10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13

OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2002
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	From transition period from           to          .

Commission file number 000-23709

DoubleClick Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3870996
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

450 West 33rd Street, 16th Floor

New York, New York 10001

(212) 683-0001

(Address, including Zip Code and Telephone Number,

including Area Code of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock $.001 par value

      Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      The aggregate market value of voting stock held by non-affiliates of the registrant as of June 28, 2002 was approximately $901,525,552 (based on the last reported sale price on the NASDAQ National Market on that date). As of March 26, 2003 there were 136,671,818 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Stockholders, which is to be filed subsequent to the date hereof, are incorporated by reference into Part III.

DOUBLECLICK INC.

2002 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		2
Item 2.	Properties		22
Item 3.	Legal Proceedings		22
Item 4.	Submission of Matters to a Vote of Security Holders		23
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		23
Item 6.	Selected Financial Data		23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		48
Item 8.	Financial Statements and Supplementary Data		50
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		87
PART III
Item 10.	Directors and Executive Officers of the Registrant		87
Item 11.	Executive Compensation		87
Item 12.	Security Ownership of Certain Beneficial Owners and Management		87
Item 13.	Certain Relationships and Related Transactions		87
Item 14.	Controls and Procedures		87
Item 15.	Principal Accountant Fees and Services		88
PART IV
Item 16.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		88

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Cautionary Note Regarding Forward-Looking Statements

      This report contains forward-looking statements relating to future events and our future performance within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Stockholders are cautioned that such statements involve risks and uncertainties. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this report and in our other public filings with the Securities and Exchange Commission. It is routine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations are made as of the date of this annual report on Form 10-K and may change prior to the end of each quarter or the year. While we may elect to update forward-looking statements at some point in the future, we may choose not to do so even if our estimates change.

PART I

Item 1. Business Overview

      We are a leading provider of products and services used by direct marketers, Web publishers and advertisers to plan, execute and analyze their marketing programs. Combining marketing technology and data expertise, our products and services help our customers optimize their advertising and marketing campaigns online and through direct mail. We offer a broad array of marketing technology and data products and services to our customers to allow them to address the full range of the marketing process, from pre-campaign planning and testing to execution, measurement and campaign refinements.

      In 2002, we derived our revenues from three business units: TechSolutions, Data (consisting of our Abacus division) and Media. During 2002, we sold our media businesses in a series of transactions. Accordingly, we will not report a DoubleClick Media segment in the future.

      DoubleClick TechSolutions: DoubleClick TechSolutions offers direct marketers, Web publishers and advertisers worldwide industry leading technology solutions for their marketing needs in an increasingly multi-channel world. In 2002, DoubleClick TechSolutions reported revenues of $187.2 million, a decline of 9.6% from 2001. We currently serve ads for over 1,300 clients worldwide. As of December 31, 2002, DoubleClick TechSolutions had also signed up over 290 customers for the DARTmail email delivery technology, which scaled to deliver over 2.4 billion emails in the fourth quarter of 2002.

      Since the successful launch of DoubleClick’s first technology product in 1997, DoubleClick, through our DoubleClick TechSolutions unit, has established a track record of innovation and reliability. With our acquisition of Protagona plc in November 2002, we now offer DoubleClick Ensemble, a campaign management software product and other related products and services. We have also introduced new products and services that provide our customers with additional capabilities and complement our existing products and services.

      The products offered by DoubleClick TechSolutions include our ad management products consisting of the DART for Publishers Service, the DART Enterprise ad serving software product, the DART for Advertisers Service, a suite of email products based on our DARTmail Service and our analytics and campaign management products and services.

      Our patented DART (Dynamic, Advertising, Reporting and Targeting) ad management technology is the platform for many of these products and services. The DART ad management technology is a sophisticated targeting, reporting and delivery tool, relied upon by our customers to measure campaign performance and provide dynamic ad space inventory management.

•  Ad Management Products.

•  DART For Publishers Service. Since January 1997, our DART for Publishers Service has provided Web publishers with a comprehensive solution for ad inventory management and ad

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targeting, delivery and reporting. Deploying the DART ad management technology in data centers all over the world, the DART for Publishers Service offers the scalability, reliability and design needed to deliver large volumes of ads. We have enhanced rich media usability for our customers, which allows Web sites to use advanced technology, such as streaming video, downloaded programs that interact instantly with the user and ads that change when the user’s mouse passes over them. During 2002, we have added other advanced capabilities to our DART ad management technology for improved reach and more powerful brand impact, providing marketers with opportunities to generate more revenue and to more easily traffic, target, serve and report on ad campaigns.

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DART Enterprise Software. DART Enterprise is an online advertising and marketing management licensed software product for Web publishers and merchants. This ad serving software automates critical processes needed to run a successful online marketing business, including sophisticated inventory and order management, precision targeting, dynamic delivery, tracking and detailed campaign reporting. DART Enterprise enables our clients to customize and integrate this product with other key back-end systems. DART Enterprise was known as AdServer prior to March 2002.

•  Advertiser Products.

•  DART for Advertisers. The DART for Advertisers Service, which also uses the DART ad management technology, is a Web-based application that enables advertisers and their agencies to increase their return on investment and to streamline the ad management process through analytical reporting. The DART for Advertisers Service offers effective campaign planning, management and optimization to allow advertisers and their agencies to simplify and control their online ad campaigns, understand their customers and act quickly on knowledge gained.

•  MediaVisor. MediaVisor is a Web-based workflow solution that streamlines the entire media planning, buying and tracking process for agencies and advertisers. MediaVisor can be used as a stand-alone tool or in conjunction with DART for Advertisers or with many existing in-house systems.

•  Email Products. Our suite of email technology products includes both the DARTmail Service, which is a Web-based application, and Unitymail, a licensed software product. Our DARTmail Service enables advertisers and merchants to deliver personalized email communications to their customers for the purposes of building long-term, profitable relationships with their customers. These products and services allow direct marketers and Web publishers to manage and deliver their email marketing campaigns.

•  Campaign Management Products.

•  DoubleClick Ensemble. DoubleClick Ensemble is an integrated campaign management software solution that allows direct marketers to plan and execute their acquisition and retention programs from their desktop. This solution also enables marketers to track and analyze campaigns across multiple response channels and apply the learnings to optimize future marketing efforts. This solution was initially developed by Protagona plc, which we acquired in November 2002.

•  Emerging Products and Services.

•  SiteAdvance. In June 2002, we introduced SiteAdvance, a hosted Web site measurement and analysis solution that provides in-depth marketing analytics connecting Web site metrics with multi-channel marketing data. This tool, which complements our DARTmail and DART for Advertisers products and services, enables direct marketers to understand the interaction between marketing programs, site traffic and online transactions.

•  Strategic Services. In the summer of 2002, we formed a Strategic Services team of marketing professionals and analysts that we expect will help our clients gain insight into marketing problems across numerous areas, including email marketing, online advertising, site analytics and optimization and database marketing.

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      DoubleClick TechSolutions’ offerings are backed worldwide by support teams offering service 24 hours a day, seven days a week. Through our professional services group, we provide comprehensive education and consulting services that help our customers maximize the value of our DoubleClick TechSolutions products and services. These consulting services include customizing and extending existing DoubleClick TechSolutions products and services in order to help our customers capitalize on additional revenue opportunities, integrating DoubleClick TechSolutions into existing infrastructure and data assets and training employees on maximizing online advertising effectiveness.

DoubleClick Data

      DoubleClick Data consists of our Abacus division and until May 2002, included our research division. DoubleClick Data generated revenues of $83.3 million in 2002, an increase of 2.5% from 2001 and our Abacus division generated $80.2 million in DoubleClick Data revenues in 2002, an increase of 12% from 2001. Our DoubleClick research business was, until the sale of its key remaining assets to NetRatings, Inc. in May 2002, reported as a part of our DoubleClick Data segment.

      Abacus is a leading provider of information products and services to the direct marketing industry. Abacus’ services help direct marketers, merchants and businesses to increase response rates and profits from their direct mail marketing campaigns. Abacus applies advanced statistical modeling techniques to the Abacus Alliance database of consumer and business purchasing behavior to help the Alliance members acquire and retain customers. Based on this data modeling, Abacus identifies those consumers or businesses most likely to purchase a particular product or service. Alliance members use this data to reach identified consumers and businesses by direct mail and email. Abacus is a cooperative alliance and only those members of the Abacus Alliance that contribute transaction information into the Abacus Alliance database are entitled to the full range of Abacus services.

      Abacus Products for Direct Marketing. Abacus has been primarily a United States based merchant to consumer business. Abacus also maintains the Abacus Alliance for direct marketers in the United Kingdom, which was operated through a joint venture with VNU until June 2002, at which time we acquired VNU’s 50% interest in the joint venture. Abacus also maintains a Business-to-Business Alliance which now has over one billion transactions and helps its members to improve their direct mail targeting and customer segmentation.

      The Abacus Alliance offers a combination of transactional, geographic, demographic and behavioral profile data, enabling marketers to gain a better understanding of consumer behaviors and conduct more effective marketing campaigns. The key products and services we offer to our Abacus Alliance members include the following:

•  Prospecting. Our prospecting service provides a customer with new prospect names ranked according to the likelihood that the consumer will respond to a particular direct marketing offer. The criteria for ranking include recency, frequency, time of year and dollar amount of catalog purchases. This service enables catalog companies to expand their business base and offset consumer attrition.

•  Housefile Modeling. Abacus’ housefile modeling services allow customers to match Abacus Alliance data to their existing customer information. This service offers our clients a ranking of the customers contained in a client’s housefile list according to their propensity to respond. This service also allows clients to select only optimal customers to mail, to reactivate older buyers, activate inquiries, suppress low performing names, cross-sell and replace marginal prospect lists at a lower cost.

•  Direct Mail List Optimization. Like our prospecting service, our list optimization service ranks names on a direct mail list according to likelihood of response. This optimization service enables the customer to identify and target the most likely buyers. This process not only increases the potential profitability of the lists a client currently uses, whether a house list or acquired from another source, but also permits the client to use lists that were previously considered unprofitable by selecting names most likely to generate sales.

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      Abacus has additional products that are designed to extend the Abacus modeling techniques, alliance relationships and tools. These products include the following:

•  Business-to-Business Alliance. The Business-to-Business Alliance allows its participants to leverage the combined breadth of member transactional data managed through a cooperative database. Unlike the Abacus Alliance, which focuses on consumer catalog purchases transactional data, the Business-to-Business Alliance is designed for directly marketed business-to-business products and services.

•  ChannelView. ChannelView is a tool designed for the multi-channel marketer to identify which campaigns are driving customers to purchase across multiple channels through access to daily analysis of marketing programs. ChannelView is a Web-based application that allows individual clients to see the results of their direct mail campaigns across multiple order channels, such as from Web sites, catalogs and retail stores.

DoubleClick Media

      Over the course of 2002, we disposed of our media business through a number of transactions. Specifically, in January, we sold our European media business to AdLINK Internet Media AG, a German provider of Internet advertising solutions. As a result of that sale, we currently hold 15% of the outstanding shares of AdLINK. In July, we sold our North American media business to MaxWorldwide, Inc., an independent Internet advertising sales company. As a result of that sale, we currently hold 19.8% of the outstanding shares of MaxWorldwide. In addition, in December 2002, we sold a portion of our interest in DoubleClick Japan to Trans Cosmos Inc., a provider of information technology services in Japan, which reduced our ownership interest from 38.2% to 15.6% of the outstanding shares of DoubleClick Japan. We also operated our media business in Asia (Hong Kong, Taiwan, Korea, China and Singapore) through joint venture partners, which ceased operations in 2002.

      Prior to these dispositions, DoubleClick Media offered to advertisers worldwide a broad range of online media purchasing opportunities to satisfy a variety of marketing objectives. DoubleClick Media also enabled Web publishers worldwide to outsource ad sales for their Web sites to DoubleClick’s ad sales force and to leverage the revenue generating potential of their media by joining DoubleClick’s Web site network.

      DoubleClick Media generated revenues of $32.7 million in 2002, representing a decrease of 74.7% from 2001 due primarily to the dispositions of the media businesses in 2002. Going forward, we will no longer report a DoubleClick Media segment.

Technology Infrastructure

      DoubleClick’s technology infrastructure and operations are built to deliver high availability, performance, security and scalability. We built our systems environment with multiple layers of redundancy to help ensure we meet and exceed any service level agreements with our customers. We utilize multiple hosting and Internet service provider partners to maximize redundancy and diversity. Our server and networking environment is built with the same design criteria.

      Our systems management tools are designed to take full advantage of this robust architecture seamlessly when switching traffic from one server to another, one data center to another and from one Internet service provider to another. We have built in horizontal scaling capabilities where appropriate to help ensure the unlimited scalability. At the same time, the design helps us to minimize the impact of the problems if they occur.

      We have implemented tight change management processes to help ensure the integrity of the production environment. We emphasize the quality of service to our customers by employing internal as well as external monitoring capabilities. We not only provide the 24 hour, seven days a week monitoring for our internal technology environment but also we provide this service from the end-user perspective. We also have a problem resolution process and escalation steps to handle problems we may encounter while monitoring.

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Sales and Marketing

North America

      We sell our products and services in the United States through a sales and marketing organization that consisted of 315 employees as of December 31, 2002. These employees are primarily located at our headquarters in New York and also in our offices in other North American cities, including Atlanta, Broomfield (CO), Chicago, Los Angeles, San Francisco and Toronto, Canada. We generally organize the sales force for our TechSolutions products into three teams, each one dedicated to one of our three customer groups: marketers, Web publishers and agencies. Our sales force for our Abacus products and services is generally organized into two teams, one dedicated to the business-to-consumer segment and the other dedicated to the business-to-business segment.

      We conduct comprehensive marketing programs and support our direct sales efforts to actively promote the DoubleClick brand. These programs include public relations, online advertisements, print advertisements, Web advertising seminars, trade shows and ongoing customer communications programs.

International

      Our European operations are based out of our Irish subsidiary located in Dublin, Ireland and our Asian operations are run through our branch office in Hong Kong. We sell our technology products and services through our directly and indirectly owned subsidiaries primarily located in Australia, Canada, France, Germany, Ireland, Spain, the United Kingdom and Hong Kong. In Japan, our technology products and services are sold through DoubleClick Japan, of which we own approximately 15% of the outstanding shares. We operate the international DoubleClick Data business through an indirect wholly-owned subsidiary located in the United Kingdom. Our international sales and marketing organization consisted of 99 employees as of December 31, 2002. Please see our discussion of the risks attendant to our international operations under “Risk Factors” beginning on page 9.

Corporate History; Recent Significant Transactions

      We were incorporated in Delaware on January 23, 1996 as DoubleClick Incorporated, and changed our name to DoubleClick Inc. on May 14, 1996. On February 25, 1998, we completed our initial public offering of common stock, receiving net proceeds of approximately $62.5 million. On December 10, 1998, we received net proceeds of approximately $93.7 million in connection with our first follow-on offering of common stock. On March 16, 1999, we completed the sale of our 4.75% Convertible Subordinated Notes due 2006 through a private offering under Rule 144A, and received approximately $244.7 million in net proceeds. On April 2, 1999, we paid to stockholders of record on March 22, 1999 a stock dividend of one share of common stock for each share held. On January 10, 2000, we paid to stockholders of record as of December 31, 1999 a stock dividend of one share of common stock for each share held. On February 24, 2000, we received net proceeds of approximately $502.9 million in connection with a follow-on offering of common stock. During 2002, our service and product offerings were grouped into three segments for financial reporting: DoubleClick TechSolutions, DoubleClick Data and DoubleClick Media. Going forward our product and service offerings will be grouped into two segments for financial reporting: DoubleClick TechSolutions and DoubleClick Data and we will no longer report a DoubleClick Media segment.

      During 2002, we made acquisitions of certain complimentary businesses, and disposed of certain of our non-strategic businesses. Specifically, on January 18, 2002, we acquired MessageMedia, Inc., a provider of permission-based, email marketing and messaging products and services. On June 26, 2002, we acquired the remaining 50% of the Abacus Direct Europe joint venture that we did not previously own from VNU Marketing Information Europe & Asia B.V., an affiliate of Claritas (UK) Limited. In addition, on November 4, 2002, we acquired Protagona plc, a campaign management software company based in the United Kingdom. On January 28, 2002, we sold our European media business to AdLINK Internet Media AG, a German provider of Internet advertising solutions, and on July 10, 2002, we sold our North American Media business to MaxWorldwide, Inc., an independent Internet advertising sales company. On December 26,

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2002, we also sold a portion of our interest in DoubleClick Japan to Trans Cosmo Inc., a provider of information technology services in Japan.

      Our Internet address is www.doubleclick.net. We make available free of charge on our Internet Web Site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

      See Note 19 to the Consolidated Financial Statements for revenues and gross profit attributable to each of our lines of business and revenues and long-lived asset information by geographic area.

Competition

      The market for marketing technology and data products and services is very competitive. We expect this competitive environment to continue in some of our businesses due to low barriers to entry. Competition may also increase as a result of industry consolidation.

      We believe that our ability to compete depends on many factors both within and beyond our control, including the following:

•  the timing and acceptance of new products and services and enhancements to existing products and services developed either by us or our competitors;

•  customer service and support efforts;

•  our ability to adapt and scale our technology, and develop and introduce new technologies, as customer needs change and grow;

•  sales and marketing efforts;

•  the features, ease of use, performance, price and reliability of products and services developed either by us or our competitors; and

•  the relative impact of general economic and industry conditions on either us or our competitors.

      DoubleClick TechSolutions’ ad management products and services compete with providers of outsourced ad management services and ad serving software and related services as well as inhouse solutions. TechSolutions’ email delivery products and services compete with other providers of email delivery and inhouse solutions, including providers of email delivery software and related services.

      DoubleClick Data, through the Abacus division, competes with a broad range of companies that provide information products and marketing research services to the direct marketing industry. Our Abacus division also competes with data aggregation companies for a share of our customers’ marketing data budgets.

      In addition, customer relationship management companies offer products and services that compete functionally with those offered by several of DoubleClick’s business units. DoubleClick TechSolutions and DoubleClick Data also compete with companies engaged in marketing analytics and marketing automation.

Privacy and Data Protection

      We have been a leader in promoting consumer privacy and are committed to enhancing consumer understanding of the technologies that are used to provide information to marketing technology and data companies like DoubleClick. Our Chief Privacy Officer leads our privacy and data protection efforts. Our privacy team focuses on ensuring that we are effectively implementing our privacy policies and procedures, works with our clients to institute and improve their privacy procedures and educates our customers and the industry about our leadership with regard to privacy.

      In 2000, we created a Privacy Advisory Board consisting of consumer advocates, security experts and authorities in the field of online privacy. The Privacy Advisory Board makes recommendations about how we can improve privacy procedures through the adoption of policies aimed at protecting the privacy interests of consumers online. In addition, we conduct periodic reviews of our data protection practices.

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Seasonality and Cyclicality

      We believe that our business is subject to seasonal fluctuations. Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects our DoubleClick TechSolutions business, and the direct marketing industry generally compiles more customer data in the third calendar quarter, which directly affects our DoubleClick Data business. Further, Internet user traffic typically drops during the summer months, which reduces the amount of online advertising. Expenditures by direct marketers and advertisers tend to vary in cycles that reflect overall economic conditions as well as budgeting and buying patterns. We believe that our email technology business may experience seasonal patterns similar to those of the traditional direct marketing industry, which typically generates lower revenues earlier in the calendar year and higher revenues during the calendar year-end months. If these patterns continue our revenue may be affected by these fluctuations. Our revenue has in the past and may in the future be materially affected by a decline in the economic prospects of our customers or in the economy or our industry in general, which could alter our current or prospective customers’ spending priorities or budget cycles or extend our sales cycle.

Proprietary Rights

      Our success and ability to effectively compete are substantially dependent on the protection of our proprietary technologies and our other intellectual property, which we protect through a combination of patent, trademark, copyright, trade secret, unfair competition and contract law. In September 1999, the U.S. Patent and Trademark Office issued to us a patent that covers our DART ad management technology and service. We own other patents, and have patent applications pending, for our technology and related products and services.

      We also have rights in the trademarks and service marks that we use to market our products and services. These marks include, among others, DOUBLECLICK®, DART®, DARTMAIL®, ABACUS^TM, DOUBLECLICK ENSEMBLE^TM, SITEADVANCE^TM and CHANNELVIEW^TM. We have applied to register our trademarks in the United States and internationally. We have received registrations for the marks DOUBLECLICK, DART, DARTMAIL and the Abacus logo and have applied for registrations of others. We cannot assure you that any of our current or future patent applications or trademark or service mark applications will be approved. In addition, we have licensed, and may license in the future, our trademarks, trade dress and similar proprietary rights to third parties.

      In order to secure and protect our proprietary rights, we generally enter into confidentiality, proprietary rights and license agreements, as appropriate, with our employees, consultants and business and technology partners, and generally control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, we cannot be certain that the steps we take to prevent unauthorized use of our proprietary rights are sufficient to prevent misappropriation of our products and services, technologies or intellectual property, particularly in foreign countries where laws or law enforcement practices may not protect our proprietary or intellectual property rights as fully as in the United States. In addition, we cannot assure you that we will be able to adequately enforce the contractual arrangements that we have entered into to protect our proprietary technologies and intellectual property.

      Third parties have asserted, and may in the future assert, infringement claims against us, which could adversely affect the value of our proprietary rights, our intellectual property and our reputation. Such claims could subject us to significant liability for damages, and we could be restricted from using our intellectual property. Any claims asserted by third parties or litigation instituted by third parties may also result in limitations on our ability to use our intellectual property, unless we enter into arrangements with third parties responsible for such claims, which may not be available on commercially reasonable terms, if at all.

EMPLOYEES

      As of December 31, 2002, we employed 1,111 persons, including 414 in sales and marketing, 213 in engineering and product development, 321 in technology operations, customer support and consulting and

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customer support, and 163 in general administration. We are not subject to any collective bargaining agreements and believe that our relationships with our employees are good.

RISK FACTORS

      As indicated in this annual report on Form 10-K under the caption “Cautionary Note Regarding Forward-Looking Statements”, certain of the information contained in this annual report consists of forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include the following:

RISKS RELATING TO OUR COMPANY AND OUR BUSINESS

      WE HAVE A LIMITED OPERATING HISTORY AND OUR FUTURE FINANCIAL RESULTS MAY FLUCTUATE, WHICH MAY CAUSE OUR STOCK PRICE TO DECLINE.

      We have a limited operating history. An investor in our common stock must consider the risks and difficulties frequently encountered by companies in new and rapidly evolving industries, including the marketing technology and data businesses. Our risks include:

•  ability to achieve anticipated revenue growth rates;

•  ability to manage our operations;

•  competition;

•  attracting, retaining and motivating qualified personnel;

•  maintaining our current, and developing, new relationships with direct marketers, Web publishers, advertisers and advertising agencies;

•  ability to anticipate and adapt to the changing industry conditions; and

•  ability to develop and introduce new products and services and continue to develop, upgrade and integrate technology.

      We also depend on the use of the Internet for advertising and as a communications medium, the demand for advertising services in general, and on general economic and industry conditions. We cannot assure you that our business strategy will be successful or that we will successfully address these risks. If we are unsuccessful in addressing these risks, our revenues may decline or may not grow in accordance with our business model and may fall short of expectations of market analysts and investors, which could negatively affect the price of our stock.

      WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES.

      We have incurred net losses each year since inception, including net losses of $117.9 million, $265.8 million and $156.0 million for the years ended December 31, 2002, 2001 and 2000, respectively. As of December 31, 2002, our accumulated deficit was $666.4 million. We have not achieved profitability on an annual basis and expect to incur operating losses at times in the future. We expect to continue to incur significant operating and capital expenditures. We also have lease obligations for facilities that currently constitute excess or idle facilities. Periodically, we evaluate the expenses likely to be incurred for these facilities, and where appropriate, have taken restructuring charges with respect to these expenses. We cannot assure you that there will not be additional restructuring charges recognized with respect to our excess or idle facilities. As a result of these factors, we will need to generate significant revenue to achieve and maintain profitability. We cannot assure you that we will generate sufficient revenue to achieve or sustain 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 revenue does not meet our expectations, or if operating expenses exceed what we anticipate or cannot be reduced accordingly, our business, results of operations and financial condition will be materially and adversely affected.

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WE DERIVE A SIGNIFICANT PORTION OF OUR REVENUE FROM ADVERTISING SERVICES. A CONTINUED DECREASE IN EXPENDITURES BY DIRECT MARKETERS AND ADVERTISERS OR A CONTINUED DOWNTURN IN THE ECONOMY COULD CAUSE OUR REVENUES TO DECLINE SIGNIFICANTLY IN ANY GIVEN PERIOD.

      We derive, and expect to continue to derive for the foreseeable future, a large portion of our revenue from products and services we provide to direct marketers, Web publishers, advertisers and advertising agencies. Expenditures by direct marketers and advertisers tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. The overall market for advertising, including online advertising, has been characterized in the last couple of years by increasing softness of demand, lower prices for advertisements, the reduction or cancellation of advertising contracts, an increased risk of uncollectible receivables from customers and the reduction of marketing and advertising budgets, especially for online advertising. As a result of these reductions, advertising spending across traditional media, as well as the Internet, has decreased. We cannot assure you that further reductions will not occur.

      The revenue outlook for DoubleClick TechSolutions is adversely affected by an environment where the supply of advertising inventory exceeds advertisers’ demand. Under these circumstances, Web publishers tend to remove ad space from their Web sites in an effort to correct the supply-demand imbalance; other Web publishers may cut back on their Web presence or go out of business. Faced with smaller budgets, advertisers and advertising agencies purchase less advertising inventory and tend not to invest as much in online advertising. Consequently, the number of ad impressions delivered by DoubleClick TechSolutions may decline or fail to grow or the price that we can charge for our services may decline, which in either case would adversely affect our revenues. A decline in the economic prospects of direct marketers or the economy in general would also adversely impact the revenue outlook for our email business.

      DoubleClick Data, which provides products and services to direct marketers, may face similar pressures. Some direct marketers may respond to economic downturns by reducing the number of catalogs mailed, thereby possibly reducing the demand for DoubleClick Data’s services. If direct marketing activities fail to grow or decline our revenues could be adversely affected.

      We cannot assure you that further reductions in marketing spending will not occur. We also cannot assure you that if economic conditions improve, marketing budgets and advertising spending will increase, or not decrease, from current levels. A continued decline in the economic prospects of marketers or the economy in general could alter current or prospective marketers’ spending priorities or increase the time it takes to close a sale with a customer. As a result, our revenues from marketing and advertising may decline significantly in any given period.

WE DO NOT OFTEN MAINTAIN LONG-TERM AGREEMENTS WITH OUR CUSTOMERS AND MAY BE UNABLE TO RETAIN CUSTOMERS, ATTRACT NEW CUSTOMERS OR REPLACE DEPARTING CUSTOMERS WITH CUSTOMERS THAT CAN PROVIDE COMPARABLE REVENUES.

      Many of our contracts with our customers are short-term. We cannot assure you that our customers will continue to use our products and services or that we will be able to replace in a timely or effective manner departing customers with new customers that generate comparable revenues. Further, we cannot assure you that our customers will continue to generate consistent amounts of revenues over time. Our failure to develop and sustain long-term relationships with our customers would materially and adversely affect our results of operations.

MANY OF OUR CUSTOMERS CONTINUE TO EXPERIENCE BUSINESS CONDITIONS THAT COULD ADVERSELY AFFECT OUR BUSINESS.

Some of our customers have experienced and may continue to experience difficulty raising capital and supporting their current operations and implementing their business plans, or may be anticipating such difficulties and, therefore, may elect to scale back the resources they devote to marketing in general and our offerings in particular. These customers may not be able to discharge their payment and other obligations to

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us. The non-payment or late payment of amounts due to us from our customers could negatively impact our financial condition. If the current business environment for our customers does not improve, our business, results of operations and financial condition could be materially adversely affected. In addition, failure of our customers to comply with federal, state or local laws or the Company’s policies could damage our reputation and adversely affect our business, results of operations or financial condition.

INDUSTRY SHIFTS, CONTINUING EXPANSION OF OUR PRODUCTS AND SERVICES AND OTHER CHANGES MAY STRAIN OUR MANAGERIAL, OPERATIONAL, FINANCIAL AND INFORMATION SYSTEM RESOURCES.

      In recent years, we have had to respond to significant changes in our industry. As a result, we have experienced industry shifts, continuing expansion of product and service offerings and other changes that have increased the complexity of our business and placed considerable demands on our managerial, operational and financial resources. We continue to increase the scope of our product and service offerings both domestically and internationally and to deploy our resources in accordance with changing business conditions and opportunities. To continue to successfully implement our business plan in our changing industry requires effective planning and management processes. 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 train and manage our workforce. We cannot assure you that management will be effective in attracting and retaining qualified personnel, integrating acquired businesses or otherwise responding to new business conditions. We also cannot assure you that our information systems, procedures or policies will be adequate to support our operations or that our management will be able to achieve the execution necessary to offer our products and services and implement our business plan successfully. Our inability to effectively respond to these challenges could materially and adversely affect our business, financial condition and results of operations.

OUR BUSINESS MODEL IS UNPROVEN, AND WE MAY NOT BE ABLE TO GENERATE PROFITS FROM MANY OF OUR PRODUCTS AND SERVICES.

      A significant part of our business model involves generating revenue by providing marketing technology and data products and services to direct marketers, Web publishers and advertisers. The profit potential for our business model has not yet been proven, and we have not yet achieved full-year profitability. The profitability of our business model is subject to external and internal factors. Any single factor or combination of factors could limit the profit potential, long term and short term, of our business model.

      Like other businesses in the marketing and advertising sectors, our revenue outlook is sensitive to downturns in the economy, including declines in advertising and marketing budgets. The profit potential of our business model is also subject to the acceptance of our products and services by direct marketers, Web publishers and advertisers. Intensive marketing and sales efforts may be necessary to educate prospective customers regarding the uses and benefits of, and to generate demand for, our products and services. Enterprises may be reluctant or slow to adopt a new approach that may replace existing techniques, or may feel that our offerings fall short of their needs. If these outcomes occur, it would have an adverse effect on the profit potential of our business model.

      Internal factors also influence the profit potential of our business model. In order to be profitable, our revenue must exceed the expense incurred by us to run our technology infrastructure, research and development, sales and marketing and all other operations. Our failure to achieve these results would adversely affect the profit potential of our business model.

MISAPPROPRIATION OF CONFIDENTIAL INFORMATION COULD CAUSE US TO LOSE CUSTOMERS.

      We currently retain highly confidential information of our customers in secure database servers. Although we observe security measures throughout our operations, we cannot assure you that we will be able to prevent unauthorized individuals from gaining access to these database servers. Any unauthorized access to our servers, or abuse by our employees, could result in the theft of confidential customer information. If

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confidential customer information is compromised, we could lose customers or become subject to litigation and our reputation could be harmed, any of which could materially and adversely affect our business and results of operations.

COMPETITION IN DIRECT MARKETING, ONLINE ADVERTISING AND RELATED PRODUCTS AND SERVICES IS INTENSE, AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.

      The market for marketing technology and data products and services is very competitive. We expect this competition to continue because there are low barriers to entry for some of our businesses. Also, industry consolidation may lead to stronger, better capitalized entities against which we must compete. We expect that we will encounter additional competition from new sources as we expand our product and service offerings.

      We believe that our ability to compete depends on many factors both within and beyond our control, including the following:

•  the features, performance, price and reliability of products and services offered either by us or our competitors;

•  the launch timing and market success of products and services developed either by us or our competitors;

•  our ability to adapt and scale our products and services, and to develop and introduce new products and services that respond to market needs;

•  our ability to adapt to evolving technology and industry standards;

•  our customer service and support efforts;

•  our sales and marketing efforts; and

•  the relative impact of general economic and industry conditions on either us or our competitors.

      Our divisions face competition from a variety of sources. DoubleClick TechSolutions competes with providers of software and service bureau solutions for the delivery of Web ads and email for direct marketers, Web publishers and advertisers as well as with inhouse solutions. We also compete with providers of email delivery and inhouse solutions, including providers of email delivery software and related services.

      DoubleClick Data competes with data aggregation companies and providers of information products and marketing research services to the direct marketing industry. We also compete indirectly with others, such as providers of customer relationship management services, companies engaged in providing analytic services and other companies that facilitate marketing automation.

      Many of our existing and potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we have. These factors could allow them to compete more effectively than we can, including devoting greater resources to the development, promotion and sale of their products and services, engaging in more extensive research and development, undertaking more far-reaching marketing campaigns, adopting more aggressive pricing policies and making more attractive offers to existing and potential employees, strategic partners, direct marketers, Web publishers and advertisers. We cannot assure you that our competitors will not develop products or services that are equal or superior to our products and services or that achieve greater acceptance than our products and services. 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 direct marketer, Web publisher, advertising and ad agency customers. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross profits 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.

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OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND YOU SHOULD NOT RELY ON THEM AS AN INDICATION OF FUTURE OPERATING PERFORMANCE.

      Our revenue and results of operations may fluctuate significantly in the future as a result of a variety of factors, many of which are beyond our control. These factors include:

•  direct marketer, Web publisher and advertiser demand for our products and services;

•  Internet user traffic levels;

•  number and size of ad units per page on our customers’ Web sites;

•  downward pricing pressures from current and potential customers for our products and services;

•  the introduction of new products or services by us or our competitors;

•  variations in the levels of capital, operating expenditures and other costs relating to our operations;

•  the size and timing of significant pre-tax charges, including for goodwill impairment, the write-down of assets and restructuring charges, such as costs for severance and idle facilities;

•  costs related to any acquisitions or dispositions of technologies or businesses;

•  general seasonal and cyclical fluctuations; and

•  general economic and industry conditions.

      We may not be able to adjust spending quickly enough to offset any unexpected revenue shortfall. Our expenses include upgrading and enhancing our ad management and email delivery technology, expanding our product and service offerings, marketing and supporting our products and services and supporting our sales and marketing operations. If we have a shortfall in revenue in relation to our expenses, or if our expenses exceed revenue, then our business, results of operations and financial condition could be materially and adversely affected. These results would likely affect the market price of our common stock in a manner that may be unrelated to our long-term operating performance.

      Our business is subject to seasonal fluctuations. Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects the DoubleClick TechSolutions business. Further, Internet user traffic typically drops during the summer months, which reduces the amount of online advertising. The direct marketing industry generally uses our data services more in the third calendar quarter based on plans for holiday season mailings, which directly affects the DoubleClick Data business. The email technology business may experience seasonal patterns similar to the traditional direct marketing industry, which typically generates lower revenues earlier in the calendar year and higher revenues during the calendar year-end months.

      As a result, we believe that period-to-period comparisons of our results of operations may not be indicators 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 our common stock may fall.

WE MAY NOT BE ABLE TO CONTINUE TO GROW THROUGH ACQUISITIONS OF OR INVESTMENTS IN OTHER COMPANIES.

      Our business has expanded rapidly in part as a result of acquisitions or investments in other companies, including the acquisitions of Abacus Direct, NetGravity, FloNetwork, MessageMedia and Protagona. We may continue to acquire or make investments in other complementary businesses, products, services or technologies as a means to grow our business. From time to time we have had discussions with other companies regarding our acquiring, or investing in, their businesses, products, services or technologies. We cannot assure you that we will be able to identify other suitable acquisition or investment candidates. Even if we do identify suitable candidates, we cannot assure you that we will be able to make other acquisitions or investments on

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commercially acceptable terms, if at all. Even if we agree to buy a company, technology or other assets, we cannot assure you that we will be successful in consummating the purchase. If we are unable to continue to expand through acquisitions, our revenue may decline or fail to grow.

      We are also minority investors in a few technology companies, including AdLINK, MaxWorldwide and DoubleClick Japan. Our investments have decreased in value as a result of market volatility, and periodically, we have recorded charges to earnings for all or a portion of the unrealized loss due to declines in market value considered to be other than temporary. The market value of these investments may decline in future periods due to the continued volatility in the stock market in general or the market prices of securities of technology companies in particular and we may be required to record further charges to earnings as a result. Further, we cannot assure you that we will be able to sell these securities at or above our cost basis. We have recorded goodwill in connection with a number of our acquired businesses, including MessageMedia, FloNetwork and Flashbase. As a result of significantly lower than-expected revenues generated to date and considerably reduced estimates of future performance, we have in the past recognized impairment charges with respect to the goodwill of some acquired businesses. If market conditions require, we may in the future record additional impairments in the value of our acquired businesses.

WE MAY NOT MANAGE THE INTEGRATION OF ACQUIRED COMPANIES SUCCESSFULLY OR ACHIEVE DESIRED RESULTS.

      As a part of our business strategy, we have in the past, and could in the future enter into a number of business combinations and acquisitions. Acquisitions are accompanied by a number of risks, including:

•  the difficulty of assimilating the operations and personnel of the acquired companies;

•  the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;

•  the difficulty of incorporating acquired technology and rights into our products and services;

•  unanticipated expenses related to technology and other integration;

•  difficulties in disposing of the excess or idle facilities of an acquired company or business;

•  difficulties in maintaining uniform standards, controls, procedures and policies;

•  the impairment of relationships with employees and customers as a result of any integration of new management personnel;

•  the inability to develop new products and services that combine our knowledge and resources and our acquired businesses or the failure for a demand to develop for the combined companies’ new products and services;

•  potential failure to achieve additional sales and enhance our customer base through cross-marketing of the combined company’s products to new and existing customers; and

•  potential unknown liabilities associated with acquired businesses.

      We may not succeed in addressing these risks or other problems encountered in connection with these business combinations and acquisitions. If so, these risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations. 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.

DISRUPTION OF OUR SERVICES DUE TO UNANTICIPATED PROBLEMS OR FAILURES COULD HARM OUR BUSINESS.

      Our DART ad management and DARTmail technologies reside in our data centers in multiple locations in the United States and abroad. Continuing and uninterrupted performance of our technology is critical to our success. Customers may become dissatisfied by any system failure that interrupts our ability to provide our

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services to them, including failures affecting our ability to deliver advertisements without significant delay to the viewer or our ability to deliver a customer’s online marketing campaign. Sustained or repeated system failures would reduce the attractiveness of our products and services to our customers and could result in contract terminations or fee rebates or credits, thereby reducing revenue. Slower response time or system failures may also result from straining the capacity of our technology 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 could be materially and adversely affected.

      Our operations are dependent on our ability to protect our computer systems against damage from natural disasters, fire, power loss, water damage, telecommunications failures, vandalism and other malicious acts, and similar unexpected adverse events. In addition, interruptions in our products or services could result from the failure of our telecommunications providers to provide the necessary data communications capacity in the time frame we require. 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 products and services. Our business, results of operations and financial condition could be materially and adversely affected by any damage or failure that interrupts, delays or destroys our operations. Some of our data centers are located at facilities provided by a third party and if these parties are unable to adequately protect our data centers, our business, results of operations and financial conditions could be materially and adversely affected. We are in the process of moving our primary data center from New York to Thornton, Colorado. Any unanticipated problems that may occur during or as a result of this move could adversely affect our systems and harm our business.

WE DEPEND ON THIRD-PARTY INTERNET AND TELECOMMUNICATIONS PROVIDERS, OVER WHOM WE HAVE NO CONTROL, TO OPERATE OUR SERVICES. INTERRUPTIONS IN OUR SERVICES CAUSED BY ONE OF THESE PROVIDERS COULD HAVE AN ADVERSE EFFECT ON REVENUE AND SECURING ALTERNATE SOURCES OF THESE SERVICES COULD SIGNIFICANTLY INCREASE EXPENSES.

      We depend heavily on several third-party providers of Internet and related telecommunication services, including hosting and co-location facilities, in delivering our products and services. These companies may not continue to provide services to us without disruptions in service, at the current cost or at all. The costs associated with any transition to a new service provider could be substantial, requiring us to reengineer our computer systems and telecommunications infrastructure to accommodate a new service provider. This process could be both expensive and time consuming. In addition, failure of our Internet and related telecommunications providers to provide the data communications capacity in the time frame we require could cause interruptions in the services we provide. Unanticipated problems affecting our computer and telecommunications systems in the future could cause interruptions in the delivery of our services, causing a loss of revenue and potential loss of customers.

WE ARE DEPENDENT ON KEY PERSONNEL AND ON KEY EMPLOYEE RETENTION AND RECRUITING 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. We do not have employment agreements with most of these executives and do not maintain key person life insurance on any of these executives. The loss of the services of one or more of our key employees could significantly delay or prevent the achievement of our product development and other business objectives and could harm our business. Our future success also depends on our continuing ability to attract, retain and motivate highly skilled employees for key positions. There is competition for qualified employees in our industry. We may not be able to retain our key employees or attract, assimilate and 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 for some positions.

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IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WE COULD LOSE OUR INTELLECTUAL PROPERTY RIGHTS.

      Our success and ability to effectively compete are substantially dependent on the protection of our proprietary technologies, patents, trademarks, service marks, copyrights and trade secrets, which we protect through a combination of patent, trademark, copyright, trade secret, unfair competition and contract law. We cannot assure you that any of our intellectual property rights will be viable or of value in the future.

      In September 1999, the U.S. Patent and Trademark Office issued to us a patent that covers our DART ad management technology. We are currently seeking reissue of this patent, which would limit the scope of the existing patent, and this reissue proceeding is pending before the U.S. Patent and Trademark Office. We cannot assure you that this patent will be reissued. We own other patents, and have patent applications pending for our other technology. We cannot assure you that the patent applications that we have filed in the United States and internationally will be issued or that patents issued or acquired by us now or in the future will be valid and enforceable or provide us with any meaningful protection.

      We also have rights in the trademarks and service marks that we use to market our products and services. These marks include DOUBLECLICK®, DART®, DARTMAIL®, ABACUS^TM, DOUBLECLICK ENSEMBLE^TM, SITEADANCE^TM AND CHANNELVIEW^TM. We have applied to register our trademarks and service marks in the United States and internationally. We cannot assure you that any of these current or future applications will be approved. Even if these marks are registered, these marks may be invalidated or successfully challenged by others. If our trademarks or service marks are not registered because third parties own these marks, our use of these marks will be restricted unless we are able to enter into arrangements with these parties, which may not be available on commercially reasonable terms, if at all.

      We also enter into confidentiality, assignments of proprietary rights and license agreements, as appropriate, with our employees, consultants and business and technology partners, and generally control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, we cannot be certain that the steps we take to prevent unauthorized use of our intellectual property rights are sufficient to prevent misappropriation of our products and services or technologies, particularly in foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States. In addition, we cannot assure you that we will be able to adequately enforce the contractual arrangements that we have entered into to protect our proprietary technologies and intellectual property. If we lose our intellectual property rights, this could have a material and adverse impact on our business, financial condition and results of operations.

IF WE FACE A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT, WE MAY BE LIABLE FOR DAMAGES AND BE REQUIRED TO MAKE CHANGES TO OUR TECHNOLOGY OR BUSINESS.

      Infringement claims may be asserted against us, which could adversely affect our reputation and the value of our intellectual property rights. From time to time we have been, and we expect to continue to be, subject to claims or notices in the ordinary course of our business, including assertions of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our customers. We do not conduct exhaustive patent searches to determine whether our technology infringes patents held by others. In addition, the protection of proprietary rights in Internet related industries is inherently uncertain due to the rapidly evolving technological environment. As such, there may be numerous patent applications pending, many of which are confidential during a large part of their prosecution, that provide for technologies similar to ours.

      Third party infringement claims and any resultant litigation, should it occur, could subject us to significant liability for damages, restrict us from using our technology or operating our business generally, or require changes to be made to our technology. Even if we prevail, litigation is time consuming and expensive to defend and would result in the diversion of management’s time and attention. Claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims unless we are able to enter into royalty, licensing or other similar agreements with the third parties asserting these claims.

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Such agreements, if required, may not be available on terms acceptable to us, or at all. If we are unable to enter into these types of agreements, we would be required to either cease using the subject product or change the technology underlying the applicable product. If a successful claim of infringement is brought against us and we fail to develop non-infringing technology as an alternative or to license the infringed or similar technology on a timely basis, it could materially adversely affect our business, financial condition and results of operations.

OUR BUSINESS MAY BE MATERIALLY ADVERSELY AFFECTED BY LAWSUITS RELATED TO PRIVACY, DATA PROTECTION AND OUR BUSINESS PRACTICES.

      We have been a defendant in several lawsuits alleging, among other things, that we unlawfully obtain and use Internet users’ personal information and that our use of cookies violates various laws. We have also been the subject of an inquiry involving the attorneys general of several states relating to our practices in the collection, maintenance and use of information about, and our disclosure of these information practices to, Internet users. Although these particular situations were resolved in 2002, we may in the future be subject to additional claims or regulatory inquiries with respect to our business practices. Class action litigation and regulatory inquiries of these types are often expensive and time consuming and their outcome may be uncertain.

      Any additional claims or regulatory inquiries, whether successful or not, could require us to devote significant amounts of monetary or human resource to defend ourselves and could harm our reputation. We may need to spend significant amounts on our legal defense, senior management may be required to divert their attention from other portions of our business, new product launches may be deferred or canceled as a result of any proceedings, and we may be required to make changes to our present and planned products or services, any of which could materially and adversely affect our business, financial condition and results of operations. If, as a result of any proceedings, a judgment is rendered or a decree is entered against us, it may materially and adversely affect our business, financial condition and results of operations and harm our reputation.

OUR BUSINESS DEPENDS IN PART ON SUCCESSFUL ADAPTATION OF OUR BUSINESS TO INTERNATIONAL MARKETS, IN WHICH WE HAVE LIMITED EXPERIENCE. FAILURE TO SUCCESSFULLY MANAGE THE RISKS OF INTERNATIONAL OPERATIONS AND SALES AND MARKETING EFFORTS WOULD HARM OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

      We have operations in a number of countries and have limited experience in developing localized versions of our products and services and in marketing, selling and distributing our products and services internationally. We sell our technology products and services through our directly and indirectly owned subsidiaries primarily located in Australia, Canada, France, Germany, Spain, Ireland, the United Kingdom and Hong Kong. In Japan, we sell our technology products and services through DoubleClick Japan, of which we own approximately 15%. We also operate the DoubleClick Data business in the United Kingdom.

      Our international operations are subject to other inherent risks, including:

•  the high cost of maintaining international operations;

•  uncertain demand for our products and services;

•  the impact of recessions in economies outside the United States;

•  changes in regulatory requirements;

•  more restrictive data protection regulation;

•  reduced protection for intellectual property rights in some countries;

•  potentially adverse tax consequences;

•  difficulties and costs of staffing and managing foreign operations;

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•  cultural differences in the conduct of business;

•  political and economic instability;

•  fluctuations in currency exchange rates; and

•  seasonal fluctuations in Internet usage and marketing and advertising spending.

      These risks may have a material and adverse impact on the business, results of operations and financial condition of our operations in a particular country and could result in a decision by us to reduce or discontinue operations in that country. The combined impact of these risks in each country may also materially and adversely affect our business, results of operations and financial condition as a whole.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY MAKE IT DIFFICULT FOR A THIRD PARTY TO ACQUIRE US.

      Some of the provisions of our certificate of incorporation, our bylaws and Delaware law could, together or separately:

•  discourage potential acquisition proposals;

•  delay or prevent a change in control; or

•  impede the ability of our stockholders to change the composition of our board of directors in any one year.

      As a result, it could be more difficult for third parties to acquire us, even if doing so might be beneficial to our stockholders. Difficulty in acquiring us could, in turn, limit the price that investors might be willing to pay for shares of our common stock.

OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS, AND THIS VOLATILITY COULD RESULT IN US BECOMING SUBJECT TO SECURITIES LITIGATION, WHICH IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.

      The market price of our common stock has fluctuated in the past and is likely to continue to be highly volatile and subject to wide fluctuations. In addition, the stock market has experienced extreme price and volume fluctuations. Investors may be unable to resell their shares of our common stock at or above their purchase price.

      Additionally, in the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. Many companies in our industry have been subject to this type of litigation in the past. We may also become involved in this type of litigation. Litigation is often expensive and diverts management’s attention and resources, which could materially and adversely affect our business, financial condition and results of operations.

FUTURE SALES OF OUR COMMON STOCK MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

      As of December 31, 2002, we had 136,173,715 shares of common stock outstanding, excluding 18,707,691 shares subject to options outstanding as of such date under our stock option plans that are exercisable at prices ranging from $0.01 to $1,134.80 per share. We cannot predict the effect, if any, that future sales of common stock or the availability of shares of common stock for future sale will have on the market price of our common stock prevailing from time to time. 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 materially reduce prevailing market prices for our common stock.

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RISKS RELATED TO OUR INDUSTRY

DIRECT MARKETERS AND ADVERTISERS MAY BE RELUCTANT TO DEVOTE A PORTION OF THEIR BUDGETS TO MARKETING TECHNOLOGY AND PRODUCTS AND SERVICES OR ONLINE ADVERTISING.

      Companies doing business on the Internet, including DoubleClick, must compete with traditional advertising media, including television, radio, cable and print, for a share of advertisers’ total marketing budgets. Potential customers may be reluctant to devote a significant portion of their marketing budget to online advertising or marketing technology and data products and services if they perceive the Internet or direct marketing to be a limited or ineffective marketing medium. Any shift in marketing budgets away from marketing technology and data products or services or online advertising spending could materially and adversely affect our business, results of operations or financial condition.

THE LACK OF APPROPRIATE ADVERTISING MEASUREMENT STANDARDS OR TOOLS MAY CAUSE US TO LOSE CUSTOMERS OR PREVENT US FROM CHARGING A SUFFICIENT AMOUNT FOR OUR PRODUCTS AND SERVICES.

      Because online marketing technology and data products and services remain relatively new disciplines, there are currently no generally accepted methods or tools for measuring the efficacy of online marketing and advertising as there are for advertising in television, radio, cable and print. Many traditional advertisers may be reluctant to spend sizable portions of their budget on online marketing and advertising until there exist widely accepted methods and tools that measure the efficacy of their campaigns.

      We could lose customers or fail to gain customers if our products and services do not utilize the measuring methods and tools that may become generally accepted. Further, new measurement standards and tools could require us to change our business and the means used to charge our customers, which could result in a loss of customer revenues.

IF THE DELIVERY OF INTERNET ADVERTISING ON THE WEB, OR THE DELIVERY OF OUR EMAIL MESSAGES, ARE LIMITED OR BLOCKED, DEMAND FOR OUR PRODUCTS AND SERVICES MAY DECLINE.

      Our business may be adversely affected by the adoption by computer users of technologies that harm the performance of our products and services. For example, computer users may use software designed to filter or prevent the delivery of Internet advertising or Internet browsers set to block the use of cookies. We cannot assure you that the number of computer users who employ these or other similar technologies will not increase, thereby diminishing the efficacy of our products and services. In the case that one or more of these technologies becomes widely adopted by computer users, demand for our products and services would decline.

      We also depend on our ability to deliver emails over the Internet through Internet service providers and private networks. Internet service providers are able to block messages from reaching their users and we do not have, nor are we required to have, agreements with any Internet service providers to deliver emails to their customers. As a result, we could experience periodic temporary blockages of our delivery of emails to their customers, which would limit the effectiveness of our email marketing. Some Internet service providers also use proprietary technologies to handle and deliver email. If Internet service providers materially limit or block the delivery of our emails, or if our technology fails to be compatible with these Internet service providers’ email technologies, then our business, results of operations or financial condition could be materially and adversely affected. In addition, the effectiveness of email marketing may decrease as a result of increased consumer resistance to email marketing in general.

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NEW LAWS OR REGULATION IN THE UNITED STATES AND INTERNATIONALLY, AND UNCERTAINTIES REGARDING THE APPLICATION OF EXISTING LAWS AND REGULATIONS, COULD HARM OUR BUSINESS.

      Laws applicable to Internet communications, e-commerce, Internet advertising, privacy and data protection, direct marketing and emailing marketing are becoming more prevalent in the United States and worldwide. For example, various U.S. state and foreign governments may attempt to regulate our ad delivery or levy sales or other taxes on our activities, and several states and foreign countries have enacted legislation regulating the sending of unsolicited emails.

      In addition, many areas of the law affecting the Internet remain largely unsettled, even in areas where there has been some legislative action. It is difficult to determine whether and how existing laws such as those governing intellectual property, privacy and data protection, libel and taxation apply to the Internet, online marketing and advertising and our businesses.

      The growth and development of Internet commerce has prompted calls for more stringent consumer protection laws, both in the United States and abroad. These proposals may seek to impose additional burdens on companies conducting business over the Internet. Potential limitations on the collection and use of information relating to Internet users, particularly relating to email marketing, are being considered by legislatures and regulatory agencies in the United States and internationally. We are unable to predict whether any particular proposal will pass, or the nature of the limitations that may be imposed. In addition, it is possible that changes to existing law, including both amendments to existing laws and new interpretations of existing law, could have a material and adverse impact on our business, financial condition and results of operations.

      The following are examples of legislation enacted or currently being considered in the United States and internationally:

•  Legislation has been enacted in some countries and proposed in the United States to regulate the use of cookie technology. Our technology uses cookies for ad targeting and reporting, among other things. The changes required for us to comply with newly imposed requirements may be commercially unfeasible, or simply unattainable. We may, therefore, be required to discontinue the relevant business practice.

•  Data protection officials in some European countries have asserted that Internet protocol addresses and cookies are intrinsically personally-identifiable information thereby subject to privacy standards that may be more stringent than those in the U.S. We cannot assure you that our current policies and procedures would meet these more restrictive standards. The cost of such compliance could be material and we may not be able to comply with the applicable national regulations in a timely or cost-effective manner.

•  Legislation has been enacted by some foreign governments and several U.S. states to prohibit or restrict the sending of ‘unsolicited commercial email’ and similar U.S. federal legislation has been proposed several times in recent years. Although our email delivery is consent-based, it is possible that existing or future legislation in some jurisdictions may require us to change our current practices or may subject us to increased liabilities.

•  The impending expiration of a provision of the federal Fair Credit Reporting Act, or FCRA, may lead to a wave of new restrictions on the collection, use and disclosure of information about consumers. The FCRA currently prohibits U.S. states and localities from enacting new laws affecting certain uses and disclosures of consumer information. This provision is presently set to expire on January 1, 2004. If the provision is not extended, state and local governments may be permitted to enact new restrictions that could increase the costs of marketing and offering credit to consumers. Such restrictions could depress advertising spending, the overall demand for our products and services and could adversely affect our business, results of operations and financial condition, in particular the DoubleClick Data business.

      Any legislation enacted or regulation issued could dampen the growth and acceptance of our industry in general and of our offerings in particular. Our business could be negatively impacted by new laws or

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regulations applicable to direct marketing or the Internet, the application of existing laws and regulations to direct marketing or the Internet or the application of new laws and regulations to our business. In response to evolving legal requirements, we may be compelled to change or discontinue an existing offering, business or business model, or to cancel a proposed offering or new business. Any of these circumstances could have a material and adverse impact on our business, financial condition and results of operations. These changes could also require us to incur significant expenses, and we may not find ourselves able to replace the revenue lost as a consequence of the changes.

      We are a member of the Network Advertising Initiative and the Direct Marketing Association, both industry self-regulatory organizations. We cannot assure you that these organizations or similar organizations will not adopt additional, more burdensome guidelines, compliance with which could materially and adversely affect our business, financial condition and results of operations.

OUR BUSINESS MAY SUFFER IF THE WEB INFRASTRUCTURE IS UNABLE TO EFFECTIVELY SUPPORT THE GROWTH IN DEMAND PLACED ON US.

      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 us 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 products and services accordingly. Furthermore, the Web has experienced a variety of outages and other delays due to damage to portions of its infrastructure. These outages and delays could impact the direct marketers, Web publishers and advertisers using our products and services.

DOUBLECLICK DATA IS DEPENDENT ON THE SUCCESS OF THE DIRECT MARKETING INDUSTRY FOR OUR FUTURE SUCCESS.

      The future success of DoubleClick Data is dependent in large part on the continued demand for our services from the direct marketing industry, including the catalog industry, as well as the continued willingness of catalog operators to contribute their data to us. Most of our Abacus customers are large consumer merchandise catalog operators in the United States, with a growing number of operators in the United Kingdom. A significant downturn in the direct marketing industry generally, including the catalog industry, or withdrawal by a substantial number of catalog operators from the Abacus Alliance, would have a material adverse effect on our business, financial condition and results of operations. If email marketing or electronic commerce, including the purchase of merchandise and the exchange of information via the Internet or other media, increases significantly in the future, companies that now rely on catalogs or other direct marketing avenues to market their products may reallocate resources toward these new direct marketing channels and away from catalog-related marketing or other direct marketing avenues, which could adversely affect demand for some DoubleClick Data services. In addition, the effectiveness of direct mail as a marketing tool may decrease as a result of consumer saturation and increased consumer resistance to direct mail in general.

INCREASES IN POSTAL RATES AND PAPER PRICES COULD HARM DOUBLECLICK DATA.

      The direct marketing activities of our Abacus Alliance customers are adversely affected by postal rate increases, especially increases that are imposed without sufficient advance notice to allow adjustments to be made to marketing budgets. Higher postal rates may result in fewer mailings of direct marketing materials, with a corresponding decline in the need for some of the direct marketing services offered by us. Increased postal rates can also lead to pressure from our customers to reduce our prices for our services in order to offset any postal rate increase. Higher paper prices may also cause catalog companies to conduct fewer or smaller mailings which could cause a corresponding decline in the need for our products and services. Our customers may aggressively seek price reductions for our products and services to offset any increased materials cost. Any

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of these occurrences could materially and adversely affect the business, financial condition and results of operations of the DoubleClick Data business

Item 2.     Properties

      Our principal executive offices, from which each of our business units operate, are currently located in a leased facility in New York, New York. We lease office space in Broomfield, Colorado, which was the headquarters for Abacus before our merger and is now primarily used by DoubleClick Data, and in San Francisco, California, which is primarily used for sales and marketing of our TechSolutions products and services. We also lease office space in Louisville, Colorado, which was the headquarters of MessageMedia, Inc. before our merger.

      We own property in Thornton, Colorado consisting of approximately 115,000 square feet, which is primarily used by our DoubleClick TechSolutions and DoubleClick Data business units and serves as our primary data center.

      A summary of our significant leased office facilities is as follows:

	Approximate Number		Expiration
Location	of Square Feet Leased(1)		of Lease
New York, New York (headquarters)		360,000		January 2015
Broomfield, Colorado		105,000		April 2006
San Francisco, California		115,000		April 2012
Louisville, Colorado		75,000		October  2010

(1)  We currently occupy approximately 100,000 square feet of our New York facility, approximately 6,000 square feet of our San Francisco facility and most of the Broomfield facility. We do not occupy the Louisville facility. We are currently pursuing several options with respect to unused space in our New York facility, our San Francisco facility and our Louisville facility, including subletting all or a portion of the vacant space in the facilities. The remaining obligations under the New York, San Francisco and Louisville leases are approximately $150 million, $50 million and $14 million, respectively. We believe that our lease for the San Francisco facility covers approximately 90,000 square feet, or about 25,000 square feet less than what the landlord believes, and we are currently disputing this with the landlord. If we are correct, our remaining obligations for the San Francisco facility would be significantly reduced.

      We are subject to a lease for approximately 60,000 square feet of office space in London, England, which expires in September 2011. Our DoubleClick TechSolutions and DoubleClick Media business units used a portion of this space until we fully vacated the space during 2002. This office space is currently being sublet for a portion of the remaining lease term and we are pursuing several options for reducing any future liabilities associated with this space. We cannot assure you that we will not incur additional expenses relating to this facility.

      Periodically, we evaluate the expenses likely to be incurred for our facilities, and where appropriate, have taken restructuring charges with respect to these expenses. We cannot assure you that there will not be additional restructuring charges recognized with respect to our excess or idle facilities

      We also lease space for our domestic branch offices throughout the United States and for our international offices throughout Europe, Asia and Australia. We are continually evaluating our facilities requirements.

Item 3.     Legal Proceedings

      In April 2002, a consolidated amended class action complaint alleging violations of the federal securities laws was filed in the United States District Court for the Southern District of New York naming us and certain of our officers and directors and certain underwriters of our follow-on offerings as defendants. We and some of our officers and directors are named in the suit pursuant to Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 on the basis of the alleged failure to disclose the

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underwriters’ alleged compensation and manipulative practices. This action seeks, among other things, unspecified damages and costs, including attorneys’ fees. In October 2002, the action was dismissed against our officers and directors without prejudice. However, claims against us remain. In July 2002, we and the other issuers in the consolidated cases filed motions to dismiss the amended complaint for failure to state a claim, which was denied as to us in February 2003. We believe that the claims asserted by these lawsuits are without merit, and intend to defend these actions vigorously. However, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the litigation. An unfavorable outcome in litigation could materially and adversely affect our business, financial condition and results of operations.

Item 4.     Submission of Matters to a Vote of Security Holders

      No matter was submitted to a vote of our security holders during the fourth quarter of 2002.

PART II

Item 5.     Market for Registrant’s Common Equity and Related Stockholder Matters

      Our common stock has been quoted on the Nasdaq National Market under the symbol DCLK since our initial public offering on February 20, 1998. The following table sets forth, for the periods indicated, the high and low sales prices per share of the common stock as reported on the Nasdaq National Market. All prices have been restated to reflect our two-for-one stock splits effected as stock dividends on April 5, 1999 and January 10, 2000.

		High		Low
2002:
	Fourth Quarter	$	7.69	$	4.63
	Third Quarter		7.33		4.42
	Second Quarter		12.32		5.60
	First Quarter		13.88		9.09
2001:
	Fourth Quarter	$	13.00	$	5.25
	Third Quarter		14.23		5.23
	Second Quarter		16.30		9.94
	First Quarter		18.31		9.06

      On December 31, 2002, the last sale price of our common stock reported by the Nasdaq National Market was $5.66 per share. On March 26, 2003, the last sale price of our common stock reported by the Nasdaq National Market was $8.30 per share. As of March 24, 2003, we had approximately 1,234 holders of record of our common stock.

DIVIDEND POLICY

      We have never declared or paid any cash dividends on our capital stock. We currently intend to retain future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends for the foreseeable future.

Item 6.     Selected Financial Data

      The selected consolidated financial data set forth below with respect to DoubleClick’s consolidated statement of operations for each of the years ended December 31, 2002, 2001 and 2000 and with respect to DoubleClick’s consolidated balance sheets as of December 31, 2002 and 2001 have been derived from the audited financial statements which are included elsewhere herein. The selected consolidated data set forth with respect to DoubleClick’s consolidated statement of operations for each of the periods ended

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December 31, 1999 and 1998 and with respect to the DoubleClick’s consolidated balance sheet as of December 31, 2000, 1999, and 1998 are derived from the audited financial statements of DoubleClick which are not included herein. The selected financial data set forth below is qualified in its entirety by, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes to those statements included elsewhere herein.

