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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1999
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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DOUBLECLICK INC.
(Exact name of Registrant as specified in its Charter)
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DELAWARE 13-3870996
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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)
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KEVIN J. O'CONNOR
PRESIDENT AND 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
of process)
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COPIES TO:
ALEXANDER D. LYNCH, ESQ.
SCOTT L. KAUFMAN, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10019
(212) 581-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after this Registration Statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------ ----------------- ------------------ -------------------- -------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE REGISTRATION FEE(2)
- ------------------------------------------------------ ----------------- ------------------ -------------------- -------------------
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4.75% Convertible Subordinated Notes Due 2006 $250,000,000 100% $250,000,000 $69,500
- ------------------------------------------------------ ----------------- ------------------ -------------------- -------------------
Common Stock, par value $.001 per share.............. 3,030,303 shares (2) (2) N/A
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(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o).
(2) The notes are convertible into common stock. Also includes such additional
indeterminate number of shares as may become issuable upon conversion of the
notes registered hereunder by means of adjustment to the conversion price
applicable thereto.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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SUBJECT TO COMPLETION, DATED MAY 20, 1999
PROSPECTUS
DoubleClick Inc.
$250,000,000 4.75% Convertible Subordinated Notes due 2006
(Interest Payable March 15 and September 15)
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3,030,303 Shares of Common Stock
On March 22, 1999, DoubleClick Inc. issued and sold $250,000,000
aggregate principal amount of 4.75% convertible subordinated notes that mature
on March 15, 2006 in a private offering. The initial purchasers of the notes
subsequently transferred their notes to various other holders in transactions
exempt from registration under the Securities Act of 1933. In connection with
the private offering by DoubleClick, it agreed to register the notes and the
shares of common stock into which the notes are convertible to facilitate
secondary trading by these holders, who we refer to as selling securityholders.
This prospectus is part of a registration statement that fulfills this
obligation. All securities offered by this prospectus are offered by selling
securityholders.
The notes are convertible by holders into shares of our common stock at
a conversion price of $82.50 per share, subject to adjustment as described in
this prospectus. In addition, at certain times and under certain circumstances
the notes may be redeemed by DoubleClick at its election or at the election of
the holders of the notes. You can find a more extensive description of the notes
beginning on page 20.
The notes are not secured and are subordinated to all present and
future senior indebtedness of DoubleClick.
The notes are eligible for trading on the Private Offerings, Resales
and Trading through Automated Linkages, or PORTAL, Market. DoubleClick's common
stock is traded on the Nasdaq National Market under the symbol "DCLK." On May
19, 1999, the last reported sale price for the common stock was $119.56 per
share.
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AN INVESTMENT IN THE NOTES AND THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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Neither the Securities and Exchange Commission nor any state commission
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is , 1999
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TABLE OF CONTENTS
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DOUBLECLICK 3
RISK FACTORS 5
FORWARD-LOOKING INFORMATION 18
USE OF PROCEEDS 18
RATIO OF EARNINGS TO FIXED CHARGES 18
DESCRIPTION OF THE NOTES 19
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS 36
PLAN OF DISTRIBUTION 46
INCORPORATION BY REFERENCE 49
WHERE YOU CAN FIND MORE INFORMATION 49
LEGAL MATTERS 50
EXPERTS 50
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DOUBLECLICK
THE INFORMATION CONTAINED IN THIS PROSPECTUS REFLECTS A 2-FOR-1 COMMON
STOCK SPLIT IN THE FORM OF A STOCK DIVIDEND DISTRIBUTED ON APRIL 5, 1999 TO
STOCKHOLDERS OF RECORD ON MARCH 22, 1999.
DoubleClick is a leading provider of comprehensive Internet advertising
solutions for advertisers and Web publishers worldwide. DoubleClick's technology
and media expertise enable it to deliver highly targeted, measurable and
cost-effective Internet advertising for advertisers and ad agencies, and to
increase ad sales and improve ad space inventory management for Web publishers.
DoubleClick currently has two principal service offerings: the DoubleClick
Network and the DART Service.
DOUBLECLICK NETWORK (AD SALES). The DoubleClick Network
provides fully-outsourced ad sales, delivery and related
services to publishers of highly-trafficked Web sites,
including AltaVista, The Dilbert Zone, Macromedia and U.S.
News Online. The DoubleClick Network focuses on meeting the
advertising needs of Internet advertisers who target users on
a national, international and/or local basis.
DART SERVICE (AD SERVING). The DART Service, which consists of
DART for Web publishers and the recently introduced Closed
Loop Market Solutions suite of products for advertisers and ad
agencies, provides Web publishers, advertisers and ad agencies
with the ability to control the targeting, delivery,
measurement and analysis of their online marketing campaigns
on a real-time basis.
DoubleClick's proprietary DART technology provides the platform for
DoubleClick's solutions. This technology enables advertisers to optimize ad
performance by dynamically targeting and delivering ads to Web users based on
pre-selected criteria. As a user visits the Web sites of Web publishers that
utilize DoubleClick's solutions, DART collects information regarding the user
and his or her viewing activities and ad responses, and applies this data to
improve its ability to predict the user's reaction and enhance DART's ad
targeting capabilities. The sophisticated tracking and reporting functionality
incorporated into DART provides advertisers with accurate measurements of ad
performance based on selected criteria. In addition, DART provides Web
publishers with sophisticated ad space inventory management capabilities.
In 1998, DoubleClick's DART technology delivered approximately 34
billion ads worldwide. DART's dynamic matching, targeting and delivery functions
enable Web advertisers to target their advertising based on a variety of
factors, including user interests, time of day, day of week, organization name
and size, domain type (i.e., commercial, government, education, network),
operating system, server type and version, and keywords. In addition,
DoubleClick offers the ability to match geographic location of the user's server
and organization revenue, if known, through third-party databases. DART also
manages the frequency and distribution of ad placements to limit repetitive ad
exposures that can reduce ad effectiveness. Further, in order to deliver the
advertisements on the pages that are likely to result in the best response, DART
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improves its predictive capabilities by continuously collecting anonymous
information regarding the user's viewing activities and ad responses.
DART is a powerful ad performance tracking and reporting tool. Detailed
daily online performance reports allow advertisers and Web publishers to
actively monitor and react to the success of particular ads and marketing
campaigns and Web site traffic patterns, respectively. Such reports can be
further tailored to evaluate ad success based on the dynamic ad matching,
targeting and delivering factors set forth above. DART delivers advertising
content developed using most leading Web tools and technologies, including Java,
JavaScript, RealAudio, RealVideo, Enliven and VRML. In addition, DART is
compatible with leading host servers, regardless of the Web publisher's hardware
or software. DART is designed to be highly reliable and to operate 24 hours a
day, seven days a week with minimal downtime. Enhancements of the DART
technology have allowed for the development of additional features providing:
(i) advertisers with the ability to test the effectiveness of the creative
content of an advertisement before launching an ad campaign by comparing
click-through rates on alternative advertisements; (ii) advertisers with the
opportunity to track a user to the advertiser's own Web site to determine what
actions a user takes following a click-through; and (iii) Web publishers with
the ability to accurately manage and record advertising activity and track
related revenue over a network of affiliated Web sites.
Our principal executive offices are located at 41 Madison Avenue, 32nd
Floor, New York, New York 10010. Our telephone number is (212) 683-0001.
Information contained on our Web site is not part of this prospectus.
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RISK FACTORS
AN INVESTMENT IN THE NOTES AND COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE
TO BUY THE NOTES OR OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY
OCCUR, OUR BUSINESS, FINANCIAL CONDITIONS OR RESULTS OF OPERATIONS WOULD LIKELY
SUFFER. IN THIS CASE, THE PRICE OF OUR SECURITIES COULD DECLINE, AND YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT.
LIMITED OPERATING HISTORY
We were incorporated in January 1996 and have a limited operating
history. An investor in the notes, and the common stock issuable upon the
conversion of the notes, must consider the risks and difficulties frequently
encountered by early stage companies in new and rapidly evolving markets,
including the Internet advertising market. These risks include our:
- ability to sustain historical revenue growth rates;
- dependence on a continuing relationship with AltaVista;
- reliance on the DoubleClick Network;
- need to manage our expanding operations;
- competition;
- ability to attract, retain and motivate qualified personnel;
- ability to maintain our current, and develop new, strategic
relationships with Web publishers;
- ability to anticipate and adapt to the changing Internet
market; and
- ability to attract and retain a large number of advertisers
from a variety of industries.
We also depend on the growing use of the Internet for advertising,
commerce and communication, and on general economic conditions. We cannot assure
you that our business strategy will be successful or that we will successfully
address these risks.
HISTORY OF LOSSES AND ANTICIPATION OF CONTINUED LOSSES
We incurred net losses of $3.2 million for the period from January 23,
1996 (inception) through December 31, 1996, $8.4 million for the year ended
December 31, 1997, $18.2 million for the year ended December 31, 1998. We
incurred a net loss of $6.9 million for the three months ended March 31, 1999,
and as of March 31, 1999, our accumulated deficit was $61.6 million. We have not
achieved profitability and expect to continue to incur operating losses at least
into the year 2000. We expect to continue to incur significant operating and
capital expenditures and, as a result, we will need to generate significant
revenues to achieve and maintain profitability. Although our revenues have grown
in recent quarters, we cannot assure you that we will achieve sufficient
revenues for profitability. Even if we do achieve profitability, we cannot
assure you that we can sustain or increase profitability on a quarterly or
annual basis in the future. If revenues grow slower than we anticipate, or if
operating expenses exceed our
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expectations or cannot be adjusted accordingly, our business, results of
operations and financial condition will be materially and adversely affected.
OUR DEPENDENCE ON ALTAVISTA
Approximately 21.1% of our revenues for the three months ended March
31, 1999, approximately 46.5% of our revenues for the year ended December 31,
1998, and approximately 44.7% of our revenues for the year ended December 31,
1997, respectively, resulted from revenues from advertisements delivered on
or through the AltaVista Web site. On January 20, 1999, DoubleClick agreed
with Compaq to enter into an Advertising Services Agreement to replace our
existing Procurement and Trafficking Agreement with AltaVista. The
Advertising Services Agreement is effective as of January 1, 1999 and will
expire on December 31, 2001, subject to prior termination in certain limited
circumstances or further extension in accordance with the terms of the
Advertising Services Agreement. As a result of the Advertising Services
Agreement, AltaVista, which has historically been the largest DoubleClick
Network publisher, became our largest DART Service customer. The loss of
AltaVista or any significant reduction in traffic on or through the AltaVista
Web site could materially and adversely affect our business, results of
operations and financial condition.
WEB PUBLISHER CONCENTRATION
We derive a substantial portion of our DoubleClick Network revenues
from ads we deliver on the Web sites of a limited number of Web publishers.
Approximately 19.0% of our revenues for the three months ended March 31, 1999
and approximately 63.4% of our revenues for the three months ended March
resulted from ads delivered on the Web sites of the top four Web publishers on
the DoubleClick Network. Our business, results of operations and financial
condition could be materially and adversely affected by the loss of one or more
of the Web publishers that account for a significant portion of our DoubleClick
Network revenues or any significant reduction in traffic on these Web
publisher's Web sites. In addition, advertisers or Web publishers may leave the
DoubleClick Network because of such a loss, which could materially and adversely
affect our business, results of operations and financial condition. Typically,
we enter into short-term contracts with Web publishers for inclusion of their
Web sites in the DoubleClick Network. Since these contracts are short-term, we
will have to negotiate new contracts or renewals in the future which may have
terms that are not as favorable to us as the terms of the existing contracts.
Our business, results of operations and financial condition could be materially
and adversely affected by such new contracts or renewals.
OUR RELIANCE ON THE DOUBLECLICK NETWORK
Since the third quarter of 1996, we have derived the majority of our
revenues from advertisements we deliver to Web sites on the DoubleClick Network.
We expect that the DoubleClick Network will continue to account for a
substantial portion of our revenues for the foreseeable future. The DoubleClick
Network consists of Web sites of a limited number of Web publishers with which
we have short-term contracts. We cannot assure you that these Web publishers
will remain associated with the DoubleClick Network, that any DoubleClick
Network Web site will maintain consistent or increasing levels of traffic over
time, or that we will be able to timely or effectively replace any exiting
DoubleClick Network Web site with other Web sites with comparable traffic
patterns and user demographics. Our failure to successfully market the
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DoubleClick Network, the loss of one or more of the Web publishers that account
for a significant portion of our revenues from the DoubleClick Network, or the
failure of the Web sites on the DoubleClick Network to maintain consistent or
increasing levels of traffic would materially and adversely affect our business,
results of operations and financial condition.
QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS
Our revenues and operating results may vary significantly from quarter
to quarter due to a number of factors, not all of which are in our control.
These factors include:
- advertiser and Web publisher demand for our solutions;
- user traffic levels and the number of available impressions on
the DoubleClick Network's Web sites;
- seasonal fluctuations in Internet usage;
- changes in service fees we pay to Web publishers;
- changes in the growth rate of Internet usage;
- the commitment of advertising budgets to Internet advertising;
- the mix of revenues from our various Internet advertising
solutions;
- the timing and amount of costs relating to the expansion of
our operations;
- changes in our pricing policies or those of our competitors;
- the introduction of new solutions by us or our competitors;
- the mix of domestic and international sales;
- costs related to acquisitions of technology or businesses; and
- general economic and market conditions.
Our revenues for the foreseeable future will remain dependent on user
traffic levels and advertising activity on the DoubleClick Network. These future
revenues are difficult to forecast. In addition, we plan to significantly
increase our operating expenses to increase our sales and marketing operations,
to continue our international expansion, to upgrade and enhance our DART
technology, and to market and support our solutions. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. If we have a
shortfall in revenues in relation to our expenses, or if our expenses precede
increased revenues, then our business, results of operations and financial
condition would be materially and adversely affected. Such results would likely
affect the market price of our common stock in a manner which may be unrelated
to our long-term operating performance.
We believe that advertising sales in traditional media, such as
television and radio, generally are lower in the first calendar quarter of each
year. If our market makes the transition from an emerging to a more developed
medium, seasonal and cyclical patterns may develop in our industry. Our revenues
may also be affected by seasonal and cyclical patterns in Internet advertising
spending if they emerge.
