is no suit, claim, action, proceeding or investigation pending or, to
the knowledge of Company, threatened against Company or any Company Subsidiary
that could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect or materially interfere with Company's ability
to consummate the transactions contemplated hereby, and, to the knowledge of
Company, there are no existing facts or circumstances that could reasonably be
expected to result in such a suit, claim, action, proceeding or investigation.
Company is not aware of any facts or circumstances which could reasonably be
expected to result in the denial of insurance coverage under policies issued to
Company and Company Subsidiaries in respect of such suits, claims, actions,
proceedings and investigations, except in any case as could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Neither Company nor any Company Subsidiary is subject to any outstanding
order, writ, injunction or decree which could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or
materially interfere with Company's ability to consummate the transactions
contemplated hereby.
SECTION 4.13 ENVIRONMENTAL MATTERS
Except as could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (i) Company and the Company
Subsidiaries are in compliance with all applicable Environmental Laws and all
Environmental Permits; (ii) all past noncompliance of Company or any Company
Subsidiary with Environmental Laws or Environmental Permits has been resolved
without any pending, ongoing or future obligation, cost or liability; and (iii)
neither Company nor any Company Subsidiary has released a Hazardous Material at,
or transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Company or any Company Subsidiary, in
violation of any Environmental Law.
SECTION 4.14 INTELLECTUAL PROPERTY
(a) All patents, trademarks, trade names, service marks, trade dress,
Internet domain names, copyrights and any renewal rights therefor, technology,
supplier lists, trade secrets, know-how, computer software programs or
applications in both source and object code form, technical documentation of
such software programs ("TECHNICAL DOCUMENTATION"), databases, data,
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that are or have been used
(including without limitation in the development of) Company's business and/or
in any product, technology or process (i) currently being or formerly
manufactured, published or marketed by Company or (ii) previously or currently
under development for possible future manufacturing, publication, marketing or
other use by Company are hereinafter referred to as the "COMPANY INTELLECTUAL
PROPERTY."
A-16
<PAGE>
(b) Section 4.14 of the Company Disclosure Schedule contains a true and
complete list of Company's patents, patent applications, trademarks, trademark
applications, trade names, service marks, service mark applications, Internet
domain names, Internet domain name applications and other filings and formal
actions made or taken pursuant to Federal, state, local and foreign laws by
Company to protect its interests in the Company Intellectual Property.
(c) The Company Intellectual Property consists solely of items and rights
which are: (i) owned by Company; (ii) in the public domain; or (iii) rightfully
used by Company pursuant to a valid license (the "COMPANY LICENSED INTELLECTUAL
PROPERTY"), the parties and date of each such license agreement (each, a
"LICENSE AGREEMENT") being set forth on Section 4.14(c) of the Company
Disclosure Schedule. Company has all rights in Company Intellectual Property
necessary to carry out Company's current activities (and had all rights
necessary to carry out its former activities at the time such activities were
being conducted), including without limitation, to the extent required to carry
out such activities, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to the Company Licensed Intellectual Property, assign and sell, the
Company Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing, sublicensing,
sale or any other exercise of rights in any Company Intellectual Property,
product, service, work, technology or process as now used or offered or proposed
for use, licensing or sale by Company does not infringe on any copyright, trade
secret, trademark, service mark, trade name, trade dress, firm name, Internet
domain name, logo, trade dress, mask work or other proprietary or personal right
of any person or, to the knowledge of Company, the patent of any person.
Notwithstanding the foregoing, with respect to Company Licensed Intellectual
Property that (i) has a license fee of less than $1,000 per copy used in
Company's products and (ii) (x) is used on a stand alone basis or (y) causes
Company Intellectual Property to be subject to a claim (for reasons other than
that the combination of such Company Licensed Intellectual Property with other
Company Intellectual Property is infringing), Company relies on the
representations and warranties of non-infringement contained in the agreements
pursuant to which Company is authorized to use such Company Licensed
Intellectual Property. No claims (i) challenging the validity, effectiveness or,
other than with respect to the Company Licensed Intellectual Property, ownership
by Company of any of the Company Intellectual Property, or (ii) to the effect
that the use, distribution, licensing, sublicensing, sale or any other exercise
of rights in any product, service, work, technology or process as now used or
offered or proposed for use, licensing, sublicensing or sale by Company
infringes or will infringe on any intellectual property or other proprietary or
personal right of any person have been asserted or, to the knowledge of Company,
are threatened by any person, nor are there, to Company's knowledge, any valid
grounds for any bona fide claim of any such kind. All registered, granted or
issued patents, trademarks, Internet domain names and copyrights held by Company
are subsisting and, to Company's knowledge, enforceable. To the knowledge of
Company, there is no unauthorized use, infringement or misappropriation of any
of the Company Intellectual Property by any third party, employee or former
employee.
(e) All personnel, including employees, agents, consultants and contractors,
who have contributed to or participated in the conception and development of the
Company Intellectual Property on behalf of Company, have executed nondisclosure
agreements substantially in the form set forth on Appendix C to the Company
Disclosure Schedule and either (i) have been a party to a "work-for-hire"
arrangement or agreements with Company in accordance with applicable national
and state law that has accorded Company full, effective, exclusive and original
ownership of all tangible and intangible property thereby arising, or (ii) have
executed appropriate instruments of assignment in favor or Company as assignee
that have conveyed to Company effective and exclusive ownership of all tangible
and intangible property thereby arising.
A-17
<PAGE>
(f) Company is not, nor as a result of the execution or delivery of this
Agreement, or performance of Company's obligations hereunder, will Company be,
in violation of any license, sublicense, agreement or instrument to which
Company is a party or otherwise bound, nor will execution or delivery of this
Agreement, or performance of Company's obligations hereunder, cause the
diminution, termination or forfeiture of any Company Intellectual Property.
(g) Section 4.14(g) of the Company Disclosure Schedule contains a true and
complete list of all of Company's software programs commercialized by Company
(the "COMPANY SOFTWARE PROGRAMS"). Except with respect to software or technology
licensed by Company, Company owns full and unencumbered right and good, valid
and marketable title to such Company Software Programs free and clear of all
mortgages, pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind other than licenses granted in the ordinary
course of business.
(h) The source code and system documentation relating to the Company
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by Company only to employees who have a "need to know"
the contents thereof in connection with the performance of their duties to
Company and who have executed the nondisclosure agreements referred to in
Section 4.14, and (iii) have not been disclosed to any third party except
pursuant to nondisclosure agreements or in the ordinary course of business with
respect to APIs and similar code disclosures to enhance marketability of Company
Software Programs.
(i) The Company Software Programs (i) have been designed to ensure year 2000
compatibility, which includes, but is not limited to, date data century
recognition, and calculations that accommodate same century and multi-century
formulas and date values; (ii) operate and will operate in accordance with their
specifications prior to, during and after the calendar year 2000 AD; and (iii)
shall not end abnormally or provide invalid or incorrect results as a result of
date data, specifically including date data which represents or references
different centuries or more than one century.
SECTION 4.15 TAXES
(a) Company and each of Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been a member, have properly completed and timely
filed all material Tax Returns required to be filed by them and have paid all
Taxes shown thereon to be due. Company has provided adequate accruals in
accordance with generally accepted accounting principles in its latest financial
statements included in the Company Reports for any Taxes that have not been
paid, whether or not shown as being due on any Tax Returns. Other than Taxes
incurred in the ordinary course of business, Company and the Company
Subsidiaries have no material liability for unpaid Taxes accruing after the date
of the Company's latest financial statements included in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien against the
property of Company or any Company Subsidiary or is being asserted against
Company or any Company Subsidiary other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Company or any Company Subsidiary
being conducted by a Tax Authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company or any Company
Subsidiary and currently in effect, and (iv) no agreement, contract or
arrangement to which Company or any Company Subsidiary is a party that may
result in the payment of any amount that would not be deductible by reason of
Section 280G or Section 404 of the Code.
A-18
<PAGE>
(c) Company and the Company Subsidiaries have not been and will not be
required by reason of the Merger to include any material adjustment in Taxable
income for any Tax period (or portion thereof) pursuant to Section 481 or 263A
of the Code or any comparable provision under state or foreign Tax laws as a
result of transactions, events or accounting methods employed prior to the
Merger.
(d) Neither Company nor any Company Subsidiary has filed or will file any
consent to have the provisions of paragraph 341(f)(2) of the Code (or comparable
provisions of any state Tax laws) apply to Company or any Company Subsidiary.
(e) Neither Company nor any Company Subsidiary is a party to any Tax sharing
or Tax allocation agreement nor does Company or any Company Subsidiary have any
liability or potential liability to another party under any such agreement.
(f) Neither Company nor any Company Subsidiary has filed any disclosures
under Section 6662 or comparable provisions of state, local or foreign law to
prevent the imposition of penalties with respect to any Tax reporting position
taken on any Tax Return.
(g) Neither Company nor any Company Subsidiary has ever been a member of a
consolidated, combined or unitary group of which Company was not the ultimate
parent corporation.
(h) Company and each Company Subsidiary has in its possession receipts for
any Taxes paid to foreign Tax authorities. Neither Company nor any Company
Subsidiary has ever been a "personal holding company" within the meaning of
Section 542 of the Code or a "United States real property holding corporation"
within the meaning of Section 897 of the Code.
SECTION 4.16 INSURANCE
Company and each Company Subsidiary is presently insured, and during each of
the past three calendar years has been insured, against such risks as companies
engaged in a similar business would, in accordance with good business practice,
customarily be insured. The policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of Company and
Company Subsidiaries provide adequate coverage against loss. Company has
heretofore furnished to Parent a complete and correct list as of the date hereof
of all insurance policies maintained by Company or the Company Subsidiaries, and
has made available to Parent complete and correct copies of all such policies,
together with all riders and amendments thereto. All such policies are in full
force and effect and all premiums due thereon have been paid to the date hereof.
Company and the Company Subsidiaries have complied in all material respects with
the terms of such policies.
SECTION 4.17 PROPERTIES
Company and the Company Subsidiaries have good and marketable title, free
and clear of all material mortgages, liens, pledges, charges or other
encumbrances to all their material tangible properties and assets, real,
personal or mixed, reflected in the Company's consolidated financial statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as being owned by Company and the Company Subsidiaries as of
the date thereof, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements, (iii) liens arising in the ordinary course of business after the
date of such financial statements and (iv) liens that are not material in amount
or do not materially affect the value or operations of Company and the Company
Subsidiaries. All buildings, and all fixtures, equipment and other property and
assets that are material to its business on a consolidated basis, held under
leases or sub-leases by Company or any Company Subsidiary are held under valid
instruments enforceable in accordance with their respective terms, subject to
applicable laws of bankruptcy, insolvency or similar laws relating to creditors'
rights generally and to general principles of equity (whether applied in a
A-19
<PAGE>
proceeding in law or equity). Substantially all of Company's and the Company
Subsidiaries' equipment in regular use which is material to the operation of
Company or the Company Subsidiaries, has been reasonably maintained and is in
serviceable condition, reasonable wear and tear excepted.