	Year Ended December 31,
	2002			2001			2000			1999			1998
	(In thousands, except per share data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues	$	300,198		$	405,647		$	505,611		$	258,294		$	138,724
Loss from operations		(154,780	)		(283,419	)		(189,117	)		(58,715	)		(14,970	)
Loss before income taxes		(115,645	)		(263,271	)		(155,131	)		(47,234	)		(10,973	)
Net loss		(117,890	)		(265,828	)		(155,981	)		(55,821	)		(18,039	)
Basic and diluted net loss per share	$	(0.87	)	$	(2.02	)	$	(1.29	)	$	(0.51	)	$	(0.21	)
Weighted average shares used in basic and diluted per share calculation		135,840			131,622			121,278			109,756			86,248

	December 31,
	2002		2001		2000		1999		1998
	(In thousands)
CONSOLIDATED BALANCE SHEET DATA:
Working capital	$	366,873	$	406,640	$	562,510	$	309,883	$	184,408
Total assets		976,907		1,138,353		1,298,543		729,407		260,361
Convertible subordinated notes and other long term obligations		229,399		266,114		265,609		255,348		2,067
Total stockholders’ equity		610,562		703,323		817,057		361,662		206,771

Quarterly Results of Operations

      The following table sets forth certain unaudited consolidated quarterly statement of operations data for the eight quarters ended December 31, 2002. This information is unaudited, but in the opinion of management, it has been prepared substantially on the same basis as the audited consolidated financial statements appearing elsewhere in this report, and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the unaudited consolidated quarterly results of operations. The consolidated quarterly data should be read in conjunction with our audited consolidated financial statements and the notes to such statements appearing elsewhere in this report. The results of operations for any quarter are not necessarily indicative of the results of operations for any future period.

														Weighted		Weighted
														Average		Average		Basic Net			Diluted Net
					Loss			Net Loss						Common		Common		Loss Per			Loss Per
			Gross		From			Before						Shares-		Shares-		Common			Common
Quarter Ended	Revenues		Profit		Operations			Income Taxes			Net Loss			Basic		Diluted		Share			Share
	(In thousands, except per share data)
2002
March 31	$	83,656	$	51,657	$	(5,677	)	$	(3,597	)	$	(6,044	)	$	135,218	$	135,218	$	(0.04	)	$	(0.04	)
June 30		75,651		47,785		(10,656	)		4,190			4,074			136,173		139,323		0.03			0.03
September 30		74,625		48,377		(69,565	)		(59,846	)		(61,951	)		135,945		135,945		(0.46	)		(0.46	)
December 31		66,266		38,599		(68,882	)		(56,392	)		(53,969	)		136,024		136,024		(0.40	)		(0.40	)

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														Weighted		Weighted
														Average		Average		Basic Net			Diluted Net
					Loss			Net Loss						Common		Common		Loss Per			Loss Per
			Gross		From			Before						Shares-		Shares-		Common			Common
Quarter Ended	Revenues		Profit		Operations			Income Taxes			Net Loss			Basic		Diluted		Share			Share
	(In thousands, except per share data)
2001
March 31	$	114,870	$	64,534	$	(63,855	)	$	(59,991	)	$	(60,419	)	$	126,610	$	126,610	$	(0.48	)	$	(0.48	)
June 30		101,935		55,539		(46,198	)		(38,243	)		(37,923	)		131,698		131,698		(0.29	)		(0.29	)
September 30		92,693		52,805		(103,385	)		(102,236	)		(103,463	)		134,300		134,300		(0.77	)		(0.77	)
December 31		96,149		55,372		(69,981	)		(62,801	)		(64,023	)		133,880		133,880		(0.48	)		(0.48	)

      In the fourth quarter of 2002, DoubleClick recorded a restructuring charge of approximately $65.8 million. This charge was primarily related to a decrease in estimated sublease income associated with our New York facility. (See Note 14 to the Consolidated Financial Statements.) In addition, DoubleClick recognized a gain of approximately $7.9 million from the sale of certain investments in affiliates. These investments included DoubleClick Japan and ValueClick. (See Notes 3 and 6, respectively to the Consolidated Financial Statements.)

      In the third quarter of 2002, DoubleClick recorded an impairment charge of approximately $43.8 million relating to the impairment of goodwill associated with its email reporting unit. (See Note 9 to the Consolidated Financial Statements.) Also in the third quarter of 2002, DoubleClick recorded a restructuring charge of approximately $23.8 million primarily relating to the abandonment of additional space at our New York facility (See Note 14 to the Consolidated Financial Statements.) In addition, DoubleClick recorded impairment charges of approximately $14.1 million relating to certain investments in affiliates based on a decline in market value that was considered to be other than temporary. (See Note 5 to the Consolidated Financial Statements.) In July 2002, DoubleClick sold its North American Media business to MaxWorldwide and recognized a gain of $8.1 million. (See Note 2 to the Consolidated Financial Statements.) In addition, DoubleClick repurchased $64.9 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $53.6 million in cash. As a result, DoubleClick recognized a gain of approximately $11.9. (See Note 11 to the Consolidated Financial Statements.)

      In the second quarter of 2002, DoubleClick recognized a gain of approximately $12.3 million on the sale of its @plan research product line. (See Note 4 to the Consolidated Financial Statements.) In addition, DoubleClick recorded a restructuring charge of $7.3 million primarily relating to office consolidations and closures. (See Note 9 to the Consolidated Financial Statements.)

      In the fourth quarter of 2001, DoubleClick recorded a restructuring charge of $48.2 million. These events included the involuntary terminations of approximately 190 employees, primarily from DoubleClick’s TechSolutions and Media operations, as well as the consolidation of its leased office space in San Francisco. (See Note 14 to the Consolidated Financial Statements.) Also in the fourth quarter of 2001, in connection with DoubleClick’s agreement with AdLINK, management determined that the sale of its European Media operations would generate a loss. Accordingly, DoubleClick recorded a charge of approximately $8.8 million, which represents the difference between the consideration to be paid and the net assets to be sold. (See Note 9 to the Consolidated Financial Statements.) In addition, DoubleClick repurchased $10.0 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $8.3 million in cash, and as a result, recognized a gain of approximately $1.8 million. (See Note 11 to the Consolidated Financial Statements.)

      In the third quarter of 2001, DoubleClick recorded an impairment charge of approximately $63.3 million equal to the difference between its investments in @plan and Flashbase and the estimated fair value of these businesses. (See Note 9 to the Consolidated Financial Statements.) Also in the third quarter, DoubleClick wrote down its investment in ValueClick and recognized an impairment charge of approximately $11.7 million, which represented the difference between DoubleClick’s carrying value and the estimated fair value of its investment in ValueClick. (See Note 6 to the Consolidated Financial Statements.) In addition, DoubleClick repurchased $20.3 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million in cash. As a result, DoubleClick recognized a gain of approximately $6.4 million. (See Note 11 to the Consolidated Financial Statements.) DoubleClick recorded restructuring provisions totaling $5.3 mil-

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lion in the third quarter of 2001. These measures included the involuntary terminations of approximately 170 employees, primarily from DoubleClick’s TechSolutions division. This charge included severance costs associated with this additional work force reduction and future lease costs. (See Note 14 to the Consolidated Financial Statements.)

      In the second quarter of 2001, DoubleClick recognized expense of approximately $10.5 million due to issuance of additional shares of common stock to the former shareholders of DoubleClick Scandinavia based upon their continued employment and the attainment of specific revenue objectives following the company’s merger with DoubleClick in December 1999. (See Note 13 to the Consolidated Financial Statements.) In April 2001, DoubleClick recognized a gain of approximately $7.2 million from the initial public offering of our consolidated subsidiary, DoubleClick Japan. (See Note 3 to the Consolidated Financial Statements.)

      In the first quarter of 2001, DoubleClick recorded restructuring provisions of approximately $29.0 million. These measures included the involuntary terminations of approximately 230 employees, primarily from DoubleClick’s media operations. This charge included severance costs associated with this work force reduction, accruals of future lease costs and the write-off of fixed assets. (See Note 14 to the Consolidated Financial Statements).

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Item 7.      Management’s Discussion and Analysis of Financial Condition and Results of Operations

DOUBLECLICK INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Overview

      DoubleClick provides marketing technology and data products and services that direct marketers, Web publishers and advertisers use to optimize their marketing programs and efficiently reach their customers. These technologies have become leading tools for online advertising, email delivery, offline database marketing, campaign management and marketing analytics. Our products and services are designed to improve the performance and simplify the complexities of marketing.

      In 2002, we derived our revenues from three business segments:

•  DoubleClick Technology Solutions (“Technology” or “TechSolutions”);

•  DoubleClick Data (“Data”); and

•  DoubleClick Media (“Media”).

      DoubleClick TechSolutions. DoubleClick TechSolutions includes our ad management products and services, advertiser products, email technology products and campaign management and analytics products and services. Our ad management products enable Web sites to generate advertising revenue with a choice of our DART for Publishers Service, a Web-based application, and DART Enterprise, our licensed ad serving software product. Our advertiser products include DART for Advertisers, a Web hosted advertising management and serving solution that helps marketers reach their online goals efficiently and effectively, and MediaVisor, a hosted, Web-based media planning, buying and campaign management workflow solution.

      Our suite of email technology products include both the DARTmail Service which is a Web-based application, and Unitymail, a licensed software product. These products and services allow direct markets and Web publishers to manage and deliver their email marketing campaigns. With the acquisition of Protagona plc in November 2002, we now offer DoubleClick Ensemble, a campaign management software product and other related products and services. We also introduced SiteAdvance, a hosted Web site measurement and analysis solution that was designed specifically for online merchants.

      DoubleClick Data. DoubleClick Data consists of our Abacus division, which provides products and services to direct marketers. DoubleClick Data maintains the Abacus Alliance database, which is the largest proprietary database of consumer transactions used for target marketing purposes. Abacus combines the power of this shared data with advanced statistical modeling to help Alliance participants improve profitability and increase market share. Abacus’ key products and services include prospecting, housefile modeling and direct mail list optimization. DoubleClick also maintains an Alliance database in the United Kingdom. In addition, DoubleClick Data offers a Business-to-Business Alliance and ChannelView, an analytics tool that tracks multi-channel sales so marketers can effectively measure their promotion and campaign results.

      DoubleClick Media. During 2002, through a series of transactions, we divested the DoubleClick Media business and will no longer report a DoubleClick Media segment in the future. Prior to the divestitures, DoubleClick offered direct marketers, Web publishers and advertisers a broad range of media buying solutions to provide them with opportunities to generate revenue. DoubleClick Media offered outsourced ad sales products to direct marketers to enable them to build brand awareness and sell their products and services to consumers. The DoubleClick network, which was a collection of highly trafficked and branded Web sites, was the core infrastructure from which our media products and services were derived.

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Critical Accounting Policies

      DoubleClick’s discussion and analysis of its financial condition and results of operations are based upon DoubleClick’s consolidated financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles. The preparation of these consolidated financial statements requires DoubleClick to make estimates, judgments, and assumptions, which are believed to be reasonable, based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. A variance in the estimates or assumptions used could yield a materially different accounting result. Described below are the areas where we believe that the estimates, judgments or assumptions that we have made, if different, would have yielded the most significant differences in our financial statements.

Restructuring estimates

      DoubleClick’s restructuring reserves are primarily related to our facilities in New York and San Francisco. In determining the restructuring charge associated with our future lease commitments, DoubleClick engaged a third party real estate firm to provide it with estimates of the future sublease income for its excess and idle space, which also includes an estimate of the time period required to identify sublessees. This analysis was performed based on the current real estate market conditions in the local markets where DoubleClick’s facilities are located. This real estate firm also provided estimates of lease termination/ buyout fees landlords may charge to terminate existing leases rather than subleasing idle and excess space. DoubleClick’s restructuring charge relating to future lease commitments is based on its review of this information. Should market conditions change, this information may be updated and additional charges may be required.

Advertiser credits and bad debt

      DoubleClick records reductions to revenue for the estimated future credits issuable to its customers in the event that delivered advertisements do not meet contractual specifications. DoubleClick follows this method since reasonably dependable estimates of such credits can be made based on historical experience. Should the actual amount of customer credits differ from DoubleClick’s estimates, revisions to the associated allowance may be required. DoubleClick maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of DoubleClick’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in subsequent periods.

Valuation of investments, intangible assets, and goodwill

      DoubleClick invests in companies, technologies and intangible assets in areas within its strategic focus, some of which have highly volatile fair values and uncertain profit potentials. DoubleClick evaluates its investments for impairment on a periodic basis and reduces the carrying values of such assets to their estimated fair value when it believes an investment has experienced a decline in value that is other than temporary. Future adverse changes in market conditions or poor operating results of strategic investments could indicate an inability to recover the carrying value of the investments may not be reflected in an investment’s current carrying value, thereby possibly requiring impairment charges in the future.

      When it is determined that the carrying value of investments may not be recoverable, management measures impairment based on projected discounted cash flows, revenue projections, recent transactions involving similar businesses and price/ revenue multiples at which they were bought and sold, price/ revenue multiples of competitors, and the closing market price for investments that are publicly traded.

Deferred tax assets

      Pursuant to SFAS 109, DoubleClick records a valuation allowance to the extent its deferred tax assets are not more likely than not to be realized. For the year ended December 31, 2002 and 2001, DoubleClick has recorded a full valuation allowance against its net deferred tax assets since management believes that after

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considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, it is not more likely that not that these assets will be realized. In the event that DoubleClick were to determine that it would be able to realize some or all of its deferred tax assets, an adjustment to the net deferred tax asset would increase income and/or adjust additional paid-in capital in the period such determination was made.

Property and equipment

      Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term. DoubleClick periodically reviews the useful lives of its assets for appropriateness. In the event that it is determined that the estimated useful life of its assets needs to be adjusted to reflect depreciation expense over the remaining time that the assets are expected to be remain in service, future income or losses will be impacted in the subsequent periods after such a determination is made.

Recent Accounting Pronouncements

      In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”).” SFAS No. 145, among other things, rescinds SFAS No. 4, which required all gains and losses from the extinguishment of debt to be classified as an extraordinary item and amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002 but earlier adoption is encouraged. DoubleClick has repurchased and may in the future continue to repurchase all or a portion of its outstanding Convertible Subordinated Notes. DoubleClick adopted SFAS No. 145 effective July 1, 2002 and will no longer record gains or losses from the retirement of its Convertible Subordinated Notes as extraordinary items, net of taxes but as a component of other income in the Consolidated Statements of Operations. As required under SFAS No. 145, prior periods have been reclassified to conform to the current period’s presentation.

      In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”, (“SFAS No. 146”). SFAS No. 146 nullifies EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity including Certain Costs Incurred in a Restructuring”, (EITF 94-3). The principal difference between SFAS No. 146 and EITF 94-3 relates to the recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the FASB’s conceptual framework. In contrast, EITF 94-3 required recognition of a liability for an exit cost when management committed to an exit plan. SFAS No. 146 also establishes fair value as the objective for initial measurement of liabilities related to exit or disposal activities. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and has no effect on exit or disposal activities begun prior to this date.

      In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” This Statement amends SFAS No. 123, “Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure provisions of this Statement are effective for fiscal years ending after December 15, 2002 and have been incorporated into these financial statements and accompanying footnotes.

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Business Transactions

Acquisitions

MessageMedia

      On January 18, 2002, DoubleClick completed its acquisition of MessageMedia, Inc. (“MessageMedia”), a provider of permission-based, email marketing and messaging solutions. The acquisition of MessageMedia has allowed DoubleClick to expand its suite of email product and service offerings as well as broaden its client base. DoubleClick acquired all the outstanding shares, options and warrants of MessageMedia in exchange for approximately one million shares of DoubleClick common stock valued at approximately $7.5 million, and stock options and warrants to acquire DoubleClick common stock valued at approximately $0.2 million. In connection with the acquisition, DoubleClick loaned $2.0 million to MessageMedia to satisfy MessageMedia’s operating requirements. The loan was extinguished upon the closing of the acquisition and included as a component of the purchase price. The purchase price, inclusive of approximately $1.6 million of direct acquisition costs, was approximately $11.3 million. The MessageMedia options and warrants assumed by DoubleClick as the result of this merger converted into options and warrants to acquire approximately 120,000 shares of DoubleClick common stock. Approximately $1.9 million of the purchase price has been allocated to customer lists and is being amortized on a straight-line basis over two years. DoubleClick recorded approximately $28.5 million in goodwill, which represented the remainder of the excess of the purchase price over the fair value of net assets acquired. This goodwill is not tax deductible and, in accordance with SFAS No. 142, goodwill will be and has been periodically tested for impairment.

Abacus Direct Europe

      On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus Direct Europe (“Abacus Direct Europe”) joint venture that it did not previously own from VNU Marketing Information Europe & Asia B.V, an affiliate of Claritas (UK) Limited. The joint venture was formed in November 1998 and provides database-marketing services to the direct marketing industry, primarily in the United Kingdom. DoubleClick’s investment in the joint venture was previously accounted for under the equity method of accounting. DoubleClick acquired all the outstanding shares of Abacus Direct Europe held by VNU in exchange for approximately $3.7 million in cash and direct acquisition costs. Approximately $4.6 million of the purchase price has been allocated to customer lists, the Abacus U.K. Alliance and customer database. These intangibles are being amortized on a straight-line basis over two to five years based on each intangibles estimated useful life.

Protagona

      On November 4, 2002, DoubleClick completed its acquisition of Protagona plc (“Protagona”), a campaign management software company based in the United Kingdom. In the transaction, DoubleClick acquired all the outstanding shares of Protagona in exchange for approximately $13.6 million in cash. On the basis of estimated fair values, approximately $2.5 million of the purchase price has been allocated to acquired technology and $0.3 million to customer lists. These amounts are being amortized on a straight-line basis over three and two years, respectively.

Divestures

European Media Business

      On January 28, 2002, DoubleClick completed the sale of its European Media business to AdLINK Internet Media AG (“AdLINK”), a German provider of Internet advertising solutions, in exchange for $26.3 million and the assumption by AdLINK of liabilities associated with DoubleClick’s European Media business. Intercompany liabilities in an amount equal to $4.3 million were settled through a cash payment by AdLINK to DoubleClick at the closing of the transaction. Following the closing of the transaction described above, United Internet AG (“United Internet”) AdLINK’s largest shareholder, exercised its right to sell to DoubleClick 15% of the outstanding common shares of AdLINK in exchange for $30.6 million. Pursuant to

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its agreement with United Internet, the exercise of this right caused DoubleClick’s option to acquire an additional 21% of AdLINK common shares from United Internet to vest. This option is only exercisable over a two-year period if AdLINK has achieved EBITDA-positive results for two out of three consecutive fiscal quarters before December 2003. EBITDA, as defined in the option agreement, is earnings before interest, taxes, depreciation, amortization, and one-time charges such as restructuring costs, mergers and acquisition related costs, and other extraordinary items, determined in accordance with generally accepted accounting principles in the United States. Should AdLINK fail to achieve these results, the option will expire unexerciseable in December 2003. AdLINK achieved EBITDA-positive results in the fourth quarter of 2002.

      As the result of the transactions described above, DoubleClick sold its European Media business and received a 15% interest in AdLINK, which represented approximately 3.9 million shares valued at approximately $8.3 million. DoubleClick’s option to acquire an additional 21% of the outstanding common shares of AdLINK from United Internet also vested. DoubleClick was partially reimbursed $2.0 million for its cash outlays related to the acquisitions of, and payments with respect to, the minority interests in certain of its European subsidiaries pursuant to its agreement to sell its European Media business. As a result of this transaction, DoubleClick recognized a loss of approximately $1.7 million, which has been included in “Gain on Sale of Businesses, net” in the Consolidated Statements of Operations.

North America Media Business

      On July 10, 2002, DoubleClick sold its North American Media business to L90, Inc. Upon completion of the transaction, L90, Inc. was renamed MaxWorldwide, Inc. (“MaxWorldwide”). In exchange for the North American Media business, DoubleClick received 4.8 million shares in MaxWorldwide and $5 million in cash. The 4.8 million shares represented 16.1% of outstanding MaxWorldwide common stock and were valued at approximately $3.1 million. DoubleClick may also receive an additional $6 million if, during the three-year period subsequent to consummation of the transaction, MaxWorldwide has achieved EBITDA-positive results, for two out of three consecutive quarters. EBITDA, as defined in the merger agreement, is earnings before interest, taxes, depreciation and amortization, excluding certain non-recurring items. As a result of this transaction, DoubleClick recognized a gain of $8.1 million during the third quarter of 2002, which has been included in “Gain on sale of businesses, net” in the Consolidated Statements of Operations.

@plan

      On May 6, 2002, DoubleClick sold its @plan research product line to NetRatings, Inc.(“NetRatings”), a provider of technology-driven Internet audience information solutions for media and commerce, in exchange for $12.0 million in cash and 505,739 shares of NetRatings common stock valued at approximately $6.1 million. DoubleClick recognized a gain of $12.3 million on the sale of the @plan research product line, which has been included in “Gain on sale of businesses, net” in the Consolidated Statements of Operations.

DoubleClick Japan

      On December 26, 2002, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan, reducing its ownership interest to 15.6%. DoubleClick received proceeds of $14.3 million and recognized a gain of $3.1 million, which has been included in “Gain on sale of investments in affiliates” in the Consolidated Statements of Operations. As a result of this transaction, DoubleClick will account for its remaining 31,271 shares in DoubleClick Japan under the equity method of accounting. DoubleClick will also retain one seat on DoubleClick Japan’s board of directors.

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Results of Operations

      Revenues and gross profit by segment are as follows:

	Year Ended December 31, 2002											Year Ended December 31, 2001
	Technology			Data			Media		Total			Technology			Data			Media		Total
Revenue	$	187,155		$	83,349		$	32,660	$	303,164		$	206,999		$	81,329		$	129,336	$	417,664
Intersegment elimination		(2,603	)		(363	)		—		(2,966	)		(11,088	)		(929	)		—		(12,017	)
Revenue from external customers	$	184,552		$	82,986		$	32,660	$	300,198		$	195,911		$	80,400		$	129,336	$	405,647
Segment gross profit	$	117,295		$	59,788		$	9,659	$	186,742		$	132,311		$	54,817		$	41,279	$	228,407
Research consulting fees										(324	)										(157	)
Consolidated gross profit									$	186,418										$	228,250

2002 Compared to 2001

      2002 revenues and gross profits decreased from 2001 primarily as the result of the decline in overall online advertising spending and our divestiture of certain businesses, offset by growth in our email delivery and Abacus businesses. In response to the continued deterioration of general economic conditions, many companies, have significantly scaled back their advertising and marketing budgets, which has had a correspondingly negative impact on aggregate online advertising spending. Operating expenses decreased to $341.2 million from $511.7 million in 2001, and included $12.4 million in amortization of intangibles, $47.1 million in goodwill and other impairments and $94.0 million in restructuring charges in 2002. Operating expenses for the year ended December 31, 2001 included $43.5 million in amortization of goodwill, $8.7 million in amortization of intangibles, $72.1 million in goodwill and other impairments, $15.5 million in non-cash compensation charges, and $84.2 million in restructuring charges. Net loss including these charges was $117.9 million in 2002 as compared to $265.8 in 2001. We expect operating expenses to decline both in absolute dollars and as a percentage of revenue in future periods due to the implementation of cost savings initiatives.

DoubleClick TechSolutions

      DoubleClick TechSolutions revenue is derived primarily from the sales of our ad management products, consisting of the DART for Publishers Service, the DART Enterprise ad serving software product, the DART for Advertisers Service, and a suite of email products based on DoubleClick’s DARTmail Service. TechSolutions cost of revenue includes costs associated with the delivery of advertisements and emails, including Internet access costs, depreciation of the ad and email delivery systems, the amortization of purchased technology, and facility- and personnel-related costs incurred to operate and support our ad management and email products.

      TechSolutions revenue decreased 9.6% to $187.2 million for the year ended December 31, 2002 from $207.0 million for the year ended December 31, 2001. The reduction in TechSolutions revenue reflected in large part the decline in overall online advertising spending. The decline in advertising spending has also intensified pricing competition. These two trends have had a pronounced effect on our TechSolutions business.

      On a product basis, the decrease in TechSolutions revenue was primarily attributable to declines in our ad management products, offset by revenue growth in our DARTmail product offerings. Ad management revenue decreased 19.7% to $147.2 million for the year ended December 31, 2002 from $183.3 million for the year ended December 31, 2001. As a result of the trends noted above, the effective price for our ad management products decreased approximately 9% while volume dropped approximately 12%. Nearly 50% of this volume decline was associated with the divestiture of DoubleClick Media in July 2002. DARTmail revenue increased 90.6% to $39.4 million for the year ended December 31, 2002 from $20.7 million for the year ended December 31, 2001. This growth was primarily associated with our acquisitions of FloNetwork and MessageMedia.

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      DoubleClick TechSolutions gross margin was 62.7% for the year ended December 31, 2002 and 63.9% for the year ended December 31, 2001. The decrease in gross margin was primarily attributable to the restructuring charge relating to the write-off of certain fixed assets associated with the move of our data center from New York to Colorado, an increase in personnel and the amortization of purchased technology, both resulting from our acquisitions of FloNetwork and MessageMedia, offset by a reduction in depreciation expense and Internet access costs. The reduction of depreciation expense resulted from our extension of the useful life of our ad delivery hardware and software from three to four years to recognize depreciation expense over the remaining time that the assets will be in service. The decline in Internet access costs was due to the renegotiation of many of our contracts with our Internet service providers.

      As a result of the continuing decline in online advertising spending among our customers as well as pricing competition, we anticipate slight decreases in both the absolute dollar amount of TechSolutions revenues and gross profit during the year ended December 31, 2003. We believe that our TechSolutions business is tied to the relative health of the economy. Significant changes within the economy may materially impact these results.

DoubleClick Data

      DoubleClick Data revenue has historically been derived primarily from its Abacus division, which provides products and services such as prospecting, housefile modeling and list optimization to direct marketers and merchants in the Abacus member alliances. Following the acquisition of @plan.inc in February 2001, we created a separate research division within DoubleClick Data designed to offer market research analysis tools that provide advertisers, brand marketers and e-businesses with analyses of online advertising campaigns, consumer behavior and purchasing patterns. Research revenue was derived primarily from the sale of annual subscriptions to its market research systems. DoubleClick Data cost of revenue includes expenses associated with maintaining and updating the Abacus and Research databases, the technical infrastructure to produce our products and services, facility and personnel related expenses to operate and support our production equipment, the amortization of purchased intangible assets, and subscriptions to third party providers of lifestyle and demographic data that is used to supplement our transactions based database.

      On May 6, 2002, DoubleClick sold its @plan research product line to NetRatings, Inc., a provider of technology-driven Internet audience information solutions for media and commerce, in exchange for $12.0 million in cash and 505,739 shares of NetRatings common stock, valued at approximately $6.1 million. Revenue and gross profits recognized by the @plan research product line were approximately $3.1 million and $1.9 million, respectively, for the year ended December 31, 2002 and $9.9 million and $4.1 million for the year ended December 31, 2001.

      On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus Direct Europe B.V. joint venture that it did not previously own from VNU Marketing Information Europe & Asia B.V., an affiliate of Claritas (UK) Limited. The joint venture was formed in November 1998 and provides database-marketing services to the direct marketing catalog industry, primarily in the United Kingdom. The results of operations for Abacus Direct Europe have been included in DoubleClick’s Consolidated Statements of Operations from the date of acquisition. Revenues and gross profits recognized for Abacus Direct Europe were approximately $4.2 million and $2.4 million, respectively for the year ended December 31, 2002. Revenues for Abacus Direct Europe were primarily related to prospecting services provided to Abacus Alliance members in the United Kingdom.

      DoubleClick Data revenue increased 2.5% to $83.3 million for the year ended December 31, 2002 from $81.3 million for the year ended December 31, 2001. Gross margin increased to 71.7% for the year ended December 31, 2002 from 67.4% for the year ended December 31, 2001.

      Overall, DoubleClick Data revenue represents an increase in revenues generated from the Abacus US business of $4.6 million and revenues generated from Abacus Direct Europe of $4.2 million, offset by the impact of the sale of the @plan research product line in May 2002. The growth in revenues from the

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Abacus US business related primarily to increases in prospecting and housefile modeling services provided to Abacus Alliance and Business-to-Business Alliance members as direct marketers began to focus on client acquisition towards the later half of 2002.

      The increase in gross margin was primarily attributable to an increase in sales, the reduction in depreciation expense on production equipment and the divestiture of the lower margin @plan business, offset by the amortization of purchased intangible assets associated with Abacus Direct Europe. The reduction of depreciation expense resulted from our extension of the useful life of our ad delivery hardware and software from three to four years to recognize depreciation expense over the remaining time that the assets will be in services.

      We anticipate revenue and gross profit of DoubleClick Data to increase in 2003 as a result of our acquisition of Abacus Direct Europe, continued growth in our Abacus Alliance and Business-to-Business Alliance, and the expected expansion into additional international territories.

DoubleClick Media

      DoubleClick Media revenue is derived primarily from the sale and delivery of advertising impressions through third-party Web sites comprising the DoubleClick Media network. DoubleClick Media cost of revenue consists primarily of service fees paid to Web publishers for impressions delivered on our network, and the costs of ad delivery and technology support provided by DoubleClick TechSolutions.

      Revenue for DoubleClick Media decreased 74.7% to $32.7 million for the year ended December 31, 2002 from $129.3 million for the year ended December 31, 2001. The decrease in DoubleClick Media revenue primarily resulted from the sale of DoubleClick’s European and North American Media businesses. On January 28, 2002, DoubleClick completed the sale of the European Media business to AdLINK. On July 10, 2002, DoubleClick completed the sale of the North American Media business to L90, which was renamed MaxWorldwide. For the year ended December 31, 2002 and 2001, revenues derived by the European Media business were $1.1 million and $29.0 million, respectively. Revenue recognized by the North American Media business was approximately $20.8 million and $85.5 million for the year ended December 31, 2002 and 2001, respectively. On December 26, 2002, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan and reduced its ownership interest to 15.6%. As a result of this transaction, DoubleClick will account for its remaining 31,271 shares in DoubleClick Japan under the equity method of accounting and will no longer consolidate its results of operations. Revenue recognized by the DoubleClick Japan Media business was approximately $10.8 million and $14.8 million for the year ended December 31, 2002 and 2001, respectively.

      DoubleClick Media revenue also decreased due to decline in overall online advertising spending and the departure of the AltaVista Web site from the DoubleClick network. DoubleClick Media revenue for the year ended December 31, 2001 included approximately $8.8 million, or 6.8% of DoubleClick Media revenue, for advertising impressions delivered to users of the AltaVista Web site. No such revenue was recognized in DoubleClick Media’s results during the year ended December 31, 2002.

      DoubleClick Media’s gross margin was 29.6% for the year ended December 31, 2002 and 31.9% for the year ended December 31, 2001. Gross margin decreased due to increased levels of price competition and increases in the amount of unsold inventory, which diluted the effective price of delivered advertising impressions. This decrease was partially offset by lower average site fees remitted to Web publishers and a reduction in the cost of technology support provided by DoubleClick TechSolutions.

      Gross profits recognized by the European, North American and DoubleClick Japan Media businesses were approximately $0.4 million, $7.4 million and $1.9 million for the year ended December 31, 2002. Gross profits recognized by the European, North American and DoubleClick Japan Media businesses were approximately $11.7 million, $26.5 million and $3.1 million for the year ended December 31, 2001.

      As a result of the transactions discussed above, DoubleClick has fully divested its Media operations and will not report a DoubleClick Media segment in the future.

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Operating Expenses

Sales and marketing

      Sales and marketing expenses consist primarily of compensation and related benefits, sales commissions, general marketing costs, advertising, bad debt expense and other operating expenses associated with the sales and marketing departments. Sales and marketing expenses were $101.5 million or 33.8% of revenue for the year ended December 31, 2002, and $182.8 million or 45.1% of revenue for the year ended December 31, 2001. The $81.3 million decrease in sales and marketing expense was primarily attributable to reductions in personnel-related costs of $32.6 million, the elimination of non-cash compensation paid to former shareholders of DoubleClick Scandinavia of $15.2 million, a decline in marketing expenditures of $9.8 million, as well as reductions in rent and utilities of $7.3 million, travel and entertainment expenses of $4.4 million, and bad debt expense of $4.2 million. These decreases are commensurate with the decline in our revenues, headcount reductions associated with our restructuring activities, and other cost savings initiatives. We expect the absolute dollar amount of sales and marketing expenses to decrease slightly, but to increase as a percentage of revenues in 2003 due to anticipated lower revenues.

General and administrative

      General and administrative expenses consist primarily of compensation and related benefits, professional services, and other operating expenses associated with our executive, finance, human resources, legal, facilities, and administrative departments. General and administrative expenses were $46.4 million or 15.5% of revenue for the year ended December 31, 2002, and $65.7 million or 16.2% of revenue for the year ended December 31, 2001. The $19.3 million decrease in general and administrative expense was primarily the result of overall reductions in professional services fees of $8.9 million, personnel-related costs of $6.3 million, and rent and utilities of $1.8 million. Decreased professional services fees resulted in part from a reduction in legal fees as well as a reduction in consulting fees associated with tighter cost controls in place. Personnel-related costs declined as the result of headcount reductions associated with our restructuring activities. The reduction in rent and utilities was also the result of headcount reductions as well as office closures and consolidations. We expect the absolute dollar amount of general and administrative expenses to decrease significantly as a result of corporate headcount reductions but to only decrease slightly as a percentage of revenues in 2003 due to anticipated lower revenues.

Product development

      Product development expenses consist primarily of compensation and related benefits, consulting fees and other operating expenses associated with the product development departments. The product development departments perform research and development, enhance and maintain existing products, and provide quality assurance. Product development expenses were $39.8 million or 13.3% of revenue for the year ended December 31, 2002, and $53.4 million or 13.2% of revenues for the year ended December 31, 2001. The $13.7 million decrease in product development expenses were primarily the result of reductions personnel-related costs of $9.1 million, professional fees of $2.4 million, and rent and utilities of $2.1 million. Personnel-related costs declined as the result of headcount reductions associated with our restructuring activities. The decrease in professional fees was associated with the implementation of tighter cost controls. Rent and utilities declined as a result of headcount reductions as well as office closures and consolidations. Although we will continue to concentrate on the efficient allocation of our resources, we believe that on-going investment in product development is critical to the attainment of our strategic objectives. We expect the absolute dollar amount of product development expenses to decrease slightly, but to increase as a percentage of revenues in 2003 due to anticipated lower revenues.

Amortization of goodwill

      In accordance with SFAS 142, goodwill is no longer amortized as of January 1, 2002 but is periodically tested for impairment. Goodwill amortization was approximately $43.5 million for the year ended Decem-

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ber 31, 2001 related to the acquisitions of @plan, Flashbase, FloNetwork Inc., DoubleClick Scandinavia, and DoubleClick Japan.

Amortization of other intangibles

      Amortization of intangible assets consists primarily of the amortization of customer lists and patents. Amortization expense was $12.4 million for the year ended December 31, 2002 and $8.7 million for the year ended December 31, 2001. The increase was primarily the result of the amortization of customer lists acquired in the business combinations of MessageMedia and Abacus Direct Europe.

Goodwill and other impairments

      Goodwill and other impairments was $47.1 million for the year ended December 31, 2002 and $72.1 million for the year ended December 31, 2001. For the year ended December 31, 2002, based upon the prolonged softness in the economy and the current and projected operational performance of DoubleClick’s email reporting unit, DoubleClick initiated a third-party valuation of its email reporting unit to determine whether the recorded balance of goodwill related to this reporting unit was recoverable. The outcome of this valuation resulted in an impairment charge of approximately $43.8 million being recorded during the year. The fair market value of the email reporting unit was determined based on cash flow projections, recent transactions involving similar businesses and price/ revenue multiples at which they were bought and sold, and price/ revenue multiples of our competitors in the email marketplace. In addition, DoubleClick also determined that the fair value of certain intangibles assets were considered impaired. DoubleClick recorded an impairment charge of $3.3 million based on the difference between the carrying value and estimated fair value of certain intangible assets associated with the email reporting unit.

      For the year ended December 31, 2001, the persistence of unfavorable economic conditions led DoubleClick management to undertake a review of the recoverability of certain of its investments. As a result of significantly lower-than-expected revenues generated to date and considerably reduced estimates of future performance, management concluded that its investments in @plan.inc (“@plan”) and Flashbase, Inc. (“Flashbase”) were impaired. Accordingly, DoubleClick recognized an approximately $63.3 million impairment charge equal to the difference between its investments in and the estimated fair value of these businesses in the third quarter of 2001. Of this amount, approximately $53.3 million related to @plan and $10.0 million related to Flashbase.

      The amount of the goodwill impairment was calculated based on discounted analyses of these entities’ expected future cash flows, which were no longer deemed adequate, to support the value of the goodwill associated with these investments. In both cases, sharply-reduced estimates of anticipated revenue growth and operating results, triggered primarily by the continued softness in aggregate online advertising spending, generated correspondingly lowered expectations of future cash flows and formed the basis for the recording of the charge in the third quarter of 2001.

      These businesses expected future cash flows and terminal values are based on management’s budgeted forecasts and estimates. In its calculation to determine the impairment charge for its investment in @plan, DoubleClick used a discount rate of 15% and assumed a remaining useful life of 2.5 years, which represented the remaining useful life of the goodwill associated with this investment. In its calculation to determine the impairment charge for Flashbase, DoubleClick used a discount rate of 15% and a useful life of 1.75 years, which represented the remaining useful life of the goodwill associated with this investment.

      In addition, in connection with DoubleClick’s decision to sell its European Media operations, management determined that the estimated fair value of the consideration it would receive pursuant to the sale agreement would be less than the carrying value of its European Media operations. Management concluded that its investment in its European Media operations was impaired. As a result, DoubleClick recorded a charge of approximately $8.8 million in the fourth quarter of 2001.

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Purchased in-process research and development

      In connection with our acquisition of FloNetwork in April 2001, $1.3 million of the purchase price was allocated to in-process research and development projects and charged to operations as the projects had not reached technological feasibility as of the date of acquisition and were determined to have no alternative future uses. We recognized no such charges during the year ended December 31, 2002.

Restructuring charges

      During the year ended December 31, 2002, management took additional steps to realign its sales, development and administrative organization and reduce corporate overhead to position DoubleClick for profitable growth in the future consistent with management’s long-term objectives. This involved the involuntary termination of approximately 250 employees, primarily from our TechSolutions division, as well as the closure of several offices and charges for excess real estate space. As a consequence, DoubleClick recorded a charge of $98.4 million to operations during the year, of which $94.0 million and $4.4 million have been classified in operating expenses and cost of revenue, respectively. The charge primarily related to payments for severance of approximately $5.7 million, the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously accrued) of approximately $77.0 million and the write-off of fixed assets situated in closed or abandoned offices of approximately $15.7 million. The accrual for future lease costs and the write-off of fixed assets were primarily related to our New York office. These charges were driven by the abandonment of additional space, reductions in the estimates of future sublease income, as well as the lengthening of the time required to find a sublease tenant. In addition, management decided to move our data center operations from New York to our Thornton, Colorado facility. As a result, DoubleClick recorded a charge of $4.4 million to cost of revenue relating to the write-off of certain fixed assets.

      DoubleClick expects to eliminate certain operating expenses totaling approximately $21.0 million on an annualized basis, primarily related to personnel- and facility-related expenses, as a result of the restructuring initiatives undertaken during the year ended December 31, 2002. A majority of these reductions are expected to impact sales and marketing and general and administrative expenses. DoubleClick expects to begin to recognize the full effect of these cost savings in the third quarter of 2003. Of the remaining $107.1 million in cash outlays relating to our restructuring activities, we estimate that we will pay approximately $36.1 million in 2003, and approximately $11.0 million in 2004 and the years thereafter. We anticipate that these outlays will be funded from available sources of liquidity. However, there can be no assurance that such cost reductions can be sustained or that estimated costs of such actions will not change.

      During the year ended December 31, 2001, our management took certain actions to increase operational efficiencies and bring costs in line with revenues. These measures included the involuntary terminations of approximately 605 employees, primarily from our Media and TechSolutions divisions, as well as the consolidation of some of our leased office space and the closure of several of our offices. As a consequence, we recorded an $84.2 million charge to operations during the year of 2001. This charge included approximately $10.4 million for severance-related payments to terminated employees, approximately $51.7 million for the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously recorded), approximately $19.5 million for the write-off of fixed assets situated in office locations that were closed or consolidated, and approximately $2.6 million in other exit costs, which included consulting and professional fees related to the restructuring activities and expenses associated with the decision to move the TechSolutions customer support department from New York to Colorado. These fixed asset impairments arose primarily from the write-off of the carrying values of leasehold improvements in offices in New York, San Francisco and London that were abandoned as part of the restructuring activities.

      DoubleClick is continuing to review its operational performance and may incur additional restructuring charges in 2003, principally related to changes in estimates and assumptions surrounding excess real estate.

Loss from operations

      DoubleClick’s operating loss was $154.8 million for the year ended December 31, 2002 and $283.4 million for the year ended December 31, 2001. The decrease in its operating loss of $128.6 million is primarily

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attributable to the decrease in our sales and marketing expenses of $81.3 million, the elimination of goodwill amortization of $43.5 million, a decrease in goodwill and other impairments of $25.0 million, a decrease in general and administrative expenses of $19.3 million and a decrease in product development costs of $13.7 million. This was partially offset by a decrease in gross profits of approximately $41.8 million and an increase in amortization of intangibles of approximately $3.7 million. DoubleClick continues to manage its operations with a focus on productivity and manage its headcount accordingly, but due to the general economic and industry trends it may incur future losses from operations.

Equity in losses of affiliates

      Equity in losses of affiliates was $0.3 million for the year ended December 31, 2002 and $2.5 million for the year ended December 31, 2001. For the year ended December 31, 2002, DoubleClick recognized equity income of $0.2 million relating to DoubleClick’s 50% interest in the Abacus Direct Europe joint venture and an equity loss of approximately $0.5 million from our equity investment in MaxWorldwide. Since the June 26, 2002 acquisition of the remaining 50% interest of Abacus Direct Europe that DoubleClick did not previously own, the results of operations of Abacus Direct Europe have been consolidated into DoubleClick’s operations. For the year ended December 31, 2001, DoubleClick’s equity loss was wholly attributed to ValueClick. The decrease in equity in losses of affiliates was primarily the result of our investment in ValueClick being accounted for as a cost method investment during the year ended December 31, 2002. As a result of the cumulative dilutive effects of ValueClick’s issuance of stock in connection with business combinations consummated during 2001, DoubleClick no longer recorded its proportionate share of ValueClick’s results in 2002.

Gain on equity transactions of affiliates, net

      For the year ended December 31, 2001, we recognized a gain of approximately $7.2 million from the initial public offering of our consolidated subsidiary DoubleClick Japan, which was partially offset by a loss of approximately $5.3 million related to the decrease in value of our proportionate share of the net assets of our equity-method investee ValueClick following the consummation of business combinations with ClickAgents.com, Inc., Bach Systems Inc. and Z Media, Inc.

      We recognized no such gains or losses during the year ended December 31, 2002.

Impairment of investments in affiliates

      Impairment of investments in affiliates was $14.1 million for the year ended December 31, 2002 and $16.2 million for the year ended December 31, 2001. During the year ended December 31, 2002, DoubleClick determined that the carrying value of certain of its investments, principally its cost-method investments in AdLINK Internet Media AG (“AdLINK”) and NetRatings, Inc. (“NetRatings”) and its equity-method investment in MaxWorldwide, Inc. (“MaxWorldwide”) were impaired based on the continued decline in the fair market value of these investments. As a result, DoubleClick recorded an impairment charge of $11.7 million during the third quarter of 2002, which represented the difference between DoubleClick’s carrying value and the estimated fair value of these investments. The estimated fair values of DoubleClick’s investments in AdLINK, NetRatings and MaxWorldwide were determined based on the closing market price of their stock on September 30, 2002. Additionally, DoubleClick’s cost method investment in the joint venture, DoubleClick Asia, is being liquidated and has no continuing value. As a consequence, DoubleClick wrote-off its entire investment in DoubleClick Asia and recognized an impairment charge of $2.4 million during the third quarter of 2002.

      During the year ended December 31, 2001, as a result of the significant decline in the market value of Internet-based companies and the decreasing declining access of these companies to public and private financing, management performed an assessment of the carrying values of certain of its investments in affiliates in the second quarter of 2001. In the course of its analysis, DoubleClick determined that the carrying value of its cost-method investment in Return Path, Inc. (“Return Path”) was no longer recoverable. As a consequence, DoubleClick wrote off its entire investment in Return Path and recognized an impairment

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charge of $4.5 million during the second quarter of 2001. In addition, DoubleClick determined that the carrying value of its equity method investment in ValueClick was impaired. Consequently, DoubleClick wrote down its investment in ValueClick and recognized an impairment charge of approximately $11.7 million during the third quarter of 2001, which represented the difference between DoubleClick’s carrying value and the estimated fair value of its investment in ValueClick. The estimated fair value of DoubleClick’s investment in ValueClick was determined based on the closing market price of ValueClick stock on September 30, 2001.

Gain on early extinguishment of debt

      For the year ended December 31, 2002, DoubleClick repurchased $64.9 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $53.6 million in cash, inclusive of $1.2 million of accrued interest payable. DoubleClick wrote off approximately $0.7 million in deferred issuance costs and recognized a gain of approximately $11.9 million as the result of the early retirement of this debt.

      For the year ended December 31, 2001, DoubleClick repurchased $20.3 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million in cash. DoubleClick wrote off approximately $0.3 million in deferred issuance costs and recognized a gain of approximately $6.4 million as the result of the early retirement of this debt.

Gain on sale of investments in affiliates

      DoubleClick’s gain on sale of investments in affiliates was $7.9 million for the year ended December 31, 2002. The gain was associated with the sale of our investment in ValueClick and partial sales of our ownership interests in DoubleClick Japan and NetRatings. DoubleClick entered into a repurchase agreement with ValueClick whereby ValueClick repurchased all of our remaining 7.9 million shares for $21.3 million or approximately $2.70 per share. DoubleClick recognized a gain of $4.7 million from the sale of the investment. In addition, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan and reduced its ownership interest to 15.6%. DoubleClick received proceeds of $14.3 million and recognized a gain of $3.1 million. Additionally, DoubleClick sold 402,011 shares of NetRatings, Inc. and received proceeds of approximately $2.5 million. DoubleClick recognized an immaterial gain on the sale of this investment.

      We recognized no such gains or losses during the year ended December 31, 2001.

Gain on sale of businesses, net

      DoubleClick’s gain on sale of businesses, net was $17.9 million for the year ended December 31, 2002. The gain primarily consisted of gains on the sale of our North American Media business and @plan research product line of $8.1 million and $12.3 million, respectively, offset by a loss of $1.7 million recognized on sale of our European Media business.

      We recognized no such gains or losses during the year ended December 31, 2001.

Interest and other, net

      Interest and other, net was $15.9 million for the year ended December 31, 2002 and $29.3 million for the year ended December 31, 2001. Interest and other, net included $25.7 million of interest income for the year ended December 31, 2002, partially offset by $10.8 million in interest expense. For the year ended December 31, 2001, Interest and other, net included $43.0 million of interest income, partially offset by $12.6 million in interest expense. The decrease in interest income was attributable to the decrease in average investment yields due to declines in interest rates. The decrease in interest expense is directly associated with the repurchase of the Convertible Subordinated Notes during the year. Interest and other, net in future periods may fluctuate in correlation with the average cash, investment and debt balances we maintain and as a result of changes in the market rates of our investments and any future debt repurchases.

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Provision for income taxes

      The provision for income taxes recorded for the year ended December 31, 2002 of $4.8 million consists principally of income taxes of $4.1 million on the earnings of some of the Company’s foreign subsidiaries and gain on the sale of DoubleClick’s European Media business, and approximately $0.7 million of state and local taxes. The provision for income taxes recorded for the year ended December 31, 2001 of $4.8 million consists principally of income taxes of $3.5 million on the earnings of certain of the Company’s foreign subsidiaries and state and local taxes of $1.3 million. The provision for income taxes for the years ended December 31, 2002 and 2001, does not reflect tax benefits attributable to the Company’s net operating loss and other tax carryforwards due to limitations and uncertainty surrounding DoubleClick’s prospective realization of such benefit.

Results of Operations

      Revenues and gross profit by segment are as follows:

	Year Ended December 31, 2001											Year Ended December 31, 2000
	Technology			Data			Media		Total			Technology			Data			Media		Total
Revenue	$	206,999		$	81,329		$	129,336	$	417,664		$	203,391		$	72,355		$	253,827	$	529,573
Intersegment elimination		(11,088	)		(929	)		—		(12,017	)		(23,848	)		(114	)		—		(23,962	)
Revenue from external customers	$	195,911		$	80,400		$	129,336	$	405,647		$	179,543		$	72,241		$	253,827	$	505,611
Segment gross profit	$	132,311		$	54,817		$	41,279	$	228,407		$	145,560		$	49,230		$	64,251	$	259,041
Research consulting fees										(157	)										—
Consolidated gross profit									$	228,250										$	259,041

2001 Compared to 2000

      2001 revenues and gross profits decreased from 2000 primarily as the result of the decline in overall online advertising spending offset by growth in our email delivery business. In response to the continued deterioration of general economic conditions, many companies have significantly scaled back their advertising and marketing budgets, which has had a correspondingly negative impact on aggregate online advertising spending. Operating expenses increased to $511.7 million from $448.2 million in 2000, and included $43.5 million in amortization of goodwill, $8.7 million in amortization of intangibles, $72.1 million in goodwill and other impairments, $15.5 million in non-cash compensation charges, $1.3 million in purchased in-process research and development costs, and $84.2 million in restructuring charges in 2001. Operating expenses for the year ended December 31, 2000 included $35.9 million in amortization of goodwill, $5.3 million in amortization of intangibles, $49.4 million in goodwill impairments, $24.4 million in non-cash compensation charges, and $2.4 million in restructuring charges. Net loss including these charges was $265.8 million in 2001 as compared to $156.0 million in 2000.

DoubleClick TechSolutions

      DoubleClick TechSolutions revenue increased 1.8% to $207.0 million for the year ended December 31, 2001 from $203.4 million for the year ended December 31, 2000. The increase in TechSolutions revenue was primarily attributable to the launch of our new email product offerings, offset by the continuing weakness of aggregate online advertising spending, which has negatively impacted our ad management products and services. The decline in advertising spending has also intensified pricing competition. These two trends have had a pronounced effect on our TechSolutions business.

      DARTMail revenues were $20.7 million during the year ended December 31, 2001. DARTMail revenues were derived primarily from our purchase of FloNetwork in April 2001. Ad management revenue decreased 9% to $183.3 million for the year ended December 31, 2001 from $201.5 for the year ended December 31, 2000. As a result of the trends noted above, the effective price for our ad management products decreased

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approximately 14% offset by an increase in volumes of approximately 6%. The decline in the effective price was primarily associated with the decrease in the fee charged to DoubleClick Media.

      DoubleClick TechSolutions gross margin was 63.9% for the year ended December 31, 2001 and 71.6% for the year ended December 31, 2000. The decline in gross margin resulted primarily from an increase in depreciation expense relating to ad and email delivery hardware, Internet access costs, and the amortization of purchased technology associated with the acquisition of FloNetwork. In addition, gross margin was impacted by the decrease in the fee charged to DoubleClick Media for the provision of technology support. The costs were offset by the reduction in personnel associated with restructuring activities.

DoubleClick Data

      DoubleClick Data revenue increased 12.4% to $81.3 million for the year ended December 31, 2001 compared with $72.4 million for the year ended December 31, 2000. These results reflected a slight decrease in revenues generated by our Abacus division, which was more than offset by the impact of the acquisition of @plan in February 2001. Abacus revenues were $71.4 million and Research revenues were $9.9 million for the year ended December 31, 2001. Abacus experienced a decrease in revenues associated with its Abacus Alliance offset by an increase in revenues from its new Business-to-Business Alliance. The weakness in the economy and its effect on marketing budgets has negatively impacted our DoubleClick Data business.

      Gross margin declined from 68.0% for the year ended December 31, 2000 to 67.4% for the year ended December 31, 2001. The decline in gross margin was primarily due to the gross margin associated with our Research division, which is significantly lower than margins of our Abacus division. In addition, Abacus experienced higher costs associated with its data collection as well as the amortization of acquired email lists. These costs were offset by the reduction in personnel associated with restructuring activities.

DoubleClick Media

      Revenue for DoubleClick Media decreased 49.0% to $129.3 million for the year ended December 31, 2001 from $253.8 million for the year ended December 31, 2000. The decrease in DoubleClick Media revenue reflected in large part the decline in overall online advertising spending. In response to the continued deterioration of general economic conditions, many companies, particularly Internet-related companies, have significantly scaled back their advertising and marketing budgets, which has had a correspondingly negative impact on aggregate online advertising spending. DoubleClick Media revenue also decreased due to a reduction in the number of advertising impressions delivered to users of the AltaVista Web site. DoubleClick Media revenue derived from advertising impressions delivered to users of the AltaVista Web site was $8.8 million, or 6.8% of DoubleClick Media revenue for the year ended December 31, 2001, compared to $28.4 million, or 11.2% of revenue for the year ended December 31, 2000. Because of specific contractual terms unique to AltaVista, we recognize revenue from sales commissions, billing and collection fees and DART service fees derived from the sale and delivery of ads on the AltaVista Web site and associated services.

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      DoubleClick Media gross margin was 31.9% for the year ended December 31, 2001 and 25.3% for the year ended December 31, 2000. Gross margin was lower in 2000 primarily due to the $18.5 million write-off of our advance to a Web publisher in December 2000. Excluding this one-time charge, gross margin would have been 32.6% for the year ended December 31, 2000. The decrease in gross margin, exclusive of this one-time charge, is primarily the result of increased levels of price competition and increases in the amount of unsold inventory, which diluted the effective price of delivered advertising impressions. This decrease was partially offset by lower average site fees remitted to Web publishers and a reduction in the cost of technology support provided by DoubleClick TechSolutions.

Operating Expenses

Sales and marketing

      Sales and marketing expenses consist primarily of compensation and related benefits, sales commissions, general marketing costs, advertising, bad debt expense, and other operating expenses associated with the sales and marketing departments. Sales and marketing expenses were $182.8 million, or 45.1% of revenue for the year ended December 31, 2001 and $227.2 million, or 44.9% of revenue for the year ended December 31, 2000. The decrease in sales and marketing expense of $44.4 million was primarily attributable to decreases in personnel-related costs of approximately $17.1 million due to headcount reductions associated with our restructuring activities. Non-cash compensation expense decreased approximately $8.5 million due to the elimination of the non-cash compensation due to the former shareholders of DoubleClick Scandinavia as the result of the accelerated payment of their remaining contingent consideration in the second quarter of 2001. In addition, marketing and bad debt expenses decreased $7.1 million and $4.4 million, respectively. These decreases are commensurate with the decline in our revenues and the level of business activity.

General and administrative

      General and administrative expenses consist primarily of compensation and related benefits, professional services fees and facility-related costs. General and administrative expenses were $65.7 million, or 16.2% of revenue for the year ended December 31, 2001, and $83.2, or 16.5% of revenue for the year ended December 31, 2000. The decrease in general and administrative expense of $17.5 million was primarily the result of overall reductions in professional services fees of $6.9 million, personnel-related costs of $2.4 million, recruiting fees of $2.2 million and travel and entertainment expenses of $1.6 million. Decreased professional services fees resulted in part from a reduction in consulting fees associated with system conversion and integration. Personnel related costs, recruiting fees and travel and entertainment expenses declined due to job eliminations associated with our restructuring activities.

Product development

      Product development expenses consist primarily of compensation and related benefits, consulting fees, and other operating expenses associated with the product development departments. Product development expenses were $53.4 million, or 13.2% of revenue for the year ended December 31, 2001 and $44.8 million, or 8.9% of revenue for the year ended December 31, 2000. The increase in product development expenses of $8.7 million was primarily the result of growth-related increases in compensation and related benefits for product development personnel of $4.6 million and depreciation expense of $2.9 million, which were partially offset by reductions in professional fees of approximately $1.4 million.

Amortization of goodwill

      Goodwill amortization was $43.5 million for the year ended December 31, 2001 and 35.9 million for the year ended December 31, 2000. The increase of $7.6 million was the result of goodwill amortization associated with our acquisitions of @plan, DoubleClick Japan and FloNetwork, partially offset by reductions in amortization expense relating to DoubleClick Scandinavia and DoubleClick Iberoamerica as the result of their impairment write-downs in the fourth quarter of 2000.

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      Effective January 1, 2002 in accordance with SFAS No. 142, DoubleClick ceased amortizing goodwill. The adoption of SFAS No. 142 would have reduced its goodwill amortization expense by approximately $43.5 million and $35.9 million for the years ended December 31, 2001 and 2000, respectively.

Amortization of other intangibles

      Amortization of intangible assets consists primarily of the amortization of customer lists and patents. Amortization expense was $8.7 million for the year ended December 31, 2001 and $5.3 million for the year ended December 31, 2000. The increase of $3.4 million was primarily the result of the increase in the amortization of customer lists associated with our acquisition of FloNetwork and the purchase of the intellectual property assets of Sabela Media and L90, Inc.

Goodwill and other impairments

      Goodwill and other impairments was $72.1 million for the year ended December 31, 2001 and $49.4 million for the year ended December 31, 2001.

      In connection with DoubleClick’s decision to sell its European Media operations, management determined that the estimated fair value of the consideration it would receive pursuant to the sale agreement would be less than the carrying value of its European Media operations. As a result, management concluded that its investment in its European Media operations was impaired. DoubleClick recorded a charge of approximately $8.8 million in the fourth quarter of 2001, which represented the difference between the estimated fair value of the consideration to be received and the carrying value of the net assets to be sold.

      The persistence of the unfavorable economic conditions that began in 2000 led DoubleClick management to undertake a review of the recoverability of certain of its investments in the third quarter of 2001. As a result of significantly lower-than-expected revenues generated to date and considerably reduced estimates of future performance, management concluded that its investments in @plan and Flashbase were impaired. Accordingly, DoubleClick recognized an approximately $63.3 million impairment charge equal to the difference between its investments and the estimated fair value of these businesses in the third quarter of 2001. Of this amount, approximately $53.3 million related to @plan and $10.0 million related to Flashbase.

      In the second quarter of 2001, management reviewed the recoverability of its investments in @plan and Flashbase. As @plan had only been acquired in February of 2001, management believed that it did not, at that time, have enough operational experience with this investment to determine that it was impaired.

      In connection with the restructuring activities undertaken in the beginning of 2001, DoubleClick reorganized its sweepstakes offering with the expectation that Flashbase would, through the improved visibility of its product line and a streamlined cost structure, continue to represent a viable component of its business despite lower-than-expected revenues generated to date. As of the end of the second quarter of 2001, management did not believe, given the reorganization and Flashbase’s budgeted forecasts, that this investment was impaired. At the end of the third quarter, as this investment’s results mirrored general economic trends and fell well short of projections, the decision was ultimately made to devote resources away from the sweepstakes offering and towards more profitable lines of business. It was at this time that management concluded its investment in Flashbase was impaired.

      The amount of the goodwill impairment was calculated based on discounted analyses of these businesses’ expected future cash flows, which were no longer deemed adequate to support the value of the goodwill associated with these investments. In both cases, sharply-reduced estimates of anticipated revenue growth and operating results, triggered primarily by the continued softness in aggregate online advertising spending, generated correspondingly lowered expectations of future cash flows and formed the basis for the recording of the charge in the third quarter of 2001. These entities’ expected future cash flows and terminal values are based on management’s budgeted forecasts and estimates. To the extent that these entities’ results fall short of DoubleClick’s revised projections, additional impairment charges could be incurred.

      As a result of the significant decline in its stock price in 2000, DoubleClick reviewed the recoverability of the goodwill associated with its acquisitions of DoubleClick Scandinavia and DoubleClick Iberoamerica in

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accordance with its accounting policy. In the course of its analysis, DoubleClick determined that the goodwill attributable to DoubleClick Scandinavia and DoubleClick Iberoamerica was in excess of its estimates of these entities’ future cash flows. Accordingly, DoubleClick recognized $49.4 million in impairment charges equal to the difference between its investment in and the estimated fair value of these entities in the fourth quarter of 2000. Of this amount, $48.2 million related to DoubleClick Scandinavia and $1.2 million related to DoubleClick Iberoamerica.

Purchased in-process research and development

      In connection with our acquisition of FloNetwork in April 2001, $1.3 million of the purchase price was allocated to in-process research and development projects and charged to operations as the projects had not reached technological feasibility as of the date of acquisition and were determined to have no alternative future uses.

      DoubleClick incurred no such charges for the year ended December 31, 2000.

Restructuring charges

      Throughout 2001, our management took certain actions to increase operational efficiencies and bring costs in line with revenues. These measures included the involuntary terminations of approximately 605 employees, primarily from our Media and TechSolutions divisions, as well as the consolidation of some of our leased office space and the closure of several of our offices. As a consequence, we recorded an $84.2 million charge to operations during the year of 2001. This charge included approximately $10.4 million for severance-related payments to terminated employees, approximately $51.7 million for the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously recorded), approximately $19.5 million for the write-off of fixed assets situated in office locations that were closed or consolidated, and approximately $2.6 million in other exit costs, which included consulting and professional fees related to the restructuring activities and expenses associated with the decision to move the TechSolutions customer support department from New York to Colorado.

      In December 2000, management took certain actions to reduce employee headcount in order to better align its sales, development and administrative organization. This involved the involuntary terminations of approximately 180 employees. As a consequence, we recorded a $2.4 million charge to operations during the fourth quarter of 2000 related to payments for severance as well as the costs of outplacement services and the provision of continued benefits to terminated personnel.

Loss from operations

      Our operating loss was $283.4 million for the year ended December 31, 2001 and $189.1 million for the year ended December 31, 2000. The increase in operating loss of $94.3 million was primarily attributable to the decrease in revenues, the incurrence of certain non-recurring charges, including goodwill impairment and restructuring charges, and the increase in the amortization of intangible assets discussed above.

Equity in losses of affiliates

      Equity in losses of affiliates was $2.5 million for the year December 31, 2001 and $6.8 million for the year ended December 31, 2000. Included in equity in losses of affiliates for the year ended December 31, 2000 was $3.8 million of non-recurring income related to DoubleClick’s proportionate share of the gain recognized by ValueClick following the initial public offering of its consolidated subsidiary, ValueClick Japan. The decrease in equity in losses of affiliates was primarily the result of a reduction in the amount of amortization expense associated with our investment in ValueClick. Following our impairment write-down of the goodwill related to our investment in ValueClick in the fourth quarter of 2000, amortization expense associated with this investment decreased from $9.1 million for the year ended December 31, 2000 to $0.7 million for the year ended December 31, 2001.

