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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 1999
REGISTRATION NO. 333-78959
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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)
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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. / /
--------------------------
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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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
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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, whom 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 18.
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 August
13, 1999, the last reported sale price for the common stock was $ per share.
------------------------
AN INVESTMENT IN THE NOTES AND THE COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK. PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 5.
---------------------
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 August , 1999
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TABLE OF CONTENTS
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DoubleClick................................................................................................ 3
Risk Factors............................................................................................... 5
Use of Proceeds............................................................................................ 19
Ratio of Earnings to Fixed Charges......................................................................... 19
Description of the Notes................................................................................... 20
Material United States Federal Income Tax Considerations................................................... 35
Selling Securityholders.................................................................................... 41
Plan of Distribution....................................................................................... 45
Incorporation By Reference................................................................................. 47
Where You Can Find More Information........................................................................ 47
Legal Matters.............................................................................................. 48
Experts.................................................................................................... 48
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DOUBLECLICK
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 Major League Baseball. 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
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.
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Our principal executive offices are located at 41 Madison Avenue, 32nd
Floor, New York, New York 10010. Our telephone number is (212) 683-0001. Our Web
site is at www.doubleclick.net.
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.
RISKS RELATED TO OUR COMPANY AND OUR BUSINESS
OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT
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.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE 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 $12.5 million for the six months ended June 30, 1999, and as of June 30,
1999, our accumulated deficit was $67.3 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 expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.
WE RELY HEAVILY ON OUR RELATIONSHIP WITH ALTAVISTA AND ANY CHANGE IN THIS
RELATIONSHIP COULD HARM OUR BUSINESS
Approximately 20.6% and 50.1% of revenues and 43.8% and 50.1% of systems
revenues for the six months ended June 30, 1999 and 1998, respectively, resulted
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 the existing Procurement and Trafficking Agreement. The
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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. On June 29, 1999, Compaq agreed to transfer to
CMGI, Inc. a controlling interest in AltaVista. Compaq and its wholly owned
subsidiary Digital Equipment Corporation will contribute the assets and
liabilities comprising AltaVista's business, which we understand will include
the Advertising Services Agreement, to a new company the CMGI will own
approximately 83% of, with the remainder owned by Compaq. The loss of AltaVista
as a customer or any significant reduction in traffic on or through the
AltaVista Web site would materially and adversely affect our business, results
of operations and financial condition.
A SUBSTANTIAL PORTION OF OUR REVENUES ARE DERIVED FROM WEB SITES OF A LIMITED
NUMBER OF WEB PUBLISHERS AND THE LOSS OF THESE WEB PUBLISHERS AS CUSTOMERS
COULD HARM OUR BUSINESS
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% and 57.0% or our revenues for the six months ended June 30, 1999 and 1998,
respectively, 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 which account for a significant portion of our
DoubleClick Network revenues or any significant reduction in traffic on such 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.
WE DERIVE THE MAJORITY OF OUR REVENUES FROM ADVERTISEMENTS WE DELIVER TO WEB
SITES ON THE DOUBLECLICK NETWORK AND A DECREASE IN TRAFFIC LEVELS COULD HARM
OUR BUSINESS
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
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.
OUR 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;
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- 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.
RAPID GROWTH IN OUR BUSINESS COULD STRAIN OUR MANAGERIAL, OPERATIONAL, FINANCIAL
AND INFORMATION SYSTEMS RESOURCES
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 June 30,
1996, we had a total of 13 employees and, as of June 30, 1999, we had a total of
658 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.
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF THE MARKET FOR INTERNET ADVERTISING
FAILS TO DEVELOP
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
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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.
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.
OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO SUCCESSFULLY IMPLEMENT OUR 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.