SECTION 4.18 AFFILIATES
Section 4.18 of the Company Disclosure Schedule sets forth the names and
addresses of each person who is, in Company's reasonable judgment, an affiliate
(as such term is used in Rule 145 under the Securities Act or under applicable
SEC accounting releases with respect to pooling of interests accounting
treatment) of Company.
SECTION 4.19 OPINION OF FINANCIAL ADVISOR
BancBoston Robertson Stephens Inc. ("ROBERTSON STEPHENS") has delivered to
the board of directors of Company its written opinion to the effect that, as of
the date hereof, the Exchange Ratio is fair to the holders of shares of Company
Common Stock from a financial point of view.
SECTION 4.20 BROKERS
No broker, finder or investment banker (other than Robertson Stephens) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Company. Company
has heretofore made available to Parent true, complete and correct copies of all
agreements between Company and Robertson Stephens pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 4.21 CERTAIN BUSINESS PRACTICES
Neither Company nor any Company Subsidiary nor any directors, officers,
agents or employees of Company or any Company Subsidiary (in their capacities as
such) has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
SECTION 4.22 SECTION 203 OF THE DGCL NOT APPLICABLE
The Board of Directors of Company has approved the Merger, this Agreement
and the Stockholder Agreements, and such approval is sufficient to render
inapplicable to the Merger, this Agreement and the Stockholder Agreements and
the transactions contemplated by this Agreement and the Stockholder Agreements
the provisions of Section 203 of the DGCL. To Company's knowledge, no other
state takeover statute or similar statute or regulation applies or purports to
apply to the Merger, this Agreement, the Stockholders Agreements or the
transactions contemplated by this Agreement and the Stockholders Agreements.
SECTION 4.23 BUSINESS ACTIVITY RESTRICTION
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Company or any subsidiary of
Company is a party or subject to that has or could reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by Company
in any material respect. Company has not entered into any agreement under which
Company is restricted in any material respect from selling, licensing or
otherwise distributing any of its technology or products to, or providing
services to, customers or potential customers or any class of customers, in any
geographic area, during any period of time or in any segment of the market or
line of business.
A-20
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company, subject to the exceptions
specifically disclosed in the Parent Disclosure Schedule, all such exceptions to
be referenced to a specific representation set forth in this Article V or to
otherwise be clearly applicable to representations hereof not specifically
referenced, that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Parent and each directly and indirectly owned subsidiary of Parent (the
"PARENT SUBSIDIARIES") has been duly organized and is validly existing and in
good standing (to the extent applicable) under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted. Parent, and each Parent Subsidiary is duly qualified or licensed to
do business, and is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets forth, as of the
date of this Agreement, a true and complete list of each Parent Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Parent Subsidiary and the percentage of each Parent Subsidiary's outstanding
capital stock or other equity interests owned by Parent or another Parent
Subsidiary and (ii) an indication of whether each Parent Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Neither Parent nor any Parent Subsidiary owns an equity interest in any
partnership or joint venture arrangement or other business entity that is
material to the business, assets, liabilities, financial condition or results of
operations of Parent and the Parent Subsidiaries, taken as a whole.
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS
The copies of each of Parent's and Merger Subs' certificate of incorporation
and bylaws previously provided to Company by Parent are true, complete and
correct copies thereof. Such certificates of incorporation and bylaws are in
full force and effect.
SECTION 5.03 CAPITALIZATION
The authorized capital stock of Parent consists of 400,000,000 shares of
Parent Common Stock and 5,000,000 shares of preferred stock. As of the date
hereof (i) 39,763,603 shares of Parent Common Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) no shares of
Parent Common Stock are held in the treasury of the Company, (iii) no shares of
Parent Common Stock are held by the Parent Subsidiaries, (iv) 5,495,205 shares
of Parent Common Stock are reserved for future issuance pursuant to outstanding
options and warrants to purchase Parent Common Stock ("PARENT STOCK OPTION"), of
which 4,195,377 and 1,299,828 shares of Parent Common Stock are reserved for
future issuance pursuant to unvested, outstanding and vested, outstanding,
unexercised Parent Stock Options, respectively, and (v) no shares of Parent
preferred stock are issued and outstanding. Except for the shares of Parent
Common Stock issuable pursuant to the Parent Stock Plans, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Parent is a party or by which Parent is bound relating to the
issued or unissued capital stock of Parent or any Parent Subsidiary or
obligating Parent or any Parent Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Parent or any Parent Subsidiary.
All shares of Parent Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective
A-21
<PAGE>
Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of Parent or any
Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of
Parent Common Stock or any capital stock of any Parent Subsidiary. Each
outstanding share of capital stock of each Parent Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such share owned by Parent
or another Parent Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
Parent's or such other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. There are no material outstanding
contractual obligations of Parent or any Parent Subsidiary to provide funds to,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any Parent Subsidiary or any other person.
SECTION 5.04 AUTHORITY RELATIVE TO THIS AGREEMENT
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate such transactions. This Agreement has
been duly executed and delivered by each of Parent and Merger Sub and, assuming
the due authorization, execution and delivery by Company, constitutes a legal,
valid and binding obligation of each of Parent and Merger Sub enforceable
against Parent and Merger Sub in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of remedies (whether in a proceeding at law or in equity).
SECTION 5.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, (i) conflict with or
violate any provision of the articles of incorporation or bylaws of Parent or
any equivalent organizational documents of any Parent Subsidiary, (ii) assuming
that all consents, approvals, authorizations and permits described in Section
5.05(b) have been obtained and all filings and notifications described in
Section 5.05(b) have been made, conflict with or violate any Law applicable to
Parent or any other Parent Subsidiary or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected or (iii) result in any
breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or any Parent Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, require any consent,
approval, authorization or permit of, or filing by Parent with or notification
by Parent to, any Governmental Entity, except pursuant to applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the rules
and regulations of the NNM, state takeover laws, the premerger notification
requirements of the HSR Act, if any, and the filing and recordation of the
Certificate of Merger as required by the DGCL.
A-22
<PAGE>
SECTION 5.06 SEC FILINGS; FINANCIAL STATEMENTS
(a) Parent has timely filed all forms, reports, statements and documents
required to be filed by it (A) with the SEC since March 1, 1998 (collectively,
together with any such forms, reports, statements and documents Parent may file
subsequent to the date hereof until the Closing, the "PARENT REPORTS") and (B)
with any other Governmental Entities. Each Parent Report (i) was prepared in all
material respects in accordance with the requirements of the Securities Act, the
Exchange Act or the NNM, as the case may be, and (ii) did not at the time it was
filed (or, in the case of registration statements filed under the Security Act,
at the time of effectiveness) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each material form, report,
statement and document referred to in clause (B) of this paragraph was prepared
in all material respects in accordance with the requirements of applicable Law.
No Parent Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the NNM, any other stock exchange or any other comparable Governmental
Entity.
(b) Except as is provided in the Parent Reports, each of the consolidated
financial statements (including, in each case, any notes thereto) contained in
the Parent Reports was prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto) and each presented fairly, in all material respects, the
consolidated financial position of Parent and the consolidated Parent
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and the Parent Subsidiaries as reported in
the Parent Reports, including the notes thereto, none of Parent or any Parent
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1998 that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.07 POOLING; CERTAIN TAX MATTERS
Neither Parent nor, to the knowledge of Parent, any of its affiliates has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could reasonably be expected to prevent (a) the Merger from
being treated for accounting purposes as a "pooling of interests" in accordance
with U.S. GAAP and the accounting standards of the SEC or (b) the Merger from
constituting a "reorganization" under Section 368 of the Code. Parent is not
aware of any agreement, plan or other circumstance that could reasonably be
expected to prevent the Merger from being so treated as a "pooling of interests"
or from so qualifying as a reorganization under Section 368 of the Code.
SECTION 5.08 OPINION OF FINANCIAL ADVISOR
Goldman, Sachs & Co. ("GOLDMAN SACHS") has delivered to the board of
directors of Parent its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to Parent.
A-23
<PAGE>
SECTION 5.09 BROKERS
No broker, finder or investment banker (other than Goldman Sachs) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent. Parent
has heretofore made available to Company true, complete and correct copies of
all agreements between Parent and Goldman Sachs pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 5.10 AFFILIATES
Section 5.10 of the Parent Disclosure Schedule sets forth the names and
addresses of each person who is, in Parent's reasonable judgment, an affiliate
of Parent.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS BY COMPANY PENDING THE CLOSING
Company agrees that, between the date of this Agreement and the Effective
Time, unless Parent shall otherwise agree in writing, (x) the respective
businesses of Company and the Company Subsidiaries shall be conducted only in,
and Company and the Company Subsidiaries shall not take any action except in,
the ordinary course of business consistent with past practice and (y) Company
shall use all reasonable efforts to keep available the services of such of the
current officers, significant employees and consultants of Company and the
Company Subsidiaries and to preserve the current relationships of Company and
the Company Subsidiaries with such of the corporate partners, customers,
suppliers and other persons with which Company or any Company Subsidiary has
significant business relations in order to preserve substantially intact its
business organization. By way of amplification and not limitation, neither
Company nor any Company Subsidiary shall, between the date of this Agreement and
the Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change its certificate of incorporation or bylaws
or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee or encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license or encumbrance of, (i) any shares of capital
stock of Company or any Company Subsidiary of any class, or securities
convertible into or exchangeable or exercisable for any shares of such
capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Company or any
Company Subsidiary, other than the issuance of shares of Company Common
Stock pursuant to the exercise of warrants or stock options therefor
outstanding as of the date of this Agreement, (ii) the issuance in the
ordinary course of business consistent with past practice of up to an
additional 500,000 shares of Company Common Stock under Company's Stock
Plans pursuant to new grants of options or share purchase rights or (iii)
any property or assets of Company or any Company Subsidiary except sales of
inventory in the ordinary course of business consistent with past practice;
A-24
<PAGE>
(c)(i) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or person or any division thereof
(other than in connection with the formation of foreign subsidiaries and the
capitalization thereof with no more than $500,000); (ii) incur any
indebtedness for borrowed money (other than in de minimus amounts) or issue
any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money or make any loans or advances material to the business,
assets, liabilities, financial condition or results of operations of Company
and the Company Subsidiaries, taken as a whole; (iii) terminate, cancel or
request any material change in, or agree to any material change in, any
Company Material Contract or other material License Agreement (other than as
described in Section 6.01(c)(iii) of the Company Disclosure Schedule); (iv)
make or authorize any capital expenditure, other than capital expenditures
in the ordinary course of business that have been described in the
Disclosure Schedule and that are not, in the aggregate, in excess of
$4,000,000 for Company and the Company Subsidiaries taken as a whole; or (v)
enter into or amend any contract, agreement, commitment or arrangement that,
if fully performed, would not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock, except that any Company Subsidiary may pay dividends or make
other distributions to Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination of
the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of options granted under the Company Stock Plans
or authorize cash payments in exchange for any Company Stock Options granted
under any of such plans, except pursuant to existing arrangements disclosed
to Parent prior to the date hereof;
(g) amend the terms of, repurchase, redeem or otherwise acquire, or
permit any Company Subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of any Company Subsidiary or propose
to do any of the foregoing;
(h) other than pursuant to existing agreements of Company previously
provided to Parent, increase the compensation payable or to become payable
to its directors, officers, consultants or employees (other than any such
increases for non-officers that are made in the ordinary course of business
consistent with past practice), grant any rights to severance or termination
pay to, or enter into any employment or severance agreement which provides
benefits upon a change in control of Company that would be triggered by the
Merger with, any director, officer, consultant or other employee of Company
or any Company Subsidiary who is not currently entitled to such benefits
from the Merger, establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer, consultant or employee
of Company or any Company Subsidiary (except as allowed under Section
6.01(b)), except to the extent required by applicable Law or the terms of a
collective bargaining agreement, or enter into or amend any contract,
agreement, commitment or arrangement between Company or any Company
Subsidiary and any of Company's directors, officers, consultants or
employees (except as allowed under Section 6.01(b));
(i) except as permitted under Section 6.01(c), pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
A-25
<PAGE>
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities (A) reflected or reserved
against on the consolidated balance sheet of Company and the consolidated
the Company Subsidiaries dated as of March 31, 1999 included in Company's
quarterly report on Form 10-Q for the period then ended (the "COMPANY
BALANCE SHEET") and only to the extent of such reserves or (B) that are both
immaterial in amount and incurred in the ordinary course of business
consistent with past practice after the date of the Company Balance Sheet;
(j) make any change with respect to Company's accounting policies,
principles, methods or procedures, including, without limitation, revenue
recognition policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any material
Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of Company
contained in this Agreement untrue or incorrect in any material respect or
result in any of the conditions to the Merger set forth herein not being
satisfied, except as specifically permitted hereunder.
