ALTAVISTA CO, S-1/A, 2000-03-09

ALTAVISTA CO
S-1/A, 2000-03-09
BUSINESS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on March 9, 2000
Registration Statement No. 333-93013

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Amendment No. 3 to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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AltaVista Company
(Exact name of Registrant as specified in its charter)

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<CAPTION>
Delaware 7379 04-3479713
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

1070 Arastradero Road

Palo Alto, California 94304

(650) 320-7700
(Address, including zip code, and telephone number
Including area code, of Registrant's principal executive offices)

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Stephanie A. Lucie, Esq.
Vice President, General Counsel and Secretary
AltaVista Company
529 Bryant Street
Palo Alto, California 94301
(650) 617-3400
(Name, Address, Including Zip Code, and Telephone Number
Including Area Code, of Agent for Service)

Copies to:
<TABLE>
<S> <C>
Michael V. Gisser, Esq. Bruce K. Dallas, Esq.
Kenton J. King, Esq. Davis Polk & Wardwell
Skadden, Arps, Slate, Meagher & Flom LLP 1600 El Camino Real
525 University Avenue, Suite 220 Menlo Park, California 94025
Palo Alto, California 94301 (650) 752-2000
(650) 470-4500
</TABLE>

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

---------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file an 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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

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<PAGE>

Explanatory Note

This registration statement includes two forms of prospectus, one to be
used in connection with an offering in the United States and Canada and one to
be used in connection with an offering outside of the United States and
Canada. The only difference between the prospectuses is the form of cover
page. The form of cover page for the international prospectus is included in
the registration statement immediately following the prospectus to be used in
United States and Canada.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this prospectus is not complete and may be +
+changed. We may not sell these securities until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+prospectus is not an offer to sell these securities and we are not soliciting +
+offers to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued March 9, 2000

14,800,000 Shares

[AltaVista Company Logo]

COMMON STOCK

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We are offering 14,800,000 shares of our common stock. This is our initial
public offering and no public market currently exists for our shares. We
anticipate that the initial public offering price will be between $18.00 and
$20.00 per share.

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We have applied for quotation of our common stock on the Nasdaq National Market
under the symbol "ALTA."

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Investing in our common stock involves risks, including risks related to our
controlling stockholder's ownership of more than a majority of our outstanding
common stock. See "Risk Factors" beginning on page 5.

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PRICE $ A SHARE

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<CAPTION>
Underwriting
Price Discounts Proceeds
to and to
Public Commissions AltaVista
------ ------------ ---------
<S> <C> <C> <C>
Per Share......................................... $ $ $
Total............................................. $ $ $
</TABLE>

We have granted the underwriters the right to purchase up to an additional
2,220,000 shares to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers
on , 2000.

-----------

MORGAN STANLEY DEAN WITTER
CHASE H&Q
ROBERTSON STEPHENS
PRUDENTIAL VOLPE TECHNOLOGY
a unit of Prudential Securities
WIT SOUNDVIEW

, 2000
<PAGE>

Our artwork will consist of web page screen shots displaying various pages
of our portal. Descriptive captions will be used for the screen shots. In
addition, we plan to use our corporate logo which contains the words
"AltaVista: Smart Is Beautiful."

<PAGE>

TABLE OF CONTENTS

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Page
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Prospectus Summary................. 1
Risk Factors....................... 5
Special Note About Forward-Looking
Statements........................ 17
Use of Proceeds.................... 18
Dividend Policy.................... 18
Capitalization..................... 19
Dilution........................... 20
Unaudited Pro Forma Condensed
Statements of Operations and
Balance Sheet..................... 21
Selected Historical Financial
Information....................... 28
Management's Discussion and
Analysis of Financial Condition
and Results of Operations......... 29
Business........................... 42
</TABLE>
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Page
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Management.......................... 59
Certain Relationships and Related
Transactions....................... 69
Ownership of Principal Stockholders
and Management..................... 76
Description of Capital Stock........ 78
Shares Eligible for Future Sale..... 82
Certain Federal Income Tax
Considerations for Non-United
States Stockholders................ 84
Underwriters........................ 86
Legal Matters....................... 90
Experts............................. 90
Where You Can Find More Information
About AltaVista.................... 91
Index to Financial Statements....... F-1
</TABLE>

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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from the
information contained in this prospectus. We are offering to sell, and seeking
offers to buy, the common stock, only in jurisdictions where offers and sales
are permitted. The information contained in this prospectus is accurate only
as of the date of this prospectus, regardless of when this prospectus is
delivered or when any sale of our common stock occurs.

Until , 2000 (25 days after the date of this prospectus), all
dealers that buy, sell or trade in our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

i
<PAGE>

PROSPECTUS SUMMARY

This summary highlights selected information in this prospectus, but it may
not contain all of the information that is important to you. To better
understand this offering, and for a more complete description of the offering
and related transactions, you should read this entire prospectus carefully,
including the "Risk Factors" section and the combined financial statements and
the notes to those statements, which are included elsewhere in this prospectus.

AltaVista Company

AltaVista is an Internet search, new media and commerce network that
delivers personalized, relevant information and e-commerce services to millions
of users worldwide. With our patented technologies, international user base and
relationships with content and service providers, we seek to provide a single
destination for all of a user's search, information, communication and commerce
needs on the Internet. Our goal is to expand our user base by building on our
strength in search, and extending our content and e-commerce capabilities,
thereby increasing the attractiveness of our Internet properties to advertisers
and merchants.

The quality of our services has enabled us to be one of the top web sites in
terms of user reach. We target our services and branding toward Web
enthusiasts. Web enthusiasts, whether experienced Internet users or newly
online, are passionate about the Internet and view it as a powerful tool to
obtain knowledge and to communicate. We believe that the AltaVista user base,
which we estimate, based on internally generated data, consisted of more than
54 million different visitors worldwide during the month of January 2000, is
one of the most Web-savvy and brand-loyal on the Internet. Data from @Plan, a
market research company, in the Fall of 1999 shows that the typical AltaVista
user is a more frequent online user and more likely to buy products online than
the typical Internet user. We believe that as Internet use continues to
increase and users become more familiar and comfortable with using the
Internet, the number of Web enthusiasts as a percentage of total Internet users
will increase.

Market research firm International Data Corporation estimates that the
number of Internet users will increase from approximately 142 million at the
end of 1998 to approximately 502 million by the end of 2003, representing a
compound annual growth rate of approximately 29%. Internet advertising revenues
in the United States are expected to increase from $2.1 billion in 1998 to over
$11.5 billion by 2003, according to Jupiter Communications, a market research
company. Forrester Research has estimated that consumer purchases of goods and
services over the Internet in the United States alone will increase from
approximately $20 billion in 1999 to approximately $184 billion in 2004,
representing a compound annual growth rate of over 56%.

We combine search technology, timely media content, local content and
personalized e-commerce offerings with a broad network of relationships with
content and service providers to supply our users with an easy-to-use tool for
their Internet navigation and commerce needs. Our web sites offer users ways to
quickly, accurately and dynamically access the knowledge they seek. During
January 2000, we delivered over 1.9 billion page views to our users, based on
internally generated data. Our portal has the following capabilities:

Search Platform. AltaVista Search offers search functionality that enables
Internet users to find information on the Internet. We believe that AltaVista
Search produces highly relevant search results. We also believe that our index,
which is frequently updated, contained over 250 million web pages at
January 31, 2000, based on internally generated data.

AltaVista Live!. We offer users a comprehensive destination for Internet
navigation, directory services, personalized content and rich local community
information on the AltaVista Live! service. As part of our commitment to
provide our users with finance-oriented content as well as to further broaden
the community aspects of AltaVista Live!, on February 1, 2000, we acquired
Raging Bull, Inc,.

1
<PAGE>

AltaVista Shopping.com. AltaVista Shopping.com is an e-commerce service that
provides customers with the information necessary to make personalized online
buying decisions and gives retailers the ability to reach a large customer
base. AltaVista Shopping.com's goal is to make the shopping experience
informed, quick, interactive and personalized. We use our search technology to
enhance the shopping experience by increasing the speed and accuracy of the
shopping search, enabling our users to research and compare merchandise from
among millions of products.

Free Communications Services. We offer a number of free services to help
attract users to the AltaVista portal. We offer e-mail service and dial-up
Internet access through our AltaVista FreeAccess program to our users.

CMGI, Inc. will own approximately 73.8% of our outstanding common stock upon
completion of this offering. Accordingly, CMGI will have the power, acting
alone, to elect a majority of our board of directors and will have the ability
to determine the outcome of any corporate actions requiring stockholder
approval, regardless of how our other stockholders may vote. CMGI may exercise
its voting power by written consent, without convening a meeting of the
stockholders. This means CMGI will be able to effect a sale or merger of
AltaVista without prior notice to, or the consent of, our other stockholders.
CMGI's ownership may have the effect of delaying, deferring or preventing a
change in control of AltaVista. CMGI's interests could conflict with the
interests of our other stockholders.

History

Historically, we were operated within Digital Equipment Corporation, which
was acquired by Compaq Computer Corporation in June 1998. In January 1999, we
were incorporated and began doing business as a separate business unit within
Compaq. To broaden the capabilities of AltaVista, in February 1999, Compaq
acquired Shopping.com, an e-commerce company, and, in April 1999, acquired Zip2
Corp., a local portal service. In August 1999, CMGI acquired approximately
81.5% of our equity ownership and Compaq retained approximately 18.5% of our
equity ownership. In connection with this acquisition, the AltaVista Search web
site and associated intellectual property, Shopping.com, Zip2 and other assets
were contributed to us. In October 1999, we acquired iAtlas from CMGI to
enhance our search service with iAtlas' filtering technology and distributed a
stock dividend of all Zip2 stock owned by us to our stockholders. In February
2000, we acquired Raging Bull, a finance-oriented content provider and online
community and an affiliate of CMGI. In February 2000, we also acquired Transium
Corporation, a provider of scalable hosted search services that make content
manageable and searchable and provide fast and relevant search results.

Our principal executive offices are located at 1070 Arastradero Road, Palo
Alto, California 94304, and our telephone number is (650) 320-7700. We offer
our complete network through the www.altavista.com Internet portal and also
offer our e-commerce services through the www.shopping.com web site. The
information on these web sites is not incorporated by reference into this
prospectus.

2
<PAGE>

THE OFFERING

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Common stock offered:
United States offering............................ 11,840,000 shares
International offering............................ 2,960,000 shares
Total........................................... 14,800,000 shares

Common stock to be outstanding after the offering.. 153,995,511 shares
Use of Proceeds.................................... For working capital,
including sales and
marketing, and other
general corporate
purposes. In addition, we
may use a portion of the
net proceeds to invest in
joint ventures or other
collaborative
arrangements, or to invest
in or acquire businesses,
technologies, products or
services. See "Use of
Proceeds" on Page 18.
Proposed Nasdaq National Market Symbol............. ALTA
</TABLE>

The common stock to be outstanding after the offering is based on shares
outstanding as of January 31, 2000, plus approximately 7,364,000 shares of
common stock issuable upon conversion of outstanding convertible notes and
convertible preferred stock, including the assumed exercise of Compaq's pre-
emptive rights to purchase additional convertible notes, as of that date. The
shares outstanding exclude:

. 16,474,667 shares of common stock issuable as of January 31, 2000 upon
the exercise of outstanding stock options issued under our stock option
plans at a weighted average exercise price of $11.45 per share and
options to purchase 1,220,830 shares of common stock granted during
January 2000 with exercise prices equal to the initial public offering
price

. 7,488,384 shares of common stock and options to purchase common stock
issued after January 31, 2000 in connection with our acquistions of
Raging Bull and Transium

. 2,600,000 shares of common stock initially reserved for issuance under
our employee stock purchase plan

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Unless otherwise specifically stated, information in this prospectus (with
the exception of the financial statements) assumes:

. Conversion of $129.8 million of our convertible notes by CMGI and Compaq
into shares of convertible preferred stock prior to the closing of this
offering

. Compaq's exercise of its pre-emptive right to purchase additional
convertible notes in an amount not to exceed $17.5 million, and
conversion of these notes into convertible preferred stock prior to the
closing of this offering

. Conversion of all outstanding shares of our convertible preferred stock
into an aggregate of approximately 7,364,000 shares of common stock upon
completion of this offering

. No exercise of the underwriters' over-allotment option

. A 1.3-for-one split of our outstanding common stock to be approved and
effected prior to the closing of this offering

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This prospectus includes statistical data regarding our company, the
Internet and the industries in which we compete. This data is based on our
records or taken or derived from information published or prepared by various
sources, including International Data Corporation, a provider of market and
strategic information for the information technology industry, and Jupiter
Communications, a market research company. Market data used throughout this
prospectus relating to our relative position in our industry is based upon
industry sources and the good faith estimates of our management, based upon
relevant information known to them.

The respective trademarks and logos of AltaVista, Shopping.com, iAtlas,
Raging Bull, Transium, and our other trademarks mentioned in this prospectus
are the property of AltaVista. All other trademarks or trade names referred to
in this prospectus are the property of their respective owners.

3
<PAGE>

SUMMARY FINANCIAL DATA

The following table presents our summary pro forma financial data. We have
derived this data from "Unaudited Pro Forma Condensed Statements of
Operations," and the financial statements and notes that are included elsewhere
in this prospectus. You should read those sections for a further explanation of
the financial data summarized here.

The summary pro forma financial data may not be indicative of our future
performance and does not reflect what our financial position would have been
had we operated as a separate, stand-alone entity during the periods presented.
The pro forma statement of operations data reflect the acquisition by CMGI of
an 81.495% equity interest in us and the acquisition by us of Shopping.com as
if they had occurred as of January 1, 1998. The summary pro forma financial
data exclude results of Zip2, which was acquired on April 1, 1999 and
distributed as a stock dividend to our stockholders on October 20, 1999.

Prior to August 18, 1999, our fiscal year ended on December 31. In August
1999, we retroactively adopted the CMGI fiscal year end of July 31.

<TABLE>
<CAPTION>
Seven Months Three Months Ended
Year Ended Ended ---------------------------------------------
December 31, July 31, March 31, June 30, October 31, January 31,
1998 1999 1999 1999 1999 2000
------------ ------------ --------- --------- ----------- -----------
(in thousands, except per share information)
<S> <C> <C> <C> <C> <C> <C>
Summary Pro Forma
Statement of Operations
Data:
Advertising, service and
other revenue, net..... $ 37,139 $ 47,087 $ 16,705 $ 21,601 $ 30,196 $ 46,865
Product revenue, net.... 8,122 26,212 4,862 12,397 22,421 4,030
--------- --------- --------- --------- --------- ---------
Total revenue......... 45,261 73,299 21,567 33,998 52,617 50,895
Gross profit ........... 24,730 30,848 10,532 15,396 21,150 34,522
Product development
(a).................... 15,911 16,728 5,324 7,773 10,630 11,571
Sales and marketing
(a).................... 39,413 52,048 23,203 20,212 50,348 64,085
General and
administrative and
other (a).............. 26,282 23,690 3,597 5,539 6,471 7,171
Stock-based compensation
and amortization of
intangibles............ 875,067 510,456 218,767 218,767 219,795 222,300
--------- --------- --------- --------- --------- ---------
Loss from operations.... (931,943) (572,074) (240,359) (236,895) (266,094) (270,605)
Net loss................ $(939,162) $(572,504) $(240,467) $(236,952) $(267,993) $(272,221)
Loss per share--basic
and diluted............ $ (7.22) $ (4.41) $ (1.85) $ (1.82) $ (2.06) $ (2.07)
</TABLE>
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(a) Excludes stock-based compensation for the three months ended October 31,
1999 and January 31, 2000 as follows (in thousands): Product development
$83 and $235; Sales and marketing $56 and $156; and General and
administrative $139 and $391.

The summary pro forma consolidated balance sheet data below reflect the
conversion into common stock of amounts outstanding under our convertible notes
payable to CMGI and Compaq, and exercise of Compaq's pre-emptive right to
purchase additional convertible notes, based on CMGI's and Compaq's irrevocable
election to convert these amounts into equity upon the closing of this
offering. The summary pro forma as adjusted balance sheet data also reflect the
receipt of the net proceeds from the sale of the shares of our common stock in
this offering.

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<CAPTION>
As of January 31, 2000
---------------------------------
Pro Forma
Actual Pro Forma As Adjusted
---------- ---------- -----------
(in thousands)
<S> <C> <C> <C>
Summary Pro Forma Balance Sheet Data:
Cash and cash equivalents................... $ 12,368 $ 29,827 $ 288,343
Goodwill and other intangibles, net......... 2,252,216 2,252,216 2,252,216
Total assets................................ 2,402,724 2,420,183 2,678,699
Demand convertible notes payable to CMGI and
Compaq..................................... 129,814 -- --
Total stockholders' equity.................. $2,188,893 $2,336,166 $2,594,682
</TABLE>

4
<PAGE>

RISK FACTORS

This offering and an investment in our common stock involve a high degree
of risk. You should consider carefully the risks described below, which are
the most significant risks we face based on our business and the industry in
which we operate, before you decide to buy our common stock. If any of the
following risks were to occur, our business, financial condition or results of
operations would likely suffer. In that event, the trading price of our common
stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business

We have incurred substantial operating losses and anticipate continued
losses

We have incurred significant net operating losses in each fiscal quarter
since our inception, including an operating loss of $542.9 million for the six
months ended January 31, 2000. As of January 31, 2000, we had an accumulated
deficit of $765.1 million. We cannot assure you that we will ever achieve
profitability on a quarterly or annual basis or, if we achieve profitability,
that it will be sustainable. We will need to generate significant additional
revenue to achieve profitability. We anticipate significant increased
expenses, the amount of which we cannot accurately predict but currently
estimate to range from $20 million to $35 million in the second half of fiscal
2000, compared to the first half of fiscal 2000. These increased expenses
result from our plan to continue to expand and improve our operating
infrastructure and expand our sales and marketing efforts. As a result, we
expect to incur additional losses and continued negative cash flow from
operations for the foreseeable future.

We may not be able to maintain or improve our competitive position because
of the number of Internet portals and the intense competition among these
Internet portals

The Internet portal market is highly competitive, and we expect competition
will continue to intensify. We may not be able to compete successfully and
competitive pressures may seriously harm our business. For the month of
January 2000, Media Metrix ranked us fifth among all search engines and
Nielson/Net Ratings ranked us eighth among all search engine and portal web
sites, as measured in terms of unique visitors at home and at work.

Many companies currently offer directly competitive products or services
addressing Web search and navigation, including America Online, CNET, Direct
Hit, Excite, the Go Network, Google, HotBot, Inktomi, Lycos, Microsoft
Network, Northern Light and Yahoo!. The size of the Web index, the speed with
which search results return and the relevance of results are factors which,
among others, determine a portal's success. Many of our existing competitors,
as well as a number of potential new competitors, have significant financial,
technical, marketing and distribution resources, which may enable them to
increase the speed and relevance of their search results. As the market for
Internet and Intranet search and navigational services develops, other
companies may be expected to offer similar services or directly and indirectly
compete with us for advertising revenues.

Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand name recognition, greater
access to proprietary content and significantly greater financial, marketing
and other resources. In addition, our competitors may be acquired by, receive
investments from or enter into commercial relationships with larger, well-
established and better financed companies as use of the Internet and other
online services increases. New technologies or the expansion of existing
technologies may increase these competitive pressures. We may not be able to
compete successfully against current and future competitors, and the
competitive pressures we face may seriously harm our business.

Our quarterly financial results are volatile

Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, which are outside our control. These
factors include:

. the timing and amount of advertising and e-commerce activity on our web
sites

5
<PAGE>

. changes in the mix of content and services provided by our competitors

. the demand for and market acceptance of our web sites

Moreover, our operating results in one or more future quarters may fail to meet
our expectations or those of investors. If this occurs, we could experience an
immediate and significant decline in the trading price of our stock.

We plan to increase our operating expenses and if our revenues do not
increase, our business could be seriously harmed

Because our staffing and operating expenses are based on anticipated revenue
levels, and because a high percentage of our costs is fixed, small variations
in the timing of the recognition of specific revenue could cause significant
variations in operating results from quarter to quarter. We anticipate
significant increased operating expenses, the amount of which we cannot
accurately predict but currently estimate to range from $25 million to $35
million in the second half of fiscal 2000, compared to the first half of fiscal
2000. If we are unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall, any significant revenue shortfall would
likely harm our business and operating results.

Because we have a limited operating history as a combined company,
evaluation of our business is difficult

AltaVista as it exists today has not operated as a combined organization at
any time during the period for which historical financial information is
presented in this prospectus. In addition, the recent acquisitions of
Shopping.com, iAtlas, Raging Bull and Transium and the divestiture of Zip2 have
required adjustments and allocations in connection with the preparation of our
historical and pro forma financial statements. As a result, our historical and
pro forma results of operations are not necessarily indicative of future
operating or financial performance.

If we cannot effectively integrate our recent and potential future
acquisitions, we may experience increased costs, operating inefficiencies,
system disruptions and the loss of users

The recent acquisitions of iAtlas, Raging Bull and Transium create
challenges in coordinating business processes and integrating logistics,
marketing, product development, services and operations. If we do not
successfully integrate iAtlas, Raging Bull and Transium our future revenue and
profitability may be harmed and our value may be diminished.

The integration of acquired companies into a cohesive business requires the
combination of different business strategies, financial accounting and other
internal systems, varied technologies and personnel who have different
expertise and backgrounds. We may not be able to successfully integrate the
operations, personnel or systems of these acquired companies in a timely
fashion, or at all. If we fail to integrate operations and personnel
effectively, we will experience duplication of costs and operating
inefficiencies. If we are unable to integrate technologies successfully, we may
experience system disruptions or failures that could result in user
dissatisfaction and, potentially, the loss of users. We also cannot be certain
that we will achieve value from our acquisitions commensurate with the
consideration paid.

Expansion into international markets and development of country-specific
web sites may be difficult or unprofitable

We currently have branch offices located in Canada, France, Germany, Italy,
Sweden, The Netherlands and the United Kingdom. We plan to expand our
operations in each of these countries and enter additional international
markets. Though more than half of the visitors to our web sites are from
outside the United States, Internet usage and Internet advertising are at an
earlier stage of development internationally than in the United States. Our
international operating presence is limited to facilities located in seven
countries and a total of approximately 36 employees. Our failure to establish
successful operations and sales and marketing efforts in international markets
could seriously harm the financial results of our international operations.

6
<PAGE>

There are difficulties inherent in doing business in international markets,
such as:

. unproven markets for Internet advertising

. less developed distribution and payment mechanisms that may impede the
growth of e-commerce

. unexpected changes in regulatory requirements

. potentially adverse tax environment

. export restrictions, export controls relating to encryption technology,
tariffs and other trade barriers

. difficulties in staffing and managing foreign offices

. burdens of complying with applicable foreign laws and exposures to
different legal standards, particularly with respect to intellectual
property, privacy and distribution of potentially offensive or unlawful
content over the Internet

. fluctuations in currency exchange rates

. seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world

Any difficulties of conducting our business internationally could harm our
international operations and, consequently, our business.

Because we expect to derive significant revenue from Internet advertising,
weaker than expected growth of Internet advertising could harm our
operating results

Advertising revenue comprised approximately 57% of our total revenues for
the six months ended January 31, 2000. We expect to derive a large portion of
our revenues in the foreseeable future from sales of Internet advertising.
Accordingly, our future success is highly dependent on the continued
development of the Internet as an advertising medium. The market for Internet
advertising has only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market competitors. Most of our
advertising customers have limited experience with the Internet as an
advertising medium, have not yet devoted a significant portion of their
advertising expenditures to Internet-based advertising and may not find such
advertising to be effective for promoting their products and services relative
to traditional print and broadcast media. If the market fails to continue to
develop, develops more slowly than expected or becomes saturated with
competitors, or if our products and services do not achieve or sustain
acceptance by Internet users or advertisers, our business could be seriously
harmed.

Weaker than anticipated performance by DoubleClick could harm our operating
results

Approximately 71% of our advertising, service and other revenue for the six
months ended January 31, 2000, was derived from customer advertising contracts
serviced by DoubleClick. DoubleClick is a service provider that currently acts
as our outside sales agent and serves advertisements for the more than 2000
advertisers that advertise on our website. We anticipate that for the
foreseeable future, a substantial portion of our advertising revenues will be
derived from ads delivered by DoubleClick through its DART service software.
We have no assurance that DoubleClick will achieve the advertising revenue
targets that we have set for it, and a failure by DoubleClick to assist us in
achieving these targets could harm our business. If DoubleClick's DART service
were to fail or suffer severe interruptions, or our relationship with
DoubleClick were otherwise interrupted or terminated, we would need to replace
its delivery capability, which could temporarily reduce our advertising
revenues.

According to reports filed by DoubleClick with the Securities and Exchange
Commission, for the year ended December 31, 1999, DoubleClick's revenues were
$258.3 million and its net loss was $55.8 million. At December 31, 1999,
DoubleClick's working capital was $309.8 million.

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Failure of our new Internet sales strategy could harm our operating results

We are increasing the size of our internal sales organization to improve our
ability to earn revenue from our traffic, maintain closer relationships with
our key advertisers and partners and reduce advertising sales costs. The number
of our full-time employees in sales and marketing has grown from five in July
1999 to 39 as of January 31, 2000. If we fail to develop our internal sales
organization or to manage our advertising sales strategy effectively, our
business could be seriously harmed.

We may need additional financing in the future, which may not be available
or may require us to issue additional equity securities that could lead to
substantial dilution to our stockholders

Historically, Compaq and CMGI have funded our operations as needed, however,
we do not expect to borrow funds from Compaq or CMGI after completion of this
offering. We intend to expand our business rapidly and expect to incur
significant operating losses for the foreseeable future. We believe funding
from CMGI and Compaq prior to completion of this offering, together with the
net proceeds of this offering, will be sufficient to satisfy our cash
requirements for the next 18 months. We may be required to raise substantial
additional funds in order to support more rapid expansion, develop new or
enhanced services or technologies, respond to competitive pressures, acquire
complementary businesses or respond to unanticipated requirements, through
public or private financings, strategic relationships or other arrangements. We
cannot be sure that additional funding, if needed, will be available on
acceptable terms or at all. If adequate funds are not available, we may be
required to curtail significantly or defer one or more of our operating goals
or programs. If we succeed in raising additional funds through the issuance of
equity securities, the issuance could result in substantial dilution to
existing stockholders. If we raise additional funds through the issuance of
debt securities or preferred stock, these new securities would have rights,
preferences and privileges senior to those of the holders of our common stock.
The terms of these securities could also impose restrictions on our operations.
We have no current plans to sell additional equity securities in the near term.

Our brand may not achieve the broad recognition necessary to succeed

We believe that broader recognition and positive perception of the AltaVista
brand are essential to our future success. Accordingly, we intend to continue
to pursue an aggressive brand enhancement strategy, which will include mass
market and multimedia advertising, promotional programs and public relations
activities. These initiatives will require significant expenditures. We believe
that users currently associate our brand primarily with our search
capabilities. To expand our business, we will need to increase association of
our brand with e-commerce, as well as personalized local content services. If
our brand enhancement strategy is unsuccessful, these expenses may never be
recovered and we may be unable to increase future revenues. Successful
positioning of our brand will depend in large part on:

. the success of our advertising and promotional efforts

. an increase in the number of users and page views of our web site

. the ability to continue to provide high quality customer service

Advertising expense was $70.5 million during the six months ended January
31, 2000. To increase awareness of our brand, we expect to spend approximately
$120 million on advertising during the fiscal year ending July 31, 2000. These
expenditures may not result in sufficient increase in revenues to offset these
expenditures. In addition, even if brand recognition increases, the number of
new users or the number of page views of our web sites may not increase. Even
if the number of new users increases, those users may not regularly use our web
sites.

Our ability to grow our business could be substantially impaired if we are
unable to expand our e-commerce services

To increase our revenues, we will need to expand our operations by promoting
new or complementary products and by expanding the breadth and depth of our
services. Specifically, our future success will depend in

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part on obtaining revenues from the facilitation of e-commerce transactions
with online and offline retailers. The market for e-commerce services is
extremely competitive. Because we have limited experience in this market, we
may have limited success. If we expand our operations in this manner, we will
require significant resources for additional development and such expansion
may strain our management, financial and operational resources. Our expansion
into new product and service offerings may not be timely or may not generate
sufficient revenues to offset their cost. If this occurs, our business could
be seriously harmed.

A failure of retailers and product information providers to whom we direct
users to satisfy our users that are directed to them could harm our
business

In an effort to provide objective information to our users, we provide
product information and direct users to various online and offline retailers
and manufacturers, including our competitors. We have no control over the
experience that our users will have while visiting these other web sites.
Users who are not satisfied with their experience with these other web sites
may decide not to use our web site. Should this occur, our business will be
harmed. If we fail to select the most relevant additional categories of
interest to users or fail to adequately provide superior content within these
categories, our business may suffer. We rely on market research to determine
what categories are likely to expand in terms of users' interest. Should our
reliance on this research prove to be misguided, we may waste valuable time
and resources in expanding our service in areas that do not add value to our
web site, which in turn will significantly impact our ability to earn more
revenues from merchants and suppliers.

We may be unable to integrate and retain our workforce effectively, which
could harm our business

As a result of our rapid growth, as well as our recent acquisitions of
iAtlas, Raging Bull and Transium, we have experienced, and believe we will
continue to experience, rapid growth in our operations. This growth has
placed, and our anticipated future growth will continue to place, a
significant strain on our managerial, operational and financial resources. Our
future success will depend in part on our ability to integrate and retain our
workforce. As of January 31, 2000, we had a total of approximately 700
employees. Many of our employees have joined us recently. We will need to
integrate these new employees into our business successfully or our business
could be seriously harmed.

We may be unable to recruit or retain qualified personnel, which could harm
our business

We also must continue to identify, recruit, hire, train, retain and
motivate other highly skilled technical, managerial, editorial, marketing and
customer service personnel. We anticipate that we will need to significantly
increase our work force, perhaps by as much as 10% to 15% per quarter, for the
next year as a result of anticipated growth in our business. Competition for
these personnel is intense, and we may not be able to successfully recruit,
assimilate or retain sufficiently qualified personnel. In particular, we may
encounter difficulties in recruiting a sufficient number of qualified software
developers, and we may not be able to retain these developers, which could
harm our relationships with existing and future users at a critical stage of
development. The failure to recruit and retain necessary technical,
managerial, editorial, merchandising, marketing and customer service personnel
could harm our business and our ability to obtain new users and develop new
products.

We depend on key management personnel to achieve our business objectives

Our future success depends in part on the continued service of our key
management personnel, in particular Rodney W. Schrock, our CEO. Competition
for these personnel is intense. The loss of one or more of our key management
personnel could harm our business. None of our key management personnel is
bound by an employment agreement for any specific term.

If we are unable to cope with transitory peaks in usage of our web sites,
we may lose user confidence

On certain occasions, including the launch of our enhanced web sites in
October 1999, we have experienced unusually high levels of activity on our web
sites that have resulted in increased response times for our services.

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These increased response times result from a number of factors, including the
number of users of our web sites and the particular services being demanded by
users. These events could cause our users to perceive our web sites as not
functioning properly and, therefore, cause them to use other methods for
searches and e-commerce. If this occurs, our business could be seriously
harmed.

System failures could damage our reputation and result in the loss of users

The performance, reliability and availability of our web sites and network
infrastructure are critical to our reputation and ability to attract and
retain users, advertisers and content providers. Although we have redundant
and back-up systems and a disaster recovery plan, our systems and operations
may be vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, Internet breakdowns, attacks by computer hackers,
earthquake and similar events. In the past, parts of our sites have
experienced occasional system failures as a result of power loss and hardware
problems within our network infrastructure, but we have not experienced any
material consequences as a result of system failures. We do not carry business
interruption insurance sufficient to compensate fully for any or all losses
from any or all damage or interruptions. Despite the implementation of network
security measures, including a proprietary firewall, our servers may be
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions, which could lead to interruptions, delays, loss of data or the
inability to accept and fulfill customer orders. Any system error or failure
that causes interruption in availability of content or an increase in response
time could result in a loss of revenue. In addition, because our Web
advertising revenues are directly related to the number of advertisements we
deliver to our users, system interruptions that result in the unavailability
of our web sites or slower response times for users would reduce the number of
advertisements delivered and reduce revenues and harm user perception of our
business.

If we cannot adequately protect our intellectual property, our
competitiveness may be harmed

Most of our intellectual property has been contributed by Compaq. To
protect our rights to intellectual property, we rely, and we believe the
contributors relied, on a combination of patent, trademark and copyright law,
trade secret protection, misappropriation and anti-piracy laws,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, clients, strategic partners and others. The protective
steps we and the contributors have taken may have been inadequate and may
continue to be inadequate to deter infringement or misappropriation of our
intellectual property and proprietary information. We may also be unable to
detect the unauthorized use of, or take appropriate steps to enforce, our
intellectual property rights.

As of January 31, 2000, we had over 70 patents and pending patent
applications. These patents and patent applications are generally directed at
the search technology that is used on our web sites, as well as related
inventions. We and our predecessors may not have sought protection for
technologies that may be or may become important to our business. In addition,
the technologies we have sought to protect may not be adequately protected by
patents.

As of January 31, 2000, we had over 600 trademark registrations and/or
applications in the United States and abroad which are generally directed at
protecting our core brands and selected sub-brands, such as the AltaVista
trademark and tradename, the AltaVista logos, and the "smart is beautiful"
slogan. We expect to file several more trademark registrations in the United
States and abroad directed at the same type of protection. We own many domain
name registrations in the United States and internationally, including
www.altavista.com and www.shopping.com, which are important to us because they
serve as both addresses for web users to find our web site and are themselves
highly recognizable brand names.

We also have copyrights in the text and graphics and other copyrightable
content on our web sites and in the software we use as our search engine. We
rely on these copyrights to make it more difficult for competitors to copy our
web site and to maintain and build our competitive advantage.

We may be unable to obtain or maintain intellectual property protection or
registrations in territories or markets that are important to our success. In
addition, given the early stage of our international expansion, we cannot
predict which territories or markets may be important to our success. Further,
we may not have selected the proper intellectual

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property for which to seek protection by way of registration. In addition,
effective patent, trademark, copyright and trade secret protection may not be
available in every country in which we offer or intend to offer our services.
The protections we have sought may be inadequate.

Infringement or other intellectual property claims could adversely affect
our ability to market our services, limit our rights to our technology and
harm our results of operations

Other parties may assert infringement claims against us or claim that we
have violated a patent or infringed a copyright, trademark or other
proprietary right belonging to them. These claims, could result in:

. payment by us of substantial damages

. injunctive or other equitable relief that could block our ability to
market or license our products

. the loss of rights to technologies necessary to operate portions of our
business

Any litigation, regardless of the outcome, could result in the expenditure of
substantial costs and diversion of managerial and other resources.

If we cannot adapt to continuous change, our business will be harmed

The market for portal, search, e-commerce and other Internet services is
characterized by rapid ongoing technological change, changes in user
requirements and preferences, frequent new service introductions embodying new
processes and technologies and evolving industry standards and practices that
could render our existing services and methodologies obsolete. As a result,
our future success will depend on our ability to adapt to rapidly changing
technologies, to adapt our services to evolving industry standards and to
continually improve the performance, features and reliability of our services
in response to competitive service offerings and the evolving demands of the
marketplace. In addition, the widespread adoption of new Internet technologies
could require us to incur substantial expenditures to modify or adapt our
services or infrastructure. If we are unable, for technical, financial or
other reasons, to adapt in a timely manner in response to changing market
conditions or these requirements, our business could be seriously harmed.

Online security breaches could result in a loss of consumer confidence in
e-commerce, which could hurt our ability to implement our business strategy

We incur substantial expense to protect against and remedy security
breaches and their consequences. A party that is able to circumvent our
security systems could steal proprietary information or cause interruptions in
our operations. Security breaches also could damage our reputation and expose
us to a risk of loss or litigation and possible liability. In the past, we
have experienced occasional security breaches, but we have not experienced any
material consequences as a result of security breaches. Our insurance policies
carry coverage limits, which may not be adequate to reimburse us for losses
caused by security breaches. We cannot guarantee that our security measures
will prevent security breaches.

The secure transmission of confidential information over the Internet is
essential to maintain confidence in our service. We currently require
customers to guarantee their purchases with their credit card, either online
or through our toll-free telephone service. We rely on licensed encryption and
authentication technology to effect secure transmission of confidential
information, including credit card numbers. It is possible that advances in
computer capabilities, new discoveries or other developments could result in a
compromise or breach of the technology used by us to protect customer
transaction data. Any well-publicized compromise of security could deter
people from using the Web or from using it to conduct transactions that
involve the transmission of confidential information. In addition, because
many of our advertisers seek to advertise on our web site to encourage people
to use the Web to purchase goods or services, our business could be seriously
harmed if Internet users reduce their use of the Web because of security
concerns.

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Risks Related to Our Relationships with CMGI and Compaq

You will not be able to control AltaVista corporate events because CMGI
will own approximately 73.8% of our outstanding common stock after the
offering

Upon completion of this offering, CMGI will beneficially own approximately
73.8% of our outstanding common stock, or 72.7% if the underwriters' over-
allotment option is fully exercised. Accordingly, CMGI will have the power,
acting alone, to elect a majority of our board of directors and will have the
ability to determine the outcome of any corporate actions requiring
stockholder approval, regardless of how our other stockholders may vote. Under
Delaware law and our Certificate of Incorporation, CMGI may exercise its
voting power by written consent, without convening a meeting of the
stockholders. CMGI's interests could conflict with the interests of our other
stockholders.

CMGI may need to maintain control of AltaVista to avoid becoming an
investment company, which could influence its decision to sell control of
AltaVista

The possible need of CMGI to maintain control of AltaVista in order to
avoid becoming a registered investment company could influence decisions by
CMGI as to the disposition of any or all of its ownership position in
AltaVista. As a result, CMGI may be motivated to maintain at least a majority
ownership position in AltaVista, even if other stockholders of AltaVista might
consider a sale of control of AltaVista to be in their best interests. As long
as it is a majority stockholder, CMGI has contractual rights to purchase
shares in any future financings of AltaVista, other than this offering,
sufficient to maintain its majority ownership position. CMGI's ownership may
have the effect of delaying, deferring or preventing a change in control of
our company or discouraging a potential acquirer from attempting to obtain
control of us, which in turn could adversely affect the market price of our
common stock.

We have three directors who are also directors and/or executive officers of
CMGI and one director who is an officer of Compaq who may face significant
conflicts of interest

Three of our six directors are also directors or executive officers of CMGI
and one director is an officer of Compaq. These directors may have conflicts
of interest with respect to matters potentially or actually involving us, such
as acquisitions, financings and other corporate opportunities that may be
suitable for us. In addition, a number of our executive officers own
substantial amounts of CMGI stock and options to purchase CMGI stock. This
ownership could create, or appear to create, potential conflicts of interest
when directors and officers are faced with decisions that could have different
implications for our company and CMGI.

We may have potential business conflicts of interest with CMGI with our
past and ongoing relationships, and because of CMGI's majority ownership,
we may not resolve these conflicts on the most favorable terms to us

Conflicts of interests may have arisen or may in the future arise between
CMGI and ourselves in a number of areas relating to our past and ongoing
relationships, including:

. tax allocation matters

. rental of CMGI facilities

. contractual relationships with CMGI and its affiliates concerning
technical services, content provision, and other matters

. our acquisitions of iAtlas and Raging Bull, affiliates of CMGI

. business opportunities that may be attractive to both CMGI and us

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Nothing restricts CMGI from competing with us. Our certificate of
incorporation expressly provides that, except in limited circumstances,
neither CMGI nor any of our officers or directors who are also officers or
directors of CMGI will be liable to us as a result of engaging in activities
or lines of business similar to ours.

We may not be able to resolve any potential conflicts, and even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated party. The agreements we have with CMGI may be amended upon
agreement between the parties. While we are controlled by CMGI, CMGI may be
able to require us to agree to amendments to these agreements that may be less
favorable to us than the current terms of these agreements.

If Compaq ceases to direct traffic to our web site, our business could be
harmed

Historically, approximately 5 to 10% of total monthly traffic to our web
sites has originated through the instant Internet keyboard access buttons on
some Compaq personal computers and Compaq's agreement with CMGI to program the
browser that is bundled with Compaq personal computers to default to any web
sites designated from time to time by CMGI. Compaq will, through May 2002,
preprogram up to four instant Internet keyboard buttons, based on the total
number of these buttons, on each Presario-branded, including successor brands
or sub-brands, consumer desktop and portable personal computer so that, when a
user presses the button, the user is directed to the applicable web site
designated by CMGI. For example, if designated by CMGI and preprogrammed by
Compaq, the search button would direct the user to the search area of our web
site. CMGI pays Compaq a royalty for these preprogramming services, for which
we reimburse CMGI, based on the amount of redirected user traffic. Compaq may
terminate this arrangement if the AltaVista web sites fail to be one of the 12
most trafficked web sites for four consecutive months, as measured in terms of
unique visitors at home and at work, by Media Metrix. Our rankings by Media
Metrix for the months of October 1999 through

January 2000 were 11, 14, 12 and 9. Additionally, users can reprogram the
buttons, or select a proprietary online service provider that controls the
buttons, and the browser to take them to alternative web sites.

Media Metrix estimates the amount of user traffic on web sites by
monitoring the monthly activity of selected user groups and expanding the
results across the number of potential users. Actual usage may differ
materially from statistics provided by Media Metrix. If any inaccuracies in
Media Metrix estimates cause traffic to our web sites to be underestimated
when compared to other web sites, then Compaq's obligations could terminate,
which could seriously harm our business. We are not a party to, or a named
third-party beneficiary of, the agreement between Compaq and CMGI. Therefore,
Compaq and CMGI may amend their agreement, even in ways that could harm our
business, without our consent. If we do not meet our user traffic targets and
Compaq elects to stop pre-programming its keyboards, if Compaq and CMGI amend
their agreement in a manner adverse to us, if CMGI designates web sites other
than ours or if a significant number of users reprogram their keyboards to
discontinue us as their default web site, traffic to our web site could
decline and our business could be seriously harmed.

Risks Related to Our Industry

We may become subject to more restrictive regulations that could adversely
affect our ability to increase Internet sales

Although there are currently few laws and regulations directly applicable
to the Internet, new laws and regulations are under consideration in the
United States and internationally, addressing issues such as intellectual
property, personal privacy, pricing, content, advertising, taxation and
characteristics and quality of Internet products and services. The application
of existing laws and regulations governing Internet issues such as
intellectual property ownership and infringement, defamation, obscenity and
personal privacy is also subject to substantial uncertainty. New government
laws and regulations, or the application of existing laws and regulations, may
expose us to significant liabilities, significantly slow Internet growth and
otherwise affect our financial performance.

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Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. If such access
fees are imposed, the costs of communicating on the Internet could increase
substantially, potentially slowing the growth in use of the Internet, which
could in turn decrease demand for our services or increase our cost of doing
business, and, as a result, seriously harm our business.

Privacy regulations could impair our ability to obtain information about
our users

The ability of us or any of our strategic partners to use cookies to target
users may become subject to laws limiting or prohibiting this practice.
Cookies are information that is stored on a user's hard drive and passed to a
web site's server through the user's browser software. Cookies may be placed
on the user's hard drive without the user's knowledge or consent, but can be
removed by the user at any time through modification of the user's browser
settings. Due to privacy concerns, some Internet commentators, advocates and
governmental bodies in the United States and internationally have suggested
that the use of cookies and other profiling technologies be limited or
eliminated. In addition, currently available Internet browsers allow a user to
prevent cookies from being stored on the user's hard drive. Any reduction or
limitation in the use of cookies could limit the effectiveness of our, or our
partners', user targeting.

We depend on the continued growth in use of the Internet for the growth of
our business

The Web-based information market is new and rapidly evolving. The growth of
our business would be harmed if Web usage does not continue to increase or
increases slowly. Web usage may be inhibited for a number of reasons, such as:

. inadequate network infrastructure

. security and fraud concerns

. inconsistent quality of service

. unavailability of cost-effective, high-speed access to the Internet

We depend on efficient operation of the Internet for growth of our business

Our users depend on Internet service providers and other web site operators
for access to our web site. Many of these services have experienced
significant service outages in the past and could experience service delays
and other difficulties due to system failures unrelated to our systems. These
occurrences could cause our users to perceive the Web in general or our web
site in particular as an unreliable medium and, therefore, cause them to no
longer use our services. We also depend on content and service providers to
deliver information and data feeds to us on a timely basis. Our web site could
experience disruptions or interruptions in service due to the failure or delay
in the transmission or receipt of this information, which could seriously harm
our business.

We may be held liable for our services and user generated content

As a distributor of content over the Internet, we face potential liability
for negligence, intellectual property infringement, defamation, indecency and
other claims based on the nature and content of the materials that we
distribute. Legal claims have been brought, and sometimes successfully
pressed, against Internet content distributors. Although we maintain general
liability insurance, our insurance may not cover potential claims of this type
or may not be adequate to indemnify us for all liability that may be imposed.
In addition, although we generally require our content providers to indemnify
us from these liabilities, the indemnification may be inadequate. Any
imposition of liability that is not covered by insurance, is in excess of
insurance coverage or is not covered by an indemnification by a content
provider could seriously harm our business.

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Although the sections of the Communications Decency Act of 1996 that
proposed to impose criminal penalties on anyone distributing indecent material
to minors over the Internet were held to be unconstitutional by the U.S.
Supreme Court, there can be no assurance that similar laws will not be
proposed and adopted. The nature of the CDA and similar legislation and the
manner in which it may be interpreted and enforced cannot be fully determined,
and legislation similar to the CDA could subject us to potential liability,
which in turn could have an adverse effect on our business, financial
condition and results of operations. These laws could also damage the growth
of the Internet generally and decrease the demand for our services, which
could harm our business.

Risks Related to This Offering

Our stock price is likely to be highly volatile, particularly because we
are an Internet company

The stock market has from time to time experienced significant price and
volume fluctuations that have affected the market prices for the securities of
technology companies, particularly Internet companies. These broad market
fluctuations may result in a material decline in the market price of our
common stock, regardless of our operating performance. In the past, following
periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. We may become involved in this type of litigation in the future.
Litigation is often expensive and diverts management's attention and
resources, which could harm our business, financial condition and results of
operations.

If our existing stockholders sell a substantial number of shares of our
common stock in the public market, the market price of our common stock
will likely fall

If our stockholders sell substantial amounts of our common stock in the
public market following this offering, including shares issuable upon the
exercise of outstanding options, the market price of our common stock will
likely fall. CMGI and Compaq will directly own approximately 73.8% and 16.5%,
respectively, of the outstanding shares of our common stock upon completion of
this offering and will have registration rights which will permit them to
offer all of these shares in the public market beginning approximately 180
days after completion of this offering. These sales also might make it more
difficult for us to sell equity securities in the future at a time and price
that we deem appropriate. After this offering, we will have outstanding
153,995,511 shares of common stock. Of these shares, the 14,800,000 shares
being offered in this offering will be freely tradeable.

AltaVista and our directors, executive officers and substantially all of
our stockholders have agreed that they will not sell, directly or indirectly,
any common stock without the prior written consent of Morgan Stanley & Co.
Incorporated for a period of 180 days after the completion of this offering.
We have no agreement with Morgan Stanley for a waiver of this restriction.
However, Morgan Stanley may, in its discretion, release it. In some cases
underwriters have agreed to waive lock-up restrictions when a company's stock
has performed well and market conditions are favorable, in order to allow a
follow-on offering of common stock. Any decision by Morgan Stanley to waive
the lock-up restrictions would depend on a number of factors, including market
conditions, the performance of our common stock in the market and our
financial condition at that time. If Morgan Stanley were to waive the lock-up
restrictions prior to the expiration of the 180-day period, and our
stockholders were to sell additional shares of common stock to the public, the
market price of our common stock could decline.

Our management has broad discretion as to the use of proceeds from this
offering and may use the proceeds in ways with which you do not agree

Our management will have broad discretion in how we use the net proceeds of
this offering. Investors will be relying on the judgment of our management
regarding the application of the proceeds of this offering.

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You will experience immediate and substantial dilution upon completion of
this offering

The initial offering price of our common stock will be substantially higher
than the pro forma net tangible book value per share of the outstanding common
stock immediately after the offering. If you purchase common stock in this
offering, you will incur immediate and substantial dilution of $16.78 per
share, at an assumed initial public offering price of $19.00 per share. In
addition, to the extent outstanding stock options are exercised, you will incur
further dilution. As of January 31, 2000, we had granted options that were
outstanding to purchase an aggregate of 16,474,667 shares of common stock at
exercise prices between $.05 and $22.73 per share, and at a weighted average
exercise price of $11.45, which is significantly lower than the proposed
initial public offering price of the common stock to be sold in this offering.
If you purchase common stock in this offering and these options are exercised,
you will suffer substantial additional dilution in the book value per share of
your shares of our common stock.

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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this prospectus, including under
the sections "Prospectus Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this prospectus, that are based on our management's beliefs and
assumptions and on information currently available to our management. Forward-
looking statements include the information concerning our possible or assumed
future results of operations, business strategies, financing plans,
competitive position, potential growth opportunities, benefits resulting from
our pending acquisition of Raging Bull, this offering, the effects of future
regulation and the effects of competition. Forward-looking statements include
all statements that are not historical facts and, in some cases, can be
identified by the use of forward-looking terminology such as the words
"believes," "expects," "anticipates," "intends," "plans," "estimates" or
similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these forward-
looking statements. You should not put undue reliance on any forward-looking
statements.

You should understand that many important factors, in addition to those
discussed elsewhere in this prospectus, could cause our results to differ
materially from those expressed in forward-looking statements. These factors
include our competitive environment, economic and other conditions in the
markets in which we operate, integration of newly acquired businesses,
government regulations and continuation of strategic relationships with third
parties.

17
<PAGE>

USE OF PROCEEDS

The net proceeds to AltaVista from the sale of shares of common stock in
this offering are estimated to be $258.5 million, or $297.7 million if the
underwriters exercise their over-allotment option in full, based upon an
assumed initial public offering price of $19.00 per share and after deducting
estimated underwriting discounts and commissions and our estimated offering
expenses of $3.0 million.

The principal purposes of this offering are:

. to increase our equity capital

. to facilitate future access by us to public equity markets

. to provide increased visibility and credibility in the marketplace

Because of our need to be able to react to business opportunities and
competitive pressures, we cannot allocate precisely our use of these proceeds,
but we currently estimate that during the next 12 months we will use
approximately 35% to 45% for sales and marketing expenses, including expenses
related to advertising and the hiring of additional sales personnel,
approximately 10% to 15% for product development expenses and approximately 5%
to 10% for computer equipment, software and facilities improvements. We may
also use a portion of the net proceeds to invest in joint ventures or other
collaborative arrangements, or to invest in or acquire businesses,
technologies, products or services. While we evaluate these types of
opportunities from time to time, we currently have no commitments or
agreements with respect to any acquisitions, except for a signed letter of
intent to invest $5 million in Pyungchang Computer and Communications, Inc.

The amounts and timing of the expenditures set forth above will vary
significantly depending on a number of factors, including, but not limited to,
the availability of other financing, the success and timing of our advertising
and hiring efforts, the amount of cash generated by our operations and the
market response to our web sites. Accordingly, we will have significant
discretion in the use of the net proceeds of this offering. Investors will be
relying on the judgment of our management regarding the application of the
proceeds of this offering. Pending use of the net proceeds as discussed above,
we intend to invest these funds in short-term, interest-bearing, investment-
grade obligations.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock and
do not anticipate any cash dividends on our common stock for the foreseeable
future.

18
<PAGE>

CAPITALIZATION

The following table sets forth AltaVista's capitalization as of January 31,
2000:

. on an actual basis

. on a pro forma basis to reflect the conversion of AltaVista's debt to
CMGI and Compaq as of January 31, 2000 into convertible preferred stock,
the exercise of Compaq's pre-emptive right to purchase an additional
$17.5 million in convertible notes, the conversion of all our issuable
convertible notes into preferred stock, and the conversion of all of our
convertible preferred stock into common stock

. on a pro forma basis as adjusted to give effect to the sale of the shares
of common stock offered hereby and receipt and application of the
estimated net proceeds from this offering, assuming an initial public
offering price of $19.00 per share

This table should be read in conjunction with the information included in
this prospectus under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the combined financial
statements and the notes to those statements included elsewhere in this
prospectus.

Prior to August 18, 1999, Compaq funded our operations as needed. Since
August 18, 1999, CMGI has funded our operations as needed, with a
corresponding increase in our related party debt. From time to time, at
Compaq's election, it may participate in the funding of our operations as
needed, based on its pro rata ownership interest. We expect that we will
continue to borrow funds from CMGI and, if it elects to participate, Compaq
until the closing of this offering. CMGI and Compaq have agreed that the net
borrowings incurred after the end of the fiscal quarter preceding the closing,
to the extent outstanding, will be converted into additional shares of our
common stock at the initial public offering price.

<TABLE>
<CAPTION>
As of January 31, 2000
-----------------------------------
Pro Forma
Actual Pro Forma As Adjusted
---------- ---------- -----------
(in thousands, except share data)
<S> <C> <C> <C>
Debt to CMGI and Compaq.................... $ 129,814 $ -- $ --
========== ========== ==========
Long-term debt............................. $ 6,838 $ 6,838 $ 6,838
---------- ---------- ----------
Stockholders' equity:
Series A convertible stock, par value
$.01: 5,000,000 shares authorized
(actual); no shares authorized (pro forma
and pro forma as adjusted); no shares
issued or outstanding (actual, pro forma
and pro forma as adjusted)............... -- -- --
Common stock, par value $.01; 200,000,000
shares authorized (actual); 1,500,000,000
shares authorized (pro forma and pro
forma as adjusted); 131,831,437 shares
issued and outstanding (actual);
139,195,511 shares issued and outstanding
(pro forma); 153,995,511 shares issued
and outstanding (pro forma as adjusted).. 1,318 1,392 1,540
Additional paid-in capital................. 2,956,361 3,103,560 3,361,928
Deferred compensation and other............ (3,682) (3,682) (3,682)
Accumulated deficit........................ (765,104) (765,104) (765,104)
---------- ---------- ----------
Total stockholders' equity............... 2,188,893 2,336,166 2,594,682
---------- ---------- ----------
Total capitalization................... $2,195,731 $2,343,004 $2,601,520
========== ========== ==========
</TABLE>

The shares of common stock outstanding in the actual, pro forma and pro
forma as adjusted columns exclude:

. 7,488,384 shares of common stock and options to purchase common stock
issued after January 31, 2000 in connection with our acquisitions of
Raging Bull and Transium

. 2,600,000 shares of common stock initially reserved for issuance under
our employee stock purchase plan

19
<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of January 31, 2000
was approximately $83.9 million or approximately $.60 per share of common
stock. Pro forma net tangible book value per share represents the amount of
total tangible assets less total liabilities, divided by 139.2 million, the
number of shares of common stock treated as outstanding on a pro forma basis
after giving effect to the exercise of Compaq's pre-emptive right to purchase
an additional $17.5 million in convertible notes of the Company, the conversion
by CMGI and Compaq of the Company's notes into convertible preferred stock and
the conversion of all shares of convertible preferred stock into common stock.
After giving effect to the sale by the Company of the shares of common stock
being offered at an assumed initial public offering price of $19.00 per share,
and after deducting the estimated underwriting discount and offering expenses
payable by the Company, the Company's pro forma net tangible book value at
January 31, 2000 would have been approximately $342.5 million, or approximately
$2.22 per share. This represents an immediate increase in net tangible book
value to existing stockholders of $1.62 per share and an immediate dilution of
$16.78 per share to new investors. The following table illustrates the per
share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $19.00
Pro forma net tangible book value per share before
this offering as of January 31, 2000........................ $ .60
Increase per share attributable to new investors............. 1.62
-----
Pro forma net tangible book value per share after this
offering...................................................... 2.22
------
Dilution per share to new investors............................ $16.78
======
</TABLE>

Assuming exercise in full of the underwriters' over-allotment option, the
Company's pro-forma net tangible book value at January 31, 2000 would have been
approximately $381.7 million, or approximately $2.44 per share. This represents
an immediate increase in net tangible book value to existing stockholders of
$1.84 per share and an immediate dilution of $16.56 per share to new investors.

The following table summarizes, on a pro forma basis as of January 31, 2000,
the differences between existing stockholders and new investors with respect to
the number of shares of common stock issued by the AltaVista Company, the total
consideration paid and the average price per share paid:

<TABLE>
<CAPTION>
Average
Shares Issued Total Consideration Price
---------------------- ------------------------- Per
Number Percentage Amount Percentage Share
----------- ---------- -------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders... 131,831,437 85.6% $2,170,847,531 83.5% $16.47
CMGI and Compaq
Convertible Notes and
Rights................. 7,364,074 4.8 147,273,465 5.7 20.00
New investors........... 14,800,000 9.6 281,200,000 10.8 19.00
----------- ----- -------------- -----
Total............... 153,995,511 100.0% $2,599,320,996 100.0%
=========== ===== ============== =====
</TABLE>

Our sale of additional shares of common stock upon exercise in full of the
underwriters' over-allotment option would reduce the percentage of common stock
held by all assumed existing stockholders to 89.1% of the total number of
shares of common stock to be outstanding upon completion of this offering and
will increase the number of shares of common stock held by new investors to
17,020,000 shares or 10.9% of the total number of shares of common stock to be
outstanding upon completion of this offering.

The foregoing discussions and tables exclude:

. 16,474,677 shares of common stock issuable as of January 31, 2000 upon
the exercise of outstanding stock options issued under our stock option
plans at a weighted average exercise price of $11.45 per share and
options to purchase 1,220,830 shares of common stock granted during
January 2000 with exercise prices equal to the initial public offering
price.

. 7,488,384 shares of common stock and options to purchase common stock
issued after January 31, 2000 in connection with our acquisitions of
Raging Bull and Transium.

. 2,600,000 shares of common stock initially reserved for issuance under
our employee stock purchase plan.

20
<PAGE>

UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS AND BALANCE SHEET

We derived the following unaudited pro forma condensed statements of
operations for the year ended December 31, 1998, the seven months ended July
31, 1999 and the six months ended January 31, 2000 from our historical
statements of operations for the period from January 1, 1998 through June 11,
1998 and the period June 12, 1998 through December 31, 1998 and the historical
statement of operations for the seven months ended July 31, 1999 and the six
months ended January 31, 2000, adjusted to give effect to the following
events, as if those events had occurred on January 1, 1998:

. Inclusion of the results of operations of Shopping.com for its fiscal
year ended January 31, 1999 in the pro forma condensed results of
operations for the year ended December 31, 1998 and estimated results for
the period from January 1, 1999 to February 15, 1999, its acquisition
date, for the pro forma condensed results of operations for the seven
months ended July 31, 1999

. Elimination of the results of operations of Zip2 from its acquisition
date, April 2, 1999, to its disposition date, October 20, 1999

. The acquisitions by CMGI of AltaVista and Shopping.com on August 18, 1999
accounted for under the purchase method as if the acquisition had
occurred on January 1, 1998. The fair value of the consideration paid has
been allocated to the assets acquired and liabilities assumed based upon
the fair values. Preliminary estimates and assumptions on the value of
the assets and liabilities is based upon information available at the
date of preparation of these unaudited pro forma condensed financial
statements, and will be adjusted upon final allocation of purchase price
within one year from the acquisition date. We anticipate, however, that
the final allocation of the purchase price will not differ materially
from the preliminary allocation. The fair value of the consideration paid
for Zip2 is excluded from the pro forma adjustment as Zip2 was acquired
on April 2, 1999 and was disposed of on October 20, 1999

We derived the following unaudited pro forma condensed balance sheet as of
January 31, 2000 from our historical balance sheet as of January 31, 2000,
adjusted to give effect to the following events, as if those events had
occurred on that date:

. Reflects the assumed exercise of Compaq's pre-emptive right to purchase
an additional $17.5 million in our convertible notes, the conversion by
CMGI and Compaq of all our assumed and actual outstanding convertible
notes into convertible preferred stock, and the conversion of all of our
preferred stock into common stock

. Reflects a proposed 1.3-for-one split of our outstanding common stock to
be approved and effected prior to the closing of this offering

The unaudited pro forma condensed statements of operations and balance
sheet do not include the financial results and purchase accounting for Raging
Bull and Transium because they were not deemed significant. The iAtlas
acquisition has been reflected in the pro forma condensed balance sheet and
due to its insignificance in the pro forma condensed statements of operations
only from the date at its acquisition of CMGI (September 28, 1999) and
thereafter. The estimated purchase price for each of these acquisitions is
approximately: $28 million for iAtlas; $163.0 million for Raging Bull; and,
$10 million for Transium.

The unaudited pro forma condensed financial statements do not purport to
represent what our results of operations or financial condition would have
actually been or what operations would be if the transactions that give rise
to the pro forma adjustments had occurred on the dates assumed, and are not
indicative of future results. The unaudited pro forma condensed financial
statements below should be read in conjunction with the historical financial
statements and related notes included in this prospectus.

21
<PAGE>

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
AltaVista
---------------------------
Period from Period from
Jan. 1, 1998 June 12, 1998
through through Pro Forma
June 11, 1998 Dec. 31, 1998 Shopping.com Adjustments Pro Forma
------------- ------------- ------------ ----------- ---------
(in thousands, except per share information)
<S> <C> <C> <C> <C> <C>
Advertising, service and
other revenue, net..... $13,622 $ 23,517 $ -- $ -- $ 37,139
Product revenue, net.... -- -- 8,122 -- 8,122
------- --------- --------- --------- ---------
Total revenue......... 13,622 23,517 8,122 -- 45,261
Cost of advertising,
service and other
revenue ............... 3,445 6,964 -- -- 10,409
Cost of product
revenue................ -- -- 10,122 -- 10,122
------- --------- --------- --------- ---------
Total cost of sales... 3,445 6,964 10,122 -- 20,531
------- --------- --------- --------- ---------
Gross profit (loss)..... 10,177 16,553 (2,000) -- 24,730
------- --------- --------- --------- ---------
Operating expenses:
Product development ... 5,413 7,210 3,288 -- 15,911
Sales and marketing ... 5,426 23,900 10,087 -- 39,413
General and
administrative........ 1,744 3,806 19,193 -- 24,743
Loss on disposal of
assets................ -- -- 1,539 -- 1,539
Stock-based
compensation (a)...... -- -- 6,696 (6,696) --
Amortization of
intangibles (b)....... 8 50,982 -- 824,077 875,067
------- --------- --------- --------- ---------
Loss from operations.... (2,414) (69,345) (42,803) (817,381) (931,943)
Other expense:
Interest expense,
net.................. 79 221 5,748 -- 6,048
------- --------- --------- --------- ---------
Loss before
extraordinary loss..... (2,493) (69,566) (48,551) (817,381) (937,991)
Extraordinary loss...... -- -- 1,171 -- 1,171
------- --------- --------- --------- ---------
Net loss................ $(2,493) $(69,566) $ (49,722) $(817,381) $(939,162)
======= ========= ========= ========= =========
Net loss per share--
basic and diluted...... $ (0.02) $ (0.54) $ (7.22)
Shares used in computing
net loss per share--
basic and diluted ..... 130,000 130,000 130,000
</TABLE>
- --------

(a) Reflects elimination of stock-based compensation since pro forma
amortization of intangibles already considers this amount. Since the
stock-based compensation generated by stock options issued by
Shopping.com and recorded in its historical financial statements
represents outstanding equity interests at the time of its acquisition
date, and the intrinsic value of those stock option issuances is
considered in the purchase accounting acquisition price for this
transaction, amounts representing the amortization of the excess purchase
price attributable to this transaction already retroactively include a
charge for such stock options issuances.

(b) Reflects the incremental increase in amortization of intangible assets,
resulting from CMGI's acquisition of approximately 81.5% of our equity
ownership as if the acquisition had occurred as of the beginning of the
period presented. Amortization of identifiable intangibles and goodwill is
calculated on an estimated useful life of three years using the straight
line method.