PROBLEMS RESULTING FROM THE YEAR 2000 PROBLEM COULD REQUIRE US TO INCUR
UNANTICIPATED EXPENSES AND COULD DIVERT MANAGEMENT'S TIME AND ATTENTION
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
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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 substantially completed many elements of our Year 2000 readiness
assessment, testing and remediation plan, and plan to complete all remaining
elements of the plan as early in the fourth quarter of 1999 as practicable. We
have completed a Year 2000 simulation test on the ad delivery functions of our
software, and will perform a similar test on the ad reporting functions of our
software in the third quarter of 1999. As a result of the testing to date, we
have identified aspects of our software that will require minor code revisions
to become Year 2000 compliant, and we plan to complete the necessary revisions
as early in the fourth quarter of 1999 as practicable. To date, we have not
identified any material way in which our software is not currently Year 2000
compliant. In the process of contacting our material vendors for Year 2000
assurances, we have identified certain non-U.S. companies providing server
hosting services to DoubleClick's international data centers that have been
unable to provide adequate assurances of Year 2000 readiness. Beginning in the
third quarter, we will continue our investigation of these vendors, and will
develop contingency plans in those cases in which we determine that such plans
are warranted.
DISRUPTION OF OUR SERVICES DUE TO UNANTICIPATED PROBLEMS OR FAILURES COULD HARM
OUR BUSINESS
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 currently have in
operation a disaster recovery site. 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.
COMPETITION IN THE MARKETS FOR INTERNET ADVERTISING AND RELATED PRODUCTS AND
SERVICES IS INTENSE AND LIKELY TO INCREASE IN THE FUTURE, AND WE MAY NOT BE
ABLE TO SUCCESSFULLY COMPETE
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;
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- 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, 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.
WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF OR INVESTMENTS IN OTHER
COMPANIES
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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WE ARE DEPENDENT ON KEY PERSONNEL FOR OUR FUTURE SUCCESS
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.
OUR BUSINESS MAY SUFFER IF THE WEB INFRASTRUCTURE IS UNABLE TO EFFECTIVELY
SUPPORT THE GROWTH IN DEMAND PLACED ON IT
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.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR FACE A CLAIM OF
INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR
SIGNIFICANT DAMAGES
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 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
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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.
WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS OR WE WILL
NOT BE COMPETITIVE
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.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE FAIL TO SUCCESSFULLY EXPAND OUR
INTERNATIONAL OPERATIONS AND SALES AND MARKETING EFFORTS
We have operations in a number of international markets. We intend to
continue to 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;
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- 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.
CHANGES IN GOVERNMENT REGULATION COULD DECREASE OUR REVENUES AND INCREASE OUR
COSTS
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.
CHANGES IN LAWS RELATING TO PRIVACY OF INTERNET USERS COULD HARM OUR BUSINESS
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 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.
OUR DIRECTORS AND OFFICERS EXERCISE SIGNIFICANT CONTROL OVER US
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.
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OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS
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.
FUTURE SALES OF OUR COMMON STOCK MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
As of June 30, 1999, DoubleClick had 39,734,929 shares of common stock
outstanding, excluding 5,382,205 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 $131.375 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.
WE HAVE INCURRED SIGNIFICANT DEBT OBLIGATIONS WHICH COULD HARM OUR BUSINESS
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
182% as of June 30, 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.
RISKS RELATED TO THE OFFERING
YOU MAY NEVER BE REPAID 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 June 30, 1999, DoubleClick had outstanding $397,000 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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THERE IS ONLY A LIMITED MARKET FOR THE NOTES, AND THEIR TRADING PRICES ARE
DEPENDENT ON A NUMBER OF FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL
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.
WE MAY BE UNABLE TO REPURCHASE THE NOTES UPON THE OCCURENCE OF A DESIGNATED
EVENT
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 the event of a highly leveraged
reorganization, merger or similar transaction involving us. Please see
"Description of Notes."
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THE MARKET FOR UNRATED DEBT IS SUBJECT TO DISRUPTIONS, WHICH COULD HAVE AN
ADVERSE EFFECT ON THE MARKET PRICE OF THE NOTES
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.