SECTION 6.02 NOTICES OF CERTAIN EVENTS
Each of Parent and Company shall give prompt notice to the other of (i) any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the Merger; (ii) any notice or
other communication from any Governmental Entity in connection with the Merger;
(iii) any actions, suits, claims, investigations or proceedings commenced or, to
its knowledge, threatened against, relating to or involving or otherwise
affecting Parent or the Parent Subsidiaries or Company or the Company
Subsidiaries, respectively, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Parent Material Contract
or Company Material Contract, respectively; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect, respectively, or to delay or impede the ability of
either Parent or Company, respectively, to perform their respective obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.03 ACCESS TO INFORMATION; CONFIDENTIALITY
(a) Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or Company or any of the Parent
Subsidiaries or the Company Subsidiaries is a party or pursuant to applicable
Law or the regulations or requirements of any stock exchange or other regulatory
organization with whose rules a party hereto is required to comply, from the
date of this Agreement to the Effective Time, Parent and Company shall (and
shall cause the Parent Subsidiaries and Company Subsidiaries, respectively, to)
(i) provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively,
"REPRESENTATIVES")) access at reasonable times upon prior notice to its and its
subsidiaries' officers, employees, agents, properties, offices and other
facilities and to the books and records thereof, and (ii) furnish promptly such
information concerning its and its subsidiaries' business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request. No investigation conducted pursuant to
this Section 6.03 shall affect or be deemed to modify any representation or
warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Confidentiality Agreement with respect to the information disclosed pursuant to
this Section 6.03.
A-26
<PAGE>
SECTION 6.04 NO SOLICITATION OF TRANSACTIONS
Until this Agreement has been terminated as provided herein, Company shall
not, directly or indirectly, and shall cause its Representatives not to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing nonpublic information), any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of Company's Representatives or subsidiaries, or any
Representative retained by Company's subsidiaries, to take any such action;
PROVIDED, HOWEVER, that nothing contained in this Agreement, including this
Section 6.04, shall prohibit the Company or the board of directors of Company
(i) from complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange
Act with regard to a tender or exchange offer not made in violation of this
Section 6.04 or (ii) prior to receipt of the approval by the stockholders of
Company of this Agreement and the Merger from providing information (subject to
a confidentiality agreement at least as restrictive as the Confidentiality
Agreement) in connection with, and negotiating, another unsolicited, bona fide
written proposal regarding a Competing Transaction that (i) Company's board of
directors shall have concluded in good faith, in part on the basis of advice of
independent outside counsel of nationally recognized reputation, that such
action is necessary to prevent Company's board of directors from violating its
fiduciary duties to Company's stockholders under applicable law, (ii) if any
cash consideration is involved, shall not be subject to any financing
contingency, and with respect to which Company's board of directors shall have
determined (based in part upon the advice of Company's independent financial
advisors of nationally recognized reputation) that the acquiring party is
reasonably capable of consummating such Competing Transaction on the terms
proposed, and (iii) Company's board of directors reasonably believes in good
faith that such Competing Transaction provides greater value to the stockholders
of Company than the Merger (based in part upon the written opinion of Company's
independent financial advisors of nationally recognized reputation that such
Competing Transaction is superior from a financial point of view) (any such
Competing Transaction being referred to herein as a "SUPERIOR PROPOSAL"). Any
violation of the restrictions set forth in this Section 6.04 by any
Representative of Company or any of its Subsidiaries, whether or not such Person
is purporting to act on behalf of Company or otherwise, shall be deemed to be a
breach of this Section 6.04 by Company. Company shall notify Parent promptly if
any proposal or offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made, such notice to include the
identity of the person making such proposal, offer, inquiry or contact, and the
terms of such Competing Transaction, and shall keep Parent apprised, on a
current basis, of the status of such Competing Transaction and of any
modifications to the terms thereof. Company immediately shall cease and cause to
be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party.
SECTION 6.05 5TAX-FREE TRANSACTION; POOLING
From and after the date of this Agreement, each party hereto shall use all
reasonable efforts to cause the Merger to qualify, and shall not knowingly take
any actions or cause any actions to be taken which could reasonably be expected
to prevent the Merger from (a) qualifying as a "reorganization" under Section
368(a) of the Code or (b) being treated for financial accounting purposes as a
"pooling of interests" in accordance with U.S. GAAP and the accounting standards
of the SEC.
SECTION 6.06 CONTROL OF OPERATIONS
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to
A-27
<PAGE>
the Effective Time, Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
SECTION 6.07 FURTHER ACTION; CONSENTS; FILINGS
(a) Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
Merger, (ii) obtain from Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Parent or Company or any of their respective subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger and (iii) make all necessary filings, and thereafter make any other
required or appropriate submissions, with respect to this Agreement and the
Merger required under (A) the rules and regulations of the NNM, (B) the
Securities Act, the Exchange Act and any other applicable Federal or state
securities Laws, (C) the HSR Act, if any, and (D) any other applicable Law. The
parties hereto shall cooperate and consult with each other in connection with
the making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and none
of the parties shall file any such document if any of the other parties shall
have reasonably objected to the filing of such document. No party shall consent
to any voluntary extension of any statutory deadline or waiting period or to any
voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent and agreement of the other parties
hereto, which consent shall not be unreasonably withheld or delayed.
(b) Each of Company and Parent will give (or will cause their respective
subsidiaries to give) any notices to third persons, and use, and cause their
respective subsidiaries to use, reasonable efforts to obtain any consents from
third persons necessary, proper or advisable (as determined in good faith by
Parent with respect to such notices or consents to be delivered or obtained by
Company) to consummate the transactions contemplated by this Agreement.
SECTION 6.08 ADDITIONAL REPORTS
Company and Parent shall each furnish to the other copies of any reports of
the type referred to in Sections 4.07 and 5.06, which it files with the SEC on
or after the date hereof, and Company and Parent, as the case may be, covenant
and warrant that as of the respective dates thereof, such reports 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 the statements therein, in
light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present in all material
respects the financial position of Company and its consolidated subsidiaries or
Parent and its consolidated subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information including therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and U.S. GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
SECTION 6.09 TAX INFORMATION
Company shall provide the following information to Parent not later than two
weeks after the date of this Agreement: (i) a complete list of the types of Tax
Returns being filed by Company and each Company Subsidiary in each taxing
jurisdiction, (ii) a list of all closed years with respect to each such type of
Tax Return filed in each jurisdiction, and (iii) a list of any deferred
intercompany gain with respect to transactions to which Company or any Company
Subsidiary has been a party. Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of Company's and
Company Subsidiaries' Tax Returns and other records and workpapers relating to
Taxes.
A-28
<PAGE>
SECTION 6.10 CONDUCT OF BUSINESS BY PARENT.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not knowingly take any action a principal purpose
of which is, and the reasonably likely result of which would be, a material
delay in or interference with the consummation of the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 REGISTRATION STATEMENT; PROXY STATEMENT
(a) As promptly as practicable after the execution of this Agreement, Parent
and Company shall jointly prepare and shall file with the SEC a document or
documents that will constitute (i) the prospectus forming part of the
registration statement on Form S-4 of Parent (together with all amendments
thereto, the "REGISTRATION STATEMENT"), in connection with the registration
under the Securities Act of Parent Common Stock to be issued to Company's
stockholders pursuant to the Merger and (ii) the proxy statement with respect to
the Merger relating to the special meetings of Company's stockholders to be held
to consider approval of this Agreement and the Merger (the "COMPANY
STOCKHOLDERS' MEETING") (together with any amendments thereto, the "PROXY
STATEMENT"). Copies of the Proxy Statement shall be provided to the NNM in
accordance with its rules. Each of the parties hereto shall use all reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
Registration Statement, the parties hereto shall take all action required under
any applicable Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Merger. Parent or Company, as the case may be, shall
furnish all information concerning Parent or Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement and the Proxy Statement. As promptly as practicable after
the effective date of the Registration Statement, the Proxy Statement shall be
mailed to the stockholders of Company. Each of the parties hereto shall cause
the Proxy Statement to comply as to form and substance as to such party in all
material respects with the applicable requirements of (i) the Exchange Act, (ii)
the Securities Act, (iii) the rules and regulations of the NNM.
(b) The Proxy Statement shall include (i) the approval of the Merger and the
recommendation of the board of directors of Company to Company's stockholders
that they vote in favor of approval of this Agreement and the Merger, subject to
the right of the board of directors of Company to withdraw its recommendation
and recommend a Superior Proposal in compliance with Section 6.04 of this
Agreement, and (ii) the opinion of Robertson Stephens referred to in Section
4.19. The board of directors of Company shall submit this Agreement to Company's
stockholders whether or not at any time subsequent to the date hereof such board
determines that it can no longer make such recommendation; PROVIDED, HOWEVER,
that, in the case of such withdrawal of such board's recommendation, Company may
delay or adjourn the meeting at which this Agreement is submitted to such
stockholders by as many as ten business days in order to give such stockholders
a reasonable opportunity to consider such withdrawal of recommendation.
