Conversant, Inc.
VALUECLICK INC/CA (Form: S-4/A, Received: 09/27/2001 08:24:51)
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As filed with the Securities and Exchange Commission on September 27, 2001

Registration No. 333-65562



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


AMENDMENT NO. 4
TO
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933


VALUECLICK, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware   7319   77-0495335
(State or Other Jurisdiction
of Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

4360 Park Terrace Drive, Suite 100, Westlake Village, California 91361
(818) 575-4500
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

James R. Zarley, Chairman and Chief Executive Officer
ValueClick, Inc.
4360 Park Terrace Drive, Suite 100
Westlake Village, California 91361
(818) 575-4500
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)

Copies to:

Kenneth R. Bender, Esq.   Aaron J. Alter, Esq.
Brobeck, Phleger & Harrison LLP   Wilson Sonsini Goodrich & Rosati
550 South Hope Street   Professional Corporation
Los Angeles, CA 90071   650 Page Mill Road
(213) 489-4060   Palo Alto, California 94304
    (650) 493-9300

Approximate date of commencement of proposed sale to the public:
As soon as practicable following consummation of the merger described in this registration statement.


   If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / /

   If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

   If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /


    The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




LOGO LOGO


JOINT PROXY STATEMENT-PROSPECTUS

To the stockholders of each of ValueClick, Inc. and Mediaplex, Inc.

    The boards of directors of ValueClick, Inc. and Mediaplex, Inc. have agreed to a merger pursuant to which Mediaplex will merge with ValueClick.

    If the merger is completed, holders of Mediaplex common stock will receive 0.4113 of a share of ValueClick common stock for each share of Mediaplex common stock they own. As a result, Mediaplex stockholders will hold approximately 28.4% of the ValueClick common stock outstanding immediately after the merger. ValueClick has registered approximately 21.3 million shares in connection with this transaction.

    Mediaplex common stock trades on the Nasdaq National Market under the symbol "MPLX." On September 26, 2001, the closing price of Mediaplex common stock was $0.70 per share. ValueClick common stock trades on the Nasdaq National Market under the symbol "VCLK." On September 26, 2001, the closing price of ValueClick common stock was $2.01 per share.

    The boards of directors of both ValueClick and Mediaplex have approved the merger and recommend that their respective stockholders vote FOR the merger proposal. We strongly urge you to read and consider carefully this document in its entirety.

     For a discussion of significant risks that should be considered before voting at the special meetings, see "Risk Factors" beginning on page 13.

    Completion of the merger requires the approval of both the Mediaplex stockholders and the ValueClick stockholders. Officers, directors and stockholders of Mediaplex and ValueClick who hold approximately 37.9% of ValueClick's common stock and 29.5% of Mediaplex's common stock as of the record date for the special meetings have agreed to vote for the merger proposal. Both ValueClick and Mediaplex have scheduled a special meeting of their stockholders to vote on proposals for the merger. The dates, times and places of the special meetings are as follows:

     
ValueClick Stockholder Meeting   Mediaplex Stockholder Meeting
October 19, 2001   October 19, 2001
10:00 a.m., local time   10:00 a.m., local time
4360 Park Terrace Drive, Suite 100   177 Steuart Street, Suite 600
Westlake Village, California 91361   San Francisco, California 94105

    Your vote is very important. Whether or not you expect to attend the special meeting, please complete, date, sign and return the accompanying proxy in the enclosed postage paid envelope so that your shares may be represented at the meeting. Returning the proxy does not deprive you of your right to attend the meeting and vote your shares in person.


SIG

 

SIG

James R. Zarley

 

Gregory R. Raifman
Chairman of the Board and
Chief Executive Officer of ValueClick
  Chairman of the Board of Mediaplex

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

    This joint proxy statement/prospectus is dated September 27, 2001 and is first being mailed to stockholders of each of ValueClick and Mediaplex on or about September 28, 2001.


LOGO


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF
VALUECLICK, INC.
October 19, 2001
at 10:00 a.m. local time


    NOTICE IS HEREBY GIVEN that a special meeting of stockholders of ValueClick, Inc., a Delaware corporation, will be held at 4360 Park Terrace Drive, Suite 100, Westlake Village, California, on October 19, 2001, beginning at 10:00 a.m. local time for the purpose of considering and voting on the following matters:

    The business to be conducted at the meeting is more fully described in the rest of this document. As of the date of this notice, ValueClick's board of directors knows of no other business to be conducted at the special meeting.

    ValueClick's board of directors has fixed the close of business on September 21, 2001 as the record date for the determination of ValueClick stockholders entitled to notice of, and to vote at, the special meeting and at any continuation or adjournment of the meeting.

     
    By Order of the Board of Directors

 

 

/s/ James R. Zarley
James R. Zarley
Chairman and Chief Executive Officer
Westlake Village, California
September 27, 2001
   

     All ValueClick stockholders are cordially invited to attend the special meeting. Whether or not you expect to attend the special meeting, please complete, date, sign and return the enclosed proxy card as promptly as possible in order to ensure your representation at the special meeting. A postage prepaid envelope is enclosed for that purpose. Even if you have given your proxy, you may still vote in person if you attend the special meeting.


LOGO


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF
MEDIAPLEX, INC.
October 19, 2001
at 10:00 a.m. local time


    NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Mediaplex, Inc., a Delaware corporation, will be held at 177 Steuart Street, Suite 600, San Francisco, California, on October 19, 2001, beginning at 10:00 a.m. local time for the purpose of considering and voting on the following matters:

    The business to be conducted at the meeting is more fully described in the rest of this document. As of the date of this notice, Mediaplex's board of directors knows of no other business to be conducted at the special meeting.

    Mediaplex's board of directors has fixed the close of business on September 26, 2001 as the record date for the determination of Mediaplex stockholders entitled to notice of, and to vote at, the special meeting and at any continuation or adjournment of the meeting.

     
    By Order of the Board of Directors

 

 

 
    /s/ Tom A. Vadnais

 

 

 
    Tom A. Vadnais
President and Chief Executive Officer
San Francisco, California
September 27, 2001
   

     All Mediaplex stockholders are cordially invited to attend the special meeting. Whether or not you expect to attend the special meeting, please complete, date, sign and return the enclosed proxy card as promptly as possible in order to ensure your representation at the special meeting. A postage prepaid envelope is enclosed for that purpose. Even if you have given your proxy, you may still vote in person if you attend the special meeting. .



TABLE OF CONTENTS

 
  Page
     
QUESTIONS AND ANSWERS ABOUT THE MERGER   iii
SUMMARY OF THIS JOINT PROXY STATEMENT/PROSPECTUS   1
  The Companies   1
  Recommendation of the Boards of Directors   1
  Opinions of Financial Advisors   2
  The Special Meetings   2
  Record Dates; Votes Required   2
  Voting Agreements   2
  Appraisal Rights   3
  Conflicts of Interests of Directors and Executive Officers in the Merger   3
  Treatment of Stock Options and Restricted Stock   3
  Tax Consequences   3
  Overview of the Merger Agreement   4
  Termination of the Merger Agreement   4
  Termination Fees and Expenses   5
  "No Solicitation" Provision   5
  Regulatory Matters   5
  Accounting Treatment   5
  Completion and Effectiveness of the Merger   5
  Market Price Information   5
  Recent Developments   6
SELECTED SUMMARY FINANCIAL
DATA
  7
UNAUDITED COMPARATIVE PER
SHARE DATA
  12
RISK FACTORS   13
THE SPECIAL MEETINGS   31
  Joint Proxy Statement/Prospectus   31
  Date, Time and Place of the Special Meetings   31
  Purpose of the Special Meetings   31
  Stockholder Record Date for the Special Meetings   31
  Vote Required for Adoption of the Merger Agreement   31
  Vote Required for Authorization to Adjourn or Postpone the Special Meetings   32
  Proxies   32
  Appraisal Rights   33
  Solicitation of Proxies   33
THE MERGER   34
  General Description of the Merger   34
  Background of the Merger   34
  ValueClick's Reasons for the Merger   37
  Recommendation of ValueClick's Board Of Directors   39
  Opinion of Wit SoundView Corporation   39
  Mediaplex's Reasons for the Merger   48
  Recommendation of Mediaplex's Board of Directors   49
  Opinion of US Bancorp Piper Jaffray   50
  Conflicts of Interests of ValueClick Directors and Executive Officers in the Merger   56
  Conflicts of Interests of Mediaplex Directors and Executive Officers in the Merger   56
  ValueClick Purchase of Mediaplex Common Stock   57
  Completion and Effectiveness of the Merger   57
  Material United States Federal Income Tax Consequences of the Merger   58
  Accounting Treatment of the Merger   59
  Regulatory Matters   59
  Restrictions on Sales of Shares by Affiliates of Mediaplex   60
  Appraisal Rights   60
  Delisting and Deregistration of Mediaplex Common Stock after the Merger   60
THE MERGER AGREEMENT   61
  Effective Time   61
  Conversion and Exchange of Mediaplex Stock   61
  Exchange of Certificates   61
  Mediaplex Stock Options   61
  Representations and Warranties   62
  Covenants   62
  Conditions to the Merger   66
  Termination   67
  Expenses   69
  Amendment, Extension and Waiver   69
RELATED AGREEMENTS   69
  Voting Agreements   69
  Board Composition Agreement   69
VALUECLICK MANAGEMENT
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  70
  Overview   70
  Results of Operations   72
  Three-Month Period Ended June 30, 2001 Compared to June 30, 2000   72
  Fiscal Years Ended December 31, 2000 and 1999   75
  Fiscal Years Ended December 31, 1999 and 1998   77
  Liquidity and Capital Resources   79
  Three-month Period Ended March 31, 2001   79
  Year Ended December 31, 2000   79
  Recently Issued Accounting Standards   80
  Quantitative and Qualitative Disclosures About Market Risk   81
  ValueClick Unaudited Quarterly Results of Operations   82
MEDIAPLEX MANAGEMENT
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  83
  Overview   83
  Six-Month Period Ended June 30, 2001 Compared to June 30, 2000   84
  Year ended December 31, 2000 compared to year ended December 31, 1999   86

i


  Year ended December 31, 1999 compared to year ended December 31, 1998   88
  Liquidity and Capital Resources   90
  Quantitative and Qualitative Disclosures about Market Risk   91
  New Accounting Pronouncements   91
  Mediaplex Unaudited Quarterly Results of Operations   92
VALUECLICK'S BUSINESS   93
  Business   93
  The ValueClick Solution   93
  Network Of Web Sites   94
  Products And Services   95
  International Operations   97
  Technology Platform   98
  Sales, Marketing And Customer Service   98
  Web Publishers   98
  Advertisers   98
  Competition   98
  Intellectual Property Rights   99
  The DoubleClick Investment   100
  Employees   100
  Properties   100
  Legal Proceedings   100
  Market Information   101
  Dividend Policy   101
MEDIAPLEX'S BUSINESS   102
  Business   102
  The Products and Services   102
  The Technology   104
  Intellectual Property Rights   105
  Competitive Environment   105
  Privacy   105
  Customers   106
  Research & Development   106
  Employees   106
  Properties   106
  Legal Proceedings   107
  Market Information   107
  Dividend Policy   108
  Formation of Mediaplex   108
VALUECLICK'S MANAGEMENT   109
  Board of Directors   111
  Board Committees   111
  Director Compensation   112
  Compensation Committee Interlocks and Insider Participation   112
  Executive Compensation   112
  Stock Option Grants and Exercises   113
  Aggregate Option Values at December 31, 2000   114
  Employment Agreements   114
 
Options Granted Under Employment Agreements

 

115
  Certain Relationships and Related Transactions   116
VALUECLICK'S PRINCIPAL
STOCKHOLDERS
  117
MEDIAPLEX'S MANAGEMENT   119
  Classified Board   121
  Board Meetings and Committees   121
  Director Compensation   121
  Employment Agreements   122
  Executive Compensation   122
  Option Grants During Last Fiscal Year   123
  Aggregate Option Exercises During Last Fiscal Year and Fiscal Year End Option Values   124
MEDIAPLEX'S PRINCIPAL
STOCKHOLDERS
  126
MEDIAPLEX RELATED PARTY
TRANSACTIONS
  128
  Certain Relationships and Related Transactions During the Last Fiscal Year   128
  Certain Business Relationships   128
  Transactions with Management and Others   128
DESCRIPTION OF VALUECLICK CAPITAL
STOCK
  129
  Authorized Capital Stock   129
  ValueClick Common Stock   129
  ValueClick Preferred Stock   129
  Registration Rights   129
  Anti-Takeover Effects of Provisions of Delaware Law and ValueClick's Restated Certificate of Incorporation and Restated Bylaws   130
  Transfer Agent and Registrar   130
  Listing   130
COMPARISON OF RIGHTS OF
VALUECLICK STOCKHOLDERS AND
MEDIAPLEX STOCKHOLDERS
  131
LEGAL MATTERS   133
EXPERTS   133
STOCKHOLDER PROPOSALS   133
WHERE YOU CAN FIND MORE
INFORMATION
  134
STATEMENTS REGARDING FORWARD-
LOOKING INFORMATION
  134
TRADEMARKS   135
INDEX TO FINANCIAL STATEMENTS   F-1
ANNEX A—Agreement and Plan of Merger
ANNEX B—Opinion of Wit SoundView Corporation
ANNEX C—Opinion of US Bancorp Piper Jaffray

ii



QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:   What will I receive in the merger?
A:     If the merger is completed, Mediaplex stockholders will receive 0.4113 of a share of ValueClick common stock for each share of Mediaplex common stock that they own. Mediaplex stockholders will receive a cash payment for any fractional share.
        For example, a Mediaplex stockholder owning 100 shares of Mediaplex common stock will receive 41 shares of ValueClick common stock and a cash payment equal to the value of 0.13 of a share of ValueClick common stock.
      If the merger is completed, ValueClick stockholders will continue to hold their existing ValueClick common stock. ValueClick stockholders immediately prior to the merger will hold approximately 70% of ValueClick's common stock when the merger is completed.
Q:   What do I need to do now?
A:   After carefully reading and considering the information contained in this document, please respond by completing, signing and dating your proxy card and returning it in the enclosed postage paid envelope as soon as possible so that your shares may be represented at your special meeting.
    If your shares are held in "street name" by your broker, you should follow the directions provided by your broker. Your broker will vote your shares only if you provide instructions on how you would like to vote your shares.
Q:   What if I don't vote?
A:     If you are a ValueClick stockholder and fail to respond, it will have no effect on the vote.
      If you are a Mediaplex stockholder and fail to respond, it will have the same effect as a vote against the merger.
      If you are a stockholder of either ValueClick or Mediaplex and respond but do not indicate how you want to vote, your proxy will be counted as a vote for the merger proposal.
      If you are a ValueClick stockholder and respond and abstain from voting, your proxy will have no effect on the vote.
      If you are a Mediaplex stockholder and respond and abstain from voting, your proxy will have the same effect as a vote against the adoption of the merger agreement.
Q:   Can I change my vote after I have delivered my proxy?
A:   Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:
      First, you can revoke your proxy.
      Second, you can submit a new proxy.
    If you choose either of these two methods, you must submit your notice of revocation or your new proxy to the secretary of ValueClick or Mediaplex, as appropriate, before the special meeting. You can submit your notice of revocation by U.S. mail or by facsimile. However, if you are submitting a new proxy, the new proxy must be submitted by U.S. mail or other delivery service. If your shares are held in an account at a brokerage firm or bank, you should contact your brokerage firm or bank to change your vote.
      Third, if you are a holder of record, you can attend your special meeting and vote in person. Your attendance at your special meeting alone will not revoke your proxy. Only your vote at your special meeting will revoke your proxy.

iii


Q:   Should I send in my Mediaplex stock certificates now?
A:   No. After the merger is completed, Mediaplex stockholders will receive written instructions from the exchange agent on how to exchange Mediaplex stock certificates for shares of ValueClick. Please do not send in your Mediaplex stock certificates with your proxy.
Q:   When do you expect the merger to be completed?
A:   ValueClick and Mediaplex are working to complete the merger as quickly as possible. ValueClick and Mediaplex anticipate completing the merger shortly after the ValueClick stockholders have approved and the Mediaplex stockholders have adopted the merger agreement. ValueClick and Mediaplex hope to complete the merger before November 30, 2001.
Q:   Who can help answer my questions?
A:   If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this document or the enclosed proxy card, you should contact:

 

 


 

if you are a ValueClick stockholder:
Investor Relations
ValueClick, Inc.
4360 Park Terrace Drive, Suite 100
Westlake Village, California 91361
Telephone: (818) 575-4500
Facsimile: (818) 575-4508

 

 


 

if you are a Mediaplex stockholder:
Investor Relations
Mediaplex, Inc.
177 Steuart Street, Suite 600
San Francisco, CA 94105
Telephone: (415) 808-1900
Facsimile (415) 808-1901

iv



SUMMARY OF THIS JOINT PROXY STATEMENT/PROSPECTUS

     This summary highlights selected information in this document and may not contain all of the information that is important to you. You should carefully read this entire document and the other documents we refer to for a more complete understanding of the merger. This summary and the balance of this document contain forward-looking statements about events that are not certain to occur, and you should not place undue reliance on those statements. Please carefully read "Statements Regarding Forward-Looking Information" at page 134 of this document.

The Companies

ValueClick, Inc.

4360 Park Terrace Drive, Suite 100
Westlake Village, California 91361
Telephone: (818) 575-4500
Facsimile: (818) 575-4508
http://www.valueclick.com

    ValueClick is a leading provider of performance-based Internet advertising solutions.

    Specifically, ValueClick provides online advertisers and publishers of Web sites advertising models known as cost-per-click, cost-per-action and cost-per-lead, in which an advertiser only pays ValueClick, and ValueClick in turn only pays a publisher of a Web site, when an Internet user clicks on an advertiser's banner advertisement, performs a specific action, such as a software download, an online registration or other transactions or when an e-mail lead is generated. You should not consider the information on ValueClick's Web site to be part of this document.

Mediaplex, Inc.

177 Steuart Street, Suite 600
San Francisco, CA 94105
Telephone: (415) 808-1900
Facsimile: (415) 808-1901
http://www.mediaplex.com

    Mediaplex provides technology-based marketing products and services that enable advertisers to optimize their online marketing efforts. These marketing products and services allow companies to combine their online direct marketing and branding activities with critical enterprise business data in order to effectively use the Internet to manage and transact business.

    Mediaplex's proprietary mobile Java objects technology platform, MOJO, enables advertisers to deliver, in real time, customized advertising messages to a targeted consumer. Mediaplex's MOJO platform interfaces with companies' existing enterprise data and software applications to access critical business information that is used to customize the advertising message. Mediaplex's MOJO technology is the only industry platform providing an integrated ad serving and e-mail solution.

    In July 2000, Mediaplex expanded its technology platform from online adserving and e-mail to include technology systems for traditional advertising by buying AdWare Systems, Inc.

    Mediaplex's services are offered as a comprehensive solution, or individually as part of a complementary service with other advertising and technology providers. You should not consider the information on Mediaplex's Web site to be part of this document.

Recommendation of the Boards of Directors (see pages 39 and 49)

    To ValueClick Stockholders:   ValueClick's board of directors believes that the merger is advisable and in the best interests of ValueClick's stockholders and has voted to approve the merger agreement and recommends that ValueClick's stockholders vote FOR the approval of the merger agreement.

    To Mediaplex Stockholders:   Mediaplex's board of directors believes that the merger is advisable and in the best interests of Mediaplex's stockholders, and has unanimously voted to approve the merger agreement and unanimously recommends that Mediaplex's stockholders vote FOR the adoption of the merger agreement.

1


Opinions of Financial Advisors (see pages 39 and 50)

    Opinion of ValueClick's Financial Advisor.   In deciding to approve the merger, ValueClick's board of directors considered the opinion of its financial advisor, Wit SoundView Corporation, that, as of the date of its opinion, and subject to and based on the considerations referred to in its opinion, the 0.4113 ratio to exchange shares of ValueClick common stock for shares of Mediaplex common stock is fair, from a financial point of view, to ValueClick. The fairness opinion is not a recommendation to any stockholder to approve the merger. The full text of this opinion is attached as Annex B to this document. ValueClick urges its stockholders to carefully read Wit SoundView's opinion in its entirety.

    Opinion of Mediaplex's Financial Advisor.   U.S. Bancorp Piper Jaffray Inc. has given a written opinion, dated June 29, 2001, to the Mediaplex board of directors as to the fairness, from a financial point of view, to the holders of common stock of Mediaplex of the 0.4113 exchange ratio set forth in the merger agreement. The full text of this opinion is attached to this document as Annex C. You should read the opinion carefully in its entirety to understand the procedures followed, assumptions made, matters considered and limitations on the review undertaken by U.S. Bancorp Piper Jaffray in providing its opinion. The opinion of U.S. Bancorp Piper Jaffray is directed to the Mediaplex board of directors and does not constitute a recommendation to any Mediaplex stockholder as to any matter relating to the merger.

The Special Meetings (see page 31)

    ValueClick.   The special meeting of ValueClick stockholders will be held at 4360 Park Terrace Drive, Suite 100, Westlake Village, California on October 19, 2001, beginning at 10:00 a.m., local time.

    Mediaplex.   The special meeting of Mediaplex stockholders will be held at 177 Steuart Street, Suite 600, San Francisco, California on October 19, 2001, beginning at 10:00 a.m., local time.

Record Dates; Votes Required (see page 31)

    ValueClick.   If you owned shares of ValueClick on September 21, 2001, the record date for the ValueClick special meeting, you are entitled to receive this document and to vote in connection with the merger. On that date, there were 37,059,102 shares of ValueClick common stock outstanding, approximately 16,243,251 of which, or 43.8 percent, were owned by ValueClick's directors and executive officers. You can cast one vote for each share of ValueClick common stock you own. The affirmative vote of a majority of the shares of ValueClick common stock voting at the special meeting is required to approve the merger proposal and grant discretionary authority to ValueClick's board of directors or its chairman to adjourn or postpone the special meeting to solicit additional votes to approve the merger agreement.

    Mediaplex.   If you owned shares of Mediaplex on September 26, 2001, the record date for the Mediaplex special meeting, you are entitled to receive this document and to vote in connection with the merger. On that date, there were 35,706,466 shares of Mediaplex common stock outstanding, approximately 5,433,464 of which, or 15.2 percent, were owned by Mediaplex directors and executive officers. You can cast one vote for each share of Mediaplex common stock you own. The affirmative vote of a majority of the outstanding shares of Mediaplex is required to adopt the merger agreement and grant discretionary authority to Mediaplex's board of directors or its chairman to adjourn or postpone the special meeting to solicit additional votes to adopt the merger agreement.

Voting Agreements

    ValueClick.   ValueClick entered into voting agreements with five directors and stockholders of Mediaplex, which require those persons to vote all of their shares of Mediaplex common stock in favor of the adoption of the merger agreement. As of the record date, these stockholders owned shares representing approximately 29.5% of the voting power of Mediaplex capital stock entitled to vote at the Mediaplex special meeting.

2


    Mediaplex.   Mediaplex entered into a voting agreement with ten directors, officers and stockholders of ValueClick which require those persons to vote all their shares of ValueClick common stock in favor of the approval of the merger agreement. As of the record date, these stockholders owned shares representing approximately 37.9% of the voting power of ValueClick capital stock entitled to vote at the ValueClick special meeting.

Appraisal Rights (see page 33)

    Under Delaware law, Mediaplex stockholders are not entitled to appraisal rights in connection with the merger.

Conflicts of Interests of Directors and Executive Officers in the Merger (see page 56)

    Some of the directors and executive officers of ValueClick and Mediaplex will receive benefits if the merger is completed which results in those persons having interests in the merger that are different from, or are in addition to, the interests of their company's stockholders. Each board of directors took into account these interests prior to making its decision. Specifically, as a result of or in connection with the merger:

Treatment of Restricted Stock and Stock Options (see pages 60 and 61)

    When the merger is completed, each outstanding Mediaplex stock option will be assumed by ValueClick and will be converted into an option to purchase that number of shares of ValueClick common stock equal to the product of 0.4113 multiplied by the number of shares of Mediaplex common stock underlying the option.

Tax Consequences (see page 58)

    The merger has been structured with the intent that it qualify as a tax-deferred "reorganization" for federal income tax purposes. Qualification of the merger as a reorganization will result in the following federal income tax consequences to the Mediaplex stockholders:

3


    Brobeck, Phleger & Harrison LLP, counsel to ValueClick, has rendered an opinion to ValueClick and Wilson Sonsini Goodrich & Rosati, a Professional Corporation, counsel to Mediaplex, has rendered an opinion to Mediaplex, that the merger will constitute a "reorganization" for federal income tax purposes and the federal income tax consequences to the Mediaplex stockholders of the exchange of their shares of Mediaplex common stock for shares of ValueClick common stock in the merger will be as described above. The discussion above constitutes the opinion of both Brobeck, Phleger & Harrison LLP and Wilson Sonsini Goodrich & Rosati, a Professional Corporation. The merger will not be completed unless ValueClick and Mediaplex receive opinions of their respective counsel confirming their opinions as to the qualification of the merger as a reorganization.

Overview of the Merger Agreement (see page 61)

    Conditions to the Completion of the Merger.   Each of ValueClick's and Mediaplex's obligation to complete the merger is subject to the satisfaction or waiver of a number of conditions, including, among others:

    ValueClick and Mediaplex can jointly agree to terminate the merger agreement at any time. Either party may also terminate the merger agreement if:

4


    ValueClick may terminate the merger agreement if Mediaplex's board of directors fails to recommend adoption of the merger agreement or effects a change in its recommendation of the merger agreement, or if Mediaplex breaches its representations and warranties or covenants in the merger agreement in a manner that would cause the conditions to ValueClick's obligations to complete the merger to not be satisfied.

    Mediaplex may terminate the merger agreement if Mediaplex's board of directors decides to accept a superior proposal from a third party so long as Mediaplex has given ValueClick three business days notice and Mediaplex has paid ValueClick a termination fee, or if ValueClick breaches its representations and warranties or covenants in the merger agreement in a manner that would cause the conditions to Mediaplex's obligations to complete the merger to not be satisfied.

    The merger agreement provides that Mediaplex will be required to pay a termination fee of $1,996,893 to ValueClick and to reimburse ValueClick for up to $499,223 of its out-of-pocket fees and expenses incurred in connection with the merger if:

    The merger agreement provides that if either ValueClick or Mediaplex fails to obtain the approval of its respective stockholders, it will be required to reimburse the other party for up to $499,223 of its out-of-pocket fees and expenses incurred in connection with the merger. With respect to Mediaplex only, the merger agreement provides that Mediaplex will also be required to pay ValueClick the termination fee of $1,996,893 if Mediaplex enters into an acquisition agreement with a third party within nine months of termination of the merger agreement due to failure to obtain Mediaplex stockholder approval if the acquisition proposal existed prior to the Mediaplex stockholders' meeting.

    The merger agreement contains detailed provisions prohibiting Mediaplex from seeking a competing takeover proposal, as described on page 64.

Regulatory Matters (see page 59)

    Under U.S. antitrust laws, the merger may not be completed until ValueClick and Mediaplex have notified the Antitrust Division of the Department of Justice and the Federal Trade Commission of the merger and have filed the necessary report forms, and until a required waiting period has ended. ValueClick and Mediaplex received notice of early termination of the waiting period on August 20, 2001.

Accounting Treatment

    ValueClick will account for the merger under the purchase method of accounting for business combinations.

Completion and Effectiveness of the Merger

    The merger will be completed when all of the conditions to completion of the merger are satisfied or waived in accordance with the merger agreement. The merger will become effective when a certificate of merger is filed with the State of Delaware, which will occur as soon as possible after the stockholders of ValueClick and Mediaplex have approved the proposals at their special respective meetings. ValueClick and Mediaplex hope to complete the merger by November 30, 2001.

Market Price Information

    Shares of each of ValueClick and Mediaplex common stock are traded on the Nasdaq National Market. The following table sets forth

5


the closing sales prices of the common stock of ValueClick and Mediaplex on the last trading day before the public announcement of the execution and delivery of the merger agreement, a recent date prior to the printing of this document and on a pro forma equivalent share basis. The market price of shares of ValueClick common stock and Mediaplex common stock fluctuates. As a result, you should obtain current market quotations before you vote at the special meetings.

 
  ValueClick
  Mediaplex
Exchange Ratio         0.4113
Closing price on June 29, 2001   $ 3.20   $ 0.91
Pro forma equivalent       $ 1.32
Closing price on September 26, 2001   $ 2.01   $ 0.70
Pro forma equivalent         $ 0.83

Recent Developments

    On April 4, 2001, Mediaplex received a notice from The Nasdaq Stock Market that its common stock had failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive trading days as required for continued listing on the Nasdaq National Market. On July 10, 2001, Mediaplex received a Nasdaq Staff Determination indicating that Mediaplex is not in compliance with the minimum price requirement for continued listing on The Nasdaq Stock Market and that its securities are subject to delisting from the Nasdaq Stock Market. On August 30, 2001, Mediaplex attended an oral hearing before the Nasdaq Listings Qualifications Panel to review the Nasdaq Staff Determination. At the hearing, Mediaplex requested that the Nasdaq Listings Qualifications Panel grant Mediaplex an exception from the minimum bid price requirement pending the completion of the merger. Until the Nasdaq Listing Qualifications Panel reaches its decision, Mediaplex's stock will remain listed on the Nasdaq National Market. If Mediaplex's common stock is delisted from the Nasdaq National Market, its liquidity and trading price could be negatively effected.

6



SELECTED HISTORICAL SUMMARY FINANCIAL DATA

    The following tables present selected historical financial data of ValueClick, selected historical financial data of Mediaplex and selected unaudited pro forma financial data of ValueClick, which reflect the merger.


ValueClick Selected Historical Financial Data

    The following selected historical financial data of ValueClick is only a summary and you should read it in conjunction with ValueClick's consolidated financial statements and the notes to those financial statements and "ValueClick's Management Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this document.

 
  Period From
May 1, 1998
(Inception)
Through
December 31,
1998

   
   
   
   
 
 
  Year Ended
December 31,

  Six-month Period Ended June 30,
 
 
  1999
  2000
  2000
  2001
 
 
   
   
   
  (unaudited)

 
Consolidated Statement of Operations Data:                                
(In thousands, except per share data)                                
Revenues   $ 2,059   $ 25,971   $ 64,332   $ 31,715   $ 22,376  
Cost of revenues     1,107     12,465     31,930     16,356     10,876  
   
 
 
 
 
 
  Gross profit     952     13,506     32,402     15,359     11,500  
Operating expenses:                                
  Sales and marketing (1)     523     2,989     11,436     4,766     5,754  
  General and administrative (1)     410     4,706     12,896     5,177     6,678  
  Product development (1)     155     1,100     4,846     1,874     1,894  
  Stock-based compensation     61     3,506     5,058     2,694     1,615  
  Amortization of intangible assets     33     401     1,069     448     901  
  Merger-related costs             353         980  
   
 
 
 
 
 
    Total operating expenses     1,182     12,702     35,658     14,959     17,822  
   
 
 
 
 
 
Income (loss) from operations     (230 )   804     (3,256 )   400     (6,322 )
  Equity in loss of ValueClick Japan     (9 )   (64 )            
  Interest income, net     7     45     4,120     1,260     2,564  
  Gain (loss) on sale of marketable securities             (9,006 )   (9,006 )   701  
  Impairment write-down of marketable securities             (60,233 )        
  Gain from ValueClick Japan stock issuance             13,656     13,656      
  Gain on the sale of ValueClick Japan stock             2,344          
   
 
 
 
 
 
Income (loss) before income taxes and minority interests     (232 )   785     (52,375 )   6,310     (3,057 )
  Provision for (benefit from) income taxes         1,853     2,539     3,823     (20 )
   
 
 
 
 
 
Net income (loss) before minority interest     (232 )   (1,068 )   (54,914 )   2,487     (3,037 )
  Minority share of income in ValueClick Japan         (6 )   (419 )   (154 )   (39 )
   
 
 
 
 
 
    Net income (loss)   $ (232 ) $ (1,074 ) $ (55,333 ) $ 2,333   $ (3,076 )

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic and diluted   $ (0.02 ) $ (0.06 ) $ (1.72 ) $ 0.08   $ (0.08 )
   
 
 
 
 
 
Shares used to calculate net income (loss) per common share:                                
  Basic     12,640     17,683     32,151     28,352     36,448  
   
 
 
 
 
 
  Diluted     12,640     17,683     32,151     30,041     36,448  
   
 
 
 
 
 

7



(1)
Excludes stock-based compensation for the following periods (In thousands):

 
  Period from May 1, 1998 (inception) through December 31, 1998
   
   
   
   
 
  Year Ended
  Six-month Period
Ended June 30

 
  1999
  2000
  2000
  2001
 
   
   
   
  (unaudited)

Sales and marketing   $   $ 1,122   $ 1,610   $ 862   $ 509
General and administrative     61     1,893     2,718     1,455     831
Product development         491     730     377     275
   
 
 
 
 
    $ 61   $ 3,506   $ 5,058   $ 2,694   $ 1,615
   
 
 
 
 
 
  December 31,
   
 
  June 30,
2001

 
  1998
  1999
  2000
 
   
   
   
  (Unaudited)

Consolidated Balance Sheet Data:                        
(In thousands)                        
Cash, cash equivalents and marketable securities   $ 262   $ 3,681   $ 127,450   $ 120,858
Working capital     454     6,828     129,036     125,473
Total assets     1,323     18,737     154,050     143,658
Total stockholders' equity     755     11,593     127,493     123,723

8



Mediaplex Selected Historical Financial Data

    The following selected historical financial data of Mediaplex is only a summary and you should read it in conjunction with Mediaplex's consolidated financial statements and the notes to those financial statements and "Mediaplex's Management Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this document.

 
  September 10,
1996
(inception) to
December 31,
1996

   
   
   
   
  Six Months Ended
June 30,

 
 
  Year Ended December 31,
 
 
  1997
  1998
  1999
  2000
  2000
  2001
 
 
   
   
   
   
   
  (Unaudited)

 
Consolidated Statement of Operations Data:
(In thousands, except per share data)
                                           
Statement of Operations Data:                                            
Revenues   $   $ 426   $ 3,588   $ 26,405   $ 63,636   $ 34,830   $ 14,308  
Cost of revenues         445     2,770     20,418     43,799     25,222     7,089  
   
 
 
 
 
 
 
 
Gross Profit (loss)         (19 )   818     5,987     19,837     9,608     7,219  
Operating expenses:                                            
  Sales and marketing     23     481     1,398     12,007     22,786     12,588     5,904  
  Research and development     49     347     556     5,733     10,307     4,689     4,678  
  General and administrative     183     267     636     10,221     22,181     15,334     6,176  
  Restructuring expense                     1,929         2,373  
  Amortization of goodwill and intangibles                 753     4,700     501     4,461  
   
 
 
 
 
 
 
 
    Total operating expenses     255     1,095     2,590     28,714     61,903     33,112     23,592  
   
 
 
 
 
 
 
 
Loss from operations     (255 )   (1,115 )   (1,772 )   (22,727 )   (42,066 )   (23,504 )   (16,373 )
Interest income (expense), net         (2 )   (247 )   912     4,587     2,436     1,436  
   
 
 
 
 
 
 
 
Net loss     (255 )   (1,117 )   (2,019 )   (21,815 )   (37,479 ) $ (21,068 ) $ (14,937 )
Beneficial conversion feature of Series C convertible preferred stock                 14,360              
   
 
 
 
 
 
 
 
Net loss attributable to common stockholders   $ (255 ) $ (1,117 ) $ (2,019 ) $ (36,175 ) $ (37,479 ) $ (21,068 ) $ (14,937 )
   
 
 
 
 
 
 
 
Net loss per share attributable to common stockholders—basic and diluted   $ (0.07 ) $ (0.13 ) $ (0.25 ) $ (2.34 ) $ (1.11 ) $ (0.65 ) $ (0.42 )
   
 
 
 
 
 
 
 
Weighted average shares used to compute net loss per share—basic and diluted     3,796     8,457     8,186     15,427     33,756     32,427     35,855  
   
 
 
 
 
 
 
 

   

 
  December 31,
  June 30,
 
 
  1996
  1997
  1998
  1999
  2000
  2001
 
 
   
   
   
   
   
  (Unaudited)

 
Consolidated Balance Sheet Data:
(In thousands)
                                     
Cash and cash equivalents   $ 27   $ 142   $ 375   $ 78,052   $ 34,894   $ 10,269  
Short-term investments                 9,913     22,244     10,050  
Working capital (deficit)     (46 )   (586 )   (1,863 )   84,085     57,838     20,427  
Total assets     52     262     1,444     103,442     107,843     86,917  
Long-term debt less current portion         65     232     280     458     451  
Accumulated deficit     (255 )   (1,373 )   (3,392 )   (39,566 )   (77,045 )   (91,988 )
Total stockholders' equity (deficit)     (22 )   (558 )   (1,962 )   90,713     90,472     77,408  

9



Summary Unaudited Pro Forma Combined Condensed Consolidated Financial Data

    The following selected unaudited pro forma combined condensed consolidated financial data is only a summary and you should read it in connection with our unaudited pro forma combined condensed consolidated financial statements and notes to those statements included elsewhere in this document.