Due to all of the foregoing factors and the other risks discussed in
this section, you should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of future performance. It is possible
that in some future periods our results of operations may be below the
expectations of public market analysts and investors. In this event, the price
of the notes or our common stock may fall.
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NEED TO MANAGE GROWTH
To successfully implement our business plan in the rapidly evolving
market for Internet advertising requires an effective planning and management
process. We continue to increase the scope of our operations both domestically
and internationally, and we have grown our workforce substantially. As of March
31, 1996, we had a total of 13 employees and, as of March 31, 1999, we had a
total of 549 employees. In addition, we plan to continue to expand our sales and
marketing and customer support organizations both domestically and
internationally. This growth has placed, and our anticipated future growth in
our operations will continue to place, a significant strain on our management
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls and reporting systems and procedures, and will
need to continue to expand, train and manage our workforce. Our future
performance may also depend on the effective integration of acquired businesses.
Such integration, even if successful, may take a significant period of time and
expense, and may place a significant strain on our resources. Our business,
results of operations and financial condition will be materially and adversely
affected if we are unable to effectively manage our expanding operations or the
relocation of our data operations.
RECENT DEVELOPMENT OF THE INTERNET ADVERTISING MARKET AND UNPROVEN ACCEPTANCE
AND EFFECTIVENESS OF WEB ADVERTISING
Our future success is highly dependent on an increase in the use of the
Internet as an advertising medium. The Internet advertising market is new and
rapidly evolving, and it cannot yet be compared with traditional advertising
media to gauge its effectiveness. As a result, demand and market acceptance for
Internet advertising solutions is uncertain. Most of our current or potential
advertising customers have little or no experience using the Internet for
advertising purposes and they have allocated only a limited portion of their
advertising budgets to Internet advertising. The adoption of Internet
advertising, particularly by those entities that have historically relied upon
traditional media for advertising, requires the acceptance of a new way of
conducting business, exchanging information and advertising products and
services. Such customers may find Internet advertising to be less effective for
promoting their products and services relative to traditional advertising media.
In addition, most of our current and potential Web publisher customers have
little or no experience in generating revenues from the sale of advertising
space on their Web sites. We cannot assure you that the market for Internet
advertising will continue to emerge or become sustainable. If the market for
Internet advertising fails to develop or develops more slowly than we expect,
then our business, results of operations and financial condition could be
materially and adversely affected.
There are currently no standards for the measurement of the
effectiveness of Internet advertising and standard measurements may need to be
developed to support and promote Internet advertising as a significant
advertising medium. Our advertising customers may challenge or refuse to accept
our or third-party measurements of advertisement delivery results, and our
customers may not accept any errors in such measurements. In addition, the
accuracy of database information used to target advertisements is essential to
the effectiveness of Internet advertising that may be developed in the future.
The information in our database, like any database, may contain inaccuracies
which our customers may not accept.
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Substantially all of our revenues are derived from the delivery of
banner advertisements. If advertisers determine that banner advertising is an
ineffective or unattractive advertising medium, we cannot assure you that we
will be able to effectively make the transition to any other form of Internet
advertising. Also, there are "filter" software programs that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising, and our business, results of operations and financial
condition, would be materially and adversely affected by Web users' widespread
adoption of such software.
UNPROVEN BUSINESS MODEL
Our business model is to generate revenues solely by providing Internet
advertising solutions to advertisers, ad agencies and Web publishers. The profit
potential for our business model is unproven. To be successful, both Internet
advertising and our solutions will need to achieve broad market acceptance by
advertisers, ad agencies and Web publishers. Our ability to generate significant
revenues from advertisers will depend, in part, on our ability to contract with
Web publishers that have Web sites with adequate available ad space inventory.
Further, these Web sites must generate sufficient user traffic with demographic
characteristics attractive to our advertisers. The intense competition among
Internet advertising sellers has led to the creation of a number of pricing
alternatives for Internet advertising. These alternatives make it difficult for
us to project future levels of advertising revenues and applicable gross margin
that can be sustained by us or the Internet advertising industry in general.
Market acceptance of our new solutions, including DoubleClick Local and
the Closed Loop Marketing Solutions suite of products, will depend on the
continued emergence of Internet commerce, communication and advertising, and
market demand for our solutions. We cannot assure you that the market for our
new solutions will develop or that demand for our new solutions will emerge or
become sustainable.
YEAR 2000 RISKS
Currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
We have generally completed our preliminary assessment of our Year 2000
readiness. We plan to perform a Year 2000 simulation on our software during the
second quarter of 1999, following the implementation of revisions to our
software in the first quarter of 1999. We are also in the process of contacting
certain third-party vendors, licensors and providers of software, hardware and
services regarding their Year 2000 readiness. Following this testing and after
contacting these vendors and licensors, we will be better able to make a
complete evaluation of our Year 2000 readiness, to determine what costs will be
necessary to be Year 2000 compliant, and to determine whether contingency plans
need to be developed.
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RISK OF SYSTEM FAILURE
The DART technology resides on a computer system located in our New
York City offices and in DoubleClick data centers in New Jersey, California,
Australia, Brazil, England, France, Germany, The Netherlands and Sweden. This
system's continuing and uninterrupted performance is critical to our success.
Customers may become dissatisfied by any system failure that interrupts our
ability to provide our services to them, including failures affecting our
ability to deliver advertisements without significant delay to the viewer.
Sustained or repeated system failures would reduce the attractiveness of our
solutions to advertisers, ad agencies and Web publishers. Slower response time
or system failures may also result from straining the capacity of our deployed
software or hardware due to an increase in the volume of advertising delivered
through our servers. To the extent that we do not effectively address any
capacity constraints or system failures, our business, results of operations and
financial condition would be materially and adversely affected.
Our operations are dependent on our ability to protect our computer
systems against damage from fire, power loss, water damage, telecommunications
failures, vandalism and other malicious acts, and similar unexpected adverse
events. In addition, interruptions in our solutions could result from the
failure of our telecommunications providers to provide the necessary data
communications capacity in the time frame we require. Despite precautions we
have taken, unanticipated problems affecting our systems have from time to time
in the past caused, and in the future could cause, interruptions in the delivery
of our solutions. DoubleClick's ad serving capabilities, operational information
and data storage are presently redundant, as well as archived. We expect all of
our back-end systems for disaster recovery to be fully redundant by the second
quarter of 1999. Our business, results of operations and financial condition
could be materially and adversely affected by any damage or failure that
interrupts or delays our operations.
OUR MARKETS ARE HIGHLY COMPETITIVE
Our markets, namely Internet advertising and related products and
services, are intensely competitive. We expect such competition to continue to
increase because our markets pose no substantial barriers to entry. Competition
may also increase as a result of industry consolidation. We believe that our
ability to compete depends upon many factors both within and beyond our control,
including the following:
- the timing and market acceptance of new solutions and
enhancements to existing solutions developed either by us or
our competitors;
- customer service and support efforts;
- sales and marketing efforts; and
- the ease of use, performance, price and reliability of
solutions developed either by DoubleClick or its competitors.
We compete for Internet advertising revenues with large Web publishers
and Web search engine companies, such as America Online, Excite, Lycos,
Microsoft, Infoseek and Yahoo!. Further, our DoubleClick Network competes with a
variety of Internet advertising networks, including 24/7 Media. In marketing our
DoubleClick Network and DART Service to Web publishers, we also compete with
providers of ad servers and related services, including NetGravity and AdForce.
We also encounter competition from a number of other sources,
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including content aggregation companies, companies engaged in advertising sales
networks, advertising agencies, and other companies which facilitate Internet
advertising.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. These factors may allow them to respond more quickly than
we can to new or emerging technologies and changes in customer requirements. It
may also allow them to devote greater resources than we can to the development,
promotion and sale of their products and services. Such competitors may also
engage in more extensive research and development, undertake more far-reaching
marketing campaigns, adopt more aggressive pricing policies and make more
attractive offers to existing and potential employees, strategic partners,
advertisers and Web publishers. We cannot assure you that our competitors will
not develop products or services that are equal or superior to our solutions or
that achieve greater market acceptance than our solutions. In addition, current
and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our prospective advertising,
ad agency and Web publisher customers. As a result, it is possible that new
competitors may emerge and rapidly acquire significant market share. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share. We cannot assure you that we will be able to compete
successfully or that competitive pressures will not materially and adversely
affect our business, results of operations or financial condition.
Companies doing business on the Internet, including ours, must also
compete with television, radio, cable and print (traditional advertising media)
for a share of advertisers' total advertising budgets. Advertisers may be
reluctant to devote a significant portion of their advertising budget to
Internet advertising if they perceive the Internet to be a limited or
ineffective advertising medium.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR INVESTMENTS
We may acquire or make investments in complementary businesses,
products, services or technologies. From time to time we have had discussions
with companies regarding our acquiring, or investing in, their businesses,
products, services or technologies. We cannot assure you that we will be able to
identify suitable acquisition or investment candidates. Even if we do identify
suitable candidates, we cannot assure you that we will be able to make such
acquisitions or investments on commercially acceptable terms. If we buy a
company, we could have difficulty in assimilating that company's personnel and
operations. In addition, the key personnel of the acquired company may decide
not to work for us. If we make other types of acquisitions, we could have
difficulty in assimilating the acquired products, services or technologies into
our operations. These difficulties could disrupt our ongoing business, distract
our management and employees, increase our expenses and adversely affect our
results of operations due to accounting requirements such as goodwill.
Furthermore, we may incur debt or issue equity securities to pay for any future
acquisitions. The issuance of equity securities could be dilutive to our
existing stockholders.
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DEPENDENCE ON KEY PERSONNEL
Our future success depends to a significant extent on the continued
service of our key technical, sales and senior management personnel, in
particular, Kevin J. O'Connor, our Chief Executive Officer and Chairman of the
Board of Directors, Kevin P. Ryan, our President and Chief Operating Officer,
and Dwight A. Merriman, our Chief Technical Officer. We have no employment
agreements with any of these executives. The loss of the services of Messrs.
O'Connor, Ryan or Merriman, or certain other key employees, would likely have a
material adverse effect on our business, results of operations and financial
condition. Our future success also depends on our continuing to attract, retain
and motivate highly skilled employees. Competition for employees in our industry
is intense. We may be unable to retain our key employees or attract, assimilate
or retain other highly qualified employees in the future. We have from time to
time in the past experienced, and we expect to continue to experience in the
future, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications.
DEPENDENCE ON THE WEB INFRASTRUCTURE
Our success will depend, in large part, upon the maintenance of the Web
infrastructure, such as a reliable network backbone with the necessary speed,
data capacity and security, and timely development of enabling products such as
high speed modems, for providing reliable Web access and services and improved
content. We cannot assure you that the Web infrastructure will continue to
effectively support the demands placed on it as the Web continues to experience
increased numbers of users, frequency of use or increased bandwidth requirements
of users. Even if the necessary infrastructure or technologies are developed, we
may have to spend considerable amounts to adapt our solutions accordingly.
Furthermore, the Web has experienced a variety of outages and other delays due
to damage to portions of its infrastructure. Such outages and delays could
impact the Web sites of Web publishers using our solutions and the level of user
traffic on Web sites on the DoubleClick Network.
DEPENDENCE ON PROPRIETARY RIGHTS AND RISK OF INFRINGEMENT
Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of patent, copyright, trade secret and trademark law. We have filed
three patent applications in the United States and one patent application
internationally. In addition, we apply to register our trademarks in the United
States and internationally. We own the registration for the DoubleClick
trademark in the United States. We cannot assure you that any of our patent
applications or trademark applications will be approved. Even if they are
approved, such patents or trademarks may be successfully challenged by others or
invalidated. If our trademark registrations are not approved because third
parties own such trademarks, our use of such trademarks will be restricted
unless we enter into arrangements with such third parties which may be
unavailable on commercially reasonable terms.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or
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law enforcement practices may not protect our proprietary rights as fully as in
the United States.
Our DART technology collects and utilizes data derived from user
activity on the DoubleClick Network and the Web sites of Web publishers using
our solutions. This data is used for ad targeting and predicting ad performance.
Although we believe that we have the right to use such data and the compilation
of such data in our database, we cannot assure you that any trade secret,
copyright or other protection will be available for such information. In
addition, others may claim rights to such information. Further, pursuant to our
contracts with Web publishers using our solutions, we are obligated to keep
certain information regarding each Web publisher confidential.
We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation.
We cannot assure you that any of our proprietary rights will be viable
or of value in the future since the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries is
uncertain and still evolving. Furthermore, third parties may assert infringement
claims against us. From time to time we have been, and we expect to continue to
be, subject to claims in the ordinary course of our business, including claims
of alleged infringement of the trademarks and other intellectual property rights
of third parties by us or the Web publishers with Web sites in the DoubleClick
Network. Such claims and any resultant litigation, should it occur, could
subject us to significant liability for damages and could result in the
invalidation of our proprietary rights. In addition, even if we prevail, such
litigation could be time-consuming and expensive to defend, and could result in
the diversion of our time and attention, any of which could materially and
adversely affect our business, results of operations and financial condition.
Any claims or litigation from third parties may also result in limitations on
our ability to use the trademarks and other intellectual property subject to
such claims or litigation unless we enter into arrangements with the third
parties responsible for such claims or litigation which may be unavailable on
commercially reasonable terms.
RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE
The Internet and Internet advertising markets are characterized by
rapidly changing technologies, evolving industry standards, frequent new product
and service introductions, and changing customer demands. Our future success
will depend on our ability to adapt to rapidly changing technologies and to
enhance existing solutions and develop and introduce a variety of new solutions
to address our customers' changing demands. We may experience difficulties that
could delay or prevent the successful design, development, introduction or
marketing of our solutions. In addition, our new solutions or enhancements must
meet the requirements of our current and prospective customers and must achieve
significant market acceptance. Material delays in introducing new solutions and
enhancements may cause customers to forego purchases of our solutions and
purchase those of our competitors.