(c) No amendment or supplement to the Proxy Statement or the Registration
Statement shall be made without the approval of Parent and Company, which
approval shall not be unreasonably withheld or delayed; PROVIDED, HOWEVER, that
the consent of Parent shall not be required to amend or supplement the Proxy
Statement to reflect the withdrawal of the recommendation of Company's board of
directors that Company's stockholders vote in favor of the approval of this
Agreement and/or the recommendation that Company's stockholders approve of a
Superior Proposal. Each of the parties hereto shall advise the other parties
hereto, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of
A-29
<PAGE>
the issuance of any stop order, of the suspension of the qualification of the
Parent Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or of any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to stockholders of Company, at the
time of the Company Stockholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or any Company
Subsidiary, or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to the
Registration Statement or the Proxy Statement, Company shall promptly inform
Parent. All documents that Company is responsible for filing with the SEC in
connection with the Merger will comply as to form in all material respects with
the applicable requirements of the rules and regulations of the Securities Act
and the Exchange Act.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to stockholders of Company, at the
time of Company Stockholders' meeting and at the Effective Time and (B) in the
case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event or circumstance relating to Parent or any
Parent Subsidiary, or their respective officers or directors, should be
discovered by Parent that should be set forth in an amendment or a supplement to
the Registration Statement or the Proxy Statement, Parent shall promptly inform
Company. All documents that Parent is responsible for filing with the SEC in
connection with the Merger will comply as to form in all material respects with
the applicable requirements of the rules and regulations of the Securities Act
and the Exchange Act.
SECTION 7.02 STOCKHOLDERS' MEETING
Company shall call and hold the Company Stockholders' Meeting as promptly as
practicable after the date hereof for the purpose of voting upon the approval of
this Agreement and the Merger pursuant to the Proxy Statement, and Company shall
use all reasonable efforts to hold the Company Stockholders' Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective, subject to Company's right to delay or adjourn such meeting as
provided in Section 7.01(c). Unless Company's board of directors has withdrawn
its recommendation of this Agreement and the Merger in compliance with Section
6.04, Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Proxy Statement and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by the DGCL or applicable
other stock exchange requirements to obtain such approval. Company shall take
all other action necessary or, in the reasonable opinion of Parent, advisable to
promptly and expeditiously secure any vote or consent of stockholders required
by applicable Law and Company's certificate of incorporation and bylaws to
effect the Merger. Company shall call and hold the Company Stockholders' Meeting
for the purpose of voting upon the approval of this Agreement and the Merger
whether or not Company's board of directors at any time subsequent
A-30
<PAGE>
to the date hereof determines that this Agreement is no longer advisable or
recommends that Company's stockholders reject it.
SECTION 7.03 AFFILIATES
(a) Company will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex B hereto from (i) each person
identified in Section 4.18 of the Company Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any person
who, to the knowledge of Company, may be deemed to have become an affiliate of
Company after the date of this Agreement and prior to the Effective Time as soon
as practicable after attaining such status. The foregoing notwithstanding,
Parent shall be entitled to place legends as specified in the Affiliate
Agreement on the certificates evidencing any of the Parent Common Stock to be
received by (i) any affiliate of Company or (ii) any person Parent reasonably
identifies (by written notice to Company) as being a person who may be deemed an
"affiliate" within the meaning of Rule 145 promulgated under the Securities Act,
and to issue appropriate stop transfer instructions to the transfer agent for
such Parent Common Stock, consistent with the terms of the Affiliate Agreement,
regardless of whether such person has executed Affiliate Agreement and
regardless of whether such person's name and address appear on Section 4.18 of
the Company Disclosure Schedule.
(b) Parent will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex C hereto from (i) each person
identified in Section 5.10 of the Parent Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any person
who, to the knowledge of Parent, may be deemed to have become an affiliate of
Parent after the date of this Agreement and prior to the Effective Time as soon
as practicable after attaining such status.
SECTION 7.04 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
(a) Parent and the Merger Sub agree that all rights to indemnification,
advancement of expenses, exculpation, limitation of liability and any and all
similar rights now existing in favor of each present and former director,
officer, employee and agent of Company and each Company Subsidiary
(collectively, the "Indemnified Parties") as provided in the Company's present
charter, by-laws or contractual arrangement in effect on the date hereof, shall
survive the Merger and shall continue in full force and effect for a period of
six years from the Effective Time, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals
who at any time prior to the Effective Time were directors, officers, employees
or agents of the Company, unless such modification shall be required by law, and
Parent agrees to cause the Surviving Corporation to comply with its obligations
thereunder; provided, however, that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect to any such claim or claims shall continue until the disposition of any
and all such claims.
(b) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers a material amount of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guaranty the
indemnification obligations referred to in this Section 7.04 or will make or
cause to be made proper provision so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, assume the
indemnification obligations described herein for the benefit of the Indemnified
Parties and have substantially equal financial ability as the Company
(immediately prior to the Effective Time) to satisfy the obligations of the
parties pursuant to this Section 7.04 as a condition to such merger,
consolidation or transfer becoming effective.
A-31
<PAGE>
(c) The provisions of this Section 7.04 are (i) intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Parties and (ii)
in addition to, and not in substitution for, any other rights to indemnification
or contribution that any such person may have by contract or otherwise.
(d) For a period of three years after the Effective Time, Parent shall use
its best efforts to maintain in effect the directors' and officers' liability
insurance policies maintained by Company; PROVIDED, HOWEVER, that in no event
shall Parent be required to expend in any one year in excess of 150% of the
annual premium currently paid by Company for such coverage, which Company hereby
represents is $250,000, and provided further, that if the premium for such
coverage exceeds such amount, Parent shall purchase a policy with the greatest
coverage available for such 150% of the annual premium.
SECTION 7.05 NO SHELF REGISTRATION
Parent shall not be required to amend or maintain the effectiveness of the
Registration Statement for the purpose of permitting resale of the shares of
Parent Common Stock received pursuant hereto by the persons who may be deemed to
be "affiliates" of Company within the meaning of Rule 145 promulgated under the
Securities Act.
SECTION 7.06 PUBLIC ANNOUNCEMENTS
The initial press release concerning the Merger shall be a joint press
release and, thereafter, Parent and Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the Merger and shall not issue any such press release or
make any such public statement without the prior written approval of the other,
except to the extent required by applicable Law or the requirements of the rules
and regulations of the NNM, in which case the issuing party shall use all
reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
SECTION 7.07 NNM LISTING
Prior to the Effective Time, Parent shall file with the NNM a Notification
Form for Listing of Additional Shares with respect to the Parent Common Stock
issued or issuable in connection with the Merger and shall use all reasonable
efforts to obtain approval from NNM of the listing of such Parent Common Stock
as of the Effective Time, subject to official notice of issuance.
SECTION 7.08 BLUE SKY
Parent shall use all reasonable efforts to obtain prior to the Effective
Time all necessary permits and approvals required under Blue Sky Laws to permit
the distribution of the shares of Parent Common Stock to be issued in accordance
with the provisions of this Agreement.
SECTION 7.09 EMPLOYEE BENEFIT MATTERS
Unless Parent consents otherwise in writing, Company shall take all action
necessary to terminate, or cause to terminate, before the Effective Time, any
Company Benefit Plan that is a 401(k) plan or other defined contribution
retirement plan.
SECTION 7.10 REGISTRATION STATEMENT ON FORM S-8.
On the date of the Effective Time or as soon thereafter as is practicable,
Parent shall file a registration statement on Form S-8 covering the issuance of
Parent Common Stock issuable under the Company Stock Plans.
A-32
<PAGE>
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE
MERGER
The obligations of the parties hereto to consummate the Merger are subject
to the satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared effective by the
SEC under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC and not
concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly approved by the
requisite vote of stockholders of Company in accordance with the DGCL;
(c) no court of competent jurisdiction shall have issued or entered any
order, writ, injunction or decree, and no other Governmental Entity shall
have issued any order, which is then in effect and has the effect of making
the Merger illegal or otherwise prohibiting its consummation;
(d) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act or any other applicable
competition, merger control or similar Law shall have expired or been
terminated; and
(e) all consents, approvals and authorizations legally required to be
obtained to consummate the Merger shall have been obtained from all
Governmental Entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in a
Parent Material Adverse Effect or a Company Material Adverse Effect.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF COMPANY
The obligations of Company to consummate the Merger, or to permit the
consummation of the Merger are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained in
this Agreement shall be true, complete and correct in all respects (ignoring
for this purpose all materiality or Material Adverse Effect qualifications
in such representations and warranties) both when made and on and as of the
Effective Time as if made at and as of the Effective Time (other than (i)
representations and warranties which address matters only as of a certain
date which shall have been true, complete and correct as of such certain
date, and (ii) failures to be true, complete and correct that do not, in the
aggregate, constitute a Parent Material Adverse Effect), and Company shall
have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Parent to such effect;
(b) Parent shall have performed or complied in all material respects
with all covenants required by this Agreement to be performed or complied
with by it on or prior to the Effective Time and Company shall have received
a certificate of the Chief Executive Officer and Chief Financial Officer of
Parent to that effect;
(c) Wilson Sonsini Goodrich & Rosati, legal counsel to Company, shall
have issued its opinion, such opinion dated on the date of the Closing,
addressed to Company, and reasonably satisfactory to it, based upon
customary representations of Company and Parent and customary assumptions,
to the effect that the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, which opinion shall not have been
withdrawn or modified in any material respect; PROVIDED, HOWEVER, that if
such firm does not render such opinion, this condition
A-33
<PAGE>
shall nonetheless be deemed satisfied if such opinion, dated as of the date
of the Closing, is rendered to Company by Brobeck, Phleger & Harrison LLP,
counsel to Parent; and
(d) There shall have been no Parent Material Adverse Effect since the
date of this Agreement.
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF PARENT
The obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company contained in
this Agreement shall be true, complete and correct in all respects (ignoring
for this purpose all materiality or Material Adverse Effect qualifications
in such representations and warranties) both when made and on and as of the
Effective Time as if made at and as of the Effective Time (other than (i)
representations and warranties which address matters only as of a certain
date which shall have been true, complete and correct as of such certain
date, and (ii) failures to be true, complete and correct that do not, in the
aggregate, constitute a Company Material Adverse Effect), and Parent shall
have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Company to such effect;
(b) Company shall have performed or complied in all material respects
with all covenants required by this Agreement to be performed or complied
with by it on or prior to the Effective Time and Parent shall have received
a certificate of the Chief Executive Officer and Chief Financial Officer of
Company to that effect;
(c) Brobeck, Phleger & Harrison LLP, special counsel to Parent, shall
have issued its opinion, such opinion dated on the date of the Closing,
addressed to Parent, and reasonably satisfactory to it, based upon customary
representations of Company and Parent and customary assumptions, to the
effect that the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, which opinion shall not have been withdrawn
or modified in any material respect; PROVIDED, HOWEVER, that if such firm
does not render such opinion, this condition shall nonetheless be deemed
satisfied if such opinion, dated as of the date of Closing, is rendered to
Parent by Wilson Sonsini Goodrich & Rosati, legal counsel to Company;
(d) Parent shall have been advised in writing by PricewaterhouseCoopers
LLP as of the date upon which the Effective Time is to occur, in a form and
in substance reasonably acceptable to Parent, that the Merger can properly
be accounted for as a "pooling of interests" business combination in
accordance with U.S. GAAP and the accounting standards of the SEC; Company
shall have been advised in writing by KPMG LLP as of the date upon which the
Effective Time is to occur that such firm concurs with the management of the
Company that there is no reason why the Merger cannot be treated for
financial accounting purposes as a "pooling of interests" business
combination in accordance with U.S. GAAP and the accounting standards of the
SEC;
(e) There shall have been no Company Material Adverse Effect since the
date of this Agreement;
(f) All consents of third parties required pursuant to the terms of any
Material Contract as a result of the Merger shall have been obtained; and
(g) At least five of the employees of Company set forth on Schedule
8.03(g) shall have either (i) entered into employment, proprietary invention
and non-competition agreements substantially in the form of Annex D or (ii)
if so permitted as provided on Schedule 8.03(g), allowed Parent to assume
their respective employment agreement as in effect on the date hereof and
entered into a non-competition and proprietary invention agreement with
Parent in substantially the form included in Annex D.