Unaudited Pro Forma Combined Condensed Consolidated Statement of
Operations Data:

(In thousands, except per share data)

  For the
Year ended
December 31, 2000

  For the
Six-month period ended
June 30, 2001

 
Revenues   $ 135,018   $ 36,684  
Cost of revenues     80,982     17,965  
   
 
 
  Gross profit     54,036     18,719  
Operating expenses:              
  Sales and marketing (2)     33,288     11,510  
  General and administrative (2)     22,275     8,701  
  Research and product development (2)     14,720     6,683  
  Stock-based compensation     16,632     2,812  
  Amortization of intangibles     1,759     901  
  Merger-related costs     353     980  
  Restructuring charge     1,929     2,373  
   
 
 
    Total operating expenses     90,956     33,960  
   
 
 
Loss from operations     (36,920 )   (15,241 )
  Interest income, net     8,714     4,000  
  Gain (loss) on sale of marketable securities     (9,006 )   701  
  Impairment write-down of marketable securities     (60,233 )    
  Gain on subsidiary stock issuance     13,656      
  Gain on sale of subsidiary stock     2,344      
   
 
 
Loss before income taxes and minority interests     (81,445 )   (10,540 )
  Provision (benefit from) for income taxes     2,921     (20 )
   
 
 
Loss before minority interest     (84,366 )   (10,520 )
  Minority share of income in subsidiary     (419 )   (39 )
   
 
 
Net loss   $ (84,785 ) $ (10,559 )
   
 
 
Net loss per common share:              
  Basic and diluted   $ (1.80 ) $ (0.21 )
   
 
 
Pro forma shares used to calculate net loss per common share:              
  Basic     47,025     51,322  
   
 
 
  Diluted     47,025     51,322  
   
 
 

(2)
Total pro forma stock-based compensation excluded from the individual statements of operations line items was as follows (In thousands):

 
  For the
year ended
December 31, 2000

  For the
six-month period
ended
June 30, 2001

 
   
  (unaudited)

Sales and marketing   $ 2,583   $ 657
General and administrative     12,886     1,991
Research and product development     1,163     164
   
 
    $ 16,632   $ 2,812
   
 

10


Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet Data:
(In thousands)

  June 30, 2001
 
Cash and cash equivalents   $ 131,127  
Marketable securities     10,050  
Long-term investments     29,211  
Working capital     143,825  
Total assets     204,172  
Long-term debt, less current portion     456  
Accumulated deficit     (59,492 )
Total stockholders' equity     172,653  

11



UNAUDITED COMPARATIVE PER SHARE DATA

    Presented below is per share data regarding the income and book value of ValueClick and Mediaplex on both a historical and a per share equivalent unaudited pro forma basis. The unaudited pro forma consolidated per share information is derived from the unaudited pro forma combined condensed consolidated financial statements included elsewhere in this document. You should read the information below in conjunction with the financial statements and accompanying notes of each of ValueClick and Mediaplex and with the unaudited pro forma combined condensed consolidated financial statements included elsewhere in this document. The Mediaplex equivalent pro forma per share data is calculated by multiplying the pro forma ValueClick per share amounts by the exchange ratio of 0.4113 for each share of Mediaplex.

 
  Year Ended
December 31, 2000

  Six Months Ended
June 30, 2001

 
ValueClick Historical Per Common Share:              
  Net loss per common share—basic and diluted   $ (1.72 ) $ (0.08 )
  Book value per share     3.50     3.39  
  Cash dividends          
Mediaplex Historical Per Common Share:              
  Net loss per common share—basic and diluted   $ (1.11 ) $ (0.42 )
  Book value per share     2.52     2.09  
  Cash dividends          
Pro Forma Consolidated Per Common Share:              
  Net loss per ValueClick share—basic and diluted   $ (1.80 ) $ (0.21 )
  Net loss per equivalent Mediaplex share—basic and diluted     (0.74 )   (0.09 )
  Book value per ValueClick share         3.36  
  Book value per equivalent Mediaplex share         1.38  
  Cash dividends          

12



RISK FACTORS

     Before you vote to adopt or to approve the merger agreement, you should carefully consider the risks described below in addition to the other information referred to in this document, including the section entitled "Information Regarding Forward-Looking Statements." The risks and uncertainties described below are not the only ones facing ValueClick or Mediaplex. Additional risks and uncertainties not presently known to either ValueClick or Mediaplex or that we believe are now immaterial may also impair our business. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline and you may lose all or part of your investment.


Risks Associated With the Merger

Decreases in the trading price of ValueClick will reduce the value of what Mediaplex stockholders receive in the merger.

    Upon completion of the merger, shares of Mediaplex capital stock will be converted into shares of ValueClick capital stock. The ratio at which the shares will be converted is fixed, and there will be no adjustment for changes in the market price of either Mediaplex common stock or ValueClick common stock. Any change in the price of ValueClick common stock will affect the value that Mediaplex stockholders receive in the merger. Mediaplex's common stock and ValueClick's common stock have historically experienced significant volatility, and the value of the shares of ValueClick's common stock received in the merger may fluctuate. Stock price changes may result from a variety of factors that are beyond the control of Mediaplex and ValueClick. Neither party is permitted to terminate the merger agreement or resolicit the vote of its stockholders solely because of changes in the market price of either party's common stock.

    The prices of Mediaplex common stock and ValueClick common stock at the closing of the merger may vary from their respective prices on the date of this document and on the date of the special meetings. Because the date the merger is completed may be later than the date of the special meetings, the prices of Mediaplex's common stock and ValueClick's common stock on the date of the special meetings may not be indicative of their respective prices on the date the merger is completed.

The purchase price that Mediaplex stockholders will receive in the merger is less than Mediaplex book value, and the exchange ratio in the merger may not equal or exceed Mediaplex's book value.

    Mediaplex agreed to a purchase price that is less than its book value because it believed that the stock market was currently over-discounting the internet advertising companies that trade on the Nasdaq National Market. This over-discount of ValueClick's stock was evidenced by the fact that its stock was trading at a price less than its cash per share value. Additionally, Mediaplex believed that a likelihood existed that the public markets would ultimately value ValueClick's stock using more traditional methodologies that would result in the exchange ratio value being greater than the current book value of Mediaplex. If the price of ValueClick's stock does not rise in the future from its current trading levels, however, the exchange ratio will result in Mediaplex stockholders receiving an amount of ValueClick stock that constitutes a purchase price less than Mediaplex's book value.

ValueClick and Mediaplex may not realize the intended benefits of the merger if ValueClick is unable to integrate Mediaplex's operations, products and personnel in a timely and efficient manner.

    Achieving the benefits of the merger will depend in part on the integration of ValueClick's and Mediaplex's operations, products and personnel in a timely and efficient manner. For ValueClick to provide enhanced and more valuable products to its customers after the merger, ValueClick will need to integrate Mediaplex's development operations and product lines. This integration may be difficult and unpredictable because Mediaplex's products are highly complex, have been developed independently and were designed without regard to integration. Successful integration of Mediaplex

13


product development operations and product lines also requires coordination of different development and engineering teams, as well as sales and marketing efforts and personnel. This, too, may be difficult and unpredictable because of possible cultural conflicts between the companies, the different geographical locations of the companies, and different opinions on product and technology decisions. If ValueClick cannot successfully integrate Mediaplex's operations, products and personnel, ValueClick and Mediaplex may not realize the expected benefits of the merger which could adversely affect the combined company's business.

The merger will result in significant costs to ValueClick and Mediaplex, whether or not the merger is completed.

    The merger will result in significant costs to ValueClick and Mediaplex. Transaction costs are estimated at approximately $2.1 million. These costs are expected to consist primarily of fees for investment bankers, attorneys, accountants, filing fees and financial printers. All of these costs will be incurred whether or not the merger is completed. In addition, if the merger agreement is terminated under specified circumstances, Mediaplex may be obligated to pay ValueClick a $1,996,893 termination fee and Mediaplex and ValueClick may be obligated under some circumstances to reimburse the other company's costs up to a maximum of $499,223.

Directors of ValueClick and Mediaplex have potential conflicts of interest in recommending that you vote in favor of approval of the merger agreement.

    Some of the directors of ValueClick and some of the directors of Mediaplex who recommend that you vote in favor of the merger agreement have employment or severance agreements or benefits arrangements that provide them with interests in the merger that differ from yours. Following completion of the merger, Gregory R. Raifman, Chairman of the board of Mediaplex, will serve as Vice-Chairman of the board of ValueClick, and Tom Vadnais, President and Chief Executive Officer of Mediaplex, will serve as the Chief Executive Officer of the Mediaplex business reporting to James R. Zarley, Chairman and Chief Executive Officer of ValueClick. In addition, Messrs. Raifman and Vadnais and one other Mediaplex director to be designated will become directors of ValueClick after completion of the merger. The receipt of compensation or other benefits in the merger, including the vesting of stock options, or the continuation of indemnification arrangements for current directors of Mediaplex following completion of the merger, may influence these directors in making their recommendation that you vote in favor of the merger agreement.

Failure to complete the merger could cause ValueClick's or Mediaplex's stock price to decline.

    If the merger is not completed for any reason, ValueClick's or Mediaplex's stock price may decline because costs related to the merger, such as legal, accounting and financial advisor fees, must be paid even if the merger is not completed. In addition, if the merger is not completed, ValueClick's or Mediaplex's stock price may decline to the extent that the current market price reflects a market assumption that the merger will be completed.

If the merger is not completed, Mediaplex may be unable to find another company willing to enter into a business combination with Mediaplex on acceptable terms.

    If the merger is not completed and if Mediaplex's board of directors determines to seek another business combination, Mediaplex may be unable to find a partner willing to pay an equivalent or more attractive price than that which ValueClick will pay in the merger, which could further depress Mediaplex's stock price. In addition, if Mediaplex needs to raise additional capital, Mediaplex cannot be certain that additional financing will be available to it on favorable terms, or at all.

14


If the conditions to the merger are not met, the merger will not occur.

    Specified conditions must be satisfied or waived to complete the merger. These conditions are described in detail in the merger agreement. ValueClick and Mediaplex cannot assure you that each of the conditions will be satisfied. If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and ValueClick and Mediaplex each may lose some or all of the intended benefits of the merger. For example, if either party suffers a material adverse change in its condition prior to closing, the other party may not be required to close.

ValueClick and Mediaplex may waive one or more of the conditions to the merger without resoliciting stockholder approval for the merger.

    Each of the conditions to ValueClick's and Mediaplex's obligations to complete the merger may be waived, in whole or in part, to the extent permitted by applicable laws, by agreement of ValueClick and Mediaplex. The boards of directors of ValueClick and Mediaplex will evaluate the materiality of any such waiver to determine whether amendment of this document and resolicitation of proxies is warranted. However, ValueClick and Mediaplex generally do not expect any such waiver to be sufficiently material to warrant resolicitation of stockholders. In the event that the board of directors of ValueClick or Mediaplex determines any such waiver is not sufficiently material to warrant resolicitation of stockholders, the applicable company will have the discretion to complete the merger without seeking further stockholder approval.

Sales of ValueClick's and Mediaplex's products could decline if customer relationships are disrupted by the merger.

    The merger may have the effect of disrupting customer relationships. ValueClick's and Mediaplex's customers may not continue their current buying patterns during the pendency of, and following, the merger. Customers may defer purchasing decisions as they evaluate the likelihood of successful integration of ValueClick's and Mediaplex's products and the combined company's future product strategy. ValueClick's or Mediaplex's customers may instead purchase products of competitors. In addition, by increasing the breadth of ValueClick's and Mediaplex's business, the merger may make it more difficult for the combined company to enter into relationships with customers and strategic partners, some of whom may view the combined company as a more direct competitor than either ValueClick or Mediaplex as independent companies. Any significant delay or reduction in orders for ValueClick's or Mediaplex's products could cause sales of the combined company's products to decline.

Mediaplex may lose its listing on the Nasdaq National Market which could significantly impair Mediaplex Stockholders' ability to sell Mediaplex stock readily, or at all.

    On April 4, 2001, Mediaplex received a notice from The Nasdaq Stock Market that its common stock had failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive trading days as required for continued listing on the Nasdaq National Market. From July 2, 2001 through July 10, 2001, Mediaplex common stock closed between $1.00 and $1.06 a share. On July 10, 2001, Mediaplex received a Nasdaq Staff Determination indicating that Mediaplex is not in compliance with the minimum price requirement for continued listing on The Nasdaq Stock Market and that its securities are subject to delisting from the Nasdaq Stock Market. Since July 10, 2001, Mediaplex stock has traded below $1.00 per share. On August 30, 2001, Mediaplex attended an oral hearing before the Nasdaq Listings Qualifications Panel to review the Nasdaq Staff Determination. At the hearing, Mediaplex requested that the Nasdaq Listings Qualifications Panel grant Mediaplex an exception from the minimum bid price requirement pending the completion of the merger. Until the Nasdaq Listing Qualifications Panel reaches its decision, Mediaplex's stock will remain listed on the Nasdaq National Market.

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    If Mediaplex's securities are delisted from the Nasdaq National Market, the liquidity of its securities may be impacted adversely, not only in the number of shares which could be bought or sold, but also through delays in the timing of transactions and reductions in potential security analyst and media coverage. This may reduce the demand for Mediaplex's common stock and the trading price of its securities. A delisting would greatly impair Mediaplex's ability to raise additional working capital.

If Mediaplex loses its listing on the Nasdaq National Market, Mediaplex stock may become subject to regulation as a "penny stock" which may restrict the ability of holders of the stock to sell it in the secondary market.

    If Mediaplex's securities are delisted from the Nasdaq National Market, its common stock may be eligible to trade on the OTB Bulletin Board. In that event, Mediaplex's common stock may become subject to regulation as a "penny stock." The SEC has adopted regulations which generally define "penny stock" to be any equity security that has a market price or exercise price of less than $5.00 per share, subject to certain exceptions, including listing on the Nasdaq National Market or the Nasdaq SmallCap Market. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer is also subject to additional sales practice requirements. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell Mediaplex's securities and may affect the ability of holders to sell these securities in the secondary market and the price at which such holder can sell any such Mediaplex securities.

    If Mediaplex were to reapply to list its securities on Nasdaq following any delisting, it might reapply for listing on the Nasdaq SmallCap Market rather than the Nasdaq National Market. Compared to securities listed on the Nasdaq National Market, securities listed on the Nasdaq SmallCap Market are less likely to receive analyst coverage and are less likely to be invested in by institutional investors.


Risks Relating to the Operations of ValueClick and Mediaplex Following the Merger

Integrating ValueClick's and Mediaplex's operations may divert management's attention away from its day-to-day operations.

    Integration of ValueClick's and Mediaplex's operations, products and personnel may place a significant burden on management and its internal resources. The diversion of management attention and any difficulties encountered in the transition and integration process could harm the combined company's business.

If the combined company fails to manage its growth effectively, its expenses could increase and its management's time and attention could be diverted.

    As the combined company continues to increase the scope of its operations, it will need an effective planning and management process to implement its business plan successfully in the rapidly evolving Internet advertising market. The combined company's business, results of operations and financial condition will be substantially harmed if the combined company is unable to manage its expanding operations effectively. The combined company plans to continue to expand its sales and marketing, customer support and research and development organizations. Past growth has placed, and any future growth will continue to place, a significant strain on its management systems and resources. ValueClick has recently implemented a new financial reporting system, and the combined company will likely need to continue to improve its financial and managerial controls and its reporting systems and procedures. In addition, the combined company will need to expand, train and manage its work force.

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The combined company's failure to manage the combined company growth effectively could increase its expenses and divert management's time and attention.

Unexpected significant costs to integrate ValueClick and Mediaplex into a single business may negatively impact the financial condition of the combined company and the market price of ValueClick's stock.

    ValueClick and Mediaplex will incur costs from integrating Mediaplex's operations, products and personnel. These costs may be significant and may include expenses and other liabilities for:

    The integration costs that ValueClick and Mediaplex incur may negatively impact the financial condition of the combined company and the market price of ValueClick's stock.

Mediaplex and ValueClick have limited operating histories, a history of losses, an accumulated deficit and may continue to experience losses.

    For the six months ended June 30, 2001, Mediaplex incurred net losses of approximately $14.9 million and had an accumulated deficit of approximately $92.0 million. For the six months ended June 30, 2001, ValueClick incurred net losses of approximately $3.1 million and had an accumulated deficit of approximately $59.5 million. Mediaplex expects to continue to incur losses before amortization charges for the foreseeable future. These losses will be substantial, and ValueClick and Mediaplex may never become profitable.

    Because ValueClick and Mediaplex have limited operating histories, it may be difficult to evaluate business and prospects of the combined company. You should consider the combined company's prospects in light of the risks, expenses and difficulties frequently encountered by early-stage companies in the rapidly-changing Internet market. These risks include the combined company's ability to:

    If the combined company is unsuccessful in addressing these risks and uncertainties, its business, results of operations and financial condition could be materially and adversely affected.

If banner advertising on the Internet loses its appeal to direct marketing companies, the combined company's revenues could decline.

    ValueClick currently derives over 70% of its revenues by delivering banner advertisements that generate click-throughs to its advertisers' Web sites. This business model may not continue to be effective in the future for a number of reasons, including the following: click rates have always been low and may decline as the number of banner advertisements on the Web increases; Internet users can install "filter" software programs which allow them to prevent banner advertisements from appearing

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on their screens; banner advertisements are, by their nature, limited in content relative to other media; direct marketing companies may be reluctant or slow to adopt banner advertising that replaces, limits or competes with their existing direct marketing efforts; and direct marketing companies may prefer other forms of Internet advertising, including permission-based e-mail. If the number of direct marketing companies who purchase banner clicks from ValueClick does not continue to grow, the combined company may experience difficulty in attracting publishers, and its revenues could decline.

If ValueClick's business model is not accepted by Internet advertisers or Web publishers, the combined company's revenues could decline.

    ValueClick conducts primarily all of its business on a cost-per-click or CPC, cost-per-action, or CPA, or cost-per-lead, or CPL, pricing model. These business models are relatively new and much less common than the cost-per-thousand impressions (or CPM) pricing model, which many other Internet advertising companies use. ValueClick's ability to generate significant revenue from advertisers will depend, in part, on its ability to demonstrate the effectiveness of its pricing models to advertisers, many of which may be more accustomed to the CPM pricing model, and to Web publishers; and on its ability to attract and retain advertisers and Web publishers by differentiating ValueClick's technology and services from those of its competitors. One component of ValueClick's strategy is to enhance advertisers' ability to measure their return on investment and track the performance and effectiveness of their advertising campaigns. However, ValueClick has limited experience in implementing its strategy. To date, few advertisers have taken advantage of the most sophisticated tool ValueClick offers for tracking Internet users' activities after they have reached advertisers' Web sites. The combined company will not be able to assure you that ValueClick's strategy will succeed.

    Intense competition among Web sites and Internet advertising services has led to the proliferation of a number of alternative pricing models for Internet advertising. These alternatives, and the likelihood that additional pricing alternatives will be introduced, make it difficult for ValueClick to project the levels of advertising revenue or the margins that the combined company, or the Internet advertising industry in general, will realize in the future. Moreover, an increase in the amount of advertising on the Web may result in a decline in click rates. Since ValueClick predominantly relies on a performance-based pricing model to generate revenue, any decline in click rates may make the combined company's pricing models less viable or less attractive solutions for Web publishers and advertisers.

The combined company's revenues could decline if ValueClick fails to effectively manage its existing advertising space and its growth could be impeded if it fails to acquire new advertising space.

    The combined company's success depends in part on ValueClick's ability to effectively manage its existing advertising space. The Web sites that list their unsold advertising space with ValueClick are not bound by long-term contracts that ensure them a consistent supply of advertising space, which ValueClick refers to as inventory. In addition, Web sites can change the amount of inventory they make available to the combined company at any time. If a Web site publisher decides not to make advertising space from its Web sites available to the combined company, it may not be able to replace this advertising space with advertising space from other Web sites that have comparable traffic patterns and user demographics quickly enough to fulfill the combined company's advertisers' requests. This would result in lost revenues. The combined company expects that its customers' requirements will become more sophisticated as the Web matures as an advertising medium. If ValueClick fails to manage its existing advertising space effectively to meet its customers' changing requirements, the combined company's revenues could decline. The combined company's growth depends on its ability to expand ValueClick's advertising inventory. To attract new customers, the combined company must maintain a consistent supply of attractive advertising space. The combined company intends to expand ValueClick's advertising inventory by selectively adding to its network new Web sites that offer attractive demographics, innovative and quality content and growing Web user traffic. The combined company's

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ability to attract new Web sites to the combined company network and to retain Web sites currently in its network will depend on various factors, some of which are beyond the combined company's control. These factors include the combined company's ability to introduce new and innovative product lines and services, ValueClick's ability to efficiently manage its existing advertising inventory, the combined company's pricing policies and the cost-efficiency to Web publishers of outsourcing their advertising sales. In addition, the number of competing Internet advertising networks that purchase advertising inventory from small- to medium-sized Web sites continues to increase. The combined company will not be able to assure you that the size of its inventory will increase or even remain constant in the future.

The combined company may face intellectual property disputes that are costly or could hinder or prevent its ability to deliver its products and services.

    The combined company may be subject to disputes and legal actions alleging intellectual property infringement, unfair competition or similar claims against it. One of the combined company's principal competitors, DoubleClick, was awarded a patent on certain aspects of ad-delivery technology, including the ability to target the delivery of ads over a network such as the Internet and the ability to compile statistics on individual Web users and the use of those statistics to target ads. DoubleClick has previously brought lawsuits against other companies in the combined company's industry on the basis of this patent. ValueClick has, however, entered into an agreement with DoubleClick whereby DoubleClick has agreed to not sue or threaten to sue ValueClick or any of its customers, affiliates or licensees, in connection with its patent, so long as DoubleClick or any of its subsidiaries hold at least five percent of ValueClick's capital stock on a fully diluted basis. The combined company will not be able to assure you that DoubleClick will continue to own at least five percent of capital stock after the merger is concluded or that DoubleClick will abide by its agreement not to sue ValueClick.

    Other companies may apply for or be awarded patents or have other intellectual property rights covering aspects of the combined company's technology or business. In 2000, 24/7 Media was awarded a patent relating to its technology for delivering content and advertising information over the Internet. The combined company's failure to prevail in any litigation with any party asserting intellectual property infringement could result in substantial monetary damages, including: damages for past infringement, which could be tripled if a court determines that the infringement was willful; an injunction requiring the combined company to stop offering its services in their current form; the need to redesign ValueClick's or Mediaplex's systems; or the need to pay significant license fees in order to use technology belonging to third parties.

If the technology that ValueClick or Mediaplex currently uses to target the delivery of banners and to prevent fraud on its networks is restricted or becomes subject to regulation, the combined company's expenses could increase and the combined company could lose customers or advertising inventory.

    Web sites typically place small files of information, commonly known as cookies, on an Internet user's hard drive, generally without the user's knowledge or consent. Cookie information is passed to the Web site through an Internet user's browser software. ValueClick and Mediaplex currently use cookies to track an Internet user's movement through the advertiser's Web site and to monitor and prevent potentially fraudulent activity on its network. ValueClick does not share, collect or sell any other information concerning Internet users. Most currently available Internet browsers allow Internet users to modify their browser settings to prevent cookies from being stored on their hard drive, and some users currently do so. Internet users can also delete cookies from their hard drives at any time. Some Internet commentators and privacy advocates have suggested limiting or eliminating the use of cookies, and legislation has been introduced in some jurisdictions to regulate the use of cookie technology. The effectiveness of ValueClick's and Mediaplex's technology could be limited by any reduction or limitation in the use of cookies. If the use or effectiveness of cookies is limited, the combined company would have to switch to other technologies to gather demographic and behavioral information. While such technologies currently exist, they are substantially less effective than cookies.

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The combined company would also have to develop or acquire other technology to prevent fraud. Replacement of cookies could require significant reengineering time and resources, might not be completed in time to avoid losing customers or advertising inventory, and might not be commercially feasible. ValueClick's or Mediaplex's use of cookie technology or any other technologies designed to collect Internet usage information may subject it to litigation or investigations in the future. Any litigation or government action against either ValueClick or Mediaplex could be costly and time-consuming, could require the combined company to change its business practices and could divert management's attention.

The combined company could lose customers or advertising inventory if it fails to measure clicks on banner advertisements in a manner that is acceptable to its advertisers and Web publishers.

    ValueClick earns advertising revenues and makes payments to Web publishers based on the number of clicks on advertisements delivered on its network. Advertisers' and Web publishers' willingness to use ValueClick's services and join its network will depend on the extent to which they perceive ValueClick's measurements of clicks to be accurate and reliable. Advertisers and Web publishers often maintain their own technologies and methodologies for counting clicks, and from time to time ValueClick has had to resolve differences between its measurements and theirs. Any significant dispute over the proper measurement of clicks or other user responses to advertisements could cause the combined company to lose customers or advertising inventory.

If the combined company fails to compete effectively against other Internet advertising companies, it could lose customers or advertising inventory and its revenues could decline.

    The Internet advertising markets are characterized by rapidly changing technologies, evolving industry standards, frequent new product and service introductions and changing client demands. The introduction of new services embodying new technologies and the emergence of new industry standards and practices could render the combined company's existing services obsolete and unmarketable or require unanticipated investments in research and development. The combined company's failure to adapt successfully to these changes could harm its business, results of operations and financial condition.

    The market for Internet advertising and related services is intensely competitive. The combined company expects this competition to continue to increase because there are no significant barriers to entry. Increased competition may result in price reductions for advertising space, reduced margins and loss of our market share. The combined company's principal competitors are other companies that provide advertisers with performance-based Internet advertising solutions, such as CPC, CPL or CPA. ValueClick directly competes with a number of competitors in the CPC market segment, such as Advertising.com and Datacomm. ValueClick also competes in the performance-based marketing segment with CPL and CPA performance-based companies such as DirectLeads and CommissionJunction. ValueClick also competes with other Internet advertising networks that focus on the traditional CPM model, including DoubleClick, Engage and 24/7 Media. Unlike ValueClick or Mediaplex, these companies primarily deal with publishers of large Web sites and advertisers seeking increased brand recognition. These companies have longer operating histories, greater name recognition and have greater financial and marketing resources than ValueClick. DoubleClick is a principal stockholder of ValueClick.

    Competition for advertising placements among current and future suppliers of Internet navigational and informational services, high-traffic Web sites and ISPs, as well as competition with other media for advertising placements, could result in significant price competition and reductions in advertising revenues. In addition, as the combined company expands the scope of its Web services, it may compete with a greater number of Web publishers and other media companies across an increasing range of different Web services, including in vertical markets where competitors may have advantages

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in expertise, brand recognition and other areas. If existing or future competitors develop or offer services that provide significant performance, price, creative or other advantages over those offered by the combined company, its business, result of operations and financial condition would be negatively affected. The combined company will also compete with traditional advertising media, such as direct mail, television, radio, cable and print, for a share of advertisers' total advertising budgets. Many current and potential competitors enjoy competitive advantages over ValueClick and Mediaplex, such as longer operating histories, greater name recognition, larger customer bases, greater access to advertising space on high-traffic Web sites, and significantly greater financial, technical and marketing resources. As a result, the combined company may not be able to compete successfully. If the combined company fails to compete successfully, it could lose customers or advertising inventory and its revenues could decline.

The combined company's revenue growth could be negatively impacted if Internet usage and the development of Internet infrastructure do not continue to grow.

    The combined company's business and financial results will depend on continued growth in the use of the Internet. Internet usage may be inhibited for a number of reasons, such as: inadequate network infrastructure; security concerns; inconsistent quality of service; and unavailability of cost-effective, high-speed service. If Internet usage grows, its infrastructure may not be able to support the demands placed on it and its performance and reliability may decline. In addition, Web sites have experienced interruptions in their service as a result of outages and other delays occurring throughout the Internet network infrastructure, and as a result of sabotage, such as the recent electronic attacks designed to interrupt service on many Web sites. The Internet could lose its viability as a commercial medium due to delays in the development or adoption of new technology required to accommodate increased levels of Internet activity. If use of the Internet does not continue to grow, or if the Internet infrastructure does not effectively support its growth, the combined company's revenues could be materially and adversely affected.

The combined company's long-term success may be materially adversely affected if the market for e-commerce does not grow or grows slower than expected.

    Because many of the combined company's customers' advertisements encourage online purchasing, the combined company's long-term success may depend in part on the growth and market acceptance of e-commerce. The growth and acceptance of e-commerce has developed more slowly than expected and the combined company's business will be adversely affected if the market for e-commerce does not grow or grows slower than now expected. A number of factors outside of the combined company's control could hinder the future growth of e-commerce, including the following:

    In particular, any well-publicized compromise of security involving Web-based transactions could deter people from purchasing items on the Internet, clicking on advertisements, or using the Internet generally, any of which could cause the combined company to lose customers and advertising inventory and could materially, adversely affect the combined company's revenues.

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The combined company will depend on key personnel, the loss of whom could harm its business.

    The successful integration of Mediaplex with ValueClick after the merger will depend in part on the retention of personnel critical to the business and operations of the combined company due to, for example, unique technical skills or management expertise. The combined company may be unable to retain Mediaplex management, technical, sales and customer support personnel that are critical to the success of the integrated companies, resulting in disruption of operations, loss of key information, expertise or know-how and unanticipated additional recruitment and training costs and otherwise diminishing anticipated benefits of the merger.

    The combined company's future success is substantially dependent on the continued service of its key senior management, technical and sales personnel and in particular the combined company's Chairman and Chief Executive Officer, James R. Zarley, the combined company's Chief Operating Officer, Sam Paisley and Mediaplex's President and Chief Executive Officer, Tom A. Vadnais. ValueClick's employment agreements with its key personnel are short-term and on an at-will basis. The combined company will not have key-person insurance on any of its employees. The loss of the services of any member of its management team, or of any other key employees, could divert management's time and attention, increase the combined company's expenses and adversely affect its ability to conduct its business efficiently. The combined company's future success also depends on the combined company's continuing ability to attract, retain and motivate highly skilled employees. Competition for employees in the combined company's industry is intense. The combined company may be unable to retain the combined company's key employees or attract, assimilate or retain other highly qualified employees in the future. ValueClick and Mediaplex have experienced difficulty from time to time in attracting the personnel necessary to support the growth of their business, and may experience similar difficulties in the future.

DoubleClick will remain ValueClick's largest stockholder, and DoubleClick may have interests that are different from, or in addition to, yours.

    DoubleClick, which is one of ValueClick's competitors, currently owns approximately 22% of ValueClick's outstanding common stock and if the merger is completed approximately 15% of ValueClick's outstanding stock. DoubleClick also has the right to maintain its percentage ownership if ValueClick issues new securities, other than in a public offering, in connection with an acquisition of, or merger with, another company or under other specified exceptions until February 28, 2003. DoubleClick may have interests that are different from, or in addition to, your interests. Because ValueClick has generally agreed to use DoubleClick rather than other providers of services similar to those that DoubleClick makes available, and because ValueClick may have additional commercial relationships with DoubleClick in the future, conflicts of interest could arise with respect to the nature, quality and pricing of services that DoubleClick provides to ValueClick. DoubleClick currently has the right to designate two members of ValueClick's board of directors. In addition, the holders of approximately 41% of ValueClick's currently outstanding common stock have agreed to vote their shares in favor of a specified number of DoubleClick's nominees to ValueClick's board of directors, depending on DoubleClick's percentage ownership of ValueClick's common stock. If the merger is completed, DoubleClick will be entitled to designate one member of ValueClick's board of directors. Because DoubleClick provides Internet advertising services that compete with those of the combined company, conflicts of interest could arise for DoubleClick's representatives on ValueClick's board of directors. ValueClick has not implemented specific policies with respect to these potential conflicts of interest, which could be resolved in a manner adverse to the combined company.

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DoubleClick has rights that may affect a future sale or takeover of the combined company or discourage third-party offers for the combined company.

    As long as DoubleClick continues to own 10% or more of the combined company's common stock on a fully diluted basis, the combined company must obtain DoubleClick's consent before it takes specified actions such as implementing any anti-takeover provision. DoubleClick has agreed to standstill provisions under which it would not acquire more than 45% ownership of ValueClick on a fully diluted basis for a period of three years from February 2000, but after that time it may acquire additional shares of ValueClick's common stock. These standstill provisions would terminate upon the announcement or commencement of a tender or exchange offer to acquire shares of ValueClick's common stock which would result in the offeror owning 50% or more of ValueClick's common stock. As long as DoubleClick owns 10% or more of ValueClick's common stock on a fully diluted basis, DoubleClick will have the right to receive prior notice of, and will have the opportunity to respond to, a proposed sale of the combined company or an unsolicited offer to buy the combined company. These rights may discourage third-party offers for the combined company.

Delaware law contains anti-takeover provisions that could deter takeover attempts that could be beneficial to the combined company's stockholders.

    Provisions of Delaware law could make it more difficult for a third party to acquire the combined company, even if doing so would be beneficial to its stockholders. Section 203 of the Delaware General Corporation Law may make the acquisition of ValueClick and the removal of incumbent officers and directors more difficult by prohibiting stockholders holding 15% or more of ValueClick's outstanding voting stock from acquiring ValueClick without the board of director's consent for at least three years from the date they first hold 15% or more of the voting stock. DoubleClick is not subject to this provision of Delaware law with respect to its investment in ValueClick.

System failures could significantly disrupt the combined company's operations, which could cause it to lose customers or advertising inventory.

    The combined company's success depends on the continuing and uninterrupted performance of our systems. Sustained or repeated system failures that interrupt the combined company's ability to provide services to customers, including failures affecting the combined company's ability to deliver advertisements quickly and accurately and to process users' responses to advertisements, would reduce significantly the attractiveness of its solutions to advertisers and Web publishers. The combined company's business, results of operations and financial condition could be materially and adversely affected by any damage or failure that interrupts or delays its operations. The combined company's computer systems will be vulnerable to damage from a variety of sources, including telecommunications failures, power outages, malicious human acts and natural disasters. The combined company will lease server space in Los Angeles, California; Boca Raton, Florida; Louisville, Kentucky; McLean, Virginia and Tokyo, Japan. Therefore, any of the above factors affecting the Los Angeles, Santa Clara, Northern California Bay Area, Louisville, McLean, Boca Raton or Tokyo areas would substantially harm the combined company's business. Moreover, despite network security measures, the combined company's servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems in part because the combined company cannot control the maintenance and operation of its third-party data centers. Despite the precautions taken, unanticipated problems affecting the combined company's systems could cause interruptions in the delivery of its solutions in the future. ValueClick's data storage centers incorporate redundant systems, consisting of additional servers, but its primary system does not switch over to its backup system automatically. The combined company's insurance policies may not adequately compensate it for any losses that may occur due to any failures in its systems.

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The combined company may experience capacity constraints that could reduce its revenues.

    The combined company's future success depends in part on the efficient performance of its software and technology, as well as the efficient performance of the systems of third parties. As the numbers of Web pages and Internet users increase, the combined company's services and infrastructure may not be able to grow to meet the demand. A sudden and unexpected increase in the volume of advertising delivered through its servers or in click rates could strain the capacity of the software or hardware that the combined company has deployed. Any capacity constraints the combined company experiences could lead to slower response times or system failures and adversely affect the availability of advertisements, the number of advertising views delivered and the level of user responses received, which would harm the combined company's revenues. To the extent that the combined company does not effectively address capacity constraints or system failures, its business, results of operations and financial condition could be harmed substantially. The combined company will also depend on the Internet service providers, or ISPs, that provide consumers with access to the Web sites on which its customers' advertisements appear. Internet users have occasionally experienced difficulties connecting to the Web due to failures of their ISPs' systems. Any disruption in Internet access provided by ISPs or failures by ISPs to handle the higher volumes of traffic expected in the future could materially and adversely affect the combined company's revenues.

It may be difficult to predict the combined company's financial performance because its quarterly operating results may fluctuate.

    The combined company's revenues and operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond the combined company's control. You should not rely on period-to-period comparisons of ValueClick's or Mediaplex's results of operations as an indication of the combined company's future performance. The combined company's results of operations may fall below the expectations of market analysts and investors in some future periods. If this happens, the market price of ValueClick's common stock may fall. The factors that may affect the combined company's quarterly operating results include:

    Expenditures by advertisers also tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. Any decline in the economic prospects of advertisers or the economy generally may alter current or prospective advertisers' spending priorities, or may increase the time it takes the combined company to close sales with advertisers, and could materially and adversely affect its business, results of operations and financial condition.

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The combined company may be unable to reduce spending if its revenues are lower than expected because its short-term expenses are fixed and future revenues and operating results are difficult to forecast.

    The combined company's current and future expense estimates are based, in large part, on its estimates of future revenues and on its investment plans. In particular, the combined company plans to increase its operating expenses significantly in order to expand its sales and marketing operations; enhance its technology and software solutions; acquire additional advertising inventory; enhance its advertising management platform; and continue its international expansion. Most of the combined company's expenses are fixed in the short term. The combined company may be unable to reduce spending if its revenues are lower than expected. Any significant shortfall in revenues in relation to the combined company's expectations could materially and adversely affect its cash flows.