RISKS RELATED TO THE PENDING MERGERS WITH ABACUS AND NETGRAVITY
WE MAY NOT ACHIEVE THE EXPECTED BENEFITS FROM EITHER MERGER
We entered into merger agreements with Abacus and NetGravity with the
expectations that these mergers will result in significant benefits. Achieving
the benefits of each merger depends on the timely, efficient and successful
execution of a number of post-merger events, including integrating the
operations and personnel of the acquired company. We will need to overcome
significant issues, however, in order to realize any benefits or synergies from
the mergers. The successful execution of these post-merger events will involve
considerable risk and may not be successful. Abacus is a provider of information
products and marketing research services to the direct marketing industry.
NetGravity is a provider of online interactive marketing solutions. NetGravity's
business model has principally been to license software designed to enable its
customers to directly manage their online interactive marketing activities.
DoubleClick is a provider of advertising solutions for advertisers and Web
publishers. DoubleClick provides outsourced, service-based solutions to
customers who choose not to directly manage their online interactive marketing
activities. DoubleClick has virtually no experience in Abacus's business and
little direct experience with NetGravity's primary business model. Furthermore,
Abacus's principal offices are located in Broomfield, Colorado, and NetGravity's
principal offices are located in San Mateo, California, while DoubleClick's
principal offices are located in New York, New York. There are currently no
plans to relocate any of these principal offices. In order for the mergers to be
successful, we must successfully integrate Abacus's operations and personnel and
NetGravity's operations and personnel with DoubleClick's operations and
personnel. Our failure to complete the integration successfully could result in
the loss of key personnel and customers.
DOUBLECLICK, ABACUS AND NETGRAVITY MAY NOT BE ABLE TO SUCCESSFULLY CROSS-MARKET
THEIR PRODUCTS OR DEVELOP NEW PRODUCTS
We intend that DoubleClick, Abacus and NetGravity will initially offer
products and services to the customers of the other companies. We cannot assure
you that any company's customers will have any interest in the other company's
products and services. The failure of such cross-marketing efforts would
diminish the benefits realized by the mergers.
In addition, we intend after the mergers to develop new products and
services that combine the knowledge and resources of the DoubleClick, Abacus and
NetGravity businesses. We cannot assure you that such products or services will
be successful or that we can successfully integrate or realize the anticipated
benefits of the mergers. We cannot assure you that the transactions or other
data in Abacus's database will be predictive or useful in other sales channels,
including Internet advertising. To date, the
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companies have not thoroughly investigated the obstacles, technological,
market-driven or otherwise, to developing and marketing these new products and
services in a timely and efficient way. We cannot assure you that we will be
able to overcome the obstacles in developing new products and services, or that
there will be a market for the new products or services developed by us after
the mergers. Any such failure or inability could have a material adverse effect
on the combined company's business, financial condition and operating results or
could result in loss of key personnel. In addition, the attention and effort
devoted to the integration of the acquired companies will significantly divert
management's attention from other important issues, and could seriously harm the
combined company.
THE MERGERS COULD ADVERSELY AFFECT COMBINED FINANCIAL RESULTS
DoubleClick expects to incur one-time charges relating to each of the Abacus
merger and the NetGravity merger. If the benefits of the mergers do not exceed
the costs associated with them, including any dilution to our stockholders
resulting from the issuance of shares in connection with the mergers, our
financial results could be adversely affected.
THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE AS A RESULT OF THE MERGERS
The market price of our common stock may decline as a result of the mergers
with Abacus or NetGravity if:
- The integration of DoubleClick with either company is unsuccessful;
- We do not achieve the perceived benefits of either merger as rapidly or to
the extent anticipated by financial or industry analysts; or
- The effect of either merger on our financial results is not consistent
with the expectations of financial or industry analysts.
FAILURE OF EITHER MERGER TO QUALIFY AS A POOLING OF INTERESTS WOULD NEGATIVELY
AFFECT OUR FINANCIAL RESULTS
The failure of either merger to qualify for pooling-of-interests accounting
treatment for financial reporting purposes for any reason would materially and
adversely affect our reported financial results and, likely, the price of our
common stock.