A-34
<PAGE>
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, notwithstanding any requisite adoption and approval
of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of directors
of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall not have
occurred on or before January 31, 2000; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 9.01(b) shall not be available
to any party whose material breach of this Agreement shall have caused, or
resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by either Parent or Company, if any Governmental Order, writ,
injunction or decree preventing the consummation of the Merger shall have
been entered by any court of competent jurisdiction and shall have become
final and nonappealable;
(d) by Parent, if (i) the board of directors of Company withdraws,
modifies or changes its recommendation of this Agreement or the Merger in a
manner adverse to Parent or its stockholders, (ii) the board of directors of
Company shall have recommended to the stockholders of Company a Competing
Transaction, (iii) the Company fails to comply in all material respects with
Section 6.04 or Section 7.02, (iv) a Competing Transaction shall have been
announced or otherwise publicly known and the board of directors of Company
shall have (A) failed to recommend against acceptance of such by its
stockholders (including by taking no position, or indicating its inability
to take a position, with respect to the acceptance by its stockholders of a
Competing Transaction involving a tender offer or exchange offer) within 5
business days of delivery of a written request from Parent for such action,
(B) failed to reconfirm its approval and recommendation of this Agreement
and the transactions contemplated hereby within 5 business days of delivery
of a written request from Parent for such action or (C) determined that such
Competing Transaction was a Superior Proposal and to take any of the actions
allowed by clause (ii) of Section 6.04 (and shall not have, prior to
Parent's termination of this Agreement pursuant to this Section
9.01(d)(iv)(C), (x) reconfirmed its approval and recommendation of this
Agreement and (y) recommended against acceptance of such Superior Proposal
by its stockholders), or (v) the board of directors of Company resolves to
take any of the actions described above;
(e) by Parent or Company, if this Agreement and the Merger shall fail to
receive the requisite votes for approval at the Company Stockholders'
Meeting or any adjournment or postponement thereof;
(f) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, incomplete
or incorrect, in either case such that the conditions set forth in Section
8.03 would not be satisfied (a "TERMINATING COMPANY BREACH"); PROVIDED,
HOWEVER, that if such Terminating Company Breach is curable by Company
through the exercise of its reasonable efforts within 20 days and for so
long as Company continues to exercise such reasonable efforts, Parent may
not terminate this Agreement under this Section 9.01(f); and PROVIDED,
FURTHER that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01; or
(g) by Company, upon breach of any representation, warranty, covenant or
agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall
A-35
<PAGE>
have become untrue, incomplete or incorrect, in either case such that the
conditions set forth in Section 8.02 would not be satisfied (a "TERMINATING
PARENT BREACH"); PROVIDED, HOWEVER, that if such Terminating Parent Breach
is curable by Parent through the exercise of its reasonable efforts within
20 days and for so long as Parent continues to exercise such reasonable
efforts, Company may not terminate this Agreement under this Section
9.01(g); and PROVIDED, FURTHER that the preceding proviso shall not in any
event be deemed to extend any date set forth in paragraph (b) of this
Section 9.01.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.01 will remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.02 EFFECT OF TERMINATION
Except as provided in Section 9.05, in the event of termination of this
Agreement pursuant to Section 9.01, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party hereto
or any of its affiliates or any of its or their officers or directors, and all
rights and obligations of each party hereto shall cease; PROVIDED, HOWEVER, that
nothing herein shall relieve any party hereto from liability for the willful or
intentional breach of any of its representations and warranties or the willful
or intentional breach of any of its covenants or agreements set forth in this
Agreement. No termination of this Agreement shall affect the obligation of the
parties contained in the Confidentiality Agreements, which shall survive
termination of this Agreement and remain in full force and effect in accordance
with their terms.
SECTION 9.03 AMENDMENT
This Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective boards of directors at any time prior to the
Effective Time; PROVIDED, HOWEVER, that, after the approval of this Agreement by
the stockholders of Company, no amendment may be made that changes the amount or
type of consideration into which Company common stock will be converted pursuant
to this Agreement. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.04 WAIVER
At any time prior to the Effective Time, any party hereto may (a) extend the
time for or waive compliance with the performance of any obligation or other act
of any other party hereto, (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance by the other party with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 9.05 TERMINATION FEE; EXPENSES
(a) Except as set forth in this Section 9.05, all Expenses incurred in
connection with this Agreement and the Merger shall be paid by the party
incurring such Expenses, whether or not the Merger is consummated, except
that Parent and Company each shall pay one-half of all Expenses (other than
attorneys' and accountants' fees and expenses) incurred solely for printing,
filing and mailing the Registration Statement and the Proxy Statement and
all SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement and any fees required to be
paid under the HSR Act.
(b) In the event that (i) Parent shall terminate this Agreement pursuant
to Section 9.01(d) or (ii) this Agreement shall be terminated pursuant to
Section 9.01(b) or pursuant to Section 9.01(e) as a result of the failure to
obtain the requisite approval of the Company
A-36
<PAGE>
stockholders and (A) at or prior to such termination, there shall exist or
have been publicly proposed a Competing Transaction with respect to Company
and (B) within 12 months after such termination, Company shall enter into a
definitive agreement with respect to any Competing Transaction or any
Competing Transaction involving Company shall be consummated, then, in the
case of (i), promptly after such termination, or in the case of (ii),
immediately before the execution and delivery of such agreement or such
consummation, Company shall pay to Parent an amount equal to $30 million
(the "TERMINATION FEE").
(c) In the event that Parent shall terminate this Agreement pursuant to
Section 9.01(f), then Company shall promptly reimburse Parent for Parent's
Expenses, and if, within twelve months of such termination of this
Agreement, Company shall enter into a definitive agreement with respect to
any Competing Transaction or any Competing Transaction involving Company
shall be consummated concurrently with the consummation of such Competing
Transaction, then, immediately before the execution and delivery of such
agreement or such consummation, Company shall pay to Parent an amount in
cash equal to the Termination Fee less the amount of any Expenses of Parent
previously reimbursed by Company pursuant to this Section 9.05(c).
(d) Parent and Company agree that the agreements contained in Section
9.05(b) and 9.05(c) above are an integral part of the transaction
contemplated by this Agreement and constitute liquidated damages and not a
penalty. Accordingly, if Company fails to pay to Parent any amounts due
under Section 9.05(b) or 9.05(c), Company shall pay the cash and expenses
(including legal fees and expenses) in connection with any action, including
the filing of any lawsuit of other legal action, taken to collect payment,
together with interest on such amounts at the prime rate of Citibank, N.A.
in effect on the date such payment was required to be made.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be. This Section 10.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 NOTICES
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by telecopy or facsimile, by
registered or certified mail (postage prepaid, return receipt requested) or by a
nationally recognized courier service to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.02):
(a) if to Company:
NetGravity, Inc.
1900 South Norfolk Street, Suite 150
San Mateo, CA 94403
Attention: Stephen Recht
Telecopier: (650) 425-6070
A-37
<PAGE>
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Larry W. Sonsini
Telecopier: (650) 493-6811
(b) if to Parent or Merger Sub:
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, NY 10010
Attention: Elizabeth Wang, General Counsel
Telecopier: (212) 889-0029
with a copy to:
Brobeck, Phleger & Harrison LLP
One Market, Spear Street Tower
San Francisco, CA 94105
Attention: Steve L. Camahort
Telecopier: (415) 442-1010
SECTION 10.03 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.04 ASSIGNMENT; BINDING EFFECT; BENEFIT
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, other than Section 7.04, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns any rights or
remedies under or by reason of this Agreement.
SECTION 10.05 INCORPORATION OF EXHIBITS
The Parent Disclosure Schedule, the Company Disclosure Schedule and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth herein.
A-38
<PAGE>
SECTION 10.06 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE OTHER THAN CONFLICT OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES
HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH
OF THE PARTIES HERETO WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(III) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 10.07 WAIVER OF JURY TRIAL
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY
OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 HEADINGS; INTERPRETATION
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 10.09 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 ENTIRE AGREEMENT
This Agreement (including the Exhibits, the Parent Disclosure Schedule and
the Company Disclosure Schedule) and the Confidentiality Agreement constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
A-39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
<TABLE>
<S> <C> <C>
DOUBLECLICK INC.
By: /s/ KEVIN P. RYAN
-----------------------------------------
Kevin P. Ryan
PRESIDENT AND CHIEF OPERATING OFFICER
NETGRAVITY, INC.
By: /s/ ERIC W. SPIVEY
-----------------------------------------
Eric W. Spivey
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NJ MERGER CORPORATION
By: /s/ KEVIN P. RYAN
-----------------------------------------
Kevin P. Ryan
PRESIDENT
</TABLE>
A-40
<PAGE>
APPENDIX B
FORM OF STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into as of
July 12, 1999 between DoubleClick Inc., a Delaware corporation ("Parent"), and
the undersigned stockholder ("Stockholder") of NetGravity, Inc., a Delaware
corporation ("Company"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth in the Merger Agreement described
below.
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger and Reorganization
dated as of July 12, 1999 by and among Parent, NJ Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub") and Company
(such agreement as it may be amended is hereinafter referred to as the "Merger
Agreement") Parent has agreed to acquire the outstanding securities of Company
pursuant to a statutory merger of Merger Sub with and into Company (the
"Merger") in which each outstanding share of capital stock of Company (the
"Company Capital Stock") will be converted into shares of common stock of Parent
(the "Parent Shares") at the exchange rate set forth in the Merger Agreement
(the "Transaction");
WHEREAS, in order to induce Parent to enter into the Merger Agreement and
consummate the Transaction, Company has agreed to use its reasonable best
efforts to cause each stockholder of Company who is an affiliate of Company to
execute and deliver to Parent a Stockholder Agreement upon the terms set forth
herein; and
WHEREAS, Stockholder is the registered and beneficial owner of such number
of shares of the outstanding capital stock of Company as is indicated on the
signature page of this Agreement (the "Shares").