If the combined company does not successfully develop its international strategy, its revenues and cash flows and the growth of its business could be harmed.

    ValueClick initiated operations, through joint ventures and wholly-owned subsidiaries or divisions, in Japan in 1998, in the United Kingdom in 1999, and France, Germany, Brazil and Canada in 2000. Subsequently, ValueClick discontinued operations in Brazil and Canada in 2001. ValueClick's foreign operations subject it to foreign currency exchange risks. ValueClick currently does not utilize hedging instruments to mitigate foreign exchange risks.

    The combined company's international expansion will subject it to additional foreign currency exchange risks and will require management attention and resources. The combined company expects to pursue expansion through a number of international alliances and to rely extensively on these business partners initially to conduct operations, establish local networks, register Web sites as affiliates and coordinate sales and marketing efforts. The combined company's success in these markets will depend on the success of its business partners and their willingness to dedicate sufficient resources to the relationships. The combined company cannot assure you that it will be successful in its efforts overseas. International operations are subject to other inherent risks, including:

    The combined company's failure to address these risks adequately could materially and adversely affect its business, results of operations and financial condition.

The combined company may be liable for content displayed on the Web sites of its publishers which could increase its expenses.

    The combined company may be liable to third parties for content in the advertising it delivers if the artwork, text or other content involved violates copyright, trademark, or other intellectual property rights of third parties or if the content is defamatory. Any claims or counterclaims could be time-consuming, result in costly litigation or divert management's attention.

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Mediaplex's revenues depend upon a few key clients, and if it loses a major client, the combined company's revenues may be significantly reduced.

    Mediaplex's revenues have been derived from a limited number of advertisers and advertising agencies that use its services. The combined company's quarterly and annual results of operations would be harmed by the loss of any of these clients. In 2000, no individual client accounted for more than 10% of Mediaplex's revenues. In the first three months of 2001, McCann Erickson Worldwide and Sun Microsystems accounted for 22% and 18% of Mediaplex's revenues, respectively. At March 31, 2001, one ad agency through which Mediaplex performs services for advertisers, accounted for 25% of Mediaplex's outstanding accounts receivable. Mediaplex expects that some of these entities may continue to account for a significant percentage of its revenues for the foreseeable future. Current advertisers may not continue to purchase advertising services from the combined company or the combined company may not be able to successfully attract additional advertisers. In addition, the non-payment or late payment of amounts due to Mediaplex from a significant advertiser or ad agency could harm its financial condition.

If the combined company fails to establish, maintain and expand Mediaplex's business and marketing alliances and partnerships, the combined company's ability to grow could be limited, the combined company may not achieve desired revenues and its stock price may decline.

    In order to grow Mediaplex's business, the combined company must generate, retain and strengthen successful business and marketing alliances with advertising agencies.

    Mediaplex depends, and expects to continue to depend, on its business and marketing alliances, which are companies with which Mediaplex has written or oral agreements to work together to provide services to Mediaplex's clients, to refer business from their clients and customers to Mediaplex. If companies with which the combined company has business and marketing alliances do not refer their clients and customers to Mediaplex to perform their online campaign and message management, the combined company's revenues and results of operations would be severely harmed.

    AdWare has two primary business partnerships that have an impact on the combined company's ability to deliver needed functionality to the combined company's customers. The first is with Strata, the company whose radio pre-buy product is integrated with AdWare SPOT. Radio pre-buy is an integral part of broadcast media buying functionality. A loss of that partnership would necessitate the development of an entirely new product that would require resources and time. The second is with IBM; loss of this partnership might damage the combined company's reputation and negatively impact the combined company's ability to drive revenues in the digital asset management arena.

The combined company will be dependent upon Mediaplex technologies, including both its MOJO and AdWare technologies, for the combined company future revenues, and if Mediaplex's technologies do not generate revenues, the combined company's business may fail.

    The combined company's future revenues are likely to be dependent on the acceptance by clients of the use of Mediaplex's technologies, which Mediaplex believes to be the cornerstone of its business. If Mediaplex technologies do not perform as anticipated or otherwise do not attract clients to use its services, the combined company's operations will suffer. In addition, Mediaplex has incurred and will continue to incur significant expense developing its technologies. If the combined company's revenues generated from the use of its technologies do not cover these development costs, the combined company's financial condition would suffer.

If Mediaplex's technologies suffer from design defects, the combined company may need to expend significant resources to address resulting product liability claims.

    The combined company's business will be harmed if Mediaplex's technologies suffer from design or performance defects and, as a result, the combined company could become subject to significant

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product liability claims. Technology as complex as Mediaplex's may contain design and/or performance defects which are not detectable even after extensive internal testing. Such defects may become apparent only after widespread commercial use. Mediaplex's contracts with its clients currently do not contain provisions to limit the combined company's exposure to liabilities resulting from product liability claims. Although Mediaplex has not experienced any product liability claims to date, the combined company cannot assure you that it will not do so in the future. A product liability claim brought against the combined company which is not adequately covered by its insurance could materially harm.

Mediaplex's sales and implementation cycle is lengthy, which could divert the combined company's financial and other resources, and is subject to delays, which could result in delayed revenues.

    If the sales and implementation cycle of Mediaplex's services is delayed, the combined company's revenues will likewise be delayed. Mediaplex's sales and implementation cycle is lengthy, causing Mediaplex to recognize revenues long after its initial contact with a client. During Mediaplex's sales effort, Mediaplex spends significant time educating prospective clients on the use and benefit of its message management services. As a result, the sales cycle for Mediaplex's products and services is long, ranging from a few weeks to several months for its larger clients. The sales cycle for Mediaplex's message management services and media management applications is likely to be longer than the sales cycle for competitors because Mediaplex believe that clients may require more extensive approval processes related to integrating internal business information with their advertising campaigns. In addition, in order for a client to implement Mediaplex's services, the client must commit a significant amount of resources over an extended period of time. Furthermore, even after a client purchases Mediaplex's services, the implementation cycle is subject to delays. These delays may be caused by factors within the combined company's control, such as possible technology defects, as well as those outside its control, such as clients' budgetary constraints, internal acceptance reviews, functionality enhancements, lack of appropriate customer staff to implement Mediaplex's media management applications and the complexity of clients' advertising needs. Also, failure to deliver service or application features consistent with delivery commitments could result in a delay or cancellation of the agreement.

The expected benefits of Mediaplex's acquisition of AdWare may not be realized and the combined company may have difficulties in integrating the personnel, operations and technology of AdWare.

    In July 2000, Mediaplex acquired AdWare Systems, Inc., a media management applications service provider. Mediaplex anticipates that as a result of this acquisition, it will be able to offer agencies, advertisers and other partners a more complete online-to-offline media-management solution. In April 2001, Mediaplex began the integration of its MOJO AdServer and AdWare FINANCIALS 6 products. The integration allows for the relevant financial online media campaign information that is stored in MOJO to be passed on to AdWare's FINANCIALS 6 database, without manual intervention. Mediaplex plans to further integrate additional product lines.

    However, it is uncertain whether Mediaplex can successfully integrate AdWare's products in a timely manner, or that any of the anticipated benefits of its acquisition of AdWare will be realized. The integration of Mediaplex and AdWare is a complex, time consuming and expensive process and may disrupt both businesses if not completed in a timely and efficient manner. Mediaplex has no experience in integrating operations on the scale presented by the acquisition. The integration process is complicated by the need to integrate different operations, technology, multiple executive offices and different corporate cultures. The failure to integrate Mediaplex and AdWare successfully could materially harm Mediaplex's business and operations.

    Should Mediaplex choose to substantially increase its presence in the digital asset management arena, it needs to acquire complete ownership of the AdVISUAL intellectual property that is now

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partially owned by Mediaplex's development partner, ImageSoft. Currently, AdWare shares ownership of the AdVISUAL code with ImageSoft. AdWare and ImageSoft hold joint copyrights in AdVisual, AdVisual Capture, and AdVisual 2.0. Should ImageSoft choose not to focus on and invest in AdVISUAL in the future, the current customer base will be negatively impacted and Mediaplex's reputation may be damaged. Gaining full control of AdVISUAL would require purchasing ImageSoft's share of the intellectual property.

The combined company may not be able to protect its technology from unauthorized use, which could diminish the value of its services, weaken its competitive position and reduce its revenues.

    Mediaplex's success depends in large part on its proprietary technology, including its MOJO platform. In addition, Mediaplex believes that its Mediaplex, AdWare and MOJO trademarks are key to identifying and differentiating its services from those of its competitors. Mediaplex may be required to spend significant resources to monitor and police its intellectual property rights. If Mediaplex fails to successfully enforce its intellectual property rights, the value of its services could be diminished and its competitive position may suffer.

    Mediaplex relies on a combination of patent, copyright, trademark and trade secret laws, confidentiality procedures and licensing arrangements to establish and protect its proprietary rights. Third-party software providers could copy or otherwise obtain and use Mediaplex's technology without authorization or develop similar technology independently which may infringe upon its proprietary rights. Mediaplex may not be able to detect infringement and may lose competitive position in the market before its does so. In addition, competitors may design around Mediaplex's technology or develop competing technologies. Intellectual property protection may also be unavailable or limited in some foreign countries.

    Mediaplex generally enters into confidentiality or license agreements with its employees, consultants, vendor clients and corporate partners, and generally controls access to and distribution of its technologies, documentation and other proprietary information. Despite these efforts, unauthorized parties may attempt to disclose, obtain or use Mediaplex's services or technologies. Its precautions may not prevent misappropriation of its services or technologies, particularly in foreign countries where laws or law enforcement practices may not protect Mediaplex's proprietary rights as fully as in the United States.

If the combined company fails to keep pace with rapidly changing technologies, it could lose customers or advertising inventory.

    The Internet advertising market is characterized by rapidly changing technologies, evolving industry standards, frequent new product and service introductions and changing customer demands. The introduction of new products and services embodying new technologies and the emergence of new industry standards and practices can render existing products and services obsolete and unmarketable or require unanticipated investments in research and development. The combined company's success will depend on its ability to adapt to rapidly changing technologies, to enhance existing solutions and to develop and introduce a variety of new solutions to address its customers' changing demands. For example, advertisers are increasingly requiring Internet advertising networks to have the ability to deliver advertisements utilizing new formats that surpass stationary images and incorporate rich media, such as video and audio, interactivity, and more precise consumer targeting techniques. ValueClick's system does not support some types of advertising formats, such as certain video and audio formats, and many of the Web sites in its network have not implemented systems to allow rich media advertisements. In addition, an increase in the bandwidth of Internet access resulting in faster data delivery may provide new products and services that will take advantage of this expansion in delivery capability. If the combined company fails to adapt successfully to developments such as these, it could lose customers or advertising inventory. ValueClick purchases most of the software used in its business from third parties. ValueClick intends to continue to acquire technology necessary for it to conduct its

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business from third parties. ValueClick cannot assure you that, in the future, these technologies will be available on commercially reasonable terms, or at all. The combined company may also experience difficulties that could delay or prevent the successful design, development, introduction or marketing of new solutions. Any new solution or enhancement that the combined company develops will need to meet the requirements of its current and prospective customers and may not achieve significant market acceptance. If the combined company fails to keep pace with technological developments and the introduction of new industry and technology standards on a cost-effective basis, its expenses could increase, and ValueClick could lose customers or advertising inventory.

Changes in government regulation and industry standards could decrease demand for the combined company's services and increase its costs of doing business.

    Laws and regulations that apply to Internet communications, commerce and advertising are becoming more prevalent. These regulations could affect the costs of communicating on the Web and adversely affect the demand for the combined company's advertising solutions or otherwise harm its business, results of operations and financial condition. The United States Congress has enacted Internet legislation regarding children's privacy, copyrights and taxation. Other laws and regulations may be adopted, and may address issues such as user privacy, pricing, intellectual property ownership and infringement, copyright, trademark, trade secret, export of encryption technology, acceptable content, taxation and quality of products and services. This legislation could hinder growth in the use of the Web generally and decrease the acceptance of the Web as a communications, commercial and advertising medium.

    Legislation has been proposed recently to prohibit the sending of unsolicited commercial e-mail. ValueClick has a consent-based email delivery business that it believes should not, as a matter of policy, be affected by this kind of legislation. However, it is possible that legislation will be passed that requires the combined company to change its current practices, or subject the combined company to increased possibility of legal liability for its practices.

    Due to the global nature of the Web, it is possible that, although the combined company's transmissions originate in California, Florida and Japan, the governments of other states or foreign countries might attempt to regulate its transmissions or levy sales or other taxes relating to its activities. In addition, the growth and development of the market for Internet commerce may prompt calls for more stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on companies conducting business over the Internet. The laws governing the Internet remain largely unsettled, even in areas where there has been some legislative action. It may take years to determine how existing laws, including those governing intellectual property, privacy, libel and taxation, apply to the Internet and Internet advertising. The combined company's business, results of operations and financial condition could be materially and adversely affected by the adoption or modification of laws or regulations relating to the Internet, or the application of existing laws to the Internet or Internet-based advertising.

The combined company could be held liable for its or its clients' failure to comply with federal, state and foreign laws governing consumer privacy.

    Recent growing public concern regarding privacy and the collection, distribution and use of information about Internet users has led to increased federal, state and foreign scrutiny and legislative and regulatory activity concerning data collection and use practices. Any failure of the combined company to comply with applicable foreign, federal and state laws and regulatory requirements of regulatory authorities may result in, among other things, indemnification liability to the combined company's clients and the advertising agencies it works with, administrative enforcement actions and fines, class action lawsuits, cease and desist orders, and civil and criminal liability. Recently, class action lawsuits have been filed alleging violations of privacy laws by Internet service providers. In October

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1998, the European Union adopted a directive addressing data privacy that may result in limitations on the combined company's ability to collect and use information regarding Internet users. These restrictions may limit the combined company's ability to target advertising in most European countries. The combined company's failure to comply with these or other federal, state or foreign laws could result in liability and materially harm the combined company's business.

    In addition to government activity, privacy advocacy groups and the high-technology and direct marketing industries are considering various new, additional or different self-regulatory standards. This focus, and any legislation, regulations or standards promulgated, may impact the combined company adversely. Governments, trade associations and industry self-regulatory groups may enact more burdensome laws, regulations and guidelines, including consumer privacy laws, affecting the combined company and its clients. Since many of the proposed laws or regulations are just being developed, and a consensus on privacy and data usage has not been reached, ValueClick and Mediaplex cannot yet determine the impact these regulations may have on its business. However, if the gathering of profiling information were to be curtailed, Internet advertising would be less effective, which would reduce demand for Internet advertising and harm the combined company's business.

    The combined company's customers are also subject to various federal and state regulations concerning the collection and use of information regarding individuals. These laws include the Children's Online Privacy Protection Act, the Federal Drivers Privacy Protection Act of 1994, the privacy provisions of the Gramm-Leach-Bliley Act, as well as other laws that govern the collection and use of consumer credit information. ValueClick and Mediaplex cannot assure you that their clients are currently in compliance, or will remain in compliance, with these laws and their own privacy policies. The combined company may be held liable if its clients use its technology in a manner that is not in compliance with these laws or their own stated privacy standards.

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THE SPECIAL MEETINGS

Joint Proxy Statement/Prospectus

    This document is being furnished to you in connection with the solicitation of proxies by each of ValueClick's and Mediaplex's board of directors in connection with the proposed merger.

Date, Time and Place of the Special Meetings

    The special meetings are scheduled to be held as follows:

     
For ValueClick stockholders:   For Mediaplex stockholders:

October 19, 2001

 

October 19, 2001
10:00 a.m., local time   10:00 a.m., local time
4360 Park Terrace Drive, Suite 100   177 Steuart Street, Suite 600
Westlake Village, California   San Francisco, California

Purpose of the Special Meetings

    The special meetings are being held so that stockholders of each of ValueClick and Mediaplex may consider and vote upon proposals related to the merger agreement. Adoption of the merger agreement proposals will constitute approval of the merger.

Stockholder Record Date for the Special Meetings

    ValueClick.   ValueClick's board of directors has fixed the close of business on September 21, 2001 as the record date for determining which ValueClick stockholders are entitled to notice of and to vote at the special meeting. On the record date, there were 37,059,102 shares of ValueClick common stock outstanding, held by approximately 245 holders of record.

    Mediaplex.   Mediaplex's board of directors has fixed the close of business on September 26, 2001 as the record date for determining which Mediaplex stockholders are entitled to notice of and to vote at the Mediaplex special meeting. On the record date, there were 35,706,466 shares of Mediaplex common stock outstanding, held by approximately 300 holders of record.

Vote Required for Adoption of the Merger Agreement

    ValueClick.   A majority of the outstanding shares of ValueClick common stock must be represented, either in person or by proxy, to constitute a quorum at the ValueClick special meeting. The affirmative vote of the holders of a majority of the shares of ValueClick's common stock voting on the proposal is required to approve the merger agreement. At the ValueClick special meeting, each share of ValueClick common stock is entitled to one vote on all matters properly submitted to the ValueClick stockholders.

    Mediaplex has entered into voting agreements with several directors, officers and major stockholders of ValueClick that require these ValueClick stockholders to vote their shares of ValueClick common stock in favor of the approval of the merger agreement. As of the record date, these stockholders owned shares representing approximately 37.9% of the voting power of ValueClick capital stock entitled to vote at the ValueClick special meeting.

    The directors and executive officers of ValueClick owned approximately 43.8% of the outstanding shares of ValueClick common stock as of the record date, and each of them, with the exception of two directors who did not vote, has indicated their intention to vote in favor of approval of the merger agreement or has entered into a voting agreement with Mediaplex as described above.

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    Mediaplex.   A majority of the votes entitled to be cast at the Mediaplex special meeting must be represented, either in person or by proxy, to constitute a quorum at the Mediaplex special meeting. The affirmative vote of the holders of a majority of the shares of Mediaplex's common stock outstanding as of the record date is required to adopt the merger agreement. At the Mediaplex special meeting, each share of Mediaplex common stock is entitled to one vote on all matters properly submitted to the Mediaplex stockholders.

    ValueClick has entered into voting agreements with several directors, officers and major stockholders of Mediaplex, that require these Mediaplex stockholders to vote their shares of Mediaplex common stock in favor of the adoption of the merger agreement. As of the record date, these stockholders owned shares representing approximately 29.5% of the voting power of Mediaplex capital stock entitled to vote at the Mediaplex special meeting.

    The directors and executive officers of Mediaplex owned approximately 15.2% of the outstanding shares of Mediaplex common stock as of the record date, and each of them has indicated their intention to vote in favor of adoption of the merger agreement or has entered into a voting agreement with ValueClick as described above.

Vote Required for Authorization to Adjourn or Postpone the Special Meetings

     ValueClick . A majority of the outstanding shares of ValueClick common stock must be represented, either in person or by proxy, to constitute a quorum at the ValueClick special meeting. The affirmative vote of the holders of a majority of the shares of ValueClick common stock voting on the proposal is required to grant ValueClick's board of directors or its chairman, in their discretion, the authority to adjourn or postpone the special meeting if necessary to further solicit proxies if there are not sufficient votes at the time of the meeting to approve the merger agreement.

    The ValueClick board of directors, with Mr. Salzman absent and Mr. Epstein abstaining, recommends that the stockholders of ValueClick vote "FOR" authorization of the ValueClick board of directors or its chairman, in their discretion, to adjourn or postpone the special meeting if necessary to solicit further proxies.

     Mediaplex . A majority of the votes entitled to be cast at the Mediaplex special meeting must be represented, either in person or by proxy, to constitute a quorum at the Mediaplex special meting. The affirmative vote of the holders of a majority of the shares of Mediaplex common stock represented, either in person or by proxy, at the meeting is required to grant Mediaplex's board of directors or its chairman, in their discretion, the authority to adjourn or postpone the special meeting if necessary to further solicit proxies if there are not sufficient votes at the time of the meeting to approve the merger agreement.

    The Mediaplex board of directors unanimously recommends that the stockholders of Mediaplex vote "FOR" authorization of the Mediaplex board of directors or its chairman, in their discretion, to adjourn or postpone the special meeting if necessary to solicit further proxies.

Proxies

    All shares of ValueClick common stock represented by properly executed proxy cards received before or at the ValueClick special meeting and all shares of Mediaplex common stock represented by properly executed proxy cards received before or at the Mediaplex special meeting will, unless the proxies are revoked, be voted in accordance with the instructions indicated on those proxy cards. If no instructions are indicated on a properly executed proxy card, the shares will be voted FOR the proposals. You are urged to mark the box on the proxy card to indicate how to vote your shares.

    If a properly executed proxy card is returned and the stockholder has abstained from voting on one or more of the proposals, the ValueClick common stock or Mediaplex common stock represented

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by the proxy will be considered present at the special meeting for purposes of determining a quorum, but will not be considered to have been voted on the abstained proposals.

    If your shares are held in an account at a brokerage firm or bank, you must instruct them on how to vote your shares. If an executed proxy card is returned by a broker or bank holding shares which indicates that the broker or bank does not have discretionary authority to vote on the proposals, the shares will be considered present at the meeting for purposes of determining the presence of a quorum, but will not be considered to have been voted on the proposals. Your broker or bank will vote your shares only if you provide instructions on how to vote by following the information provided to you by your broker.

    Abstentions and broker non-votes will have no effect on any of the proposals at the ValueClick special meeting. Abstentions, failures to vote and broker non-votes for a particular proposal will have the same effect as a vote against that particular proposal at the Mediaplex special meeting.

    You may revoke your proxy at any time before it is voted by:


    Your attendance at the special meeting will not in and of itself revoke your proxy.

Appraisal Rights

    Under Delaware law, you are not entitled to appraisal rights in connection with the merger.

Solicitation of Proxies

    ValueClick will pay the expenses incurred in connection with the printing and mailing of this document. ValueClick and Mediaplex will also request banks, brokers and other intermediaries holding shares of ValueClick or Mediaplex common stock beneficially owned by others to send this document to, and obtain proxies from, the beneficial owners and will, upon request, reimburse the holders for their reasonable expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone, telegram and other electronic means, advertisements and personal solicitation by the directors, officers or employees of ValueClick and Mediaplex. No additional compensation will be paid to directors, officers or employees for those solicitation efforts.

    You should not send in any stock certificates with your proxy card. If you are a Mediaplex stockholder, a transmittal letter with instructions for the surrender of your Mediaplex stock certificates will be mailed to you as soon as practicable after completion of the merger.

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THE MERGER

     This section describes material aspects of the proposed merger. While we believe that the description covers the material terms of the merger, this summary may not contain all of the information that is important to you. You should read this entire document, including the annexes, carefully for a more complete understanding of the merger and the terms of the merger agreement.

General Description of the Merger

    At the effective time, Mars Acquisition Corp., a wholly-owned subsidiary of ValueClick, will be merged with and into Mediaplex. Mediaplex will be the surviving corporation and will continue as a wholly-owned subsidiary of ValueClick. As a result of the merger, each share of Mediaplex common stock outstanding at the effective time will be converted automatically into 0.4113 of a share of ValueClick common stock, with cash paid for any fractional share.

    Based on the number of shares of Mediaplex common stock and ValueClick common stock outstanding as of the record date and the exchange ratio, approximately 14,686,069 shares of ValueClick common stock will be issuable pursuant to the merger agreement, representing approximately 28.4% of the total ValueClick common stock expected to be outstanding after the merger. Based on shares of Mediaplex common stock underlying its outstanding stock options as of the record date and the exchange ratio, options to purchase approximately 3,564,450 additional shares of ValueClick common stock will be assumed by ValueClick in the merger. This assumes that none of Mediaplex's stock options are exercised between the record date and the effective time.

Background of the Merger

    Beginning in the fourth quarter of 2000 and continuing through June 2001, Mediaplex's executives held numerous internal discussions to outline strategies that would enable Mediaplex to increase stockholder value in light of the then current economic conditions. One of these strategies was to increase efforts to identify possible strategic combinations. During this period, Mediaplex's executives had discussions regarding potential business transactions with numerous parties that had either contacted Mediaplex executives or had been identified and contacted by Mediaplex. The discussions with a few of these parties progressed to the point at which negotiations regarding a possible merger, and the terms of such a merger were discussed. Mediaplex's board of directors met on eight occasions during this period to review and discuss the status of discussions with ValueClick and the other parties identified by Mediaplex management.

    In connection with ValueClick's long-term strategic plans involving growth through strategic alliances, investments, acquisitions or business combinations, ValueClick's management has been searching for strategic acquisition candidates since early 2001. As part of this process, ValueClick identified Mediaplex as a company with strategic assets that fit into ValueClick's growth strategy. While ValueClick's management considered other potential acquisition candidates before it agreed to acquire Mediaplex, discussions with these other candidates led ValueClick's management to conclude that a business combination with these other candidates would not be in the best interest of ValueClick and its stockholders at that time for a variety of reasons, including the financial condition and operating performance of the other candidates, and potential challenges in integrating the other candidates with ValueClick. By contrast, ValueClick's management determined to pursue the Mediaplex transaction because of the potential synergies between the two companies, the economic terms of the acquisition and the overlap of existing customer bases of the two companies.

    On May 4, 2001, ValueClick's chief executive officer, James Zarley, and chief operating officer, Samuel Paisley, held a telephone conference with Mediaplex's chairman, Greg Raifman, to discuss each company's corporate development program and overall business strategy.

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    On or about May 10, 2001, Messrs. Zarley and Raifman had a telephone conversation in which they further discussed the respective companies' businesses and strategy. From May 10, 2001 through May 21, 2001, Messrs. Zarley and Raifman had periodic telephone conversations generally discussing the possibility of a strategic transaction between ValueClick and Mediaplex.

    On May 22, 2001, ValueClick executed a non-disclosure agreement with Mediaplex.

    On May 22, 2001, Messrs. Zarley and Paisley, and ValueClick's chief financial officer, Kurt Johnson, met with Mr. Raifman and Mediaplex's chief executive officer, Tom Vadnais, at ValueClick's Westlake Village office. The Mediaplex representatives, who were joined by members of their management team on a telephone conference line, gave an online presentation of their ad serving and email technology platforms and reviewed new customer acquisitions and existing major customer relationships. The Mediaplex representatives also described recent actions to transfer its media business to Exile on Seventh and overall plans to achieve profitability. The ValueClick representatives presented ValueClick's operating and financial performance for the year 2000 and the first quarter of 2001.

    On May 23, 2001, Messrs. Zarley and Paisley visited Mediaplex's co-location center in San Jose and its technology development center in Cupertino and interviewed key managers responsible for network operations and technology development. At Mediaplex's corporate office in San Francisco, Messrs. Zarley and Paisley discussed the financial outlook for 2001 and strategic fit of the two companies with Messrs. Raifman and Vadnais and the chief financial officer of Mediaplex. They also discussed with Mr. Raifman the general and economic terms of a potential acquisition of Mediaplex by ValueClick. At that time, Messrs. Zarley and Paisley proposed a valuation, based primarily on a comparison of the then current market capitalization of each company, in which Mediaplex stockholders would receive ValueClick common stock representing between 26% and 28% of ValueClick post-merger.

    On May 24, 2001, Messrs. Zarley and Raifman had a telephone conversation in which they discussed the valuation proposed by ValueClick in the May 23rd meeting, and began to pursue due diligence on the companies. From May 24, 2001 through May 29, 2001, Mr. Raifman had frequent discussions with Messrs. Zarley and Paisley regarding the terms of a merger proposal during which time ValueClick, based on further comparisons of each company's financial condition, results of operations and market capitalization over various periods, revised its original valuation to propose that Mediaplex stockholders would receive approximately 30% of ValueClick post-merger. The final valuation reflected these factors as well as the results of ValueClick's due diligence, the analysis prepared by Wit SoundView, discussions among ValueClick's board of directors and consideration of market information in ValueClick's industry sector.

    On May 29, 2001, Mr. Zarley submitted a non-binding term sheet containing the original economic terms to Mediaplex and discussed the document with Mr. Raifman. This non-binding proposal contemplated: the merger of a wholly owned subsidiary of ValueClick into Mediaplex in a tax-free reorganization, with Mediaplex stockholders receiving freely tradeable shares of ValueClick common stock representing approximately 30% of ValueClick post-merger with the exact exchange ratio to be specified in the merger agreement; for ValueClick's board of directors following the merger to consist of three designees of Mediaplex and six designees of ValueClick; for Mr. Zarley to be Chairman and for Mr. Raifman to be Vice-Chairman of ValueClick's board following the merger; for Mr. Zarley to continue as Chief Executive Officer, Mr. Paisley to continue as Chief Operating Officer of ValueClick and Mr. Vadnais to be the Chief Executive Officer of the Mediaplex business reporting to Mr. Zarley. The proposal also provided for a 4% termination fee if the merger agreement was terminated under specified circumstances and for specified limitations on Mediaplex's ability to negotiate unsolicited offers. Over the next three days, the companies' respective legal advisors and senior executives discussed the term sheet, and both companies agreed to begin negotiating a merger agreement and to commence detailed due diligence.

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    On May 29, 2001, there was a special telephonic meeting of the Mediaplex board of directors that included a discussion of a potential strategic transaction with ValueClick and the terms contained in ValueClick's non-binding term sheet. At this meeting, the Mediaplex board authorized Mediaplex's management to continue discussions with representatives of ValueClick regarding a potential strategic transaction.

    On June 4, 2001, ValueClick and Mediaplex, together with their respective legal, financial and accounting advisors, began negotiating the revised economic terms of the merger agreement, including the specific circumstances under which the termination fee would be payable and the exact restrictions on Mediaplex's ability to negotiate unsolicited offers, and other related agreements. From June 5, 2001 until the execution of the merger agreement on July 1, 2001, ValueClick and Mediaplex and their respective financial, legal and accounting advisors, each conducted business, financial and legal due diligence reviews.

    On June 8, 2001, Mediaplex retained US Bancorp Piper Jaffray to render an opinion to Mediaplex regarding the fairness of the proposed merger from a financial point of view to Mediaplex stockholders.

    On June 11, 2001, ValueClick retained WitSoundView Corporation to render an opinion to ValueClick regarding the fairness of the proposed merger from a financial point of view to ValueClick.

    On June 25, 2001, there was a special telephonic meeting of the Mediaplex board of directors to review the terms of the merger with ValueClick. Representatives of Mediaplex senior management, US Bancorp Piper Jaffray, Mediaplex's financial advisor, and Wilson Sonsini Goodrich & Rosati, Professional Corporation, Mediaplex's outside legal counsel, also attended. Representatives of Wilson Sonsini Goodrich & Rosati made a presentation to the members of Mediaplex's board of directors regarding their legal duties and responsibilities in connection with considering the merger, and discussed the principal terms of the merger agreement and related agreements. Mediaplex's chief executive officer, Mr. Vadnais, led Mediaplex's board in a discussion of ValueClick's and Mediaplex's business and the risks and opportunities facing the companies. Mediaplex's chairman, Mr. Raifman, led the board in a discussion of previous presentations by management regarding potential strategic transactions. At this time, management reported on the progress of discussions with other parties that had expressed interest in a transaction with Mediaplex and noted that no other firm offers had been made and that other parties that had expressed an interest in a strategic transaction with Mediaplex either did not have a stock price that management believed to be attractive to Mediaplex stockholders or had expressed an interest in buying only certain assets of Mediaplex rather than the entire company. After discussing with Mediaplex's management the level of interest from other potential acquirors in pursuing further discussions, the Mediaplex board of directors concluded that no other transactions were viable at that time. Mediaplex's board of directors then reviewed and discussed the status of the negotiations with ValueClick, the proposed exchange ratio, termination fees, the opportunity to entertain alternative proposals and termination rights. Representatives of US Bancorp Piper Jaffray presented an overview and analysis of the financial terms of the proposed transaction and discussed, among other things, ValueClick's and Mediaplex's financial performance. After discussion, the board authorized management to continue discussions with representatives of ValueClick with respect to calculating the exact exchange ratio to be specified in the merger agreement.

    On June 27, 2001, ValueClick's board of directors met to review and approve the terms of the merger with Mediaplex. Mr. Salzman did not attend this meeting. Representatives of ValueClick's senior management, Wit Soundview Corporation, ValueClick's financial advisor, and Brobeck, Phleger & Harrison LLP, ValueClick's legal counsel, also attended. Representatives of Brobeck made a presentation to the members of ValueClick's board of directors regarding the legal framework surrounding the deliberations of the merger, and discussed the principal terms of the merger agreement and related agreements. Mr. Zarley led ValueClick's board in a discussion of ValueClick's and Mediaplex's businesses and the risks and opportunities facing the companies. ValueClick's board of directors reviewed and discussed the status of the negotiations, including the terms of the merger

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agreement, the final exchange ratio, termination fees, Mediaplex's opportunity to entertain alternative proposals and termination rights. Representatives of Wit Soundview Corporation presented an overview and analysis of the financial terms of the proposed transaction and discussed, among other things, ValueClick's and Mediaplex's financial performance. Wit Soundview Corporation also delivered its oral opinion to ValueClick's board of directors that, as of such date, and subject to and based on the considerations referred to in its opinion, the consideration to be received by the holders of Mediaplex's common stock pursuant to the merger agreement was fair to ValueClick from a financial point of view. After discussion, ValueClick's board of directors approved, by a vote of seven to zero, with one abstention, the merger agreement and related agreements and authorized its officers to execute, on ValueClick's behalf, the merger agreement and related agreements.

    On June 28, 2001, there was a special telephonic meeting of the Mediaplex board of directors to review and approve the terms of the merger with ValueClick. Representatives of Mediaplex senior management, US Bancorp Piper Jaffray, and Wilson Sonsini Goodrich & Rosati, Professional Corporation, also attended. At this meeting, US Bancorp Piper Jaffray delivered its oral opinion to Mediaplex's board of directors that, as of such date and subject to and based on the matters referred to in its written opinion, the 0.4113 exchange ratio set forth in the merger agreement was fair to Mediaplex's stockholders from a financial point of view. After discussion, Mediaplex's board of directors unanimously approved the merger agreement and related agreements and authorized its officers to execute, on Mediaplex's behalf, the merger agreement and related agreements.

    On July 1, 2001, Mediaplex and ValueClick entered into the merger agreement. In connection with the merger agreement, several of ValueClick's executive officers and directors and stockholders entered into voting agreements with Mediaplex, and several executive officers and directors and stockholders of Mediaplex entered into voting agreements with ValueClick. On July 2, 2001, Mediaplex and ValueClick issued a joint press release announcing the signing of the merger agreement.

ValueClick's Reasons for the Merger

    ValueClick's board of directors believed that the following potential benefits of the merger will contribute to ValueClick's success:

    ValueClick's board of directors reviewed a number of factors in evaluating the merger, including, but not limited to, the following:

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    The ValueClick board of directors also considered a number of potentially negative factors, including, but not limited to:

    The foregoing discussion is not intended to be exhaustive but is believed to include all material factors considered by the ValueClick board of directors. The ValueClick board of directors did not quantify or otherwise assign relative weight to the specific factors considered. In addition, the ValueClick board of directors did not reach any specific conclusion on each factor considered, or any aspect of any particular factor, but conducted an overall analysis of these factors. Individual members of the ValueClick board of directors may have given different weight to different factors. After taking into account all of the factors set forth above, the members of the ValueClick board of directors voting concluded that the merger agreement and the merger were advisable and in the best interests of, ValueClick and its stockholders and that ValueClick should proceed with the merger.

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Recommendation of ValueClick's Board Of Directors

    After careful consideration, the ValueClick board of directors, with one director absent and one director not voting, on June 27, 2001, determined that the terms of the merger agreement and the merger are advisable, and in the best interest of, ValueClick and its stockholders and approved the merger agreement and the merger. The ValueClick board of directors, with Mr. Salzman absent and Mr. Epstein abstaining, recommends that the stockholders of ValueClick vote "FOR" the approval of the merger agreement. Mr. Epstein abstained from voting because his counsel advised him that his position as the Executive Vice President of DoubleClick, Inc., a provider of Internet advertising solutions for advertisers and Web publishers, could present a possible conflict of interest with respect to the transaction.

    In considering the recommendation of the ValueClick board of directors with respect to the merger agreement, the ValueClick stockholders should be aware that some directors and executive officers of ValueClick will receive benefits if the merger is completed which results in those persons having interests in the merger that are different from, or are in addition to, the interests of ValueClick stockholders. Please see "Conflicts of Interests of ValueClick Directors and Executive Officers in the Merger" on page 56 of this document.

Opinion of Wit SoundView Corporation

    Under an engagement letter, dated June 10, 2001, ValueClick retained Wit SoundView Corporation to render an opinion to the board of directors of ValueClick as to the fairness, from a financial point of view, to ValueClick of the exchange ratio in the merger. ValueClick selected Wit SoundView to render its opinion based on Wit SoundView's qualifications, experience and reputation and its knowledge of Internet industries. Wit SoundView is a nationally recognized investment banking firm and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, private placements and valuation for corporate and other purposes. In addition, ValueClick maintains relationships with a number of investment banking firms with expertise in its industry sector including the three firms that acted as underwriters to ValueClick's initial public offering and have analysts who cover ValueClick. Wit SoundView is one of these three firms, and ValueClick selected Wit SoundView to perform the fairness opinion based on their current knowledge of ValueClick's affairs, their expertise in ValueClick's industry and the reasonableness of their engagement terms. At a meeting of the board of directors of ValueClick on June 27, 2001, Wit SoundView delivered its opinion as investment bankers that, as of June 27, 2001, and based upon and subject to the various assumptions, limitations and considerations set forth in the opinion, the exchange ratio in the merger was fair, from a financial point of view, to ValueClick.