22
<PAGE>

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999

<TABLE>
<CAPTION>
Shopping.com
Historical January 1, 1999 - Zip2 Pro Forma
AltaVista February 15, 1999 Disposition Adjustments Pro Forma
---------- ----------------- ----------- ----------- ---------
(in thousands, except per share information)
<S> <C> <C> <C> <C> <C>
Advertising, service and
other revenue, net..... $ 49,812 $ -- $(2,725) $ -- $ 47,087
Product revenue, net.... 23,781 2,431 -- -- 26,212
--------- ------- ------- --------- ---------
Total revenue......... 73,593 2,431 (2,725) 73,299
Cost of advertising,
service and other
revenue................ 17,446 -- (3,315) -- 14,131
Cost of product
revenue................ 25,402 2,918 -- -- 28,320
--------- ------- ------- --------- ---------
Total cost of sales... 42,848 2,918 (3,315) -- 42,451
--------- ------- ------- --------- ---------
Gross profit (loss)..... 30,745 (487) 590 -- 30,848
--------- ------- ------- --------- ---------
Operating expenses:
Product development .. 17,478 697 (1,447) -- 16,728
Sales and marketing .. 51,151 3,531 (2,634) -- 52,048
General and
administrative ...... 23,939 952 (1,201) -- 23,690
Stock-based
compensation (a)..... 35,782 -- -- (35,782) --
Amortization of
intangibles (b)...... 133,976 -- (37,806) 414,286 510,456
--------- ------- ------- --------- ---------
Loss from operations.... (231,581) (5,667) 43,678 (378,504) (572,074)
Other expense:
Interest expense,
net.................. 159 10 24 -- 193
Other nonoperating
loss................. 237 -- -- -- 237
--------- ------- ------- --------- ---------
Total............... 396 10 24 -- 430
Loss before income
taxes.................. (231,977) (5,677) 43,654 (378,504) (572,504)
--------- ------- ------- --------- ---------
Net loss................ $(231,977) $(5,677) $43,654 $(378,504) $(572,504)
========= ======= ======= ========= =========
Net loss per share--
basic and diluted...... $ (1.78) $ (4.40)
Shares used in computing
net loss per share--
basic and diluted...... 130,000 130,000
</TABLE>
- --------

(a) Reflects elimination of stock-based compensation since pro forma
amortization of intangibles already considers this amount. Since the
stock-based compensation generated by stock options issued by the
AltaVista Business and recorded in its historical financial statements
represents outstanding equity interests at the time of its acquisition
date, and the intrinsic value of those stock option issuances is
considered in the purchase accounting acquisition price for this
transaction, amounts representing the amortization of the excess purchase
price attributable to this transaction already retroactively include a
charge for such stock options issuances.

(b) Reflects the incremental increase in amortization of intangible assets,
resulting from CMGI's acquisition of approximately 81.5% of our equity
ownership as if the acquisition had occurred as of the beginning of the
period presented. Amortization of identifiable intangibles and goodwill
is calculated on an estimated useful life of three years using the
straight-line method.

23
<PAGE>

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JANUARY 31, 2000

<TABLE>
<CAPTION>
Historical Zip2 Pro Forma
AltaVista Disposition Adjustments Pro Forma
---------- ----------- ----------- ---------
(in thousands, except per share information)
<S> <C> <C> <C> <C>
Advertising, service and other
revenue, net.................... $ 79,279 $(2,218) $ -- $ 77,061
Product revenue, net............. 26,451 -- -- 26,451
--------- ------- -------- ---------
Total revenue.................. 105,730 (2,218) 103,512
Cost of advertising, service and
other revenue................... 23,739 (2,310) -- 21,429
Cost of product revenue.......... 26,411 -- -- 26,411
--------- ------- -------- ---------
Total cost of sales............ 50,150 (2,310) -- 47,840
--------- ------- -------- ---------
Gross profit..................... 55,580 92 -- 55,672
--------- ------- -------- ---------
Operating expenses:
Product development (a)........ 22,354 (153) -- 22,201
Sales and marketing (a)........ 115,971 (1,538) -- 114,433
General and administrative
(a)........................... 14,876 (1,234) -- 13,642
Stock-based compensation (b)... 16,610 -- (15,550) 1,060
Amortization of intangibles
(c)........................... 428,628 (21,244) 33,651 441,035
--------- ------- -------- ---------
Loss from operations............. (542,859) 24,261 (18,101) (536,699)
Other expense:
Interest expense, net.......... 1,973 (6) -- 1,967
Other nonoperating loss........ 1,548 -- -- 1,548
--------- ------- -------- ---------
Total........................ 3,521 (6) -- 3,515
Loss before income taxes......... (546,380) 24,267 (18,101) (540,214)
--------- ------- -------- ---------
Net loss, including the period
August 1, 1999 to
August 18, 1999................. $(546,380) $24,267 $(18,101) $(540,214)
========= ======= ======== =========
Net loss per share--basic and
diluted......................... $ (4.17) $ (4.13)
Shares used in computing net loss
per share--basic and
diluted......................... 130,945 130,945
</TABLE>
- --------

(a) Pro Forma excludes stock-based compensation as follows (in thousands):
product development $318; Sales and Marketing $212; and General and
administrative $530.

(b) Reflects elimination of stock-based compensation since pro forma
amortization of intangibles already considers this amount. Since the
stock-based compensation generated by stock options issued by the
AltaVista Business and recorded in its historical financial statements
represents outstanding equity interests at the time of its acquisition
date, and the intrinsic value of those stock option issuance is
considered in the purchase accounting acquisition price for this
transaction, amounts representing the amortization of the excess purchase
price attributable to this transaction already retroactively include a
charge for such stock options issuances.

(c) Reflects the incremental increase in amortization of intangible assets,
resulting from CMGI's acquisition of approximately 81.5% of our equity
ownership as if the acquisition had occurred as of the beginning of the
period presented. Amortization of identifiable intangibles and goodwill
is calculated on an estimated useful life of three years using the
straight-line method.

24
<PAGE>

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

JANUARY 31, 2000

<TABLE>
<CAPTION>
Assumed exercise Proposed
Historical of Compaq's Conversion of 1.3-for-one
AltaVista pre-emptive right notes to equity stock split Pro Forma
---------- ----------------- --------------- ------------ ----------
(in thousands, except per share information)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 12,368 $17,459 $ -- -- $ 29,827
Accounts receivable,
net.................. 50,567 -- -- -- 50,567
Other current assets.. 8,846 -- -- -- 8,846
---------- ------- --------- ---- ----------
Total current
assets............. 71,781 17,459 -- -- 89,240

Property, plant and
equipment, less
accumulated
depreciation........... 56,247 -- -- -- 56,247
Goodwill and other
intangible assets,
net.................... 2,252,216 -- -- -- 2,252,216
Investments............. 11,913 -- -- -- 11,913
Receivable from Compaq.. 10,315 -- -- -- 10,315
Other noncurrent
assets................. 252 -- -- -- 252
---------- ------- --------- ---- ----------
Total assets........ $2,402,724 $17,459 $ -- -- $2,420,183
========== ======= ========= ==== ==========

LIABILITIES AND OWNERS' NET
INVESTMENT
Current liabilities:
Capital lease
obligation, current
portion.............. $ 3,150 $ -- $ -- -- $ 3,150
Payable to CMGI, net.. 795 -- -- -- 795
Notes payable to
CMGI................. 121,752 -- (121,752) -- --
Notes payable to
Compaq............... 8,062 17,459 (25,521) -- --
Accounts payable...... 6,010 -- -- -- 6,010
Other current
liabilities.......... 67,224 -- -- -- 67,224
---------- ------- --------- ---- ----------
Total current
liabilities........ 206,993 17,459 (147,273) -- 77,179
---------- ------- --------- ---- ----------
Capital lease
obligation, net of
current portion........ 6,838 -- -- -- 6,838
---------- ------- --------- ---- ----------
Total liabilities... 213,831 17,459 (147,273) -- 84,017

Commitments and
contingencies
Preferred stock, par
value $0.01; no shares
outstanding and pro
forma.................. -- -- -- -- --
Common stock, par value
$0.01; 101,408,798 and
139,195,511 shares
outstanding historical
and pro forma,
respectively........... 1,014 -- 57 321 1,392
Capital in excess of
par.................... 2,956,665 -- 147,216 (321) 3,103,560
Unearned compensation
and other.............. (3,682) -- -- -- (3,682)
Accumulated deficit..... (765,104) -- -- -- (765,104)
---------- ------- --------- ---- ----------
Owners' net investment.. 2,188,893 -- 147,273 -- 2,336,166
---------- ------- --------- ---- ----------
Total liabilities and
owners' net
investment........... $2,402,724 $17,459 $ -- $-- $2,420,183
========== ======= ========= ==== ==========
</TABLE>

25
<PAGE>

NOTES TO UNAUDITED PRO FORMA

CONDENSED STATEMENTS OF OPERATIONS AND BALANCE SHEET

Summary of CMGI transaction

On August 18, 1999, CMGI acquired an 81.495% equity stake in the AltaVista
operations of Compaq for consideration preliminarily valued at approximately
$2.4 billion. The AltaVista business includes the assets and liabilities
constituting the AltaVista Internet search service, Zip2 Corp. and
Shopping.com. In consideration for the acquisition, CMGI issued shares of its
common stock valued at approximately $1.8 billion, 18,090 shares of its
Series D Preferred Stock, which were converted into shares of CMGI common
stock on October 28, 1999, valued at approximately $173 million, and
promissory notes for an aggregate original principal amount of $220 million.
Additionally, outstanding AltaVista and Zip2 stock options were valued at an
aggregate of approximately $213 million.

The purchase price of $2.4 billion for the 81.495% equity stake was
increased to $2.9 billion to reflect a 100% step up in purchase accounting for
the AltaVista business' assets acquired and liabilities assumed.

The allocation of the purchase price was as follows (in millions):

<TABLE>
<CAPTION>
AltaVista
and AltaVista
Shopping.com Zip2 Total
------------ ------ ---------
<S> <C> <C> <C>
Net tangible assets (liabilities)............. $ 34.8 $ (7.3) $ 27.5
Patents, trademarks and domain names.......... 33.4 1.5 34.9
Completed technology.......................... 150.9 4.0 154.9
Assembled workforce........................... 7.0 3.0 10.0
Goodwill...................................... 2,433.9 266.3 2,700.2
-------- ------ --------
Total purchase price.......................... $2,660.0 $267.5 $2,927.5
======== ====== ========
</TABLE>

The table above separates the portion of the purchase price allocated to
the fair value of the Zip2 operations for the presentation of the pro forma
condensed statements of operations since Zip2 was distributed to our
stockholders on October 20, 1999 and will not be included in our continuing
operations.

26
<PAGE>

SELECTED HISTORICAL FINANCIAL INFORMATION

We have derived the following selected historical financial information
from our audited and unaudited historical financial statements and you should
read it in conjunction with those financial statements and notes. We have
derived the selected historical financial data as of December 31, 1996, 1997
and 1998, for each of the years ended December 31, 1996 and 1997, and for the
periods from January 1, 1998 to June 11, 1998 and from June 12, 1998 to
December 31, 1998 from our financial statements, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. We have derived the
selected historical financial data as of July 31, 1999 and for the seven
months then ended from our financial statements, which have been audited by
KPMG LLP, independent certified public accountants. We have derived the
selected historical financial data as of December 31, 1995 and for the period
from inception, July, 1995, through December 31, 1995, from our unaudited
financial statements as of and for those periods which are not included
elsewhere in this prospectus. Our financial statements and the accompanying
selected historical financial information for periods prior to August 18, 1999
do not reflect the accounting effects of CMGI's acquisition of its ownership
interest on that date. We have derived the selected historical financial data
as of January 31, 2000, and for the six months ended December 31, 1998 and
January 31, 2000 from our unaudited financial statements as of and for those
periods which are included elsewhere in this prospectus, and which, in our
opinion, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of this unaudited interim
financial information.

The selected financial data set forth below is qualified in its entirety
by, and should be read in conjunction with, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," our financial
statements and notes, and the unaudited pro forma condensed financial
statements and notes included elsewhere in this prospectus. The operating
results for the periods presented are not necessarily indicative of the
results to be expected for any full fiscal year or any other period.

27
<PAGE>

SELECTED HISTORICAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Combined Combined
Period from Period from Combined
Inception January 1, Period from Combined Consolidated
July, 1995 Combined Combined 1998 June 12, Seven Months Combined Six Six Months
through Year ended Year ended through 1998 through ended Months Ended Ended
December 31, December 31, December 31, June 11, December 31, July 31, December 31, January 31,
1995 1996 1997 1998 1998 1999 1998 2000 (a)
------------ ------------ ------------ ----------- ------------ ------------- ------------ ------------
(in thousands, except per share information)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Selected
Statement of
Operations Data:
Advertising,
service and
other revenue,
net............. $ -- $ 900 $13,813 $13,622 $ 23,517 $ 49,812 $ 21,070 $ 79,279
Product revenue,
net(b).......... -- -- -- -- -- 23,781 -- 26,451
----- ------- ------- ------- -------- --------- -------- ---------
Total Revenue... -- 900 13,813 13,622 23,517 73,593 21,070 105,730
Cost of
advertising,
service and
other
revenue(c)...... -- 1,963 5,008 3,445 6,964 17,446 6,416 23,739
Cost of product
revenue......... -- -- -- -- -- 25,402 -- 26,411
Gross profit
(loss).......... -- (1,063) 8,805 10,177 16,553 30,745 14,654 55,580
Product
development(c).. 713 3,475 6,000 5,413 7,210 17,478 6,545 22,354
Sales and
marketing(c).... -- 941 5,615 5,426 23,900 51,151 22,395 115,971
General and
administrative(c).. 181 1,784 2,785 1,744 3,806 23,939 3,507 14,876
Stock-based
compensation(d).. -- -- -- -- -- 35,782 -- 16,610
Amortization of
intangibles(e).. -- 19 25 8 50,982 133,976 46,160 428,628
Loss from
operations...... (894) (7,282) (5,620) (2,414) (69,345) (231,581) (63,953) (542,859)
Net loss......... (895) (7,314) (5,734) (2,493) (69,566) (231,977) (64,163) (507,670)
Net loss per
share--basic and
diluted......... $ (3.88)
Shares used in
computing net
loss per share--
basic and
diluted......... 130,945
</TABLE>

<TABLE>
<CAPTION>
Combined Combined Combined Combined Combined Consolidated
December 31, December 31, December 31, December 31, July 31, January 31,
1995 1996 1997 1998 1999 2000
------------ ------------ ------------ ------------ -------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Selected Balance Sheet
Data (at period end):
Cash and cash
equivalents............ $-- $ -- $ -- $ -- $ 7,482 $ 12,368
Goodwill and other
intangibles, net(e).... -- 56 31 226,488 709,185 2,252,216
Total assets............ 383 5,540 17,220 264,330 828,405 2,402,724
Notes payable to CMGI
and Compaq............. -- -- -- -- -- 129,814
Long-term obligations... -- -- -- 1,656 3,344 6,838
Net stockholders'
equity................. $379 $5,120 $14,615 $252,290 $743,853 $2,188,893
</TABLE>
- --------

(a) The statement of operations for the six months ended January 31, 2000
represents the AltaVista revenues and expenses for the entire six-month
period, less an amount representing the total net results for the 18-day
portion of the six-month period before the CMGI transaction.

(b) Reflects product revenue in the periods ended July 31, 1999 and January 31,
2000 due to the acquisition of Shopping.com on February 15, 1999.

(c) Excludes stock-based compensation for the seven months ended July 31, 1999
and the six months ended January 31, 2000 as follows (in thousands): Cost
of advertising, service and other revenue $2,063 and $897; Product
development $7,485 and $3,571; Sales and marketing $12,661 and $5,714; and
General and administrative $13,573 and $6,428.
(d) Reflects stock-based compensation for options granted in May and June 1999.
(e) Goodwill and other intangibles increased by $274.1 million when Compaq
purchased Digital Equipment Corporation in June 1998, by $616.7 million
when Compaq acquired Shopping.com in February 1999 and Zip2 in April 1999
and by $1.8 billion when CMGI acquired its interest in us in August 1999.

28
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements and notes included elsewhere in this prospectus. This discussion
contains forward-looking statements reflecting our current expectations that
involve risk and uncertainties. Actual results and the timing of events may
differ significantly from those projected in such forward looking statements
due to a number of factors, including those set forth in the section entitled
"Risk Factors" and elsewhere in this prospectus.

Our financial statements presented elsewhere in this prospectus reflect the
results of operations of the business while part of Digital Equipment
Corporation, Compaq or CMGI. Prior to August 18, 1999, our results have been
carved out from the historical financial statements of Digital and Compaq.
Thereafter, our results have been carved out from the historical financial
statements of CMGI. In all instances, the results reflect the appropriate
push-down accounting adjustments.

Prior to August 18, 1999, our fiscal year ended on December 31. We have
since retroactively adopted the CMGI fiscal year end of July 31. The most
current financial period presented is for the six months ended January 31,
2000. This stub period is compared with the six months ended December 31,
1998. Because the fiscal year end change results in no material effect on
reported trends, and due to the impracticality of preparing comparable seven
month or fiscal quarter historical carve out financial statements, we believe
that these comparison periods are reasonable for purposes of comparing and
analyzing our results of operations and financial condition.

Overview

AltaVista is an Internet search, new media and commerce network that
delivers personalized, relevant information and e-commerce services to
millions of users worldwide. With our patented technologies, international
user base and relationships with a variety of content and service providers,
we seek to provide a single destination for all of a consumer's search,
information, communication and commerce needs on the Internet. Our goal is to
expand our user base by extending our search, content and e-commerce
capabilities, thereby increasing the attractiveness of our Internet properties
to advertisers and merchants.

Advertising, service and other revenue. Advertising, service and other
revenue comprises sales of advertising and sponsorships, fees for search
services, production and development fees, licensing of search product
software and related support services, and shopping services revenue.
Advertising and sponsorship revenue results from advertising delivered on a
web page, at an agreed rate per thousand of impressions delivered. Advertising
revenue is recognized ratably over the term of the contract, provided we have
met our obligations to deliver impressions in each period. Fees for search
services are derived from third parties' use of our search technology. Fees
for search services are recognized ratably over the term of the contract
provided that we do not have significant remaining obligations. Production and
development fees are recognized upon delivery of the agreed upon service, with
accruals provided for ongoing maintenance obligations. To date, revenue from
production and development fees has not been significant. Search product
software and support are sold directly to customers and through resellers. We
generally license our search software in the form of a perpetual license
agreement and revenue is recognized upon shipment of the software product.
Search software customers may enter into separate support contracts. Revenue
for these contracts is recognized ratably over the period of the contract. To
date, revenue from search product software and support has not been
significant. Shopping service revenue occurs when we earn commissions on sales
of products on other web sites. Only the commission fee, not the gross product
revenue, is recorded as revenue. We earn commission revenue through a
combination of fixed fees and variable charges per click through when our
traffic is directed to a third party site. To date, shopping services revenue
has not been significant.

Occasionally, we enter into barter transactions, which are a component of
advertising revenue. Since January 1, 1999 revenue from barter transactions
has not been significant. Barter transactions are the exchange of advertising
space on our web site for reciprocal space or traffic on other web sites.
Barter transactions are

29
<PAGE>

recognized ratably over the term of the contract as long as both we and the
other party with whom we have bartered have met contractual obligations.

Through December 31, 1998, we derived substantially all of our revenue from
sales of advertising and sponsorships and fees for search services. From
January 1, 1999 through January 31, 2000, we derived our revenue primarily
from sales of advertising and sponsorships and, subsequent to the acquisition
of Shopping.com, from sales of products on the Internet. Although we have
experienced revenue growth in recent periods, we cannot predict whether we
will achieve continued growth in the future.

We currently derive a substantial portion of our advertising revenues from
short-term advertising contracts negotiated by DoubleClick in accordance with
the terms of the Procurement and Trafficking Agreement between AltaVista and
DoubleClick. Effective January 1, 1999, we renegotiated the agreement so that
we may now form an internal sales force to sell advertisements directly to
advertisers. DoubleClick retains the right to deliver the advertisements
negotiated either by DoubleClick or by us and also retains the exclusive right
to sell advertising to designated customers. Under the agreement as in effect
January 1, 1999, we bear the economic risk associated with the sale of
advertisements, whether by DoubleClick or AltaVista. Prior to the January 1,
1999 amendments, we recorded revenues net of DoubleClick's selling commission,
and recorded no corresponding sales and marketing expenses. Effective January
1, 1999, we record gross revenues from sales of advertisements by DoubleClick,
and record DoubleClick's commission and service fees as sales and marketing
expense. Historically, we have recorded all revenues from DoubleClick as
domestic revenues. In the future, we intend to record as international
revenues those revenues derived from advertising and sponsorships sold on our
international web sites.

Product revenue. As a result of the Shopping.com acquisition on February
15, 1999, we began recording product revenue derived from sales of products on
the Internet and associated freight and handling fees. Products sold on the
Shopping.com site have historically included consumer electronics, computer
products, books, videos and other items. When we sell products directly, the
revenue is recorded at the gross sales amount, net of allowances for returns,
and the cost of goods sold is recorded in cost of revenue. We record revenue
at the gross sales amount on direct sales since we bear full customer credit
risk and merchandise return risk following vendor shipment, and are the
merchant of record on these transactions.

In October 1999, we changed our e-commerce business strategy and we
launched a new web site emphasizing shopping services. The new web site
utilizes our proprietary search technology to allow users to find, compare and
evaluate merchandise, and choose vendors. Because of the change in our e-
commerce business strategy, we anticipate that revenues derived from
advertising and fee-based shopping services will increase as a percentage of
our overall revenues. We cannot predict whether the new shopping services
strategy will result in higher revenues or improved operating results.

Changes in the competitive environment or changing market conditions may
cause us to make pricing, marketing or acquisition decisions that could
materially harm our financial results.

Cost of revenue. Cost of advertising, service and other revenue consists of
expenses associated with operation of our web sites including depreciation,
compensation, network and related costs and fees paid to third parties for
content. For product revenue, cost of revenues consists of cost of goods sold,
freight and handling.

Operating expenses. Operating expenses comprise product development, sales
and marketing, general and administrative expenses, stock based compensation
and amortization of intangibles as described below. These expenses have
increased significantly since our inception due to investments in new or
enhanced technology, increases in advertising expenditures, and increased
infrastructure costs associated with the rapid growth of our organization. We
expect that operating expenses will continue to increase in the foreseeable
future, particularly in the areas of product development and advertising, and
planned investments in international operations.

30
<PAGE>

Product development consists primarily of compensation, consulting and
equipment depreciation incurred in the development of search, new media and e-
commerce technology. After February 15, 1999, product development also
includes AltaVista Shopping.com's web site development expenses, primarily
compensation, consulting and equipment depreciation. From the date of
Shopping.com's acquisition through October 31, 1999, product development also
included the cost of Shopping.com's computer operations. In the quarter ended
January 31, 2000, following the implementation of our new shopping services
business model, the cost of these computer operations were included in cost of
revenue.

Sales and marketing expenses consist of compensation, advertising,
commissions, fees for traffic, marketing and promotional expenses, barter
costs and allowances for bad debts. Beginning January 1999, our contract
change with DoubleClick resulted in the recognition of commissions and service
fees paid to DoubleClick as sales and marketing expenses. In the future, we
expect to increase significantly our sales and marketing expenses as a result
of anticipated expansion of our internal sales organization and increased
advertising and promotion expenses. For fiscal year 2000, we anticipate that
advertising expense alone will be approximately $120 million.

General and administrative expenses consist of compensation and related
expenses of executive and administrative personnel, fees for professional
services such as legal, accounting and consulting and allocation of corporate
services. Through 1998, direct general and administrative spending was related
to a small division headquarters staff, and all corporate services, such as
accounting, legal, human resources and information systems were provided by
Digital or Compaq and charged via corporate allocations utilizing our relative
percentage of revenue, headcount, space or other appropriate factor. In
January 1999, when Compaq established AltaVista as a separate subsidiary we
began building local capability for the provision of these corporate services,
and direct general and administrative spending increased. Subsequent to the
CMGI acquisition on August 18, 1999, we incurred all general and
administrative spending directly.

For the seven months ended July 31, 1999, we recorded amortization of
stock-based compensation of $35.8 million in connection with the grant of
stock options to our employees and officers. We recorded approximately $15.6
million amortization in August 1999. The stock-based compensation charges
represent the difference between the exercise price and the deemed fair value
of the stock on their date of grant. The deferred stock-based compensation
balance was eliminated in conjunction with purchase accounting adjustments
associated with the CMGI acquisition in August 1999. Additional stock-based
compensation associated with the iAtlas acquisition of approximately $4.7
million will be substantially amortized by July 31, 2001.

Compaq's purchase of AltaVista, as part of its Digital acquisition, and its
acquisitions of Shopping.com and Zip2 were accounted for using the purchase
method and resulted in intangible assets of $890.7 million. CMGI's acquisition
of iAtlas in September 1999 was accounted for using the purchase method and
resulted in intangible assets of $23.0 million. Our distribution of Zip2 to
our stockholders included the distribution of $259.0 million of intangible
assets. CMGI's acquisition of approximately 81.5% of our equity ownership
resulted in incremental intangible assets of $2.2 billion. We intend to
amortize our total intangibles of $2.7 billion as of January 31, 2000 using
the straight-line method over a three-year period.

Seasonality. We expect to experience seasonality in our business, with user
traffic lower during the summer and year-end vacation and holiday periods when
overall usage of the Internet is lower. Because Internet-based commerce and
advertising is an emerging market, additional seasonal and other patterns may
develop in the future as the market matures. Any seasonality is likely to
cause quarterly fluctuations in our operating results, and these patterns
could harm our business, results of operations and financial condition.

History

31
<PAGE>

On June 11, 1998, Compaq acquired Digital for an aggregate purchase price of
$9.1 billion. In January 1999, Compaq incorporated and formed AltaVista as a
separate business unit. To broaden the capabilities of AltaVista, on February
15, 1999, Compaq acquired Shopping.com, an e-commerce company for an aggregate
purchase price of $256.9 million, and on April 2, 1999, Compaq purchased Zip2,
a local portal service for an aggregate purchase price of $340.9 million.

On June 29, 1999, Compaq, through its wholly owned subsidiary Digital,
announced an agreement with CMGI whereby CMGI would acquire approximately 81.5%
of our equity ownership for consideration of approximately $2.4 billion,
consisting of common stock valued at approximately $1.8 billion, Series D
preferred stock valued at approximately $173 million, promissory notes for an
aggregate principal amount of $220 million and direct costs of the acquisition
in the amount of approximately $4 million. Additionally, options to purchase
AltaVista common stock were assumed by CMGI in the transaction and were valued
at approximately $213 million. In connection with this acquisition, the
AltaVista Search web site and associated intellectual property, Shopping.com,
Zip2 and other assets were contributed to us. These transactions were completed
on August 18, 1999.

On October 20, 1999, we distributed the net assets of Zip2 to our
stockholders, CMGI and Digital, in the form of a pro rata dividend.
Accordingly, Zip2's results of operations are not included in our financial
statements after the date of disposition.

On October 22, 1999, CMGI merged its iAtlas subsidiary into the Company in a
transaction valued at approximately $28 million, CMGI's acquisition cost.

Our combined financial results may not be indicative of our results of
operations, financial position and cash flow in the future, nor do they reflect
the results which we would have attained had the enterprises been operated as
stand-alone businesses in the past. Our business and prospects must be
considered in light of the risks involved in operating in a highly competitive
and rapidly changing business area. The business has incurred substantial
losses in past reporting periods. We expect to continue to incur operating
losses for the foreseeable future due to higher investment in more advanced
search technology, improved functionality and expanded content of the web
sites, and in extensive advertising and public relations activities to promote
our brand.

In February 2000, we acquired Raging Bull, Inc., a finance-oriented content
provider and online community and an affiliate of CMGI. This acquisition was
effected by exchanging our common stock for all of the outstanding common and
preferred stock of Raging Bull, and by exchanging our stock options for all of
the outstanding stock options of Raging Bull. The total acquisition cost was
approximately $163 million, of which approximately $148 million is expected to
be allocated to goodwill and other intangible assets.

In February 2000, we acquired Transium Corporation, a provider of search
services, at an estimated total acquisition cost of approximately $10 million,
of which approximately $9 million is expected to be allocated to goodwill and
other intangible assets.

Results of Operations

Six Months Ended January 31, 2000 Compared to the Six Months Ended December
31, 1998

Our operating results reflect the operations included within Compaq based on
its allocated acquisition cost. Operating results of Shopping.com are combined
with AltaVista beginning February 15, 1999, the date on which it was
effectively acquired. Operating results of Zip2 were combined with AltaVista
beginning April 2, 1999, the date on which it was acquired, through October 20,
1999, the date on which it was distributed to our stockholders. Operating
results of iAtlas were consolidated with AltaVista Company beginning
September 28, 1999, the date on which it was acquired by CMGI.

32
<PAGE>

Revenues. For the six months ended December 31, 1998 and the six months
ended January 31, 2000, advertising, service and other revenue increased 276%
from $21.1 million to $79.3 million. The increased revenue was primarily
attributable to increased sales of advertising and sponsorships resulting from
increased page views on the web site. Revenue also increased by approximately
$17 million due to the change in the DoubleClick contract from recording
revenue on a net to gross basis.

Revenues derived from the DoubleClick agreement for the six months ended
December 31, 1998 and the six months ended January 31, 2000 were $16.6 million
and $56.6 million and represented approximately 79% and 71% of advertising,
service and other revenues.

For the six months ended December 31, 1998 and January 31, 2000, fees for
search services were approximately 11% and 4% of advertising, service and
other revenues. There were no revenues from the licensing of search product or
production and development fees prior to October 31, 1999. For the six months
ended January 31, 2000, revenue from the licensing of search product and
production and development fees were approximately 2% and 4% of advertising,
service and other revenues. For the six months ended December 31, 1998, barter
revenue was not significant. For the six months ended January 31, 2000, barter
revenue was approximately 4% of advertising, service and other revenue.

Product revenue for the six months ended January 31, 2000 was $26.5
million, compared to no revenues in the prior period, as a result of
Shopping.com operating results being included in our results since its
acquisition on February 15, 1999. For the six months ended January 31, 2000,
product revenues included $12.8 million, approximately 48% of product revenue,
from sales of computer equipment purchased from Compaq and sold to FreePC.
Shopping.com recognized a nominal gross profit on such revenues.

Cost of Revenues and Gross Profit. Cost of advertising, service and other
revenue for the six months ended December 31, 1998 and the six months ended
January 31, 2000, increased approximately 270% from $6.4 million to
$23.7 million. Approximately $12 million of this increase was due to increases
in equipment and other costs associated with web site operations,
approximately $3.5 million was due to increases in number of personnel and
associated costs, and approximately $1 million was due to increases in content
fees paid to third parties. Gross profit (loss) improved during these periods
as a result of revenue increases thereby better leveraging infrastructure
fixed costs. Starting January 1, 1999, gross profit on advertising and service
revenue also increased as a result of the change in reporting revenues derived
from the DoubleClick agreement from a net to gross basis.

Cost of product revenue for the six months ended January 31, 2000 was $26.4
million, compared to no costs in prior periods, as a result of Shopping.com
operating results being included in our results since its acquisition on
February 15, 1999. We have generally experienced negative gross margins from
product revenue in the periods reported due to our low pricing strategy that
was aimed at aggressively increasing customer base and web site traffic.

Product Development Expenses. Product development expenses for the six
months ended December 31, 1998 and the six months ended January 31, 2000
increased approximately 245% from $6.5 million to $22.4 million. Approximately
$7 million of this increase was attributable to an increased number of
development personnel and related costs primarily directed to development of
search technology. In addition, product development expenses increased by
approximately $7 million as a result of Shopping.com, Zip2 and iAtlas
development costs being included following their acquisition dates.

Sales and Marketing Expense. Sales and marketing expense for the six months
ended December 31, 1998 and the six months ended January 31, 2000, increased
approximately 418% from $22.4 million to $116.0 million. The increase was due
to an approximately $70 million increase in advertising and promotion
expenses, the inclusion of $18.7 million of DoubleClick fees and commissions
in sales and marketing expense during the six months ended January 31, 2000,
and an approximately $9 million increase in compensation and related expenses
associated with an increased number of sales personnel. In addition, sales and
marketing expense increased by

33
<PAGE>

approximately $7 million as a result of Shopping.com and Zip2 sales and
marketing costs being included following their acquisition dates. These
increases were offset, in part, by a reduction of approximately $14 million in
fees paid to other Internet sites for traffic directed to AltaVista.

General and Administrative Expense. General and administrative expense for
the six months ended December 31, 1998 and the six months ended January 31,
2000 increased approximately 326% from $3.5 million to $14.9 million. This
increase was primarily attributable to an increase of approximately $4 million
compensation and related expenses associated with a higher number of personnel,
an increase of approximately $3 million in legal and consulting fees and
approximately $3 million related to the inclusion of the results of
Shopping.com and Zip2 for the period subsequent to their acquisition dates. In
addition, in 1999 we completed the transition to a standalone company, which
resulted in increased investment in administrative services and infrastructure
that had previously been allocated from Digital and Compaq.

Stock-based Compensation Expenses. For the six months ended January 31,
2000, we recorded amortization of stock-based compensation of $16.6 million in
connection with the grant of stock options to our employees and officers. The
stock-based compensation charges represent the amortization of the difference
between the exercise price and the deemed fair value of the stock pursuant to
CMGI's acquisition of approximately 81.5% of our equity ownership. Effective
with this acquisition on August 18, 1999, 25% of all AltaVista's then
outstanding stock options vested as a result of an accelerated vesting clause
relating to a change in control provision that was included in the stock option
plan, and we recorded the related stock-based compensation expense associated
with the accelerated vesting during the period June 29, 1999 through August 18,
1999. The remaining stock-based compensation charges would be amortized over
the remaining four-year vesting term of the options; however, deferred
compensation expense recorded prior to August 18, 1999 was eliminated in the
course of applying purchase accounting. Accordingly, this stock-based
compensation was recorded only for the period from June 29, 1999 through August
18, 1999. In addition, for the six months ended January 31, 2000, we recorded
$1.1 million stock-based compensation related to iAtlas.

If the amortization of stock-based compensation was not presented separately
in operating expenses and was included in the specific components of operating
expenses, it would increase cost of advertising, service and other revenue by
$.9 million, product development expense by $3.6 million, sales and marketing
expense by $5.7 million, and general and administrative expense by $6.4
million.

Amortization of Intangibles. Amortization of intangibles for the six months
ended December 31, 1998 and the six months ended January 31, 2000 was $46.2
million and $428.6 million. The increase was due to
amortization of intangibles recorded in connection with CMGI's acquisition of
approximately 81.5% of our equity ownership, as well as the acquisitions of
Shopping.com and iAtlas.

Other Income (Expense), Net. For the six months ended December 31, 1998 and
the six months ended January 31, 2000, interest expense was $210,000 and $2.3
million. For the six months ended December 31, 1998, most of our interest
expense corresponded to an allocation of Digital's or Compaq's worldwide
interest expense based on our proportionate share of total assets. We believe
this method provides a reasonable basis for allocation within our historical
statement of operations. Subsequent to August 18, 1999, the interest expense
relates to advances of funds from CMGI and Compaq that are reflected in notes
payable to CMGI and Compaq. The balance due to CMGI and Compaq on January 31,
2000 is $129.8 million, and these notes bear interest at a rate of 7% per year.

For the six months ended January 31, 2000, interest income was $314,000
which is the interest on AltaVista's cash bank balances. Other non-operating
expenses of $1.5 million for the six months ended January 31, 2000 related
primarily to the non-recoverable cost of the write off of fixed assets that are
being taken out of service.

The combined statement of operations for the six months ended January 31,
2000 represents our revenues and expenses for the entire six-month period, less
$38.7 million representing the total net loss for the 18-day portion of the
six-month period before the CMGI transaction.

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<PAGE>

Net Loss. Net loss for the six months ended December 31, 1998 and the
period ended January 31, 2000 was $64.2 million and $507.7 million. The net
loss increased by $443.5 million due to an increase of $382.5 million in the
amortization of intangibles associated with CMGI's acquisition of
approximately 81.5% of our equity ownership, and the acquisitions of
Shopping.com, Zip2 and iAtlas. Net loss also increased due to increases of
$16.6 million in stock based compensation and $120.8 million increase in other
operating expenses. These expense increases were partially offset by a $40.9
million increase in gross profit.

Comparison of Fiscal Years Ended December 31, 1996, 1997, the period from
January 1, 1998 to June 11, 1998, the period from June 12, 1998 to December
31, 1998 and the Seven Months Ended July 31, 1999

Financial information and financial statements for AltaVista are derived
from the historic books and records of Digital through June 11, 1998. Upon
Compaq's acquisition of Digital, Compaq's basis in AltaVista became Compaq's
acquisition cost of the business. In accordance with the purchase accounting
method, Compaq recorded the individual assets and liabilities of AltaVista at
estimated fair values thereby creating new bases in such assets and
liabilities. Financial information and financial statements for AltaVista
beginning June 12, 1998 are derived from the historic books and records of
Compaq which are prepared using this new basis. Prior to 1996, AltaVista had
no revenue and its operating activities related primarily to development of
search technology.

The following discussion presents fiscal year 1998 in two periods due to
the change in accounting basis that occurred when Compaq acquired Digital. The
periods shown are January 1, 1998 through June 11, 1998 and June 12, 1998
through December 31, 1998. In addition, as a result of the fiscal year end
change which was adopted when CMGI acquired AltaVista, we present a seven
month period ended July 31, 1999.

Due to the varying lengths of the periods discussed below, the following
discussion does not identify the absolute dollar amount of changes between
periods. Instead, the trend in changes in the elements of revenue and spending
over time are described, and listed in order of significance, from most to
least significant.

Revenues. Advertising, service and other revenue for 1996, 1997, the period
from January 1, 1998 to June 11, 1998 and the period June 12, 1998 to December
31, 1998 was $.9 million, $13.8 million, $13.6 million and $23.5 million. For
the seven months ended July 31, 1999, advertising, service and other revenue
was $49.8 million. The increased revenue in all periods was primarily
attributable to increased sales of advertising and sponsorships resulting from
increased page views. Revenues for barter transactions represented 7% and 5%
of revenues reported in 1997 and the period ended June 11, 1998. In all other
periods, revenue from barter transactions was not significant. We do not
expect significant revenue from barter transactions in the future. Fees for
search services have remained essentially flat in absolute dollars in the
periods reported, and are not expected to grow at the rate of advertising and
sponsorship revenue. Fees for search services were approximately 71%, 29%,
12%, 13% and 4% for 1996, 1997, the period from January 1, 1998 to June 11,
1998, the period June 12, 1998 to December 31, 1998 and the seven months ended
July 31, 1999. For the seven months ended July 31, 1999 revenue also increased
due to the change in the DoubleClick contract from recording revenue on a net
to gross basis. If DoubleClick revenue had been recorded on a net basis for
the seven months ended July 31, 1999, advertising, service and other revenue
would have been approximately $37.8 million.

Revenue derived from the DoubleClick agreement for 1996, 1997, the period
January 1, 1998 to June 11, 1998 and the period June 12, 1998 to December 31,
1998 was $.3 million, $9.3 million, $9.7 million and $18.0 million. For the
seven months ended July 31, 1999, revenue derived from the DoubleClick
agreement was $40.0 million. Net revenues derived from the agreement
represented approximately 28%, 67%, 72% and 77% of the our total net revenues
for 1996, 1997, the period January 1, 1998 to June 11, 1998 and the period
June 12, 1998 to December 31, 1998. For the seven months ended July 31, 1999,
revenues derived from the agreement represented approximately 83% of
advertising and service revenue.

Product revenue for the seven months ended July 31, 1999 was $23.8 million
as a result of Shopping.com operating results being included in the combined
results since its acquisition on February 15, 1999. For the seven months ended
July 31, 1999, Shopping.com revenue included $8.1 million, approximately 34%
of product

35
<PAGE>

revenue, from sales of computer equipment purchased from Compaq and sold to
FreePC. Shopping.com recognized a nominal gross profit on those revenues.

Cost of Revenues and Gross Profit. Cost of advertising, service and other
revenue for 1996, 1997, the period from January 1, 1998 to June 11, 1998 and
the period from June 12, 1998 to December 31, 1998 was $2.0 million, $5.0
million, $3.4 million and $7.0 million. For the seven months ended July 31,
1999, cost of advertising, service and other revenue was $17.4 million. These
increases were attributable to increases in equipment and other costs
associated with web-site operations, increases in number of personnel and
associated costs, and increases in content fees paid to third parties. Gross
profit (loss) improved during these periods as a result of revenue offset in
part by limited increases in infrastructure fixed costs. Beginning January
1999, gross profit on advertising, service and other revenue also increased as
a result of the change in reporting revenues derived from the DoubleClick
agreement from a net to gross basis.

Cost of product revenue for the seven months ended July 31, 1999 was $25.4
million, as a result of Shopping.com operating results being included in the
combined results since its acquisition on February 15, 1999. Shopping.com
experienced negative gross margins in the periods reported due to its low
pricing strategy that was aimed at aggressively increasing its customer base
and web-site traffic.

Product Development Expenses. Product development expenses for 1996, 1997,
the period from January 1, 1998 to June 11, 1998 and the period from June 12,
1998 to December 31, 1998 were $3.5 million, $6.0 million, $5.4 million and
$7.2 million. For the seven months ended July 31, 1999, development expenses
were $17.5 million. These increases were attributable to an increased number
of development personnel and related costs primarily directed to development
of search technology. In addition, the 1999 product development expenses were
higher as a result of Shopping.com and Zip2 development costs being included
following their acquisition dates.

Sales and Marketing Expenses. Sales and marketing expenses for 1996, 1997,
the period from January 1, 1998 to June 11, 1998 and the period from June 12,
1998 to December 31, 1998 were $.9 million, $5.6 million, $5.4 million and
$23.9 million . For the seven months ended July 31, 1999, sales and marketing
expenses were $51.2 million. Results for the seven months ended July 31, 1999
included $14.0 million of DoubleClick commissions and fees.

The increase from 1996 to 1997 was primarily attributable to expenses
associated with compensation and expenses related to a higher number of sales
and marketing personnel and higher barter costs. The increases from 1997 and
the period from January 1, 1998 to June 11, 1998 to the period June 12, 1998
to December 31, 1998 were primarily attributable to increases in fees paid to
other Internet sites for traffic directed to AltaVista, and to a lesser extent
expenses associated with increased headcount. Sales and marketing expenses
continued to increase in 1999, primarily due to the inclusion of DoubleClick
fees in sales and marketing expenses, increases in advertising and promotion
expenses, and increases in compensation and related expenses associated with
an increased number of personnel. In addition, the 1999 sales and marketing
expenses were higher as a result of Shopping.com and Zip2 sales and marketing
costs being included following their acquisition dates.

General and Administrative Expenses. General and administrative expenses
for 1996, 1997, the period from January 1, 1998 to June 11, 1998 and the
period June 12, 1998 to December 31, 1998 were $1.8 million, $2.8 million $1.7
million and $3.8 million. For the seven months ended July 31, 1999, general
and administrative expenses were $23.9 million. These increases were primarily
attributable to compensation and related expenses associated with a higher
number of personnel, increased legal and consulting fees and, for the 1999
periods, inclusion of the results of Shopping.com and Zip2 for the period
subsequent to their acquisition dates. The seven months ended July 31, 1999
included an $11.5 million charge related to a litigation settlement with One
Zero Media, Inc. For additional information concerning this settlement, see
note 14 of the Combined Financial Statements. In addition, in 1999 we
completed the transition to a stand-alone company, which resulted in the
investment in administrative services and infrastucture that had previously
been allocated from Digital and Compaq.

36
<PAGE>

Stock-based Compensation Expenses. For the seven months ended July 31,
1999, we recorded amortization of stock-based compensation of $35.8 million in
connection with the grant of stock options to our employees and officers. The
stock-based compensation charges represent the amortization of the difference
between the exercise price and the deemed fair value of the stock options
pursuant to CMGI's acquisition of approximately 81.5% of our equity ownership.
Effective with this acquisition on August 18, 1999, 25% of all AltaVista's
then outstanding stock options vested as a result of an accelerated vesting
clause relating to a change in control provision that was included in the
stock option plan, and we recorded the related stock-based compensation
expense associated with the accelerated vesting during the period from
June 29, 1999 through August 18, 1999. The remaining stock-based compensation
charges would be amortized over the remaining four-year vesting term of the
options; however, deferred compensation expense recorded prior to August 18,
1999 was eliminated in the course of applying purchase accounting.
Accordingly, this stock-based compensation was recorded only for the period
from June 29, 1999 through August 18, 1999.

If the amortization of stock-based compensation was not presented
separately in operating expenses and was included in the specific components
of operating expenses, it would increase cost of advertising, service and
other revenue by $2.1 million, product development expense by $7.5 million,
sales and marketing expense by $12.7 million, and general and administrative
expense by $13.6 million.

Amortization of Intangibles. Amortization of intangibles for the years
ended 1996, 1997 and the period from January 1, 1998 to June 11, 1998 was not
significant. Amortization of intangibles for the period June 12, 1998 to
December 31, 1998 was $51.0 million. The increase in the period June 12, 1998
to December 31, 1998 was a result of Compaq's acquisition of Digital, and
reflects the increased amortization associated with the push down of Compaq's
basis in the intangibles. Amortization of intangibles for the seven months
ended July 31, 1999 was $134.0 million.

Other Income (Expense), Net. For the years ended 1996, 1997, the period
from January 1, 1998 to June 11, 1998 and the period June 12, 1998 to December
31, 1998, interest expense was approximately $32,000, $114,000, $79,000 and
$221,000. For the seven months ended July 31, 1999, interest expense was
approximately $159,000. We incurred no direct interest expense until the
purchase of the www.altavista.com domain name in July 1998, which was financed
with a note payable to the seller. Prior to that date, all interest expense
represented an allocation of Digital's or Compaq's worldwide interest expense
based on our proportionate share of total assets. We believe this method
provides a reasonable basis for allocation within our historical statement of
operations. For the seven months ended July 31, 1999, other loss was
approximately $237,000, related to fixed assets dispositions.

Net Loss. Net loss for the years ended 1996, 1997, the period from January
1, 1998 to June 11, 1998 and the period June 12, 1998 to December 31, 1998 was
$7.3 million, $5.7 million, $2.5 million and $69.6 million. Net loss for the
seven months ended July 31, 1999 was $232.0 million. In 1997 and the period
from January 1, 1998 to June 11, 1998, the net loss decreased over 1996
because revenue growth exceeded the growth in operating expenses. In the
period June 12, 1998 to December 31, 1998, the net loss increased due to
substantial increases in operating expenses. For the seven months ended July
31, 1999, the net loss included $134.0 million for amortization of intangibles
resulting from the acquisitions of Shopping.com and Zip2, as well as
$35.8 million of stock-based compensation.

Liquidity and Capital Resources From inception through August 18, 1998, we
financed our working capital through capital contributions from Digital and
Compaq. All cash generated from and required to support our operations was
deposited and received through Digital and Compaq's corporate operating cash
accounts. As a result, there were no separate bank accounts for AltaVista, and
the amounts recorded as net contribution from owner in our combined statement
of cash flows represent the net effect of all cash transactions between
Digital or Compaq and AltaVista. From August 19 through January 31, 2000, we
financed our working capital through cash received from CMGI and Compaq. In
return, we have issued demand notes payable to CMGI and Compaq that are
convertible into preferred stock. From time to time, at Compaq's election, it
may participate in the funding of our working capital needs, based on its pro
rata ownership interest.

At July 31, 1999 and January 31, 2000 we had cash and cash equivalents of
$7.5 million and $12.4 million.

37
<PAGE>

Net cash used in operating activities for the years ended 1996, 1997, the
period January 1, 1998 to June 11, 1998 and the period June 12, 1998 to
December 31, 1998 was $6.8 million, $6.9 million, $6.1 million and
$9.1 million. Cash used in 1996 was primarily the result of net operating
losses. Cash used in 1997 and the period January 1, 1998 to June 11, 1998 was
primarily the result of net operating losses and changes in operating assets
and liabilities, partially offset by depreciation and provision for bad debts.
Cash used in the period June 12, 1998 to December 31, 1998 was primarily the
result of net operating losses, partially offset by depreciation and
amortization and net change in operating assets and liabilities.

Net cash used in operating activities was $38.4 million, $8.6 million and
$97.6 million for the seven months ended July 31, 1999, the six months ended
December 31, 1998 and the six months ended January 31, 2000. Net cash used was
primarily the result of net operating losses partially offset by amortization,
depreciation and stock-based compensation.

Net cash used in investing activities for the years 1996, 1997, the period
January 1, 1998 to June 11, 1998 and the period June 12, 1998 to December 31,
1998 was $5.3 million, $8.3 million, $5.4 million and $3.9 million. Net cash
used in investing activities was $554.0 million for the seven months ended
July 31, 1999, $1.5 million for the six months ended December 31, 1998 and
$32.8 million for the six months ended January 31, 2000. Cash used in
investing in 1996, 1997 and 1998 and the six months ended December 31, 1998
and January 31, 2000 was primarily related to investment in fixed assets. Cash
used in investing for the seven months ended July 31, 1999 was primarily
related to the acquisitions of Shopping.com and Zip2, investment in fixed
assets and purchase of investments.

Net cash provided by financing for the years 1996, 1997, the period January
1, 1998 to June 11, 1998, the period June 12, 1998 to December 31, 1998 and
the six months ended December 31, 1998 was $12.1 million, $15.2 million, $11.5
million, $13.0 million, and $10.2 million, which was essentially all related
to funding received from Digital and Compaq. Net cash provided by financing
for the seven months ended July 31, 1999 and the six months ended January 31,
2000 was $599.9 million and $135.3 million which was primarily funding
received from Compaq and CMGI.

Noncash investing activities were $311.3 million for the period June 12,
1998 to December 31, 1998 and consisted of the push down of net assets
resulting from the accounting basis change that occurred when Compaq acquired
Digital on June 12, 1998, and $2.9 million related to the purchase of the
AltaVista domain name that was funded by a note payable.

Noncash investing activities were $61.5 million for the seven months ended
July 31, 1999, and consisted primarily of Compaq and AltaVista stock options
issued for acquisitions. Noncash investing activities were $2.2 billion for
the six months ended January 31, 2000, and consisted primarily of the change
in basis attributable to the CMGI transaction.

Future capital requirements will depend upon many factors, including the
rate of growth in user traffic on our site, rate of international expansion,
the timing and magnitude of our development efforts, and investments or
acquisition opportunities. We anticipate significant increased expenditures on
advertising, expansion of facilities and computer operations infrastructure,
as well as personnel. We believe funding from CMGI and Compaq prior to
completion of this offering, together with the net proceeds of this offering,
will be sufficient to satisfy our cash requirements for the next 18 months. We
intend to invest our excess cash in high quality, interest-bearing securities.
We may be required to raise additional funds in order to support more rapid
expansion, develop new or enhanced services or technologies, respond to
competitive pressures, acquire complementary businesses or respond to
unanticipated requirements through public or private financings, strategic
relationships or other arrangements. We cannot be sure that additional
funding, if needed, will be available on acceptable terms or at all. If
adequate funds are not available, we may be required to curtail significantly
or defer one or more of our operating goals or programs. If we succeed in
raising additional funds through the issuance of equity securities, the
issuance could result in substantial dilution to existing stockholders. If we
raise additional funds through the issuance of debt securities or preferred
stock, these new securities would have rights, preferences and privileges
senior to those of the holders of our common stock. The terms of these
securities could also impose restrictions on our operations. We have no
current plans to sell additional equity securities in the near term.

38
<PAGE>

Unaudited Pro Forma Quarterly Results of Operations

The following table sets forth our pro forma statement of income data for
the six quarters ended January 31, 2000. This information gives effect to the
acquisition by CMGI of an 81.495% equity interest in us and the acquisition by
us of Shopping.com as if they had occurred as of January 1, 1998. The pro
forma results exclude Zip2 which was acquired on April 2, 1999 and distributed
to CMGI and Compaq on October 20, 1999. This data has been prepared on the
same basis and includes the same adjustments as the unaudited Pro Forma
Condensed Statements of Operations for the fiscal year ended December 31, 1998
and the seven months ended July 31, 1999 and the notes included elsewhere in
this prospectus. Because of the application of purchase accounting, we believe
our historical operating results are not indicative of our future operating
results. We believe the information presented below is the most concise and
efficient presentation possible for the operating results of the combined
entities. The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the results of operations that would
have been reported if the Shopping.com acquisition had been consummated at the
beginning of the earliest period or that we may report in the future.

<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------
September 30, December 31, March 31, June 30, October 31, January 31,
1998 1998 1999 1999 1999 2000
------------- ------------ --------- --------- ----------- -----------
(unaudited)
(in thousands)
Unaudited Pro Forma
Quarterly Results of
Operations
<S> <C> <C> <C> <C> <C> <C>
Advertising, service and
other revenue, net..... $ 8,842 $ 12,228 $ 16,705 $ 21,601 $ 30,196 $ 46,865
Product revenue, net.... 2,015 4,176 4,862 12,397 22,421 4,030
--------- --------- --------- --------- --------- --------
Total revenue........ 10,857 16,404 21,567 33,998 52,617 50,895
Cost of advertising,
service and other
revenue................ 3,008 3,408 5,200 5,971 8,198 13,231
Cost of product
revenue................ 2,266 5,888 5,835 12,631 23,269 3,142
--------- --------- --------- --------- --------- --------
Cost of revenue...... 5,274 9,296 11,035 18,602 31,467 16,373
--------- --------- --------- --------- --------- --------
Gross profit............ 5,583 7,108 10,532 15,396 21,150 34,522
--------- --------- --------- --------- --------- --------
Product
development (a)....... 3,940 4,193 5,324 7,773 10,630 11,571
Sales and
marketing (a)......... 9,282 18,900 23,203 20,212 50,348 64,085
General and
administrative (a).... 3,584 12,880 3,597 5,539 6,471 7,171
Loss on disposal of
assets................ 338 1 -- -- --
Stock based
compensation.......... -- -- -- -- 278 782
Amortization of
intangibles........... 218,767 218,767 218,767 218,767 219,517 221,518
--------- --------- --------- --------- --------- --------
Loss from operations.... (230,328) (247,633) (240,359) (236,895) (266,094) (270,605)
Other income/expense
Interest, net.......... 1,499 3,985 108 76 289 1,678
Other non-operating
loss.................. -- -- -- (19) 1,610 (62)
--------- --------- --------- --------- --------- --------
Total................ 1,499 3,985 108 57 1,899 1,616
Loss before income
taxes.................. (231,827) (251,618) (240,467) (236,952) (267,993) (272,221)
Extraordinary loss...... -- 1,171 -- -- -- --
--------- --------- --------- --------- --------- --------
Net loss................ $(231,827) $(252,789) $(240,467) $(236,952) $(267,993) (272,221)
========= ========= ========= ========= ========= ========
<CAPTION>
Three Months Ended
------------------------------------------------------------------------
September 30, December 31, March 31, June 30, October 31, January 31,
1998 1998 1999 1999 1999 2000
------------- ------------ --------- --------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Advertising, service and
other revenue, net..... 81% 75% 77% 64% 57% 92%
Product revenue, net.... 19 25 23 36 43 8
--------- --------- --------- --------- --------- --------
Total revenue........ 100 100 100 100 100 100
Cost of advertising,
service and other
revenue (a)............ 28 21 24 18 16 26
Cost of product
revenue................ 21 36 27 37 44 6
--------- --------- --------- --------- --------- --------
Cost of revenue...... 49 57 51 55 60 32
--------- --------- --------- --------- --------- --------
Gross profit............ 51% 43% 49% 45% 40% 68%
========= ========= ========= ========= ========= ========
</TABLE>
- --------

39
<PAGE>

reported trends and due to the impracticality of preparing comparable seven
months or fiscal quarter historical carve out financial statements, we have
presented the quarters through June 30, 1999 on a calendar quarter basis. Pro
forma results for the month ended July 31, 1999 are: advertising and service
revenue of $8.8 million; product revenue of $9.0 million; loss from operations
of $(94.8) million; and net loss of $(95.1) million.

Unaudited Historical Quarterly Results of Operations

The following table sets forth our unaudited statement of operations data
for the six quarters ended January 31, 2000. This data should be read in
conjunction with our financial statements for the fiscal year ended
December 31, 1998 and the seven months ended July 31, 1999 and the notes
included elsewhere in this prospectus. Prior to August 18, 1999, we operated
on a calendar year end. Because of the acquisition of Shopping.com, and the
acquisition and subsequent disposition of Zip2, the information set forth
below is not indicative of the results of operations that we may report in the
future.

<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------------------
Combined Combined Combined Combined Consolidated Consolidated
September 30, December 31, March 31, June 30, October 31, January 31,
1998 1998 1999 1999 1999 2000
------------- ------------ --------- --------- ------------ ------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Unaudited Historical
Quarterly Results of
Operations
Advertising, service and
other revenue, net..... $ 8,842 $ 12,228 $ 16,705 $ 24,289 $ 32,414 $ 46,865
Product revenue, net.... -- -- 2,431 12,397 22,421 4,030
-------- -------- -------- --------- --------- ---------
Total revenue.......... 8,842 12,228 19,136 36,686 54,835 50,895
Cost of advertising,
service and other
revenue (a)............ 3,008 3,408 5,200 8,949 10,508 13,231
Cost of product
revenue................ -- -- 2,917 12,631 23,269 3,142
-------- -------- -------- --------- --------- ---------
Cost of revenue........ 3,008 3,408 8,117 21,580 33,777 16,373
Gross profit............ 5,834 8,820 11,019 15,106 21,058 34,522
-------- -------- -------- --------- --------- ---------
Product
development (a)........ 3,187 3,358 4,627 9,171 10,783 11,571
Sales and
marketing (a).......... 6,714 15,681 19,672 22,069 51,886 64,085
General and
administrative (a)..... 1,909 1,598 2,645 6,488 7,705 7,171
Stock-based compensation
and amortization of
intangibles............ 23,030 23,130 34,667 83,410 222,938 222,300
-------- -------- -------- --------- --------- ---------
Loss from operations.... (29,006) (34,947) (50,592) (106,032) (272,254) (270,605)
Interest income......... -- -- -- -- (104) (210)
Interest expense........ 104 106 98 47 399 1,888
Other non-operating
(income) loss.......... -- -- -- -- 1,610 (62)
-------- -------- -------- --------- --------- ---------
(29,110) (35,053) (50,690) (106,079) (274,159) (272,221)
Less net loss for the
period August 1, 1999
to August 18, 1999..... -- -- -- -- 38,710 --
-------- -------- -------- --------- --------- ---------
Net loss................ $(29,110) $(35,053) $(50,690) $(106,079) $(235,449) $(272,221)
======== ======== ======== ========= ========= =========

<CAPTION>
Three Months Ended
--------------------------------------------------------------------------
Combined Combined Combined Combined Consolidated Consolidated
September 30, December 31, March 31, June 30, October 31, January 31,
1998 1998 1999 1999 1999 2000
------------- ------------ --------- --------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Advertising, service and
other revenue, net..... 100% 100% 87% 66% 59% 92%
Product revenue, net.... -- -- 13 34 41 8
-------- -------- -------- --------- --------- ---------
Total revenue.......... 100 100 100 100 100 100
Cost of advertising,
service and other
revenue (a)............ 34 28 27 24 19 26
Cost of product
revenue................ -- -- 15 34 42 6
-------- -------- -------- --------- --------- ---------
Cost of revenue........ 34 28 42 59 61 32
Gross profit............ 66% 72% 58% 41% 38% 68%
======== ======== ======== ========= ========= =========
</TABLE>
- --------

(a) Excludes stock-based compensation for the three months ended June 30,
1999, October 31, 1999 and January 31, 2000 as follows (in thousands):
Cost of advertising, service and other revenue $514, $897 and none;
Product development $1,863, $3,336 and $235; Sales and marketing $3,151,
$5,558 and $156; and General and administrative $3,378, $6,037 and $391.

40
<PAGE>

Prior to August 18, 1999, our fiscal year ended on December 31. In August
1999, we retroactively adopted the CMGI fiscal year end of July 31, 1999.
Because the fiscal year end change results in no material effect on reported
trends, and due to the impracticality of preparing comparable seven months or
fiscal quarter historical carve out financial statements, we have presented
the quarters through June 30, 1999 on a calendar quarter basis. Results for
the month ended July 31, 1999 are: advertising and service revenue of $8.8
million; product revenue of $9.0 million; loss from operations of
$(75.0) million; and net loss of $(75.2) million.

Quantitative and Qualitative Disclosure About Market Risk

Market Risk. Our exposure to market risk is principally confined to its
short-term available-for-sale securities, which have short maturities and,
therefore, minimal and immaterial market risk.

Interest Rate Sensitivity. As of January 31, 2000, we had cash and cash
equivalents of $12.4 million, which consisted of highly liquid money market
instruments with maturities less than 90 days. Because of the short maturities
of these instruments, a sudden change in market interest rates would not have
a material impact on the fair value of the portfolio. We would not expect our
operating results or cash flows to be affected to any significant degree by
the effect of a sudden change in market interest rates on our portfolio.

Foreign Currency Exchange Risk. To date we have not had extensive
international operations; therefore our foreign currency exchange risk is
immaterial.

Effect of Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new standard establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. We do not expect SFAS No. 133 to have a
material effect on our financial position or results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101.
SAB No. 101 summarized certain of the SEC Staff's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101, and any resulting change in accounting principle that a
registrant would have to report, is effective no later than the Company's
fiscal quarter ending October 31, 2000. The Company does not expect the
application of SAB No. 101 to have a material effect on its financial position
or results of operations, nor does the Company expect to report a change in
accounting principle resulting from its application.

Year 2000 Compliance

We currently are not aware of any Year 2000 problem in any of our critical
systems and services. However, the success to date of our Year 2000 efforts
cannot guarantee that a Year 2000 problem affecting third parties upon which
we rely will not become apparent in the future that could harm our business.

41
<PAGE>

BUSINESS

Background

In 1995, Digital Equipment Corporation developed technology to rapidly
search the Internet to retrieve web pages in response to a user's request for
information. This significant technological achievement, called the AltaVista
search engine, was one of the first modern Internet search engines to provide
extensive coverage of the Web, along with advanced search functionality, and
was available free of charge to anyone on the Internet. Digital integrated
this search engine with additional information services to create the
AltaVista Internet portal. In June 1998, Compaq acquired Digital and, in
January 1999, incorporated and formed AltaVista as a separate business unit.
To broaden the capabilities of AltaVista, in February 1999, Compaq acquired
Shopping.com, an e-commerce company, and, in April 1999, acquired Zip2, a
local portal service. In August 1999, CMGI acquired approximately 81.5% of our
equity ownership and Compaq retained approximately 18.5% of our equity
ownership. In connection with this acquisition, the AltaVista Search web site
and associated intellectual property, Shopping.com, Zip2 Corp. and other
assets were contributed to us. In October 1999, we acquired iAtlas from CMGI
to enhance our search service with iAtlas' filtering technology and
distributed a stock dividend of all Zip2 stock owned by us to our
stockholders. In October 1999, we launched our enhanced web sites with new
features, functionality and a layout aimed at providing an interactive medium
for the pursuit of knowledge and information. We embarked on an aggressive
marketing and public relations campaign in connection with the launch. As part
of our commitment to provide our users with high quality financial content as
well as to further broaden the community aspects of AltaVista Live!, in
February 2000, we acquired Raging Bull, a finance-oriented content provider
and online community and an affiliate of CMGI. In February 2000, we also
acquired Transium Corporation, a provider of search services. We offer our
complete network through the www.altavista.com Internet portal and also offer
our e-commerce services through the www.shopping.com web site.

Company Overview

AltaVista is an Internet search, new media and commerce network that
delivers personalized, relevant information and e-commerce services to
millions of users worldwide. With our patented technologies, international
user base and relationships with content and service providers, we seek to
provide a single destination for all of a user's search, information,
communication and commerce needs on the Internet. Our goal is to expand our
user base by extending our search, content and e-commerce capabilities,
thereby increasing the attractiveness of our Internet properties to
advertisers and merchants.

The quality of our services has enabled us to be one of the top web sites
in terms of user reach. "User reach" is an industry term used to describe the
percentage of all Internet users in the United States who have visited a
particular Internet site one or more times during a specified period of time.
We target our services and branding towards Web enthusiasts. Web enthusiasts,
whether experienced Internet users or newly online, are passionate about the
Internet and view it as a powerful tool to obtain knowledge and to
communicate. We believe the AltaVista user base, which we estimate, based on
internally generated data, consisted of more than 54 million unique users
worldwide during the month of January 2000, is one of the most Web-savvy and
brand-loyal on the Internet. "Unique user" is an industry term used to
describe an individual who has visited a particular Internet site one or more
times during a specified period of time. Data from @Plan, a market research
company, in the Fall of 1999 shows that the typical AltaVista user is a more
frequent online user and more likely to buy products online than the typical
Internet user. We believe that as Internet use continues to increase and users
become more familiar and comfortable with using the Internet, the number of
Web enthusiasts as a percentage of total Internet users will increase. In
addition to our broad domestic reach, we have a significant international user
base with over half of our users residing outside the United States.

Since our inception as an Internet search service, we have grown to become
a comprehensive information, media and commerce destination web site. During
January 2000, we delivered over 1.9 billion page views to our users, based on
internally generated data. We provide a suite of services including:

. AltaVista Search, our proprietary Internet search technology indexing
over 250 million web pages according to internally generated data

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. AltaVista Live!, our dynamic, personalized information service with
original content, real-time and local information, and a variety of
content channels including money, news, sports, travel, careers, health
and entertainment

. AltaVista Shopping.com, our shopping service

. Free communications services including: Internet access and e-mail
services

Since developing one of the first large-scale Internet search engines, we
have accumulated more than 70 Internet search-related patents and patent
applications. We believe that, as the number of web sites grows and the
Internet increases in complexity, our extensive search capability will
continue to be a key tool in enabling users to obtain information and
knowledge from the Internet. According to a 1999 Jupiter Communications / NFO
Consumer Study, 88% of the online population uses search engines, up from 83%
in 1998.