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      As a result of the cumulative dilutive effects of the transactions described below, DoubleClick does not believe that it is able to exercise significant influence over its investment in ValueClick as of December 31, 2001. Accordingly, DoubleClick will no longer record its proportionate share of ValueClick’s results but instead carry this investment at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. At December 31, 2001, DoubleClick has recorded approximately $5.9 million in unrealized gains associated with its investment in ValueClick.

Gain on equity transactions of affiliates, net

      For the year ended December 31, 2001, we recognized a gain of approximately $7.2 million from the initial public offering of our consolidated subsidiary DoubleClick Japan, which was partially offset by a loss of approximately $5.7 million related to the decrease in value of our proportionate share of the net assets of our equity-method investee ValueClick following the consummation of business combinations with ClickAgents.com, Mediaplex, and the issuance of common stock to the former shareholders of Bach Systems, Inc., due to the achievement of certain performance objectives. For the year ended December 31, 2000, we recognized an approximately $8.9 million gain related to the increase in the value of our investment as the result of ValueClick’s initial public offering and an approximately $20.7 million gain through partial sale our interest in NetGravity to the minority shareholders of DoubleClick Japan.

Impairment of investments in affiliates

      Impairment of investments in affiliates was $16.2 million for the year ended December 31, 2001 and $24.1 million for the year ended December 31, 2000. During the year ended December 31, 2001, as a result of the significant decline in the market value of Internet-based companies and the decreasing declining access of these companies to public and private financing, management performed an assessment of the carrying values of certain of its investments in affiliates in the second quarter of 2001. In the course of its analysis, DoubleClick determined that the carrying value of its cost-method investment in Return Path, Inc. (“Return Path”) was no longer recoverable. As a consequence, DoubleClick wrote off its entire investment in Return Path and recognized an impairment charge of $4.5 million during the second quarter of 2001. In addition, DoubleClick determined that the carrying value of its equity method investment in ValueClick was impaired. Consequently, DoubleClick wrote down its investment in ValueClick and recognized an impairment charge of approximately $11.7 million during the third quarter of 2001, which represented the difference between DoubleClick’s carrying value and the estimated fair value of its investment in ValueClick. The estimated fair value of DoubleClick’s investment in ValueClick was determined based on the closing market price of ValueClick stock on September 30, 2001.

      DoubleClick recognized approximately $24.1 million in impairment charges relating to its investment in ValueClick for the year ended December 31, 2000.

Gain on early extinguishment of debt

      For the year ended December 31, 2001, DoubleClick repurchased $20.3 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million in cash. DoubleClick wrote off approximately $0.3 million in deferred issuance costs and recognized a gain of approximately $6.4 million as the result of the early retirement of this debt.

      There were no such gains recognized during the year ended December 31, 2000.

Write-down of warrant

      In the third quarter of 2000, DoubleClick management determined that the remaining exercise period of its warrant to purchase approximately 10.8 million additional common shares of ValueClick was not a sufficient period to allow for the price of ValueClick common stock to move above the warrant’s strike price. The application of an option-pricing model confirmed that the estimated fair value of the ValueClick warrant was negligible. As a result, DoubleClick wrote off the entire value of the warrant and recognized an impairment charge of approximately $18.7 million.

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      There were no such charges incurred for the year ended December 31, 2001.

Interest and other, net

      Interest and other, net was $29.3 million for the year ended December 31, 2001 and $53.8 million for the year ended December 31, 2000. Interest and other, net included $43.0 million of interest income for the year ended December 31, 2001, partially offset by $12.8 million in interest expense. For the year ended December 31, 2000, Interest and other, net included $54.4 million in interest income, income of approximately $5.0 million related to contract termination fees associated with the restructuring of our Advertising Services Agreement with AltaVista in fiscal year 2000, and $8.6 million relating to merger termination fees paid by NetCreations on the termination of our merger agreement in December 2000.

      These amounts were partially offset by interest expense of $12.1 million. The decrease in interest income was primarily attributable to decreases in the average quarterly balances of our investments in marketable securities and decreases in average investment yields due to declines in interest rates.

Provision for income taxes

      The provision for income taxes does not reflect the benefit of our historical losses due to limitations and uncertainty surrounding our prospective realization of the benefit. The provision for income taxes recorded for the year ended December 31, 2001 of $4.8 million consists principally of income taxes of $3.5 million on the earnings of certain of the Company’s foreign subsidiaries and state and local taxes of $1.3 million. For the year ended December 31, 2000, the provision for income taxes of $1.5 million consists principally of income taxes of $2.3 million on the earnings of certain of the company’s foreign subsidiaries, state and local taxes of $0.9 million, and a benefit of $1.7 million relating to the change in estimated tax refunds receivable.

Liquidity and Capital Resources

      Since inception, we have financed our operations primarily through private placements of equity securities, and public offerings of our common stock and Convertible Subordinated Notes.

      Operating activities generated $43.9 million for the year ended December 31, 2002, used $7.6 million for the year ended December 31, 2001, and generated $41.6 million for the year ended December 31, 2000. Cash provided by operating activities for the year ended December 31, 2002 resulted primarily from our net loss, adjusted for non-cash items, and decreases in accounts payable, offset by an increase in accrued expenses and other liabilities. Cash used by operating activities in 2001 resulted from our net loss, excluding non-cash items, and decreases in accounts payable and deferred revenue, partially offset by a decrease in accounts receivable and an increase in accrued expenses. Cash provided by operating activities in 2000 resulted primarily from a our net loss, excluding non-cash items, and increases in accounts payable and accrued expenses, which were partially offset by increases in accounts receivable and prepaid expenses. Cash flow from operating activities may be impacted in future periods based on the timing and amount of restructuring payments.

      Investing activities provided $65.0 million for the year ended December 31, 2002, and used $85.6 million and $525.5 million for the years ended December 31, 2001 and 2000, respectively. Cash provided by investing activities for the year ended December 31, 2002, resulted primarily from proceeds received from the sale of businesses and investments in affiliates. Cash used in investing activities for the year ended December 31, 2001 resulted primarily from the purchases of equipment and the net cash outlays for acquisitions of businesses and intangible assets, which was partially offset by the maturities of some of our investments in marketable securities. Cash used in investing activities for the year ended December 31, 2000 resulted principally from the investment of the proceeds of our common stock issuance in marketable securities, as well as purchases of equipment and the net cash outlays for the acquisition of businesses and intangible assets. Capital expenditures are expected to increase in 2003 due to the replacement of obsolete equipment.

      Financing activities used $69.5 for the year ended December 31, 2002 and provided $4.2 million and $559.6 million for the years ended December 31, 2001 and 2000, respectively. Cash used by financing activities resulted primarily from the repurchase of convertible bonds, purchases of our common stock and

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payments under capital lease obligations. Cash generated by financing activities for the year ended December 31, 2001 resulted primarily from the initial public offering of our consolidated subsidiary, DoubleClick Japan, and the proceeds from the exercise of stock options, mostly offset by cash payments for debt and stock repurchases. Cash provided by financing activities for the year ended December 31, 2000 consisted primarily of the net proceeds from our public offering of common stock. Cash flow from financing activities may be impacted in future periods based on the potential for additional repurchases of our convertible bonds and common stock.

      DoubleClick’s cash and cash equivalents decreased $21.9 million as a result of the deconsolidation our subsidiary, DoubleClick Japan. On December 26, 2002, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan and reduced its ownership interest to 15.6%. As a result of this transaction, DoubleClick will account for its remaining 31,271 shares in DoubleClick Japan under the equity method of accounting.

      As of December 31, 2002, we had $123.7 million of cash and cash equivalents, $601.2 million in investments in marketable securities consisting of government and corporate debt securities and $25.1 million in restricted cash. As of December 31, 2002, our principal commitments consisted of $154.8 million principal amount our Convertible Subordinated Notes and our obligations under operating and capital leases.

      DoubleClick’s contractual obligations are as follows:

	Payments Due by Period
			Less than						More than
Contractual Obligations	Total		1 year		1-3 years		3-5 years		5 years
Long-Term Debt Obligations		154,800						154,800
Capital Lease Obligations		7,015		6,163		852
Operating Lease Obligations(1)		270,384		25,520		55,919		49,545		139,400
Total		432,199		31,683		56,771		204,345		139,400

(1)  Operating lease obligations primarily include rental payments for office facilities. As of December 31, 2002, DoubleClick has recorded restructuring reserves and assumed liabilities in connection with acquisitions totaling approximately $120 million relating to excess space at these facilities.

      Although we have no material commitments for capital expenditures, we continue to anticipate that our capital expenditures and lease commitments will be a material use of our cash resources consistent with the levels of our operations, infrastructure and personnel.

      We believe that our existing cash and cash equivalents and investments in marketable securities will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.

Related Party Transactions

      DoubleClick maintains a 15% interest in AdLINK Internet Media AG (“AdLINK”). This interest was acquired in January 2002 as a result of the sale of DoubleClick’s European Media business. DoubleClick recognized revenue of approximately $2.0 during the year ended December 31, 2002 relating to services provided to AdLINK.

      In addition, DoubleClick holds a 19.8% interest in MaxWorldwide, Inc (“MaxWorldwide”). This interest was acquired in July 2002 as a result of the sale of DoubleClick’s North American Media business. Subsequent to the sale of the DoubleClick’s North American Media business, DoubleClick recognized revenue of approximately $1.4 million during the year ended December 31, 2002 relating to services provided to MaxWorldwide.

      Additionally, DoubleClick maintains a minority interest in DoubleClick Japan. On December 26, 2002, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan and reduced its ownership interest to 15.6%. As a result of this transaction, DoubleClick will account for its remaining 31,271 shares in DoubleClick

47

Japan under the equity method of accounting. DoubleClick will also retain one seat on DoubleClick Japan’s board of directors. DoubleClick Japan will continue to sell DoubleClick’s suite of DART technology products as part of a long-term technology reseller agreement. Revenue recognized through sales to DoubleClick Japan subsequent to the date of deconsolidation was not material.

Item 7a.      Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

      The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in a variety of government and corporate obligations and money market funds. As of December 31, 2002, our investments in marketable securities had a weighted average time to maturity of 366 days.

      The following table presents the amounts of our financial instruments that are subject to interest rate risk by expected maturity and average interest rates as of December 31, 2002.

	Time to Maturity
	One Year			One to Two			Two to
	or Less			Years			Four Years			Fair Value
	(In thousands)
Assets:
Cash and cash equivalents	$	123,671			—			—		$	123,671
Average interest rate		0.95	%
Fixed-rate investments in marketable securities	$	306,974		$	279,320		$	14,930		$	601,224
Average interest rate		3.52	%		2.84	%		2.60	%
Liabilities:
Convertible subordinated notes		—			—		$	154,800		$	135,636
Average interest rate								4.75	%

      As of December 31, 2002, restricted cash was $25.1 million and the average interest rate associated with this cash was 2.21%. Restricted cash consists of office lease security deposits and funds to cover our automated clearinghouse payment function.

      We did not hold derivative financial instruments as of December 31, 2002 and have not held these instruments in the past.

Foreign Currency Risk

      We transact business in various foreign countries and are thus subject to exposure from adverse movements in foreign currency exchange rates. This exposure is primarily related to revenue and operating expenses denominated in European and Asian currencies, as well as cash balances held in currencies other than the functional currency of DoubleClick and its subsidiaries. The effect of foreign exchange rate fluctuations on operations resulted in losses of $1.2 million for the year ended December 31, 2002, respectively. This was principally as a result of the weakening of the U.S. dollar and its impact upon our U.S. dollar denominated deposits held by our international subsidiaries for the year ended December 31, 2002. The effect of foreign exchange fluctuations on our operations for the year ended December 31, 2001, was not material.

      To date we have not used financial instruments to hedge operating activities denominated in foreign currencies. We assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis. As of December 31, 2002, we had $33.4 million in cash and cash equivalents denominated in foreign currencies.

      Our international business is subject to risks typical of an international business, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other

48

regulations and restrictions and foreign exchange rate volatility. Accordingly, our future results could be materially and adversely affected by changes in these or other factors.

Equity Risk

      The Company holds investments in equity instruments of public companies received as a result of certain business transactions, including shares held in DoubleClick Japan, NetRatings, Inc., AdLINK Internet Media AG and MaxWorldwide, Inc. Such investments, which are in the Internet industry, are subject to significant fluctuations in fair market value due to the volatility of the stock market. The following represents the cost basis and fair market value of these investments, which is included in as “Investment in affiliates” on the accompanying Consolidated Balance Sheets.

	As of December 31, 2002
			Fair Market
	Cost Basis		Value
DoubleClick Japan		6,401		6,332
NetRatings, Inc.		606		746
AdLINK Internet Media AG		1,855		2,818
MaxWorldwide, Inc.		1,994		2,880

      Certain of DoubleClick’s investments have suffered a decrease in value as a result of recent market volatility. As a consequence, DoubleClick wrote-down these investments to their estimated fair value in 2002. We will continue to evaluate our investments in marketable securities for impairment due to declines in market value considered to be other than temporary. That evaluation includes, in addition to persistent, declining stock prices, general economic and company-specific assessments. In the event of a determination that a further decline in market value is other than temporary, a charge to earnings will be recorded for all or a portion of the unrealized loss, and a new cost basis in the investment will be established.

49

DOUBLECLICK INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of PricewaterhouseCoopers LLP, Independent Accountants	51
Consolidated Balance Sheets as of December 31, 2002 and 2001	52
Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000	53
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000	54
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000	55
Notes to the Consolidated Financial Statements	56
Schedule II — Valuation and Qualifying Accounts	86

50

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of DoubleClick Inc.:

      In our opinion the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of DoubleClick Inc. and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for the opinion expressed above.

      As discussed in Notes 1 and 7 to the consolidated financial statements, on January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets.”

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

New York, New York

January 22, 2003

51

DOUBLECLICK INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

		December 31,			December 31,
		2002			2001
ASSETS
Cash and cash equivalents		$	123,671		$	99,511
Investments in marketable securities			306,974			339,996
Accounts receivable, net of allowances of $13,704 and $21,579, respectively			48,850			81,412
Prepaid expenses and other current assets			24,324			35,180
	Total current assets		503,819			556,099
Investment in marketable securities			294,249			295,019
Restricted cash			25,091			17,636
Property and equipment, net			98,545			156,996
Goodwill			20,572			57,567
Intangible assets, net			13,378			21,845
Investment in affiliates			12,125			24,128
Other assets			9,128			9,063
	Total assets	$	976,907		$	1,138,353
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	7,218		$	32,718
Accrued expenses and other current liabilities			117,320			95,956
Current portion of capital lease obligations			6,163			6,936
Deferred revenue			6,245			13,849
	Total current liabilities		136,946			149,459
Convertible subordinated notes			154,800			219,700
Long term portion of capital lease obligations			852			6,366
Other long term liabilities			73,747			40,048
Minority interest in consolidated subsidiaries			—			19,457
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $0.001; 5,000,000 shares authorized, none outstanding			—			—
Common stock, par value $0.001; 400,000,000 shares authorized, 137,854,385 and 134,799,135 shares issued, respectively			138			135
Treasury stock, 1,680,670 and 765,170 shares, respectively			(8,949	)		(4,466	)
Additional paid-in capital			1,281,244			1,265,953
Accumulated deficit			(666,441	)		(548,552	)
Other accumulated comprehensive income/(loss)			4,570			(9,747	)
	Total stockholders’ equity		610,562			703,323
	Total liabilities and stockholders’ equity	$	976,907		$	1,138,353

The accompanying notes are an integral part of these consolidated financial statements.

52

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,

(In thousands, except per share amounts)

			2002			2001			2000
Revenue			$	300,198		$	405,647		$	505,611
Cost of revenue				109,406			177,397			228,083
Write-off of advance to Web publisher				—			—			18,487
Restructuring charge				4,374			—			—
	Total cost of revenue			113,780			177,397			246,570
		Gross profit		186,418			228,250			259,041
Operating expenses:
	Sales and marketing (inclusive of non-cash compensation of $15,233 and $23,732 in 2001 and 2000, respectively)			101,527			182,782			227,229
	General and administrative (inclusive of non-cash compensation of $259 and $637 for 2001 and 2000, respectively)			46,401			65,695			83,227
	Product development			39,790			53,447			44,789
	Amortization of goodwill			—			43,472			35,864
	Amortization of other intangibles			12,392			8,703			5,289
	Goodwill and other impairments			47,077			72,103			49,371
	Purchased in-process research and development			—			1,300			—
	Restructuring charges			94,011			84,167			2,389
		Total operating expenses		341,198			511,669			448,158
Loss from operations				(154,780	)		(283,419	)		(189,117	)
Other income/(expense):
	Equity in losses of affiliates			(331	)		(2,534	)		(6,789	)
	Gain on equity transactions of affiliates, net			—			1,463			29,676
	Impairment of investments in affiliates			(14,147	)		(16,235	)		(24,052	)
	Write-down of warrant			—			—			(18,650	)
	Gain on early extinguishment of debt			11,855			8,199			—
	Gain on sale of investments in affiliates			7,880			—			—
	Gain on sale of businesses, net			17,946			—			—
	Interest and other, net			15,932			29,255			53,801
		Total other income		39,135			20,148			33,986
Loss before income taxes				(115,645	)		(263,271	)		(155,131	)
Provision for income taxes				4,794			4,764			1,497
Loss before minority interest				(120,439	)		(268,035	)		(156,628	)
Minority interest in results of consolidated subsidiaries				2,549			2,207			647
Net loss			$	(117,890	)	$	(265,828	)	$	(155,981	)
Basic and diluted net loss per share			$	(0.87	)	$	(2.02	)	$	(1.29	)
Weighted average shares used in basic and diluted net loss per share				135,840			131,622			121,278

The accompanying notes are an integral part of these consolidated financial statements.

53

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

(In thousands)

					2002			2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss				$	(117,890	)	$	(265,828	)	$	(155,981	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation and leasehold amortization				42,340			53,369			33,440
		Goodwill amortization				—			43,472			35,864
		Amortization of intangible assets				14,713			9,532			5,289
		Equity losses of affiliates				331			2,534			6,789
		Gain on equity transactions of affiliates, net				—			(1,463	)		(29,676	)
		Impairment of investments in affiliates				14,147			16,235			24,052
		Goodwill and other impairments				47,077			72,103			49,371
		Write-down of warrant				—			—			18,650
		Write-off of advance to Web publisher				—			—			18,487
		Write-off of purchased in-process research and development				—			1,300			—
		Gain on early extinquishment if debt				(11,855	)		(8,199	)		—
		Minority interest				(2,549	)		(2,207	)		(647	)
		Non-cash restructuring charge				14,160			17,683			—
		Non-cash compensation				—			15,492			24,369
		Gain on sale of businesses, net				(17,946	)		—			—
		Gain on sale of investment of affiliates, net				(7,880	)		—			—
		Other non-cash items				2,583			3,395			980
		Provisions for bad debts and advertiser credits				19,126			28,775			47,078
		Changes in operating assets and liabilities net of the effects of acquisitions and dispositions:
			Accounts receivable			3,431			17,234			(75,048	)
			Prepaid expenses and other assets			6,899			6,214			(19,879	)
			Accounts payable			(15,904	)		(33,353	)		46,165
			Accrued expenses and other liabilities			52,503			37,471			8,519
			Deferred revenue			626			(21,385	)		3,807
				Net cash provided by (used in) operating activities		43,912			(7,626	)		41,629
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of investments in marketable securities					(488,286	)		(533,275	)		(504,890	)
	Maturities of investments in marketable securities					522,734			566,941			152,524
	Restricted cash					(7,455	)		—			—
	Purchases of property and equipment					(12,113	)		(64,886	)		(121,294	)
	Security deposits					—			—			(5,820	)
	Acquisition of businesses and intangible assets, net of cash acquired					(4,842	)		(53,037	)		(28,804	)
	Proceeds from sale of businesses					16,927			—			—
	Investments in affiliates and other					—			(1,363	)		(17,260	)
	Proceeds from sale of investments of affiliates					37,994			—			—
				Net cash provided by (used in) investing activities		64,959			(85,620	)		(525,544	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from the issuance of common stock, net of issuance costs					1,144			2,364			504,660
	Proceeds from the exercise of stock options					4,569			7,196			50,577
	Proceeds from DoubleClick Japan stock issuance, net of offering cost					—			25,380			5,754
	Proceeds used in repurchase of convertible bonds					(53,578	)		(21,850	)		—
	Purchases of treasury stock					(4,483	)		(4,466	)		—
	Payments under capital lease obligations and notes payable					(16,113	)		(4,897	)		(1,398	)
	Other					(1,000	)		507			—
				Net cash (used in) provided by financing activities		(69,461	)		4,234			559,593
DECONSOLIDATION OF SUBSIDIARY						(21,890	)		—			—
Effect of exchange rate changes on cash and cash equivalents						6,640			(5,159	)		(1,234	)
Net increase (decrease) in cash and cash equivalents						24,160			(94,171	)		74,444
Cash and cash equivalents at beginning of period					$	99,511		$	193,682		$	119,238
Cash and cash equivalents at end of period					$	123,671		$	99,511		$	193,682

The accompanying notes are an integral part of these consolidated financial statements.

54

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

	Convertible
	Preferred Stock				Common Stock				Treasury Stock						Additional									Other			Total
															Paid-In			Deferred			Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Compensation			Deficit			Income			Equity
Balance at December 31, 1999		—	$	—		112,453,892	$	112		—		$	—		$	475,565		$	(1,106	)	$	(109,831	)	$	(3,078	)	$	361,662
Net loss																						(155,981	)					(155,981	)
Cumulative foreign currency translation																									(13,457	)		(13,457	)
Unrealized gain on marketable securities																									1,763			1,763
Comprehensive loss																						(155,981	)		(11,694	)		(167,675	)
Issuance of common stock for acquisition						23,721		—								1,945												1,945
Issuance of options for acquisition						—		—								1,313												1,313
Issuance of common stock for investment						732,860		1		(206,813	)		(23,766	)		84,198												60,433
Other adjustments																(233	)		233									—
Amortization of deferred compensation																			637									637
Issuance of common stock, net of issuance costs						5,733,411		6								502,913												502,919
Common shares issued upon exercise of stock options						4,700,670		5								50,572												50,577
Employee stock purchases						83,615		—								1,741												1,741
Investee sale of DoubleClick common stock										46,530			5,347			(2,442	)											2,905
Tax benefit upon exercise of stock options																600												600
Balance at December 31, 2000		—		—		123,728,169		124		(160,283	)		(18,419	)		1,116,172			(236	)		(265,812	)		(14,772	)		817,057
Net loss																						(265,828	)					(265,828	)
Cumulative foreign currency translation																									(7,540	)		(7,540	)
Unrealized gain on marketable securities																									12,565			12,565
Comprehensive loss																						(265,828	)		5,025			(260,803	)
Issuance of common stock for acquisitions						5,977,417		6								98,871												98,877
Payment of non-cash compensation						2,724,338		3								37,414												37,417
Equity transactions of affiliates										37,045			4,257			1,773						(4,257	)					1,773
Purchase of treasury stock										(765,170	)		(4,466	)														(4,466	)
Amortization of deferred compensation																			236									236
Issuance of common stock under 401(k) plan						245,460										2,045												2,045
Common shares issued upon exercise of stock options						1,879,790		2								7,194												7,196
Employee stock purchases						243,961										2,364												2,364
Investee sale of DoubleClick common stock										123,238			14,162									(12,655	)					1,507
Tax benefit upon exercise of stock options																120												120
Balance at December 31, 2001		—		—		134,799,135		135		(765,170	)		(4,466	)		1,265,953			—			(548,552	)		(9,747	)		703,323
Net loss																						(117,890	)					(117,890	)
Cumulative foreign currency translation																									20,050			20,050
Unrealized loss on marketable securities																									(5,733	)		(5,733	)
Comprehensive loss																						(117,890	)		14,317			(103,573	)
Issuance of common stock for acquisitions						1,000,240		1								7,709												7,710
Purchase of treasury stock										(915,500	)		(4,483	)														(4,483	)
Issuance of common stock under 401(k) plan						256,253										1,871												1,871
Common shares issued upon exercise of stock options						1,623,591		2								4,567												4,569
Employee stock purchases						175,166										1,144												1,144
Balance at December 31, 2002		—	$	—		137,854,385	$	138		(1,680,670	)	$	(8,949	)	$	1,281,244		$	—		$	(666,441	)	$	4,570		$	610,562

The accompanying notes are an integral part of these consolidated financial statements

55

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002

NOTE 1 — Description of Business and Significant Accounting Policies

Description of business

      DoubleClick is a leading provider of products and services used by direct marketers, Web publishers and advertisers to plan, execute and analyze their marketing programs. Combining marketing technology and data expertise, DoubleClick’s products and services help its customers optimize their advertising and marketing campaigns online and through direct mail. DoubleClick offers a broad array of marketing technology and data products and services to its customers to allow them to address a full range of the marketing process, from pre-campaign planning and testing, to execution, measurement and campaign refinements.

      DoubleClick derives its revenues from three business units: Technology (or “TechSolutions”), Data and Media based on the types of services provided. DoubleClick TechSolutions includes our ad management products, consisting of the DART for Publishers Service, the DART Enterprise ad serving software product, the DART for Advertisers Service, and a suite of email products based on DoubleClick’s DARTmail Service. DoubleClick Data includes its Abacus division, which utilizes the information contributed to the proprietary Abacus database by Abacus Alliance members to make direct marketing more effective for Abacus Alliance members and other clients. DoubleClick Media included the DoubleClick network that provided fully outsourced and effective ad sales and related services to a worldwide group of advertisers and publishers. As a result of the sale of the European Media Business on January 28, 2002 and North American Media business on July 10, 2002, the Media operations consisted only of the investment in DoubleClick Japan. On December 26, 2002, DoubleClick reduced its ownership percentage in DoubleClick Japan and will no longer consolidate their results of operations. See Note 3, “Investment in DoubleClick Japan.” As a result of the preceding transactions, we were fully divested of our Media operations as of December 31, 2002. Accordingly, DoubleClick will not report a DoubleClick Media segment in the future.

Basis of presentation

      The accompanying consolidated financial statements include the accounts of DoubleClick, its wholly owned subsidiaries, and subsidiaries over which it exercises a controlling financial interest. All significant intercompany transactions and balances have been eliminated. Investments in entities in which DoubleClick does not have a controlling financial interest, but over which it has significant influence are accounted for using the equity method. Investments in which DoubleClick does not have the ability to exercise significant influence are accounted for using the cost method.

Cash and cash equivalents, investments in marketable securities, and restricted cash

      Cash and cash equivalents represent cash and highly liquid investments with a remaining contractual maturity at the date of purchase of three months or less.

      Marketable securities are classified as current or long-term assets depending on their dates of maturity. As of December 31, 2002, all marketable securities included in long-term assets mature in the calendar year 2004.

      DoubleClick classifies its investments in marketable securities as available-for-sale. Accordingly, these investments are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders’ equity. DoubleClick recognizes gains and losses when these securities are sold using the specific identification method. DoubleClick has not recognized any material gains or losses from the sale of its investments in marketable securities.

      Restricted cash represents funds to cover office lease security deposits and our automated clearinghouse payment function.

56

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      At December 31, 2002 cash and cash equivalents, investments in marketable securities, and restricted cash consisted of the following:

			Unrealized			Unrealized		Estimated
	Cost		Loss			Gain		Fair Value
Cash and cash equivalents:
Cash	$	90,673		—			—	$	90,673
Money market funds		3,241		—			—		3,241
Municipal bonds and notes		17,254		—			—		17,254
Corporate debt securities		12,503		—			—		12,503
	$	123,671		—			—	$	123,671
Investments in marketable securities and restricted cash:
Government securities	$	295,651		—			1,199	$	296,850
Corporate debt securities		330,712		(1,248	)		—		329,464
	$	626,363		(1,248	)		1,199	$	626,314

      At December 31, 2001 cash and cash equivalents, investments in marketable securities, and restricted cash consisted of the following:

			Unrealized			Unrealized		Estimated
	Cost		Loss			Gain		Fair Value
Cash and cash equivalents:
Cash	$	80,493		—			—	$	80,493
Money market funds		4,318		—			—		4,318
Municipal bonds and notes		14,700		—			—		14,700
	$	99,511		—			—	$	99,511
Investments in marketable securities and restricted cash:
Government securities	$	172,917		—			992	$	173,909
Corporate debt securities		473,581		(44	)		5,205		478,742
	$	646,498		(44	)		6,197	$	652,651

Property and equipment

      Property and equipment is recorded at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term. As required by SOP 98-1, Accounting for Costs of Computer Software Developed or Obtained for Internal Use, DoubleClick capitalizes certain computer software developed or obtained for internal use. Capitalized computer software is depreciated using the straight-line method over the estimated life of the software or generally three to five years.

Goodwill and intangible assets

      DoubleClick records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Until December 31, 2001, goodwill was amortized on a straight-line basis over its estimated useful life, which was generally three years.

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      Effective July 1, 2001, DoubleClick adopted certain provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” and effective January 1, 2002, DoubleClick adopted the full provisions of SFAS No. 141 and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 established new standards for accounting and reporting requirements for business combinations and requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method is prohibited. SFAS No. 142 established new standards for goodwill acquired in a business combination, eliminated amortization of goodwill and set forth methods to periodically evaluate goodwill for impairment. Intangible assets with a determinable useful life will continue to be amortized over that life. DoubleClick completed its initial impairment testing and no changes to the carrying value of goodwill and other intangible assets were made as a result of the adoption of SFAS No. 142. Subsequent impairment testing will take place annually, as well as when a triggering event indicating impairment may have occurred. See Note 9, “Impairment of Goodwill and Other Intangibles.”

      Intangible assets include patents, trademarks, customer lists, and purchased technology. Such intangible assets are amortized on a straight-line basis over their estimated useful lives, which are generally two to five years.

Impairment of long-lived assets

      DoubleClick assesses the recoverability of long-lived assets, including goodwill and intangible assets, held and used whenever events or changes in circumstances indicate that future cash flows (undiscounted and without interest charges) expected to be generated by an asset’s disposition or use may not be sufficient to support its carrying amount. If such undiscounted cash flows are not sufficient to support the recorded value of assets, an impairment loss is recognized to reduce the carrying value of long-lived assets to their estimated fair value.

Revenue recognition

      DoubleClick’s revenues are presented net of a provision for advertiser credits, which is estimated and established in the period in which services are provided. These credits are generally issued in the event that delivered advertisements do not meet contractual specifications. Actual results could differ from these estimates.

      Technology. Revenues include fees earned from the use of DART ad management products and services and email products and services, DoubleClick’s Web-based ad management (advertising impression delivery) solution. Revenues derived from the use of DART email delivery technology and email services are recognized in the period the advertising impressions or emails are delivered provided collection of the resulting receivable is reasonably assured. DART services activation fees are deferred and recognized ratably over the expected term of the customer relationship.

      For DoubleClick’s licensed ad serving software solution, revenues are recognized upon completion of product installation, which is generally when customers begin utilizing the product, there is pervasive evidence of an arrangement, collection is reasonably assured, the fee is fixed or determinable, and vendor-specific objective evidence exists to allocate the total fees to all elements of the arrangement. A portion of the initial ad serving software license fee is attributed to the customer’s right to receive, at no additional charge, software upgrades released during the subsequent twelve months. Revenues attributable to software upgrades are deferred and recognized ratably over the period covered by the software license agreement, which is generally one year.

      Revenues from consulting services are recognized as the services are performed and customer-support revenues are deferred and recognized ratably over the period covered by the customer support agreement, generally one year.

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      Data. DoubleClick provides services to its customers that result in a deliverable product in the form of marketing data or customized written reports. DoubleClick recognizes revenues when the product is shipped to the customer provided collection of the resulting receivable is reasonably assured. In certain cases, DoubleClick provides subscriptions to unlimited products for a fixed fee and over a fixed period of time, which revenue is recognized ratably.

      In December 1999, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. SAB 101 summarizes certain of the SEC’s views on the application of generally accepted accounting principles to revenue recognition in financial statements. The adoption of SAB 101 of recognizing revenue for the Technology and Data segments did not have a material effect on DoubleClick’s financial position or results of operations.

      Media. Revenues are derived primarily from the sale and delivery of advertising impressions through third-party Web sites within the DoubleClick network (the “network”). Revenues are recognized in the period the advertising impressions are delivered provided collection of the resulting receivable is reasonably assured. Deferred revenue consists primarily of payments received in advance of revenue being earned for the delivery of such advertising impressions.

      DoubleClick becomes obligated to make payments to third-party Web sites, which have contracted with DoubleClick to be part of the network, in the period the advertising impressions are delivered. Such expenses are classified as costs of revenues in the consolidated statement of operations.

Product development

      Product development expenses consist primarily of compensation and related benefits, consulting fees and other operating expenses associated with the product development departments. The product development departments perform research and development, enhance and maintain existing products, and provide quality assurance. To date, all product development costs have been expensed as incurred. Software development costs are required to be capitalized when a product’s technological feasibility has been established by completion of a working model of the product and ending when a product is available for general release to customers. To date, completion of a working model of DoubleClick’s products and general release have substantially coincided. As a result, DoubleClick has not capitalized any software development costs.

Issuance of stock by affiliates

      Changes in DoubleClick’s interest in its affiliates arising as the result of their issuance of common stock are recorded as gains and losses in the consolidated statement of operations, except for any transactions that must be recorded directly to equity in accordance with the provisions of SAB No. 51.

Advertising expenses

      DoubleClick expenses the cost of advertising and promoting its services as incurred. Such costs are included in sales and marketing in the consolidated statements of operations and totaled $3.6 million, $12.8 million, and $22.5 million for the years ended December 31, 2002, 2001, and 2000, respectively.

Income taxes

      DoubleClick uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and to operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is

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recognized in results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

Foreign currency

      The functional currencies of DoubleClick’s foreign subsidiaries are their respective local currencies. The financial statements maintained in local currencies are translated to United States dollars using period-end rates of exchange for assets and liabilities and average rates during the period for revenues, cost of revenues and expenses. Translation gains and losses are accumulated as a separate component of stockholders’ equity. Net gains and losses from foreign currency transactions are included in the consolidated statements of operations and were not significant during the periods presented.

Equity-based compensation

      DoubleClick accounts for its employee stock option plans under the intrinsic value method, in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense related to the granting of employee stock options is recorded over the vesting period only if, on the date of grant, the fair value of the underlying stock exceeds the option’s exercise price. DoubleClick has adopted the disclosure-only requirements of SFAS No. 123 Accounting for Stock-Based Compensation, which allows entities to continue to apply the provisions of APB No. 25 for transactions with employees and provide pro forma net income and pro forma earnings per share disclosures for employee stock grants made as if the fair value based method of accounting in SFAS No. 123 had been applied to these transactions.

      In December 2002, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148 “Accounting for Stock-Based Compensation — Transition and Disclosure” which amends SFAS No. 123 “Accounting for Stock-Based Compensation.” See “New accounting pronouncements.”

      Had DoubleClick determined compensation expense of employee stock options based on the estimated fair value of the stock options at the grant date, consistent with the guidelines of SFAS 123, DoubleClick’s net loss would have been increased to the pro forma amounts indicated below:

		Year Ended December 31,
		2002			2001			2000
		(In thousands, except per share amounts)
Net loss:
	As reported	$	(117,890	)	$	(265,828	)	$	(155,981	)
	Pro forma per SFAS 123		(239,327	)		(419,403	)		(338,514	)
Net loss per share:
As reported		$	(0.87	)	$	(2.02	)	$	(1.29	)
Pro forma per SFAS 123			(1.76	)		(3.19	)		(2.79	)

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      The per share weighted average fair value of options granted for the years ended December 31, 2002, 2001 and 2000 was $4.09, $6.86, and $51.12, respectively, on the grant date with the following weighted average assumptions:

	Year Ended December 31,
	2002			2001			2000
Expected dividend yield		0	%		0	%		0	%
Risk-free interest rate		3.82	%		4.51	%		6.18	%
Expected life		4.5 years			4.5 years			4 years
Volatility		70	%		100	%		115	%

      The pro forma impact of options on the net loss for the years ended December 31, 2002, 2001 and 2000, is not representative of the effects on net income (loss) for future years, as future years will include the effects of additional years of stock option grants.

Basic and diluted net loss per share

      Basic net loss per common share excludes the effect of potentially dilutive securities and is computed by dividing the net loss available to common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted net loss per share adjusts this calculation to reflect the impact of outstanding convertible securities, stock options and other potentially dilutive financial instruments to the extent that their inclusion would have a dilutive effect on net loss per share for the reporting period.

      At December 31, 2002, 2001, and 2000, outstanding options of approximately 16.5 million, 23.9 million, and 22.2 million, respectively, to purchase shares of common stock were not included in the computation of diluted net loss per share because to do so would have had an antidilutive effect for the periods presented. Similarly, the computation of diluted net loss per share for 2002, 2001 and 2000 excludes the effect of 3,752,724, 5,326,055, and 6,060,606 shares, respectively, issuable upon conversion of the 4.75% Convertible Subordinated Notes due 2006, since their inclusion would also have had an antidilutive effect. As a result, the basic and diluted net loss per share amounts are equal for all periods presented.

Concentrations of credit risk

      Financial instruments that potentially subject DoubleClick to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and accounts receivable.

      Credit is extended to customers based on an evaluation of their financial condition and collateral is not required. DoubleClick performs ongoing credit assessments of its customers and maintains an allowance for doubtful accounts.

      In 1999, DoubleClick advanced approximately $20 million to AllAdvantage, an Internet advertising and sweepstakes company. In view of the weak market for Internet advertising in general and the financial difficulties of AllAdvantage in particular, management concluded that was no longer recoverable and the remaining balance of approximately $18.5 million was written off in the fourth quarter of 2000. This charge has been classified as a cost of revenue in the consolidated statements of operations DoubleClick has no other such arrangements.

      DoubleClick’s financial instruments consist of cash and cash equivalents, investments in marketable securities, restricted cash, accounts receivable, accounts payable, accrued expenses and convertible subordinated notes. At December 31, 2002 and 2001 the fair value of these instruments approximated their financial statement carrying amount with the exception of the convertible subordinated notes, which had estimated fair values of $135.6 million and $173.8 million at December 31, 2002 and 2001, respectively.

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Use of estimates

      The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

      Certain reclassifications have been made to the prior years’ financial statements to conform to current year presentation.

New accounting pronouncements

      In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections’ (“SFAS No. 145”). SFAS No. 145, among other things, rescinds SFAS No. 4, which required all gains and losses from the extinguishment of debt to be classified as an extraordinary item and amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002 but earlier adoption is encouraged. DoubleClick has repurchased and may in the future continue to repurchase a portion of its outstanding Convertible Subordinated Notes. DoubleClick adopted SFAS No. 145 effective July 1, 2002 and no longer records gains or losses from the retirement of its Convertible Subordinated Notes as extraordinary items, net of taxes but as a component of other income in the Consolidated Statements of Operations. As required under SFAS No. 145, prior periods have been reclassified to conform to the current period’s presentation.

      In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities’ (“SFAS No.146”). SFAS No. 46 nullifies EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity including Certain Costs Incurred in a Restructuring” (EITF 94-3). The principal difference between SFAS No. 146 and EITF 94-3 relates to the recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the FASB’s conceptual framework. In contrast, EITF 94-3 required recognition of a liability for an exit cost when management committed to an exit plan. SFAS No. 146 also establishes fair value as the objective for initial measurement of liabilities related to exit or disposal activities. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and has no effect on exit or disposal activities begun prior to this date.

      In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” This Statement amends SFAS No. 123, “Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure provisions of this Statement are effective for fiscal years ending after December 15, 2002 and have been incorporated into these financial statements and accompanying footnotes.

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Change in accounting estimate

      Effective January 1, 2002, DoubleClick changed its estimate of the useful lives of its production equipment and software. The estimated useful life for these assets was extended from three years to four years in order to recognize depreciation expense over the remaining time that the assets are expected to be in service. The change was based on an analysis performed by DoubleClick’s operations department. As a result of this change, net loss was reduced by approximately $8.3 million, or $0.06 per basic and diluted share, for the year ended December 31, 2002.

NOTE 2 — Business Transactions

Acquisitions

MessageMedia

      On January 18, 2002, DoubleClick completed its acquisition of MessageMedia, Inc. (“MessageMedia”), a provider of permission-based email marketing and messaging solutions. The acquisition of MessageMedia has allowed DoubleClick to expand its suite of email product and service offerings as well as broaden its client base.

      DoubleClick acquired all the outstanding shares, options and warrants of MessageMedia in exchange for approximately one million shares of DoubleClick common stock valued at approximately $7.5 million, and stock options and warrants to acquire DoubleClick common stock valued at approximately $0.2 million. In connection with the acquisition, DoubleClick loaned $2.0 million to MessageMedia to satisfy MessageMedia’s operating requirements. The loan was extinguished upon the closing of the acquisition and included as a component of the purchase price. The purchase price, inclusive of approximately $1.6 million of direct acquisition costs, was approximately $11.3 million. The value of the approximately one million shares of DoubleClick common stock issued was determined based on the average market price of DoubleClick common stock, as quoted on the Nasdaq National Market, for the day immediately prior to, the day of, and the day immediately after the number of shares due to MessageMedia shareholders became irrevocably fixed pursuant to the agreement under which MessageMedia was acquired. The MessageMedia options and warrants assumed by DoubleClick as the result of this merger converted into options and warrants to acquire approximately 120,000 shares of DoubleClick common stock and have been valued using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected dividend yield	0.0	%
Risk-free interest rate	3.7	%
Expected life (in years)	3.6
Volatility	100	%

      The aggregate purchase price of $11.3 million has been allocated to the assets acquired and the liabilities assumed according to their fair values at the date of acquisition as follows (in millions):

Current assets	$	4.6
Other intangible assets		1.9
Goodwill		28.5
Other non-current assets		4.1
Total assets acquired	$	39.1
Total liabilities assumed	$	(27.8	)
Net assets acquired	$	11.3

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      Approximately $1.9 million of the purchase price has been allocated to customer lists and is being amortized on a straight-line basis over two years. DoubleClick recorded approximately $28.5 million in goodwill, which represents the remainder of the excess of the purchase price over the fair value of net assets acquired. This goodwill is not tax deductible and, in accordance with SFAS No. 142, will be and has been periodically tested for impairment. (See Note 7.)

      Assumed liabilities include costs accrued of approximately $12.5 million for idle space at a facility in Louisville, Colorado. As of December 31, 2002, approximately $1.5 million has been paid.

      The results of operations for MessageMedia have been included in DoubleClick’s Consolidated Statements of Operations from the date of acquisition.

Abacus Direct Europe

      On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus Direct Europe (“Abacus Direct Europe”), joint venture that it did not previously own from VNU Marketing Information Europe & Asia B.V, an affiliate of Claritas (UK) Limited. The joint venture was formed in November 1998 and provides database-marketing services to the direct marketing industry, primarily in the United Kingdom. The results of operations for Abacus Direct Europe have been included in DoubleClick’s Consolidated Statements of Operations from the date of acquisition. DoubleClick’s investment in the joint venture was previously accounted for under the equity method of accounting. DoubleClick acquired all the outstanding shares of Abacus Direct Europe held by VNU in exchange for approximately $3.7 million in cash and direct acquisition costs. The purchase price has been allocated to the assets acquired and the liabilities assumed according to their fair value at the date of acquisition as follows (in millions):

Current assets		$	3.1
Property and equipment			0.3
Other intangibles assets			4.6
Total assets acquired		$	8.0
	Total liabilities assumed		(3.2	)
		$	4.8
Less: proportionate share of net assets held through equity investment			(1.1	)
Net assets acquired		$	3.7

      Approximately $4.6 million of the purchase price has been allocated to customer lists, the Abacus U.K. Alliance, and customer database. These intangibles are being amortized on a straight-line basis over two to five years based on each intangibles estimated useful life.

Protagona

      On November 4, 2002, DoubleClick completed its acquisition of Protagona plc (“Protagona”), a campaign management software company based in the United Kingdom. In the transaction, DoubleClick acquired all the outstanding shares of Protagona in exchange for approximately $13.6 million in cash. This purchase price, which includes approximately $0.2 million in direct acquisition costs, has been allocated to the

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assets acquired and the liabilities assumed according to their fair values at the date of acquisition as follows (in millions):

Cash	$	14.7
Other current assets		1.2
Intangible assets		2.8
Other non-current assets		1.0
Total assets acquired	$	19.7
Current liabilities	$	(4.2	)
Other non-current liabilities		(1.9	)
Total liabilities assumed	$	(6.1	)
Net assets acquired	$	13.6

      On the basis of estimated fair values, approximately $2.5 million of the purchase price has been allocated to acquired technology and $0.3 million to customer lists. These amounts are being amortized on a straight-line basis over three and two years, respectively.

      The results of operations for Protagona have been included in DoubleClick’s consolidated statements of operations from the date of acquisition.

FloNetwork

      On April 23, 2001, DoubleClick completed its acquisition of FloNetwork Inc. (“FloNetwork”), a privately-held provider of email technology services. In the transaction, which has been accounted for as a purchase, DoubleClick acquired all of the outstanding shares, option and warrants of FloNetwork in exchange for $17.1 million in cash, DoubleClick common stock valued at $30.7 million and stock options and warrants to acquire DoubleClick common stock valued at $3.8 million. The value of the approximately 2,800,000 shares of DoubleClick common stock issued was determined based on the average market price of DoubleClick common stock, as quoted on the Nasdaq National Market, for the day immediately prior to, the day of, and the day immediately after the number of shares and cash consideration due to FloNetwork shareholders became irrevocably fixed pursuant to the agreement under which FloNetwork was acquired. The FloNetwork options and warrants assumed by DoubleClick as the result of this merger converted into options and warrants to acquire approximately 430,000 shares of DoubleClick common stock and have been valued using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected dividend yield	0.0	%
Risk-free interest rate	4.5	%
Expected life (in years)	4.1
Volatility	115	%

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      The aggregate purchase price of $52.7 million, which includes approximately $1.1 million of direct acquisition costs, has been allocated to the assets acquired and the liabilities assumed according to their fair values at the date of acquisition as follows (in millions):

Current assets	$	5.4
Acquired in-process research and development		1.3
Other intangible assets		6.5
Goodwill		45.0
Other non-current assets		3.3
Total assets acquired	$	61.5
Current liabilities	$	(8.8	)
Total liabilities assumed	$	(8.8	)
Net assets acquired	$	52.7

      On the basis of fair value appraisals, approximately $4.3 million of the purchase price has been allocated to acquired technology, $2.2 million to customer lists and $1.3 million to purchased in-process research and development. The amounts allocated to customer lists and acquired technology is being amortized on a straight-line basis over two and three years, respectively. The amounts attributed to in-process research and development projects have been charged to operations as they had not reached technological feasibility as of the date of acquisition and were determined to have no alternative future uses. DoubleClick has also recorded approximately $45.0 million in goodwill, which represents the remainder of the excess of the purchase price over the fair value of net assets acquired. This goodwill was not tax deductible and was being amortized on a straight-line basis over three years. In accordance with SFAS 142, DoubleClick ceased to amortize goodwill as of January 1, 2002. See Note 1, “Description of business and significant accounting policies.”

      The results of operations for FloNetwork have been included in DoubleClick’s Consolidated Statements of Operations from the date of acquisition.

Flashbase

      Effective May 26, 2000, DoubleClick acquired Flashbase, Inc. (“Flashbase”) for approximately $19.6 million. In connection with the acquisition, which has been accounted for under the purchase method, DoubleClick recorded approximately $19.5 million in goodwill. Additional payments of approximately $4.2 million were made in March 2001 based on the continued employment of the former shareholders and the attainment of specific performance objectives for the year ended December 31, 2000. Of this amount, approximately $1.7 million was paid in cash and the remaining $2.5 million was paid in DoubleClick common stock. Such amounts were included in “Sales and marketing” in the 2000 Consolidated Statement of Operations.

Divestures

European Media Business

      On January 28, 2002, DoubleClick completed the sale of its European Media business to AdLINK Internet Media AG (“AdLINK”), a German provider of Internet advertising solutions, in exchange for $26.3 million and the assumption by AdLINK of liabilities associated with DoubleClick’s European Media business. Intercompany liabilities in an amount equal to $4.3 million were settled through a cash payment by AdLINK to DoubleClick at the closing of the transaction. Following the closing of the transaction described above, United Internet AG (“United Internet”), AdLINK’s largest shareholder, exercised its right to sell to DoubleClick 15% of the outstanding common shares of AdLINK in exchange for $30.6 million. Pursuant to

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its agreement with United Internet, the exercise of this right caused DoubleClick’s option to acquire an additional 21% of AdLINK common shares from United Internet to vest. This option is only exercisable over a two-year period if AdLINK has achieved EBITDA-positive results for two out of three consecutive fiscal quarters before December 2003. EBITDA, as defined in the option agreement, is earnings before interest, taxes, depreciation, amortization, and one-time charges, such as restructuring costs, mergers and acquisition related costs, and other extraordinary items, determined in accordance with generally accepted accounting principles in the United States. Should AdLINK fail to achieve these results, the option will expire unexerciseable in December 2003. AdLINK achieved EBITDA-positive results in the fourth quarter of 2002.

      As the result of the transactions described above, DoubleClick sold its European Media business and received a 15% interest in AdLINK, which represented approximately 3.9 million shares valued at approximately $8.3 million. DoubleClick’s option to acquire an additional 21% of the outstanding common shares of AdLINK from United Internet also vested. DoubleClick was partially reimbursed $2.0 million for its cash outlays related to the acquisitions of, and payments with respect to, the minority interests in certain of its European subsidiaries pursuant to its agreement to sell its European Media business. DoubleClick’s investment in AdLINK is included in “Investments in affiliates” in the Consolidated Balance Sheets.

      Revenue recognized from sales to AdLINK was approximately $2.0 million during the year ended December 31, 2002.

North America Media Business

      On July 10, 2002, DoubleClick sold its North American Media business to L90, Inc. Upon completion of the transaction, L90, Inc. was renamed MaxWorldwide, Inc. (“MaxWorldwide”). In exchange for the North American Media business, DoubleClick received 4.8 million shares in MaxWorldwide and $5 million in cash. The 4.8 million shares represented 16.1% of outstanding MaxWorldwide common stock and were valued at approximately $3.1 million. DoubleClick may also receive an additional $6 million if, during the three-year period subsequent to consummation of the transaction, MaxWorldwide has achieved EBITDA-positive results, for two out of three consecutive quarters. EBITDA, as defined in the merger agreement, is earnings before interest, taxes, depreciation and amortization, excluding certain non-recurring items. As a result of this transaction, DoubleClick recognized a gain of $8.1 million during the third quarter of 2002, which has been included in “Gain on sale of businesses, net” in the Consolidated Statements of Operations.

      On August 13, 2002, MaxWorldwide repurchased 5,596,972 shares of its common stock. As the result of this repurchase, DoubleClick’s ownership percentage increased to 19.8%.

      DoubleClick accounts for this investment under the equity method of accounting. The investment is included in “Investments in affiliates” in the Consolidated Balance Sheets. MaxWorldwide has yet to achieve EBITDA-positive results for each of the fiscal quarters subsequent to this transaction. MaxWorldwide’s results for the three months ended December 31, 2002 were not available as of the date of this filing. DoubleClick will report its share of MaxWorldwide’s results on a 90-day lag.

      Subsequent to the sale of DoubleClick’s North American Media business, DoubleClick recognized revenue of approximately $1.4 million during the year ended December 31, 2002 relating to services provided to MaxWorldwide.

      The following unaudited pro forma results of operations have been prepared assuming that the acquisitions of Protagona, Abacus Direct Europe, and MessageMedia, consummated during 2002, the acquisitions of FloNetwork and @plan (See Note 5), consummated during 2001, and the dispositions of the European and North American Media businesses, @plan research product line (See Note 5), and DoubleClick Japan (See Note 4) completed during 2002, occurred at the beginning of the respective periods presented. This pro forma financial information should not be considered indicative of the actual results that would have been achieved had the acquisitions and disposals been completed on the dates indicated and does not purport to indicate results of operations as of any future date or any future period.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Year Ended December 31,
	2002			2001
	(Unaudited, in thousands,
	except per share amounts)
Revenues	$	261,230		$	307,562
Amortization of intangible assets		9,400			24,989
Goodwill and other impairments		47,077			18,819
Net loss	$	(131,890	)	$	(183,005	)
Net loss per basic and diluted share	$	(0.97	)	$	(1.37	)

NOTE 3 — Investment in DoubleClick Japan

      In July 2000, DoubleClick contributed its wholly-owned subsidiary, NetGravity Japan, to its affiliate DoubleClick Japan in return for an additional 27% ownership interest in DoubleClick Japan. In addition to increasing DoubleClick’s equity interest to approximately 37%, the agreement with DoubleClick Japan enabled it to elect a majority of the seats on DoubleClick Japan’s Board of Directors and exercise a controlling financial interest in its operations. Accordingly, DoubleClick consolidated the net assets and results of operations of DoubleClick Japan as of the date of the transfer. As DoubleClick Japan’s net assets and results and operations had not previously been consolidated in DoubleClick’s financial statements, this simultaneous transfer and acquisition was treated as a partial sale of DoubleClick’s interest in NetGravity and a step acquisition of an additional equity interest in DoubleClick Japan. Full reverse acquisition accounting was applied and a $20.7 million gain recognized to the extent that NetGravity Japan was deemed sold to the minority shareholders of DoubleClick Japan. This gain has been included in “Gain on equity transactions of affiliates, net” in the consolidated statements of operations. Goodwill of $21.3 million was recorded to reflect the proportionate step-up in DoubleClick Japan’s net assets as the result of the reverse acquisition.

      Subsequent to the transfer of NetGravity Japan described above, DoubleClick made an additional investment of $5.4 million in DoubleClick Japan, which increased its interest to approximately 43%. This transaction was accounted for as a step acquisition and DoubleClick recorded approximately $0.7 million of goodwill, which represented the excess of its additional investment over the fair value of the incremental assets acquired.

      On April 25, 2001, DoubleClick’s consolidated subsidiary, DoubleClick Japan, completed its initial public offering of common stock on the Nasdaq Japan Market, issuing 23,456 shares at approximately $1,236 per share. DoubleClick Japan’s net proceeds, after deducting underwriting discounts, commissions and direct offering costs, were approximately $25.4 million. As a result of this offering, DoubleClick’s ownership interest in DoubleClick Japan decreased from 43.2% to 38.2%. DoubleClick recorded a $16.6 million increase in minority interest, reduced the carrying amount of the goodwill associated with its acquisition of DoubleClick Japan by $1.6 million and recognized a gain of approximately $7.2 million, which represented the incremental increase in consolidated net equity related to its proportionate share of the proceeds from DoubleClick Japan’s stock offering. Pursuant to Accounting Principles Board Opinion No. 23, no deferred taxes have been recorded related to this gain as it is considered permanently reinvested in DoubleClick Japan. This gain has been included in “Gain on equity transactions of affiliates, net” in the consolidated statements of operations.

      On December 26, 2002, DoubleClick sold 45,049 shares of common stock in DoubleClick Japan and reduced its ownership interest to 15.6%. DoubleClick received proceeds of $14.3 million and recognized a gain of $3.1 million, which has been included in “Gain on sale of investments in affiliates” in the Consolidated Statements of Operations. As a result of this transaction, DoubleClick will account for its remaining 31,271 shares in DoubleClick Japan under the equity method of accounting. DoubleClick will also retain one seat on DoubleClick Japan’s board of directors. DoubleClick’s investment in DoubleClick Japan is included in “Investments in affiliates” in the Consolidated Balance Sheets.

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NOTE 4 — @plan.inc

      On February 2, 2001, DoubleClick completed its acquisition of @plan.inc (“@plan”), a provider of online market research planning systems. In the transaction, which has been accounted for as a purchase, DoubleClick acquired all of the outstanding shares, options and warrants of @plan in exchange for $39.1 million in cash, DoubleClick common stock valued at $48.7 million, and stock options and warrants to acquire DoubleClick common stock valued at approximately $15.7 million. The value of the approximately 3,200,000 shares of common stock issued was determined based on the average market price of DoubleClick common stock, as quoted on the Nasdaq National Market, for the day immediately prior to and the day of the final determination of the number of shares and cash consideration due to @plan shareholders became irrevocably fixed pursuant to the agreement under which @plan was acquired. The @plan options and warrants assumed by DoubleClick as the result of the merger converted into options and warrants to acquire approximately 1,200,000 shares of DoubleClick common stock and have been valued using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected dividend yield	0.0	%
Risk-free interest rate	6.1	%
Expected life (in years)	4.3
Volatility	107	%

      The aggregate purchase price of $104.3 million, which includes approximately $0.8 million of direct acquisition costs, has been allocated to the assets acquired and the liabilities assumed based on their respective fair values at the date of acquisition as follows (in millions):

Cash	$	26.6
Other current assets		3.5
Goodwill		79.1
Other non-current assets		0.8
Total assets acquired	$	110.0
Current liabilities	$	(5.7	)
Total liabilities assumed	$	(5.7	)
Net assets acquired	$	104.3

      DoubleClick has recorded approximately $79.1 million in goodwill, which represents the excess of the purchase price over the fair value of net assets acquired. This goodwill was not tax-deductible and was being amortized on a straight-line basis over three years. In accordance with SFAS 142, DoubleClick ceased to amortize this goodwill when the statement is applied in its entirety in 2002. See Note 1, “Description of business and significant accounting policies.”

      The results of operations for @plan have been included in DoubleClick’s Consolidated Statements of Operations from the date of acquisition.

      On May 6, 2002, DoubleClick sold its @plan research product line to NetRatings, Inc.(“NetRatings”) a provider of technology-driven Internet audience information solutions for media and commerce, in exchange for $12.0 million in cash and 505,739 shares of NetRatings common stock valued at approximately $6.1 million. DoubleClick recognized a gain of $12.3 million on the sale of the @plan research product line, which has been included in “Gain on sale of businesses, net” in the Consolidated Statements of Operations. DoubleClick’s investment in NetRatings is included in “Investments in affiliates” in the Consolidated Balance Sheets.

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NOTE 5 — Investment in Affiliates

      DoubleClick’s investments in affiliates at December 31, 2002 and 2001 consist of the following:

	December 31,
	2002		2001
ValueClick, Inc.	$	—	$	22,531
DoubleClick Asia		—		1,182
AdLINK		2,818		—
NetRatings, Inc.		746		—
MaxWorldwide, Inc.		1,994		—
DoubleClick Japan, Inc.		6,401		—
Other		166		415
	$	12,125	$	24,128

      As of December 31, 2002 DoubleClick’s investments in AdLINK, and NetRatings represent investments in publicly traded companies which are accounted for as available-for-sale marketable securities. Accordingly these investments are carried at fair value. At December 31, 2002 DoubleClick’s cost basis in these investments is as follows:

AdLINK	$	1,855
NetRatings	$	606

      As of December 31, 2002 DoubleClick’s investment in MaxWorldwide, Inc. and DoubleClick Japan represent investments in publicly traded companies which are accounted under the equity method of accounting. At December 31, 2002 the fair value of these investments is as follows:

MaxWorldwide, Inc.	$	2,880
DoubleClick Japan, Inc.	$	6,332

      See Note 6 for information regarding DoubleClick’s investment in ValueClick, Inc. All other investments in affiliates are accounted for under the cost basis.

      During the second quarter of 2001, as a result of the significant decline in the market value of Internet-based companies and the declining access of these companies to public and private financing, management performed an assessment of the carrying values of its investments in affiliates. In the course of its analysis, DoubleClick determined that the carrying value of its cost-method investment in Return Path, Inc. (“Return Path”) was no longer recoverable. As a consequence, DoubleClick wrote off its entire investment in Return Path and recognized an impairment charge of $4.5 million.

      In the third quarter of 2002, DoubleClick determined that the carrying value of certain of its investments, principally its cost-method investments in AdLINK Internet Media AG (“AdLINK”) and NetRatings, Inc. (“NetRatings”) and its equity-method investment in MaxWorldwide, Inc. (“MaxWorldwide”) were impaired based on the continued decline in the fair market value of these investments. As a result, DoubleClick recorded an impairment charge of $11.7 million, which represented the difference between DoubleClick’s carrying value and the estimated fair value of these investments. The estimated fair values of DoubleClick’s investments in AdLINK, NetRatings and MaxWorldwide were determined based on the closing market price of their stock on September 30, 2002. Additionally, DoubleClick’s cost method investment in the joint venture, DoubleClick Asia, is being liquidated and has no continuing value. As a consequence, DoubleClick wrote-off its entire investment in DoubleClick Asia and recognized an impairment charge of $2.4 million.

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      These charges have been included in “Impairment of investments in affiliates” on the Consolidated Statements of Operations.

NOTE 6 — Investment in ValueClick Inc.

      Effective February 28, 2000, DoubleClick acquired an approximately 33% interest in ValueClick, Inc. (“ValueClick”) as well as a warrant to purchase ValueClick common stock for 732,860 shares of DoubleClick common stock and $10.0 million in cash. DoubleClick’s investment in ValueClick was recorded based on the fair value of the consideration paid (approximately $94.2 million) less approximately $27.7 million of treasury stock that represented its proportionate share of the DoubleClick stock held by ValueClick. In addition to approximately $41.3 million of goodwill, DoubleClick’s investment in ValueClick also included an amount of approximately $18.7 million which represented the estimated fair value of the warrant on February 28, 2000. DoubleClick’s investment in ValueClick has been accounted for under the equity method, with a 90-day lag in reporting DoubleClick’s share of the results of ValueClick. DoubleClick has recorded its proportionate share of ValueClick’s net income or loss and the amortization of goodwill associated with this investment in “Equity in losses of affiliates” in the Consolidated Statements of Operations. This goodwill was amortized on a straight-line basis using a three-year estimated useful life.

      In the first quarter of 2000, DoubleClick recorded the effects of ValueClick’s initial public offering of 4.0 million shares of common stock at $19.00 per share. ValueClick’s net proceeds, after deducting underwriting discounts, commissions and direct offering costs, were approximately $68.6 million. As a result of this offering, DoubleClick’s ownership interest was reduced from 33.0% to 28.1% and the value of its proportionate share of ValueClick’s net assets increased. DoubleClick recorded an increase in the value of its investment in ValueClick of $12.9 million, reduced the carrying amount of treasury stock to approximately $23.8 million and recognized a gain of approximately $8.9 million. This gain has been included in “Gain on equity transactions of affiliates, net” in the Consolidated Statements of Operations.

      In the third quarter of 2000, DoubleClick management determined that the remaining exercise period of its warrant to purchase approximately 10.8 million additional common shares of ValueClick was not a sufficient period to allow for the price of ValueClick common stock to move above the warrant’s strike price. The application of an option-pricing model confirmed that the estimated fair value of the ValueClick warrant was negligible. As a result, DoubleClick wrote off the entire value of the warrant and recognized an impairment charge of approximately $18.7 million. This charge has been reflected as “Write-down of warrant” in the Consolidated Statements of Operations.