    The full text of Wit SoundView's opinion is attached as Annex B to this document and sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations of the review undertaken by Wit SoundView in rendering its opinion. You are urged to, and should, read the opinion carefully and in its entirety. Wit SoundView's opinion is directed to the board of directors of ValueClick and addresses only the fairness, from a financial point of view, of the exchange ratio in the merger to ValueClick as of the date of the opinion. Wit SoundView did not express any opinion as to the price at which ValueClick's stock will trade prior to or subsequent to the closing of the merger. Wit SoundView's opinion does not constitute a recommendation of the merger over any other alternative transactions which may be available to ValueClick, does not address the underlying business decision of the board of directors of ValueClick to proceed with or effect the merger, or constitute a recommendation to the stockholders of ValueClick as to how to vote or as to any other action ValueClick stockholders should take regarding the merger.

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    This summary is qualified in its entirety by reference to the full text of the opinion. In conducting its analysis and arriving at its opinion, Wit SoundView, among other things:

    Wit SoundView also took into account its assessment of general economic, market and financial conditions and its experience in similar transactions, as well as its experience in securities valuation in general. Wit SoundView's opinion was necessarily based upon economic, market, financial and other conditions as they existed and could be evaluated as of the date of Wit SoundView's opinion. Wit SoundView assumed no responsibility to update or revise its opinion based upon events or circumstances occurring after the date of its opinion.

    In arriving at its opinion, Wit SoundView did not make, obtain or assume any responsibility for any independent evaluation or appraisal of any of the assets or liabilities, contingent or otherwise, of either ValueClick or Mediaplex. Wit SoundView assumed and relied upon the accuracy and completeness of the financial and other information supplied to or otherwise made available to it in

40


arriving at its opinion and did not attempt independently to verify, or undertake any obligation to verify, the information it reviewed. Wit SoundView further relied upon the assurances of the management of ValueClick that they were not aware of any facts that would make that information inaccurate or misleading. ValueClick's board did not review the forecasts, projections and other material information about ValueClick provided to Wit SoundView. Based upon the assurances of ValueClick's management that they were not aware of any facts that would make the information provided to Wit SoundView inaccurate or misleading, the ValueClick board believed that Wit SoundView's reliance on that information was reasonable under the circumstances. In addition, Wit SoundView assumed that the forecasts and projections provided to them by ValueClick and Mediaplex represented the best currently available estimates and judgments of ValueClick's and Mediaplex's respective management as to the future financial conditions and results of operations of ValueClick and Mediaplex, and assumed that the forecasts and projections were reasonably prepared based on the best currently available estimates and judgments. Wit SoundView assumed no responsibility for and expressed no view as to the forecasts and projections or the assumptions on which they were based.

    In order to understand fully the financial analyses described below, the included tables must be read together with the text of the summary of each analysis. The tables alone do not constitute a complete description of the analyses.

    Stock Price Trading Range and Historical Exchange Ratio Analyses.   Wit SoundView analyzed the trading prices of the Mediaplex common stock during the six month and twelve month periods ended June 27, 2001. This analysis indicated that during the six month period ended June 27, 2001, the closing prices for the Mediaplex common stock ranged from a low of $0.53 per share to a high of $2.00 per share; and that during the twelve month period ended June 27, 2001, the closing prices for the Mediaplex common stock ranged from a low of $0.53 per share to a high of $21.88 per share.

    Wit SoundView also analyzed the historical exchange ratios of the Mediaplex common stock to the ValueClick common stock, based on the closing prices of such common stocks during the six month and twelve month periods ended June 27, 2001.

    This analysis indicated that during the six month period ended June 27, 2001, the exchange ratios ranged from a low of 0.142x to a high of 0.395x. Based on the closing price of the ValueClick common stock on June 27, 2001, these exchange ratios would imply a range of value of the Mediaplex common stock of $0.43 per share to $1.20 per share.

    This analysis also indicated that during the twelve month period ended June 27, 2001, the exchange ratios ranged from a low of 0.142x to a high of 2.383x. Based on the closing price of the ValueClick common stock on June 27, 2001, these exchange ratios would imply a range of value of the Mediaplex common stock of $0.43 per share to $7.27 per share. Wit SoundView noted that while the exchange ratio in the merger was higher than the prior six month historical trading range, the exchange ratio was in the lower quarter of the trading range for the prior twelve-month period.

    Comparable Companies Trading Analysis.   Wit SoundView reviewed publicly available financial information for companies which Wit SoundView deemed to be generally comparable to Mediaplex for purposes of this analysis. These companies were selected because they are engaged in Internet media and marketing businesses comparable to those of Mediaplex. The comparable companies used in this analysis were:

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    In its analysis, Wit SoundView determined the fully-diluted common equity market capitalization plus debt, preferred stock and minority interests, if any, minus cash, cash equivalents and equity investments in affiliates, if any, or Enterprise Value, of each of the comparable companies as a multiple of:

    The following table sets forth the results of this analysis:

 
  Enterprise Value as a
Multiple of 2001:

 
Company

  Revenue
  Gross Profit
 
Avenue A, Inc.   NM (2) NM (2)
ClickAction, Inc.   0.38 x 0.54 x
Digital Impact, Inc.   0.23 x 0.41 x
MessageMedia, Inc.(1)   0.49 x 1.01 x
Modem Media, Inc.   0.51 x 1.16 x
Netcentives Inc.   0.10 x NM (3)

(1)
MessageMedia was acquired by DoubleClick on June 1, 2001. Fully-diluted common equity market capitalization of Message Media for purposes of calculating its enterprise value is based on the May 31, 2001 closing stock price of MessageMedia.
(2)
Not meaningful because the company has a fully-diluted common equity market capitalization of less than its net cash.
(3)
Not meaningful because the projected estimates for the company shows a negative gross profit for 2001.

    To determine implied values for the Mediaplex common stock, Wit SoundView applied the multiples reflected in the table above to Mediaplex's estimated calendar year 2001 revenues and gross profit, as appropriate, excluding Mediaplex's media business, added Mediaplex's cash and cash equivalents, less debt, minority interest, estimated transaction costs in connection with the merger and cash burn to break-even on an operating income basis, or Net Cash, and divided by Mediaplex's fully-diluted shares outstanding, based on the treasury stock method. Wit SoundView also compared these implied values per share of Mediaplex common stock to the implied price per share represented by the exchange ratio, based on the closing price of the ValueClick common stock on June 27, 2001.

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    The following tables set forth the results of this analyses:

2001 Revenue
(In millions, except per share amounts and percentages)

 
 
  Low
  Medium
  High
 
Comparable companies multiples     0.00 x(1)   0.38 x   0.51 x
Mediaplex estimate   $ 20.8   $ 20.8   $ 20.8  
   
 
 
 
  Implied enterprise value     0.0     8.0     10.7  
   
 
 
 
Net cash     42.5     42.5     42.5  
   
 
 
 
  Fully-diluted market cap.   $ 42.5   $ 50.5   $ 53.2  
   
 
 
 
Diluted shares outstanding     39.7     39.7     39.7  
   
 
 
 
  Implied per share value   $ 1.07   $ 1.27   $ 1.34  
   
 
 
 
  Offer price premium (discount) to implied per share value     17.2 %   (1.3) %   (6.3) %

(1)
Low multiple of 0.00x represents a fully-diluted common equity market capitalization equal to net cash. This multiple was selected given that some comparable companies have fully-diluted common equity market capitalizations less than their net cash values.

2001 Gross Profits
(In millions, except per share amounts and percentages)

 
 
  Low
  Medium
  High
 
Comparable companies multiples     0.00 x(1)   0.77 x   1.16 x
Mediaplex estimate   $ 12.0   $ 12.0   $ 12.0  
   
 
 
 
  Implied enterprise value     0.0     9.3     14.0  
   
 
 
 
Net cash     42.5     42.5     42.5  
   
 
 
 
  Fully-diluted market cap.   $ 42.5   $ 51.8   $ 56.5  
   
 
 
 
Diluted shares outstanding     39.7     39.7     39.7  
   
 
 
 
  Implied per share value   $ 1.07   $ 1.30   $ 1.42  
   
 
 
 
  Offer price premium (discount) to implied per share value     17.2 %   (3.8) %   (11.8) %

(1)
Low multiple of 0.00x represents a fully-diluted common equity market capitalization equal to net cash. This multiple was selected given that some comparable companies have fully-diluted common equity market capitalizations less than their net cash values.

    Premium Paid Analysis.   Based on publicly available information, Wit SoundView analyzed the premiums implied by the offer price in selected merger and acquisition transactions announced since February 29, 2000 over the closing prices of the common stock of the acquired company during selected periods prior to announcement of the applicable transaction. Those transactions were selected for analysis because they involved acquired companies engaged in Internet media and marketing businesses comparable to those of Mediaplex. The selected transactions were (acquiror/acquired company):

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    The following table sets forth the results of this analysis, as well as the premiums implied by the exchange ratio in the merger for Mediaplex common stock as of and for the periods indicated based on the closing price of ValueClick common stock on June 27, 2001:

 
  Implied Offer Price Premium (Discount) to Historical Price
Prior to Announcement of Transaction

 
 
  One Day
Prior

  Prior
10 Day
Avg.

  Prior
1 Month
Avg.

  Prior
2 Month
Avg.

  Prior
3 Month
Avg.

  Prior
6 Month
Avg.

 
                           
Median   49.4 % 41.9 % 47.9 % 37.9 % 22.8 % (25.0 )%
High   62.5 % 90.8 % 134.1 % 182.4 % 199.2 % 140.6 %
Low   27.6 % (15.0 )% (38.5 )% (49.1 )% (53.8 )% (62.1 )%
Exchange Ratio for Mediaplex   29.3 % 32.3 % 36.8 % 33.0 % 45.8 % 31.4 %

    Wit SoundView then applied these premiums and discounts to comparable historical trading prices for the Mediaplex common stock to determine implied values per share of Mediaplex common stock. The following table sets forth the results of this analysis:

 
  Implied Value Per Share of Mediaplex Common Stock
Based On Premium (Discount) In Selected Transactions

 
  One Day
Prior

  Prior
10 Day
Avg.

  Prior
1 Month
Avg.

  Prior
2 Month
Avg.

  Prior
3 Month
Avg.

  Prior
6 Month
Avg.

                                     
Median   $ 1.45   $ 1.38   $ 1.43   $ 1.34   $ 1.19   $ 0.73
High   $ 1.58   $ 1.85   $ 2.27   $ 2.74   $ 2.90   $ 2.33
Low   $ 1.24   $ 0.82   $ 0.60   $ 0.49   $ 0.45   $ 0.37

    Wit SoundView noted that the implied offer price for the Mediaplex common stock based on the exchange ratio in the merger and the closing price of the ValueClick common stock on June 27, 2001 was $1.254 per share, which represents premiums of less than the median premiums for each period other than the prior three and six month averages, and was within the range of premiums for those periods. Wit SoundView noted this fact and accounted for it in its analysis concluding that the exchange ratio was fair, from a financial point of view, to ValueClick.

    Precedent Transactions Analysis.   Based on publicly available information, Wit SoundView reviewed financial terms of selected merger and acquisition transactions involving acquired companies engaged in Internet media and marketing businesses comparable to those of Mediaplex announced since June 14, 1999. Due to dramatic declines in industry-wide projections and valuation metrics over the twelve months prior to the date of its opinion, however, Wit SoundView believed that the more recent transactions (announced since June 1, 2001) were the most relevant. The selected recent transactions were (acquiror/acquired company):

    In its analysis, Wit SoundView determined the enterprise value implied by the offer price in each transaction as a multiple of estimated calendar year 2001 revenues of the acquired company, as projected by Wit SoundView and/or other research analysts. Offer price is defined as fully-diluted shares acquired multiplied by either the acquiror closing stock price one day prior to announcement, if a stock transaction, or cash offered per share, if a cash transaction, plus notes payable, capital lease obligations and out-of-the-money convertible debt, less cash and short-term investments.

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    The following table sets forth the results of this analysis, as well as the implied multiple for Mediaplex based on the exchange ratio in the merger:

 
  Implied Enterprise Value as a
Multiple of 2001 Revenue

Low   0.25x
High   0.79x
Exchange Ratio for Mediaplex   0.34x

    To determine implied values for the Mediaplex common stock, Wit SoundView applied the multiples reflected in the table above to Mediaplex's estimated calendar year 2001 revenues, excluding Mediaplex's media business, added Mediaplex's net cash, and divided by Mediaplex's fully-diluted shares outstanding. The following table sets forth the results of this analysis, as well as the results based on the multiple implied by the exchange ratio in the merger:

(In millions, except per share amounts)

 
 
  Low
  High
  Exchange Ratio for Mediaplex
 
Comparable transactions multiples     0.25 x   0.79 x   0.34 x
Mediaplex's 2001 revenue estimate   $ 20.8   $ 20.8   $ 20.8  
   
 
 
 
  Implied enterprise value     5.1     16.4     7.2  
   
 
 
 
Net cash     42.5     42.5     42.5  
   
 
 
 
  Implied fully-diluted market cap.   $ 47.6   $ 58.9   $ 49.65  
   
 
 
 
Diluted shares outstanding     39.7     39.7     39.7  
   
 
 
 
  Implied value per share   $ 1.20   $ 1.49   $ 1.25  
   
 
 
 

    Contribution Analysis.   Wit SoundView calculated the respective percentage contributions of ValueClick and Mediaplex to the combined company's

    No synergies or purchase accounting adjustments resulting from the merger were included in determining amounts for the combined company. Wit SoundView compared those percentages to the respective percentage ownership of the combined company by ValueClick and Mediaplex stockholders on a pro forma fully diluted basis.

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    The following table summarizes this analysis:

 
  Contribution
 
 
  Mediaplex
  ValueClick
 
FY 2001 Revenues   30.6 % 69.4 %
FY 2001 Gross profit   33.1 % 66.9 %
FY 2002 Revenues   31.8 % 68.2 %
FY 2002 Gross profit   39.5 % 60.5 %
Net cash   31.3 % 68.7 %
Net cash, as adjusted   28.1 % 71.9 %
 
Pro Forma Fully-Diluted Market Capitalization

 

30.0

%

70.0

%

    Relative Valuation Analysis.   Wit SoundView performed a relative valuation analysis of Mediaplex and ValueClick based upon the "Comparable Companies Trading Analysis" described above, with respect to Mediaplex, and a similar analysis with respect to ValueClick, based on review of publicly available information for companies which Wit SoundView deemed to be generally comparable to ValueClick for purposes of this analysis. Those companies were selected because they are engaged in Internet advertising and distribution businesses comparable to those of ValueClick. The ValueClick comparable companies used in this analysis:

    This analysis implied a range of value of ValueClick of $2.85 to $4.06 per share. Wit SoundView then calculated implied exchange ratios and premium (discount) to the offer price in the merger based on the exchange ratio in the merger and closing stock prices for ValueClick and Mediaplex on June 27, 2001 based on this range for ValueClick and the range of value of Mediaplex of $1.07 to $1.42 per share implied by the "Comparable Companies Trading Analysis" described above.

    The following tables set forth the results of this analysis:

 
  Implied Exchange Ratio
ValueClick

 
Mediaplex

  Low - $2.85
  High - $4.06
 
Low - $1.07   0.38 x 0.26 x
High - $1.42   0.50 x 0.35 x
 
  Premium (Discount) to Exchange Ratio
ValueClick

 
Mediaplex

  Low - $2.85
  High - $4.06
 
Low - $1.07   (8.6 )% (35.9 )%
High - $1.42   21.4 % (14.8 )%

    Pro Forma Merger Analysis.   Wit SoundView analyzed the pro forma effects of the merger on ValueClick's estimated fiscal year 2001 and 2002 results of operations, based on projections provided by the managements of ValueClick and Mediaplex, including the purchase accounting effects of merger and estimated operating synergies based on estimates provided by ValueClick management. This analysis indicated that the merger would be dilutive to ValueClick's fully-diluted earnings before interest, taxes, depreciation and amortization, plus interest income, less taxes, divided by fully-diluted shares outstanding, or Cash Earnings Per Share, for fiscal 2001 by $0.04 per share, but accretive to ValueClick's fully-diluted Cash Earnings Per Share for fiscal 2002 by $0.09 per share.

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    In arriving at its opinion, Wit SoundView considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it.

    Wit SoundView did not perform a discounted cash flow analysis in evaluating the exchange ratio because projections for each of ValueClick and Mediaplex beyond 2002 were not available, research analysts have generally not prepared projections beyond 2002 for ValueClick, Mediaplex or comparable companies, research estimates for Mediaplex have not been revised to reflect the transfer of its media business and the uncertainty of industry-wide online advertising forecasts makes financial projections beyond the current year less meaningful.

    The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Wit SoundView believes that selecting any portion of its analyses, without considering all analyses, would create an incomplete view of the process underlying its opinion. In addition, Wit SoundView may have deemed various assumptions more or less probable than other assumptions so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Wit SoundView's view of the actual value of ValueClick or Mediaplex or any of their respective securities. In performing its analyses, Wit SoundView made many assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the managements of ValueClick and Mediaplex. Any estimates contained in Wit SoundView's analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by the estimates.

    The analyses performed were prepared solely as part of Wit SoundView's analysis of the fairness from a financial point of view to ValueClick of the exchange ratio in the merger and were conducted in connection with the delivery of Wit SoundView's opinion. The analyses do not purport to be appraisals or reflect the prices at which securities of ValueClick or Mediaplex might actually be sold.

    The exchange ratio in the merger was determined through negotiations between ValueClick and Mediaplex and was approved by the board of directors of ValueClick. Wit SoundView's opinion and presentation to the board of directors of ValueClick were among many factors taken into consideration by the board of directors of ValueClick in approving the merger agreement.

    Wit SoundView, as part of its investment banking services, is regularly engaged in the valuation of businesses and their securities in connection with mergers, acquisitions, divestitures, restructurings, recapitalizations, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. On March 30, 2000, Wit SoundView's predecessor entered into an underwriting agreement with other underwriters and ValueClick in connection with the initial public offering of ValueClick securities. Pursuant to the underwriting agreement, Wit SoundView received a $1.33 per share underwriting discount with respect to the 688,000 shares they agreed to purchase. Wit SoundView also, from time to time, may in the future perform certain financial advisory services for ValueClick or Mediaplex for which it may receive a fee. In the ordinary course of business, Wit SoundView may actively trade the securities of ValueClick or Mediaplex for its own account and for the accounts of its customers and, accordingly, may at any time hold a short or long position in such securities.

    Under its engagement letter, Wit SoundView received a fee of $250,000 upon delivery of its opinion. In addition, ValueClick has agreed to reimburse Wit SoundView for out-of-pocket expenses incurred by Wit SoundView in connection with its engagement and to indemnify Wit SoundView and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Wit SoundView or any of its affiliates against liabilities and expenses, including liabilities under the federal securities laws, related to or arising out of Wit SoundView's engagement.

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Mediaplex's Reasons for the Merger

    On June 28, 2001, the Mediaplex board of directors voted unanimously to approve the merger agreement and the merger. The board also:

    In the course of reaching its decision to approve the merger agreement and the merger, Mediaplex's board of directors consulted with Mediaplex's management, as well as its outside legal counsel and its legal, financial and accounting advisors, and considered the following material factors:

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    The Mediaplex board of directors also considered a number of negative factors, including:

    The purchase price that Mediaplex stockholders will receive in the merger is less than the book value of Mediaplex's assets. Mediaplex agreed to a purchase price that is less than its book value because it believed that the stock market was currently over-discounting the internet advertising companies that trade on the Nasdaq National Market. This over-discount of ValueClick's stock was evidenced by the fact that its stock was trading at a price less than its cash per share value. Additionally, Mediaplex believed that a likelihood existed that the public markets would ultimately value ValueClick's stock using more traditional methodologies that would result in the exchange ratio value being greater than the current book value of Mediaplex.

    The foregoing discussion of information and factors considered by the Mediaplex board of directors is not intended to be exhaustive but is believed to include all material factors considered by the Mediaplex board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Mediaplex board of directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, the Mediaplex board of directors did not reach any specific conclusion on each factor considered, or any aspect of any particular factor, but conducted an overall analysis of these factors. Individual members of the Mediaplex board of directors may have given different weight to different factors. The Mediaplex board of directors considered the experience and expertise of US Bancorp Piper Jaffray, its financial advisor for quantitative analysis of the financial terms of the merger. After taking into account all of the factors set forth above, the Mediaplex board of directors unanimously agreed that the merger agreement and the merger were fair to, and in the best interests of, Mediaplex and its stockholders and that Mediaplex should proceed with the merger.

Recommendation of Mediaplex's Board of Directors

    After careful consideration, the Mediaplex board of directors, on June 28, 2001, unanimously determined that the terms of the merger agreement and the merger are fair to, and in the best interest of, Mediaplex and its stockholders and approved the merger agreement and the merger. In reaching its decision, the Mediaplex board of directors consulted with its management team and advisors and independently considered the proposed merger agreement and the transactions contemplated by the merger agreement. The Mediaplex board of directors unanimously recommends that the stockholders of Mediaplex vote "FOR" the adoption of the merger agreement.

    In considering the recommendation of the Mediaplex board of directors with respect to the merger agreement, the Mediaplex stockholder should be aware that some of Mediaplex's directors and executive officers will receive benefits if the merger is completed which results in those persons having

49


interests in the merger that are different from, or are in addition to, the interests of Mediaplex stockholders. Please see "Conflicts of Interests of Mediaplex Directors and Executive Officers in the Merger" beginning on page 56 of this document.

Opinion of US Bancorp Piper Jaffray

    Mediaplex retained US Bancorp Piper Jaffray to render to the Mediaplex board of directors an opinion as to the fairness, from a financial point of view, to the holders of Mediaplex common stock of the exchange ratio set forth in the merger agreement.

    US Bancorp Piper Jaffray delivered to the Mediaplex board of directors on June 28, 2001 its oral opinion, subsequently confirmed in writing, as of that date and based upon and subject to the assumptions, factors and limitations set forth in the written opinion and described below, that the exchange ratio set forth in the merger agreement was fair, from a financial point of view, to the holders of Mediaplex common stock. A copy of the US Bancorp Piper Jaffray written opinion is attached to this document as Annex C and is incorporated into this document by reference. The Mediaplex stockholders should read the opinion carefully in its entirety in conjunction with this document and should carefully consider the assumptions made, matters considered and the limits of the review undertaken, by US Bancorp Piper Jaffray.

    While US Bancorp Piper Jaffray rendered its opinion and provided analyses to the Mediaplex board of directors, US Bancorp Piper Jaffray was not requested to and did not make any recommendation to the board of directors as to the specific form or amount of the consideration to be received by Mediaplex stockholders in the proposed merger. The consideration was determined through negotiations between Mediaplex and ValueClick. US Bancorp Piper Jaffray's written opinion, which was directed to the board of directors, addresses only the fairness, from a financial point of view, to the holders of common stock of Mediaplex of the proposed exchange ratio. The opinion does not address Mediaplex's underlying business decision to participate in the merger, and does not constitute a recommendation to any Mediaplex stockholder as to how a stockholder should vote with respect to the merger.

    In arriving at its opinion, US Bancorp Piper Jaffray reviewed, among other things:

    In addition, US Bancorp Piper Jaffray visited the offices of Mediaplex and engaged in discussions with members of senior management of both ValueClick and Mediaplex concerning the financial condition, current operating results and business outlook of ValueClick, Mediaplex and the combined company following the merger.

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    In delivering its opinion to the Mediaplex board of directors, US Bancorp Piper Jaffray presented various analyses and other information material to its opinion. The following is a summary of this presentation:

Implied Consideration

    Giving effect to the proposed exchange ratio and the trading price of ValueClick common stock at the close of trading on June 25, 2001 of $3.05, US Bancorp Piper Jaffray calculated an implied aggregate consideration for the common stock and common stock equivalents of Mediaplex of approximately $49.9 million.

Stock Trading Analyses

    US Bancorp Piper Jaffray reviewed the stock trading history of Mediaplex and ValueClick. US Bancorp Piper Jaffray presented the recent common stock trading information contained in the following table:

 
  Mediaplex
  ValueClick
Closing price on June 25, 2001   $ 0.91   $ 3.05
7 calendar day closing average     0.93     3.02
30 calendar day closing average     0.90     3.01
60 calendar day closing average     0.86     3.07
90 calendar day closing average     0.84     3.40
180 calendar day closing average     1.23     4.06
52 week high trade     22.25     15.19
52 week low trade     0.50     2.58

    US Bancorp Piper Jaffray also presented graphs illustrating daily stock price and volume performance of Mediaplex and ValueClick over the prior year.

Exchange Ratio Analysis

    US Bancorp Piper Jaffray analyzed the exchange ratio against the "implied" exchange ratio based on historical stock prices for Mediaplex and ValueClick. US Bancorp Piper Jaffray examined the exchange ratios implied by the stock prices of Mediaplex and ValueClick on June 25, 2001 and one week, one month, three months, six months and one year prior to such date.

 
  Ratios
Merger exchange ratio   0.4113x
June 25, 2001   0.2984x
1 Week   0.3049x
1 Month   0.2958x
3 Month   0.2771x
6 Month   0.2520x
1 Year   0.5269x

Comparable Company Analysis

    US Bancorp Piper Jaffray compared financial information and valuation ratios relating to Mediaplex to corresponding data and ratios from nine publicly traded companies that are engaged primarily in Internet media and marketing services and are deemed comparable to Mediaplex:

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      Avenue A, Inc.
      Digital Impact, Inc.
      Engage, Inc.
      L90, Inc.
      24/7 Media, Inc.
      Click Action Inc.
      DoubleClick Inc.
      Organic, Inc.
      ValueClick, Inc.

    The comparable company analysis was based on information obtained from SEC filings, public company disclosures, press releases, industry and popular press reports, databases, Wall Street research reports and other sources and, with respect to ValueClick and Mediaplex, financial planning data provided by ValueClick and Mediaplex management.

    In its analysis, US Bancorp Piper Jaffray calculated and considered several factors, including the ratio of equity value to


 
   
  Comparable Companies(3)
 
 
  Mediaplex(1)(2)
  Low
  Mean
  Median
  High
 
Equity value to latest twelve months revenue   4.1 x 0.1 x 1.1 x 0.8 x 3.6 x
Equity value to calendar year 2001 revenue   2.4 x 0.1 x 1.2 x 0.7 x 4.3 x
Equity value to calendar year 2002 revenue   1.7 x 0.1 x 1.3 x 0.6 x 3.9 x
Equity value to latest twelve months gross profit   8.5 x 0.3 x 2.5 x 1.9 x 6.5 x
Equity value to calendar year 2001 gross profit   4.1 x 0.4 x 2.4 x 1.8 x 7.6 x
Equity value to calendar year 2002 gross profit   2.4 x 0.5 x 3.7 x 3.6 x 6.9 x

(1)
Data for Mediaplex was provided by management and excludes Mediaplex's media business, which was sold to Exile on Seventh LLC in May, 2001.

(2)
Equity values are calculated using fully-diluted shares from the treasury stock method as of the close of trading on June 25, 2001.

(3)
Comparable companies projected revenue and gross profit data are based on Wall Street estimates.

Merger and Acquisition Analysis

    US Bancorp Piper Jaffray reviewed 10 merger and acquisition transactions that it deemed comparable to the merger. It selected these transactions by searching SEC filings, public company disclosures, press releases, industry and popular press reports, databases and other sources and by applying the following criteria:

    US Bancorp Piper Jaffray compared the resulting multiples of selected valuation data to multiples for Mediaplex derived from the implied value payable in the merger.

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  Comparable Transactions
 
 
  Mediaplex(1)
  Low
  Mean
  Median
  High
 
Equity value to latest 12 months revenue   4.1 x 1.2 x 2.9 x 2.9 x 5.3 x
Equity value to latest 12 months gross profit   8.5 x 1.4 x 5.5 x 4.7 x 14.9 x

(1)
Data for Mediaplex was provided by management and excludes Mediaplex's media business, which was sold to Exile on Seventh LLC in May, 2001.

Premiums Paid Analysis

    US Bancorp Piper Jaffray reviewed 104 completed merger and acquisition transactions that it deemed comparable to the merger to determine the implied premiums payable in the transaction over market trading prices of the target companies one day, one week and one month prior to announcement of the transaction. It selected these transactions by searching SEC filings, public company disclosures, press releases, industry and popular press reports, databases and other sources and by applying the following criteria:

    The table below shows a comparison of those premiums to the premium that would be paid to holders of Mediaplex common stock based on the implied value payable in the merger. The premium calculations for Mediaplex stock are based upon an assumed announcement date of June 25, 2001:

 
   
  Implied Premium (Discount)
   
 
 
  Mediaplex
  Low
  Mean
  Median
  High
 
One day before announcement   37.9 % (26.9 )% 34.5 % 29.5 % 190.7 %
One week before announcement   30.7 % (20.6 )% 45.4 % 39.0 % 322.8 %
One month before announcement   37.9 % (47.8 )% 52.3 % 40.0 % 298.6 %

Mediaplex Discounted Cash Flow Analysis

    US Bancorp Piper Jaffray performed a discounted cash flow analysis for Mediaplex in which it calculated the present value of the projected future cash flows of Mediaplex using internal financial planning data prepared by Mediaplex management. US Bancorp Piper Jaffray estimated a range of theoretical values for Mediaplex based on the present value of its implied annual cash flows and a terminal value for Mediaplex in 2004 calculated based upon a multiple of revenue. US Bancorp Piper Jaffray applied a range of discount rates of 25% to 35% and a range of terminal value multiples of 1.0x to 2.0x of forecasted 2004 revenue:

Equity Value of Mediaplex (in thousands)

   
Low   $ 15,930
Mid     28,569
High     44,627

    US Bancorp Piper Jaffray noted that its calculation of the implied aggregate considerations for the common stock and common stock equivalents of Mediaplex in the merger of approximately $49.9

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million exceeded the high end of this range of theoretical values implied by its discounted cash flow analysis. See "—Implied Consideration."

Pro Forma Analysis

    US Bancorp Piper Jaffray analyzed pro forma effects resulting from the impact of the transaction on the projected revenue per share and projected cash earnings per share of the combined company at and for the fourth quarter of 2001, the calendar year 2001, the four quarters in 2002 and calendar year 2002 using management estimates for Mediaplex and ValueClick. US Bancorp Piper Jaffray performed this analysis with and without taking into account cost of goods sold synergies of approximately $30,000 in calendar year 2001 and $1.9 million in calendar year 2002 and operating expense synergies of approximately $525,000 in calendar year 2001 and $5.6 million in calendar year 2002 that management estimates the combined company may realize following consummation of transaction. US Bancorp Piper Jaffray determined that the transaction could be accretive for the 2001 and 2002 calendar years to the projected stand-alone revenue per share and cash earnings per share of ValueClick, both with and without taking into account cost of goods sold synergies and operating expense synergies.

Contribution Analysis

    US Bancorp Piper Jaffray analyzed the actual or expected contributions of each of Mediaplex and ValueClick to:

In performing this analysis, US Bancorp Piper Jaffray used forward looking information provided by management of Mediaplex and ValueClick and did not take into account potential synergies. The analysis indicated that Mediaplex would contribute the following to the combined entity:

 
  Percentage Contribution
 
 
  Mediaplex
  ValueClick
 
Revenues:          
  Latest 12 months   18.1 % 81.9 %
  Calendar year 2001   30.6   69.4  
  Calendar year 2002   31.8   68.2  
   
 
 
  Mean revenue contribution   26.8   73.2  

Gross Profit:

 

 

 

 

 
  Latest 12 months   17.0   83.0  
  Calendar year 2001   33.2   66.8  
  Calendar year 2002   39.5   60.5  
   
 
 
  Mean gross profit contribution   29.9   70.1  

Calendar year 2002 cash net income

 

39.9

 

60.1

 
Net cash & cash equivalents (1)   29.7   70.3  

Pro forma equity ownership (2)

 

30.0

%

70.0

%

(1)
Cash and cash equivalents, less outstanding debt.

(2)
Calculated using fully-diluted shares from the treasury stock method, as of the close of trading on June 25, 2001.

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    In reaching its conclusion as to the fairness of the exchange ratio and in its presentation to the board of directors, US Bancorp Piper Jaffray did not rely on any single analysis or factor described above, assign relative weights to the analyses or factors considered by it, or make any conclusion as to how the results of any given analysis, taken alone, supported its opinion. The preparation of a fairness opinion is a complex process and not necessarily susceptible to partial analysis or summary description. US Bancorp Piper Jaffray believes that its analyses must be considered as a whole and that selection of portions of its analyses and of the factors considered by it, without considering all of the factors and analyses, would create a misleading view of the processes underlying the opinion.

    The analyses of US Bancorp Piper Jaffray are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the analyses. Analyses relating to the value of companies do not purport to be appraisals or valuations or necessarily reflect the price at which companies may actually be sold. No company or transaction used in any analysis for purposes of comparison is identical to Mediaplex, ValueClick or the merger. Accordingly, an analysis of the results of the comparisons is not mathematical; rather, it involves complex considerations and judgments about differences in the companies to which Mediaplex and ValueClick were compared and other factors that could affect the public trading or transactional value of the companies.

    For purposes of its opinion, US Bancorp Piper Jaffray relied upon and assumed the accuracy, completeness and fairness of the financial statements and other information provided to it by Mediaplex and ValueClick or otherwise made available to it and did not assume responsibility for the independent verification of that information. Information prepared for financial planning purposes was not prepared with the expectation of public disclosure. US Bancorp Piper Jaffray relied upon the assurances of the management of Mediaplex and ValueClick that the information provided to it by Mediaplex and ValueClick was prepared on a reasonable basis, the financial planning data and other business outlook information reflect the best currently available estimates of management, and management was not aware of any information or facts that would make the information provided to US Bancorp Piper Jaffray incomplete or misleading. US Bancorp Piper Jaffray also assumed that there have been no material changes in Mediaplex's and ValueClick's assets, financial condition, results of operations, business or prospects since the respective dates of their last financial statements made available to US Bancorp Piper Jaffray.

    For purposes of its opinion, US Bancorp Piper Jaffray assumed that the final form of the merger agreement would be substantially similar to the last draft it reviewed, without modification or waiver of material terms or conditions by Mediaplex and ValueClick. Subsequent to the delivery of its opinion, US Bankcorp Piper Jaffray reviewed the final form of the merger agreement and the accompanying exhibits which did not vary from the June 21, 2001 draft reviewed by US Bankcorp Piper Jaffray in any manner that was material to its analyses. US Bancorp Piper Jaffray also assumed that, in the course of obtaining the necessary regulatory approvals for the merger, no restrictions, including any divestiture requirements, will be imposed that would have a material adverse effect on the contemplated benefits of the merger. In addition, US Bancorp Piper Jaffray assumed that the merger will constitute a reorganization for federal income tax purposes.

    In arriving at its opinion, US Bancorp Piper Jaffray did not perform any appraisals or valuations of any specific assets or liabilities of Mediaplex and ValueClick, and was not furnished with any appraisals or valuations. US Bancorp Piper Jaffray expressed no opinion as to the liquidation value of any entity. US Bancorp Piper Jaffray expressed no opinion as to the price at which shares of Mediaplex and ValueClick common stock have traded or at which the shares of Mediaplex, ValueClick or the combined company may trade at any future time. US Bancorp Piper Jaffray was not authorized to solicit, and did not solicit, other persons regarding a business combination with Mediaplex. The opinion is based on information available to US Bancorp Piper Jaffray and the facts and circumstances as they existed and were subject to evaluation on the date of the opinion. Events occurring after that date could materially affect the assumptions used in preparing the opinion. US Bancorp Piper Jaffray has

55


not undertaken to and is not obligated to affirm or revise its opinion or otherwise comment on any events occurring after the date it was given.

    US Bancorp Piper Jaffray was not requested to opine as to, and the opinion does not address, the basic business decision to proceed with or effect the transaction. The opinion does not address the relative merits of the transaction, on the one hand, or any alternative business strategies or alternative transactions that may be available, on the other hand.

    US Bancorp Piper Jaffray, as a customary part of its investment banking business, evaluates businesses and their securities in connection with mergers and acquisitions, underwritings and secondary distributions of securities, private placements and valuations for estate, corporate and other purposes. The Mediaplex board of directors selected US Bancorp Piper Jaffray because of its expertise, reputation and familiarity with the advertising technology industry in general and with Mediaplex in particular. US Bancorp Piper Jaffray writes research on and maintains a market in Mediaplex's common stock. US Bancorp Piper Jaffray acted as a co-manager for the initial public offering of Mediaplex's common stock in November 1999. Pursuant to the underwriting agreement for Mediaplex's initial public offering, US Bankcorp Piper Jaffray and the other underwriters of the offering received a 7% underwriting discount on each share of stock that they purchased in the offering. In the ordinary course of its business, US Bancorp Piper Jaffray and its affiliates may actively trade securities of Mediaplex for their own accounts or the accounts of their customers and, accordingly, may at any time hold a long or short position in those securities.