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
We have operations in a number of international markets. We intend to
continue to
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expand our international operations and international sales and marketing
efforts. To date, we have limited experience in developing localized versions of
our solutions and in marketing, selling and distributing our solutions
internationally. We have established DoubleClick Networks in Australia, Canada,
France, Germany, Benelux (Belgium, The Netherlands, and Luxembourg) and the
United Kingdom. In Japan, Iberoamerica (Spain, Portugal and Latin America),
Italy and Scandinavia (Sweden, Norway, Finland, and Denmark), we are relying on
our business partners to conduct operations, establish local networks, aggregate
Web publishers and coordinate sales and marketing efforts. Our success in such
markets is directly dependent on the success of our business partners and their
dedication of sufficient resources to our relationship.
International operations are subject to other inherent risks,
including:
- the impact of recessions in economies outside the United
States;
- changes in regulatory requirements;
- reduced protection for intellectual property rights in some
countries;
- potentially adverse tax consequences;
- difficulties and costs of staffing and managing foreign
operations;
- political and economic instability;
- fluctuations in currency exchange rates; and
- seasonal fluctuations in Internet usage.
These risks may materially and adversely affect our business, results
of operations or financial condition.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. Recently, the United
States Congress passed Internet laws regarding children's privacy, copyrights
and taxation. Such legislation could dampen the growth in use of the Web
generally and decrease the acceptance of the Web as a communications, commercial
and advertising medium. The governments of other states or foreign countries
might attempt to regulate our transmissions or levy sales or other taxes
relating to our activities. The European Union recently enacted its own privacy
regulations that may result in limits on the collection and use of certain user
information. The laws governing the Internet, however, remain largely unsettled,
even in areas where there has been some legislative action. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel and taxation apply to the Internet and Internet
advertising. In addition, the growth and development of the market for Internet
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on companies
conducting business over the Internet. Our business, results of operations and
financial condition could be adversely affected by the adoption or modification
of laws or regulations relating to the Internet.
PRIVACY CONCERNS
In recent months, the U.S. federal and various state governments have
proposed limitations on the collection and use of information regarding Internet
users. In October 1998, the European Union adopted a directive that may result
in limitations on our collection and use
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of information regarding Internet users in Europe. Our DART technology targets
advertising to users through the use of "cookies" and other
non-personally-identifying information. The effectiveness of our DART technology
could be limited by any regulation or limitation in the collection or use of
information regarding Internet users. Since many of the limitations are still in
the proposal stage, we cannot yet determine the full impact of these regulations
on our business.
SUBSTANTIAL INFLUENCE BY OFFICERS AND DIRECTORS
Our executive officers, directors and entities affiliated with them
beneficially own a significant percentage of our outstanding common stock. These
stockholders may be able to exercise substantial influence over all matters
requiring approval by our stockholders, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
may also have the effect of delaying or preventing a change in control of
DoubleClick.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile and could be subject to wide
fluctuations. In addition, the stock market has experienced extreme price and
volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile. Fluctuations in the market price for
our common stock could adversely affect the trading price of the notes. In the
past, companies that have experienced volatility in the market price of their
stock have been the object of securities class action litigation. If we were the
object of securities class action litigation, it could result in substantial
costs and a diversion of management's attention and resources.
SHARES ELIGIBLE FOR FUTURE SALE
As of March 31, 1999, DoubleClick had 39,465,228 shares of common stock
outstanding, excluding 5,401,156 shares subject to options outstanding as of
such date under DoubleClick's stock option plans that are exercisable at prices
ranging from $0.064 to $65.25 per share. No prediction can be made as to the
effect, if any, that future sales of notes or shares of common stock or the
availability of shares of common stock for future sale, will have on the market
price of common stock prevailing from time to time. In addition, the filing of a
registration statement with respect to the notes and the common stock issuable
upon conversion thereof will trigger "piggyback" registration rights held by
some of DoubleClick's stockholders. Sales of substantial amounts of common stock
(including shares issued upon the exercise of stock options), or the perception
that such sales could occur, may adversely affect prevailing market prices for
common stock.
DoubleClick and Kevin O'Connor, Kevin Ryan, Dwight Merriman and
Jeffrey Epstein have agreed with the initial purchasers of the notes not to
offer, sell, contract to sell, pledge or otherwise dispose of, or file (or
participate in the filing of) a registration statement with the Commission in
respect of, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of
the Exchange Act and the
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rules and regulations of the Commission promulgated thereunder with respect to,
any shares of capital stock of DoubleClick or any securities convertible or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of the Purchase Agreement (March 17, 1999) without the prior written consent of
Salomon Smith Barney Inc.; provided, however, that DoubleClick may issue common
stock, or grant options to purchase common stock or other awards under its stock
or bonus plans, to employees and directors of DoubleClick, DoubleClick may issue
common stock or securities convertible into common stock and file registration
statements, in each case in connection with acquisitions the consideration for
which includes the issuance of such common stock or securities convertible into
common stock; provided that the parties receiving common stock in any
acquisition agree to be bound by the foregoing restrictions, the four senior
executive officers named above may sell or otherwise dispose of 500,000 shares
of common stock in the aggregate without such consent and DoubleClick may file a
registration statement with respect to the notes and the common stock issuable
upon conversion thereof. With the consent of Salomon Smith Barney Inc., shares
of common stock may be sold before the expiration of the lock-up period without
prior notice to the other stockholders of DoubleClick or to any public market in
which the common stock trades.
WE HAVE SIGNIFICANT DEBT OBLIGATIONS
We incurred $250 million of indebtedness from the sale of the notes.
This new debt resulted in a ratio of long-term debt to total equity of
approximately 176% as of March 31, 1999. As a result of the sale of the notes,
we have substantially increased our principal and interest obligations. The
degree to which we are leveraged could materially and adversely affect our
ability to obtain additional financing and could make us more vulnerable to
industry downturns and competitive pressures. Our ability to meet our debt
service obligations will depend on our future performance, which will be subject
to financial, business, and other factors affecting our operations, many of
which are beyond our control.
YOU MAY NOT BE PAID ON THE NOTES
The notes are not secured by our assets and are subordinated in right
of payment to all of our existing and future senior indebtedness. In the event
of bankruptcy, liquidation or reorganization and in certain other events, we
will not be able to pay our obligations with respect to the notes until all
senior indebtedness has been fully paid. The notes are effectively subordinated
to all of the liabilities of our subsidiaries since we are a shareholder of our
subsidiaries and will only receive funds as a shareholder after our subsidiaries
have repaid all obligations to their creditors. We may not have sufficient
assets remaining to pay amounts due on any or all of the notes then outstanding.
The indenture with respect to the notes does not prohibit or limit us or our
subsidiaries from incurring additional senior indebtedness, other debt or other
liabilities. Our ability to pay our obligations on the notes could be adversely
affected if we or our subsidiaries incur more debt.
As of March 31, 1999, DoubleClick had outstanding $333,000 of senior
indebtedness to which the notes are subordinated. Both we and our subsidiaries
expect that from time to time we will incur additional indebtedness to which the
notes will be subordinated.
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ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS
There is a limited market for the notes. We cannot assure you as to the
liquidity of any markets that may develop for the notes, your ability to sell
your notes or the price at which you may be able to sell your notes. Future
trading prices of the notes will depend on many factors, including:
- prevailing interest rates
- our operating results
- the price of the DoubleClick common stock
- the market for similar securities
The notes are eligible for trading in the PORTAL market, however, we do not
intend to apply for listing of the notes on any securities exchange.
THERE ARE LIMITATIONS ON REPURCHASE OF THE NOTES IF A DESIGNATED EVENT OCCURS
In the event of a Designated Event, each holder of the notes will have
the right to require us to repurchase all or some of their notes. Our ability to
repurchase the notes upon a Designated Event may be limited by the terms of any
debt ranking senior to the notes and the subordination provisions of such
indebtedness. Further, our ability to repurchase notes upon a Designated Event
will depend on the availability of sufficient funds and compliance with
applicable securities laws. Accordingly, we may be unable to repurchase the
notes upon a Designated Event. Our failure to repurchase any notes upon a
Designated Event at the request of the holder would constitute an event of
default under the notes, which could result in the acceleration of our
obligation to pay our obligation under the notes and all of our other
outstanding indebtedness.
The term "Designated Event" means the occurrence of any event in which
all or substantially all DoubleClick common stock is or will be exchanged for
consideration which is not all or substantially all DoubleClick common stock
listed, or, upon consummation of or immediately following such event which will
be listed, on a United States national securities exchange or approved for
quotation on the Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices. The Designated Event
would include a transaction or event which occurs through an:
- exchange offer
- liquidation
- tender offer
- consolidation
- merger
- combination
- reclassification
- recapitalization
The term "Designated Event" is limited to certain specified
transactions and many not include other events that might adversely affect our
financial condition. Even though we are required to repurchase the notes upon a
Designated Event, holders still may not be protected in
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the event of a highly leveraged reorganization, merger or similar transaction
involving us. Please see "Description of Notes."
RISKS OF INVESTING IN UNRATED DEBT
The notes have not been rated. As a result, holders of the notes will
have the risks associated with an investment in unrated debt. Historically, the
market for unrated debt has been subject to disruptions that have caused
substantial volatility in the prices of such securities and greatly reduced
liquidity for the holders of such securities. If the notes are traded, they may
trade at a discount from their initial offering price, depending upon prevailing
interest rates, the market for similar securities, the performance of
DoubleClick and certain other factors. The liquidity of, and trading markets
for, the notes may also be adversely affected by general declines in the market
for unrated debt. Such declines may adversely affect the liquidity of, and
trading markets for, the notes, independent of the financial performance of or
prospects for DoubleClick. In addition, certain regulatory restrictions prohibit
certain types of financial institutions from investing in unrated debt, which
may further suppress demand for such securities. There can be no assurance that
the market for the notes will not be subject to similar disruptions. Any such
disruptions may have an adverse effect on holders of the notes.
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FORWARD-LOOKING INFORMATION
This prospectus includes "forward-looking statements" regarding future
events or our future performance within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this prospectus or incorporated by
reference regarding our financial position and business strategy may constitute
forward-looking statements. Although we believe that the expectations reflected
in these forward-looking statements are reasonable, we cannot guarantee that
these expectations will prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are listed in this
prospectus, and they include the forward-looking statements under "Risk
Factors." All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by these statements.
USE OF PROCEEDS
All of the notes and the shares of DoubleClick common stock issuable
upon conversion of the notes are being sold by the selling securityholders or by
their pledgees, donees, transferees or other successors in interest. DoubleClick
will not receive any proceeds from the sale of the notes or the shares of its
common stock issuable upon conversion of the notes.
RATIO OF EARNINGS TO FIXED CHARGES
We have not recorded earnings for any of the three years ended December
31, 1998, or for the three-month period ended March 31, 1999, and therefore are
unable to cover fixed charges and unable to disclose the ratio of earnings to
fixed charges. However, the following table discloses our pre-tax loss from
continuing operations and our amount of fixed charges for the periods indicated:
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended
(in thousands) 1996 1997 1998 March 31, 1999
------- ------- ------- --------------
<S> <C> <C> <C> <C>
Pre-tax loss from continuing operations: $ 3,192 $ 8,356 $18,173 $ 6,925
Fixed charges:
Interest expense: 91 341 75 342
Interest component of rent
expenses on operating leases: 162 194 466 335
Total fixed charges: $ 253 $ 535 $ 541 $ 677
------- ------- ------- -------
Ratio of Loss to Fixed Charges - (a) - (a) - (a) - (a)
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
- ----------
(a) As a result of the loss incurred for the years ended 1996, 1997, and
1998 and for the three months ended March 31, 1999, the ratio coverage
was less than 1:1 as DoubleClick was unable to cover the indicated
fixed charges. DoubleClick must generate additional earnings of $2,939,
$7,821 and $17,632 for the years ended 1996, 1997 and 1998,
respectively, and $6,248 for the three months ended March 31, 1999,
to achieve a coverage of 1:1.
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DESCRIPTION OF THE NOTES
The notes were issued under an Indenture dated as of March 22, 1999,
between DoubleClick and The Bank of New York, as Trustee. Registered holders of
the notes may request copies of the Indenture and the Registration Agreement
between DoubleClick and the initial purchasers of the notes which relates to the
registration under the Securities Act of 1933 of the notes and the shares of
common stock underlying the notes. The following description is a summary of the
material provisions of the Indenture and the registration agreement. It is not a
complete description and does not restate those documents either in part or in
their entirety. We urge you to read the Indenture and the registration
agreement. The Indenture and the registration agreement, and not the following
description, define your rights as holders of the notes. Copies of the Indenture
and the registration agreement are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.
GENERAL
The notes represent general unsecured obligations of DoubleClick and
are subordinated in right of payment to all existing and future senior debt of
DoubleClick to the extent set forth in the Indenture. The Indenture does not
limit the amount of other indebtedness or securities that may be issued by
DoubleClick or any of its subsidiaries. DoubleClick currently conducts its
operations directly and through its subsidiaries. Accordingly, DoubleClick may
in the future be dependent upon the cash flow of its subsidiaries to meet some
or all of its obligations, including its obligations under the notes. The notes
are effectively subordinated to all existing and future indebtedness and other
liabilities and commitments of DoubleClick's subsidiaries.
Brief Description of the notes:
- Aggregate Principal Amount:
--------------------------------------------
$250,000,000
- Interest:
--------------------------------------------
Interest is paid on each of March 15 and September 15 through
maturity at an annual rate of 4.75%, beginning on September
15, 1999.
- Maturity:
--------------------------------------------
The notes mature and must be repaid by DoubleClick on March
15, 2006. This maturity is subject to any redemptions at the
option of either a holder or DoubleClick.
- Subordination:
--------------------------------------------
The notes are not secured and are subordinate to all present
and future Senior
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Debt, as defined below, of DoubleClick. The notes are
effectively subordinated to all indebtedness and liabilities
of DoubleClick's subsidiaries.
- Conversion:
--------------------------------------------
The notes are convertible into DoubleClick's common stock. The
conversion price is $82.50 per share, subject to adjustment as
described below.
- Redemption:
--------------------------------------------
At the election of DoubleClick. Beginning on March 20, 2001,
through maturity, the notes are redeemable at DoubleClick's
option. This redemption option may be exercised for some or
all of the notes, but DoubleClick must provide 30 days' prior
notice. The redemption price applicable to redemptions by
DoubleClick ranges between 103.393% and 100.679% of the
principal amount, plus accrued interest, depending upon how
close to maturity the redemption occurs.