      In the third quarter of 2000, DoubleClick recognized its proportionate share of the gain resulting from the initial public offering of ValueClick Japan, a consolidated subsidiary of ValueClick. Pursuant to SAB 51, ValueClick recognized a gain to the extent that a portion of its interest was deemed sold through the offering at a price higher than its original basis. DoubleClick’s proportionate share of this gain, approximately $3.9 million, has been included in “Equity in losses of affiliates” in the Consolidated Statements of Operations.

      In light of the steady decline in the market price of ValueClick’s common stock since its initial public offering, DoubleClick management made an assessment of the carrying value of its investment in ValueClick in the fourth quarter of 2000 and determined that it was in excess of its estimated fair value. Consequently, DoubleClick wrote down its investment in ValueClick and recognized an impairment charge of approximately $24.1 million, which represented the difference between the carrying value and the estimated fair value of its investment in ValueClick. This impairment has been recorded as “Impairment of investments in affiliates” in the Consolidated Statements of Operations. The estimated fair value of DoubleClick’s investment in ValueClick was determined based on the closing market price of ValueClick common stock on December 1, 2000.

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      In the first quarter of 2001, DoubleClick recorded the effects of ValueClick’s issuance of approximately 5.7 million shares to complete a purchase acquisition of Bach Systems, Inc. (“Bach Systems”) and to consummate a pooling of interests merger with ClickAgents.com, Inc. (“ClickAgents”). DoubleClick has treated the ValueClick’s pooling with ClickAgents as a book value purchase of ClickAgents by ValueClick. As a result of these transactions, DoubleClick’s ownership interest was reduced from 28.1% to 23.5% and the value of its proportionate share of ValueClick’s net assets decreased. DoubleClick recorded a decrease in the value of its investment in ValueClick of $3.8 million, reduced the carrying value of treasury stock to approximately $15.3 million and recognized a loss of approximately $3.8 million. This loss has been included in “Gain on equity transactions of affiliates, net” in the Consolidated Statements of Operations. Under the terms of the purchase agreement, ValueClick may issue additional shares of common stock to the former shareholders of Bach Systems if certain performance objectives are achieved over the eight quarters following the closing date.

      In the second quarter of 2001, DoubleClick recorded the effects of ValueClick’s issuance of approximately 2.7 million shares to complete its pooling of interest merger with Z Media, Inc. As a result of the merger, DoubleClick’s ownership interest in ValueClick was reduced from 23.5% to 21.7% and the value of its proportionate share of ValueClick’s net assets decreased. Pursuant to its accounting policy, DoubleClick recorded a decrease in the value of its investment in ValueClick of $1.8 million, reduced the carrying amount of treasury stock to $14.2 million and recognized a loss of approximately $1.5 million. This loss has been included in “Gain on equity transactions of affiliates, net” in the Consolidated Statements of Operations.

      In the second quarter of 2001, ValueClick sold the remaining 567,860 shares of DoubleClick common stock it owned to third parties. DoubleClick recorded an increase in the value of its investment in ValueClick of approximately $1.5 million, which was equal to its proportionate share of the cash proceeds from the sale. Also as a result of this transaction, DoubleClick reduced the carrying amount of treasury stock to zero and recognized a charge to retained earnings of approximately $12.7 million, which represented the difference between the treasury shares’ original basis and the cash proceeds from the sale.

      In response to the prolonged downturn of the economy in general, and the continued weakness in aggregate online advertising spending in particular, DoubleClick management undertook a review of the recoverability of certain of its investments in the third quarter of 2001. Noting the continued fall in the price of ValueClick stock, management determined that its investment in ValueClick was impaired. Consequently, DoubleClick wrote down its investment in ValueClick and recognized an impairment charge of approximately $11.7 million, which represented the difference between DoubleClick’s carrying value and the estimated fair value of its investment in ValueClick. The estimated fair value of DoubleClick’s investment in ValueClick was determined based on the closing market price of ValueClick stock on September 30, 2001. This charge has been included in “Impairment of investments in affiliates” in the Consolidated Statements of Operations.

      In the fourth quarter of 2001, DoubleClick recorded the effects of ValueClick’s issuance of approximately 0.6 million shares to the former shareholders of Bach Systems upon the achievement of certain performance objectives. As a result of this issuance, DoubleClick’s ownership interest was reduced from 21.7% to 21.3% and the value of its proportionate share of ValueClick’s net assets decreased. DoubleClick recorded a decrease in the value of its investment in ValueClick of $0.3 million and recognized a loss of approximately $0.3 million. This loss has been included in Gain on equity transactions of affiliates, net in the Consolidated Statements of Operations.

      Also in the fourth quarter of 2001, DoubleClick recorded the effects of ValueClick’s issuance of approximately 14.9 million shares to complete its purchase acquisition of Mediaplex, Inc. As a result of the merger, DoubleClick’s ownership interest was reduced from 21.3% to 15.2% and the value of its proportionate share of ValueClick’s net assets decreased. DoubleClick recorded a decrease in the value of its investment in ValueClick of $0.1 million and recognized a loss of approximately $0.1 million. This loss has been included in “Gain on equity transactions of affiliates, net” in the Consolidated Statements of Operations.

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      For the year ended December 31, 2001 and 2000, DoubleClick recognized approximately $0.7 million and $9.1 million, respectively, of goodwill amortization associated with its investment in ValueClick.

      As a result of the cumulative dilutive effects of the transactions described above, DoubleClick does not believe that it was able to exercise significant influence over its investment in ValueClick as of December 31, 2001. Accordingly, DoubleClick no longer record its proportionate share of ValueClick’s results but instead carry this investment at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. DoubleClick’s investment in ValueClick is included in “Investment in affiliates” in the Consolidated Balance Sheets.

      In the fourth quarter of 2002 DoubleClick entered into a repurchase agreement with ValueClick whereby ValueClick repurchased all of the remaining 7.9 million shares for $21.3 million or approximately $2.70 per share. DoubleClick recognized a gain of $4.7 million from the sale of the investment, which has been included in “Gain on sale of investments in affiliates” on the Consolidated Statements of Operations.

NOTE 7 — Goodwill

      The changes in the carrying amount of goodwill for the year ended December 31, 2002 are as follows:

	Tech			Media			Data			Total
	(In thousands)
Balance at January 1, 2002	$	35,806		$	14,276		$	7,485		$	57,567
Acquisition of MessageMedia (See Note 2)		28,514			—			—			28,514
Sale of European Media business (See Note 2)		—			(6,186	)		—			(6,186	)
Sale of @plan research product line (See Note 4)		—			—			(7,485	)		(7,485	)
Goodwill impairment (See Note 9)		(43,768	)		—			—			(43,768	)
Effect of foreign currency translation		20			813			—			833
Deconsolidation of DoubleClick Japan (See Note 3)		—			(8,903	)		—			(8,903	)
Balance at December 31, 2002	$	20,572		$	—		$	—		$	20,572

      Upon the adoption of SFAS No. 142 on January 1, 2002, DoubleClick ceased amortizing goodwill. The following adjusts reported net loss and basic and diluted net loss per share as if the adoption of SFAS No. 142 occurred as of January 1, 2000.

	Year Ended December 31,
	2002			2001			2000
	(In thousands, except per share amounts)
Reported net loss	$	(117,890	)	$	(265,828	)	$	(155,981	)
Add back: goodwill amortization		—			44,157			44,922
Adjusted net loss	$	(117,890	)	$	(221,671	)	$	(111,059	)
Reported basic and diluted net loss per share	$	(0.87	)	$	(2.02	)	$	(1.29	)
Add back: goodwill amortization		—			0.34			0.37
Adjusted basic and diluted net loss per share	$	(0.87	)	$	(1.68	)	$	(0.92	)

      The amortization of goodwill is inclusive of goodwill amortization associated with DoubleClick’s investment in ValueClick of approximately $0.7 million and $9.1 million for the years ended December 31, 2001 and 2000, respectively.

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NOTE 8 — Intangible Assets

      Intangible assets consist of the following:

				December 31, 2002
		Weighted
		Average		Gross							December 31,
		Amortization		Carrying		Accumulated					2001
		Period		Amount		Amortization			Net		Net
		(In thousands)
Intangible assets:
	Patents and trademarks		36 months	$	2,084	$	(1,762	)	$	322	$	5,896
	Customer lists		27 months		21,599		(15,616	)		5,983		11,507
	Purchased technology and other		32 months		10,672		(3,599	)		7,073		4,442
			31 months	$	34,355	$	(20,977	)	$	13,378	$	21,845

      For the year ended December 31, 2001, DoubleClick purchased customer lists for approximately $12.6 million in cash.

      Amortization expense was $14.7 million, $8.8 million, and $5.3 million for the years ended December 31, 2002, 2001, and 2000 respectively. For the years ended December 31, 2002 and 2001, $2.3 million and $0.8 million, respectively, of amortization expense relating to purchased technology has been included as a component of cost of revenue in the Consolidated Statements of Operations.

      Based on the balance of intangible assets December 31, 2002, the annual amortization expense for each of the succeeding five years is estimated to be $8.7 million, $2.6 million, $0.8 million, $0.8 million, and $0.4 million in 2003, 2004, 2005, 2006, and 2007, respectively.

NOTE 9 — Impairment of Goodwill and Other Intangible Assets

      The persistence of unfavorable economic conditions led DoubleClick management to undertake a review of the recoverability of certain of its investments in the third quarter of 2001. As a result of significantly lower-than-expected revenues generated to date and considerably reduced estimates of future performance, management concluded that its investments in @plan.inc (“@plan”) and Flashbase, Inc. (“Flashbase”) were impaired. Accordingly, DoubleClick recognized an approximately $63.3 million impairment charge equal to the difference between its investments in and the estimated fair value of these entities in the third quarter of 2001. Of this amount, approximately $53.3 million related to @plan and $10.0 million related to Flashbase.

      The amount of the goodwill impairment was calculated based on discounted analyses of these entities’ expected future cash flows, which were no longer deemed adequate, to support the value of the goodwill associated with these investments. In both cases, sharply-reduced estimates of anticipated revenue growth and operating results, triggered primarily by the continued softness in aggregate online advertising spending, generated correspondingly lowered expectations of future cash flows and formed the basis for the recording of the charge in the third quarter of 2001.

      These businesses’ expected future cash flows and terminal values are based on management’s budgeted forecasts and estimates. In its calculation to determine the impairment charge for its investment in @plan, DoubleClick used a discount rate of 15% and assumed a remaining useful life of 2.5 years, which represented the remaining useful life of the goodwill associated with this investment. In its calculation to determine the impairment charge for Flashbase, DoubleClick used a discount rate of 15% and a useful life of 1.75 years, which represented the remaining useful life of the goodwill associated with this investment.

      In connection with DoubleClick’s decision to sell its European Media operations, management determined that the estimated fair value of the consideration it would receive pursuant to the sale agreement would

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be less than the carrying value of its European Media operations. As a result, management concluded that its investment in its European Media operations was impaired. DoubleClick recorded a charge of approximately $8.8 million in the fourth quarter of 2001, which represented the difference between the estimated fair value of the consideration to be received and the carrying value of the net assets to be sold.

      In 2002, based upon the prolonged softness in the economy and the current and projected operational performance of DoubleClick’s email reporting unit, DoubleClick initiated a third-party valuation of its email reporting unit to determine whether the recorded balance of goodwill related to this reporting unit was recoverable. The outcome of this valuation resulted in an impairment charge of approximately $43.8 million being recorded during the year. The fair market value of the email reporting unit was determined based on revenue projections, recent transactions involving similar businesses and price/revenue multiples at which they were bought and sold, and price/revenue multiples of our competitors in the email marketplace. In addition, DoubleClick also determined that the fair value of certain intangibles assets were considered impaired. DoubleClick recorded an impairment charge of $3.3 million based on the difference between the carrying value and estimated fair value of certain intangible assets also associated with the email reporting unit.

NOTE 10 — Property and Equipment

			December 31,
	Estimated
	Useful Life		2002			2001
			(In thousands)
Computer equipment and purchased software		1-3 years	$	181,145		$	167,037
Furniture and fixtures		5 years		8,833			12,769
Leasehold improvements		1-15 years		20,741			48,116
Building and building improvements		20-40 years		26,654			26,331
Land				3,050			3,050
Capital work-in-progress				1,364			3,637
				241,787			260,940
Less accumulated depreciation and amortization				(143,242	)		(103,944	)
			$	98,545		$	156,996

      Depreciation and amortization expense related to property and equipment was approximately $42.3 million, $53.4 million and $33.4 million in 2002, 2001 and 2000, respectively.

NOTE 11 — Convertible Subordinated Notes

      On March 17, 1999, DoubleClick issued 4.75% Convertible Subordinated Notes due 2006 with a principal amount of $250 million (the “Convertible Notes”). The Convertible Notes are convertible into DoubleClick common stock at a conversion price of $41.25 per share, subject to adjustment at the occurrence of certain events and at the holder’s option. Interest on the Convertible Notes is payable semiannually on March 15 and September 15 of each year. The Convertible Notes are unsecured and are subordinated to all existing and future Senior Indebtedness (as defined in the Convertible Notes indenture) of DoubleClick. If the closing sales price of DoubleClick common stock exceeds 140% of the conversion price for at least 20 trading days in any consecutive 30 trading day period, or anytime after March 15, 2003, the Convertible Notes may be redeemed at the option of DoubleClick, in whole or in part, at the redemption prices set forth in the Convertible Notes indenture.

      Upon occurrence of a change of control of DoubleClick or if DoubleClick’s common stock is no longer listed for trading on the Nasdaq Stock Market’s National Market, a United States national securities

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exchange or an established automated over the counter trading market in the United States prior to maturity of the Convertible Notes, each holder of the Convertible Notes has the right to require DoubleClick to redeem all or any part of the holder’s Convertible Notes at a price equal to 100% of the principal amount, plus accrued interest, of the Convertible Notes being redeemed.

      Interest expense relating to the Convertible Notes was approximately $10.3 million, $11.6 million and $11.9 million for the years ended December 31, 2002, 2001 and 2000, respectively.

      In the second half of 2001, DoubleClick repurchased approximately $30.3 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $21.9 million in cash. DoubleClick wrote off approximately $0.2 million in deferred issuance costs and recognized a gain of approximately $8.2 million.

      In the third quarter of 2002, DoubleClick repurchased $64.9 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $53.6 million in cash, inclusive of $1.2 million of accrued interest payable. DoubleClick wrote off approximately $0.7 million in deferred issuance costs and recognized a gain of approximately $11.9 million.

NOTE 12 — Stockholders’ Equity

      DoubleClick’s Certificate of Incorporation authorizes 400,000,000 shares of $0.001 par value common stock and authorizes 5,000,000 shares of preferred stock.

      Pursuant to an underwriting agreement dated February 17, 2000, DoubleClick completed a public offering of 7,500,000 shares of its common stock, of which DoubleClick sold 5,733,411 shares and certain stockholders sold 1,766,589 shares. DoubleClick’s net proceeds were approximately $502.9 million, after deducting underwriting discounts, commissions and offering expenses.

      Certain holders of common stock are subject to substantial restrictions on transfer and also have certain “piggyback” and demand registration rights which, with certain exceptions, require DoubleClick to use its best efforts to include in any of DoubleClick’s registration statements any shares requested to be so included. Further, DoubleClick will pay all expenses directly incurred on its behalf in connection with such registration.

Stock splits

      In April 1999 and January 2000, DoubleClick effected two-for-one stock splits in the form of 100 percent stock dividends. The splits were approved for shareholders of record as of March 22, 1999 and December 31, 1999, respectively. Accordingly, all share and per share amounts presented in these consolidated financial statements and related notes have been restated to reflect these stock splits.

Stock repurchase plan

      In September 2001, the Board of Directors authorized a stock repurchase program that permitted the repurchase of up to $100 million of outstanding DoubleClick common stock or convertible subordinated notes over a one-year period. During the year ended December 31, 2001, DoubleClick purchased 765,000 shares of its common stock at an average price of $5.84 per share. In the third quarter of 2002, DoubleClick purchased 915,500 shares of its common stock at an average price of $4.90 per share.

Employee stock purchase plan

      Under the DoubleClick Employee Stock Purchase Plan (the “ESPP”), which became effective on April 3, 2000, participating employees may purchase shares of DoubleClick common stock at 85% of its fair market value at the beginning or end of an offering period, whichever is lower, through payroll deductions in an amount not to exceed 10% of an employee’s base compensation. For the years ended December 31, 2002 and 2001, DoubleClick issued 175,166 and 243,961 shares respectively, pursuant to its ESPP. An additional 2,295,472 shares were reserved for issuance at December 31, 2002.

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Stock purchase warrants

      In connection with its acquisition of @plan in February 2001, DoubleClick assumed 99,495 stock purchase warrants. These warrants each represent the right to purchase, until May 26, 2006, one share of DoubleClick common stock at an exercise price of $28.14 per share. As of December 31, 2002, none of these warrants have been exercised.

      In connection with its acquisition of FloNetwork in April 2001, DoubleClick assumed 7,452 stock purchase warrants. These warrants each represent the right to purchase, until September 22, 2007, one share of DoubleClick common stock at an exercise price of $27.13 per share. As of December 31, 2002, none of these warrants have been exercised.

      At December 31, 2002, DoubleClick had 106,947 stock purchase warrants outstanding with a weighted-average exercise price of $28.07. At December 31, 2002, the weighted-average remaining contractual life of these warrants was approximately 3.5 years.

Stock incentive plan

      The 1997 Stock Incentive Plan (the “1997 Plan” or the “Plan”) was adopted by the Board of Directors on November 7, 1997 and was subsequently approved by the stockholders.

      Under the 1997 Plan, 37,548,162 shares of common stock have been authorized for the issuance of incentive and nonqualified stock options as of December 31, 2002. In addition, 10,866,138 shares of common stock are available for future grants under the 1997 Plan as of December 31, 2002. The number of shares of common stock reserved for issuance under the 1997 Plan automatically increases on the first trading day of each calendar year, by an amount equal to three percent (3%) of the total number of shares of common stock outstanding on the last trading day of the immediately preceding calendar year, provided that no such increase will exceed 2,400,000 shares.

      Generally, options granted under the Plan vest ratably over a period of three to four years from the date of grant and expire 10 years from the date of grant and terminate, to the extent unvested, on the date of termination, and to the extent vested, generally at the end of the three-month period following the termination of employment. To the extent that an option grant permits the exercise of unvested shares and is subject to repurchase by DoubleClick upon an employee’s termination of service, those unvested shares of common stock that are subsequently repurchased by DoubleClick, whether at the exercise price or direct issue paid per share, will be added to the reserve of common stock available for issuance under the 1997 Plan. In no event, however, may any one participant in the 1997 Plan receive option grants or direct stock issuances for more than 1,500,000 shares of common stock in the aggregate per calendar, beginning with the 1998 calendar year.

      In October 1999, DoubleClick implemented the 1999 Non-Officer Stock Incentive Plan, pursuant to which 750,000 shares of common stock have been authorized for issuance. As of December 31, 2002 no shares have been issued under this plan.

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      A summary of the stock option activity for the three years ended December 31, 2002 is as follows:

		Outstanding			Weighted
		Number of			Average Exercise
		Options			Price
Balance at December 31, 1999			23,110,571		$	35.95
	Options granted		8,597,287			65.49
	Options exercised		(4,653,638	)		10.68
	Options canceled		(4,807,972	)		65.55
Balance at December 31, 2000			22,246,248			46.03
	Options assumed		1,535,692			10.72
	Options granted		8,243,903			9.26
	Options exercised		(1,879,790	)		3.83
	Options canceled		(6,196,592	)		49.75
Balance at December 31, 2001			23,949,461			33.46
	Options granted		6,151,677			7.03
	Options exercised		(1,623,591	)		2.81
	Options canceled		(9,769,856	)		47.01
Balance at December 31, 2002			18,707,691		$	24.17
Exercisable at December 31, 2002			8,940,410		$	30.11
Available for future grants			11,616,138

      For the years ended December 31, 2001 and 2000, DoubleClick amortized $236,000 and $637,000 respectively, of deferred compensation related to options which were granted with exercise prices below fair market value at the date of grant. As of December 31, 2002, all deferred compensation has been fully amortized. All stock options granted in 2002 and 2001 were granted with exercise prices at fair market value at the date of grant.

      The following table summarizes information about stock options outstanding at December 31, 2002:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
Actual Range of	Outstanding		Contractual		Exercise		Exercisable		Exercise
Exercise Prices	at 12/31/02		Life		Price		at 12/31/02		Price
0.01-  2.00		1,808,814		3.4		0.10		1,808,814		0.10
2.01-  9.00		7,361,747		7.3		6.44		1,492,290		5.82
9.01- 14.00		3,884,663		7.3		11.54		1,617,411		11.57
14.01- 50.00		2,413,314		7.1		28.12		1,978,497		28.71
50.01-124.56		3,197,803		6.9		86.92		2,005,921		85.45
124.57-1,134.80		41,350		7.1		336.29		37,477		357.48

NOTE 13 — Non-Cash Compensation

      Non-cash compensation primarily represents the consideration paid to certain former shareholders of DoubleClick Scandinavia AB (“DoubleClick Scandinavia”). Shares of DoubleClick common stock were issued based upon the continued employment of the former shareholders and the attainment of specific

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revenue objectives for the year ended December 31, 2001. In May 2001, DoubleClick agreed to pay the former shareholders the minimum consideration they were entitled to receive for the 2001 fiscal year under the terms of the original agreement. As a result, DoubleClick recognized approximately $15.2 million in non-cash compensation expense, which represented the remaining unaccrued portion of this accelerated payment.

Note 14 — Restructuring Charges

2000 Restructuring

      In December 2000, management took certain actions to reduce employee headcount in order to better align its sales, development and administrative organization. This involved the involuntary terminations of approximately 180 employees. As a consequence, DoubleClick recorded a $2.4 million charge to operations during the fourth quarter of 2000 related to payments for severance as well as the costs of outplacement services and the provision of continued benefits to terminated personnel. As of December 31, 2000, approximately $1.2 million of the $2.4 million charge remained accrued in “Accrued expenses and other current liabilities”. In 2001, the remainder of the 2000 restructuring charge was paid.

2001 Restructuring

      Throughout 2001, DoubleClick’s management took certain actions to increase operational efficiencies and bring costs in line with revenues. These measures included the involuntary terminations of approximately 605 employees, primarily from our Media and TechSolutions divisions, as well as the consolidation of some of our leased office space and the closure of several of our offices. As a consequence, we recorded an $84.2 million charge to operations during the year of 2001. This charge included approximately $10.4 million for severance-related payments to terminated employees, approximately $51.7 million for the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously recorded), approximately $19.5 million for the write-off of fixed assets situated in office locations that were closed or consolidated, and approximately $2.6 million in other exit costs, which included consulting and professional fees related to the restructuring activities and expenses associated with the decision to move the TechSolutions customer support department from New York to Colorado. These fixed asset impairments arose primarily from the write-off of the carrying values of leasehold improvements in offices in New York, San Francisco and London that were abandoned as part of the restructuring activities. As of December 31, 2001, approximately $15.0 million and $34.6 million remained accrued in “Accrued expenses and other current liabilities” and “Other long-term liabilities”, respectively.

2002 Restructuring

      During 2002, management took additional steps to realign its sales, development and administrative organization and reduce corporate overhead to position DoubleClick for profitable growth in the future consistent with management’s long-term objectives. This involved the involuntary termination of approximately 250 employees, primarily from our TechSolutions division, as well as charges for excess real estate space and the closure of several offices. As a consequence, DoubleClick recorded a charge of $98.4 million to operations during the year, of which $94.0 million and $4.4 million have been classified in operating expenses and cost of revenue, respectively. The charge primarily related to payments for severance of approximately $5.7 million, the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously accrued) of approximately $77.0 million, and the write-off of fixed assets situated in closed or abandoned offices of approximately $15.7 million. The accrual for future lease costs and the write-off of fixed assets were primarily related to our New York office. These charges were driven by the abandonment of additional space, reductions in the estimates of future sublease income, as well as the lengthening of the time required to find a sublease tenant. In addition, management decided to move our data center operations from New York to our Thornton, Colorado facility. As a result, DoubleClick recorded a charge of $4.4 million to

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cost of revenue relating to the write-off of related fixed assets. As of December 31, 2002, approximately $36.1 million and $71.0 million remained accrued in “Accrued expenses and other current liabilities” and “Other long-term liabilities”, respectively.

      In determining the restructuring charge associated with its future lease commitments, DoubleClick engaged a third party real estate firm to provide it with estimates of the expected future sublease income for its excess and idle space, which also includes an estimate of the time period required to identify sublessees. This analysis was performed based on the current real estate market conditions in the local markets where DoubleClick’s facilities are located. This real estate firm also provided estimates of lease termination/buyout fees landlords may charge to terminate existing leases rather than subleasing idle and excess space. DoubleClick’s restructuring charge relating to future lease commitments is based on its review of this information. Should market conditions or other circumstances change, this information may be updated and additional charges may be required.

      The following table sets forth a summary of the costs and related charges for DoubleClick’s restructuring charges and the balance of the restructuring reserves established:

					Future Lease
					Costs, Related
					Asset Write-offs
		Severance			& Other Exit Costs			Total
2000 Restructuring
	Restructuring charge	$	2,389		$	—		$	2,389
	Cash expenditures		(1,217	)		—			(1,217	)
Balance at December 31, 2000			1,172			—			1,172
	Cash Expenditures		(1,172	)		—			(1,172	)
Balance at December 31, 2001		$	—		$	—		$	—
2001 and 2002 Restructuring
	Restructuring charge	$	10,407		$	73,760		$	84,167
	Cash expenditures		(9,492	)		(7,371	)		(16,863	)
	Reversal of deferred rent liability		—			2,758			2,758
	Non cash charges		—			(20,441	)		(20,441	)
Balance at December 31, 2001			915			48,706			49,621
	Restructuring charge		5,718			92,667			98,385
	Cash expenditures		(6,277	)		(13,540	)		(19,817	)
	Reversal of deferred rent liability		—			2,440			2,440
	Non cash charges		—			(23,515	)		(23,515	)
Balance at December 31, 2002		$	356		$	106,758		$	107,114

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 15 — Income Taxes

      Loss before provision for income taxes consisted of:

	Year Ended December 31,
	2002			2001			2000
	(In thousands)
U.S.	$	(92,965	)	$	(223,603	)	$	(43,731	)
Foreign		(22,680	)		(39,668	)		(111,400	)
	$	(115,645	)	$	(263,271	)	$	(155,131	)

      The provision (benefit) for income taxes consisted of:

		Year Ended December 31,
		2002		2001		2000
		(In thousands)
Current tax provision (benefit):
	Federal	$	—	$	—	$	(1,724	)
	State and local		681		1,294		900
	Foreign		4,113		3,470		2,321
Total current tax provision		$	4,794	$	4,764	$	1,497
Deferred tax provision (benefit):
	Federal	$	—	$	—	$	—
	State and local		—		—		—
	Foreign		—		—		—
Total deferred tax provision (benefit)			—		—		—
Provision for income taxes		$	4,794	$	4,764	$	1,497

      The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate as follows:

	Year Ended December 31,
	2002			2001			2000
	(In thousands)
Tax at U.S. Federal income tax rate	$	(40,476	)	$	(92,145	)	$	(54,296	)
State taxes, net of federal income tax effect		443			842			585
Domestic nondeductible compensation		—			83			222
Domestic valuation allowance		20,717			41,165			13,080
Foreign operations		8,349			25,138			41,946
Domestic nondeductible goodwill		16,206			30,341			2,743
Other		(445	)		(660	)		(2,783	)
Income tax provision	$	4,794		$	4,764		$	1,497

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      The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2002 and 2001 are as follows:

		December 31,
		2002			2001
		(In thousands)
Deferred tax assets:
	Allowance for doubtful accounts and advertiser discounts	$	3,791		$	6,924
	Property and equipment		27,102			9,820
	Accrued expenses and other		6,834			5,477
	Net operating loss, capital loss and tax credit carryforwards		210,626			188,094
	Equity investments		507			27,101
	Restructuring charges		43,844			18,584
	Other		959			5,819
Total deferred tax assets			293,663			261,819
Valuation allowance			(293,663	)		(261,819	)
Net deferred tax assets		$	—		$	—

      DoubleClick has recorded a full valuation allowance against its net deferred tax assets for the year ended December 31, 2002 since management believes that after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, it is not more likely than not that these assets will be realized.

      At December 31, 2002, DoubleClick had domestic and foreign net operating loss carryforwards of approximately $461.2 million. The federal net operating loss carryforward was $415.9 million. Approximately $332.6 million of these net operating loss carryforwards relate to the exercise of employee stock options and any tax benefit derived therefrom, when realized, will be accounted for as a credit to additional paid-in capital rather than a reduction to the income tax provision. Approximately $43.8 million of net operating loss carryforwards were acquired in various corporate acquisitions and any tax benefit derived therefrom, when realized, will be accounted for as a credit to goodwill or other acquired intangible assets rather than a reduction to the income tax provision. In addition, DoubleClick had $42.1 million of capital loss carryforwards and $4.0 million of research tax credit carryforwards. The federal net operating loss and research tax credit carryforwards expire in various years beginning in 2012, while the capital loss carryforwards expire in various years beginning in 2007. The utilization of a portion of the net operating loss, capital loss, and research tax credit carryforwards may be subject to limitations under U.S. federal, state and local, and foreign income tax laws.

NOTE 16 — Additional Financial Information

      Supplementary disclosure of cash flow information:

	Year Ended December 31,
	2002		2001		2000
	(In thousands)
Cash paid for interest	$	11,972	$	13,049	$	12,061
Cash paid for income taxes	$	1,418	$	1,146	$	1,256

      Non-cash investing activities: During the years ended December 31, 2001 and 2000 DoubleClick recorded approximately $7.0 million and $10.3 million, respectively, related to capital lease obligations.

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DOUBLECLICK INC.

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      The following summarizes the components of interest and other, net:

	Year Ended December 31,
	2002			2001			2000
	(In thousands)
Interest income	$	25,715		$	43,029		$	54.437
Interest expense		(10,838	)		(12,816	)		(12,093	)
Miscellaneous income		—			—			13,657
Other		1,055			(958	)		(2,200	)
	$	15,932		$	29,255		$	53,801

      For the year ended December 31, 2000, miscellaneous income included approximately $5.0 million related to contract termination fees associated with the restructuring of DoubleClick’s Advertising Services Agreement with AltaVista in fiscal year 2000 and $8.6 million related to merger termination fees paid by NetCreations to DoubleClick on the termination of a merger agreement in December 2000.

NOTE 17 — Benefit Plan

      DoubleClick has a defined contribution plan offered to all eligible employees and is qualified under section 401(k) of the Internal Revenue Code. Participating employees may contribute a percentage of their salary to the plan. Employee contributions are invested at the direction of the employee in one or more funds or DoubleClick common stock. Beginning February 2000, DoubleClick has partially matched employee contributions with DoubleClick common stock. Prior to February 2000, DoubleClick partially matched employee contributions with cash. DoubleClick contributed $1.9 million; $2.0 million and $2.5 million to the Plan during the years ended December 31, 2002, 2001 and 2000, respectively.

NOTE 18 — Commitments and Contingencies

Leases

      DoubleClick leases facilities and equipment under capital and operating leases expiring at various dates through 2015. DoubleClick also subleases facilities under operating leasing expiring at various dates through 2010. The future minimum lease payments and the sub rental income under these leases are as follows (in thousands):

	Capital			Operating		Sub Rental
Years Ending December 31,	Leases			Leases		Income
2003	$	6,526		$	25,520	$	(6,889	)
2004		859			27,837		(6,821	)
2005		—			28,082		(6,463	)
2006		—			25,155		(2,073	)
2007		—			24,390		(1,776	)
Thereafter		—			139,400		(11,841	)
Total minimum lease payments	$	7,385		$	270,384	$	(35,863	)
Less: amount representing interest		(370	)
Present value of net minimum lease payments	$	7,015

      Rent expense for the years ended December 31, 2002, 2001 and 2000 was $11.6 million, $15.6 million, and $16.8 million, respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Operating lease obligations primarily represent rental payments for office facilities. At December 31, 2002 DoubleClick has recorded restructuring reserves and assumed liabilities in connection with the acquisitions totaling approximately $120 million relating to excess and abandoned space at these facilities.

      In addition, DoubleClick had outstanding standby letters of credit of $19.1 million. These letters of credit collateralize DoubleClick’s obligations to third parties under certain operating leases.

Legal

      In April 2002, a consolidated amended class action complaint alleging violations of the federal securities laws in connection with DoubleClick’s follow-on offerings was filed in the United States District Court for the Southern District of New York naming as defendants DoubleClick, some of its officers and directors and certain underwriters of DoubleClick’s follow-on offerings. In October 2002, the action was dismissed against the named officers and directors without prejudice. However, claims against the Company remain. In July 2002, the Company and the other issuers in the consolidated cases filed motions to dismiss the amended complaint for failure to state a claim, which was denied as to the Company in February 2003. DoubleClick intends to dispute these allegations and defend this lawsuit vigorously.

NOTE 19 — Segment Reporting

      DoubleClick is organized into three segments: Technology (or “TechSolutions”), Data and Media. As a result of a series of transactions in 2002, DoubleClick was fully divested of its Media operations as of December 31, 2002. Accordingly, DoubleClick will not report a DoubleClick Media segment in the future. Following the sale of the European Media Business on January 28, 2002 and North American Media business on July 10, 2002, the Media operations consisted only of the investment in DoubleClick Japan. On December 26, 2002 DoubleClick reduced its ownership percentage in DoubleClick Japan and will no longer consolidate their results of operations. See Note 3, “Investment in DoubleClick Japan.”

      Revenues and gross profit by segment are as follows:

	Year Ended December 31, 2002											Year Ended December 31, 2001											Year Ended December 31, 2000
	Technology			Data			Media		Total			Technology			Data			Media		Total			Technology			Data			Media		Total
Revenue	$	187,155		$	83,349		$	32,660	$	303,164		$	206,999		$	81,329		$	129,336	$	417,664		$	203,391		$	72,355		$	253,827	$	529,573
Intersegment elimination		(2,603	)		(363	)		—		(2,966	)		(11,088	)		(929	)		—		(12,017	)		(23,848	)		(114	)		—		(23,962	)
Revenue from external customers	$	184,552		$	82,986		$	32,660	$	300,198		$	195,911		$	80,400		$	129,336	$	405,647		$	179,543		$	72,241		$	253,827	$	505,611
Segment gross profit	$	117,295		$	59,788		$	9,659	$	186,742		$	132,311		$	54,817		$	41,279	$	228,407		$	145,560		$	49,230		$	64,251	$	259,041
Data commission fee										(324	)										(157	)										—
Consolidated gross profit									$	186,418										$	228,250										$	259,041

		Revenues						Long-lived Assets
		2002		2001		2000		2002		2001
United States		$	231,310	$	304,544	$	397,265	$	122,589	$	168,524
International			68,888		101,103		108,346		19,034		76,947
	Total	$	300,198	$	405,647	$	505,611	$	141,623	$	245,471

      The accounting policies of DoubleClick’s segments are the same as those described in the summary of significant accounting policies. Intersegment revenues, which relate primarily to DART and Data transfer fees and the research consulting fees charged by @plan, are valued at approximately the same rates charged to external customers. DART and Data transfer fees are recognized as revenue by TechSolutions and Data,

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respectively, and as costs of revenue by DoubleClick’s other business units in the computation of segment gross profit. Correspondingly, these transfer fees have no net impact on the determination of consolidated gross profit. The revenues generated from intersegment research consulting services are included as a component of Data’s gross profit and are classified as operating expenses of DoubleClick’s other business units. All such intersegment amounts are eliminated in the Consolidated Statements of Operations.

85

SCHEDULE II

DOUBLECLICK INC

VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

						Additions Charged
				Balance at		to Costs and		Other						Balance at
Description				Beginning of Period		Expenses		Adjustments			Deductions			End of Period
2002:
	Allowances deducted from accounts receivable:
		Allowance for doubtful accounts		$	9,819	$	8,122	$	(2,753	)	$	(7,008	)	$	8,180
		Allowances for advertiser credits			11,760		11,004		(2,488	)		(14,752	)		5,524
			Total	$	21,579	$	19,126	$	(5,241	)	$	(21,760	)	$	13,704
2001:
	Allowances deducted from accounts receivable:
		Allowance for doubtful accounts		$	6,701	$	11,348	$	2,353		$	(10,583	)	$	9,819
		Allowances for advertiser credits			20,014		17,427		—			(25,681	)		11,760
			Total	$	26,715	$	28,775	$	—		$	(36,264	)	$	21,579
2000:
	Allowances deducted from accounts receivable:
		Allowance for doubtful accounts		$	6,634	$	16,946	$	—		$	(16,879	)	$	6,701
		Allowances for advertiser credits			8,370		30,132		—			(18,488	)		20,014
			Total	$	15,004	$	47,078	$	—		$	(35,367	)	$	26,715

Other adjustments represent amounts assumed in purchase accounting of business combinations

and amounts transferred as a result of business divestitures.

86

Item 9.     Changes In and Disagreements with Accountants and Financial Disclosure

      Not Applicable.

PART III

Item 10.     Directors and Executive Officers of the Registrant

      Incorporated by reference from the information in our proxy statement for the 2003 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

Other Information

      Our Chairman of the Board, Kevin O’Connor, has informed us that, in order to diversify his investment portfolio while avoiding conflicts of interest or the appearance of any such conflict that might arise from his position with the Company, he has established a new written plan in accordance with SEC Rule 10b5-1 for gradually liquidating a portion of his holdings of our common stock. In particular, we have been notified that during the period that commenced on March 14, 2003 and will end on March 12, 2004, Mr. O’Connor intends to sell a fixed number of shares of common stock on a weekly basis. The plan provides for the sale on specified dates during the term of 15,000 shares each week other than one week when 20,000 shares will be sold.

Item 11.     Executive Compensation

      Incorporated by reference from the information in our proxy statement for the 2003 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

Item 12.     Security Ownership of Certain Beneficial Owners and Management

      Incorporated by reference from the information in our proxy statement for the 2003 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

Item 13.     Certain Relationships and Related Transactions

      Incorporated by reference from the information in our proxy statement for the 2003 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

Item 14.     Controls and Procedures

      (a) Evaluation of disclosure controls and procedures. Based on the our evaluation of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a date within 90 days of the filing date of this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are operating in an effective manner.

      (b) Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation.

87

Item 15.     Principal Accountant Fees and Services

      Incorporated by reference from the information in our proxy statement for the 2003 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

PART IV

Item 16.      Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a) 1.     Financial Statements.

      The financial statements as set forth under Item 8 of this report are incorporated by reference.

      2.     Financial Statement Schedules.

      The financial statement schedule as set forth in Item 8 of this report is incorporated by reference.

      (b) Reports on Form 8-K

      None.

      (c) Exhibits.

Number			Description
	2.1	—	Agreement and Plan of Merger and Reorganization, dated as of June 13, 1999, by and among Registrant, Atlanta Merger Corp. and Abacus Direct Corporation (Incorporated by reference to Exhibit 2.1 of Registrant’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, among Registrant, NJ Merger Corporation and NetGravity, Inc. (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated July 22, 1999).
	2.3	—	Agreement for the Sale and Purchase of Shares, dated as of December 17, 1999, between Registrant and the Sellers listed on Appendix 1 thereto (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated January 12, 2000).
	2.4	—	Amended and Restated Agreement and Plan of Merger and Reorganization, dated as of November 17, 2000, by and among DoubleClick Inc., Atlas Merger Sub, Inc., Atlas Acquisition Corp. and @plan.inc, including annexes thereto but excluding any schedules (Incorporated by reference to @plan.inc’s Form 8-K filing, dated November 20, 2000).
	2.5	—	Amendment to the Amended and Restated Agreement and Plan of Merger and Reorganization, dated as of January 22, 2001, by and among DoubleClick Inc., Atlas Merger Sub, Inc., Atlas Acquisition Corp. and @plan. inc, as amended, (Incorporated by reference to Registrant’s Current Report on Form 8-K, dated January 22, 2001).
	2.8	—	Business Purchase Agreement, dated as of November 12, 2001, by and among DoubleClick Inc., several of its European subsidiaries, Channon Management Limited, AdLINK Internet Media AG, several of its European subsidiaries, and United Internet AG (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated November 21, 2001).
	2.9	—	Option Agreement, dated as of November 12, 2001, by and among DoubleClick Inc., Channon Management Limited, and United Internet AG (Incorporated by reference to Exhibit 2.2 of Registrant’s Current Report on Form 8-K dated November 21, 2001).
	2.10	—	Agreement and Plan of Merger, dated as of June 29, 2002, by and among MaxWorldwide, Inc., L90, Inc., Registrant, DoubleClick Media Inc., Picasso Media Acquisition, Inc. and Lion Merger Sub, Inc. (Incorporated by reference to Exhibit 99.2 of Registrant’s Current Report on Form 8-K dated July 11, 2002).
	3.1	—	Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form S-1 (Registration number 333-67459)).
	3.1(a)	—	Certificate of Amendment of our Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.01 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).

88

Number			Description
	3.1(b)	—	Certificate of Correction of Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1(a) of Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).
	3.2	—	Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.5 of the Registrant’s Registration Statement on Form S-1 (“Registration Statement No. 333-42323”)).
	4.1	—	Specimen common stock certificate (Incorporated by reference to Registration Statement No. 333-42323).
	4.2	—	Indenture, dated as of March 22, 1999, between Registrant and the Bank of New York, as trustee, including the form of 4.75% Convertible Subordinated Notes due 2006 attached as Exhibit A thereto (Incorporated by reference to Exhibit 6.1 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	4.3	—	Registration Agreement, dated as of March 22, 1999, by and among Registrant and the Initial Purchasers (Incorporated by reference to Exhibit 6.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	10.1	—	1996 Stock Option Plan (Incorporated by reference to Exhibit 10.1 of Registration Statement No. 333-42323).
	10.2	—	1997 Stock Incentive Plan (Incorporated by reference to Exhibit 99.1 of Registrant’s Registration Statement on Form S-8 (Registration No. 333-55618)).
	10.3	—	DoubleClick Employee Stock Purchase Plan (Incorporated by reference to Exhibit 99.13 of Registrant’s Registration Statement on Form S-8 (Registration No. 333-90653)).
	10.4	—	Stockholders Agreement, dated as of June 4, 1997 (Incorporated by reference to Exhibit 10.4 of Registration Statement No. 333-42323).
	10.5	—	Agreement of Lease, dated as of January 26, 1999 (the “New York Lease”), between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant (Incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
	10.6	—	Lease, dated March 2, 2000, by and between LNR-Lennar Brannan Street, LLC and DoubleClick Inc., as amended.
	10.7	—	Lease, dated May 22, 1998, between Western States Ventures, LLC and Abacus Direct Corporation, for office space in Broomfield, CO (Incorporated by reference to Exhibit 10.9 of Registrant’s Annual Report on Form 10-K for the year ended 1999).
	10.8	—	First Amendment to the New York Lease, dated January 26, 1999, by and between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant.
	10.9	—	Second Amendment to the New York Lease, dated December 28, 1999, by and between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant.
	10.10	—	Severance Agreement, dated as of August 20, 2001, between DoubleClick Inc. and Jeffrey Epstein (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
	10.11	—	Severance Agreement, dated August 6, 2001 between DoubleClick Inc. and Stephen Collins (Incorporated by reference to Exhibit 10.15 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.12	—	Severance Agreement, dated October 31, 2001, between DoubleClick Inc. and Barry Salzman (Incorporated by reference to Exhibit 10.16 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.13	—	Severance Agreement, dated as of November 1, 2002, between DoubleClick Inc. and Christopher Saridakis (Incorporated by reference to Exhibit 10.17 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
	21.1	—	Subsidiaries of the Registrant.
	23.1	—	Consent of PricewaterhouseCoopers LLP.
	99.1	—	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	99.2	—	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

89

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, DoubleClick Inc. has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on this 27th day of March, 2003.

DOUBLECLICK INC.

By: /s/ KEVIN P. RYAN

Kevin P. Ryan

Chief Executive Officer and Director

      Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 27, 2003:

	Signature	Title
/s/ KEVIN P. RYAN (Kevin P. Ryan)		Chief Executive Officer (Principal Executive Officer) and Director
/s/ BRUCE DALZIEL (Bruce Dalziel)		Chief Financial Officer (Principal Financial Officer)
/s/ CORY DOUGLAS (Cory Douglas)		Vice President of Corporate Finance (Principal Accounting Officer)
/s/ KEVIN J. O’CONNOR (Kevin J. O’Connor)		Chairman of the Board of Directors
/s/ DWIGHT A. MERRIMAN (Dwight A. Merriman)		Director
/s/ DAVID N. STROHM (David N. Strohm)		Director
/s/ MARK E. NUNNELLY (Mark Nunnelly)		Director
/s/ W. GRANT GREGORY (W. Grant Gregory)		Director
/s/ DON PEPPERS (Don Peppers)		Director
/s/ THOMAS S. MURPHY (Thomas S. Murphy)		Director

90

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Kevin P. Ryan, certify that:

      1.      I have reviewed this annual report on Form 10-K of DoubleClick Inc.;

      2.       Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

      3.       Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

      4.       The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

      b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

      c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

      5.      The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

      a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

      6.     The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ KEVIN P. RYAN

Kevin P. Ryan

Chief Executive Officer

Dated: March 27, 2003

91

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Bruce Dalziel, certify that:

      1.       I have reviewed this annual report on Form 10-K of DoubleClick Inc.;

      2.      Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

      3.      Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

      4.      The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

      b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

      c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

      5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

      a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

      6.      The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ BRUCE DALZIEL

Bruce Dalziel

Chief Financial Officer

Dated: March 27, 2003

92

EXHIBIT INDEX

Number			Description
	2.1	—	Agreement and Plan of Merger and Reorganization, dated as of June 13, 1999, by and among Registrant, Atlanta Merger Corp. and Abacus Direct Corporation (Incorporated by reference to Exhibit 2.1 of Registrant’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, among Registrant, NJ Merger Corporation and NetGravity, Inc. (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated July 22, 1999).
	2.3	—	Agreement for the Sale and Purchase of Shares, dated as of December 17, 1999, between Registrant and the Sellers listed on Appendix 1 thereto (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated January 12, 2000).
	2.4	—	Amended and Restated Agreement and Plan of Merger and Reorganization, dated as of November 17, 2000, by and among DoubleClick Inc., Atlas Merger Sub, Inc., Atlas Acquisition Corp. and @plan.inc, including annexes thereto but excluding any schedules (Incorporated by reference to @plan.inc’s Form 8-K filing, dated November 20, 2000).
	2.5	—	Amendment to the Amended and Restated Agreement and Plan of Merger and Reorganization, dated as of January 22, 2001, by and among DoubleClick Inc., Atlas Merger Sub, Inc., Atlas Acquisition Corp. and @plan. inc, as amended, including annexes thereto but excluding any schedules (Incorporated by reference to Registrant’s Current Report on Form 8-K, dated January 22, 2001).
	2.8	—	Business Purchase Agreement, dated as of November 12, 2001, by and among DoubleClick Inc., several of its European subsidiaries, Channon Management Limited, AdLINK Internet Media AG, several of its European subsidiaries, and United Internet AG (Incorporated by reference to Exhibit 2.1 of Registrant’s Current Report on Form 8-K dated November 21, 2001).
	2.9	—	Option Agreement, dated as of November 12, 2001, by and among DoubleClick Inc., Channon Management Limited, and United Internet AG (Incorporated by reference to Exhibit 2.2 of Registrant’s Current Report on Form 8-K dated November 21, 2001).
	2.10	—	Agreement and Plan of Merger, dated as of June 29, 2002, by and among MaxWorldwide, Inc., L90, Inc., the Registrant, DoubleClick Media Inc., Picasso Media Acquisition, Inc. and Lion Merger Sub, Inc. (Incorporated by reference to Exhibit 99.2 of Registrant’s Current Report on Form 8-K dated July 11, 2002).
	3.1	—	Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form S-1 (Registration number 333-67459)).
	3.1(a)	—	Certificate of Amendment of our Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.01 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
	3.1(b)	—	Certificate of Correction of Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1(a) of Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).
	3.2	—	Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.5 of the Registrant’s Registration Statement on Form S-1 (“Registration Statement No. 333-42323”)).
	4.1	—	Specimen common stock certificate (Incorporated by reference to Registration Statement No. 333-42323).
	4.2	—	Indenture, dated as of March 22, 1999, between Registrant and the Bank of New York, as trustee, including the form of 4.75% Convertible Subordinated Notes due 2006 attached as Exhibit A thereto (Incorporated by reference to Exhibit 6.1 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	4.3	—	Registration Agreement, dated as of March 22, 1999, by and among Registrant and the Initial Purchasers (Incorporated by reference to Exhibit 6.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	10.1	—	1996 Stock Option Plan (Incorporated by reference to Exhibit 10.1 of Registration Statement No. 333-42323).
	10.2	—	1997 Stock Incentive Plan (Incorporated by reference to Exhibit 99.1 of Registrant’s Registration Statement on Form S-8 (Registration No. 333-55618)).

Number			Description
	10.3	—	DoubleClick Employee Stock Purchase Plan (Incorporated by reference to Exhibit 99.13 of Registrant’s Registration Statement on Form S-8 (Registration No. 333-90653)).
	10.4	—	Stockholders Agreement, dated as of June 4, 1997 (Incorporated by reference to Exhibit 10.4 of Registration Statement No. 333-42323).
	10.5	—	Agreement of Lease, dated as of January 26, 1999 (the “New York Lease”), between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant (Incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
	10.6	—	Lease, dated March 2, 2000, by and between LNR-Lennar Brannan Street, LLC and DoubleClick Inc., as amended.
	10.7	—	Lease, dated May 22, 1998, between Western States Ventures, LLC and Abacus Direct Corporation, for office space in Broomfield, CO (Incorporated by reference to Exhibit 10.9 of Registrant’s Annual Report on Form 10-K for the year ended 1999).
	10.8	—	First Amendment to the New York Lease, dated January 26, 1999, by and between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant.
	10.9	—	Second Amendment to the New York Lease, dated December 28, 1999, by and between John Hancock Mutual Life Insurance Company, as Owner and Landlord, and DoubleClick, as Tenant.
	10.10	—	Severance Agreement, dated as of August 20, 2001, between DoubleClick Inc. and Jeffrey Epstein (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
	10.11	—	Severance Agreement, dated August 6, 2001 between DoubleClick Inc. and Stephen Collins (Incorporated by reference to Exhibit 10.15 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.12	—	Severance Agreement, dated October 31, 2001, between DoubleClick Inc. and Barry Salzman (Incorporated by reference to Exhibit 10.16 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.13	—	Severance Agreement, dated as of November 1, 2002, between DoubleClick Inc. and Christopher Saridakis (Incorporated by reference to Exhibit 10.17 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
	21.1	—	Subsidiaries of the Registrant.
	23.1	—	Consent of PricewaterhouseCoopers LLP.
	99.1	—	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	99.2	—	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

STATEMENT OF DIFFERENCES

The trademark symbol shall be expressed as	‘TM’
The registered trademark symbol shall be expressed as	‘r’

EX-10.6

                                                                    EXHIBIT 10.6

                                          LEASE

This LEASE, which includes the preceding Summary Information and Definitions
("SUMMARY") attached hereto and incorporated herein by this reference ("Lease"),
is made as of the _____ day of March, 2000, by and between LNR-LENNAR BRANNAN
STREET, LLC, a California limited liability company limited liability company
("Landlord"), and DOUBLECLICK, INC., a Delaware corporation ("TENANT").

1. PREMISES.

1.1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises described in Section 1.5 of the Summary above, improved
or to be improved with the Tenant Improvements. Such lease is upon, and subject
to, the terms, covenants and conditions herein set forth and each party
covenants, as a material part of the consideration for this Lease, to keep and
perform their respective obligations under this Lease. The term "Premises" shall
only include Premises A and/or Premises B as and when such portions of the
Premises are delivered to Tenant in accordance with the terms hereof.

1.2. LANDLORD'S RESERVATION OF RIGHTS. Provided Tenant's use of and access to
the Premises is not interfered with in an unreasonable manner, and subject to
the terms of this Lease, Landlord reserves for itself the right from time to
time to enter the Premises to perform any obligations or exercise any rights of
Landlord set forth in this Lease.

1.3. MEASUREMENT OF PREMISES. As used in this Lease, the term "RENTABLE AREA" or
"RENTABLE SQUARE FOOTAGE" means the "Total Rentable Area" (and not the "Gross
Measured Area" or the "Building Rentable Area") measured in accordance with
ANSI/BOMA Z65.1 - 1996 (the "BOMA Standard").

The parties stipulate that for all purposes of this Lease, the Total Rentable
Area of the Premises is 117,000 rentable square feet.

2. TERM.

2.1. TERM; NOTICE OF LEASE DATES. The Term of this Lease as to Premises A and
Premises B, respectively, shall be for the period designated in Section 1.6 of
the Summary commencing on the Premises B Commencement Date (as determined
pursuant to Exhibit "C"), and ending on the expiration of such periods, unless
the Term is sooner terminated as provided in this Lease. If the Premises B
Commencement Date falls on any day other than the first day of a calendar month
then the term of this Lease will be measured from the first day of the month
following the month in which the Premises B Commencement Date occurs. Within ten
(10) days after Landlord's written request, Tenant shall execute a written
confirmation of the Premises A Commencement Date, the Premises B Commencement
Date and the expiration date of the Term in substantially the form of the Notice
of Lease Term Dates attached hereto as Exhibit "D". The Notice of Lease Term
Dates shall be binding upon Tenant unless Tenant objects thereto in writing
within such ten (10) day period.

2.2. ESTIMATED COMMENCEMENT DATE. It is estimated by the parties that the Term
of this Lease will commence on the Premises A Estimated Commencement Date set
forth in Section 1.7 of the Summary. The Estimated Commencement Date is merely
an estimate of the Premises A Commencement Date and, consequently, Tenant agrees
that Landlord shall have no liability to Tenant for any loss or damage, nor
shall Tenant be entitled to terminate or cancel this Lease if the Term of this
Lease does not commence by the Estimated Premises A Commencement Date for any
reason whatsoever, including any delays in substantial completion of the Tenant
Improvements.



2.3. EARLY OCCUPANCY. Tenant shall have the right to enter upon the Premises for
up to thirty (30) days prior to the Premises A Commencement Date and the
Premises B Commencement Date, respectively, for purposes of installing Tenant's
furniture, fixtures and equipment and data, voice and computer cabling
("TENANT'S WORK") in the applicable portion of the Premises. Tenant's Work shall
be performed by Tenant at Tenant's sole cost and expense. If Tenant occupies the
Premises prior to either Commencement Date, such early occupancy shall be
subject to all of the terms and conditions of this Lease, including, without
limitation, the provisions of Sections 17, 20 and 22, except that provided
Tenant does not commence the operation of business from the Premises A or
Premises B, as applicable, Tenant will not be obligated to pay Monthly Basic
Rent or any additional rent during the period of such early occupancy. Tenant
agrees to provide Landlord with prior notice of any such intended early
occupancy and to cooperate with Landlord during the period of any such early
occupancy so as not to interfere with Landlord in the completion of any
improvements to the Premises constructed pursuant to Exhibit "C".

3. RENT.

3.1. BASIC RENT. Tenant agrees to pay Landlord, as basic rent for the Premises,
the Monthly Basic Rent in the amounts designated in Section 1.8 of the Summary.
The Monthly Basic Rent shall be paid by Tenant in monthly installments in the
amounts designated in Section 1.8 of the Summary in advance on the first day of
each and every calendar month during the Term, without demand, notice, and,
except as otherwise expressly provided herein, without any deduction or offset
except that the first full month's Monthly Basic Rent for Premises A shall be
paid upon Tenant's execution and delivery of this Lease to Landlord. Monthly
Basic Rent for any partial month shall be prorated in the proportion that the
number of days this Lease is in effect during such month bears to the actual
number of days in such month.

3.2. ADDITIONAL RENT. All amounts and charges payable by Tenant under this Lease
in addition to the Monthly Basic Rent described in Section 3.1 above (including,
without limitation, payments for insurance, repairs and parking, and Tenant's
Percentage of Real Property Taxes and Assessments, and Insurance Costs,
respectively) shall be considered additional rent for the purposes of this
Lease, and the word "RENT" in this Lease shall include such additional rent
unless the context specifically or clearly implies that only the Monthly Basic
Rent is referenced. All additional rent shall be prorated to the extent any
charges are applicable to any periods outside the Term of this Lease and shall
also be prorated for Tenant's partial occupancy for the portion of the Term
prior to the Premises B Commencement Date. The Monthly Basic Rent and additional
rent shall be paid to Landlord as provided in Section 7, without any prior
demand therefor and, except as otherwise expressly provided herein, without any
deduction or offset whatever, in lawful money of the United States of America.

4. REAL PROPERTY TAXES AND ASSESSMENTS; INSURANCE COSTS.

4.1. DEFINITION OF REAL PROPERTY TAXES AND ASSESSMENTS. All Real Property Taxes
and Assessments shall be adjusted to reflect an assumption that the Building is
fully assessed for real property tax purposes as a completed building(s) ready
for occupancy. As used in this Lease, the term "REAL PROPERTY TAXES AND
ASSESSMENTS" shall mean: any form of assessment, license fee, license tax,
business license fee, commercial rental tax, levy, charge, improvement bond,
tax, water and sewer rents and charges, utilities and communications taxes and
charges or similar or dissimilar imposition imposed by any authority having the
direct power to tax, including any city, county, state or federal government, or
any school, agricultural, lighting, drainage or other improvement or special
assessment district thereof, or any other governmental charge, general and
special, ordinary and extraordinary, foreseen and unforeseen, which may be
assessed against any legal or equitable interest of Landlord in the Site and the
Premises, including the following by way of illustration but not limitation:

(a)   any tax on Landlord's "right" to rent or "right" to other income from the
      Premises or as against Landlord's business of leasing the Premises;

(b)   any assessment, tax, fee, levy or charge in substitution, partially or
      totally, of any assessment, tax, fee, levy or charge previously included
      within the definition of real property tax including assessments, taxes,
      fees, levies and charges may be imposed by governmental agencies for


                                      -2-


      such services as fire protection, street, sidewalk and road maintenance,
      refuse removal and for other governmental services formerly provided
      without charge to property owners or occupants. It is the intention of
      Tenant and Landlord that all such new and increased assessments, taxes,
      fees, levies and charges be included within the definition of "real
      property taxes" for the purposes of this Lease;

(c)   any assessment, tax, fee, levy or charge allocable to or measured by the
      area of the Premises or the rent payable by Tenant hereunder, including,
      without limitation, any gross receipts tax or excise tax levied by state,
      city or federal government, or any political subdivision thereof, with
      respect to the receipt of such rent, or upon or with respect to the
      possession, leasing, operation, management, maintenance, alteration,
      repair, use or occupancy by Tenant, or any portion thereof but not on
      Landlord's other operations;

(d)   any assessment, tax, fee, levy or charge upon this transaction or any
      document to which any tenant is a party, creating or transferring an
      interest or an estate in the Building; and/or

(e)   any assessment, tax, fee, levy or charge by any governmental agency
      related to any transportation plan, fund or system (including assessment
      districts) instituted within the geographic area of which the Building is
      a part.

Notwithstanding the foregoing provisions of this Section 4.1 above to the
contrary, "Real Property Taxes and Assessments" shall not include Landlord's
federal or state income, franchise, inheritance or estate taxes.

If Tenant reasonably believes that the amount of any real property tax is
improper for any reason, Tenant may notify Landlord in writing of Tenant's
desire that such real property taxes be contested or challenged with the
applicable taxing authority. Tenant shall indicate the basis for Tenant's
contention that such taxes are improper in Tenant's notice to Landlord. Upon
receipt of any such request from Tenant, Landlord shall have a period of thirty
(30) days in which to notify Tenant of Landlord's election to either initiate a
challenge or contest of such taxes or take no action with respect thereto. If
Landlord fails to notify Tenant of its election within such thirty (30) day
period Landlord shall be deemed to have elected to take no action with respect
to such taxes. If Landlord elects or is deemed to have elected to take no action
with respect to any such disputed taxes, Tenant shall have the right to contest
such taxes at Tenant's sole cost and expense provided Tenant notifies Landlord
in writing that it has elected to contest such taxes on its own. In the event
Tenant is successful in any such real property tax contest, and obtains for
Landlord a refund or rebate of overpaid taxes, Landlord agrees to reimburse
Tenant out of such reimbursed or refunded amount, the actual and reasonable
documented legal fees and expenses incurred by Tenant in prosecuting such tax
contest. Tenant shall also receive a pro rata portion of any tax refund or
rebate to the extent attributable to any portion of the Term for which Tenant
paid taxes hereunder.

4.2. DEFINITION OF INSURANCE COSTS. As used in this Lease, "Insurance Costs"
shall mean the cost of insurance obtained by Landlord pursuant to Section 21
(including self-insured amounts and deductibles) for the Project and the
Premises, including the Tenant Improvements.

4.3. ESTIMATE STATEMENT. By the first day of April of each calendar year during
the Term of this Lease, Landlord shall endeavor to deliver to Tenant a statement
("ESTIMATE STATEMENT") estimating the Real Property Taxes and Assessments, and
Insurance Costs for the current calendar year payable by Tenant. Landlord shall
have the right no more than three (3) times in any calendar year to deliver a
revised Estimate Statement for such calendar year if Landlord determines that
the Real Property Taxes and Assessments, and Insurance Costs are greater than
those set forth in the original Estimate Statement (or previously delivered
revised Estimate Statement) for such calendar year. The Real Property Taxes and
Assessments, and Insurance Costs shown on the Estimate Statement (or revised
Estimate Statement, as applicable) shall be divided into twelve (12) equal
monthly installments, and Tenant shall pay to Landlord, concurrently with the
regular monthly rent payment next due following the receipt of the Estimate
Statement (or revised Estimate Statement, as applicable), an amount equal to one


                                      -3-


(1) monthly installment of such Real Property Taxes and Assessments, and
Insurance Costs multiplied by the number of months from January in the calendar
year in which such statement is submitted to the month of such payment, both
months inclusive (less any amounts previously paid by Tenant with respect to any
previously delivered Estimate Statement or revised Estimate Statement for such
calendar year). Subsequent installments shall be paid concurrently with the
regular monthly rent payments for the balance of the calendar year and shall
continue until the next calendar year's Estimate Statement (or current calendar
year's revised Estimate Statement) is received.