    Under the terms of the engagement letter dated June 8, 2001, Mediaplex agreed to pay US Bancorp Piper Jaffray a fee of $250,000 for rendering its opinion to the Mediaplex board of directors. This fee is not contingent upon completion of the merger. Whether or not the transaction is consummated, Mediaplex has also agreed to pay the reasonable out-of-pocket expenses of US Bancorp Piper Jaffray and to indemnify US Bancorp Piper Jaffray against liabilities incurred. These liabilities include liabilities under the federal securities laws in connection with the engagement of US Bancorp Piper Jaffray by the board of directors.

Conflicts of Interests of ValueClick Directors and Executive Officers in the Merger

    In considering the recommendation of the ValueClick board of directors to vote for the proposal to approve the merger agreement, stockholders of ValueClick should be aware that some members of the ValueClick board of directors and some members of ValueClick's management team have agreements or arrangements that provide them with benefits if the merger is completed which results in those persons having interests in the merger that differ from those of ValueClick stockholders. The ValueClick board of directors was aware of these agreements and arrangements during its deliberations of the merits of the merger and in determining to recommend to the ValueClick stockholders that they vote for the proposal to approve the merger agreement.

    Continued Service.   All of ValueClick's executive officers will continue to be executive officers of ValueClick after the merger. Three ValueClick directors will resign from the ValueClick board of directors.

    Incentive Compensation.   ValueClick's executive officers may be awarded incentive compensation based on the combined Company's growth and operating results.

Conflicts of Interests of Mediaplex Directors and Executive Officers in the Merger

    In considering the recommendation of the Mediaplex board of directors to vote for the proposal to approve the merger agreement, stockholders of Mediaplex should be aware that some members of the Mediaplex board of directors and some members of Mediaplex's management team have agreements or arrangements that provide them with benefits if the merger is completed which results in those persons having interests in the merger that differ from those of Mediaplex stockholders. The Mediaplex board

56


of directors was aware of these agreements and arrangements during its deliberations of the merits of the merger and in determining to recommend to the Mediaplex stockholders that they vote for the proposal to adopt the merger agreement.

    Severance Agreements for Officers.   Each of Tom Vadnais and Scott Barlow are parties to agreements with Mediaplex pursuant to which each will be entitled to severance payments if he is involuntarily terminated following the merger. Pursuant to these agreements, Messrs. Vadnais and Barlow would receive approximately $400,000 and $50,000, respectively, if ValueClick terminates their employment involuntarily following the merger. In addition, all options to purchase Mediaplex common stock held by Mr. Vadnais would become immediately exercisable upon completion of the merger.

    Consulting Agreement.   Upon completion of the merger, ValueClick will enter into a consulting agreement with Gregory Raifman, the current chairman of the board of directors of Mediaplex whereby in exchange for consulting services, ValueClick will pay Mr. Raifman $250,000 over a one-year period.

    Accelerated Vesting of Outside Director Stock Options.   Upon completion of the merger, stock options held by Messrs. Carlin, DeSorrento, Guarascio and Dr. Sealey, each to purchase 50,000 shares of Mediaplex common stock at an exercise price of $0.75 per share, will become fully vested.

    Appointment to ValueClick Board of Directors.   Upon the completion of the merger, three Mediaplex directors, Gregory R. Raifman, Tom A. Vadnais and Ira Carlin, will become directors of ValueClick. In addition, Mr. Raifman will become Vice-Chairman of ValueClick's board of directors.

    Employment after the Merger.   Upon the completion of the merger, Tom A. Vadnais will become the Chief Executive Officer of the Mediaplex business reporting to Mr. Zarley. Mr. Vadnais will also be a member of Mediaplex's board of directors following the merger.

    Indemnification and Insurance.   The merger agreement provides that, upon completion of the merger, ValueClick will indemnify and hold harmless, and pay all applicable expenses to, all past and present directors and officers of Mediaplex and its subsidiaries in all of their capacities, for acts or omissions occurring at or prior to the completion of the merger:

    The merger agreement also provides that, upon completion of the merger, for a period of six years after the completion of the merger, ValueClick will maintain in effect the existing policy of directors' and officers' liability insurance maintained by Mediaplex, or substitute for the current policy a policy or policies with comparable coverage; but ValueClick will not be required to pay aggregate premiums for insurance in excess of 125% of the aggregate premiums paid by ValueClick for coverage of its directors and officers in the twelve-month period prior to the completion of the merger.

ValueClick Purchase of Mediaplex Common Stock

    Since the signing of the merger agreement, ValueClick, in several transactions, has purchased 1,521,000, or 4.2%, of the outstanding shares of Mediaplex common stock. Of the 1,521,000 shares, ValueClick purchased, on August 16, 2001, 500,000 shares directly from Gregory Raifman, Chairman of Mediaplex, at $0.90 per share, the closing market price for Mediaplex shares that day.

Completion and Effectiveness of the Merger

    The merger will be completed when all of the conditions to completion of the merger are satisfied or waived, including the adoption of the merger agreement by the stockholders of each of ValueClick

57


and Mediaplex. The merger will become effective upon the filing of the certificate of merger with the Secretary of State of the State of Delaware.

    ValueClick and Mediaplex are working toward completing the merger as quickly as possible. ValueClick and Mediaplex intend to complete the merger immediately after the stockholders of ValueClick and Mediaplex adopt the merger agreement at their respective special meetings. ValueClick and Mediaplex hope to complete the merger by November 30, 2001.

Material United States Federal Income Tax Consequences of the Merger

    The following discussion describes the material U.S. federal income tax consequences of the merger generally applicable to the holders of Mediaplex common stock who exchange Mediaplex common stock for ValueClick common stock in the merger. This discussion addresses only those stockholders who hold Mediaplex common stock as a capital asset and will hold ValueClick common stock received in the merger as a capital asset.

    This discussion does not address all U.S. federal income tax considerations that may be relevant to particular stockholders in light of their individual circumstances or to stockholders who hold their Mediaplex common stock as other than a capital asset, to stockholders that are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign stockholders, to stockholders who hold Mediaplex common stock as part of a straddle, hedge, or conversion transaction, to stockholders who acquired Mediaplex common stock pursuant to the exercise of employee stock options or otherwise as compensation, or to stockholders whose shares are qualified small business stock for purposes of Section 1202 of the Internal Revenue Code of 1986, as amended, or the Code.

    The following discussion is based upon the current provisions of the Code, applicable Treasury Regulations, judicial decisions and current administrative rulings, all of which are subject to change, possibly on a retroactive basis. Tax consequences under state, local, foreign and other laws are not addressed in this discussion. Each stockholder is advised to consult his or her tax advisor as to the particular facts and circumstances which may be unique to that stockholder and also as to any estate, gift, state, local or foreign tax considerations arising out of this merger.

    Based upon the assumptions and representations referred to in this discussion, Brobeck, Phleger & Harrison LLP, counsel to ValueClick, has rendered an opinion to ValueClick and Wilson Sonsini Goodrich & Rosati, a Professional Corporation, has rendered an opinion to Mediaplex, that the merger will constitute a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code and the federal income tax consequences to the Mediaplex stockholders of the exchange of their shares of Mediaplex common stock for shares of ValueClick common stock in the merger will be as described below. In addition, it is a condition to the merger that ValueClick and Mediaplex each receive an opinion from their respective counsel confirming their opinions that the merger will constitute a reorganization. In the event that either ValueClick or Mediaplex waives this condition to the merger or there is a material change in the anticipated tax consequences of the merger prior to the closing, the parties will recirculate this document and resolicit the vote of the Mediaplex stockholders.

    The tax opinions are conditioned upon the following:

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    Qualification of the merger as a reorganization will result in the following federal income tax consequences to the Mediaplex stockholders:

    Exchange of Mediaplex Common Stock for ValueClick Common Stock.   A holder of Mediaplex common stock whose shares of Mediaplex common stock are exchanged in the merger for ValueClick common stock will not recognize taxable gain or loss upon the exchange, except with respect to cash received in payment for a fractional share. The aggregate tax basis of ValueClick common stock received by the holder will be equal to the aggregate tax basis of Mediaplex common stock that is exchanged, excluding any portion of the holder's basis allocated to any fractional shares, and the holding period of ValueClick common stock received will include the holding period of Mediaplex common stock that is exchanged.

    Cash For Fractional Shares.   A holder of Mediaplex common stock who receives cash in lieu of a fractional shares of ValueClick common stock will be treated as having received the fractional shares pursuant to the merger and then as having exchanged the fractional shares for cash in a redemption by ValueClick. The amount of any gain or loss upon this deemed redemption will be equal to the difference between the ratable portion of the tax basis of Mediaplex common stock exchanged in the merger that is allocated to the fractional share and the cash received for the fractional share. Any gain or loss will constitute long-term capital gain or loss if Mediaplex common stock has been held by the holder for more than one year at the time of the consummation of the merger.

    Reporting Requirements.   Each holder of Mediaplex common stock that receives ValueClick common stock in the merger will be required to retain records and file with the stockholder's federal income tax return a statement setting forth certain facts relating to the merger.

    This discussion constitutes the opinion of Brobeck, Phleger & Harrison LLP and Wilson Sonsini Goodrich & Rosati, a Professional Corporation. No rulings have been or will be requested from the Internal Revenue Service with respect to any of the matters addressed in this discussion. The tax opinions of counsel referred to herein will not bind the Internal Revenue Service, and the Internal Revenue Service may sustain a position contrary to the tax opinions. A successful Internal Revenue Service challenge to the reorganization status of the merger would result in Mediaplex stockholders recognizing taxable gain or loss with respect to each share of Mediaplex common stock surrendered equal to the difference between the stockholder's basis in the Mediaplex share and the fair market value, as of the effective time of the merger, of the ValueClick common stock and any cash received in exchange therefor. In that case, a stockholder's aggregate basis in the ValueClick common stock so received would be equal to the fair market value and the stockholder's holding period for such stock would begin the day after the merger.

Accounting Treatment of the Merger

    ValueClick intends to account for the merger under the purchase method of accounting for business combinations.

Regulatory Matters

    Antitrust Considerations.   The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which prevents specified transactions from being completed until required information and materials are furnished to the Antitrust Division of the Department of Justice and the Federal Trade Commission and specified waiting periods are terminated or expire. ValueClick and Mediaplex received notice of early termination of the waiting period on August 20, 2001.

    The Antitrust Division of the Department of Justice or the Federal Trade Commission may challenge the merger on antitrust grounds, either before or after expiration of the waiting period. Accordingly, at any time before or after the completion of the merger, either the Antitrust Division of the Department of Justice or the Federal Trade Commission could take action under the antitrust laws

59


as it deems necessary or desirable in the public interest, or other persons could take action under the antitrust laws. Additionally, at any time before or after the completion of the merger, any state could take action under the antitrust laws as it deems necessary or desirable in the public interest. There can be no assurance that a challenge to the merger will not be made or that, if a challenge is made, ValueClick and Mediaplex will prevail.

Restrictions on Sales of Shares by Affiliates of Mediaplex

    The shares of ValueClick common stock to be issued in connection with the merger will be registered under the Securities Act of 1933 and will be freely transferable under the Securities Act, except for shares of ValueClick common stock issued to any person who is deemed to be an "affiliate" of Mediaplex at the time of the special meeting. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under the common control of Mediaplex and may include executive officers, directors and major stockholders of Mediaplex. Affiliates may not sell their shares of ValueClick common stock acquired in connection with the merger except pursuant to:

    ValueClick's registration statement on Form S-4, of which this document forms a part, does not cover the resale of shares of ValueClick common stock to be received by Mediaplex's affiliates in connection with the merger.

Appraisal Rights

    Under Delaware law, no Mediaplex stockholder is entitled to appraisal rights in connection with the merger.

Delisting and Deregistration of Mediaplex Common Stock after the Merger

    If the merger is completed, Mediaplex common stock will be delisted from the Nasdaq National Market and will be deregistered under the Securities Exchange Act of 1934.

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THE MERGER AGREEMENT

     The following summary highlights selected information from the merger agreement, the complete text of which is incorporated by reference and attached to this document as Annex A. This summary may not contain all the information that is important to you. ValueClick and Mediaplex urge you to read carefully the merger agreement in its entirety.

Effective Time

    Once all the conditions to the merger contained in the merger agreement have been satisfied or waived, ValueClick and Mediaplex will complete the merger. The merger will become effective when the certificate of merger is filed with the Delaware Secretary of State.

Conversion and Exchange of Mediaplex Stock

    At the effective time, each share of Mediaplex common stock will be converted automatically into 0.4113 of a share of ValueClick common stock. This multiple is referred to in this document as the exchange ratio.

    No fractional shares of ValueClick common stock will be issued in the merger. Instead, fractional shares will be paid in cash, without interest, based on the closing price for ValueClick common stock reported by Nasdaq on the day on which the merger becomes effective.

Exchange of Certificates

    Soon after the effective time Mellon Investor Services, L.L.C, the exchange agent, will mail to each record holder of Mediaplex common stock a transmittal letter that record holders will use to exchange Mediaplex common stock certificates for ValueClick common stock certificates and cash for any fractional share. Transmittal letters will also be available following completion of the merger at the offices of the exchange agent at 85 Challenger Road, Ridgefield Park, NJ 07660. Additionally, after the effective time, holders of Mediaplex common stock certificates can exchange their stock certificates for certificates evidencing ValueClick common stock at the offices of the exchange agent. Do not surrender your certificate before the effective time. After the effective time, transfers of Mediaplex common stock will not be registered on Mediaplex stock transfer books.

    No dividends or other distributions on the ValueClick common stock that are declared or made after the merger and have a record date after the merger will be paid to Mediaplex stockholders until they surrender their certificates.

Mediaplex Stock Options

    At the effective time, each outstanding Mediaplex stock option will be assumed by ValueClick and become an option to purchase a number of shares of ValueClick common stock equal to the number of shares of Mediaplex common stock subject to that Mediaplex stock option immediately before the effective time, multiplied by the exchange ratio, rounded down to the nearest whole share. The exercise price of the ValueClick stock option will be equal to the exercise price of Mediaplex stock option divided by 0.4113, rounded up to the nearest cent. All other terms and conditions of the Mediaplex stock options will not change and the Mediaplex stock options will operate in accordance with their terms.

    Based on the Mediaplex stock options outstanding at the record date and assuming no Mediaplex stock options are exercised prior to the effective time, ValueClick will be required to reserve 3,564,450 shares of ValueClick common stock for issuance upon exercise of Mediaplex stock options assumed by ValueClick in the merger.

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Representations and Warranties

    The merger agreement contains representations and warranties of Mediaplex relating to, among other things:

      corporate organizational matters;
      subsidiaries;
      capital structure;
      authorization, validity of agreement, necessary action;
      board approval and applicable state takeover laws;
      the stockholder vote required to adopt the merger agreement;
      consents and approvals;
      reports and financial statements;
      no undisclosed liabilities;
      environmental laws;
      absence of specified changes or events;
      litigation;
      employee benefits;
      tax matters;
      intellectual property;
      employment matters;
      compliance with applicable laws;
      specified contracts;
      information supplied in connection with proxy statement/prospectus;
      opinions of financial advisors;
      absence of questionable payments;
      insider interests; and
      brokers and finders.

    The merger agreement contains representations and warranties of ValueClick relating to, among other things:

      corporate organizational matters;
      capital structure;
      authorization, validity of agreement, necessary action;
      the stockholder vote required to approve the merger agreement;
      consents and approvals;
      SEC filings and financial statements;
      litigation;
      no undisclosed liabilities;
      share ownership;
      absence of specified changes or events;
      information supplied in connection with proxy statement/prospectus; and
      brokers and finders.

Covenants

    The covenants in the merger agreement are complicated and not easily summarized. You are urged to read carefully the provisions of the merger agreement titled "Covenants."

    Mediaplex agreed that, during the period before completion of the merger, except as expressly contemplated or permitted by the merger agreement, or to the extent that ValueClick consents in writing, Mediaplex and its subsidiaries will each carry on its respective business in the usual, regular and ordinary course, and substantially in the same manner as previously conducted, and will use its commercially reasonable efforts to preserve intact its present line of business and its relationships with third parties. In addition to these agreements regarding the conduct of business generally, Mediaplex has agreed that, subject to specified exceptions, neither it nor its subsidiaries will:

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    The merger agreement contains detailed provisions prohibiting Mediaplex from seeking a competing transaction. Under these "no solicitation" provisions, Mediaplex has agreed that it and its subsidiaries will authorize or permit any of its representatives to, directly or indirectly:

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    An "acquisition proposal" is any offer or proposal, other than by ValueClick, which contemplates any of the following:

    Mediaplex's board of directors is not prohibited, however, from taking and disclosing to Mediaplex's stockholders a position with respect to a tender or exchange offer pursuant to Rule 14e-2 under the Exchange Act. In addition, these restrictions will not prohibit Mediaplex from furnishing information to, entering into a confidentiality agreement with, or entering into or conducting discussions or negotiations with, a third party in response to a "superior proposal" if:

    A "superior proposal" is any bona fide, unsolicited written acquisition proposal for the outstanding shares of Mediaplex common stock on terms that the Mediaplex board of directors determines in good faith, after considering the advice of a financial advisor of nationally recognized reputation and taking

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into account all the terms and conditions of the acquisition proposal, are more favorable to the Mediaplex stockholders than the terms of the merger agreement; so long as any required financing to consummate such transaction by the third party will be obtained by such third party on a timely basis.

    Mediaplex has agreed that:

Conditions to the Merger

    Mutual Obligations.   ValueClick's and Mediaplex's obligations to complete the merger depend on the satisfaction or waiver by both companies of each of the following conditions:

    ValueClick's Obligations.   The obligation of ValueClick to complete the merger is subject to the satisfaction or waiver of the following conditions:

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    Mediaplex's Obligations.   Mediaplex's obligation to complete the merger are subject to the satisfaction of the following conditions:


    For purposes of the merger agreement, a material adverse effect means a material adverse effect on or development with:

    A material adverse effect will not result from, among other things, changes in the economy generally, changes in the online advertising business generally, trading prices of ValueClick's and Mediaplex's stock price, or the announcement of the execution or compliance with the terms of the merger agreement.

    Each of the conditions to ValueClick's and Mediaplex's obligation to complete the merger and other transactions contemplated by the merger agreement may be waived, in whole or in part, to the extent permitted by applicable law, by agreement of ValueClick and Mediaplex.

Termination

    The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the stockholder approvals have been obtained:

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    Effect of Termination.   If the merger agreement is terminated by either party, the merger agreement will become void and ValueClick and Mediaplex will have no liability under the merger agreement, assuming no fraud or willful material breach of the merger agreement has occurred. Provisions for no solicitation, termination, termination fees and expenses and the general contract provisions will survive termination of the merger agreement.

    Termination Fee and/or Payment of Expenses Upon Termination.   The merger agreement requires each party to make a payment to the other party depending on the circumstances surrounding the termination. Specifically, if the agreement is terminated because:

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Expenses

    With the exception of the provisions above regarding termination fees and expenses, whether or not the merger is completed, all expenses and fees incurred in connection with the merger agreement and the merger will be paid by the party incurring the expenses or fees.

Amendment, Extension and Waiver

    The merger agreement may be amended, modified and supplemented by the parties, by action taken or authorized by their respective boards of directors, at any time before or after the approval of the merger by the stockholders of ValueClick and Mediaplex has been obtained. All amendments to the merger agreement must be in writing signed by each party. After the agreement has been approved by the stockholders of the respective companies, no amendment which under applicable law requires further approval of the stockholders may be made without such further approval.


RELATED AGREEMENTS

Voting Agreements

    The following summary of the voting agreements is qualified in its entirety by reference to the complete text of the voting agreements, forms of which are exhibits to the registration statement we filed with the SEC. We urge you to carefully read the full text of the voting agreements.

    In connection with the execution and delivery of the merger agreement, ValueClick entered into a voting agreement with each of Gregory Raifman, Jon Edwards, Pequot Offshore Private Equity Fund, Inc., Pequot Private Equity Fund, L.P. and McCann-Erickson Worldwide under which those Mediaplex stockholders agreed to vote all the shares of Mediaplex common stock with respect to which they have voting power in favor of the adoption of the merger agreement. As of the record date for the Mediaplex special meeting, these stockholders owned shares of Mediaplex common stock representing approximately 29.5% of the total voting power of the outstanding shares of Mediaplex capital stock.

    In addition, Mediaplex entered into a voting agreement with H. Investment Company, Gurbaksh Chahal, Taj Chahal, Steven J. Umberger, The London Family Trust, Buzby-Vasan 1997 Trust, James R. Zarley, Michael Bueno, Brian Coryat and Robert D. Leppo under which those ValueClick stockholders agreed to vote their shares of ValueClick common stock in favor of the approval of the merger agreement. As of the record date for the ValueClick special meeting, these stockholders owned shares of ValueClick common stock representing approximately 37.9% of the total voting power of the outstanding shares of ValueClick capital stock.

    These voting agreements terminate on the earliest of the (a) closing date of the merger, (b) the termination of the merger agreement or (c) November 30, 2001.

Board Composition Agreement

    In connection with the merger agreement and pursuant to a board composition agreement, ValueClick has agreed to appoint Gregory Raifman, Tom Vadnais and Ira Carlin to the board of directors of ValueClick upon the completion of the merger.

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VALUECLICK MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

     The following discussion contains forward-looking statements based on ValueClick's current expectations, estimates and projections about ValueClick's operations, industry, financial condition and liquidity. Words such as "anticipates," "expects," "intends," "plans," "believes," "may," "will" or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, ValueClick's actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Risk Factors" set forth in this document discusses some of the important risk factors that may affect ValueClick's business, results of operations and financial condition. ValueClick undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

    ValueClick focuses on a performance-based Internet advertising solutions, known as cost-per-click, or CPC, cost-per-action, or CPA, and cost-per-lead, or CPL, in which an advertiser only pays ValueClick, and ValueClick in turn only pays a publisher of a Web site when an Internet user clicks on an advertiser's banner advertisement or performs an action, as specifically defined in each campaign. ValueClick provides our advertising customers, primarily direct marketing companies, an Internet advertising alternative to the cost-per-thousand-impressions, or CPM, model, in which advertisers pay whenever their banner ads are displayed. ValueClick's solution provides publishers of over 30,000 small- to medium-sized Web sites the opportunity to generate advertising revenues. ValueClick also provides publishers of large Web sites the ability to capture incremental revenues from their unsold advertising inventory.

    ValueClick's Internet advertising business began in July 1997, as a line of business within Web-Ignite Corporation. In May 1998, the Internet advertising business of Web-Ignite was transferred to ValueClick, LLC, a newly-formed California limited liability company controlled by Web-Ignite's sole stockholder. On December 31, 1998, ValueClick, LLC reorganized as ValueClick, Inc., a Delaware corporation.

    ValueClick generates revenues by delivering banner and text-link advertisements to Web sites in the ValueClick network. Pricing of ValueClick's advertising is on a CPC, CPA and CPL basis and varies depending on whether advertising is delivered across ValueClick's entire network or across targeted categories within ValueClick's network. During 2000, approximately 70% of ValueClick's revenues were derived from banner advertising delivered across ValueClick's entire network. ValueClick sells its services through its sales and marketing staff located in Westlake Village, San Francisco and Fremont, California; New York, New York; West Palm Beach, Florida; Tokyo and Osaka, Japan; London, England; Paris, France; and, Munich, Germany. The advertisements ValueClick delivers are sold under short-term agreements that are subject to cancellation. ValueClick recognizes revenues in the month that clicks or actions from clicks on delivered advertisements occur or when a customer lead is delivered, provided that no significant obligations on ValueClick's part remain and collection of the related receivable is probable. To date, ValueClick's agreements have not required a guaranteed minimum number of clicks or actions. ValueClick pays each Web site in the ValueClick network a price-per-click or price-per-action, which is based upon the respective volume delivered by the Web site in a given month. These payments made to Web publishers are included in the cost of revenues. ValueClick's agreements with Web publishers are also subject to cancellation.

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    ValueClick operates in one industry segment, the performance based Internet advertising industry, and as such has no other separate reportable industry segments.

    In December 2000 and January 2001, ValueClick completed its mergers with ClickAgents.com, Inc. and Z Media, Inc., respectively. The mergers were accounted for using the pooling-of-interests method and accordingly, the financial information for all periods have been restated to combine our results with the results of ClickAgents and Z Media.

    ValueClick's operations are domiciled in the United States with operations in Japan through its majority owned subsidiary, ValueClick Japan and with operations in Europe through its wholly-owned subsidiary, ValueClick Europe, ValueClick France and ValueClick Germany. Other international subsidiaries included ValueClick Canada and ValueClick Brazil. ValueClick's geographic information is as follows:

 
  Six-month Period Ended
June 30, 2001

   
 
  Revenues
  Income (loss) from Operations
  Long-lived
Assets
as of June 30, 2001

United States   $ 13,486,000   $ (6,123,000 ) $ 9,061,000
Japan     5,962,000     81,000     1,171,000
Europe     2,861,000     (7,000 )   131,000
Other     67,000     (273,000 )   25,000
   
 
 
  Total   $ 22,376,000   $ (6,322,000 ) $ 10,388,000
   
 
 
 
  Six-month Period Ended
June 30, 2000

   
 
  Revenues
  Income (loss) from Operations
  Long-lived
Assets
as of June 30, 2000

United States   $ 26,793,000   $ 110,000   $ 10,290,000
Japan     4,562,000     475,000     304,000
Europe     360,000     (179,000 )   68,000
Other         (6,000 )  
   
 
 
  Total   $ 31,715,000   $ 400,000   $ 10,662,000
   
 
 
 
  Year Ended
December 31, 2000

   
 
  Revenues
  Income (loss)
from
Operations

  Long-lived
Assets
at December 31, 2000

United States   $ 50,194,000   $ (3,005,000 ) $ 9,989,000
Japan     11,679,000     1,523,000     471,000
Europe     2,443,000     (1,140,000 )   154,000
Other     16,000     (634,000 )   48,000
   
 
 
  Total   $ 64,332,000   $ (3,256,000 ) $ 10,662,000
   
 
 

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  Year Ended
December 31, 1999

   
 
  Revenues
  Income (loss)
from
Operations

  Long-Lived
Assets
at December 31, 1999

United States   $ 23,878,000   $ 961,000   $ 4,921,000
Japan     2,093,000     15,000     200,000
Europe         (172,000 )   17,000
   
 
 
  Total   $ 25,971,000   $ 804,000   $ 5,138,000
   
 
 

    All ValueClick's operations in 1998 were based in the United States.

Results of Operations—Three-Month Period Ended June 30, 2001 Compared to June 30, 2000

    Revenues.   ValueClick's revenues are derived primarily from the sale of clicks on advertisements delivered through the ValueClick and ClickAgents networks, actions delivered through Bach Systems' onResponse.com network and leads generated through the Z Media network. ValueClick charges each advertiser an amount based on the number of times users click on the advertiser's banner ad, the number of times users perform actions, as defined by each specific contract, on the advertiser's website or the number of leads generated based on the interest in the advertiser's website. Net revenues for the three-month period ended June 30, 2001 were $9.7 million compared to $16.5 million for the same period in 2000, a decrease of $6.8 million or 41.5%. The revenue decline for the 2001 period was attributable primarily to the continued softness in the overall media market, due in part to the continued decline in advertising from electronic commerce and other Internet customers and the general economic slowdown, partially offset by the increased revenue from ValueClick's Japanese and European operations and the inclusion of Bach Systems' onResponse.com business in 2001.

    The ValueClick worldwide network delivered approximately 44.6 million click-throughs, 1.2 million actions and 7.7 million leads during the second quarter of 2001, compared to approximately 36 million click-throughs and 5.5 million leads during the corresponding period in 2000. ValueClick also delivered more than 23 billion ad impressions during the second quarter of 2001. The increase in overall sales volume was offset by the decrease in the average price per click and price per lead for the three-month period ended June 30, 2001 compared to the same period in 2000.

    Cost of Revenues.   Cost of revenues consists primarily of amounts that ValueClick paid to Web site publishers on the ValueClick consolidated networks. ValueClick pays these publishers on either a CPC, CPA or CPL. Cost of revenues also includes depreciation costs of the advertising delivery system and Internet access costs. Cost of revenues was $4.8 million for the three-month period ended June 30, 2001 compared to $8.7 million for the same period in 2000, a decrease of $3.9 million or 45.4%. The decrease in cost of revenues was directly attributable to the decreased delivery of advertisements. Gross profit margin increased to 50.8% in the second quarter of 2001 from 47.2% in 2000. The increase in gross margin was primarily due to a decrease in the average cost per click for the three-month period ended June 30, 2001 compared to the same period in 2000.

    Sales and Marketing.   Sales and marketing expenses consist primarily of compensation (including commissions), travel, advertising, trade show costs and costs of marketing materials. Sales and marketing expenses remained consistent at $2.8 million for each of the three-month periods ended June 30, 2001 and 2000.

    General and Administrative.   General and administrative expenses consist primarily of facilities costs, executive and supporting personnel compensation and professional service fees. General and administrative expenses remained consistent at $3.0 million for each of the three-month periods ended June 30, 2001 and 2000.

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    Product Development.   Product development costs include expenses for the development of new technologies designed to enhance the performance of ValueClick's service, including the compensation and related expenses for ValueClick's software engineering department, as well as costs for contracted services and supplies. To date, all product development costs have been expensed as incurred. Product development expenses for the three-month period ended June 30, 2001 were $853,000 compared to $1.1 million for the same period in 2000, a decrease of $194,000 or 18.5%. The slight decrease was due primarily to the decrease in the number of technology support personnel from the same period in 2000. Though expenses in this area have reduced slightly, ValueClick believes that continued investment in product development is critical to attaining its strategic objectives.

    Stock-Based Compensation.   Deferred stock compensation reflects the difference between the deemed fair value of ValueClick's common stock for financial accounting purposes and the exercise price of options on the date the options were granted. Stock-based compensation for the three-month period ended June 30, 2001 amounted to $655,000, which relates to the amortization of existing deferred compensation recorded in prior periods for stock options and restricted shares. The decrease in stock- based compensation from $1.4 million for the three-month period ended June 30, 2000 relates to ValueClick's amortization method that proportionally charges to expense the deferred stock compensation as options vest.

    Amortization of Intangibles and Acquired Software.   Amortization of intangibles and acquired software represents principally the amortization of acquired software purchased from a founding stockholder in May 1998, goodwill created as a result of the acquisitions of Bach Systems in November 2000, the majority interest in ValueClick Japan in August 1999 and software acquired from StraightUP!, Inc. in September 2000. The increase in the current period represents the amortization of Bach Systems goodwill not included in 2000.

    Merger-Related Costs.   Merger-related costs represent direct transaction costs incurred related to the pooling-of-interests with Z Media consummated on January 31, 2001.

    Interest Income, Net.   Interest income, net, principally consists of interest earned on ValueClick's cash and cash equivalents and is net of interest paid on debt obligations. Interest income was $1.2 million for each of the three-month periods ended June 30, 2001 and 2000. The consistency in interest income reflects slightly higher cash and cash equivalents balances over the three-month period, ended June 30, 2001, offset by decreasing interests rates from 2000.

    Provision for Income Taxes.   For the three-month period ended June 30, 2001, ValueClick's benefit from Federal, state and foreign income taxes amounted to $120,000, compared to a provision of $2.8 million for the same period in 2000. Income taxes for interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ValueClick's ongoing review and evaluation. The provision for income taxes reflects certain non-deductible expenses, including the stock-based compensation charges and goodwill amortization.

    Minority Share of Income of ValueClick Japan.   Minority share of loss of ValueClick Japan was $106,000 for the three-month period ended June 30, 2001, compared to a minority share of income of $22,000 for the same period in 2000. ValueClick accounts for its interest in ValueClick Japan on a consolidated basis for financial reporting purposes, resulting in a minority interest in the net income achieved by ValueClick Japan.

Results of Operations—Six-Month Period Ended June 30, 2001 Compared to June 30, 2000

    Revenues.   Net revenues for the six-month period ended June 30, 2001 were $22.4 million compared to $31.7 million for the same period in 2000, a decrease of $9.3 million or 29.4%. The revenue decline for six-month period ended June 30, 2001 was attributable primarily to the continued

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softness in the overall media market, due in part to the continued decline in advertising from electronic commerce and other Internet customers and the general economic slowdown, partially offset by the increased revenue from ValueClick's Japanese and European operations and the inclusion of Bach Systems' onResponse.com business in 2001.

    The ValueClick worldwide network delivered approximately 93.6 million click-throughs, 3.9 million actions and 16.8 million leads during the six-month period ended June 30, 2001, compared to approximately 70.0 million click-throughs and 11.0 million leads during the corresponding period in 2000. ValueClick also delivered more than 43.6 billion ad impressions during the six-month period ended June 30, 2001. The increase in overall sales volume was offset by the decrease in the average price per click and price per lead for the six-month period ended June 30, 2001 compared to the same period in 2000.

    Cost of Revenues.   Cost of revenues was $10.9 million for the six-month period ended June 30, 2001 compared to $16.4 million for the same period in 2000, a decrease of $5.5 million or 33.5%. The decrease in cost of revenues was directly attributable to the decreased delivery of advertisements. Gross profit margin increased to 51.4% in the six-month period ended June 30, 2001 from 48.4% in 2000. The increase in gross margin was primarily due to a decrease in the average cost per click for the six-month period ended June 30, 2001 compared to the same period in 2000.

    Sales and Marketing.   Sales and marketing expenses for the six-month period ended June 30, 2001 were $5.8 million compared to $4.8 million for the same period in 2000, an increase of $1.0 million or 20.7%. The increase in sales and marketing expenses was due primarily to the addition of sales and marketing personnel and to increased advertising, public relations and other sales and marketing activities in the first three months of 2001 compared to 2000.

    General and Administrative.   General and administrative expenses for the six-month period ended June 30, 2001 were $6.7 million compared to $5.2 million for the same period in 2000, an increase of $1.5 million or 29.0%. The increase in general and administrative expenses was due primarily to the addition of executive and administrative employees in the first three months of 2001 compared to 2000.

    ValueClick also incurred related expenses associated with hiring additional personnel, expanding its corporate offices to accommodate its increased personnel and other professional service expenses incurred as a public company that were not incurred fully in the 2000 period.

    Product Development.   Product development expenses remained consistent at $1.9 million for each of the six-month periods ended June 30, 2001 and 2000.

    Stock-Based Compensation.   Stock-based compensation for the six-month period ended June 30, 2001 amounted to $1.6 million, which relates to the amortization of existing deferred compensation recorded in prior periods for stock options and restricted shares. The decrease in stock-based compensation from $2.7 million for the six-month period ended June 30, 2000 relates to ValueClick's amortization method that proportionally charges to expense the deferred stock compensation as options vest.

    Amortization of Intangibles and Acquired Software.   Amortization of intangibles and acquired software represents principally the amortization of acquired software purchased from a founding stockholder in May 1998, goodwill created as a result of the acquisitions of Bach Systems in November 2000, the majority interest in ValueClick Japan in August 1999 and software acquired from StraightUP!, Inc. in September 2000. The increase in the current period represents the amortization of Bach Systems goodwill not included in 2000.

    Merger-Related Costs.   Merger-related costs represent direct transaction costs incurred related to the pooling-of-interests with Z Media consummated on January 31, 2001.

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    Interest Income, Net.   Interest income was $2.6 million for the six-month period ended June 30, 2001 compared to $1.3 million for the same period in 2000. The increase is attributable to the increased balances of cash and cash equivalents throughout the six-month period ended June 30, 2001 primarily resulting from the proceeds ValueClick received from its initial public stock offering effective in late March 2000.

    Provision for Income Taxes.   For the six-month period ended June 30, 2001, ValueClick's benefit from Federal, state and foreign income taxes amounted to $20,000, compared to a provision of $3.8 million for the same period in 2000. Income taxes for interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ValueClick's ongoing review and evaluation. The provision for income taxes reflects certain non-deductible expenses, including the stock-based compensation charges and goodwill amortization.

    Minority Share of Income of ValueClick Japan.   Minority share of income of ValueClick Japan was $39,000 for the six-month period ended June 30, 2001, compared to $154,000 for the same period in 2000. ValueClick accounts for its interest in ValueClick Japan on a consolidated basis for financial reporting purposes, resulting in a minority interest in the net income achieved by ValueClick Japan.

Fiscal Years Ended December 31, 2000 and 1999

    Revenues.   ValueClick's revenues are derived primarily from the sale of clicks on advertisements delivered through the ValueClick and ClickAgents networks, actions delivered through Bach Systems' onResponse.com network and leads generated through the Z Media network. ValueClick charges each advertiser an amount based on the number of times users click on the advertiser's advertisement, the number of times users perform actions, as defined by each specific contract, on the advertiser's website or the number of leads generated based on the interest in the advertiser's website. Net revenues for the year ended December 31, 2000 were $64.3 million compared to $26.0 million for 1999, an increase of $38.3 million or 147.7%. Revenue growth for 2000 was attributable primarily to growth in the worldwide ValueClick consolidated networks and ValueClick's ability to serve a larger advertiser customer base. Additionally, the increase in revenue in 2000 over 1999 resulted from the inclusion of the operating results of Bach Systems for the two-month period ended December 31, 2000. The ValueClick worldwide network delivered 138.6 million click-throughs during the year ended December 31, 2000, compared to 47.6 million click-throughs during the year ended 1999. ValueClick also delivered more than 42.3 billion ad impressions during 2000.