At the election of a holder. Upon a Designated Event, as
defined below, each holder of notes may require DoubleClick to
redeem its notes at 100% of the principal amount, plus accrued
interest and liquidated damages (as defined below in the
discussion on Registration Rights).
The notes are limited to $250.0 million aggregate principal amount,
have been issued only in denominations of $1,000 and integral multiples of
$1,000.
The Indenture does not contain any financial covenants or restrictions
on the payment of dividends, the incurrence of other Indebtedness (as defined
below) or the issuance or repurchase of other outstanding securities of
DoubleClick. The Indenture contains no covenants or other provisions to afford
protection to holders of the notes in the event of a highly leveraged
transaction or a change in control of DoubleClick except to the extent described
under "Redemption at Option of the Holder."
The notes bear interest at the annual rate of 4.75% from March 22,
1999, payable twice per year on March 15 and September 15, beginning on
September 15, 1999, to holders of record at the close of business on the
preceding February 15 and August 15, respectively. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, interest and liquidated damages, if any,
with respect to the notes will be payable at the office or agency of DoubleClick
maintained for such purpose within New York, New York or, subject to applicable
laws and regulations, at the office of any paying agent, or, at the option of
DoubleClick, payment of interest may be made by check mailed to the holders of
the notes at their respective addresses set forth in the register of holders of
notes. Until otherwise designated by DoubleClick, DoubleClick's office or agency
in New York, New York will be the office of the Trustee maintained for such
purpose.
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CONVERSION OF NOTES
The holders of notes will be entitled at any time after the notes'
initial issuance date (March 22, 1999) through the close of business on the
business day immediately preceding the final maturity date of the notes, subject
to prior redemption, to convert any notes or portions thereof, in denominations
of $1,000 or multiples of $1,000, into common stock of DoubleClick, at a
conversion price of $82.50 per share, subject to adjustment as described below.
Except as described below, no payment or other adjustment will be made on
conversion of any notes for interest accrued thereon or liquidated damages, if
any, accrued thereon or for dividends or distribution on, any DoubleClick common
stock issued. If any notes not called for redemption are converted during the
period from, but excluding, a record date for any interest payment date to, but
excluding, such interest payment date, such notes must be accompanied by funds
equal to the interest and liquidated damages, if any, payable on such interest
payment date on the principal amount so converted. DoubleClick is not required
to issue fractional shares of DoubleClick common stock upon conversion of notes
and, instead, will pay a cash adjustment based upon the market price of
DoubleClick common stock on the last business day prior to the date of
conversion.
In the case of notes called for redemption, conversion rights will
expire at the close of business on the business day preceding the day fixed for
redemption unless DoubleClick defaults in the payment of the redemption price.
The initial conversion price of $82.50 per share of DoubleClick common
stock is subject to adjustment under formulae as set forth in the Indenture in
certain events, including:
(1) the issuance of DoubleClick common stock as a dividend or
distribution on the DoubleClick common stock,
(2) certain subdivisions and combinations of the DoubleClick
common stock,
(3) the issuance to all holders of DoubleClick common stock of
rights or warrants to purchase DoubleClick common stock, at a
price per share less than the current market price (as defined
in the Indenture),
(4) the distribution to all holders of DoubleClick common stock of
capital stock, other than common stock, or evidences of
indebtedness, cash, rights or warrants, or other assets,
including securities, but excluding those rights, warrants,
dividends and distributions referred to above or paid in cash,
(5) distributions consisting of cash, excluding any cash dividend
on the DoubleClick common stock to the extent that the
aggregate cash dividend, together with the sum of (a) the
aggregate amount of any other distributions made exclusively
in cash to all holders of common stock within the 12 months
preceding the date fixed for determining the stockholders
entitled to such distribution (the "Distribution Record Date")
and in respect of which no conversion price adjustment has
been made plus (b) the aggregate amount of all Excess Payments
(as defined in the Indenture) in respect of any tender offers
or other negotiated transactions by DoubleClick or any of its
subsidiaries for common stock concluded within the 12 months
preceding the Distribution Record Date and in respect of which
no conversion price adjustments have been made, exceeds 12
1/2% of the product of the Current Market Price per share, and
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(6) payment in respect of a tender offer or exchange offer by
DoubleClick or any subsidiary of DoubleClick for all or any
portion of the DoubleClick common stock to the extent that the
cash and value of any other consideration included in such
payment per share of DoubleClick common stock exceeds 12 1/2%
of the Current Market Price, as defined in the Indenture, per
share of DoubleClick common stock on the Purchase Date as
defined in the Indenture multiplied by the number of shares
outstanding on such day.
If we reclassify or change our outstanding common stock (other than
changes to the par value or resulting from a subdivision or a combination), or
consolidate with or merge into any person (other than a merger where we are the
continuing corporation and which does not result in a reclassification or change
in the common stock), or transfer all or substantially all our assets determined
on a consolidated basis, the notes will become convertible into the kind and
amount of securities, cash or other assets which the holders of the notes would
have owned immediately after any such transaction if the holders had converted
the notes immediately before the effective date of such transaction.
The Indenture also provides that if rights, warrants or options expire
unexercised, the conversion price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
In the event of a taxable distribution to holders of DoubleClick common
stock or in certain other circumstances requiring conversion price adjustments,
the holders of notes may, in certain circumstances, be deemed to have received a
distribution subject to United States income tax as a dividend; in certain other
circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of DoubleClick common stock. Please see "Material United
States Federal Income Tax Considerations" below.
DoubleClick from time to time may to the extent permitted by law reduce
the conversion price by any amount for any period of at least 20 days, in which
case DoubleClick shall give at least 15 days' notice of such reduction, if the
Board of Directors has made a determination that such reduction would be in the
best interests of DoubleClick, which determination shall be conclusive.
DoubleClick may, at its option, make such reductions in the conversion price, in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of DoubleClick common stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. Please see
"Material United States Federal Income Tax Considerations."
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion price will not be adjusted for the
issuance of DoubleClick common stock or any securities convertible into or
exchangeable for DoubleClick common stock or carrying the right to purchase any
of the foregoing.
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REDEMPTION AT THE OPTION OF DOUBLECLICK
The notes will not be subject to redemption at our option prior to
March 20, 2001. On and after March 20, 2001, the notes may be redeemed at the
option of DoubleClick, in whole or in part (in any integral multiple of $1,000)
at the following redemption prices (expressed as percentages of the principal
amount), in each case, together with accrued interest and liquidated damages, if
any, to, but excluding, the redemption date, subject to the right of holders of
record on the relevant record date to receive interest and liquidated damages,
if any, due on an interest payment date; provided, however, that we may not
redeem the notes prior to March 15, 2003 unless the closing sales price of our
common stock exceeds 140% of the conversion price for at least 20 trading days
in any consecutive 30 trading day period ending on the trading day prior to the
date the notice of redemption is first mailed to the holders of the notes. If
redeemed during the 12-month period beginning March 15 of the years indicated
(March 20, in the case of 2001) such redemption price shall be as indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
2001 103.393% 2004 101.357%
2002 102.714% 2005 100.679%
2003 102.036%
</TABLE>
On or after the redemption date, interest and liquidated damages, if any, will
cease to accrue on the notes, or portion thereof, called for redemption unless
we fail to redeem the notes.
If less than all of the notes are to be redeemed at any time, the
Trustee will select notes for redemption in accordance with the requirements of
the principal national securities exchange, if any, on which the notes are
listed, or, if the notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee deems fair and appropriate. No notes of $1,000 in
principal amount or less shall be redeemed in part. Notice of redemption shall
be mailed at least 30 but not more than 60 days before the redemption date to
each holder of notes to be redeemed at its registered address. If a holder's
notes are to be redeemed in part only, the notice of redemption that relates to
such notes shall state the portion of the principal amount to be redeemed.
MANDATORY REDEMPTION
We are not required to make mandatory redemption or sinking fund
payments with respect to the notes.
REDEMPTION AT THE OPTION OF THE HOLDER
If a Designated Event occurs, each holder of notes shall have the
right, at the holder's option, to require DoubleClick to redeem any or all of
such holder's notes pursuant to a Designated Event offer at a purchase price
equal to 100% of the principal amount to be redeemed, together with accrued and
unpaid interest and liquidated damages, if any, thereon to the date payment is
made. Within 30 days following any Designated Event, unless we have given the
holders notice of our intention to redeem the notes at our election as discussed
above under "Optional Redemption," we will mail a notice to each holder
informing them that a Designated Event offer is being made and containing
relevant information and instructions regarding the terms of the redemption,
including notice of the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date such notice is mailed
unless a
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later date is required by applicable law. We will publicly announce the results
of our Designated Event offer on or as soon as practicable after the Designated
Event payment date. Payment for notes properly surrendered for redemption, and
not withdrawn, will be made promptly following the repurchase date.
We will comply with the requirements of Rules 13e-4 and 14e-1 under the
Exchange Act and any other applicable securities laws and regulations in
connection with repurchasing note upon pursuant to a Designated Event offer.
A "Designated Event" will be deemed to have occurred upon a Change of
Control or a Termination of Trading.
A "Change of Control" will be deemed to have occurred when: (i) any
"person" or "group" (as such terms are used in Section 13(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote generally in
elections of directors of DoubleClick (the "Voting Stock"); (ii) DoubleClick or
any subsidiary of DoubleClick consolidates with or merges into any other
corporation, or any other corporation merges into DoubleClick or any subsidiary
of DoubleClick, unless the stockholders of DoubleClick immediately before such
transaction own, directly or indirectly immediately following such transaction,
at least a majority of the combined voting power of the outstanding voting
securities entitled to vote generally in elections of directors of DoubleClick
or the corporation resulting from such transaction in substantially the same
respective proportions as their ownership of the Voting Stock immediately before
such transaction; (iii) DoubleClick or DoubleClick and its subsidiaries, taken
as a whole, sells, assigns, conveys, transfers or leases all or substantially
all of the assets of DoubleClick or of DoubleClick and its subsidiaries, taken
as a whole, as applicable (other than to one or more wholly-owned subsidiaries
of DoubleClick); or (iv) the Continuing Directors do not constitute a majority
of the board of directors of DoubleClick (or, if applicable, a successor
corporation to DoubleClick); provided, however, that (a) a Change of Control
under clause (i), (ii) or (iii) above shall not be deemed to have occurred if
either the closing sales price per share of DoubleClick's common stock for any
five trading days within the period of 10 consecutive trading days ending
immediately after the later of the Change of Control or the public announcement
of the Change of Control (in the case of a Change of Control under clause (i)
above) or the period of 10 consecutive trading days ending immediately before
the Change of Control (in the case of a Change of Control under clause (ii) or
(iii) above) shall equal or exceed 105% of the conversion price of the notes in
effect on the date of such Change of Control or the public announcement of such
Change of Control, as applicable, or (b) a Change of Control under clause (i),
(ii) or (iii) above shall not be deemed to have occurred if at least 90% of the
consideration in the Change of Control transaction consists of shares of capital
stock traded on a U.S. national securities exchange or quoted on Nasdaq, and as
a result of such transaction, the notes become convertible solely into such
capital stock.
The definition of Change of Control includes a phrase relating to the
sale, assignment, conveyance, transfer or lease of "all or substantially all" of
the assets of DoubleClick. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
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holder of notes to require DoubleClick to repurchase such notes as a result of a
sale, assignment, conveyance, transfer or lease of less than all of the assets
of DoubleClick or DoubleClick and its subsidiaries, taken as a whole, to another
person or group may be uncertain.
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of DoubleClick who (i) was a member of such
Board of Directors on the date of the Indenture or (ii) was nominated for
election or elected to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
A "Termination of Trading" will be deemed to have occurred if
DoubleClick common stock (or other common stock into which the notes are then
convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on Nasdaq or other established
automated over-the-counter trading market in the United States.
The redemption rights of the holders of notes could discourage a
potential acquiror of DoubleClick. The Designated Event redemption feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of DoubleClick by means of a merger, tender offer, solicitation
or otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, the Designated Event redemption feature is a result of
negotiations between DoubleClick and the initial purchasers of the notes. We
have no current intention to engage in a transaction involving a Designated
Event, although it is possible that we could decide to do so in the future.
Subject to the limitations on mergers, consolidations and sales of assets
described herein, we could, in the future, enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that would not
constitute a Designated Event under the Indenture, but that could increase the
amount of Indebtedness (including Senior Debt) outstanding at such time or
otherwise affect our capital structure or credit ratings. The payment of the
Designated Event payment is subordinated to the prior payment of Senior Debt as
described under " -- Subordination of Notes" below.
Our ability to repurchase notes upon the occurrence of a Designated
Event is subject to limitations. If a Designated Event were to occur, we cannot
assure you that we would have sufficient financial resources, or would be able
to arrange financing, to pay the redemption price for all notes tendered by
holders thereof. Our subsidiaries may be parties in the future to credit
agreements and other agreements relating to Indebtedness which contain
restrictions on transferring funds sufficient to permit us to effect a
Designated Event payment. In addition, our future credit agreements or other
agreements relating to Indebtedness (including Senior Debt) may prohibit or
restrict us from making a Designated Event payment. In the event a Designated
Event occurs at a time when such prohibitions or restrictions are in effect, we
could seek the consent of our lenders and lenders to our subsidiaries to enable
us to purchase notes or could attempt to refinance the borrowings that contain
such prohibitions or restrictions. If we do not obtain such consents or repay
such borrowings, we will be effectively prohibited from purchasing notes. In
such case, our failure to purchase tendered notes would constitute an Event of
Default under the Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn, cause
a default under our Senior Debt. Moreover, the occurrence of a Change in Control
may cause an event of default under
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Designated Senior Debt (as defined below). As a result, in such a case, any
repurchase of the notes would, absent a waiver, be prohibited under the
subordination provisions of the Indenture until the Senior Debt is paid in full.
Please see " -- Subordination of Notes" below and "Risk Factors -- You May Not
Be Paid on the Notes."