4.4. ACTUAL STATEMENT. By the first day of April of each succeeding calendar
year during the Term of this Lease, Landlord shall endeavor to deliver to Tenant
a statement ("ACTUAL STATEMENT") of the actual Real Property Taxes and
Assessments, and Insurance Costs for the immediately preceding calendar year. If
the Actual Statement reveals that Real Property Taxes and Assessments, and
Insurance Costs were over-stated or under-stated in any Estimate Statement (or
revised Estimate Statement) previously delivered by Landlord pursuant to Section
4.8 above, then within thirty (30) days after delivery of the Actual Statement,
Tenant shall pay to Landlord the amount of any such under-payment, or Landlord
shall credit Tenant against the next monthly rent falling due, or, at Landlord's
sole discretion, pay to Tenant the amount of such over-payment, as the case may
be. Such obligation will be a continuing one which will survive the expiration
or earlier termination of this Lease. Prior to the expiration or sooner
termination of the Lease Term and Landlord's acceptance of Tenant's surrender of
the Premises, Landlord will have the right to estimate the actual Real Property
Taxes and Assessments, and Insurance Costs for the then current Lease Year and
to collect from Tenant prior to Tenant's surrender of the Premises, Tenant's
Percentage of any excess of such actual Real Property Taxes and Assessments, and
Insurance Costs over the estimated Real Property Taxes and Assessments, and
Insurance Costs paid by Tenant in such Lease Year. Within ninety (90) days after
the end of the calendar year in which the Term expires or is terminated,
Landlord shall deliver to Tenant an Actual Statement of Real Property Taxes and
Assessments and Insurance Costs for said calendar year. If such statement
reveals that Tenant has previously paid more than Tenant's Percentage of actual
Real Property Taxes and Assessments and Insurance Costs, Landlord shall refund
to Tenant the amount of any over-payment concurrently with its delivery of the
Actual Statement to Tenant. If the Actual Statement reveals that Tenant's
payments of estimated Real Property Taxes and Assessments and Insurance Costs
for the preceding calendar year were less than Tenant's Percentage of the actual
Real Property Taxes and Assessments and Insurance Costs, then Tenant shall pay
any deficiency to Landlord within thirty (30) days after receipt of the Actual
Statement. The obligations of the parties hereunder shall survive the expiration
or earlier termination of this Lease.

4.5. NO RELEASE. Any delay or failure by Landlord in delivering any Estimate or
Actual Statement pursuant to this Section 4 shall not constitute a waiver of its
right to receive Tenant's payment of Real Property Taxes and Assessments, and
Insurance Costs, nor shall it relieve Tenant of its obligations to pay Real
Property Taxes and Assessments, and Insurance Costs pursuant to this Section 4,
except that Tenant shall not be obligated to make any payments based on such
Estimate or Actual Statement until ten (10) business days after receipt of such
statement.

5. SECURITY DEPOSIT.

As security for the performance of certain obligations by Tenant under this
Lease, prior to and as a condition of Landlord commencing the construction of
the Base Building Improvements and the Tenant Improvements, Tenant shall post a
security deposit in the form of an irrevocable standby letter of credit ("LETTER
OF CREDIT") in compliance with all provisions of this Paragraph 5. The Letter of
Credit shall be in the amount specified in Section 1.11 of the Summary. The
Letter of Credit shall reflect Landlord as beneficiary, be issued by a bank
approved by Landlord, and shall be capable of being drawn upon at a location in
Southern California. In all cases, the identity of the issuer of the Letter of
Credit shall be subject to the approval of Landlord, which approval shall not be
unreasonably withheld. The form of the Letter of Credit shall be subject to the
review and approval of Landlord, which approval shall not be unreasonably
withheld, and the Letter of Credit shall contain language allowing Landlord to
draw upon the Letter of Credit upon presentation to the issuer of the Letter of
Credit Landlord's written statement that Landlord is entitled to all or any
portion of the funds represented by such Letter of Credit in accordance


                                      -4-


with the terms of this Lease. Landlord shall be entitled to draw upon the Letter
of Credit following the giving of notice of default and the expiration of the
cure period in accordance with Section 23.1(b). Approval by Tenant prior to any
drawing upon the Letter of Credit shall not be required. The Letter of Credit
shall be for an original term of at least one (1) year and renewed annually
thereafter until the eighth (8th) anniversary of the Commencement Date. Tenant
shall deliver to Landlord a replacement or substitute Letter of Credit meeting
the requirements of this Paragraph 5 at least thirty (30) days prior to the
expiration of the Letter of Credit then held by Landlord. Provided Tenant is not
then in monetary default beyond any applicable notice and cure period set forth
in Section 23, the then amount of the Letter of Credit shall be reduced by
$750,000 on each of the second (2nd) through eighth (8th) anniversaries of the
Premises B Commencement Date such that the Letter of Credit amount shall have
been reduced to $750,000 during the last two (2) years of the initial Term.

Landlord and Tenant agree that Landlord may draw upon the Letter of Credit after
notice to Tenant upon the occurrence of any event of default (following the
expiration of any applicable notice and cure period set forth in Section 23) in
the payment of Monthly Basic Rent, Real Property Taxes and Assessments and
Insurance Costs, but only so much of the Letter of Credit as is necessary to
cure such default. In the event partial drawings are not permitted upon the
Letter of Credit and Tenant defaults, Landlord may draw upon the full amount of
the Letter of Credit, apply a portion of the funds so obtained by Landlord as
authorized above in this Paragraph 5, retain the balance of the Letter of Credit
proceeds and Tenant shall thereafter post additional cash funds with Landlord in
an amount which will fully restore the Letter of Credit held in cash by Landlord
to the amount required under this Paragraph 5, or Tenant shall post a substitute
Letter of Credit representing the full amount of the Letter of Credit (in which
event Landlord shall return the cash balance of the Letter of Credit proceeds
upon receipt of the substitute Letter of Credit). In the event of a sale or
other disposition of the Premises, Landlord may require that Tenant furnish to
Landlord's transferee a substitute or amended Letter of Credit, naming such
transferee as the beneficiary and otherwise in compliance with this Lease,
provided Landlord returns to Tenant the Letter of Credit then held by Landlord.
Tenant shall pay all fees and costs associated with such transfer.

Notwithstanding any contrary provision in this Paragraph 5, should the Letter of
Credit be revoked or should the creditworthiness of the issuer of the Letter of
Credit become materially impaired (in Landlord's reasonable judgment), Landlord
may require that Tenant, within thirty (30) days of Landlord's notice, post with
Landlord a replacement Letter of Credit the full amount of the Security Deposit
then required by this Lease. In such event, Landlord shall return to Tenant any
Letter of Credit then in its possession. The intent of the parties by this
Paragraph 5 is that Landlord shall have and retain at all times during the
initial eight (8) years of the Term, a valid Letter of Credit capable of being
drawn upon by Landlord in compliance with this Paragraph 5 for the purpose of
immediately obtaining funds in the amount of the then required Security Deposit,
so that Landlord is in substantially the same position as if Landlord had in its
possession a cash payment by Tenant of the then required Security Deposit.

6. USE.

6.1. GENERAL. Tenant shall use the Premises solely for the Permitted Use
specified in Section 1.12 of the Summary, and shall not use or permit the
Premises to be used for any other use or purpose whatsoever; provided, however,
Tenant may use the Premises or, in the case of a permitted assignment of this
Lease or subletting of the Premises or any portion thereof, may allow the
Premises or a portion thereof to be used, for any lawful use provided Tenant
shall be responsible for and shall hold Landlord harmless from and release
Landlord from any and all taxes, fees, costs, assessments, exactions, charges
and impositions of any kind which may hereafter be imposed due to any use of the
Premises for any use other than the Permitted Use specified in Section 1.12 of
the Summary. Without limiting the foregoing, Tenant shall pay all fees, costs
and exactions imposed with respect to Tenant's use of the Premises for "business
services" use or any other use. Tenant shall, at its sole cost and expense,
observe and comply with all requirements of any board of fire underwriters or
similar body relating to the Premises, all recorded covenants, conditions and
restrictions now or hereafter affecting the Project, copies of which have been
or will be provided by Landlord to Tenant, and all laws, statutes, codes, rules
and regulations now or hereafter in force relating to or affecting the
condition, use, occupancy, alteration or improvement of the Premises, including,
without limitation, the provisions of Title III of the Americans with
Disabilities


                                      -5-


Act of 1990 ("ADA") as it pertains to Tenant's use, occupancy, improvement and
alteration of the Premises (whether, except as otherwise provided herein,
structural or nonstructural, including unforeseen and/or extraordinary
alterations and/or improvements to the Premises, regardless of the period of
time remaining in the Lease Term. Tenant shall not use or allow the Premises to
be used (a) in violation of any recorded covenants, conditions and restrictions
affecting the Site, copies of which have been or will be provided by Landlord to
Tenant, or of any law or governmental rule or regulation, or of any certificate
of occupancy issued for the Premises or Building, or (b) for any improper,
immoral, unlawful or reasonably objectionable purpose. Tenant shall not do or
permit to be done anything which will obstruct or interfere with the rights of
other tenants or occupants of the Project or the Building, or injure or annoy
them. Tenant shall not cause, maintain or permit any nuisance in, on or about
the Premises, the Building, the Project or the Site, nor commit or suffer to be
committed any waste in, on or about the Premises. Tenant shall not place
anything or allow anything to be placed near the glass of any window, door,
partition or wall which may appear unsightly from outside the Premises. No
awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord. No curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises, other than Building standard materials,
without the prior written consent of Landlord. Tenant shall not place a load
upon any floor of the Premises which exceeds the load per square foot which such
floor was designed to carry and which is allowed by law. Landlord shall have the
right to prescribe the weight, size and position of all equipment, materials,
furniture or other property brought into the Building. Landlord reserves the
right from time to time, in Landlord's sole and absolute discretion, exercisable
without prior notice and without liability to Tenant, to: (a) name or change the
name of the Building, Site or Project; (b) change the address of the Building or
Project, and/or (c) install, replace or change any signs in, on or about the
Building or Site (except for Tenant's signs, if any, which are expressly
permitted by the Lease). The Premises shall not be used for the storage of
merchandise held for sale to the general public, or for lodging or for
manufacturing of any kind. No cooking shall be done or permitted by Tenant on
the Premises, except that use by Tenant of Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted and the use of a microwave shall be permitted, provided that such
equipment and use is in accordance with all applicable federal, state, county
and city laws, codes, ordinances, rules and regulations. Tenant shall not use
the name of the Project or Building in connection with, or in promoting or
advertising, the business of Tenant, except for Tenant's address. Tenant assumes
any and all responsibility for protecting its Premises from theft, robbery and
pilferage.

6.2. PARKING.

(a)   Tenant's Parking Privileges. During the Term of this Lease, Landlord
      hereby leases to Tenant, and Tenant hereby leases from Landlord, the
      number of parking privileges specified in Section 1.16 of the Summary
      hereof for use by Tenant's employees, business invitees or guests in the
      Parking Structure. In no event, however, shall the foregoing be construed
      to permit Tenant to provide parking for the general public in any manner
      whatsoever.

(b)   Parking Charges. Each of Tenant's parking privileges set forth in Section
      1.16 of the Summary hereof shall be subject to a monthly parking fee as
      set forth in Section 1.16 of the Summary and as same may be established
      and adjusted by Landlord from time to time in accordance therewith.

(c)   Parking Rules. Tenant's parking privileges shall be used only for parking
      by vehicles no larger than normally sized passenger automobiles, vans and
      pick-up trucks. All responsibility for damage to or loss of vehicles is
      assumed by the parker and Landlord shall not be responsible for any such
      damage or loss by water, fire, defective brakes, the act or omissions of
      others, theft, or for any other cause.

6.3. SIGNS AND AUCTIONS. Tenant shall have no right to place any sign upon the
exterior of the Building, Site or Project or which can be seen from outside the
Premises. Tenant shall have no right to conduct any auction in, on or about the
Premises, the Building or Site. Notwithstanding the foregoing, subject to
Landlord's prior reasonable approval, the sign criteria for the Project, all
covenants, conditions, and restrictions affecting the Project as to which Tenant
has or will be provided copies, and all applicable


                                      -6-


laws, rules, regulations, and local ordinances, and subject to Tenant obtaining
all necessary permits and approvals from the City of San Francisco ("CITY"),
Tenant shall have the exclusive right, at Tenant's sole cost and expense, to
have the name "DOUBLECLICK, INC.", "CLICK CITY" or any variation of Tenant's
name, placed on the exterior of the Building. The specific locations of any
exterior signs shall be designated by Tenant and the City with Landlord's
approval which shall not be unreasonably withheld. Tenant shall be solely
responsible for payment of all costs and expenses arising from any exterior
signs, including, without limitation, all design, fabrication and permitting
costs, license fees, installation, maintenance, repair and removal costs.

Tenant shall maintain and repair all of Tenant's signs at Tenant's expense.
Within thirty (30) days after the expiration or earlier termination of this
Lease, Landlord shall, at Tenant's sole cost and expense, (i) cause all of
Tenant's signs to be removed from the exterior and interior of the Building,
(ii) repair any damage caused by the removal of Tenant's signs, and (iii)
restore the underlying surfaces to the condition existing prior to the
installation of Tenant's signs.

The sign rights granted herein are personal to the original Tenant executing
this Lease, Affiliates and permitted assignees of Tenant approved by Landlord
under Section 14.1, but may not be assigned, voluntarily or involuntarily, to
any subtenant of Tenant or any other person or entity. The rights granted to the
original Tenant hereunder are not assignable separate and apart from the Lease,
nor may any right granted herein be separated from the Lease in any manner,
either by reservation or otherwise.

6.4. HAZARDOUS MATERIALS. Tenant will (i) obtain and maintain in full force and
effect all Environmental Permits that may be required from time to time under
any Environmental Laws applicable to Tenant or the Premises and (ii) be and
remain in compliance in all material respects with all terms and conditions of
all such Environmental Permits and with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in all Environmental Laws applicable to Tenant or the
Premises. As used in this Lease, the term "ENVIRONMENTAL Law" means any past,
present or future federal, state, local or foreign statutory or common law, or
any regulation, ordinance, code, plan, order, permit, grant, franchise,
concession, restriction or agreement issued, entered, promulgated or approved
thereunder, relating to (a) the environment, human health or safety, including,
without limitation, emissions, discharges, releases or threatened releases of
Hazardous Materials (as defined below) into the environment (including, without
limitation, air, surface water, groundwater or land), or (b) the manufacture,
generation, refining, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport, arranging for transport, or handling of Hazardous
Materials. "ENVIRONMENTAL PERMITS" means, collectively, any and all permits,
consents, licenses, approvals and registrations of any nature at any time
required pursuant to, or in order to comply with, any Environmental Law. Except
for ordinary and general office supplies, such as copier toner, liquid paper,
glue, ink and common household cleaning materials (some or all of which may
constitute "HAZARDOUS MATERIALS" as defined in this Lease), Tenant agrees not to
cause or permit any Hazardous Materials to be brought upon, stored, used,
handled, generated, released or disposed of on, in, under or about the Premises
or any other portion of the Project by Tenant, its agents, employees,
subtenants, assignees, licensees, contractors or invitees (collectively,
"TENANT'S PARTIES"), without the prior written consent of Landlord, which
consent Landlord may withhold in its sole and absolute discretion. Upon the
expiration or earlier termination of this Lease, Tenant agrees to promptly
remove from the Premises and the Project, at its sole cost and expense, any and
all Hazardous Materials, including any equipment or systems containing Hazardous
Materials which are installed, brought upon, stored, used, generated or released
upon, in, under or about the Premises and/or the Project or any portion thereof
by Tenant or any of Tenant's Parties. To the fullest extent permitted by law,
Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord
and Landlord's partners, officers, directors, employees, agents, successors and
assigns (collectively, "LANDLORD INDEMNIFIED PARTIES") from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs) which arise or
result from the presence of Hazardous Materials on, in, under or about the
Premises or any other portion of the Project and which are caused or permitted
by Tenant or any of Tenant's Parties. Tenant agrees to promptly notify Landlord
of any release of Hazardous Materials in the Premises or any


                                      -7-


other portion of the Project which Tenant becomes aware of during the Term of
this Lease, whether caused by Tenant or any other persons or entities. In the
event of any release of Hazardous Materials caused or permitted by Tenant or any
of Tenant's Parties, Landlord shall have the right, but not the obligation, to
cause Tenant to immediately take all steps Landlord deems necessary or
appropriate to remediate such release and prevent any similar future release to
the satisfaction of Landlord and Landlord's mortgagee(s). At all times during
the Term of this Lease, Landlord will have the right, but not the obligation, to
enter upon the Premises to inspect, investigate, sample and/or monitor the
Premises to determine if Tenant is in compliance with the terms of this Lease
regarding Hazardous Materials. Tenant will, upon the request of Landlord or any
mortgagee at any time during which Tenant is in default under this Section 6.4
beyond any applicable notice and cure period set forth in Section 23, cause to
be performed an environmental audit of the Premises at Tenant's expense by an
established environmental consulting firm reasonably acceptable to Tenant,
Landlord and the mortgagee. As used in this Lease, the term "HAZARDOUS
MATERIALS" shall mean and include any hazardous or toxic materials, substances
or wastes as now or hereafter designated under any law, statute, ordinance,
rule, regulation, order or ruling of any agency of the State, the United States
Government or any local governmental authority, including, without limitation,
asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea
formaldehyde foam insulation, polychlorinated biphenyls ("PCBS"), and freon and
other chlorofluorocarbons. The provisions of this Section 6.4 will survive the
expiration or earlier termination of this Lease.

Pursuant to Section 11 of the Work Letter, Landlord, as part of Landlord's Work,
shall cause Premises A and Premises B and any other portion of the Project to
comply with applicable Environmental Laws prior to Landlord's delivery of
possession thereof to Tenant. Upon written request from Tenant, Landlord shall
permit Tenant to review any and all reports, studies, and other documentation
pertaining to the remediation of Hazardous Materials in the Premises.

7. PAYMENTS AND NOTICES.

All rent and other sums payable by Tenant to Landlord hereunder shall be paid to
Landlord at the first address designated in Section 1.1 of the Summary, or to
such other persons and/or at such other places as Landlord may hereafter
designate in writing. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery (including delivery by
nationally recognized overnight courier or express mailing service), facsimile
transmission sent by a machine capable of confirming transmission receipt, with
a hard copy of such notice delivered no later than one (1) business day after
facsimile transmission by another method specified in this Section 7, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed to Tenant at the address(es) designated in Section 1.2 of the Summary,
or to Landlord at the address(es) designated in Section 1.1 of the Summary.
Either party may, by written notice to the other, specify a different address
for notice purposes. Notice given in the foregoing manner shall be deemed given
(i) upon confirmed transmission if sent by facsimile transmission, provided such
transmission is prior to 5:00 p.m. on a business day (if such transmission is
after 5:00 p.m. on a business day or is on a non-business day, such notice will
be deemed given on the following business day), (ii) when actually received or
refused by the party to whom sent if delivered by a carrier or personally served
or (iii) if mailed, on the day of actual delivery or refusal as shown by the
certified mail return receipt or the expiration of three (3) business days after
the day of mailing, whichever first occurs. For purposes of this Section 7, a
"business day" is Monday through Friday, excluding holidays observed by the
United States Postal Service.

8. BROKERS.

The parties recognize that the broker(s) who negotiated this Lease are stated in
Section 1.13 of the Summary, and agree that Landlord shall be solely responsible
for the payment of brokerage commissions to said broker(s) pursuant to the terms
of a separate commission agreement, and that Tenant shall have no responsibility
therefor unless written provision to the contrary has been made. Each party
represents and warrants to the other, that, to its knowledge, no other broker,
agent or finder (a) negotiated or was instrumental in negotiating or
consummating this Lease on its behalf, and (b) is or might be entitled to a
commission or compensation in connection with this Lease. Any broker, agent or
finder that has dealt


                                      -8-


with Tenant in connection with this Lease whom Tenant has failed to disclose
herein shall be paid by Tenant. Tenant shall indemnify, defend (by counsel
reasonably approved in writing by Landlord) and hold Landlord harmless from and
against any and all claims, judgments, suits, causes of action, damages, losses,
liabilities and expenses (including attorneys' fees and court costs) resulting
from any breach by Tenant of the foregoing representation, including, without
limitation, any claims that may be asserted against Landlord by any broker,
agent or finder undisclosed by Tenant herein. Landlord shall indemnify, defend
(by counsel reasonably approved in writing by Tenant) and hold Tenant harmless
from and against any and all claims, judgments, suits, causes of action,
damages, losses, liabilities and expenses (including attorneys' fees and court
costs) resulting from any breach by Landlord of the foregoing representation,
including, without limitation, any claims that may be asserted against Tenant by
any broker, agent or finder undisclosed by Landlord herein. The foregoing
indemnities shall survive the expiration or earlier termination of this Lease.

9. SURRENDER; HOLDING OVER.

9.1. SURRENDER OF PREMISES. Upon the expiration or sooner termination of this
Lease, Tenant shall surrender all keys for the Premises to Landlord, and
exclusive possession of the Premises to Landlord broom clean and in good
condition and repair, reasonable wear and tear excepted (and casualty damage for
which Tenant is not responsible for repair excepted, with all of Tenant's
personal property (and those items, if any, of Tenant Improvements and Tenant
Changes identified by Landlord pursuant to Section 12.2 below) removed therefrom
and all damage caused by such removal repaired, as required pursuant to Sections
12.2 and 12.3 below. If, for any reason, Tenant fails to surrender the Premises
within the first sixty (60) days following the expiration or earlier termination
of this Lease (including upon the expiration of any subsequent month-to-month
tenancy consented to by Landlord pursuant to Section 9.2 below), with such
removal and repair obligations completed, then in accordance with Landlord's
rights and remedies under Section 12.4 and the other provisions of this Lease,
Tenant shall indemnify, protect, defend (by counsel approved in writing by
Landlord) and hold Landlord harmless from and against any and all claims,
judgments, suits, causes of action, damages, losses, liabilities and expenses
(including attorneys' fees and court costs) resulting from such failure to
surrender, including, without limitation, any claim made by any succeeding
tenant based thereon. The foregoing indemnity shall survive the expiration or
earlier termination of this Lease.

9.2. HOLD OVER. If Tenant remains in possession of the Premises after the
expiration or earlier termination of the Lease Term, Tenant shall become a
tenant from month-to-month upon the terms and conditions set forth in this Lease
(including Tenant's obligation to pay all Real Property Taxes and Assessments,
and Insurance Costs and any other additional rent under this Lease), but at a
Monthly Basic Rent equal to (a) one hundred twenty five percent (125%) of the
Monthly Basic Rent applicable to the Premises immediately prior to the date of
such expiration or termination during the first three (3) months of the holdover
period, (b) one hundred fifty percent (150%) of the Monthly Basic Rent
applicable to the Premises immediately prior to the date of such expiration or
termination during the fourth (4th) through the sixth (6th) month of the
holdover period, and (c) two hundred percent (200%) of the Monthly Basic Rent
applicable to the Premises immediately prior to the date of such expiration or
earlier termination commencing as of the seventh (7th) month of the holdover
period and continuing thereafter. Tenant shall pay an entire month's Monthly
Basic Rent calculated in accordance with this Section 9.2 for any portion of a
month it holds over and remains in possession of the Premises pursuant to this
Section 9.2. Nothing in this Section 9.2 shall be construed to create any
expressed or implied right to holdover beyond the expiration of the Lease Term
or any extension thereof.

9.3. NO EFFECT ON LANDLORD'S RIGHTS. The foregoing provisions of this Section 9
are in addition to, and do not affect, Landlord's right of re-entry or any other
rights of Landlord hereunder or otherwise provided by law or equity.

10. TAXES ON TENANT'S PROPERTY.

Tenant shall be liable for, and shall pay before delinquency, all taxes and
assessments (real and personal) levied against (a) any personal property or
trade fixtures placed by Tenant in or about the


                                      -9-


Premises (including any increase in the assessed value of the Premises based
upon the value of any such personal property or trade fixtures); and (b) any
Tenant Improvements or alterations in the Premises (whether installed and/or
paid for by Landlord or Tenant) to the extent such items are assessed at a
valuation higher than the valuation at which tenant improvements conforming to
the Building's standard tenant improvements are assessed. If any such taxes or
assessments are levied against Landlord or Landlord's property, Landlord may,
after written notice to Tenant (and under proper protest if requested by Tenant)
pay such taxes and assessments, and Tenant shall reimburse Landlord therefor
within ten (10) business days after demand by Landlord; provided, however,
Tenant, at its sole cost and expense, shall have the right, with Landlord's
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of any such taxes and assessments so paid under protest.

11.   CONDITION OF PREMISES; REPAIRS.

11.1. CONDITION OF PREMISES. Tenant acknowledges that, except as otherwise
expressly set forth in this Lease, neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises, the
Building, the Site or the Project or their condition, or with respect to the
suitability thereof for the conduct of Tenant's business. The taking of
possession of the applicable portion of the Premises by Tenant for the conduct
of business (but not for any earlier period for which access is given for
purposes of completing the Tenant Improvements or for performing Tenant's Work)
shall conclusively establish that the Project, the Site, the applicable portion
of the Premises and the Tenant Improvements therein, were at such time
substantially complete and in good, sanitary and satisfactory condition and
repair with all work required to be performed by Landlord, if any, pursuant to
Exhibit "C" completed and without any obligation on Landlord's part to make any
alterations, upgrades or improvements thereto, subject only to (i) Landlord's
obligation to complete any incomplete or defective items of Landlord's Work, and
(ii) Landlord's repair obligations under Section 11.2 below.

11.2. LANDLORD'S REPAIR OBLIGATIONS. Subject to Section 18.1 and 18.2 of this
Lease, Landlord, at its sole cost and expense, shall repair, maintain and
replace, as necessary the Building shell and other structural portions of the
Building and the Parking Structure, including the Building's roof structure (but
not the Building roof cover and membrane) and the foundations of both the
Building and the Parking Structure; provided, however, subject to Article 22
hereof, to the extent such maintenance, repairs or replacements are required as
a result of any act, neglect, fault or omission of Tenant or any of Tenant's
agents, employees, contractors, licensees or invitees, Tenant shall pay to
Landlord, as additional rent, the costs of such maintenance, repairs and
replacements. Landlord shall not be liable to Tenant for failure to perform any
such maintenance, repairs or replacements, unless Landlord shall fail to make
such maintenance, repairs or replacements and such failure shall continue for an
unreasonable time following written notice from Tenant to Landlord of the need
therefor. Notwithstanding the foregoing, if Landlord shall fail to perform any
of its repair obligations as provided herein, Tenant is authorized to make
repairs as set forth below in this Section 11.2:

(a)   General Action. If Tenant provides notice (the "First Notice") to Landlord
      of an event or circumstance which pursuant to the terms of this Lease
      requires Landlord to repair any element of the Building or the Parking
      Structure (a "Required Action"), and Landlord fails to provide the
      Required Action within thirty (30) days after receipt of Tenant's First
      Notice to perform such repair obligation (provided that if the nature of
      the Required Action is such that the same cannot be reasonably completed
      within a thirty (30) day period, Landlord's time period for completion
      shall not be deemed to have expired if Landlord diligently commences such
      cure within such period and thereafter diligently proceeds to rectify and
      complete the Required Action, as soon as possible), then Tenant may
      proceed to take the Required Action, pursuant to the terms of this Lease,
      provided Tenant first delivers to Landlord a second notice specifying that
      Tenant will take the Required Action (the "Second Notice") and Landlord
      fails to take the Required Action within five (5) days after Landlord's
      receipt of the Second Notice.

(b)   Emergency Action. Notwithstanding the foregoing, if there exists an
      emergency such that the Building, the Parking Structure or any portion
      thereof are rendered untenantable and Tenant's personnel are forced to
      cease the use of such area and if Tenant gives Landlord notice (the


                                      -10-


      "Emergency Notice") of Tenant's intent to take action with respect thereto
      (the "Necessary Action") and the Necessary Action is also a Required
      Action, and the emergency could be cured by such Necessary Action, Tenant
      may take the Necessary Action if Landlord does not commence the Necessary
      Action within one (1) business day after the Emergency Notice (the
      "Emergency Cure Period") and thereafter uses its best efforts and due
      diligence to complete the Necessary Action as soon as possible.

(c)   Reimbursement for Action. If any Required Action or Necessary Action is
      taken by Tenant pursuant to the terms of this Section then Landlord shall
      reimburse Tenant for its reasonable and documented costs and expenses in
      taking the Required Action or Necessary Action within thirty (30) days
      after receipt by Landlord of an invoice from Tenant which sets forth a
      reasonably particularized breakdown of its costs and expenses in
      connection with taking the Required Action or Necessary Action on behalf
      of Landlord (the "Repair Invoice").

Subject to the foregoing, Tenant waives the right to make repairs at Landlord's
expense under any law, statute or ordinance now or hereafter in effect
(including the provisions of California Civil Code Section 1942 and any
successive sections or statutes of a similar nature).

11.3. TENANT'S REPAIR OBLIGATIONS. Except for Landlord's obligations
specifically set forth in this Lease, but subject to Article 22, Tenant shall at
all times and at Tenant's sole cost and expense, keep, maintain, clean, repair,
preserve and replace, as necessary, the Premises, the Building and the Parking
Structure and all parts thereof including, without limitation, the roof cover
and roof membrane of the Building, all Tenant Improvements, Tenant Changes,
utility meters, exterior landscaping, lighting, sidewalks, planted areas, and
parking areas, the basic heating, ventilating, air conditioning ("HVAC"),
sprinkler and electrical systems within the Building core and standard conduits,
connections and distribution systems thereof within the Premises, all special or
supplemental HVAC systems, electrical systems, pipes and conduits, all fixtures,
furniture and equipment, Tenant's storefront, Tenant's signs, locks, closing
devices, security devices, windows, window sashes, casements and frames, floors
and floor coverings, shelving, kitchen and/or restroom facilities and appliances
located within the Premises to the extent such facilities and appliances are
intended for the exclusive use of Tenant, if any, custom lighting, and any
alterations, additions and other property located within the Premises in good
condition and repair, reasonable wear and tear excepted. Tenant shall replace,
at its expense, any and all plate and other glass in and about the Premises
which is damaged or broken from any cause whatsoever except due to the gross
negligence or willful misconduct of Landlord, its agents or employees. Such
maintenance and repairs shall be performed with due diligence, lien-free and in
a good and workmanlike manner, by licensed contractor(s) which are selected by
Tenant and approved by Landlord, which approval Landlord shall not unreasonably
withhold or delay. Except as otherwise expressly provided in this Lease,
Landlord shall have no obligation to alter, remodel, improve, repair, renovate,
redecorate or paint all or any part of the Premises.

12. ALTERATIONS.

12.1. TENANT CHANGES; CONDITIONS. After installation of the initial Tenant
Improvements for the Premises pursuant to Exhibit "C", Tenant may, at its sole
cost and expense, make alterations, additions, improvements and decorations to
the Premises (collectively, "TENANT CHANGES") subject to and upon the following
terms and conditions:

(a)   Notwithstanding any provision in this Section 12 to the contrary, Tenant
      is absolutely prohibited from making any alterations, additions,
      improvements or decorations which: (i) affect any area outside the
      Premises; (ii) affect the Building's structure or proper functioning of
      equipment, services or systems, or Landlord's access thereto; (iii) except
      for Tenant's signage, changes to which shall require approval by the City
      under all circumstances, affect the outside appearance, character or use
      of the Project or the Building; (iv) weaken or impair the structural
      strength of the Building; (v) in the reasonable opinion of Landlord,
      lessen the value of the Project or Building; or (vi) will violate or
      require a change in any occupancy certificate applicable to the Premises.


                                      -11-


(b)   Before proceeding with any Tenant Change which is not otherwise prohibited
      in Section 12.1(a) above, Tenant must first obtain Landlord's written
      approval thereof (including approval of all plans, specifications and
      working drawings for such Tenant Change), which approval shall not be
      unreasonably withheld or delayed or conditioned. However, Landlord's prior
      approval shall not be required for any Tenant Change which satisfies the
      following conditions (hereinafter a "PRE-APPROVED CHANGE"): (i) the costs
      of such Tenant Change does not exceed Twenty-Five Thousand Dollars
      ($25,000.00) individually; (ii) if customarily prepared for work equal in
      scope to the Tenant Changes in question. Tenant delivers to Landlord final
      plans, specifications and working drawings for such Tenant Change at least
      ten (10) days prior to commencement of the work thereof; and (iii) Tenant
      and such Tenant Change otherwise satisfy all other conditions set forth in
      this Section 12.1.

(c)   After Landlord has approved the Tenant Changes and the plans,
      specifications and working drawings therefor (or is deemed to have
      approved the Pre-Approved Changes as set forth in Section 12.1(b) above),
      Tenant shall: (i) enter into an agreement for the performance of such
      Tenant Changes with such contractors and subcontractors selected by Tenant
      and approved by Landlord, which approval shall not be unreasonably
      withheld or delayed; (ii) before proceeding with any Tenant Change
      (including any Pre-Approved Change), provide Landlord with ten (10) days'
      prior written notice thereof; and (iii) pay to Landlord, within ten (10)
      days after written demand, the costs of any increased insurance premiums
      incurred by Landlord to include such Tenant Changes in the fire and
      extended coverage insurance obtained by Landlord pursuant to Section 21
      below. However, Landlord shall be required to include the Tenant Changes
      under such insurance only to the extent such insurance is actually
      obtained by Landlord and such Tenant Changes are insurable under such
      insurance; if such Tenant Changes are not or cannot be included in
      Landlord's insurance, Tenant shall insure the Tenant Changes under its
      casualty insurance pursuant to Section 20.1(a) below. In addition, before
      proceeding with any Tenant Change, Tenant's contractors shall obtain, on
      behalf of Tenant and at Tenant's sole cost and expense all necessary
      governmental permits and approvals for the commencement and completion of
      such Tenant Change. Landlord's approval of any contractor(s) and
      subcontractor(s) of Tenant shall not release Tenant or any such
      contractor(s) and/or subcontractor(s) from any liability for any conduct
      or acts of such contractor(s) and/or subcontractor(s).


(d)   Tenant shall pay to Landlord, as additional rent, the reasonable costs of
      Landlord's engineers and other consultants (but not Landlord's on-site
      management personnel) for review of all plans, specifications and working
      drawings for the Tenant Changes, within ten (10) business days after
      Tenant's receipt of invoices either from Landlord or such consultants. In
      addition to such costs, Tenant shall pay to Landlord, within ten (10)
      business days after completion of any Tenant Change, the actual,
      reasonable costs incurred by Landlord for services rendered by Landlord's
      management personnel and engineers to coordinate and/or supervise any of
      the Tenant Changes to the extent such services are provided in excess of
      or after the normal on-site hours of such engineers and management
      personnel.

(e)   All Tenant Changes shall be performed: (i) substantially in accordance
      with the approved plans, specifications and working drawings; (ii)
      lien-free and in a good and workmanlike manner; (iii) in compliance with
      all laws, rules, regulations of all governmental agencies and authorities
      including, without limitation, the provisions of the ADA; (iv) in such a
      manner so as not to unreasonably interfere with the occupancy of any other
      tenant in the Project or Building, nor impose any additional expense upon
      nor delay Landlord in the maintenance and operation of the Project or
      Building; and (v) at such times, in such manner and subject to such rules
      and regulations as Landlord may from time to time reasonably designate.

(f)   Throughout the performance of the Tenant Changes, Tenant shall obtain, or
      cause its contractors to obtain, workers compensation insurance and
      general liability insurance in compliance with the provisions of Section
      20 of this Lease.


                                      -12-


(g)   Subject to the provisions of this Section 12, including, without
      limitation, Landlord's prior approval of plans and specifications, Tenant
      shall have the non-exclusive right, at Tenant's sole cost and expense, to
      (a) install supplemental HVAC units on the roof of the Building and b) to
      construct a roof deck on the exterior of the Building in an area
      immediately adjacent to the fourth (4th) floor penthouse ("ROOF DECK");
      provided, however, the portions of the roof of the Building within which
      Landlord may exercise or grant additional roof rights shall be limited to
      the area shown on Exhibit "H-1" and the exercise of such roof rights by
      Landlord or any other party shall not interfere with Tenant's right to use
      the roof area as granted herein and in Exhibit "H". The location of any
      supplemental HVAC units shall be at Landlord's sole discretion. Tenant
      shall be solely responsible for obtaining all necessary permits and
      approvals for the installation of any supplemental HVAC units and the Roof
      Deck, and shall pay all costs thereof. In addition, Tenant shall operate,
      maintain, repair and replace any supplemental HVAC equipment and the Roof
      Deck at its sole cost and expense.

(h)   Landlord shall have seven (7) business days following a request from
      Tenant to approve or disapprove any plans for Tenant Changes or Tenant's
      proposed contractor(s). If Landlord has not responded to Tenant's request
      for approval within three (3) business days following the expiration of
      such seven (7) day period and a second request for approval from Tenant,
      the plans and/or contractor shall automatically be deemed approved.

12.2. REMOVAL OF TENANT CHANGES AND TENANT IMPROVEMENTS. All Tenant Changes and
the initial Tenant Improvements in the Premises (whether installed or paid for
by Landlord or Tenant), shall become the property of Landlord and shall remain
upon and be surrendered with the Premises at the end of the Term of this Lease;
provided, however, Landlord may, by written notice delivered to Tenant at the
time Landlord is notified of and/or approves any Tenant Change identify those
items of the Tenant Changes which Landlord shall require Tenant to remove at the
end of the Term of this Lease. If Landlord requires Tenant to remove any such
items as described above, Tenant shall, at its sole cost, remove the identified
items on or before the expiration or sooner termination of this Lease and repair
any damage to the Premises caused by such removal (or, at Landlord's option,
shall pay to Landlord all of Landlord's costs of such removal and repair). In no
event shall Tenant be required to remove the initial Tenant Improvements.

12.3. REMOVAL OF PERSONAL PROPERTY. All articles of personal property owned by
Tenant or installed by Tenant at its expense in the Premises (including business
and trade fixtures, furniture and moveable partitions) shall be, and remain, the
property of Tenant, and shall be removed by Tenant from the Premises, at
Tenant's sole cost and expense, on or before the expiration or sooner
termination of this Lease. Tenant shall promptly repair any damage caused by
such removal; provided, however, Tenant shall not be obligated to repaint the
affected area.

12.4. TENANT'S FAILURE TO REMOVE. If Tenant fails to remove by the expiration or
sooner termination of this Lease all of its personal property, or any items of
Tenant Improvements or Tenant Changes identified by Landlord for removal
pursuant to Section 12.2 above, or if Tenant fails to comply with its
obligations under Section 12.3, Landlord may, at its option, treat such failure
as a hold over pursuant to Section 9.3 above, and/or may (without liability to
Tenant for loss thereof, at Tenant's sole cost and in addition to Landlord's
other rights and remedies under this Lease, at law or in equity: (a) remove and
store such items in accordance with applicable law; and/or (b) upon ten (10)
days' prior notice to Tenant, sell all or any such items at private or public
sale for such price as Landlord may obtain as permitted under applicable law.
Landlord shall apply the proceeds of any such sale to any amounts due to
Landlord under this Lease from Tenant (including Landlord's attorneys' fees and
other costs incurred in the removal, storage and/or sale of such items), with
any remainder to be paid to Tenant.

13. LIENS.

Tenant shall not permit any mechanic's, materialmen's or other liens to be filed
against all or any part of the Project, the Site, the Building or the Premises,
nor against Tenant's leasehold interest in the Premises, by reason of or in
connection with any repairs, alterations, improvements or other work


                                      -13-


contracted for or undertaken by Tenant or any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. Tenant shall, at
Landlord's request, provide Landlord with enforceable, unconditional and final
lien releases (and other evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or
materials with respect to the Premises. Landlord shall have the right at all
reasonable times to post on the Premises and record any notices of
non-responsibility which it deems necessary for protection from such liens. If
any such liens are filed, Tenant shall, at its sole cost, immediately cause such
lien to be released of record or bonded to Landlord's reasonable satisfaction so
that it no longer affects title to the Project, the Site, the Building or the
Premises. If Tenant fails to cause such lien to be so released or bonded within
twenty (20) days after filing thereof, Landlord may, without waiving its rights
and remedies based on such breach, and without releasing Tenant from any of its
obligations, cause such lien to be released by any means it shall deem proper,
including payment in satisfaction of the claim giving rise to such lien. Tenant
shall pay to Landlord within five (5) days after receipt of invoice from
Landlord, any sum paid by Landlord to remove such liens, together with interest
at the Interest Rate from the date of such payment by Landlord. NOTICE IS HEREBY
GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
FURNISHED OR TO BE FURNISHED TO TENANT, OR TO ANYONE HOLDING THE PREMISES
THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD
IN THE PREMISES.

14. ASSIGNMENT AND SUBLETTING.

14.1. RESTRICTION ON TRANSFER. Except as otherwise expressly provided in this
Section 14, Tenant shall not, without the prior written consent of Landlord,
which consent Landlord will not unreasonably withhold, delay or condition,
assign this Lease or any interest herein or sublet the Premises or any part
thereof, or permit the use or occupancy of the Premises by any party other than
Tenant and its Affiliates (any such assignment, encumbrance, sublease, license
or the like shall sometimes be referred to as a "TRANSFER"). In no event may
Tenant encumber this Lease. Any Transfer without Landlord's consent (except for
a Permitted Transfer pursuant to Section 14.2 below) shall constitute a default
by Tenant under this Lease, and in addition to all of Landlord's other remedies
at law, in equity or under this Lease, such Transfer shall be voidable at
Landlord's election. In addition, this Lease shall not, nor shall any interest
of Tenant herein, be assignable by operation of law without the written consent
of Landlord. For purposes of this Section 14, other than with respect to a
Permitted Transfer under Section 14.2 and transfers of stock of Tenant if Tenant
is a publicly-held corporation and such stock is transferred publicly over a
recognized security exchange or over-the-counter market, if Tenant is a
corporation, partnership or other entity, any transfer, assignment, encumbrance
or hypothecation of fifty percent (50%) or more (individually or in the
aggregate) of any stock or other ownership interest in such entity, and/or any
transfer, assignment, hypothecation or encumbrance of any controlling ownership
or voting interest in such entity, shall be deemed an assignment of this Lease
and shall be subject to all of the restrictions and provisions contained in this
Section 14.

14.2. PERMITTED CONTROLLED TRANSFERS. Notwithstanding the provisions of Sections
14.1 above to the contrary, Tenant may assign this Lease or sublet the Premises
or any portion thereof (herein, a "PERMITTED TRANSFER"), without Landlord's
consent and without extending any sublease or termination option to Landlord,
and without any obligation to comply with Section 14.4(d), to any corporation
which controls, is controlled by or is under common control with Tenant, or to
any corporation resulting from a merger or consolidation with Tenant, or to any
person or entity which acquires all the assets of Tenant's business as a going
concern (each, an "Affiliate"), provided that: (a) at least ten (10) days prior
to such assignment or sublease, Tenant delivers to Landlord the financial
statements and other financial and background information of the assignee or
sublessee described in Section 14.3 below; (b) if an assignment, the assignee
assumes, in full, the obligations of Tenant under this Lease (or if a sublease,
the sublessee of a portion of the Premises or Term assumes, in full, the
obligations of Tenant with respect to such portion); (c) the financial net worth
of the assignee is sufficient in Landlord's commercially reasonable discretion
to permit the assignee to perform the obligations of the Tenant hereunder; (d)
Tenant remains fully liable under this Lease; and (e) the use of the Premises
under Article 6 remains unchanged.


                                      -14-


14.3. LANDLORD'S OPTIONS. If at any time or from time to time during the Term
Tenant desires to effect a Transfer, Tenant shall deliver to Landlord written
notice ("TRANSFER NOTICE") setting forth the terms and provisions of the
proposed Transfer and the identity of the proposed assignee, sublessee or other
transferee (sometimes referred to hereinafter as a "TRANSFEREE"). Tenant shall
also deliver to Landlord with the Transfer Notice, a current financial statement
and financial statements for the preceding two (2) years of the Transferee which
have been certified or audited by a reputable independent accounting firm
acceptable to Landlord, and such other information concerning the business
background and financial condition of the proposed Transferee as Landlord may
reasonably request. Except with respect to a Permitted Transfer, Landlord shall
have the option, exercisable by written notice delivered to Tenant within twenty
(20) days after Landlord's receipt of the Transfer Notice, such financial
statements and other information, either to:

(a)   approve or disapprove such Transfer, which approval shall not be
      unreasonably withheld, delayed or conditioned; or

(b)   if Tenant desires to sublease more than 70,200 rentable square feet,
      recapture and sublet from Tenant that portion of the Premises which Tenant
      has requested to sublease at the rental and on the other terms set forth
      in this Lease prorated for the portion of the Premises to be sublet and
      for the term set forth in Tenant's Notice, or, in the case of an
      assignment or encumbrance, terminate this Lease with respect to the entire
      Premises and recapture the Premises, which termination shall be effective
      thirty (30) days after Tenant's receipt of Landlord's notice.

If Landlord exercises its option to sublease any such space from Tenant
following Tenant's request for Landlord's approval of the proposed sublease of
such space, (i) Landlord shall be responsible for the construction of any
partitions which Landlord reasonably deems necessary to separate such space from
the remainder of the Premises, (ii) Landlord and any sub-subtenant or assignee
of Landlord with respect to such subleased space shall have the right to use in
common with Tenant all lavatories, corridors and lobbies which are within the
Premises and which are reasonably required for the use of such space, and (iii)
Tenant shall be released from all defaults and liability with respect to any
subletting of such space by Landlord or the occupancy of such subleased space by
any subtenant of Landlord.

14.4. ADDITIONAL CONDITIONS; EXCESS RENT. If for a Transfer other than a
Permitted Transfer Landlord does not exercise its sublease or termination option
and instead approves of the proposed Transfer pursuant to Section 14.3(a) above,
Tenant may enter into the proposed Transfer with such proposed Transferee
subject to the following further conditions:

(a)   the Transfer shall be on substantially the same terms set forth in the
      Transfer Notice delivered to Landlord (if the terms have materially
      changed, Tenant must submit a revised Transfer Notice to Landlord and
      Landlord shall have another twenty (20) days after receipt thereof to make
      the election in Sections 14.3(a) or 14.3(b) above);

(b)   no Transfer shall be valid and no Transferee shall take possession of the
      Premises until an executed counterpart of the assignment, sublease or
      other instrument affecting the Transfer has been delivered to Landlord
      pursuant to which the Transferee shall expressly assume all of Tenant's
      obligations under this Lease (or with respect to a sublease of a portion
      of the Premises or for a portion of the Term, all of Tenant's obligations
      applicable to such portion);

(c)   no Transferee shall have a further right to assign, encumber or sublet,
      except on the terms herein contained; and

(d)   fifty percent (50%) of any rent or other economic consideration received
      by Tenant as a result of such Transfer which exceeds, in the aggregate,
      the total rent which Tenant is obligated to pay Landlord under this Lease
      (prorated to reflect obligations allocable to any portion of the Premises
      subleased), shall be paid to Landlord within ten (10) days after receipt
      thereof as additional rental under this Lease, without affecting or
      reducing any other obligations of Tenant hereunder.


                                      -15-


14.5. REASONABLE DISAPPROVAL. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer (other than a Permitted
Transfer) pursuant to Section 14.3(a) shall be deemed reasonably withheld if
based upon any reasonable factor, including, without limitation, any or all of
the following factors: (a) the proposed Transfer would result in a sublease of
more than 70,200 rsf or more than two subleases per floor of the Premises being
in effect at any one time during the Term; (b) the proposed Transferee is an
existing tenant of the Project or is negotiating with Landlord (or has
negotiated with Landlord in the last six (6) months) for space in the Project;
(c) the proposed Transferee is a governmental entity; (d) the portion of the
Premises to be sublet or assigned has inadequate means of ingress and egress;
(e) the use of the Premises by the Transferee is not permitted by the use
provisions in Section 6 hereof, (f) omitted; (g) the Transferee does not have
the financial capability to fulfill the obligations imposed by the Transfer; or
(h) the Transferee is not in Landlord's reasonable opinion of reputable or good
character.

14.6. NO RELEASE. Except for any recapture of the Premises or any portion
thereof under Section 14.3, no Transfer shall release Tenant of Tenant's
obligations under this Lease or alter the primary liability of Tenant to pay the
rent and to perform all other obligations to be performed by Tenant hereunder.
Landlord may require that any Transferee remit directly to Landlord on a monthly
basis, all monies due Tenant by said Transferee, and each sublease shall provide
that if Landlord gives said sublessee written notice that Tenant is in default
under this Lease, said sublessee will thereafter make all payments due under the
sublease directly to or as directed by Landlord, which payments will be credited
against any payments due under this Lease. Tenant hereby irrevocably and
unconditionally assigns to Landlord all rents and other sums payable under any
sublease of the Premises; provided, however, that Landlord hereby grants Tenant
a license to collect all such rents and other sums so long as Tenant is not in
default under this Lease. Tenant shall, within ten (10) days after the execution
and delivery of any assignment or sublease, deliver a duplicate original copy
there of to Landlord. However, the acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision hereof.
Consent by Landlord to one Transfer shall not be deemed consent to any
subsequent Transfer. In the event of default by any Transferee of Tenant or any
successor of Tenant in the performance of any of the terms hereof, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such Transferee or successor. Landlord may consent to subsequent
assignments of the Lease or sublettings or amendments or modifications to the
Lease with assignees of Tenant, without notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto and any such actions
shall not relieve Tenant of liability under this Lease.

14.7. ADMINISTRATIVE AND ATTORNEYS' FEES. If Tenant effects a Transfer or
requests the consent of Landlord to any Transfer, then Tenant shall, upon
demand, pay Landlord a non-refundable administrative fee of Five Hundred Dollars
($500.00), plus any reasonable attorneys' and paralegal fees and costs incurred
by Landlord in connection with such Transfer or request for consent (whether
attributable to Landlord's in-house attorneys or paralegals or otherwise).
Acceptance of the $500.00 administrative fee and/or reimbursement of Landlord's
attorneys' and paralegal fees shall in no event obligate Landlord to consent to
any proposed Transfer.

14.8. MATERIAL INDUCEMENT. Tenant understands, acknowledges and agrees that (a)
Landlord's option to sublease from Tenant any space which Tenant proposes to
sublease or terminate this Lease upon any proposed assignment or encumbrance of
this Lease by Tenant as provided in Section 14.3(b) above rather than approve
the proposed sublease, assignment or encumbrance, and (b) Landlord's right to
receive fifty percent (50%) of any excess consideration paid by a Transferee in
connection with an approved Transfer as provided in Section 14.4(d) above, are a
material inducement for Landlord's agreement to lease the Premises to Tenant
upon the terms and conditions herein set forth.

15. ENTRY BY LANDLORD.

Landlord and its employees and agents shall at all reasonable times have the
right to enter the Premises to inspect the same, to exhibit the Premises to
prospective lenders or purchasers (or during the last year of the Term, to
prospective tenants), to post notices of non-responsibility, and/or to alter,
improve or repair the Premises or any other portion of the Building or Project,
all without being deemed guilty of or


                                      -16-


liable for any breach of Landlord's covenant of quiet enjoyment or any eviction
of Tenant, and without abatement of rent. In exercising such entry rights,
Landlord shall endeavor to minimize, as reasonably practicable, the interference
with Tenant's business, and shall provide Tenant with reasonable advance written
notice of such entry (except in emergency situations and for scheduled
services). For each of the foregoing purposes, Landlord shall at all times have
and retain a key with which to unlock all of the doors in, upon and about the
Premises, excluding Tenant's vaults and safes, and Landlord shall have the means
which Landlord may deem proper to open said doors in an emergency in order to
obtain entry to the Premises. Any entry to the Premises obtained by Landlord by
any of said means or otherwise shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction of Tenant from the Premises or any portion thereof, or grounds
for any abatement or reduction of rent and Landlord shall not have any liability
to Tenant for any damages or losses on account of any such entry by Landlord
except, subject to the provisions of Section 22.1, to the extent of Landlord's
gross negligence or willful misconduct.

16. UTILITIES.

16.1. UTILITIES. Tenant shall directly contract for service from any company or
companies providing electricity, gas, water, and other utility service ("SERVICE
Provider,") to the Premises. Landlord shall in no way be liable or responsible
for any loss, damage, or expense that Tenant may sustain or incur by reason of
any change, failure, interference, disruption, or defect in the supply or
character of the utilities furnished to the Premises, or if the quantity or
character of the utilities supplied by any Service Provider is no longer
available or suitable for Tenant's requirements, no such change, failure,
defect, unavailability, or unsuitability shall constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of rent, or relieve Tenant from any of its obligations under the
Lease.

16.2. TENANT'S OBLIGATIONS. Tenant shall cooperate fully at all times with
Landlord, and abide by all reasonable regulations and requirements which
Landlord may prescribe for the proper functioning and protection of the
Building's services and systems. Tenant shall not use any apparatus or device
in, upon or about the Premises which may in any way increase the amount of
services or utilities beyond the capacities of the Building systems. Tenant
shall not connect any conduit, pipe, apparatus or other device to the Building's
water, waste or other supply lines or systems for any purpose without Landlord's
consent, which shall not be unreasonably withheld or delayed.

16.3. FAILURE OF UTILITIES. In addition, in the event of the failure of any
utilities to the Premises, Tenant shall not be entitled to any abatement or
reduction of rent (except as expressly provided in Sections 18.3 and 19.2 if
such failure is a result of a damage or taking described therein), no eviction
of Tenant shall result, and Tenant shall not be relieved from the performance of
any covenant or agreement in this Lease. Tenant hereby waives the provisions of
California Civil Code Section 1932(1) or any other applicable existing or future
law, ordinance or governmental regulation permitting the termination of this
Lease due to an interruption, failure or inability of any Service Provider to
provide any services.

17. INDEMNIFICATION AND EXCULPATION.

17.1. TENANT'S ASSUMPTION OF RISK AND WAIVER. Except to the extent such matter
is not covered by the insurance required to be maintained by Tenant under this
Lease and such matter is attributable to the gross negligence or willful
misconduct of Landlord, Landlord shall not be liable to Tenant, Tenant's
employees, agents or invitees for: (i) any damage to property of Tenant, or of
others, located in, on or about the Premises, nor for (ii) the loss of or damage
to any property of Tenant or of others by theft or otherwise, (iii) any injury
or damage to persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or leaks from any part of the
Premises or from the pipes, appliance of plumbing works or from the roof, street
or subsurface or from any other places or by dampness or by any other cause of
whatsoever nature, or (iv) any such damage caused by other tenants or persons in
the Premises, occupants of adjacent property of the Project, or the public, or
caused by operations in construction of any private, public or quasi-public
work. Landlord shall in no event be liable to Tenant for any consequential
damages or for loss of revenue or income and Tenant waives any and all claims
for any such damages. Notwithstanding anything to the contrary contained in this
Section 17.1, all property


                                      -17-


of Tenant, its agents, employees and invitees kept or stored on the Premises,
whether leased or owned by any such parties, shall be so kept or stored at the
sole risk of Tenant and Tenant shall hold Landlord harmless from any claims
arising out of damage to the same, including subrogation claims by Tenant's
insurance carriers, unless such damage shall be caused by the gross negligence
or willful misconduct of Landlord. Landlord or its agents shall not be liable
for interference with the light or other intangible rights.

17.2. TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall be liable for, and
shall indemnify, defend, protect and hold Landlord and Landlord's members,
partners, officers, directors, shareholders, employees, agents, successors and
assigns (collectively, "LANDLORD INDEMNIFIED PARTIES") harmless from and
against, any and all claims, damages, judgments, suits, causes of action,
losses, liabilities and expenses, including attorneys' fees and court costs
(collectively, "INDEMNIFIED CLAIMS"), arising or resulting from (a) any
occurrence at the Premises following the date Landlord delivers all or any
portion of the Premises to Tenant, unless caused by the gross negligence or
willful misconduct of Landlord or its agents, employees or contractors, (b) any
act or omission of Tenant or any of Tenant's agents, employees, contractors,
subtenants, assignees, licensees or with respect to acts or omissions within the
Premises only, Tenant's invitees (collectively, "TENANT PARTIES"); (c) the use
of the Premises and conduct of Tenant's business by Tenant or any Tenant
Parties, or any other activity, work or thing done, permitted or suffered by
Tenant or any Tenant Parties, in or about the Premises or elsewhere in the
Project; and/or (d) any default by Tenant of any obligations on Tenant's part to
be performed under the terms of this Lease or the terms of any contract or
agreement to which Tenant is a party or by which it is bound, affecting this
Lease or the Premises. The foregoing indemnification shall include, but not be
limited to, any injury to, or death of, any person, or any loss of, or damage
to, any property on the Premises, or on adjoining sidewalks, streets or ways, or
connected with the use, condition or occupancy thereof, whether or not Landlord
or its mortgagee has or should have knowledge or notice of the defect or
conditions causing or contributing to such injury, death, loss or damage. In
case any action or proceeding is brought against Landlord or any Landlord
Indemnified Parties by reason of any such Indemnified Claims, Tenant, upon
notice from Landlord, shall defend the same at Tenant's expense by counsel
approved in writing by Landlord, which approval shall not be unreasonably
withheld, provided Landlord hereby approves any counsel engaged by Tenant's
insurance carrier.

17.3. LANDLORD'S INDEMNIFICATION OF TENANT. Notwithstanding anything to the
contrary contained in Paragraph 17.2 or elsewhere in the Lease, Tenant shall not
be required to protect, defend, save harmless or indemnify Landlord from any
liability for injury, loss, accident or damage to any person resulting from
Landlord's negligent acts or omissions or willful misconduct or that of its
agents, contractors, servants, employees or licensees, in connection with
Landlord's activities on or about the Premises, and Landlord hereby indemnifies
and agrees to protect, defend and hold Tenant harmless from and against
Indemnified Claims out of Landlord's negligent acts or omissions or willful
misconduct or those of its agents, contractors, servants, employees or licensees
in connection with Landlord's activities on or about the Premises to the extent
that injuries are involved and any default by Landlord of Landlord's obligations
under this Lease. Such exclusion from Tenant's indemnity and such agreement by
Landlord to so indemnify and hold Tenant harmless are not intended to and shall
not relieve any insurance carrier of its obligations under policies required to
be carried by Tenant pursuant to the provisions of this Lease to the extent that
such policies cover (or, if such policies would have been carried as required,
would have covered) the result of negligent acts or omissions or willful
misconduct of Landlord or those of its agents, contractors, servants, employees
or licensees; provided, however, the provisions of this sentence shall in no way
be construed to imply the availability of any double or duplicate coverage.
Landlord's and Tenant's indemnification obligations hereunder may or may not be
coverable by insurance, but the failure of either Landlord or Tenant to carry
insurance covering the indemnification obligation shall not limit their
indemnity obligations hereunder.


17.4. SURVIVAL; NO RELEASE OF INSURERS. The indemnification obligations under
Section 17.2 and 17.3 shall survive the expiration or earlier termination of
this Lease. Landlord's and Tenant's covenants, agreements and indemnification in
Sections 17.1, 17.2 and 17.3 above are not intended to and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Landlord and Tenant pursuant to the provisions of this Lease.


                                      -18-


18. DAMAGE OR DESTRUCTION.

18.1. LANDLORD'S RIGHTS AND OBLIGATIONS. In the event the Premises or any part
thereof is damaged by fire or other casualty to an extent not exceeding sixty
percent (60%) of the full replacement cost thereof, and Landlord's contractor
estimates in a writing delivered to the parties that the damage thereto is such
that the Premises may be repaired, reconstructed or restored to substantially
its condition immediately prior to such damage within twelve (12) months from
the date of such casualty, then Landlord shall commence and proceed diligently
with the work of repair, reconstruction and restoration and this Lease shall
continue in full force and effect. If, however, the Premises is damaged to an
extent exceeding sixty percent (60%) of the full replacement cost thereof, or
Landlord's contractor estimates that such work of repair, reconstruction and
restoration will require longer than twelve (12) months to complete, or the
damage is not covered by any Special Form (formerly known as "All Risk") policy
of insurance and the damage exceeds the Landlord Uninsured Contribution Cap (as
defined below), then Landlord may elect to either:

(a)   repair, reconstruct and restore the portion of the Premises damaged by
      such casualty (including the Tenant Improvements and, to the extent of
      insurance proceeds received from Tenant, Tenant Changes), in which case
      this Lease shall continue in full force and effect; or

(b)   terminate this Lease effective as of the date which is thirty (30) days
      after Tenant's receipt of Landlord's election to so terminate; provided,
      however, if Landlord terminates this Lease because the uninsured damage
      exceeds the Landlord Uninsured Contribution Cap, Tenant may vitiate and
      render void Landlord's termination notice if Tenant shall notify Landlord
      within such thirty (30) day period that Tenant will pay the costs to
      repair such damage in excess of the Landlord Uninsured Contribution Cap to
      be paid by Landlord, in which event Landlord shall pay up to the Landlord
      Uninsured Contribution Cap towards restoration and Tenant shall pay all
      excess costs of restoration. For casualties occurring during the first
      five (5) years of the original Term, the Landlord Uninsured Contribution
      Cap is Two Million Dollars ($2,000,000.00); thereafter, the Landlord
      Uninsured Contribution Cap shall be reduced by Three Hundred Thousand
      Dollars ($300,000.00) per year to Eight Hundred Thousand Dollars
      ($800,000.00) as of the commencement of and through the balance of the
      tenth (10th) and final year of the initial ten (10) year Term; provided,
      however, that if Tenant exercises either or both of its Extension Options
      pursuant to Rider No. 1 to this Lease (including as a result of the
      operation of Section 18.5 below), the Landlord Uninsured Contribution Cap
      shall be increased and reinstated to Two Million Dollars ($2,000,000.00)
      effective upon the exercise of each such Extension Option and shall again
      thereafter be reduced by Three Hundred Thousand Dollars ($300,000.00) per
      year to Eight Hundred Thousand Dollars ($800,000.00) as of the
      commencement of and through the balance of the fifth (5th) and final year
      of the applicable Option Term.

Under any of the conditions of this Section 18.1, Landlord shall give written
notice to Tenant of its intention to repair or terminate within the later of
forty-five (45) days after the occurrence of such casualty, or fifteen (15) days
after Landlord's receipt of the estimate from Landlord's contractor.

18.2. TENANT'S COSTS AND INSURANCE PROCEEDS. In the event of any damage or
destruction of all or any part of the Premises, Tenant shall immediately: (a)
notify Landlord thereof; and (b) deliver to Landlord all insurance proceeds
received by Tenant with respect to the Tenant Improvements and Tenant Changes in
the Premises (excluding proceeds for Tenant's furniture and other personal
property), whether or not this Lease is terminated as permitted in this Section
18, and Tenant hereby assigns to Landlord all rights to receive such insurance
proceeds. If, for any reason (including Tenant's failure to obtain insurance for
the full replacement cost of any Tenant Changes which Tenant is required to
insure pursuant to Sections 12.1(c) and/or 20.1(a) hereof), Tenant fails to
receive insurance proceeds covering the full replacement cost of such Tenant
Changes which are damaged, Tenant shall be deemed to have self-insured the
replacement cost of such Tenant Changes, and upon any damage or destruction
thereto, Tenant shall immediately pay to Landlord the full replacement cost of
such items, less any insurance proceeds actually received by Landlord from
Landlord's or Tenant's insurance with respect to such items. If Landlord elects
not to restore the Premises and to terminate this Lease, Tenant shall be
entitled to


                                      -19-


recover from the proceeds of Tenant's insurance for the Premises or Landlord's
insurance, as the case may be, the unamortized cost of: (i) any Tenant Changes
and (ii) any Tenant Improvements to the extent paid for by Tenant (i.e., in
excess of the Allowance provided by Landlord).