    Cost of Revenues.   Cost of revenues consists primarily of amounts that ValueClick pays to Web site publishers on the ValueClick consolidated networks. ValueClick pays these publishers on either a CPC, CPA or CPL basis. Cost of revenues also includes depreciation costs of the advertising delivery system and Internet access costs. Cost of revenues was $31.9 million for the year ended December 31, 2000 compared to $12.5 million for 1999, an increase of $19.4 million or 156.2%. The increase in cost of revenues was directly attributable to the increased delivery of clicks and actions on advertisements. Gross profit margins decrease slightly to 50.4% for 2000 from 52.0% in 1999.

    Sales and Marketing.   Sales and marketing expenses consist primarily of compensation (including commissions), travel, advertising, trade show costs and costs of marketing materials. Sales and marketing expenses for the year ended December 31, 2000 were $11.4 million compared to $3.0 million in 1999, an increase of $8.4 million or 282.6%. The increase in sales and marketing expenses was due primarily to the addition of sales and marketing personnel domestically and worldwide and to increased advertising, public relations and other sales and marketing activities.

    General and Administrative.   General and administrative expenses consist primarily of facilities costs, executive and administrative compensation and professional service fees. General and administrative expenses for the year ended December 31, 2000 were $12.9 million compared to

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$4.7 million for 1999, an increase of $8.2 million or 174.0%. The increase in general and administrative expenses was due primarily to expenses associated with hiring additional executive and administrative personnel, expanding ValueClick's offices to accommodate ValueClick's increased personnel, facilities costs associated with the opening of new sales and international offices, and professional service expenses that were not incurred in 1999.

    Product Development.   Product development costs include expenses for the development of new technologies designed to enhance the performance of ValueClick's service, including the salaries and related expenses for ValueClick's software engineering department, as well as costs for contracted services and supplies. To date, all product development costs have been expensed as incurred. Product development expenses for the year ended December 31, 2000 were $4.8 million compared to $1.1 million for 1999, an increase of $3.7 million or 340.5%. The increase was due primarily to the hiring of additional engineers and support personnel needed to attain ValueClick's strategic objectives.

    Stock-Based Compensation.   Deferred stock compensation included in the accompanying consolidated balance sheets reflects the difference between the deemed fair value of ValueClick's common stock for financial accounting purposes and the exercise price of options on the date of the options were granted. Stock-based compensation expense for the year ended December 31, 2000 amounted to $5.1 million, which relates primarily to the amortization of existing deferred compensation recorded in prior periods for stock options and restricted shares. The increase in stock-based compensation from $3.5 million for the year ended December 31, 1999 represents a full year of amortization in 2000 as well as additional deferred compensation recorded in 2000 related to stock options granted to ClickAgents' employees.

    Amortization of Intangible Assets and Acquired Software.   Amortization of intangibles and acquired software represents principally the amortization of acquired software purchased from a founding stockholder in May 1998, goodwill created as a result of the acquisitions of Bach Systems in November 2000 and a majority interest in ValueClick Japan in August 1999 and software acquired from StraightUP!, Inc. in September 2000.

    Merger-Related Costs.   The merger-related costs incurred in 2000 represent non-recurring direct incremental costs associated with the merger with ClickAgents accounted for under the pooling-of-interests method.

    Interest Income, Net.   Interest income, net principally consists of interest earned on our cash and cash equivalents and is net of interest paid on debt obligations. Interest income was $4.1 million for the year ended December 31, 2000 compared to $45,000 for 1999. The increase is attributable to the increased balances of cash and cash equivalents primarily resulting from the proceeds ValueClick received from its initial public stock offering, the DoubleClick investment transaction, the sale of a portion of ValueClick's stock holdings in DoubleClick and the initial public stock offerings of ValueClick's majority owned subsidiary, ValueClick Japan.

     Loss on Sale of Marketable Securities/Impairment Write-Down of Marketable Securities . On February 28, 2000, ValueClick consummated an investment by DoubleClick under which DoubleClick acquired 7,878,562 shares of ValueClick's common stock in exchange for $10.0 million in cash and 732,860 shares of DoubleClick common stock. The shares of DoubleClick common stock were valued at approximately $85.8 million for accounting purposes based on an average price of $117.07 per share.

    ValueClick accounted for its holdings of DoubleClick common stock as an available for sale investment, whereby the investment was carried at market value with unrealized holding gains and losses from increases and decreases in market value being recorded as a separate component of stockholders' equity until realized or when losses were determined to be other than temporary.

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    During May 2000, ValueClick sold 165,000 shares of its DoubleClick common stock for cash proceeds of $10.3 million. The sale of these shares resulted in a realized non-cash loss of $9.0 million. In December 2000, ValueClick made a judgmental determination that the decline in market value of ValueClick's DoubleClick stock was other than temporary. Factors considered in arriving at this determination in December 2000 included: the market value of the DoubleClick common stock was significantly below the carrying value for a continuous period of six months or more; the prospects for a recovery in the market value of the DoubleClick common stock was not likely in the near term given the market conditions that developed in the Internet advertising market and the market performance of DoubleClick in the fourth quarter of 2000; and DoubleClick significantly adjusting downward its fourth quarter 2000 results and future financial projections in December 2000 as a result of market conditions. Accordingly, for the year ended December 31, 2000, ValueClick recorded a non-cash charge to operations of $60.2 million representing the unrealized holding losses previously accounted for as a separate component of stockholders' equity.

    Gain on the ValueClick Japan Stock Issuance.   On May 31, 2000, ValueClick Japan, ValueClick's majority-owned subsidiary, completed its initial public offering on Japan's "Mothers Market" in which it sold 1,000 shares of its Common Stock at $27,822 per share. The proceeds to ValueClick Japan from the offering, after deducting direct incremental costs and underwriting discounts and commissions, were $25.4 million. The gain of $13.7 million recorded in ValueClick's consolidated statements of operations for the year ended December 31, 2000 represents the change in net equity for ValueClick's share of the proceeds received by ValueClick Japan for their stock issuance. No additional ValueClick Japan stock issuances are anticipated in the near future.

    Gain on the Sale of ValueClick Japan Stock.   During 2000, ValueClick sold 177 shares of its ValueClick Japan holdings for aggregate proceeds of $2.6 million and a resulting realized gain of $2.3 million. ValueClick maintained a majority interest in ValueClick Japan with 52.6% ownership subsequent to the sale of these shares.

    Provision for Income Taxes.   For the year ended December 31, 2000, ValueClick's provision for federal, state and foreign income taxes amounted to $2.5 million, compared to $1.9 million for 1999. The provision for income taxes for both periods reflects certain non-deductible expenses, including the stock-based compensation charges and goodwill amortization. Additionally, income tax benefits from the impairment write-down of marketable securities and the net realized capital losses are not reflected as the realization of theses benefits is not deemed more likely than not.

    Minority Share of Income of ValueClick Japan.   Minority share of income of ValueClick Japan was $419,000 for the year ended December 31, 2000. ValueClick accounts for its interest in ValueClick Japan on a consolidated basis for financial reporting purposes, resulting in a minority interest in the net income achieved by ValueClick Japan.

Fiscal Years Ended December 31, 1999 and 1998

    Revenues.   ValueClick's revenues were $26.0 million for the year ended December 31, 1999 as compared to $2.1 million for the period from May 1, 1998, ValueClick's inception, through December 31, 1998. The increase in revenues over these periods was due to the growth of the ValueClick consolidated network and ValueClick's ability to serve a larger advertiser customer base.

    Cost of Revenues.   For the year ended December 31, 1999 ValueClick's cost of revenues was $12.5 million compared to $1.1 million for the period from May 1, 1998, ValueClick's inception, through December 31, 1998. The increase in cost of revenues over these periods was directly attributable to the increased delivery of banner advertisements and clicks on banner advertisements.

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    Sales and Marketing.   For the year ended December 31, 1999 ValueClick's sales and marketing expenses were $3.0 million compared to $523,000 for the period from May 1, 1998, ValueClick's inception, through December 31, 1998. The $2.5 million increase in sales and marketing expense was primarily due to the addition of sales and marketing personnel, and to increased advertising, public relations and other sales and marketing activities.

    General and Administrative.   For the year ended December 31, 1999 ValueClick had general and administrative expenses of $4.7 million compared to $410,000 for the period from May 1, 1998, ValueClick's inception, through December 31, 1998. The $4.3 million increase in 1999 was primarily attributable to the addition of executive and administrative employees. In addition, ValueClick increased its allowance for doubtful accounts by $754,000 as a result of the significant growth in ValueClick's revenue and accounts receivable and ValueClick's limited historical collection experience. ValueClick also has incurred related expenses associated with hiring additional personnel, expanding ValueClick's corporate offices to accommodate our increased personnel and other professional service expenses that were not incurred in 1998.

    Product Development.   For the year ended December 31, 1999, ValueClick had product development expenses of $1.1 million compared to $155,000 on a combined historical basis for the period from May 1, 1998, ValueClick's inception, through December 31, 1998. The increase was primarily attributable to the hiring of additional engineers and support personnel.

    Stock-Based Compensation.   In connection with the grant of stock options to employees and the imposition of restrictions on common shares held by certain founding employees, during the year ended December 31, 1999, ValueClick recorded a deferred compensation balance of approximately $8.6 million. This deferred compensation represented the difference between the deemed fair value of ValueClick's common stock for financial accounting purposes and the exercise price of these options at the date of grant or the purchase price of these restricted shares at the date of issuance, resulting in an expense charge of $2.9 million for the year ended December 31, 1999 related to amortization of this deferred compensation. Deferred compensation is presented as a reduction of stockholders' equity and amortized over the vesting period of applicable options or restricted shares which is generally four years. Stock-based compensation for the year ended December 31, 1999 also included a charge of approximately $563,000 related to the issuance of stock and stock options to non-employees for services provided.

    Amortization of Intangible Assets and Acquired Software.   Amortization of intangibles and acquired software represents principally the amortization of acquired software purchased from a founding stockholder in May 1998 and amortization of goodwill created as a result of the acquisition of a majority interest in ValueClick Japan in August 1999.

    Equity in Losses of ValueClick Japan.   Equity in loss of ValueClick Japan increased from $9,000 for the period from May 1, 1998, ValueClick's inception, through December 31, 1998 to $64,000 for the year ended December 31, 1999. The loss is primarily a result of the increase in operating expenses required to grow the ValueClick Japan business, which began full operation in November 1998.

    Interest and Other Income (Expense), Net.   Interest and other income principally consists of interest earned on our cash and cash equivalents and is net of interest paid on debt obligations. Interest expense was $7,000 for the period from May 1, 1998 (inception) through December 31, 1998 and $45,000 for the year ended December 31, 1999.

    Income Taxes.   For the period from May 1, 1998, ValueClick's inception, through December 31, 1998, ValueClick was a limited liability company, or LLC, and as such, was subject to the provisions of Subchapter K of the Internal Revenue Code. Under those provisions, ValueClick did not pay federal income taxes on any taxable income. Instead, the members of the LLC were liable for individual

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federal income taxes on ValueClick's taxable income. Upon conversion to a C-corporation on December 31, 1998, ValueClick commenced using the asset and liability method of accounting for income taxes. ValueClick's conversion from an LLC to a C-corporation did not have a material impact on ValueClick's financial position or results of operations. Following the conversion, ValueClick has been operating as a C-corporation and is subject to federal and state income taxes. For the year ended December 31, 1999, ValueClick's provision for federal and state income taxes amounted to $1.9 million.

Liquidity and Capital Resources

Three-month Period Ended March 31, 2001

    ValueClick has historically financed its operations through working capital generated from operations and equity financings. Net cash used in operating activities was $3.6 million for the six-month period ended June 30, 2001, representing primarily the timing of payments for taxes and other current obligations.

    The net cash provided by investing activities for the six-month period ended June 30, 2001 of $5.6 million was a result of $6.9 million proceeds from the sale of marketable securities partially offset by cash used to purchase property and equipment of $1.3 million.

    Net cash used in financing activities for the six-month period ended June 30, 2001 of $63,000 resulted from the payment of virtually all outstanding debt.

Year Ended December 31, 2000

    Since ValueClick's inception, ValueClick has financed its operations through working capital generated from operations and equity financings. Net cash provided by operating activities was $7.0 million for the fiscal year ended December 31, 2000.

    The net cash provided by investing activities for the fiscal year ended December 31, 2000 of $8.0 million was the result of $10.3 million in proceeds received from the sale of 165,000 shares of ValueClick's DoubleClick holdings, $2.6 million in proceeds received from the sale of 177 shares of ValueClick's ValueClick Japan holdings offset by $5.0 million of cash used to purchase property and equipment, core technologies, and business acquisitions.

    Net cash provided by financing activities was $104.1 million for the fiscal year ended December 31, 2000, which resulted principally from the following transactions:

Doubleclick Transaction

    ValueClick received $10.0 million in cash and 732,860 shares of DoubleClick common stock on February 28, 2000, upon the closing of the investment by DoubleClick in ValueClick.

Initial Public Stock Offering

    On March 30, 2000 ValueClick completed its initial public offering in which it sold 4,000,000 shares of its Common Stock at $19.00 per share. The initial public offering closed on April 5, 2000. ValueClick's proceeds from the offering, after deducting direct incremental costs and underwriting discounts and commissions, were $68.6 million.

Valueclick Japan's Stock Issuance

    On May 31, 2000 ValueClick Japan, ValueClick's majority-owned subsidiary, completed its initial public offering on Japan's "Mothers Market" in which it sold 1,000 shares of its Common Stock at $27,822 per share. The proceeds to ValueClick Japan from the offering, after deducting direct incremental costs and underwriting discounts and commissions, were $25.4 million.

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Credit Facility.

    On October 21, 1999, ValueClick executed a loan and security agreement with Silicon Valley Bank for a $2.5 million revolving credit line to be used for general working capital. Interest on the outstanding balances accrues at an annual rate of one percentage point above the bank's prime rate. As of June 30, 2001, the bank's prime rate was 6.75%. The credit facility, as amended, contains no restrictive covenants. In exchange for the credit facility, ValueClick granted the bank a first priority security interest in ValueClick's goods and equipment, accounts receivables and intellectual property. At June 30, 2001, ValueClick had no outstanding borrowings against this credit line.

    In May 2000, ValueClick entered into a loan and security agreement with Bank of America for a $200,000 revolving line of credit. Interest on outstanding balances accrue at an annual rate of one percentage point above the Bank's Prime Rate (6.75% at June 30, 2001). The outstanding balance as of December 31, 2000 of $101,000 was paid on January 31, 2001 and ValueClick currently has no outstanding borrowings against this credit line.

    ValueClick has no material commitments for capital expenditures anticipated; however, ValueClick will incur capital expenditures consistent with its anticipated growth in operations.

    ValueClick believes that its existing cash and cash equivalents and its available bank credit are sufficient to meet its anticipated cash needs for working capital and capital expenditures for the next twelve months.

Recently Issued Accounting Standards

    In June 1998, the Financial Accounting Standards Board issued Statement of Accounting Standards (SFAS) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133, as amended by SFAS No. 137 and 138, establishes new standards of accounting and reporting for derivative instruments and hedging activities. SFAS 133, as amended, requires that all derivatives be recognized at fair value in the statement of financial position, and that the corresponding gains and losses be reported either in the statement of operations or as a component of comprehensive loss, depending on the type of hedging relationship that exists. ValueClick adopted the guidance in SFAS 133 for its fiscal year beginning January 1, 2001. To date, ValueClick has not held derivative instruments or engaged in hedging activities. Accordingly, adoption of SFAS No. 133, as amended, did not have a significant impact on ValueClick's consolidated financial position, results of operations or cash flows.

    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Serving of Financial Assets and Extinguishments of Liabilities," which replaces SFAS No. 125, which revised standards for accounting for securitizations and other transfers of financial assets and collateral. SFAS No. 140 carries over most the provisions of SFAS No. 125 without reconsideration. To date, ValueClick has not engaged in any transactions that would fall under SFAS No. 140 and do not believe that adoption of SFAS No. 140 will have a significant impact on its consolidated financial position, results of operations or cash flows.

    In July 2001, the FASB issued Statement No. 141 (SFAS 141), "Business Combinations" and Statement No. 142 (SFAS 142), "Goodwill and Other Intangible Assets." SFAS 141 establishes new standards for accounting and reporting requirements for business combinations initiated after June 30, 2001 and prohibits the use of the pooling-of-interests method for combinations initiated after June 30, 2001. In addition, SFAS 141 broadens the criteria for recording intangible assets separate from goodwill. Previously recorded goodwill and intangibles will have to be evaluated against the new criteria and may result in certain intangible assets being reclassified as goodwill or, alternatively, previously recognized intangible assets that were recorded as goodwill may be separately recorded apart from goodwill. SFAS 142 changes the accounting for goodwill from an amortization method to an

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impairment-only approach. Upon adoption of SFAS 142, goodwill will be tested at the reporting unit annually and whenever events or circumstances occur indicating that goodwill might be impaired. Amortization of goodwill, including goodwill recorded in past business combinations, will cease. The adoption date for ValueClick will be January 1, 2002 and ValueClick is still assessing what the impact of SFAS 141 and SFAS 142 will be on its results of operations and financial position.

Quantitative and Qualitative Disclosures About Market Risk

    ValueClick does not hold any derivative instruments and does not engage in hedging activities. The interest rate of ValueClick's line of credit with Silicon Valley Bank and Bank of America varies depending on each bank's prime rate. Currently, ValueClick does not have any outstanding borrowings under either of these credit facilities.

    ValueClick's investment in ValueClick Japan subjects ValueClick to foreign currency exchange risks as ValueClick Japan denominates its transactions in the Japanese Yen. ValueClick's exposure is limited to the extent of the amount of ValueClick Japan's net assets which totaled $25.6 million at December 31, 2000. ValueClick also transacts business in various foreign countries and is subject to exposure from adverse movements in other foreign currency exchange rates. This exposure is primarily related to revenue and operating expenses for ValueClick Europe, which denominates its transactions in U.K. pounds. Through June 30, 2001 the effect of foreign exchange rate fluctuations for any reporting period has not been material. Historically, ValueClick has not hedged its exposure to exchange rate fluctuations. Accordingly, ValueClick may experience economic loss and a negative impact on earnings or equity as a result of foreign currency exchange rate fluctuations.

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

    As part of the consideration for DoubleClick's investment in ValueClick, ValueClick received 732,860 shares of DoubleClick common stock valued at approximately $85.8 million based on an average value of $117.07 per share for the public announcement date of January 13, 2000 and the five trading days before and after that date. In April 2000, all of the DoubleClick shares that ValueClick owns were registered for sale by DoubleClick in a registration statement that went effective September 11, 2000. During 2000, ValueClick sold 165,000 shares of the DoubleClick common stock for cash proceeds of $10.3 million. The sale of these shares resulted in a realized non-cash loss of $9.0 million. In December 2000, ValueClick made a determination that the decline in market value of the remaining DoubleClick stock was other than temporary. Accordingly, for the year ended December 31, 2000 ValueClick recorded a non-cash charge to operations of $60.2 million representing the unrealized holding losses previously accounted for a separate component of stockholders' equity.

    During April 2001, ValueClick sold its remaining 567,860 shares of its DoubleClick common stock for cash proceeds of $6.9 million. The sale of these shares resulted in a realized gain of $701,000.

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ValueClick Unaudited Quarterly Results of Operations
(In thousands, except per share data)

 
  Three-Months Ended
 
 
  Mar. 31,
1999

  Jun. 30,
1999

  Sept. 30,
1999

  Dec. 31,
1999

  Mar. 31,
2000

  Jun. 30,
2000

  Sept. 30,
2000

  Dec. 31,
2000

  Mar. 31,
2001

  Jun. 30,
2001

 
Revenues   $ 2,166   $ 3,739   $ 7,178   $ 12,888   $ 15,214   $ 16,501   $ 15,687   $ 16,930   $ 12,716   $ 9,660  
Cost of revenues     1,116     1,511     3,412     6,426     7,649     8,707     7,369     8,205     6,123     4,753  
   
 
 
 
 
 
 
 
 
 
 
  Gross profit     1,050     2,228     3,766     6,462     7,565     7,794     8,318     8,725     6,593     4,907  
Operating expenses:                                                              
  Sales and marketing(1)     258     395     831     1,505     1,986     2,780     2,915     3,755     2,965     2,789  
  General and administrative(1)     347     650     1,295     2,414     2,147     3,030     3,930     3,789     3,710     2,968  
  Product development(1)     108     213     266     513     827     1,047     1,416     1,556     1,041     853  
  Stock-based compensation     33     441     1,003     2,029     1,297     1,397     1,223     1,141     960     655  
  Amortization of intangible assets     13     13     160     215     223     225     225     396     462     440  
  Merger-related costs                                 353     713     267  
   
 
 
 
 
 
 
 
 
 
 
    Total operating expenses     759     1,712     3,555     6,676     6,480     8,479     9,709     10,990     9,851     7,972  
   
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations     291     516     211     (214 )   1,085     (685 )   (1,391 )   (2,265 )   (3,258 )   (3,065 )
  Equity in losses of ValueClick Japan     (42 )   (10 )   (12 )                            
Interest income, net     5     14     19     7     61     1,199     1,401     1,459     1,390     1,174  
  Gain (loss) on sale of marketable securities                         (9,006 )               701  
  Impairment write-down of marketable securities                                 (60,233 )        
  Gain from ValueClick Japan stock issuance                         13,656                  
  Gain on the sale of ValueClick Japan stock                             1,076     1,268          
   
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes and minority interests     254     520     218     (207 )   1,146     5,164     1,086     (59,771 )   (1,868 )   (1,190 )
  Provision for (benefit from) income taxes     127     409     583     734     1,044     2,779     1,007     (2,291 )   100     (120 )
   
 
 
 
 
 
 
 
 
 
 
Income (loss) before minority interest     127     111     (365 )   (941 )   102     2,385     79     (57,480 )   (1,968 )   (1,070 )
  Minority share of (income) loss in ValueClick Japan             28     (34 )   (132 )   (22 )   (129 )   (136 )   (144 )   106  
   
 
 
 
 
 
 
 
 
 
 
    Net income (loss)   $ 127   $ 111   $ (337 ) $ (975 ) $ (30 ) $ 2,363   $ (50 ) $ (57,616 ) $ (2,112 ) $ 964  
   
 
 
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share   $ 0.01   $ 0.01   $ (0.02 ) $ (0.05 ) $ (0.00 ) $ 0.07   $ 0.00   $ (1.60 ) $ (0.06 ) $ (0.03 )
   
 
 
 
 
 
 
 
 
 
 

(1)
Excludes stock-based compensation from the individual statements of operations line items as follows:

 
  Three-Months Ended
 
  Mar. 31,
1999

  Jun. 30,
1999

  Sept. 30,
1999

  Dec. 31,
1999

  Mar. 31,
2000

  Jun. 30,
2000

  Sept. 30,
2000

  Dec. 31,
2000

  Mar. 31,
2001

  Jun. 30,
2001

Sales and marketing   11   141   321   649   415   447   387   361   303   206
General and administrative   17   238   542   1,096   700   754   667   597   498   333
Product development   5   62   140   284   182   196   169   183   159   116

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MEDIAPLEX MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion of the financial condition and results of operations of Mediaplex should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this document as well as its audited consolidated financial statements and notes thereto. This discussion contains forward-looking statements that involve risks and uncertainties. Mediaplex's actual results may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including, but not limited to, those set forth under "Risk Factors" beginning on page 13 and elsewhere in this joint document.

Overview

    Mediaplex provides technology solutions for both online and traditional, or offline, marketers. Mediaplex utilizes its proprietary technology, MOJO®, to enhance its service offerings. Mediaplex also plans to leverage the capabilities of its MOJO® technology to offer adserving and e-mail functions, which enable advertisers to integrate their internal business information into an online advertising campaign and to tailor their advertising messages or offers in real-time. Along with its subsidiary, AdWare Systems, Inc., Mediaplex offers a suite of capabilities ranging from agency accounting to digital asset management.

    Mediaplex generates revenue from adserving and e-mail, application management services and professional services. Adserving revenue and application management services revenue consist of monthly recurring fees for processing transactions on Internet sites and hosting the related services. Such revenue is recognized as the services are performed. Mediaplex's application management services provide customers rights to access applications, hardware and network for the application access, customer service, and rights to enhancements and updates. Mediaplex's customers do not have the right to take possession of the software at any time during the hosting agreement. Contracts for application management services that exceed designated minimum monthly or quarterly volume usage are recognized as revenue in the month or quarter in which minimum volume is exceeded.

    Mediaplex also realizes revenue by providing a global media management planning, production and financial system for advertising agencies and advertisers through its AdWare Systems product line. Based upon the system modules selected by the client, a monthly recurring fee is charged for usage of the module. This fee varies by client. Mediaplex's applications are provided via hosting services and are accessed by our clients via network connections. These services are provided under multi-year contracts. Revenue is recognized based upon actual monthly usage.

    Mediaplex also provides professional services for a fee, which is principally based on the extent of services provided. Revenues from professional services are recognized in the period they are rendered, provided that no significant obligations on its part remain at the end of the period and the collection of the resulting receivable is probable. To the extent that significant obligations remain, Mediaplex defers recognition of the corresponding portion of the revenues until these obligations are met.

    In May 2001, Mediaplex began transitioning its media clients and media related service capabilities to Exile on Seventh, a San Francisco-based digital advertising agency. This action completed Mediaplex's transition to a technology solutions company. As a result, the company no longer sells campaign management services or buys online advertising inventory other than for limited campaigns until the transition period is completed.

    Prior to May 2001, the cost of revenues consists primarily of the cost of procuring advertising space on third-party Internet sites. Following the Exile on Seventh transaction, the cost of revenues consists primarily of the costs and expenses associated with maintaining the systems for Mediaplex's

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application management services, and the communications and other costs related to maintaining Mediaplex's servers at third-party locations.

    Until December 31, 1999, Mediaplex expensed all of its research and development costs in the period in which it incurred these costs. For the year ended December 31, 2000, Mediaplex has incurred substantial costs associated with enhancing its products. As such, Mediaplex capitalized $472,000 in software development costs which are being amortized over a three-year period. For the six months ended June 30, 2001, Mediaplex capitalized $1.4 million in software development costs.

    In March 1999, Mediaplex acquired Netranscend Software, Inc., a Java-based business automation solutions software company, for a note payable of $430,000, due in four annual installments beginning in March 2000, and 1,979,000 shares of Mediaplex's common stock, with an estimated fair value of $1.29 per share. This acquisition was accounted for under the purchase method of accounting. Mediaplex recorded $3.0 million of goodwill and other identifiable intangible assets in connection with this acquisition, which are being amortized over a three-year period. As of June 30, 2001, $210,000 remain outstanding on the note payable related to this purchase.

    In July 2000, Mediaplex acquired AdWare Systems, Inc., a global media management applications service provider, for 1,320,331 shares of common stock with an estimated fair value of $23.9 million and $4.0 million in cash, from McCann-Erickson Worldwide, a subsidiary of The Interpublic Group of Companies, Inc. The acquisition has been accounted for by the purchase method of accounting. Mediaplex recorded $23.3 million of goodwill and other identifiable intangible assets in connection with this acquisition, which are being amortized over a three-year period.

    Mediaplex has a limited operating history upon which you may evaluate its business and prospects. Mediaplex incurred net losses of $2.0 million in 1998, $21.8 million in 1999, $37.5 million in 2000, and $14.9 million for the six month period ended June 30, 2001. At June 30, 2001, Mediaplex's accumulated deficit was $92.0 million, which includes a non-cash charge of $14.4 million related to the beneficial conversion feature incurred for the issuance of its Series C preferred stock. Mediaplex anticipates that it will incur additional operating losses for the foreseeable future.

Six Month Period Ended June 30, 2001 Compared to June 30, 2000.

    Revenues.   Revenues decreased to $14.3 million for the six months ended June 30, 2001 from $34.8 million for the six months ended June 30, 2000. This decrease was primarily due to the decrease in revenue from Mediaplex's media services business and its subsequent exit from the media services business in May 2001. This decrease was also due to the decline in market demand for media services as advertising agencies began performing more of these services themselves. Media revenue decreased by $27.0 million for the six months ended June 30, 2001 compared to the six months ended June 30, 2000. Offsetting the decrease in media revenue, Mediaplex's technology services revenue increased to $8.1 million for the six months ended June 30, 2001 from six months ended June 30, 2000. Adserving impressions totaled 8.3 billion during the three months ended June 30, 2001, up 24% from the first quarter of 2001. The total number of AdWare users increased to 8,900 from 8,000 during the first quarter of 2001. Although Mediaplex expects to continue to experience residual media services revenue during the next couple of quarters as it completes the transition out of the media services business, Mediaplex expects its total revenue to decrease compared to the prior year. However, Mediaplex expects its technology services revenue to increase and replace the lost revenue over time.

    In the first six months of 2001, McCann Erickson Worldwide and Sun Microsystems accounted for 26% and 17% of revenues, respectively. In the first six months of 2000, Luckysurf accounted for approximately 11% of total revenue. As of June 30, 2001, three advertising agencies, through which Mediaplex performs services for advertisers, accounted for 56% of accounts receivable. As of June 30, 2000, two advertising agencies accounted for 29% of receivables.

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    Cost of Revenues.   Cost of revenues decreased to $7.1 million, or 49.5% of revenues, for the six months ended June 30, 2001 from $25.2 million, or 72.4% of revenues, for the six months ended June 30, 2000. This decrease in cost of revenues in 2001 was related to Mediaplex's exiting of the media services business, as its costs associated with obtaining advertising space on web sites in connection with the media services business have historically been higher as a percentage of revenues than the costs of revenues associated with its technology business. As a result, Mediaplex's overall cost of revenues decreased primarily as a result of the decrease in its media revenue.

    Gross Profit.   Gross profit decreased to $7.2 million, or 50.5% of revenue, for the six months ended June 30, 2001 from $9.6 million, or 27.6% of revenue, for the six month period ended June 30, 2000. Although gross profit measured in absolute dollars decreased from 2000 to 2001, gross profit as a percentage of revenues increased over the same period. This is reflective of the effect that technology services and professional services have on revenue. Revenues earned from the application management services have lower direct cost than revenues earned from Mediaplex's media services, which incur the high costs of purchasing media space on Internet sites. The gross profit also benefited from one-time and non-recurring credits in the cost of media services and delivery costs totalling approximately $542,000. Mediaplex expects gross profit as a percentage of revenues to continue to increase as the transition out of the media services business is completed.

    Sales and Marketing.   Sales and marketing expenses consist primarily of compensation expenses, including salaries, commissions and related payroll expenses, recruiting costs, and marketing expenses, including those expenses associated with customer service and support. Sales and marketing expenses decreased to $5.9 million, or 41.3% of revenues, for the six months ended June 30, 2001 from $12.6 million, or 36.1% of revenues, for the six months ended June 30, 2000. This decrease in sales and marketing expenses was primarily due to the cost savings realized under the restructuring plans that Mediaplex implemented in December 2000 and May 2001. Mediaplex eliminated all media related positions after the transition of its media services business to Exile on Seventh. These positions had previously been recorded as sales and marketing expenses. The number of sales and marketing personnel was 54 as of June 30, 2001, compared to 109 as of June 30, 2000. Although Mediaplex continues its efforts to reduce company-wide expenses, it expects that sales and marketing expenses will increase in absolute dollars to the extent that its revenues increase.

    Research and Development.   Research and development expenses consist primarily of compensation and related expenses for Mediaplex's internal development staff, network operations staff and fees for outside contractor services. Research and development expenses were $4.7 million, or 32.7% of revenues, for the six months ended June 30, 2001, and $4.7 million, or 13.5% or revenues, for the six months ended June 30, 2000. Mediaplex continues its efforts to reduce overall costs in response to lower revenues, while continuing to expand its product offerings. The number of development engineers increased to 94 as of June 30, 2001, from 39 as of June 30, 2000. Mediaplex expects to continue to spend significant amounts on research and development as it continues to develop and enhance its technology. Accordingly, Mediaplex expects that research and development expenses will increase in absolute dollars.

    General and Administrative.   General and administrative expenses consist primarily of compensation and related expenses and fees for contractor services. General and administrative expenses decreased to $6.2 million, or 43.2% of revenues, for the six months ended June 30, 2001, from $15.3 million, or 44.0% of revenues for the six months ended June 30, 2000. Included in the general and administrative expense for the six months ended June 30, 2001, was non-cash stock-based compensation of $1.4 million related to the extension of the exercise period for three former employees. Mediaplex had 34 general and administrative personnel as of June 30, 2001, compared to 40 persons as of June 30, 2000 as Mediaplex eliminated support positions for the media services business.

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Although Mediaplex expects to continue to reduce excess expenses, it expects that general and administrative expenses will increase as its technology business grows.

    Stock-based Compensation Expense.   For accounting purposes, Mediaplex recognized stock-based compensation in connection with the issuance of shares of its common stock and the granting of options or warrants to purchase its common stock to employees and consultants with purchase or exercise prices that are less than the deemed fair market value at the grant date. Stock-based compensation related to the issuance of fully vested shares of common stock has been expensed in the period in which the common stock was issued. Stock-based compensation related to the issuance of options and warrants to purchase common stock is being amortized over the vesting period of the stock options. During the six month periods ended June 30, 2001 and 2000, stock-based compensation expense is recorded in the functional expense categories in the statement of operations. Total deferred stock compensation remaining as of June 30, 2001 was $202,000.

    Restructuring Charges.   In May 2001, Mediaplex signed an agreement with Exile On Seventh. The agreement includes the transition of Mediaplex's media clients and media related service capabilities to Exile On Seventh. In association with this transition, management announced a restructuring program intended to eliminate the excess workforce and equipment related to the former media business. Mediaplex terminated 36 employees in the three months ended June 30, 2001 and an additional eight employees in July 2001. In connection with this restructuring, Mediaplex recorded a restructuring charge of approximately $2.1 million, or 33.0% of revenues, of which approximately $1.3 million relates to employee termination costs and $840,000 to the write-down of excess computer equipment and software and the closing of additional facilities. Mediaplex anticipates that it will complete its restructuring by the end of the third quarter in 2001. There was no restructuring expense recorded during the six months ended June 30, 2000.

    Amortization of Goodwill and Intangible Assets.   Amortization expense was $4.5 million, or 31.2% of revenues, for the six months ended June 30, 2001, compared to $501,000, or 1.4% of revenues, for the six months ended June 30, 2000. Amortization expense increased due to the amortization of goodwill and intangible assets recorded in connection with Mediaplex's acquisition of AdWare Systems, Inc. in July 2000.

    Interest Income, Net.   Interest income, net decrease to $1.4 million, or 10.0% of revenues, for the six months ended June 30, 2001, from $2.4 million, or 7.0% of revenues, for the six months ended June 30, 2001. The decrease in interest income, net, was due to the decrease in cash and cash equivalents resulting from Mediaplex's operating loss. In addition, Mediaplex realized less interest on its cash and cash equivalents due to the decrease in interest rates during the first six months of 2001.

    Net Loss.   Net loss was $14.9 million for the six months ended June 30, 2001, and $21.1 million for the six months ended June 30, 2000. The decrease in net loss of $6.2 million from the six months ended June 30, 2001, compared to the six months ended June 30, 2000, was primarily due to Mediaplex's exit from the media business and a decrease in general operating expenses realized by Mediaplex's restructuring efforts.

Year ended December 31, 2000 compared to year ended December 31, 1999

    Revenues.   Revenues increased to $63.6 million for the year ended December 31, 2000 from $26.4 million for the year ended December 31, 1999. The period-to-period increase was primarily due to the growth of Mediaplex's selling advertising campaign management services to a broad set of advertisers, primarily focused on advertising agencies and their respective clientele. Additionally, in July 2000, Mediaplex acquired AdWare Systems, Inc., which contributed revenues for media management application services. Mediaplex's revenue also included advertising serving fees for clients utilizing Mediaplex's MOJO technology to run their online campaigns. In 1999, substantially all of

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Mediaplex's revenues consisted of advertising fees received for providing advertising campaign management services.

    Cost of Revenues.   Cost of revenues increased to $43.8 million, or 68.8% of revenues, for the year ended December 31, 2000 from $20.4 million, or 77.3% of revenues, for the year ended December 31, 1999. The increase in cost of revenues in 2000 was primarily due to the increase in Mediaplex's revenues. The cost of revenues comprised primarily media placement costs, including the communications and other costs related to maintaining Mediaplex's ad servers at third-party sites. With Mediaplex's acquisition of AdWare, its cost of revenues also includes operational expenses related to the maintenance of Mediaplex's enterprise solutions systems.

    Gross Profit.   Gross profits increased to $19.8 million, or 31.2% of revenues, for the year ended December 31, 2000, from $6.0 million, or 22.7% of revenues, for the year ended December 31, 1999. Since the revenue generated by AdWare does not have the media placement costs, Mediaplex realized a higher gross margin for the year ended December 31, 2000 compared to the year ended December 31, 1999. Mediaplex also experienced a shift in types of services offered during 2000, from almost completely campaign management services at the end of 1999 to a mix that included technology services, which have lower direct associated costs.