SUBORDINATION OF NOTES
The notes are general unsecured obligations of DoubleClick, are
subordinated in right of payment to all existing and future Senior Debt of
DoubleClick and rank pari passu in right of payment with all other existing and
future Indebtedness and liabilities of DoubleClick that are not subordinated by
their express terms to the notes. In addition, the notes will be structurally
subordinated to all indebtedness and other liabilities of DoubleClick's
subsidiaries, if any. As of March 31, 1999, we had $333,000 of indebtedness that
would have constituted Senior Debt, consisting solely of capital leases. As of
the same date, DoubleClick's subsidiaries did not have any Indebtedness. The
Indenture does not restrict the amount of Senior Debt or other Indebtedness of
DoubleClick or any subsidiary of DoubleClick. Please see "Risk
Factors--Subordination of Notes."
No payment on account of principal of, or premium, if any, interest or
liquidated damages, if any, on or any other amounts due on the notes, including,
without limitation, any payments on the Designated Event offer, and no
redemption, purchase or other acquisition of the notes may be made unless (i)
full payment of amounts then due on all Senior Debt has been made or duly
provided for pursuant to the terms of the instrument governing such Senior Debt,
and (ii) at the time for, or immediately after giving effect to, any such
payment, redemption, purchase or other acquisition, there shall not exist under
any Senior Debt or any agreement pursuant to which any Senior Debt has been
issued any default which shall not have been cured or waived and which shall
have resulted in the full amount of such Senior Debt being declared due and
payable. In addition, the Indenture provides that if any of the holders of any
issue of Designated Senior Debt notify (the "Payment Blockage Notice") the
Trustee that a default has occurred giving the holders of such Designated Senior
Debt the right to accelerate the maturity thereof, no payment on account of
principal of, or premium, if any, interest or liquidated damages, if any, or any
other amounts due on the notes and no purchase, redemption or other acquisition
of the notes will be made for the period (the "Payment Blockage Period")
commencing on the date the Payment Blockage Notice is received and ending
(unless earlier terminated by notice given to the Trustee by the holders or the
representative of such holders) on the earlier of (A) the date on which such
event of default shall have been cured or waived or (B) 180 days from the date
the Payment Blockage Notice is received. Subject to the foregoing, unless the
holders of such Designated Senior Debt or the representative of such holders
shall have accelerated the maturity of such Designated Senior Debt, DoubleClick
may resume payments on the notes after the end of such Payment Blockage Period.
Not more than one Payment Blockage Notice may be given in any consecutive
365-day period, irrespective of the number of defaults with respect to Senior
Debt during such period.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of DoubleClick or acceleration of the
principal amount due on the notes because of an Event of Default, all Senior
Debt must be paid in full before the holders of
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the notes are entitled to any payments whatsoever (other than payments of
certain junior securities).
If payment of the notes is accelerated because of an Event of Default,
DoubleClick shall give prompt written notice to the holders of Senior Debt or to
the trustee(s) for such Senior Debt of the acceleration. DoubleClick may not pay
the principal of, premium, if any, or interest or liquidated damages, if any, on
any other amounts due on the notes until five business days after such holders
or trustee(s) of Senior Debt receive notice of such acceleration and,
thereafter, may pay principal of, premium, if any, interest and liquidated
damages, if any, on or any other amounts due on the notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
As a result of these subordination provisions, in the event of DoubleClick's
insolvency, holders of the notes may recover ratably less than general creditors
of DoubleClick.
The term "Designated Senior Debt" means any Senior Debt which, at the
date of determination, has an aggregate principal amount outstanding of, or
commitments to lend up to, at least $15,000,000 and is specifically designated
by DoubleClick in the instrument evidencing or governing such Senior Debt as
"Designated Senior Debt" for purposes of the Indenture.
The term "Indebtedness" means, with respect to any person, all
Obligations, whether or not contingent, of such person:
- (a) for borrowed money (including, but not limited to, any
indebtedness secured by a security interest, mortgage or other
lien on the assets of such person which is (1) given to secure
all or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to another, or
(2) existing on property at the time of acquisition thereof),
(b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on
the balance sheet of the lessee under generally accepted
accounting principles or under any lease or related document
(including a purchase agreement) which provides that such
Person is contractually obligated to purchase or to cause a
third party to purchase such leased property,(d) in respect of
letters of credit, bank guarantees or bankers' acceptances
(including reimbursement obligations with respect to any of
the foregoing), (e) with respect to Indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim
affecting title or resulting in an encumbrance to which the
property or assets of such Person are subject, whether or not
the obligation secured thereby shall have been assumed or
guaranteed by or shall otherwise be such person's legal
liability, (f) in respect or the balance of the deferred and
unpaid purchase price of any property or assets, and (g) under
interest rate or currency swap agreement, cap floor and collar
agreements, spot and forward contracts and similar agreements
and arrangements;
- with respect to any obligation of others of the type described
in the preceding clause or under clause below assumed by or
guaranteed in any manner by such person or in effect
guaranteed by such Person through an agreement to purchase
(including, without limitation, "take or pay" and similar
arrangements), contingent or otherwise (and the obligations of
such Person under any such assumptions, guarantees or other
such arrangements); and
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- any and all deferrals, renewals, extensions, refinancings and
refundings of, or amendments modifications or supplements to,
any of the foregoing.
The term "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages, and other liabilities payable under
the documentation governing any Indebtedness.
The term "Senior Debt" means the principal of, premium, if any,
interest on and other amounts due on Indebtedness of DoubleClick, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or Guaranteed by DoubleClick (including all deferrals, renewals,
extensions, refinancings and refundings of, or amendments, modifications or
supplements to, any of the foregoing), unless, in the instrument creating or
evidencing such indebtedness or pursuant to which such Indebtedness is
outstanding, it is expressly provided that such Indebtedness is not senior in
right of payment to, or ranks pari passu in right of payment with, the notes.
Senior Debt includes, with respect to the obligations described above, interest
accruing, pursuant to the terms of such Senior Debt, on or after the filing of
any petition in bankruptcy or for reorganization relating to DoubleClick,
whether or not post-filing interest is allowed in such proceeding, at the rate
specified in the instrument governing the relevant obligation. Notwithstanding
anything to the contrary in the foregoing, Senior Debt shall not include: (i)
Indebtedness of or amounts owed by DoubleClick for compensation to employees, or
for goods, services or materials purchased in the ordinary course of business;
(ii) Indebtedness of DoubleClick to a Subsidiary of DoubleClick other than such
Indebtedness that would be subject to a prior claim by the lenders under
DoubleClick's existing credit facilities; or (iii) any liability for federal,
state, local or other taxes owed or owing by DoubleClick.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that DoubleClick may not consolidate or merge
with or into any person (whether or not DoubleClick is the surviving
corporation) continue in a new jurisdiction, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets unless:
- DoubleClick is the surviving or continuing
corporation or the person formed by or surviving any such consolidation
or merger (if other than DoubleClick) or the person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of DoubleClick is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
- the corporation formed by or surviving any such
consolidation or merger (if other than DoubleClick) or the corporation
to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made assumes all the obligations of
DoubleClick, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the notes, the registration
agreement and the Indenture;
- such sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of DoubleClick's
properties or assets shall be as an entirety or
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virtually as an entirety to one corporation and such corporation shall
have assumed all the obligations of DoubleClick, pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee, under the notes, the registration agreement and the Indenture;
- immediately after such transaction, no default or
Event of Default exists; and
- DoubleClick or such corporation shall have delivered
to the Trustee an officers' certificate and an opinion of counsel, each
stating that such transaction and the supplemental indenture comply
with the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
REPORTS
Whether or not required by the rules and regulations of the Commission,
so long as any notes are outstanding, DoubleClick will file with the Commission
and furnish to the Trustee and the holders of notes all quarterly and annual
financial information (without exhibits) required to be contained in a filing
with the Commission on Forms 10-Q and 10-K, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual consolidated financial statements only, a report thereon by
DoubleClick's independent auditors. DoubleClick shall not be required to file
any report or other information with the Commission if the Commission does not
permit such filing.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default is defined in the Indenture as being:
- default for 30 days in payment of any installment of
interest or liquidated damages, on the notes;
- default in payment of the principal of or premium, if
any, on the notes, upon redemption or otherwise;
- default in DoubleClick's performance of its
obligations in connection with a Designated Event;
- default by DoubleClick for 60 days after notice in
the observance or performance of any other covenants in the notes or
the Indenture;
- payment defaults or other defaults causing
acceleration of Indebtedness prior to maturity, where the principal
amounts of the Indebtedness subject to such defaults aggregates $15
million or more, and where such defaults are not cured within 30 days
after DoubleClick receives notice of such defaults;
- failure by DoubleClick or any material subsidiary to
pay final non-appealable judgments (other than where fully covered by a
reputable insurance company) in excess of $15 million, which judgments
are not stayed, bonded or discharge within 60 days after their entry;
and
- certain events involving bankruptcy, insolvency or
reorganization of DoubleClick or any of its Material Subsidiaries.
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If any Event of Default (other than an Event of Default arising from
certain events of bankruptcy or insolvency) occurs and is continuing, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding notes may declare all the notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to DoubleClick or any
material subsidiary, all outstanding notes will become due and payable without
further action or notice. Holders of the notes may not enforce the Indenture or
the notes except as provided in the Indenture. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders of the Notes notice of any continuing default or Event of
Default (except a default or Event of Default relating to the payment of
principal, premium, if any, interest or liquidated damages, if applicable) if it
determines that withholding notice is in their interest.
By notice to the Trustee, the holders of a majority in aggregate
principal amount of the notes then outstanding may, on behalf of the holders of
all of the notes, waive any existing default or Event of Default and its
consequences under the Indenture except a continuing default or Event of Default
in the payment of the Designated Event payment or interest or liquidated
damages, if applicable, on, or the principal of or premium on, the notes.
We are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and we are required, upon becoming
aware of any default or Event of Default, to deliver to the Trustee a statement
specifying such default or Event of Default.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the then outstanding notes, and any
existing default or compliance with any provision of the Indenture or the notes
may be waived with the consent of the holders of a majority in principal amount
of the then outstanding notes.
Without the consent of each holder affected, an amendment, supplement
or waiver may not (with respect to any notes held by a nonconsenting holder of
notes) (i) reduce the amount of notes whose holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any note or alter the provisions with respect to the
redemption of the notes, (iii) reduce the rate of or change the time for payment
of interest on any note, (iv) waive a default in the payment of principal of or
premium, if any, or interest or liquidated damages, if any, on any notes (except
a rescission of acceleration of the notes by the holders of at least a majority
in aggregate principal amount of the notes and a waiver of the payment default
that resulted from such acceleration), (v) make any note payable in money other
than that stated in the notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past defaults or the rights of holders of notes
to receive payments of principal of or premium, if any, or interest or
liquidated damages, if any, on the notes, (vii) waive a redemption payment with
respect to any note, (viii) impair the right to convert the notes into
DoubleClick's common stock, (ix) modify the conversion or subordination
provisions of the Indenture in a manner adverse to the holders of the notes or
(x) make any change in the foregoing amendment and waiver provisions.
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Notwithstanding the foregoing, without the consent of any holder of
notes, DoubleClick and the Trustee may amend or supplement the Indenture or the
notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated notes in addition to or in place of definitive Notes, to provide
for the succession of another person to DoubleClick and the assumption by such
successor to DoubleClick's covenants and obligations under the Indenture, to
evidence and provide for the acceptance of the appointment under the Indenture
of a successor Trustee, to make any change that would provide any additional
rights or benefits to the holders of the notes or that does not adversely affect
the legal rights under the Indenture of any such holder, to make provisions with
respect to the conversion rights of holders of notes in the event of a
consolidation, merger, continuation or sale of assets as required by the
Indenture, or to comply with requirements of the Commission in order to qualify,
or maintain the qualifications of, the Indenture under the Trust Indenture Act.
NOTICES. Notices to holders of the notes will be given by mail
to the addresses of such holders as they appear in the Trustee's register of
note holders. Such notices will be deemed to have been given on the date of such
mailing or on the date of the first such publication, as the case may be.
REGISTRATION RIGHTS
DoubleClick has filed with the Commission a registration statement, of
which this prospectus is a part, covering resales by holders of the notes and
the common stock issuable upon conversion of the notes within 60 days after the
date on which the notes were issued. We have agreed to use our reasonable best
efforts to cause the shelf registration statement to be declared effective
within 150 days of the date on which the notes were issued. We also have agreed
to use reasonable best efforts to keep the shelf registration statement
effective until the earlier of:
- the second anniversary of the closing date (which was March
22, 1999) or, if later, the second anniversary of the last
date on which any securities are issued upon exercise of the
initial purchasers' over-allotment option;
- the date on which all the notes and common stock issued or
issuable upon conversion thereof may be sold by non-affiliates
("affiliates" for such purpose having the meaning set forth in
Rule 144) of DoubleClick pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated under the Securities
Act;
- the date as of which all the notes and common stock issued or
issuable upon conversion thereof have been transferred
pursuant to Rule 144 under the Securities Act (or any similar
provision then in force); and
- such date as of which all the notes and the common stock
issued or issuable upon conversion thereof have been sold
pursuant to this prospectus.
LIQUIDATED DAMAGES. If the shelf registration statement (i) is not
filed with the Commission on or prior to 60 days, or has not been declared
effective by the Commission within 150 days, after March 22, 1999, or (ii) is
filed and declared effective but shall thereafter cease to be effective (without
being succeeded immediately by a replacement shelf registration statement filed
and declared effective) or usable for the offer and sale of Transfer Restricted
Securities (as
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defined below) for a period of time (including any suspension period as
discussed below) which shall exceed 60 days in the aggregate in any 12-month
period during the period beginning on the closing date and ending on or prior to
the second anniversary of the closing date, DoubleClick will pay liquidated
damages to each holder of Transfer Restricted Securities that has complied with
its obligations under the registration agreement. The amount of liquidated
damages payable during any period in which a registration default shall have
occurred and be continuing is that amount which is equal to one-quarter of one
percent (25 basis points) per annum per $1,000 principal amount of notes or
$2.50 per annum per 12.12121 shares of common stock (subject to adjustment in
the event of a stock split, stock recombination, stock dividend and the like)
constituting Transfer Restricted Securities for the first 90 days during which a
registration default has occurred and is continuing and one-half of one percent
(50 basis points) per annum per $1,000 principal amount of notes or $5.00 per
annum per 12.12121 shares of common stock (subject to adjustment in the event of
a stock split, stock recombination, stock dividend and the like) constituting
Transfer Restricted Securities for any additional days during which such
Registration Default has occurred and is continuing. We have agreed to pay all
accrued liquidated damages by wire transfer of immediately available funds or by
federal funds check generally on interest payment dates. Following the cure of a
registration default, liquidated damages will cease to accrue with respect to
such registration default.