18.3. ABATEMENT OF RENT. In the event that as a result of any such damage,
repair, reconstruction and/or restoration of the Premises, Tenant is prevented
from using, and does not use, the Premises or any portion thereof, then the rent
shall be abated or reduced, as the case may be, during the period that Tenant
continues to be so prevented from using and does not use the Premises or portion
thereof, in the proportion that the rentable square feet of the portion of the
Premises that Tenant is prevented from using, and does not use, bears to the
total rentable square feet of the Premises. Notwithstanding the foregoing to the
contrary, if the damage is due to the negligence or willful misconduct of Tenant
or any Tenant Parties, there shall be no abatement of rent. Except for abatement
of rent as provided hereinabove, Tenant shall not be entitled to any
compensation or damages for loss of, or interference with, Tenant's business or
use or access of all or any part of the Premises resulting from any such damage,
repair, reconstruction or restoration.

18.4. INABILITY TO COMPLETE. Notwithstanding anything to the contrary contained
in this Section 18, in the event Landlord is obligated or elects to repair,
reconstruct and/or restore the damaged portion of the Premises pursuant to
Section 18.1 above, but is delayed from completing such repair, reconstruction
and/or restoration beyond the date which is six (6) months after the date
estimated by Landlord's contractor for completion thereof pursuant to Section
18.1, by reason of any causes beyond the reasonable control of Landlord
(including, without limitation, delays due to Force Majeure events as defined in
Section 32.15, and delays caused by Tenant or any Tenant Parties), then Landlord
may elect to terminate this Lease upon thirty (30) days' prior written notice to
Tenant.

18.5. DAMAGE NEAR END OF TERM. In addition to its termination rights in Sections
18.1 and 18.4 above, Landlord shall have the right to terminate this Lease if
any damage to the Premises occurs during the last twelve (12) months of the Term
of this Lease and Landlord's contractor estimates in a writing delivered to the
parties that the repair, reconstruction or restoration of such damage cannot be
completed within the earlier of (a) the scheduled expiration date of the Lease
Term, or (b) sixty (60) days after the date of such casualty; provided, however,
that if Tenant has properly exercised or then exercises Tenant's Extension
Option pursuant to Rider No. 1, the provisions of this Section 18.5 shall not
apply.

18.6. TENANT'S TERMINATION RIGHT. Notwithstanding anything to the contrary which
may be contained elsewhere in this Lease, if (a) any repairs, reconstruction or
restoration of the Premises undertaken by Landlord pursuant to this Section 18
are not completed within twelve (12) calendar months after the date of the
casualty, subject to extension for any Tenant Delay or subsequently occurring
Force Majeure Delay (but not for more than six (6) months), (b) the repairs
and/or restoration are expected by Landlord's contractor to take longer than
twelve (12) months to complete, or (c) the damage occurs during the last twelve
(12) months of the Term and cannot be restored within thirty (30) days, then
Tenant shall have the right to terminate this Lease by delivering written notice
to Landlord prior to Landlord's completion of such restoration (in the case of
item (a) or prior to Landlord's commencement of such restoration in the case of
item (b)).

18.7. WAIVER OF TERMINATION RIGHT. This Lease sets forth the terms and
conditions upon which this Lease may terminate in the event of any damage or
destruction. Accordingly, the parties hereby waive the provisions of California
Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 (and any
successor statutes thereof permitting the parties to terminate this Lease as a
result of any damage or destruction).

19. EMINENT DOMAIN.

19.1. SUBSTANTIAL TAKING. Subject to the provisions of Section 19.4 below in
case the whole of the Premises, or such part thereof as shall substantially
interfere with Tenant's use and occupancy of the Premises as reasonably
determined by Landlord and Tenant, shall be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of
appropriation, condemnation or


                                      -20-


eminent domain, or sold to prevent such taking, either party shall have the
right to terminate this Lease effective as of the date possession is required to
be surrendered to said authority.

19.2. PARTIAL TAKING; ABATEMENT OF RENT. In the event of a taking of a portion
of the Premises which does not substantially interfere with the conduct of
Tenant's business, then, except as otherwise provided in the immediately
following sentence, neither party shall have the right to terminate this Lease
and Landlord shall thereafter proceed to make a functional unit of the remaining
portion of the Premises, and rent shall be abated with respect to the part of
the Premises which Tenant shall be so deprived on account of such taking.

19.3. CONDEMNATION AWARD. Subject to the provisions of Section 19.4 below, in
connection with any taking of the Premises or Building, Landlord shall be
entitled to receive the entire amount of any award which may be made or given in
such taking or condemnation, without deduction or apportionment for any estate
or interest of Tenant, it being expressly understood and agreed by Tenant that
no portion of any such award shall be allowed or paid to Tenant for any
so-called bonus or excess value of this Lease, and such bonus or excess value
shall be the sole property of Landlord. Tenant shall not assert any claim
against Landlord or the taking authority for any compensation because of such
taking (including any claim for bonus or excess value of this Lease); provided,
however, if any portion of the Premises is taken, Tenant shall be granted the
right to recover from the condemning authority (but not from Landlord) any
compensation as may be separately awarded or recoverable by Tenant for the
taking of Tenant's furniture, fixtures, equipment and other personal property
within the Premises, for Tenant's relocation expenses, and for any loss of
goodwill or other damage to Tenant's business by reason of such taking.

19.4. TEMPORARY TAKING. In the event of a taking of the Premises or any part
thereof for temporary use, (a) this Lease shall be and remain unaffected thereby
and rent shall not abate, and (b) Tenant shall be entitled to receive for itself
such portion or portions of any award made for such use with respect to the
period of the taking which is within the Term, provided that if such taking
shall remain in force at the expiration or earlier termination of this Lease,
Tenant shall perform its obligations under Section 9 with respect to surrender
of the Premises and shall pay to Landlord the portion of any award which is
attributable to any period of time beyond the Term expiration date. For purpose
of this Section 19.4, a temporary taking shall be defined as a taking for a
period of two hundred seventy (270) days or less.

19.5. WAIVER OF TERMINATION RIGHT. This Lease sets forth the terms and
conditions upon which this Lease may terminate in the event of a taking.
Accordingly, the parties waive the provisions of the California Code of Civil
Procedure Section 1265.130 and any successor or similar statutes permitting the
parties to terminate this Lease as a result of a taking.

20. TENANT'S INSURANCE.

20.1. TYPES OF INSURANCE. On or before the earlier of the Premises A
Commencement Date or the date Tenant commences or causes to be commenced any
work of any type in or on any portion of the Premises pursuant to this Lease,
and continuing during the entire Term, Tenant shall obtain and keep in full
force and effect, the following insurance:

(a)   Special Form (formerly known as All Risk) insurance, including fire and
      extended coverage, sprinkler leakage (including earthquake sprinkler
      leakage), vandalism, malicious mischief plus earthquake and flood coverage
      upon property of every description and kind owned by Tenant and located in
      the Premises or Building, or for which Tenant is legally liable or
      installed by or on behalf of Tenant including, without limitation,
      furniture, equipment and any other personal property, and any Tenant
      Changes (but excluding the initial Tenant Improvements previously existing
      or installed in the Premises), in an amount not less then the full
      replacement cost thereof. In the event that there shall be a dispute as to
      the amount which comprises full replacement cost, the decision of Landlord
      or the mortgagees of Landlord shall be presumptive.

(b)   Commercial general liability insurance coverage on an occurrence basis,
      including personal injury, bodily injury (including wrongful death), broad
      form property damage, operations hazard,


                                      -21-


      owner's protective coverage, contractual liability (including Tenant's
      indemnification obligations under this Lease, including Section 17
      hereof), liquor liability (if Tenant serves alcohol on the Premises),
      products and completed operations liability, and owned/non-owned auto
      liability, with an initial combined single limit of liability of not less
      than Five Million Dollars ($5,000,000.00). The limits of liability of such
      commercial general liability insurance shall be increased every five (5)
      years during the Term of this Lease to an amount reasonably required by
      Landlord.

(c)   Worker's compensation and employer's liability insurance, in statutory
      amounts and limits, covering all persons employed in connection with any
      work done on or about the Premises for which claims for death or bodily
      injury could be asserted against Landlord, Tenant or the Premises.

(d)   Loss of income, extra expense and business interruption insurance in such
      amounts as will reimburse Tenant for direct or indirect loss of earnings
      for a period of up to twelve (12) months attributable to all perils
      commonly insured against by prudent tenants or attributable to prevention
      of access to the Premises, Tenant's parking areas or to the Building as a
      result of such perils.

(e)   Any other form or forms of insurance as Tenant or Landlord or the
      mortgagees of Landlord may reasonably require from time to time, in form,
      amounts and for insurance risks against which a prudent tenant would
      protect itself, but only to the extent such risks and amounts are
      available in the insurance market at commercially reasonable costs.

20.2. REQUIREMENTS. Each policy required to be obtained by Tenant hereunder
shall: (a) be issued by insurers which are approved by Landlord and/or
Landlord's mortgagees and are authorized to do business in the state in which
the Building is located and rated not less than financial class X, and not less
than policyholder rating A in the most recent version of Best's Key Rating Guide
(provided that, in any event, the same insurance company shall provide the
coverages described in Sections 20.1(a) and 20.1(d) above); (b) be in form
reasonably satisfactory from time to time to Landlord; (c) name Tenant as named
insured thereunder and shall name Landlord and, at Landlord's request, such
other persons or entities of which Tenant has been informed in writing, as
additional insureds thereunder, all as their respective interests may appear;
(d) shall not have a deductible amount exceeding Twenty Five Thousand Dollars
($25,000.00), which deductible amount shall be deemed self-insured with full
waiver of subrogation; (e) specifically provide that the insurance afforded by
such policy for the benefit of Landlord and any other additional insureds shall
be primary, and any insurance carried by Landlord or any other additional
insureds shall be excess and non-contributing; (f) contain an endorsement that
the insurer waives its right to subrogation as described in Section 22 below;
(g) require the insurer to notify Landlord (and any other additional insureds)
in writing not less than thirty (30) days prior to any material change,
reduction in coverage, cancellation or other termination thereof; (h) contain a
cross liability or severability of interest endorsement; and (i) be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof. Each
such policy shall also provide that any loss otherwise payable thereunder shall
be payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of the Premises for purposes more
hazardous than permitted by the provisions of such policy, (iii) any foreclosure
or other action or proceeding taken by any mortgagee pursuant to any provision
of the mortgage upon the happening of a default thereunder, or (iv) any change
in title or ownership of the Premises. Tenant agrees to deliver to Landlord, as
soon as practicable after the placing of the required insurance, but in no event
later than the date Tenant is required to obtain such insurance as set forth in
Section 20.1 above, certified copies of each such insurance policy (or
certificates from the insurance company evidencing the existence of such
insurance and Tenant's compliance with the foregoing provisions of this Section
20). Tenant shall cause replacement policies or certificates to be delivered to
Landlord not less than thirty (30) days prior to the expiration of any such
policy or policies. If any such initial or replacement policies or certificates
are not furnished within the time(s) specified herein, Tenant shall be deemed to
be in material default under this Lease without the benefit of any additional
notice or cure period provided in Section 23.1 below, and Landlord shall have
the right, but not the obligation, to procure such policies and certificates at
Tenant's expense.


                                      -22-


20.3. EFFECT ON INSURANCE. Tenant shall not do or permit to be done anything
which will (a) violate or invalidate any insurance policy maintained by Landlord
or Tenant hereunder, or (b) increase the costs of any insurance policy
maintained by Landlord pursuant to Section 21 or otherwise with respect to the
Building or the Project. If Tenant's occupancy or conduct of its business in or
on the Premises results in any increase in premiums for any insurance carried by
Landlord with respect to the Building or the Project, Tenant shall pay such
increase as additional rent within ten (10) days after being billed therefor by
Landlord. If any insurance coverage carried by Landlord pursuant to Section 21
or otherwise with respect to the Building or the Project shall be cancelled or
reduced (or cancellation or reduction thereof shall be threatened) by reason of
the use or occupancy of the Premises by Tenant or by anyone permitted by Tenant
to be upon the Premises, and if Tenant fails to remedy such condition within
five (5) days after notice thereof, Tenant shall be deemed to be in default
under this Lease, without the benefit of any additional notice or cure period
specified in Section 23.1 below, and Landlord shall have all remedies provided
in this Lease, at law or in equity, including, without limitation, the right
(but not the obligation) to enter upon the Premises and attempt to remedy such
condition at Tenant's cost.

21. LANDLORD'S INSURANCE.

During the Term, Landlord shall insure the Premises and the Tenant Improvements
initially installed in the Premises pursuant to Exhibit "C" (excluding, however,
Tenant's furniture, equipment and other personal property and any Tenant
Changes) against damage by fire and standard comprehensive, "All Risk" extended
coverage perils and with vandalism and malicious mischief endorsements, rental
loss coverage, plus earthquake damage coverage, and such additional coverage as
Landlord deems appropriate on a replacement cost basis. Landlord shall also
carry commercial general liability insurance, in such reasonable amounts and
with such reasonable deductibles as would be carried by a prudent owner of a
similar building in the state in which the Building is located. At Landlord's
option, all such insurance may be carried under any blanket or umbrella policies
which Landlord has in force for other buildings and projects. Landlord may, but
shall not be obligated to, carry any other form or forms of insurance as
Landlord or the mortgagees or ground lessors of Landlord may reasonably
determine is advisable. The cost of insurance obtained by Landlord pursuant to
this Section 21 (including self-insured amounts and deductibles) shall be
included in Insurance Costs.

22. WAIVER OF CLAIMS; WAIVER OF SUBROGATION.

22.1. MUTUAL WAIVER OF PARTIES. Landlord and Tenant hereby waive their rights
against each other with respect to any claims or damages or losses which are
caused by or result from (a) any occurrence insured against under any insurance
policy (other than the commercial general liability insurance) carried by
Landlord or Tenant (as the case may be) pursuant to the provisions of this Lease
and enforceable at the time of such damage or loss, or (b) any occurrence which
would have been covered under any insurance (other than the commercial general
liability insurance) required to be obtained and maintained by Landlord or
Tenant (as the case may be) under Sections 20 and 21 of this Lease (as
applicable) had such insurance been obtained and maintained as required therein.
The foregoing waivers shall be in addition to, and not a limitation of, any
other waivers or releases contained in this Lease.

22.2. WAIVER OF INSURERS. Each party shall cause each insurance policy (other
than the commercial general liability insurance) required to be obtained by it
pursuant to Sections 20 and 21 to provide that the insurer waives all rights of
recovery by way of subrogation against either Landlord or Tenant, as the case
may be, in connection with any claims, losses and damages covered by such
policy. If either party fails to maintain any such insurance required hereunder,
such insurance shall be deemed to be self-insured with a deemed full waiver of
subrogation as set forth in the immediately preceding sentence.

23. TENANT'S DEFAULT AND LANDLORD'S REMEDIES.

23.1. TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a default under this Lease by Tenant:


                                      -23-


(a)   the abandonment of the Premises by Tenant. "ABANDONMENT" is herein defined
      to include, but is not limited to, any absence by Tenant from the Premises
      for ten (10) business days or longer while in default of any other
      provision of this Lease beyond any applicable notice and cure period set
      forth in this Section 23;

(b)   the failure by Tenant to make any payment of rent or additional rent or
      any other payment required to be made by Tenant hereunder, when such
      failure continues for three (3) days after written notice thereof from
      Landlord that such payment was not received when due;

(c)   the failure by Tenant to observe or perform any of the express or implied
      covenants or provisions of this Lease to be observed or performed by
      Tenant, other than as specified in Sections 23.1(a) or (b) above, where
      such failure shall continue for a period of thirty (30) days after written
      notice thereof from Landlord to Tenant; provided, however, that, if the
      nature of Tenant's default is such that more than thirty (30) days are
      reasonably required for its cure, then Tenant shall not be deemed to be in
      default if Tenant shall commence such cure within said thirty (30) day
      period and thereafter diligently prosecute such cure to completion, which
      completion shall occur not later than ninety (90) days from the date of
      such notice from Landlord; and

(d)   (i) the making by Tenant or any guarantor hereof of any general assignment
      for the benefit of creditors, (ii) the filing by or against Tenant or any
      guarantor hereof of a petition to have Tenant or the guarantor adjudged a
      bankrupt or a petition for reorganization or arrangement under any law
      relating to bankruptcy (unless, in the case of a petition filed against
      the Tenant or the guarantor, the same is dismissed within sixty (60)
      days), (iii) the appointment of a trustee or receiver to take possession
      of substantially all of Tenant's assets located at the Premises or of
      Tenant's interest in this Lease or of substantially all of the guarantor's
      assets, where possession is not restored to Tenant or the guarantor within
      sixty (60) days, or (iv) the attachment, execution or other judicial
      seizure of substantially all of Tenant's assets located at the Premises or
      of Tenant's interest in this Lease or of substantially all of the
      guarantor's assets where such seizure is not discharged within sixty (60)
      days.

(e)   any material representation or warranty made by Tenant in this Lease or
      any other document delivered in connection with the execution and delivery
      of this Lease or pursuant to this Lease proves to be incorrect in any
      material respect; and

(f)   Tenant shall be liquidated or dissolved or shall begin proceedings towards
      its liquidation or dissolution.

Any notice sent by Landlord to Tenant pursuant to this Section 23 shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure, Section 1161.

23.2. LANDLORD'S REMEDIES; TERMINATION. In the event of any such default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall have the immediate option to
terminate this Lease and all rights of Tenant hereunder. In the event that
Landlord shall elect to so terminate this Lease, then Landlord may recover from
Tenant:

(a)   the worth at the time of award of any unpaid rent which had been earned at
      the time of such termination; plus

(b)   the worth at the time of the award of the amount by which the unpaid rent
      which would have been earned after termination until the time of award
      exceeds the amount of such rental loss that Tenant proves could have been
      reasonably avoided; plus

(c)   the worth at the time of award of the amount by which the unpaid rent for
      the balance of the term after the time of award exceeds the amount of such
      rental loss that Tenant proves could be reasonably avoided; plus


                                      -24-


(d)   any other amount necessary to compensate Landlord for all the detriment
      proximately caused by Tenant's failure to perform its obligations under
      this Lease or which, in the ordinary course of things, would be likely to
      result therefrom including, but not limited to: unamortized Tenant
      Improvement costs; attorneys' fees; brokers' commissions; the costs of
      refurbishment, alterations, renovation and repair of the Premises; and
      removal (including the repair of any damage caused by such removal) and
      storage (or disposal) of Tenant's personal property, equipment, fixtures,
      Tenant Changes, Tenant Improvements and any other items which Tenant is
      required under this Lease to remove but does not remove.

As used in Sections 23.2(a) and 23.2(b) above, the "WORTH AT THE TIME OF AWARD"
is computed by allowing interest at the Interest Rate set forth in Section 1.14
of the Summary. As used in Section 23.2(c) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

23.3. LANDLORD'S REMEDIES; RE-ENTRY RIGHTS. In the event of any such default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed, stored and/or disposed
of pursuant to Section 12.4 of this Lease or any other procedures permitted by
applicable law. No re-entry or taking possession of the Premises by Landlord
pursuant to this Section 23.3, and no acceptance of surrender of the Premises or
other action on Landlord's part, shall be construed as an election to terminate
this Lease unless a written notice of such intention be given to Tenant or
unless the termination thereof be decreed by a court of competent jurisdiction.

23.4. LANDLORD'S REMEDIES; CONTINUATION OF LEASE. In the event of any such
default by Tenant, in addition to any other remedies available to Landlord under
this Lease, at law or in equity, Landlord shall have the right to continue this
Lease in full force and effect, whether or not Tenant shall have abandoned the
Premises. The foregoing remedy shall also be available to Landlord pursuant to
California Civil Code Section 1951.4 and any successor statute thereof in the
event Tenant has abandoned the Premises. In the event Landlord elects to
continue this Lease in full force and effect pursuant to this Section 23.4, then
Landlord shall be entitled to enforce all of its rights and remedies under this
Lease, including the right to recover rent as it becomes due. Landlord's
election not to terminate this Lease pursuant to this Section 23.4 or pursuant
to any other provision of this Lease, at law or in equity, shall not preclude
Landlord from subsequently electing to terminate this Lease or pursuing any of
its other remedies.

23.5. LANDLORD'S RIGHT TO PERFORM. Except as specifically provided otherwise in
this Lease, all covenants and agreements by Tenant under this Lease shall be
performed by Tenant at Tenant's sole cost and expense and without any abatement
or offset of rent. If Tenant shall fail to pay any sum of money (other than
Monthly Basic Rent) or perform any other act on its part to be paid or performed
hereunder and such failure shall continue for three (3) days with respect to
monetary obligations (or ten (10) days with respect to non-monetary obligations)
after Tenant's receipt of written notice thereof from Landlord, Landlord may,
without waiving or releasing Tenant from any of Tenant's obligations, make such
payment or perform such other act on behalf of Tenant. All sums so paid by
Landlord and all necessary incidental costs incurred by Landlord in performing
such other acts shall be payable by Tenant to Landlord within five (5) days
after demand therefor as additional rent.

23.6. INTEREST. If any monthly installment of Rent, or any other amount payable
by Tenant hereunder is not received by Landlord by the date which is three (3)
days after Tenant's receipt of written notice thereof from Landlord, it shall
bear interest at the Interest Rate set forth in Section 1.14 of the Summary from
the date due until paid. All interest, and any late charges imposed pursuant to
Section 23.7 below, shall be considered additional rent due from Tenant to
Landlord under the terms of this Lease.

23.7. LATE CHARGES. Tenant acknowledges that, in addition to interest costs, the
late payments by Tenant to Landlord of any Monthly Basic Rent or other sums due
under this Lease will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and impractical
to fix. Such other costs include, without limitation, processing, administrative
and accounting


                                      -25-


charges and late charges that may be imposed on Landlord by the terms of any
mortgage, deed of trust or related loan documents encumbering the Premises, the
Building or the Project. Accordingly, if any monthly installment of Monthly
Basic Rent or any other amount payable by Tenant hereunder is not received by
Landlord by the due date thereof, Tenant shall pay to Landlord an additional sum
of five percent (5%) of the overdue amount as a late charge, but in no event
more than the maximum late charge allowed by law. The parties agree that such
late charge represents a fair and reasonable estimate of the costs that Landlord
will incur by reason of any late payment as hereinabove referred to by Tenant,
and the payment of late charges and interest are distinct and separate in that
the payment of interest is to compensate Landlord for the use of Landlord's
money by Tenant, while the payment of late charges is to compensate Landlord for
Landlord's processing, administrative and other costs incurred by Landlord as a
result of Tenant's delinquent payments. Acceptance of a late charge or interest
shall not constitute a waiver of Tenant's default with respect to the overdue
amount or prevent Landlord from exercising any of the other rights and remedies
available to Landlord under this Lease or at law or in equity now or hereafter
in effect.

23.8. RIGHTS AND REMEDIES CUMULATIVE. All rights, options and remedies of
Landlord contained in this Section 23 and elsewhere in this Lease (including
Section 28 below) shall be construed and held to be cumulative, and no one of
them shall be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Section 23 shall be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.

23.9. TENANT'S WAIVER OF REDEMPTION. Tenant hereby waives and surrenders for
itself and all those claiming under it, including creditors of all kinds, (i)
any right and privilege which it or any of them may have under any present or
future law to redeem any of the Premises or to have a continuance of this Lease
after termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future law which exempts property from liability for debt or for
distress for rent.

23.10. COSTS UPON DEFAULT AND LITIGATION. Subject to Section 32.4, Tenant shall
pay to Landlord and its mortgagees as additional rent all the expenses incurred
by Landlord or its mortgagees in connection with any default by Tenant hereunder
or the exercise of any remedy by reason of any default by Tenant hereunder,
including reasonable attorneys' fees and expenses. If Landlord or its mortgagees
shall be made a party to any litigation commenced against Tenant or any
litigation pertaining to this Lease or the Premises, at the option of Landlord
and/or its mortgagees, Tenant, at its expense, shall provide Landlord and/or its
mortgagees with counsel approved by Landlord and/or its mortgagees and shall pay
all costs incurred or paid by Landlord and/or its mortgagees in connection with
such litigation.

24. LANDLORD'S DEFAULT.

Subject to the terms of Section 11.2 which provide certain remedies to Tenant in
the event Landlord defaults with respect to its repair obligations under this
Lease, Landlord shall not be in default in the performance of any obligation
required to be performed by Landlord under this Lease unless Landlord has failed
to perform such obligation within thirty (30) days after the receipt of written
notice from Tenant specifying in detail Landlord's failure to perform; provided
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, then Landlord shall not be
deemed in default if it commences such performance within such thirty (30) day
period and thereafter diligently pursues the same to completion. Upon any such
uncured default by Landlord, Tenant may exercise any of its rights provided at
law or in equity; provided, however: (a) Tenant shall have no right to offset or
abate rent in the event of any default by Landlord under this Lease, except to
the extent offset rights are specifically provided to Tenant in this Lease; (b)
Tenant shall have no right to terminate this Lease; (c) Tenant's rights and
remedies hereunder shall be limited to the extent (i) Tenant has expressly
waived in this Lease any of such rights or remedies and/or (ii) this Lease
otherwise expressly limits Tenant's rights or remedies, including the limitation
on Landlord's liability contained in Section 31 hereof; and (d) in no event
shall Landlord be liable for consequential damages. Nothing in this Section 24
shall extend any of the periods for Landlord's performance contained in Section
18.6.


                                      -26-


25. SUBORDINATION.

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, and at the election of Landlord or any
mortgagee of a mortgage or a beneficiary of a deed of trust now or hereafter
encumbering all or any portion of the Building or Site, or any lessor of any
ground or master lease now or hereafter affecting all or any portion of the
Building or Site ("SUPERIOR INTEREST(S)"), this Lease shall be subject and
subordinate at all times to such ground or master leases (and such extensions
and modifications thereof), and to the lien of such mortgages and deeds of trust
(as well as to any advances made thereunder and to all renewals, replacements,
modifications and extensions thereof). Notwithstanding the foregoing, Landlord
and the holder of any Superior Interest, as applicable, shall have the right to
subordinate or cause to be subordinated any or all ground or master leases or
the lien of any or all mortgages or deeds of trust to this Lease. In the event
that any ground or master lease terminates for any reason or any mortgage or
deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for
any reason, at the election of Landlord's successor in interest, Tenant shall
attorn to and become the tenant of such successor. Tenant hereby waives its
rights under any current or future law which gives or purports to give Tenant
any right to terminate or otherwise adversely affect this Lease and the
obligations of Tenant hereunder in the event of any such foreclosure proceeding
or sale. Tenant covenants and agrees to execute and deliver to Landlord within
fifteen (15) days after receipt of written demand by Landlord and in the form
reasonably required by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground or
master lease or the lien of any such mortgage or deed of trust or Tenant's
agreement to attorn. Should Tenant fail to sign and return any such documents
within said ten day period, Tenant shall be in default hereunder without the
benefit of any additional notice or cure periods specified in Section 23.1
above. Notwithstanding any contrary provision contained in this Section 25, as a
condition to any subordination of this Lease to any such Superior Interests,
Landlord shall obtain from the holders of any Superior Interests now or
hereafter existing against the Project, non-disturbance agreements in
commercially reasonable form which shall provide that so long as Tenant is not
in default under this Lease beyond any applicable cure periods set forth herein,
that Tenant's use, occupancy, and possession of the Premises shall not be
disturbed by anyone claiming, by, through or under Landlord and which shall
recognize all of Tenant's rights hereunder and all of the terms of this Lease.

26. ESTOPPEL CERTIFICATE.

26.1. TENANT'S OBLIGATIONS. Within ten (10) business days following Landlord's
written request, Tenant shall execute and deliver to Landlord an estoppel
certificate, in a form substantially similar to the form of Exhibit "F" attached
hereto, certifying: (a) the Commencement Date of this Lease; (b) that this Lease
is unmodified and in full force and effect (or, if modified, that this Lease is
in full force and effect as modified, and stating the date and nature of such
modifications); (c) the date to which the rent and other sums payable under this
Lease have been paid; (d) that there are not, to the best of Tenant's knowledge,
any defaults under this Lease by either Landlord or Tenant, except as specified
in such certificate; and (e) such other matters as are reasonably requested by
Landlord. Any such estoppel certificate delivered pursuant to this Section 26.1
may be relied upon by any mortgagee, beneficiary, purchaser or prospective
purchaser of any portion of the Site, as well as their assignees.

26.2. TENANT'S FAILURE TO DELIVER. Tenant's failure to deliver such estoppel
certificate within such time shall constitute a default hereunder without the
applicability of the notice and cure periods specified in Section 23.1 above and
shall be conclusive upon Tenant that: (a) this Lease is in full force and effect
without modification, except as may be represented by Landlord; (b) there are no
uncured defaults in Landlord's or Tenant's performance (other than Tenant's
failure to deliver the estoppel certificate); and (c) not more than one (1)
month's rental has been paid in advance. Tenant shall indemnify, defend (with
counsel reasonably approved by Landlord in writing) and hold Landlord harmless
from and against any and all claims, judgments, suits, causes of action,
damages, losses, liabilities and expenses (including attorneys' fees and court
costs) attributable to any failure by Tenant to timely deliver any such estoppel
certificate to Landlord pursuant to Section 26.1 above.


                                      -27-


27. OMITTED.

28. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.

28.1. MODIFICATIONS. If, in connection with Landlord's obtaining or entering
into any financing or ground lease for any portion of the Building or Site, the
lender or ground lessor shall request modifications to this Lease, Tenant shall,
within ten (10) business days after request therefor, execute an amendment to
this Lease including such modifications, provided such modifications are
reasonable, do not increase the obligations of Tenant hereunder, or adversely
affect the leasehold estate created hereby or Tenant's rights hereunder.

28.2. CURE RIGHTS. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee covering the Premises or ground lessor of Landlord whose
address shall have been furnished to Tenant, and shall offer such beneficiary,
mortgagee or ground lessor a reasonable opportunity to cure the default
(including with respect to any such beneficiary or mortgagee, time to obtain
possession of the Premises, subject to this Lease and Tenant's rights hereunder,
by power of sale or a judicial foreclosure, if such should prove necessary to
effect a cure).

29. QUIET ENJOYMENT.

Landlord covenants and agrees with Tenant that, upon Tenant performing all of
the covenants and provisions on Tenant's part to be observed and performed under
this Lease (including payment of rent hereunder), Tenant shall have the right to
use and occupy the Premises in accordance with and subject to the terms and
conditions of this Lease as against all persons claiming by, through or under
Landlord.

30. TRANSFER OF LANDLORD'S INTEREST.

The term "Landlord" as used in this Lease, so far as covenants or obligations on
the part of the Landlord are concerned, shall be limited to mean and include
only the owner or owners, at the time in question, of the fee title to, or a
lessee's interest in a ground lease of, the Site. In the event of any transfer
or conveyance of any such title or interest (other than a transfer for security
purposes only), the transferor shall be automatically relieved of all covenants
and obligations on the part of Landlord contained in this Lease accruing after
the date of such transfer or conveyance. Landlord and Landlord's transferees and
assignees shall have the absolute right to transfer all or any portion of their
respective title and interest in the Site, the Building, the Premises and/or
this Lease without the consent of Tenant, and such transfer or subsequent
transfer shall not be deemed a violation on Landlord's part of any of the terms
and conditions of this Lease.

31. LIMITATION ON LANDLORD'S LIABILITY.

Notwithstanding anything contained in this Lease to the contrary, the
obligations of Landlord under this Lease (including any actual or alleged breach
or default by Landlord) do not constitute personal obligations of the individual
partners, directors, officers, members or shareholders of Landlord or Landlord's
members or partners, and Tenant shall not seek recourse against the individual
partners, directors, officers, members or shareholders of Landlord or against
Landlord's members or partners or any other persons or entities having any
interest in Landlord, or any of their personal assets for satisfaction of any
liability with respect to this Lease. In addition, in consideration of the
benefits accruing hereunder to Tenant and notwithstanding anything contained in
this Lease to the contrary, Tenant hereby covenants and agrees for itself and
all of its successors and assigns that the liability of Landlord for its
obligations under this Lease (including any liability as a result of any actual
or alleged failure, breach or default hereunder by Landlord), shall be limited
solely to, and Tenant's and its successors' and assigns' sole and exclusive
remedy shall be against, Landlord's interest in the Project, including
insurance, condemnation and sale proceeds and no other assets of Landlord.


                                      -28-


32. MISCELLANEOUS.

32.1. GOVERNING LAW. This Lease shall be governed by, and construed pursuant to,
the laws of the state in which the Building is located.

32.2. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 30 above, and
except as otherwise provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective heirs, personal representatives and
permitted successors and assigns; provided, however, no rights shall inure to
the benefit of any Transferee of Tenant unless the Transfer to such Transferee
is made in compliance with the provisions of Section 14, and no options or other
rights which are expressly made personal to the original Tenant hereunder or in
any rider attached hereto shall be assignable to or exercisable by anyone other
than the original Tenant under this Lease.

32.3. NO MERGER. The voluntary or other surrender of this Lease by Tenant or a
mutual termination thereof shall not work as a merger and shall, at the option
of Landlord, either (a) terminate all or any existing subleases, or (b) operate
as an assignment to Landlord of Tenant's interest under any or all such
subleases.

32.4. PROFESSIONAL FEES. If either Landlord or Tenant should bring suit against
the other with respect to this Lease, including for unlawful detainer or any
other relief against the other hereunder, then all costs and expenses incurred
by the prevailing party therein (including, without limitation, its actual
appraisers', accountants', attorneys' and other professional fees and court
costs), shall be paid by the other party.

32.5. WAIVER. The waiver by either party of any breach by the other party of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant and condition
herein contained, nor shall any custom or practice which may become established
between the parties in the administration of the terms hereof be deemed a waiver
of, or in any way affect, the right of any party to insist upon the performance
by the other in strict accordance with said terms. No waiver of any default of
either party hereunder shall be implied from any acceptance by Landlord or
delivery by Tenant (as the case may be) of any rent or other payments due
hereunder or any omission by the non-defaulting party to take any action on
account of such default if such default persists or is repeated, and no express
waiver shall affect defaults other than as specified in said waiver. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.

32.6. TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular. Words used in any gender include
other genders. The Section headings of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof. Any deletion of language from this Lease prior to its execution by
Landlord and Tenant shall not be construed to raise any presumption, canon of
construction or implication, including, without limitation, any implication that
the parties intended thereby to state the converse of the deleted language.

32.7. TIME. Time is of the essence with respect to performance of every
provision of this Lease in which time or performance is a factor. All references
in this Lease to "DAYS" shall mean calendar days unless specifically modified
herein to be "business" days.

32.8. PRIOR AGREEMENTS; AMENDMENTS. This Lease (and the Exhibits and Riders
attached hereto) contain all of the covenants, provisions, agreements,
conditions and understandings between Landlord and Tenant concerning the
Premises and any other matter covered or mentioned in this Lease, and no prior
agreement or understanding, oral or written, express or implied, pertaining to
the Premises or any such other matter shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations are


                                      -29-


deemed superseded by the execution of this Lease to the extent they are not
expressly incorporated herein.

32.9. SEPARABILITY. The invalidity or unenforceability of any provision of this
Lease (except for Tenant's obligation to pay Monthly Basic Rent, Real Property
Taxes and Assessments, and Insurance Costs) shall in no way affect, impair or
invalidate any other provision hereof, and such other provisions shall remain
valid and in full force and effect to the fullest extent permitted by law.

32.10. RECORDING. Neither Landlord nor Tenant shall record this Lease. In
addition, neither party shall record a short form memorandum of this Lease
without the prior written consent (and signature on the memorandum) of the
other, and provided that prior to recordation Tenant executes and delivers to
Landlord, in recordable form, a properly acknowledged quitclaim deed or other
instrument extinguishing all of the Tenant's rights and interest in and to the
Site, Building and Premises, and designating Landlord as the transferee, which
deed or other instrument shall be held by Landlord and may be recorded by
Landlord once the Lease terminates or expires (but not prior thereto). The form
of any short form memorandum shall be subject to Landlord's prior reasonable
approval and shall not disclose any of the terms of this Lease except as
expressly authorized by Landlord. If such short form memorandum is recorded in
accordance with the foregoing, the party requesting the recording shall pay for
all costs of or related to such recording, including, but not limited to,
recording charges and documentary transfer taxes.

32.11. EXHIBITS AND RIDERS. All Exhibits and Riders attached to this Lease are
hereby incorporated in this Lease as though set forth at length herein.

32.12. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a
lesser amount than the rent payment herein stipulated shall be deemed to be
other than on account of the rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease. Tenant agrees that each of the foregoing
covenants and agreements shall be applicable to any covenant or agreement either
expressly contained in this Lease or imposed by any statute or at common law.

32.13. FINANCIAL STATEMENTS. Upon ten (10) days prior written request from
Landlord (which Landlord may make at any time during the Term but no more often
that two (2) times in any calendar year), Tenant shall deliver to Landlord (a) a
current financial statement of Tenant and any guarantor of this Lease, and (b)
financial statements of Tenant and such guarantor for the two (2) years prior to
the current financial statement year. Such statements shall be prepared in
accordance with generally acceptable accounting principles and certified as true
in all material respects by Tenant (if Tenant is an individual) or by an
authorized officer, member/manager or general partner of Tenant (if Tenant is a
corporation, limited liability company or partnership, respectively).

32.14. NO PARTNERSHIP. Landlord does not, in any way or for any purpose, become
a partner of Tenant in the conduct of its business, or otherwise, or joint
venturer or a member of a joint enterprise with Tenant by reason of this Lease.
The provisions of this Lease relating to Percentage Rent payable hereunder, if
any, are included solely for the purpose of providing a method whereby rent is
to be measured and ascertained.

32.15. FORCE MAJEURE. In the event that either party hereto shall be delayed or
hindered in or prevented from the performance of any act required hereunder by
reason of strikes, lock-outs, labor troubles, inability to procure materials,
failure of power, governmental moratorium or other governmental action or
inaction (including failure, refusal or delay in issuing permits, approvals
and/or authorizations), injunction or court order, riots, insurrection, war,
fire, earthquake, flood or other natural disaster or other reason of a like
nature not the fault of the party delaying in performing work or doing acts
required under the terms of this Lease (but excluding delays due to financial
inability) (herein collectively, "FORCE MAJEURE DELAYS"), then performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay. The provisions of this Section 32.15 shall not apply to
nor operate to excuse Tenant from the payment of


                                      -30-


Monthly Basic Rent, additional rent or any other payments strictly in accordance
with the terms of this Lease, nor shall this Section 32.15 operate to extend the
time periods for restoration under Section 18.6.

32.16. COUNTERPARTS. This Lease may be executed in one or more counterparts,
each of which shall constitute an original and all of which shall be one and the
same agreement.

32.17. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that the
terms of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms could adversely affect the ability of Landlord
to negotiate other leases and impair Landlord's relationship with other tenants.
Accordingly, Tenant agrees that except as required by law due to Tenant's status
as a public company (or pursuant to Tenant's business judgment as to its
reporting obligations), Tenant and its partners, officers, directors, employees,
agents and attorneys, shall not intentionally and voluntarily disclose the terms
and conditions of this Lease to any newspaper or other publication or any other
tenant or apparent prospective tenant of the Building or other portion of the
Project, or real estate agent, either directly or indirectly, without the prior
written consent of Landlord, provided, however, that Tenant may disclose the
terms to prospective subtenants or assignees under this Lease.

32.18. NON-DISCRIMINATION. Tenant acknowledges and agrees that there shall be no
discrimination against, or segregation of, any person, group of persons, or
entity on the basis of race, color, creed, religion, age, sex, marital status,
national origin, or ancestry in the leasing, subleasing, transferring,
assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion
thereof.

33. LEASE EXECUTION.

33.1. TENANT'S AUTHORITY. If Tenant executes this Lease as a partnership,
corporation or limited liability company, then Tenant and the persons and/or
entities executing this Lease on behalf of Tenant represent and warrant that:
(a) Tenant is a duly organized and existing partnership, corporation or limited
liability company, as the case may be, and is qualified to do business in the
state in which the Building is located; (b) such persons and/or entities
executing this Lease are duly authorized to execute and deliver this Lease on
Tenant's behalf in accordance with the Tenant's partnership agreement (if Tenant
is a partnership), or a duly adopted resolution of Tenant's board of directors
and the Tenant's by-laws (if Tenant is a corporation) or with Tenant's operating
agreement (if Tenant is a limited liability company); and (c) this Lease is
binding upon Tenant in accordance with its terms. Concurrently with Tenant's
execution and delivery of this Lease to Landlord and/or at any time during the
Term within ten (10) days of Landlord's request, Tenant shall provide to
Landlord a copy of any documents reasonably requested by Landlord evidencing
such qualification, organization, existence and authorization.

33.2. JOINT AND SEVERAL LIABILITY. If more than one person or entity executes
this Lease as Tenant: (a) each of them is and shall be jointly and severally
liable for the covenants, conditions, provisions and agreements of this Lease to
be kept, observed and performed by Tenant; and (b) the act or signature of, or
notice from or to, any one or more of them with respect to this Lease shall be
binding upon each and all of the persons and entities executing this Lease as
Tenant with the same force and effect as if each and all of them had so acted or
signed, or given or received such notice. 33.3. GUARANTY. Omitted.

33.4. NO OPTION. The submission of this Lease for examination or execution by
Tenant does not constitute a reservation of or option for the Premises and this
Lease shall not become effective as a Lease until it has been executed by
Landlord and delivered to Tenant.

34. WAIVER OF JURY TRIAL.

EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING
SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY


                                      -31-


BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY
HEREUNDER.

35. BACK-UP GENERATOR.

Subject to the terms and conditions set forth in this Section 35 and to Tenant
obtaining all necessary governmental permits and approvals, and so long as
Tenant shall not adversely interfere with any Building systems, Tenant shall
have the right to install, operate and maintain, at Tenant's sole cost and
expense, a back-up generator ("Generator") upon the Premises. Landlord shall,
subject to and in accordance with Article 12, have the right to review and
approve Tenant's plans and specifications for the proposed equipment, including,
without limitation, the size, desired location, method of installation and
visibility of such equipment. The location of the Generator shall be selected by
Tenant, subject to Landlord's approval which approval shall not be unreasonably
withheld, conditioned or delayed.

Notwithstanding the foregoing, in no event may the installation of the Generator
involve the installation of an underground storage tank. The above-ground
storage tank associated with the Generator (the "AST") shall not exceed 10,000
gallons in capacity, shall be double walled in thickness, shall contain diesel
fuel only (to power the Generator only), and shall employ at a minimum a double
containment system whereby if the first containment system fails, a second
containment system shall be present to prevent releases of Hazardous Materials,
all in accordance with applicable laws and environmental regulations. For these
purposes, a sealed, uncracked concrete basement slab containment area without
drains shall be sufficient (but shall not be the exclusive method) to constitute
the second containment system, provided it is large enough to completely contain
a release of the maximum volume of Hazardous Materials which could be present in
the first containment system. Tenant acknowledges that any loss of parking
attributable to the location of the Generator and/or AST will be at Tenant's
sole risk and come out of Tenant's share of parking. All handling, use, storage
and disposal of Hazardous Materials relating to the AST or the Generator shall
be accomplished by Tenant at its sole cost and expense in accordance with and
subject to the terms of Section 6.4 above.

Prior to or within sixty (60) days following the expiration or earlier
termination of the Term of this Lease, Tenant agrees to (i) promptly remove from
the Project, at its sole cost and expense, the AST (including, at Landlord's
request, the basement slab), if any, and the Generator and all Hazardous
Materials which are brought upon, stored, used, generated or released upon, in,
under or about the Premises, the Project or any portion thereof by Tenant or any
Tenant Parties in connection with the Generator or AST, and (ii) return the
Premises and the balance of the Project to substantially the condition existing
prior to Tenant's installation of the Generator and AST. Tenant shall be solely
responsible for complying with any and all Environmental Laws relating to the
AST, the Generator and all Hazardous Materials associated with either of the
same, including, without limitation, all permitting and tank installations,
monitoring and removal/closure obligations. For purposes of all Environmental
Laws, Tenant shall be the owner and operator of the AST. Tenant shall be
responsible for ensuring compliance by all Tenant Parties with all Environmental
Laws relating to the AST and the Generator. Any acknowledgment, consent or
approval by Landlord of Tenant's use or handling of Hazardous Materials shall
not constitute an assumption of risk respecting the same nor a warranty or
certification by Landlord that Tenant's proposed use and handling of Hazardous
Materials is safe or reasonable or in compliance with Environmental Laws.

From time to time during the Term and for up to one hundred eighty (180) days
thereafter, Landlord may, and upon Landlord's request, Tenant shall, retain a
registered environmental consultant ("CONSULTANT") acceptable to Landlord to
conduct an environmental investigation of the Project ("ENVIRONMENTAL
ASSESSMENT") (i) for Hazardous Materials contamination in, about or beneath the
Project relative to the AST or the Generator, and (ii) to assess the activities
of Tenant and all Tenant Parties with respect to the Generator and the AST for
compliance with all Environmental Laws and to recommend the use of procedures
intended to reasonably reduce the risk of a release of Hazardous Materials. If
the Environmental Assessment discloses any material breach of Environmental Laws
by Tenant or any Tenant Parties, then the cost thereof shall be the sole
responsibility of Tenant, payable as additional rent under this Lease.
Otherwise, the costs of the Environmental Assessment shall be the responsibility
of Landlord. If Landlord so requires, Tenant shall comply, at its sole cost and
expense, with all reasonable


                                      -32-


recommendations contained in the Environmental Assessment, including any
reasonable recommendations with respect to precautions which should be taken
with respect to Tenant's or Tenant Parties' activities at the Project relative
to the AST or the Generator or any recommendations for additional testing and
studies to detect the presence of Hazardous Materials relative to the AST or the
Generator. Tenant covenants to reasonably cooperate with the Consultant and to
allow entry and reasonable access to the AST and the Generator for the purpose
of the Consultant's investigations.

If any cleanup or monitoring procedure is required by any applicable
governmental authorities in or about the Project as a consequence of any
Hazardous Materials contamination by Tenant or any of Tenant's Parties arising
out of the Generator or AST use, and the procedure for cleanup is not completed
(to the satisfaction of all applicable governmental authorities) prior to the
expiration or earlier termination of the Term of this Lease (referred to herein
as "Tenant's Failure to Clean-Up"), then, without limiting any of Landlord's
other rights and remedies contained in this Lease (including, without
limitation, any indemnity and restoration obligations of Tenant contained in
this Lease), Tenant will additionally be liable for any revenue of Landlord lost
to the extent Landlord is precluded from re-leasing the Premises or any other
portion of the Project as a result of such contamination.

Tenant shall indemnify and hold Landlord harmless from any and all liability,
losses, damages, actions or causes of action, judgments, costs and expenses
arising in any way from Tenant's installation, operation, maintenance and
removal of the Generator and the AST, or any breach of Tenant's obligations
under this Lease with respect to the Generator and the AST. The representations,
warranties and agreements of the Tenant set forth in this Section 35 shall
survive the expiration of the Lease Term or the earlier termination of the Lease
for any reason.

36. ROOFTOP COMMUNICATIONS EQUIPMENT.

Subject to all applicable governmental laws and regulations, and in accordance
with the terms of Landlord's Antennae License Agreement in the form attached
hereto as Exhibit "H", Tenant shall have the right to install, maintain and
operate, at Tenant's sole cost and expense, a satellite dish or other
telecommunications equipment at a location on the roof of the Building
reasonably approved by Landlord. Use of the roof top space shall be for Tenant's
internal purposes only and shall be non-exclusive and in common with Landlord.
Tenant shall not pay a monthly license fee for the rights granted herein.
Landlord reserves the right to use the roof; provided, however, that Landlord
shall use reasonable efforts to minimize any interference with the operation of
Tenant's telecommunications equipment.


                                      -33-


IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.

TENANT:                                   LANDLORD:

DOUBLECLICK, INC.                         LNR-LENNAR BRANNAN STREET, LLC
a Delaware corporation                    a California limited liability company

                                          By:   LNR Western Properties, Inc., a
                                          California corporation
By: /s/ Stephen Collins                   Its:  Managing Member
   -------------------------------------
    Print Name: Stephen Collins
               -------------------------
    Print Title: Chief Financial Officer
                ------------------------

                                          By: /s/ Daniel C. Grable
                                             -----------------------------------
By: /s/ Thomas Etergino                       Print Name: Daniel C. Grable
   ----------------------------------                     ----------------------
    Print Name: Thomas Etergino               Print Title: Vice President
                ---------------------                      ---------------------
    Print Title: Controller
                 --------------------

                                          By: /s/ David O. Team
                                             -----------------------------------
                                              Print Name: David O. Team
                                                         -----------------------
                                              Print Title: Vice President
                                                          ----------------------


                                      -34-


                             EXTENSION OPTION RIDER

                              RIDER NO. 1 TO LEASE

This Rider No. 1 is made and entered into by and between LNR-LENNAR BRANNAN
STREET, LLC, a California limited liability company ("LANDLORD"), and
DOUBLECLICK, INC., a Delaware corporation ("TENANT"), as of the day and year of
the Lease between Landlord and Tenant to which this Rider is attached. Landlord
and Tenant hereby agree that, notwithstanding anything contained in the Lease to
the contrary, the provisions set forth below shall be deemed to be part of the
Lease and shall supersede any inconsistent provisions of the Lease. All
references in the Lease and in this Rider to the "Lease" shall be construed to
mean the Lease (and all exhibits and Riders attached thereto), as amended and
supplemented by this Rider. All capitalized terms not defined in this Rider
shall have the same meaning as set forth in the Lease.

1. Landlord hereby grants to Tenant two (2) options (the "EXTENSION OPTION(S)")
to extend the Term of the Lease for two (2) additional periods of five (5) years
(the "OPTION TERM[S]"), on the same terms, covenants and conditions as provided
for in the Lease during the initial Term, except for the Monthly Basic Rent,
which shall equal the "fair market rental rate" for the Premises for the
applicable Option Term as defined and determined in accordance with the Fair
Market Rental Rate Rider attached to the Lease as Rider No. 2.

2. Each Extension Option must be exercised, if at all, by written notice
("EXTENSION NOTICE") delivered by Tenant to Landlord no later than that date
which is two hundred seventy (270) days prior to the expiration of the then
current Term of the Lease. An Extension Option shall, at Landlord's sole option,
not be deemed to be properly exercised if, at the time the Extension Option is
exercised or on the scheduled commencement date for the Option Term, Tenant has
committed an uncured event of default whose cure period has expired pursuant to
Section 23 of the Lease. Provided Tenant has properly and timely exercised the
Extension Option, the then current term of the Lease shall be extended by the
Option Term, and all terms, covenants and conditions of the Lease shall remain
unmodified and in full force and effect, except that the Monthly Basic Rent
shall be as set forth above.


                                      -1-


                          FAIR MARKET RENTAL RATE RIDER

                              RIDER NO. 2 TO LEASE

This Rider No. 2 is made and entered into by and between LNR-LENNAR BRANNAN
STREET, LLC, a California limited liability company ("LANDLORD"), and
DOUBLECLICK, INC., a Delaware corporation ("TENANT"), as of the day and year of
the Lease between Landlord and Tenant to which this Rider is attached. Landlord
and Tenant hereby agree that, notwithstanding anything contained in the Lease to
the contrary, the provisions set forth below shall be deemed to be part of the
Lease and shall supersede any inconsistent provisions of the Lease. All
references in the Lease and in this Rider to the "Lease" shall be construed to
mean the Lease (and all exhibits and Riders attached thereto), as amended and
supplemented by this Rider. All capitalized terms not defined in this Rider
shall have the same meaning as set forth in the Lease.

1. The term "fair market rental rate" as used in the Lease and any Rider
attached thereto shall mean the annual amount per rentable square foot,
projected during the applicable Option Term, that a willing, non-equity,
financially comparable, renewal tenant (excluding sublease and assignment
transactions) would pay, and a willing, institutional landlord of a comparable
quality building located in the "South of Market Area" (as said phrase is
commonly used by local realtors) of San Francisco, California ("Comparison
Area") would accept, in an arm's length transaction for a building of comparable
size, quality and height as the Premises, taking into account the age, quality
and layout of the existing improvements in the Premises, and taking into account
items that professional real estate brokers or professional real estate
appraisers customarily consider, including, but not limited to, rental rates,
space availability, tenant size, tenant improvement allowances, parking charges
and any other lease considerations, if any, then being charged or granted by
Landlord or the lessors of such similar buildings. The fair market rental rate
will be an effective rate, not specifically including, but accounting for, the
appropriate economic considerations described above.

2. Landlord shall provide written notice of Landlord's determination of the fair
market rental rate not later than ninety (90) days after the last day upon which
Tenant may timely exercise the right giving rise to the necessity for such fair
market rental rate determination. Tenant shall have fifteen (15) business days
("TENANT'S REVIEW Period") after receipt of Landlord's notice of the fair market
rental rate within which to accept such fair market rental rate or to reasonably
object thereto in writing. Failure of Tenant to so object to the fair market
rental rate submitted by Landlord in writing within Tenant's Review Period shall
conclusively be deemed Tenant's rejection thereof. If within Tenant's Review
Period Tenant reasonably objects to or is deemed to have disapproved the fair
market rental rate submitted by Landlord, Landlord and Tenant will meet together
with their respective legal counsel to present and discuss their individual
determinations of the fair market rental rate for the Premises under the
parameters set forth in Paragraph 1 above and shall diligently and in good faith
attempt to negotiate a rental rate on the basis of such individual
determinations. Such meeting shall occur no later than ten (10) days after the
expiration of Tenant's Review Period. The parties shall each provide the other
with such supporting information and documentation as they deem appropriate. At
such meeting if Landlord and Tenant are unable to agree upon the fair market
rental rate, they shall each submit to the other their respective best and final
offer as to the fair market rental rate. If Landlord and Tenant fail to reach
agreement on such fair market rental rate within five (5) business days
following such a meeting (the "Outside Agreement Date"), Tenant's [Extension
Option] will be deemed null and void unless Tenant demands appraisal, in which
event each party's determination shall be submitted to appraisal in accordance
with the provisions of Section 3 below.

3. (a) Landlord and Tenant shall each appoint one (1) independent appraiser who
shall by profession be an M.A.I. certified real estate appraiser who shall have
been active over the five (5) year period ending on the date of such appointment
in the leasing of commercial properties in the Comparison Area. The
determination of the appraisers shall be limited solely to the issue of whether
Landlord's or Tenant's last proposed (as of the Outside Agreement Date) best and
final fair market rental rate for the Premises is the closest to the actual fair
market rental rate for the Premises as determined by the


                                      -1-


appraisers, taking into account the requirements specified in Section 1 above.
Each such appraiser shall be appointed within fifteen (15) days after the
Outside Agreement Date.

(b) The two (2) appraisers so appointed shall within fifteen (15) days of the
date of the appointment of the last appointed appraiser agree upon and appoint a
third appraiser who shall be qualified under the same criteria set forth
hereinabove for qualification of the initial two (2) appraisers.

(c) The three (3) appraisers shall within thirty (30) days of the appointment of
the third appraiser reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted best and final fair market rental rate, and
shall notify Landlord and Tenant thereof. During such thirty (30) day period,
Landlord and Tenant may submit to the appraisers such information and
documentation to support their respective positions as they shall deem
reasonably relevant and Landlord and Tenant may each appear before the
appraisers jointly to question and respond to questions from the appraisers.

(d) The decision of the majority of the three (3) appraisers shall be binding
upon Landlord and Tenant and neither party shall have the right to reject the
decision or to undo the exercise of the applicable Option. If either Landlord or
Tenant fails to appoint an appraiser within the time period specified in Section
3(a) hereinabove, the appraiser appointed by one of them shall within thirty
(30) days following the date on which the party failing to appoint an appraiser
could have last appointed such appraiser reach a decision based upon the same
procedures as set forth above (i.e., by selecting either Landlord's or Tenant's
submitted best and final fair market rental rate), and shall notify Landlord and
Tenant thereof, and such appraiser's decision shall be binding upon Landlord and
Tenant and neither party shall have the right to reject the decision or to undo
the exercise of the applicable Option.

(e) If the two (2) appraisers fail to agree upon and appoint a third appraiser,
both appraisers shall be dismissed and the matter to be decided shall be
forthwith submitted to arbitration under the provisions of the American
Arbitration Association based upon the same procedures as set forth above (i.e.,
by selecting either Landlord's or Tenant's submitted best and final fair market
rental rate).

(f) The cost of each party's appraiser shall be the responsibility of the party
selecting such appraiser, and the cost of the third appraiser (or arbitration,
if necessary) shall be shared equally by Landlord and Tenant.

(g) If the process described hereinabove has not resulted in a selection of
either Landlord's or Tenant's submitted best and final fair market rental rate
by the commencement of the applicable lease term, then the fair market rental
rate estimated by Landlord will be used until the appraiser(s) reach a decision,
with an appropriate rental credit and other adjustments for any overpayments of
Monthly Basic Rent or other amounts if the appraisers select Tenant's submitted
best and final estimate of the fair market rental rate. The parties shall enter
into an amendment to this Lease confirming the terms of the decision.


                                      -2-


                               OPTIONS IN GENERAL

                              RIDER NO. 3 TO LEASE

This Rider No. 3 is made and entered into by and between LNR-LENNAR BRANNAN
STREET, LLC, a California limited liability company ("LANDLORD"), and
DOUBLECLICK, INC., a Delaware corporation ("TENANT"), as of the day and year of
the Lease between Landlord and Tenant to which this Rider is attached. Landlord
and Tenant hereby agree that, notwithstanding anything contained in the Lease to
the contrary, the provisions set forth below shall be deemed to be part of the
Lease and shall supersede any inconsistent provisions of the Lease. All
references in the Lease and in this Rider to the "Lease" shall be construed to
mean the Lease (and all exhibits and Riders attached thereto), as amended and
supplemented by this Rider. All capitalized terms not defined in this Rider
shall have the same meaning as set forth in the Lease.

(a) DEFINITION. As used in this Lease and any Rider or Exhibit attached hereto,
the word "Option" means the Extension Options pursuant to Rider 1 herein.

(b) OPTIONS PERSONAL. Each Option granted to Tenant is personal to the original
Tenant executing this Lease, an Affiliate (as defined in Section 14.2) and any
assignee approved by Landlord in accordance with Section 14.3. The Options, if
any, granted to Tenant under this Lease are not assignable separate and apart
from this Lease, nor may any Option be separated from this Lease in any manner,
either by reservation or otherwise.

(c) EFFECT OF DEFAULT ON OPTIONS. Tenant will have no right to exercise any
Option, notwithstanding any provision of the grant of option to the contrary,
and Tenant's exercise of any Option may be nullified by Landlord and deemed of
no further force or effect, if (i) Tenant is in default (beyond any applicable
notice and cure period) of any monetary obligation or material non-monetary
obligation under the terms of this Lease as of Tenant's exercise of the Option
in question or at the commencement of the Option event. The provisions of this
subsection (c) are intended to and shall be construed to also apply to an
Affiliate.

(d) OPTIONS AS ECONOMIC TERMS. Each Option is hereby deemed an economic term
which Landlord, in its sole and absolute discretion, may or may not offer in
conjunction with any future extensions of the Term.


                                      -1-


               SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS

This SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS ("SUMMARY") is hereby
incorporated into and made a part of the attached Lease which pertains to the
Building described in Section 1.4 below. All references in the Lease to the
"Lease" shall include this Summary. All references in the Lease to any term
defined in this Summary shall have the meaning set forth in this Summary for
such term. Any initially capitalized terms used in this Summary and any
initially capitalized terms in the Lease which are not otherwise defined in this
Summary shall have the meaning given to such terms in the Lease. If there is any
inconsistency between the Summary and the Lease, the provisions of the Lease
shall control.

1.1   LANDLORD'S ADDRESS:     LNR - Lennar Brannan Street, LLC
                              c/o Lennar Partners
                              18401 Von Karman, Suite 540
                              Irvine, California  92612
                              Attn:  Brannan Street Asset Manager
                              Telephone:  (949) 442-6100
                              Facsimile:  (949) 442-6175

1.2   TENANT'S ADDRESS:       DoubleClick, Inc.
                              450 West 33rd Street
                              New York, New York  10001
                              Attn:  General Counsel
                              Telephone:  (212) 683-0001
                              Facsimile:  (212) 655-4634

                              With A Copy To:

                              Loeb & Loeb LLP
                              345 Park Avenue
                              New York, New York  10154
                              Attn: Scott I. Schneider, Esq.

1.3 SITE; PROJECT: The Site consists of the parcel(s) of real property located
at 250 Brannan Street, San Francisco, County of San Francisco, State of
California, as shown on the site plan attached hereto as Exhibit "A" as such
area may be expanded or reduced (in either case only with Tenant's and
Landlord's approval) from time to time. The Project includes the Site and all
buildings, improvements and facilities, now or subsequently located on the Site
from time to time, including, without limitation, the one (1) building
("BUILDING") and appurtenant parking structure (the "PARKING STRUCTURE") upon
which and adjacent to which the Building is constructed, as depicted on the site
plan attached hereto as Exhibit "A".

1.4 BUILDING: A three (3) story building with a basement and penthouse area
located on the Site, containing for all purposes of this Lease 117,000 rentable
square feet, the address of which is 250 Brannan Street, San Francisco,
California.

1.5 PREMISES: Those certain premises (collectively, the "Premises") consisting
of: (i) "Premises A" consisting of approximately 68,000 rentable square feet of
area located on the basement, ground, second (2nd) and third (3rd) floors and
penthouse of the Building on the Brannan Street side of the Building as
generally shown on the floor plan attached hereto as Exhibit "B"; (ii) "Premises
B" consisting of approximately 49,000 rentable square feet of area located on
the second (2nd) and third (3rd) floors of the Building above the parking
garage; (iii) the Parking Structure; and (iv) all other improvements and
facilities on the Site.


                                      -1-


1.6 TERM: Ten (10) Years and No (0) Months as to Premises B. As to Premises A
and the remainder of the Premises: Ten (10) Years and the number of additional
months and days as are necessary for the Premises A lease term to be coterminous
with the Premises B lease term.

1.7 ESTIMATED COMMENCEMENT DATE AS TO PREMISES A: October 15, 2000; ESTIMATED
COMMENCEMENT DATE AS TO PREMISES B: January 15, 2001; ACTUAL COMMENCEMENT DATE
AS TO BOTH PREMISES A AND PREMISES B: To be determined as provided in Exhibit
"C" attached hereto. SCHEDULED DELIVERY DATE AS TO PREMISES A: August 15, 2000;
SCHEDULED DELIVERY DATE AS TO PREMISES B: January 15, 2001; ACTUAL DELIVERY DATE
AS TO BOTH PREMISES A AND PREMISES B: to be determined as provided in Exhibit
"C" attached hereto.