    Sales and Marketing.   Sales and marketing expenses consist primarily of compensation expenses, including salaries, commissions and related payroll expenses, recruiting costs, and marketing expenses, including those expenses associated with customer service and support. Sales and marketing expenses increased to $22.8 million, or 35.8% of revenues, for the year ended December 31, 2000, from $12.0 million, or 45.5% of revenues, for the year ended December 31, 1999. The dollar increase in sales and marketing expenses during 2000 was primarily due to the significant growth of Mediaplex's sales, marketing, account management, media procurement and management organization in 2000 as Mediaplex focused on selling advertising campaign management services. The increase in Mediaplex's revenues also contributed to an increase in the commissions Mediaplex paid to its sales staff. The number of sales and marketing personnel increased from 71 as of December 31, 1999 to 95 as of December 31, 2000. Mediaplex expects that sales and marketing expenses will continue to increase.

    Research and Development.   Research and development expenses consist primarily of compensation and related expenses for Mediaplex's internal development staff, network operations staff and fees for outside contractor services. Research and development expenses increased to $10.3 million, or 16.2% of revenues, for the year ended December 31, 2000, from $5.7 million, or 21.7% of revenues, for the year ended December 31, 1999. This dollar increase in research and development expenses was due primarily to an increase in the number of development engineers in Mediaplex's research and development organization. The number of development engineers increased from 43 as of December 31, 1999 to 98 as of December 31, 2000. Mediaplex expects to continue to spend significant amounts on research and development as it continues to develop and enhance its technology. Accordingly, Mediaplex expects that research and development expenses will continue to increase.

    General and Administrative.   General and administrative expenses consist primarily of compensation and related expenses and fees for contractor services. General and administrative expenses increased to $22.2 million, or 34.9% of revenues, for the year ended December 31, 2000, from $10.2 million, or 38.7% of revenues, for the year ended December 31, 1999. Included in the general and administrative expense for the year ended December 31, 2000, were stock-based compensation of $10.2 million. The dollar increase in general and administrative expenses, excluding the stock-based compensation, was due primarily to the hiring of additional general and administrative personnel. Mediaplex had 26 general and administrative personnel as of December 31, 1999 and 43 persons as of December 31, 2000. Mediaplex expects that general and administrative expenses will continue to increase.

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    For accounting purposes, Mediaplex recognizes stock-based compensation in connection with the issuance of shares of its common stock and the granting of options or warrants to purchase Mediaplex's common stock to employees and consultants with purchase or exercise prices that are less than the deemed fair market value at the grant date. Stock-based compensation related to the issuance of shares of common stock has been expensed in the period in which the common stock was issued. Stock-based compensation related to the issuance of options and warrants to purchase common stock is being amortized over the vesting period of the stock options. Total deferred stock compensation as of December 31, 2000 was $792,000.

    Restructuring Expense.   In December 2000, Mediaplex's management took action to reduce employee headcount in order to better align its sales, development and administrative organization and to position it for profitable growth in the future consistent with its long term objectives. This involved the involuntary terminations of approximately 70 employees. As a consequence, Mediaplex recorded a $1.9 million expense, or 3.0% of revenues, during the fourth quarter of 2000 related to payments for severance and pending lease cancellations being executed under the restructuring plan. Mediaplex anticipates future operating and cash flow savings of $3.5 million in Sales and Marketing, $700,000 in Research and Development, and $1.8 million in General and Administrative costs in fiscal year 2001.

    Amortization of Goodwill and Intangible Assets.   Amortization expense increased to $4.7 million, or 7.4% of revenue, for the year ended December 31, 2000, from $753,000, or 2.9% of revenues, for the year ended December 31, 1999. This increase is mainly due to the amortization of goodwill and intangible assets recorded in connection with Mediaplex's acquisition of AdWare Systems, Inc. in July 2000. The amortization of goodwill and intangible assets recorded in 1999 related solely to Mediaplex's acquisition of Netranscend Software, Inc. in March 1999.

    Interest Income (Expense), Net.   Interest income, net, increased to $4.6 million, or 7.2% of revenues, for the year ended December 31, 2000, from $912,000, or 3.5% of revenues, for the year ended December 31, 1999, representing primarily interest earned on the cash, cash equivalents, and short-term investments Mediaplex generated in 1999 from its initial public offering.

    Net Loss.   Net loss was $37.5 million for the year ended December 31, 2000, and $21.8 million for the year ended December 31, 1999. The increase in net loss of $15.7 million from 1999 to 2000 was primarily due to the increase in operating expenses of $33.2 million.

Year ended December 31, 1999 compared to year ended December 31, 1998

    Revenues.   Revenues increased to $26.4 million for the year ended December 31, 1999 from $3.6 million for the year ended December 31, 1998. The period-to-period increase was primarily due to the growth of Mediaplex's selling advertising campaign management services to a broad set of advertisers, including advertising agencies, which Mediaplex began in April 1998. In 1999, substantially all of Mediaplex's revenues consisted of advertising fees received for providing advertising campaign management services. In 1998, Mediaplex's revenues were primarily derived from the sale of advertising on Mediaplex's Internet content sites.

    Cost of Revenues.   Cost of revenues increased to $20.4 million, or 77.3% of revenues, for the year ended December 31, 1999 from $2.8 million, or 77.2% of revenues, for the year ended December 31, 1998. The increase in cost of revenues in 1999 was primarily due to the increase in Mediaplex's revenues. The cost of revenues for the year ended December 31, 1999 comprised primarily media placement costs, including the communications and other costs related to maintaining Mediaplex's ad servers at third-party sites, while the cost of revenues for the year ended December 31, 1998 consisted primarily of the cost of maintaining Mediaplex's Internet content sites.

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    Gross Profit.   Gross profits increased to $6.0 million, or 22.7% of revenues, for the year ended December 31, 1999 from $818,000, or 22.8% of revenues, for the year ended December 31, 1998. The slight increase on Mediaplex's gross profit as a percentage of revenue is reflective of the economies of scale associated with providing more campaign management services in 1999.

    Sales and Marketing.   Sales and marketing expenses increased to $12.0 million, or 45.5% of revenues, for the year ended December 31, 1999 from $1.4 million, or 39.0% of revenues, for the year ended December 31, 1998. The increase in sales and marketing expenses in both dollars and as a percentage of revenue during 1999 was primarily due to the significant growth of Mediaplex's sales and marketing organization in 1999 as Mediaplex focused on selling advertising campaign management services. The number of sales and marketing personnel increased from 13 as of December 31, 1998 to 71 as of December 31, 1999.

    Research and Development.   Research and development expenses increased to $5.7 million, or 21.7% of revenues, for the year ended December 31, 1999 from $556,000, or 15.5% of revenues, for the year ended December 31, 1998. This dollar increase in research and development expenses in both dollars and as a percentage of revenue was due primarily to an increase in the number of development engineers in Mediaplex's research and development organization. The number of development engineers increased from 2 as of December 31, 1998 to 43 as of December 31, 1999.

    General and Administrative.   General and administrative expenses increased to $10.2 million, or 38.7% of revenues, for the year ended December 31, 1999 from $636,000, or 17.7% of revenues, for the year ended December 31, 1998. The dollar increase in general and administrative expenses was due primarily to the hiring of additional general and administrative personnel. Mediaplex had 4 general and administrative personnel as of December 31, 1998 and 26 persons as of December 31, 1999.

    Amortization of Goodwill and Intangible Assets.   Amortization expense was $753,000, or 2.9% of revenues, for the year ended December 31, 1999, due to the amortization of goodwill and intangible assets recorded in connection with our acquisition of Netranscend Software, Inc. in March 1999. Mediaplex recorded no goodwill amortization expense in 1998.

    Interest Income (Expense), Net.   Interest income, net, was $912,000 for the year ended December 31, 1999, representing primarily interest earned on the cash and cash equivalents Mediaplex generated in 1999 from private placements of convertible preferred stock and the initial public offering. The net interest expense of $247,000 for the year ended December 31, 1998 was primarily due to the beneficial conversion feature of a note payable to stockholders.

    Net Loss.   Net loss was $21.8 million for the year ended December 31, 1999, and $2.0 million for the year ended December 31, 1998. The increase in net loss of $19.8 million from 1998 to 1999 was primarily due to the increase in operating expenses of $26.1 million, which includes a $10.8 million increase in non-cash stock-based compensation expense, in 1999 from 1998.

    Beneficial Conversion Feature of the Series C Convertible Preferred Stock.   In August 1999, Mediaplex issued 4,000,000 shares of Series C convertible preferred stock at a purchase price of $3.59 per share. These shares were convertible into shares of common stock on a one-for-one basis. Because the conversion price was less than the low end of the price range for the anticipated initial public offering, the Series C preferred stock was deemed to have an embedded beneficial conversion feature. This feature allows the holders to acquire common stock at a purchase price below its deemed fair value. The amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds. Consequently, the issuance and sale of the Series C preferred stock resulted in a beneficial conversion feature of $14.4 million, which has been reflected as a preferred dividend in Mediaplex's 1999 statement of operations.

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Liquidity and Capital Resources

    From Mediaplex's inception in September 1996 through August 1999, Mediaplex financed its operations primarily through the private placement of preferred stock, which generated net proceeds of $24.2 million. In November 1999, Mediaplex completed an initial public offering of its common stock, which generated net proceeds of $75.4 million. As of June 30, 2001, Mediaplex had $11.4 million in cash, cash equivalents, and restricted cash, $10.1 million in short-term investments and $29.2 million in long-term investments. Due to the recent drop in interest rates, Mediaplex recently invested in securities with longer maturities and fixed rates.

    Net cash used in operating activities for the six months ended June 30, 2001 and the years ended December 31, 2000, 1999, and 1998 was $5.6 million, $21.1 million, $9.1 million and $240,000, respectively. Net cash used in operating activities in each of these periods was primarily the result of net losses before non-cash charges of depreciation and amortization and stock-based compensation. The net cash used was also influenced by a net increases in accounts receivable and a significant payoff of outstanding payables, both of which were partially offset by increases in accrued liabilities. Additionally, in December 2000, Mediaplex incurred approximately $1.9 million in restructuring expense.

    Net cash used in investing activities for the six months ended June 30, 2001 and the years ended December 31, 2000, 1999, and 1998 was $19.1 million, $23.7 million, $12.7 million and $79,000, respectively. Net cash used in investing activities 2000 was primarily due to the purchase of short-term investments. In connection with Mediaplex's acquisition of Adware, a payment to McCann-Erickson of $4 million was made in July 2000. For the six months ended June 30, 2001, the net cash used in investing activities was primarily due to the purchase of long-term and short-term investments offset by the sale of long-term and short-term investments and was also impacted by the capitalization of research and development cost incurred by Mediaplex's subsidiary, AdWare Systems, Inc., which Mediaplex acquired in July 2000. For all periods, Mediaplex invested significantly in computer equipment and software to host its various technology product offerings.

    Net cash provided by financing for the six months ended June 30, 2001 and years ended December 31, 2000, 1999, and 1998 was $135,000, $1.6 million, $99.5 million and $551,000, respectively. In 2000, the principal source of funds provided by financing was from the issuance of common stock through the exercise of stock options, warrants and the employee purchase plan. These funds were primarily offset by the purchase of treasury stock. In 1999, net cash provided by financing activities was primarily due to issuance of shares of Mediaplex's common stock and Mediaplex's preferred stock. In 1999 and 1998, the funds borrowed from stockholders under notes payable bore interest at 6% per annum. These notes payable were paid off in 1999, and Mediaplex currently has no other borrowings.

    Mediaplex has no material commitments for capital expenditures anticipated; however, Mediaplex will incur capital expenditures consistent with its anticipated growth in operations, infrastructure and personnel. Mediaplex believes that its current level of cash and cash equivalents will be sufficient to meet its anticipated liquidity needs for working capital and capital expenditures until at least September 30, 2002. Mediaplex's forecast of the period of time through which its financial resources will be adequate to support operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially as a result of the risk factors described beginning on page 13 of this document. If Mediaplex requires additional capital resources to grow its business internally or to acquire complementary technologies and businesses, it may seek to sell additional equity or debt securities or secure a bank line of credit. The sale of additional equity or convertible debt securities could result in additional dilution to Mediaplex's stockholders. Mediaplex cannot assure you that any financing arrangements will be available in amounts or on terms acceptable to it.

    Mediaplex's stock is currently trading at prices less than $1 per share. The staff of the Nasdaq National Market has informed Mediaplex that its stock will be delisted by the Nasdaq, thus adversely

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affecting or limiting or restricting Mediaplex's ability to raise funds through stock issuances. Mediaplex is appealing the staff's decision, but there is no guarantee Mediaplex will be successful in its appeal.

Quantitative and Qualitative Disclosures About Market Risk

    The primary objective of Mediaplex's investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, Mediaplex maintains its portfolio of cash equivalents and investments in marketable securities in a variety of securities, including commercial papers and money market funds. Mediaplex did not hold derivative financial instruments as of June 30, 2001, and never held these instruments in the past.

    The following table presents the amounts of Mediaplex's financial instruments that are subject to interest rate risk by year of expected maturity and average interest rates:

 
  Fair Value
 
 
  December 31,
2000

  June 30,
2001

 
 
  (Dollars in thousands)

 
Cash and cash equivalents   $ 34,894   $ 10,269  
Average interest rate     6.60 %   3.38 %

Short-term investments in marketable securities

 

$

22,244

 

$

10,017

 
Average interest rate     6.63 %   4.83 %

Long-term investments in marketable securities

 

$


 

$

29,065

 
Average interest rate     %   5.36 %

    As of June 30, 2001, Mediaplex had limited transactions in Germany. Accordingly, Mediaplex is subject to exposure from adverse movements in foreign currency exchange rates. This exposure is primarily related to operating expenses in Germany. The effect of foreign exchange rate fluctuations for the six months ended June 30, 2001 was not material. Mediaplex does not use financial instruments to hedge operating activities denominated in the local currency. Mediaplex assesses the need to utilize financial instruments to hedge currency exposures on an ongoing basis. As of June 30, 2001 Mediaplex had $59,000 in cash and cash equivalents denominated in foreign functional currencies.

    The introduction of the Euro has not had a material impact on how Mediaplex conducts business and Mediaplex does not anticipate any changes in how it conducts business as a result of increased price transparency.

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

New Accounting Pronouncements

    In July 2001, the FASB issued Statement No. 141 (FASB 141), "Business Combinations" and FASB Statement No. 142 (FASB 142), "Goodwill and Other Intangible Assets." FASB 141 establishes new standards for accounting and reporting requirements for business combinations initiated after June 30, 2001 and prohibits the use of the pooling-of-interests method for combinations initiated after June 30, 2001. In addition, FASB 141 broadens the criteria for recording intangible assets separate from goodwill. Previously recorded goodwill and intangibles will have to be evaluated against the new criteria and may result in certain intangible assets being reclassified as goodwill or alternatively, previously recognized intangible assets that were recorded as goodwill may be separately recorded apart from goodwill. FASB 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Upon adoption of FASB 142, goodwill will be tested at the reporting unit annually and whenever events or circumstances occur indicating that goodwill might be impaired. Amortization of goodwill, including goodwill recorded in past business combinations, will cease. The adoption date for Mediaplex will be January 1, 2002 and Mediaplex is still assessing what the impact of FASB 141 and FASB 142 will be on its results of operations and financial position.

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Mediaplex Unaudited Quarterly Results of Operations
(In thousands, except per share data)

 
  Three-Month Ended
 
 
  Mar. 31,
1999

  Jun. 30,
1999

  Sept. 30,
1999

  Dec. 31,
1999

  Mar. 31,
2000

  Jun. 30,
2000

  Sept. 30,
2000

  Dec. 31,
2000

  Mar. 31,
2001

  Jun. 30,
2001

 
Revenues   $ 1,634   $ 5,689   $ 6,618   $ 12,464   $ 16,227   $ 18,604   $ 13,483   $ 15,322   $ 7,974   $ 6,334  
Cost of revenues     1,340     4,421     5,187     9,470     11,849     13,374     8,917     9,659     4,156     2,933  
   
 
 
 
 
 
 
 
 
 
 
  Gross profit     294     1,268     1,431     2,994     4,378     5,230     4,566     5,663     3,818     3,401  
Operating expenses:                                                              
  Sales and marketing     794     1,742     4,191     5,280     6,029     6,559     5,513     4,685     3,066     2,839  
  Research and development     664     976     1,814     2,279     2,118     2,568     2,500     3,121     2,462     2,215  
  General and administrative     1,802     857     2,477     5,085     12,618     2,719     2,696     4,148     2,601     3,575  
  Restructuring expense                                 1,929     285     2,088  
  Amortization of goodwill and intangibles         251     251     251     250     251     2,188     2,011     2,217     2,244  
   
 
 
 
 
 
 
 
 
 
 
    Total operating expenses     3,260     3,826     8,733     12,895     21,015     12,097     12,897     15,894     10,631     12,961  
   
 
 
 
 
 
 
 
 
 
 
Loss from operations     (2,966 )   (2,558 )   (7,302 )   (9,901 )   (16,637 )   (6,867 )   (8,331 )   (10,231 )   (6,813 )   (9,560 )
Interest income (expense), net     1     12     173     726     1,251     1,185     1,121     1,030     701     735  
   
 
 
 
 
 
 
 
 
 
 
Net Loss     (2,965 )   (2,546 )   (7,129 )   (9,175 )   (15,386 )   (5,682 )   (7,210 )   (9,201 )   (6,112 )   (8,825 )
Beneficial conversion feature of Series C convertible preferred stock             14,360                              
   
 
 
 
 
 
 
 
 
 
 
Net loss attributable to common stockholders   $ (2,965 ) $ (2,546 ) $ (21,489 ) $ (9,175 ) $ (15,386 ) $ (5,682 ) $ (7,210 ) $ (9,201 ) $ (6,112 ) $ (8,825 )
   
 
 
 
 
 
 
 
 
 
 
Net loss per share attributable to common stockholders—basic and diluted   $ (0.32 ) $ (0.17 ) $ (1.44 ) $ (0.41 ) $ (0.48 ) $ (0.17 ) $ (0.21 ) $ (0.25 ) $ (0.17 ) $ (0.25 )
   
 
 
 
 
 
 
 
 
 
 
Weighted average shares used to compute net loss per share—basic and diluted     9,280     14,976     14,903     22,536     31,771     33,064     34,578     35,561     35,701     36,008  
   
 
 
 
 
 
 
 
 
 
 

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VALUECLICK'S BUSINESS

Business

    ValueClick is a leading provider of performance-based Internet advertising solutions. For marketers seeking measurable results, ValueClick strives to provide the highest return on their advertising investment through a combination of performance-based pricing, advanced targeting capabilities, rigorous network quality control and an integrated product line. Specifically, ValueClick provides online advertisers and publishers of Web sites advertising models known as cost-per-click, or CPC, cost-per-action, or CPA, and cost-per-lead, or CPL, in which an advertiser only pays ValueClick, and ValueClick in turn only pays a publisher of a Web site, when an Internet user clicks on an advertiser's banner advertisement or performs a specific action, such as a software download, an online registration or other transactions.

    As one of the largest aggregators of advertising on small- to medium-sized Web sites, ValueClick believes that it provides advertisers a cost-effective solution for purchasing advertising space from thousands of Web publishers through a single source. ValueClick's advertising network, which currently consists of over 30,000 Web sites worldwide and reaches approximately 1 out of every 3 of U.S.-based Internet users each month, grew approximately 103% during 2000. In order to join ValueClick's network, member Web sites must satisfy ValueClick's strict quality standards for content and traffic. In 2000, ValueClick served in excess of 42 billion Web advertisements and delivered over 158 million visitors to advertisers' Web sites.

About ValueClick

    ValueClick began its Internet advertising business in July 1997, as a line of business within Web-Ignite Corporation. In May 1998, the Internet advertising business of Web-Ignite was transferred to ValueClick, LLC, a newly-formed California limited liability company controlled by Web-Ignite's sole stockholder. On December 31, 1998, ValueClick, LLC reorganized as ValueClick, Inc., a Delaware corporation. In 1998, ValueClick began to expand its operations internationally and currently has international operations in five foreign countries located in North America, South America, Western Europe and Japan. For additional information regarding ValueClick's international operations, see "ValueClick's Business—International Operations."

    In February 2000, ValueClick entered into a strategic investment transaction with DoubleClick, Inc., a leading worldwide provider of Internet advertising solutions for advertisers and Web publishers. As part of this transaction, ValueClick sold approximately 30% of its common stock to DoubleClick and agreed to sell additional common stock to DoubleClick in the future. For additional information regarding the DoubleClick transaction, see "ValueClick's Business—The DoubleClick Investment." Beginning in late 2000, ValueClick expanded its operations through several acquisitions of complementary businesses. In November 2000, ValueClick acquired Bach Systems, Inc. dba OnResponse.com to add CPA advertising services to its product line. In November 2000, ValueClick acquired ClickAgents.com, Inc. to expand its network of CPC-based publishers and advertisers. Most recently, ValueClick acquired Z Media, Inc. in January 2001 to add CPL advertising services to its product line. For further details of these acquisitions, see "ValueClick's Business—The ValueClick Solution."

The ValueClick Solution

    As the results of Internet advertising are scrutinized more and more, ValueClick believes advertisers are progressively seeking performance-based models, such as CPC, CPA and CPL. These models are intended to reduce the risk of advertising by only charging for a specific outcome, with the objective of maximizing the number of responses per advertising dollar. Responses can include an electronic reply by the Internet user, user registration and actual e-commerce transactions.

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Performance-based solutions also encourage consumers to respond immediately to advertising and interact directly with the advertiser in real-time.

    ValueClick offers a suite of CPC, CPA and CPL advertising products to address the growing demand for cost-effective, performance-based advertising solutions. Through ValueClick's core CPC business it offer advertisers an alternative to the traditional cost-per-thousand-impressions model, known as CPM, in which advertisers are charged for every impression delivered, regardless of whether the user responds to the advertisement or not. Instead, ValueClick's performance-based CPC model only charges advertisers when an Internet user clicks on the advertisers' banner ad and is redirected to their Web site, thereby reducing the response risk for the advertiser. In December 2000, ValueClick added to its CPC business line by completing the acquisition of ClickAgents.com, Inc., which brought approximately 7,800 new publishers and 200 new advertisers to ValueClick's network.

    With the acquisition of Bach Systems, Inc., which does business as onResponse.com, completed in November of 2000, ValueClick added cost-per-action advertising services to our product line. Bach Systems develops customized cost-per-action and cost-per-lead campaigns on behalf of advertising and direct marketing clients. These campaigns are tailored to generate the desired end result for the advertiser, whether that be a registration, download or purchase, under a pricing structure where the advertiser only pays for specific results.

    In January 2001, ValueClick further augmented its performance-based services by completing the acquisition of Z Media, Inc., a leading co-registration company. Co-registration is the process of creating lists of registered subscribers who have opted-in to receive e-mail on topics of interest. These highly- targeted registered names are then offered to advertisers and direct marketers on a cost-per-lead basis.

    These additions to ValueClick's product line allows it to offer an integrated suite of performance-based products for its clients and address the growing need for solutions that maximize the return on advertising expenditures.

Network of Web Sites

    In order to fulfill ValueClick's clients' CPC, CPL and CPA advertising campaigns, ValueClick has become one of the largest aggregators of advertising on small- to medium-sized Web sites. ValueClick has developed highly automated systems and processes which make it easy for Web site publishers to join the ValueClick network. ValueClick has also developed an effective publisher referral program that facilitates growth and retention of Web publishers. By aggregating this underutilized inventory of advertising space, ValueClick has developed a low-cost solution for advertisers who want to access the visitors of these Web sites. ValueClick's network currently consists of over 30,000 Web sites worldwide. In 2000, ValueClick delivered over 42 billion banner advertisements and registered over 138 million clicks.

    ValueClick believes the effectiveness of its advertising solution is dependent on the quality of the Web sites in our network. ValueClick currently rejects a high percentage of the Web sites that apply to its network for failure to meet its quality standards. This includes inappropriate content, insufficient traffic, illegal activity and fraudulent clicking activity. ValueClick enforces its quality standards using manual auditing and automated processes that continually monitor and review Web site content. In addition, ValueClick eliminates Web sites that encourage users to click on banner advertisements for reasons other than an interest in our advertisers' message.

    ValueClick believes its solutions offer several benefits to both advertisers and Web publishers. The principal benefits of ValueClick's solutions to advertisers include:

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    The principal benefits of ValueClick's solutions to Web publishers include:

Products And Services

    ValueClick develops its products and services to meet the changing needs of its advertisers and Web publishers and ValueClick anticipates these offerings will continue to evolve and expand. ValueClick offers the following products and services for advertisers:

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Automotive
Business & Finance
Careers
Consumer Technology
E-Commerce & Portals
  E-Commerce & Shopping
Entertainment
Family & Lifestyles
Games
Health & Fitness
  MIS & Information
News & Culture
Sports & Recreation
Travel
Youth & Students Technology

    ValueClick offers the following products and services for Web publishers:

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International Operations

    ValueClick currently has established operations in five foreign countries, covering North and South America, Western Europe and Japan. All operations are wholly-owned subsidiaries, with the exception of ValueClick Japan, in which ValueClick has a majority ownership position.

    ValueClick Japan commenced operations in November 1998. ValueClick currently owns a 52.6% interest in ValueClick Japan, which has 93 employees. In May 2000, ValueClick Japan completed its initial public offering on the Tokyo Stock Exchange for emerging growth companies. In August 1999, ValueClick commenced operations in the European market with ValueClick Europe, a wholly-owned subsidiary of ValueClick based in the United Kingdom. In 2000, ValueClick expanded in Europe by opening wholly owned subsidiaries in Paris, France and Munich, Germany. Also in 2000, ValueClick continued to expand its international presence outside Europe by opening wholly-owned subsidiaries in Toronto, Canada and Sao Paolo, Brazil which were subsequently discontinued in the second quarter of 2001. Total employees in ValueClick's wholly-owned international subsidiaries totaled 26 as of June 30, 2001.

    In addition, ValueClick continues to build Web publisher networks on a country-by-country basis from its U.S. office. This network will provide an operating base for establishing a local presence as

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each market develops and provide for easier transition to local operations when appropriate local partners are identified.

Technology Platform

    ValueClick's operating infrastructure, including its network of servers, has been designed to provide maximum performance, reliability and the ability to increase our capacity without increasing our costs.

    ValueClick's proprietary ad serving applications reside on servers configured with the FreeBSD operating system and ValueClick's primary database servers reside on servers configured with the Sun operating system. The applications are developed primarily in Perl, a widely used software development language, and are served on Apache servers. ValueClick maintains tolerance and performance objectives for banner delivery response time from our network. To ensure that these standards are met and to facilitate ValueClick's maintenance procedures, ValueClick keeps standby hardware for each component at its data center locations. ValueClick's internal maintenance group assures quick and complete resolution of hardware concerns.

    ValueClick currently serves advertisements from three third-party data center facilities located in Los Angeles, California, Boca Raton, Florida and Tokyo, Japan. ValueClick's U.S. locations also provide redundancy for each other. The entire network is monitored both electronically and by system administrators and escalation procedures are designed to resolve abnormalities quickly. All systems are backed up daily and the data is stored off-site. ValueClick has agreements with Digital Island and Verio to provide ValueClick with access to the Internet at ValueClick's data centers located in Los Angeles and Boca Raton, respectively.

Sales, Marketing And Customer Service

    ValueClick markets its products and services primarily through direct marketing, print advertising and online advertising throughout the year. ValueClick also markets them through the ValueClick properties' websites, trade show participation and other media events. In addition, ValueClick actively pursues public relations programs to promote its brand, products and services to potential network Web publishers and advertisers, as well as to industry analysts.

Web Publishers

    ValueClick's highly automated, online application process is supported by a team of 26 network development and customer service professionals across all ValueClick properties. Their responsibilities include screening and approving or declining prospective Web publishers; monitoring network quality; maintaining relationships; consulting with publishers on additional revenue opportunities; and the trafficking and optimization of client advertising campaigns.

Advertisers

    ValueClick sells its products and services to online advertisers primarily through its direct sales force, consisting of 101 sales persons across all ValueClick properties. ValueClick makes extensive use of telemarketing and e-marketing strategies. Each of ValueClick's account executives assists the advertisers he or she services, typically advertising, direct marketing and e-commerce companies, with all aspects of media planning and design of their advertising campaigns. These services include advertisement purchasing and placement, assessment of results and optimization of performance.

Competition

    ValueClick faces intense competition in the Internet advertising market. ValueClick expects that this competition will continue to intensify in the future as a result of industry consolidations and the continuing maturation of the industry. ValueClick competes with a diverse and large pool of advertising, media and Internet companies.

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    ValueClick's ability to compete depends upon several factors, including the following:

    ValueClick's ability to aggregate a large network of small- to medium-sized Web sites efficiently,
    the timing and market acceptance of new solutions and enhancements to existing solutions developed by us,
    ValueClick's customer service and support efforts,
    ValueClick's sales and marketing efforts,
    the ease of use, performance, price and reliability of solutions developed by ValueClick, and
    ValueClick's ability to remain price competitive while maintaining its strong gross margins.

    Additional competitive factors include each competitor's reputation, knowledge of the advertising market, financial controls, geographical coverage, relationships with clients, technological capability and quality and breadth of services. ValueClick expects that it will face additional competition from new entrants into the market in the future.

    ValueClick's principal competitors are other companies that provide advertisers with performance-based Internet advertising solutions, such as CPC, CPL and CPA. ValueClick directly competes with a number of competitors in the CPC market segment, such as Advertising.com. ValueClick also competes in the performance-based marketing segment with CPL and CPA performance-based companies such as CyberAgents and CommissionJunction. ValueClick also competes with other Internet advertising networks that focus on the traditional CPM model, including DoubleClick, Engage and 24/7 Media. Unlike ValueClick, these companies primarily deal with publishers of large Web sites and advertisers seeking increased brand recognition. These companies have longer operating histories and greater name recognition than we ValueClick. DoubleClick acquired a substantial percentage of ValueClick in February 2000—see "ValueClick's Business—The DoubleClick Investment."

    Competition for advertising placements among current and future suppliers of Internet navigational and informational services, high-traffic Web sites and ISPs, as well as competition with other media for advertising placements, could continue to result in significant price competition and reductions in advertising revenues. In addition, as ValueClick continues to expand the scope of its Web services, ValueClick may compete with a greater number of Web publishers and other media companies across an increasing range of different Web services, including in vertical markets where competitors may have advantages in expertise, brand recognition and other areas. If existing or future competitors develop or offer services that provide significant performance, price, creative or other advantages over those offered by ValueClick, ValueClick's business, result of operations and financial condition could be negatively affected.

Intellectual Property Rights

    ValueClick currently relies on a combination of copyright and trademark laws, trade secret protection, confidentiality and non-disclosure agreements and contractual provisions with its employees and with third parties to establish and protect ValueClick's proprietary rights. ValueClick has registered the trademark "ValueClick" in the United States, the European Union and Japan.

    In February 2000, in connection with a strategic investment transaction with DoubleClick, DoubleClick agreed, as long as it owns or has the right to acquire at least 5% of ValueClick's capital stock, not to sue or threaten to sue ValueClick or any of our customers, affiliates or licensees (1) for infringement of any claim of DoubleClick's U.S. Patent No. 5,948,061 or (2) for infringement of any claim of any U.S. patent or patent application, or foreign patent or patent application, that is related to U.S. Patent No. 5,948,061 or that claims priority from this patent or otherwise makes claims similar to those made in this patent. DoubleClick's Patent No. 5,948,061 covers the process of using linked advertising space and compiling statistics on individual users in order to target advertisements over the Internet or computer networks. DoubleClick has agreed that if it no longer owns at least 5% of ValueClick's capital stock, it will in good faith negotiate with ValueClick for a license to use its

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technology under commercially reasonable terms. However, there can be no assurance that ValueClick will be able to secure such a license. See "ValueClick's Business—The DoubleClick Investment" below.

The DoubleClick Investment

    On February 28, 2000, ValueClick completed a strategic investment transaction with DoubleClick, a leading worldwide provider of Internet advertising solutions for advertisers and Web publishers. The terms of this agreement involved an investment by DoubleClick of approximately $95.8 million in ValueClick and possible additional investments by DoubleClick in the future. DoubleClick's common stock is quoted on the Nasdaq National Market under the symbol "DCLK." Under the terms of the investment, DoubleClick acquired approximately 30% of ValueClick's fully diluted outstanding common stock and a 15-month warrant to acquire additional shares of ValueClick's common stock at $21.76 per share for an amount of shares so that DoubleClick could own up to 45% of ValueClick's fully diluted capital stock. The warrant expired unexercised in May 2001.

    ValueClick and certain of its principal stockholders have also agreed to grant certain additional rights to DoubleClick, including an agreement to elect designees of DoubleClick to our Board of Directors, a right of first offer in connection with future sales of shares of ValueClick's capital stock and a right of first offer in the event of a sale of ValueClick.

    During May 2000, ValueClick sold 165,000 shares of its DoubleClick common stock for cash proceeds of $10.3 million. The sale of these shares resulted in a realized non-cash loss of $9.0 million.

    In December 2000, ValueClick made an assessment that the decline in market value of the remaining DoubleClick stock was other than temporary. Accordingly, for the year ended December 31, 2000 ValueClick recorded a non-cash charge to operations of $60.2 million representing the unrealized holding losses previously accounted for as a separate component of stockholders' equity.

    During April 2001, ValueClick sold its remaining 567,860 shares of its DoubleClick common stock for cash proceeds of $6.9 million. The sales of these shares resulted in a realized gain of $701,000.

Employees

    As of June 30, 2001, ValueClick had 110 employees in the U.S., 93 employees in Japan and 26 employees in its other international locations. None of these employees are covered by collective bargaining agreements. Management believes that ValueClick's relations with its employees are good.

Properties

    ValueClick's principal executive offices are located in Westlake Village, California, where ValueClick leases a property with approximately 23,000 square feet of space. ValueClick's lease expires on December 12, 2002. ValueClick's current monthly rent due under this lease is $44,850. ValueClick also leases approximately 7,000 square feet of office space in New York City, 2,750 square feet of office space in Carpinteria, California, 10,080 square feet of office space in Fremont, California, 1,120 square feet of office space in San Jose, California, 3,090 square feet of office space in West Palm Beach, Florida, 5,735 square feet of office space in Redwood City, California, 4,551 square feet of office space in Tokyo, Japan, 1,786 square feet of office space in London, England, 1,080 square feet of office space in Paris, France, 1,430 square feet of office space in Ontario, Canada, 1,362 square feet of office space in Sao Paulo, Brazil, and 1,791 square feet of office space in Munich, Germany. ValueClick believes that its existing space is adequate for its current operations, and that suitable replacement and additional space will be available in the future on commercially reasonable terms if needed.

Legal Proceedings

    On February 22, 2001, a complaint was filed in Los Angeles Superior Court (Case No. BC245538) against ValueClick, its subsidiary ClickAgents, and the two founders of ClickAgents, both of whom remain employees of ClickAgents. The plaintiff, Adam Powell, alleges that the founders of ClickAgents

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entered into a joint venture agreement and other related agreements with him in early 1999, and that the founders and ClickAgents breached those agreements in July 1999 when the plaintiff's relationship with ClickAgents was terminated. The plaintiff also asserted various other causes of action, including fraud, breach of fiduciary duty, and conversion, arising from the same set of allegations. The plaintiff claims he is entitled to a percentage of ClickAgents' profits and a percentage of the merger consideration from ValueClick, which the plaintiff estimated in his complaint to exceed $11 million, and to other equitable relief, including appointment of a receiver. On May 4, 2001, the plaintiff filed a First Amended Complaint, removing some of his causes of actions and adding Chase Mellon Shareholder Services, LLC, ValueClick's transfer agent and registrar, as a new defendant.

    On May 25, 2001, ValueClick and ClickAgents jointly filed a demurrer and motion to strike with the court. On June 15, 2001, the court granted in part ValueClick's and ClickAgents' demurrer and dismissed all claims against ValueClick and ClickAgents and ordered the plaintiff to file an amended complaint against the remaining individual defendants in the case. On July 18, 2001, the plaintiff filed a petition for a writ of mandate requesting that the Court of Appeals vacate the court's order to dismiss ValueClick and ClickAgents. The Court of Appeals summarily denied that petition on August 7, 2001. The plaintiff has since filed a notice that he intends to appeal the ruling. No briefing schedule has been set. Notwithstanding the possible appeal, on or about July 30, 2001, the Plaintiff filed a Second Amended complaint, removing all of his claims against ValueClick and ClickAgents.

    ValueClick continues to believe that the plaintiff's allegations are without merit and intends to vigorously defend itself. ValueClick has not recorded an accrual related to damages, if any, resulting from this case, as an unfavorable outcome is, in management's opinion, not probable.