We supplement our core search capabilities with a suite of services that is
unique to AltaVista. AltaVista Live! is our multimedia service that delivers
personalized content such as real-time news and stock quotes, sports scores
and Internet broadcasts. AltaVista Live! also provides users community-
specific content including city and region-specific information such as
weather and movie reviews and listings. AltaVista Shopping.com is a resource
for comparison shopping and product information, offering users the ability to
find, compare and purchase merchandise from both online and offline merchants.
We also offer free communications services such as Internet access and e-mail.
Approximately 2 million people have downloaded and registered to use our free
Internet access program since the launch of AltaVista FreeAccess in August
1999. In addition, we license our proprietary search technology and access to
our search index to third parties located in the United States and abroad.

We generate service revenues through sales of advertising and sponsorships,
fees for search services, product and development fees, licensing of our
search product, software and related support services and shopping services.
Advertising and sponsorship revenue results from advertising delivered on a
web page at an agreed rate per thousand of impressions delivered. Fees for
search services are derived from third parties' use of our search technology.
Search product software and support are sold directly to customers and through
resellers. Shopping service revenue occurs when we earn commissions on sales
of products on other web sites.

We believe that the combination of our unique technologies, relationships
with a variety of content and service providers and commitment to delivering
immediate, current information will enable us to enhance our position as one
of the most visited Internet resources.

Industry

Internet Growth

The Internet has emerged as a mass-market communications medium, enabling
millions of users to obtain and share information, interact with each other
and conduct business electronically. Declining prices for personal computers
and Internet access, coupled with increasing speed, convenience and
improvements in content have led to rapid growth in Internet usage. Market
research firm International Data Corporation estimates that the number of
Internet users worldwide will increase from approximately 142 million at the
end of 1998 to approximately 502 million by the end of 2003, representing a
compound annual growth rate of approximately 29%. As more and more users are
drawn to the Internet, the number of web pages on the Internet is expected to
experience similar rapid growth. The NEC Research Institute, an independent
research organization, estimates that there are over 800 million web pages on
the publicly indexable Web.

As the Internet grows, advertisers and marketers have the opportunity to
use this channel to reach global audiences more easily than ever before.
Internet advertising revenues in the United States are expected to increase
from $2.1 billion in 1998 to over $11.5 billion by 2003, according to Jupiter
Communications, a market research company. The Internet has also emerged as a
significant channel for e-commerce. Forrester Research has estimated that
consumer purchases of goods and services over the Internet in the United
States alone will

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increase from approximately $20 billion in 1999 to approximately $184 billion
in 2004, representing a compound annual growth rate of over 56%. In many
retail categories, the Internet and the emergence of electronic retailers are
fundamentally reshaping industry dynamics and competition.

Emergence and Evolution of the Internet Portal

Many Internet portals originated as single-purpose services offering
limited search and directory capabilities. As the Internet user base expanded,
user traffic increased in frequency and duration. This led to users demanding
more sophisticated navigation tools and access to a greater amount and variety
of information. Users began to seek a single source for their Internet
navigation and e-commerce needs. As a result, these portals began to provide
their users with access to a combination of fundamental Internet services such
as access, navigation and search and broadly relevant content, including news,
directory listings and product information.

Portals are evolving to become the single destination for all of a
consumer's search, information, communication and commerce needs on the
Internet. To differentiate their services and to attract the attention of
users, portals are aggressively expanding and enriching their offerings with
additional content and services. Many have added services, including
personalized pages, e-mail services, instant messaging and individual web
pages hosting, so-called sticky services, which tend to increase the frequency
and duration of user visits.

The Demand for Personalized, Relevant Knowledge

As use of the Internet has grown, individuals, businesses and organizations
have moved to quickly establish web sites, services, information and other
resources. The explosion of content on the Internet has made it increasingly
challenging for users to access all of the information and pull from it that
which is useful and relevant to them. We believe that, in order to fulfill the
promise of the Internet as a vast repository of information and revolutionary
enabler of communication and commerce, ready access to relevant information,
products and services must be available to all users. Furthermore, the range
of web sites being searched for information must include as many web sites as
possible and must be updated frequently as individual web sites are
continually modified. We believe that as the amount of information on the
Internet increases, Internet users will increasingly demand improved search
assistance. An easier and more effective means of getting information from the
Internet will improve the user's experience and enhance businesses' ability to
connect with potential customers. Successful Internet companies will be those
that build strong brands to attract customers, assist customers in navigating
efficiently through the massive volume of content on the Internet and offer a
satisfying, contextually relevant user experience.

The AltaVista Solution

We combine search technology, timely media content, local content and
shopping services with a broad network of content and service providers to
supply our users with an easy-to-use, single source for their Internet
navigation and e-commerce needs. Our web sites offer users ways to quickly,
accurately and dynamically access the knowledge they seek. Our portal has the
following capabilities:

Search Platform

AltaVista Search offers search functionality that enables Internet users to
find information on the Internet. We believe that AltaVista Search produces
highly relevant search results. Our index, which is frequently updated,
contained over 250 million web pages at January 2000, according to internally
generated data. Our search engine applies a complex, proprietary algorithm for
evaluating the relevancy of results based on several key attributes such as
popularity and quality of the web page and frequency of the requested text's
appearance. Our users can further narrow their desired information requests by
performing advanced searches that give them the ability to search for
information within certain date ranges or to specifically search for one of
eight possible sources of information: web pages, categories, news,
discussions, products, images, audio or video. We have developed significant
proprietary technologies and have over 70 patents and patent applications. Our
search technologies

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provide a strong foundation on which to build additional functionality to meet
our users' growing needs. We continue to add features to the AltaVista search
service in areas such as natural language question and answer through Ask
Jeeves, company fact sheets attached to search results through iAtlas,
locating web sites through Internet keywords without knowledge of the domain
name through RealNames, translating languages through Babelfish with Systran
and searching photographs and multimedia content through AltaVista Photo &
Media Finder with Virage and Corbis. We also recently added an advanced search
center to the AltaVista search service. The advanced search center provides
our users with search tutorials and a community platform that allows our users
to share their search strategies.

AltaVista Live!

In addition to AltaVista Search, we offer users a comprehensive destination
for Internet navigation, directory services, personalized content and rich
local community information on the AltaVista Live! service. This destination
has many important features, including:

. finance and real-time stock quotes

. sports

. weather

. national news

. local news

. original content

. lottery results

. maps and directions

. movie and TV listings

. horoscopes

. a community section

. e-mail and calendaring

As part of our strategy to further broaden the community aspects of
AltaVista Live!, on February 1, 2000, we acquired Raging Bull, a finance-
oriented community and content Internet company and an affiliate of CMGI. As a
result of our relationships with content and service providers, we offer users
a destination that includes international and national content while providing
a rich and relevant local community feel through our AltaVista local service.
For example, a user can state an interest in a movie and we will identify
local theaters and show times, offer movie reviews and provide maps and
directions. In addition, to enhance the AltaVista Live! experience, we give
users the ability to personalize our content and information offerings through
our My Live! service. My Live! allows users to personalize more than 20
categories of information and choose what content they want delivered and
where they want it on their My Live! web page.

AltaVista Shopping.com

We offer an e-commerce service that provides customers with the information
necessary to make informed online buying decisions and gives retailers the
ability to reach a large customer base. AltaVista Shopping.com's goal is to
make the shopping experience informed, quick, interactive and personalized. We
use our search technology to enhance the shopping experience by increasing the
speed and accuracy of the shopping search, enabling our users to research and
compare merchandise from among millions of products. We provide several of
these services through agreements with: ZDNet for expert reviews,
ConsumerReviews.com for consumer product reviews and BizRate for merchant
rankings. We allow consumers to compare instantly online merchants that sell
the desired product and will also direct consumers to offline, local store
outlets in their own

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neighborhood complete with driving directions. For our merchants and
advertisers, this creates highly dynamic, personally targeted selling
opportunities.

Free Communications Services

We offer a number of free services to help attract users to the AltaVista
portal. We offer e-mail service and dial-up Internet access through our
AltaVista FreeAccess program to our users. The AltaVista FreeAccess service is
combined with a microportal, a small screen window that provides continuous
personalized, up-to-the-minute news and information, as well as links to
AltaVista services and search capabilities. The AltaVista FreeAccess software
can be downloaded directly from the AltaVista web sites or from numerous
download and partner sites throughout the Internet. AltaVista FreeAccess is
also available at many leading retail outlets nationwide and in Canada.
Approximately 2 million people have downloaded and registered to use our free
Internet access program since the launch of AltaVista FreeAccess in August
1999. Our free e-mail service, which is completely integrated into the
AltaVista network, is used by over 785,000 of our users as of February 29,
2000, according to internally generated data.

The AltaVista Strategy

By focusing on our users' desire for comprehensive, personalized and
relevant information and e-commerce capabilities, we are building our network
into an Internet destination for web users and businesses that want to
efficiently access this information. We believe that our enhanced user
experience will lead to increases in both unique users and page views which,
in turn, will drive increased advertising, sponsorship and commerce revenues.

Our business strategy entails the following:

. Provide a superior user experience through distinct and innovative
technologies, content and services. We plan to continue integrating new
capabilities and services into the AltaVista portal.

. AltaVista Search. To maintain and extend our search capabilities, we
will continue to invest in developing our technology to provide an
extensive and relevant Internet search experience. Our goal is to
continue expanding our extensive index while delivering consistently
relevant results faster. We focus on providing our users with an
exhaustive tool for finding information. We plan to increase the
coverage of our index by adding additional sources of information.

We intend to extend our multimedia search capabilities by expanding our
index and adding additional multimedia types and innovative new
features. We believe a key component of our multimedia index will be
our new MP3 search capability, which will allow users to quickly and
easily find music in the increasingly popular MP3 format on the
Internet. Finally, we plan to expand the use of our search technology
by continuing to license our technology to third parties.

. AltaVista Live! We intend to develop additional personalization
capabilities and features to enable our users to create their own
Internet experience which should enhance user loyalty to our network.
We currently produce seven distinct content channels, with plans for
over 28 channels by the end of 2000. We plan to expand our content
channels to include, among other categories, technology, banking and
college to continue to offer users a satisfying resource to gain
knowledge that interests them.

. AltaVista Shopping.com. We are building our AltaVista Shopping. com
service into an objective source for product information on millions
of products offered by both online and offline merchants. By
increasing our index of products available and expanding our referral
service, we plan to attract additional customers and merchants to our
web site. We plan to add product categories targeted at our users,
including home appliances and recreational products. We also intend to
establish member loyalty programs to attract users and increase
loyalty to our shopping service.

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. Increase User Base. We believe that expanding our capabilities, features
and content will draw new users and increase user loyalty, repeat usage and
duration per visit. In addition, we plan to introduce and expand programs
to encourage user registration. We also expect our relationships with
Compaq, the top selling personal computer manufacturer in the world, and
CMGI will continue to increase our user base. Our strategy to increase our
user base includes the following:

. Expand Offering of Free Communications Services. We offer our
registered users a range of free communications services including
Internet access, Web-based e-mail and a real-time notification
service. We have entered into an agreement with 1stUp, an affiliate
of CMGI, to provide free Internet access through AltaVista
FreeAccess. AltaVista Live! is the permanent home page displayed
every time an AltaVista FreeAccess user logs onto the Internet,
giving users instant access to customizable content and services
available on the AltaVista network. On December 1, 1999, we
introduced our FreeAccess service into Canada and we plan to expand
this service into Europe.

. Expand Online Community Offerings. Our acquisition of Raging Bull is
part of our plan to expand our services that allow users to create
and actively manage online communities around topics that interest
them. Based upon data obtained from Media Metrix, Raging Bull was
first among all web sites in the average number of different page
requests made per day during November 1999 by those persons visiting
that Web site. Raging Bull is best known for its finance message
boards and will assist us in building our Web-wide communities in
other important areas such as politics, health, sports, games and
technology. We plan to integrate all these capabilities into the
AltaVista network. Additionally, we currently have a rich community
section of AltaVista Live! with clubs, photo albums and voice chat
among other features. Users can build their own homepages and photo
albums, chat with friends around the world, build clubs for their
favorite hobbies and develop message boards to stay in touch with
people worldwide.

. Member Loyalty Programs. We are developing an AltaVista member
loyalty program to reward frequent users of our network. We plan to
launch this program in the first quarter of 2000. In addition, we
will be offering an AltaVista-branded credit card through an
agreement with Fleet Credit Card Services, the eighth largest bank
credit card issuer in the United States. Cardholders will be able to
earn points based on usage of various AltaVista services and on
purchases made from AltaVista Shopping.com's network of qualified
merchants. Cardholders can then apply their points toward purchasing
products from AltaVista Shopping.com.

. Promote the AltaVista Brand. We believe that building increased brand
recognition is critical to our goal of adding to our existing user base and
increasing our attractiveness to merchants and advertisers. We intend to
significantly increase our focus on building brand awareness through an
extensive advertising campaign spanning print, radio, television and
Internet media.

. Pursue Global Expansion Opportunities. We believe the global opportunity to
expand our business is significant. International users have been accessing
our central www.altavista.com web site and utilizing its multi-lingual
search capabilities for several years. Currently, over half of our users
reside outside the United States. We intend to address this opportunity by
building an international organization and seeking relationships with
selected content and service providers that can extend the AltaVista
network throughout the world. In addition, we plan to aggressively expand
our global reach by adding more local web sites with country-specific
content to our international network.

. Pursue Strategic Acquisitions and Relationships. We intend to continue to
pursue strategic acquisitions and relationships that can provide
complementary content, features and functionality and increase our user
base. Additionally, to further advance and promote our web sites we expect
to leverage our relationship with CMGI to form relationships with, and
integrate services and features offered by, CMGI's Internet operating
companies and affiliates.

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. Capitalize on New Technologies. We intend to capitalize on the
proliferation of handheld and other innovative Internet access devices and
on the penetration of wireless and broadband technologies.

. Increase Revenues Through Expanding Internal Advertising Sales
Capabilities. We plan to aggressively expand our internal sales
organization to increase our effectiveness at generating revenues from our
traffic and maintain closer relationships with our key advertisers and
content and service providers. We recently increased our sales staff from
five in July 1999, to 39 as of January 31, 2000.

AltaVista Services

We offer a wide variety of Internet services, directly and through
partners, free of charge to Web users. Our network of services include:

AltaVista Search

AltaVista search is our core Internet navigation and search service. Our
search technology helps users find personally relevant information on the
Internet. Users can search for information on the Internet by entering their
desired information request in a series of keywords or in the form of a
natural-language question. In addition to being large, our index is frequently
updated. We maintain a database that records how often pages are updated and
removes obsolete links to ensure current information.

AltaVista search is extremely fast, responding to most queries in less than
a second. We believe we also deliver highly accurate and relevant results due
to our proprietary ranking algorithm, a complex formula that evaluates
possible search results based on several key attributes, such as the
popularity and quality of the web page and the frequency of the requested
text's appearance. Through our relationship with Ask Jeeves and RealNames, we
provide our users with the ability to search using natural-language questions
or brand names in addition to standard keyword searches.

We believe our multimedia search capabilities are distinctive. Currently,
based on internally generated data a user can search through a database of 25
million images, audio clips and video clips. This database is obtained from a
combination of general Internet indexing and licensed private collections such
as those from Virage and Corbis. We are significantly expanding our multimedia
capabilities and expect this expansion to be more central to our business as
we expand our broadband offerings.

Another important feature of AltaVista search is its ability to search for
information in 25 foreign languages. Our search engine was the first with the
ability to search the Internet for words in foreign languages and across both
domestic and international web pages, and continues to offer this capability
in more foreign languages than any other search engine. Through our
relationship with Systran, a leading provider of language translation
software, our users can also choose to translate web pages into French,
Spanish, German, Italian or Portuguese, or translate sites in those five
languages back to English. Our users also have the ability to translate any
search result into the same five languages.

AltaVista Live!

AltaVista Live! is our real-time, personalized information and news service
offering an attractive, personalized destination for AltaVista network users.
This destination centralizes numerous Internet resources into one web site,
integrating our search platform, seven content channels and other useful,
dynamic resources. AltaVista Live! provides breaking news, real-time stock
quotes, live sports scores, weather and local information, links to other
AltaVista services such as AltaVista Search, AltaVista Shopping.com and free
communications services such as e-mail.

Links to our content channels are an integral part of AltaVista Live!. Our
content channels combine original content with content we receive through
numerous content providers relationships in order to provide a dynamic, real-
time resource for news and information across numerous topics. AltaVista Live!
currently carries content in seven channels:

. Money. Our money channel delivers content related to personal finance
matters, business news, and the stock market. Among the distinct features
of the web site are access to live stock quotes, up-to-the-minute

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news and analysis and the ability for users to personalize the web page to
track their personal stock portfolios. Further, we offer a real-time,
personalized notification service that alerts users to changes in their
stock portfolios. In February 2000, we acquired Raging Bull. Raging Bull
is a leading community and content web site dedicated to finance and stock
market information, with editorial content and more than 10,000 dynamic
discussion boards. Based upon data from Media Metrix, Raging Bull was
first among all web sites in average unique page views per user for the
month of November 1999. Raging Bull has grown to a community of more than
1.7 million unique users and 300,000 registered members.

. News. Our news channel delivers up-to-the-minute news by topic, by region
or by news source. The news channel covers areas of interest, including
national, international, money, technology, sports, entertainment,
health, politics, life & leisure, human rights, and travel and other
human interest, as well as major events. We provide our content through
relationships with various news sources, including The Associated Press,
The New York Times, Washington Post, ZDNet, and Reuters.

. Sports. Our sports channel is dedicated to sports news, real-time scores
and information. As the exclusive provider of sports content within our
sports channel, Fox Sports.com offers our users original content from
numerous staff writers and editors. The channel provides our users the
ability to search and access information on sports topics such as news
stories, featured events, scoreboards and video. Users can also easily
search for sports news by utilizing specialized links to AltaVista Live!
sports web pages focused on specific sports, leagues and teams.

. Travel. Our travel channel is an online resource for users to make travel
plans. The channel's content includes news and headlines that may affect
travel plans and tips for travelers from industry resources and
columnists. In addition, through our relationship with TheTrip.com, our
travel channel enables our users to book flights, cars and hotels,
research popular destinations, and save money through special travel
promotions.

. Careers. Our career channel is a resource for information related to
personal career advice and job-hunting information. The channel's content
includes feature articles and columns related to careers, job hunting and
the job market; tools such as a salary calculator and career workshops;
resources such as interviewing, resume writing, networking and other job
hunting tips; and discussion groups related to careers. In addition, we
provide content, resources and advice for employers and self-employed
workers. The channel also gives users the ability to post their resumes
and have them viewed by potential employers.

. Health. Our health channel, through a relationship with
HealthCentral.com, is a centralized resource for information on health,
medicine and preventive care. The channel offers our users original
content from nationally-acclaimed medical broadcaster Dean Edell, M.D.,
as well as HealthCentral's health risk assessment tools and topic centers
for health and medical issues. We expect one of the key features of our
health channel will be the Ask the Doctor section where users have access
to Dr. Edell. Our health channel will also feature a customized health
risk assessment and personal health record, the latest health and
wellness news, and access to a large online multimedia library spanning
more than 6,000 topics.

. Entertainment. Our entertainment channel offers an Internet destination
for entertainment news and information, including music, movies, games
and pop culture content as well as adventure sports such as skiing,
snowboarding, hiking and adventure/recreational travel.

. Women. Our women channel provides our users with the ability to search
and access information of interest to women. As the exclusive provider of
women-related content within our women channel, Women.com offers our
users a range of content and features from numerous writers and editors.

. Real Estate. Our real estate channel provides our users with the ability
to search and access information on real estate and related issues such
as home buying and selling, renting, mortgages, moving resources, senior
housing, corporate housing and self storage. As the exclusive provider of
real estate content within our real estate channel, Move.com offers our
users original content regarding various real estate subjects, classified
listings for rent or purchase and interactive tools, such as
affordability calculators.

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The content on AltaVista Live!'s channels comes from a variety of industry
news and information providers. In addition to the content providers described
above, the following table shows some of our content providers according to
type of content they provide us:

News and Weather Education
.Associated Press .Studyabroad.com
.AccuWeather.com .Suzan Nolan
.Fastv.com .NUA.com

.latimes.com
.MyWay.com Entertainment
.The New York Times on the Web .Audio Explosion
.Reuters . Listen.com
.Washingtonpost.Newsweek .Mondo Media
Interactive .Small World

.Stats Inc.
Business and Finance .Thingworld
.BigCharts .Yack.com
.Briefing.com
.BusinessWire.com Multimedia
.CBS Marketwatch.com .Corbis
.CSI .InterVU
.Dow Jones.com .Lipstream
.Edgar Online .Tibco
.Hoovers .Tribal Voice
.Industry Standard .Virage
.Investment Challenge.com

.JagNotes Other
. Merrill Lynch
.Morningstar.com .AutoDesk
.Cammunity
.Nasdaq .Critical Path
.NYSE .Experts Exchange
.NetEarnings
.PR NewsWire .NewMoon
.Switchboard.com
.Raging Bull .Systran
.On24 .TheTrip.com
.S&P Comstock
. Worldly Investor .Travlang.com
.Yodlee.com
.ZDNet

One of the unique features of our content channels is that we deliver
content real-time and live. We are the first portal to deliver around-the-
clock production of timely and appropriate content tuned to the time of day.
Our AltaVista Live! service operates 24 hours a day, with a staff of producers
and editors. AltaVista Live! also operates with a day/night programming model
where different news and information is delivered depending on their relevancy
to the time of day. For example, on our finance channel, from 6 a.m. until 9
a.m. Eastern time, content is focused on pre-market news and commentary;
during market hours we provide live market updates; after the market's close
we provide market recaps and previews of international markets; and overnight
we deliver coverage of international markets.

In addition to providing a wealth of real-time content, we further enhance
our users' experience by enabling them to personalize their AltaVista Live!
web site through our My Live! service. My Live! allows our users to build
their own portal using content modules selected from AltaVista Live!, enabling
users to specify exactly what layout and content is most relevant to them. My
Live! allows users to organize their personal portal with a variety of layouts
and gives them a choice of several content sources. My Live! extends our
community features,

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which include personal photo albums and message boards, online chat
capabilities and clubs associated with various hobbies. The many content
features of AltaVista Live! that users can arrange and customize include:

. news and information
. real-time stock quotes and portfolio and market tracking
. sports scores
. lottery numbers
. weather
. web cameras
. horoscopes
. local information
. maps and directions
. live Internet chats
. links to user-specified web pages
. personal photographs

AltaVista Live! offers unique personalization capabilities which allow
users to insert local information and services onto their customized home
pages. Through our relationship with Zip2, these services include:

. local yellow pages
. local business searches for a variety of businesses including florists,
book stores, health clubs and child care
. restaurant searches based on type of cuisine or type of venue
. local TV listings
. weather
. maps and directions
. local movie theaters and showtimes

AltaVista Shopping.com

AltaVista Shopping.com is an objective comparison shopping service that
provides information on millions of products offered by both online and
offline merchants. AltaVista Shopping.com enables users to search the Internet
for products, review and compare products and retailers and get
recommendations and gift ideas. AltaVista Shopping.com provides links to
numerous products, sorted by 20 categories including apparel and accessories,
books, computer hardware and software, furniture, jewelry, office supplies,
music, toys, and sports and fitness equipment, among others. Each product
category has an individual page dedicated to it, with product-specific search
capabilities and links to specialized retailers. Our core AltaVista
Shopping.com service allows users to:

. Find Products--We have integrated AltaVista's search technology into
AltaVista Shopping.com to enable our users to search for products and
online and offline retailers. Customers can search by specifying certain
criteria, such as the type of product, features they are looking for,
particular brands, and price ranges. Users are presented with a list of
relevant products. Users can also refine their search by simply clicking
on one of AltaVista Shopping.com's various departments, ranging from
consumer electronics to clothing to housewares to toys.

. Compare Features and Prices--AltaVista Shopping.com gives users the
ability to compare products based on numerous, product-specific features.
Upon receiving product search results, users can specify which products
are most relevant and compare them based on individual features. For
example, a customer interested in buying a television set can search
under different criteria and choose specific brands and models from the
search results to compare. AltaVista Shopping.com will then display the
narrowed group of products and compare them based on such specific
features as sound, screen size, color and length of warranty.

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. Read Reviews and Ratings--In addition to comparison of features and
prices, AltaVista Shopping.com allows customers to read reviews and
ratings of various products. We provide expert and consumer product
reviews through our relationships with ZDNet and ConsumerReviews.com, and
supply merchant ratings through BizRate.com.

Free Communications Services

Internet Access. We provide free, unlimited Internet access across the
United States and Canada. Users can download and install a file onto their
computers that gives them Internet access featuring an AltaVista Live! home
page and featuring our microportal product. The microportal allows users to
easily navigate the Web through a small micro-browser that remains open as a
separate screen window without disrupting the user's browsing or other desktop
activities. Acting as a constant gateway to users' most desired information,
the screen window provides links to AltaVista services and displays rotating,
customizable content. Through one-click access, users can get information
about world events, news, sports, financial information, stock quotes, weather
updates, TV listings and local content. In return for free Internet access,
users must periodically interact with advertisements. Our free Internet access
service includes extensive customer support including 24 hour phone and e-mail
support. We use 1stUp, an affiliate of CMGI, to provide these services.

E-Mail. We provide free e-mail services to our registered users. These
users can set up a personal mailbox enabling them to send and receive
electronic mail via an easy-to-use interface throughout the AltaVista Internet
portal.

Key Relationships

We have entered into a number of agreements with technology, marketing and
online companies in an effort to expand our product and services offerings and
grow our user base. We intend to continue developing these relationships and
enter into new relationships with the goal of expanding the features and
functionality of the AltaVista portal and providing Web users with the
information and services they desire.

DoubleClick

In November 1999, we entered into an interim advertising services agreement
effective from January 1, 2000 through December 31, 2000 with DoubleClick,
which temporarily suspends an agreement we had entered into with DoubleClick
in January 1999. In January 2001, the agreement entered into in January 1999
will once again be effective unless a successor agreement is signed. As a
result of our plans to aggressively expand our internal sales organization and
develop closer relationships with our key advertisers, the interim agreement
with DoubleClick provides for us to maintain and service some key advertising
accounts previously serviced by DoubleClick. The interim agreement allows
DoubleClick to continue to sell advertisements throughout our network
including web sites acquired by us, such as those operated by Raging Bull.
Under the terms of the interim agreement, DoubleClick will provide us with the
right to use its DART service software to target and measure delivery of
advertising. All advertising placed on our web site by us or DoubleClick,
other than static advertising, will be delivered exclusively by DoubleClick
through the DART service. With the exception of ten accounts to be designated
by DoubleClick, we have the right to designate 60 advertising accounts on
January 1, 2000 as well as 30 more each subsequent quarter and designate them
as AltaVista accounts. We may sell advertising directly to these AltaVista
accounts. In addition, we may sell advertising to affiliates of CMGI that are
not competitors of DoubleClick, provided these companies use the DART service,
not to resell to third parties and account for less than a fixed proportion of
the aggregate impressions delivered during the month for that category of
advertising. Under the agreement, DoubleClick earns a sales commission based
on the net revenues generated from all advertising sold by DoubleClick on
behalf of AltaVista, and for all sales, customer support and other services
that DoubleClick performs for us. In addition, we pay to DoubleClick a DART
service fee for all advertising delivered by DoubleClick to our web sites.

Under the agreement entered into in January 1999, which will replace the
interim agreement in January 2001 unless the parties further amend the
agreement, DoubleClick only retains the exclusive right to deliver through its
proprietary computer systems the advertisements negotiated either by
DoubleClick or us and also retains the exclusive right to sell advertising to
designated customers. We may designate up to 200 advertising accounts as
accounts for which we have the exclusive right to sell banner, badges,
buttons, toolboxes and text lines to

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domestic advertisers, provided the sales do not exceed a fixed maximum
percentage. The interim agreement also permits us to enter into an arrangement
with Engage Technologies, Inc., an affiliate of CMGI, to sell advertising
impressions for banners to advertisers who are unaware of the specific web
sites that their advertisements will appear in, often referred to as white
label advertising. We may allow Engage to sell white label advertising by
entering into an agreement with Engage that either covers all our web sites or
covers only the shopping.com site. Both DoubleClick and AltaVista retain the
right to sell certain non-banner advertising to international advertisers
under the interim agreement. In addition, all unsold advertising inventory may
be bartered by us. During the term of the interim agreement, we will pay to
DoubleClick a DART services fee for all advertising delivered by DoubleClick
to our web sites and sales commissions.

We may terminate our agreements with DoubleClick if one of our competitors
acquires DoubleClick or if DoubleClick is not among the top three centralized
Internet advertisement delivery companies based on a market analysis of a
period of not less than 180 days.

1stUp.com

In June 1999, we entered into a strategic alliance agreement with 1stUp.Com
Corporation, an affiliate of CMGI. Under the terms of the agreement, 1stUp
provides free Internet access to users of AltaVista's Internet web sites
through AltaVista FreeAccess. AltaVista FreeAccess is powered by patent-
pending technology from 1stUp and the required software may be downloaded from
the AltaVista web sites. Approximately 2 million people have downloaded and
registered to use our free Internet access program since the launch of
AltaVista FreeAccess in August 1999. AltaVista Live! is the permanent home
page displayed every time an AltaVista FreeAccess user logs onto the Internet,
giving users instant access to web sites of customizable content and services
available on the AltaVista network. 1stUp will receive a fee for each
impression leading to an AltaVista web page and 1stUp will pay us a portion of
adjusted revenues it receives from advertisers and sponsors through AltaVista
FreeAccess. Under the terms of the agreement, 1stUp will design and maintain
software that allows users to view advertisements and various types of reward
banners. The strategic alliance agreement has terms that extend through June
2001.

Compaq

In June 1999, CMGI entered into an agreement with Compaq to define various
aspects of the relationship between CMGI and Compaq. Under the agreement,
subject to certain exclusions, Compaq will preprogram up to four instant
Internet keyboard buttons, based on the total number of these buttons, on each
Presario-branded, including successor brands or sub-brands, consumer desktop
and portable personal computer, so that when a user presses the button, the
user is directed to the applicable CMGI-designated web sites. For example, if
designated by CMGI and preprogrammed by Compaq, the search button would direct
the user to the search area of our web site. Compaq will also preprogram
instant Internet keyboard buttons on any Compaq-only branded consumer-oriented
Internet appliances subject to the same exclusions as the instant Internet
keyboard buttons, as long as the designated CMGI web sites are competitive in
price and performance. In addition, when an instant Internet keyboard button
described above is preprogrammed to our home page, the home link for the
Internet browser that is bundled with these Compaq computers will also be
linked to our home page. CMGI pays to Compaq a royalty for these
preprogramming services, for which we reimburse CMGI, based on the amount of
redirected user traffic.

Compaq has the right to terminate these arrangements if the AltaVista
portal fails to be one of the 12 most trafficked web sites for four
consecutive months, as measured in terms of unique visitors at home and at
work, by Media Metrix. Our rankings by Media Metrix for the months of October
1999 through 2000 were 11, 14, 12 and 9. Media Metrix estimates the amount of
user traffic on web sites by monitoring the monthly activity of selected user
groups and expanding the results across the number of potential users. Actual
usage may differ materially from statistics provided by Media Metrix. If we
experience reduced traffic to our web sites or any inaccuracies in Media
Metrix estimates cause traffic to our web sites to be underestimated when
compared to other web sites, then Compaq could terminate its arrangement with
CMGI, which could seriously harm our business.

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CMGI has agreed not to display advertisements for Compaq competitors on
CMGI web pages or products that are linked to or redirected directly from
Compaq web sites or computers. Subject to certain conditions, Compaq and its
affiliates will designate our search engine as the exclusive Internet search
service offered or promoted on Compaq web sites provided that we maintain a
competitive search service as determined by industry standards agreed to by
CMGI and Compaq. However, this arrangement terminates, at Compaq's election,
upon a change of control of AltaVista. For all Compaq products which contain
instant Internet keyboard buttons or other features labeled or otherwise
dedicated to a search engine, such as an Internet browser, subject to licensor
approval, Compaq will not redirect users to any search engine other than
AltaVista Search. However, users can reprogram the buttons preprogrammed by
Compaq, or select a proprietary online service provider that controls the
buttons, and the browser to take them to alternative web sites.

Compaq may disclose to CMGI new technology that it develops which may be of
interest to us or CMGI for incorporation into the AltaVista web sites. If CMGI
is interested in licensing such technology, CMGI has an option period of 30
days from the date of disclosure during which CMGI can acquire a non-exclusive
license to use that technology on the AltaVista web sites for a one-time fee
set by Compaq.

This agreement expires in May 2002. CMGI has the option to extend the
agreement for one additional year upon the same terms as the prior year if
CMGI has met or exceeded an agreed upon revenue target for payments to Compaq,
or is willing to pay Compaq the shortfall and the AltaVista web sites are
among the top five trafficked web sites as determined by Media Metrix. Each
subsequent year CMGI and Compaq will agree on appropriate revenue and traffic
targets required for CMGI to have an additional one-year renewal option. We
are not a party to, or a named third-party beneficiary of, the agreement
between CMGI and Compaq. Therefore, CMGI and Compaq may amend the agreement,
even in ways that could harm our business, without our consent.

HealthCentral.com

In September 1999, we entered into a three-year agreement with
HealthCentral.com, Inc., an owner and provider of web sites, which provides
access to health content, information and e-commerce. Under the terms of the
agreement, HealthCentral.com is the exclusive domestic health content provider
for the AltaVista Health channel, provided it delivers the content we desire
within a given time period. The agreement with HealthCentral.com allows us to
provide our users with the ability to search for information on health,
medicine, preventive care and to purchase prescriptions and health-related
products. As the exclusive provider of healthcare content within our health
channel, HealthCentral.com offers our users original content from nationally-
acclaimed medical broadcaster Dean Edell, M.D., as well as HealthCentral.com's
health risk assessment tools and topic centers for health and medical issues.
We expect one of the key features of our health channel will be the Ask the
Doctor section where users have access to Dr. Edell. Our health channel also
features a customized health risk assessment and personal health record, the
latest health and wellness news, and access to a large online multimedia
library spanning more than 6,000 topics. Under the terms of the agreement, we
will not display any advertisements of any HealthCentral.com competitor on the
AltaVista Health channel. We also guarantee a certain number of
HealthCentral.com advertising impressions for every year of the agreement.

Over the term of the agreement, HealthCentral.com will pay us up to $65
million in cash and stock if we deliver the minimum number of advertising
impressions. In addition, HealthCentral.com has agreed to issue us warrants to
purchase its common stock if we meet higher performance thresholds. If we fail
to deliver the minimum advertising impressions, and fail to make up for the
shortfall, HealthCentral.com reduces its monthly payments to us by the same
percentage as the shortfall.

The agreement has a three-year term, but may be terminated earlier by
HealthCentral.com if we fail to deliver at least 50% of the guaranteed number
of advertising impressions for any six-month period and by either party after
two years.

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Fleet Credit Card Services

In November 1999, we entered into an agreement with Fleet Credit Card
Services, L.P., the eighth largest bank card issuer in the United States with
more that eight million customers, to offer a co-branded AltaVista credit
card. We expect to offer the new credit cards through Fleet to United States
consumers in early 2000. Cardholders will automatically be eligible to earn
points for every dollar they spend through the new AltaVista Incentive Rewards
Program. Rewards for every card purchase will be offered toward products on
AltaVista Shopping.com and its affiliate partners on a wide selection of
computer products, electronics, music, videos, books and other consumer
merchandise. We will also offer incentives for shopping at dozens of stores so
that consumers can take full advantage of our intelligent shopping process
that helps users compare prices, availability and ratings for online products
and retailers.

Fleet has agreed to provide an Internet purchase guarantee, which protects
cardholders against liability in the event of unauthorized transactions on any
of our web sites. In addition, cardholders will be able to take advantage of
convenient online services to check current balances and transaction history.
Fleet will be the sole and complete owner of the accounts and will have the
sole and complete responsibility and discretion to establish and change from
time to time any and all of the financial or other terms and conditions
applicable to the accounts. During the term of the agreement, Fleet will be
our exclusive credit card provider. We are also obligated to provide a minimum
number of Fleet advertising impressions every year of the agreement. The
agreement has a term of three years from the date of launch of the co-branded
credit card, but may be terminated during specified periods by either party if
the other does not meet its targets under the agreement.

Over the term of the agreement Fleet will pay us an aggregate of up to $34
million, based on a minimum number of advertising impressions. If we fail to
deliver a minimum number of advertising impressions, Fleet reserves the right
to terminate the agreement. Under the terms of the agreement, we also have the
opportunity to earn up to an additional $16 million, based on the number of
accounts opened with Fleet and the aggregate amount of transactions completed.

Fox Sports.com

In January 2000, we entered into a three-year agreement with News Digital
Media, Inc., d/b/a Fox Sports.com, an owner and provider of web sites, which
provides access to sports content, information and e-commerce. Under the terms
of the agreement, Fox Sports.com is the exclusive domestic sports content
provider for the AltaVista sports channel, provided it delivers the content
desired by us within a given time period. The agreement with Fox Sports.com
allows us to provide our users with the ability to search and access
information on sports topics such as news stories, featured events,
scoreboards and video. As the exclusive provider of sports content within our
sports channel, Fox Sports.com offers our users original content from numerous
staff writers and editors. Under the terms of the agreement, we will not
display content of direct Fox Sports.com competitors or advertisements of Fox
Sports.com competitors or advertisements of third parties that conflict with
exclusive contractual obligations of Fox Sports.com on any web pages of the
sports channel that also display content provided by Fox Sports.com.

Over the term of the agreement, in exchange for a guarantee of a number of
impressions of Fox Sports.com (1) Fox Sports.com will pay us up to an
aggregate of $18 million in cash if we deliver the minimum number of
impressions required under the agreement and shall purchase an aggregate of
$700,000 of advertising on the AltaVista Networks, and (2) AltaVista shall
purchase an aggregate of $300,000 of advertising on Fox Sports or any of its
affiliates' websites. If we fail to deliver the minimum number of impressions
and fail to make up for the shortfall, Fox Sports.com may reduce its payments
to us by the same percentage as the shortfall.

The agreement may be terminated by either party as of the end of the second
year of the agreement. Before such early termination becomes effective, both
parties have an obligation to attempt to re-negotiate the terms of the
agreement to prevent such termination. The agreement may also be terminated by
Fox Sports.com if we do not deliver a minimum number of impressions during
each year of the agreement.

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Move.com

In January 2000, we entered into a three-year agreement with Move.com, an
owner and provider of web sites, which provides access to real estate content,
information and e-commerce. Under the terms of the agreement, Move.com is the
exclusive domestic real estate content provider for the AltaVista real estate
channel, provided Move.com delivers the content desired by us within a given
time period. The agreement with Move.com allows us to provide our users with
the ability to search and access information on real estate such as home
buying and selling, renting, mortgages, moving resources, senior housing,
corporate housing, and self storage. As the exclusive provider of real estate
content within our real estate channel, Move.com offers our users original
content regarding various real estate subjects, classified listings for rent
or purchase, and interactive tools, such as affordability calculators. Under
the terms of the agreement, we will not display content of direct competitors
of Move.com or advertisements of Move.com competitors on the real estate
channel that also displays content provided by Move.com.

Over the term of the agreement, Move.com will pay us up to $40 million in
cash if we deliver the minimum number of impressions. If we fail to deliver
the minimum number of impressions, and fail to make up for the shortfall,
Move.com may reduce its payment to us by the same percentage as the shortfall.

The agreement may be terminated earlier by us or Move.com after the first
year with three months notice without reason or may be terminated earlier by
Move.com if we fail to deliver the minimum number of advertising impressions
for six consecutive months.

Women.com

In January 2000, we entered into a three-year agreement with Women.com
Networks, Inc., an owner and provider of web sites, which provides access to
women related content and information. Under the terms of the agreement,
Women.com is the exclusive domestic women related content provider for the
AltaVista Women Channel, provided it delivers the content desired by us within
a given time period. The agreement with Women.com allows us to provide our
users with the ability to search and access information on women and astrology
related issues such as family, fashion, beauty, food, home, relationships, and
astrology. As the exclusive provider of women related content within our women
channel, Women.com offers our users a range of content and features from
numerous writers and editors. Under the terms of the agreement, we will not
display content of direct Women.com competitors or advertisements of Women.com
competitors on any web pages of the women channel that also displays content
provided by Women.com.

Over the term of the agreement, in exchange for a guarantee of a number of
impressions delivered by us, Women.com will pay us up to $12 million in cash
and an additional $3 million in the event AltaVista meets certain performance
thresholds. If we fail to deliver the minimum number of impressions, and fail
to make up for the shortfall, Women.com may reduce its payment to us by the
same percentage as the shortfall. The agreement may be terminated by either
party prior to the start of the second and third years of the agreement.
Before such early termination becomes effective, the parties have the right to
negotiate the terms of the agreement to prevent such termination.

Marketing and Public Relations

AltaVista's marketing efforts employ a mix of media to reach our target
audience, utilizing television advertising, radio, magazine, newspaper, on-
line sponsorships and link deals, online and offline promotions and direct
marketing. We also engage in proactive media and public relations to ensure
that both the press and industry are well appraised of our web site
innovations, network development and other noteworthy information.

Operations and Technology

Our business operations and computer systems are designed for high
performance, scalability, and reliability. We manage computing operations for
serving web pages in several facilities. We plan to consolidate West Coast
facilities and expand our computing capabilities in the Eastern United States,
Europe and other key regions around the world. Fault tolerance is a key
element in our operational design at every level, including architectural and
geographic redundancy.

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In 1999, we have spent more than $30 million on computing systems and other
technology. We rely on two fundamental computing platforms. AltaVista Search
runs on a large number of Digital/Compaq Alpha multiprocessor computers
running UNIX. AltaVista Shopping.com and AltaVista Live! run on a large number
of interoperable Compaq Proliant Windows/NT multiprocessor computers. Both
platforms are modular, scalable architectures. Our search platform has already
been modified and packaged in several forms for various commercial purposes.

We maintain our own customer service and support organizations at our
locations in Irvine and San Mateo. The largest customer service organization
is in Irvine, California and supports AltaVista Shopping.com. This group
handles phone, fax and e-mail inquiries from customers or potential customers.
As of March 8, 2000, AltaVista Shopping.com no longer sold products.

Governmental Regulation

We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, and laws or regulations directly applicable to access to online
commerce. However, due to the increasing popularity and use of the Internet,
new laws and regulations are under consideration in the United States and
internationally, addressing issues such as intellectual property, personal
privacy, pricing, content, advertising, taxation and characteristics and
quality of Internet products and services. The application of existing laws
and regulations governing Internet issues such as intellectual property
ownership and infringement, defamation, obscenity and personal privacy is also
subject to substantial uncertainty. New government laws and regulations, or
the application of existing laws and regulations, may expose us to significant
liabilities, significantly slow Internet growth and otherwise affect our
financial performance.

Intellectual Property

As of January 31, 2000, we had over 600 trademark registrations and/or
applications in the United States and abroad which are generally directed at
protecting our core brands and selected sub-brands, such as the AltaVista
trademark and tradename, the AltaVista logos, and the "smart is beautiful"
slogan. We expect to file several more trademark registrations in the United
States and abroad directed at the same type of protection. We own many domain
name registrations in the United States and internationally, including
www.altavista.com, www.shopping.com and www.ragingbull.com, which are
important to us because they serve as both addresses for web users to find our
web site and are themselves highly recognizable brand names.

We also have copyrights in the text and graphics and other copyrightable
content on our web sites and in our search software. We rely on these
copyrights to maintain and build our competitive advantage and to make it more
difficult for competitors to copy our web site.

We may be unable to obtain or maintain intellectual property protection or
registrations in geographies or markets that are important to our success. In
addition, given the early stage of our international expansion, we cannot
predict what territories or markets may be important to our success. Further,
we may not have selected

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the proper intellectual property for which to seek protection by way of
registration. In addition, effective patent, trademark, copyright and trade
secret protection may not be available in every country in which we offer or
intend to offer our services. The protections we have sought may be
inadequate.

Competition

The Internet portal market is highly competitive, and we expect competition
will continue to intensify. Many companies currently offer directly
competitive products or services addressing Web search and navigation,
including America Online, CNET, Direct Hit, Excite, the Go Network, Google,
HotBot, Inktomi, Lycos, Microsoft Network, Northern Light and Yahoo!. The size
of the Web index, the speed with which search results return and the relevance
of results are factors which, among others, determine a portal's success. Many
of our existing competitors, as well as a number of potential new competitors,
have significant financial, technical, marketing and distribution resources,
which may enable them to increase the speed and relevance of their search
results. As the market for Internet and Intranet search and navigational
services develops, other companies may be expected to offer similar services
and directly and indirectly compete with us for advertising revenues.

Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand name recognition, greater
access to proprietary content and significantly greater financial, marketing
and other resources. In addition, our competitors may be acquired by, receive
investments from or enter into commercial relationships with larger, well-
established and well-financed companies as use of the Internet and other
online services increases. New technologies and the expansion of existing
technologies may also increase competitive pressures.

Through our AltaVista Shopping.com retail business, we sell a select number
of products directly to consumers. The e-commerce industry is new, rapidly
evolving and intensely competitive, and we expect competition to intensify
further. Competitors include Amazon.com, Buy.com, DealTime, mySimon, CBS
StoreRunner and Value America. Barriers to entry are minimal, allowing current
and new competitors to launch new web sites at a relatively low cost.

Some of our competitors may be able to obtain merchandise from vendors on
more favorable terms, devote greater resources to marketing and promotional
campaigns, adopt more aggressive pricing or inventory availability policies
and devote substantially more resources to web site and systems development
than we can. Increased competition may result in reduced operating margins,
loss of market share and our value may be diminished. Further, as a strategic
response to changes in the competitive environment, we may, at various times,
make pricing, service or marketing decisions that could harm our business.

Employees

As of January 31, 2000, we had approximately 700 full-time employees, of
whom approximately 650 are located in the United States and Canada,
approximately 30 in Europe and the remainder in various other locations
outside the United States.

We have never had a work stoppage and no personnel are represented under
collective bargaining agreements. We consider our relations with our employees
to be good.

Facilities

Our headquarters, which we lease, is located in Palo Alto, California and
consists of approximately 75,000 square feet. We also own or lease office
space in several locations in California, including Palo Alto, San Mateo,
Irvine, Stockton and Corona Del Mar and in Chicago, Illinois. We also
currently lease space for computing operations in several locations in
California, including Palo Alto, Mountain View, Santa Clara, Scotts Valley,
Sunnyvale, Irvine and Stockton and in New York, New York and Andover,
Massachusetts.

Legal

We are not a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth information regarding our executive officers
and directors as of February 29, 2000:

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Rodney W. Schrock....... 40 Chief Executive Officer, President and Director
Kenneth R. Barber....... 55 Vice President and Chief Financial Officer
Gregory B. Memo......... 35 Executive Vice President and General Manager--AltaVista Network
Michael G. Rubin........ 33 Vice President and General Manager--AltaVista e-Commerce
David S. Wetherell...... 45 Chairman of the Board of Directors
Flint J. Brenton........ 43 Director
John G. McDonald........ 62 Director
Avram Miller............ 55 Director
Robert J. Ranalli....... 62 Director
</TABLE>

Rodney W. Schrock has served as President and Chief Executive Officer of
AltaVista since January 1999 and as a director since May 1999. In 1998, he
served as Senior Vice President and Group General Manager, Consumer Products
Group of Compaq. Mr. Schrock was elected Vice President of the Presario PC
Division on May 1995 and spent 12 total years in various positions at Compaq.

Kenneth R. Barber has served as Vice President of AltaVista since March
1999 and Chief Financial Officer of AltaVista since January 1999. Prior to
this position, he served as Vice President of Finance for the Tandem Business
Unit of Compaq from January 1997 to December 1998. At the time of the Compaq
acquisition of Tandem Computers Incorporated in August 1997, Mr. Barber was
Senior Vice President of Finance and Administration, which position he had
held since January 1997. Prior to moving to Tandem, he was Vice President of
Plans and Controls of ROLM Corporation since February 1989.

Gregory B. Memo has served as Executive Vice President and General Manager,
AltaVista Network since February 2000, prior to that he served as Vice
President and General Manager of AltaVista Search since May 1999. Prior to
this position, he served as Vice President and General Manager, Technology,
Strategy and Corporate Development from January 1999. He was Vice President
and General Manager of the Consumer Mobile Products Division at Compaq from
February 1998 until January 1999. Mr. Memo also served in several roles at
Compaq, including Director of Business Planning and Director of Product
Marketing from February 1994 to February 1998.

Michael G. Rubin has served as Vice President and General Manager of
AltaVista e-commerce of AltaVista since January 1999. From February 1998 to
January 1999, he served as General Manager of the Consumer Desktop Division
for Compaq. From June 1993 to February 1998, Mr. Rubin served in a variety of
roles at Compaq, including Director of Product Marketing and Director of
Internet Strategy of the Consumer Products Group.

David S. Wetherell has served as a director and Chairman of AltaVista since
August 1999. Mr. Wetherell has served as Chairman of the Board, President,
Chief Executive Officer and Secretary of CMGI since 1986 and as a member of
CMG@Ventures I, LLC, a venture capital firm subsidiary of CMGI, and President
of CMG@Ventures, Inc., the managing member of CMG@Ventures I, LLC, since
January 1995. He is also a managing member of CMG@Ventures II, LLC,
CMG@Ventures III, LLC and @Ventures Management, LLC, which also are strategic
investment and development venture capital subsidiaries or affiliates of CMGI.
Mr. Wetherell also serves on the boards of directors of Engage Technologies,
Inc. and NaviSite, Inc., each an affiliate of CMGI.

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Flint J. Brenton has served as a director of AltaVista since August 1999
and as Vice President of e-Commerce for Compaq since August 1999. Prior to
joining Compaq, he served as Director of Product Development for BMC Software
from July 1996 to August 1999. Mr. Brenton was General Manager of
Houston/London Operation of I-Net, Inc from January 1995 to July 1996. He also
serves as director of Harris County Salvation Army. Pursuant to the purchase
and contribution agreement, we agreed to elect to our board of directors a
designee named by Compaq. Flint J. Brenton is the current Compaq designee.

John G. McDonald has served as a director of AltaVista since May 1999. Dr.
McDonald is The IBJ Professor of Finance in the Graduate School of Business at
Stanford University, where he has been a faculty member since 1968. He teaches
MBA courses in investment, entrepreneurial finance and the Internet. In 1987,
he was elected to the Board of Governors of the NASD in Washington, D.C. In
1989, he was elected Vice Chairman of the NASD Board of Governors. Dr.
McDonald serves as an independent director of Varian, Inc., Scholastic Corp.,
Plum Creek Timber Co., Starwood Financial, Inc., and eight mutual funds
managed by Capital Research & Management Co.

Avram Miller has served as a director of AltaVista since August 1999. Mr.
Miller has served as the Chief Executive Officer of The Avram Miller Company,
a strategy and business development corporation since June 1999. Prior to this
position, he served as Vice President and Director of Corporate Business
Development for Intel Corporation from September 1984 to April 1999. Mr.
Miller is a director of CMGI, Inc. He also serves as Chairman Emeritus of the
Board of Directors of Plugged-In, a non-profit organization, and is a member
of the Board of Trustees for the California Institute of the Arts.

Robert J. Ranalli has served as a director of AltaVista since August 1999.
Mr. Ranalli retired from AT&T in 1994. He had been President of AT&T
Multimedia Services. Mr. Ranalli served as president of AT&T Consumer
Communications Services, Inc., and Chairman of the Board of both AT&T
Universal Card Services Corp. and AT&T Transtech Corp. from 1990 to 1994. He
serves on the boards of CMGI, Sterling Network Group, and DirectAg.com.

Board Committees

We have established an Audit Committee and a Compensation Committee. The
Audit Committee reviews our internal accounting procedures and considers and
reports to the Board of Directors with respect to other auditing and
accounting matters, including the selection of our independent auditors, the
scope of annual audits, fees to be paid to our independent auditors and the
performance of our independent auditors. The Audit Committee currently
consists of John G. McDonald and Robert J. Ranalli. The Compensation Committee
reviews and recommends to the Board of Directors the salaries, benefits and
stock option grants of all employees, consultants, directors and other
individuals compensated by us. The Compensation Committee also administers our
stock option and other employee benefit plans. The Compensation Committee
currently consists of John G. McDonald and Avram Miller.

Director Compensation

We do not pay cash retainers or meeting fees to our directors. We reimburse
our directors for all out-of-pocket expenses incurred in the performance of
their duties as directors of AltaVista. We have granted non-qualified stock
options to our directors who are not AltaVista employees pursuant to our stock
option plans.

Directors Plan

In September 1999, the board of directors adopted and our stockholders
approved our 1999 Stock Option Plan for Non-Employee Directors, pursuant to
which 325,000 shares of our common stock were reserved for issuance, subject
to adjustment in the event of stock splits and other similar events. This plan
was amended in October 1999. As of the date of amendment, this plan was
replaced by the Amended and Restated 1999 Directors Plan. Notwithstanding this
replacement, all then-outstanding options under this plan remain in effect, in

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accordance with their terms. This plan is administered by the Compensation
Committee of our board of directors, which committee is sometimes referred to
as the "plan administrator." The plan administrator may interpret the
Directors Plan and, subject to its provisions, may prescribe, amend and
rescind rules and make all other determinations necessary or desirable for the
administration of the Directors Plan. In addition, the plan administrator may,
in its discretion, accelerate the vesting of any option or options granted
under this plan.

In the event we undertake any merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, appropriate and proportionate adjustments
will be made to (1) the securities reserved for issuance under the Directors
Plan, (2) the number and kind of securities subject to future grants under the
plan and (3) the number, kind and exercise price of the securities underlying
options outstanding at the time of such occurrence. All outstanding options
granted under the Directors Plan will immediately become exercisable in full
upon a change in control of AltaVista.

Amended and Restated 1999 Directors Plan

In October 1999, the board of directors adopted and our stockholders
approved our Amended and Restated 1999 Stock Option Plan for Non-Employee
Directors, pursuant to which 1,300,000 shares of our common stock are reserved
for issuance, subject to adjustment in the event of stock splits and other
similar events. The Amended Directors Plan will be administered by the
Compensation Committee of our board of directors, which committee is sometimes
referred to as the "plan administrator." The plan administrator may interpret
the Amended Directors Plan and, subject to its provisions, may prescribe,
amend and rescind rules and make all other determinations necessary or
desirable for the administration of the Amended Directors Plan. The plan
administrator reserves the right to suspend or terminate the Amended Directors
Plan or amend it in any respect whatsoever. In addition, the plan
administrator may, in its discretion, accelerate the vesting of any option or
options granted under the Amended Directors Plan.

All of our directors are eligible to receive non-statutory stock options to
purchase shares of our common stock under this Plan, except for any director
who (1) is an employee of AltaVista or any of our subsidiaries or affiliates
or (2) unless otherwise determined by our board of directors, is an affiliate,
employee or designee of an institutional or corporate investor that owns more
than 5% of our outstanding common stock. Under this plan:

. we will grant an initial option to acquire 162,500 shares of our common
stock to each eligible director who is elected a director for the first
time after the plan is adopted on the date of that election;

. we also will grant an initial option to acquire 162,500 shares of our
common stock to each eligible director who

. ceases being an affiliate, employee or designee of an institutional
or corporate investor that owns more than 5% of our outstanding
common stock and

. is not otherwise an employee of us or any of our subsidiaries, but

. remains as a member of our board on the date the director's
affiliate, employee or designee status ceases

We will also grant, on each anniversary of the grant of the initial option,
to each eligible director an additional option to purchase 40,625 shares of
common stock if the director is still serving as one of our directors on that
anniversary date. Our board of directors may, in its discretion, increase to
up to 227,500 shares the aggregate number of shares of common stock subject to
any initial option or additional options so long as the maximum aggregate
number of shares that may vest for any optionee in any 48-month period will
not exceed 227,500 shares.

The option exercise price per share for each option granted under this plan
will be determined on the date of grant and will be equal to the closing price
of our common stock on a national securities exchange or as quoted on the
Nasdaq National Market, the average of the closing bid and asked prices of our
common stock in the

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over-the-counter market or the fair market value of our common stock as
determined by our board. Except as otherwise provided in the applicable option
agreement, each option granted under this plan will terminate on the tenth
anniversary of the date of grant of such option. Subject to the optionee
continuing to serve as one of our directors, each initial option will vest and
become exercisable as to 1/48th of the number of shares of common stock
originally subject to the option on each monthly anniversary of the date of
grant. Each annual option will vest and become exercisable on a monthly basis
as to 1/12th of the number of shares originally subject to the option
commencing on the 37th month after the grant date if the optionee is still
serving as a director on that monthly anniversary date.

In the event we undertake any merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, appropriate and proportionate adjustments
will be made to (1) the securities reserved for issuance under this plan, (2)
the number and kind of securities subject to future grants under the plan and
(3) the number, kind and exercise price of the securities underlying options
outstanding at the time of such occurrence. All outstanding options granted
under this plan will immediately become exercisable in full upon a change in
control of AltaVista.

Compensation Committee Interlocks and Insider Participation

Except as described below, no member of our Compensation Committee serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of our board of
directors or Compensation Committee. Avram Miller, a member of our
Compensation Committee, is a member of the board of directors of CMGI, and
David S. Wetherell, the chairman of our board of directors, is the chairman of
the board of directors of CMGI and an executive officer of CMGI. Additional
information concerning transactions between AltaVista and entities affiliated
with members of the Compensation Committee is included in this prospectus
under the caption "Certain Relationships and Related Transactions."

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Executive Compensation

The following table indicates information concerning compensation of our
Chief Executive Officer and our four most highly compensated executive
officers other than the Chief Executive Officer whose salary and bonus
exceeded $100,000 for the fiscal year ended July 31, 1999.

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Long-Term
Compensation(a) Compensation
-------------------- ------------
Securities
Underlying All Other
Name and Principal Position Salary ($) Bonus ($) Options (#) Compensation ($)
- --------------------------- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C>
Rodney W. Schrock
Chief Executive Officer,
President and Director.... 193,250 -- 1,300,000(b) 139,023(c)

Kenneth R. Barber
Vice President and
Chief Financial Officer... 146,712 -- 260,000 3,548(d)

Ross Levinsohn
Vice President and General
Manager--AltaVista
New Media.................. 37,949 400,000(e) 208,000 --

Gregory B. Memo
Executive
Vice President and General
Manager--AltaVista
Network................... 98,353 25,000(e) 292,500(f) 70,216(g)

Michael G. Rubin
Vice President and General
Manager--AltaVista
e-Commerce................. 96,922 25,000(e) 292,500 88,916(h)
</TABLE>
- --------
(a) Annual compensation reflects the actual amounts of salary and bonuses paid
to these executive officers from January 1, 1999 through July 31, 1999.
Prior to January 1, 1999, we were operated as a division of Digital
Equipment Corporation and Compaq and were not incorporated or operated as
a separate entity. As of July 31, 1999, the annual salaries of Messrs.
Schrock, Barber, Levinsohn, Memo and Rubin were $350,000, $225,000,
$200,000, $175,000 and $170,000. Mr. Schrock is eligible to receive an
annual bonus of up to 50% of his annual base compensation. Each other
executive officer named above is eligible to receive a bonus of up to 35%
of his annual base compensation. Mr. Levinsohn is eligible to receive a
$300,000 bonus in January 2000 if he is employed by us at that time and
remains employed by us through January 2001.

(b) Mr. Schrock converted 162,500 of these options into 42,237 options to
purchase CMGI common stock.

(c) Represents aggregate payments of $131,812 related to relocation expenses
and an aggregate of $7,211 of matching contributions made by Compaq and
AltaVista under the Compaq and AltaVista 401(k) plans.

(d) Represents the aggregate amount of contributions made by Compaq and
AltaVista under the Compaq and AltaVista 401(k) plans.

(e) Represents a signing bonus.

(f) Mr. Memo converted 32,500 of these options into 8,447 options to purchase
CMGI common stock.

(g) Represents aggregate payments of $65,991 related to relocation expenses
and an aggregate of $4,225 of matching contributions made by Compaq and
AltaVista under the Compaq and AltaVista 401(k) plans.

(h) Represents aggregate payments of $83,951 related to relocation expenses
and an aggregate of $4,965 of matching contributions made by Compaq and
AltaVista under the Compaq and AltaVista 401(k) plans.

Option Grants In Last Fiscal Year

The following table provides information concerning grants of options to
purchase our common stock made during the fiscal year ended July 31, 1999 to
the executive officers named in the "Summary Compensation Table." In the
fiscal year ended July 31, 1999, we granted options to purchase up to an
aggregate of 12,592,353 shares to employees, directors and consultants. These
options were granted pursuant to the 1999 Stock Option Plan. These options
have a term of ten years. Generally, options vest at the rate of 25% of the
total number of shares on the first anniversary of the date of grant and
thereafter ratably on a monthly basis for 36 months, provided that, in the
event of a change in control of AltaVista prior to January 31, 2000, 25% of
the shares subject to option will vest and be immediately exercisable, and
provided further, that in the event

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<PAGE>

optionee's employment is terminated by us without cause or by optionee for
good reason within six months following a change in control, an additional 25%
of the share subject to option will vest and be immediately exercisable.
CMGI's acquisition of approximately 81.5% of our common stock in August 1999
constituted a change of control.

The potential realizable values are based on an assumption that the price
of our common stock will appreciate at the compounded annual rate shown from
the date of grant until the end of the option term. These values do not take
into account amounts required to be paid as income taxes under the Internal
Revenue Code and any applicable state laws or option provisions providing for
termination of an option following termination of employment, non-
transferability or vesting. These amounts are calculated based on the
requirements promulgated by the Securities and Exchange Commission and do not
reflect our estimate of future stock price growth of the shares of our common
stock.

<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------
Percent of Potential Realizable
Number of Total Value at Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted to Exercise Market Option Term
Option Employees in Price Per Price Expiration ---------------------------------
Name Granted Fiscal Year Share Per Share Date 0% 5% 10%
- ---- ---------- ------------ --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rodney W. Schrock....... 1,300,000(a) 11.53% $6.73 $7.69 1/31/2009 $1,248,000 $5,502,828 $13,945,247
Kenneth R. Barber....... 260,000 2.31 6.73 7.69 1/31/2009 249,600 1,100,566 2,789,049
Ross Levinsohn.......... 208,000 1.84 6.73 7.69 1/31/2009 199,680 880,452 2,231,239
Gregory B. Memo......... 292,500(b) 2.59 6.73 7.69 1/31/2009 280,800 1,238,136 3,137,680
Michael G. Rubin........ 292,500 2.59% $6.73 $7.69 1/31/2009 $ 280,800 $1,238,136 $ 3,137,680
</TABLE>
- --------

(a) Mr. Schrock converted 162,500 of these options into 42,237 options to
purchase CMGI common stock at an exercise price of $25.90 per share in
August 1999.

(b) Mr. Memo converted 32,500 of these options into 8,447 options to purchase
CMGI common stock at an exercise price of $25.90 per share in August 1999.

Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values

The following table describes for the executive officers named in the
"Summary Compensation Table" the exercisable and unexercisable options held by
them as of July 31, 1999. No options were exercised by these executive
officers during the fiscal year ended July 31, 1999.

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at In-The-Money Options at
July 31, 1999 July 31, 1999
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Rodney W. Schrock.......... -- 1,300,000(a) -- $20,130,000
Kenneth R. Barber.......... -- 260,000 -- 4,026,000
Ross Levinsohn............. -- 208,000 -- 3,220,800
Gregory B. Memo............ -- 292,500(b) -- 4,529,250
Michael G. Rubin........... -- 292,500 -- $ 4,529,250
</TABLE>
- --------

(a) Mr. Schrock converted 162,500 of these options into 42,237 options to
purchase CMGI common stock at an exercise price of $25.90 per share in
August 1999.

(b) Mr. Memo converted 32,500 of these options into 8,447 options to purchase
CMGI common stock at an exercise price of $25.90 per share in August 1999.

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<PAGE>

The "Value of Unexercised In-the-Money Options at July 31, 1999" is based
on a value of $22.22 per share, the fair market value of our common stock as
of July 31, 1999, as determined by the board of directors, less the per share
exercise price, multiplied by the number of shares issued upon exercise of the
option.

1999 Employee Stock Purchase Plan

In December 1999, the board of directors adopted and our stockholders
approved our 1999 Employee Stock Purchase Plan, which allows eligible
employees, which may include employees located in foreign jurisdictions, to
purchase our common stock at a discount from fair market value. A maximum of
2,600,000 shares of common stock has been reserved for issuance under the
Purchase Plan.

The Purchase Plan will be administered by the Compensation Committee of our
board of directors, which committee is sometimes referred to as the "plan
administrator." The plan administrator may interpret the Purchase Plan and,
subject to its provisions, may prescribe, amend and rescind rules and make all
other determinations necessary or desirable for the administration of the
Purchase Plan.