"Transfer Restricted Securities" means each note and any share of
common stock issued on conversion thereof until the earlier of the date (A) on
which such note or share, as the case may be, (i) has been transferred pursuant
to the shelf registration statement or another registration statement covering
such note or share which has been filed with the Commission pursuant to the
Securities Act, in either case after such registration statement has become
effective under the Securities Act, (ii) has been transferred pursuant to Rule
144 under the Securities Act (or any similar provision then in force), or (iii)
may be sold or transferred pursuant to Rule 144(k) under the Securities Act (or
any similar provision then in force), or (B) that is the second anniversary of
the closing date or, if later, the second anniversary of the last date on which
any notes are issued upon exercise of the initial purchasers' over-allotment
option.
A holder of notes or the common stock issuable upon conversion of the
notes that sells such securities pursuant to the shelf registration statement
will be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities Act in connection with
such sales and will be bound by the provisions of the registration agreement
that are applicable to such holder (including certain indemnification and
contribution rights or obligations). We distributed a questionnaire to each
beneficial holder of notes to obtain certain information regarding such selling
securityholders for inclusion in the prospectus.
We will be permitted to suspend the use of the prospectus which is a
part of the shelf registration statement for a period not to exceed 30 days in
any three-month period or for three periods not to exceed an aggregate of 90
days in any twelve- month period under certain circumstances relating to pending
corporate developments, public filings with the Commission and similar events.
DoubleClick will pay the expenses of the registration statement other
than any underwriting discounts and commissions, provide to each registered
holder who has requested to
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sell pursuant to the shelf registration statement copies of this prospectus,
notify each registered holder who has requested to sell pursuant to the shelf
registration statement when the shelf registration statement has become
effective and take certain other actions as are required to permit, subject to
the foregoing, unrestricted resales of the notes or the DoubleClick common
stock.
BOOK-ENTRY; DELIVERY AND FORM; GLOBAL NOTE
Notes sold in the United States in reliance on Rule 144A or in offshore
transactions in reliance on Regulation S will be represented by a single,
permanent global note in definitive, fully-registered form without interest
coupons. The global note will be deposited with the Trustee as custodian for The
Depository Trust Company, or DTC, and registered in the name of a nominee of DTC
in New York, New York for the accounts of participants in DTC.
Investors who are "qualified institutional buyers" (as defined in Rule
144A under the Securities Act and referred to as "QIBs") and who purchase notes
in reliance on Rule 144A under the Securities Act may hold their interests in
the global note directly through DTC if they are DTC participants, or indirectly
through organizations that are DTC participants.
Investors who purchase notes in offshore transactions in reliance on
Regulation S under the Securities Act may hold their interests in the global
note directly through Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System, if they are participants in
Euroclear, or indirectly through organizations that are participants in
Euroclear. Euroclear will hold interests in the global note on behalf of its
participants through its depositary, which in turn will hold such interests in
the global note in customers' securities accounts in the depositary's name on
the books of DTC. The Chase Manhattan Bank will act initially as depositary for
Euroclear.
Notes originally purchased by or transferred to institutional
accredited investors (as defined in Rules 501(a)(1), (2), (3) or (7) under the
Securities Act) that are not QIBs will be issued and physically delivered in
fully registered, definitive form and may not be represented by interests in the
global note. Otherwise, except in the limited circumstances described below,
holders of notes represented by interests in the global note will not be
entitled to receive definitive notes.
Upon transfer of a definitive note to a QIB pursuant to Rule 144A or in
an offshore transaction pursuant to Rule 904 of Regulation S, the definitive
note will be exchanged for an interest in the global note, and the transferee
will be required to hold its interest through a participant in DTC or Euroclear,
as applicable. Upon transfer of beneficial interest in a global note to an
institutional accredited investor, such beneficial interest will be exchanged
for a definitive note. All transfers described in this paragraph will be subject
to certain instructions set forth in the Indenture, including a requirement for
the delivery of certain certifications and other documents.
Except as set forth below, the global note may be transferred, in whole
or in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
DTC has advised DoubleClick as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a
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"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of institutions that
have accounts with DTC ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (which may include the
Initial Purchasers) banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, whether directly or
indirectly.
Upon the issuance of the global note, DTC will credit, on its
book-entry registration and transfer system, the respective principal amount of
the individual beneficial interests represented by the global note to the
accounts of participants. Ownership of beneficial interests in the global note
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in the global note will be shown
on, and the transfer of those ownership interests will be effected only through,
records maintained by DTC (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in the global
note other than participants).
So long as DTC or its nominee is the registered holder and owner of the
global note, DTC or such nominee, as the case may be, will be considered the
sole legal owner of the notes represented by the global note for all purposes
under the Indenture and the notes. Except as set forth below, owners of
beneficial interests in the global note will not be entitled to receive
definitive notes and will not be considered to be the owners or holders of any
notes under the global note. DoubleClick understands that under existing
industry practice, in the event an owner of a beneficial interest in the global
note desires to take any action that DTC, as the holder of the global note, is
entitled to take, DTC would authorize the participants to take such action, and
that participants would authorize beneficial owners owning through such
participants to take such action or would otherwise act upon the instructions of
beneficial owners owning through them. No beneficial owner of an interest in the
global note will be able to transfer the interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear.
Payments of the principal of, and interest and liquidated damages on,
the notes represented by the global note registered in the name of and held by
DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the registered owner and holder of the global note.
DoubleClick expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of the global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global note as
shown on the records of DTC or its nominee. DoubleClick also expects that
payments by participants to owners of beneficial interests in the global note
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for amounts of
customers registered in the names of nominees for such customers. Such payments,
however, will be the responsibility of such participants and indirect
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participants, and neither DoubleClick, the Trustee nor any paying agent will
have any responsibility or liability for any aspect of the records relating to,
or payments made on account of, beneficial ownership interests in the global
note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests or for any other aspect of the relationship
between DTC and its participants or the relationship between such participants
and the owners of beneficial interests in the global note.
Unless and until it is exchanged in whole or in part for definitive
notes, the global note may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
Transfers between participants in Euroclear will be effected in the ordinary way
in accordance with Euroclear rules and operating procedures. If a holder
requires physical delivery of a definitive note for any reason, including to
sell notes to persons in jurisdictions which require such delivery of such notes
or to pledge such notes, such holder must transfer its interest in the global
note in accordance with the normal procedures of DTC and the procedures set
forth in the Indenture.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf Euroclear, by its depositary; however,
such cross-market transactions will require delivery of instructions to
Euroclear, by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (Brussels time). Euroclear will,
if the transaction meets its settlement requirements, deliver instructions to
its depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the global note in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants may not deliver
instructions directly to the depositary for Euroclear.
Because of time zone differences, the securities account of a Euroclear
participant purchasing an interest in the global note from a DTC participant
will be credited during the securities settlement processing day (which must be
a business day for Euroclear) immediately following the DTC settlement date, and
such credit of any transactions interests in the global note settled during such
processing day will be reported to the relevant Euroclear participant on such
day. Cash received in Euroclear as a result of sales of interests in the global
note by or through a Euroclear participant to a DTC participant will be received
with value on the DTC settlement date, but will be available in the relevant
Euroclear cash account only as of the business day following settlement in DTC.
DoubleClick expects that DTC will take any action permitted to be taken
by a holder of notes (including the presentation of notes for exchange as
described below) only at the direction of one or more participants to whose
accounts at DTC interests in the global note are credited and only in respect of
such portion of the aggregate principal amount of the notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the notes, DTC will exchange the global note for
definitive notes, which it will distribute to its participants. These definitive
notes will be subject to certain restrictions on
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registration of transfers.
Although DoubleClick expects that DTC and Euroclear will agree to the
foregoing procedures in order to facilitate transfers of interests in the global
note among participants of DTC and Euroclear, DTC and Euroclear are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither DoubleClick nor the Trustee
will have any responsibility for the performance by DTC or Euroclear or their
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
If DTC is at any time unwilling to continue as a depositary for the
global note or refuses to be a clearing agency registered under the Exchange Act
and a successor depositary is not appointed by DoubleClick within 90 days,
DoubleClick will issue definitive notes in exchange for the global note which
will be subject to certain restrictions on registration of transfers.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the
Indenture. The registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and pay any taxes and fees
required by law or permitted by the Indenture. DoubleClick is not required to
exchange or register the transfer of any note selected for redemption. Also,
DoubleClick is not required to exchange or register the transfer of any note for
a period of 15 days before the mailing of a notice of redemption of notes to be
redeemed.
The registered holder of a note will be treated as the owner of the
note for all purposes.
INFORMATION CONCERNING THE TRUSTEE
The Bank of New York, as Trustee under the Indenture, has been
appointed by DoubleClick as paying agent, conversion agent, registrar and
custodian with regard to the notes.
DoubleClick is obligated to pay reasonable compensation to the Trustee
and to indemnify the Trustee against certain losses, liabilities or expenses
incurred by it in connection with its duties relating to the notes. The
Trustee's claims for such payments will generally be senior to those of the
holders of the notes in respect of all funds collected or held by the Trustee.
MATERIAL UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS
The following is a summary of material United States federal income and
estate tax considerations relating to the purchase, ownership and disposition of
the notes and of DoubleClick common stock into which notes may be converted.
This summary is not a complete analysis of all the potential tax considerations
relating to such considerations.
This summary is based on the provisions of the Internal Revenue Code of
1986, as amended, the applicable Treasury Regulations promulgated or proposed
thereunder, judicial authority and current administrative rulings and practice.
All of these sources of authority are subject to change, possibly on a
retroactive basis.
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This summary deals only with holders that will hold notes and
DoubleClick common stock into which notes may be converted as "capital assets"
(within the meaning of Section 1221 of the Internal Revenue Code). It does not
address tax considerations applicable to investors that may be subject to
special tax rules, such as banks, tax-exempt organizations, insurance companies,
dealers in securities or currencies or persons that will hold notes as a
position in a hedging transaction, "straddle or conversion transaction" for tax
purposes. DoubleClick has not sought any ruling from the Internal Revenue
Service with respect to the statements made and the conclusions reached in the
following summary, and there can be no assurance that the IRS will agree with
such statements and conclusions.
We urge investors considering the purchase of notes to consult their
own tax advisors with respect to the application of the United States federal
income and estate tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction or under any applicable tax treaty.
UNITED STATES HOLDERS
As used in this prospectus, the term "United States Holder" means the
beneficial owner of a note or DoubleClick common stock that for United States
federal income tax purposes is:
- a citizen or resident of the United States,
- a corporation, partnership or other entity created or
organized in or under the laws of the United States or any
political subdivision thereof,
- an estate the income of which is subject to United States
federal income taxation regardless of its source, or
- a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the
trust and (b) one or more United States persons have the
authority to control all substantial decisions of the trust.
PAYMENT OF INTEREST. Interest on a note generally will be includable in
the income of a United States Holder as ordinary income at the time such
interest is received or accrued, in accordance with such Holder's method of
accounting for United States federal income tax purposes.
MARKET DISCOUNT. The holders of the notes may be affected by the
"market discount" provisions of the Code. Market discount on a note will
generally equal the amount, if any, by which the principal amount of the note
exceeds the United States Holder's acquisition price. Subject to a DE MINIMIS
exception, those provisions generally require a United States Holder of a
note acquired at a market discount to treat as ordinary income any gain
recognized on the disposition of such note to the extent of the "accrued
market discount" at the time of disposition. If a note with accrued market
discount is converted into common stock pursuant to the conversion feature,
the amount of such accrued market discount generally will be taxable as
ordinary income upon disposition of the common stock. Market discount on the
note will be treated as accruing on a straight line basis over the term of
such note or, at the election of the holder, under a constant-yield method.
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A United States holder of a note acquired at a market discount may be required
to defer the deduction of a portion of the interest on any indebtedness incurred
or maintained to purchase on carry the note until the note is disposed of in a
taxable transaction, unless the holder elects to include market discount in
income as it accrues.
AMORTIZABLE PREMIUM. A purchaser of a note at a premium over its
stated principal amount plus accrued interest generally may elect to amortize
such premium ("Section 171 premium") from the purchase date to the note's
maturity date under a constant-yield method under which amortized Section 171
premium is treated as an offset to interest income on a note and not as a
separate deduction. Section 171 premium, however, will not include any
premium attributable to a note's conversion feature. The premium attributable
to the conversion feature is the excess, if any, of the note's purchase price
over what the note's fair market value would be if there were no conversion
feature.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. Upon the sale, exchange or
redemption of a note, a United States Holder generally will recognize capital
gain or loss (except to the extent the market discount rules discussed above
otherwise provide) equal to the difference between:
- the amount of cash proceeds and the fair market value of any
property received on the sale, exchange or redemption (except
to the extent such amount is attributable to accrued interest
income, which is taxable as ordinary income) and
- such Holder's adjusted tax basis in the note.
A United States Holder's adjusted tax basis in a note generally will
equal the cost of the note to such Holder, increased by any market discount (as
discussed above) previously included in income by the Holder and decreased by
any principal payments received by such Holder and bond premium amortized by the
Holder with respect to the notes. Any capital gain or loss will be long-term if
the United States Holder's holding period is more than 12 months and will be
short-term if the holding period is equal to or less than 12 months. Long-term
capital gains are taxed at a maximum rate of 20%, and short-term capital gains
are taxed at a maximum rate of 39.6%. In taxable years beginning after December
31, 2000, the rate of tax applicable to long-term capital gains in certain
circumstances may be reduced below 20% for property held for more than five
years.
Constructive Dividends on Notes
If at any time:
- DoubleClick makes a distribution of cash or property to its
stockholders or purchases common stock and such distribution
or purchase would be taxable to such stockholders as a
dividend for United States federal income tax purposes (e.g.,
distributions of evidences of indebtedness or assets of
DoubleClick, but generally not stock dividends or rights to
subscribe for common stock) and, pursuant to the anti-dilution
provisions of the Indenture, the Conversion Rate of the notes
is increased, or
- the Conversion Rate of the notes is increased at the
discretion of DoubleClick,
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such increase in Conversion Rate may be deemed to be the payment of a taxable
dividend to United States Holders of notes pursuant to Section 305 of the
Internal Revenue Code. Such Holders of notes could therefore have taxable income
as a result of an event pursuant to which they received no cash or property.