The availability of pooling-of-interests accounting treatment for each
merger depends upon circumstances and events occurring both before and after
each merger's completion. For example, no significant change in the business of
the combined company may occur, including significant dispositions of assets,
for a period of two years following the effective time of the respective
mergers. Further, affiliates of DoubleClick and each acquired company must not
sell any shares of DoubleClick or Abacus or NetGravity capital stock, as
applicable, for a period beginning before the respective merger and ending on
the day that DoubleClick publicly announces financial results covering at least
30 days of combined operations of DoubleClick and the acquired company after the
merger. We expect that 30 days of combined financial results with Abacus and
NetGravity would not be published sooner than January 2000. If affiliates of
DoubleClick, Abacus or NetGravity sell their shares of DoubleClick common stock
prior to that time, despite a contractual obligation restricting such sale, the
applicable merger may not qualify for accounting as a pooling of interests for
financial reporting purposes.
HEIGHTENED SCRUTINY RESULTING FROM PUBLIC DEBATE OVER CONSUMER PRIVACY COULD
HARM THE COMBINED COMPANY'S BUSINESS
There has been substantial public debate among business, government and
public interest organizations over consumer privacy issues including the
collection, distribution and use of consumer data. New products and services of
the merged entity that collect and use personal data may be drawn into this
debate or be subject to new consumer privacy regulation. While we have been
active in the public debate and have
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expressed our position in favor of consumer notice, choice and industry
self-regulation, there can be no assurance that our views will prevail. As a
consequence of widespread market sentiment or governmental legislation or
regulation, the merged entity may be prevented from offering certain products or
services, or may be required to make changes to such products or services that
could negatively affect their overall effectiveness or have a material adverse
effect on the combined company's business, financial condition and operating
results.
OUR BUSINESS WILL BECOME SUBJECT TO THE RISKS OF ABACUS'S AND NETGRAVITY'S
BUSINESSES
Assuming the proposed Abacus merger and NetGravity merger are consummated,
these companies will constitute meaningful portions of DoubleClick's business.
As a result, we will become subject to additional risks that are specific to
Abacus's and NetGravity's respective businesses. For a detailed discussion of
these risks, please see the risk factors included in each of Abacus's and
NetGravity's reports filed with the Securities Exchange Commission under the
Securities Exchange Act of 1934, which reports are hereby incorporated herein by
reference.
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.
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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 six-month period ended June 30, 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>
YEAR ENDED DECEMBER 31, SIX MONTHS
------------------------------- ENDED
1996 1997 1998 JUNE 30, 1999
--------- --------- --------- --------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Pre-tax loss from continuing operations:........................ $ 3,192 $ 8,356 $ 18,173 $ 12,536
Fixed charges:
Interest expense:............................................. 91 341 75 3,337
Interest component of rent expenses on operating leases:...... 162 194 466 726
Total fixed charges:.......................................... $ 253 $ 535 $ 541 $ 4,063
--------- --------- --------- -------
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 six months ended June 30, 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 $8,473 for the
six months ended June 30, 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 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.
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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.
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,
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(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
(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."
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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.
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
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shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed unless a 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
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.
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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 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 June 30, 1999, we had $397,000 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
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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 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,
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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
- 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:
- Indebtedness of or amounts owed by DoubleClick for compensation to
employees, or for goods, services or materials purchased in the ordinary
course of business;
- 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
- 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;
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- 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 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.
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
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<PAGE>
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.
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.
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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 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
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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 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
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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 "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 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,
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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 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
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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.
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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.
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
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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. 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,
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
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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 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
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- 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,
- 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,
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<PAGE>
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 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
39
<PAGE>
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
- 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.