The Purchase Plan will be implemented by establishing purchase periods that
may be three-months, six-months or other periods as determined by the plan
administrator. The Purchase Plan will be implemented at different dates in
different countries with the initial purchase period in the first locations
not anticipated to begin before the closing of this offering.

Employees are generally eligible to participate if they are employed by us
or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year although we may impose an eligibility period
of up to two years of employment before an employee is eligible to
participate. In no event may an employee be granted the right to purchase
stock under the Purchase Plan if the employee (1) immediately after the grant
would own stock possessing 5% or more of the total combined voting power or
value of all classes of our capital stock, or (2) holds rights to purchase
stock under any of our employee stock purchase plans that together accrue at a
rate which exceeds $25,000 worth of stock for each calendar year. The Purchase
Plan permits each employee to purchase common stock through payroll deductions
of up to 15% of the employee's "pay." Pay is defined as an employee's base
cash pay, excluding variable cash payments, paid for services rendered, plus
an employee's pre-tax contributions which are part of deferred pay or benefit
plans maintained by us, with any modifications determined by the plan
administrator. The maximum number of shares an employee may purchase during a
single purchase period is 3,250 shares.

Amounts deducted and accumulated by employees are used to purchase shares
of common stock at the end of each purchase period. The price of the common
stock offered under the Purchase Plan is an amount equal to 85% of the lower
of the fair market value of the common stock at the beginning or at the end of
each purchase period. Employees may end their participation in the Purchase
Plan at any time during a purchase period, in which event, any amounts
withheld through payroll deductions and not otherwise used to purchase shares
will be returned to them. Participation ends automatically upon termination of
employment with us. Rights granted under the Purchase Plan are not
transferable by an employee other than by will or the laws of descent and
distribution.

The Purchase Plan provides that, in the event of a proposed sale of all or
substantially all of our assets, or a merger or consolidation with or into
another corporation, at the discretion of the plan administrator, (1) each
outstanding right under the Purchase Plan will be assumed or an equivalent
right will be substituted by the successor corporation (or parent or
subsidiary thereof), (2) all outstanding rights will be exercised on a date
established by the plan administrator before the date of consummation of such
sale, merger or consolidation, or (3) all outstanding rights will terminate
and the accumulated payroll deductions will be returned to employees without
interest. In the event any change is made in our capitalization, such as a
stock split or stock dividend, which results in an increase or decrease in the
number of outstanding shares of common stock, appropriate adjustments will be
made to the shares available for issuance under the Purchase Plan, the maximum
number of shares each participant may purchase and the price of the option.
The Purchase Plan will terminate in 2009. Our board of directors has the
authority to amend or terminate the Purchase Plan, except that no amendment or
termination may adversely affect any outstanding rights under the Purchase
Plan.

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<PAGE>

1999 Stock Option Plan

In May 1999, the board of directors adopted and our stockholders approved
our 1999 Stock Option Plan to promote our interests and the interests of our
stockholders by (1) attracting and retaining exceptional employees,
consultants and directors; (2) motivating such employees, consultants and
directors by means of performance-related incentives to achieve long-range
performance goals; and (3) enabling such employees, consultants and directors
to participate in our long-term growth and financial success. The Option Plan
covers an aggregate of 26,000,000 shares of our common stock and provides for
the issuance of stock options and stock appreciation rights. This plan was
terminated in September 1999. Notwithstanding this termination, all then-
outstanding options under the Option Plan will remain in effect in accordance
with their terms. In the event an optionee's employment is terminated by us
without cause or by the optionee for good reason within six months following a
change in control, an additional 25% of the shares subject to the option will
vest and be immediately exercisable.

The Option Plan will be administered by the Compensation Committee of our
board of directors, which committee is sometimes referred to as the "plan
administrator." The plan administrator may interpret the Option Plan and,
subject to its provisions, may prescribe, amend and rescind rules and make all
other determinations necessary or desirable for the administration of the
Option Plan.

In the event that the plan administrator determines that any dividend or
other distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, exchange of shares, issuance of warrants or other rights to
purchase shares, or other similar corporate transaction or event affects the
shares such that an adjustment is determined by the plan administrator to be
appropriate in order to prevent dilution or enlargement of the benefits, then
the plan administrator will adjust (1) the number of shares or other
securities with respect to which awards may be granted under the Option Plan,
(2) the maximum number of shares or other securities with respect to which an
executive officer may be granted under the Option Plan in any calendar year,
(3) the number of shares or other securities subject to outstanding awards,
and (4) the grant or exercise price with respect to outstanding awards, or, if
deemed appropriate, make provision for the payment of cash or other property
to the holder of an outstanding award in consideration for the cancellation of
such award; provided, however, that such adjustments shall be made solely by
the board with respect to awards to eligible directors.

The terms of the Option Plan provide that the plan administrator may amend,
suspend or terminate the plan at any time, provided, however, that certain
amendments require approval of our stockholders.

1999 Equity Incentive Plan

In September 1999, the board of directors adopted and our stockholders
approved our 1999 Equity Incentive Plan to attract and retain key employees
and consultants, to provide an incentive for them to achieve long-range
performance goals and to enable them to participate in our long-term growth.
The Equity Plan, together with our other stock option plans, covers an
aggregate of 26,000,000 shares of our common stock and provides for the
issuance of stock options, stock appreciation rights and restricted stock. All
grants of options, other than pursuant to the Amended Directors Plan, will be
granted pursuant to this plan. The maximum number of shares subject to options
or stock appreciation rights that may be granted to any participant in any
calendar year may not exceed 1,300,000 shares, subject to adjustment.

The Equity Plan will be administered by the Compensation Committee of our
board of directors, which committee is sometimes referred to as the "plan
administrator." The plan administrator may interpret the Equity Plan and,
subject to its provisions, may prescribe, amend and rescind rules and make all
other determinations necessary or desirable for the administration of the
Equity Plan. The Equity Plan permits the plan administrator to select the
participants who will receive awards and generally to determine the terms and
conditions of such awards.

Two types of stock options may be granted under the Plan: incentive stock
options, which are intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options.

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<PAGE>

The option price of each non-qualified stock option granted under the Equity
Plan may not be less than the par value of a share of our common stock. The
option price of each incentive stock option granted under the Equity Plan must
be at least equal to the fair market value of a share of our common stock on
the date the incentive stock option is granted.

A stock appreciation right granted under the Equity Plan entitles its
holder to receive, at the time of exercise, an amount per share equal to the
excess of the fair market value, at the date of exercise, of a share of our
common stock over a specified price fixed by the plan administrator. Stock
appreciation rights and limited stock appreciation rights may be granted under
the Equity Plan either alone or in conjunction with all or part of any stock
option granted under the Equity Plan. A limited stock appreciation right
granted under the Equity Plan entitles its holder to receive, at the time of
exercise, an amount per share equal to the excess of the change in control
price of a share of common stock over a specified price fixed by the plan
administrator.

The plan administrator will determine the terms and conditions with respect
to the grant of restricted stock. With respect to restricted stock,
participants generally have all of the rights of a stockholder with respect to
such stock.

In the event we undergo a change in control, the plan administrator may (1)
provide for the acceleration of any time period relating to the exercise or
payment of the award, (2) provide for payment to the participant of cash or
other property with a fair market value equal to the amount that would have
been received upon the exercise or payment of the award had the award been
exercised or paid upon the change in control, (3) adjust the terms of the
award in a manner determined by the plan administrator to reflect the change
in control, (4) cause the award to be assumed, or new rights substituted
therefor, by another entity or (5) make such other provision as the plan
administrator may consider equitable to participants and in our best
interests.

The terms of the Equity Plan provide that the plan administrator may amend,
suspend or terminate the Equity Plan at any time, provided, however, that no
such action may be taken which adversely affects any rights under outstanding
awards without the holder's consent.

Severance Agreements

We have entered into severance arrangements with each of our executive
officers. The terms of the severance agreements provide that in the event the
executive is terminated within six months following a change in control other
than for cause, by reason of the executive's death or disability or by the
executive for good reason, we will (1) pay to executive a lump sum severance
payment equal the executive's annual base salary as in effect immediately
prior to the date of termination, or if higher, as in effect immediately prior
to the first occurrence of an event or circumstance constituting good reason;
(2) accelerate the vesting of all the executive's outstanding options, subject
to the executive executing and delivering a Stock Purchase, Restriction, Buy-
Back and Right of First Refusal Agreement and such outstanding options will be
fully exercisable for a period of one year following the date of termination;
(3) continue to pay the mortgage subsidy agreed between us and the executive
for the life of such subsidy, if applicable; and (4) arrange to provide the
executive and his dependents life, disability, accident and health insurance
benefits substantially similar to those provided to the executive and his
dependents immediately prior to the date of termination, or if more favorable
to the executive, those provided to the executive immediately prior to the
first occurrence of an event or circumstance constitute good reason. The life,
disability, accident and health insurance benefits will be reduced to the
extent benefits of the same type are received by or made available to the
executive officer by another employer during the 12-month period following the
executive officer's termination of employment. In the event any payment or
benefit received by executive in connection with a change in control or
termination of employment would not be deductible by us, the severance
benefits shall be reduced to the extent necessary to make such payments or
benefits deductible by us. A change in control is generally defined to include
the occurrence of any of the following events:

. a person or group of persons acquires securities representing 30% or more
of our voting stock;

. current Board members and persons approved by such members cease to be a
majority of the Board;

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. our stockholders approve a merger of consolidation and after such merger
of consolidation is complete, our stockholders do not own at least 50% of
the new company; or

. our stockholders approve a plan providing for our complete liquidation or
the sale of all or substantially all of our assets.

Cause is generally defined to include the occurrence of any of the
following events:

. the executive officer's willful and continued failure to substantially
perform his or her duties;

. the executive officer's willful engaging in conduct which is demonstrably
and materially injurious to us; or

. upon exercise of option to purchase our stock, the executive officer's
failure to execute an agreement limiting his transfer rights with respect
to the stock issuable in connection with such exercise, which limitations
will expire when our stock becomes publicly traded.

Good reason is generally defined to include the occurrence of any of the
following events without the executive officer's consent following a change in
control:

. a reduction in the nature or status of the executive officer's
responsibilities;

. a reduction in the executive officer's annual base salary;

. the relocation of the executive officer's employment to a location more
than 30 miles away;

. the failure to pay to the executive officer any portion of his or her
current or deferred compensation within seven days of the date such
amounts are due;

. the failure to continue in effect any material incentive compensation
plan in which the executive officer participates;

. the failure to continue to provide the executive officer with other
material benefits; or

. any purported termination of the executive officer's employment which is
not effected pursuant to the procedures set forth in the severance
agreement.

Mortgage Subsidiary Agreements

Compaq entered into mortgage subsidy agreements with each of Messrs.
Schrock, Memo and Rubin, which agreements were assigned to AltaVista. The
total subsidy amounts received by each of these individuals is $148,716,
$123,200 and $86,506. Each of these agreements has a term of three years and
provides that AltaVista will pay a portion of the executive's monthly mortgage
payment so long as the executive remains employed by us and continues to own
the underlying property.

Deferred Compensation Plan

A Deferred Compensation Plan was approved and adopted by our board of
directors in December 1999, to be effective upon completion of this offering.
Under the terms of the deferred compensation plan, AltaVista employees who are
selected by our board of directors will be able to elect to defer a portion of
their compensation for the following calendar year. Participants in the
deferred compensation plan will be able to defer up to 25% of their salary and
100% of their bonus compensation, which amounts will be paid out at a later
date at the participant's election. AltaVista also may make discretionary
contributions to a participant's account, to which the participant generally
will become entitled after five years of service with us. AltaVista will
maintain a bookkeeping account to track deferred amounts, which amounts will
be credited with gains or losses based on the performance of deemed investment
alternatives made available to participants under the deferred compensation
plan. In addition, in the event of a change in control, as defined in our
Deferred Compensation Plan, participants may be entitled to receive a lump sum
payment of the amount credited to his or her deferral account thereunder as of
the valuation date immediately preceding the date on which the change in
control occurs.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Relationship with CMGI

As of January 31, 2000, CMGI owned approximately 81.54% of our common
stock. CMGI will directly own approximately 73.76% of our outstanding common
stock upon completion of this offering. The aggregate consideration paid by
CMGI for its equity interest in AltaVista was approximately $2.03 billion. The
aggregate value of the shares of our common stock that are owned by CMGI,
based on an assumed initial offering price of $19.00 per share, is
approximately $2.04 billion.

CMGI acquired substantially all of its equity ownership in us in August
1999, pursuant to a purchase and contribution agreement among CMGI, Compaq and
us. Pursuant to this agreement, CMGI contributed to us 18,994,975 shares of
CMGI common stock, 18,090.45 shares of CMGI series D preferred stock and all
of the shares of Zip2 and Shopping.com common stock it had purchased from
Compaq in return for 105,943,651 shares of our common stock. As part of this
same transaction, Compaq contributed the AltaVista business to us in exchange
for 24,056 shares of our common stock, 18,994,975 shares of CMGI common stock
and 18,090.45 shares of CMGI series D preferred stock.

CMGI has the power to elect the majority of our board of directors and to
approve or disapprove any corporate transactions or other matters submitted to
our stockholders for approval, including the approval of mergers or other
significant corporate transactions. CMGI may exercise its voting power by
written consent, without convening a meeting of the stockholders, meaning that
CMGI will be able to effect a sale or merger of AltaVista without prior notice
to, or the consent of, our other stockholders.

AltaVista and CMGI have entered into or, upon or prior to completion of
this offering, will enter into the present and prospective arrangements and
transactions described below. These agreements were or will be negotiated
between CMGI, as a corporate parent, and AltaVista, its subsidiary, and
therefore are not the result of negotiations between independent parties.
AltaVista and CMGI intend that these agreements and the transactions provided
for in these agreements, taken as a whole, accommodate their respective
interests in a manner that is fair to both AltaVista and CMGI. However,
because of the nature of the relationship between AltaVista and CMGI, we
cannot assure you that each of the agreements described below, or the
transactions provided for in these agreements, were or will be effected on
terms at least as favorable to AltaVista as AltaVista could have obtained from
unaffiliated third parties.

AltaVista and CMGI may enter into additional or modified arrangements and
transactions in the future. AltaVista and CMGI will negotiate the terms of
such arrangements and transactions. Upon or prior to completion of this
offering, AltaVista will adopt a policy that all future arrangements between
AltaVista and CMGI will be on terms that AltaVista believes are no less
favorable to it than the terms AltaVista believes would be available from
unaffiliated parties and, other than routine commercial transactions entered
into in the ordinary course of business, must be approved by a majority of
AltaVista's directors who are not employees of CMGI, even though such
directors may be less than a quorum.

The following is a summary of the material arrangements and transactions
between AltaVista and CMGI or its affiliates.

Debt Conversion

We have issued a convertible note to CMGI as payment for all debt incurred
by us to CMGI. CMGI may elect to convert amounts payable under the note into
Series A convertible preferred stock at any time. Under the note, debt accrues
interest at a rate of 7% per year, compounded monthly until the day CMGI
elects to convert the debt into shares of Series A convertible preferred
stock. The amount of each borrowing represented by the note is convertible
from time to time into the number of shares of Series A convertible preferred
stock equal to one-tenth of the quotient of:

. the aggregate number of principal and interest to be so converted,
divided by

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. the applicable conversion price for that fiscal quarter.

The conversion price applicable to advances made in any fiscal quarter,
except advances made in the fiscal quarter during which a qualified public
offering occurs and advances converted into Series A convertible preferred
stock in the same fiscal quarter in which they were made, is determined by
dividing our total enterprise value as of the fiscal quarter end, as
determined in good faith by our board of directors, by the number of shares of
common stock outstanding on a fully diluted, as-if-converted basis. The
conversion price applicable to all advances made after January 31, 2000 is
$19.00. Each share of Series A convertible preferred stock outstanding will
convert into ten shares of common stock upon the completion of this offering.

As of January 31, 2000 we owed CMGI $121.8 million, which amount will be
converted into approximately 608,000 shares of preferred stock immediately
prior to the closing of this offering. Upon the closing of this offering, all
outstanding shares of this preferred stock will be converted into
approximately 6,081,000 shares of our common stock. Based on an assumed
initial offering price of $19.00 per share, the aggregate value of the common
stock issuable upon conversion of the preferred stock held by CMGI and debt
owed to CMGI is approximately $115,540,000. We do not expect to borrow funds
from CMGI after completion of this offering.

Facilities and Administrative Support Agreement

Upon or prior to completion of this offering, we will enter into a
facilities and administrative support agreement with CMGI under which CMGI
will continue to make available to us space at its headquarters in Andover,
Massachusetts and at other facilities in Europe and will provide various
services to us, including rent and facilities, Internet marketing and business
development.

The initial term of this agreement will be one year from the date of the
agreement, with automatic renewals at the end of the initial term and each
renewal term for successive one-year periods. Either party will be permitted
to terminate the facilities and administrative support agreement upon 30 days,
written notice to the other party prior to the expiration of the applicable
term. The facilities and administrative support agreement will automatically
terminate upon the date CMGI owns less than 50% of our outstanding voting
capital stock.

The fees payable by us for the availability of space and related services
are typically determined through an allocation of CMGI's costs based upon the
proportion of our employee headcount to the total headcount of CMGI and other
CMGI affiliates located in the same facility or using the same services. Under
the facilities and administrative support agreement, we will pay CMGI a
monthly fee reflecting the cost of the services provided by CMGI based on the
total number of our employees and consultants on the last day of that month.
The costs of Internet marketing and business development is allocated by CMGI
in equal shares to each of its affiliates that use the services.

Tax Allocation Agreement

Upon or prior to completion of this offering, we will enter into a tax
allocation agreement with CMGI to allocate responsibilities, liabilities and
benefits relating to taxes. We will be required to pay our share of income
taxes shown as due on any consolidated, combined or unitary tax returns filed
by CMGI for tax periods ending on or before or including the date as of which
we will no longer be a member of CMGI's group for federal, state or local tax
purposes, as the case may be. CMGI will indemnify us against liability for all
taxes in respect of consolidated, combined or unitary tax returns for periods
as to which CMGI is filing group returns which include us. Accordingly, any
redetermined tax liabilities for those periods will be the responsibility of
CMGI, and any refunds or credits of taxes attributable to us or our
subsidiaries in respect of consolidated, combined or unitary tax returns for
those periods will be for the account of CMGI. We will be responsible for
filing any separate tax returns for any taxable period and will be responsible
for any tax liabilities, and entitled to any refunds or credits of taxes, with
respect to separately filed tax returns. We will indemnify CMGI against any
tax liability with respect to separately filed tax returns.

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Neither CMGI nor we will have any obligation to make any payment to the
other party for the use of the other party's tax attributes, such as net
operating losses. However, if one party realizes a windfall tax benefit
because of an adjustment to items on the other party's tax return, the party
that realizes the windfall tax benefit will be required to pay to the other
party the actual incremental tax savings it has realized. For example, if an
expense deducted by CMGI for a period prior to the closing date were
disallowed and required to be capitalized by us for a period after the closing
date, thereby generating future depreciation deductions to us, we would be
required to pay to CMGI any incremental tax savings as a result of the
depreciation deductions when those tax savings are actually realized by us.

Each of AltaVista and CMGI has control of any audit, appeal, litigation or
settlement of any issue raised with respect to a tax return for which it has
filing responsibility. Payments of claims under the agreement must be made
within 30 days of the date that a written demand for the claim is delivered.
Interest accrues on payments that are not made within ten days of the final
due date at the rate applicable to underpayments of the applicable tax. Any
dispute concerning the calculation or basis of determination of any payment
provided under the tax allocation agreement will be resolved by a law firm or
"big five" accounting firm selected and paid for jointly by the parties.

Investor Rights Agreement

Upon or prior to completion of this offering, we will enter into an
investor rights agreement with CMGI under which we will grant CMGI
registration rights and rights to purchase shares to maintain its majority
ownership. Under this agreement, CMGI and its assignees will have the right to
demand, on up to two occasions, that AltaVista register the sale of all or
part of their shares of our common stock having an aggregate value of at least
$10 million under the Securities Act. In addition, at any time after we become
eligible to file a registration statement on Form S-3 under the Securities
Act, CMGI and its assignees will have the right to request, on up to five
occasions, that we effect a registration of their shares of our common stock
having an aggregate value of at least $2.5 million on Form S-3. CMGI and its
assignees also are entitled to include shares of our common stock in a
registered offering by us of our securities for our own account, subject to
the underwriters' right to reduce the number of included shares. We will pay
all costs associated with the registration of shares by us pursuant to this
agreement, other than underwriting discounts and commissions and various other
expenses.

Also under this agreement, until such time as CMGI, or any permitted
transferee, owns less than a majority of voting power of the outstanding
shares of our capital stock, we will permit CMGI, or the transferee, to
purchase a portion of any shares that we may in the future issue so that CMGI
or the transferee will maintain its majority ownership position. Any such
purchases will be at the same price as is paid by third parties for the
shares. This right is transferable by CMGI to any party that acquires directly
from CMGI shares of common stock representing at least a majority of the
outstanding shares of our common stock.

Transactions with CMGI Affiliates

CMGi Solutions. On December 1, 1999, we entered into a source code
licensing agreement with CMGi Solutions, Inc., a wholly owned subsidiary of
CMGI. Under this agreement, CMGi Solutions has licensed to us a clientside
software application called AltaVista Alert and its required server-side
software for us to use in the course of our business. In connection with this
agreement we paid CMGi Solutions a one-time license fee of $150,000 in January
2000 and a monthly recurring license fee based on peak simultaneous online
users, ranging from 5 cents to 1 cent per online user per month. The contract
is for a term of 24 months, with a cap of $600,000 on monthly fees we pay them
for the term. We have made no payments to CMGi Solutions to date.

Critical Path. On September 14, 1999, we entered into an 18-month e-mail
services agreement with Critical Path Inc., 4% of which is held by CMGI. Under
this agreement, Critical Path provides e-mail outsourcing services to us which
we offer free to registered users. We have engineered our site so that users
can activate their mailbox from the AltaVista site and can subsequently get
access to their e-mail box without logging in

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again if they are logged in to the AltaVista site. Under this agreement we pay
Critical Path based upon the number of mailboxes existing on the Critical Path
system at the end of each month and upon the features activated on the
mailbox. Under the terms of the deal we are obligated to pay Critical Path a
one-time fee of $17,000, as well as a minimum of $10,000 per month. However,
we have made no payments to date.

Engage. On October 10, 1999, we entered into a three-year alliance
agreement with Engage Technologies, Inc., approximately 81% of which is held
by CMGI. Under this agreement, we license Engage's ad management and profile
technology for use throughout our network. Engage's profile technology allows
targeted online advertising based on an anonymous collection of information
about our user's consumer interests, demographic characteristics and
geographic locations. Under the agreement, we paid Engage $1 million in
license and maintenance fees. We will also pay Engage up to $1 million in
consulting fees and $500,000 in annual maintenance fees for each of the second
and third years of the agreement. We will also pay up to a maximum of $8
million to Engage for usage of Engage Local profiles. In January 2000, we paid
Engage $764,450.

iAtlas. On September 28, 1999, CMGI acquired iAtlas Corporation, previously
an unrelated entity, in a stock-for-stock exchange. To enhance our search
service with iAtlas' filtering technology, on October 22, 1999, we acquired
iAtlas from CMGI for a total consideration of 1,556,387 shares of our common
stock for an aggregate acquisition cost of approximately $28 million.

ICast. On December 23, 2000, we entered into a software license agreement
with ICast, 80% of which is owned by CMGI. Under this agreement, we have
licensed our search technology to ICast for its Zinezone site. In connection
with the agreement, ICast has agreed to pay us $70,900 and has made no
payments to us to date.

NaviSite. On September 4, 1998, we entered into a services agreement with
NaviSite, for an original term of three months, with a side letter entered
into on May 21, 1999 extending the term to November 21, 1999. We were charged
a one-time fee of $88,110 in August 1999, with monthly recurring fees of
$68,310. Since the beginning of the original term, we have made total payments
to NaviSite of approximately $1 million. Navisite is 72% owned by CMGI. Under
this agreement, NaviSite provides to us various Internet services that include
hosting, setup and management, load balancing and web statistical reporting.

Raging Bull. On February 1, 2000, we completed our acquisition of Raging
Bull. We issued approximately 6,609,492 shares of our common stock, valued at
approximately $150.2 million, and options to purchase approximately 657,200
shares of our common stock, valued at approximately $12.3 million, for an
aggregate purchase price of approximately $163 million, in consideration for
all the outstanding capital stock and stock options of Raging Bull. Ten
percent of the shares of our common stock issued to stockholders of Raging
Bull, however, are held in escrow to secure the obligations of Raging Bull and
its stockholders to indemnify us against the breach or inaccuracy of any
representation or warranty, or the breach of any covenant contained or
contemplated by the merger agreement we entered into with Raging Bull.
Immediately prior to our acquisition, Raging Bull was owned in part by various
CMGI affiliates.

ThingWorld. On October 21, 1999, we entered into a one-year content
licensing agreement with ThingWorld.com LLC, 36% of which is held by CMGI,
through its CMG@Ventures funds. ThingWorld is the creator, owner, manufacturer
and distributor of software products and services that enable users to create,
view, play, search for and collect multimedia digitized images and sounds.
Under this agreement, the first $20,000 of net revenue from advertising sales
on the co-branded web pages will be paid to us, thereafter all subsequent net
revenue will be shared on an equal basis.

Tribal Voice. On September 30, 1999, we entered into a license and
distribution agreement with Tribal Voice, Inc, which is wholly owned by CMGI.
Under this agreement, Tribal Voice licensed us to deploy a version of its
PowWow live voice chat software. The agreement grants us a royalty-free
license to provide the PowWow software to our users. In connection with this
agreement, we will pay Tribal Voice a one-time development fee of $15,000 and
50% of net ad revenues for ads served.

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Vicinity. On May 1, 1998, Digital entered into a Mapping Service and
Linking Agreement with Vicinity Corporation, 29% of which is held by CMGI,
through its CMG@Ventures funds which agreement was contributed to us in
connection with Compaq's acquisition of Digital. Under this agreement,
Vicinity provided map and driving direction information to us. The agreement
expired on May 1, 1999. In connection with the agreement, we have paid
Vicinity $32,000 on August 1, 1998, and $160,000 on July 31, 1999. In January
2000, our Shopping.com subsidiary entered into a new contract with Vicinity.

Zip2. In October 1999, we distributed a stock dividend of all Zip2 stock
owned by us to our stockholders. As a result, Zip2 was owned by CMGI and
Compaq, 81.5% and 18.5%, respectively. Zip2 has subsequently been acquired by
MyWay.com Corporation in a stock transaction. Zip2 develops, hosts and
maintains web sites based on a technology platform that combines web
operations with local and national content and services. Zip2 has partnered
with the interactive divisions of leading newspaper companies to create
premiere local web destinations that combine popular portal features with the
newspaper company's local content. We have entered into an agreement with
Zip2, which assigns a co-ownership interest in and a license to the Zip2
technology to AltaVista, allowing us to further develop and enhance the
AltaVista Live! service. Our agreement with Zip2 also provides for the
transfer of equipment from Zip2 to AltaVista and for AltaVista to provide
transition services to Zip2.

Relationship with Compaq

As of January 31, 2000, Compaq owned approximately 18.25% of our common
stock. Compaq will directly own approximately 16.46% of our outstanding common
stock upon completion of this offering. The aggregate consideration paid by
Compaq for its equity interest in AltaVista was approximately $138 million.
The aggregate value of the shares of our common stock that are owned by
Compaq, based on an assumed initial offering price of $19.00 per share, is
approximately $457 million.

Debt Conversion

We have issued a convertible demand note to Compaq as payment for all debt
incurred by us to Compaq. Compaq may elect to convert amounts payable under
the note into Series A convertible preferred stock at any time. Under the
note, debt accrues interest at a rate of 7% per year, compounded monthly until
the day Compaq elects to convert the debt into shares of Series A convertible
preferred stock. The amount of each borrowing represented by the note is
convertible from time to time into the number of shares of Series A
convertible preferred stock equal to one-tenth of the quotient of:

. the aggregate number of principal and interest to be so converted,
divided by

. the applicable conversion price for that fiscal quarter.

The conversion price applicable to advances made in any fiscal quarter,
except advances made in the fiscal quarter during which a qualified initial
public offering occurs and advances converted into Series A convertible
preferred stock in the same fiscal quarter in which they were made, is
determined by dividing our total enterprise value as of the fiscal quarter
end, as determined in good faith by our board of directors, by the number of
shares of common stock outstanding on a fully diluted, as-if-converted basis.
The conversion price applicable to all advances made after January 31, 2000 is
$19.00. Each share of Series A convertible preferred stock outstanding will
convert into ten shares of common stock upon the completion of this offering.

As of January 31, 2000, we owed Compaq $8.1 million, and Compaq has the
right to provide us with additional convertible debt financing of $17.5
million which amounts will be converted into 128,000 shares of preferred stock
immediately prior to the closing of this offering. Upon the closing of this
offering, all outstanding shares of this preferred stock will be converted
into 1,283,000 shares of our common stock. Based on an assumed initial
offering price of $19.00 per share, the aggregate value of the common stock
issuable upon conversion of the preferred stock held by Compaq and debt owed
to CMGI is approximately $24.4 million. We do not expect to borrow funds from
Compaq after completion of this offering.

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Compaq and CMGI Agreement

In June 1999, CMGI entered into an agreement with Compaq to define various
aspects of the relationship between CMGI and Compaq. Under the agreement,
subject to certain exclusions, Compaq will preprogram up to four instant
Internet keyboard buttons, based on the total number of these buttons, on each
Presario-branded, including successor brands or sub-brands, consumer desktop
and portable personal computer, so that when a user presses the button, the
user is directed to the applicable CMGI-designated web sites. For example, if
designated by CMGI and preprogrammed by Compaq, the search button would direct
the user to the search area of our web site. Compaq will also preprogram
instant Internet keyboard buttons on any Compaq-only branded consumer-oriented
Internet appliances subject to the same exclusions as the instant Internet
keyboard buttons, as long as the designated CMGI web sites are competitive in
price and performance. In addition, when an instant Internet keyboard button
described above is preprogrammed to our home page, the home link for the
Internet browser that is bundled with these Compaq computers will also be
linked to our home page. For the six months ended January 31, 2000, CMGI paid
to Compaq $3.6 million for these preprogramming services, for which we will
reimburse CMGI, based on the amount of redirected user traffic.

Compaq has the right to terminate these arrangements if the AltaVista
portal fails to be one of the 12 most trafficked web sites for four
consecutive months, as measured in terms of unique visitors at home and at
work, by Media Metrix. Our rankings by Media Metrix for the months of October
1999 through January 2000 were 11, 14, 12 and 9. Media Metrix estimates the
amount of user traffic on web sites by monitoring the monthly activity of
selected user groups and expanding the results across the number of potential
users. Actual usage may differ materially from statistics provided by Media
Metrix. If we experience reduced traffic to our web sites or if any
inaccuracies in Media Metrix estimates cause traffic to our web sites to be
underestimated when compared to other web sites, then Compaq could terminate
its arrangement with CMGI, which could harm our business.

Compaq Representation on Our Board of Directors

Pursuant to the purchase and contribution agreement, we agreed to elect to
our board of directors a designee named by Compaq. Flint J. Brenton is the
current Compaq designee. In addition, at any meeting of our stockholders at
which members of our board of directors are to be elected and the term of a
member designated by Compaq expires, our board of directors is required to
nominate and recommend to our stockholders a designee

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named by Compaq. If, however, Compaq at any time owns less than five percent
of our capital stock, Compaq's rights to designate a member of our board of
directors will terminate and any then current Compaq designee on our board
will be required to resign.

Registration Rights Agreement

In connection with CMGI's acquisition of majority ownership of us, we
entered into a registration rights agreement with Compaq with respect to
shares of our common stock retained by Compaq. Pursuant to this agreement,
Compaq and its assignees will have the right to demand, on up to five
occasions, that we register under the Securities Act the sale of all or part
of their shares of common stock having an aggregate value of at least $25
million. Compaq and its assignees also are entitled to include shares of
common stock in a registered offering by us of our securities for our own
account, subject to the underwriters' right to reduce the number of included
shares. We will pay all costs associated with the registration of shares by us
pursuant to this agreement, other than underwriting discounts and commissions
and various other selling expenses.

Master Lease Agreement

In November 1999, we entered into a Master Lease and Financing Agreement
with Compaq Financial Services Corporation, a subsidiary of Compaq. From time
to time, under this agreement, Compaq Financial may lease equipment and
computer software programs to us and provide us with financing for license
fees related to

computer software programs and other services. As of January 31, 2000, our
outstanding balance under the agreement was approximately $26 million.

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OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial
ownership of common stock of AltaVista and CMGI, as of January 31, 2000 and as
adjusted to reflect the sale of our common stock in this offering, by:

. each person known by us to beneficially own more than 5% of our common
stock

. each of our directors

. each executive officer named in the Summary Compensation Table

. all of our directors and executive officers as a group

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Except as indicated by the footnotes
below, we believe, based on the information furnished to us, that the persons
and entities named in the tables below have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by
them, subject to applicable community property laws. Percentage of outstanding
shares of AltaVista common stock is based on 131,831,437 shares of common
stock outstanding as of January 31, 2000, and as adjusted to reflect the
issuance of 14,800,000 shares of common stock in this offering. The
outstanding shares of our common stock shown as held by CMGI and Compaq
include shares issuable upon the conversion of our outstanding debt to CMGI
and Compaq as of January 31, 2000. The percentages of outstanding shares of
CMGI common stock are based on 279,933,518 shares of common stock outstanding
as of January 31, 2000, reflecting the 2-for-1 split of CMGI's outstanding
shares of common stock effected in January 2000. In computing the number of
shares of common stock beneficially owned by a person and the percentage
ownership of that person, shares of common stock subject to options held by
that person that are currently exercisable or exercisable within 60 days of
January 31, 2000 are deemed outstanding. These shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o AltaVista Company, 1070 Arastradero Road, Palo Alto,
California 94304.

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<TABLE>
<CAPTION>
Percent of Shares
Outstanding
--------------------
Name and Address of Number of Shares Before the After the
Beneficial Owner Company Beneficially Owned Offering Offering
- ------------------- --------- ------------------ ---------- ---------
<S> <C> <C> <C> <C>
CMGI, Inc................... AltaVista 113,581,082 81.6% 73.8%
100 Brickstone Square
Andover, Massachusetts
01810
Compaq Computer Corporation,
as successor in interest to
Digital Equipment
Corporation................ AltaVista 25,339,380 18.2% 16.5%
20555 SH 249
Houston,Texas 77070
Rodney W. Schrock........... AltaVista 379,165(a) * *
CMGI 40,474(a) * *
Kenneth R. Barber........... AltaVista 75,833(a) * *
CMGI -- -- --
Ross Levinsohn.............. AltaVista 60,665(a) * *
CMGI -- -- --
Gregory B. Memo............. AltaVista 72,989(a) * *
CMGI 16,894(a) * *
Michael G. Rubin............ AltaVista 85,312(a) * *
CMGI -- -- --
David S. Wetherell.......... AltaVista 113,581,082(b) 81.6 73.8
CMGI 35,533,656 12.5% 12.5%
Flint J. Brenton............ AltaVista -- -- --
CMGI -- -- --
John G. McDonald............ AltaVista 60,125(a) * *
CMGI -- -- --
Avram Miller................ AltaVista 113,601,393(d) 81.6 73.8
CMGI 87,999(a) * *
Robert J. Ranalli........... AltaVista 113,601,393(e) 81.6 73.8
CMGI 108,399(a) * *
All directors and executive
officers as a group
(10 persons)............... AltaVista 114,355,793(f) 82.2 74.3
CMGI 35,807,422(g) 12.7% 12.7%
</TABLE>
- --------
* Indicates beneficial ownership of less than 1% of the common stock.

(a) Consists of shares issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of January 31, 2000.
In August 1999, Mr. Schrock converted options to purchase 162,500 shares
of AltaVista common stock into options to purchase 84,474 shares of CMGI
common stock. Also in August 1999, Mr. Memo converted options to purchase
32,500 shares of AltaVista common stock into options to purchase 16,894
shares of CMGI common stock.

(b) Consists of shares owned by CMGI. Mr. Wetherell disclaims beneficial
ownership of all 113,581,082 shares owned by CMGI.

(c) As of January 31, 2000, Mr. Wetherell owned 35,553,656 shares of the
common stock of CMGI, which includes: (i) 2,691,776 shares which may be
acquired upon the exercise of options that are exercisable 60 days after
January 31, 2000, (ii) 16,932,672 shares held by the North Andover LLC of
which Mr. Wetherell is a manager, as to which Mr. Wetherell disclaims
beneficial ownership and (iii) 388,244 shares held in the David S.
Wetherell Charitable Trust, of which Mr. Wetherell is a trustee, as to
which Mr. Wetherell disclaims beneficial ownership.

(d) Includes 20,311 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of January 31, 2000.
Also includes 113,581,082 shares owned by CMGI. Mr. Miller disclaims
beneficial ownership of all 113,581,082 shares owned by CMGI.

(e) Includes 20,311 shares issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of January 31, 2000.
Also includes 113,581,082 shares owned by CMGI. Mr. Ranalli disclaims
beneficial ownership of all 113,581,082 shares owned by CMGI.

(f) Includes 774,711 shares issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of January 31, 2000.

(g) Includes 2,925,542 shares issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of January 31, 2000.

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DESCRIPTION OF CAPITAL STOCK

The following description summarizes the material terms of the capital
stock of AltaVista. This information does not purport to be complete and is
subject in all respects to the applicable provisions of the Delaware General
Corporation Law, AltaVista's amended and restated certificate of incorporation
and AltaVista's bylaws.

Immediately following the closing of this offering, the authorized capital
stock of AltaVista will consist of 1,495,000,000 shares of common stock, $.01
par value per share, and 5,000,000 shares of preferred stock, $.01 par value
per share. Immediately following the closing of this offering, 153,995,511
shares of common stock will be issued and outstanding and no shares of
preferred stock will be issued and outstanding.

Common Stock

Voting Rights. Each outstanding share of common stock is entitled to one
vote on all matters submitted to a vote of AltaVista's stockholders, including
the election of directors. There are no cumulative voting rights, and
therefore the holders of a plurality of the shares of common stock voting for
the election of directors may elect all of AltaVista's directors standing for
election.

Dividends. Holders of common stock are entitled to receive dividends at the
same rate if and when dividends are declared by our board of directors out of
assets legally available for the payment of dividends, subject to preferential
rights of any outstanding shares of preferred stock.

Liquidation. In the event of a liquidation, dissolution or winding up of
the affairs of AltaVista, whether voluntary or involuntary, after payment of
the debts and other liabilities of AltaVista and making provisions for the
holders of any outstanding shares of preferred stock, the remaining assets of
AltaVista will be distributed ratably among the holders of shares of common
stock.

Rights and Preferences. The common stock has no preemptive, redemption,
conversion or subscription rights. The rights, powers, preferences and
privileges of holders of common stock and subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock that we may designate and issue in the future.

Fully Paid and Non-assessable. All outstanding shares of common stock are,
and the shares of common stock issued pursuant to this offering will be, fully
paid and non-assessable.

Special Meetings of Stockholders. Our revised certificate of incorporation
provides that special meetings of stockholders may be called at any time only
by the Chairman of our board of directors, the board of directors, our Chief
Executive Officer, President or holders of at least 40% of the then-
outstanding voting power of all shares entitled to vote in the election of
directors. This provision could have the effect of delaying, deferring or
preventing a change in control of our company or discouraging a potential
acquiror from attempting to obtain control of us, which in turn could
adversely affect the market price of our common stock.

Preferred Stock

We currently have no shares of preferred stock outstanding. Immediately
prior to the closing of this offering, we will have outstanding approximately
736,000 shares of Series A convertible preferred stock. All such shares of
Series A convertible preferred stock will be held by CMGI and Compaq and will
automatically convert upon the closing of this offering into an aggregate of
7,364,074 shares of our common stock. Additional information concerning the
issuance of our convertible preferred stock to CMGI and Compaq is included in
this prospectus under the captions "Certain Relationships and Related
Transactions--Relationship with CMGI" and "--Relationship with Compaq."

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Our revised certificate of incorporation authorizes the board of directors
to create and issue one or more series of preferred stock and determine the
rights and preferences of each series, to the extent permitted by the
certificate of incorporation and applicable law. Among other rights, the board
of directors may determine:

. the number of shares constituting the series and the distinctive
designation of the series;

. the dividend rate on the shares of the series, whether dividends will be
cumulative, and if so, from which date or dates, and the relative rights
of priority, if any, of payment of dividends on shares of the series;

. whether the series shall have voting rights, in addition to the voting
rights provided by law, and if so, the terms of such voting rights;

. whether the series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the board of
directors shall determine;

. whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;

. whether the series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of
such sinking fund; and

. the rights of the shares of the series in the event of voluntary or
involuntary liquidation, dissolution or winding-up of AltaVista and the
relative rights or priority, if any, of payment of shares of the series.
Except for any difference so provided by the board of directors, the
shares of all series of preferred stock will rank on a parity with
respect to the payment of dividends and to the distribution of assets
upon liquidation.

Registration Rights

Information regarding the registration rights of CMGI and Compaq is
included in this prospectus under the headings "Certain Relationships and
Related Transactions--Relationship with CMGI--Investors Rights Agreement" and
"Certain Relationships and Related Transactions--Relationship with Compaq--
Registration Rights Agreement."

Delaware Anti-takeover Law

Our revised certificate of incorporation contains a provision expressly
electing not to be governed by Section 203 of the Delaware General Corporation
Law. In general, Section 203 restricts some business combinations involving
interested stockholders or their affiliates. An interested stockholder is
defined as any person or entity that is the beneficial owner of at least 15%
of a corporation's voting stock or is an affiliate or associate of the
corporation or the owner of 15% or more of the outstanding voting stock of the
corporation at any time in the past three years. Because of this election,
Section 203 will not apply to us.

Corporate Opportunities

Our revised certificate of incorporation provides that CMGI will have no
duty to refrain from engaging in the same or similar activities or lines of
business as us, and neither CMGI nor any of its officers or directors, except
as provided below, will be liable to us or our stockholders for breach of any
fiduciary duty solely by reason of any of these activities. If CMGI acquires
knowledge of a potential transaction or matter which may be a corporate
opportunity for both CMGI and us, CMGI will have no duty to communicate or
offer this corporate opportunity to us. In addition, CMGI will not be liable
to us or our stockholders for breach of any fiduciary duty as a stockholder
solely by reason of the fact that CMGI pursues or acquires this corporate
opportunity for itself,

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directs this corporate opportunity to another person, or does not communicate
information regarding this corporate opportunity to us.

If a director or officer of us who is also a director or officer of CMGI
acquires knowledge of a potential transaction or matter which may be a
corporate opportunity for both us and CMGI, this individual will have fully
satisfied and fulfilled his or her fiduciary duty to us and our stockholders
with respect to this corporate opportunity if he or she acts in a manner
consistent with the following policy:

. the corporate opportunity will belong to us if this opportunity is
expressly offered to the person in writing solely in his or her capacity
as our director or officer;

. otherwise, this opportunity will belong to CMGI;

In addition to any vote of the stockholders required by our revised
certificate of incorporation, the affirmative vote of the holders of more than
80% of the outstanding shares of common stock will be required to alter, amend
or repeal, or adopt any provision inconsistent with, the corporate opportunity
provisions described above. Accordingly, so long as CMGI beneficially owns at
least 20% of the outstanding shares of our common stock, it can prevent any
such alteration, amendment, repeal or adoption.

Any person purchasing or otherwise acquiring our common stock will be
deemed to have notice of, and to have consented to, the foregoing provisions
of our revised certificate of incorporation.

Limitation of Liability and Indemnification

Our revised certificate of incorporation limits the liability of our
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors will not be personally liable for monetary damages for
breach of their fiduciary duties as directors, except liability for:

. any breach of their duty of loyalty to the corporation or its
stockholders

. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law

. unlawful payments of dividends or unlawful stock repurchases or
redemptions or

. any transaction from which the director derived an improper personal
benefit

This provision has no effect on any non-monetary remedies that may be
available to us or our stockholders, nor does it relieve us or our officers or
directors from compliance with federal or state securities laws.

Our revised certificate of incorporation also generally provides that we
will indemnify, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law, any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit,
investigation, administrative hearing or any other proceeding by reason of the
fact that he or she is or was a director or officer of ours, or is or was
serving at our request as a director, officer, employee or agent of another
entity, against expenses incurred by him or her in connection with that
proceeding. An officer or director will not be entitled to indemnification by
us if:

. the officer or director did not act in good faith and in a manner
reasonably believed to be in, or not opposed to, our best interests

. with respect to any criminal action or proceeding, the officer or
director had reasonable cause to believe his or her conduct was unlawful

In addition, we plan to enter into indemnification agreements with our
directors containing provisions which may require us, among other things, to
indemnify our directors against various liabilities that may arise by virtue
of their status or service as directors and to advance their expenses incurred
as a result of any proceeding against

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them as to which they could be indemnified. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling AltaVista pursuant to the foregoing provisions
or otherwise, AltaVista has been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

AltaVista's revised certificate of incorporation also permits AltaVista to
secure insurance on behalf of any officer or director for any liability
arising out of his or her actions in such capacity, regardless of whether our
revised certificate of incorporation would otherwise permit indemnification
for that liability. Our officers and directors are currently insured under a
policy procured by CMGI that provides coverage against losses arising from
claims against them for any actual or alleged act, omission, misstatement,
misleading statement, neglect, error or breach of duty by them in their
capacity as officers or directors of AltaVista. We also have obtained our own
liability insurance.

At the present time, there is no pending litigation or proceeding involving
any director, officer, employee or agent of AltaVista in which indemnification
will be required or permitted. We are not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

Transfer Agent and Registrar

American Stock Transfer & Trust Company will serve as our Transfer Agent
and Registrar for our common stock. The transfer agent's address and telephone
number is 40 Wall Street, New York, New York 10005, (212) 936-5100.

Listing

We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "ALTA."

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SHARES ELIGIBLE FOR FUTURE SALE

Effect of Sales of Shares

Prior to this offering, no public market existed for our common stock, and
we can make no prediction as to the effect, if any, that sales of shares of
common stock or the availability of shares of our common stock for sale will
have on the market price of the common stock prevailing from time to time.
Nevertheless, sales of substantial amounts of our common stock in the public
market, or the perception that such sales occur, could adversely affect the
market price of our common stock and could impair our future ability to raise
capital through an offering of our equity securities.

Sale of Restricted Shares

Upon completion of this offering, based upon the number of shares
outstanding as of January 31, 2000, we will have an aggregate of 153,995,511
shares of common stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. Of these
outstanding shares, the 14,800,00 shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
except that any shares purchased by our "affiliates," as that term is defined
in Rule 144 under the Securities Act, generally only may be sold in compliance
with the limitations of Rule 144 described below. All of the remaining
[133,562,036] shares of common stock that will be outstanding after this
offering will be "restricted securities" as that term is defined under Rule
144. Restricted securities may be sold in the public market only if they
qualify for an exemption from registration under Rule 144, including Rule
144(k), or Rule 701 under the Securities Act.

Lock-Up Agreements

Our directors, executive officers and substantially all of our other
stockholders, holding shares in the aggregate, have agreed that they will not
sell, directly or indirectly, any shares of common stock without the prior
written consent of Morgan Stanley & Co. Incorporated for a lock-up period of
180 days from the date of this prospectus. Upon expiration of the lock-up
period, 180 days after the date of this prospectus, shares will be
available for resale to the public in accordance with Rule 144 or Rule 701.

Rule 144

In general, under Rule 144 as currently in effect, commencing 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year is entitled to sell within any three-month
period a number of shares that does not exceed the greater of:

. 1% of the number of shares of common stock then outstanding, which is
expected to be approximately 1,483,620 shares upon completion of this
offering

. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale, subject to the restrictions
specified in Rule 144

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about us.
Commencing 90 days after the date of this prospectus, shares not subject
to a lock-up agreement will be available for resale to the public in
accordance with Rule 144.

Rule 144(k)

Under Rule 144(k), a person who is not one of our affiliates at any time
during the three months preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years is entitled to sell such
shares under Rule 144(k) without complying with the manner of sale, public
information, volume limitation

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or notice provisions of Rule 144. Therefore, unless otherwise restricted, Rule
144(k) shares may be sold immediately upon completion of this offering.
Immediately upon completion of this offering, no outstanding shares may be
sold under Rule 144(k).

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect,
any of our employees, consultants or advisors who purchase shares from us in
connection with a compensatory stock plan or other written agreement are
eligible to resell such shares 90 days after the effective date of this
offering in reliance on Rule 144, but without compliance with various
restrictions, including the holding period, contained in Rule 144.

Stock Options

As of January 31, 2000, options to purchase a total of 16,474,667 shares of
common stock were outstanding, of which 2,881,108 were then exercisable and
2,500,963 were then vested. Upon completion of this offering, we intend to
file a registration statement to register for resale an aggregate of
26,000,000 shares of common stock reserved or anticipated to be reserved for
issuance under our purchase and option plans. That registration statement will
become effective immediately upon filing. Accordingly, shares covered by that
registration statement will become eligible for sale in the public markets,
subject to vesting restrictions, Rule 144 volume limitations applicable to our
affiliates or the lock-up agreements with Morgan Stanley & Co. Incorporated.
All holders of options to purchase shares of our common stock have entered
into the lock-up agreement.

We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of the prospectus, except
we may issue and grant options to purchase shares of common stock under our
purchase and option plans. In addition, we may issue shares of common stock in
connection with an acquisition of another company provided that the terms of
such issuance may provide that the common stock issued to specified persons in
connection with an acquisition will not be resold prior to the expiration of
the 180-day lock-up period.

Registration Rights

Upon completion of this offering, under specified circumstances and subject
to customary conditions, CMGI and Compaq, who in aggregate hold shares of
our common stock, or their permitted assignees, will be entitled to rights
with respect to the registration under the Securities Act of some or all of
their shares, subject to the 180-day lockup period described above. Under the
agreements providing for these registration rights, these stockholders are
subject to lock-up periods of not more than 180 days following the date of
this prospectus or any subsequent prospectus. A more detailed discussion of
these registration rights is included in this prospectus under the headings
"Certain Relationships and Related Transactions--Relationship with CMGI--
Investor Rights Agreement" and "Certain Relationships and Related
Transactions--Relationship with Compaq--Registration Rights Agreement."

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
FOR NON-UNITED STATES STOCKHOLDERS

The following is a general summary of certain United States federal income
tax consequences of the purchase, ownership, and sale or other taxable
disposition of our common stock by non-U.S. holders. A "non-U.S. holder" is a
person or entity, other than:

. an individual who is a citizen or resident of the United States;

. a corporation, partnership, or other entity created or organized under
the laws of the United States or any political subdivision thereof;

. an estate that is subject to United States federal income taxation
without regard to the source of its income; and

. a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.

This summary does not address all tax considerations that may be relevant
to non-U.S. holders in light of their particular circumstances or to certain
non-U.S. holders that may be subject to special treatment under United States
federal income tax laws. This summary is based upon the United States Internal
Revenue Code of 1986, as amended, existing, temporary and proposed regulations
promulgated thereunder and administrative and judicial decisions, all of which
are subject to change, possibly with retroactive effect. In addition, this
summary does not address the effect of any state, local or foreign tax laws.
Each prospective purchaser of our common stock should consult its tax advisor
with respect to the tax consequences of purchasing, owning and disposing of
our common stock.

Dividends

Dividends paid to a non-U.S. holder of our common stock generally will be
subject to a withholding of United States federal income tax at a 30% rate or
a reduced rate specified by an applicable income tax treaty. For purposes of
determining whether tax is to be withheld at a reduced rate under an income
tax treaty, we will presume that dividends paid on or before December 31, 2000
to an address in a foreign country are paid to a resident of that country
unless we have knowledge that the presumption is not warranted.

In order to obtain a reduced rate of withholding for dividends paid after
December 31, 2000, a non-U.S. holder will be required to provide an Internal
Revenue Service Form W-8BEN certifying its entitlement to benefits under a
treaty. In addition, in certain cases where dividends are paid to a non-U.S.
holder that is a partnership or other pass-through entity, persons holding an
interest in the entity may need to provide the required certification.

The withholding tax does not apply to dividends paid to a non-U.S. holder
that provides a Form 4224 or, after December 31, 2000, a Form W-8ECI,
certifying that the dividends are effectively connected with the non-U.S.
holder's conduct of a trade or business within the United States. Instead, the
effectively connected dividends will be subject to regular U.S. income tax as
if the non-U.S. holder were a U.S. resident. A non-U.S. corporation receiving
effectively connected dividends may also be subject to an additional "branch
profits tax" imposed at a rate of 30%, or a lower treaty rate, on an earnings
amount that is net of the regular tax.

Sale or Other Disposition of Our Common Stock

A non-U.S. holder generally will not be subject to United States federal
income tax in respect of any gain recognized on the sale or other taxable
disposition of our common stock unless:

. the gain is effectively connected with the conduct of a trade or business
of the non-U.S. holder within the United States;

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. in the case of a non-U.S. holder who is an individual and holds our
common stock as a capital asset, the holder is present in the United
States for 183 or more days in the taxable year of the disposition and
certain other tests are met;

. the non-U.S. holder is subject to tax pursuant to the provisions of
United States federal income tax law applicable to certain United States
expatriates; or

. we are or have been a "United States real property holding corporation"
for United States federal income tax purposes at any time within the
five-year period preceding the disposition or the non-U.S. holder's
holding period, whichever period is shorter. We do not believe we are,
and do not anticipate becoming, a United States real property holding
corporation.

Backup Withholding and Information Reporting

Dividends

United States backup withholding tax generally will not apply to dividends
paid on our common stock on or before December 31, 2000 at an address outside
of the United States, unless we have knowledge that the payee is a U.S.
person. A non-U.S. holder, however, may need to certify its non-U.S. status in
order to avoid backup withholding at a 31% rate on dividends paid after
December 31, 2000 or dividends paid on or before that date at an address in
the United States. We must report annually to the Internal Revenue Service and
to each non-U.S. holder the amount of dividends paid to, and the tax withheld
with respect to, such holder, regardless of whether any tax was withheld. This
information may also be made available to the tax authorities in the non-U.S.
holder's country of residence.

Sale or Other Disposition of Our Common Stock

Upon the sale or other taxable disposition of our common stock by a non-
U.S. holder to or through a United States office of a broker, the broker must
backup withhold at a rate of 31% and report the sale to the Internal Revenue
Service, unless the holder certifies its non-U.S. holder under penalties of
perjury or otherwise establishes an exemption. Upon the sale or other taxable
disposition of our common stock by a non-U.S. holder to or through the foreign
office of a United States broker, or a foreign broker with a certain
relationship to the United States, the broker must report the sale to the
Internal Revenue Service (but not backup withhold) unless the broker has
documentary evidence in its files that the seller is a non-U.S. holder and/or
certain other conditions are met or the holder otherwise establishes an
exemption.

Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules generally are allowable as a refund or credit against
a non-U.S. holder's United States federal income tax liability, if any,
provided that the required information is furnished to the Internal Revenue
Service on a timely basis.

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UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the U.S. underwriters named
below, for whom Morgan Stanley & Co. Incorporated, Chase Securities Inc.,
FleetBoston Robertson Stephens Inc., Prudential Securities Incorporated and
SoundView Technology Group, Inc. are acting as U.S. representatives, and the
international underwriters named below for whom Morgan Stanley & Co.
International Limited, Chase Securities Inc., BancBoston Robertson Stephens
International Ltd, Prudential-Bache Securities (U.K.) Inc., and SoundView
Technology Group, Inc. are acting as international representatives, have
severally agreed to purchase, and we have agreed to sell to them, severally,
the number of shares indicated below:

<TABLE>
<CAPTION>
Number of
Name Shares
---- ----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated.............................
Chase Securities Inc..........................................
FleetBoston Robertson Stephens Inc............................
Prudential Securities Incorporated............................
SoundView Technology Group, Inc...............................
----------
Subtotal ................................................... 11,840,000
==========
International Underwriters:
Morgan Stanley & Co. International Limited....................
Chase Securities Inc..........................................
BancBoston Robertson Stephens International Ltd...............
Prudential-Bache Securities (U.K.) Inc. ......................
SoundView Technology Group, Inc...............................
----------
Subtotal ..................................................... 2,960,000
----------
Total....................................................... 14,800,000
==========
</TABLE>

The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively
referred to as the "underwriters" and the "representatives," respectively. The
underwriters are offering the shares of common stock, subject to their
acceptance of the shares from us and subject to prior sale. The underwriting
agreement provides that the obligations of the several underwriters to pay for
and accept delivery of the shares of common stock offered by this prospectus
are subject to the approval of certain legal matters by their counsel and to
other conditions. The underwriters are obligated to take and pay for all of
the shares of common stock offered by this prospectus if any such shares are
taken. However, the underwriters are not required to take or pay for the
shares covered by the underwriters' over-allotment option described below.

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In the agreement between U.S. and international underwriters, sales may be
made between U.S. underwriters and international underwriters of any number of
shares as may be mutually agreed. The per share price of any shares so sold
will be the public offering price listed on the cover page of this prospectus,
in U.S. dollars, less an amount not greater than the per share amount of the
concession to dealers set forth below.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price listed on the cover
page of this prospectus and part to selected dealers at a price that
represents a concession not in excess of $ a share under the public
offering price. No underwriter may allow, and no dealer may reallow, a
concession to other underwriters or dealers. After the initial offering of the
shares of common stock, the offering price and other selling terms may from
time to time be varied by the representatives.

We have granted to the U.S. underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to an aggregate of 2,220,000
additional shares of common stock at the public offering price listed on the
cover page of this prospectus, less underwriting discounts and commissions.
The U.S. underwriters may exercise this option solely for the purpose of
covering overallotments, if any, made in connection with the offering of the
shares of common stock offered by this prospectus. To the extent the option is
exercised, each U.S. underwriter will become obligated, subject to the
conditions contained in the underwriting agreement, to purchase about the same
percentage of the additional shares of common stock as the number listed next
to the U.S. underwriter's name in the preceding table bears to the total
number of shares of common stock listed next to the names of all U.S.
underwriters in the preceding table. If the U.S. underwriters' option is
exercised in full, the total price to the public would be $ , the total
underwriters' discounts and commissions would be $ and total proceeds
to AltaVista would be $ .

The underwriting discounts and commissions will be determined by
negotiations between AltaVista and the representatives. Among the factors to
be considered in determining the discounts and commissions will be the size of
the offering, the nature of the securities offered and the discounts and
commissions charged in comparable transactions.

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.

We have applied for quotation of the common stock on the Nasdaq National
Market under the symbol "ALTA."

Each of AltaVista and the directors, executive officers and substantially
all of the stockholders of AltaVista has agreed that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, it will not, during the period ending 180 days after the date of
this prospectus:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock;

whether any such transaction described above is to be settled by delivery of
common stock or such other securities, in cash or otherwise.

The restrictions described in this paragraph do not apply to:

. the sale of shares to the underwriters;

. the issuance by AltaVista of shares of common stock upon the exercise of
an option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing; or

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. transactions by any person other than AltaVista relating to shares of
common stock or other securities acquired in open market transactions
after the completion of the offering of the shares.

At our request, the U.S. underwriters have reserved for sale, at the
initial public offering price, up to 2,920,000 shares of common stock offered
in this offering under a directed share program. We currently expect that
1,460,000 of these shares will be offered to persons and entities that have
contributed to the development of AltaVista, as well as employees. The
directed share program with respect to these persons is being administered by
Morgan Stanley Dean Witter. In addition, we currently expect that 1,460,000 of
these shares will be offered to U.S. stockholders of CMGI who held at least
200 shares of CMGI stock as of January 24, 2000 in any one account and who
have access to the Internet and a personal e-mail address. The directed share
program with respect to these qualifying CMGI stockholders is being
administered by Wit SoundView's affiliate, Wit Capital Corporation. We cannot
assure you that any of the reserved shares will be so purchased. The number of
shares of common stock available for sale to the general public in this
offering will be reduced by the number of reserved shares sold. Any reserved
shares not purchased will be offered to the general public on the same basis
as the other shares offered in this offering.

Purchases of the shares reserved for qualified CMGI stockholders are to be
made through an account at Wit Capital in accordance with Wit Capital's
procedures for opening an account and transacting in securities. If Wit
Capital receives indications of interest from qualifying CMGI stockholders for
a number of shares exceeding the number of shares reserved for such
shareholders, Wit Capital intends to allocate shares among these stockholders
by a random number generation process.

Morgan Stanley Dean Witter Online Inc., an affiliate of Morgan Stanley &
Co. Incorporated, is acting as an underwriter in connection with the offering
and will distribute shares of common stock over the Internet to its eligible
account holders. A prospectus in electronic format is being made available on
an Internet web site maintained by Wit SoundView's affiliate, Wit Capital
Corporation. In addition, all dealers purchasing common shares from Wit
Capital Corporation in this offering have agreed to make a prospectus in
electronic format available on a web site maintained by each of them. A
prospectus in electronic format is being made available on an Internet web
site maintained by Prudential Securities Incorporated to eligible clients
through its Prudential Securities.com division, however, clients of Prudential
Securities Incorporated may place orders only by directly contacting their
financial advisors.

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock
for their own account. In addition, to cover over-allotments or to stabilize
the price of the common stock, the underwriters may bid for, and purchase,
shares of common stock in the open market. Finally, the underwriting syndicate
may reclaim selling concessions allowed to an underwriter or a dealer for
distributing the common stock in the offering, if the syndicate repurchases
previously distributed common stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the common stock above
independent market levels. The underwriters are not required to engage in
these activities and may end any of these activities at any time.

From time to time, Morgan Stanley & Co. Incorporated has provided, and
continues to provide, investment banking services to AltaVista. In addition,
from time to time, some of the underwriters have provided, and continue to
provide, investment banking services to CMGI and/or its affiliates.

AltaVista and the underwriters have agreed to indemnify each other against
some liabilities relating to this offering, including liabilities under the
Securities Act.

88
<PAGE>

Pricing of the Offering

Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between AltaVista and the U.S. representatives. The material factors
considered in determining the initial public offering price will be the future
prospects of AltaVista and its industry in general, sales, earnings and
certain other financial operating information of AltaVista in recent periods,
and the price-earnings ratios, price-sales ratios, market prices of securities
and certain financial and operating information of companies engaged in
activities similar to those of AltaVista. The estimated initial public
offering price range set forth on the cover page of this preliminary
prospectus is subject to change as a result of market conditions and other
factors.

89
<PAGE>

LEGAL MATTERS

The validity of the shares offered hereby will be passed upon for us by
Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California. Davis Polk &
Wardwell, Menlo Park, California, is representing the underwriters in
connection with this offering. In addition, Skadden, Arps, Slate, Meagher &
Flom LLP or an affiliated entity may purchase up to shares reserved by
the underwriters for sale in the directed share program described under
"Underwriters."

EXPERTS

The combined financial statements and related schedule of the AltaVista
Business as of July 31, 1999 and for the seven month period then ended and as
of August 18, 1999, have been included herein and in the Registration
Statement in reliance upon the reports of KPMG LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing. In September 1999, the Company's
Board of Directors engaged KPMG LLP as the Company's principal accountants to
audit the Company's combined financial statements. Prior to such engagement,
KPMG and the Company discussed no significant matters. Such discussions
occurred in the normal course of business, and KPMG's responses were not a
condition to its engagement by the Company.

PricewaterhouseCoopers LLP served as AltaVista's independent accountants
until the Company dismissed PricewaterhouseCoopers LLP effective November 16,
1999, which dismissal was approved by the Company's Board of Directors.
PricewaterhouseCoopers LLP performed the audits of the financial statements
and related schedule of AltaVista as of December 31, 1997 and 1998 and for the
years ended December 31, 1996 and 1997, for the period from January 1, 1998
through June 11, 1998, and for the period from June 12, 1998 through
December 31, 1998. The reports of PricewaterhouseCoopers LLP on the financial
statements and schedule of AltaVista prepared in connection with the
aforementioned audits did not contain any adverse opinions or disclaimers of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. Furthermore, in connection with the aforementioned
audits and through November 16, 1999, there were no disagreements between
PricewaterhouseCoopers LLP and the Company on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which disagreement if not resolved to the satisfaction of
PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to
make reference thereto in their reports on the financial statement for such
year.

The financial statements of Alta Vista as of December 31, 1997 and 1998 and
for the years ended December 31, 1996 and 1997, for the period from January 1,
1998 through June 11, 1998 and for the period from June 12, 1998 through
December 31, 1998, included in this prospectus, have been so included in
reliance on the report of PricewaterhouseCoopers, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Shopping.com as of January 31,
1998 and 1999 and for each of the years in the two-year period ended
January 31, 1999, included in this prospectus, have been so including in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting .

The financial statements of Shopping.com as of January 31, 1997 and for the
year then ended, have been included herein and in the Registration Statement
in reliance on the report of Singer Lewak Greenbaum & Goldstein LLP,
independent certified public accountants, given on the authority of said firm
as experts in accounting and auditing.