NOW, THEREFORE, the parties agree as follows:
1. SHARES.
1.1 OWNERSHIP OF SHARES. Stockholder is the beneficial owner of (i.e., has
sole or shared voting or investment power with respect to) the Shares. The
Shares constitute Stockholder's entire interest in the outstanding capital stock
and voting securities of Company. The Shares are free and clear of any liens,
claims, options, charges or other encumbrances. Stockholder's principal
residence or place of business is accurately set forth on the signature page
hereto. As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the Effective Time or (ii) termination of the Merger Agreement in
accordance with the terms thereof.
1.2 NEW SHARES. Stockholder agrees that any shares of capital stock or
voting securities of Company that Stockholder purchases or with respect to which
Stockholder otherwise acquires beneficial ownership after the date of this
Agreement and prior to the Expiration Date ("New Shares") shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares for so long as they are held by Stockholder.
2. AGREEMENT TO VOTE SHARES. Prior to the Expiration Date, at every
meeting of the stockholders of Company at which any of the following is
considered or voted upon, and at every adjournment thereof, and on every action
or approval by written resolution of the stockholders of Company with respect to
any of the following, Stockholder shall vote the Shares and any New Shares, in
each case as to which Stockholder then has voting control, in favor of approval
and adoption of the Merger Agreement and of the Transaction.
B-1
<PAGE>
3. IRREVOCABLE PROXY. Stockholder hereby agrees to timely deliver to
Parent a duly executed proxy in the form attached hereto as Exhibit I (the
"Proxy"), such Proxy to cover the Shares and all New Shares in respect of which
Stockholder is entitled to vote at each meeting of the stockholders of Company
and held by Stockholder as of the record date for such meeting (including,
without limitation, each written consent in lieu of a meeting) solely for
purposes of voting such shares in favor of approval and adoption of the Merger
Agreement; PROVIDED, THAT, such proxy shall only survive for so long as the
Merger Agreement is in effect. In the event that Stockholder is unable to
provide any such Proxy in a timely manner, Stockholder hereby grants Parent a
power of attorney to execute and deliver such Proxy for and on behalf of
Stockholder, such power of attorney, which being coupled with an interest, shall
survive any death, disability, bankruptcy, or any other such impediment of
Stockholder. Upon the execution of this Agreement by Stockholder, Stockholder
hereby revokes any and all prior proxies or powers of attorney given by
Stockholder with respect to the Shares and agrees not to grant any subsequent
proxies or powers of attorney with respect to the Shares until after the
Expiration Date.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER. Stockholder
hereby represents, warrants and covenants to Parent as follows:
(a) Stockholder has full power and legal capacity to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Stockholder and constitutes the valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance with
its terms, except as may be limited by (i) the effect of bankruptcy, insolvency,
conservatorship, arrangement, moratorium or other laws affecting or relating to
the rights of creditors generally, or (ii) the rules governing the availability
of specific performance, injunctive relief or other equitable remedies and
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. Except as may be limited by (i) the effect of bankruptcy,
insolvency, conservatorship, arrangement, moratorium or other laws affecting or
relating to the rights of creditors generally, or (ii) the rules governing the
availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, regardless of whether considered in a
proceeding in equity or at law, the execution and delivery of this Agreement by
Stockholder does not, and the performance of Stockholder's obligations hereunder
will not, result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any right to terminate, amend, accelerate or cancel any right or obligation
under, or result in the creation of any lien or encumbrance on any Shares or New
Shares pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Stockholder is a party or by which Stockholder or the Shares or New Shares are
or will be bound or affected.
(b) Except to the extent otherwise permitted under Section 6.04 of the
Merger Agreement, until the Expiration Date, Stockholder will not (and will use
Stockholder's reasonable best efforts to cause its affiliates, officers,
directors and employees and any investment banker, attorney, accountant or other
agent retained by Stockholder, not to: (i) initiate or solicit, directly or
indirectly, any proposal, plan or offer to acquire all or any material part of
the business or properties or capital stock of Company, whether by merger,
purchase of assets, tender offer or otherwise, or to liquidate Company or
otherwise distribute to the stockholders of Company all or any substantial part
of the business, properties or capital stock of Company (each, an "Acquisition
Proposal"); (ii) initiate, directly or indirectly, any contact with any person
in an effort to or with a view towards soliciting any Acquisition Proposal;
(iii) furnish information concerning Company's business, properties or assets to
any corporation, partnership, person or other entity or group (other than
Parent, or any associate, agent or representative of Parent) under any
circumstances that could reasonably be expected to relate to an actual or
potential Acquisition Proposal; or (iv) negotiate or enter into discussions or
an agreement, directly or indirectly, with any entity or group with respect of
any potential Acquisition Proposal. In the
B-2
<PAGE>
event Stockholder shall receive or become aware of any Acquisition Proposal
subsequent to the date hereof, Stockholder shall promptly inform Parent as to
any such matter and the details thereof to the extent possible without breaching
any other agreement to which such Stockholder is a party or violating its
fiduciary duties.
(c) Stockholder understands and agrees that if Stockholder attempts to vote
or provide any other person with the authority to vote any of the Shares held by
Stockholder as of the record date for any meeting at which such Shares are to be
voted other than in compliance with this Agreement, Company shall not, and
Stockholder hereby unconditionally and irrevocably instructs Company to not
record such vote unless and until Stockholder shall have complied with the terms
of this Agreement.
5. NO LIMITATION ON DISCRETION AS DIRECTOR. If the Stockholder is a
natural person and is a member of the board of directors of Company, then this
Agreement will apply to the exercise by Stockholder in his individual capacity
of rights attaching to ownership of the Shares, and nothing herein shall be
deemed to apply to, or to limit in any manner the discretion of Stockholder with
respect to, any action which may be taken or omitted by him acting in his
fiduciary capacity as a director of Company.
6. ADDITIONAL DOCUMENTS. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent, to carry out the purpose and intent of this
Agreement.
7. CONSENT AND WAIVER. Stockholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Transaction under the
terms of any agreement to which Stockholder is a party or pursuant to any rights
Stockholder may have.
8. TERMINATION. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
9. CONFIDENTIALITY. Stockholder agrees (i) to hold any information
regarding this Agreement and the Transaction in strict confidence, and (ii) not
to divulge any such information to any third person, except to the extent any of
the same is hereafter publicly disclosed by Parent.
10. MISCELLANEOUS.
10.1 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
10.2 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without the prior written consent of the other. This Agreement is
intended to bind Stockholder solely as a securityholder of Company only with
respect to the specific matters set forth herein.
10.3 AMENDMENT AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
10.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means
B-3
<PAGE>
available to Parent at law or in equity and Stockholder hereby waives any and
all defenses which could exist in its favor in connection with such enforcement
and waives any requirement for the security or posting of any bond in connection
with such enforcement.
10.5 NOTICES. All notices, requests, demands or other communications that
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail, postage prepaid, or sent by facsimile
transmission, as follows:
(a) If to Stockholder, at the address set forth below Stockholder's
signature at the end hereof.
(b) if to Parent, to:
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, NY 10010
Attention: Elizabeth Wang, General Counsel
Facsimile No: (212) 889-0029
with a copy to:
Brobeck, Phleger & Harrison LLP
Spear Street Tower
One Market
San Francisco, CA 94105
Attention: Steve L. Camahort
Facsimile No.: (415) 442-1010
or to such other address as any party hereto or any Indemnified Person may
designate for itself by notice given as herein provided.
10.6 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
10.7 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
10.8 COUNTERPART. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
10.9 EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
B-4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Stockholder Agreement to be
executed as of the date first above written.
<TABLE>
<S> <C>
DOUBLECLICK INC. STOCKHOLDER
By: -----------------------------------
-------------------------------------------
Name: -------------------------------- (Signature)
Title: ----------------------------------
-------------------------------------------
(Signature of Spouse)
-------------------------------------------
(Print Name of Stockholder)
-------------------------------------------
(Print Street Address)
-------------------------------------------
(Print City, State and Zip)
-------------------------------------------
(Print Telephone Number)
-------------------------------------------
(Social Security or Tax I.D. Number)
</TABLE>
Total Number of Shares of Company Capital Stock owned on the date hereof:
<TABLE>
<S> <C>
Common Stock:
------------------------------------
State of
Residence:
------------------------------------
</TABLE>
B-5
<PAGE>
APPENDIX C
BANCBOSTON ROBERTSON STEPHENS, INC.
Suite 2600
555 California St.
San Francisco, CA 94104
415-781-8700
[LOGO]
July 12, 1999
Board of Directors
NetGravity, Inc.
1900 S. Amphlett Blvd., Suite 150
San Mateo, CA 94403-1151
Members of the Board:
We understand that NetGravity (the "Company"), Doubleclick Inc. ("Acquiror") and
the New Jersey Merger Corporation (a wholly owned subsidiary of Acquiror,
"Merger Sub") are proposing to enter into an Agreement and Plan of Merger (the
"Agreement") which will provide, among other things, for the merger (the
"Merger") of Merger Sub with and into the Company. Upon consummation of the
Merger, the Company will become a wholly owned subsidiary of Acquiror. Under the
terms set forth in a draft of the Agreement dated July 12, 1999 (the "Draft
Agreement"), at the effective time of the Merger, each outstanding share of
common stock of the Company, par value $0.001 per share ("Company Common
Stock"), other than certain shares to be canceled pursuant to the Agreement and
shares held by stockholders who properly exercise dissenters' rights
("Dissenting Shares"), will be converted into the right to receive 0.28 shares
(the "Exchange Ratio") of the common stock of Acquiror, par value $0.001 per
share ("Acquiror Common Stock"). The terms and conditions of the Merger are set
out more fully in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view and as of the date hereof to the "Holders of Company
Common Stock". The "Holders of Company Common Stock" shall be defined as all
holders of Company Common Stock other than Acquiror, Merger Sub, any affiliates
of Acquiror or Merger Sub or any holders of Dissenting Shares.
For purposes of this opinion we have, among other things:
(i) reviewed certain publicly available financial statements and
other business and financial information of the Company and Acquiror,
respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by the
Company's management;
(iii) reviewed certain financial forecasts and other forward looking
financial information relating to the Company prepared by the
management of the Company;
(iv) reviewed with Acquiror the publicly available estimates of
research analysts relating to Acquiror;
(v) held discussions with the respective managements of the Company
and Acquiror concerning the businesses, past and current operations,
financial condition and future prospects of both the Company and
Acquiror, independently and combined, including discussions with the
managements of the Company and Acquiror concerning their views regarding
the strategic rationale for the Merger;
C-1
<PAGE>
Board of Directors
NetGravity, Inc.