40
<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 August 12, 1999:
- the name of each selling securityholder who has provided DoubleClick with
notice 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 as of August 12, 1999.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SHARES OF
NAME OF SELLING OF NOTES THAT PERCENTAGE OF NOTES COMMON STOCK THAT
SECURITYHOLDER(1) MAY BE SOLD OUTSTANDING MAY BE SOLD (2)
- ------------------------------------------------------- ---------------- ------------------- ------------------
<S> <C> <C> <C>
AIG/National Union Fire Insurance--FRIC................ $ 600,000 * % 7,272
Allstate Insurance Company............................. 750,000 * 9,090
Arkansas Teachers Retirement System.................... 1,719,000 * 20,836
Bancroft Convertible Growth and Income Fund, Inc....... 250,000 * 3,030
Bank of America Convertible Securities Fund DTC #2130
Bank of America Personal Trust....................... 100,000 * 1,212
Bank of America Securities LLC......................... 190,000 * 2,303
Baptist Health of South Florida........................ 113,000 * 1,369
BNP Arbitrage SNC...................................... 9,000,000 3.6 109,090
Boston Museum of Fine Arts............................. 88,000 * 1,066
Boulder Capital Inc.................................... 5,500,000 2.2 66,666
Boulder II Limited..................................... 1,700,000 * 20,606
CEDE & Co.............................................. 4,450,000 1.8 53,939
Chrysler Corporation Master Retirement Trust........... 990,000 * 12,000
Convexity Partners..................................... 700,000 * 8,484
CPR (USA) Inc.......................................... 3,333 * 40
David Lipscomb University General Endowment............ 75,000 * 909
Delaware PERS.......................................... 1,045,000 * 12,666
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SHARES OF
NAME OF SELLING OF NOTES THAT PERCENTAGE OF NOTES COMMON STOCK THAT
SECURITYHOLDER(1) MAY BE SOLD OUTSTANDING MAY BE SOLD (2)
- ------------------------------------------------------- ---------------- ------------------- ------------------
<S> <C> <C> <C>
Delta Airlines Master Trust............................ 405,000 * 4,909
Donaldson Lufkin & Jenrette Securities Corp............ 3,000,000 1.2 36,364
Elliott Associates, L.P................................ 1,500,000 * 18,181
Ellsworth Convertible Growth and Income Fund, Inc...... 250,000 * 3,030
Engineers Joint Pension Fund........................... 238,000 * 2,884
Equitable Life Assurance Separate Account-- Balanced... 85,000 * 1,030
Equitable Life Assurance Separate Account--
Convertibles......................................... 1,505,000 * 18,242
Federated Equity Funds, on behalf of its Federated
Capital Appreciation Fund............................ 7,000 * 84
Forest Alternative Strategies Fund II LP A-5-I......... 370,000 * 4,484
Forest Alternative Strategies Fund II LP A-5-M......... 125,000 * 1,515
Forest Fulcrum Fund LP................................. 7,180,000 2.9 87,030
Forest Global Convertible Fund Series A-5.............. 11,020,000 4.4 133,575
Forest Performance Fund................................ 300,000 * 3,636
Goldman Sachs & Company................................ 7,880,000 3.2 95,515
Hudson River Trust Balanced Account.................... 1,285,000 * 15,575
Hudson River Trust Growth & Income Account............. 2,315,000 3.9 28,060
Hudson River Trust Growth Investors.................... 1,075,000 * 13,030
Hull Overseas Ltd...................................... 250,000 * 3,030
ICI American Holdings Trust............................ 455,000 * 5,515
Island Holdings........................................ 10,000 * 121
JMG Convertible Investments LP......................... 6,000,000 2.4 72,727
Kentfield Trading, Ltd................................. 7,076,000 2.8 85,769
LDG Limited............................................ 250,000 * 3,030
Liberty View Plus Fund................................. 2,727 * 33
LLT Limited............................................ 330,000 * 4,000
Major League Baseball Players Benefit Plan............. 485,000 * 5,878
McMahan Securities Co. LP.............................. 758,000 * 9,187
Memphis Light, Gas & Water Retirement Fund............. 1,095,000 * 13,272
Merrill Lynch Pierce Fenner & Smith Inc................ 2,448,000 * 29,672