CONVERSION OF THE NOTES. A United States Holder generally will not
recognize any income, gain or loss upon conversion of a note into DoubleClick
common stock, except with respect to cash received in lieu of a fractional share
of DoubleClick common stock. Such Holder's tax basis in the DoubleClick common
stock received on conversion of a note will be the same as such Holder's
adjusted tax basis in the note at the time of conversion, reduced by any basis
allocable to a fractional share interest, and the holding period for the
DoubleClick common stock received on conversion will generally include the
holding period of the note converted.
Cash received in lieu of a fractional share of DoubleClick common stock
upon conversion will be treated as a payment in exchange for the fractional
share of DoubleClick common stock. Accordingly, the receipt of cash in lieu of a
fractional share of DoubleClick common stock generally will result in capital
gain or loss, measured by the difference between the cash received for the
fractional share and the United States Holder's adjusted tax basis in the
fractional share.
DIVIDENDS ON COMMON STOCK. The amount of any distribution by
DoubleClick in respect of the DoubleClick common stock will be equal to the
amount of cash and the fair market value, on the date of distribution, of any
property distributed. Generally, distributions will be treated as a dividend,
subject to tax as ordinary income, to the extent of DoubleClick's current or
accumulated earnings and profits, then as a tax-free return of capital to the
extent of the Holder's tax basis in the DoubleClick common stock and thereafter
as gain from the sale of exchange of such stock.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the Holder owns less
than 20% of the voting power and value of DoubleClick's stock, other than any
non-voting, non-convertible, non-participating preferred stock. A corporate
United States Holder that owns 20% or more of the voting power and value of
DoubleClick's stock, other than any non-voting, non-convertible,
non-participating preferred stock, generally will qualify for an 80% dividends
received deduction. The dividends received deduction is subject, however, to
certain holding period, taxable income and other limitations.
SALE OF COMMON STOCK. Upon the sale or exchange of DoubleClick common
stock, a United States Holder generally will recognize capital gain or loss
(except to the extent the market discount rules discussed above otherwise
provide) equal to the difference between:
- the amount of cash and the fair market value of any property
received upon the sale or exchange and
- such Holder's adjusted tax basis in the DoubleClick common
stock.
Such capital gain or loss will be long-term if the United States Holder's
holding period is more than 12 months and will be short-term if the holding
period is equal to or less than 12 months. Long-term capital gains are taxed at
a maximum rate of 20% and short-term capital gains are
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taxed at a maximum rate of 39.6%. In taxable years beginning after December 31,
2000, the rate of tax applicable to long-term capital gains in certain
circumstances may be reduced below 20% for property held for more than five
years. A United States Holder's basis and holding period in DoubleClick common
stock received upon conversion of a note are determined as discussed above under
"Conversion of the Notes."
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. In general,
information reporting requirements will apply to payments of principal, premium,
if any, and interest on a note, payments of dividends on DoubleClick common
stock, payments of the proceeds of the sale of a note and payments of the
proceeds of the sale of DoubleClick common stock to certain noncorporate United
States Holders. The payor will be required to withhold backup withholding tax at
the rate of 31% if:
- the payee fails to furnish a taxpayer identification number
("TIN") to the payor or establish an exemption from backup
withholding,
- the IRS notifies the payor that the TIN furnished by the payee
is incorrect,
- there has been a notified payee underreporting with respect to
interest, dividends or original issue discount described in
Section 3406(c) of the Internal Revenue Code or
- there has been a failure of the payee to certify under the
penalty of perjury that the payee is not subject to backup
withholding under the Internal Revenue Code.
Any amounts withheld under the backup withholding rules from a payment to a
United States Holder will be allowed as a credit against such Holder's United
States federal income tax and may entitle the Holder to a refund, provided that
the required information is furnished to the IRS.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any
beneficial owner of a note or DoubleClick common stock that is not a United
States Holder.
PAYMENT OF INTEREST. Generally, interest income of a Non-United States
Holder that is not effectively connected with a United States trade or business
will be subject to a withholding tax at a 30% rate, or, if applicable, a lower
treaty rate. However, interest paid on a note by DoubleClick or any Paying Agent
to a Non-United States Holder will qualify for the "portfolio interest
exemption" and therefore will not be subject to United States federal income tax
or withholding tax, provided that such interest income is not effectively
connected with a United States trade or business of the Non-United States Holder
and provided that the Non-United States Holder:
- does not actually or constructively own, pursuant to the
conversion feature of the notes or otherwise, 10% or more of
the combined voting power of all classes of stock of
DoubleClick entitled to vote,
- is not a controlled foreign corporation related to DoubleClick
actually or constructively through stock ownership,
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- is not a bank which acquired the notes in consideration for an
extension of credit made pursuant to a loan agreement entered
into in the ordinary course of business and
- either (a) provides a Form W-8, or a suitable substitute form,
signed under penalties of perjury that includes its name and
address and certifies as to its non-United States status, or
(b) is a securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business and provides a
statement to DoubleClick or its agent under penalties of
perjury in which it certifies that a Form W-8, or a suitable
substitute, has been received by it from the Non-United States
Holder or qualifying intermediary and furnishes DoubleClick or
its agent with a copy thereof.
Amended Treasury Regulations, which are generally effective for
payments made after December 31, 2000, provide alternative methods for
satisfying the certification requirements described immediately above.
Except to the extent that an applicable treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate, or, if applicable, a lower treaty rate. Even
though such effectively connected interest is subject to income tax, and may be
subject to the branch profits tax, it is not subject to withholding tax if the
Holder delivers a properly executed IRS Form 4224 (or successor form) to the
payor.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. A Non-United States Holder
of a note will generally not be subject to United States federal income tax or
withholding tax on any gain realized on the sale, exchange or redemption of the
note, including the receipt of cash in lieu of fractional shares upon conversion
of a note into DoubleClick common stock, unless:
- the gain is effectively connected with a United States trade
or business of the Non-United States Holder,
- in the case of a Non-United States Holder who is an
individual, such Holder is present in the United States for a
period or periods aggregating 183 days or more during the
taxable year of the disposition and certain other conditions
are met or
- the Holder is subject to tax pursuant to the provisions of the
Internal Revenue Code applicable to certain United States
expatriates.
CONVERSION OF THE NOTES. In general, no United States federal income
tax or withholding tax will be imposed upon the conversion of a note into
DoubleClick common stock by a Non-United States Holder except with respect to
the receipt of cash in lieu of fractional shares by Non-United States Holders
upon conversion of a note where any of the conditions described above under
"Non-United States Holders --Sale, Exchange or Redemption of the Notes" is
satisfied.
SALE OR EXCHANGE OF COMMON STOCK. A Non-United States Holder generally
will not be
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subject to United States federal income tax or withholding tax on the sale or
exchange of DoubleClick common sock unless any of the conditions described above
under "Non-United States Holder -- Sale, Exchange or Redemption of the Notes" is
satisfied.
DIVIDENDS. Distributions by DoubleClick with respect to the DoubleClick
common stock that are treated as dividends paid, or deemed paid, as described
above under "United States Holders - Dividends on Common Stock" to a Non-United
States Holder, excluding dividends that are effectively connected with the
conduct of a trade or business in the United States by such Holder and are
taxable as described below, will be subject to United States federal withholding
tax at a 30% rate, or lower rate provided under any applicable income tax
treaty. Except to the extent that an applicable tax treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder on dividends paid, or deemed paid, that are effectively connected
with the conduct of a trade or business in the United States by the Non-United
States Holder. If such Non-United States Holder is a foreign corporation, it may
also be subject to a United States branch profits tax on such effectively
connected income at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Even though such effectively connected dividends
are subject to income tax, and may be subject to the branch profits tax, they
will not be subject to U.S. withholding tax if the Holder delivers IRS Form 4224
(or successor form) to the payor.
DEATH OF A NON-UNITED STATES HOLDER. A note held by an individual who
is not a citizen or resident of the United States at the time of death will not
be includable in the decedent's gross estate for United States estate tax
purposes, provided that such Holder or beneficial owner did not at the time of
death actually or constructively own 10% or more of the combined voting power of
all classes of stock of DoubleClick entitled to vote, and provided that, at the
time of death, payments with respect to such note would not have been
effectively connected with the conduct by such Non-United States Holder of a
trade or business within the United States.
DoubleClick common stock actually or beneficially held by an individual
who is a Non-United States Holder at the time of his or her death, or previously
transferred subject to certain retained rights or powers, will be subject to
United States federal estate tax unless otherwise provided by an applicable
estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. United States
information reporting requirements and backup withholding tax will not apply to
payments on a note to a Non-United States Holder if the statement described in
"Non-United States Holders -- Payment of Interest" is duly provided by such
Holder, provided that the payor does not have actual knowledge that the Holder
is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a note, or any payment of
the proceeds of the sale of DoubleClick common stock effected outside the United
States by a foreign office of a "broker" (as defined in applicable Treasury
Regulations); unless such broker:
- is a United States person,
- is a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or
business in the United States or
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- is a controlled foreign corporation for United States federal
income tax purposes.
Payment of the proceeds of any such sale effected outside the United States by a
foreign office of any broker that is described in (1), (2) or (3) of the
preceding sentence will not be subject to backup withholding tax, but will be
subject to information reporting requirements unless such broker has documentary
evidence in its records that the beneficial owner is a Non-United States Holder
and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption. Payment of the proceeds of any such sale to or through
the United States office of a broker is subject to information reporting and
backup withholding requirements, unless the beneficial owner of the note
provides the statement described in "Non-United States Holders -- Payment of
Interest" or otherwise establishes an exemption. Under Treasury Regulations,
dividend payments will be subject to information reporting and backup
withholding unless applicable certification requirements are satisfied.
UNITED STATES REAL PROPERTY HOLDING CORPORATIONS. The discussion of the
United States taxation of Non-United States Holders of notes and DoubleClick
common stock assumes that DoubleClick is at no time a United States real
property holding corporation within the meaning of Section 897(c) of the
Internal Revenue Code. Under present law, DoubleClick would not be a United
States real property holding corporation so long as (a) the fair market value of
its United States real property interests is less than (b) 50% of the sum of the
fair market value of its United States real property interests, its interests in
real property located outside the United States, and its other assets which are
used or held or use in a trade or business. DoubleClick believes that it is not
a United States real property holding corporation and does not expect to become
such a corporation.
If DoubleClick becomes a "United States real property holding
corporation," gain recognized by Non-United States Holders on a disposition of
notes or DoubleClick common stock would be subject to United States federal
income tax in certain circumstances.
THE PRECEDING DISCUSSION OF MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
EACH PROSPECTIVE HOLDER SHOULD CONSULT ITS OWN TAX ADVISER AS TO PARTICULAR TAX
CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND THE
COMMON STOCK OF DOUBLECLICK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.
44
<PAGE>
SELLING SECURITYHOLDERS
The notes were originally purchased from DoubleClick on March 22, 1999.
The initial purchasers of the notes have advised DoubleClick that the notes were
resold in transactions exempt from the registration requirements of the
Securities Act to qualified institutional buyers (within the meaning of Rule
144A under the Securities Act of 1933), institutional accredited investors (as
defined in Rule 501 (a) (1), (2), (3) or (7) under the Securities Act of 1933)
and to non-U.S. persons outside the United States in transactions exempt from
registration under the Securities Act of 1933. These subsequent purchasers, or
their transferees, pledgees, donees or successors, may from time to time offer
and sell any or all of the notes and/or shares of DoubleClick common stock
issuable upon conversion of the notes pursuant to this prospectus.
The selling securityholders listed below provided us the information
contained in the following table with respect to themselves and the respective
principal amount of notes and common stock beneficially owned by them and which
may be sold by each of them under this prospectus. We have not independently
verified this information.
The selling securityholders may choose to sell notes and/or shares of
common stock issuable upon conversion of the notes from time to time. See "Plan
of Distribution."
The following table sets forth as of ______, 1999:
- the name of each selling securityholder who has provided
DoubleClick with notice as of the date of this prospectus
pursuant to the registration rights agreement of their intent
to sell or otherwise dispose of notes and/or shares of
DoubleClick common stock issuable upon conversion of the notes
pursuant to the registration statement,
- the principal amount of notes and the number of shares of
DoubleClick common stock issuable upon conversion of the notes
which they may sell from time to time pursuant to the
registration statement, and
- the percentage of outstanding notes and common stock
beneficially owned by the selling securityholder prior to the
offering.
<TABLE>
<CAPTION>
Principal Amount Shares of Percentages of
Name of Selling of Notes that Percentage of Notes Common Stock that Common Stock
Securityholder May be Sold Outstanding May be Sold (1) Outstanding
--------------- ------------------ ------------------- -------------
<S> <C> <C> <C> <C>
Selling Securityholders
to be named in a $250,000,000 100% 3,030,303
Supplement or
Amendment (2)
------------ ----------- ----------
Total $250,000,000 100% 3,030,303
</TABLE>
(1) Assumes full conversion of the notes held by such holder at
the initial rate of $82.50 in principal amount of the notes
per share of common stock.
(2) No holder may offer notes or shares of common stock pursuant
to this prospectus until such holder is named as a selling
securityholder.
No selling securityholder nor any of its affiliates has held any
position or office with,
45
<PAGE>
been employed by or otherwise has had any material relationship with DoubleClick
or DoubleClick's affiliates, during the three years prior to the date of this
prospectus.
A selling securityholder may offer all or some portion of the notes and
shares of DoubleClick common stock issuable upon conversion of the notes.
Accordingly, no estimate can be given as to the amount or percentage of notes or
DoubleClick common stock that will be held by the selling securityholders upon
termination of sales pursuant to this prospectus. In addition, the selling
securityholders identified in the table above may have sold, transferred or
disposed of all or a portion of their notes since the date on which they
provided the information regarding their holdings in transactions exempt from
the registration requirements of the Securities Act. Information concerning the
selling securityholders may change from time to time and any such changed
information will be set forth in supplements or amendments to this prospectus if
and when necessary.