July 12, 1999
Page 2
(vi) reviewed the financial terms and conditions set forth in the
Draft Agreement;
(vii) reviewed the stock price and trading history of the Company and
Acquiror;
(viii) compared the financial performance of the Company and the
Acquiror and the prices and trading activity of the Company Common
Stock and Acquiror Common Stock with that of certain other publicly
traded companies comparable with the Company and Acquiror,
respectively;
(ix) compared the financial terms of the Merger with the financial
terms to the extent publicly available, of other transactions that we
deemed relevant;
(x) reviewed the pro forma impact of the Merger on Acquiror's
revenue per share;
(xi) reviewed and considered in the analysis, information prepared
by members of the management of the Company and relating to the
relative contributions of the Company and Acquiror to the combined
company;
(xii) participated in discussions and negotiations among
representatives of the Company and Acquiror and their financial and
legal advisors; and
(xiii) made such other studies and inquiries, and reviewed such other
data, as we deemed relevant.
In our review and analysis, and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided to us (including information furnished to us orally or
otherwise discussed with us by management of the Company and Acquiror) or
publicly available and have neither attempted to verify, nor assumed
responsibility for verifying, and of such information. We have relied upon the
assurances of management of the Company and Acquiror that they are not aware of
any facts that would made such information inaccurate or misleading.
Furthermore, we did not obtain or make, or assume any responsibility for
obtaining or making, any independent evaluation or appraisal of the properties,
assets or liabilities (contingent or otherwise) of the Company or Acquiror, nor
were we furnished with any such evaluation or appraisals. With respect to the
financial forecasts and projections (and the assumptions and bases therefor) for
each of the Company and Acquiror that we have reviewed, upon the advice of the
managements of the Company and Acquiror, we have assumed that such forecasts and
projections have been reasonably prepared in good faith on the basis of
reasonable assumptions and reflect the best currently available estimates and
judgments as to the future financial condition and performance of the Company
and Acquiror, respectively, and we have further assumed that such projections
and forecasts will be realized in the amounts and in the time periods currently
estimated. In this regard, we note that each of the Company and Acquiror face
exposure to the Year 2000 problem. We have not undertaken any independent
analysis to evaluate the reliability or accuracy of the assumptions made by the
managements of the Company and Acquiror with respect to the potential effect
that the Year 2000 problem might have on their respective forecasts. We have
assumed that the Merger will be consummated upon the terms set forth in the
Draft Agreement without material alteration thereof, including among other
things, that the Merger will be accounted for as a "pooling-of-interests"
business combination in accordance with U.S. generally accepted accounting
principles ("GAAP") and that the Merger will be treated as a tax-free
reorganization pursuant to the Internal Revenue Code of 1986, as amended. In
addition, we have assumed that the historical financial statements of each of
the Company
C-2
<PAGE>
Board of Directors
NetGravity, Inc.
July 12, 1999
Page 3
and Acquiror reviewed by us have been prepared and fairly presented in
accordance with U.S. GAAP consistently applied. We have relied as to all legal
matters relevant to rendering our opinion on the advice of counsel.
This opinion is necessarily based upon market, economic and other conditions as
in effect on, and information made available to us as of, the date thereof. It
should be understood that subsequent developments may affect the conclusion
expressed in this opinion and that we disclaim any undertaking or obligation to
advise any person of any change in any matter affecting this opinion which may
come or be brought to our attention after the date of this opinion. Our opinion
is limited to the fairness, from a financial point of view and as to the date
hereof, to the Holders of Company Common Stock of the Exchange Ratio. We do not
express any opinion as to (i) the value of any employee agreement or other
arrangement entered into in connection with the Merger, (ii) any tax or other
consequences that might result from the Merger or (iii) what the value of
Acquiror Common Stock will be when issued to the Company's stockholders pursuant
to the Merger or the price at which the shares of Acquiror Common Stock that are
issued pursuant to the Merger may be traded in the future. Our opinion does not
address the relative merits of the Merger and the other business strategies that
the Company's Board of Directors has considered or may be considering, nor does
it address the decision of the Company's Board of Directors to proceed with the
Merger.
We are acting as financial advisor to the Company in connection with the Merger
and will receive (i) a fee contingent upon the delivery of this opinion and (ii)
an additional fee contingent upon the consummation of the Merger. In addition,
the Company has agreed to indemnify us for certain liabilities that may arise
out of our engagement. In the past, we have provided certain investment banking
services to the Company from time to time for which we have been paid fees,
including acting as lead manager for its initial public offering and as lead
manager in a recent secondary offering, and we may provide additional investment
banking services to the Company or the Acquiror in the future for which we would
also be paid fees. We maintain a market in the shares of Company Common Stock
and Acquiror Common Stock. In the ordinary course of business, we may trade in
the Company's securities and Acquiror's securities for our own account and the
account of our customers and, accordingly, may at any time hold a long or short
position in the Company's securities or Acquiror's securities.
Our opinion expressed herein in provided for the information of the Board of
Directors of the Company in connection with its evaluation of the Merger. Our
opinion is not intended to be and does not constitute a recommendation to any
stockholder of the Company or Acquiror as to how such stockholder should vote,
or take any other action, with respect to the Merger. This opinion may not be
summarized, described or referred to or furnished to any party except with our
express prior written consent.
Based upon and subject to the foregoing considerations, it is our opinion that,
as of the date hereof, the Exchange Ratio is fair to the Holders of Company
Common Stock from a financial point of view.
<TABLE>
<S> <C>
Very truly yours,
BANCBOSTON ROBERTSON STEPHENS INC.
/s/ BancBoston Robertson Stephens Inc.
------------------------------------------------
</TABLE>
C-3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's certificate of incorporation provides that, except to the
extent prohibited by the Delaware General Corporation Law (the "DGCL"), the
Registrant's directors shall not be personally liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty as directors
of the Registrant. Under the DGCL, the directors have a fiduciary duty to the
Registrant which is eliminated by this provision of the certificate of
incorporation and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
for breach of the director's duty of loyalty to the Registrant, for acts or
omissions which are found by a court of competent jurisdiction to be not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited by
the DGCL. This provision also does not affect the directors' responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws. The Registrant has obtained liability insurance for its
officers and directors.
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of the director: (i) for any breach
of the director's 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) arising under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's certificate of incorporation or
bylaws, any agreement, a vote of stockholders or otherwise. The Registrant's
certificate of incorporation eliminates the personal liability of directors to
the fullest extent permitted by the DGCL and provides that the Registrant shall
fully indemnify any person who was or is a party or is threatened to be made a
party to, any threatened, pending or completed action, suite or proceeding
(whether civil, criminal, administrative of investigative) by reason of the fact
that such person is or was a director or officer of the Registrant, or is or was
serving at the request of the Registrant as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Registrant's certificate of incorporation. The
Registrant is not aware of any threatened litigation or proceeding that may
result in a claim for such indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement or incorporated by reference herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of July 12, 1999, by and among the Registrant,
NJ Merger Corporation and NetGravity, Inc. (attached as Appendix A to the proxy statement/prospectus
contained in this registration statement).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Registrant's Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1
of the Registrant's Registration Statement on Form S-1 (File No. 333-67459)).
3.2 Registrant's Amended and Restated Bylaws (incorporated by reference to Exhibit 3.5 of the Registrant's
Registration Statement on Form S-1 (File No. 333-42323)).
4.1 Indenture, dated as of March 22, 1999, between the Registrant and the Bank of New York, as trustee,
including the form of 4.75% Convertible Subordinated Notes due 2006 attached as Exhibit A thereto
(incorporated by reference to Exhibit 6.1 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999).
4.2 Form of Stockholder Agreement, dated as of July 12, 1999, by and among the Registrant and certain
stockholders of NetGravity, Inc. (attached as Appendix B to the proxy statement/ prospectus contained in
this registration statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP regarding the legality of the securities being issued.
8.1 Opinion of Brobeck, Phleger & Harrison LLP regarding certain tax matters.
8.2 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, regarding certain tax matters.
23.1 Consent of Brobeck, Phleger & Harrison LLP, included in Exhibit 5.1 and 8.1.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation, included in Exhibit 8.2.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of PricewaterhouseCoopers LLP.
23.6 Consent of BancBoston Robertson Stephens Inc.
24.1 Power of Attorney, included on the signature page of this Registration Statement.
99.1 Form of NetGravity, Inc. Proxy Card.
</TABLE>
II-2
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
None.
(c) Opinion of BancBoston Robertson Stephens Inc., attached as Appendix
C to the proxy statement/prospectus which is part of this registration
statement.
ITEM 22. UNDERTAKINGS
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 thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(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 the
offering.
(4) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that is incorporated by reference in the registration statement
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;
(5) that, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form;
(6) that every prospectus (i) that is filed pursuant to paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to this
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment
II-3
<PAGE>
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;
(7) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
this Registration Statement through the date of responding to the request; and
(8) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this Registration Statement when it
became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 20 above, 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 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, 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 Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in The City of New York,
State of New York, on this 22nd day of September, 1999.
<TABLE>
<S> <C> <C>
DOUBLECLICK INC.
By: /s/ KEVIN J. O'CONNOR
-----------------------------------------
Kevin J. O'Connor
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
We, the undersigned directors and/or officers of DoubleClick Inc. (the
"Company"), hereby severally constitute and appoint Kevin J. O'Connor, Chief
Executive Officer, and Stephen E. Collins, Chief Financial Officer, and each of
them individually, with full powers of substitution and resubstitution, our true
and lawful attorneys, with full powers to them and each of them to sign for us,
in our names and in the capacities indicated below, the Registration Statement
on Form S-4 filed with the Securities and Exchange Commission, and any and all
amendments to said Registration Statement (including post-effective amendments),
and any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, in connection with the registration under
the Securities Act of 1933, as amended, of equity securities of the Company, and
to file or cause to be filed the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and purposes as each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, and hereby ratifying and
confirming all that said attorneys, and each of them, or their substitute or
substitutes, shall do or cause to be done by virtue of this Power of Attorney.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement to be signed by the following persons in the capacities
indicated on September 22, 1999:
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
Chief Executive Officer
/s/ KEVIN J. O'CONNOR and Chairman of the
- ------------------------------ Board of Directors
Kevin J. O'Connor (Principal Executive
Officer)
/s/ STEPHEN R. COLLINS Chief Financial Officer
- ------------------------------ (Principal Financial and
Stephen R. Collins Accounting Officer)
/s/ DWIGHT A. MERRIMAN
- ------------------------------ Chief Technology Officer
Dwight A. Merriman and Director
/s/ DAVID N. STROHM
- ------------------------------ Director
David N. Strohm
/s/ MARK E. NUNNELLY
- ------------------------------ Director
Mark E. Nunnelly
/s/ W. GRANT GREGORY
- ------------------------------ Director
W. Grant Gregory
/s/ DONALD PEPPERS
- ------------------------------ Director
Donald Peppers
/s/ THOMAS S. MURPHY
- ------------------------------ Director
Thomas S. Murphy
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Registrant's Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1
of the Registrant's Registration Statement on Form S-1 (File No. 333-67459)).
3.2 Registrant's Amended and Restated Bylaws (incorporated by reference to Exhibit 3.5 of the Registrant's
Registration Statement on Form S-1 (File No. 333-42323)).