Milenco L.P............................................ 1,000,000 * 12,121
Motion Picture Industry Health Plan--Active Member
Fund................................................. 120,000 * 1,454
Motion Picture Industry Health Plan--Retiree Member
Fund................................................. 60,000 * 727
Museum of Fine Arts, Boston............................ 23,000 * 278
Nalco Chemical Company................................. 225,000 * 2,727
Nations Horizon Capital Income Fund DTC #901 Bank of
New York............................................. 2,000,000 * 24,242
New Hampshire Retirement System........................ 153,000 * 1,854
Nicholas-Applegate Convertible Fund.................... 346,000 * 4,193
Nomura Securities International Inc.................... 7,500,000 3.0 90,909
OCM Convertible Limited Partnership.................... 30,000 * 363
OCM Convertible Trust.................................. 525,000 * 6,363
Onex Industrial Partners Limited....................... 4,600,000 1.8 55,757
Pacific Innovations Trust Capital Income Fund DTC #2616
PNC Bank, National Association....................... 100,00 * 1,212
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SHARES OF
NAME OF SELLING OF NOTES THAT PERCENTAGE OF NOTES COMMON STOCK THAT
SECURITYHOLDER(1) MAY BE SOLD OUTSTANDING MAY BE SOLD (2)
- ------------------------------------------------------- ---------------- ------------------- ------------------
<S> <C> <C> <C>
Parker-Hanrifin Corporation............................ 36,000 * 436
Partner Reinsurance Company Ltd........................ 105,000 * 1,272
Pilgrim Convertible Fund............................... 1,843,000 * 22,339
ProMutual.............................................. 108,000 * 1,309
Putnam Balanced Retirement Fund........................ 82,000 * 993
Raytheon Company Master Pension Trust.................. 500,000 * 6,060
RBC Capital Services Inc............................... 100,000 * 1,212
San Diego City Retirement System....................... 670,000 * 8,121
San Diego County Employees Retirement System........... 1,755,000 * 21,272
Southern Farm Bureau Life Insurance--FRIC.............. 625,000 * 7,575
Starvest--Managed...................................... 90,000 * 1,090
Starvest Combined Portfolio............................ 875,000 * 10,606
State Employees' Retirement Fund of the State of
Delaware............................................. 350,000 * 4,242
State of Connecticut Combined Investment Funds......... 1,180,000 * 14,303
State of Oregon Equity................................. 5,210,000 2.1 63,151
Tennessee Consolidated Retirement System............... 5,000,000 2.0 60,606
The First Foundation................................... 250,000 * 3,030
TQA Arbtiage Fund, L.P................................. 400,000 * 4,848
TQA Leverage Fund, L.P................................. 1,625,000 * 19,696
TQA Vantage Fund, Ltd.................................. 1,585,000 * 19,212
TQA Vantage Plus Fund, Ltd............................. 540,000 * 6,545
Tribeca Investments L.L.C.............................. 14,000,000 5.6 169,696
Triton Capital Investments, LTD........................ 10,970,000 4.4 132,969
University of Rochester................................ 28,000 * 339
Van Kampen Convertible Securities Fund................. 270,000 * 3,272
Van Kampen Harbor Fund................................. 1,480,000 * 17,939
Vanguard Convertible Securities Fund, Inc.............. 750,000 * 9,090
Wake Forest University................................. 585,000 * 7,090
Warburg Dillion Read LLC............................... 25,000 * 303
Westgate International, L.P............................ 1,500,000 * 18,181
Zeneca Holdings Trust.................................. 455,000 * 5,515
Other holders of notes or future transferees of such
holders(3)........................................... 95,352,940 33.8 1,155,793
---------------- ----- ----------
Total.................................................. $ 250,000,000 100 % 3,030,303
</TABLE>
- ------------------------
* less than one percent
(1) Each of the named securityholders beneficially owns less than one percent of
our outstanding common stock. Other holders of notes collectively
beneficially own 2.9% of our outstanding common stock. No holder may offer
notes or shares of common stock pursuant to this prospectus until such
holder is named as a selling securityholder.