The financial statements of Zip2 Corp. as of December 31, 1997 and 1998,
and for each of the years in the three-year period ended December 31, 1998,
included in this Prospectus, have been so indicated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting .

90
<PAGE>

WHERE YOU CAN FIND MORE INFORMATION ABOUT ALTAVISTA

We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of
common stock offered hereby. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules filed therewith. For further information with respect to AltaVista
and the common stock offered hereby, reference is made to the registration
statement and the exhibits and schedules filed therewith. Statements contained
in this prospectus regarding the contents of any contract or any other
document to which reference is made are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference. A copy of the registration
statement and the exhibits and schedule filed therewith may be inspected
without charge at the public reference facilities maintained by the Commission
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048, and copies of all or any
part of the registration statement may be obtained from such offices upon the
payment of the fees prescribed by the Commission. Information on the operation
of the Public Reference Room may be obtained by calling the Commission at 1-
800-SEC-0330. The Commission maintains a web site that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission. The address of the web site is
http://www.sec.gov.

AltaVista intends to provide its stockholders with annual reports
containing combined financial statements audited by an independent accounting
firm and quarterly reports containing unaudited combined financial data for
the first three quarters of each year.

91
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
AltaVista Business

Report of KPMG LLP, Independent Accountants............................... F-2
Balance Sheets as of December 31, 1998 (unaudited), July 31, 1999, August
18, 1999 and January 31, 2000 (unaudited)................................ F-3
Statements of Operations for the seven months ended July 31, 1999 and for
the six months ended December 31, 1998 and January 31, 2000 (unaudited).. F-4
Statement of Changes in Owners' Net Investment............................ F-5
Statements of Cash Flows for the seven months ended July 31, 1999 and for
the six months ended December 31, 1998 and January 31, 2000 (unaudited).. F-6
Notes to Financial Statements............................................. F-7

AltaVista
Report of PricewaterhouseCoopers LLP, Independent Accountants............. F-31
Balance Sheet as of December 31, 1997 and 1998............................ F-33
Statement of Operations for the year ended December 31, 1996 and 1997, for
the period from January 1, 1998 to June 11, 1998, and for the period from
June 12, 1998 to December 31, 1998....................................... F-34
Statement of Changes in Owner's Net Investment............................ F-35
Statement of Cash Flows for the year ended December 31, 1996 and 1997, for
the period from January 1, 1998 to June 11, 1998, and for the period from
June 12, 1998 to December 31, 1998....................................... F-36
Notes to Financial Statements............................................. F-37
Shopping.com
Report of PricewaterhouseCoopers LLP, Independent Accountants............. F-48
Consolidated Balance Sheet as of January 31, 1998 and 1999................ F-49
Consolidated Statement of Operations for the year ended January 31, 1998
and 1999................................................................. F-50
Consolidated Statement of Shareholders' Equity (Deficit).................. F-51
Consolidated Statement of Cash Flows as of January 31, 1998 and 1999...... F-52
Notes to Consolidated Financial Statements................................ F-53
Report of Singer Lewak Greenbaum & Goldstein LLP, Independent
Accountants.............................................................. F-70
Balance Sheet as of January 31, 1997...................................... F-71
Statement of Operations for the year ended January 31, 1997............... F-72
Statement of Shareholders' Deficit for the year ended January 31, 1997.... F-73
Statement of Cash Flows for the year ended January 31, 1997............... F-74
Notes to Financial Statements............................................. F-75
Zip2 Corp.
Index to Consolidated Financial Statements................................ F-81
Report of PricewaterhouseCoopers LLP, Independent Accountants............. F-82
Consolidated Balance Sheet as of December 31, 1997 and 1998, and as of
March 31, 1999 (unaudited)............................................... F-83
Consolidated Statement of Operations for the year ended December 31, 1996,
1997 and 1998, and for the three months ended March 31, 1998 and 1999
(unaudited).............................................................. F-84
Consolidated Statement of Shareholders' Equity............................ F-85
Consolidated Statement of Cash Flows for the year ended December 31, 1996,
1997 and 1998, and for the three months ended March 31, 1998 and 1999
(unaudited).............................................................. F-86
Notes to Consolidated Financial Statements................................ F-87
</TABLE>

F-1
<PAGE>

REPORT OF KPMG LLP, INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders of the AltaVista Business:

We have audited the accompanying combined balance sheet of AltaVista (as
defined in Note 1) as of July 31, 1999, and the related combined statements of
operations, changes in owners' net investment, and cash flows for the seven-
month period ended July 31, 1999 and the accompanying consolidated balance
sheet of the AltaVista Company as of August 18, 1999. These combined and
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined and
consolidated financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the combined and consolidated financial statements referred
to above present fairly, in all material respects, the combined financial
position of AltaVista as of July 31, 1999, the results of its operations and
its cash flows for the seven-month period ended July 31, 1999, and the
consolidated financial position of the AltaVista Company as of August 18,
1999, in conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, effective August 18,
1999, CMGI acquired a majority interest in the AltaVista Business in a
business combination accounted for as a purchase. As a result of the
acquisition, the consolidated financial information as of and for the periods
after the acquisition date are presented on a different cost basis than that
for the periods before the acquisition and, therefore, are not comparable.

KPMG LLP

San Francisco, California

February 22, 2000

F-2
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>

<CAPTION>
Combined Combined Consolidated Consolidated
December 31, July 31, August 18, January 31,
1998 1999 1999 2000
------------ ---------- ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.............. $ -- $ 7,482 $ -- $ 12,368
Accounts receivable, net
of allowances of $2,832,
$5,052, $5,380 and $4,416
at December 31, 1998,
July 31, 1999, August 18,
1999, and January 31,
2000, respectively....... 12,819 37,057 32,157 50,567
Other receivables......... -- -- -- 3,631
Prepaid expenses and other
current assets........... 350 5,211 5,357 5,215
-------- ---------- ---------- ----------
Total current assets.... 13,169 49,750 37,514 71,781

Property, plant and
equipment, less accumulated
depreciation............... 24,173 46,746 51,091 56,247
Goodwill and other
intangible assets, net..... 226,488 709,185 2,902,202 2,252,216
Investments................. 500 11,480 11,480 11,913
Receivable from Compaq...... -- 10,315 10,315 10,315
Other noncurrent assets..... -- 929 930 252
-------- ---------- ---------- ----------
Total assets............ $264,330 $ 828,405 $3,013,532 $2,402,724
======== ========== ========== ==========

LIABILITIES AND OWNERS' NET
INVESTMENT
Current liabilities:
Long-term debt, current
portion.................. $ 658 $ 916 $ 916 $ --
Capital lease obligation,
current portion.......... -- 1,502 1,444 3,150
Payable to CMGI, net...... -- -- -- 795
Notes payable to CMGI..... -- -- -- 121,752
Notes payable to Compaq... -- -- -- 8,062
Accounts payable.......... 691 27,008 22,066 6,010
Other current
liabilities.............. 9,035 51,783 58,239 67,224
-------- ---------- ---------- ----------
Total current
liabilities............ 10,384 81,209 82,665 206,993
-------- ---------- ---------- ----------
Long-term debt, net of
current portion............ 1,656 962 962 --
Capital lease obligation,
net of current portion..... -- 2,381 2,374 6,838
-------- ---------- ---------- ----------
Total liabilities....... 12,040 84,552 86,001 213,831
Commitments and
contingencies
Preferred stock, $0.01 par
value, authorized 5,000,000
shares, no shares issued
and outstanding............ -- -- -- --
Common stock, $.01 par
value, authorized
200,000,000 shares,
100,000,000 and 101,408,798
shares issued and
outstanding at August 18,
1999 and January 31, 2000,
respectively............... -- -- 1,000 1,014
Treasury stock.............. -- -- -- (196)
Capital in excess of par.... -- 171,667 2,926,531 2,956,665
Net contribution from
owner...................... 321,856 1,007,901 -- --
Unearned compensation....... -- (135,885) -- (3,632)
Accumulated other
comprehensive income....... -- 1,713 -- 146
Accumulated deficit......... (69,566) (301,543) -- (765,104)
-------- ---------- ---------- ----------
Owners' net investment...... 252,290 743,853 2,927,531 2,188,893
-------- ---------- ---------- ----------
Total liabilities and
owners' net
investment............. $264,330 $ 828,405 $3,013,532 $2,402,724
======== ========== ========== ==========

</TABLE>

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

F-3
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Combined Combined Consolidated
Seven Months Six Months Six Months
Ended Ended Ended
July 31, December 31, January 31,
1999 1998 2000
------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Advertising, service and other revenue,
net................................... $ 49,812 $ 21,070 $ 79,279
Product revenue, net (a)............... 23,781 -- 26,451
--------- -------- ---------
Total revenue...................... 73,593 21,070 105,730
--------- -------- ---------
Cost of advertising, service and other
revenue (b)........................... 17,446 6,416 23,739
Cost of product revenue (a)............ 25,402 -- 26,411
--------- -------- ---------
Total cost of revenue.............. 42,848 6,416 50,150
--------- -------- ---------
Gross profit......................... 30,745 14,654 55,580
--------- -------- ---------
Operating expenses:
Product development (b).............. 17,478 6,545 22,354
Sales and marketing (b).............. 51,151 22,395 115,971
General and administrative (b)....... 23,939 3,507 14,876
Stock-based compensation............. 35,782 -- 16,610
Amortization of intangible assets.... 133,976 46,160 428,628
--------- -------- ---------
Loss from operations................... (231,581) (63,953) (542,859)
Interest income........................ -- -- (314)
Interest expense....................... 159 210 2,287
Other nonoperating loss................ 237 -- 1,548
--------- -------- ---------
(231,977) (64,163) (546,380)
Less net loss for the period August 1,
1999 to August 18, 1999............... -- -- 38,710
--------- -------- ---------
Net loss............................... (231,977) (64,163) (507,670)
Other comprehensive income (loss):
Unrealized gain (loss) on
securities.......................... 1,713 -- (103)
--------- -------- ---------
Comprehensive loss..................... $(230,264) $(64,163) $(507,773)
========= ======== =========
Net loss per common share:
Basic................................ $ (5.04)
=========
Diluted.............................. $ (5.04)
=========
Shares used in computing net loss per
common share:
Basic................................ 100,727
=========
Diluted.............................. 100,727
=========
</TABLE>
- --------

(a) Includes sales of Compaq computers to FreePC.com of $8,130, none and
$12,755 for the seven months ended July 31, 1999 and the six months ended
December 31, 1998 and January 31, 2000, respectively. The costs of such
Compaq computers were $7,364, none and $12,216 for the seven months ended
July 31, 1999 and the six months ended December 31, 1998 and January 31,
2000, respectively.

(b) Excludes stock-based compensation for the seven months ended July 31, 1999
and the six months ended December 31, 1998 and January 31, 2000,
respectively, as follows (in thousands): Cost of advertising, service and
other revenue $2,063, none and $897; Product development $7,485, none and
$3,571; Sales and marketing $12,661, none and $5,714; and General and
administrative $13,573, none and $6,428.

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

F-4
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

STATEMENT OF CHANGES IN OWNERS' NET INVESTMENT
(in thousands)

<TABLE>
<CAPTION>
Treasury Accumulated Total
Common Stock Stock Capital Net Other Owners'
-------------- ------------- in Excess Contribution Unearned Accumulated Comprehensive Net
Shares Amount Shares Amount of Par from Owner Compensation Deficit Income Investment
------- ------ ------ ------ ---------- ------------ ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Combined balance,
December 31,
1998............. -- $ -- -- $ -- $ -- $ 321,856 $ -- $ (69,566) $ -- $ 252,290
Net loss........ -- -- -- -- -- -- -- (231,977) -- (231,977)
Unearned
compensation.... -- -- -- -- 171,667 -- (171,667) -- -- --
Amortization of
unearned
compensation.... -- -- -- -- -- -- 35,782 -- -- 35,782
Fair value
adjustment on
available for
sale
securities...... -- -- -- -- -- -- -- -- 1,713 1,713
Net contribution
from owner...... -- -- -- -- -- 686,045 -- -- -- 686,045
------- ------ --- ----- ---------- ----------- --------- --------- ------- ----------
Combined balance,
July 31, 1999.... -- -- -- -- 171,667 1,007,901 (135,885) (301,543) 1,713 743,853
Net loss........ -- -- -- -- -- -- -- (38,710) -- (38,710)
Unearned
compensation.... -- -- -- -- (190) -- 190 -- -- --
Amortization of
unearned
compensation.... -- -- -- -- -- -- 15,550 -- -- 15,550
Fair value
adjustment on
available for
sale
securities...... -- -- -- -- -- -- -- -- (249) (249)
Net contribution
from owner...... -- -- -- -- -- (2,750) -- -- -- (2,750)
------- ------ --- ----- ---------- ----------- --------- --------- ------- ----------
Combined balance,
August 18, 1999.. -- $ -- -- $ -- $ 171,477 $ 1,005,151 $(120,145) $(340,253) $ 1,464 $ 717,694

CMGI
acquisition...... 100,000 $1,000 -- $ -- $2,755,054 $(1,005,151) $ 120,145 $ 340,253 $(1,464) $2,209,837
------- ------ --- ----- ---------- ----------- --------- --------- ------- ----------
Consolidated
balance, August
18, 1999......... 100,000 1,000 -- -- 2,926,531 -- -- -- -- 2,927,531
Net loss
(unaudited)..... -- -- -- -- -- -- -- (507,670) -- (507,670)
Dividend of Zip2
(unaudited)..... -- -- -- -- -- -- -- (257,434) -- (257,434)
Deferred stock-
based
compensation
(unaudited)..... -- -- -- -- -- -- (4,692) -- -- (4,692)
Stock-based
compensation
(unaudited)..... -- -- -- -- -- -- 1,060 -- -- 1,060
Issuance of
common stock
(unaudited)..... 1,409 14 -- -- 30,134 -- -- -- -- 30,148
Treasury stock
(unaudited)..... -- -- 8 (196) -- -- -- -- -- (196)
Fair value
adjustment on
available for
sale securities
(unaudited)..... -- -- -- -- -- -- -- -- 146 146
------- ------ --- ----- ---------- ----------- --------- --------- ------- ----------
Consolidated
balance, January
31, 2000
(unaudited)...... 101,409 $1,014 8 $(196) $2,956,665 $ -- $ (3,632) $(765,104) $ 146 $2,188,893
======= ====== === ===== ========== =========== ========= ========= ======= ==========
</TABLE>

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

F-5
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Combined Consolidated
Seven Months Combined Six Six Months
Ended Months Ended Ended
July 31, December 31, January 31,
1999 1998 2000
------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss............................... $(231,977) $(64,163) $ (507,670)
Net loss for the period August 1, 1999
to August 18, 1999.................... -- -- (38,710)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization........ 140,149 48,939 436,725
Provision for bad debts and
concessions......................... 3,266 185 937
Stock-based compensation............. 35,782 -- 16,610
Stock issued to a community
educational foundation.............. -- -- 739
Changes in operating assets and
liabilities:
Accounts receivable................ (25,777) (3,676) (17,262)
Other receivables.................. -- -- (3,631)
Prepaid expenses and other current
assets............................ 1,394 2,666 (355)
Accounts payable to CMGI........... -- -- 938
Accounts payable................... 18,803 524 (16,134)
Other current liabilities.......... 19,941 6,884 30,207
--------- -------- ----------
Net cash used in operating
activities...................... (38,419) (8,641) (97,606)
--------- -------- ----------
Cash flows from investing activities:
Purchase of investments.............. (10,980) -- (433)
Purchases of property and equipment.. (23,591) (1,053) (30,060)
Proceeds from dispositions of
property and equipment.............. -- -- 225
Acquisition of Shopping.com, net of
cash acquired....................... (224,193) -- --
Acquisition of Zip2, net of cash
acquired............................ (294,761) -- --
Acquisition of iAtlas, net of cash
acquired............................ -- -- 248
Zip2 dividend, cash disposed......... -- -- (2,629)
Increase in other assets............. (487) (477) (124)
--------- -------- ----------
Net cash used in investing
activities...................... (554,012) (1,530) (32,773)
--------- -------- ----------
Cash flows from financing activities:
Borrowings of long-term debt......... 368 -- 9,284
Repayment of long-term debt.......... (11,521) (436) (2,258)
Notes payable to CMGI................ -- -- 121,752
Notes payable to Compaq.............. -- -- 8,062
Issuance of common stock............. -- -- 1,365
Change in contribution from owners... 611,066 10,607 (2,940)
--------- -------- ----------
Net cash provided by financing
activities...................... 599,913 10,171 135,265
--------- -------- ----------
Net increase in cash................... 7,482 -- 4,886
Cash and cash equivalents at beginning
of period............................. -- -- 7,482
--------- -------- ----------
Cash and cash equivalents at end of
period................................ $ 7,482 $ -- $ 12,368
========= ======== ==========
Noncash investing and financing
activities:
Change in basis attributable to CMGI
acquisition......................... $ -- $ -- $2,209,837
========= ======== ==========
Owners' stock options issued for
acquisitions........................ $ 59,811 $ -- $ --
========= ======== ==========
Unrealized gain (loss) on available-
for-sale securities................. $ 1,713 $ -- $ (103)
========= ======== ==========
Stock issued to CMGI upon merger with
iAtlas.............................. $ -- $ -- $ 28,033
========= ======== ==========
</TABLE>

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

F-6
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

NOTE 1--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Reporting entity

The results of the AltaVista search and new media operations within Digital
Equipment Corporation (which was acquired by Compaq Computer Corporation in
June 1998) prior to and following the combination with those of Shopping.com
and Zip2, from their respective dates of acquisition in 1999, through August
18, 1999, the date of the CMGI acquisition, are collectively referred to
herein as those of AltaVista ("AltaVista") and represent the predecessor
operations of AltaVista Company.

AltaVista Company was incorporated in June 1999, and was a dormant company
until the CMGI acquisition date. On the CMGI acquisition date, the individual
operations which had been combined to form AltaVista, including the
Shopping.com and Zip2 subsidiaries, have been consolidated and their results
thereafter (including the results of iAtlas following its acquisition by CMGI
in September 1999) are presented as the consolidated financial results of
AltaVista Company ("AltaVista Company" or the "Company"). The consolidated
financial results of AltaVista Company do not include the results of the Zip2
subsidiary after its date of disposal.

The results of AltaVista and AltaVista Company are collectively referred to
as the results of the AltaVista Business (the "AltaVista Business" or the
"Business").
Description of business

The AltaVista Business is an Internet search, new media and commerce
network that delivers personalized, relevant information and e-commerce
services to millions of users worldwide. With patented technologies,
international user base and relationships with a variety of contract and
service providers, the Company seeks to provide a single destination for all
of a user's search, information, communication and commerce needs on the
Internet.

Shopping.com is an e-commerce service that provides customers with the
information necessary to make personalized online buying decisions and gives
retailers the ability to reach a large customer base. Shopping.com's goal is
to make the shopping experience informed, quick, interactive and personalized.
Shopping.com leverages its search technology to enhance the shopping
experience by increasing the speed and accuracy of the shopping search,
enabling users to research, compare and purchase merchandise.

Zip2 supports the delivery of localized editorial content, consumer
information and advertising products by newspapers and other local media
companies through a comprehensive suite of Web development solutions and
service offerings.

iAtlas provides enhanced Internet solutions and services with products that
provide knowledge about Internet businesses to enable the delivery of focused
business information to end users.

Basis of presentation

The December 31, 1998 balance sheet information was derived from audited
financial statements.

As a result of the acquisition of Digital Equipment Corporation, the prior
owner of AltaVista, by Compaq on June 11, 1998, the financial statements of
AltaVista after the acquisition date are derived from the historic books and
records of Compaq and reflect the pushdown of Compaq's basis in the assets and
liabilities. On August 18, 1999, CMGI consummated an agreement with Compaq
pursuant to which CMGI purchased a

F-7
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

majority interest in AltaVista. (See Note 3). This transaction resulted in
Compaq retaining approximately 18.5% minority interest in AltaVista. As a
result of the CMGI transaction, the Company's financial statements as of and
after August 18, 1999 reflect the pushdown of CMGI's and Compaq's new bases in
the assets acquired and liabilities assumed. Since August 18, 1999, certain
services have been provided to the Company by CMGI. Such costs include rent
and facilities, Internet marketing and business development expenses (See Note
9).

The financial statements of Shopping.com, Zip2 and iAtlas are included from
their respective dates of acquisition and reflect the pushdown of Compaq's and
CMGI's bases in the assets and liabilities. The consolidated financial
statements do not include the operations of Zip2 after its date of
disposition.

The consolidated statement of operations for the six months ended January
31, 2000 presents the Company's consolidated revenues and expenses for the
entire six-month period (including the period after August 18, 1999, when the
pushdown of the CMGI transaction was reflected in the basis of the assets
acquired and liabilities assumed). Results for the portion of the six-month
period before the CMGI transaction (August 1, 1999 to August 18, 1999) have
been excluded in determining net results for the period after the application
of pushdown accounting. AltaVista's summary operating results for the period
from August 1, 1999 to August 18, 1999 are as follows: total revenue of $7.2
million; gross profit of $3.1 million; stock-based compensation of
$15.6 million; amortization of intangibles of $14.6 million; loss from
operations at $38.7 million; and, net loss of $38.7 million.

The statements of operations include the revenue and costs directly
attributable to the AltaVista Business including charges for shared
facilities, functions and services used by the AltaVista Business and provided
by Compaq or CMGI. Certain costs and expenses have been allocated based on
management's estimates of the cost of services provided to the AltaVista
Business by Compaq or CMGI. Such costs include corporate research and
engineering expenses, corporate selling and marketing expenses and corporate
general and administrative expenses (see Note 9). Such allocations and charges
are based on either a direct cost pass-through or a percentage of total costs
for the services provided based on factors such as headcount or the specific
level of activity directly related to such costs (i.e., direct spending).
Management believes that these allocations are based on assumptions that are
reasonable under the circumstances. However, these allocations and estimates
are not necessarily indicative of the costs and expenses which would have
resulted if the AltaVista Business had been operated as a separate entity.

The AltaVista Business has incurred recurring losses from operations
through January 31, 2000. Historically, the funds required for the conduct of
the AltaVista Business' operations were provided by Compaq or CMGI. CMGI has
committed to fund the Company's operations through the fiscal year ended July
31, 2000. The historical operating results may not be indicative of future
results.

Principles of combination and consolidation

All significant intercompany balances and transactions have been
eliminated.

On October 20, 1999, the Company distributed the shares of Zip2 to CMGI and
Compaq based upon their proportional ownership interest in the Company.
Accordingly, Zip2's results of operations are not included in the consolidated
financial statements after the date of disposition.

Change in fiscal year end

Until the acquisition by CMGI, AltaVista's fiscal year ended on December
31. In August 1999, the Company retroactively adopted the CMGI fiscal year end
of July 31, 1999. The most current financial period presented is the six-month
period ended January 31, 2000. This interim period is compared with the six
months

F-8
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

ended December 31, 1998. Because the fiscal year end change results in no
material effect on reported trends, and due to the impracticality of preparing
comparable seven month or fiscal quarter historical carve out financial
statements, management believes these comparison periods are reasonable for
purposes of comparing and analyzing the results of operations and financial
condition.

Use of estimates

Concentration of credit risk

Financial instruments which potentially subject the AltaVista Business to a
concentration of credit risk consist of accounts receivable. The AltaVista
Business' accounts receivable are derived primarily from advertising and
product revenue earned from customers located in the United States. The
AltaVista Business maintains reserves for potential credit loss. Historically
such losses have not been significant and have been within management's
expectations.

During all periods presented, the AltaVista Business derived a significant
portion of its revenues from customer advertising contracts serviced by
DoubleClick, Inc. ("DoubleClick") through the Procurement and Trafficking
Agreement (the "Agreement"). DoubleClick is expected to continue to provide
services which support a significant portion of the AltaVista Business'
revenues. Accounts receivable from DoubleClick comprised 77.8%, 62.7%, 72.8%
and 75.0% of gross accounts receivable as of December 31, 1998, July 31, 1999,
August 18, 1999 and January 31, 2000, respectively.

Business risks

The AltaVista Business is subject to risks and uncertainties common to
growing technology-based companies, including rapid technological change,
growth and commercial acceptance of the Internet, dependence on third-party
technology, new service introductions and other activities of competitors,
significant financing requirements, dependence on key personnel, international
expansion, and limited operating history.

Revenue recognition

Advertising, service and other revenue

Advertising, service and other revenue is comprised of sales of advertising
and sponsorships, fees for search services, production and development fees,
licensing of search product software and related support services, and
Shopping.com services revenue. Advertising and sponsorship revenue results
from advertising delivered on a web page, at an agreed rate per thousand of
impressions delivered. Advertising revenue is recognized ratably over the term
of the contract, provided the AltaVista Business has met its obligations to
deliver impressions in each period. Fees for search services are derived from
third parties' use of the Business's search technology. Fees for search
services are recognized ratably over the term of the contract provided that
the Business does not have significant remaining obligations. Production and
development fees are recognized upon delivery of the

F-9
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

agreed upon service, with accruals provided for ongoing maintenance
obligations. To date, revenue from production and development fees has not
been significant. Search product software and support is sold directly to
customers and through resellers. The search software license is generally a
perpetual license agreement and revenue is recognized upon shipment of the
software product. Search software customers may enter into separate support
contracts. Revenue for these support contracts is recognized ratably over the
period of contract. To date, revenue from search product software and support
has not been significant. Shopping services revenue occurs when the Company
earns commissions on sales of products on other web sites. Only the commission
fee, not the gross product revenue, is recorded as revenue. The Business earns
commission revenue through a combination of fixed fees and variable charges
per click through when its traffic is directed to an affiliate's site. To
date, shopping services revenue has not been significant.

The AltaVista Business' revenues are derived primarily from short-term
advertising contracts serviced by DoubleClick in accordance with the terms of
the Procurement and Trafficking Agreement (the "Agreement"). Prior to January
1, 1999, AltaVista recorded as revenues its contractual percentage of the
total revenues generated from the delivery of advertisements. Effective
January 1, 1999, the AltaVista Business renegotiated the Agreement. The
Agreement was renegotiated to enable the AltaVista Business to use its
internal sales force to sell advertisements directly to advertisers.
DoubleClick retains the exclusivity for delivering through its proprietary
computer systems the advertisements negotiated either by DoubleClick or the
AltaVista Business. Under the new agreement, the AltaVista Business bears the
economic risk of the advertising transactions. Accordingly, the AltaVista
Business now records the full sales amount as revenue upon delivery of
advertisements. The AltaVista Business reports as selling and marketing
expense, the amounts due to DoubleClick for sales commission, billing and
collection services, and cost of ad delivery. The Agreement is for a term of
three years from the effective date (the "Initial Term"). The Agreement is
automatically renewed for additional twelve-month periods following the
Initial Term unless either party provides notice of termination during the
third year of the Agreement and no later than ninety days prior to the
expiration of the Initial Term or no later than 180 days prior to the
expiration of any twelve-month renewal period.

Net revenues recorded per the Agreement represented 54% of the AltaVista
Business's total net revenues for both the seven months ended July 31, 1999
and the six months ended January 31, 2000. Amounts included in sales and
marketing expense related to DoubleClick sales commissions were $10.2 million
and $14.3 million, for the seven months ended July 31, 1999 and for the six
months ended January 31, 2000, respectively. Amounts included in sales and
marketing expense related to DoubleClick billing and collection services were
$0.8 million and $1.1 million for the seven months ended July 31, 1999 and for
the six months ended January 31, 2000, respectively. Amounts included in sales
and marketing expense related to DoubleClick for the cost of ad delivery were
$3.0 million and $3.3 million for the seven months ended July 31, 1999 and for
the six months ended January 31, 2000, respectively.

The AltaVista Business has entered into agreements with companies whereby
it receives a percentage of revenue generated by these companies through e-
commerce transactions. Such revenue is recognized by the AltaVista Business
upon notification from these companies of revenue earned by the AltaVista
Business, and, to date, have not been significant.

Also included in revenue is the exchange by the AltaVista Business of
advertising space on its web site for a reciprocal advertising space or
traffic in other web sites or receipt of services. Revenue from these
transactions is recognized during the period in which the advertisements are
placed and are recorded at the lower of estimated fair value of the service
received or the estimated fair value of the advertisement given. Revenue for
barter transactions was insignificant for the seven months ended July 31, 1999
and for the six months ended January 31, 2000.

F-10
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

As a result of the acquisitions of Zip2 and iAtlas, the historical
financial statements include revenue from the delivery of web development
solutions, web software applications hosting, technical and sales-related
consulting services and from a share of advertising revenue generated by
newspaper and other local media customers. Revenue from the delivery of web
development solutions combined with consulting, Web hosting and other
continuing service obligations are recognized ratably as service revenue over
the contract terms which range from one to six years. Revenue from technical
and sales-related consulting services are recognized when services are
provided. Provisions for contractual adjustments and losses are recorded in
the period such items are identified. Revenue from contractual rights to share
in advertising revenue generated by newspaper and other local media customers
are recognized as advertising revenue as the fees are earned and become
receivable from the customer. Amounts payable due to newspaper and other local
media customers from contractual rights to share in advertising revenue
generated by Zip2 and iAtlas are recognized as costs of revenue in the period
the related revenue is earned.

Deferred revenue primarily comprises cash collections in advance of revenue
recognition, primarily associated with banner advertising and consulting
services, and is recognized at the time the AltaVista Business' obligations
under the contracts are fulfilled.

Product revenue

As a result of the acquisition of Shopping.com, the historical financial
statements now include revenues from the sales of consumer products. The
AltaVista Business recognizes the full sales amount as revenue for such
transactions at the time the vendor ships the product to the customer when the
AltaVista Business bears full customer credit risk and merchandise return risk
following vendor shipment. The AltaVista Business provides an allowance for
sales returns based on historical experience. To date, the AltaVista Business'
sales returns have not been material.

Product development

Product development costs are expensed as incurred. Software development
costs subsequent to the establishment of technological feasibility are
capitalized and amortized to cost of revenues. Based upon the AltaVista
Business' product development process, technological feasibility is
established upon completion of a working model. Costs incurred by the
AltaVista Business between completion of the working model and the point at
which the product is ready for general release have been insignificant.

Advertising expense

The AltaVista Business expenses advertising costs at such time as
advertisements are published or broadcast. Advertising costs included in sales
and marketing expense are approximately $11.5 million, $2.5 million and $70.5
million for the seven months ended July 31, 1999, the six months ended
December 31, 1998 and the six months ended January 31, 2000, respectively.

Stock-based compensation plans

The AltaVista Business accounts for its stock-based compensation plans
using the intrinsic value method prescribed by Accounting Principles Board
Opinion (APB) No. 25, "Accounting for Stock Issued to Employees." The
AltaVista Business amortizes stock compensation expense using an accelerated
method (See Note 13).

F-11
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Interest expense

Interest expense was $159,000, $2,287,000 and $210,000 for the seven months
ended July 31, 1999 and the six months ended January 31, 2000, and December
31, 1998, respectively. There was no direct interest expense incurred by
AltaVista until the purchase of the www.altavista.com domain name in July 1998
(see Note 4). Prior to that date, all interest expense corresponded to an
allocation of Digital's or Compaq's worldwide interest expense based on
AltaVista's proportionate share of total assets. Management believes this
method provides a reasonable basis for allocation within AltaVista's
historical statement of operations. Since August 19, 1999, CMGI and Compaq
have advanced funds and CMGI has provided services to the Company from time to
time. These amounts are reflected in demand notes payable to CMGI and Compaq,
respectively, in the accompanying consolidated balance sheet, and bear
interest at 7%. Interest expense included in the consolidated statement of
operations for the six months ended January 31, 2000 includes $2,098,000 and
$62,000 related to the CMGI and Compaq notes payable, respectively (See Note
9).

Income taxes

AltaVista was not a separate taxable entity for federal, state or local
income tax purposes and its operations were included in the consolidated
Compaq tax returns for periods prior to August 18, 1999, and will be included
with CMGI thereafter. The AltaVista Business accounts for income taxes under
the separate return method using an asset and liability approach. Deferred tax
assets generated from operating losses require a full valuation allowance
because, given the history of operating losses, realizability of such tax
benefit is not probable.

Net loss per share

On August 18, 1999, AltaVista merged into a subsidiary of CMGI which then
changed its name to AltaVista Company. The Company has 200 million shares of
common stock authorized of which 100 million shares were issued and
outstanding on August 18, 1999.

A reconciliation of the numerator and denominator of pro forma basic and
diluted loss per share is provided as follows (in thousands, except share and
per share amounts):

<TABLE>
<CAPTION>
Six months ended
January 31, 2000
----------------
<S> <C>
Numerator--basic and diluted............................... $ (507,670)
Denominator--basic and diluted:
Weighted average common shares outstanding................ 100,727,223
Basic and diluted loss per share........................... $ (5.04)
</TABLE>

F-12
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Options to purchase common stock and shares issuable upon conversion of the
demand notes payable into preferred stock and the conversion of such preferred
stock into common stock are not included in the diluted loss per share
calculations as their effect, due to losses generated by the Company, are
antidilutive for all periods presented. These potentially dilutive securities
are as follows:

<TABLE>
<CAPTION>
Six months ended
January 31, 2000
----------------
<S> <C>
Options to purchase common stock........................... 13,611,921
Assumed conversion of outstanding CMGI and Compaq demand
notes payable into preferred stock and the conversion of
such preferred stock into common stock.................... 4,957,452
Assumed exercise of Compaq's right to provide additional
demand notes payable financing to the Company, which is
then convertible into preferred and common stock.......... 706,842
</TABLE>

Comprehensive loss

Comprehensive income, as defined, includes all changes in equity (net
assets) during a period from non-owner sources. For the seven months ended
July 31, 1999, AltaVista had unrealized gains on available-for-sale securities
of $1.7 million. For the six months ended January 31, 2000, the Company had
unrealized losses on available-for-sale securities which totaled $103,000.

Cash

The AltaVista Business considers all highly-liquid investments with an
original maturity of three months or less to be cash equivalents.

Cash generated from and required to support AltaVista's operations prior to
August 18, 1999 was deposited and received through Compaq's corporate
operating cash accounts. As a result, there were no separate bank accounts for
AltaVista, and the amounts recorded as Net Contribution from Owner in our
combined statement of cash flows represent the net effect of all cash
transactions between Compaq and AltaVista. From August 19, 1999 through
January 31, 2000, the Company financed working capital through cash received
from CMGI and Compaq. In return, the Company issued demand notes payable that
are convertible to preferred stock.

Fair value of financial instruments

The carrying amount of the AltaVista Business' financial instruments, which
include accounts receivable, accounts payable, accrued expenses and demand
notes payable approximate their fair values at December 31, 1998, July 31,
1999, August 18, 1999 and January 31, 2000.

F-13
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Property and equipment

Property and equipment were recorded at fair market value at their
respective dates of acquisition. Minor replacements, maintenance and repairs
are charged to current operations. Depreciation is computed by applying the
straight-line method over the estimated useful lives of the related assets as
follows:

<TABLE>
<CAPTION>
Estimated
Useful
Lives In Years
--------------
<S> <C>
Machinery and equipment....................................... 3-10
Furniture and fixtures........................................ 5-10
Buildings and improvements.................................... 10-33
</TABLE>

Leasehold improvements are amortized over the shorter of the useful life of
the improvement or the life of the related lease.

Intangible assets

Intangible assets as of July 31, 1999 consist primarily of completed
technology, assembled workforce, trademarks and goodwill resulting from the
pushdown of the fair value of all assets attributable to the AltaVista
Business as recorded on Compaq's books as part of the acquisition of Digital
Equipment Corporation and from the acquisitions of Shopping.com and Zip2. As
of and after August 18, 1999, the intangibles reflect the pushdown of fair
market values based on the CMGI acquisition and, after September 28, 1999,
from the acquisition of iAtlas. Intangible assets are being amortized on a
straight-line basis over their estimated useful lives of three years.

Impairment of long-lived assets

The AltaVista Business reviews for the impairment of long-lived assets,
certain identifiable intangibles and goodwill whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss would be recognized when estimated
undiscounted future cash flows expected to result from the use of the asset
and its eventual disposition is less than its carrying amount. If an asset is
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. The AltaVista Business has not identified any such impairment losses.

Investments

Marketable equity securities are classified as available-for-sale.
Available-for-sale securities are included in prepaid expenses and other
current assets and are stated at fair value, with the unrealized gains and
losses reported in owners' net investment. Realized gains and losses and
declines in value judged to be other than temporary on available-for-sale
securities are included in results of operations.

The AltaVista Business has obtained equity interests of less than 20% in
several privately held companies. These investments are accounted for using
the cost method. For these investments, the AltaVista Business' policy is to
regularly review the assumptions underlying the operating performance and cash
flow forecasts in assessing the carrying values. The AltaVista Business
records impairment losses on investments when events and circumstances
indicate that such assets might be impaired and it is determined the
investment has suffered an other than temporary decline in value. To date, no
such impairment has been recorded.

F-14
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Segment information

The AltaVista Business has adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information" (SFAS No. 131). SFAS No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Boards ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
The new standard establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. The Company
does not expect SFAS No. 133 to have a material effect on its financial
position or results of operations.

Interim results

The interim financial statements as of January 31, 2000, and for the six
months ended January 31, 2000 and December 31, 1998 have been prepared using
the same accounting principles as were used for preparing the audited
financial statements, and in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly the AltaVista Business' financial position, results of
operations and cash flows as of January 31, 2000 and for the six-months ended
January 31, 2000 and December 31, 1998. The results for the seven months ended
July 31, 1999 and for the six months ended January 31, 2000 and December 31,
1998 are not necessarily indicative of future results.

NOTE 2--ACQUISITIONS AND DISPOSITIONS

Compaq acquisition

On June 11, 1998, Compaq consummated its acquisition of Digital Equipment
Corporation. The purchase price was allocated to the assets acquired and
liabilities assumed related to AltaVista based on Compaq's estimates of fair
value. The fair value assigned to intangible assets acquired was based on a
valuation prepared by an independent third party appraisal company and
included intangibles aggregating $274.1 million (goodwill of $255.6 million,
proven technology of $13.0 million and trademarks of $5.6 million).

Shopping.com and Zip2 acquisitions

Effective February 15, 1999, Compaq completed its acquisition of
Shopping.com. The aggregate purchase price of $256.9 million consisted of
$218.9 million in cash, the issuance of Compaq employee stock options with a
fair value of $32.1 million and other acquisition costs. The transaction was
accounted for using the purchase method of accounting. The results of
operations of the acquired entity and the estimated fair market

F-15
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

values of the acquired assets and liabilities have been included in the
AltaVista Business' financial statements from the date of acquisition. The
aggregate purchase price including liabilities assumed has been allocated to
the assets acquired, consisting primarily of goodwill of approximately $271
million that is being amortized over a three year period. The purchase price
allocation was based on the results of an independent third party appraisal.

At the time of the acquisition by Compaq, Shopping.com was a defendant in
various litigation matters for which Compaq agreed to assume liability. Any
unrecorded costs incurred in connection with resolving these matters will be
added to the purchase accounting allocation or charged to expense. An equal
amount will be recorded as a capital contribution from Compaq.

Effective April 1, 1999, Compaq completed its acquisition of Zip2. The
aggregate purchase price of $340.9 million consisted of $307.2 million in
cash, the issuance of employee stock options with a fair value of $27.7
million and other acquisition costs. The results of operations of the acquired
entity and the estimated fair market values of the acquired assets and
liabilities have been included in the AltaVista Business' financial statements
from the date of acquisition. The aggregate purchase price including
liabilities assumed has been allocated to the assets acquired, consisting
primarily of goodwill of approximately $335 million that is being amortized
over a three year period. The purchase price allocation was based on the
results of an independent third party appraisal.

iAtlas merger

On October 22, 1999, CMGI merged its iAtlas subsidiary into the Company in
a transaction valued at approximately $28 million, which represents CMGI's
acquisition cost. CMGI acquired all of the issued and outstanding stock of
iAtlas on September 28, 1999, for approximately 304,000 shares of CMGI common
stock, and iAtlas has been included in the consolidated financial statements
from the date of the acquisition.

Zip2 disposition

On October 20, 1999, the Company distributed shares in Zip2 to CMGI and
Compaq according to their respective ownership percentages. Subsequent to
October 20, 1999, the Company and CMGI finalized a related separation
agreement concerning certain technology, assets and liabilities to be retained
or utilized by the Company, which has not been reflected in the consolidated
balance sheet as of January 31, 2000. The Company's estimated costs of
utilizing such technology, assets and liabilities for the period from October
20, 1999 to January 31, 2000 are included in results of operations. Operations
of Zip2 after October 20, 1999 will be included with one or more CMGI
businesses that are separate from the Company.

The purchase prices for the Shopping. com, Zip2 and iAtlas transactions
were allocated to assets acquired and liabilities assumed as set forth below.
The AltaVista Business' basis in the assets and liabilities of Zip2 disposed
of on October 20, 1999 were as set forth below (in thousands):

<TABLE>
<CAPTION>
Shopping.com Zip2 iAtlas Zip2
Acquisition Acquisition Transaction Disposition
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets (net of
cash).................... $ 1,791 $ 3,090 $ 161 $ 3,226
Fixed assets.............. 1,935 3,497 747 13,570
Other assets.............. 546 2,877 6 795
Goodwill and other
intangibles.............. 276,384 340,258 23,003 258,950
Deferred compensation..... -- -- 4,692 --
Liabilities............... $ 23,717 $ 21,218 $ 825 $ 21,736
</TABLE>

F-16
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Raging Bull

In November 1999, the Company agreed to acquire Raging Bull, Inc., a
finance-oriented community and content Internet company and an affiliate of
CMGI. The acquisition of Raging Bull was completed on February 1, 2000. The
aggregate acquisition cost of $163.0 million consists of the issuance of the
Company's common stock with a fair value of $150.2 million for all of the
issued and outstanding common and preferred stock of Raging Bull, the issuance
of the Company's stock options with a fair value of $12.3 million in exchange
for all of the outstanding options of Raging Bull, and other acquisition
costs. This transaction will be accounted for under the purchase method of
accounting. The results of operations of the acquired entity and the estimated
fair market values of the acquired assets and liabilities will be included in
the Company's financial statements from the date of acquisition. The aggregate
purchase price including liabilities assumed will be allocated to the assets
acquired, consisting primarily of goodwill and other intangibles of
approximately $148.3 million that will be amortized over a three-year period.

Transium

On February 2, 2000, the Company agreed to acquire Transium Corporation
and, on February 22, 2000, completed the acquisition. Total acquisition cost
is expected to be approximately $10.0 million, consisting of approximately
$5.0 million cash and approximately $5.0 million, representing 170,532 shares
of the Company's common stock issued to Transium shareholders and option
holders. Approximately $9.0 million of the total acquisition cost is expected
to be allocated to goodwill and other intangibles.

NOTE 3--CMGI ACQUISITION

CMGI's acquisition of AltaVista was accomplished in a series of integrated
transactions. In the first step of the transaction, CMGI received 100% of the
stock of Shopping.com and approximately 52% of the stock of Zip2 in exchange
for a $220 million note payable from CMGI to Compaq. In the second step, NEWCO
(formed by CMGI for purposes of this transaction) issued 81,495,016 common
shares of NEWCO to CMGI in exchange for the stock of Shopping.com and Zip2
held by CMGI, as well as approximately 19 million shares of CMGI common and
approximately 18,000 shares of CMGI Series D preferred shares. In the third
step, NEWCO then acquired 100% of the AltaVista Business and the remaining
shares of Zip2 common stock from Compaq in exchange for the CMGI common and
Series D preferred shares and 18,504,884 common shares of NEWCO (18.5%). NEWCO
was then renamed the AltaVista Company. Because at the completion of this
series of integrated transactions the Company acquired 100% of Shopping.com,
Zip2 and the AltaVista Business, the Company has revalued 100% of the acquired
entities in accordance with paragraph 67 of APB No. 16.

F-17
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

CMGI's purchase price is summarized as follows: CMGI issued 18,994,975
shares of its common stock valued at approximately $1.8 billion, 18,090.45
shares of its Series D Preferred Stock valued at approximately $173 million
and promissory notes for an aggregate principal amount of $220 million.
Additionally, options to purchase AltaVista Business common stock were assumed
by CMGI in the transaction and were valued at approximately $213 million.
CMGI's purchase price of $2.4 billion for 81.495% of the equity interest in
the AltaVista Business was used as a basis to step up the value of the
AltaVista Company to approximately $2.9 billion, in order to apply purchase
accounting to the Company's assets acquired and liabilities assumed. The
Company's allocation of the step-up was as follows (in millions):

<TABLE>
<S> <C>
Net tangible assets................................................ $ 27.5
Patents, trademarks and domain names............................... 34.9
Completed technology............................................... 154.9
Assembled workforce................................................ 10.0
Goodwill........................................................... 2,700.2
--------
Total step-up value.............................................. $2,927.5
========
</TABLE>

The resulting purchase price allocation was recorded on August 18, 1999.
All of the aforementioned intangibles are being amortized over a three-year
life.

The following unaudited pro forma combined amounts for the year ended
December 31, 1998 and for the seven months ended July 31, 1999 give effect to
the CMGI acquisition of the AltaVista Business, including Shopping.com, as if
it had occurred on January 1, 1998 and January 1, 1999, respectively (the pro
forma results of operations for the year ended December 31, 1998 reflects
Shopping.com's results for the period from February 1, 1998 to January 31,
1999 and the pro forma results of operations for the seven month period ended
July 31, 1999 reflects Shopping.com's results for the period from January 1,
1999 to July 31, 1999). The results of Zip2 have not been included in the pro
forma combined results given its disposal in October 1999. The results of
iAtlas have not been included in the unaudited pro forma combined results due
to its insignificance.

<TABLE>
<CAPTION>
(in thousands) Year Ended Seven Months
December 31, Ended July 31,
1998 1999
------------ --------------
<S> <C> <C>
Net revenues..................................... $ 45,261 $ 73,299
========= =========
Net loss......................................... $(939,162) $(572,504)
========= =========
Pro forma net loss per share..................... $ (9.39) $ (5.73)
========= =========
</TABLE>

F-18
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

NOTE 4--INTANGIBLE ASSETS

<TABLE>
<CAPTION>
(in thousands) December 31, July 31, August 18, January
1998 1999 1999 31, 2000
------------ -------- ---------- ----------
<S> <C> <C> <C> <C>
Goodwill....................... $255,600 $861,342 $2,700,158 $2,456,878
Completed technology........... 12,950 15,750 154,900 150,900
Trademarks..................... 5,550 7,050 34,880 33,410
Other.......................... -- 7,247 10,050 7,105
Purchased domain name ......... 3,422 3,422 2,214 2,233
-------- -------- ---------- ----------
277,522 894,811 2,902,202 2,650,526
Less: accumulated
amortization.................. 51,034 185,626 -- 398,310
-------- -------- ---------- ----------
$226,488 $709,185 $2,902,202 $2,252,216
======== ======== ========== ==========
</TABLE>

Purchased domain name

In March 1996, AltaVista entered into an agreement pursuant to which the
other party assigned to AltaVista all of its rights, title and interest to the
www.altavista.com domain name and AltaVista agreed to grant the other party a
non-exclusive license to use the www.altavista.com domain name as part of
their corporate name. In July 1998, the other party agreed to sell, transfer
and assign to AltaVista all of its rights in and to the www.altavista.com
domain name granted under the original agreement for an aggregate
consideration of approximately $3.4 million. The consideration paid consists
of cash and a note payable of $2.75 million (see Note 8).

NOTE 5--INVESTMENTS

In December 1998, Compaq purchased on behalf of AltaVista 500,000 shares of
Series B preferred stock of RealNames Corporation. The total consideration
paid of approximately $500,000 resulted in AltaVista owning less than 20% of
RealNames Corporation.

In January 1999, Compaq purchased on behalf of AltaVista 2,023,635 shares
of Series D preferred stock of Virage, Inc. for approximately $3,480,000. In
September 1999, the Company purchased 131,983 shares of Series E preferred
stock of Virage, Inc. for $433,000. The aggregate purchases resulted in the
Company owning less than 20% of the investee.

In March 1999, Compaq purchased on behalf of AltaVista 1,000,000 shares of
Series B preferred stock of FreePC.com for approximately $5,000,000 resulting
in AltaVista owning less than 20% of FreePC.com. In January 2000, FreePC.com
was acquired and became a wholly owned subsidiary of eMachines, Inc. Pursuant
to the transaction, the Company's shares of Series B preferred stock of
FreePC.com were converted into 1,100,055 shares of eMachines, Inc. Series C
preferred stock and a warrant to purchase 471,452 shares of eMachines, Inc.
common stock. The conversion resulted in the Company owning less than 20% of
eMachines, Inc.

In July 1999, the AltaVista Business purchased 2,171,809 shares of Series C
preferred stock of 1stUp.com Corporation for approximately $2,500,000
resulting in the AltaVista Business owning less than 20% of 1stUp.com. On
November 4, 1999, CMGI acquired all of the issued and outstanding stock of
1stUp.com. As a result, the Company now owns 137,705 shares of CMGI common
stock at a cost of $2,500,000. Upon disposition of these shares, any gain or
loss will be recorded as a capital contribution from CMGI to the Company.

F-19
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

NOTE 6--PROPERTY AND EQUIPMENT

Property and equipment are summarized below (in thousands):

<TABLE>
<CAPTION>
December 31, July 31, August 18, January 31,
1998 1999 1999 2000
------------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Land.......................... $ 3,491 $ 3,491 $ 3,491 $ 3,491
Buildings..................... 8,451 11,741 13,422 13,422
Leasehold improvements........ 1,296 5,266 5,107 3,091
Machinery and equipment....... 11,480 35,295 26,822 38,277
Construction in process....... 2,773 343 2,249 3,926
------- ------- ------- -------
27,491 56,136 51,091 62,207
Less: Accumulated
depreciation................. 3,318 9,390 -- (5,960)
------- ------- ------- -------
Property and equipment, net... $24,173 $46,746 $51,091 $56,247
======= ======= ======= =======
</TABLE>

Depreciation expense totaled $2.1 million, $3.3 million and $6.2 million
for the period from January 1, 1998 through June 11, 1998, for the period from
June 12, 1998 to December 31, 1998 and the seven months ended July 31, 1999,
respectively.

NOTE 7--OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>
(in thousands) December 31, July 31, August 18, January 31,
1998 1999 1999 2000
------------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Accrued legal................. $ -- $22,058 $21,773 $10,504
Deferred revenue.............. 150 7,498 8,671 9,706
Accrued advertising
commissions.................. -- 7,011 4,550 10,762
Accrued advertising expense... -- 4,327 5,510 11,366
Accrued revenue share fees.... 7,656 1,856 1,550 1,670
Other......................... 1,229 9,033 16,185 23,216
------ ------- ------- -------
Total other current
liabilities................ $9,035 $51,783 $58,239 $67,224
====== ======= ======= =======
</TABLE>

NOTE 8--DEBT

Long-term debt

Long-term debt as of July 31, 1999 and August 18, 1999 includes a note
payable related to the purchased domain name which bears interest at an annual
rate of 7%. The note plus accrued interest was payable in 12 quarterly
installments commencing October 1, 1998. In October 1999, this note and
accrued interest were paid in full.

Demand notes payable

Concurrent with the CMGI acquisition, the Company issued a convertible
demand note payable to CMGI (see Note 9) pursuant to which the Company would
pay to CMGI, upon demand of CMGI, the lesser of (i) the principal sum of
$200,000,000 or (ii) the aggregate unpaid principal amount of all advances
(and 7% interest thereon) made from CMGI to the Company. CMGI will at any time
have the option to require the Company to issue shares of the Company's
capital stock as follows: (a) prior to a qualified public offering (as
defined), the Company will issue that number of shares of its Series A
Convertible Preferred stock (see Note 13) equal to one-tenth of the quotient
of (i) the aggregate amount of principal and interest to be so converted at
any particular date, divided by (ii) the applicable conversion price;
(b) following a qualified public offering, the Company will issue that number
of shares of its common stock equal to the quotient of (i) the aggregate
amount of principal and interest to be so converted at any particular date
divided by (ii) the applicable conversion price. The conversion

F-20
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

price shall be determined as of a fiscal quarter end for that particular
fiscal quarter by dividing (i) the total enterprise valuation of the Company
as of the fiscal quarter end by (ii) the number of shares of the Company's
common stock outstanding as of that date, determined on a fully-diluted, as-if
converted basis. During the first quarter in which a qualified public offering
occurs, the conversion price applicable to that quarter will be the initial
public offering price. At August 18, 1999, there were no amounts outstanding
under the convertible demand note. As of January 31, 2000, the Company had
approximately $121.8 million outstanding under the convertible demand note,
which, if so elected by CMGI, could have been converted into approximately
468,000 shares of Series A Convertible Preferred stock.

Compaq has certain pre-emptive rights which allow it to purchase a
proportionate amount of debt or convertible preferred stock relative to the
amount of any debt or convertible preferred stock issued to CMGI in connection
with CMGI's exercise of the conversion feature of the demand notes payable. As
of January 31, 2000, principal and interest due to Compaq under this
arrangement was approximately $8.1 million. Further, Compaq held a right to
purchase an additional proportionate amount of debt totalling approximately
$17.5 million. Compaq's total outstanding and issuable convertible debt could
be converted into approximately 99,000 shares of Series A Convertible
Preferred Stock. The total Series A Convertible Preferred Stock issuable to
CMGI and Compaq could be converted into approximately 5,664,000 shares of
common stock.

NOTE 9--RELATED PARTY TRANSACTIONS

Related-party revenue and costs

Product revenue includes sales of Compaq computers to FreePC.com, an
AltaVista Business investee (see Note 5), of $8,130,000, none and $12,755,000
for the seven months ended July 31, 1999 and the six months ended December 31,
1998 and January 31, 2000, respectively. The costs of such Compaq computers
were $7,364,000, none, and $12,216,000 for the seven months ended July 31,
1999 and the six months ended December 31, 1998 and January 31, 2000,
respectively.

Compaq allocated costs and notes payable to Compaq

The amounts allocated by Compaq to AltaVista and included in the
accompanying combined statement of operations for the seven months ended July
31, 1999 are $686,000 and $117,000 for general and administrative expenses and
interest expense, respectively. In December 1999, Compaq advanced funds to the
Company. These amounts are reflected in convertible demand notes payable to
Compaq in the accompanying consolidated balance sheet, and bear interest at 7%
per annum. Interest expense included in the consolidated statement of
operations for the six months ended January 31, 2000 includes $62,000 related
to the Compaq notes payable.

Amounts paid to CMGI

Since August 19, 1999, CMGI has advanced funds and provided services to the
Company from time to time. These amounts are reflected in convertible demand
notes payable to CMGI in the accompanying consolidated balance sheet, and bear
interest at 7% per annum. The CMGI amounts included in the accompanying
consolidated statement of operations for the six months ended January 31, 2000
are $3,343,000, $2,098,000, $165,000 and $101,000 for sales and marketing
expenses, interest expense, product development expenses and general and
administrative expenses, respectively.

NOTE 10--INCOME TAXES

No income tax expense has been provided in the historical financial
statements since the AltaVista Business net operating losses generated have
not been benefited.

F-21
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Deferred tax assets and liabilities of AltaVista at July 31, 1999, computed
under the separate return method, comprise the following (in thousands):

<TABLE>
<CAPTION>
July 31,
1999
--------
<S> <C>
Property and equipment............................................. $ 3,251
Reserves and accruals.............................................. 5,717
Stock-based compensation........................................... 1,379
Capitalized research and development costs......................... 1,407
Net operating losses............................................... 68,268
--------
Gross deferred tax assets........................................ 80,022
Deferred tax liability intangible assets........................... (8,050)
Valuation allowance.............................................. (71,972)
--------
Net deferred tax assets............................................ $ --
========
</TABLE>

In light of the recent history of operating losses, the AltaVista Business
has provided a valuation allowance for all of its deferred tax assets.
Presently management is unable to conclude that it is more likely than not
that the deferred tax assets will be realized.

As of July 31, 1999, AltaVista has a net operating loss carryover of
approximated $176 million for federal and California income tax purposes.
Approximately $50 million of the net operating loss remained with Compaq after
the assets and liabilities of the AltaVista Business were transferred to CMGI.

Federal and California tax laws impose substantial restrictions on the
utilization of net operating loss carryforwards in the event of an ownership
change as defined in Section 382 of the Internal Revenue Code. If the
AltaVista Business has an ownership change, its ability, if any, to utilize
the net operating loss carryforwards could be significantly reduced.

NOTE 11--MARKETING AGREEMENTS

Premier Search Services Agreement with Microsoft

In September 1998, AltaVista and Microsoft entered into a one year Premier
Search Services agreement whereby Microsoft guaranteed a minimum number of
impressions on its various Internet search versions and web site. For the
guaranteed impressions, AltaVista was to pay $18.0 million in four quarterly
installments. All impressions delivered above the guaranteed impressions were
to be paid at a specified contractual rate, not to exceed a total payment of
$23.0 million. This agreement was amended in February 1999. Under the amended
agreement, Microsoft guaranteed a minimum number of impressions for total
consideration of $16.5 million. Included in sales and marketing expenses in
the accompanying combined financial statements related to this agreement for
the seven months ended July 31, 1999 is approximately $10.3 million.

NOTE 12--RETIREMENT PLANS

401(k) Investment Plan

The AltaVista Business has a 401(k) investment plan (the "Investment Plan")
covering substantially all of its U.S. employees effective May 1, 1999 for
AltaVista and Zip2, and July 1, 1999 for Shopping.com. Under the

F-22
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Investment Plan, employees may defer up to 20% of their eligible pre-tax
earnings, subject to the Internal Revenue Service annual contribution
limitation. The Company matches 33% of each employee's contribution up to 6%
and such matching contributions were approximately $100,000 and $287,000, for
the seven months ended July 31, 1999 and the six months ended January 31,
2000, respectively.

Pensions

Upon consummation of the acquisition of Digital by Compaq, Compaq assumed
certain of Digital's defined benefit and defined contribution plans of which
employees of AltaVista were participants. The AltaVista employees who were
eligible to participate in the Digital plans at the time of the acquisition
continued to be eligible to participate in these plans until May 1, 1999 at
which time the employees had the option to rollover their fund balances to a
qualified plan or, if balances exceeded $5,000, to leave such balances in the
plan. The benefits generally are based on years of service and compensation
during the employee's career. Pension cost is based on estimated benefit
formulas.

Additionally, Compaq assumed the defined benefit postretirement plans that
provide medical and dental benefits for the AltaVista retirees and their
eligible dependents in the United States.

The combined statements of operations include allocated costs as fringe
benefits included in general and administrative expense based upon an average
cost per employee for the retirement plan and are not significant for any
periods presented.

NOTE 13--CAPITAL STOCK AND STOCK OPTION PLANS

Capital stock

On August 18, 1999, AltaVista merged into a subsidiary of CMGI which then
changed its name to AltaVista Company (the "Company"). The Company has 200
million shares of common stock authorized, of which 100 million shares were
issued and outstanding on August 18, 1999.

The Company's Board of Directors has approved the authorization of
5,000,000 shares of Series A Convertible Preferred Stock, par value $0.01. As
of January 31, 2000, no such shares have been issued.

The significant rights that the holders of the Series A Convertible
Preferred Stock are entitled to are as follows:

(a) The right to receive dividends at a rate of 7% of the applicable
purchase price (as defined) per share per annum commencing as of the
date the particular shares are issued, payable when declared by the
Board of Directors of the Company.

(b) In the event of any liquidation, dissolution or winding up of the
Company, the entire assets of the Company available for such
distribution shall be distributed ratably among the holders of the
Series A Convertible Preferred Stock. If amounts available for
distribution to each holder is at least equal to the applicable
purchase price for each such share plus a dividend computed at a rate
of 7% of the applicable purchase price for each such share per annum,
compounded annually from their issuance date (the preferential amount),
holders of each share of Series A Convertible Preferred Stock shall be
entitled to be paid first out of the assets of the Company available
for distribution to holders of the Company's capital stock of all
classes an amount equal to the preferential amount. After the payment
of the preferential amount, the holders of the Company's common stock
shall be entitled to receive the

F-23
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

remaining assets and funds of the Company available for distribution to
its stockholders. A consolidation or merger of the Company or a sale of
all or substantially all of the assets of the Company shall be regarded
as a liquidation, dissolution or winding up of the Company.

(c) Each holder of Series A Convertible Preferred Stock shall be entitled
to vote on all matters and shall be entitled to that number of votes
equal to the largest number of whole shares of common stock into which
such holder's shares of Series A Convertible Preferred Stock could be
converted.

(d) Any shares of the Series A Convertible Preferred Stock may, at the
option of the holder, be converted into a number of shares of common
stock calculated as follows: the sum of the product obtained by
multiplying the applicable conversion rate for each tranche of Series A
Convertible Preferred Stock by the number of shares of each tranche of
Series A Convertible Preferred Stock being converted. The conversion
rate shall be the quotient obtained by dividing (i) the applicable
purchase price by (ii) the applicable conversion value. The conversion
value shall be equal to the quotient obtained by dividing (i) the
applicable purchase price by (ii) ten. The conversion value is subject
to certain anti-dilution provisions.

(e) All outstanding shares of Series A Convertible Preferred Stock
automatically convert into common stock, using the aforementioned
conversion formula, upon the closing of an underwritten public offering
in which (1) the price to the public is not less than an amount per
share calculated as follows: the aggregate purchase prices for each
tranche multiplied by the number of shares issued in such tranche plus
a dividend computed at 7% per share per annum, compounded annually from
their issue date, divided by the total number of shares of Series A
Convertible Preferred Stock issued and outstanding, and (2) the
aggregate gross proceeds received by the Company shall equal or exceed
$15,000,000.

(f) At the written election of a majority of the holders of the Series A
Convertible Preferred Stock on or before July 2, 2006, beginning on
January 2, 2007 and on the first day of July in each year thereafter,
the Company shall redeem, pro rata based on the number of shares of
each tranche, 25% of all of the outstanding shares of Series A
Convertible Preferred Stock. The redemption price for each share shall
be equal to the aforementioned preferential amount.

AltaVista stock option plans

On May 28, 1999, AltaVista adopted the AltaVista Company 1999 Stock Option
Plan (the "Plan"). The Plan was administered by a committee designated by the
Board of Directors to administer the Plan and composed of individuals who are,
to the extent necessary, "non-employee directors." In September 1999, the
Board of Directors adopted and stockholders approved the 1999 Equity Incentive
Plan in order to replace the May 28, 1999 Plan. The Plan was terminated, but
all then-outstanding options under the Plan remain in effect.

Subject to the terms of the Plan and applicable law, the committee had the
full authority to (a) designate participants; (b) determine the type, size,
terms and conditions of awards made to participants; and (c) establish rules
and regulations under and make any other determination necessary or desirable
for the administration of the Plan. The number of shares with respect to which
awards may have been granted under the Plan was 20,000,000.

As of July 31, 1999 and January 31, 2000, there were 9,638,282 and
7,873,901 options outstanding under the Plan (including options issued to Zip2
employees in exchange for their outstanding options at the time of
acquisition), respectively. The weighted average exercise prices were $8.25
and $8.22, respectively. Certain of

F-24
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

these options were issued at below fair value. The corresponding compensation
expense of approximately $172 million was scheduled to be amortized over the
four year vesting periods of the related options, from the grant dates.
Amortization of stock-based compensation is included in a single line in the
historical statements of operations, is calculated using an accelerated method
and totaled $35.8 million and $16.6 million for the seven months ended July
31, 1999 and for the six months ended January 31, 2000, respectively.

The individual cost and expense captions on the historical statement of
operations exclude stock-based compensation as follows (in thousands):

<TABLE>
<CAPTION>
Six Months
Seven Months Ended
Ended July 31, January 31,
1999 2000
-------------- -----------
<S> <C> <C>
Cost of advertising,
service and other
revenue................ $ 2,063 $ 897
Product development..... 7,485 3,571
Sales and marketing..... 12,661 5,714
General and
administrative......... 13,573 6,428
------- -------
$35,782 $16,610
======= =======
</TABLE>

In September 1999, the Company instituted the 1999 Stock Option Plan for
Non-Employee Directors in which non-qualified options were granted to
directors who were not employees. The Board reserved 250,000 shares of common
stock for issuance under the plan. In September 1999, the 1999 Stock Option
Plan for Non-Employee Directors was terminated; however, all then-outstanding
options under that plan remain in effect. As of January 31, 2000 options to
purchase 109,000 shares of common stock, with a weighted average exercise
price of $22.33 were outstanding under the plan.

1999 Directors Plan

In October 1999, the Board of Directors adopted and the stockholders
approved the 1999 Amended and Restated Directors Plan, pursuant to which
1,000,000 share of the Company's common stock are reserved for issuance. As of
January 31, 2000, options to purchase 231,000 shares of common stock, with a
weighted average exercise price of $29.55, were outstanding.