4.1 Indenture, dated as of March 22, 1999, between the Registrant and the Bank of New York, as trustee,
including the form of 4.75% Convertible Subordinated Notes due 2006 attached as Exhibit A thereto
(incorporated by reference to Exhibit 6.1 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999).
4.2 Form of Stockholder Agreement, dated as of July 12, 1999, by and among the Registrant and certain
stockholders of NetGravity, Inc. (attached as Appendix B to the proxy statement/ prospectus contained in
this registration statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP regarding the legality of the securities being issued.
8.1 Opinion of Brobeck, Phleger & Harrison LLP regarding certain tax matters.
8.2 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, regarding certain tax matters.
23.1 Consent of Brobeck, Phleger & Harrison LLP, included in Exhibit 5.1 and 8.1.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation, included in Exhibit 8.2.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of PricewaterhouseCoopers LLP.
23.6 Consent of BancBoston Robertson Stephens Inc.
24.1 Power of Attorney, included on the signature page of this Registration Statement.
99.1 Form of NetGravity, Inc. Proxy Card.
</TABLE>
<PAGE>
EXHIBIT 5.1
September 23, 1999
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, NY 10010
Re: DoubleClick Inc. Registration Statement on Form S-4 for Issuance of
Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to DoubleClick Inc., a Delaware corporation (the
"Company"), in connection with the proposed public offering of the Company's
Common Stock (the "Shares"), as described in the Company's Registration
Statement on Form S-4 (the "Registration Statement") filed on the date hereof
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act").
This opinion is being furnished in accordance with the requirements of Item
21(a) of Form S-4 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents, the corporate proceedings
taken by the Company in connection with the issuance and sale of the Shares and
such other instruments, documents or other information as we deemed necessary or
appropriate in rendering our opinion. Based on such review, we are of the
opinion that the Shares have been duly authorized and if, as and when issued in
accordance with the Registration Statement and the related proxy
statement/prospectus (as amended and supplemented through the date of issuance)
will be legally issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement and to the reference to this firm under the caption "Legal Matters" in
the prospectus which is part of the Registration Statement. In giving this
consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Act, the rules and regulations
of the Securities and Exchange Commission promulgated thereunder, or Item 509 of
Regulation S-K.
This opinion letter is rendered as of the date first above written and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 8.1
September 23, 1999
DoubleClick, Inc.
41 Madison Avenue, 32nd Floor
New York, NY 10010
Ladies and Gentlemen:
This opinion is being delivered to you in connection with (i) the Agreement
and Plan of Merger and Reorganization (the "Agreement") dated as of July 12,
1999, among DoubleClick, Inc., a Delaware corporation ("DoubleClick"), NJ Merger
Corporation, a Delaware corporation ("Sub"), and NetGravity, Inc., a Delaware
corporation ("NetGravity"), and (ii) the preparation and filing with the
Securities and Exchange Commission of a Form S-4 Registration Statement relating
to the Merger (the "Registration Statement"). Pursuant to the Agreement, Sub
will merge with and into NetGravity (the "Merger"), and NetGravity will become a
wholly owned subsidiary of DoubleClick.
Except as otherwise provided, capitalized terms referred to herein have the
meanings set forth in the Agreement. All section references, unless otherwise
indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
We have acted as legal counsel to DoubleClick in connection with the Merger.
As such, and for the purpose of rendering this opinion, we have examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (including
all schedules and exhibits thereto):
1. The Agreement;
2. The Registration Statement;
3. Such other instruments and documents related to DoubleClick, NetGravity
and Sub and to the consummation of the Merger as we have deemed necessary or
appropriate.
In connection with rendering this opinion, we have assumed that:
A. Original documents submitted to us (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been (or will be by the Effective Time) due execution and delivery of all
documents where due execution and delivery are prerequisites to the
effectiveness thereof; and
B. The Merger will be consummated in accordance with the Agreement without
any waiver or breach of any material provision thereof, and the Merger will be
effective under applicable state law.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that the statements regarding United States federal income tax
consequences set forth in the Registration Statement under the heading "The
Merger--Material Federal Income Tax Considerations," insofar as they constitute
statements of law or legal conclusions, are correct in all material respects. We
express no opinion as to any federal, state or local, foreign or other tax
consequences, other than as set forth in the Registration Statement under the
heading "The Merger--Material Federal Income Tax Considerations."
In addition to the assumptions and representations described above, this
opinion is subject to the exceptions, limitations and qualifications set forth
below.
(1) This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or
<PAGE>
DoubleClick, Inc.
September 23, 1999
Page 2
the courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, will not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
(2) No opinion is expressed as to any transaction other than the Merger
(whether or not undertaken in connection with the Merger) or as to any
transaction whatsoever, including the Merger, if all the transactions described
in the Agreement are not consummated in accordance with the terms of such
Agreement and without waiver or breach of any material provision thereof or if
all of the representations, warranties, statements and assumptions upon which we
relied are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
This opinion is rendered to you solely in connection with the filing of the
Registration Statement. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. We also consent to the references to our
firm name wherever appearing in the Registration Statement with respect to the
discussion of the federal income tax consequences of the Merger, including any
amendments to the Registration Statement. This opinion may not be relied upon
for any other purpose, and may not be made available to any other person,
without our prior written consent.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 8.2
[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]
September 23, 1999
NetGravity, Inc.
1900 S. Northfolk Street,
Suite 150
San Mateo, CA 94403-1151
Ladies and Gentlemen:
We have acted as counsel to NetGravity, Inc., a Delaware corporation
("NetGravity"), in connection with the proposed merger (the "Merger") among
DoubleClick, Inc., a Delaware corporation ("DoubleClick"), NJ Merger
Corporation, a Delaware corporation ("Merger Sub"), and NetGravity pursuant to
an Agreement and Plan of Merger and Reorganization dated as of July 12, 1999,
(the "Merger Agreement"). The Merger and certain proposed transactions incident
thereto are described in the Registration Statement on Form S-4 (the
"Registration Statement") of DoubleClick, which includes the Proxy
Statement/Prospectus of NetGravity and DoubleClick. Unless otherwise indicated,
any capitalized terms used herein and not otherwise defined have the meaning
ascribed to them in the Proxy Statement/Prospectus.
In connection with this opinion, we have examined and are familiar with the
Merger Agreement, the Registration Statement, and such other documents, records
and matters of law as we have deemed necessary or appropriate for purposes of
our opinion. In addition, we have assumed (i) that the Merger will be
consummated in the manner contemplated by the Registration Statement and in
accordance with the provisions of the Merger Agreement, (ii) the truth and
accuracy of the representations and warranties made by DoubleClick and
NetGravity in the Merger Agreement, (iii) the truth and accuracy of the
certificates of representations expected to be provided to us by DoubleClick,
NetGravity and Merger Sub at the Effective Time, and (iv) any representation or
statement made "to the best of knowledge," "belief," or similarly qualified is
correct without such qualification.
Based upon and subject to the foregoing, in our opinion, the discussion
contained in the Registration Statement under the caption "The Merger--Material
Federal Income Tax Considerations," subject to the limitations and
qualifications described therein, sets forth the material United States Federal
income tax considerations generally applicable to the Merger. Because this
opinion is being delivered prior to the Effective Time of the Merger, it must be
considered prospective and dependent on future events.
This opinion is furnished to you solely for use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as
Exhibit 8.2 to the Registration Statement. We also consent to the reference to
our firm name wherever appearing in the Registration Statement with respect to
the discussion of the material federal income tax consequences of the Merger. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of DoubleClick Inc. of our report dated January 19, 1999
relating to the consolidated financial statements and financial statement
schedule, which appears in DoubleClick Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1998. We also consent to the references to us under the
headings "Experts" and "Selected Historical Consolidated Financial Data" in such
Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, New York
September 22, 1999
<PAGE>
EXHIBIT 23.4
The Board of Directors
NetGravity, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in this Registration
Statement.
/s/ KPMG LLP
KPMG LLP
San Francisco, California
September 22, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of DoubleClick Inc. of our report dated March 1, 1999
relating to the financial statements of Abacus Direct Corporation, which appears
on page F-1 of the Abacus Direct Corporation Annual Report on Form 10-K for the
year ended December 31, 1998. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Broomfield, Colorado
September 23, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF BANCBOSTON ROBERTSON STEPHENS INC.
We hereby consent to the inclusion of and reference to our opinion dated
July 12, 1999 to the Board of Directors of NetGravity, Inc. ("NetGravity") in
the Registration Statement on Form S-4 (the "Registration Statement") of
DoubleClick Inc. ("DoubleClick"), covering common stock of DoubleClick to be
issued in connection with the proposed business combination involving
DoubleClick and NetGravity. In giving the foregoing consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended (the "Securities Act"), or
the rules and regulations promulgated thereunder, nor do we admit that we are
experts with respect to any part of the Registration Statement within the
meaning of the term "experts" as used in the Securities Act or the rules and
regulations promulgated thereunder.
/s/ BancBoston Robertson Stephens Inc.
BancBoston Robertson Stephens Inc.
San Francisco, California
September 21, 1999
<PAGE>
________________________________________________________________________________
EXHIBIT 99.1
(FORM OF PROXY)
NETGRAVITY, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TUESDAY, OCTOBER 26, 1999
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF NETGRAVITY)
The undersigned stockholder of NetGravity, Inc. hereby appoints Eric W.
Spivey and Stephen E. Recht, and each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Special Meeting of Stockholders of
NetGravity, Inc. to be held at 8:00 a.m., local time, on Tuesday, October 26,
1999, at the Residence Inn By Marriott, 2000 Winward Way, San Mateo,
California 94404.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
________________________________________________________________________________
- DETACH HERE -
<PAGE>
________________________________________________________________________________
Please mark
your votes / X /
as indicated in
this example
1. Approval and adoption of the merger agreement among DoubleClick Inc.,
NetGravity, Inc. and NJ Merger Corporation and approval of the merger
between DoubleClick and NetGravity.
FOR AGAINST ABSTAIN
/ / / / / /
2. Granting the Board of Directors discretionary authority to adjourn the
special meeting to solicit additional votes for approval of the merger
agreement.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion upon such other matters as may properly come before
the meeting or any adjournments or postponements thereof.
The Board of Directors recommends a vote FOR each of the proposals.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND
PROPOSAL 2.
Do you plan to attend the special meeting? Yes / / No / /
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME APPEARS ON THE ENVELOPE IN WHICH
THIS MATERIAL WAS MAILED. IF SHARES ARE HELD JOINTLY, EACH STOCKHOLDER SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD USE FULL TITLE AND, IF
MORE THAN ONE, ALL SHOULD SIGN. IF THE STOCKHOLDER IS A CORPORATION, PLEASE
SIGN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF THE STOCKHOLDER IS A
PARTNERSHIP, PLEASE SIGN FULL PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
Signature(s) ______________________________________ Dated ____________ ,
________________________________________________________________________________
- FOLD AND DETACH HERE -