(2) 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.
(3) Information about other selling securiting holders will be set forth in
prospectus supplements, if required.
43
<PAGE>
No selling securityholder nor any of its affiliates has held any position or
office with, 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.
44
<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:
- 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
45
<PAGE>
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 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.
46
<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 Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999;
- Reports on Form 8-K dated February 3, 1999, March 15, 1999, March 15,
1999, June 17, 1999 and July 22, 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:
Kevin J. O'Connor
President and Chief Executive Officer
DoubleClick Inc.
41 Madison Avenue, 32(nd) Floor
New York, New York 10010
(212) 683-0001
47
<PAGE>
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.
48
<PAGE>
DOUBLECLICK INC.
$250,000,000
4.75% CONVERTIBLE SUBORDINATED NOTES DUE 2006
------------------
3,030,303 SHARES OF COMMON STOCK
PROSPECTUS
August , 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 this 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 knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited by
DGCL. This provision also does not affect the directors' responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. The Registrant has obtained liability insurance for its
officers and directors.
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of the director: (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) arising under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's certificate of incorporation or
bylaws, any agreement, a vote of stockholders or otherwise. The 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 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.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of June 13, 1999, by and among DoubleClick,
Atlanta Merger Corp. and Abacus Direct Corporation (incorporated by reference to Exhibit 2.1 of
DoubleClick's Current Report on Form 8-K dated June 17, 1999).
2.2 Agreement and Plan of Merger and Reorganization dated as of July 12, 1999, by and among DoubleClick, NJ
Merger Corporation and NetGravity, Inc. (incorporated by reference to Exhibit 2.1 of DoubleClick's
Current Report on Form 8-K dated July 22, 1999).
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 Purchasers
(incorporated by reference to Exhibit 6.2 of DoubleClick's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Stock Option Agreement, dated as of June 13, 1999, by and between DoubleClick and Abacus Direct
Corporation (incorporated by reference to Exhibit 10.1 of DoubleClick's Current Report on Form 8-K dated
June 17, 1999).
10.2 Agreement of Lease, dated as of January 26, 1999, between John Hancock Mutual Life Insurance Company as
Owner and Landlord and DoubleClick Inc. as Tenant (incorporated by reference to Exhibit 10.2 of
DoubleClick's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
12.1 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.
24.1* Power of Attorney.
25.1* Statement of Eligibility of the Trustee on Form T-1.
</TABLE>
- ------------------------
* Previously filed.
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 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
II-2
<PAGE>
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.
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-3
<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 Amendment No. 1 to
the 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
16th day of August, 1999.
<TABLE>
<S> <C> <C>
DOUBLECLICK INC.
By: /s/ KEVIN J. O'CONNOR
---------------------------------------
Kevin J. O'Connor
Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on August 16, 1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
- -------------------------------------------------------- --------------------------------------------------------
<C> <S>
/s/ KEVIN J. O'CONNOR Chief Executive Officer and Chairman of the Board of
-------------------------------------------- Directors (Principal Executive Officer)
Kevin J. O'Connor
* Chief Financial Officer (Principal Financial and
-------------------------------------------- Accounting Officer)
Stephen R. Collins
* Chief Technology Officer and Director
--------------------------------------------
Dwight A. Merriman
* Director
--------------------------------------------
David N. Strohm
* Director
--------------------------------------------
Mark E. Nunnelly
* Director
--------------------------------------------
W. Grant Gregory
* Director
--------------------------------------------
Donald Peppers
* Director
--------------------------------------------
Thomas S. Murphy
</TABLE>
<TABLE>
<S> <C>
*By: /s/ KEVIN J. O'CONNOR
--------------------------------------
Kevin J. O'Connor
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of June 13, 1999, by and among DoubleClick,
Atlanta Merger Corp. and Abacus Direct Corporation (incorporated by reference to Exhibit 2.1 of
DoubleClick's Current Report on Form 8-K dated June 17, 1999).