All directors are eligible to receive non-statutory stock options to
purchase shares of common stock under the 1999 Directors Plan, except for any
director who (i) is an employee of the Company or any subsidiaries or
affiliates or (ii) unless otherwise determined by the Board of Directors, is
an affiliate, employee or designee of an institutional or corporate investor
that owns more than 5% of our outstanding common stock. Under the plan all
non-employee directors:

. will be granted an initial option to acquire 125,000 shares of common
stock when a director is elected a for the first time after the plan is
adopted on the date of that election;

. will also be granted an initial option to acquire 125,000 shares of
common stock when the director

. ceases being an affiliate, employee or designee of an institutional
or corporate investor that owns more than 5% of our outstanding
common stock and

. is not otherwise an employee of the Company or any of its
subsidiaries, but

. remains as a member of the board on the date the director's
affiliate, employee or designee status ceases.

F-25
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

Each non-employee director will also receive, on each anniversary of the
grant of the initial option, an additional option to purchase 31,250 shares of
common stock if the director is still serving as one of the Company's
directors on that anniversary date. The Board of Directors may, in its
discretion, increase to up to 175,000 shares the aggregate number of shares of
common stock subject to any initial option or additional options so long as
the maximum aggregate number of shares that may vest for any optionee in any
48-month period will not exceed 175,000 shares.

The option exercise price per share for each option granted under the 1999
Directors Plan will be determined on the date of grant and will be equal to
the closing price of our common stock on a national securities exchange or as
quoted on the Nasdaq National Market, the average of the closing bid and asked
prices of the Company's common stock in the over-the-counter market or the
fair market value of our common stock as determined by the Board of Directors.
Except as otherwise provided in the applicable option agreement, each option
granted under the 1999 Directors Plan will terminate on the tenth anniversary
of the date of grant of such option. Subject to the optionee continuing to
serve as a director, each initial option will vest and become exercisable as
to 1/48th of the number of shares of common stock originally subject to the
option on each monthly anniversary of the date of grant. Each annual option
will vest and become exercisable on a monthly basis as to 1/12th of the number
of shares originally subject to the option commencing on the 37th month after
the grant date if the optionee is still serving as a director on that monthly
anniversary date.

1999 Equity Incentive Plan

In September 1999, the Board of Directors adopted and the stockholders
approved the 1999 Equity Incentive Plan (the "Equity Plan") to attract and
retain key employees and consultants. The Equity Plan covers an aggregate of
20,000,000 shares of common stock and provides for the issuance of stock
options, stock appreciation rights and restricted stock. All grants of
options, other than pursuant to the 1999 Amended and Restated Directors Plan,
will be granted pursuant to this plan. The maximum number of shares subject to
options or stock appreciation rights that may be granted to any participant in
any calendar year may not exceed 1,000,000 shares. As of January 31, 2000,
options to purchase 4,458,920 shares of common stock, with a weighted average
exercise price of $25.69, were outstanding.

Two types of stock options may be granted under the Equity Plan: incentive
stock options ("ISOs"), which are intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, and non-qualified stock options
("NSOs"). The option price of each NSO granted under the Equity Plan may not
be less than the par value of a share of common stock. The option price of
each ISO granted under the Equity Plan must be at least equal to the fair
market value of a share of common stock on the date the ISO is granted.

A stock appreciation right granted under the Equity Plan entitles its
holder to receive, at the time of exercise, an amount per share equal to the
excess of the fair market value (at the date of exercise) of a share of common
stock over a specified price fixed by the plan administrator. Stock
appreciation rights and limited stock appreciation rights may be granted under
the Equity Plan either alone or in conjunction with all or part of any stock
option granted under the Equity Plan. A limited stock appreciation right
granted under the Equity Plan entitles its holder to receive, at the time of
exercise, an amount per share equal to the excess of the change in control
price of a share of common stock over a specified price fixed by the plan
administrator.

F-26
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

The following table summarizes stock option activity under all the
AltaVista Business option plans:

<TABLE>
<CAPTION>
Weighted
Price Per Average Price
Shares Share Per Share
---------- ------------ -------------
<S> <C> <C> <C>
Options outstanding December 31, 1998.. -- $ -- $ --
Options granted in the acquisition of
Zip2.................................. 998,666 0.06-2.14 0.59
Options granted........................ 8,687,759 8.75-12.00 9.10
Options lapsed or canceled............. (48,143) 0.15-8.75 2.35
---------- ------
Options outstanding July 31, 1999...... 9,638,282 $ 8.25
---------- ------
Options granted (unaudited)............ 4,975,054 $22.33-29.55 $25.72
Options lapsed or canceled
(unaudited)........................... (1,241,646) 0.59-29.55 10.36
Options exercised (unaudited).......... (186,577) 0.14-12.00 7.31
Options exchanged for CMGI options
(unaudited)........................... (512,292) 8.75-12.00 9.07
---------- ------
Options outstanding January 31, 2000
(unaudited)........................... 12,672,821 $14.88
========== ======
</TABLE>

On January 28, 2000, 939,100 stock option grants were approved at an
exercise price to be based either upon an independent valuation of the Company
as of July 31, 2000 or using the price of an initial public offering of the
Company's common stock, which ever occurs first. Because the exercise price of
these grants is not yet determinable, such grants are not included in the
preceding table.

The following table summarizes significant ranges of outstanding and
exercisable options at July 31, 1999:

<TABLE>
<CAPTION>
Options
Options Outstanding Exercisable
------------------------------- ----------------
Weighted
Average Weighted Weighted
Contractual Average Average
Remaining Exercise Exercise
Shares Life (Years) Price Shares Price
--------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
Range of exercise prices
$0.06-2.14.................... 960,923 9.0 $ 0.59 237,875 $0.59
$8.75......................... 7,751,560 9.8 8.75 -- --
$12.00........................ 925,799 9.9 12.00 -- --
--------- ------ ------- -----
9,638,282 $8.25 237,875 $0.59
========= ====== ======= =====
</TABLE>

The weighted average fair value per share of stock based compensation
issued during the seven months ended July 31, 1999 was $23.71. The fair value
of these options was estimated using the Black-Scholes model with the
following weighted average assumptions:

Assumptions Table:
<TABLE>
<CAPTION>
Seven Months
Ended
July 31, 1999
-------------
<S> <C>
Expected option life (in years)................................ 3.0
Risk-free interest rate........................................ 5.6%
Volatility..................................................... 97.0%
Dividend yield................................................. 0.0%
</TABLE>

F-27
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

The table that follows summarizes the pro forma effect of net loss if the
fair values of stock based compensation had been recognized in the period
presented as compensation expense on a straight-line basis over the vesting
period of the grant. The following pro forma effect on net loss for the
periods presented is not representative of the pro forma effect on net loss in
future years because it does not take into consideration pro forma
compensation expense related to grants made prior to 1995.

<TABLE>
<CAPTION>
Seven Months
Ended
July 31,
1999
------------
<S> <C>
(in thousands, except per share data)
Net loss:
As reported................................................... $(231,977)
Pro forma..................................................... (239,703)
Pro forma net loss per share:
As reported................................................... $ (2.32)
Pro forma..................................................... (2.39)
</TABLE>

1999 Employee Stock Purchase Plan

In December 1999, the Board of Directors adopted and the stockholders
approved the 1999 Employee Stock Purchase Plan (the "Purchase Plan"), which
allows eligible employees, which may include employees located in foreign
jurisdictions, to purchase common stock at a discount from fair market value.
A total of 2,000,000 shares of common stock has been reserved for issuance
under the Purchase Plan.

The Purchase Plan will be implemented by establishing purchase periods that
may be three months, six months or other periods as determined by the plan
administrator. The Purchase Plan may be implemented at different dates in
different countries with the initial purchase period in the first locations
not anticipated to begin before the closing of this offering.

The Purchase Plan permits each employee to purchase common stock through
payroll deductions of up to 15% of the employee's pay. The maximum number of
shares an employee may purchase during a single purchase period is 2,500
shares. Amounts deducted and accumulated by employees are used to purchase
shares of common stock at the end of each purchase period. The price of the
common stock offered under the Purchase Plan is an amount equal to 85% of the
lower of the fair market value of the common stock at the beginning or at the
end of each purchase period.

NOTE 14--COMMITMENTS AND CONTINGENCIES

Lease commitments

The AltaVista Business leases office space and equipment under
noncancelable operating and capital leases with various expiration dates
through 2009. Rent expense for the seven months ended July 31, 1999 and for
the six months ended January 31, 2000 and December 31, 1998 was $1.4 million,
$3.3 million and $0.3 million, respectively.

F-28
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

At July 31, 1999, future minimum lease payments under noncancelable
operating and capital leases are as follows (in thousands):

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
<S> <C> <C>
Year ending July 31,
2000....................................................... $1,708 $ 5,448
2001....................................................... 1,562 6,192
2002....................................................... 913 6,017
2003....................................................... 158 5,951
2004....................................................... 27 5,899
Thereafter................................................. -- 22,135
------ -------
Total minimum lease payments............................... 4,368 $51,642
=======
Less: Amount representing interest......................... 485
------
Present value of capital lease obligations................. 3,883
Less: Current portion...................................... 1,502
------
Long-term portion of capital lease obligations............. $2,381
======
</TABLE>

Included in the above lease commitments as of July 31, 1999 are total
minimum lease payments of $3.9 million and $2.4 million for capital leases and
operating leases, respectively, of Zip2.

Indemnification Agreement

Compaq has agreed to assume liability for certain AltaVista Business claims
or liabilities (primarily related to Shopping.com), and has further
indemnified CMGI and the AltaVista Business for certain claims or liabilities
which existed at or prior to the CMGI acquisition date. As of July 31, 1999,
August 18, 1999 and January 31, 2000, the AltaVista Business has recorded a
receivable from Compaq of approximately $10.3 million representing its claim
against Compaq for the indemnification of a corresponding accrual amount for
certain legal settlements.

Litigation

On December 16, 1999, the Company settled a claim with One Zero Media,
Inc., which related to a condition that existed as of July 31, 1999. The
resulting settlement amount, of approximately $11.5 million, has been recorded
as a general and administrative expense in the combined statement of
operations for the seven-month period ended July 31, 1999, and no offsetting
indemnification from Compaq has been recorded as of this date. The settlement
was paid in full by the Company in January 2000.

Note 15--SEGMENT INFORMATION

The AltaVista Business has adopted SFAS No. 131, which requires the
reporting of segment information using the "management approach" versus the
"industry approach" previously required. Based on the information provided to
the Business's chief operating decision maker for purposes of making decisions
about allocating resources and assessing performance, the Business's
operations have been classified in two primary business segments (i)
advertising, service and other and (ii) product. The advertising, service and
other segment provides advertising and sponsorships, search services,
production and development, licensing of search product software

F-29
<PAGE>

ALTAVISTA COMPANY

(Including Predecessor Operations)

NOTES TO FINANCIAL STATEMENTS--(Continued)

(information as of and for the periods ended December 31, 1998 and January 31,
2000 is unaudited)

and related support services. The product segment provides e-commerce sales of
consumer products. Prior to the acquisition of Shopping.com effective February
15, 1999, the Business's operations were classified in a single operating
segment, advertising service and other headquarter expenses pertain primarily
to and are included in the advertising, service and other operating segment.

Performance measurement and resource allocation for the reportable
operating segments are based on many factors. The primary financial measure
used is loss from operations before stock-based compensation and amortization
of intangibles. The chief operating decision maker does not use a measurement
of total assets for purposes of making decisions about allocating resources
and assessing performance. The total asset information by operating segment
presented below is based upon a reasonable allocation of total assets to each
operating segment. The accounting policies of the reportable operating
segments are the same as those described in the Summary of Significant
Accounting Policies (see Note 1).

The Alta Vista Business derives the vast majority of its revenues from its
operations in the United States. All intercompany transactions have been
eliminated, and intersegment revenues are not significant.

Summarized financial information of the Business's operations by business
segment are as follows (in thousands):

<TABLE>
<CAPTION>
Seven Months Six Months Six Months
Ended Ended Ended
July 31, December 31, January 31,
1999 1998 2000
------------ ------------ -----------
<S> <C> <C> <C>
Net revenues:
Advertising, service and other......... $ 49,812 $ 21,070 $ 79,279
Product................................ 23,781 -- 26,451
--------- -------- ---------
Total revenue........................ $ 73,593 $ 21,070 $ 105,730
========= ======== =========
Loss from operations:
Loss from operations before stock-based
compensation and amortization of
intangibles...........................
Advertising, service and other....... $ (37,560) $(17,793) $ (85,024)
Product.............................. (24,263) -- (12,597)
--------- -------- ---------
(61,823) (17,793) (97,621)
Stock-based compensation and
amortization of intangibles........... 169,758 46,160 445,238
--------- -------- ---------
Loss from operations................. $(231,581) $(63,953) $(542,859)
========= ======== =========
</TABLE>

<TABLE>
<CAPTION>
December 31, July 31, August 18, January 31,
1998 1999 1999 2000
------------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Total assets:
Advertising, service and other.. $ 37,842 $ 90,658 $ 90,482 $ 140,598
Product......................... -- 28,562 20,848 9,910
-------- -------- ---------- ----------
37,842 119,220 111,330 150,508
Goodwill and other intangible
assets, net.................... 226,488 709,185 2,902,202 2,252,216
-------- -------- ---------- ----------
Total assets.................. $264,330 $828,405 $3,013,532 $2,402,724
======== ======== ========== ==========
</TABLE>

F-30
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Compaq Computer Corporation

In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in owner's net investment and of cash flows present
fairly, in all material respects, the financial position of AltaVista (the
"Business") at December 31, 1998, and the results of its operations and its
cash flows for the period from June 12, 1998 through December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Business's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financials statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above. We have not audited the financial statements
of the Business for any period subsequent to December 31, 1998.

PricewaterhouseCoopers LLP

Boston, Massachusetts
June 29, 1999

F-31
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Compaq Computer Corporation

In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in owner's net investment and of cash flows present
fairly, in all material respects, the financial position of AltaVista (the
"Business") at December 31, 1997, and the results of its operations and its
cash flows for the period from January 1, 1998 through June 11, 1998, and the
years ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Business's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financials statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Boston, Massachusetts
June 29, 1999

F-32
<PAGE>

ALTAVISTA

BALANCE SHEET
(in thousands)

<TABLE>
<CAPTION>
December 31,
------------------
1997 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable, less allowance of $1,427 and
$2,832............................................... $ 6,290 $ 12,819
Prepaid expenses...................................... 481 350
-------- --------
Total current assets.................................... 6,771 13,169
Property and equipment, less accumulated depreciation... 10,418 24,173
Goodwill and other intangible assets, net............... 31 226,488
Investments............................................. -- 500
-------- --------
Total assets............................................ $ 17,220 $264,330
======== ========
LIABILITIES AND OWNER'S NET INVESTMENT
Current liabilities:
Long-term debt, current portion....................... $ -- $ 658
Accounts payable...................................... 702 691
Salaries, wages and related items..................... 455 455
Accrued partner fees.................................. 281 7,656
Deferred revenue...................................... 500 150
Other current liabilities............................. 667 774
-------- --------
Total current liabilities............................... 2,605 10,384
-------- --------
Commitments and contingencies
Long-term debt.......................................... -- 1,656
-------- --------
Net contribution from owner............................. 28,738 321,856
Accumulated deficit..................................... (14,123) (69,566)
-------- --------
Owner's net investment.................................. 14,615 252,290
-------- --------
Total liabilities and owner's net investment............ $ 17,220 $264,330
======== ========
</TABLE>

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

F-33
<PAGE>

ALTAVISTA

STATEMENT OF OPERATIONS
(in thousands)

<TABLE>
<CAPTION>
Period from Period from
Year ended January 1, June 12,
December 31, 1998 through 1998 through
---------------- June 11, December 31,
1996 1997 1998 1998
------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues........................... $ 900 $13,813 $13,622 $ 23,517
Cost of revenues................... 1,963 5,008 3,445 6,964
------- ------- ------- --------
Gross profit (loss).............. (1,063) 8,805 10,177 16,553
------- ------- ------- --------
Operating expenses:
Sales and marketing.............. 941 5,615 5,426 23,900
Product development.............. 3,475 6,000 5,413 7,210
General and administrative....... 1,784 2,785 1,744 3,806
Amortization of intangible
assets.......................... 19 25 8 50,982
------- ------- ------- --------
Loss from operations............... (7,282) (5,620) (2,414) (69,345)
Interest expense................... 32 114 79 221
------- ------- ------- --------
Loss before income taxes........... (7,314) (5,734) (2,493) (69,566)
Income taxes....................... -- -- -- --
------- ------- ------- --------
Net loss........................... $(7,314) $(5,734) $(2,493) $(69,566)
======= ======= ======= ========
</TABLE>

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

F-34
<PAGE>

ALTAVISTA

STATEMENT OF CHANGES IN OWNER'S NET INVESTMENT
(in thousands)

<TABLE>
<CAPTION>
Net Total
Contribution Accumulated Owner's Net
from Owner Deficit Investment
------------ ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1996................... $ 1,454 $ (1,075) $ 379
Net loss................................... -- (7,314) (7,314)
Net contribution from owner................ 12,055 -- 12,055
-------- -------- --------
Balance, December 31, 1996................. 13,509 (8,389) 5,120
Net loss................................... -- (5,734) (5,734)
Net contribution from owner................ 15,229 -- 15,229
-------- -------- --------
Balance, December 31, 1997................. 28,738 (14,123) 14,615
Net loss................................... -- (2,493) (2,493)
Net contribution from owner................ 11,536 -- 11,536
-------- -------- --------
Balance, June 11, 1998..................... 40,274 (16,616) 23,658
======== ======== ========
Net loss................................... -- (69,566) (69,566)
Net contribution from owner................ 321,856 -- 321,856
-------- -------- --------
Balance, December 31, 1998................. $321,856 $(69,566) $252,290
</TABLE>

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

F-35
<PAGE>

ALTAVISTA

STATEMENT OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Period from Period from
Year ended January 1, June 12,
December 31, 1998 through 1998 through
---------------- June 11, December 31,
1996 1997 1998 1998
------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss......................... $(7,314) $(5,734) $(2,493) $(69,566)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization.. 854 2,685 2,079 54,147
Provision for bad debts........ -- 1,427 1,220 2,516
Changes in operating assets and
liabilities:
Accounts receivable.......... (573) (7,144) (3,248) (7,017)
Prepaid expenses............. (181) (300) (3,577) 3,708
Accounts payable............. 37 665 47 (58)
Salaries, wages and related
items....................... 161 290 371 (371)
Deferred revenue............. 100 400 (187) (163)
Other current liabilities.... 118 830 (329) 7,681
------- ------- ------- --------
Net cash used in operating
activities................ (6,798) (6,881) (6,117) (9,123)
------- ------- ------- --------
Cash flows from investing
activities:
Purchase of intangible assets.... (75) -- -- (477)
Purchases of property and
equipment....................... (5,182) (8,348) (5,419) (2,906)
Investments...................... -- -- -- (500)
------- ------- ------- --------
Net cash used in investing
activities................ (5,257) (8,348) (5,419) (3,883)
------- ------- ------- --------
Cash flows from financing
activities:
Repayment of long-term debt...... -- -- -- (436)
Net change in contribution from
owner........................... 12,055 15,229 11,536 13,442
------- ------- ------- --------
Net cash provided by
financing activities...... 12,055 15,229 11,536 13,006
------- ------- ------- --------
Net increase in cash ............ $ -- $ -- $ -- $ --
======= ======= ======= ========
Noncash investing activities:
Contribution of net assets from
owner........................... $ -- $ -- $ -- $308,414
Purchase of URL.................. $ -- $ -- $ -- $ 2,930
Noncash financing activities:
Note payable from purchase of
URL............................. $ -- $ -- $ -- $ 2,750
</TABLE>

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

F-36
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS

NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:

Description of business

AltaVista (the "Business") provides Internet search and navigation
technology, enabling the delivery of information through broad-based search
capabilities. The Business's objective is to deliver the most personally
relevant Internet results faster than anyone else on the Internet. With the
leverage from numerous partnerships, the business is extending its services to
delivering highly personalized e-Commerce offerings and local content through
an integrated network of new media and e-Commerce partners.

Basis of presentation

These financial statements present the assets, liabilities, changes in
owner's net investment, results of operations and cash flows applicable to the
operations of the Business. The financial statements of the Business are
derived from the historic books and records of Digital Equipment Corporation
("Digital") through June 11, 1998. As a result of the acquisition of Digital
by Compaq Computer Corporation ("Compaq") on June 11, 1998, the financial
statements of the Business after the acquisition date are derived from the
historic books and records of Compaq and reflect the "pushdown" of Compaq's
bases in the assets and liabilities.

The statement of operations includes all revenues and costs directly
attributable to the Business, including charges for shared facilities,
functions and services used by the Business and provided by Digital or Compaq.
Certain costs and expenses have been allocated based on management's estimates
of the cost of services provided to the Business by Digital or Compaq. Such
costs include corporate research and engineering expenses, corporate selling
and marketing expenses and corporate general and administrative expenses (see
Note 5). Such allocations and charges are based on either a direct cost pass-
through or a percentage of total costs for the services provided based on
factors such as headcount or the specific level of activity directly related
to such costs (i.e., direct spending). Management believes that these
allocations are based on assumptions that are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the costs and expenses which would have resulted if the Business
had been operated as a separate entity.

The Business has incurred recurring losses from operations through December
31, 1998. Compaq has committed to provide the funds required for the conduct
of the Business's operations at least through December 31, 1999 or to the
date, if earlier, on which it ceases to be the controlling shareholder. The
historical operating results may not be indicative of future results.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Significant estimates include the allowance for accounts receivable and the
lives of intangible assets.

Concentration of credit risk

Financial instruments which potentially subject the Business to a
concentration of credit risk consist of accounts receivable. The Business's
accounts receivable are derived primarily from advertising revenue earned from
customers located in the U.S. The Business maintains reserves for potential
credit loss. Historically such losses have not been significant and have been
within management's expectations.

F-37
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

During all the periods presented, the Business derived substantially all of
its revenues from the Procurement and Trafficking Agreement (the "Agreement")
with DoubleClick, Inc. ("DoubleClick"). Under the Agreement, DoubleClick is
the exclusive third-party provider of advertising services on specified pages
within the Business's web site. The agreement was amended on January 7, 1998
to extend the term of the Agreement through December 1999, and to provide that
either party may terminate the Agreement, after July 1998, upon 90 days prior
written notice. The Agreement is expected to continue to account for a
significant portion of the Business's revenues. The termination of the
Agreement, or any development materially affecting the business or financial
condition of DoubleClick would have a material adverse effect on the
Business's results of operations and financial position. Accounts receivable
from DoubleClick comprised 77% and 77.8% of gross accounts receivable as of
December 31, 1997 and 1998, respectively.

Business risks

The Business is subject to risks and uncertainties common to growing
technology-based companies, including rapid technological change, growth and
commercial acceptance of the Internet, dependence on third-party technology,
new service introductions and other activities of competitors, dependence on
key personnel, international expansion, and limited operating history.

Cash

Cash received from operations by the Business is swept by Compaq or Digital
and recorded as reductions of net contribution from owner; disbursements made
by Compaq or Digital on behalf of the Business are recorded as increases to
net contribution from owner.

Property and equipment

Property and equipment were recorded at fair market value at the date of
the acquisition by Compaq. Minor replacements, maintenance and repairs are
charged to current operations. Depreciation is computed by applying the
straight-line method over the estimated useful lives of the related assets as
follows:

<TABLE>
<CAPTION>
Estimated Useful
Lives In Years
----------------
<S> <C>
Machinery and equipment..................................... 3-10
Furniture and fixtures...................................... 5-10
Buildings and improvements.................................. 10-33
</TABLE>

Leasehold improvements are amortized over the shorter of the useful life of
the improvement or the life of the related lease.

Revenue recognition

The Business's revenues are derived primarily from short term advertising
contracts negotiated by DoubleClick in accordance with the terms of the
Agreement. The Business records as revenues its contractual percentage of the
total revenues generated from the delivery of advertisements. Such revenues
are recognized in the periods in which the advertisement is delivered,
provided that no significant obligations remain and collection of the
resulting receivable is probable. To the extent DoubleClick does not collect
billings from the advertisers, or grants additional discounts, the Business is
at risk for its contractual percentage of such bad debts and additional
discounts. Provisions for bad debts and additional discounts are provided at
the time of revenue recognition based upon historical experience and current
economic conditions. Net revenues derived from the Agreement represented 22%,
58%, 68%, and 74% of the Business's total net revenues for the years ended

F-38
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1996 and 1997 and for the period January 1, 1998 through June 11,
1998, and for the period June 12, 1998 to December 31, 1998, respectively.

The Business has recently entered into agreements with partners whereby the
Business receives a percentage of revenues generated by the partners through
e-Commerce transactions. Such revenues are recognized by the Business upon
notification from the partners of revenues earned by the Business and, to
date, have not been significant.

Also included in revenue is the exchange by the Business of advertising
space on the Business' web site for reciprocal advertising space or traffic in
other web sites or receipt of services. Revenue from these transactions is
recognized during the period in which the advertisements are placed and are
recorded at the lower of estimated fair value of the service received or the
estimated fair value of the advertisement given. Revenues from these
transactions represented 7% and 5% of total net revenues for the period
December 31, 1998 through January 1, 1998 and for the year ended December 31,
1997, respectively. Revenues for barter transactions were immaterial for the
period from June 12, 1998 through December 31, 1998 and for the year ended
December 31, 1996.

Deferred revenue

Deferred revenue comprises cash collections in advance of revenue
recognition, primarily associated with banner advertising and consulting
services, and is recognized at the time the Business's obligations under the
contracts are fulfilled.

Fair value of financial instruments

The carrying amount of the Company's financial instruments, which include
accounts receivable, accounts payable, accrued expenses and notes payable
approximate their fair values at December 31, 1997 and 1998.

Intangible assets

Intangible assets primarily consist of trademarks and goodwill resulting
from the "pushdown" of the fair market value of the intangible assets
attributable to the Business as recorded on Compaq's books resulting from the
acquisition of Digital. Intangible assets also relate to the Business's
purchase of Universal Resource Locators ("URL"). Intangible assets are being
amortized on a straight-line basis over their estimated useful lives of three
years.

Impairment of long-lived assets

The Business reviews for the impairment of long-lived assets, certain
identifiable intangibles and goodwill whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss would be recognized when estimated
undiscounted future cash flows expected to result from the use of the asset
and its eventual disposition is less than its carrying amount. If an asset is
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. The Business has not identified any such impairment losses.

Investments

Compaq obtained equity interests in one privately held company which is
intended to be contributed to the Business. The investment resulted in the
Business owning less than 20% of the investee. Accordingly, the investment is
accounted for under the cost method. The investment was purchased near
December 31, 1998, therefore, its carrying value approximates fair value. For
non-quoted investments, the Business's policy is to regularly review the
assumptions underlying the operating performance and cash flow forecasts in
assessing the carrying values.

F-39
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

Product development

Product development costs are expensed as incurred. Software development
costs subsequent to the establishment of technological feasibility are
capitalized and amortized to cost of software. Based upon the Business's
product development process, technological feasibility is established upon
completion of a working model. Costs incurred by the Business between
completion of the working model and the point at which the product is ready
for general release have been insignificant.

Advertising expense

The Business expenses advertising costs the first time the advertisement is
published or broadcasted. Included in sales and marketing is approximately $0,
$2,339,000, $2,465,500 and $2,880,000 for the years ended December 31, 1996
and 1997 and for the period January 1, 1998 through June 11, 1998, and for the
period June 12, 1998 to December 31, 1998, respectively.

Interest expense

Interest expense represented $32,000, $114,000, $79,000 and $221,000 for
the years ended December 31, 1996 and 1997 and for the period January 1, 1998
through June 11, 1998, and for the period June 12, 1998 to December 31, 1998,
respectively. There was no direct interest expense incurred by the Business
until the purchase of the URL in July 1998 (Note 3). Prior to that date,
interest expense corresponded to an allocation of Digital's or Compaq's
worldwide interest expense based upon the Business' proportionate share of
total assets. Management believes that this method provides a reasonable basis
for allocation within the Business' historical statement of operations.

Income taxes

The Business was not a separate taxable entity for federal, state or local
income tax purposes and its operations are included in the consolidated
Digital or Compaq tax returns. The Business accounts for income taxes under
the separate return method in accordance with SFAS No. 109, "Accounting for
Income Taxes." Under the separate return method, deferred tax assets generated
from operating losses required a full valuation allowance because given the
history of operating losses, realizability of such tax benefit is not
probable.

Stock-based compensation plans

As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Business accounts for its stock-based compensation plans using the
intrinsic value method prescribed by Accounting Principals Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, no stock
compensation expense has been recorded for any of the periods presented in the
accompanying financial statements.

Earnings per share

The Business is not a separate legal entity and has no historical capital
structure. Therefore, historical earnings per share have not been presented in
the financial statements.

Comprehensive income

The Business has adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements.

F-40
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

Comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources. To date, the Business has not had any
transactions that are required to be reported in comprehensive income.

Segment information

Effective January 1, 1998, the Business adopted the provisions of SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). The Business identifies its operating segments based on business
activities, management responsibility and geographical location. The Business
has organized its operations in a single operating segment providing delivery
of relevant and personalized e-Commerce offerings and local content. Further,
the Business derives the vast majority of its revenue from its operations in
the United States.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
new standard establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. The Business
does not expect SFAS No. 133 to have a material effect on its financial
position or results of operations.

In February 1998, the Accounting Standards Executive Committee ("AcSEC")
issued Statement of Position ("SoP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SoP 98-1
establishes the accounting for costs of software products developed or
purchased for internal use, including when such costs should be capitalized.
The Business does not expect SoP 98-1, which is effective for the Business
beginning January 1, 1999, to have a material effect on its financial position
or results of operations.

In April 1998, the AcSEC issued SoP 98-5, "Reporting on the Costs of Start-
Up Activities." Start-up activities are defined broadly as those one-time
activities related to opening a new facility, introducing a new product or
service, commencing some new operation or organizing a new entity. Under SoP
98-5, the cost of start-up activities should be expensed as incurred. SoP 98-5
is effective for the Business beginning January 1, 1999 and the Business does
not expect its adoption to have a material effect on its financial position or
results of operations.

NOTE 2--PROPERTY AND EQUIPMENT:

Property and equipment are summarized below (in thousands):

<TABLE>
<CAPTION>
December 31,
---------------
1997 1998
------- -------
<S> <C> <C>
Land........................................................ $ -- $ 3,491
Buildings................................................... -- 8,451
Leasehold improvements...................................... 1,111 1,296
Machinery and equipment..................................... 11,002 11,480
Construction in-process..................................... 2,168 2,773
------- -------
14,281 27,491
Less: Accumulated depreciation.............................. 3,863 3,318
------- -------
Property and equipment, net................................. $10,418 $24,173
======= =======
</TABLE>

Depreciation expense totaled $834,000, $2,660,000, $2,070,000, and
$3,318,000 for the years ended December 31, 1996 and 1997 and for the period
January 1, 1998 through June 11, 1998, and for the period June 12, 1998 to
December 31, 1998, respectively.

F-41
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 3--INTANGIBLE ASSETS:

Intangible assets are summarized below (in thousands):

<TABLE>
<CAPTION>
December 31,
-------------
1997 1998
---- --------
<S> <C> <C>
Goodwill...................................................... $-- $255,600
Completed technology.......................................... -- 12,950
Trademarks.................................................... 75 5,550
Purchased URL sites........................................... -- 3,422
--- --------
75 277,522
Less: accumulated amortization................................ 44 51,034
--- --------
$31 $226,488
=== ========
</TABLE>

Compaq acquisition

On June 11, 1998, Compaq consummated its acquisition of Digital. The
purchase price was allocated to the assets acquired and liabilities assumed
based on Compaq's estimates of fair value. The fair value assigned to
intangible assets acquired was based on a valuation prepared by an independent
third-party appraisal company.

Purchased URL

In March 1996, the Business entered into an agreement pursuant to which the
other party assigned to the Business all of its right, title and interest in
and to the AltaVista URL and the Business agreed to grant the other party a
nonexclusive license to use the AltaVista URL as part of their corporate name.
In July 1998, the other party agreed to sell, transfer and assign to the
Business all of its rights in and to the AltaVista URL granted under the
original agreement for an aggregate consideration of approximately $3.3
million. The consideration paid consists of cash and a note payable of
$2,750,000 (Note 5).

NOTE 4--INVESTMENT:

In December 1998, Compaq purchased 500,000 shares of Series B preferred
stock of Centraal Corporation ("Centraal"). The total consideration paid of
approximately $500,000 has been included in long-term investments from the
date of acquisition and represents an ownership of less than 10%. This
investment is accounted for under the cost method of accounting.

NOTE 5--LONG-TERM DEBT:

Long-term debt consists of a note payable related to the purchased URL
which bears interest at an annual rate of 7%. The note plus accrued interest
is payable in twelve quarterly installments commencing October 1, 1998.

Principal payments due under the note are as follows:

<TABLE>
<S> <C>
1999.................................................................. $ 658
2000.................................................................. 932
2001.................................................................. 724
------
Total................................................................. $2,314
======
</TABLE>

F-42
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 6--RELATED PARTY TRANSACTIONS:

The Business uses Digital or Compaq manufactured equipment for its
operations which represents 60% of the total assets at December 31, 1997 and
are not significant with respect to total assets at December 31, 1998. Digital
manufactured equipment is recorded at fair market value at the date of
acquisition.

Allocated costs

The amounts allocated to the Business and included in the accompanying
statement of operations are as follows (in thousands):

<TABLE>
<CAPTION>
Period from Period from
January 1, June 12,
Year ended 1998 1998
December 31, through through
------------- June 11, December 31,
1996 1997 1998 1998
------ ------ ----------- ------------
<S> <C> <C> <C> <C>
Research and engineering
expenses............... $ 764 $ 558 $318 $388
Selling and marketing
expenses............... 600 600 -- --
General and
administrative
expenses............... 1,001 1,082 631 973
Interest expense........ 32 114 79 145
</TABLE>

Beginning January 1, 1998, selling and marketing expenses were not
allocated from Compaq because these expenses were incurred directly by the
Business.

NOTE 7--INCOME TAXES:

Given the recent history of operating losses, deferred tax assets generated
from operating losses required a full valuation allowance because
realizability of such tax benefit is not probable. Accordingly, the
accompanying statement of operations includes no benefit for income taxes.

Deferred tax assets and liabilities at December 31, 1998 and 1997 are
comprised of the following (in thousands):

<TABLE>
<CAPTION>
December 31,
-----------------
1997 1998
------- --------
<S> <C> <C>
Receivable allowances..................................... $ 655 $ 1,249
Capitalized research and development costs................ 1,752 1,534
Loss carryforwards........................................ 3,615 10,288
Property, plant and equipment............................. -- 2,868
Other..................................................... 14 201
------- --------
Gross deferred tax assets............................... 6,036 16,140
------- --------
Intangible assets......................................... -- (6,036)
Property, plant and equipment............................. (387) --
------- --------
Gross deferred tax liabilities.......................... (387) (6,036)
------- --------
Deferred tax asset valuation allowance.................... (5,649) (10,104)
------- --------
$ -- $ --
======= ========
</TABLE>

Net operating loss carryforwards will remain with Compaq after the assets
and liabilities of the Business are transferred to the Company.

F-43
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 8--MARKETING AGREEMENTS:

Premier Provider Agreement with Netscape

In June 1998, the Business entered into a Premier Provider agreement (the
"Service Agreement") with Netscape Corporation ("Netscape"), whereby Netscape
guaranteed a minimum number of exposures (as defined) for the Business's
search and directory service on the Netscape's Page, as defined. The Service
Agreement is for one year and the Business's minimum financial commitment
under the Service Agreement is $14,150,000, of which $3,650,000 was paid upon
execution of the Service Agreement and $3,500,000 was paid on July 15 and
December 15, 1998. The remaining payment to satisfy the minimum financial
commitment is payable on March 31, 1999. All exposures delivered above the
minimum number of impressions will be payable at specified contractual rates.
Amounts included in sales and marketing expense in the accompanying financial
statements related to the Service Agreement are approximately $1,550,000 for
the period from the date of the Service Agreement through June 11, 1998 and
$10,000,000 for the period from June 12, 1998 through December 31, 1998.

The Business's primary obligation under the Service Agreement is to display
certain Netscape buttons and/or information prominently on the Business's home
page and pages linked thereto. Other obligations include the implementation of
certain technologies to maintain compatibility with the Netscape's browser and
the placement of certain hypertext links for keywords searched on the
Business's Web site. Effective January 11, 1999, the Business terminated the
Service Agreement without penalty.

Premier Search Services Agreement with Microsoft

In September 1998, the Business and Microsoft (the "Portal") entered into a
one year Premier Search Services Agreement (the "Search Services Agreement")
whereby the Portal guaranteed a minimum number of impressions on the Portal's
various internet search versions and Web site (referred to as the "Guaranteed
Impressions"). For the Guaranteed Impressions, the Business shall pay $18
million, in four equal payments of $4.5 million as follows: the first payment
was paid upon execution, the second, third and fourth payments are due 90
days, 180 days and 270 days, respectively after September 16, 1998. All
impressions delivered above the Guaranteed Impressions will be payable at
specified contractual rates, not to exceed a total amount paid of $23 million.
Included in sales and marketing expense in the accompanying financial
statements related to the Search Services Agreement for the period from June
12, 1998 to December 31, 1998 is approximately $6.2 million.

NOTE 9--PENSIONS:

Upon consummation of the acquisition of Digital by Compaq, Compaq assumed
certain of Digital's defined benefit and defined contribution plans of which
employees of the Business were participants. The Business' employees who were
eligible to participate in the Digital plans at the time of the acquisition
continue to be eligible to participate in these plans. The benefits generally
are based on years of service and compensation during the employee's career.
Pension cost is based on estimated benefit formulas.

Additionally, Compaq assumed the defined benefit postretirement plans that
provide medical and dental benefits for Business' retirees and their eligible
dependents in the United States.

The statements of operations include allocated costs as fringe benefits
included in general and administrative expense based upon an average cost per
employee for the retirement plan and are not significant for any periods
presented.

F-44
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 10--STOCK OPTION PLANS:

The following disclosure related to stock-based compensation includes
information applicable to the Business derived from the historic books and
records of Digital through June 11, 1998 and Compaq thereafter.

Included in the acquisition of Digital by Compaq on June 11, 1998, all
outstanding Digital options were cancelled and Compaq issued, in exchange, a
fully vested and exercisable option to purchase shares of Compaq stock. The
Compaq options are subject to all other terms and conditions as applicable
immediately prior to the acquisition.

The following table summarizes activities under the stock option plans
related to employees of the Business:

<TABLE>
<CAPTION>
Weighted
Price Per Average Price
Shares Share Per Share
------- ----------- -------------
<S> <C> <C> <C>
Digital Options
Options outstanding, December 31, 1995: 25,894 $37.30
Options granted........................... 38,890 $0.00-54.13 38.18
Options lapsed or canceled................ (1,000) 56.00 56.00
Options exercised......................... (5,130) 0.00-22.88 5.53
------- ------
Options outstanding, December 31, 1996: 58,654 40.32
Options granted........................... 24,000 46.69-51.69 47.31
Options lapsed or canceled................
Options exercised......................... (4,931) 19.69-37.75 24.07
------- ------
Options outstanding, December 31, 1997: 77,723 43.49
Options granted ..........................
Options lapsed or canceled................ -- --
Options exercised......................... (1,790) 19.69-37.75 21.65
------- ------
Options outstanding, June 11, 1998.......... 75,933 44.00
------- ------
Compaq Options
Options granted in the acquisition of
Digital.................................. 150,997 9.90-39.23 22.03
Options granted........................... 109,500 35.88 35.88
Options lapsed or canceled................ (2,386) 36.71 36.71
Options exercised......................... (94,001) 9.90-23.48 20.69
------- ------
Options outstanding, December 31, 1998...... 164,110 $31.82
======= ======
</TABLE>

The following table summarizes significant ranges of outstanding and
exercisable options at December 31, 1998:

<TABLE>
<CAPTION>
Options
Options Outstanding Exercisable
--------------------------------------- ----------------------
Weighted
Average Weighted Weighted
Range of Contractual Average Average
Exercise Remaining Exercise Exercise
Prices Options Life (Years) Price Options Price
-------------- ------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
$10.01 - 15.00 3,802 2.42 $11.50 3,802 $11.50
15.01 - 20.00 15,909 7.67 18.98 15,909 18.98
20.01 - 25.00 5,668 7.33 22.66 5,668 22.66
25.01 - 30.00 27,044 7.42 27.06 27,044 27.06
over 30.00 111,687 9.51 35.95 9,487 36.65
------- ------
164,110 8.74 31.81 61,910 19.48
======= ======
</TABLE>

F-45
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

The weighted average fair value per share of stock based compensation
issued during the years ended December 31, 1996 and 1997 and during the period
from June 12, 1998 through December 31, 1998 was $15.53, $17.23, and $13.53,
respectively. There were no options issued during the period from January 1,
1998 to June 11, 1998. The fair value for these options was estimated using
the Black-Scholes model with the following weighted average assumptions.

Assumptions Table:

<TABLE>
<CAPTION>
Period from
January 1,
Year Ended 1998 Period from
December 31, Through June 12,
--------------- June 11, 1998 Through
1996 1997 1998 December 31,
Digital Digital Digital 1998 Compaq
------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Expected option life (in years)... 4 4 2 2
Risk-free interest rate........... 6.2% 6.3% 5.5% 4.6%
Volatility........................ 35.0% 35.0% 35.0% 33.5%
Dividend yield.................... 0.0% 0.0% 0.0% 0.2%
</TABLE>

<TABLE>
<CAPTION>
Period from
January 1, Period from
Year Ended 1998 June 12,
December 31, through 1998 through
---------------- June 11, December 31,
1996 1997 1998 1998
------- ------- ----------- ------------
<S> <C> <C> <C> <C>
(In thousands)
Net loss:
As reported..................... $(7,314) $(5,734) $(2,493) $(69,566)
Pro forma....................... (7,375) (5,904) (2,603) (69,665)
</TABLE>

NOTE 11--SUBSEQUENT EVENTS:

Acquisitions

Compaq acquired Shopping.com effective February 15, 1999. The aggregate
purchase price of $256.9 million consisted primarily of $218.9 million in
cash, the issuance of employee stock options with a fair value of $32 million
and other acquisition costs.

Compaq also acquired Zip2 on April 1, 1999. The aggregate purchase price of
$339.1 million consisted of $307.2 million in cash, the issuance of
approximately 999,000 employee stock options with a fair value of
$25.9 million and other acquisition costs.

Both acquisitions were intended to be included in the Business. On June 29,
1999, Compaq entered into a Purchase and Contribution Agreement (the "Purchase
Agreement") with CMGI whereby Compaq agreed to effectively sell controlling
interests in the Business including Zip2 and Shopping.com.

F-46
<PAGE>

ALTAVISTA

NOTES TO FINANCIAL STATEMENTS--(Continued)

Procurement and Trafficking Agreement with DoubleClick

Effective January 1, 1999, the Agreement has been amended by the Interim
Amended and Restated Services Agreement so that the Business could form its
internal sales force to sell advertisements directly to advertisers.
DoubleClick no longer has the exclusivity to sell advertisements on the
Business's web site. DoubleClick only retains the exclusivity for delivering
through its proprietary computer system the advertisements negotiated either
by DoubleClick or by the Business. Under the new agreement, the Business is
bearing substantially the entire economic risk of the transaction. This
agreement is for a term of three years from the effective date (the "Initial
Term"). The agreement is automatically renewed for additional twelve-month
periods following the Initial Term unless either party provides notice of
termination during the third year of the Agreement and no later than ninety
days prior to expiration of the Initial Term or no later than 180 days prior
to the expiration of any twelve-month renewal period.

Premier Search Services Agreement with Microsoft

The Search Services Agreement was amended in February 1999. Under the
amended Search Services Agreement, Microsoft guaranteed a minimum number of
impressions for a total consideration of $16.5 million. No additional payment
is due if the number of impressions delivered exceeds the minimum number of
impressions. A payment of $4.5 million has been made as of December 31, 1998.
A second payment of $12 million is due after the effective date of the Search
Services Agreement.

Stock Option Plan

On May 28, 1999, the Company adopted the AltaVista Company 1999 Stock
Option Plan (the "Plan"). The Plan will be administered by a committee of the
Board designated by the Board of Directors to administer the Plan and composed
of individuals who are, to the extent necessary, "non-employee directors".

F-47
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder of Shopping.com

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of shareholders' equity (deficit) and
of cash flows present fairly, in all material respects, the financial position
of Shopping.com and its subsidiary at January 31, 1998 and 1999, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above. We have not audited the consolidated financial
statements of Shopping.com for any period subsequent to January 31, 1999.

PricewaterhouseCoopers LLP

Costa Mesa, California
June 9, 1999, except as to Note 12,
which is as of July 2, 1999

F-48
<PAGE>

SHOPPING.COM

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents......................... $ 4,761,000 $ 90,000
Accounts receivable, net of allowance for doubtful
accounts of $10,000 and $61,000.................. 169,000 648,000
Prepaid and other current assets.................. 666,000 1,465,000
Deposits.......................................... 1,373,000
----------- ------------
Total current assets................................ 5,596,000 3,576,000
Property and equipment, net......................... 2,846,000 1,972,000
Other assets........................................ 216,000 546,000
----------- ------------
Total assets........................................ $ 8,658,000 $ 6,094,000
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable.................................. $ 777,000 $ 5,580,000
Notes payable..................................... 3,000,000
Other accrued liabilities......................... 583,000 12,252,000
Current portion of capital lease obligations...... 211,000 250,000
----------- ------------
Total current liabilities........................... 1,571,000 21,082,000
Capital lease obligations, net of current portion... 229,000 92,000
----------- ------------
Total liabilities................................... 1,800,000 21,174,000
----------- ------------
Commitments and contingencies (Note 9)
Shareholders' Equity (Deficit)
Common stock, no par value 20,000,000 shares
authorized; 4,002,000 and 10,212,406 shares
issued and outstanding........................... 14,817,000 42,102,000
Unearned compensation............................. (557,000) (58,000)
Accumulated deficit............................... (7,402,000) (57,124,000)
----------- ------------
Total shareholders' equity (deficit)................ 6,858,000 (15,080,000)
----------- ------------
Total liabilities and shareholders' equity
(deficit).......................................... $ 8,658,000 $ 6,094,000
=========== ============
</TABLE>

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

F-49
<PAGE>

SHOPPING.COM

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Net sales........................................... $ 851,000 $ 8,122,000
Cost of sales....................................... 856,000 10,122,000
----------- ------------
Gross loss.......................................... (5,000) (2,000,000)
----------- ------------
Operating expenses:
General and administrative (a).................... 2,324,000 19,193,000
Advertising and marketing (a)..................... 2,006,000 10,087,000
Product development (a)........................... 658,000 3,288,000
Stock-based compensation.......................... 675,000 6,696,000
Loss on disposal of assets........................ 25,000 1,539,000
----------- ------------
Total operating expenses........................ 5,688,000 40,803,000
----------- ------------
Loss from operations................................ (5,693,000) (42,803,000)
----------- ------------
Other income (expense):
Interest expense.................................. (1,195,000) (5,819,000)
Interest income................................... 15,000 71,000
----------- ------------
Total other income (expense).................... (1,180,000) (5,748,000)
----------- ------------
Loss before extraordinary item.................... (6,873,000) (48,551,000)
Extraordinary loss (Note 6)....................... (1,171,000)
----------- ------------
Net loss............................................ $(6,873,000) $(49,722,000)
=========== ============
Basic and diluted per share amounts:
Loss before extraordinary item.................... $ (4.03) $ (10.10)
=========== ============
Extraordinary Item................................ $ -- $ (0.24)
=========== ============
Net loss.......................................... $ (4.03) $ (10.34)
=========== ============
Weighted average shares outstanding............... 1,786,894 4,808,069
=========== ============
</TABLE>
- --------

(a) Excludes stock-based compensation for the years ended December 31, 1998
and 1999, respectively, as follows: General and administrative $459 and
$6,588; Advertising and marketing $211 and $105; and Product development
$5 and $3.

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

F-50
<PAGE>

SHOPPING.COM

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
Preferred Stock
--------------------------------------------
Series A Convertible Series B Convertible Common Stock
--------------------- --------------------- ---------------------- Unearned Accumulated
Shares Amount Shares Amount Shares Amount Compensation Deficit Total
---------- --------- ---------- --------- ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January
31, 1997....... -- $ -- -- $ -- 1,152,500 $ 123,000 $ -- $ (202,000) $ (79,000)
Sale of common
stock.......... 100,000 2,000 2,000
Issuance of
common stock
for services... 38,000 54,000 54,000
Contribution of
domain name.... 90,000 90,000
Sale of Series A
Preferred
Stock.......... 1,000,000 200,000 200,000
Issuance of
Series A
Preferred Stock
for net
assets,........ 500,000 100,000 (100,000)
Sale of Series B
Preferred
Stock, net..... 1,073,000 749,000 749,000
Beneficial
conversion
feature........ 327,000 (327,000)
Issuance of
common stock
for software... 125,000 1,000,000 1,000,000
Sale of common
stock in IPO,
net............ 1,300,000 9,374,000 9,374,000
Conversion of
Series A and B
Preferred to
Common Stock... (1,500,000) (300,000) (1,073,000) (749,000) 1,286,500 1,049,000
Issuance of
warrants, net.. 1,666,000 1,666,000
Unearned
compensation... 1,232,000 (1,232,000)
Amortization of
unearned
compensation... 675,000 675,000
Net loss........ (6,873,000) (6,873,000)
---------- --------- ---------- --------- ---------- ----------- ----------- ------------ ------------
Balance, January
31, 1998....... -- -- -- -- 4,002,000 14,817,000 (557,000) (7,402,000) 6,858,000

Exercise of
stock options.. 5,175 5,000 5,000
Issuance of
common stock
for services... 121,226 2,878,000 2,878,000
Conversion of
debt to common
stock.......... 3,806,701 1,833,000 1,833,000
Issuance of
warrants, net.. 13,290,000 13,290,000
Exercise of
warrants....... 2,277,304 3,082,000 3,082,000
Stock-based
compensation--
employees...... 2,869,000 2,869,000
Stock-based
compensation--
nonemployees... 3,328,000 3,328,000
Amortization of
unearned
compensation... 499,000 499,000
Net loss........ (49,722,000) (49,722,000)
---------- --------- ---------- --------- ---------- ----------- ----------- ------------ ------------
Balance, January
31, 1999....... $ -- $ -- 10,212,406 $42,102,000 $ (58,000) $(57,124,000) $ 15,080,000
---------- --------- ---------- --------- ---------- ----------- ----------- ------------ ------------
</TABLE>

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

F-51
<PAGE>

SHOPPING.COM

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(6,873,000) $(49,722,000)
Adjustments to reconcile net loss to net cash used
in operating activities
Common stock issued for services................. 54,000 2,878,000
Warrants issued for services..................... 2,914,000
Amortization of debt issuance costs.............. 91,000 1,149,000
Amortization of debt discount.................... 1,082,000 2,462,000
Amortization of beneficial conversion feature.... 1,999,000
Extraordinary loss on conversion of notes
payable......................................... 1,171,000
Stock-based compensation--employees.............. 675,000 3,368,000
Stock-based compensation--nonemployees........... 3,328,000
Accrued interest converted to Common Stock....... 142,000
Depreciation and amortization.................... 163,000 600,000
Loss on disposal of assets....................... 25,000 1,539,000
Allowance for doubtful accounts.................. 10,000 61,000
Changes in assets and liabilities:
Accounts receivable.............................. (179,000) (636,000)
Prepaid expenses................................. (771,000) (799,000)
Deposits......................................... (196,000)
Other assets..................................... (34,000) (354,000)
Accounts payable................................. 546,000 4,803,000
Other accrued liabilities........................ 265,000 12,018,000
Stock subscription............................... 23,000
----------- ------------
Net cash used in operating activities.......... (4,923,000) (13,275,000)
----------- ------------
Cash flows from investing activities:
Purchase of property and equipment................. (1,564,000) (1,006,000)
----------- ------------
Net cash used in investing activities.......... (1,564,000) (1,006,000)
----------- ------------
Cash flows from financing activities:
Proceeds from the issuance of note payable--
related party..................................... 305,000
Payments on note payable--related party............ (355,000)
Payment on capital lease obligations............... (9,000) (333,000)
Proceeds from the issuance of notes payable........ 1,750,000 4,825,000
Payments on notes payable.......................... (1,750,000) (850,000)
Proceeds from exercise of warrants................. 1,905,000
Payment of debt issuance costs..................... (241,000) (942,000)
Proceeds from the issuance of Series A Preferred
Stock, net........................................ 200,000
Proceeds from the issuance of Series B Preferred
Stock, net........................................ 1,483,000
Proceeds from the issuance of 8% Debentures........ 5,000,000
Proceeds from the issuance of Common Stock, net.... 9,865,000 5,000
----------- ------------
Net cash provided by financing activities...... 11,248,000 9,610,000
----------- ------------
Net increase (decrease) in cash and cash
equivalents................................... 4,761,000 (4,671,000)
Cash and cash equivalents, beginning of
period........................................ -- 4,761,000
----------- ------------
Cash and cash equivalents, end of period....... $ 4,761,000 $ 90,000
=========== ============
Supplemental disclosure of cash flow information--
Note 3
</TABLE>

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

F-52
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY

Shopping.com (the "Company") was incorporated in California on November 22,
1996. Cyber Depot, Inc. ("CyberDepot") was incorporated in California in
January 1996 and among other business ventures commenced the design and
development of proprietary software for the Internet shopping marketplace in
February 1996. In March 1997, CyberDepot exchanged substantially all of its
assets and liabilities and proprietary software for 500,000 shares of Series A
Preferred Stock and Common Stock warrants (Note 7). The Company and CyberDepot
are considered to be entities under common control; accordingly, CyberDepot's
results have been combined with the Company since February 1996.

The Company is an Internet-based electronic retailer in marketing a broad
range of products to both consumers and trade customers. The Company employs
proprietary information systems along with industry software to provide its
customers with access to an automated marketplace of products, which consist
of inventories of multiple manufacturers and distributors, price comparisons,
detailed product descriptions, delivery status of products ordered and back
order information. The Company commenced selling products over the Internet in
July 1997 and completed its initial public offering ("IPO") in November 1997.

The Company's fiscal year ends on January 31; accordingly, all references
to 1998 and 1999 are for the years ended January 31, 1998 and 1999,
respectively.

The Company has incurred losses from operations through January 31, 1999.
Compaq Computer Corporation ("Compaq") has committed to provide the funds
required for the conduct of the Company's operations at least through January
31, 2000 or to the date, if earlier, on which it ceases to be the controlling
shareholder (Notes 11 and 12).

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany transactions and balances
have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
valuation of warrants, equity and debt securities, allowances for doubtful
accounts, and product returns, and litigation reserves require the use of
significant estimates. The Company believes the techniques and assumptions
used in establishing these estimates are appropriate.

Fair Value of Financial Instruments

It is management's belief that the carrying amounts for the Company's
financial instruments are reasonable estimates of their related fair values
due to the short-maturity of these instruments.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with an original
maturity of three months or less to be cash equivalents.

F-53
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Deposits

Deposits primarily consist of cash held by a third party that was collected
on behalf of the Company from the exercise of stock options and warrants. Of
the total $1,373,000 outstanding as of January 31, 1999, $1,177,000 represent
the deposits held by the third party.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. The Company maintains its cash and cash equivalents in bank
deposit accounts which, at times, may exceed federally insured limits. The
Company has not experienced any losses in these accounts and believes that it
is not exposed to any significant credit risk.

Accounts receivable are typically unsecured and are derived from revenues
earned from customers primarily located in the United States. The Company
generally requires no collateral from its customers for non-credit card sales.
To date, the Company has not experienced any material losses.

During 1998 and 1999, the Company sold products to its lead underwriter in
its IPO that accounted for approximately 40% and 2% of total net sales,
respectively. During 1998 and 1999, the Company purchased products from four
and two vendors, respectively, that represented 10% or more of total
purchases. These vendors represented 85% and 49% of total purchases in 1998
and 1999, respectively.

Long-Lived Assets

The Company assesses potential impairments to its long-lived assets when
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. An impairment loss would be recognized when the
sum of the expected future undiscounted net cash flows is less than the
carrying amount of the asset. The amount of the impairment loss is based on
the difference between the related asset's carrying value and the expected
future discounted net cash flows.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation
and amortization using the straight-line method over the following estimated
useful lives:

<TABLE>
<S> <C>
Computer equipment.......................................... 5 years
Purchased software.......................................... 3 to 5 years
Furniture and equipment..................................... 5 to 7 years
Leasehold improvements...................................... 5 years
</TABLE>

Leasehold improvements and assets under capital leases are amortized over
the term of the lease or estimated useful lives, whichever is shorter.
Maintenance and minor replacements are charged to expense as incurred. Gains
and losses on disposals are included in the results of operations. During
1999, the Company wrote-off the $1,201,000 carrying value of certain purchased
software which management determined had no future benefit.

Issuance Costs

Issuance costs are amounts paid or the estimated value of warrants issued
to placement agents or financial consultants to obtain debt or equity
financing. The Company allocates issuance costs for debt issued with warrants
between debt and equity based on the relative fair value of the individual
elements at the time of

F-54
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

issuance. Debt issuance costs are recorded as deferred charges and are
amortized over the term of the related debt using the effective interest
method. Equity issuance costs are deducted from the proceeds of the related
equity securities.

Stock-Based Compensation

The Company accounts for employee stock compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and complies with the
disclosure provisions of Statement of Financial Accounting Standards
"Accounting for Stock-Based Compensation" ("SFAS 123"). Under APB 25,
compensation expense is based on the difference, if any, on the date of grant
between the fair value of the Company's Common Stock and the exercise price.
Unearned compensation is amortized over the vesting period of the related
options.

Stock Split

At the completion of the Company's IPO in November 1997, the Company
effected a one-for-two reverse stock split of its Common Stock. All share and
per share data have been retroactively restated to reflect this stock split.

Revenue Recognition

The Company recognizes revenue at the time the vendor ships the product to
the customer. The Company provides an allowance for sales returns based on
historical experience. To date, the Company's sales returns have been
insignificant.

Advertising

The Company expenses advertising costs the first time the advertisement is
published or broadcasted. Included in advertising and marketing is $899,000
and $6,234,000 in advertising expense for 1998 and 1999, respectively.

Product Development

Product development expenses consist principally of payroll, consulting
fees, and related expenses for development and maintenance of the Company's
web site, including depreciation of computer equipment and purchased software.
All product development costs have been expensed as incurred.

Income Taxes

Income taxes are computed using the asset and liability method. Under the
asset and liability method, deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of
deferred tax assets that, based on available evidence, are not expected to be
realized.

Net Loss per Share

The Company computes net loss per share in accordance with SFAS 128
"Earnings per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per
share is computed by dividing the net loss available to common shareholders
for the period by the weighted average number of Common Stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if the effect is antidilutive.

F-55
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Comprehensive Income

Effective February 1, 1998, the Company adopted the provisions of SFAS 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all charges in equity (net assets) during a
period from non-owner sources. To date, the Company has not had any material
transactions that are required to be reported in comprehensive income.

Segment Information

Effective January 1, 1998, the Company adopted the provisions of SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information." The
Company operates in a single business segment that provides eCommerce to
individuals and businesses. The adoption of SFAS 131 did not have a material
impact to the Company's financial statement disclosure.

Recent Accounting Pronouncements

In March 1998, Statement of Position 98-I "Accounting for the Cost of
Computer Software Developed of Obtained for Internal Use" ("SOP 98-1") was
issued. SOP 98-1 provides guidance over accounting for computer software
developed or obtained for internal use including the requirement to capitalize
specified costs and amortization of such costs. The Company will adopt the
provisions of SOP 98-1 for the fiscal year ending January 31, 2000, and does
not expect adoption to have a material impact on its financial position and
results of operations.

In April 1998, SOP 98-5 "Reporting on the Costs of Start-Up Activities" was
issued. Start-up activities are defined broadly as those one-time activities
relating to opening a new facility, introducing a new product or service,
conducting business in a new territory, conducting business with a new class
of customer, commencing some new operation or organizing a new entity. Under
SOP 98-5, the cost of start-up activities should be expensed as incurred. SOP
98-5 is effective for the Company's year ending January 31, 2000. The Company
does not expect adoption to have a material impact to its financial position
and result of operations.

NOTE 3--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

In February and September 1998, the Company executed two separate
agreements with the same party whereby it issued 47,059 and 66,667 shares of
Common Stock, respectively, in exchange for radio advertising valued at
$2,675,000. The value of the advertising was based on the fair value of the
Common Stock issued. During 1999, the Company entered into two separate
agreements for investor and public relation services in exchange for shares of
Common Stock and stock options (Note 9). In September 1997, the Company
entered into an agreement whereby it issued 125,000 shares of the Company's
Common Stock in exchange for a five year software license. The estimated fair
value of the software license was $1,000,000. The value of other services
provided in exchange for Common Stock was based on the fair value of the
Common Stock issued.

F-56
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company entered into the following non-cash investing and financing
activities:

<TABLE>
<CAPTION>
Year Ended January
31,
---------------------
1998 1999
---------- ----------
<S> <C> <C>
Supplemental Schedule of Non-Cash Investing and
Financing Activities
Common Stock issued or to be issued for services... $ 54,000 $4,497,000
Warrants and options issued or to be issued for
services.......................................... 3,100,000
Exercise of warrants............................... 1,177,000
Common Stock issued for software license........... 1,000,000
Conversion of debt into Common Stock............... 1,833,000
Series A Preferred Stock and Common Stock warrants
issued in exchange for net assets................. 100,000
Contribution of domain name........................ 90,000
Equipment acquired under capital leases............ 449,000 236,000
Supplemental Disclosures of Cash Flow Information
Cash paid for interest............................. 56,000 86,000
Cash paid for taxes................................ -- --
</TABLE>

NOTE 4--COMPOSITION OF CERTAIN BALANCE SHEET COMPONENTS

Prepaid and other current assets consist of the following:

<TABLE>
<CAPTION>
January 31,
-------------------
1998 1999
-------- ----------
<S> <C> <C>
Advertising............................................. $458,000 $ 104,000
Insurance............................................... 112,000 20,000
Investor and public relations........................... 1,295,000
Other................................................... 96,000 46,000
-------- ----------
$666,000 $1,465,000
======== ==========
</TABLE>

Property and equipment consist of the following:

<TABLE>
<CAPTION>
January 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Computer equipment................................... $1,229,000 $1,698,000
Purchased software................................... 1,469,000 475,000
Furniture and equipment.............................. 237,000 309,000
Leasehold improvements............................... 59,000 103,000
---------- ----------
2,994,000 2,585,000
Less accumulated depreciation and amortization....... (148,000) (613,000)
---------- ----------
Total.............................................. $2,846,000 $1,972,000
========== ==========
</TABLE>

F-57
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Included in property and equipment at January 31, 1998 and 1999 is equipment
acquired under capital leases of $449,000 and $685,000 with related accumulated
amortization of $11,000 and $134,000, respectively. During 1997, 1998, and
1999, the Company recorded $1,000, $147,000 and $577,000 in depreciation
expense, respectively. Other assets consist of the following:

<TABLE>
<CAPTION>
January 31,
-----------------
1998 1999
-------- --------
<S> <C> <C>
Deposits................................................... $105,000 $487,000
Other...................................................... 111,000 59,000
-------- --------
$216,000 $546,000
======== ========
</TABLE>

Other accrued liabilities consist of the following:

<TABLE>
<CAPTION>
January 31,
------------------------
1998 1999
----------- ------------
<S> <C> <C>
Legal.............................................. $ 331,000 $ 1,000,000
Litigation reserves................................ 113,000 8,510,000
Investor and public relations...................... 1,805,000
Termination and severance.......................... 307,000
Payroll and vacation............................... 76,000 151,000
Gift certificates.................................. 150,000
Other.............................................. 63,000 329,000
----------- ------------
$ 583,000 $ 12,252,000
=========== ============
</TABLE>

NOTE 5--NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss
per share:

<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Loss before extraordinary item.................. $(6,873,000) $(48,551,000)
Preferred stock dividends from beneficial
conversion feature............................. (327,000)
----------- ------------
Loss before extraordinary item available to
common shareholders............................ (7,200,000) (48,551,000)
Extraordinary loss (Note 6)..................... (1,171,000)
----------- ------------
Net loss available to common shareholders....... $(7,200,000) $(49,722,000)
----------- ------------
Weighted average shares outstanding............. 1,786,894 4,808,069
----------- ------------
Basic and diluted per share amounts:
Loss before extraordinary item................ $ (4.03) $ (10.10)
----------- ------------
Extraordinary item............................ $ -- $ (0.24)
----------- ------------
Net loss...................................... $ (4.03) $ (10.34)
=========== ============
</TABLE>

F-58
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table sets forth potential dilutive securities that are not
included in the diluted net loss per share calculation above because to do so
would be antidilutive in the periods indicated:

<TABLE>
<CAPTION>
Year Ended
January 31,
---------------------
1998 1999
---------- ----------
<S> <C> <C>
Weighed average effect of potential dilutive securities:
Series A Preferred Stock............................... $ 734,000 --
Series B Preferred Stock............................... 324,000 --
Common Stock warrants.................................. 19,000 $ 754,000
Common Stock options................................... 61,000 447,000
---------- ----------
$1,138,000 $1,201,000
========== ==========
</TABLE>

NOTE 6--BORROWINGS

Convertible Debentures

In June, July and November 1998, the Company issued $1,250,000, $1,250,000
and $2,500,000, respectively of 8% convertible debentures ("the 8%
Debentures"). Interest is payable quarterly, two years from the issuance date
(the "Maturity Date") or upon conversion. The Company, at its option, may pay
any accrued interest in shares of Common Stock at the Conversion Price then in
effect, as defined. The Debentures are convertible into Common Stock at a
conversion price equal to the lower of (i) the lowest market price for any
three days in the 30 days preceding conversion; or (ii) $16.00 per share (the
"Base Rate"), which is subject to a 10% reduction in the event of contract
breach, as defined. The holders of the 8% Debentures may convert up to 20% of
the original principal amount between 30 days and 90 days after issuance, up
to an additional 25% (45% cumulative) 120 days after issuance, up to an
additional 35% (80% cumulative) 150 days after issuance, with the balance
being convertible at anytime thereafter. Any 8% Debentures not previously
converted as of the Maturity Date automatically convert into Common Stock at
the applicable conversion rate, as defined.