1.8 MONTHLY BASIC RENT: Upon the commencement of the Term of this Lease as to
the applicable portion of the Premises, and on the first day of each month
thereafter during the Term of this Lease as to the applicable portion of the
Premises, Tenant shall pay to Landlord, in advance and, except as expressly
provided herein, without offset, deduction or demand as Monthly Basic Rent for
the Premises the following monthly payments:



       Months         Monthly Basic Rent   Annual Basic Rent    Annual Rent PSF
- -------------------   ------------------   -----------------   ------------------
                                                      
     Premises A            $255,000            $3,060,000         $45.00 NNN
  Commencement Date
 through Premises B
  Commencement Date

     Premises B           $438,750**           $5,265,000         $45.00 NNN
  Commencement Date
  through month 60*

  months 61 - 120*        $477,750**           $5,733,000         $49.00 NNN


*     Measured from the Premises B Commencement Date

**    Applies to the entire Premises

1.9 TENANT'S PERCENTAGE: Tenant shall pay to Landlord: (a) 100% of Real Property
Taxes and Assessments (as defined in Section 4.1); and (b) 100% of Insurance
Costs (as defined in Section 4.2).

1.10 OMITTED.

1.11 SECURITY DEPOSIT: $6,000,000.00 by letter of credit in accordance with
Section 5.

1.12 PERMITTED USE: Subject to Section 6.1, multimedia uses, business services,
internet services, internet advertising services and related uses.

1.13 BROKERS: The CAC Group, Bruce A. Wilson, 255 California Street, 2nd Floor,
San Francisco, California 94111 representing Landlord. Cushman & Wakefield, Mr.
David Duble, One Maritime Plaza, Suite 900, San Francisco, California 94111
representing Tenant.

1.14 INTEREST RATE: The lesser of: (a) the rate announced from time to time by
Wells Fargo Bank or, if Wells Fargo Bank ceases to exist or ceases to publish
such rate, then the rate announced from time to time by the largest (as measured
by deposits) chartered bank operating in California, as its "prime rate" or
"reference rate", plus three percent (3%); or (b) the maximum rate permitted by
law.

1.15 TENANT IMPROVEMENTS: The tenant improvements installed or to be installed
in the Premises as described in the Work Letter Agreement attached hereto as
Exhibit "C".


                                      -2-


1.16 PARKING: A total of approximately one hundred twenty-eight (128) self park
and tandem parking spaces at a monthly cost of $175.00 per space per month for
the first year of the Term, subject, however, to the payment of Real Property
Taxes and Assessments and Insurance Costs attributable to the parking areas and
to the provisions set forth in Section 6.2. After the first year of the Term,
the parking space rental rate shall be determined on an annual basis based upon
the then fair market rental rate for Tenant's parking spaces determined in the
same manner that fair market rent is to be determined for Tenant's Renewal
Options as described in Rider No. 2 of the Lease, provided that in no event
shall Tenant's parking rate charges per space increase by more than ten percent
(10%) per annum. Subject to the other provisions of this Lease, Tenant shall be
responsible for the operation, maintenance and repair of the Parking Structure.

Notwithstanding the monthly parking rate payable by Tenant to Landlord, Tenant,
in its sole discretion, without Landlord's consent and without any obligation to
notify Landlord of the rates charged by Tenant, shall have the right to
establish monthly parking rates for Tenant's employees, agents, and business
invitees. However, in no event shall Tenant be permitted to provide parking for
the general public, whether on a monthly, weekly, daily, or hourly basis. Tenant
shall have the right, at its sole cost and expense, subject to the terms and
conditions of this Lease, including without limitation the foregoing and the
provisions of Sections 17 and 20, to hire a third party to operate and maintain
the Parking Structure on Tenant's behalf.

1.17  GUARANTORS:  None.

                  ----------------------     ------------------------
                     Landlord's Initials         Tenant's Initials


                                      -3-


                            FIRST AMENDMENT TO LEASE

      This FIRST AMENDMENT TO LEASE ("FIRST AMENDMENT") is made and entered into
as of October 1, 2000, by and between LNR - LENNAR BRANNAN STREET, LLC, a
California limited liability company ("LANDLORD") and DOUBLECLICK, INC., a
Delaware corporation ("TENANT").

                                    R E C I T A L S :

      A. Landlord and Tenant entered into that certain Lease dated March __,
2000 (the "Lease"), pursuant to which Tenant leased from Landlord Premises A and
Premises B (collectively, the "Premises") described therein and containing
approximately 117,000 rentable square feet, along with the Parking Structure and
all other improvements and facilities on the Site, the address of which is 250
Brannan Street, San Francisco, California.

      B. The Scheduled Delivery Date set forth in the Lease for Premises A (i.e.
the date upon which Landlord anticipated completing the Base Building
Improvements with respect to Premises A, and the date upon which Tenant
anticipated commencing Tenant's Work in Premises A) was August 15, 2000.

      C. Due to various delays at the Site, Landlord was unable to cause the
Base Building Improvements with respect to Premises A to be substantially
completed on or before August 15, 2000, and as of the date hereof the Base
Building Improvements with respect to Premises A have yet to be substantially
completed. Further, it is unlikely that Landlord will substantially complete the
Base Building Improvements with respect to Premises B on or before the Scheduled
Delivery Date as to Premises B.

      D. Pursuant to the Lease, Tenant has the right to enter Premises A from
and after July 15, 2000 if Landlord has not completed the Base Building
Improvements for Premises A by such date. Tenant has proceeded to prepare its
Plans and has or will shortly hereafter submit its Plans for Tenant's Work to
the Building Department so as to obtain its Building Permit therefor, all with
the goal of Tenant maintaining its target date of completing Tenant's Work and
occupying the Premises for the conduct of its business notwithstanding the
delays experienced by Landlord in substantially completing the Base Building
Improvements.

      E. Accordingly, Landlord and Tenant now desire to amend the Lease in
certain respects so as (x) to allow Tenant access to the Premises to construct
Tenant Improvements prior to Landlord's completion of the Base Building
Improvements without affecting Tenant's rights and remedies under the Lease
except as hereinafter provided in this First Amendment and (y) to incorporate
Landlord's Construction Schedule to better identify the work to be completed by
Landlord pursuant to the Work Letter Agreement and the anticipated time frames
for completion of such work.

      NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.    Capitalized Terms. Except as otherwise expressly provided herein to the
      contrary, all capitalized terms used in this First Amendment shall have
      the same meaning given such terms in the Lease.

2.    Tenant Access Upon the Premises. Effective as of the date first written
      above, and notwithstanding the fact that Landlord has not yet
      substantially completed all Base Building Improvements contemplated by the
      Lease, Tenant shall have the right to enter upon the Premises and
      construct the Tenant Improvements contemplated by the Lease. Said entry
      and construction by Tenant shall be in accordance with and subject to all
      terms and conditions of the Lease, including the Exhibit C Work Letter
      Agreement, except that Tenant shall not be obligated to pay rent, taxes or
      other occupancy charges during the period of any such early entry which is
      prior to the Commencement Dates for Premises A and/or B, respectively.
      Tenant shall use


                                       1


      reasonable efforts not to interfere with Landlord or Landlord's
      contractors and subcontractors in the completion of the Base Building
      Improvements by such parties.

3.    Construction Schedule for Base Building Improvements. Landlord has caused
      to be prepared and Tenant has acknowledged receipt of a Construction
      Schedule (the "Schedule") of completion for the Base Building
      Improvements, a copy of which Schedule is annexed hereto as Exhibit 1 and
      is incorporated herein and is similarly incorporated by reference in the
      Lease. Landlord and Tenant hereby agree that, notwithstanding the
      attachment of the Schedule hereto, there shall be no change to the
      Scheduled Delivery Dates for Premises A and Premises B as set forth in the
      Lease. Further, Landlord and Tenant agree that the second full paragraph
      of Section 8 (a) of Exhibit C to the Lease shall be amended to read in its
      entirety as follows:

      "Notwithstanding anything to the contrary in this Subsection (a) and
      notwithstanding Tenant's immediate right to enter the Premises and
      construct Tenant Improvements, subject to any Force Majeure Delays and
      Tenant Delays (as described in this clause), if the Base Building
      Improvements and other work shown on the Schedule to be completed by
      Landlord as of the points in time labeled "Premises A - Commence Work" and
      "Premises B - Commence Work" on the last page of the Schedule are not so
      completed (as certified by Landlord's Architect after consulting with
      Tenant's Architect and providing Tenant's Architect with an opportunity to
      review the work in place) by Landlord, other than minor "punch-list"
      items, within sixty (60) days following the applicable Scheduled Delivery
      Dates set forth in Section 1.7 of the Summary, then Tenant, as its sole
      and exclusive remedy, shall be entitled to receive two (2) days of
      abatement of Monthly Basic Rent for each day beyond the sixtieth (60th)
      day following the applicable Scheduled Delivery Date that Landlord is
      delayed in so completing the applicable Base Building Improvements and
      such other work for Premises A or Premises B for reasons other than Force
      Majeure Delays or Tenant Delays (as described in this clause). To the
      extent that Landlord is delayed in so completing the Base Building
      Improvements and such other work due to Force Majeure Delays and/or Tenant
      Delays (as described in this clause), the applicable Scheduled Delivery
      Date shall be extended accordingly. However, for the purposes of this
      clause, a Tenant Delay shall not be deemed to extend the Scheduled
      Delivery Date unless Landlord has given Tenant written notice of such
      Tenant Delay and Tenant has not ceased such activity causing the alleged
      Tenant Delay within two (2) Business Days after Tenant has received such
      notice."

4.    Determination of Term Commencement Date. Due to Tenant's right to enter
      the Premises and construct Tenant Improvements prior to the completion of
      all Base Building Improvements by Landlord, the determination of the Term
      Commencement Date pursuant to Exhibit C, Section 8(b) of the Lease shall
      be amended and superseded by the following:

      "(b) Term Commencement Date. The Term of the Lease and Tenant's obligation
to pay rent as to the Premises A and B, respectively, will commence on the
earlier of: (i) the date Tenant moves into the applicable portion of the
Premises to commence operation of its business in said portion of the Premises;
(ii) the later of (A) the date the Tenant Improvements have been "substantially
completed" and (B) the date that the Base Building Improvements for the
applicable portion of the Premises have been "substantially completed"; or (iii)
ninety (90) days from substantial completion of the Base Building Improvements
for the applicable portion of the Premises; provided, however, that if
substantial completion of the Base Building Improvements is delayed as a result
of any Tenant Delays, then the date for establishing substantial completion
under item (iii) herein as would otherwise have been established pursuant to
this Section will be accelerated by the number of days of such "Tenant Delays."
However, for the purposes of this clause (b), a Tenant Delay shall not be deemed
to accelerate the date for establishing substantial completion of the Base
Building Improvements unless Landlord has given Tenant written notice of such
Tenant Delay and Tenant has not ceased such activity causing the alleged Tenant
Delay within two (2) Business Days after Tenant has received such notice.


                                       2


5.    Amendment to Section 8(c) of Exhibit C. The reference to "Section 9(b)" in
      Section 8(c) of Exhibit C to the Lease is hereby deleted and substituted
      with a reference to "Section 8(b)."

6.    No Further Modification. Except as set forth in this First Amendment, all
      of the terms and provisions of the Lease shall apply with respect to the
      Premises and shall remain unmodified and in full force and effect.

7.    Counterparts. This Amendment may be executed in one or more counterparts,
      each of which shall constitute an original and all of which shall be one
      and the same agreement.

      IN WITNESS WHEREOF, this First Amendment has been executed as of the date
and year first above written.

TENANT:                                        LANDLORD:

DOUBLECLICK, INC.                        LNR-LENNAR BRANNAN STREET, LLC
a Delaware corporation                   a California limited liability company

By:/s/ Elizabeth Wang                    By:
       -------------------------------      -----------------------------------
   Print Name: Elizabeth Wang               Print Name:
               -----------------------                 ------------------------
   Print Title: Vice President              Print Title:
                ----------------------                  -----------------------

                                         By:
                                            -----------------------------------
                                            Print Name:
                                                       ------------------------
                                            Print Title:
                                                        -----------------------


                                       3



                            SECOND AMENDMENT TO LEASE

      THIS SECOND AMENDMENT TO LEASE ("Amendment") is made and entered into as
of August 17, 2001, by and between LNR-LENNAR BRANNAN STREET, LLC, a California
limited liability company ("Landlord"), and DOUBLECLICK, INC., a Delaware
corporation ("Tenant").

                                R E C I T A L S :

      A. Landlord and Tenant entered into that certain lease (the "Original
Lease") dated March 2000, as amended by that certain First Amendment to Lease
dated October 1, 2001 ("First Amendment"), pursuant to which Tenant leased from
Landlord Premises A and Premises B (collectively, the "Premises") described
therein and containing 117,000 rentable square feet, along with the Parking
Structure and all other improvements and facilities on the Site, the address of
which is 250 Brannan Street, San Francisco, California and more particularly
described in the Original Lease. The Original Lease, as amended by the First
Amendment shall hereinafter be referred to as the "Lease." All capitalized terms
not otherwise defined herein shall have the same meaning assigned to them in the
Lease.

      B. Due to various delays in the completion of the Base Building
Improvements for Premises A and Premises B, Tenant has accumulated a number of
days of abated Monthly Basic Rent pursuant to Section 8(a) of Exhibit C to the
Lease. However, Landlord and Tenant dispute the number of days of abated Monthly
Basic Rent which have been accumulated by Tenant.

      C. The parties now desire to resolve their differences by fixing the
number of days of abated Monthly Basic Rent Tenant shall receive by establishing
the date upon which Tenant shall begin to pay Monthly Basic Rent with respect to
Premises A and Premises B and to set forth other agreements of the parties and
modifications to the Lease as set forth herein.

                                   A G R E E M E N T :

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
the Lease and agree as follows:

1.    Monthly Basic Rent Commencement Date. Notwithstanding anything set forth
      in the Lease (including without limitation, the provisions of Section 8(a)
      of Exhibit C to the Lease), Tenant shall commence the payment of Monthly
      Basic Rent as to both Premises A and Premises B on March 1, 2002 (the
      "Basic Rent Commencement Date"). In accordance with the Schedule of
      Monthly Basic Rent set forth in Section 1.8 of the Lease, Monthly Basic
      Rent shall be $438,750.00 per month commencing on the Basic Rent
      Commencement Date through month 60 of the Term. The abatement of Monthly
      Basic Rent until the Basic Rent Commencement Date shall, except as
      otherwise expressly provided herein, be deemed to satisfy all obligations
      of Landlord to abate Monthly Basic Rent arising from any late delivery of
      Premises A or Premises B as provided in the Lease and, except as otherwise
      expressly provided herein, Tenant hereby waives all claims against
      Landlord for any such abated Monthly Basic Rent or any other damages
      arising from any alleged late delivery by Landlord of Premises A or
      Premises B. Notwithstanding the foregoing provisions of this Paragraph 1,
      the Basic Rent Commencement Date shall be extended if as of the date
      Tenant substantially completes the portion of the Premises A Tenant
      Improvements (the "March 23 Improvements") which are described in the
      plans prepared by the Phillips Group dated March 23, 2001 (the "March 23
      Plans"): (i) permanent electrical power is not in place at the Building,
      or (ii) if pedestrian access to the Building and vehicular and pedestrian
      access to and from the parking garage and Federal Street and pedestrian
      access to and from the Building and the parking garage is not available,
      or (iii) the parking garage is not substantially complete, or (iv) any
      other aspect of the Base Building Improvements are not complete which
      legally prevents Tenant from taking occupancy of Premises A and commencing
      business operations therefrom. Any such extension of the Basic Rent
      Commencement Date shall be on a day for day basis. Notwithstanding the
      foregoing provisions of this Paragraph 1, Tenant acknowledges that a PG&E


                                       1


      power pole is presently located in the sidewalk between the parking garage
      and Federal Street and that the power pole affects but does not prevent
      vehicular egress from the parking garage to Federal Street. PG&E had
      previously indicated to Landlord that it would remove or relocate the
      power pole from its current location on or before the date hereof but has
      since indicated that the power pole may not be removed or relocated until
      on or about August 30, 2001. Landlord is diligently pursuing removal or
      relocation of the power pole and agrees to continue to do so until the
      power pole is removed or relocated so as not to affect entry to the
      parking garage, but Tenant agrees that if the power pole has not been
      removed or relocated prior to Tenant's substantial completion of the March
      23 Improvements, such power pole shall not be construed as causing the
      failure or non-satisfaction of the condition for vehicular access to and
      from the parking garage and Federal Street so long as vehicles can enter
      and exit the parking garage at Federal Street. Furthermore,
      notwithstanding the foregoing provisions of this Paragraph 1, and despite
      the fact that Tenant's obligation to commence payment of Monthly Basic
      Rent as to Premises B is to commence on the Basic Rent Commencement Date
      of March 1, 2002 subject to the conditions set forth above, if for reasons
      other than "Tenant Delays" (as defined in the Lease and modified in
      Paragraph 2 below), any portion of the Premises B Base Building
      Improvements are not complete as of the point in time that either (i)
      Tenant has completed its tenant improvements within a portion of Premises
      B pursuant to plans approved by Landlord, or (ii) Tenant would be able to
      complete such tenant improvements but for the incomplete Base Building
      Improvements within such portion of Premises B, and such incomplete Base
      Building Improvements for Premises B either preclude Tenant from
      completing its tenant improvements within such portion of Premises B or
      legally prevent Tenant from taking occupancy of such portion of Premises B
      and commencing business operations therefrom, then Tenant shall receive
      one (1) day of abatement of Monthly Basic Rent pro rated for the portion
      of Premises B which Tenant is to then occupy, for each day that Landlord
      delays in completing the necessary Premises B Base Building Improvements
      which either preclude Tenant from completing the tenant improvements for
      such portion of Premises B or legally prevent Tenant from taking occupancy
      of such portion of Premises B. Except for any such pro rated rent
      abatement as to a specific portion of Premises B, if any, pursuant to the
      foregoing sentence of this Paragraph 1, Tenant shall be obligated to pay
      Monthly Basic Rent for all other portions of Premises B commencing on the
      Basic Rent Commencement Date, notwithstanding that Tenant has not improved
      or taken occupancy of such portions of Premises B.

2.    Commencement Date. Notwithstanding the terms of Paragraph 1 above and
      notwithstanding anything to the contrary contained in the Lease (including
      without limitation, the provisions of Section 8(b) of Exhibit C to the
      Lease), the Term of the Lease as to both Premises A and Premises B and
      Tenant's obligation to pay additional rent including operating expenses,
      Real Property Taxes and Assessments and Insurance Costs and parking
      charges (but not Tenant's obligation to pay Monthly Basic Rent as to
      Premises A or Premises B), will commence on the date (the "Commencement
      Date") which is the earlier of: (i) the date Tenant moves into any portion
      of the Premises to commence operation of its business from the Premises;
      (ii) the date which is ninety (90) days after Landlord completes the Base
      Building Improvements; or (iii) the date the March 23 Improvements have
      been "substantially completed"; provided, however, in any event the
      parking garage must be completed such that Tenant may utilize the parking
      garage, and provided that if substantial completion of the Base Building
      Improvements are delayed as a result of any "Tenant Delays" (as defined in
      the Lease), then the date for establishing substantial completion under
      item (ii) herein as would otherwise have been established pursuant to this
      Section will be accelerated by the number of days of such "Tenant Delays".
      For purposes of item (ii) above, a Tenant Delay shall not be deemed to
      accelerate the date for establishing substantial completion of the Base
      Building Improvements unless Landlord has given Tenant written notice of
      such Tenant Delay and Tenant has not ceased such activity causing the
      alleged Tenant Delay within two (2) Business Days after Tenant has
      received such notice.

3.    Payment of Certain Fees.


                                       2


3.1. City of San Francisco Planning Code Section 313 (the so-called
"Jobs-Housing Linkage Program") authorizes the City of San Francisco (the
"City") to assess a certain one-time fee ("Housing Linkage Fee") in connection
with any development of more than 25,000 gross square feet of office space. The
Housing Linkage Fee is currently $11.34 per gross square foot (to be increased
to $14.96 per gross square foot on January 1, 2002 and thereafter as provided in
the City Planning Code). This Fee became payable when the most current amendment
to Planning Code Section 313 went into effect, but to date the City has not
invoiced Tenant for any Housing Linkage Fee. Tenant is responsible for this fee
pursuant to the Lease and has previously indicated to Landlord and the City that
it will pay this fee if and when Tenant is invoiced by the City.

3.2. City of San Francisco Administrative Code Chapter 38 authorizes the City to
assess a certain one-time fee ("Transit Fee") in connection with development of
space for "office use" (which for purposes of this statute includes clerical,
professional and business services uses), subject to a credit for prior use as
non-office space. The Transit Fee is currently $5.00 per gross square foot. The
City has sent a determination notice to Tenant setting the Transit Fee for the
Premises at $352,646.25. Tenant is responsible for this fee pursuant to the
Lease and has previously indicated to Landlord and the City that it will pay
this Transit Fee.

3.3. City of San Francisco Planning Code Section 314 authorizes the City to
assess a certain one-time fee ("Child-Care Fee") in connection with the
development of more than 50,000 gross square feet of office or hotel space. The
Child-Care Fee is currently $1.00 per gross square foot. To date, the City has
not assessed any Child-Care Fee on the Building.

3.4. The current approved use of the Premises by Tenant under applicable zoning
designations is "business services" as that term is defined in Planning Code
Section 890.111 and as determined by the Zoning Administrator in his
interpretation letter dated June 7, 2000. Landlord and Tenant desire that
Landlord pursue, at Landlord's cost, and with Tenant's cooperation, approval for
general office use at the Building pursuant to Planning Code Section 321. As
detailed in the specific provisions of Planning Code Section 321, Planning
Commission approval for general office use at the Building will remain valid so
long as construction of the office development commences within eighteen (18)
months following receipt of such office use approval. In connection with the
processing of applications for approval of the use of the Building as general
office use, Tenant agrees to be bound by any conditions of approval imposed by
the City, subject to the limitation on Tenant's obligation to share in Office
Development Fees and Business Services Development Fees per Section 3.6 below,
and provided Tenant shall not be obligated to pay any Office Development Fees or
incur any costs to comply with any conditions of approval relative to the
allocation for office use for the Building unless and until Landlord shall
reimburse Tenant for Landlord's fifty percent (50%) share of any previously
incurred Business Services Development Fees upon the Office Vesting Date as
provided in Section 3.5 below. For purposes of this Amendment, the "Office
Vesting Date" shall mean the date established by the Zoning Administrator in a
Zoning Administrator interpretation letter provided to Landlord and Tenant and
dated August 10, 2001 (the "ZAL"), or if such determination as specified in the
ZAL is not upheld for any reason, the "Office Vesting Date" shall be the date
that the Planning Commission or other government agency with jurisdiction
otherwise confirms that the construction requirement of Section 321(d) of the
Planning Code has been or need not be satisfied or when Landlord and Tenant
otherwise agree, in good faith, that such "Office Vesting Date" has occurred. By
way of clarification of the preceding sentence, the ZAL established that the
Office Vesting Date shall be the date upon which the change of use building
permit is signed off by the Department of Building Inspection, as more
particularly provided in the ZAL, but the parties acknowledge that such
determination may be subject to challenge or appeal.

3.5. Until and through any Office Vesting Date, without limiting Tenant's
obligations with respect to the payment of Real Property Taxes and Assessments
as provided in the Lease, Tenant agrees to pay the Housing Linkage Fee, the
Transit Fee and any other development fees which may be assessed by the City in
connection with Tenant's development of the Premises under its current business
services use designation (herein, collectively "Business Services Development
Fees"). Notwithstanding the foregoing, within thirty (30) days after the Office
Vesting Date, Landlord agrees to reimburse Tenant for fifty percent (50%) of any
such Business Services Development Fees paid by Tenant through the Office
Vesting Date


                                       3


or when payable by Tenant following such Office Vesting Date, including, without
limitation, fifty percent (50%) of the Housing Linkage Fee and Transit Fee (but
exclusive of building permit fees). In addition, Landlord and Tenant agree to
share equally and pay upon assessment the costs of any additional development
fees which may be assessed against the Premises or the Building including,
without limitation, the Child Care Fee, in connection with the receipt of
approvals for general office use at the Building and any such development fees
as may thereafter be assessed against the Premises or the Building by reason of
such general office use allocation (herein, collectively, "Office Development
Fees"), provided Tenant shall not be obligated to incur or pay any Office
Development Fees as described in this Amendment until such time as (i) the
Office Vesting Date occurs, and (ii) Landlord reimburses Tenant for Landlord's
fifty percent (50%) share of all Business Services Development Fees as provided
herein. If Landlord shall fail to reimburse Tenant for any Business Services
Development Fees or to pay its share of any Office Development Fees or Business
Services Development Fees (not previously incurred) or other fees described in
Section 3.4 within thirty (30) days of when such fees shall become payable by
Landlord as provided herein, Tenant shall have the right to offset such unpaid
fee amounts against the next due Monthly Basic Rent under the Lease, with
interest on such unpaid fee amounts at ten percent (10%) simple interest per
annum imposed on a per diem basis until Tenant shall be reimbursed and/or paid
in full satisfaction of Landlord's obligations. Landlord agrees to promptly
apply for and to diligently pursue receipt of approvals for general office use
at the Building, but the parties acknowledge that Landlord cannot guarantee that
such approvals will in fact be received or in what time frame such approvals
might be received, if at all. Furthermore, notwithstanding the foregoing
provisions of this Paragraph 3, if at any time Landlord believes that Landlord's
50% share of the Office Development Fees and Business Services Development Fees
(not previously incurred) or other fees described in Section 3.4 to be assessed
as a condition to receipt of approvals for general office use will exceed
$1,200,000.00, Landlord shall have the right to withdraw its application for
such office use approval. The provisions of this Paragraph 3 shall survive any
transfer or assignment of this Lease by Landlord or Tenant.

3.6. Notwithstanding anything to the contrary contained in this Paragraph 3, if
Landlord obtains the office use allocation, Tenant's liability for fifty percent
(50%) of the Office Development Fees and Business Services Development Fees and
other fees described in Section 3.4 shall not exceed One Million Two Hundred
Thousand Dollars ($1,200,000.00) and, subject to Landlord's right to withdraw
its application for approvals for general office use for the Building, Landlord
shall pay all Office Development Fees and Business Services Development Fees and
other fees described in Section 3.4 in excess of Two Million Four Hundred
Thousand Dollars ($2,400,000.00).

4.    Tenant Improvement Allowance/ Monthly Basic Rent Adjustment. Pursuant to
      Exhibit C of the Lease, Landlord granted to Tenant a tenant improvement
      allowance of Twenty Five Dollars ($25.00) per usable square foot of the
      Premises (referred to in the Lease and herein as the "Allowance").
      Notwithstanding the provisions of Paragraph 6(f) of Exhibit C to the
      contrary, Landlord agrees to disburse the Allowance on a pro-rata
      incremental basis and Tenant agrees to accept disbursement of the
      Allowance on a pro-rata incremental basis as and when Tenant completes the
      installation of "Qualified Tenant Improvements" at the Building during the
      Term hereof. As used herein, "Qualified Tenant Improvements" shall mean
      Tenant Improvements which: (i) are for the improvement of all of a portion
      of the Premises which contains 5,000 usable square feet of area or more;
      (ii) provide for occupancy of such space by Tenant or an approved assignee
      or subtenant of Tenant for business services or office use (if office use
      allocation has been obtained); (iii) are described in Final Plans
      (including in the March 23 Plans) which have been reviewed and approved by
      Landlord as provided in Paragraph 5(b) of Exhibit C but as modified
      hereby, and (iv) are for ordinary and typical office/business services
      improvements (exclusive of, by way of example only, cabling, specialized
      electrical distribution, furniture, trade fixtures and business equipment
      and the like). For purposes hereof, "Final Plans" shall mean those plans
      for the area of the Premises to be built out by Tenant or for an approved
      assignee or subtenant. Landlord shall disburse a pro rata portion of the
      Allowance towards costs of Qualified Tenant Improvements in an amount
      equal to the lesser of (1) the actual cost of such Qualified Tenant
      Improvements, or (2) the Allowance multiplied by a fraction, the numerator
      of which is the usable square footage of the portion of the Premises to be
      improved by such Qualified Tenant Improvements, and the denominator of
      which is 104,715 (the Usable Area of the Premises). The


                                       4


      applicable portions of the Allowance shall be disbursed in one installment
      upon completion of the applicable portion of the Qualified Tenant
      Improvements when Tenant provides to Landlord "Evidence of Completion and
      Payment" as defined in Paragraph 6 of Exhibit C (including all
      requirements for a final disbursement) for the Qualified Tenant
      Improvements in question.

5.    Completion of Tenant Improvements. Pursuant to Exhibit C to the Lease,
      Tenant is to promptly, diligently and continuously pursue construction of
      the Tenant Improvements shown in the March 23 Plans to successful
      completion in full compliance with the March 23 Plans and Exhibit C. The
      March 23 Plans do not constitute the "Final Plans" and are not sufficient
      to "convey the architectural design of the Premises or the layout of the
      Tenant Improvements for all of the Premises" as required by the Lease, nor
      are they consistent with any previous Space Plans submitted by Tenant to
      Landlord from the standpoint that they do not cover all portions of the
      Premises and therefore cannot be consistent with space plans depicting the
      entire Premises. The parties acknowledge that Tenant does not presently
      have Final Plans for the balance of the Premises other than the portion of
      the Premises described in the March 23 Plans and that Tenant does not
      intend to complete all of the Tenant Improvements simultaneously and
      likely will not complete all of the Tenant Improvements by the Rent
      Commencement Date.

6.    March 23 Plan Approval Letter. Concurrently with Tenant's execution and
      delivery to Landlord of this Amendment, Tenant shall execute and return to
      Landlord an original counterpart of that certain letter from Robert
      Herzfeld of Mariposa Management to Mr. Frank Altieri of DoubleClick and
      Ms. Dani Grant of JLS Industries/Grant Enterprises in the form attached
      hereto as Exhibit "A".

7.    Floors. The Lease requires that Landlord deliver the floors of the
      Premises in a "commercially reasonable level condition for underlayment of
      carpeting or resilient flooring." Landlord contends that it has delivered
      the floors of the Building in accordance with the standard required in the
      Lease and Tenant presently disputes Landlord's contention and claims the
      condition of the floors of the Premises including basement concrete
      flooring and wood flooring on upper floors of the Building as delivered by
      Landlord does not meet the requirements of the Lease. Without
      acknowledging any liability for same, in satisfaction of Landlord's
      obligations regarding the delivery condition of the floors of the
      Building, Landlord agrees to pay (i) Tenant's actual costs to cause its
      contractor to apply "Cell-Crete" filler (or similar material), at
      Landlord's cost, to smooth out any perceived undulations in the basement
      concrete floor as identified by Tenant in accordance with Proposal Number
      10953 from Cell-Crete Corporation (a copy of which is attached hereto as
      Exhibit "B"), and (ii) pay Tenant's actual costs up to $15,000 for
      Tenant's contractor to install "Ardex" (or similar material) on the upper
      wood sub-floors in locations determined by Tenant to smooth out any
      perceived variations in the wood sub floor identified by Tenant.

8.    Entire Agreement. This Amendment embodies the entire understanding between
      Landlord and Tenant with respect to its subject matter and can be changed
      only by an instrument in writing signed by Landlord and Tenant. Except as
      amended hereby, the Lease shall remain in full force and effect.


                                       5



9.    Counterparts. This Amendment may be executed in one or more counterparts,
      each of which shall be deemed an original but all of which, taken
      together, shall constitute one and the same Amendment.

IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first set forth above.

LANDLORD:

LNR-LENNAR BRANNAN STREET, LLC
a California limited liability company

By: /s/ Daniel C. Grable
   ----------------------------------
    Print Name: Daniel C. Grable
    ---------------------------------
    Print Title: Vice Presidnet
    ---------------------------------

By:
    ---------------------------------
    Print Name:
    ---------------------------------
    Print Title:
    ---------------------------------


TENANT:

DOUBLECLICK, INC.

a Delaware corporation

By: /s/Elizabeth H. Wang
    ---------------------------------
    Print Name: Elizabeth H. Wang
    ---------------------------------
    Print Title: Vice President
    ---------------------------------

By: /s/ Frank Altieri
    ---------------------------------
    Print Name: Frank Altieri
    ---------------------------------
    Print Title: Vice President
    ---------------------------------


                                       6


                            THIRD AMENDMENT TO LEASE

      THIS THIRD AMENDMENT TO LEASE ("Amendment") is made and entered into as of
August 31, 2001, by and between LNR-LENNAR 250 BRANNAN STREET, LLC, a California
limited liability company ("Landlord"), and DOUBLECLICK, INC., a Delaware
corporation ("Tenant").

                                R E C I T A L S :

      A. Tenant and LNR-LENNAR BRANNAN STREET, LLC, a California limited
liability company ("LNR-Lennar"), entered into that certain lease (the "Original
Lease") dated March 2000, as amended by that certain First Amendment to Lease
dated October 1, 2000 ("First Amendment") and that certain Second Amendment to
Lease dated as of August 17, 2001 ("Second Amendment"), pursuant to which Tenant
leased from Landlord Premises A and Premises B (collectively, the "Premises")
described therein and containing 117,000 rentable square feet, along with the
Parking Structure and all other improvements and facilities on the Site, the
address of which is 250 Brannan Street, San Francisco, California, as more
particularly described in the Original Lease. The Original Lease, as amended by
the First Amendment, by the Second Amendment and by a letter agreement dated
August 8, 2001 shall hereinafter be referred to as the "Lease." All capitalized
terms not otherwise defined herein shall have the same meaning assigned to them
in the Lease.

      B. LNR-Lennar has transferred its interest as landlord under the Lease to
Landlord.

      C. Tenant desires to sublease or license to third parties the use of some
of the parking spaces allocated to Tenant under the Lease, but the Lease (at
Section 6.2(a)) provides that Tenant may not provide parking for the general
public in any manner whatsoever.

      D. The parties now desire to amend the Lease (i) to allow Tenant to
sublease or license to third parties the use of some of the parking spaces
allocated to Tenant under the Lease upon the terms and conditions provided for
herein, and (ii) to permit Tenant to first deduct costs and expenses incurred by
it in connection with an approved Transfer in determining the amount of excess
consideration to be shared with Landlord with respect to such Transfer.

                               A G R E E M E N T :

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
the Lease and agree as follows:

1.    Landlord's Consent to Subleasing or Licensing Parking Space Use.
      Notwithstanding the provisions of Section 1.16 or Section 6.2(a) of the
      Lease to the contrary, Landlord hereby consents to Tenant subletting or
      licensing the use by third parties or the general public of any or all of
      the parking spaces allocated to Tenant under the Lease upon the terms and
      conditions set forth herein, and provided Tenant complies with all
      applicable entitlements, permits, laws, rules and regulations of the City
      and County of San Francisco in connection with any such subletting,
      licensing or use of parking spaces at the Project.

2.    Sharing of Parking Revenue. Tenant agrees to share with and pay to
      Landlord fifty percent (50%) of any and all "Excess Consideration" Tenant
      receives with respect to any parking spaces at the Project which are
      subleased, licensed or otherwise made available by Tenant for use by any
      third parties other than employees, agents and business invitees of
      Tenant; such parking spaces as may from time to time be subleased,
      licensed or otherwise made available by Tenant for use by any third
      parties other than employees, agents and business invitees of Tenant being
      referred to herein as "Subleased Spaces" and the third party users of such
      Subleased Spaces (whether pursuant to a sublease, license or other
      arrangement) being referred to herein as "Parking Subtenants". As used
      herein, "Excess Consideration" shall mean any and all revenue,


                                       1


      income, receipts, fees, charges or other consideration of any kind
      (individually and collectively "Parking Consideration") received by Tenant
      with respect to the use of any Subleased Spaces at the Project by any
      Parking Subtenants at any time during the Term of the Lease calculated on
      a monthly basis, less the monthly parking fees charged from time to time
      by Landlord to Tenant pursuant to the terms of the Lease for the same
      Subleased Spaces and for the same period of the Term in question, and less
      the total of all reasonable, actual and documented costs and expenses
      incurred by Tenant in connection with the subleasing or licensing of such
      Subleased Spaces, determined on a monthly basis for each monthly period of
      the Term in question, such as marketing and advertising expenses,
      management fees, parking taxes, brokerage fees and commissions and costs
      of issuing parking access or identification cards and/or otherwise
      administering, maintaining and monitoring the use of Subleased Spaces by
      any Parking Subtenants. Tenant shall pay to Landlord any monthly Excess
      Consideration, monthly in arrears, within ten (10) days following the
      expiration of each calendar month of the Term during which Tenant has
      subleased, licensed or otherwise allowed the use of any such Subleased
      Spaces by any Parking Subtenants.

3.    Subordination. Without the need for any other instrument to effectuate
      such subordination, all agreements pertaining to the use, management,
      maintenance and/or repair of parking spaces at the Project including,
      without limitation, all leases, subleases, license agreements, brokerage
      or listing agreements, management and/or repair agreements and/or
      contracts (collectively "Parking Contracts") shall be subject and
      subordinate to the terms of the Lease and in the event of any termination
      of the Lease, Landlord may, at its option terminate any or all such
      Parking Contracts or take over all of Tenant's rights, title and interest
      in and to any or all of such Parking Contracts.

4.    Liability for Parking Subtenants. In the manner and to the extent provided
      in Section 17 of the Lease, Tenant shall indemnify, defend, protect and
      hold Landlord and all Landlord Indemnified Parties (as defined in Section
      17.2 of the Lease) harmless from and against any and all Indemnified
      Claims (as defined in Section 17.2 of the Lease) arising or resulting from
      any of the matters described in Section 17.2 relating to the use of
      parking spaces and other portions of the Project by any Parking
      Subtenants. For purposes of applying the provisions of Section 17.2 of the
      Lease to the use of Subleased Spaces by any Parking Subtenants, Parking
      Subtenants shall be deemed to be "Tenant Parties" notwithstanding any
      other provisions of the Lease to the contrary.

5.    ACCOUNTING AND RECORDS MATTERS.

5.1. From and after the date upon which Tenant shall sublease, license or
otherwise make available any parking spaces at the Project to any Parking
Subtenants, Tenant shall submit to Landlord within ten (10) days after the
expiration of each calendar month during the Term, a written statement certified
by an officer of Tenant, indicating (i) the total number of Subleased Spaces
which are subleased, licensed or otherwise made available to Parking Subtenants
for the immediately preceding calendar month, (ii) the total Parking
Consideration received by Tenant for any such Subleased Spaces for such
immediately preceding calendar month, and (iii) the total Excess Consideration,
if any, received by Tenant for Subleased Spaces for such immediately preceding
calendar month. Concurrently with Tenant's delivery to Landlord of each such
monthly statement of Excess Consideration, Tenant shall pay to Landlord
Landlord's fifty percent (50%) share of such monthly Excess Consideration.
Within thirty (30) days following the expiration of each calendar year of the
Term, the parties agree to reconcile Tenant's records regarding Parking
Consideration and Excess Consideration for the preceding calendar year and if
the amount of Excess Consideration paid by Tenant to Landlord on a monthly basis
for the preceding calendar year exceeds fifty percent (50%) of the total Excess
Consideration for such calendar year, Landlord shall refund to Tenant the
overpayment amount within thirty (30) days of such reconciliation determination
and if the amount of Excess Consideration paid by Tenant to Landlord on a
monthly basis for the preceding calendar year is less than fifty percent (50%)
of the total Excess Consideration for such calendar year, Tenant shall pay to
Landlord the underpayment amount within thirty (30) days of such reconciliation
determination.


                                       2


5.2. For the purposes of determining the amount of excess rent or other economic
consideration, if any, payable to Landlord in connection with an approved
Transfer as provided in Section 14.4 (d) of the Lease, the Landlord and Tenant
hereby agree that before sharing any such rent or other economic consideration,
Tenant shall first be permitted to deduct from the revenue received in any such
Transfer, the actual out-of-pocket costs and expenses incurred by Tenant in
connection with any such Transfer, including, without limitation, brokerage
commissions, reasonable legal expenses, demising expenses and other commercially
reasonable concessions such as work allowances.

6.    Entire Agreement. This Amendment embodies the entire understanding between
      Landlord and Tenant with respect to its subject matter and can be changed
      only by an instrument in writing signed by Landlord and Tenant. Except as
      amended hereby, the Lease shall remain in full force and effect.


                                       3


7.    Counterparts. This Amendment may be executed in one or more counterparts,
      each of which shall be deemed an original but all of which, taken
      together, shall constitute one and the same Amendment.

IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first set forth above.

LANDLORD:

LNR-LENNAR 250 BRANNAN STREET, LLC
a California limited liability company

By:  LNR Western Properties, Inc., a California corporation
Its:  Member

By: /s/ Daniel C. Grable
   ----------------------------------
    Print Name: Daniel C. Grable
               ----------------------
    Print Title: Vice President
                ---------------------

By:
   ----------------------------------
    Print Name:
               ----------------------
    Print Title:
                ---------------------

TENANT:

DOUBLECLICK, INC.
a Delaware corporation

By: /s/ Frank Altieri
   ----------------------------------
    Print Name: Frank Altieri
                ---------------------
    Print Title: Vice President
                ---------------------

By: /s/ Elizabeth H. Wang
   ----------------------------------
    Print Name: Elizabeth H. Wang
               ----------------------
    Print Title: Vice President
                ----------------------


                                     4

EX-10.8

                                                                    EXHIBIT 10.8

                               AMENDMENT TO LEASE

            AGREEMENT (this "Agreement" or this "Amendment") made as of the 26th
day of January, 1999 between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation having an office at John Hancock Place, P.O. Box 111,
Boston, Massachusetts 02117, hereinafter referred to as "Landlord" and
DOUBLECLICK INC., a Delaware corporation, having its place of business at 41
Madison Avenue, New York, New York 10010, hereinafter referred to as "Tenant".

                              W I T N E S S E T H:

            WHEREAS, pursuant to an Agreement of Lease made as of January 26,
1999 (the "Lease"; all capitalized and other terms used herein (but not
otherwise defined herein and which are defined in the Lease) shall have the
respective meanings ascribed to such terms in the Lease) between Landlord and
Tenant, Landlord demised to Tenant space on the sixteenth (16th) floor and other
space as indicated therein (herein sometimes collectively called the "Original
Premises") in the building known as 450 West 33rd Street in the Borough of
Manhattan, City of New York; and

            WHEREAS, the parties desire to amend the Lease to reflect the
addition of additional space to the Original Premises.

            NOW THEREFORE, in consideration of the sum of ten dollars and other
good and valuable consideration paid by each party to the other, receipt whereof
is hereby acknowledged, it is agreed as follows:

            FIRST: Upon the date of this Amendment (the "Additional Space
Commencement Date"), Landlord shall deliver possession to Tenant of the space on
the twelfth


(12th) floor of the building, as cross-hatched on the diagram annexed hereto as
Exhibit A (which space shall be deemed to be part of the Interior Demised Area),
and loading bay #18 and freight elevator #F-13, as cross-hatched on the diagram
annexed hereto as Exhibit B, (collectively the "Additional Space"), and the
Additional Space shall be deemed to be part of the demised premises for the
balance of the term of the Lease (including any renewals thereof pursuant to
Article 53 thereof). Except as otherwise provided in this Agreement, whenever in
the Lease reference is made to the "demised premises", "leased premises" or a
similar phrase, from and after the Additional Space Commencement Date such
phrases shall be deemed to include the Additional Space, and, except as
otherwise expressly set forth herein or in the Lease, all the terms, covenants,
and conditions of the Lease shall apply to both the Original Premises and the
Additional Space. For purposes of the Additional Space only, the terms
"Commencement Date", "on the date of this lease", "on the date hereof" or any
such similar terms shall mean the Additional Space Commencement Date, and the
term "Rent Commencement Date" shall be deemed to be the date which shall be the
274th day after the Commencement Date.

            SECOND: Effective upon the Additional Space Commencement Date, the
provisions of the Lease underscored below in this Paragraph SECOND shall be
applied separately to the Original Premises and to the Additional Space. As
applied to the Original Premises only, such provisions are not modified, except
that references therein to the "demised premises", "leased premises" or a
similar phrase shall be deemed references only to the original Premises. As
applied to the Additional Space only, such provisions are hereby modified to
provide that references therein (including as modified hereby) to the "demised
premises", "leased premises" or a similar phrase shall be deemed references only
to the Additional Space, and such provisions are also hereby modified, with
respect to the Additional Space only, as follows:


                                       2



            (A) Rule and Regulation #3

               Reference to loading bay #21 and freight elevator #F-8 in Insert
44 of the Text to Numbered Insertions shall be deemed a reference to loading bay
#18 and freight elevator #F-13.

            (B) Rule and Regulation #8 and Rule and Regulation #14

               Reference to the tenant of the 12th floor of the building in
Inserts 47 and 49 of the Text to Numbered Insertions shall be deemed a reference
to any prospective tenant of space in the building.

            (C) Article 38(A)(1)

               (1) The amount of fixed rent for the Additional Space provided in
Article 38(A)(1)(i) of the Lease shall be THREE MILLION ONE HUNDRED FIFTY-THREE
THOUSAND SIX HUNDRED FIFTY-FOUR AND 00/100ths DOLLARS ($3,153,654.00) and the
term "Rent Commencement Date" therein shall be changed to the term "Commencement
Date".

               (2) The amount of fixed rent for the Additional Space provided in
Article 38(A)(1)(ii) of the Lease shall be THREE MILLION FOUR HUNDRED THREE
THOUSAND NINE HUNDRED FORTY-FOUR AND 00/100ths DOLLARS ($3,403,944.00) and the
term "Rent Commencement Date" used therein shall be changed to the term
"Commencement Date".

            (D) Article 38(E)

               The phrase "one-year period", appearing in two places in the
first sentence of Article 38(E) shall be changed to the phrase "274-day
anniversary of the Commencement Date" at the end of the sentence of Article
38(E) shall be changed to the phrase "the Rent Commencement Date, as defined in
the Amendment to Lease dated as of January 26, 1999 (the

                                       3


"Amendment") between Landlord and Tenant", and the second sentence of Article
38(E) is deleted.

            (E) Article 39(B)

               The last sentence of Article 39(B) is deleted and the following
is substituted in lieu thereof:

            "Landlord shall provide the twelfth floor of the demised premises
            with ten (10) watts of connected load of electricity per rentable
            square foot of the twelfth floor of the demised premises and such
            electrical capacity shall thereafter remain for Tenant's use for the
            balance of the term of the lease. If, by reason of Landlord's
            failure to provide (or Landlord's delay in providing) such amount of
            watts of electricity to Tenant (taking into consideration the
            existing electrical capacity for the twelfth floor of the demised
            premises and any alternative measures Landlord may take to
            ameliorate the effect on Tenant of any such failure or delay) in
            connection with Tenant's work for the Tenant Improvements or
            thereafter, Tenant shall incur increased costs in connection with
            such work or Tenant is delayed in commencing its operations from the
            demised premises, Landlord shall reimburse Tenant for the amount of
            any such increase in costs and Tenant shall receive an additional
            day of fixed rent abatement pursuant to Article 38(E) for each day
            of any such delay that Tenant sustains in commencing its operations
            from the demised premises, provided that, notwithstanding the
            foregoing, Landlord shall not be liable for any such reimbursement
            and Tenant shall not receive any such additional fixed rent
            abatement to the extent that Landlord's failure to provide (or delay
            in providing) the aforementioned watts of electricity to Tenant is
            due to force majeure events. The steam capacity servicing the
            demised premises as of the date of the Amendment shall remain for
            Tenant's use during the term of this lease."

            (F) Article 39 (E)

               The amounts "$50,361.00", "$125,902.50", and "$25,180.50" set
forth in Article 39(E) of the Lease, shall be "$100,116.00," "$250,290.00" and
"$50,058.00," respectively, and the phrase "the 120th day" shall be "the 90th
day".


                                       4



            (G) Article 39(G)

               There is no further modification required of these provisions
since Tenant is given the right to receive up to an additional 400 amperes of
"back-up" electricity (at 460/480 volts) from the building generator for the
twelfth floor of the building, pursuant to the terms and conditions of Article
39(G).

            (H) Article 41

               The phrases "the 16th floor," "loading bay #21" and "freight
elevator #F-8," wherever used in Article 41, shall be changed to the phrases
"the 12th floor," "loading bay #18" and "freight elevator #F-13," respectively,
and the following is added at the end of the second sentence of Article 41 after
the words "except as otherwise expressly set forth herein":

               "and except that Landlord shall perform the following work, which
               shall be of material, design, capacity, finish and color standard
               for the building:

               (i) Landlord shall furnish and install perimeter heating and
            enclosures throughout the twelfth floor;

               (ii) The bathrooms in the twelfth floor will be in compliance
            with the Americans with Disabilities Act;

               (iii) Landlord will remove all hazardous material, including
            asbestos, from the demised premises which is in the demised premises
            on the date of the Amendment, and Landlord will provide Tenant with
            a Form ACP-5 in connection with Tenant's application to the
            Buildings Department for an alterations permit for the Tenant
            Improvements. If, by reason of Landlord's failure to so remove (or
            Landlord's delay in removing) any such hazardous material or provide
            Tenant with a Form ACP-5 (taking into consideration any alternative
            measures Landlord may take to ameliorate the effect on Tenant of any
            such failure or delay) in connection with Tenant's work for the
            Tenant Improvements or thereafter, Tenant shall incur increased
            costs in connection with such work or Tenant is delayed in
            commencing its operations from the demised premises, Landlord shall
            reimburse Tenant for the amount of any such increase in costs and
            Tenant shall receive an additional day of fixed rent abatement
            pursuant to Article 38(E) for each day of any such delay that Tenant
            sustains in commencing its operations from the demised premises.


                                       5



               "Except for work referred to in clause (iii) above, which shall
               be completed by Landlord as indicated above, Landlord shall use
               its best efforts to complete the work referred to in clauses (i)
               and (ii) above as soon as possible after the date of the
               Amendment, subject to delays due to force majeure and to delays
               attributable to delays of, or failures in, Tenant's consulting
               with Landlord, in Tenant's supplying information or giving
               authorizations, in Tenant's interference with Landlord's
               performance of such work, or to any other reason attributable to
               Tenant or Tenant's contractors (of any level), employees or
               invitees."

            (I) Article 42

               (1) The percentage "3.584%" set forth in Article 42(A)(iii) shall
be "7.126%".

               (2) The Base Tax Year set forth in Article 42(A)(iv) shall be the
fiscal year from July 1, 1999 to June 30, 2000.

            (J) Article 43

               (1) The Expense Base Year set forth in Article 43(A)(5) shall be
the calendar year 1999.

               (2) The percentage "3.584%" set forth in Article 43 (A) (6) shall
be "7.126%".

               (3) The date "January 1, 1999" set forth in Article 43(B) shall
be "January 1, 2000".

            (K) Articles 44 and 45

               (1) The amount of Landlord's Work Contribution set forth in
Article 44(A)(1) shall be $4,033,984.00 for the Additional Space.

               (2) Subdivisions (a), (b), (c), (d), (e) and (f) of Article
44(A)(2) shall be deleted and the following substituted in lieu thereof:


                                       6



               "(a) HVAC System. Furnishing and installation of a 400 ton HVAC
               system on the north or south sides (or at Tenant's election on
               the east or west sides) of the terrace area outside the 16th
               floor of the building or on the second roof setback (but not on
               the upper roof of the 16th floor of the building) or in such
               other location as is agreeable to Landlord and Tenant, with the
               specifications therefor to be determined by Tenant, subject to
               Landlord's prior written consent, not to be unreasonably withheld
               or delayed."

               (3) The last paragraph of Article 45(A) is amended for the
Additional Space to change the amount "$100;000" to the amount "$200,000".

            (L) Article 53

               Article 53 shall be applied separately for the Original Premises
and the Additional Space, and in applying such Article separately to the
Additional Space, the Base Tax Year referred to in Article 53(b)(iii) shall be
the fiscal tax year in which the commencement of the renewal term shall occur
and the Expense Base Year referred to in Article 53(B)(iv) shall be the calendar
year in which the commencement of the renewal term shall occur.

            (M) Article 56(I)

               Article 56(1) is deleted with respect to the Original Premises,
but is restated to apply solely to the Additional Space, and as restated, reads
as follows:

                    "(I) Notwithstanding anything to the contrary contained
               elsewhere in this lease, in the event that or on prior to the
               fifth anniversary of the Commencement Date of this lease, a
               prospective tenant of space in the building shall require a
               dedicated loading bay and freight elevator and there is no other
               loading bay and freight elevator available for such prospective
               tenant (except for the building loading bay and freight elevator
               used in common by the tenants of the building), Tenant shall
               share the use of loading bay #18 and freight elevator F-13 with
               such prospective tenant on an equal basis, including the sharing,
               on an equal basis with such other tenant, of all obligations,
               liabilities, costs and expenses imposed by this lease with
               respect to such loading bay and freight elevator on Tenant. Upon
               the election by

                                       7


               such prospective tenant to use such loading bay and freight
               elevator, provided that there is no other loading bay and freight
               elevator available for such prospective tenant (except for the
               building loading bay and freight elevator used in common by the
               tenants of the building), the same shall be deemed deleted from
               the demised premises, and in lieu thereof, Tenant and such
               prospective tenant shall share the exclusive use of such loading
               dock and freight elevator; Landlord shall thereafter be required
               to maintain the same at its cost and expense, and Tenant shall be
               obligated to reimburse Landlord for 50% of the costs thereof as
               additional rent under this lease."

            (N) Article 56(J)(2)

               The percentage in Article 56(J)(2) shall be 7.126%.

            (O) Article 58

               (1) The amount set forth in Article 58(A)(i) of the Lease shall
be FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00).

               (2) The amount set forth in Article 58(A)(ii) of the Lease shall
be TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00).

               (3) The amount set forth in Article 58(A)(iii) of the Lease shall
be TWO MILLION AND 00/100 DOLLARS ($2,000,000.00).

               (4) The amount set forth in Article 58(A)(iv) of the Lease shall
be ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000.00).

               (5) The amount set forth in Article 58(A)(v) of the Lease shall
be ONE MILLION AND 00/100 DOLLARS ($1,000,000.00).

               (6) The amount set forth in Article 58(A)(vi) of the Lease shall
be FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00).

               At Tenant's option, Tenant may provide Landlord with one Letter
of Credit which shall aggregate its obligations hereunder with respect to the
Additional Space and its


                                       8


obligations under Article 58 of the Lease with respect to the Original Premises,
it being understood and agreed that such Letter of Credit must be satisfactory
to Landlord.

            (P) Exhibit D

               The amounts "$28.75" and "$31.75" in Exhibit D to shall be
changed to "$31.50" and "$34.00", respectively, and the two references to the
"Rent Commencement Date" shall be deemed to be references to the "Commencement
Date".

               THIRD: Article 52 of the Lease shall apply to both the Original
Premises and the Additional Space together. In connection therewith, Landlord
and Tenant confirm that any calculation concerning rental terms of all or any
portion of the Original Space shall be performed using the rental terms of the
Original Space set forth in the Lease, prior to this Amendment, and any
calculation concerning rental terms of all or any portion of the Additional
Space shall be performed using the rental terms of the Additional Space set
forth in this Agreement.

               Article 52(E)(8) is amended to read as follows:

               "(8) No subletting shall be for less than ten thousand (10,000)
               contiguous rentable square feet of the demised premises and at no
               time shall there be more than two (2) occupants, including
               Tenant, in the Original Premises (as such term is defined in the
               Amendment) or more than four (4) occupants, including Tenant, in
               the Additional Space (as such term is defined in the Amendment)."

               The following is added to Article 52:

               "(K) On or prior to the third anniversary of the date of the
               Amendment, Tenant may sublease up to 50% of the rentable square
               foot area of the Additional Space (as such term is defined in the
               Amendment), for terms not to exceed five (5) years each,
               pursuant, and subject, to all the other terms and conditions of
               this Article 52 (including obtaining Landlord's consent thereto,
               not to be unreasonably withheld

                                       9


               or delayed, subject to the other terms and conditions of this
               Article 52), except that Article 52(G) shall not apply with
               respect to any such sublease."

            FOURTH: Article 44(A)(2)(a) of the Lease, as it read prior to this
Amendment and as it applies to the Original Premises is amended to delete the
words: "on the upper roof" and to substitute the words: "on the second roof
setback".

            FIFTH: Tenant warrants and represents that it has dealt with no
brokers other than Insignia/Edward S. Gordon Company Inc. ("Gordon") and Newmark
& Company Real Estate, Inc. ("Newmark") in connection with this Agreement.
Tenant agrees to indemnify, defend and hold Landlord harmless, including
reasonable attorneys' fees and expenses, against any claims for brokerage
commission in connection with this Agreement arising out of any conversations or
negotiations had by Tenant with any broker other than Gordon and Newmark.
Landlord will pay the leasing commission due to Gordon and Newmark pursuant to a
separate agreement or agreements and will indemnify Tenant for all claims of
brokers which have dealt with Landlord in connection with this Agreement and not
dealt with Tenant.

            SIXTH: This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when one or more of
such counterparts shall have been signed by or on behalf of each of the parties
hereto, although it shall not be necessary that any single counterpart be signed
by or on behalf of both of the parties hereto, and all such counterparts shall
be deemed to constitute but one and the same instrument. A faxed signature by or
on behalf of any party on any counterpart shall be deemed to be the equivalent
of the original of the signature of such party, it being understood that the
counterpart containing such original signature shall be promptly thereafter
forwarded to the other party hereto.


                                       10



            SEVENTH: Whenever reference is made to freight elevator #F-8 in the
letter dated January 26, 1999 between Landlord and Tenant, which was delivered
simultaneously with the delivery of the Lease, such reference shall also be
deemed to be a reference to freight elevator #F-13.

            EIGHTH: This Agreement may not be changed, modified or canceled
orally. As amended hereby, the Lease is hereby ratified and confirmed in all
respects and shall be binding upon the parties hereto and their respective
successors and assigns.

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.

                                    JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY


                                    By: /s/ illegible
                                        ----------------------------------------
                                        Investment Officer

                                    DOUBLECLICK INC.

                                    By: /s/ Jeff Epstein
                                        ----------------------------------------
                                        Chief Financial Officer


                                       11

EX-10.9

                                                                    EXHIBIT 10.9

                            SECOND AMENDMENT TO LEASE

            THIS SECOND AMENDMENT (hereinafter referred to as the "AGREEMENT" or
the "Amendment") is made as of the 28th day of December, 1999 between 450
WESTSIDE PARTNERS, LLC, a Delaware limited liability company having an office at
230 Park Avenue, New York, New York 10169, successor in interest to John Hancock
Mutual Insurance Company (hereinafter referred to as "HANCOCK"), (hereinafter
referred to as "LANDLORD") and DOUBLECLICK, INC., a Delaware corporation, having
an office at 450 West 33`d Street, New York, New York 10001 (hereinafter
referred to as "TENANT").

                              W I T N E S S E T H:

            WHEREAS, pursuant to a certain Agreement of Lease dated as of
January 26, 1999 between Hancock and Tenant, as amended by an Amendment to Lease
and letter agreement, each made as of January 26, 1999, as further modified by
letter agreement dated June 8, 1999, and letters dated June 18, 1999, June 29,
1999 and July 12, 1999 (hereinafter collectively referred to as the "LEASE"),
Tenant is the tenant of certain premises consisting of space on the sixteenth
(16th) floor, loading bay #21 and freight elevator #F-8 and the area on the east
and west sides of the rooftop/set back outside the windowed portions of the 16th
floor (hereinafter collectively referred to as the "16TH PREMISES") and the
twelfth (12th) floor, loading bay # 18 and freight elevator # F-13 (hereinafter
collectively referred to as the "12TH PREMISES") in the building located at 450
West 33rd Street, New York, New York (hereinafter referred to as the "BUILDING")
(the 16th Premises and the 12th Premises are hereinafter collectively referred
to as the "EXISTING PREMISES"); and



            WHEREAS, Landlord and Tenant desire to extend the term of the Lease
with respect to the Existing Premises and to add to the Existing Premises
additional space on the fourteenth (140 floor (hereinafter referred to as the
"14TH PREMISES") and the fifteenth (15TH) floor, loading bay #22 and freight
elevator # F-7 (hereinafter collectively referred to as the "15TH PREMISES") of
the Building which the parties hereto agree that the 14th Premises and the 15th
Premises shall each be deemed to consist of approximately 104,562 rentable
square feet (the 14th Premises and the 15th Premises are collectively
hereinafter referred to as the "ADDITIONAL PREMISES") on the terms and
conditions hereinafter set forth.

            NOW THEREFORE, for and in consideration of the rental payments to be
made hereunder by Tenant to Landlord and the mutual consideration hereinafter
set forth, Landlord and Tenant now desire to amend the Lease upon the terms and
conditions as follows (all capitalized terms used herein (but not otherwise
defined herein and which are defined in the Lease) shall have the meanings
ascribed to such terms in the Lease unless otherwise expressly set forth
herein):

            FIRST: Landlord and Tenant hereby agree that the Lease is hereby,
extended to and shall end at noon of the last day of the calendar month in which
occurs the day. preceding the fifteenth (15th) anniversary of the Commencement
Date (as hereafter defined), which ending date is hereinafter referred to as the
"EXPIRATION DATE", or shall end on such earlier date: upon which said term may
expire or be cancelled or terminated pursuant to any of the conditions or
covenants of the Lease, this Amendment or pursuant to law.

            SECOND: (a) (a) Effective upon the date a fully executed copy of
this Amendment is delivered by Landlord to Tenant (hereinafter referred to as
the "COMMENCEMENT DATE"), Landlord shall deliver possession to Tenant of a
portion of the 14th Premises consisting



of approximately 51,959 rentable square feet (hereinafter referred to as the
"UNIT A PREMISES") as shown on the floor plan annexed hereto as Exhibit A, and
the Unit A Premises shall be deemed to be part of the Existing Premises as set
forth herein from such Commencement Date through and including the Expiration
Date (including any renewals thereof pursuant to Article 53 of the Lease).

                  (b) Effective upon the date (hereinafter referred to as the
"UNIT B COMMENCEMENT DATE") upon which broom clean possession of the Unit B
Premises (as hereafter defined) is available to Tenant and Landlord has given
five (5) days' prior written notice thereof to Tenant (which notice,
notwithstanding anything in the Lease or herein to the contrary, may be sent by
hand delivery), a portion of the 14th Premises consisting of approximately
19,989 rentable square feet (hereinafter referred to as the "UNIT B PREMISES")
as shown on the floor plan annexed hereto as Exhibit B shall be deemed to be
part of the Existing Premises as set forth herein through and including the
Expiration Date (including any renewals thereof pursuant to Article 53 of the
Lease). Notwithstanding anything hereinabove or in this Agreement: to the
contrary, in the event that the Unit B Commencement Date has not occurred by
April 1, 2000, Tenant shall be entitled to a fixed rent abatement (in addition
to any other abatement of rent to which Tenant is entitled hereunder or under
the Lease) of a/z day's fixed rent otherwise payable with respect to the Unit
B Premises for each day beyond April 1, 2000 that the Unit B Commencement Date
fails to occur. In the event that the Unit B Commencement Date has not occurred
by June 1, 2000, Tenant shall be entitled to a fixed rent abatement (in addition
to any other abatement of rent to which Tenant is entitled hereunder or under
the Lease) of one (1) day's fixed rent otherwise payable with respect to the
Unit B Premises for each day beyond June 1, 2000 that the Unit B Commencement
Date fails to occur. The foregoing shall be



Tenant's sole remedy for the failure of the Unit B Commencement Date to occur by
the dates set forth in this paragraph (b).