2.2 Agreement and Plan of Merger and Reorganization dated as of July 12, 1999, by and among DoubleClick, NJ
Merger Corporation and NetGravity, Inc. (incorporated by reference to Exhibit 2.1 of DoubleClick Current
Report on Form 8-K dated July 22, 1999).
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).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Stock Option Agreement, dated as of June 13, 1999, by and between DoubleClick and Abacus Direct
Corporation (incorporated by reference to Exhibit 10.1 of DoubleClick's Current Report on Form 8-K dated
June 17, 1999).
10.2 Agreement of Lease, dated as of January 26, 1999, between John Hancock Mutual Life Insurance Company as
Owner and Landlord and DoubleClick Inc. as Tenant (incorporated by reference to Exhibit 10.2 of
DoubleClick's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
12.1 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.
24.1* Power of Attorney.
25.1* Statement of Eligibility of the Trustee on Form T-1.
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 5.1
August 16, 1999
DoubleClick Inc.
41 Madison Avenue, 32(nd) Floor
New York, NY 10010
Re: DoubleClick Inc. -- Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to DoubleClick Inc., a Delaware corporation (the
"Company"), in connection with the Company's Registration Statement on Form S-3
(Registration No. 333-78959) (the "Registration Statement") filed with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Act"), relating to the registration of the resale of (i)
$250,000,000 aggregate principal amount of 4.75% Convertible Subordinated Notes
(the "Notes") issued by the Company and (ii) 3,030,303 shares of the Company's
common stock, par value $0.001 per share (the "Common Stock"), issuable upon
conversion of the Notes plus such indeterminate number of shares of Common Stock
as may become issuable by means of an adjustment to the conversion price (the
"Conversion Shares").
In rendering our opinion, we have reviewed such documents as we deemed
necessary. We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, facsimile or
photostatic copies, the authenticity of the originals of such latter documents
and the legal competence of all signatories to such documents.
We assume that the appropriate action will be taken, prior to the offer and
sale of the Notes and the Conversion Shares under the Registration Statement, to
register and qualify the Notes and the Conversion Shares for sale under all
applicable state securities or "blue sky" laws.
We express no opinion herein as to the laws of any state or jurisdiction
other than the General Corporation Law of the State of Delaware, the laws of the
State of New York and the federal securities laws.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Notes have been duly and validly authorized and issued by the
Company and constitute the legally valid and binding obligation of the
Company; and
2. The Conversion Shares have been duly and validly authorized by the
Company and, when issued upon conversion of the Notes in accordance with the
terms of such Notes, will be validly issued, fully paid and non-assessable.
It is understood that this opinion is to be used only in connection with the
offer and sale of the Notes or the Conversion Shares while the Registration
Statement is in effect.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement in accordance with the requirements of Item 601(b)(5) of
Regulation S-K under the Act and to the use of our name therein and in the
related Prospectus under the caption "Legal Matters." In giving this consent, we
do not thereby admit that we are within the category of persons whose consent is
required under Section 7
<PAGE>
of the Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
This opinion letter is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Notes or the Conversion Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 12.1
DOUBLECLICK INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
------------------------------- ENDED
1996 1997 1998 JUNE 30, 1999
--------- --------- --------- --------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Pre-tax loss from continuing operations:........................ $ 3,192 $ 8,356 $ 18,173 $ 12,536
Fixed charges:
Interest expense:............................................. 91 341 75 3,337
Interest component of rent expenses on operating leases:...... 162 194 466 726
Total fixed charges:.......................................... $ 253 $ 535 $ 541 $ 4,063
--------- --------- --------- -------
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 six months ended June 30, 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 $8,473 for the
six months ended June 30, 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
August 16, 1999