The holders of the 8% Debentured receive one warrant to purchase one share
of Common Stock for each two shares of Common Stock issued in connection with
the corresponding conversion of the 8% Debentures. The warrants attributable
to each conversion have an exercise price equal to the lesser of (i) 120% of
the lowest market price for any three trading days prior to conversion or (ii)
125% of the Base Rate. The warrants expire in June 2003. The Company has the
right to redeem all or any portion of the Debentures, subject to a Redemption
Premium, as defined. The holders of the 8% Debentures may require the Company
to redeem the outstanding portion of the 8% Debentures in the event of a
contract breach, as defined. Additionally, in the event of contract default,
the holders may consider the 8% Debentures immediately due and payable.

In connection with the issuance of the 8% Debentures, the Company issued
warrants and made payments to placement agents, which were recorded as debt
and equity issuance costs. The debt issuance costs were originally being
amortized as additional interest expense ratably over the term of the 8%
Debentures. In November and December of 1998, the entire $5,000,000 principal
amount, plus accrued interest of the 8% Debentures was converted into
3,323,781 shares of Common Stock and 1,627,153 warrants were issued and then
exercised into 1,627,153 shares of Common Stock.

Promissory Notes

In December 1998, the Company issued a $2,500,000 secured promissory note
with a 10% per annum interest rate payable in 30 days provided however, if
within 30 days the Company closes a financing transaction, as defined, the
holder had the right to convert the note into the same class of security as
the defined financing transaction. In conjunction with the promissory note,
the Company issued 500,000 warrants to purchase common

F-59
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

stock at a price of $7.00 per share, subject to adjustment, which expire in
December 2001. The promissory note was secured by a Non-Resource Guaranty and
Pledge Agreement with a former officer and current shareholder of the Company.
In exchange for this guaranty, the former officer received 130,000 warrants to
purchase common stock at a price of $7.00 per share, subject to adjustment,
which expire in December 2003. The secured promissory note is also secured by
all assets of the Company. The secured promissory note was paid in full in
February 1999.

In September 1998, the Company issued a $500,000 promissory note to a
related party (a director of the Company is also a member of the Board of
Directors of the corporation to which the Company issued the promissory note)
that was due at the earlier of the Company receiving $500,000 in additional
financing from another source or October 1998. The Company also issued 30,000
warrants to purchase shares of Common Sock at an exercise price of $2.25 per
share. The warrants expires in September 2003. During October 1998, the
Company repaid $200,000 and renegotiated a revised due date of the earlier of
the Company receiving $300,000 in additional financing from another source or
December 1998. In connection with the modification, the Company also issued
30,000 additional warrants to purchase shares of the Company's Common Stock at
an exercise price of $1.65 that expires in November 2003. The remaining
balance of $300,000 was paid in January 1999.

In August 1998, the Company issued a $500,000 convertible promissory note
that is due six months from the date of issuance, with an interest rate of 8%
per annum, that have been converted into Common Stock at a rate of $10.00 per
share. In connection with the issuance of the convertible promissory note, the
Company issued 50,000 warrants to purchase shares of Common Stock at an
exercise price of $10.00 that expires in August 2001. The Company also issued
warrants to purchase 10,000 shares of Common Stock to the placement agent, the
value of which has been accounted for as debt and equity issuance costs. The
warrants issued to the placement agent contain the same terms and conditions
as the warrants issued with the convertible promissory note. In January 1999,
the note plus accrued interest, were converted into 156,196 shares of Common
Stock.

In May through July 1998, the Company issued $1,325,000 of unsecured
promissory notes at an interest rate of 8% per annum with principal and
accrued interest due six months from the date of issuance. In conjunction with
the issuance, the promissory note holders received a total of 132,500 warrants
to purchase shares of Common Stock that are exercisable until May 2001 (10,000
warrants are exercisable until June 2001) at an exercise price of $14.00 per
share. In November 1998, the Company provided the note holders with the option
to convert the promissory notes or extend the maturity date by 90 days in
exchange for warrants with an exercise price of $7.00 to purchase the
Company's Common Stock. Of the total promissory notes, $475,000 plus accrued
interest, were converted into shares of Common Stock and $350,000 was paid in
January 1999. The Company issued an additional 71,250 warrants to the note
holders. The holder of the remaining unpaid $500,000 principal balance has
filed a compliant against the Company contending that its entitled to convert
the note into Common Stock. The balance has not yet been paid. As a result of
the conversion of the notes to Common Stock, the Company reorganized a
$1,171,000 extraordinary loss which represents the excess of the fair value of
the Common Stock and warrants over the carrying value of the note on the date
of conversion. In addition, the Company issued warrants to purchase 20,000
shares of Common Stock at an exercise price of $14.00 per share to the
placement agent, the value of which has been accounted for as debt and equity
issuance costs.

In September 1997, the Company issued a $600,000 note to a shareholder of
the Company with an interest rate of 10% per annum that was due the earlier of
nine months or the closing of an IPO. In conjunction with the note, the
Company issued 199,800, five year warrants with an exercise price of $4.50 per
share. The note was paid in full in 1998.

F-60
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

During June through July 1997, the Company issued $1,150,000 in
subordinated promissory notes each with an interest rate of 10% per annum that
were due the earlier of nine months from the date of issuance or the closing
of an IPO. The note holders were issued 333 warrants for every $1,000 of note
principal at an exercise price of $6.00 per share that were exercisable any
time after the earlier of 90 days after the effective date of the Company's
IPO or one year from the date of issuance. The notes were paid in full in
1998.

The Company allocates the proceeds received from debt or convertible debt
with detachable warrants using the relative fair value of the individual
elements at the time of issuance. The amount allocated to the warrants is
accounted for as debt discount and is amortized to interest expense over the
expected term of the debt using the effective interest method. The carrying
amount of convertible debt has been reduced by any related unamortized debt
discount and issuance costs on the date of conversion to Common Stock.

In accordance with FASB's Emerging Issues Task Force ("EITF") Topic No. D-
60 ("Topic D-60"), the Company accounts for the beneficial conversion feature
of convertible debt securities based on the difference between the conversion
price and the fair value of the Common Stock into which the security is
convertible, multiplied by the number of shares into which the security is
convertible. The amount attributable to the beneficial conversion feature is
recognized as additional interest expense over the most beneficial conversion
period using the effective interest method. Any unamortized beneficial
conversion feature is recognized as interest expense when the related debt
security is converted into Common Stock. During the 1999, the Company
recognized $1,999,000 in expense for the beneficial conversion feature of its
convertible debt.

NOTE 7-- SHAREHOLDERS EQUITY

Convertible Preferred Stock

The Company's Series A and Series B Convertible Preferred Stock
(collectively referred to as the "Preferred Stock") is convertible upon
issuance into Common Stock at the option of the holder or automatically
converts into shares of Common Stock based upon the Conversion Price,
immediately upon the closing of an IPO of not less that $6,000,000. The
initial Conversion Price per share for the Series A Preferred Stock and Series
B Preferred Stock was $.20 and $1.50, respectively, and was subsequently
increased to $.40 and $3.00, respectively, as a result of the reverse Common
Stock split. The Conversion Price was subject to further adjustment, as
defined. The Series A Preferred Stock and Series B Preferred Stock had a
liquidation preference of $0.20 and $1.50 per share, respectively, plus all
declared and unpaid dividends. The Series A Preferred Stock and Series B
Preferred Stock were entitled to receive non-cumulative dividends of $.02 and
$.15 per share, respectively. The Preferred Stock holders were entitled to
vote on an "as converted" basis. Total shares authorized for issuance of the
Series A and Series B Preferred Stock was 1,500,000 and 4,000,000
respectively.

In March 1997, the Company issued 500,000 shares of its Series A
Convertible Preferred Stock in exchange for substantially all of the assets
and liabilities and proprietary software of CyberDepot (Note 1). In April
1997, the Company issued 1,000,000 shares of its Series A Convertible
Preferred Stock at an issuance price of $.20 per share. No issuance costs were
incurred in connection with the issuance of the Series A Convertible Preferred
Stock. During April through August 1997, the Company issued 1,073,000 of its
Series B Convertible Preferred Stock at an issuance price of $1.50 per share
with issuance costs of approximately $125,000. Upon the consummation of the
Company's IPO, each two shares of the Preferred Stock were converted into one
share of Common Stock.

In accordance with Topic D-60, the Company accounted for the beneficial
conversion feature of its convertible Preferred Stock based on the difference
between the conversion price and the estimated fair value of the Common Stock
into which the security is convertible, multiplied by the number of shares
into which the security is convertible. The resultant allocation of the
proceeds to the beneficial conversion feature was accounted for as a dividend
on the date the Preferred Stock was issued.

F-61
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Each holder of the Series A and Series B Preferred Stock was issued one
warrant for every four shares of the Series A and Series B Preferred Stock to
purchase Common Stock at an exercise price of $.40 and $3.00 per share,
respectively. The Company allocated the proceeds received from the Preferred
Stock using the relative fair value of the individual elements at the time of
issuance. The estimated value of the warrants issued to the Series A Preferred
Stock holders was determined to be de minimis. The $407,000 allocated to the
warrants associated with the Series B Convertible Preferred Stock is included
in Common Stock.

Common Stock

In November 1997, the Company completed its IPO by issuing 1,300,000 shares
of Common Stock for gross proceeds of $11,700,000. In addition to issuance
costs of $2,326,000, the Company issued 122,000, four year warrants with an
exercise price of $14.40 per share with an estimated value of $504,000.

Common Stock Warrants

A summary of the Company's warrant activity is provided below.

<TABLE>
<CAPTION>
January 31,
-----------------------------------------------------------------
1998 1999
------------------------------- ---------------------------------
Issued Exercised Outstanding Issued Exercised Outstanding
--------- --------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance....... -- -- -- 1,348,004 -- 1,348,004
Series A Preferred
Stock................ 375,000 375,000
Series B Preferred
Stock................ 268,254 268,254 (97,402) (97,402)
8% Debentures......... -- 1,627,153 (1,627,153)
Promissory Notes...... 582,750 582,750 813,750 (233,150) 580,600
Services.............. 122,000 122,000 1,645,088 (669,152) 975,936
--------- ------- --------- --------- ---------- ---------
Ending Balance.......... 1,348,004 -- 1,348,004 5,433,995 (2,626,857) 2,807,138
========= ======= ========= ========= ========== =========
</TABLE>

<TABLE>
<CAPTION>
Warrants Outstanding Warrants Exercisable
--------------------------------- --------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise January 31, Contractual Exercise January 31, Exercise
Prices 1999 Life (Years) Price 1999 Price
--------------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 1.78 - $ 3.25 772,501 3.66 $ 2.72 772,501 $ 2.72
4.50 - $ 7.00 1,284,200 3.39 $ 6.47 1,284,200 6.47
10.00 - $16.00 416,357 3.66 $14.05 416,357 14.05
21.92 - $24.00 334,080 4.14 $22.13 334,080 22.13
--------- ---------
2,807,138 2,807,138
========= =========
</TABLE>

The Company obtained a valuation for its warrants from an independent firm
that used the Black-Scholes option valuation model with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
Year
Ended
January
31,
----------
1998 1999
---- ----
<S> <C> <C>
Dividend yield................................................... 0% 0%
Risk free interest rate.......................................... 6% 5%
Expected volatility.............................................. 61% 87%
Expected term-years.............................................. 5.0 4.7
</TABLE>

The weighted average fair value of the warrants issued during 1998 and 1999
was $2.94 and $7.63, respectively.

F-62
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Option Plan

In July 1997, the Company adopted the 1997 Stock Option Plan (the "1997
Plan") that provides for the issuances of options to employees, directors and
consultants of the Company for up to a maximum of 750,000 shares of Common
Stock. Generally, options granted under the 1997 Plan expire the earlier of
ten years from the date of grant, (or five years in the case of an incentive
stock option granted to a holder of 10% or more of the Company's outstanding
Common Stock), or three months after the optionee's termination of employment.
The options vest over periods ranging from two to five years. Options are
exercisable for consideration in the form of cash or by exchange of an
equivalent value of the Company's Common Stock owned by the optionee. The 1997
Plan may be suspended or terminated at the discretion of the Board of
Directors. As of January 31, 1999, 208,000 options are available for future
grant under the 1997 Plan.

In 1998 and 1999, the Company issued options to directors and employees
with exercise prices below the fair market value of the underlying Common
Stock on the date of grant resulting in $675,000 and $3,368,000 in
compensation expense respectively. During 1999, the Company issued a total of
287,500 options to non-employees resulting in additional compensation expense
of $3,328,000 as determined using the Black-Scholes option valuation model.

A summary of the activity related to the Company's stock options issued
under the 1997 Plan, options issued to directors outside of the 1997 Plan, and
options issued to non-employees follows:

<TABLE>
<CAPTION>
Weighted
Average
Exercise
Price
Number of Per
Shares Share
--------- --------
<S> <C> <C>
Options outstanding, January 31, 1997.................... -- --
Granted to Directors................................... 125,000 $3.00
Granted to Employees................................... 105,000 3.00
Cancelled--Employees................................... (10,000) 3.00
---------
Options outstanding, January 31, 1998.................... 220,000 3.00
Granted to Directors................................... 1,875,000 8.15
Granted to Employees................................... 372,000 2.91
Granted to Non-employees............................... 287,500 17.48
Exercised--Employees................................... (5,175) 2.50
Cancelled--Employees................................... (24,125) 2.74
---------
Options outstanding, January 31, 1999.................... 2,725,200 9.60
---------
Options exercisable, January 31, 1999.................... 2,530,325 7.61
=========
</TABLE>

Options granted to directors in 1998 were issued under the 1997 Plan.
Options granted to directors and non-employees in 1999 were issued outside of
the 1997 Plan.

<TABLE>
<CAPTION>
Options Vested
Options Outstanding and Exercisable
--------------------------------- --------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise January 31, Contractual Exercise January 31, Exercise
Prices 1999 Life (Years) Price 1999 Price
-------------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 1.78 - 3.00 1,612,700 5.04 $ 1.92 1,442,825 $ 1.94
13.47 - 16.00 787,500 4.42 15.36 787,500 15.36
18.49 - 21.00 325,000 4.46 20.51 300,000 21.00
--------- ---------
2,725,200 2,530,325
========= =========
</TABLE>

F-63
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Fair Value Disclosure

The Company applies the measurement principles of APB No. 25 in accounting
for options issued to employees under its stock option plan and options issued
to Directors. If the Company had elected to recognize compensation expense
based on the fair value at the grant dates as prescribed by SFAS 123, the
Company's net loss would have been increased to the pro forma amounts
indicated below.

<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Net loss available to common shareholders:
As reported.................................... $(7,200,000) $(49,722,000)
Pro forma...................................... $(7,659,000) $(56,135,000)
Basic and diluted loss per common share:
As reported.................................... $ (4.03) $ (10.34)
Pro forma...................................... $ (4.29) $ (11.68)
</TABLE>

The pro forma effects presented above are not likely to be representative
of the effects on reported net loss for future years. The fair value of
options issued to employees, non-employees and directors was estimated at the
date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
Year Ended
January 31,
-----------
1998 1999
----- -----
<S> <C> <C>
Dividend yield................................................... 0% 0%
Risk free interest rate.......................................... 5% 5%
Expected volatility.............................................. 60% 85%
Expected term--years............................................. 3.5 4.6
</TABLE>

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

The weighted average fair values and exercise prices of options follows:

<TABLE>
<CAPTION>
Year Ended January 31,
---------------------------------------------------
1998 1999
------------------------- -------------------------
Fair Value Exercise Price Fair Value Exercise Price
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Issued at below market
value.................. $5.72 $3.00 $12.40 $16.00
Issued at market value.. $ 3.25 $ 5.52
All options............. $5.72 $3.00 $ 4.86 $ 7.71
</TABLE>

F-64
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Common Stock Equity Line

In December 1998, the Company entered into a Common Stock Private Equity
Line Subscription Agreement (the "Common Stock Line") whereby the Company, at
its option, may put shares of Common Stock to the subscriber for a maximum of
$60,000,000 at a put price that is equal to the lesser of (i) 83% of the
Common Stock fair market value or (ii) the Common Stock fair market value less
$.50 on the put date. The Common Stock Line includes the payment of semi-
annual commitment fees of $100,000 in the event the subscriber does not
receive a defined amount of proceeds from its sale of the Company's Common
Stock. In conjunction with the Common Stock Line, the Company issued 490,385
warrants to purchase the Company's Common Stock at an exercise price of $8.38
per share, with semi-annual reset provisions, that are exercisable over a 7
year period. The estimated value of the warrants issued is approximately
$4,440,000 and represents the estimated value of the Company's right to put
its Common Stock to the subscriber. No Common Stock has been sold under the
Common Stock Equity Line.

NOTE 8--INCOME TAXES

The Company did not record a provision for income taxes in 1998 and 1999
due to net losses incurred. The Company's deferred tax assets and liabilities
comprise the following:

<TABLE>
<CAPTION>
January 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................ $ 2,583,000 $ 17,277,000
Stock-based compensation........................ 7,000 1,379,000
Property and equipment.......................... 383,000
Litigation reserves............................. 46,000 3,478,000
Accrued expenses................................ 258,000 11,000
Other........................................... 4,000 52,000
----------- ------------
2,898,000 22,580,000
Valuation allowance............................... (2,898,000) (22,580,000)
----------- ------------
$ -- $ --
----------- ------------
</TABLE>

The Company has net operating loss carryforwards for both federal and state
purposes of $6,295,000 and $41,628,000 as of January 31, 1998 and 1999,
respectively. Federal and state net operating loss carryforwards begin
expiring in the years 2005 and 2011, respectively. Due to ownership changes,
the net operating loss carryforwards are subject to an annual limitation on
the amount that can be utilized. A full valuation allowance has been recorded
based on management's expectation that the Company's net deferred tax assets,
more likely than not, will not be realized based on estimated future taxable
income.

The income tax benefit differs from the amount computed by applying the
statutory federal income tax rate to net loss as follows:

<TABLE>
<CAPTION>
Year Ended
January 31,
------------
1998 1999
----- -----
<S> <C> <C>
Computed expected tax benefit.................................. (35%) (35%)
State income tax benefit, net of federal benefit............... (6%) (6%)
Non-deductible interest expense................................ 2%
Change in valuation allowance.................................. 41% 39%
----- -----
0% 0%
----- -----
</TABLE>

F-65
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE--9 COMMITMENTS AND CONTINGENCIES

SEC Investigation

In March 1998, the Company became aware that the SEC had initiated a
private investigation to determine whether the Company, its lead underwriter
in its IPO and market maker, (the "Market Maker"), or any of its officers,
directors, employees, affiliates, or others had engaged in fraudulent
activities in connection with transactions in the Company's Common Stock in
violation of federal securities laws. This investigation resulted in the SEC
temporarily suspending trading of the Company's stock for 10 days in March
1998. Due to the uncertainty regarding the outcome of the investigation,
management is unable to determine whether it will have a material adverse
effect on the Company's financial position, results of operations and cash
flows. An accrual has not been recorded in the financial statements for any
loss that may result from the outcome of the investigation.

Litigation

During the six months ended July 31, 1998, various similar class action
lawsuits were filed against the Company, certain officers of the Company, and
the Market Maker (the "Defendants") on behalf of all persons who purchased
shares of the Company's Common Stock between November 25, 1997 and March 26,
1998 alleging violations of the various state and federal securities laws by
the Defendants. The complaints charge that the Defendants participated in a
scheme and wrongful course of business to manipulate the price of the
Company's Common Stock, and the Defendants seek compensatory damages in
unspecified amounts. Compaq anticipates entering into a mediation where the
damages that may be awarded would be within a range between $2,400,000 and
$9,000,000. In addition, management believes that the Company's directors' and
officers' liability insurance carrier may reimburse a portion of any amounts
awarded.

In February 1999, a complaint was filed against the Company by a financial
advisor alleging that the Company owes $3,465,000 for breach of a warrant
agreement and an additional $2,886,000 as a transaction fee. The Company filed
an answer on April 9, 1999 denying the liability. Management is unable to
determine whether the outcome of this complaint will have a material adverse
effect on its financial position, results of operations and cash flows.

During 1999, the Company allegedly entered into a one-year consulting
agreement (for the period from December 1998 to November 1999) with firm (the
"Consulting Firm") whereby the Consulting Firm was to provide investor and
public relation services in exchange for 153,000 shares of Common Stock. As of
January 31, 1999, the shares of Common Stock have not been issued. The Company
recorded a liability of $1,555,000 based upon the fair value of the Common
Stock on the commencement of the agreement and recorded approximately $260,000
in expense related to this agreement in 1999. In March 1999, the Consulting
Firm filed a Demand for Arbitration claiming that the Company owes
approximately $3,000,000 of Common Stock pursuant to the contract. Management
is unable to determine whether the outcome of this complaint will have
material adverse effect on its financial position, results of operations and
cash flows. An accrual has not been recorded in the financial statements for
any loss that my result from the outcome of this litigation.

During 1999, the Company was negotiating a one-year consulting agreement
(for the period from February 1998 to January 1999) with a company (the
"Consultant") whereby the Consultant was to provide public relation services
in exchange for $5,000 upon execution of the agreement, monthly payments from
$5,000 to $7,000, 7,000 shares of Common Stock, and 30,000 options with
exercise prices of $22.50 and $25.00 (15,000 each) that are exercisable over a
three-year period. In June 1998, the Company wrote to the Consultant giving
the Consultant notice of termination of services and offered 2,917 shares of
Common Stock and a total of 6,250 stock options as reimbursement for services
previously provided. The Company has recorded $250,000 as expense that
represents the fair value of the Common Stock and the estimated fair value of
the stock options. As of January 31, 1999, neither the Common Stock nor the
stock options have been issued. In May 1999, the Company received a letter
from the Consultant claiming that it is owed $1,184,000 due to the Company's

F-66
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

failure to deliver all of the stock and options pursuant to the original
agreement. Management is unable to determine whether the outcome of this
complaint will have a material adverse effect on its financial position,
results of operations and cash flows. An accrual has not been recorded in the
financial statements for any loss that may result from the outcome of this
litigation.

The Company is a defendant in several complaints in which management
believes that i) it is not probable that a liability has been incurred and ii)
the amount of any potential loss cannot be reasonably estimated. Accordingly,
an accrual has not been recorded in the financial statements.

The Company and its shareholder (Note 11) have been subject to certain
claims related to contracts entered into by former management of the Company.
The Company and its shareholder intend to defend such claims as they arise;
however, no assertion can be made that additional claims for similar contracts
will not be made. In addition, the Company is involved in certain litigation
other than that described above arising in the normal course of business. The
Company believes any liability with respect to such routine litigation,
individually or in the aggregate, is not likely to be material to the
Company's financial position, results of operations and cash flows. An accrual
of $8,510,000 has been recorded for amounts management believes the Company
will incur and pay for the aggregate losses resulting from the outcome of the
aforementioned litigation.

Compaq has agreed to assume any liability that currently exists or may
exist as a result of the outcome of the Company's threatened and pending
litigation.

Employment Agreement

In June 1998, the President, Chief Executive Officer, and director (the
"Former Officer") of the Company resigned. Pursuant to a Termination and Buy
Out Agreement, the Former Officer will receive payments totaling $500,000,
with $100,000 paid on or before July 31, 1998 and the balance due in $50,000
increments on or before each succeeding fiscal quarter end, beginning October
31, 1998 until fully paid. In addition, the Former Officer received options to
purchase 150,000 shares of the Company's Common Stock at an exercise price of
$16.00 per share. The Company recorded a charge for the estimated fair value
of the options (Note 7). In September 1998, the Company approved the
conversion of $350,000 of its unpaid liability related to the Termination and
Buy Out Agreement for Common Stock at the then fair market value of $1.37 per
share, resulting in an issuance of 255,474 common shares.

Leases

The Company leases facilities for its corporate offices under non-
cancelable operating lease agreements that expires in 2002 and 2004, and have
annual rent increases of approximately 4% and 5%, respectively. The Company
also leases certain office equipment under operating and non-cancelable
capital lease arrangements. Future minimum lease payments follow:

<TABLE>
<CAPTION>
Year Ending January 31, Operating Capital
----------------------- ---------- --------
<S> <C> <C>
2000.................................................... $1,008,000 $283,000
2001.................................................... 1,220,000 58,000
2002.................................................... 1,271,000 31,000
2003.................................................... 1,205,000 15,000
2004.................................................... 1,218,000
Thereafter.............................................. 204,000
---------- --------
$6,126,000 387,000
----------
Amount representing interest............................ (45,000)
--------
Capital lease obligations............................... $342,000
========
</TABLE>

Rent expense for 1998 and 1999 was $116,000 and $221,000, respectively.

F-67
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 10--RELATED PARTY TRANSACTIONS

Total employee advances outstanding as of January 31, 1998 and 1999 were
$18,000 and $2,000, respectively, which are included in accounts receivable.
As of January 31, 1999, $36,000 in advances to a shareholder were included in
accounts receivable. During 1998, the Company made $154,000 in advances to a
then current officer of the Company, which was fully repaid during the year.
During 1998, the Company made $16,000 in advances to CyberDepot, which were
fully repaid during the year. A then current officer of the Company is the
principal shareholder of CyberDepot.

During 1998 and 1999, the Company entered into an agreement with a
consultant who was also a shareholder of the Company, under which the Company
incurred $23,000 and $52,000, respectively, in consulting expenses.

During 1998 and 1999, the Company sold $342,000 and $124,000 in products to
its lead underwriter in its IPO and current shareholder of the Company. As of
January 31, 1998 and 1999, $96,000 and $28,000 is included in accounts
receivable, respectively.

During 1998 and 1999, the Company incurred legal expenses of approximately
$528,000 and $283,000 respectively, from law firms that are also shareholders
of the Company. As of January 31, 1998 and 1999, approximately $354,000 and
$155,000 remains outstanding which are included in other accrued liabilities,
respectively.

During 1998 and 1999, the Company purchased $233,000 and $85,000 of
products from a shareholder of the Company. As of January 31, 1998, $114,000
was due to this shareholder.

During 1999, the Company paid $69,000 in consulting fees to an entity in
which a then current officer and director of the Company is the president and
principal shareholder.

In June 1998, the Company entered into a three year consulting agreement
with CyberDepot whereby CyberDepot will receive $22,000 per month and received
100,000 options to purchase shares of the Company's Common Stock at $21.00 per
share. The Company recorded a charge for the estimated fair value of the
options (Note 7). A then former officer and current shareholder of the Company
is the principal shareholder of CyberDepot. During 1999, the Company paid
$165,000 in consulting fees under the agreement. The Company paid $581,000 to
Cyber Depot in February 1999 which represents the total monthly fees over the
remaining three year term. This payment was made as a result of the changes in
control provision included in the agreement.

During 1998, the Company issued promissory notes for a total of $305,000 to
an affiliate of the Company's lead underwriter in its IPO. The note was paid
in full from the proceeds of the IPO.

NOTE 11--SUBSEQUENT EVENTS COMPAQ PURCHASE

On January 15, 1999, Compaq announced a tender offer to purchase all of the
outstanding shares of the Common Stock of the Company for $19.00 per share as
set forth in the Offer to Purchase Agreement. On January 21, 1999, the offer
price was reduced to $18.25 per share. Effective February 15, 1999, Compaq
completed the acquisition of the Company.

F-68
<PAGE>

SHOPPING.COM

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 12--SUBSEQUENT EVENTS

Purchase by CMGI

On June 29, 1999, Compaq announced it entered into an agreement to exchange
a portion of its ownership in both the AltaVista business and two of its
second-tier subsidiaries, Shopping.com and Zip2 Corporation, among other
assets ("Alta Vista Business") to CMGI, Inc. Compaq will retain 18.5% equity
ownership in AltaVista or its successor. In return, Compaq will receive
18,994,975 CMGI common shares and CMGI preferred shares convertible into
1,809,045 CMGI common shares, which combined, would represent a 16.4% equity
ownership in CMGI, on a fully diluted basis. In addition, CMGI will issue a
$220 million three-year note to Compaq, bringing total consideration for
CMGI's 81.5% ownership in the AltaVista Business to approximately $2.3
billion. The agreement, subject to normal regulatory approvals, is binding on
both parties and does not require shareholder approval for the closing.

Arbitration

In July 1999, an arbitration proceeding against the Company commenced
demanding damages in an amount to be proven, but no less than $300,000,000
and/or an order for specific performance related to agreements entered into in
December and January of 1999. The agreements included provisions in which the
Company would receive a portion of the sale proceeds from products and
services to be provided by a vendor (the "Vendor") and sold on the Company's
website. The Vendor has also made a settlement demand of $35,000,000.
Management is unable to determine whether the outcome of this complaint will
have a material effect on its financial position, results of operations and
cash flows. An accrual has not been recorded in the financial statements for
any loss that may result from the outcome of this litigation.

F-69
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholder of
Shopping.com

We have audited the accompanying balance sheet of Shopping.com (a
development stage company) as of January 31, 1997, and the related statements
of operations, shareholders' deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Shopping.com as of January
31, 1997, and the results of its operations and cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statements, the Company incurred a net loss of $201,697 and had negative cash
flows from operations for the year ended January 31, 1997, and had a
shareholders' deficit at January 31, 1997. These factors, among others, as
discussed in Note 1 to the financial statements, raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

As discussed in Note 6 to the financial statements, management of the
Company discovered an error in the number of weighted-average shares
outstanding, resulting in an understatement of previously reported loss per
share.

/s/ Singer Lewak Greenbaum & Goldstein LLP

Singer Lewak Greenbaum & Goldstein LLP

Los Angeles, California
June 17, 1997, except for Note 6,
for which the date is June 9, 1999

F-70
<PAGE>

SHOPPING.COM
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET
January 31, 1997

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash.............................................................. $ 63
Stock subscription receivable..................................... 23,000
---------
Total current assets................................................ 23,063
Furniture and equipment, net........................................ 12,165
Other assets........................................................ 3,956
---------
Total assets........................................................ $ 39,184
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Note payable--related party....................................... $ 50,000
Accounts payable.................................................. 35,986
Other accrued liabilities......................................... 31,845
---------
Total current liabilities......................................... 117,831
---------
Commitments
Shareholders' deficit:
Preferred stock, Series A convertible, no par value 1,500,000
shares
authorized no shares issued and outstanding...................... --
Preferred stock, Series B convertible, no par value 4,000,000
shares
authorized no shares issued and outstanding...................... --
Common stock, no par value 4,000,000 shares authorized 1,152,500
shares
issued and outstanding........................................... 123,050
Deficit accumulated during development stage...................... (201,697)
---------
Total shareholders' deficit......................................... (78,647)
---------
Total liabilities and shareholders' deficit......................... $ 39,184
=========
</TABLE>

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

F-71
<PAGE>

SHOPPING.COM
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS
For the Year Ended January 31, 1997

<TABLE>
<S> <C>
Operating expenses.................................................. $ 201,697
---------
Net loss............................................................ $(201,697)
=========
Basic and diluted loss per share.................................. $ (0.18)
=========
Weighted-average shares outstanding............................... 1,152,500
=========
</TABLE>

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

F-72
<PAGE>

SHOPPING.COM
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF SHAREHOLDERS' DEFICIT
For the Year Ended January 31, 1997

<TABLE>
<CAPTION>
Preferred Preferred Deficit
Stock Series Stock Series Accumulated
A Convertible B Convertible Common Stock During
------------- ------------- ------------------ Development
Shares Amount Shares Amount Shares Amount Stage Total
------ ------ ------ ------ --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1,
1996................... -- $ -- -- $ -- -- $ -- $ -- $ --
Issuance of common
stock.................. 1,152,500 23,050 23,050
Capital contributed by
Cyber Depot, Inc. to
purchase assets and
develop proprietary
software............... 100,000 100,000
Net loss................ (201,697) (201,697)
----- ----- ----- ----- --------- -------- --------- ---------
Balance, January 31,
1997................... -- $ -- -- $ -- 1,152,500 $123,050 $(201,697) $ (78,647)
===== ===== ===== ===== ========= ======== ========= =========
</TABLE>

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

F-73
<PAGE>

SHOPPING.COM
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CASH FLOWS
For the Year Ended January 31, 1997

<TABLE>
<S> <C>
Cash flows from operating activities
Net loss.......................................................... $(201,697)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation of furniture and equipment......................... 1,276
(Increase) decrease in Other assets............................... (3,956)
Increase (decrease) in Accounts payable........................... 35,986
Other accrued liabilities......................................... 31,845
---------
Net cash used in operating activities........................... (136,546)
---------
Cash flows from investing activities
Purchase of furniture and equipment............................... (13,441)
---------
Net cash used in investing activities........................... (13,441)
---------
Cash flows from financing activities
Issuance of note payable--related party........................... 50,000
Proceeds from the issuance of common stock........................ 50
Capital contribution.............................................. 100,000
---------
Net cash provided by financing activities....................... 150,050
---------
Net increase in cash................................................ 63
Cash, beginning of year............................................. --
---------
Cash, end of year................................................... $ 63
=========
</TABLE>
Supplemental schedule of non-cash investing and financing activities
During the year ended January 31, 1997, the Company issued common stock in the
amount of $23,000 for a subscription receivable.

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

F-74
<PAGE>

SHOPPING.COM
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1997

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Line of Business

Shopping.com (the "Company") was incorporated in California on November 22,
1996. Cyber Depot, Inc. ("Cyber") was incorporated in California in January
1996 and among other business ventures commenced the design and development of
proprietary software for the Internet shopping marketplace in February 1996.
In March 1997, Cyber agreed to sell certain assets and liabilities and
proprietary software to Shopping.com for 250,000 shares of Series A
convertible preferred stock with warrants, and Shopping.com continued the
design and development of the proprietary software. The operations of Cyber
devoted to the design and development of the proprietary software are
considered to be the predecessor operations of the Company and have been
included with the operations of the Company since February 1996. The propriety
software acquired by the Company in this transaction has been expensed as
software research and development. The Company is engaged in the design and
development of proprietary software for marketing a broad range of products
and services to retail customers on the Internet. On July 11, 1997, the
Company commenced selling products over the Internet through its website at
http://www.shopping.com.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company has experienced net losses of
$201,697 for the year ended January 31, 1997. In addition, the Company has
used, rather than provided, cash from its operations. In view of the matters
described above, recoverability of a major portion of the recorded asset
amounts shown in the accompanying balance sheet is dependent upon continued
operations of the Company, which in turn, is dependent upon the Company's
ability to continue to meet its financing requirements and to succeed in its
future operations. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts,
or amounts and classification of liabilities that might be necessary should
the Company be unable to continue in existence.

Management has raised capital during 1997 through private placement
offerings of equity and debt securities and completed an initial public
offering ("IPO") in the latter part of 1997, which will provide sufficient
funding to continue present operations and support future marketing and
development activities.

Estimates

Revenue Recognition

The Company recognizes revenue at the time the vendor ships the product to
the customer.

Net Loss Per Share

Net loss per share is based on the number of common shares issued in the
initial capitalization of the Company.

F-75
<PAGE>

SHOPPING.COM

NOTES TO FINANCIAL STATEMENTS--(Continued)

Stock Subscription Receivable

At January 31, 1997, the Company had subscriptions to purchase its common
stock of $23,000. This amount was collected subsequent to the balance sheet
date; therefore, the amount is shown as an asset in the accompanying balance
sheet.

Cash Equivalents

For the purpose of the statement of cash flows, the Company considers all
highly-liquid investments purchased with original maturities of three months
or less to be cash equivalents.

Furniture and Equipment

Furniture and equipment are recorded at cost, less accumulated
depreciation. Depreciation is provided using the straight-line method over
estimated useful lives of three to 15 years as follows:

<TABLE>
<S> <C>
Computer hardware............................................... 5 years
Furniture and equipment......................................... 5 to 7 years
</TABLE>

Maintenance and minor replacements are charged to expense as incurred.
Gains and losses on disposals are included in the results of operations.

Advertising

The Company expenses advertising costs as incurred. There were no
advertising costs for the year ended January 31, 1997.

Income Taxes

The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes represents the tax
payable for the period and the change during the period in deferred tax assets
and liabilities.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the Company's
financial instruments, including cash, accounts payable, and other accrued
liabilities, the carrying amounts approximate fair value due to their short
maturities. The amounts shown for note payable also approximate fair value
because current interest rates offered to the Company for debt of similar
maturities are substantially the same.

Stock Options

The Financial Accounting Standards Board ("FASB")issued SFAS No. 123,
"Accounting for Stock-Based Compensation," effective for fiscal years
beginning after December 15, 1995. SFAS No. 123 establishes and

F-76
<PAGE>

SHOPPING.COM

NOTES TO FINANCIAL STATEMENTS--(Continued)

encourages the use of the fair value based method of accounting for stock-
based compensation arrangements under which compensation cost is determined
using the fair value of stock-based compensation determined as of the date of
grant and is recognized over the periods in which the related services are
rendered. The statement also permits companies to elect to continue using the
current implicit value accounting method specified in Accounting Principles
Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees,"
to account for stock-based compensation. The Company will use the implicit
value based method and will be required to disclose the pro forma effect of
using the fair value based method to account for its stock-based compensation.

Risks and Uncertainties

The Company's future revenues and any future profits are substantially
dependent upon the widespread acceptance and use of the Internet and other
online services as an effective medium of commerce by consumers. Rapid growth
in the use of an interest in the Web, the Internet, and other online services
is a recent phenomenon, and there can be no assurance that acceptance and use
will continue to develop or that a sufficiently broad base of consumers will
adopt, and continue to use, the Internet and other online services as a medium
of commerce.

To remain competitive, the Company must continue to enhance and improve the
responsiveness, functionality, and features of the Shopping.com online store.
The Internet and the online commerce industry are characterized by rapid
technological change, changes in user and customer requirements and
preferences, frequent new product and service introductions embodying new
technologies, and the emergence of new industry standards and practices that
could render the Company's existing website and proprietary technology and
systems obsolete. The Company's success will depend, in part, on its ability
to license leading technologies useful in its business, enhance its existing
services, develop new services and technology that address the increasingly
sophisticated and varied needs of its prospective customers, and respond to
technological advances and emerging industry standards and practices on a
cost-effective and timely basis.

A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. The Company
relies on encryption and authentication technology licensed from third parties
to provide the security and authentication necessary to effect secure
transmission of confidential information, such as customer credit card
numbers. There can be no assurance that advances in computer capabilities, new
discoveries in the field of cryptography, or other events or developments will
not result in a compromise or breach of the algorithms used by the Company to
protect customer transaction data.

The online commerce market, particularly over the Internet, is new, rapidly
evolving, and intensely competitive, which competition the Company expects to
intensify in the future. Barriers to entry are minimal, and current and new
competitors can launch new websites at a relatively low cost. The Company
currently or potentially competes with a variety of other companies.

The Company carries no inventory, has no warehouse employees or facilities,
and relies on rapid fulfillment from its vendors. To satisfy customer orders,
the Company has no long-term contracts or arrangements with any of its
manufacturers or distributors that guarantee the availability of merchandise,
the continuation of particular payment terms, the extension of credit limits,
or the shopping schedules.

The Company regards its Shopping.com brand name and related software as
proprietary and relies primarily on a combination of copyright, trademark,
trade secret and confidential information laws, and employee and third party
non-disclosure agreements and other methods to protect its proprietary rights.
There can be no assurance that these protections will be adequate to protect
against technologies that are substantially equivalent or superior to the
Company's technologies. The Company does not currently hold any patents or
have any patent applications pending for itself or its products and has not
obtained federal registration for any of its trademarks.

F-77
<PAGE>

SHOPPING.COM

NOTES TO FINANCIAL STATEMENTS--(Continued)

Earnings per Share

The FASB issued SFAS No. 128, "Earnings Per Share," which is effective for
financial statements issued for periods ending after December 31, 1997. SFAS
No. 128 requires public companies to present basic loss per share and, if
applicable, diluted loss per share instead of primary and fully-diluted loss
per share.

NOTE 2--FURNITURE AND EQUIPMENT

Furniture and equipment at January 31, 1997 consisted of the following:

<TABLE>
<S> <C>
Computer hardware................................................... $12,761
Furniture and equipment............................................. 680
-------
13,441
Less accumulated depreciation....................................... 1,276
-------
Total............................................................... $12,165
=======
</TABLE>

NOTE 3--COMMITMENTS

Litigation

The Company is involved in certain litigation in the normal course of
business. The Company does not believe that the resolution of any suit will
result in any material adverse effect on the Company's financial position,
results of operations, or cash flows.

Leases

The Company leases a facility for its corporate offices under a non-
cancelable operating lease agreement that expires in 2002. Future minimum
lease payments under this non-cancelable operating lease are as follows:

<TABLE>
<CAPTION>
Year Ending January 31,
-----------------------
<S> <C>
1998................................................................ $ 75,489
1999................................................................ 117,282
2000................................................................ 125,798
2001................................................................ 131,594
2002................................................................ 137,390
Thereafter.......................................................... 40,565
--------
Total............................................................. $628,118
========
</TABLE>

Rent expense was $13,451 for the year ended January 31, 1997.

NOTE 4--NOTE PAYABLE--RELATED PARTY

The Company has a note payable to a related party which is personally
guaranteed by an officer of the Company. In addition, the note is personally
guaranteed by a vice president of the Company and secured by a second deed of
trust on a residence owned by the vice president. The note accrues interest at
the highest rate permitted by California law (approximately 11% at January 31,
1997) and is due 90 days from January 13, 1997.

Subsequent to year-end, $51,000 was repaid which includes accrued interest
of $1,000.

F-78
<PAGE>

SHOPPING.COM

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 5--INCOME TAXES

For the year ended January 31, 1997, the Company did not provide a
provision for income taxes due to the net loss incurred. At January 31, 1997,
the Company has approximately $98,000 and $49,000 in net operating loss
carryforwards for federal and state income tax purposes, respectively, that
expire in 2012 and 2002, respectively. The components of the Company's
deferred tax assets and liabilities for income taxes consist of a deferred tax
asset relating to the net operating loss carryforwards of approximately
$36,000. The other components of the Company's deferred tax assets and
liabilities are immaterial. The Company has established a valuation allowance
of approximately $36,000 to fully offset its deferred tax asset as the Company
does not believe the recoverability of this deferred tax asset is more likely
than not.

NOTE 6--RESTATEMENT

Loss per share and common shares outstanding have been restated to correct
an error discovered by management in the computation of common shares
outstanding.

NOTE 7--SUBSEQUENT EVENTS (UNAUDITED)

Series A Convertible Preferred Stock

In March 1997, the Company issued 500,000 shares of Series A convertible
preferred stock ("Series A Preferred") in connection with the acquisition of
certain assets and liabilities and proprietary software developed by Cyber
(see Note 1). The historical cost of the assets and liabilities and
proprietary software acquired was approximately $100,000, which is the amount
used to value the 500,000 shares of Series A Preferred. In April 1997, the
Company sold 500,000 shares of Series A Preferred for a price of $0.40 per
share. The holders of the Series A Preferred are entitled to receive a
noncumulative dividend of $0.04 per share per annum, payable in cash at the
option of the Company.

Each share of Series A Preferred is convertible into shares of common stock
at the option of the holder. In addition, Series A Preferred will be
automatically converted into shares of common stock based upon the effective
conversion price immediately upon the closing of an IPO of not less than
$6,000,000.

The Series A Preferred has a liquidation preference of $0.40 per share,
plus all declared and unpaid dividends prior to the payment of any amount to
the holders of common stock.

Each holder of Series A Preferred was issued one warrant for every two
shares of Series A Preferred to purchase a share of the Company's common stock
for $3.00 per share, resulting in 375,000 warrants being issued. Based on the
financial condition of the Company at the time the warrants were issued,
management
estimates that the fair value of the Company's common stock was less than the
exercise price of the warrants.

Series B Convertible Preferred Stock

During May to September 1997, the Company sold 536,500 shares of Series B
convertible preferred stock ("Series B Preferred") for a price of $3.00 per
share. The holders of the Series B Preferred are entitled to receive a non-
cumulative dividend of $0.30 per share per annum, payable in cash at the
option of the Company.

Each share of Series B Preferred is convertible into shares of common stock
at the option of the holder. In addition, Series B Preferred will be
automatically converted into shares of common stock based upon the effective
conversion price immediately upon the closing of an IPO of not less than
$6,000,000.

The Series B Preferred has a liquidation preference of $3.00 per share,
plus all declared and unpaid dividends prior to the payment of any amount to
the holders of common stock.

F-79
<PAGE>

SHOPPING.COM

NOTES TO FINANCIAL STATEMENTS--(Continued)

Each holder of Series B Preferred was issued one warrant for every two
shares of Series B Preferred to purchase a share of the Company's common stock
for $3.00 per share, resulting in 268,250 warrants being issued. Based on the
financial condition of the Company at the time the warrants were issued,
management estimates that the fair value of the Company's common stock
approximates the exercise price of the warrants.

Upon the effective date of the Company's IPO, the 536,500 outstanding
shares of Series B Preferred were converted into 536,500 shares of the
Company's common stock.

Stock Options

The Company's board of directors adopted the 1997 Stock Option Plan (the
"Plan") and reserved 250,000 shares of common stock for grants of stock
options under the Plan. Generally, options granted under the Plan expire the
earlier of 10 years from the date of grant (five years in the case of an
incentive stock option granted to a holder of 10% or more of the Company's
outstanding capital stock) or three months after the optionee's termination of
employment or service. The Company had not granted any stock options as of
January 31, 1997, therefore, the disclosures required by SFAS No. 123 are not
applicable.

Notes Payable

In June and July 1997, the Company issued $950,000 of subordinated notes.
The notes bear interest at 10% per annum and are unsecured. The notes are due
at the earlier of nine months from the date of issuance or closing of the IPO.

In connection with the note agreement, each note holder is entitled to
receive 333 warrants for each $1,000 loaned to purchase the Company's common
stock for $6.00 per share. There is a twelve-month "lock-up" on the warrants
and the common stock underlying these warrants.

En Pointe Technologies, Inc.

On September 15, 1997 the Company entered into an agreement with En Pointe
Technologies, Inc. ("En Pointe") whereby:

. En Pointe made an investment in the Company by purchasing $600,000 of
subordinated notes. In connection therewith, the Company issued 199,800
warrants to purchase the Company's common stock at $4.50 per share. As a
result of these warrants being issued with an exercise price less than
the fair market value of similar warrants, the Company will recognize
additional financing cost;

. En Pointe granted the Company a license to En Pointe's proprietary EPIC
Software for five years in exchange for 125,000 shares of the Company's
common stock valued at $6.00 per share. The Company has agreed to pay an
annual maintenance and upgrade fee of $100,000. The initial annual fee is
to be paid concurrent with the funding of the $600,000 subordinated
notes;

. En Pointe has also agreed to provide (i) consulting services to the
Company by customizing its EPIC Software and (ii) information system
services for a quarterly fee estimated to be $60,000 and $50,000,
respectively. The initial quarterly fees of $60,000 and $50,000 are to be
paid concurrent with the funding of the $600,000 subordinated notes;

. In the event that the Company does not complete its IPO within one year,
the Company is obligated to pay En Pointe $1,000,000 for the licensing of
the EPIC Software.

Stock Split

At the completion of the Company's IPO in December 1997, the Company
effected a one-for-two reverse stock split of its common stock. All share and
per share data have been retroactively restated to reflect this stock split.

F-80
<PAGE>

ZIP2 CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-82
Consolidated Balance Sheet................................................. F-83
Consolidated Statement of Operations....................................... F-84
Consolidated Statement of Shareholders' Equity............................. F-85
Consolidated Statement of Cash Flows....................................... F-86
Notes to Consolidated Financial Statements................................. F-87
</TABLE>

F-81
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Zip2 Corp.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of shareholders' equity and of cash
flows present fairly, in all material respects, the financial position of Zip2
Corp. and its subsidiary at December 31, 1997 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above. We have not audited the
consolidated financial statements of Zip2 Corp. for any period subsequent to
December 31, 1998.

PricewaterhouseCoopers LLP

San Jose, California
April 2, 1999

F-82
<PAGE>

ZIP2 CORP.

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
December 31, March 31,
-------------------------- ------------
1997 1998 1999
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......... $ 22,367,000 $ 16,028,000 $ 12,435,000
Accounts receivable, net of
allowance of $130,000 and
$180,000.......................... 704,000 956,000 994,000
Receivable from Compaq............. -- -- 1,585,000
Prepaid expenses and other current
assets............................ 878,000 466,000 511,000
------------ ------------ ------------
Total current assets............... 23,949,000 17,450,000 15,525,000
Property and equipment, net.......... 2,954,000 3,638,000 3,497,000
Goodwill, net........................ 577,000 180,000 153,000
Other assets......................... 460,000 535,000 812,000
------------ ------------ ------------
$ 27,940,000 $ 21,803,000 $ 19,987,000
------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable................... $ 390,000 $ 980,000 $ 348,000
Accrued liabilities................ 875,000 2,260,000 2,575,000
Deferred revenue................... 2,878,000 6,511,000 7,744,000
Notes payable, current............. 250,000 1,645,000 187,000
Payable to Compaq.................. -- -- 7,883,000
Capital lease obligations,
current........................... 393,000 1,078,000 1,159,000
------------ ------------ ------------
Total current liabilities............ 4,786,000 12,474,000 19,896,000
Notes payable, long-term............. 263,000 5,058,000 --
Capital lease obligations, long-
term................................ 1,219,000 2,600,000 2,716,000
------------ ------------ ------------
6,268,000 20,132,000 22,612,000
------------ ------------ ------------
Commitments (Note 7)
Shareholders' Equity:
Convertible Preferred Stock, $0.001
par value; issuable in series;
aggregate liquidation amount
$40,539,000; 12,000,000 shares
authorized; 9,412,112 shares
issued and outstanding at December
31, 1997 and 1998................. 9,000 9,000 9,000
Common Stock: $0.001 par value;
20,000,000 shares authorized;
4,956,552 and 4,967,947 shares
issued and outstanding at December
31, 1997 and 1998................. 5,000 5,000 7,000
Additional paid-in capital......... 40,088,000 54,621,000 61,008,000
Notes receivable from
shareholders...................... (184,000) (323,000) (2,065,000)
Unearned compensation.............. -- (12,620,000) (14,492,000)
Accumulated deficit................ (18,246,000) (40,021,000) (47,092,000)
------------ ------------ ------------
Total shareholders' equity........... 21,672,000 1,671,000 (2,625,000)
------------ ------------ ------------
$ 27,940,000 $ 21,803,000 $ 19,987,000
============ ============ ============
</TABLE>

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

F-83
<PAGE>

ZIP2 CORP.

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
--------------------------------------- ------------------------------
1996 1997 1998 1998 1999
----------- ------------ ------------ -------------- --------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net revenues:
Service............... $ -- $ 2,033,000 $ 4,058,000 $ 1,020,000 $ 1,953,000
Advertising........... -- 61,000 910,000 42,000 329,000
----------- ------------ ------------ -------------- --------------
Total net revenues.. -- 2,094,000 4,968,000 1,062,000 2,282,000
----------- ------------ ------------ -------------- --------------
Costs and expenses:
Cost of service
revenues............. -- 3,084,000 9,468,000 1,895,000 3,255,000
Sales and marketing... 1,430,000 7,661,000 9,184,000 2,647,000 1,722,000
Product development... 1,703,000 3,475,000 4,426,000 1,065,000 1,282,000
General and
administrative....... 847,000 2,567,000 4,105,000 707,000 1,092,000
----------- ------------ ------------ -------------- --------------
Total costs and
expenses........... 3,980,000 16,787,000 27,183,000 6,314,000 7,351,000
----------- ------------ ------------ -------------- --------------
Loss from operations.... (3,980,000) (14,693,000) (22,215,000) (5,252,000) (5,069,000)
Interest income......... 63,000 478,000 684,000 180,000 139,000
Interest and other
expenses (a)........... (10,000) (63,000) (244,000) -- (2,141,000)
----------- ------------ ------------ -------------- --------------
Net loss............ $(3,927,000) $(14,278,000) $(21,775,000) $ (5,072,000) $ (7,071,000)
=========== ============ ============ ============== ==============
</TABLE>
- --------
(a) Interest and other expenses for the three months ended March 31, 1999
included $781,000 prepayment penalty on early extinguishment of
subordinated debt, $588,000 amortization of warrants and $466,000 expenses
associated with the April 1, 1999 merger with Compaq Computer Corporation.

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

F-84
<PAGE>

ZIP2 CORP.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Convertible Notes
Preferred Stock Common Stock Additional Receivable Total
---------------- ------------------- Paid-in from Unearned Accumulated Shareholders'
Shares Amount Shares Amount Capital Shareholders Compensation Deficit Equity
--------- ------ ---------- ------- ----------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31,
1995........... -- $ -- 2,189,600 $ 2,000 $ 16,000 $ -- $ -- $ (41,000) $ (23,000)
Sale of Common
Stock for cash
and conversion
of notes
payable........ -- -- 284,350 -- 29,000 -- -- -- 29,000
Sale of Series A
Preferred Stock
for cash and
conversion of
notes payable,
net............ 3,734,732 4,000 -- -- 3,571,000 -- -- -- 3,575,000
Sale of Series B
Preferred Stock
for cash and
conversion of
notes payable,
net............ 2,420,600 2,000 -- -- 12,049,000 -- -- -- 12,051,000
Exercise of
stock options
for cash and
notes
receivable..... -- -- 1,706,086 2,000 170,000 (137,000) -- -- 35,000
Net loss........ -- -- -- -- -- -- -- (3,927,000) (3,927,000)
--------- ------ ---------- ------- ----------- ----------- ------------ ------------ ------------
Balances at
December 31,
1996........... 6,155,332 6,000 4,180,036 4,000 15,835,000 (137,000) -- (3,968,000) 11,740,000

Sale of Series B
Preferred Stock
for cash, net.. 50,000 -- -- -- 236,000 -- -- -- 236,000
Pantheon
acquisition,
net............ -- -- 501,167 1,000 230,000 -- -- -- 231,000
Sale of Series C
Preferred Stock
for cash and
conversion of
notes payable,
net............ 3,206,780 3,000 -- -- 23,697,000 -- -- -- 23,700,000
Exercise of
stock options
for cash and
notes
receivable..... -- -- 275,349 -- 90,000 (47,000) -- -- 43,000
Net loss........ -- -- -- -- -- -- -- (14,278,000) (14,278,000)
--------- ------ ---------- ------- ----------- ----------- ------------ ------------ ------------
Balances at
December 31,
1997........... 9,412,112 9,000 4,956,552 5,000 40,088,000 (184,000) -- (18,246,000) 21,672,000

Exercise of
stock options
for cash and
notes
receivable..... -- -- 1,182,122 1,000 806,000 (270,000) -- -- 537,000
Issuance of
warrants in
conjunction
with
subordinated
debt........... -- -- -- -- 560,000 -- -- -- 560,000
Repurchases of
unvested common
stock.......... -- -- (1,170,727) (1,000) (527,000) 131,000 -- -- (397,000)
Unearned
compensation... -- -- -- -- 13,694,000 -- (13,694,000) -- --
Amortization of
unearned
compensation... -- -- -- -- -- -- 1,074,000 -- 1,074,000
Net loss........ -- -- -- -- -- -- -- (21,775,000) (21,775,000)
--------- ------ ---------- ------- ----------- ----------- ------------ ------------ ------------
Balances at
December 31,
1998........... 9,412,112 9,000 4,967,947 5,000 54,621,000 (323,000) (12,620,000) (40,021,000) 1,671,000

Exercise of
stock options
for cash and
notes
receivable..... -- -- 1,993,976 2,000 1,954,000 (1,851,000) -- -- 105,000
Unearned
compensation... -- -- -- -- 2,874,000 -- (2,874,000) -- --
Amortization of
unearned
compensation... -- -- -- -- -- -- 1,002,000 -- 1,002,000
Exercise of
warrants in
conjunction
with
subordinated
debt........... 142,921 -- -- -- 1,310,000 -- -- -- 1,310,000
Exercise of
warrants....... -- -- 101,532 -- 271,000 -- -- -- 271,000
Repurchases of
unvested common
stock.......... -- -- (80,436) -- (22,000) 6,000 -- -- (16,000)
Payment for
notes
receivable..... -- -- -- -- -- 103,000 -- -- 103,000
Net loss........ -- -- -- -- -- -- -- (7,071,000) (7,071,000)
--------- ------ ---------- ------- ----------- ----------- ------------ ------------ ------------
Balances at
March 31, 1999
(unaudited).... 9,555,033 $9,000 6,983,019 $ 7,000 $61,008,000 $(2,065,000) $(14,492,000) $(47,092,000) $ (2,625,000)
========= ====== ========== ======= =========== =========== ============ ============ ============
</TABLE>

F-85
<PAGE>

ZIP2 CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
--------------------------------------- ------------------------
1996 1997 1998 1998 1999
----------- ------------ ------------ ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss.............. $(3,927,000) $(14,278,000) $(21,775,000) $(5,072,000) $(7,071,000)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Provision for
doubtful accounts.. -- 130,000 50,000 -- --
Depreciation and
amortization....... 36,000 630,000 2,471,000 320,000 550,000
Amortization of
unearned
compensation....... -- -- 1,074,000 268,000 1,002,000
Changes in assets
and liabilities,
net of effect of
Pantheon
acquisition:
Accounts
receivable....... -- (659,000) (302,000) (646,000) (38,000)
Receivable from
Compaq........... -- -- -- -- (1,585,000)
Prepaid expenses
and other current
assets........... (470,000) (366,000) 412,000 (137,000) (45,000)
Other assets...... (199,000) (258,000) (75,000) 229,000 (277,000)
Accounts payable.. 491,000 (307,000) 590,000 (73,000) (632,000)
Accrued
liabilities...... 457,000 163,000 1,385,000 112,000 315,000
Payable to
Compaq........... -- -- -- -- 1,427,000
Deferred revenue.. 521,000 2,131,000 3,633,000 681,000 1,233,000
----------- ------------ ------------ ----------- -----------
Net cash used in
operating
activities...... (3,091,000) (12,814,000) (12,537,000) (4,318,000) (5,121,000)
----------- ------------ ------------ ----------- -----------
Cash flows used in
investing activities
for acquisition of
property and
equipment............. (742,000) (1,138,000) (26,000) (15,000) --
----------- ------------ ------------ ----------- -----------
Cash flows from
financing activities:
Proceeds from issuance
of Preferred Stock,
net.................. 15,626,000 23,936,000 -- -- 1,870,000
Proceeds from issuance
of Common Stock,
net.................. 35,000 28,000 140,000 18,000 494,000
Proceeds from notes
payable.............. 609,000 141,000 7,000,000 -- --
Repayment of notes
payable.............. (11,000) (226,000) (250,000) (245,000) (589,000)
Repayment of capital
lease obligations.... -- (30,000) (666,000) 742,000 (247,000)
Proceeds from
shareholder notes
receivable........... -- 15,000 -- -- --
----------- ------------ ------------ ----------- -----------
Net cash provided
by financing
activities...... 16,259,000 23,864,000 6,224,000 515,000 1,528,000
----------- ------------ ------------ ----------- -----------
Net increase (decrease)
in cash and cash
equivalents........... 12,426,000 9,912,000 (6,339,000) (3,818,000) (3,593,000)
Cash and cash
equivalents at
beginning of year..... 29,000 12,455,000 22,367,000 22,367,000 16,028,000
----------- ------------ ------------ ----------- -----------
Cash and cash
equivalents at end of
year.................. $12,455,000 $ 22,367,000 $ 16,028,000 $18,549,000 $12,435,000
=========== ============ ============ =========== ===========
Supplemental disclosure
of cash flow
information:
Cash paid for
interest............. $ 8,000 $ 63,000 $ 243,000
=========== ============ ============
Supplemental schedule
of noncash investing
and financing
activities:
Capital leases for
equipment............ $ -- $ 1,642,000 $ 2,732,000
=========== ============ ============
Common Stock for
Pantheon
acquisition.......... $ -- $ 231,000 $ --
=========== ============ ============
Common Stock for notes
receivable, net...... $ 137,000 $ 47,000 $ 139,000
=========== ============ ============
Notes payable
converted to
Preferred and Common
Stock................ $ 29,000 $ -- $ --
=========== ============ ============
</TABLE>

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

F-86
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company

Zip2 Corp., ("Zip2" or the "Company"), was incorporated in California on
November 6, 1995. Through a comprehensive suite of Web development solutions
and service offerings, the Company supports the delivery of localized
editorial content, consumer information and advertising products by newspapers
and other local media companies.

Basis of presentation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Zip2 Bay Area, Inc. ("Zip2 Bay
Area"). Zip2 Bay Area was sold in August 1998. All intercompany accounts and
transactions have been eliminated in consolidation.

Use of estimates

Cash and cash equivalents

The Company considers all highly liquid investments with an original
maturity from date of purchase of three months or less to be cash equivalents.
At December 31, 1997 and 1998, cash equivalents were composed primarily of
investments in U.S. Treasury Bills, commercial paper and money market accounts
stated at cost, which approximates fair value.

Property and equipment

Property and equipment, including leasehold improvements, are stated at
cost net of accumulated depreciation and amortization. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets, generally three years. Leasehold improvements and assets acquired
under capital lease obligations are amortized over the shorter of the
estimated useful lives of the assets or the remaining lease term.

Goodwill

Goodwill arising from the acquisition of Pantheon III, Inc. is being
amortized using the straight-line method over three years from the acquisition
date. At each balance sheet date, the Company measures whether any impairment
exists with respect to the carrying amount of goodwill based upon the
undiscounted value of expected future cash flows from the acquired business.

Revenue recognition

The Company derives, or expects to derive, revenues from the delivery of
Web development solutions, Web software applications hosting, technical and
sales-related consulting services and from a share of advertising revenues
generated by newspaper and other local media customers.

F-87
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Revenues from the delivery of Web development solutions combined with
consulting, Web hosting and other continuing service obligations are
recognized ratably as service revenues over the contract terms which range
from one to six years. Revenues from technical and sales-related consulting
services are recognized as services are provided. Provisions for contract
adjustments and losses are recorded in the period such items are identified.
Deferred revenues represent the amount of cash received or invoices rendered
prior to revenue recognition. Revenues from contractual rights to share in
advertising revenues generated by newspaper and other local media customers
are recognized as advertising revenues as the fees are earned and become
receivable from the customer. Amounts payable due to newspaper and other local
media customers from contractual rights to share in advertising revenues
generated by the Company are recognized as costs of revenues in the period the
related revenues are earned.

Product development costs

The Company accounts for product development costs in accordance with SFAS
No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed." After technological feasibility is established using the
"working model" approach, product development costs are capitalized. The
capitalized costs are then amortized on a straight-line basis over the
estimated product life or on the ratio of current revenues to total projected
product revenue, whichever is greater. Since inception, the amount of costs
qualifying for capitalization has been immaterial and as a result, all product
development costs have been expensed as incurred.

Stock-based compensation

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of APB No. 25, "Accounting for Stock Issued to
Employees," ("APB No. 25") and complies with the disclosure provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123"). Under
APB No. 25, compensation cost is recognized based on the difference, if any,
on the date of grant between the fair value of the Company's stock and the
amount an employee must pay to acquire the stock.

Advertising costs

Advertising costs are expensed as incurred in accordance with SOP 93-7,
"Reporting on Advertising." Advertising costs for the years ended December 31,
1996, 1997 and 1998, totaled $288,000, $519,000 and $969,000, respectively.