            (c) Effective upon the date (hereinafter referred to as the "UNIT C
COMMENCEMENT DATE") upon which broom clean possession of the Unit C Premises (as
hereafter defined) is available to Tenant and Landlord has given five (5) days'
prior written notice thereof to Tenant (which notice, notwithstanding any in the
Lease or herein to the contrary, may be sent by hand delivery), a portion of the
14th Premises consisting of approximately 32,614 rentable square feet
(hereinafter referred to as the "UNIT C PREMISES") as shown on the floor plan
annexed hereto as Exhibit C shall be deemed to be part of the Existing Premises
as set forth herein through and including the Expiration Date (including any
renewals thereof pursuant to Article 53 of the Lease). Any portion of the common
area contained in the 14th Premises not otherwise demised to Tenant on each of
the Unit A Commencement Date, the Unit B Commencement Date and/or the Unit C
Commencement Date shall, upon the Unit C Commencement Date, be deemed to be part
of the Existing Premises as set forth herein through and including the
Expiration Date (including any renewals thereof pursuant to Article 53 of the
Lease). Notwithstanding anything hereinabove or in this Agreement to the
contrary, in the event that the Unit C Commencement Date has not occurred by
January 1, 2004, Tenant shall be entitled to a fixed rent abatement (in addition
to any other abatement of rent to which Tenant is entitled hereunder or under
the Lease) of a 1/2 day's fixed rent otherwise payable with respect to the Unit
C Premises for each day beyond January 1, 2004 that the Unit C Commencement Date
fails to occur. In the event that the Unit C Commencement Date has not occurred
by March 1, 2004, Tenant shall be entitled to a fixed rent abatement (in
addition to any other abatement of rent to which Tenant is entitled hereunder or
under the Lease) of one (1) day's fixed rent



otherwise payable with respect to the Unit C Premises for each day beyond March
1, 2004 that the Unit C Commencement Date fails to occur. The foregoing shall be
Tenant's sole remedy for the failure of the Unit C Commencement Date to occur by
the dates set forth in this paragraph (c).

            (d) Subject to the provisions of Article Fifth hereof, effective
upon the date (hereinafter referred to as the "15TH PREMISES COMMENCEMENT DATE")
upon which broom-clean possession of the 15th Premises is available to Tenant
and Landlord has given five (5) days' prior written notice thereof to Tenant
(which notice, notwithstanding anything in the Lease or herein to the contrary,
may be sent by hand delivery), the 15th Premises as shown on the floor plan
annexed hereto as Exhibit D shall be deemed to be part of the Existing Premises
as set forth herein through and including the Expiration Date (including any
renewals thereof pursuant to Article 53 of the Lease). Notwithstanding anything
hereinabove or in this Agreement to the contrary, in the event that the 15th
Premises Commencement Date has not occurred by July 1, 2003, Tenant shall be
entitled to a fixed rent abatement (in addition to any other abatement of rent
to which Tenant is entitled hereunder or under the Lease) of a %2 day's fixed
rent otherwise payable with respect to the 15th Premises for each day beyond
July 1, 2003 that the 15th Premises Commencement Date fails to occur. In the
event that the 15th Premises Commencement Date has not occurred by September 1,
2003, Tenant shall be entitled to a fixed rent abatement (in addition to any
other abatement of rent to which Tenant is entitled hereunder or under the
Lease) of one (1) day's fixed rent otherwise payable with respect to the 15th
Premises for each day beyond September 1, 2003 that the 15th Premises
Commencement Date fails to occur. Notwithstanding anything hereinabove to the
contrary, the parties agree that the 15th Premises Commencement Date shall not
occur prior to January 1, 2003.



            (e) Except as otherwise provided in this Agreement, whenever in the
Lease reference is made to the "demised premises", "leased premises" or a
similar phrase, from and after each of the Commencement Date, the Unit B
Commencement Date, the Unit C Commencement Date, and the 15th Premises
Commencement Date, such phrases shall be deemed to include each of the Unit A
Premises, the Unit B Premises, the Unit C Premises, and the 15th Premises,
respectively, and, except as otherwise expressly set forth herein or in the
Lease, all the terms, covenants, and conditions of the Lease shall apply to the
aggregate of the Existing Premises and the Unit A Premises, the Unit B Premises,
the Unit C Premises, and the 15th Premises on each of the Commencement Date, the
Unit B Commencement Date, the Unit C Commencement Date, and the 15th Premises
Commencement Date, respectively. For purposes of the Unit A Premises, the Unit B
Premises, the Unit C Premises, and the 15th Premises only, the terms
"Commencement Date", "on the date of this lease", "on the date hereof' or any
such similar terms used in the Lease or in this Agreement shall mean the
Commencement Date, the Unit B Commencement Date, the Unit C Commencement Date,
and the 15th Premises Commencement Date, as applicable.

            THIRD: As same is applicable only to the Existing Premises and
continuing thereafter through the Expiration Date, the Lease shall be deemed
modified as follows: ,

            (A) Section 38(A)

                  (1) The amount of fixed rent for the 16th Premises provided in
Section 38(A)(1)(i) of the Lease shall be ONE MILLION SIX HUNDRED ELEVEN
THOUSAND FIVE HUNDRED FIFTY-TWO AND 00/100ths DOLLARS ($1,611,552.00)
($134,296.00 per month) and the phrase "the day immediately preceding the fifth
(5th) anniversary of the Rent



                  Commencement Date" shall be deemed deleted therefrom and the
phrase "December 31, 2004" shall be deemed substituted in lieu thereof.

                  (2) The amount of fixed rent for the 16th Premises provided in
Section 38(A)(1)(ii) of the Lease shall be ONE MILLION SEVEN HUNDRED SIXTY-TWO
THOUSAND SIX HUNDRED THIRTY-FIVE AND 00/100ths DOLLARS ($1,762,635.00)
($146,886.25 per month) and the phrase "the fifth (5th) anniversary of the Rent
Commencement Date until the expiration of the term" shall be deemed deleted
therefrom and the phrase "January 1, 2005 through and including December 31,
2009" shall be deemed substituted in lieu thereof.

                  (3) The following shall be inserted in Article 38 of the Lease
as Section 38(A)(1)(iii) as fixed rent for the 16th Premises:

            "(iii) ONE MILLION NINE HUNDRED THIRTEEN THOUSAND SEVEN HUNDRED
            EIGHTEEN AND 00/100ths DOLLARS ($1,913,718.00) ($159,476.50 per
            month) for the period from January 1, 2010 and continuing thereafter
            throughout the remainder of the term of this lease."

                  (4) The amount of fixced rent for the 12'" Premises provided
in Section 38(A)(1)(i) of the Lease shall be THREE MILLION TWO HUNDRED THREE
THOUSAND SEVEN HUNDRED TWELVE AND 00/100ths DOLLARS ($3,203,712.00) ($266,976.00
per month) and the phrase "the day immediately preceding the fifth (5th)
anniversary of the Commencement Date" shall be deemed deleted therefrom and the
phrase "December 31, 2004" shall be deemed substituted in lieu thereof.

                  (5) The amount of fixed rent for the 12th Premises provided in
Section 38(A)(1)(ii) of the Lease shall be THREE MILLION FIVE HUNDRED FOUR
THOUSAND SIXTY AND 00/100ths DOLLARS ($3,504,060.00) ($292,005.00 per month) and
the phrase "the fifth (5th) anniversary of the Commencement Date until the
expiration of the term" shall be



deemed deleted therefrom and the phrase "January 1, 2005 through and including
December 31, 2009" shall be deemed substituted in lieu thereof.

                  (6) The following shall be inserted in Article 38 of the Lease
as Section 38(A)(1)(iii) as fixed rent for the 12th Premises:

            "(iii) THREE MILLION EIGHT HUNDRED FOUR THOUSAND FOUR HUNDRED EIGHT
            AND 00/100ths DOLLARS ($3,804,408.00) ($317,034.00 per month) for
            the period from January 1, 2010 and continuing thereafter throughout
            the remainder of the term of this lease."

            (B) Article 42

                  The Base Tax Year set forth in Section 42(A)(iv) of the Lease
for the 16th Premises shall be the fiscal year July 1, 1999 to June 30, 2000.

            (C) Article 43

                  (1) The Expense Base Year set forth in Section 43(A)(5) of the
Lease for the 16th Premises shall be the calendar year 1999.

                  (2) The date "January 1, 1999" set forth in Section 43(B) of
the Lease for the 16th Premises shall be "January 1, 2000".

(D) Exhibit D

                  (1) The amounts "$28.75" and "$31.75" in Exhibit D with
respect to the 16th Premises shall be changed to "$32.00" and "$35.00",
respectively, the phrases "the day immediately preceding 5th anniversary of Rent
Commencement Date", "5th anniversary of Rent Commencement Date" and "the
expiration of initial term" shall be deemed changed to "December 31, 20'04",
"January 1, 2005" and "December 31, 2009", respectively.

                  (2) The amounts "$31.50" and "$34.00" in Exhibit D with
respect to the 12th Premises shall be changed to "$32.00" and "$35.00",
respectively, the phrases "the day immediately preceding 5th anniversary of
Commencement Date", "5th anniversary of



Commencement Date" and "the expiration of initial term" shall be deemed changed
to "December 31, 2004", "January 1, 2005" and "December 31, 2009", respectively.

                  (3) The following shall be added to Exhibit D with respect to
the Existing Premises:

            "January 1, 2010 to the expiration of the initial term shall be
            $38.00 per rentable square foot."

            FOURTH: As same is applicable only to the Additional Premises,
effective upon the Commencement Date and continuing through the Expiration Date,
the Lease shall be deemed modified as follows:

            (A) Rule and Regulation #3

            Reference to loading bay #21 and freight elevator # F-8 in Insert 44
of the Text to Numbered Insertions shall be deemed a reference to loading bay
#22 and freight elevator # F-7.

            (B) Section 38 (A)(1)

                  (1) The amount of fixed rent for the Unit A Premises shall be
ONE MILLION SIX HUNDRED SIXTY-TWO THOUSAND SIX HUNDRED EIGHTY-EIGHT AND
00/100ths DOLLARS ($1,662,688.00) ($138,557.33 per month) from the Commencement
Date through and including December 31, 2004.

                  (2) The amount of fixed rent for the Unit B Premises shall be
SIX HUNDRED THIRTY-NINE THOUSAND SIX HUNDRED FORTY-EIGHT AND 00/100ths DOLLARS
($639,648.00) ($53,304.00 per month) from the Unit B Commencement Date through
and including December 31, 2004.

                  (3) The amount of fixed rent for the Unit C Premises shall be
ONE MILLION FORTY-THREE THOUSAND SIX HUNDRED FORTY-EIGHT AND 00/100ths



DOLLARS ($1,043,648.00) ($86,970.67 per month) from the Unit C Commencement Date
through and including December 31, 2004.

                  (4) The amount of fixed rent for the 15th Premises shall be
THREE MILLION THREE HUNDRED FORTY-FIVE THOUSAND NINE HUNDRED EIGHTY-FOUR AND
00/100ths DOLLARS ($3,345,984.00) ($278,832.00 per month) (hereinafter referred
to as the "Initial 15th Rent") plus an amount equal to the product of (i) the
Initial 15th Rent and (ii) the percentage, if any, by which the "Price Index"
(as hereafter defined) on the 15th Premises Commencement Date exceeds the "Base
Price Index" (as hereafter defined) from the 15th Premises Commencement Date
through and including December 31, 2004.

                  (5) The amount of fixed rent for the 14th Premises shall be
THREE MILLION SIX HUNDRED FIFTY-NINE THOUSAND SIX HUNDRED SEVENTY AND 00/100ths
DOLLARS ($3,659,670.00) ($304,972.50 per month) from January 1, 2005 through and
including December 31, 2009.

                  (6) The amount of fixed rent for the 15th Premises shall be
THREE MILLION SIX HUNDRED FIFTY-NINE THOUSAND SIX HUNDRED SEVENTY AND 00/100ths
DOLLARS ($3,659,670.00) ($304,972.50 per month) (hereinafter referred to as the
"Second 15th Rent") plus an amount equal to the product of (i) the Second 15th
Rent and (ii) the percentage, if any, by which the Price Index on January 1,
2005 exceeds the Base Price Index from January 1, 2005 through and including
December 31, 2009.

                  (7) The following shall be inserted in Article 38 of the Lease
as Section 38(A)(1)(iii) as fixed rent for the 14th Premises:

            "(iii) THREE MILLION NINE HUNDRED SEVENTY-THREE THOUSAND THREE
            HUNDRED FIFTY-SIX AND 00/100ths DOLLARS ($3,973,356.00) ($331,113.00
            per month) for the



            period from January 1, 2010 and continuing thereafter throughout the
            remainder of the term of the lease."

                  (8) The following shall be inserted in Article 38 of the Lease
as Section 38(A)(1)(iii) as fixed rent for the 15th Premises:

            "(iii) THREE MILLION NINE HUNDRED SEVENTY-THREE THOUSAND THREE
            HUNDRED FIFTY-SIX AND 00/100ths DOLLARS ($3,973,356.00) ($331,113.00
            per month) (hereinafter referred to as the "Third 15" Rent") plus an
            amount equal to the product of (x) the Third 15th Rent and (y) the
            percentage, if any, by which the Price Index on January 1, 2010
            exceeds the Base Price Index for the period from January 1, 2010 and
            continuing thereafter throughout the remainder of the term of the
            lease."

            (C) Section 38(A)(2)

            (1) For purposes of making certain determinations as to the fixed
rent payable for the 15" Premises, the following terms shall have the follow
meanings:

                  (i) "PRICE INDEX" shall mean the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, New York, N.Y.-Northeastern NJ Area, All Items
(1982-84=100), or any successor index thereto, appropriately adjusted. In the
event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised, the determination of adjustments provided
for herein shall be made with the use of such conversion factor, formula or
table for converting the Consumer Price Index as may be published by the Bureau
of Labor Statistics or, if said Bureau shall not publish same, then with the use
of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc., or any other nationally recognized publisher of similar
statistical information. If the Consumer Price Index ceases to be published, and
there is no successor thereto, such other index as Landlord and Tenant shall in
good faith agree upon in writing shall be substituted for the Consumer Price
Index. If Landlord and Tenant are unable to agree as to such substituted index,
such matter shall be submitted to the American Arbitration



Association or any successor organization for determination in accordance with
the regulations and procedures thereof then obtaining for commercial
arbitration.

                  (ii) "BASE PRICE INDEX" shall mean the Price Index in effect
on the date of this Second Amendment.

            (2) Promptly after the Price Indexes for the 15th Premises
Commencement Date, January 1, 2005 and January l, 2010, respectively, are
established, Landlord shall send a written notice to Tenant setting forth: (i)
the Price Index in effect on each of such dates; (ii) the Base Price Index;
(iii) the percentage, if any, by which the Price Index in effect on each such
respective date exceeds the Base Index; and (iv) the amount of fixed rent
payable with respect to the 15th Premises as provided in Article Fourth (B)(4),
(5) and (8) hereto. Each notice furnished under this Section (2) is hereinafter
called a "CPI NOTICE". Every CPI Notice given by Landlord shall be conclusive
and binding upon Tenant unless Tenant shall notify Landlord within thirty (30)
days after its receipt of such notice that it disputes the correctness of the
computations made thereon, specifying the particular respects in which such
computations are claimed to be incorrect. Pending the resolution of such dispute
by agreement or arbitration as aforesaid, Tenant shall, within thirty (30) days
after receipt of such disputed CPI Notice, pay fixed rent for the 15th Premises
due in accordance therewith, but such payment shall be without prejudice to
Tenant's position. If the dispute shall be resolved in Tenant's favor, Landlord
shall, within fifteen (15) days of such determination, pay Tenant the amount of
Tenant's overpayment of rents, if any, resulting from compliance with the
disputed CPI Notice.

                  (3) Notwithstanding anything contained in this Section (C) to
the contrary, in no event shall the fixed rent payable by Tenant with respect to
the 15th Premises be less than the numerically stated amount of fixed rent
payable by Tenant with respect to the 15th



Premises pursuant to the provisions of Article Fourth (B)(4), (5) and (8) hereto
and, pending its receipt of a CPI Notice for any period for which such fixed
rent is due, Tenant shall continue to pay fixed rent with respect to the 15th
Premises in an amount equal to the numerically stated amount of fixed rent
payable for the period in question and, if any additional amount is due to
Landlord, Tenant shall pay such additional amount with the next installment of
fixed rent due under the Lease, as hereby amended.

                  (4) Landlord's failure to prepare and deliver the CPI notice,
or Landlord's failure to make a demand, shall not in any way cause Landlord to
forfeit or surrender any rights to collect any of the increases in fixed rent
that may have become due during the term of the Lease, as hereby amended.

            (D) Section 38(E)

            Notwithstanding anything contained herein or in the Lease to the
contrary and with respect only to the Additional Premises and the fixed rent due
with respect thereto, provided that no monetary default or no non-monetary
material default on the part of Tenant shall have occurred and be continuing
during the periods for which the following credits are to be applied (provided
further that Tenant shall be entitled to be reimbursed by Landlord for any fixed
rent or additional rent paid by Tenant during such periods for which Tenant
would otherwise have been entitled to receive such credit upon Tenant's cure of
such monetary default or such non-monetary material default), Tenant shall have
no obligation to pay (1) with respect to the Unit A Premises, fixed rent for the
period from the Commencement Date through and including the day next preceding
the first (1st) anniversary of the Commencement Date, (2) with respect to the
Unit B Premises, fixed rent for the period beginning on the Unit B Commencement
Date and which ends on the later of (a) eight (8) months from the Unit B
Commencement Date or (b) December 1,



2000, (3) with respect to the Unit C Premises, the first eight (8) full monthly
installments of fixed rent from the Unit C Commencement Date, and (4) with
respect to the 15th Premises, the first twelve (12) full monthly installments of
fixed rent from the 15th Premises Commencement Date.

            (E) Section 39(E)

                  (1) The phrase "as a credit against Landlord's Work
Contribution (as hereafter defined)" shall be deemed deleted therefrom and the
phrase "at Tenant's sole cost and expense" shall be deemed substituted in lieu
thereof.

                  (2) The amounts "$50,361.00", "$125,902.50" and "$25,180.50"
and the phrase "the 12e day" as set forth in Section 39(E) of the Lease with
respect to the 16th floor, shall be modified with respect to the Additional
Premises only as follows:

                        (i) On the Commencement Date, "$51,959.00",
"$129,897.50", "$25,979.50", and "the 90th day", respectively.

                        (ii) On the Unit B Commencement Date, "$19,989.00",
"$49,972.50", "$9,994.50", and "the 90th day", respectively.

                        (iii) On the Unit C Commencement Date, "$32,614.00",
"$81,535.00", "$16,307.00", and "the Unit C Commencement Date", respectively.

                        (iv) On the 15th Premises Commencement Date,
"$104,562.00", "$261,405.00", "$52,281.00", and "the 15th Premises Commencement
Date", respectively.

            (F) Article 41

            Tenant agrees to accept possession of the Unit A Premises, the Unit
B Premises, the Unit C Premises, and the 15th Premises in their "as is"
condition on the respective



commencement dates for each of the Unit A Premises, the Unit B Premises, the
Unit C Premises, and the 15th Premises and that Landlord shall have no
obligation to do any work in the Additional Premises, and that Tenant shall
perform any work required by it in the Additional Premises, at its sole cost and
expense (subject to the provisions of Article Fourth Section l(1) hereof) in
accordance with the applicable, provisions of the Lease, as hereby amended.

            (G) Article 42

            "Tenant's Proportionate Tax Share" as set forth in Section
42(A)(iii) of the Lease for the Additional Premises shall be as follows:

                  (1)   The Unit A Premises - 3.698%.

                  (2)   The Unit B Premises -1.416%.

                  (3)   The Unit C Premises - 2.321%.

                  (4)   The 15th Premises - 7.435%.

            (H) Article 43

            "Tenant's Proportionate Operating Share" as set forth in Section
43(A)(6) of the Lease for the Additional Premises shall be as follows:

                                    (1)    The Unit A Premises - 3.698%.

                                    (2)    The Unit B Premises -1.416%.

                                    (3)    The Unit C Premises - 2.321%.

                                    (4)    The 15" Premises - 7.435%.

            (I) Articles 44 and 45

                  (1) With respect only to the 14th Premises, the term
"Landlord's Work Contribution" as set forth in Section 44(A)(1) of the Lease
shall be $4,923,434.00 and a portion of Landlord's Work Contribution, not to
exceed $738,515.10, may be applied toward "soft costs"



of architect's fees, engineering fees, space planning fees and filing fees and
other typical "soft Notwithstanding anything herein to the contrary, Tenant may
utilize the entire costs." Landlord's Work Contribution described herein whether
or not Landlord has delivered the Unit B Premises and/or the Unit C Premises,
and same may be utilized by Tenant entirely with respect to any one of the Unit
A Premises, Unit B Premises, or Unit C Premises, or in such proportion over any
of the Unit A Premises, Unit B Premises and/or Unit C Premises as Tenant may
elect in its sole discretion.

            (2) (i) (i) For purposes hereof, the term "Hazardous Materials"
shall mean asbestos and asbestos-containing materials and other materials,
which, as of the date hereof with respect to the Unit A Premises and as of the
date of each of the Unit B Premises Commencement Date with respect to the Unit B
Premises and the Unit C Commencement Date with respect to the Unit C Premises,
in accordance with applicable laws and rules of any governmental agencies having
jurisdiction, must be removed or otherwise abated. Landlord and Tenant hereby
acknowledge that, with respect to the 14 `" Premises, Landlord's Work
Contribution includes $51,959.00 with respect to the Unit A Premises, $19,989.00
with respect to the Unit B Premises and $32,614.00 with respect to the Unit C
Premises for the removal and/or abatement of Hazardous Materials. After Tenant
has completed the removal and/or abatement of Hazardous Materials in the Unit A
Premises, Unit B Premises and Unit C Premises, Tenant shall send to Landlord a
copy of receipted invoices therefor accompanied by an ACP-5 and other supporting
environmental reports required by all laws, rules and regulations of any
governmental agency, Building Department, and/or any other entity having
jurisdiction with respect thereto evidencing that such Hazardous Materials have
been removed and/or abated. Landlord shall cooperate with Tenant, at Tenant's
expense, in obtaining such evidence by



promptly executing any documents in connection therewith required to be executed
by Landlord. In the event that the cost of such removal or abatement of any
Hazardous Materials exceeds $51,959.00 with respect to the Unit A Premises,
exceeds $19,989.00 with respect to the Unit B Premises or exceeds $32,614.00
with respect to the Unit C Premises, Landlord, within thirty (30) days of
receipt of such bill by Landlord and subject to the further provisions of this
subparagraph (2), shall pay any such excess amounts to Tenant. In the event
Landlord fails to pay any such excess amounts to Tenant within thirty (30) days
of Landlord's receipt of such bill, Tenant may offset such excess amounts not
paid by Landlord against the fixed rent and additional rent next becoming due
under the Lease, as hereby amended. In the event such costs to Tenant are less
than $51,959.00 with respect to the Unit A Premises, less than $19,989.00 with
respect to the Unit B Premises or less than $32,614.00 with respect to the Unit
C Premises, Tenant, within thirty (30) days after receipt of such bill by
Landlord and subject to the further provisions of this subparagraph (2), shall
pay to Landlord the difference between such amounts and the actual cost to
Tenant for such removal or abatement.

                        (ii) In the event that either Landlord or Tenant dispute
any amounts due to the other pursuant to subsection (i) above, then either party
may request that such dispute be submitted to arbitration. The party requesting
arbitration shall do so by giving notice to that effect to the other party, and
both parties shall promptly thereafter jointly apply to the American Arbitration
Association (or any organization successor thereto) in the City and County of
New York for the appointment of a single arbitrator.

                        (iii) The arbitration shall be conducted in accordance
with the then prevailing rules of the American Arbitration Association (or any
organization successor thereto) in the City and County of New York. In rendering
such decision and award, the



arbitrator shall not add to, subtract from or otherwise modify the provisions of
this Agreement or the Lease.

                        (iv) If for any reason whatsoever a written decision and
award of the arbitrator shall not be rendered within ninety (90) days after the
appointment of such arbitrator, then at any time thereafter before such decision
and award shall have been rendered either party may apply to the Supreme Court
of the State of New York or to any other court having jurisdiction and
exercising the functions similar to those now exercised by such court, by
action, proceeding or otherwise (but not by a new arbitration proceeding) as may
be proper to determine the question in dispute consistently with the provisions
of this Agreement or the Lease.

                        (v) All the expenses of the arbitration shall be borne
by the parties equally except that each party shall be responsible for the
payment of its own legal fees and disbursements and expert witness fees.

                  (3) With respect only to the 15th Premises, the term
"Landlord's Work Contribution" as set forth in Section 44(A)(1) of the Lease
shall be $4,923,434.00 and a portion of Landlord's Work Contribution, not to
exceed $738,515.10, may be applied toward "soft costs" of architect's fees,
engineering fees, space planning fees and filing fees and other typical "soft
costs". Landlord and Tenant hereby acknowledge that, with respect to the 15t'
Premises, Landlord's Work Contribution includes $104,562.00 for the removal
and/or abatement of Hazardous Materials. After Tenant has completed the removal
and/or abatement of Hazardous Materials in the 15" Premises, Tenant shall send
to Landlord a copy of receipted invoices therefor accompanied by an ACP-5 and
other supporting environmental reports required by all laws, rules and
regulations of any governmental agency, Building Department, and/or any other



entity having jurisdiction with respect thereto evidencing that such Hazardous
Materials have been removed and/or abated. Landlord shall cooperate with Tenant,
at Tenant's expense, in obtaining such evidence by promptly executing any
documents in connection therewith required to be executed by Landlord. In the
event that the cost of such removal or abatement exceeds $104,562.00, Landlord,
within thirty (30) days of receipt of such bill by Landlord and subject to the
further provisions of this subparagraph (3), shall pay any such excess amounts
to Tenant. In the event that Landlord fails to pay any such excess amounts to
Tenant within thirty (30) days of Landlord's receipt of such bill, Tenant may
offset such excess amounts not paid by Landlord against the fixed rent and
additional rent next becoming due under the Lease, as hereby amended. In the
event such costs to Tenant are less than $104,562.00, Tenant, within thirty (30)
days after receipt of such bill by Landlord and subject to the further
provisions of this subparagraph (3), shall pay to Landlord the difference
between such amounts and the actual cost to Tenant for such removal or
abatement. In the event that either Landlord or Tenant dispute any such amounts
due to the other pursuant to this subparagraph (3), such dispute shall be
determined in accordance with the provisions of Article Fourth Section I (2)
hereof, with any references to the "Unit A Premises", the "Unit B Premises" or
the "Unit C Premises" therein being deemed to refer to the 15th Premises.

                  (4) Subdivisions (a) - (f) of Section 44(A)(2) of the Lease
with respect to the Additional Premises shall be deleted therefrom.

                  (5) The last paragraph of Section 45(A) of the Lease is
amended for the Additional Premises to change the amount "$100,000" to the
amount "$200,000".



            (J) Section 56(J)(2)

            The percentage in Section 56(J)(2) of the Lease with respect to the
Additional Premises shall be 14.87%, provided that Tenant does not elect to
exercise Tenant's Termination Option (as hereafter defined). In the event Tenant
does elect to exercise Tenant's Termination Option then the percentage in
Section 56(J)(2) of the Lease with respect to the Additional Premises shall be
7.435%.

            (K) Section 58(A)(i):

            With respect only to the 15th Premises, within fifteen (15) days
from the date that Landlord has given notice to Tenant that broom-clean
possession of the 15th Premises is available to Tenant, in addition to any other
security being held by Landlord, Tenant shall deliver to Landlord a Letter of
Credit in accordance with, and meeting the requirements of, the provisions of
Article 58 of the Lease in the amount of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) which Letter of Credit will be held by Landlord in accordance
with the provisions of Article 58 and as same may be reduced in accordance with
the provisions of Article 58 of the Lease.

            (L) Exhibit D

            The amounts "$28.75" and "$31.75" in Exhibit D shall be changed to
"$32.00" and "$35.00", respectively, the phrases "the day immediately preceding
5th anniversary of Rent Commencement Date", "5th anniversary of Rent
Commencement Date" and "the expiration of initial term" shall be deemed changed
to "December 31, 2004", "January 1, 2005" and "December 31, 2009", respectively,
and the following shall be added:

            "January 1, 2010 to the expiration of the initial term shall be
            $38.00 per rentable square foot."



            FIFTH: Provided that no monetary default or no non-monetary material
default on the part of Tenant shall have occurred and be continuing on the date
Tenant sends "Tenant's Termination Notice" (as hereafter defined), which default
is continuing after any required notice and the expiration of any applicable
cure period, Tenant shall have the option (hereinafter referred to as "TENANT'S
TERMINATION OPTION") to terminate the Lease as to the 15th Premises only,
effective upon Landlord's receipt of Tenant's Termination Notice (the date of
such receipt of said notice being hereinafter referred to as the "CANCELLATION
DATE"), upon the following terms and conditions:

                  (1) If Tenant elects to exercise Tenant's Termination Option,
Tenant shall send written notice thereof (hereinafter referred to as "TENANT'S
TERMINATION NOTICE") to Landlord by registered or certified mail, return receipt
requested, or by nationally recognized overnight courier providing for receipted
delivery, on or before December 31, 2000, accompanied by a bank, cashiers' or
certified check to the order of Landlord in the amount of $250,000.00
(hereinafter referred to as the "CANCELLATION FEE");

                  (2) In the event Tenant exercises Tenant's Termination Option
and pays the Cancellation Fee in the manner and within the time period set forth
above, the Lease shall thereupon terminate (as to the 15th Premises only) on the
Cancellation Date as though the Cancellation Date was the date initially set
forth as the Expiration Date of the Lease with respect to the 15th Premises only
and the parties hereto shall have no further obligations to the other under the
Lease, as hereby amended, with respect only to the 15th Premises.

                  (3) If Tenant fails to exercise Tenant's Termination Option in
the manner (including, without limitation, the payment of the Cancellation Fee)
and within the time period set forth above, the Termination Option shall be
deemed null and void and Tenant shall



have no further option to cancel the Lease as to the 15 `h Premises pursuant to
the provisions set forth above.

            SIXTH: The following shall be added to Article 39 of the Lease as
Sections 39(H)-(M):

                  (H) Tenant has advised Landlord that it may require one or
            more back-up generator(s) to provide electricity to certain of
            Tenant's equipment in the Additional Premises and the Existing
            Premises in the event of the interruption of electrical service to
            the Additional Premises and the Existing Premises. Such back-up
            generator(s) would necessitate the construction, installation,
            operation, testing, maintenance and use by Tenant of a generator(s),
            together with a fuel oil storage tank (hereinafter referred to as
            the "FUEL TANK") and related equipment (including Tenant's transfer
            switch), mountings, supports and risers (herein collectively
            referred to as the "GENERATOR(S)"). Subject to the further
            provisions of this Article 39, upon the request of Tenant, Landlord
            shall make available to Tenant on the Unit B Commencement Date, at
            no cost to Tenant, for Tenant's own use (and not for resale or
            sublicensing purposes) (i) up to 450 square feet of usable space
            (hereinafter referred to as the "GENERATOR AREA") on the portion of
            the southwest second (2nd) floor roof set-back.. area of the
            Building, as designated by Landlord, in its sole discretion (which
            space designated shall be feasible for such generator(s)
            installation), the approximate location of which shall be on a
            portion of the area cross-hatched on the floor plan annexed hereto
            as Exhibit E-l, for the Generator(s), (ii) up to 200 square feet of
            usable space or such greater amount as is necessary to hold a 5,000
            gallon conventional fuel tank (hereinafter referred to as the "TANK
            AREA") in the basement of the Building, the approximate location of
            which is as cross-hatched on the floor plan annexed hereto as
            Exhibit E-2, for the Fuel Tank used in connection with the
            Generator(s), and (iii) up to 50 square feet of usable space
            (hereinafter referred to as the "SWITCH AREA") in the basement of
            the Building at a location to be determined and mutually agreed upon
            by Landlord and Tenant for the installation and placement of
            Tenant's transfer switch used in connection with the Generator(s).
            The foregoing locations will permit the connection of such
            Generator(s) to the Additional Premises and the Existing Premises in
            a reasonable manner. Tenant's use of the Generator Area, the Tank
            Area and the Switch Area of the Building shall be on an exclusive
            basis. Notwithstanding anything contained herein to the contrary,
            within fifteen (15) days after the delivery of the Unit C



            Premises to Tenant, Tenant shall notify Landlord in writing whether
            Tenant will use each of the Generator Area, the Tank Area and the
            Switch Area. In the event Tenant fails to so notify Landlord,
            Tenant's right to use each of the Generator Area, the Tank Area and
            the Switch Area shall thereafter be on a "first-come, first-served"
            basis subject to availability. In connection with Tenant's use of
            each of the Generator Area, the Tank Area and the Switch Area of the
            Building, Tenant shall have access as reasonably required to each of
            the Generator Area, the Tank Area and the Switch Area for the
            construction, installation, maintenance, repair, operation and use
            of the Generator(s), the Fuel Tank and Tenant's transfer switch.
            Tenant shall, at its sole cost and expense, be permitted to fence-in
            or enclose each of the Generator Area, the Tank Area and the Switch
            Area in a manner reasonably acceptable to Landlord and in compliance
            with applicable law, but Tenant shall provide Landlord with a key
            for such enclosure. It is agreed, however, that only Tenant and
            authorized licensed electrical engineers and electrical contractors
            approved in advance by Landlord (which approval shall not be
            unreasonably withheld or delayed), federal, state or local
            governmental inspectors or persons under their direct supervision
            will be permitted to have access to each of the Generator Area, the
            Tank Area and the Switch Area. Tenant further agrees to exercise
            firm control over the people requiring access to each of the
            Generator Area, the Tank Area and the Switch Area in order to keep
            to a minimum the number of people having access to each of the
            Generator Area, the Tank Area and the Switch Area and the frequency
            of their visits. Landlord shall, at no cost to Tenant, provide
            reasonably sufficient space in the shafts of the Building, the
            approximate location of which shall be reasonably acceptable to
            Landlord and Tenant, to allow Tenant, at Tenant's sole cost and
            expense, to run electrical wiring from the Generator(s) to the
            Additional Premises and to the Existing Premises and from the
            Building generator described in Paragraph 39G of the Lease to the
            Generator(s) and to run fuel lines from the Fuel Tank to the
            Generator(s). The installation of the Generator(s) shall constitute
            a Tenant's Change and shall be performed at Tenant's sole cost and
            expense in accordance with, and subject to, the provisions of this
            lease, including, without limitation, Article 45 hereof, and
            notwithstanding anything herein or in this lease to the contrary,
            Tenant's right to install the Generator(s) shall be subject to the
            prior approval by Landlord of plans and specifications for the
            Generator(s) and the manner in which same is attached to the
            Generator Area, which approval shall not be unreasonably withheld,
            conditioned or delayed. All of the applicable provisions of this
            lease shall apply to the installation, use, operation and
            maintenance of the Generator(s), including,



            without limitation, provisions relating to compliance with laws,
            insurance, indemnity, hazardous material, repairs and maintenance.
            The license granted to Tenant in this Article 39 shall not be
            assignable by Tenant separate and apart from this lease and may not
            be sublicensed by Tenant. Notwithstanding anything in Article 39 of
            this lease to the contrary, if Tenant installs the Generator(s),
            Tenant may disconnect from, at its sole cost and expense, and
            terminate its use of, the Building generator without further
            obligation to Landlord with respect thereto.

                  (I) Tenant shall install, maintain, operate, repair and use
            the Generator(s), all at its sole cost and expense, and in such a
            manner so as not to cause any unreasonable interference to other
            tenants, occupants, licensees or Landlord in the Building or damage
            to or interference with the operation of the Building or any
            Building systems.

                  (J) Landlord may, at its option, at any time during the term
            of this lease, after reasonable prior notice to Tenant (except in
            the event of an emergency when no notice shall be required) relocate
            the Generator(s) to another area of the .second (2nd) floor roof
            set-back area designated by Landlord and relocate the Fuel Tank and
            Tenant's transfer switch to another area of the basement designated
            by Landlord, provided that such relocation does not cause the
            back-up electrical service to be interrupted or impaired and such
            relocation shall be performed at Landlord's sole cost and expense.

                  (K) (1) Landlord shall not have any obligations with respect
            to the Generator(s) or compliance with any laws or requirements of
            public authorities relating thereto (including, without limitation,
            the obtaining of any required permits or licenses, or the
            maintenance thereof), nor shall Landlord be responsible for any
            damage that may be caused to Tenant or the Generator(s) by any other
            tenant or occupant of the Building. Landlord makes no
            representa-tion with respect to the Generator(s) or its capacity or
            ability to provide back-up electrical service and Tenant agrees that
            Landlord shall not be liable to Tenant therefor.

                       (2) Any electrical service required for Tenant's use of
            the Generator(s) shall be paid for by Tenant pursuant to the
            provisions of Article 39 of this lease.

                       (3) Tenant shall (i) be solely responsible for any
            damage caused to Landlord or any other entity, person or property as
            a result of the installation, maintenance or use of the
            Generator(s), (ii) promptly pay any tax, license, permit or other



            fees or charges imposed pursuant to any laws and/or requirements of
            public authorities relating to the installation, maintenance or use
            of the Generator(s), (iii) promptly comply with all reasonable
            precautions and safeguards recommended by Landlord's insurance
            company and all federal, state or municipal governmental authorities
            or agencies, and (iv), at its sole cost and expense, (x) perform all
            necessary repairs or replacements to, or maintenance of, the
            Generator(s), (y) promptly repair any and all damage to each of the
            Generator Area, the Tank Area and the Switch Area and to any other
            part of the Building caused by or resulting from the installation,
            maintenance, repair, operation or removal of the Generator(s) or any
            portion thereof, and (z) at Tenant's Option, except as otherwise
            provided in Section (M) below, terminate its use of the Generator(s)
            and disconnect and remove same.

                  (L) Tenant shall have the right, for the period from the
            Commencement Date through six (6) months after the date Landlord
            delivers the Generator Area to Tenant, upon prior written notice to
            Landlord, to connect to the Building generator to allow Tenant to
            receive up to 350 K.W. of emergency electricity service (in addition
            to that provided to Tenant under Paragraph 39G of the Lease) from
            the Building generator at no cost to Tenant, except that Tenant
            shall be responsible for the cost of connecting to, and
            disconnecting from (at the end of such period), the Building
            generator. In the event Tenant does connect to the Building
            generator as aforesaid, Landlord agrees to, on a monthly basis,
            exercise the Building generator, check and maintain all fluid and
            battery levels and maintain a maintenance log of all maintenance
            performed to the Building generator. Landlord further agrees to
            maintain a contract with a generator service company to visually
            inspect and perform preventive maintenance two (2) times per year.
            Landlord shall, upon two (2) weeks prior written notice by Tenant
            and at Tenant's sole cost and expense, assist Tenant in scheduling
            an emergency power test (a/k/a pull the plug test). Such test shall
            be limited to the period for which Tenant is connected to the
            Building generator and Landlord shall not be obligated to conduct
            such test more than two (2) times a year.

                  (M) Tenant acknowledges and agrees that the privileges granted
            Tenant under Sections (H) - (M) shall merely constitute a license
            and shall not, now or at any time after the installation of the
            Generator(s), be deemed to grant Tenant a leasehold or other real
            property interest in the Building or any portion thereof. The
            license granted to Tenant in Sections (H) - (M) shall automatically
            terminate and expire upon the expiration or earlier termination of
            this lease and the termination of such license shall be
            self-operative and no further instrument shall be required to effect
            such



            termination and Tenant shall, at its sole cost and expense, unless,
            upon written request given by Tenant at least six (6) months prior
            to the Expiration Date requesting that the Generator(s) remain on
            the Generator Area, the Fuel Tank remain on the Tank Area and
            Tenant's transfer switch remain on the Switch Area, and such request
            is thereafter consented to by Landlord, remove the Generator(s) from
            the Generator Area, the Fuel Tank from the Tank Area and Tenant's
            transfer switch from the Switch Area within three (3) months after
            the expiration or earlier termination of this lease and repair any
            damage to each of the Generator Area, the Tank Area, the Switch Area
            and the Building resulting from such removal so as to place same, as
            closely as possible, in the same condition as existed prior to the
            installation of the Generator(s), the Fuel Tank and Tenant's
            transfer $witch, normal wear and tear excepted. This obligation
            shall survive the expiration or sooner termination of this lease.
            The foregoing notwithstanding, upon request by Landlord, Tenant, at
            Tenant's sole cost and expense, promptly shall execute and deliver
            to Landlord, in recordable form, any certificate or other document
            confirming the termination of Tenant's right to use the Generator
            Area, the Tank Area and the Switch Area.

            SEVENTH: Article 52 of the Lease shall apply to both the Existing
Premises and the Additional Premises together. In connection therewith, Landlord
and Tenant confirm that any calculation concerning rental terms of all or any
portion of the Existing Premises shall be performed using the rental terms of
the Existing Premises set forth in this Amendment, and any calculation
concerning rental terms of all or any portion of the Additional Premises shall
be performed using the rental terms of the Additional Premises set forth in this
Agreement.

            Further, the following is added to Article 52 of the Lease as
            Section 52(K):


            "(K) Tenant may sublease (a) the 14th Premises or any part thereof
            for terms not to exceed the day immediately preceding the third
            (3`d) anniversary of the Commencement Date provided that there shall
            not be more than four (4) entities (including Tenant) occupying the
            14th Premises, and (b) the 15th Premises or any part thereof for
            terms not to exceed the day being immediately preceeding the third
            (3`d) anniversary of the 15th Premises Commencement Date provided
            there shall not be more than four (4) entities (including Tenant)
            occupying the 15th Premises, pursuant, and subject, to all the other
            terms and conditions of this Article 52 (upon notice to Landlord,
            but without the need for



            Landlord's consent thereto, subject to the other terms and
            conditions of this Article 52), except that Sections 52(F), 52(G),
            52(H) and 52(I) shall not apply with respect to any such sublease."

            EIGHTH: Section 56J(1) of the Lease shall apply to both the Existing
Premises and the Additional Premises together. In connection therewith, Section
56(J)(1) of the Lease shall be deleted therefrom and the following shall be
substituted in lieu hereof:

            "(1) Landlord shall supply condenser water free of charge during
            "REGULAR HOURS" (7:00 a.m. - 6:00 p.m.) of "BUSINESS DAYS" (which
            term is used herein to mean all days except Saturdays, Sundays and
            days (hereinafter referred to "HOLIDAYS") observed by the Federal or
            New York State government as legal holidays or the building service
            employees' union holidays) throughout the year and at the rate of
            $50.00 per hour during "OVERTIME HOURS" (6:00 p.m. - 7:00 a.m.) for
            up to 1200 tons to serve the Existing Premises and the Additional
            Premises together. Landlord shall also make available to Tenant
            during the term of this lease supplemental condenser water to serve
            the Existing Premises and the Additional Premises for up to thirty
            (30) tons (i.e., two (2) 15 ton units) during regular hours and
            overtime hours free of charge on business days and for all hours on
            holidays. With respect to any condenser water required to supply any
            air-conditioning which Tenant may be permitted to install in excess
            of 1230 tons (which excess shall include Tenant's use of condenser;
            water for ug to an additional 400 tons of capacity necessary for the
            15 Premises), Landlord shall make available to Tenant, and Tenant
            shall pay for, as additional rent, such additional condenser water
            at the rate of $.072 per ton per hour during regular hours and
            overtime hours of business days and for all hours on holidays
            provided, however, that notwithstanding anything in the foregoing to
            the contrary, there shall be no charge to Tenant for condenser water
            for up to an additional 400 tons of capacity for the 15t' - Premises
            during regular hours of business days.

            NINTH: (a) (a) Landlord hereby grants Tenant, at no cost to Tenant,
a license during the term of the Lease, as extended by this Agreement, on the
terms and conditions contained herein and in the Lease to install and maintain,
at Tenant's sole cost and expense, the name of Tenant in the lobby of the
Building on the wall in a location mutually satisfactory to Landlord and Tenant
(such name of Tenant is hereinafter referred to as the "LOBBY NAME



SIGN") provided that Tenant's name shall be displayed in a similar size to that
of the name of the Daily News presently located in the lobby of the Building and
shall be made of similar materials and finishes as that of the Daily News' name
presently existing in the lobby of the Building. Tenant shall, at Tenant's sole
cost and expense, maintain the Lobby Name Sign in good order and condition,
reasonable wear and tear excepted. Within thirty (30) days after the Expiration
Date or sooner termination of the Lease, Tenant shall remove the Lobby Name Sign
and repair any damage to the lobby wall of the Building resulting from such
removal.

                  (b) Landlord hereby grants Tenant, at no cost to Tenant, a
license, during the term of the Lease, as extended by this Agreement, on the
terms and conditions contained herein and in the Lease, to install and maintain,
in good order and condition, reasonable wear and tear excepted, at Tenant's sole
cost and expense, the following: (i) on an exclusive basis, two (2) structural
signs (hereinafter referred to as the "ROOF SIGNS"), on the upper 16" floor roof
of the Building which location shall be from the southern most end to the
northern most end (between the existing columns) of the Building, facing east
and west, the height of such Roof Signs (including the structures supporting
same) shall not exceed a height of 32.5 feet as measured from the surface of the
upper 16th floor roof, provided that the Roof Signs shall in all events comply
with all requirements of Laws (as hereafter defined). Such Roof Signs shall
contain the name and/or logo and shall be in the corporate colors of Tenant, or
any corporation or entity which is controlled by Tenant ("CONTROL" being defined
as ownership of more than fifty(50%) percent of all of the voting stock of a
corporation or more than fifty (50%) percent of all the legal and equitable
interest in any other entity); (ii) the name of Tenant on the side of the
entryway of the Building, the location of which shall be reasonably acceptable
to Landlord and Tenant, and (iii) the name of Tenant on Tenant's items of
equipment, furniture,



installations or personalty on the Roof/Set-Back Area provided that same cannot
be observed from the street level (such Roof Signs, the name of Tenant on the
side of the entryway of the Building and on the Roof/Set-Back Area are
hereinafter collectively referred to as the "OUTDOOR NAME SIGNS"), provided
that, except as otherwise expressly provided in this subparagraph (b), the
location, size, content, color, materials and finish of the Outdoor Name Signs
shall be previously approved by Landlord which approval shall not be
unreasonably withheld, delayed or conditioned. Tenant's right to install and
maintain the Roof Signs is expressly conditioned on, and subject to, Tenant, or
any corporation or entity which is controlled by Tenant, occupying at least
150,000 rentable square feet of office space in the Building for the purpose of
conducting its or their own business. In the event that, at any time, Tenant, or
any corporation or entity which is controlled by Tenant, is in occupancy of less
than 150,000 rentable square feet of office space in the Building, Tenant shall,
within three (3) months after such date, at its sole cost and expense, remove
the Roof Signs and repair any damage to the Building resulting from such
removal. Notwithstanding anything hereinabove to the contrary, Landlord hereby
approves, (x) except as to materials and finish, the plan annexed hereto as
Exhibit F for the Roof Signs and (y) the right of Tenant to maintain the Outdoor
Name Signs that contain the name, logo and corporate colors of Tenant, or any
corporation or entity which is controlled by Tenant. Tenant shall, prior to
installing such Outdoor Name Signs, at its sole cost and expense, procure and
thereafter maintain on a current basis, any governmental permits and licenses
from all authorities having jurisdiction, which may be required pursuant to any
present or future law, statute, ordinance, rule, regulation, other governmental
order or controlling judicial determination of any federal, state, local,
municipal or other governmental body, agency or authority having jurisdiction
and all departments, commissions, boards and officers thereof (hereinafter
referred to



as "LAWS"), and shall at all times comply with all requirements of Laws, which
shall impose any obligation, order or duty upon Landlord or Tenant with respect
to or affecting the Outdoor Name Signs. Landlord shall cooperate with Tenant, at
Tenant's sole cost and expense, in obtaining such governmental permits and
licenses in connection with the Outdoor Name Signs. Landlord shall have no
obligation with respect to the Outdoor Name Signs. Within three (3) months after
the Expiration Date or sooner termination of the Lease, Tenant shall, at its
sole cost and expense, remove the Outdoor Name Signs and repair any damage to
the Building resulting from such removal. The rights granted to Tenant hereunder
shall not be sublet or sublicensed by Tenant and may not be assigned except in
connection with a permitted assignment of the Lease.

            TENTH: Article 53 of the Lease and Section 56(1) of the Lease are
hereby deleted in their entirety.

            ELEVENTH: Landlord acknowledges that Tenant, as part of its work to
prepare the 14th Premises for its use, will be tapping into the condenser water
outlet on the 14th Premises which is also utilized by the existing tenant of the
Unit B Premises and the Unit C Premises. Landlord represents that adequate
capacity for condenser water exists for the use of both Tenant and such existing
tenant so as to supply condensor water to Tenant in accordance with the
provisions of the Lease, as hereby amended. Notwithstanding anything hereinabove
or in this Agreement to the contrary, in the event Tenant is unable to tap into
the condenser water outlet on the 14th Premises while the existing tenant is
utilizing same, Tenant may, at its sole cost and expense, install, operate,
maintain and repair an air-cooled system for the period from the date Tenant is
unable to tap into the condenser water outlet through six (6) months after the
Unit C Premises Commencement Date. Such air-cooled system shall be vented to the
outside in a location, and such vent or louver shall be constructed utilizing a
material, reasonably acceptable



to Landlord. Tenant shall be responsible, at it sole cost and expense, for
disconnecting and removing such air-cooled system and any vent or louver and
repairing and damages to the Building resulting therefrom.

            TWELFTH: (a) (a) Commencing on April 1, 2000 and continuing
thereafter during the term of the Lease, as hereby amended, Landlord, subject to
any present or future law or rule of any governmental agency having jurisdiction
and all applicable Building codes and rules and except during periods where
emergency or repair situations exist, will designate one passenger elevator cab
in the high rise elevator bank to service only the 12th, 14th, 15th (upon the
15th Premises Commencement Date and provided Tenant does not exercise Tenant's
Termination Option) and 16th floors and the lobby of the Building for the
exclusive use of Tenant and its visitors and invitees. Notwithstanding the
foregoing, such passenger elevator cab shall not service nor stop on the 15th
Premises until the 15th Premises Commencement Date, provided Tenant does not
exercise Tenant's Termination Option. All work necessary to reprogram or
otherwise prepare such elevator cab for such exclusive use including, without
limitation, increasing such use to service the 15th Premises (provided Tenant
does not exercise Tenant's Termination Option), shall be performed by Landlord,
and Tenant shall reimburse Landlord for the actual, reasonable, out-of-pocket
costs incurred by Landlord in connection therewith within thirty (30) days of
receipt of a bill thereafter accompanied by reasonable back-up information with
respect to such costs. Notwithstanding anything in the foregoing to the
contrary, Landlord shall obtain bids for all work necessary to reprogram or
otherwise prepare the aforesaid elevator cab for such exclusive use from not
less than three (3) elevator maintenance and repair companies of recognized
standing in the Borough of Manhattan, one of which may be selected by Tenant.
Landlord will allow Tenant to participate in the bidding process and Landlord
shall



select the lowest qualified bidder to perform the aforesaid work unless Landlord
and Tenant otherwise mutually determine to select another bidder. During the
term of the Lease, Landlord shall maintain such elevator cab in the same manner
as it is obligated to maintain all other passenger elevators in the Building in
accordance with the provisions of the Lease, as hereby amended. Nothing herein
shall eliminate or reduce Landlord's obligation to maintain such elevator in
such good working order throughout the term of the Lease, as hereby extended by
this Agreement.

                  (b) As of April 1, 2000, Landlord hereby grants Tenant, at no
cost to Tenant, a license for the period from April 1, 2000 and continuing
thereafter throughout the term of the Lease, as extended by this Agreement, on
the terms and conditions contained herein and in the Lease to install and
maintain, at Tenant's sole cost and expense, a sign setting forth that such
dedicated passenger elevator is for Tenant's exclusive use. Such sign shall be
installed on the wall in the lobby of the Building adjacent to the dedicated
passenger elevator provided that the exact location of such sign and the size,
materials and finishes used for such sign shall be reasonably satisfactory to
Landlord. Tenant shall, at Tenant's sole cost and expense, maintain the sign in
good order and condition, reasonable wear and tear excepted. Within thirty (30)
days after the Expiration Date or sooner termination of the Lease, Tenant shall
remove the sign and repair any damage to the lobby wall of the Building
resulting from such removal.

                  (c) Commencing on the Unit C Commencement Date and continuing
thereafter during the term of the Lease, as hereby amended, Tenant shall be
entitled to utilize, on an exclusive basis and without additional cost except as
expressly set forth in this Article Twelfth, the presently decommissioned and
out-of-service elevator cab and elevator shaft in the north east quadrant of the
Building (hereinafter collectively referred to as the "F-4



ELEVATOR") which presently exists between the 12`h floor and the 15" floor of
the Building upon the following terms and conditions:

            (1) Tenant understands that the F-4 Elevator is available for
Tenant's use in its present "as is" condition and acknowledges that same is
decommissioned and out-of-service and may not presently be used.

            (2) In the event Tenant elects to utilize the F-4 Elevator, Tenant
shall, at its sole cost and expense, recommission the F-4 Elevator by making all
necessary repairs and improvements thereto, at its sole cost and expense, which
repairs and improvements shall be made in accordance with all of the applicable
provisions of the Lease, as hereby amended, and in accordance with all laws,
rules and regulations of any governmental agency, Building Department, and/or
any other entity having jurisdiction with respect thereto. Landlord shall
cooperate, at Tenant's expense, by promptly executing any documents in
connection therewith required to be executed by Landlord. Prior to commencing
any such work or repairs, Tenant shall obtain and thereafter maintain during any
period during which it uses or does any work or any renovation with respect to
the F-4 Elevator, all permits, licenses or any other required approvals with
respect thereto.

            (3) In connection with the renovation, recommissioning and use of
the F-4 Elevator, provided Tenant does not exercise Tenant's Termination Option,
Tenant shall, upon the 15th Premises Commencement Date, be entitled to extend
same so as to run between the 12th floor and the 16th floor of the Building,
including, without limitation, cutting any slab between the 15th Premises and
the 16th floor of the Building. Any such extension shall be performed at the
sole cost and expense of Tenant, and shall thereafter be maintained and repaired
at Tenant's sole cost and expense and, in accordance with all applicable laws,
rules and



regulations of any governmental agency, Building Department, and any other
entity having jurisdiction with respect thereto. Tenant shall not be required to
restore any slab opening between the 15th Premises and the 16th floor of the
Building on the Expiration Date or sooner termination of the Lease. Tenant
acknowledges that Landlord has made no representations that the F-4 Elevator may
be used for any purpose or that same may be recommissioned and Tenant is not
relying on any representation and that the inability of Tenant to use the F-4
Elevator or extend same to the 16th floor shall in no way affect the Lease, as
hereby amended, or Tenant's obligations thereunder. Tenant further acknowledges
that Landlord shall have no obligations of any kind with respect to the F-4
Elevator and all expenses with respect thereto and all repairs and maintenance
thereof shall be at the sole cost and expense of Tenant who shall have sole
responsibility therefor.

            THIRTEENTH: In the event the existing tenant of the Unit B Premises
and the Unit C Premises or its employees and agents (including its own security
guards) impedes Tenant's access by means of ingress and/or egress to each of the
Unit A Premises and the Unit B Premises as of the Unit B Premises Commencement
Date, Landlord shall, upon Tenant's request, take all action available to
Landlord at law or in equity against such existing tenant to prevent such
impediment from continuing but in no event shall Landlord be obligated to
terminate the lease(s) for such existing tenant.

            FOURTEENTH: Tenant warrants and represents that it has dealt with no
brokers other than Insignia/ESG, Inc. ("INSIGNIA") and Newmark & Company Real
Estate, Inc. ("NEWMARK") in connection with this Agreement. Tenant agrees to
indemnify, defend and hold Landlord harmless, including reasonable attorneys'
fees and expenses, against any claims for brokerage commission in connection
with this Agreement arising out of any conversations or



negotiations had by Tenant with any broker other than Insignia and Newmark.
Landlord will pay the leasing commission due to Insignia and Newmark pursuant to
a separate agreement or agreements and will indemnify Tenant for all claims of
brokers which have dealt with Landlord in connection with this Agreement and not
dealt with Tenant.

            FIFTEENTH: All notices to Landlord shall be addressed to Landlord
c/o Max Capital Management Corp., 230 Park Avenue, 17`" Floor, New York, New
York 10169 with a copy to FischbeinoBadillooWagneroHarding, 909 Third Avenue,
New York, New York 10022, Attention: Barry E. Shimkin, Esq.

            SIXTEENTH: In the event Landlord objects to a specific aspect of any
plans and specifications submitted by Tenant to Landlord in connection with any
Alterations and/or Tenant's Changes (as defined in the Lease), such objection
shall be limited to such portion of the plans and specifications specifically
objected to by Landlord and those portions of the plans and specifications not
specifically objected to by Landlord shall be deemed approved.

            SEVENTEENTH: This Agreement may be executed in two or more
counterparts and shall be deemed to have become effective when and only when one
or more of such counterparts shall have been signed by or on behalf of each of
the parties hereto, although it shall not be necessary that any single
counterpart be signed by or on behalf of both of the parties hereto, and all
such counterparts shall be deemed to constitute but one and the same instrument.
A faxed signature by or on behalf of any party on any counterpart shall be
deemed to be the equivalent of the signature of such party, it being understood
that the counterpart containing such existing signature shall be promptly
thereafter forwarded to the other party hereto.



            EIGHTEENTH: This Agreement may not be changed, modified or canceled
orally. As amended hereby, the Lease is hereby ratified and confirmed in all
respects and shall be binding upon the parties hereto and their respective
successors and assigns.



      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                450 WESTSIDE PARTNERS, LLC

                                By:  MAX AG 450, LLC

                                    By: MAX CAPITAL MANAGEMENT CORP., a Member

                                         By: /s/illegible
                                            ----------------------------------
                                               Name:
                                               Title:


                                DOUBLECLICK, INC.

                                By:  /s/ Dwight Merriman
                                   -------------------------------------------
                                   Name: Dwight Merriman
                                   Title: Chief Technology Officer

EX-21.1

                                                                    EXHIBIT 21.1

                         SUBSIDIARIES OF THE REGISTRANT

                                 AS OF DECEMBER 31, 2002

SUBSIDIARIES OF DOUBLECLICK INC.

DoubleClick Finance Corp. (Delaware)
DoubleClick Real Property LLC (Delaware)
DoubleClick International Internet Advertising Limited (Ireland)
DoubleClick International Asia Holding NV (Netherlands Antilles)
Protagona plc (United Kingdom)
Abacus Direct Europe BV (Netherlands)

WHOLLY-OWNED OF DOUBLECLICK INTERNATIONAL INTERNET ADVERTISING LIMITED (IRELAND)

DoubleClick International TechSolutions Limited (Ireland)
DoubleClick Deutschland GmbH (Germany)
DoubleClick France SAS (France)
DoubleClick Espana SL (Spain)
DoubleClick Media Europe Limited (British Virgin Islands)

INDIRECT WHOLLY-OWNED SUBSIDIARY OF DOUBLECLICK INC. (DELAWARE)

DoubleClick Email Canada Inc. (Canada)

WHOLLY-OWNED SUBSIDIARY OF PROTAGONA PLC

Protagona Worldwide Limited (United Kingdom)

WHOLLY-OWNED SUBSIDIARY OF ABACUS DIRECT EUROPE B.V.

Abacus Direct (UK) Limited (United Kingdom)

WHOLLY-OWNED SUBSIDIARY OF DOUBLECLICK INTERNATIONAL ASIA HOLDING NV (NETHERLAND
ANTILLES)

DoubleClick International Asia BV (Netherlands)

WHOLLY-OWNED SUBSIDIARIES OF DOUBLECLICK INTERNATIONAL ASIA BV (NETHERLANDS)

DoubleClick Korea TechSolutions Limited (Korea)
DoubleClick TechSolutions (Beijing) Co. Limited (China)
DoubleClick Asia Limited (Hong Kong)
DoubleClick Australia Pty. Limited (Australia)

Note: Jurisdiction of incorporation noted in parentheses.

EX-23.1

                                                                    EXHIBIT 23.1

                            Consent of Independent Accountants

      We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-31826, No. 333-33568, No. 333-40680, No.
333-56490, No. 333-78959, No. 333-61302 and  No. 333-58304) and Form S-8 (No.
333-30726, No. 333-40310, No.333-55048, No. 333-55618, No. 333-48277, No.
333-90653, No. 333-91661, No. 333-95105,  No. 333-81346,  No. 333-81348,  No.
333-60746, No. 333-85452,  No. 333-96991,  No. 333-103175) of DoubleClick Inc.
of our report dated January 22, 2003, relating to the consolidated financial
statements and financial statement schedule, which appear in this Form 10-K.


/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
New York, New York
March 26, 2003

EX-99.1

                                                                    Exhibit 99.1

                   Certification of Chief Executive Officer
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                           (18 U.S.C. Section 1350)

  In connection with the Annual Report on Form 10-K of DoubleClick Inc. (the
"Company") for the fiscal year ended December 31, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Kevin P.
Ryan, as Chief Executive Officer of the Company, hereby certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

       (1) The Report fully complies with the requirements of sections 13(a)
           or 15(d) of the Securities Exchange Act of 1934; and

       (2) The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company.

                                        /s/ KEVIN P. RYAN
                                        .....................................
                                        Kevin P. Ryan
                                        Chief Executive Officer

                                        March 27, 2003

EX-99.2

                                                                    Exhibit 99.2

                   Certification of Chief Financial Officer
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                           (18 U.S.C. Section 1350)

In connection with the Annual Report on Form 10-K of DoubleClick Inc. (the
"Company") for the fiscal year ended December 31, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Bruce
Dalziel, as Chief Financial Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

       (1) The Report fully complies with the requirements of sections 13(a) or
           15(d) of the Securities Exchange Act of 1934; and

       (2) The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company.

                                        /s/ BRUCE DALZIEL
                                        .....................................
                                        Bruce Dalziel
                                        Chief Financial Officer

                                        March 27, 2003