46
<PAGE>
PLAN OF DISTRIBUTION
DoubleClick is registering the notes and the shares of DoubleClick
common stock issuable upon conversion of the notes to permit public secondary
trading of such securities by the holders from time to time after the date of
this prospectus. DoubleClick has agreed, among other things, to bear all
expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the notes and the shares of
DoubleClick common stock issuable upon conversion of the notes covered by this
prospectus.
DoubleClick will not receive any of the proceeds from the offering of
the notes or the shares of DoubleClick common stock issuable upon conversion of
the notes by the selling securityholders. The notes and shares of DoubleClick
common stock issuable upon conversion of the notes may be sold from time to
time:
- directly by any selling securityholder to one or more
purchasers,
- to or through underwriters, brokers or dealers,
- through agents on a best-efforts basis or otherwise, or
- through a combination of such methods of sale.
If notes or shares of DoubleClick common stock issuable upon conversion
of the notes are sold through underwriters, brokers or dealers, the selling
securityholder will be responsible for underwriting discounts or commissions or
agents' commissions.
The notes or shares of DoubleClick common stock issuable upon
conversion of the notes may be sold:
- in one or more transactions at a fixed price or prices, which
may be changed,
- at prevailing market prices at the time of sale or at prices
related to such prevailing prices,
- at varying prices determined at the time of sale, or
- at negotiated prices.
Such sales may be effected in transactions (which may involve crosses
or block transactions):
- on any national securities exchange or quotation service on
which the notes or shares of DoubleClick common stock may be
listed or quoted at the time of sale,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or services
or in the over-the-counter market, or
- through the writing of options.
In connection with sales of the notes or shares of DoubleClick common
stock issuable upon conversion of the notes or otherwise, any selling
securityholder may:
47
<PAGE>
- enter into hedging transactions with brokers, dealers or
others, which may in turn engage in short sales of the notes
or shares of DoubleClick common stock issuable upon conversion
of the notes in the course of hedging the positions they
assume,
- sell short and deliver notes or shares of DoubleClick common
stock issuable upon conversion of the notes to close out such
short positions, or
- loan or pledge notes or shares of DoubleClick common stock
issuable upon conversion of the notes to brokers, dealers or
others that in turn may sell such securities.
The selling securityholders may pledge or grant a security interest in
some or all of the notes or shares of DoubleClick common stock issuable upon
conversion of the notes owned by it, and if it defaults in the performance of
its secured obligations, the pledgees or secured parties may offer and sell the
notes or shares of DoubleClick common stock issuable upon conversion of the
notes from time to time pursuant to this prospectus. The selling securityholders
may also transfer and donate shares in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling securityholders for purposes of this prospectus.
The selling securityholders may sell short DoubleClick common stock and
may deliver this prospectus in connection with such short sales and use the
shares covered by this prospectus to cover such short sales.
The outstanding common stock is publicly traded on Nasdaq. The initial
purchasers of the notes have advised DoubleClick that certain of the initial
purchasers are making and currently intend to continue making a market in the
notes; however, they are not obligated to do so and any such market-making may
be discontinued at any time without notice, in the sole discretion of the
initial purchasers. DoubleClick does not intend to apply for listing of the
notes on Nasdaq or any securities exchange. Accordingly, DoubleClick cannot
assure that any trading market will develop or have any liquidity.
The selling securityholders and any brokers, dealers, agents or
underwriters that participate with the selling securityholders in the
distribution of the notes or the shares of DoubleClick common stock issuable
upon conversion of the notes may be deemed to be "underwriters" within the
meaning of the Securities Act, in which event any commissions received by such
brokers, dealers, agents or underwriters and any profits realized by the selling
securityholders on the resales of the notes or the shares may be deemed to be
underwriting commissions or discounts under the Securities Act.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
such other available exemption rather than pursuant to this prospectus. There is
no assurance that any selling securityholder will sell any or all of the notes
or shares of DoubleClick common stock issuable upon conversion of the notes
described herein, and any selling securityholder may transfer, devise or gift
such securities by other means not described herein.
We agreed to indemnify and hold the initial purchasers of the notes
harmless against certain liabilities under the Securities Act . The registration
agreement provides for DoubleClick and the selling securityholders to indemnify
each other against certain liabilities arising under the
48
<PAGE>
Securities Act.
DoubleClick agreed pursuant to the registration agreement to use its
best efforts to cause the registration statement to which this prospectus
relates to become effective as promptly as is practicable and to keep the
registration statement effective until the earlier of:
- the second anniversary of the closing date (which occurred on
March 22, 1999) or, if later, the second anniversary of the
last date on which any securities are issued upon exercise of
the initial purchasers' over-allotment option,
- the date on which all the securities and common stock issued
or issuable upon conversion thereof may be sold by
non-affiliates ("affiliates" for such purpose having the
meaning set forth in Rule 144) of DoubleClick pursuant to
paragraph (k) of Rule 144 (or any successor provision)
promulgated under the Securities Act,
- the date as of which all the securities and common stock
issued or issuable upon conversion thereof have been
transferred pursuant to Rule 144 under the Securities Act (or
any similar provision then in force); and
- such date as of which all the securities and the common stock
issued or issuable upon conversion thereof have been sold
pursuant to this prospectus.
We will be permitted to suspend the use of the prospectus which is a
part of the shelf registration statement for a period not to exceed 30 days in
any three-month period or for three periods not to exceed an aggregate of 90
days in any twelve- month period under certain circumstances relating to pending
corporate developments, public filings with the Commission and similar events.
49
<PAGE>
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, 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 prospectus, and later information filed with the
SEC will update and supersede this information. The prospectus incorporates by
reference the documents set forth below that we have previously filed with the
Commission. The documents contain important information about DoubleClick and
its finances. We incorporate by reference our:
- Annual Report on Form 10-K, as amended by Annual Report on
Form 10-K/A, for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
- Reports on Form 8-K dated February 3, 1999, March 15, 1999 and
March 15, 1999; and
- The description of the DoubleClick common stock contained in
our Registration Statement on Form 8-A dated November 30, 1998
registering the DoubleClick common stock under Section 12(g)
of the Exchange Act.
In addition, all of our filings with the SEC after the date of this
prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be
deemed to be incorporated by reference until this offering is terminated or
completed.
Any statement contained in the prospectus or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the any applicable prospectus supplement) or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's Web site at http://www.sec.gov.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address. In addition, we will provide without
charge to each person, including any beneficial owner, to whom a copy of this
prospectus has been delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated by reference in this
prospectus (other than exhibits and schedules thereto, unless such exhibits or
schedules are specifically incorporated by reference into the information that
this prospectus incorporates). Written or oral requests for copies of these
documents should be directed to:
50
<PAGE>
Kevin J. O'Connor
President and Chief Executive Officer
DoubleClick Inc.
41 Madison Avenue
New York, New York 10010
(212) 683-0001
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than on the front of this document.
LEGAL MATTERS
The validity of the securities offered under this registration
statement will be passed upon for DoubleClick by Brobeck, Phleger & Harrison
LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K 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.
51
<PAGE>
DOUBLECLICK INC.
$250,000,000
4.75% CONVERTIBLE SUBORDINATED NOTES DUE 2006
------------
3,030,303 SHARES OF COMMON STOCK
PROSPECTUS
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be
incurred by DoubleClick Inc. in connection with the issuance and distribution of
the securities being registered hereby. All such expenses will be borne by
DoubleClick Inc.:
<TABLE>
<CAPTION>
Amount to
be Paid
---------
<S> <C>
SEC Registration Fee $ 69,500
Legal Fees and Expenses $ 56,000
Accounting Fees and Expenses $ 35,000
Miscellaneous $ 30,000
--------
Total $190,500
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation (the "Certificate")
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 his provision of
the Certificate 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 know 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
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 , any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest extent
permitted by Section 102(b)(7) of the DGCL and provides that the Registrant
shall
II-1
<PAGE>
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 Certificate. The Registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
Exhibit
Number Description
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 of DoubleClick's Registration Statement on
Form S-1 (File No. 333-67459)).
3.5 Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.5 of DoubleClick's Registration Statement on Form S-1
(File No. 333-42323)).
4.1 Indenture, dated as of March 22, 1999, between DoubleClick 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 DoubleClick's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
4.2 Registration Agreement, dated as of March 22, 1999, by and among
DoubleClick and the Initial Partners (incorporated by reference to
Exhibit 6.2 of DoubleClick's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999).
5* Opinion of Brobeck, Phleger & Harrison LLP.
12 Statement re: Computation of Ratio of Earnings to Fixed Charges.
23.1* Consent of Brobeck, Phleger & Harrison, included in Exhibit 5.
23.2 Consent of PriceWaterhouseCoopers LLP.
24 Power of Attorney, included on the signature page of this
Registration Statement.
25 Statement of Eligibility of the Trustee on Form T-1.
- ----------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
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 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
II-2
<PAGE>
policy as expressed in the Act, and is, therefore, unenforceable. If 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.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities offered hereby, 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 a 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;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
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.
The undersigned Registrant hereby undertakes 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 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.
II-3
<PAGE>
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and 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 20th day of May,
1999.
DOUBLECLICK INC.
By: /s/ Kevin J. O'Connor
--------------------------------
Kevin J. O'Connor
Chief Executive Officer
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-3 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.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on May 20, 1999:
SIGNATURE TITLE(S)
--------- --------
/s/ Kevin J. O'Connor
- -------------------------------- Chief Executive Officer and Chairman of the
Kevin J. O'Connor Board of Directors (Principal Executive
Officer)
/s/ Stephen R. Collins
- -------------------------------- Chief Financial Officer (Principal Financial
Stephen R. Collins and Accounting Officer)
II-5
<PAGE>
/s/ Dwight A. Merriman
- --------------------------------
Dwight A. Merriman Chief Technology Officer and Director
/s/ David N. Strohm
- --------------------------------
David N. Strohm Director
/s/ Mark E. Nunnelly
- --------------------------------
Mark E. Nunnelly Director
/s/ W. Grant Gregory
- --------------------------------
W. Grant Gregory Director
/s/ Donald Peppers
- --------------------------------
Donald Peppers Director
/s/ Thomas S. Murphy
- --------------------------------
Thomas S. Murphy Director
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of DoubleClick's
Registration Statement on Form S-1 (File No. 333-67459)).
3.5 Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.5 of DoubleClick's Registration Statement on Form
S-1 (File No. 333-42323)).
4.1 Indenture, dated as of March 22, 1999, between DoubleClick 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
DoubleClick's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
4.2 Registration Agreement, dated as of March 22, 1999, by and
among DoubleClick and the Initial Partners (incorporated by
reference to Exhibit 6.2 of DoubleClick's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999).
5* Opinion of Brobeck, Phleger & Harrison LLP.
12 Statement re: Computation of Ratio of Earnings to Fixed
Charges.
23.1* Consent of Brobeck, Phleger & Harrison, included in Exhibit 5.
23.2 Consent of PriceWaterhouseCoopers LLP.
24 Power of Attorney, included on the signature page of this
Registration Statement.
25 Statement of Eligibility of the Trustee on Form T-1.
- ----------
* To be filed by amendment.
II-7
<PAGE>
EXHIBIT 12
DOUBLECLICK INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended
1996 1997 1998 March 31, 1999
------- ------- ------- --------------
<S> <C> <C> <C> <C>
Pre-tax loss from continuing operations: $ 3,192 $ 8,356 $18,173 $ 6,925
Fixed charges:
Interest expense: 91 341 75 342
Interest component of rent
expenses on operating leases: 162 194 466 335
Total fixed charges: $ 253 $ 535 $ 541 $ 677
------- ------- ------- ---------
Ratio of Loss to Fixed Charges: - (a) - (a) - (a) - (a)
------- ------- ------- ---------
------- ------- ------- ---------
</TABLE>
- ----------
(a) As a result of the loss incurred for the years ended 1996, 1997, and 1998
and for the three months ended March 31, 1999, the ratio coverage was less
than 1:1 as DoubleClick was unable to cover the indicated fixed charges.
DoubleClick must generate additional earnings of $2,939, $7,821 and $17,632
for the years ended 1996, 1997 and 1998, respectively, and $6,248 for the
three months ended March 31, 1999 to achieve a coverage of 1:1.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated January 19, 1999
relating to the consolidated financial statements and the 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 reference to us
under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
May 19, 1999
e<PAGE>
Exhibit 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
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THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
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DOUBLECLICK INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3870996
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
41 Madison Avenue, 32nd Floor
New York, New York 10010
(Address of principal executive offices) (Zip code)
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4.75% Convertible Subordinated Notes Due 2006
(Title of the indenture securities)
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<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
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Name Address
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Superintendent of Banks of the 2 Rector Street, New York, N.Y.
State of New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 19th day of May, 1999.
THE BANK OF NEW YORK
By: /s/ Michele L. Russo
--------------------------------
Name: Michele L. Russo
Title: Assistant Treasurer
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<PAGE>
EXHIBIT 7
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $3,951,273
Interest-bearing balances........................... 4,134,162
Securities:
Held-to-maturity securities......................... 932,468
Available-for-sale securities....................... 4,279,246
Federal funds sold and Securities purchased under
agreements to resell................................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............37,861,802
LESS: Allowance for loan and
lease losses............619,791
LESS: Allocated transfer risk
reserve........................3,572
Loans and leases, net of unearned income,
allowance, and reserve............................ 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including capitalized
leases)............................................. 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries and
associated companies................................ 196,032
Customers' liability to this bank on acceptances
outstanding......................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
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Total assets........................................... $60,077,664
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LIABILITIES
Deposits:
In domestic offices................................. $27,020,578
Noninterest-bearing.......................11,271,304
Interest-bearing..........................15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 17,197,743
Noninterest-bearing..........................103,007
Interest-bearing..........................17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase............................ 1,761,170
Demand notes issued to the U.S.Treasury................ 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less......... 1,903,700
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 31,639
Bank's liability on acceptances executed and
outstanding......................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
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Total liabilities...................................... 54,583,127
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EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
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Total equity capital................................... 5,494,537
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Total liabilities and equity capital................... $60,077,664
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</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
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