Market Information

    ValueClick's common stock has traded on The Nasdaq National Market under the symbol "VCLK" since ValueClick's initial public offering on March 30, 2000. 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:

Fiscal 2001

  High
  Low
Third Quarter (through August 21, 2001)   $ 3.03   $ 2.14
Second Quarter   $ 3.74   $ 2.58
First Quarter   $ 5.81   $ 3.03

   

Fiscal 2000

  High
  Low
Fourth Quarter   $ 6.50   $ 3.69
Third Quarter   $ 12.38   $ 6.44
Second Quarter   $ 18.00   $ 9.13
First Quarter   $ 24.00   $ 20.94

    On June 29, 2001, the last trading day prior to the execution and delivery of the merger agreement, the last reported sale price on ValueClick common stock was $3.20 per share. As of the record date, there were 245 holders of record of ValueClick common stock.

Dividend Policy

    ValueClick has not declared or paid any cash dividends on its capital stock since its inception and ValueClick intends to retain future earnings, if any, for use in the operation and expansion of ValueClick's business and does not anticipate paying cash dividends in the foreseeable future.

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MEDIAPLEX'S BUSINESS

    Mediaplex, Inc., along with its wholly owned subsidiary, AdWare Systems, Inc., acquired in July, 2000, addresses the advertising technology needs of marketing and advertising agencies and large corporate marketing departments (direct clients). Mediaplex provides technology software tools that are used in both online and offline advertising campaigns. Mediaplex's core products, media planning systems, campaign management systems, and cost management systems are driven by Mediaplex's proprietary technology platforms.

    In September 1998, Mediaplex launched its MOJO third-party ad server product. The ad server product (MOJO Ad Server) is used to centrally manage online advertisement campaigns, including upload of campaign creative units onto the Mediaplex server, creation and configuration of specific ad placement rotations, and the distribution of creative units to websites that are taking part in Mediaplex's clients' campaign. Regardless of what site requests the creative unit, the MOJO ad server provides a consistent counting and reporting methodology across a client's campaign sites. As a result, advertisers and their agencies use the MOJO Ad Server to obtain campaign performance reports and gain an understanding of their spend effectiveness and return on investment, or ROI.

    In November 2000, Mediaplex released its MOJO e-mail product. The e-mail product (MOJO Mail) is used to centrally manage client's customer relationship management, or CRM, electronic mail campaigns, including message configuration, list management, and mail distribution. Regardless of the type of mail browser used by mail recipients, the MOJO Mail server provides a consistent counting and reporting methodology across a client's customer list. As a result, advertisers and their agencies use the MOJO Mail product to obtain campaign performance reports and gain an understanding of their customer response and mailing effectiveness.

    In July 2000, Mediaplex expanded its proprietary technology, MOJO, from online adserving and email to include technology systems for traditional advertising. AdWare's product lines are used to help plan, buy and pay for traditional advertising campaigns. The addition of AdWare's products into those of Mediaplex's technology is helping Mediaplex develop a complete technology solution for marketers. Mediaplex can now meet both the online and offline marketing needs for advertising agencies and direct clients.

    Until May 2001, Mediaplex had provided clients and partner agencies with online media planning, buying and account management services for their media campaigns. In May 2001, Mediaplex signed an agreement to transition its media clients and media related service capabilities to Exile on Seventh, LLP, a San Francisco-based digital advertising agency. This action completed Mediaplex's transition to a technology solutions company. As a result, the company no longer sells campaign management services or buys online advertising inventory, other than for limited campaigns to facilitate the transition of its media clients to Exile on Seventh. Therefore, except as associated with the transition campaigns, Mediaplex's revenue is now derived from software access and use charges paid by its software clients. These fees vary based on the client's use of the technology.

The Products and Services

    Mediaplex's media planning systems aid media planners at corporate marketing departments or advertising agencies. Media planners use these systems to record the available advertising opportunities and their corresponding cost. They can then use these systems to choose the configuration that best meets their campaign needs and generate a media plan which consists of the media placements they have selected. Different systems are available for each type of media buying—print, network, and spot advertisements.

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    AdWare® PRINT provides the technology required to estimate the placement cost of the advertisement, track the contract information, purchase the advertisement placement, invoice the client and pay for print advertisements. This includes print advertisements in publications and outdoor billboards.

    AdWare® NETWORK provides the technology required to track and analyze the flight schedule of network radio and television commercials, invoice clients and pay for the commercial schedule. This includes national cable and broadcast syndication buys.

    AdWare® SPOT provides the technology required to track and analyze the radio and television commercial spot buys, invoice clients and pay for spot placement. This includes commercials on syndicated programming, local cable, local broadcast and one-time-only spots.

    Mediaplex's campaign management systems aid corporate marketing departments or advertising agencies in the execution of an advertising campaign. These systems are used to track the production process, serve and track online and e-mail campaigns, and store creative units for later retrieval.

    AdWare® PRODUCTION 6 provides for the estimating of any advertising production costs, budgeting such costs and monitoring of the components of traditional advertisements. The modules in the product include WORKFLOW (tracking labor), ESTIMATING (proposed production cost), BUDGETING (actual production cost), ADCLOCK® (time management system), PURCHASING (purchase order reconciliation), JOB COSTING (budget vs. actual), BILLING (invoicing) and CLIENT PROFITABILITY (tracks profitability).

    MOJO® Adserver allows users to configure digital messaging campaigns, serve digital messages according to time and site placements, or commonly known in the industry as trafficking, and report results from such campaigns. The product's web-based interfaces, MOJO® Works (trafficking configuration) and MOJO® Reports (tracking results), provide a single point of access for digital messaging campaigns across all digital platforms, including online and wireless devices.

    MOJO® Mail is a Customer Relationship Management (CRM) technology product that allows users to configure, traffic and report results for permission-based email campaigns. The recipient has the option of receiving an email, or "opt- in," or not receiving the email, or "opt-out." Mediaplex's opt-in email product, MOJO® Mail has the potential to configure real-time emails with dynamic content that is updated upon viewing the email. The product's web-based interfaces, MOJO® Works (delivery configuration) and MOJO® Reports (tracking results), provide a single point of access for email messaging campaigns across all platforms, including online and wireless devices.

    AdVISUAL® is a content management system for the storage of traditional advertising, such as print, radio commercials and television commercials. This includes the storage of the complete advertisement along with the associated business documents such as graphics, talent, production companies, budgeting, and related production contracts.

Cost Management Systems

    Mediaplex's cost management systems aid the finance departments of corporate marketers or advertising agencies in managing their financial operations.

    AdWare® FINANCIAL 6 provides for the managing of accounts receivable, accounts payable, general ledger, budgeting and cost accounting functions. This product is integrated with AdWare® PRINT, AdWare® NETWORK, AdWare® SPOT and AdWare® PRODUCTION 6 providing an integrated technology system for traditional advertisers.

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Services

    Mediaplex's services provide the support and resources that meet the varying needs of its clients. Services include trafficking (the upload of creative units onto the MOJO server and distribution of corresponding links to campaign sites), consulting services (including customized implementation, unique reporting needs, integration of business data), customer support, training, and a help desk.

The Technology

    Mediaplex's proprietary technology enables companies to integrate their internal business information, such as inventory and client data, into their digital messaging campaigns. The technology allows for the adserving and reporting of digital messaging campaigns across all digital platforms, online and wireless, into one integrated reporting system. Also, Mediaplex's technology utilizes client-defined targeting criteria to provide real-time content changes to all digital messages.

    Mediaplex's traditional advertising products all operate using the same back-end database. As a result, users of these products experience efficiencies due to streamlined operations—for example, a campaign's budget, production and schedule information need only be input once. This technology allows the user to see their advertising and marketing campaigns from inception to completion in one report.

    Mediaplex's MOJO technology is the only industry platform providing an integrated ad serving and e-mail solution. Mediaplex believes the benefits of such a solution—including integrated reporting, integrated ROI tags, and ability to leverage targeting features across multiple types of campaigns—differentiates Mediaplex's products from those of other internet advertising service companies. Mediaplex's technology solutions include:

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Intellectual Property Rights

    Mediaplex relies on a combination of copyright and trademark and trade secret laws and restrictions on disclosure to protect its intellectual property rights. Mediaplex's success depends on the protection of the proprietary aspects of its technology as well as its ability to operate without infringing on the proprietary rights of others. Mediaplex also enters into proprietary information and confidentiality agreements with its employees, consultants and commercial partners and controls access to and distribution of its software documentation and other proprietary information.

    Mediaplex currently has five pending U.S. patent applications. Mediaplex does not know if its current patent applications or any future patent application will result in a patent being issued within the scope of the claims it seeks, if at all, or whether any patents it may receive will be challenged or invalidated. Although patents are only one component of the protection of intellectual property rights, if Mediaplex's patent applications are denied, it may result in increased competition and the development of products substantially similar to Mediaplex's. In addition, it is difficult to monitor unauthorized use of technology, particularly in foreign countries where the laws may not protect Mediaplex's proprietary rights as fully as in the United States, and its competitors may independently develop technology similar to those of Mediaplex. Mediaplex will continue to assess appropriate occasions for seeking patent and other intellectual property protections for those aspects of its technology that it believes constitute innovations providing significant competitive advantages.

Competitive Environment

    The competitive environment in 2001 is vigorous. Mediaplex expects the challenging competitive environment to continue as the economic climate resolves itself and competitors consolidate.

    Mediaplex's competitors for adserving products include Avenue A, L90, DoubleClick, Engage Technologies including AdForce and AdKnowledge, and 24/7 Media. Mediaplex's competitors for email products include Net Centives, DoubleClick, 24/7 Media, Message Media, Click Action, Radical Mail, and Digital Impact. Mediaplex's competitors in offline advertising technology include Donovan Data Systems and Encoda Systems, previously known as Columbine CJDS, which acquired DSI Datatrack Systems, Inc., and Professional Software Systems, or PSS.

Privacy

    Mediaplex does not maintain, share or sell any personally identifiable data or anonymous user profile information. Mediaplex uses non-personally identifiable information provided by the websites, pursuant to their privacy policies, about their viewers' general demographics and interests in order to target appropriate advertising to the sites.

    In addition, if Mediaplex's clients have databases of their customers, Mediaplex can use this data on behalf of those clients, again pursuant to their privacy policies. The premise is that both the site providing the ad space and the advertiser (1) have a relationship with the customer, or opt-in, (2) have an opportunity to share their privacy policy with their customers, and (3) provide an opportunity to opt-out. As a third-party adserver, Mediaplex does not always have a relationship with the user, and therefore it would be inappropriate to build user profile information when such a relationship does not exist.

    Mediaplex does not know or maintain the names, telephone numbers, home addresses or email addresses of Internet users to whom it delivers advertisements or email on behalf of its clients. Mediaplex collects data for reports on clients' campaign performance to enable analysis and optimization of digital messaging campaigns. For general reporting purposes on Mediaplex's overall adserving performance and capacity, Mediaplex may report the total number of message delivered, or impressions, on behalf of all clients for a specific time period, with no reference to individual clients or campaigns.

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    Mediaplex's clients retain the sole and exclusive right to use any data, which they have obtained through explicit permission from an Internet user; for example, if a customer of Mediaplex's client provides an email address to receive information and updates. Mediaplex relies on its clients' consumer privacy policies, as well as the privacy practices of the publisher sites included in each campaign.

    In order to measure and report information to advertisers, such as the number of people who see their ads or emails and the number of times people see the advertisement, Mediaplex sets a "cookie", which is a small file that is stored in a web user's hard drive. Cookies cannot read information from the user's hard drive; rather they allow sites and advertisers to track advertising effectiveness and to ensure that viewers do not receive the same ads repeatedly. Cookies, by themselves, cannot be used to identify any user if the user does not provide any personally identifiable information. They can be used to allow personalization features such as stock portfolio tracking and targeted news stories.

    Mediaplex is compliant with the Platform for Privacy Protection Project, or P3P, compliance criteria. P3P is the most current privacy standard efforts in the industry, providing simple and automated privacy controls for users.

Customers

    Mediaplex sells it products to a variety of advertisers and advertising agencies. In 2000, no individual customer accounted for more than 10% of Mediaplex's revenues. In the first six months of 2001, McCann Erickson Worldwide accounted for 26% of Mediaplex's revenues and Sun Microsystems accounted for 17% of Mediaplex's revenues. Mediaplex expects that these entities may continue to account for a significant percentage of its revenues for the foreseeable future. The loss of McCann Erickson Worldwide or Sun Microsystems as a customer or any material decrease in the amount of Mediaplex's products purchased by either of these customers would have a material adverse impact on its revenues and results of operations.

Research and Development

    Mediaplex spends a significant percentage of its revenues on research and development to continue to develop and enhance its technology. Research and development expenses consist primarily of compensation and related expenses for its internal development staff, network operations staff and fees for outside contractor services. Research and development expenses were $4.7 million, or 32.7% of revenues, for the six months ended June 30, 2001, and $4.7 million, or 13.5% or revenues, for the six months ended June 30, 2000. Research and development expenses were $10.3 million, or 16.2% of revenues, for the year ended December 31, 2000, $5.7 million, or 21.7% or revenues, for the year ended December 31, 1999 and were $556,000, or 15.5% of revenues, for the year ended December 31, 1998.

Employees

    As of June 30, 2001, Mediaplex had 215 full-time employees. Of these employees, 97 were engaged in research and development, 73 were engaged in sales and marketing and 45 were engaged in finance and administration. None of Mediaplex's employees are represented by a labor union or a collective bargaining agreement. Mediaplex has not experienced any work stoppages and considers its relations with its employees to be good.

Properties

    Mediaplex currently leases approximately 21,100 square feet of office space for its headquarters in San Francisco, California. Mediaplex leases approximately 36,900 square feet of office space for its AdWare Systems enterprise solutions organization in Louisville, Kentucky. Mediaplex also leases approximately 13,200 square feet of a facility in San Jose, California that houses Mediaplex's research and development organization and approximately 7,700 square feet in New York City for a sales office. In addition, Mediaplex uses third-party co-location facilities that house its web servers in Santa Clara,

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California and McLean, Virginia. Mediaplex is currently leasing sufficient office space for conducting its current operations.

Legal Proceedings

    In July and August 2001, three putative class action lawsuits were commenced on behalf of all persons who acquired Mediaplex securities between November 19, 1999 and December 6, 2000. The cases are entitled Levovitz vs. Mediaplex, Inc. et al., Atlas vs. Mediaplex, Inc. et al., and Mashayekh vs. Mediaplex, Inc. et al. In addition to the Company and each of its underwriters for its November 1999 initial public offering, Gregory Raifman, Sandra Abbott, Jon Edwards, Lawrence Lenihan, Peter Sealy, James Desorrento, and A. Brooke Seawell, all of whom are current or former officers and directors of Mediaplex, are named as individual defendants. The cases are pending before the United States District Court for the Southern District of New York.

    The complaint alleges that defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by issuing a prospectus that contained "materially false and misleading information and failed to disclose material information." It alleges that the prospectus was false and misleading because it failed to disclose the underwriter defendants' purported agreement with investors to provide them with unspecified amounts of Mediaplex shares in the initial public offering in exchange for undisclosed commissions; and the purported agreement between the underwriter defendants and certain of their customers whereby the underwriter defendants would allocate shares in Mediaplex's initial public offering to those customers in exchange for the customers' agreement to purchase Mediaplex shares in the after-market at pre-determined prices.

    Five additional putative class action lawsuits were recently commenced on behalf of all persons who acquired Mediaplex securities against the underwriter defendants only. These cases are also pending before the United States District Court for the Southern District of New York. Information on these cases is incomplete. Based on the information available, neither Mediaplex nor its directors or officers have been named as defendants in these cases. At a later date, Mediaplex and its officers and directors may be added as defendants.

    Other than the matters discussed above, Mediaplex is not a party to any material legal proceedings, nor is it aware of any pending or threatened litigation that would have a material adverse effect on its business, operating results or financial condition.

Market Information

    Mediaplex's common stock has traded on The Nasdaq National Market under the symbol "MPLX" since Mediaplex's initial public offering on November 19, 1999. 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:

Fiscal 1999

  High
  Low
Fourth Quarter (from November 19, 1999)   $  78.13   $ 20.75

   

Fiscal 2000

  High
  Low
First Quarter   $ 104.12   $ 38.62
Second Quarter   $ 57.50   $ 12.00
Third Quarter   $ 22.25   $ 6.12
Fourth Quarter   $ 15.00   $ 0.75

   

Fiscal 2001

  High
  Low
First Quarter   $   2.19   $  0.50
Second Quarter   $ 1.23   $ 0.50
Third Quarter (through August 21, 2001)   $ 1.15   $ 0.79

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    On June 29, 2001, the last trading day prior to the execution and delivery of the merger agreement, the last reported sale price on Mediaplex's common stock was $0.91 per share. As of the record date, there were 300 holders of record of Mediaplex's common stock.

Dividend Policy

    Mediaplex has never declared or paid any cash dividends on its capital stock. Mediaplex currently intends to retain future earnings, if any, to finance the expansion of its business and does not expect to pay any cash dividends in the foreseeable future.

Formation of Mediaplex

    Mediaplex, Inc., was initially incorporated in California in September 1996 as Internet Extra Corporation. On April 1, 1998, Mediaplex formed a wholly-owned subsidiary, Mediaplex, Inc., a California corporation, to conduct its current business. In November 1999, Mediaplex, Inc. merged with Internet Extra Corporation, and the merged entity was reincorporated in Delaware under the name "Mediaplex, Inc."

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VALUECLICK'S MANAGEMENT

    Set forth below is information concerning ValueClick's directors, executive officers and other key employees as of June 30, 2001.

Name

  Age
  Position(s)
James R. Zarley   56   Chairman of the Board, Chief Executive Officer and President
Samuel Paisley   51   Chief Operating Officer, Executive Vice President of Corporate Development
Kurt A. Johnson   38   Chief Financial Officer and Secretary
Peter Wolfert   37   Chief Technology Officer
Steven J. Umberger   40   President, ValueClick International
Earle A. Malm II   51   Vice Chairman
Brian Coryat   39   Founder and Director
David S. Buzby(1)(2)   41   Director
Robert D. Leppo(1)(2)   58   Director
Martin T. Hart(1)   65   Director
Jeffery E. Epstein*(1)   44   Director
Barry Salzman*(2)   38   Director

*
Messrs. Epstein and Salzman are the director designees of DoubleClick, Inc. In connection with ValueClick's strategic investment transaction with DoubleClick in February 2000, ValueClick and certain of its principal stockholders agreed to vote their shares in favor of a specified number of DoubleClick's nominees to ValueClick's board of directors. For further details of this arrangement, see "ValueClick's Business—The DoubleClick Investment."
(1)
Member of the Audit Committee.
(2)
Member of the Compensation and Incentive Plan Committee.

     James R. Zarley is the Chairman of the Board and Chief Executive Officer of ValueClick. He has served as Chairman, and has been an advisor to ValueClick, since May 1998. In February 1999, Mr. Zarley joined ValueClick in a full-time capacity and in May 1999 he became Chief Executive Officer. In January of 2001, Mr. Zarley assumed the added position of President of ValueClick, Inc. Prior to joining ValueClick, from April 1987 to December 1996, Mr. Zarley was Chief Executive Officer of Quantech Investments, an information services company. From December 1996 to May 1998, Mr. Zarley was the Chairman and Chief Executive Officer of Best Internet until its merger with Hiway Technologies, a Web hosting company, in May 1998. From May 1998 to January 1999, Mr. Zarley was the Chief Operating Officer of Hiway Technologies until its merger with Verio. Mr. Zarley has more than 30 years of technology business experience as a senior executive.

     Samuel Paisley is the Chief Operating Officer and Executive Vice President of Corporate Development of ValueClick. Mr. Paisley joined ValueClick in his initial role of Executive Vice President in April 2000 and assumed the added position of Chief Operating Officer in January 2001. Mr. Paisley previously served as Chief Financial Officer and Executive Vice President of Automata International from June 1998 to March 2000. Between August 1980 and June 1998 he held several positions at KPMG Peat Marwick LLP, finishing his employment as a partner in Information, Communications and Entertainment. Mr. Paisley brings nearly 30 years of financial experience to the ValueClick team. Mr. Paisley graduated with a B.A. from Washington & Jefferson College and an M.B.A. from the University of Pittsburgh.

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     Kurt A. Johnson joined ValueClick as its Chief Financial Officer in May 1999 and has also served as its Secretary since September 1999. Mr. Johnson brings over 15 years of financial management experience to the ValueClick team. From February 1998 to May 1999, Mr. Johnson was an investment banker at Olympic Capital Partners, specializing in mergers and acquisitions and Internet company investments. Mr. Johnson also served as Vice President of Investments for Bozarth & Turner Securities from March 1995 through January 1998. He served as Chief Financial Officer of HSD Corporation, a privately held industrial automation company, from April 1994 to March 1995, and was a divisional controller for Ogden Corporation from February 1990 to April 1994. Mr. Johnson graduated with a B.A. from Eastern Washington University and an M.B.A. from Gonzaga University and is also a Certified Management Accountant.

     Peter Wolfert joined ValueClick as its Chief Technology Officer in June 2000. Previously, Mr. Wolfert was the Senior Vice President and Director of Information Technology for Mellon Capital Management, an investment management firm in San Francisco, from October 1998 until June 2000. Prior to that he served as Senior Vice President of Information Technology at AIM Funds in San Francisco from October 1995 to October 1998. From January 1992 until October 1995, Mr. Wolfert was Senior Vice President of Information Technology at Trust Company of the West (TCW) in Los Angeles. Mr. Wolfert has over nine years experience in driving Information Technology strategic direction and tactical initiatives in technology dependent organizations. Mr. Wolfert graduated with a B.S. from the University of California at Davis, and also earned an M.B.A. with emphasis in Management Information Systems from the University of California at Irvine.

     Steven J. Umberger has been a director since May 1998 and President of ValueClick International since March 2000. Mr. Umberger also served as the President of ValueClick Europe, Limited from August 1999 until February 2000. From April 1995 to June 1999, he was employed as the Chief Marketing Officer of Hiway Technologies, a Web hosting company and later a division of Verio. Prior to that, he served as Chief Executive Officer of IAAI, a computer reseller company from March 1991 to March 1995. From March 1993 to June 1997, Mr. Umberger was also the co-owner of Acme Barricades Company, a construction rental company. Mr. Umberger graduated with a B.A. from the Virginia Military Institute and an M.B.A. from the College of William and Mary.

     Earle A. Malm II has been Vice Chairman of the Board since January 2001 and a director since July of 1999. Previously, Mr. Malm was ValueClick's President and Chief Operating Officer from February 2000 until January 2001. Mr. Malm joined ValueClick in June 1999 as its Chief Marketing Officer and served in this capacity until February 2000. Prior to joining ValueClick, Mr. Malm was the Chief Operating Officer for AIM Funds, an investment management company in San Francisco, from June 1998 to March 1999. From March 1990 to May 1998, Mr. Malm served in various capacities at GT Global, an investment management company, including Senior Vice President of Institutional Marketing, Executive Vice President of Business Development and Chief Operating Officer. In addition, Mr. Malm has over 25 years of business experience in consumer, commercial, industrial and financial services businesses, where he has held senior management positions with GE and RCA. Mr. Malm graduated with a B.S. from Bowling Green State University.

     Brian Coryat is the founder of ValueClick and has served as a director since the company's inception. Mr. Coryat served as ValueClick's Vice Chairman from February 2000 to January 2001. He also served as ValueClick's President from its inception until February 2000 and acted as the Chief Operating Officer from May 1999 until February 2000. Mr. Coryat's prior experience includes the formation, development and direction of Web-Ignite Corporation, an Internet promotions company, from May 1996 through December 1998. From September 1994 through May 1996, Mr. Coryat served as Chief Executive Officer of AAA Internet Promotions, an Internet directory listing service.

     David S. Buzby has been a director since May 1999. Mr. Buzby is an investor and operator of entrepreneurial companies. Most recently, he was Chief Operating Officer and a founding investor of BarterTrust, an international business-to-business e-commerce barter exchange, from June 1999 to

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September 2000. Previously, Mr. Buzby worked with Best Internet, a web hosting company, from August 1994 to January 1999. Mr. Buzby held various positions at Best Internet including Chief Financial Officer and Vice Chairman of the Board and was a founding investor. From 1991 through 1995, Mr. Buzby co-founded and was the CEO of Resource Holdings, a company that acquired and re-sold multiple recycling operations in Northern California. From 1988 through 1990, he worked with Springboard Partners, a leveraged buy-out partnership based in Denver, Colorado, acquiring and operating manufacturing and distribution businesses. From 1982 through 1986, Mr. Buzby held various positions in commercial banking with Chase Manhattan and Lloyds Bank International. Mr. Buzby has numerous private investments and serves on the Board of Directors of several private companies. Mr. Buzby graduated with a B.A. from Middlebury College and an M.B.A. from Harvard Business School.

     Robert D. Leppo has been a director of ValueClick since May 1998. Mr. Leppo's primary occupation since 1977 has been as a private investor. He serves on the Board of Directors of several private companies. Mr. Leppo graduated with a B.A. from Stanford University and an M.B.A. from Harvard Business School.

     Martin T. Hart has been a director since March 1999. Mr. Hart's primary occupation since 1969 has been as a private investor. Mr. Hart is also a director of PJ America, a foods service company, MassMutual Corporate Investors, an investment company, MassMutual Participation Investors, an investment company, Schuler Homes, a builder of homes, Optical Securities, a manufacturer of security systems, T-Netix, a communications company, Vail Banks, a multi-bank holding company, and Ardent Software, a software company, and he continues to serve on the Board of Directors of several private companies. Mr. Hart graduated with a B.A. from Regis University and is a Certified Public Accountant.

     Jeffery E. Epstein has been a director since February 2000. Mr. Epstein has served as the Executive Vice President of DoubleClick, Inc., a provider of Internet advertising solutions for advertisers and Web publishers, since April 1999. From March 1998 to April 1999, Mr. Epstein served as DoubleClick's Chief Financial Officer. From May 1997 to February 1998, Mr. Epstein served as Chief Financial Officer of Trans National Group Inc., a consumer services company. From January 1995 to March 1997, Mr. Epstein served as Senior Vice President of CUC International Inc., a membership based consumer services company. From February 1988 to December 1994, Mr. Epstein served as Chief Financial Officer of King World Productions, Inc., a television production company. Mr. Epstein received his B.A. from Yale University and his M.B.A. from Stanford University.

     Barry Salzman has been a director since February 2000. Mr. Salzman has served as the President of Global Media for DoubleClick, Inc., a provider of Internet advertising solutions for advertisers and Web publishers, since November 2000. Prior to that he served as the President of DoubleClick International since joining the company in February 1997. From August 1994 to January 1997, Mr. Salzman served as President of BMS Associates, Inc., a consulting firm. From June 1993 to July 1994, Mr. Salzman served as an associate for AEA Investors, Inc., a principal investment firm. From June 1989 to June 1993, Mr. Salzman served as an Engagement Manager for McKinsey & Company, a management consulting firm. Mr. Salzman received his B.S. from the University of Cape Town and his M.B.A. from Harvard University.

Board of Directors

    ValueClick's board of directors is currently composed of nine members. Each director serves until the next annual meeting or until his successor is duly elected and qualified.

Board Committees

    In March 1999, ValueClick's board of directors established an audit committee and a compensation committee and incentive plan committee. Mr. Leppo, Mr. Hart, Mr. Buzby and Mr. Epstein serve on the audit committee and Mr. Leppo, Mr. Buzby and Mr. Salzman comprise the compensation and incentive plan committee.

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Director Compensation

    The directors of ValueClick do not currently receive salaries or fees for serving as directors or for serving on committees of ValueClick's board of directors.

Compensation Committee Interlocks and Insider Participation

    No interlocking relationship exists between ValueClick's executive officers, board of directors or compensation committee and any executive officer or member of the board of directors or compensation committee of any other company, nor has any such interlocking relationship existed in the past.

Executive Compensation

    The following table sets forth all compensation awarded to, earned by or paid to ValueClick's Chief Executive Officer and other executive officers whose cash compensation exceeded $100,000 in 2000 for services rendered to ValueClick in all capacities in 1999 and 2000.


Executive Compensation Table

 
   
  Annual Compensation
  Long-Term
Compensation

   
 
Name and Principal Position

  Year
  Salary
  Bonus
  Other Annual
Compensation

  Securities
Underlying
Options/SAR

  All Other
Compensation

 
James R. Zarley
Chairman, Chief Executive
Officer and President
  2000
1999
  $
$
252,083
123,750
(1)
(2)

$

110,000
 
 
1,400,000
   
 
Brian Coryat
Founder and former
Vice Chairman
  2000
1999
  $
$
100,000
139,290
(3)
(4)

$

110,000
 
 
  $
$
3,000
3,000
(11)
(11)
Earle A. Malm II
Vice Chairman and former
President and Chief
Operating Officer
  2000
1999
  $
$
281,250
87,500

(5)

$

110,000
 
  500,000
413,600
(10)
 
 
Kurt A. Johnson
Chief Financial Officer and
Secretary
  2000
1999
  $
$
130,000
78,833

(6)

$

110,000
 
 
150,000
  $
$
3,900
650
(11)
(11)
Samuel J. Paisley
Chief Operating Officer
  2000
1999
  $
100,000
(7)
$
25,000
 
  100,000
  $
1,875
(11)
Peter Wolfert
Chief Information Officer
  2000
1999
  $
103,077
(8)
 
 
  150,000
  $
1,042
(11)
John H. Schwenk
Former Chief Technology
Officer
  2000
1999
  $
$
100,000
74,295

(9)
$
12,500
 
 
200,000
  $
$
3,000
750
(11)
(11)

(1)
Mr. Zarley's base salary decreased from $300,000 to $200,000 in August 2000.
(2)
Mr. Zarley commenced his employment in February 1999 at a base salary of $150,000.
(3)
Mr. Coryat ceased receiving his base salary of $150,000 effective September 2000.
(4)
Mr. Coryat's base salary increased from $120,000 to $150,000 in May 1999. Salary information reflects Mr. Coryat's employment as ValueClick's president for the year ended December 31, 1999.

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(5)
Mr. Malm commenced his employment in June 1999 at a base salary of $150,000. Salary information reflects Mr. Malm's employment as ValueClick's chief marketing officer for the year ended December 31, 1999. Mr. Malm relinquished his duties as president and chief operating officer in December 2000 and became Vice Chairman.
(6)
Mr. Johnson commenced his employment in May 1999 at a base salary of $130,000.
(7)
Mr. Paisley commenced his employment in March 2000 at a base salary of $150,000.
(8)
Mr. Wolfert commenced his employment in June 2000 at a base salary of $200,000.
(9)
Mr. Schwenk commenced his employment in April 1999 at a base salary of $100,000.
(10)
The grant of 500,000 options was surrendered pursuant to Mr. Malm's December 2000 employment agreement.
(11)
Represents 401(k) matching contributions paid by ValueClick on the executive's behalf.

Stock Option Grants and Exercises

    The following table sets forth certain information regarding options to purchase common stock granted to named executive officers during 2000 including the potential realizable value over the ten-year term of the options, based on assumed annually compounded rates of stock value appreciation. These assumed rates of appreciation comply with the rules of the SEC and do not represent ValueClick's estimate of future stock price. Actual gains, if any, on stock option exercises will be dependent on the future performance of ValueClick common stock. No stock appreciation rights were granted to these individuals during the year.

    These options were granted under ValueClick's 1999 Stock Option Plan.

    The following table sets forth information regarding the option grants to ValueClick's named executive officers. All the options were granted at an exercise price which ValueClick's board of directors believed to be equal to the fair market value of ValueClick's common stock on the date of grant. The potential realizable values set forth in the table are computed by:


 
  Number of
Securities
Underlying
Options
Granted

  Percent of
Total Options
Granted to
Employees in
2000

   
   
  Potential Realizable Value at Assumed
Annual Rates of Stock Appreciation
for Option Term

Name

  Exercise
Price Per
Share

  Expiration
Date

  5%
  10%
Earle A. Malm II   500,000 (1) 25.9 % $ 11.00   2/14/10   $ 3,458,920   $ 8,765,583
Samuel J. Paisley   100,000   5.2 % $ 11.00   3/27/10   $ 691,784   $ 1,753,117
Peter Wolfert   150,000   7.8 % $ 8.03   7/12/10   $ 757,504   $ 1,919,663
Brian Coryat                  
James R. Zarley                  
Kurt A. Johnson                  
John H. Schwenk                  

(1)
The grant of 500,000 options was surrendered pursuant to Mr. Malm's December 2000 employment agreement.

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Aggregate Option Values at December 31, 2000

    The following table sets forth the number of shares of ValueClick common stock subject to exercisable and unexercisable stock options held as of December 31, 2000 by ValueClick's named executive officers. Also reported are values of "in-the-money" options, which represent the positive spread between the exercise prices of outstanding stock options and $4.94, the fair market value per share at December 31, 2000.

 
   
   
  Number of Securities Underlying
Unexercised Options at
December 31, 2000

  Value of Unexercised
In-the-Money Options at
December 31, 2000

 
  Number of
Shares
Acquired on
Exercise

  Value Realized
(Market Price at
Exercise Less
Exercise Price)

Name

  Exercisable
  Unexercisable
  Exercisable
  Unexercisable
Earle A. Malm II         517,767   395,833   $ 1,628,550    
Samuel J. Paisley           100,000        
Peter Wolfert           150,000        
Brian Coryat                  
James R. Zarley   455,555   $ 8,424,990   547,778   396,667   $ 2,381,915   $ 1,561,876
Kurt A. Johnson         131,250   18,750   $ 516,797   $ 73,828
John H. Schwenk         161,000   39,000   $ 754,688   $ 182,813

Employment Agreements

    ValueClick has entered into employment agreements with each of Messrs. Zarley, Malm, Schwenk, Johnson, Paisley and Wolfert. Under these agreements, each of them is entitled to a base salary as set forth in the table below. In connection with these agreements, we have granted each of them options to purchase shares of ValueClick common stock under ValueClick's 1999 Stock Option Plan as set forth in the table below. ValueClick entered into employment agreements with Mr. Malm in June 1999, February 2000 and December 2000. The June 1999 employment agreement was entered into in connection with Mr. Malm's employment as ValueClick's chief marketing officer. The February 2000 agreement was entered into in connection with Mr. Malm's appointment as ValueClick's president and chief operating officer. Under the December 2000 agreement, Mr. Malm resigned as president and chief operating officer of ValueClick and was appointed Vice Chairman. Under these agreements, Mr. Malm remains entitled to the 413,600 options granted under the June 1999 agreement, and surrendered the 500,000 options granted under the February 2000 agreement. In addition, under the December 2000 agreement, Mr. Malm will be entitled to be reimbursed for the value, if any, of his surrendered options which would have been vested at the time of the eventual termination of that agreement. Of the options granted under these agreements discussed above, 600,000 of the options granted to Mr. Zarley, all of the options granted to Mr. Malm under his June 1999 employment agreement, 100,000 of the options granted to Mr. Schwenk, and 75,000 of the options granted to Mr. Johnson became immediately exercisable upon the closing of ValueClick's initial public offering.

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Options Granted Under Employment Agreements

Name

  Base Salary
  Number of Securities
Underlying Options

  Price
Exercise

  Expiration Date
James R. Zarley   $ 200,000   800,000
600,000
(1)
(1)
$
$
0.25
1.00
  May 13, 2009
May 19, 2009
Earle A. Malm II   $

$
150,000

300,000
(2)

(4)
13,600
400,000
500,000
(3)
(3)
(5)
$
$
$
1.00
1.00
11.00
  May 14, 2009
June 1, 2009
February 14, 2010
Kurt A. Johnson   $ 130,000   150,000 (6) $ 1.00   May 24, 2009
John H. Schwenk   $ 100,000   200,000 (7) $ 0.25   May 13, 2009
Samuel J. Paisley   $ 150,000 (8) 100,000 (9) $ 11.00   March 27, 2010
Peter Wolfert   $ 200,000 (10) 150,000 (11) $ 8.03   July 12, 2010

(1)
150,000 of Mr. Zarley's options became exercisable in June 1999. 450,000 of the options became exercisable upon the closing of ValueClick's initial public offering. An additional 155,555 of Mr. Zarley's options became exercisable in December 1999. The remaining 644,445 options become exercisable in equal monthly installments over 29 months beginning April 2000.
(2)
Reflects salary and options provided in Mr. Malm's June 1999 employment agreement. Except for the options granted under Mr. Malm's June 1999 employment agreement, all other provisions of the June 1999 and February 2000 employment agreements have been superseded by Mr. Malm's December 2000 employment agreement.
(3)
These options are currently exercisable.
(4)
Reflects compensation provided in Mr. Malm's February 2000 and December 2000 employment agreements.
(5)
The grant of 500,000 options was surrendered pursuant to Mr. Malm's December 2000 employment agreement.
(6)
25,000 of Mr. Johnson's options became exercisable in November 1999. 75,000 options became exercisable upon the closing of our initial public offering. The remaining 75,000 options vested over the 12 months ended March 2001.
(7)
100,000 options became exercisable upon the closing of ValueClick's initial public offering and the remaining 100,000 options vested over the 12 months ended March 2001.
(8)
Reflects compensation and options provided in Mr. Paisley's March 2000 employment agreement.
(9)
Mr. Paisley's options vest annually over a four year term commencing March 29, 2001.
(10)
Reflects compensation and options provided in Mr. Wolfert's July 2000 employment agreement.