Income Taxes

Income taxes are accounted for using an asset and liability approach in
accordance with SFAS No. 109, "Accounting for Income Taxes." The asset and
liability approach requires the recognition of taxes payable or refundable for
the current year and deferred tax liabilities and assets for the future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. The measurement of current and deferred tax
liabilities and assets are based on provisions of the enacted tax law; the
effects of future changes in tax laws or rates are not anticipated. The
measurement of deferred tax assets is reduced, if necessary, by the amount of
any tax benefits that, based on available evidence, are not expected to be
realized.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consists primarily of cash and cash equivalents
and accounts receivable. The Company limits its exposure to credit loss by
depositing its cash and cash equivalents with financial institutions that
management believes are of high credit quality. The Company believes that the
risk associated with accounts receivable is mitigated, to some

F-88
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

extent, by the fact that the Company's customer base is geographically
dispersed and is composed primarily of large newspaper and other local media
companies that management believes are financially secure.

During the year ended December 31, 1997, approximately 51% of the Company's
net revenues were derived from one customer that holds shares of the Company's
Series B and Series C Preferred Stock. At December 31, 1997, approximately 29%
and 15% of accounts receivable, net, were due from two customers that hold
shares of the Company's Series B and Series C Preferred Stock.

During the year ended December 31, 1998, two customers that hold shares of
the Company's Preferred Stock accounted for 11% and 10% of net revenue,
respectively. At December 31, 1998, one customer that holds shares of the
Company's Series B and Series C Preferred Stock accounted for 29% of accounts
receivable, net.

Comprehensive income

Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income and its components in financial statements.
Comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources. To date, the Company has not had any
significant transactions that are required to be reported in comprehensive
income.

Segment information

Effective January 1, 1998, the Company adopted the provisions of SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
The Company operates in a single business segment that provides Web
development solutions. The adoption of SFAS No. 131 did not have a material
impact on the Company's financial statement disclosure.

Interim results (unaudited)

The interim consolidated financial information as of March 31, 1999 and for
the three months ended March 31, 1998 and 1999, have been presented on the
same basis as the consolidated financial statements as of and for the year
ended December 31, 1998, and, in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly the Company's financial position, results of operations, cash
flows and shareholders' equity as of March 31, 1999 and for the three months
ended March 31, 1998 and 1999. The results for the three months ended March
31, 1999 are not necessarily indicative of the results to be expected for the
year ending December 31, 1999.

Recent accounting pronouncements

In March 1999, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
provides guidance over accounting for computer software developed or obtained
for internal use including the requirement to capitalize specified costs and
amortization of such costs. The Company will adopt the provisions of SOP 98-1
in its fiscal year ending December 31, 1999, and does not expect adoption to
have a material impact on its financial position or results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards of derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Company will adopt SFAS No. 133 in its fiscal year ending December 31, 1999
and does not expect adoption to have a material impact on its financial
position and results of operations.

F-89
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). Start-up activities are defined broadly as those
onetime activities related to opening a new facility, introducing a new
product or service, commencing some new operation or organizing a new entity.
Under SOP 98-5, the cost of start-up activities should be expensed as
incurred. SOP 98-5 is effective for the Company beginning January 1, 1999 and
the Company does not expect its adoption to have a material effect on its
financial position or results of operations.

NOTE 2--BALANCE SHEET COMPONENTS:

<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1998
---------- -----------
<S> <C> <C>
Property and equipment,
net:
Computer equipment and
software............... $3,240,000 $ 5,859,000
Furniture and fixtures.. 65,000 68,000
Leasehold improvements.. 222,000 358,000
---------- -----------
3,527,000 6,285,000
Less: accumulated
depreciation and
amortization........... (573,000) (2,647,000)
---------- -----------
$2,954,000 $ 3,638,000
========== ===========
</TABLE>

At December 31, 1997 and 1998, property and equipment includes $1,642,000
and $4,374,000 of computer equipment, furniture and fixtures and leasehold
improvements acquired under capital lease obligations, respectively.
Accumulated amortization of assets under capital lease obligations totaled
$164,000 and $1,371,000 at December 31, 1997 and 1998, respectively.

<TABLE>
<CAPTION>
December 31,
-------------------
1997 1998
-------- ----------
<S> <C> <C>
Accrued liabilities:
Payroll and related expenses.......................... $608,000 $ 542,000
Accrued advertising................................... -- 855,000
Other................................................. 267,000 863,000
-------- ----------
$875,000 $2,260,000
======== ==========
</TABLE>

NOTE 3--ACQUISITION:

Pantheon III, Inc. acquisition

In July 1997, the Company acquired all of the outstanding stock of Pantheon
III, Inc. ("Pantheon"), a Washington corporation involved in the development,
marketing and support of data conversion software applications for the
newspaper industry. The consideration for the acquisition totaled $907,000 and
was composed of 501,167 shares of the Company's Common Stock, the assumption
of outstanding Pantheon warrants and options in exchange for 59,166 and 45,145
warrants and options, respectively, to purchase the Company's Common Stock,
assumption of Pantheon liabilities totaling $535,000 and direct acquisition
costs totaling $130,000. The acquisition was accounted for using the purchase
method of accounting and accordingly, the purchase price was allocated to the
assets acquired and liabilities assumed on the basis of their fair values on
the acquisition date, with the excess of $675,000 being allocated to goodwill.
During the years ended December 31, 1997 and 1998, goodwill amortization
totaled $98,000 and $396,000, respectively, including an impairment charge of
$181,000 in 1998.

F-90
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 4--RELATED PARTY TRANSACTIONS:

The Company conducts a substantial portion of its business with newspapers
and other local media companies that have also made strategic investments in
the Company's Preferred Stock. The terms of such arrangements have
historically been negotiated in parallel with negotiations for the purchase of
Preferred Stock and may not necessarily reflect terms that would have resulted
from negotiations with unrelated third parties.

During the years ended December 31, 1996, 1997 and 1998, service revenues
derived from customers that also hold shares of the Company's outstanding
Preferred Stock totaled $0, $1,224,000 and $1,861,000, respectively. During
the years ended December 31, 1996, 1997 and 1998, advertising revenues derived
from customers that also hold shares of the Company's outstanding Preferred
Stock amounted to $0, $34,000 and $232,000, respectively.

In August 1998, the Company discontinued the operations of Zip2 Bay Area
and sold certain Zip2 Bay Area assets for a nominal amount to a holder of
outstanding Preferred Stock. The loss on the sale was immaterial.

NOTE 5--INCOME TAXES:

Deferred tax assets, related primarily to net operating loss carryforwards,
amounted to approximately $5,000,000 and $13,000,000 at December 31, 1997 and
1998, respectively. Valuation allowances have been provided in amounts equal
to the assets because management believes that, based on a number of factors,
it is more likely than not that the deferred tax assets will not be realized.

At December 31, 1998, the Company had approximately $ 30,000,000 of federal
net operating loss carryforwards available to offset future taxable income
which expire in varying amounts beginning in 2011. Under the Tax Reform Act of
1986, the amounts of and benefits from net operating loss carryforwards may be
impaired or limited in certain circumstances. Events which cause limitations
in the amount of net operating losses that the Company may utilize in any one
year include, but are not limited to, a cumulative ownership change of more
than 50%, as defined, over a three year period.

NOTE 6--BORROWINGS:

Notes payable

During 1996 and 1997, the Company issued notes payable to a financing
company totaling $609,000 and $141,000, respectively. These notes payable are
secured by certain computer equipment of the Company. In connection with the
issuance of the notes payable during 1996, the Company granted the financing
company warrants to purchase 46,812 shares of the Company's Series A Preferred
Stock with an exercise price of $3.65 per share. The warrants expire on the
later of August 2006 or five years following an initial public offering and
had a nominal fair value on the date of the grant.

Subordinated debt

In December 1998, the Company entered into a loan and security agreement
with two holders of the Company's warrants and an unrelated party and issued
subordinated notes totaling $7,000,000. Under the terms of the agreement, the
notes bear interest at 12.75% per year and are secured by the Company's
assets. In conjunction with the subordinated debt, warrants to purchase
136,897 shares of the Company's Series C Preferred Stock with an exercise
price of $7.67 per share were issued to the note holders. The warrants expire
on the later of seven years after the date of grant or three years after the
closing of the Company's initial public offering. The warrants had an
estimated fair value of $560,000 on the date of grant, which will be amortized
to interest expense over the term of the related debt.

F-91
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 1997 and 1998, outstanding borrowings consist of the
following:

<TABLE>
<CAPTION>
December 31,
-------------------
1997 1998
-------- ----------
<S> <C> <C>
8.6% note; principal and interest payable monthly;
due October 31, 1999................................. $275,000 $ 130,000
8.7% note; principal and interest payable monthly;
due December 1, 1999................................. 124,000 65,000
9.3% note; principal and interest payable monthly;
due April 30, 2000................................... 114,000 68,000
12.75% note; principal and interest payable beginning
July 1999; due December 2002......................... -- 7,000,000
Less: Discount associated with warrants............... -- (560,000)
-------- ----------
513,000 6,703,000
Less: Current portion................................. 250,000 1,645,000
-------- ----------
$263,000 $5,058,000
======== ==========
</TABLE>

Principal payments due under the notes payable are $1,645,000, $2,818,000
and $2,800,000 for 1999, 2000 and 2001, respectively.

Equipment lease line

During 1997 and 1998, the Company obtained certain equipment lease lines
from a leasing company. At December 31, 1997 and 1998, obligations under these
lease arrangements consist of the following:

<TABLE>
<CAPTION>
December 31,
---------------------
1997 1998
---------- ----------
<S> <C> <C>
$3,000,000 equipment lease line; equal monthly
installments through April 2002..................... $1,612,000 $2,430,000
$1,500,000 equipment lease line; equal monthly
installments through December 2002.................. -- 1,248,000
$2,000,000 equipment lease line; expires December
1999................................................ -- --
---------- ----------
1,612,000 3,678,000
Less: Current portion................................ 393,000 1,078,000
---------- ----------
$1,219,000 $2,600,000
========== ==========
</TABLE>

Under the terms of the 1997 lease lines, warrants to purchase 13,136 and
7,082 shares of the Company's Series B and Series C Preferred Stock with
exercise prices of $5.00 and $7.67 per share, respectively, were issued to the
leasing Company. The warrants expire on the later of August 2002 or five years
following an initial public offering and had a nominal fair value on the date
of grant. Under the terms of the 1998 lease lines, a warrant to purchase
18,253 shares of the Company's Series C Preferred Stock with an exercise price
of $7.67 per share was issued to the leasing Company. The warrant expires on
the shorter of five years from the date of grant or two years following an
initial public offering and had a nominal fair value on the date of grant.

F-92
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 7--COMMITMENTS:

Royalty obligations

The Company has obligations to pay minimum royalties to various companies
for mapping content. The minimum obligations under the royalty agreements
total $440,000 and $35,000 for the years ending December 31, 1999 and 2000,
respectively.

Leases

The Company leases office space and equipment under noncancelable operating
and capital leases with various expiration dates through October 2001. Rent
expense for the years ended December 31, 1996, 1997 and 1998 totaled $77,000,
$415,000 and $910,000, respectively.

At December 31, 1998, future minimum lease payments under noncancelable
operating and capital leases are as follows:

<TABLE>
<CAPTION>
Capital Operating
Year Ending December 31, Leases Leases
------------------------ ----------- ----------
<S> <C> <C>
1999................................................ $ 1,338,000 $1,159,000
2000................................................ 1,340,000 1,131,000
2001................................................ 1,170,000 687,000
2002................................................ 359,000 137,000
----------- ----------
Total minimum lease payments........................ 4,207,000 $3,114,000
==========
Less: Amount representing interest.................. (529,000)
Present value of capital lease obligations.......... 3,678,000
Less: Current portion............................... (1,078,000)
-----------
Long-term portion of capital lease obligations...... $ 2,600,000
===========
</TABLE>

NOTE 8--CONVERTIBLE PREFERRED STOCK:

At December 31, 1998, Convertible Preferred Stock consists of the
following:

<TABLE>
<CAPTION>
Proceeds
Shares Net of
---------------------- Liquidation Issuance
Series Authorized Outstanding Amount Costs
------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
A............................ 4,000,000 3,734,732 $ 3,590,000 $ 3,575,000
B............................ 4,000,000 2,470,600 12,353,000 12,287,000
C............................ 4,000,000 3,206,780 24,596,000 23,700,000
---------- --------- ----------- -----------
12,000,000 9,412,112 $40,539,000 $39,562,000
========== ========= =========== ===========
</TABLE>

The holders of Preferred Stock have various rights and preferences as
follows:

Voting

Each share of Series A, Series B and Series C has voting rights equal to an
equivalent number of shares of Common Stock into which it is convertible and
votes together as one class with the Common Stock.

As long as any shares of Convertible Preferred Stock remain outstanding,
the Company must obtain approval from a majority of the holders of Convertible
Preferred Stock in order to alter the articles of

F-93
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

incorporation as related to Convertible Preferred Stock, change the authorized
number of shares of Convertible Preferred Stock, repurchase any shares of
Common Stock other than shares subject to the right of repurchase by the
Company, change the authorized number of Directors, authorize a dividend for
any class or series other than Convertible Preferred Stock, create a new class
of stock or effect a merger, consolidation or sale of assets where the
existing shareholders retain less than 50% of the voting stock of the
surviving entity.

Dividends

Holders of Series A, B and C Convertible Preferred Stock are entitled to
receive noncumulative dividends at the per annum rate of $0.09613, $0.5 and
$0.767 per share, respectively, when and if declared by the Board of
Directors. The holders of Series A, B and C Convertible Preferred Stock will
also be entitled to participate in dividends on Common Stock, when and if
declared by the Board of Directors, based on the number of shares of Common
Stock held on an as-if converted basis. No dividends on Convertible Preferred
Stock or Common Stock have been declared by the Board from inception through
December 31, 1998.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company,
including a merger, acquisition or sale of assets where the beneficial owners
of the Company's Common Stock and Convertible Preferred Stock own less than
51% of the resulting voting power of the surviving entity, the holders of
Series A, B and C Convertible Preferred Stock are entitled to receive an
amount of $0.9613, $5.00 and $7.67 per share, respectively, plus any declared
but unpaid dividends prior to and in preference to any distribution to the
holders of Common Stock. Should the Company's legally available assets be
insufficient to satisfy the liquidation preferences, the entire amount of
assets will be distributed ratably to the holders of Series A, B and C
Convertible Preferred Stock.

After the payment has been made to the holders of the Preferred Stock in
full, the remaining legally available assets would be distributed ratably to
the holders of Series A Preferred Stock and the holders of Common Stock.

Conversion

Each share of Series A, B and C Convertible Preferred Stock is convertible,
at the option of the holder, according to a conversion ratio, subject to
adjustment for dilution. Each share of Series A, B and C Convertible Preferred
Stock automatically converts into the number of shares of Common Stock into
which such shares are convertible at the then effective conversion ratio upon:
1) the closing of a public offering of Common Stock at a per share price of at
least $10 per share with gross proceeds of at least $17,000,000 or 2) the
consent of not less than two-thirds of the then holders of the majority of
Convertible Preferred Stock, subject to the limitation that the holders of
Series A Preferred Stock shall not be entitled to more than three times the
Liquidation Preference.

At December 31, 1998, the Company had reserved 4,000,000, 4,000,000 and
4,000,000 shares of Common Stock for the conversion of Series A, B and C
Convertible Preferred Stock, respectively.

NOTE 9--COMMON STOCK:

The Company's Articles of Incorporation, as amended, authorize the Company
to issue 20,000,000 shares of $0.001 par value Common Stock. A portion of the
shares issued for notes receivable are subject to rights of repurchase by the
Company that lapse generally over a four year period from the earlier of the
purchase date or employee hire date, as applicable, until all restrictions
lapse. At December 31, 1998, there were 549,000 shares of Common Stock subject
to repurchase.

F-94
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 10--STOCK OPTION PLANS:

In April 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan"). The 1996 Plan provides for the granting of stock options to employees,
consultants and directors of the Company. Options granted under the Plan may
be either incentive stock options or nonqualified stock options. Incentive
stock options ("ISO") may be granted only to Company employees (including
officers and directors who are also employees). Nonqualified stock options
("NSO") may be granted to Company employees and consultants. The Company has
reserved 3,093,336 shares of Common Stock for issuance under the 1996 Plan.

In September 1997, the Company adopted the 1997 Stock Option Plan (the
"1997 Plan"). The 1997 Plan provides for the granting of stock options to
employees, consultants and directors of the Company. Options granted under the
1997 Plan may be either incentive stock options or nonqualified stock options.
Incentive stock options ("ISO") may be granted only to Company employees
(including officers and directors who are also employees). Nonqualified stock
options ("NSO") may be granted to Company employees and consultants. The
Company has reserved approximately 600,000 shares of Common Stock for issuance
under the 1997 Plan.

Options under the 1996 and 1997 Plans may be granted for periods of up to
ten years and at prices no less than 85% of the estimated fair value of the
shares on the date of grant as determined by the Board of Directors, provided,
however, that (i) the exercise price of an ISO and NSO shall not be less than
100% and 85% of the estimated fair value of the shares on the date of grant,
respectively, and (ii) the exercise price of an ISO and NSO granted to a 10%
shareholder shall not be less than 110% of the estimated fair value of the
shares on the date of grant, respectively. Options are exercisable immediately
subject to repurchase options held by the Company which lapse over a maximum
period of ten years at such times and under such conditions as determined by
the Board of Directors. To date, options granted generally vest over four
years.

The following table summarizes stock option activity under the Company's
stock option plans:

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1996 1997 1998
--------------------- ------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Options Exercise Exercise Exercise
Outstanding Price Shares Price Shares Price
----------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $ -- 87,500 $ 0.10 808,095 $0.46
Granted................. 1,834,686 0.10 1,209,299 0.25 3,175,204 1.07
Assumed in Pantheon
acquisition............ -- -- 45,145 3.31 -- --
Exercised............... (1,706,086) 0.10 (447,849) 0.16 (1,182,122) 0.70
Canceled................ (41,100) 0.10 (86,000) 0.25 (325,885) 1.50
---------- --------- ----------
Outstanding at period
end.................... 87,500 0.10 808,095 0.46 2,475,292 0.99
---------- --------- ----------
Weighted average grant
date fair value of
options granted during
the year............... $ 0.04 $ 0.83 $4.26
------ ------ -----
</TABLE>

F-95
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 1998, 1,064,031 options were available for grant under the
Plans.

<TABLE>
<CAPTION>
Options Outstanding at December Options Exercisable
31, 1998 at December 31, 1998
-------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
Range of Exercise Prices Outstanding Life Price Outstanding Price
------------------------ ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.10................... 20,000 7.59 $0.10 20,000 $0.10
0.25................... 112,968 8.50 0.25 109,968 0.25
0.40-$1.00............. 2,310,737 9.81 1.00 2,303,968 1.00
1.83-$3.66............. 31,587 7.72 3.39 31,587 3.39
--------- ---- ----- --------- -----
2,475,292 9.70 $0.99 2,465,523 $0.99
========= ==== ===== ========= =====
</TABLE>

At December 31, 1998, approximately 267,000 options were vested.

Unearned stock-based compensation

In connection with certain stock option grants during the year ended
December 31, 1998, the Company recognized unearned compensation totaling
$13,694,000, which is being amortized over the four year vesting periods of
the related options. Amortization expense recognized during the year ended
December 31, 1998 totaled approximately $1,074,000.

Minimum value disclosures

Had compensation cost for the Company's stock-based compensation plan been
determined based on the minimum value method at the grant dates for the awards
as prescribed by SFAS No. 123, the Company's net loss would have reflected an
immaterial change.

The Company calculated the minimum value of each option grant on the date
of grant using the Black-Scholes pricing method with the following
assumptions: dividend yield at 0%; weighted average expected option term of
five years; risk free interest rates of 6.2%, 6.2% and 5.4% for 1996, 1997 and
1998, respectively.

Notes receivable from shareholders

In connection with the issuance of Common Stock upon the exercise of stock
options, notes receivable were received from certain officers and employees.
These full-recourse notes, which accrue interest on unpaid balances at between
5.7% to 6.8% per annum and are secured by the related Common Stock, are due
between 1999 and 2008. The Company may accelerate the amounts due, in part or
in whole, upon certain events including termination of employment, payment
default or sales of the pledged securities.

NOTE 11--EMPLOYEE BENEFIT PLANS:

The Company sponsors a 401(k) defined contribution plan covering all
employees. Contributions made by the Company are determined annually by the
Board of Directors. There were no employer contributions under this plan
during the years ended December 31, 1996, 1997 and 1998.

F-96
<PAGE>

ZIP2 CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 12--SUBSEQUENT EVENTS:

Stock Option Grants

In January and February 1999, the Company granted to employees 201,000
options to purchase the Company's Common Stock at an exercise price of $1.00
per share. In connection with these stock option grants, the Company
recognized unearned compensation totaling approximately $2,874,000, which is
being amortized over the four year vesting periods of the related options.

Merger with Compaq Computer Corporation

On April 1, 1999, the Company consummated a merger agreement with Compaq
Computer Corporation ("Compaq"). Under the terms of the merger agreement, each
share of the Company's Convertible Preferred Stock and Common Stock was
converted into the right to receive an amount per share equal to $307,000,000,
divided by the number of issued and outstanding shares of Convertible
Preferred Stock and Common Stock immediately prior to the consummation of the
merger. Additionally, Compaq repaid the subordinated debt of the Company as
part of the terms of the acquisition.

F-97
<PAGE>

[ALTAVISTA LOGO]

<PAGE>

PROSPECTUS (Subject to Completion) [INTERNATIONAL COVER]

Issued

14,800,000 Shares

[AltaVista Company Logo]

COMMON STOCK

-----------

We are offering shares of our common stock. This is our initial public
offering and no public market currently exists for our shares. We anticipate
that the initial public offering price will be between $ and $ per
share.

-----------

We have applied for quotation of our common stock on the Nasdaq National Market
under the symbol "ALTA."

-----------

Investing in our common stock involves risks. See "Risk Factors" beginning on
page 5.

-----------

PRICE $ A SHARE

-----------

We have granted the underwriters the right to purchase up to an additional
2,220,000 shares to cover over-allotments.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers
on , 2000.

-----------

MORGAN STANLEY DEAN WITTER
CHASE H&Q
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL
PRUDENTIAL--BACHE SECURITIES

, 2000
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table indicates the expenses to be incurred in connection
with the offering described in this Registration Statement, all of which will
be paid by AltaVista. All amounts are estimates, other than the registration
fee, the NASD fee, and the Nasdaq National Market listing fee.

<TABLE>
<S> <C>
SEC Registration fee.......................................... 89,866
NASD Filing fee............................................... 30,500
Nasdaq National Market listing fee............................ 95,000
Accounting fees and expenses.................................. 600,000
Legal fees and expenses....................................... 1,000,000
Director and officer insurance expenses....................... *
Printing expenses............................................. 1,000,000
Transfer agent fees and expenses.............................. *
Blue sky fees and expenses.................................... 15,000
Miscellaneous fees and expense................................ 169,634
----------
Total ...................................................... $3,000,000
==========
</TABLE>
- --------
* To be completed by amendment.

Item 14. Indemnification of Directors and Officers.

Section 102 of the Delaware General Corporation Law ("DGCL"), as amended,
allows a corporation to eliminate the personal liability of directors of a
corporation to the corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except where the director breached his
duty of loyalty, failed to act in good faith, engaged in intentional
misconduct or knowingly violated a law, authorized the payment of a dividend
or approved a stock repurchase in violation of Delaware corporate law or
obtained an improper personal benefit.

Section 145 of the DGCL provides, among other things, that the Company may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the Company) by reason of the fact that the
person is or was a director, officer, agent or employee of the Company or is
or was serving at the Company's request as a director, officer, agent, or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgment, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding. The power to indemnify
applies (a) if such person is successful on the merits or otherwise in defense
of any action, suit or proceeding, or (b) if such person acted in good faith
and in a manner he reasonably believed to be in the best interest, or not
opposed to the best interest, of the Company, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The power to indemnify applies to actions brought by or in the right
of the Company as well, but only to the extent of defense expenses (including
attorneys' fees but excluding amounts paid in settlement) actually and
reasonably incurred and not to any satisfaction of judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence
or misconduct in the performance of his duties to the Company, unless the
court believes that in light of all the circumstances indemnification should
apply.

Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for such actions. A
director who was either absent when the unlawful actions were approved or
dissented at the

II-1
<PAGE>

time, may avoid liability by causing his or her dissent to such actions to be
entered in the books containing the minutes of the meetings of the board of
directors at the time such action occurred or immediately after such absent
director receives notice of the unlawful acts.

Our Amended and Restated Certificate of Incorporation includes a provision
that eliminates the personal liability of its directors for monetary damages
for breach of fiduciary duty as a director, except for liability:

. for any breach of the director's duty of loyalty to AltaVista or its
stockholders;

. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

. under the section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or

. for any transaction from which the director derived an improper personal
benefit.

These provisions are permitted under Delaware law.

Our Amended and Restated Bylaws provide that:

. we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;

. we may indemnify our other employees and agents to the same extent that
we indemnified our officers and directors, unless otherwise determined by
our Board of Directors; and

. we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware Law.

The indemnification provisions contained in the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws are not
exclusive of any other rights to which a person may be entitled by law,
agreement, vote of stockholders or disinterested directors or otherwise. In
addition, the Company maintains insurance on behalf of its directors and
executive officers insuring them against any liability asserted against them
in their capacities as directors or officers or arising out of such status.

Item 15. Recent Sales of Unregistered Securities.

In the three fiscal years preceding the filing of this registration
statement, AltaVista has issued the following securities that were not
registered under the Securities Act:

(a) Issuances of Capital Stock

In August 1999, CMGI contributed to AltaVista 18,994,975 shares of CMGI
common stock, 18,090.45 shares of CMGI series D preferred stock and all of the
shares of Zip2 and Shopping.com common stock which CMGI had purchased from
Compaq in exchange for 105,943,651 shares of AltaVista common stock. As part
of the same transaction, Compaq contributed the AltaVista business to
AltaVista in exchange for 24,056,349 shares of AltaVista common stock,
18,994,975 shares of CMGI common stock and 18,090.45 shares of CMGI series D
preferred stock.

In October 1999, AltaVista issued to CMGI 1,556,387 shares of common stock
in connection with AltaVista's acquisition of iAtlas.

In February 2000, AltaVista issued 6,609,492 shares of common stock to
former stockholders of Raging Bull in connection with AltaVista's acquisition
of Raging Bull.

In February 2000, AltaVista issued 221,692 shares of common stock to former
stockholders of Transium in connection with AltaVista's acquisition of
Transium.

(b) Grants and Exercises of Stock Options

On September 29, 1999, AltaVista granted options to purchase 2,821,330
shares of common stock at an exercise price of $17.18 per share to its
employees.

On September 29, 1999, AltaVista granted options to purchase 141,700 shares
of common stock at exercise price of $17.18 per share to its directors.

II-2
<PAGE>

On September 28, 1999, AltaVista granted options to purchase 471,900 shares
of common stock at an exercise price of $17.18 per share to former employees
of iAtlas in connection with AltaVista's acquisition of iAtlas.

On October 11, 1999, AltaVista granted options to purchase 300,300 shares
of common stock at an exercise price of $22.73 per share to its non-employee
directors.

No underwriters were involved in the foregoing sales of securities. These
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by
an issuer not involving any public offering or the rules and regulations
thereunder or, in the case of options to purchase common stock, Rule 701 under
the Securities Act. All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.

Item 16. Exhibits and Financial Statement Schedules.

a. Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Amended and Restated Certificate of Incorporation**
3.2 Amended and Restated By-Laws**
4.1 Form of common stock certificate*
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP*
10.1 1999 Stock Option Plan**
10.2 1999 Stock Option Plan Agreement**
10.3 1999 Equity Incentive Plan**
10.4 1999 Equity Incentive Plan Agreement**
10.5 1999 Stock Option Plan for Non-Employee Directors**
10.6 Amended and Restated 1999 Stock Option Plan for Non-Employee
Directors**
10.7 1999 Stock Option Plan for Non-Employee Directors Agreement**
10.8 Form of Severance Agreement**
10.9 Forms of Indemnity Agreements**
10.10 Deferred Compensation Plan**
10.11 Trust Agreement under Deferred Compensation Plan
10.12 Investor Rights Agreement by and between AltaVista and CMGI, Inc.
10.13 1999 Employee Stock Purchase Plan**
10.14+ Advertising Services Agreement, between DoubleClick, Inc. and
AltaVista, dated as of November 1, 1999**
10.15+ Advertising Services Agreement, between DoubleClick, Inc. and Compaq
Computer Corporation, dated as of January 1, 1999**
10.16+ Relevant portions of the Strategic Business Agreement, between Compaq
Computer Corporation and CMGI, Inc., dated as of June 29, 1999**
10.17+ Strategic Alliance Agreement, between 1stUp.Com Corporation and
AltaVista, dated as of June 25, 1999**
10.18 Facilities and Administrative Support Agreement by and between
AltaVista and CMGI, Inc.
10.19 Tax Allocation Agreement by and between AltaVista and CMGI, Inc.
10.20 Master Lease and Financing Agreement between Compaq Computer
Corporation and AltaVista, dated as of November 24, 1999
10.21 Amendment Number 1 to Master Lease and Financing Agreement
16.1 Letter Regarding Change in Accountants
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
21.1 Subsidiary of the Registrant**
23.1 Consent and Report of KPMG LLP
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Report of PricewaterhouseCoopers LLP**
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit
5.1)*
24.1 Power of Attorney**
27.1 Financial Data Schedule**
27.2 Financial Data Schedule**
27.3 Financial Data Schedule**
27.4 Financial Data Schedule**
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ We have sought confidential treatment from the Commission for selected
portions of this exhibit. The omitted portions will be separately filed
with the Commission.

b. Financial Statement Schedules

Schedule II -- Valuation and Qualifying Accounts

Item 17. Undertakings.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described in Item 14, or otherwise,
the registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a
claim for indemnification by the registrant against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or
(4) or 497 (h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bonafide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto, State of
California, on March 9, 2000.

AltaVista Company

/s/ Kenneth R. Barber
By: ________________________________

Name: Kenneth R. Barber
Title: Vice President and Chief
Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* President, Chief Executive March 9, 2000
____________________________________ Officer and Director
Rodney W. Schrock

* Vice President and Chief March 9, 2000
____________________________________ Financial Officer
Kenneth R. Barber

* Vice President, Corporate March 9, 2000
____________________________________ Controller and Treasurer
Mary S. Yuschak

* Chairman March 9, 2000
____________________________________
David S. Wetherell

* Director March 9, 2000
____________________________________
Flint J. Brenton

* Director March 9, 2000
____________________________________
John G. McDonald

* Director March 9, 2000
____________________________________
Avram Miller

* Director March 9, 2000
____________________________________
Robert J. Ranalli
</TABLE>

/s/ Kenneth R. Barber
*By:______________________________
Name: Kenneth R. Barber
(Attorney-in-fact)

II-5
<PAGE>

ALTAVISTA COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Years ended December 31, 1997, 1998, seven months ended July 31, 1999 and as of
August 18, 1999

<TABLE>
<CAPTION>
June 12, 1998 Seven Months
Year Ended January 1, 1998 to Ended
December 31, to December 31, July 31, August 18,
1997 June 11, 1998 1998 1999 1999
------------ --------------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts and
concessions (in
thousands):
Balance, beginning of
period................. $ -- $1,427 $ 2,647 $ 2,832 --
Additions charged to
expense................ 1,427 1,220 2,516 3,266 --
Additions due to
acquisitions........... -- -- -- 241 --
Reductions.............. -- -- (2,331) (1,287) --
Balance, end of period.. $1,427 $2,647 $ 2,832 $ 5,052 $ 5,380
</TABLE>

S-1
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
10.11 Trust Agreement under Deferred Compensation Plan
10.12 Investor Rights Agreement by and between AltaVista and CMGI, Inc.
10.18 Facilities and Administrative Support Agreement by and between
AltaVista and CMGI, Inc.
10.19 Tax Allocation Agreement by and between AltaVista and CMGI, Inc.
10.20 Master Lease and Financing Agreement between Compaq Computer
Corporation and AltaVista, dated as of November 24, 1999
10.21 Amendment Number 1 to Master Lease and Financing Agreement
16.1 Letter Regarding Change in Accountants
23.1 Consent and Report of KPMG LLP
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP
23.3 Consent of PricewaterhouseCoopers LLP
</TABLE>

<PAGE>

EXHIBIT 10.11

TRUST UNDER ALTAVISTA COMPANY
DEFERRED COMPENSATION PLAN

This Agreement (the "Trust Agreement") made this ____ day of March, 2000,
by and between AltaVista Company (the "Company") and Eastern Bank and Trust
Company (the "Trustee");

WHEREAS, the Company has adopted the AltaVista Company Deferred
Compensation Plan (the "Plan");

WHEREAS, the Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan
(the "Participants");

WHEREAS, the Company wishes to establish a trust (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to Plan Participants (and their
beneficiaries) in such manner and at such times as specified in the Plan;

WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;

WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide a source of funds to assist it in meeting its liabilities under
the Plan;
<PAGE>

NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:

Section 1. Establishment of Trust. The Company hereby deposits with
----------------------
Trustee in trust Ten Dollars ($10) which shall become the principal of the Trust
to be held, administered and disposed of by Trustee as provided in this Trust
Agreement.

(a) The Trust hereby established shall be irrevocable.

(b) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.

(c) The principal of the Trust, and any earnings thereon, shall
be held separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of Plan Participants and general creditors
as herein set forth. Plan Participants (and their beneficiaries) shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan Participants (and their beneficiaries)
against the Company. Any assets held by the Trust will be subject to the claims
of the Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.

(d) The Company, in its sole discretion, may at any time, or
from time to time, make additional deposits of cash or other property in trust
with Trustee to augment the principal to be held, administered and disposed of
by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan
Participant (or beneficiary) shall have any right to compel such additional
deposits.

Section 2. Payments to Plan Participants and Their Beneficiaries.
-----------------------------------------------------

(a) The Company shall deliver to Trustee a schedule (the
"Payment Schedule") that indicates the amounts payable in respect of each Plan
Participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan Participants
(and their beneficiaries) in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by the Company.
<PAGE>

(b) The entitlement of a Plan Participant (or his or her
beneficiaries) to benefits under the Plan shall be determined by the Company or
such party as it shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the Plan.

(c) The Company may make payment of benefits directly to Plan
Participants (or their beneficiaries) as they become due under the terms of the
Plan. The Company shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to Participants (or
their beneficiaries). In addition, if the principal of any Trust, and any
earnings thereon, are not sufficient to make payments of benefits in accordance
with the terms of the Plan, the Company shall make the balance of each such
payment as it falls due. Trustee shall notify the Company where principal and
earnings are not sufficient. Notwithstanding any other provision of this Trust
Agreement, in the event that the Company determines in good faith that the
assets of the Trust are in excess of the amount needed to pay benefits in
accordance with the terms of the Plan, the Company may direct the Trustee to
refund such excess to the Company.

Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary
--------------------------------------------------------------
When Company Is Insolvent.
- -------------------------

(a) Trustee shall cease payment of benefits to a Plan
Participant (and his or her beneficiaries) if the Company is Insolvent. The
Company shall be considered "Insolvent" for purposes of this Trust Agreement if
(i) the Company is unable to pay its debts as they become due or (ii) the
Company is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.

(b) At all times during the continuance of this Trust, as
provided in Section 1(e) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of the Company under federal and state
law as set forth below.

(i) The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of the Company alleges in
writing to Trustee that the Company has become Insolvent, Trustee shall
determine whether the Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan Participants (or his or
her beneficiaries).

(ii) Unless Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, Trustee shall have no duty to
inquire whether the Company is Insolvent. Trustee may in all events rely on such
evidence concerning the Company's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning the Company's solvency.

3
<PAGE>

(iii) If at any time Trustee has determined that the
Company is Insolvent, Trustee shall discontinue payments to Plan Participants
(or their beneficiaries) and shall hold the assets of the Trust for the benefit
of the Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan Participants (or their beneficiaries) to pursue
their rights as general creditors of the Company with respect to benefits due
under the Plan or otherwise.

(iv) Trustee shall resume the payment of benefits to Plan
Participants (or their beneficiaries) in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that the Company is not Insolvent
(or is no longer Insolvent).

(d) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
Participants (or their beneficiaries) under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
Participants (or their beneficiaries) by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.

Section 4. Payments to the Company. Except as provided in Sections 2(c)
-----------------------
and 3 hereof, the Company shall have no right or power to direct Trustee to
return to the Company or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan Participants (and their
beneficiaries) pursuant to the terms of the Plan.

Section 5. Investment Authority. Trustee shall invest the assets held
--------------------
hereunder in a manner intended to assist the Company in meeting its liabilities
under the Plan even if that does not maximize the investment return of the
assets. In no event may Trustee invest in securities (including stock or rights
to acquire stock) or obligations issued by the Company, other than a de minimis
amount held in common investment vehicles in which Trustee invests. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with Plan
Participants.

Section 6. Disposition of Income. During the term of this Trust, all
---------------------
income received by the Trust, net of expenses and taxes, shall be accumulated
and reinvested.

4
<PAGE>

Section 7. Accounting by Trustee. Trustee shall keep accurate and
---------------------
detailed records of all investments, receipts, disbursements, and all other
transactions required to be made, including such specific records as shall be
agreed upon in writing between the Company and Trustee. Within ninety (90) days
following the close of each calendar year and within ninety (90) days after the
removal or resignation of Trustee, Trustee shall deliver to the Company a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.

Section 8. Responsibility of Trustee. Trustee shall act with the care,
-------------------------
skill, prudence and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims,
provided, however, that Trustee shall incur no liability to any person for any
action taken pursuant to a direction, request or approval given by the Company
which is contemplated by, and in conformity with, the terms of the Plan or this
Trust and is given in writing by the Company. In the event of a dispute between
the Company and a party, Trustee may apply to a court of competent jurisdiction
to resolve the dispute.

(a) If Trustee undertakes or defends any litigation arising in
connection with this Trust with the Company's consent, the Company agrees to
indemnify Trustee against Trustee's costs, expenses and liabilities (including,
without limitation, attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If the Company does not pay such costs,
expenses and liabilities in a reasonably timely manner, Trustee may obtain
payment from the Trust.

(b) Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of its duties or
obligations hereunder.

(c) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder with the Company's
consent.

(d) Trustee shall have, without exclusion, all powers conferred
on Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust or the Company, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan to any
person the proceeds of any borrowing against such policy except for the payment
of benefits.

(e) However, notwithstanding the provisions of Section 8(e)
above, Trustee may loan to the Company the proceeds of any borrowing against an
insurance policy held as an asset of the Trust.

5
<PAGE>

(f) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.

Section 9. Compensation and Expenses of Trustee. The Company shall pay
------------------------------------
all administrative and Trustee's fees and expenses. If not so paid, the fees
and expenses shall be paid from the Trust.

Section 10. Resignation and Removal of Trustee.
----------------------------------

(a) Trustee may resign at any time by written notice to the
Company, which shall be effective ninety (90) days after receipt of such notice
unless the Company and Trustee agree otherwise.

(b) Trustee may be removed by the Company on sixty (60) days
notice or upon shorter notice accepted by Trustee. Upon a Change of Control, as
defined herein, Trustee may not be removed by the Company for two (2) years.

(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within ninety (90) days after receipt
of notice of resignation, removal or transfer, unless the Company extends the
time limit.

(d) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (a) or (b) of this section. If no such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.

Section 11. Appointment of Successor.
------------------------

(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, the Company may appoint any third party, such as a
bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the Company or the successor
Trustee to evidence the transfer.

(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(e) hereof and selects a successor Trustee, Trustee may
appoint any independent third party such as a bank trust department or other
party that may be granted corporate trustee powers under state law. The
appointment of a successor Trustee shall be effective when accepted in writing
by the new Trustee. The new Trustee shall have all the rights and powers of the
former Trustee,

6
<PAGE>

including ownership rights in Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by the successor Trustee to
evidence the transfer.

(c) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing Trust assets,
subject to Sections 7 and 8 hereof. The successor Trustee shall not be
responsible for and the Company shall indemnify and defend the successor Trustee
from any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time it
becomes successor Trustee.

Section 12. Amendment or Termination.
------------------------

(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and the Company. Notwithstanding the foregoing,
no such amendment shall conflict with the terms of the Plan or shall make the
Trust revocable.

(b) The Trust shall not terminate until the date on which all
Participants (and their beneficiaries) are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust any assets
remaining in the Trust shall be returned to the Company.

Section 13. Miscellaneous.
-------------

(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.

(b) Benefits payable to Plan Participants (and their
beneficiaries) under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal equitable process.

(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Massachusetts. For purposes of this Trust, Change
of Control shall mean a change in control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not the Company is in fact required to comply
therewith; provided, that, without limitation, such a change in control for
purposes of this Plan shall be deemed to have occurred if on any future date:

(i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company
for the first time becomes the "beneficial owner" (as defined in the Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company then outstanding securities; or

7
<PAGE>

(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to the effective date of the Plan),
individuals who at the beginning of such period constitute the Company's Board
of Directors and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in paragraphs (i), (ii) or (iii) of this Section) whose election by
the board of directors of the Company or nomination for election by the
stockholders of the Company was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the combined voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to implement a
re-capitalization of the Company (or similar transaction) in which no "person"
(as herein above defined) acquires thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities; or

(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.

Section 14. Effective Date. The effective date of this Trust Agreement
--------------
shall be the effective date of the Company's initial public offering of its
common stock.

ALTAVISTA COMPANY

By_____________________________________
Name:
Title:

EASTERN BANK AND TRUST COMPANY

By_____________________________________
Name:
Title:

<PAGE>

EXHIBIT 10.12

ALTAVISTA COMPANY

INVESTOR RIGHTS AGREEMENT

This Agreement dated as of March __, 2000 is entered into by and among
AltaVista Company, a Delaware corporation (the "Company"), and CMGI, Inc., a
Delaware corporation (the "Investor").

Recitals
--------

WHEREAS, the Company desires to undertake an initial public offering of its
Common Stock; and

WHEREAS, in order to induce the Investor to approve such offering, the
Company has agreed to provide for certain arrangements with respect to (i) the
registration of shares of capital stock of the Company under the Securities Act
of 1933, as amended, and (ii) the Investor's right of first refusal with respect
to certain issuances of securities of the Company;

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

I. Certain Definitions.
-------------------

As used in this Agreement, the following terms shall have the following
respective meanings:

"Commission" means the Securities and Exchange Commission, or any other
----------
federal agency at the time administering the Securities Act.

"Common Stock" means the common stock, $.01 par value per share, of the
------------
Company.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

"Initiating Holders" means the Stockholders initiating a request for
------------------
registration pursuant to Section 2.1(a) or 2.1(b), as the case may be.
<PAGE>

"Initial Public Offering" means the initial underwritten public offering of
-----------------------
shares of Common Stock pursuant to an effective Registration Statement.

"Permitted Transferee" shall have the meaning set forth in Section 3.3.
--------------------

"Prospectus" means the prospectus included in any Registration Statement,
----------
as amended or supplemented by an amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.

"Registration Statement" means a registration statement filed by the
----------------------
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

"Registration Expenses" means the expenses described in Section 2.4.
---------------------

"Registrable Shares" means (a) the shares of Common Stock held by the
------------------
Investor upon the closing of the Initial Public Offering and (b) any other
shares of Common Stock issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations or similar
events); provided, however, that shares of Common Stock which are Registrable
-------- -------
Shares shall cease to be Registrable Shares upon (i) any sale pursuant to a
Registration Statement or Rule 144 under the Securities Act or (ii) any sale in
any manner to a person or entity which, by virtue of Section 3.4 of this
Agreement, is not entitled to the rights provided by this Agreement.

"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

"Selling Stockholder" means any Stockholder owning Registrable Shares
-------------------
included in a Registration Statement.

"Stockholders" means the Investor and any persons or entities to whom the
------------
rights granted under this Agreement are transferred by the Investor, its
successors or assigns, pursuant to Section 3.4 hereof.

2
<PAGE>

II. Registration Rights.
-------------------

2.1 Required Registrations.
----------------------

(a) At any time following 180 days after the closing of the
Initial Public Offering, a Stockholder or Stockholders may request, in writing,
that the Company effect the registration on Form S-1 or Form S-2 (or any
successor form) of Registrable Shares owned by such Stockholder or Stockholders
having an aggregate value of at least $10,000,000 (based on the then current
public market price).

(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Stockholder or Stockholders may request, in writing, that the
Company effect the registration on Form S-3 (or such successor form), of
Registrable Shares having an aggregate value of at least $2,500,000 (based on
the then current public market price).

(c) Upon receipt of any request for registration pursuant to
this Section 2.1, the Company shall promptly give written notice of such
proposed registration to all other Stockholders. Such Stockholders shall have
the right, by giving written notice to the Company within 15 days after the
Company provides its notice, to elect to have included in such registration such
of their Registrable Shares as such Stockholders may request in such notice of
election, subject in the case of an underwritten offering to the approval of the
managing underwriter as provided in Section 2.1(d) below. Thereupon, the Company
shall, as expeditiously as possible, use its best efforts to effect the
registration on an appropriate registration form of all Registrable Shares which
the Company has been requested to so register (provided, however, that in the
-------- -------
case of a registration requested under Section 2.1(b), the Company will only be
obligated to effect such registration on Form S-3 (or any successor form)).

(d) If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2.1(a) or (b), as the case may be, and the Company shall include such
information in its written notice referred to in Section 2.1(c). The right of
any other Stockholder to include its Registrable Shares in such registration
pursuant to Section 2.1(a) or (b), as the case may be, shall be conditioned upon
such other Stockholder's participation in such underwriting on the terms set
forth herein. If the managing underwriter determines that the marketing factors

3
<PAGE>

require a limitation of the number of shares to be underwritten, the number of
Registrable Shares to be included in a Registration Statement filed pursuant to
this Section 2.1 shall be reduced pro rata among the requesting Stockholders
based on the quotient of (i) the total Registrable Shares to be included in the
Registration Statement, divided by (ii) the total number of Registrable Shares
that requested registration.

(e) The Initiating Holders shall have the right to select the
managing underwriter(s) for any underwritten offering requested pursuant to
Section 2.1(a) or (b), subject to the approval of the Company, which approval
will not be unreasonably withheld.

(f) The Company shall not be required to effect more than two
registrations pursuant to Section 2.1(a) or more than five registrations
pursuant to Section 2.1(b). In addition, the Company shall not be required to
effect any registration within 90 days after the effective date of any other
Registration Statement of the Company relating to an underwritten offering. For
purposes of this Section 2.1(f), a Registration Statement shall not be counted
until such time as such Registration Statement has been declared effective by
the Commission, unless the Initiating Holders withdraw their request for such
registration (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and elect not to pay the
Registration Expenses therefor pursuant to Section 2.4.

(g) If at the time of any request to register Registrable Shares by
Initiating Holders pursuant to this Section 2.1, the Company is engaged or has
plans to engage in a registered public offering or is engaged in any other
activity which, in the good faith determination of the Company's Board of
Directors, would be adversely affected by the requested registration or if
financial statements required for the requested registration are not then
available, then the Company may at its option direct that such request be
delayed for a period not in excess of 90 days from the date of such request,
such right to delay a request to be exercised by the Company not more than once
in any 12-month period.

2.2 Incidental Registration.
-----------------------

(a) Whenever the Company proposes to file a Registration Statement
(other than a Registration Statement filed pursuant to Section 2.1) at any time
and from time to time, it will, prior to such filing, give written notice to all
Stockholders of its intention to do so; provided, that no such notice need be
--------
given if no Registrable

4
<PAGE>

Shares are to be included therein as a result of a determination of the managing
underwriter pursuant to Section 2.2(b). Upon the written request of a
Stockholder or Stockholders given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Stockholder or
Stockholders to register to be registered under the Securities Act to the extent
necessary to permit their sale or other disposition in accordance with the
intended methods of distribution specified in the request of such Stockholder or
Stockholders; provided, that the Company shall have the right to postpone or
--------
withdraw any registration effected pursuant to this Section 2.2 without
obligation to any Stockholder.

(b) If the registration for which the Company gives notice pursuant
to Section 2.2(a) involves an underwriting, the Company shall so advise the
Stockholders as a part of the written notice given pursuant to Section 2.2(a).
In such event, the right of any Stockholder to include its Registrable Shares in
such registration pursuant to Section 2.2 shall be conditioned upon such
Stockholder's participation in such underwriting on the terms set forth herein.
All Stockholders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for the underwriting by the Company.
Notwithstanding any other provision of this Agreement, if the Company and the
managing underwriter(s) determine in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the Company and the
managing underwriter(s) may exclude shares from the registration and the
underwriting, and the number of shares that may be included in the registration
and the underwriting shall be allocated, first to the Company or the Company
-----
stockholder(s) for which the registration was initiated, and second to each of
------
the Stockholders requesting inclusion of their Registrable Shares in such
registration and each of the other holders of piggyback registration rights on a
parity with those Stockholders on a pro rata basis based on the total number of
Registrable Shares and other securities requested for inclusion in such
registration by each such Stockholder or other holder. If any holder of
Registrable Shares or any other Company stockholder requesting inclusions of
securities in the registration disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, and any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

(c) Notwithstanding the foregoing, the Company shall not be
required, pursuant to this Section 2.2, to include any Registrable Shares in a
Registration

5
<PAGE>

Statement if such Registrable Shares can then be sold pursuant to Rule 144(k)
under the Securities Act and represent less than 1% of the then outstanding
shares of Common Stock.

2.3 Registration Procedures.
-----------------------

(a) If and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect the registration of any
Registrable Shares under the Securities Act, the Company shall:

(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become effective as soon as possible;

(ii) as expeditiously as possible, prepare and file with
the Commission any amendments and supplements to the Registration Statement
and the prospectus included in the Registration Statement as may be
necessary to comply with the provisions of the Securities Act (including
the anti-fraud provisions thereof) and to keep the Registration Statement
effective for 12 months from the effective date or such lesser period until
all such Registrable Shares are sold;

(iii) as expeditiously as possible, furnish to each Selling
Stockholder such reasonable numbers of copies of the Prospectus, including
any preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by such Selling Stockholder;

(iv) as expeditiously as possible, use its best efforts to
register or qualify the Registrable Shares covered by the Registration
Statement under the securities or Blue Sky laws of such states as the
Selling Stockholders shall reasonably request and do any and all other acts
and things that may be necessary or desirable to enable the Selling
Stockholders to consummate the public sale or other disposition in such
states of the Registrable Shares owned by the Selling Stockholder;
provided, however, that the Company shall not be required
-------- -------

6
<PAGE>

in connection with this paragraph (iv) to qualify as a foreign corporation
or execute a general consent to service of process in any jurisdiction;

(v) as expeditiously as possible, cause all such Registrable
Shares to be listed on each securities exchange or automated quotation
system on which similar securities issued by the Company are then listed;
and

(vi) promptly make available for inspection by the Selling
Stockholders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant or
other agent retained by any such underwriter or selected by the Selling
Stockholders, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Selling Stockholder, underwriter,
attorney, accountant or agent in connection with such Registration
Statement.

(b) If the Company has delivered a Prospectus to the Selling
Stockholders, and after having done so, the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses, and following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.

(c) In the event that, in the judgment of the Company, it is advisable
to suspend use of a Prospectus included in a Registration Statement due to
pending material developments or other events that have not yet been publicly
disclosed and as to which the Company believes public disclosure would be
detrimental to the Company, the Company shall notify all Selling Stockholders to
such effect, and upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus.

7
<PAGE>

Notwithstanding anything to the contrary herein, the Company shall not exercise
its rights under this Section 2.3(c) to suspend sales of Registrable Shares for
a period in excess of 90 days in any 365-day period.

2.4 Allocation of Expenses. The Company will pay all Registration
----------------------
Expenses for all registrations under this Agreement; provided, however, that if
-------- -------
a registration under Section 2.1 is withdrawn at the request of the Initiating
Holders (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and if the Initiating Holders
elect not to have such registration counted as a registration requested under
Section 2.1, the requesting Stockholders shall pay the Registration Expenses of
such registration pro rata in accordance with the number of their Registrable
Shares included in such registration. For purposes of this Section, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company and the fees and expenses of one counsel selected by the
Selling Stockholders to represent the Selling Stockholders, state Blue Sky fees
and expenses and the expense of any special audits incident to or required by
any such registration, but excluding underwriting discounts, selling commissions
and the fees and expenses of Selling Stockholders' own counsel (other than the
counsel selected to represent all Selling Stockholders).

2.5 Indemnification and Contribution.

(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the Selling Stockholder, each underwriter of such Registrable
Shares and each other person, if any, who controls such Selling Stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which such
Selling Stockholder, underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement or any amendment or supplement to such Registration
Statement or (ii) arise out of or are based upon the omission or alleged
omission to state a material fact required to be stated

8
<PAGE>

therein or necessary to make the statements therein not misleading; and the
Company will reimburse such Selling Stockholder, underwriter and controlling
person for any legal or any other expenses reasonably incurred by such Selling
Stockholder, underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
--------
however, that the Company will not be liable in any such case to the extent that
- -------
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus or prospectus, or any such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company, in writing, by or
on behalf of such Selling Stockholder, underwriter or controlling person
specifically for use in the preparation thereof.

(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Stockholder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) (i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement or any amendment or supplement to the Registration Statement or (ii)
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such Selling Stockholder
furnished in writing to the Company by or on behalf of such Selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
-------- -------
obligations of a Selling Stockholder hereunder shall be limited to an amount
equal to the net proceeds to such Selling Stockholder of Registrable Shares sold
in connection with such registration.

(c) Each party entitled to indemnification under this Section 2.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has

9
<PAGE>

actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
--------
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
-------- -------
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2.5 except to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such Indemnified Party's expense; provided,
--------
however, that the Indemnifying Party shall pay such expense if representation of
- -------
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding; provided further that in no event shall the Indemnifying Party be
-------- -------
required to pay the expenses of more than one law firm per jurisdiction as
counsel for the Indemnified Party. The Indemnifying Party also shall be
responsible for the expenses of such defense if the Indemnifying Party does not
elect to assume such defense. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld.

(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party shall, in lieu of indemnifying
such Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Selling Stockholders
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the Selling
Stockholders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact related to information
supplied by the Company or the Selling Stockholders and the parties' relative
intent, knowledge, access to information and

10
<PAGE>

opportunity to correct or prevent such statement or omission. The Company and
the Stockholders agree that it would not be just and equitable if contribution
pursuant to this Section 2.5 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
2.5(d), (a) in no case shall any one Selling Stockholder be liable or
responsible for any amount in excess of the net proceeds received by such
Selling Stockholder from the offering of Registrable Shares and (b) the Company
shall be liable and responsible for any amount in excess of such proceeds;
provided, however, that no person guilty of fraudulent misrepresentation (within
- -------- -------
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 2.5(d), notify such party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties from whom contribution may be sought shall not relieve such party from
any other obligation it may have thereunder or otherwise under this Section
2.5(d). No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its prior written consent, which
consent shall not be unreasonably withheld.

2.6 Other Matters with Respect to Underwritten Offerings. In the
----------------------------------------------------
event that Registrable Shares are sold pursuant to a Registration Statement in
an underwritten offering pursuant to Section 2.1, the Company agrees to enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.

2.7 Information by Holder. Each Selling Stockholder shall furnish to
---------------------
the Company such information regarding such Selling Stockholder and the
distribution proposed by such Selling Stockholder as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.

III. Right Of First Refusal.
----------------------

11
<PAGE>

3.1 Rights of Investor.
------------------

(a) Until the first date on which the Investor or any Permitted
Transferee (as defined below) owns less than a majority, by voting power, of the
outstanding shares of capital stock of the Company, the Company shall not issue
or sell (i) any shares of its Common Stock, (ii) any other voting equity
securities of the Company, including, without limitation, shares of preferred
stock, (iii) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any voting equity securities of the Company or (iv) any debt
securities convertible into voting capital stock of the Company (collectively,
the "Offered Securities"), unless in each such case the Company shall have first
complied with this Section 3.1. The Company shall deliver to the Investor a
written notice of any proposed or intended issuance or sale of Offered
Securities (the "Offer"), which Offer shall (A) identify and describe the
Offered Securities, (B) describe the price and other terms upon which they are
to be issued or sold, and the number or amount of the Offered Securities to be
issued or sold, (C) identify the persons or entities (if known) to which or with
which the Offered Securities are to be offered, issued or sold and (D) offer to
issue and sell to the Investor a number of the Offered Securities (the
"Available Amount") such that, after the issuance and sale of all of the Offered
Securities, including the purchase of the Available Amount by the Investor, the
Investor would own at least a majority, by voting power, of the outstanding
capital stock of the Company (assuming the exercise and conversion of all
outstanding options, warrants and convertible securities). The Company shall
not be required to offer any Offered Securities to the Investor hereunder if,
after the issuance and sale thereof, the Investor (or the Permitted Transferee)
would continue to own at least a majority, by voting power, of the outstanding
capital stock of the Company.

(b) To accept an Offer, in whole or in part, the Investor must
deliver a written notice to the Company within 20 days after its receipt of the
Offer, setting forth the portion of the Available Amount that the Investor
elects to purchase (the "Notice of Acceptance").

(c) The Company shall have 180 days from the expiration of the
period set forth in Section 3.1(b) above to issue or sell all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given by
the Investor, upon terms and conditions which are not more favorable, in the
aggregate, to the acquiring person or persons or less favorable to the Company
than those set forth in the Offer. If the consideration to be received by the
Company from the sale of Offered Securities consists of anything other than
cash, the Board of Directors of the Company shall in good faith determine the
cash equivalent of such non-cash consideration and the Investor may

12
<PAGE>

pay an equivalent portion of its purchase price for the elected portion of the
Available Amount in cash.

(d) The purchase by the Investor of any Offered Securities is
subject in all cases to the preparation, execution and delivery by the Company
and the Investor of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Investor.

(e) The rights of the Investor under this Section 3.1 shall not
apply to the grant of options to officers, directors, consultants and employees
of the Company or any subsidiary pursuant to any plan, agreement or arrangement
approved by a vote of not less than a majority of the members of the Board of
Directors of the Company, provided, however, that if the exercise of any such
-------- -------
options results in the reduction of the Investor's, or Permitted Transferee's,
ownership to less than a majority, by voting power, of the outstanding capital
stock of the Company, the Company shall so notify the Investor (or Permitted
Transferee), and the Investor or Permitted Transferee shall have the right,
within 30 days after such notice, to purchase from the Company, at a price equal
to the then Fair Market Value (as defined below) thereof, such number of shares
of Common Stock as would increase its ownership to a majority, by voting power,
of the outstanding capital stock of the Company. "Fair Market Value" shall mean
the average closing price of the Common Stock on the Nasdaq National Market (or
other principal securities exchange or other interdealer quotation system on
which the Common Stock is traded or quoted), during the 10-day period ending on
the day prior to the date of purchase.

3.2 Termination. This Article III shall terminate upon the earlier
-----------
of (i) the sale of all or substantially all of the assets or business of the
Company, by merger, sale of assets or otherwise, and (ii) the first date on
which the Investor (or Permitted Transferee) owns less than a majority, by
voting power, of the outstanding capital stock of the Company for 30 consecutive
days.

3.3 Permitted Transferee. For purposes hereof, a "Permitted
--------------------
Transferee" shall mean any person or entity that acquires directly from the
Investor shares of Common Stock representing at least a majority of the
outstanding shares of Common Stock of the Company and to which the Investor
assigns, in writing, its rights under Section 3.1. Upon such assignment, the
Permitted Transferee shall be considered the "Investor" for purposes of Section
3.1.

13
<PAGE>

3.4 Transfers of Rights. The rights and obligations of the Investor
-------------------
under Section 2 may be assigned by Investor to any person or entity that
acquires shares of Common Stock having an aggregate value of at least $2,500,000
(as adjusted in stock splits and similar events) from the Investor. The rights
and obligations of the Investor under Section 3.1 may be assigned only to a
Permitted Transferee, and upon such assignment, the rights and obligations of
the Investor under Section 3.1 shall terminate. In the event of any such
assignment, the assignee must provide written notice of such assignment to the
Company and agree in writing to be bound by the applicable provisions of this
Agreement.

IV. General.
-------

4.1 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

4.2 Specific Performance. In addition to any and all other remedies
--------------------
that may be available at law in the event of any breach of this Agreement, each
Investor shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.

4.3 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware (without reference
to the conflicts of law provisions thereof).

4.4 Notices. All notices, requests, consents and other
-------
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid, or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:

14
<PAGE>

If to the Company, at AltaVista Company, 529 Bryant Street, Palo Alto,
California 94301, Attention: General Counsel, or at such other address or
addresses as may have been furnished in writing by the Company to the Investor;
or

If to the Investor, at CMGI, Inc., 100 Brickstone Square, Andover,
Massachusetts 01810, or at such other address or addresses as may have been
furnished to the Company in writing by such Investor.

Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.

4.5 Complete Agreement. This Agreement constitutes the entire
------------------
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.

4.6 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the Investor.

4.7 Pronouns. Whenever the context may require, any pronouns used in
--------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

4.8 Counterparts; Facsimile Signatures. This Agreement may be
----------------------------------
executed in two counterparts, each of which shall be deemed to be an original,
and both of which together shall constitute one and the same document. This
Agreement may be executed by facsimile signatures.

4.9 Section Headings. The section headings are for the convenience
----------------
of the parties and in no way alter, modify, amend, limit or restrict the
contractual obligations of the parties.

15
<PAGE>

4.10 Effective Date. This Agreement shall become effective upon the
--------------
closing of the Company's initial public offering of Common Stock pursuant to an
effective registration statement and shall terminate if such offering does not
close prior to July 31, 2000.

16
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

ALTAVISTA COMPANY

By_______________________________________
Name: Rodney W. Schrock
Title: President and Chief Executive
Officer

CMGI, INC.

By_______________________________________
Name:
Title:

<PAGE>

EXHIBIT 10.18

FACILITIES AND ADMINISTRATIVE SUPPORT AGREEMENT
-----------------------------------------------

THIS FACILITIES AND ADMINISTRATIVE SUPPORT AGREEMENT dated as of March __,
2000 is made between CMGI, Inc. ("CMGI"), a Delaware corporation, and AltaVista
Company ("AltaVista"), a Delaware corporation.

Preliminary Statement
---------------------

AltaVista desires to obtain administrative and other services from CMGI,
and CMGI is willing to furnish or make such services available to AltaVista.

By this Agreement, CMGI and AltaVista desire to set forth the basis for
CMGI's provision of services of the types referred to herein.

Agreements
----------

IT IS MUTUALLY agreed by CMGI and AltaVista (collectively, the "Parties")
as follows:

1. Provision of Services. Beginning on the date of this Agreement, CMGI will
---------------------
provide or otherwise make available to AltaVista those CMGI-supplied
services and third-party-supplied services paid for by CMGI on the bases
set forth on Schedule A and Schedule B attached hereto and consistent with
---------- ----------
the parties' practices as of the date hereof (collectively, the
"Services").

2. Billing and Payment. CMGI shall submit monthly invoices to AltaVista for
-------------------
the Services, and AltaVista shall make payment within 30 days after its
receipt of such invoices. Each invoice shall be itemized by the Service
provided.

3. Term and Termination. The initial term of this Agreement shall begin on the
--------------------
date of this Agreement and continue for a period of one year. This
Agreement shall automatically renew at the end of the initial term for
successive one-year periods unless terminated or modified in accordance
with the following provisions:

a. Entire Agreement. Either party may elect not to renew this Agreement,
----------------
except for the Services set forth on Schedule A, upon 180 days'
----------
written notice to the other party prior to the expiration of the
initial term or any renewal period.

1
<PAGE>

b. Individual Services. Either party may terminate an individual Service
-------------------
or Services, except for the services set forth on Schedule A, upon 90
----------
days' written notice to the other party.

c. Rent and Related Services. Either party may terminate those Services
-------------------------
set forth on Schedule A upon 30 days' written notice to the other
----------
party prior to the expiration of the end of the initial term or any
renewal period.

d. Material Breach. Either party may terminate this Agreement in the
---------------
event of a material breach of this Agreement by the other party that
is not cured within 30 days of written notice thereof from the other
party.

e. Automatic Termination. This Agreement, other than the Services set
---------------------
forth on Schedule A, shall automatically terminate upon the date on
----------
which the ownership by CMGI of the outstanding voting capital stock of
AltaVista shall first be less than 50% of the then outstanding voting
capital stock of AltaVista.

4. Limitation on Liability. Neither party shall be liable to the other for
-----------------------
any amount in excess of the amount invoiced to AltaVista for the 12-month
period preceding any event giving rise to liability. Neither party shall
be liable to the other for consequential damages except for those arising
out of intentional misconduct or gross negligence.

5. Force Majeure. CMGI shall be excused for failure to provide the Services
-------------
hereunder to the extent that such failure is directly or indirectly caused
by an occurrence commonly known as force majeure, including, without
-------------
limitation, delays arising out of acts of God, acts or orders of a
government, agency or instrumentality thereof (whether of fact or law),
acts of public enemy, riots, embargoes, strikes or other concerted acts of
workers (whether of CMGI or other persons), casualties or accidents,
delivery of materials, transportation or shortage of cars, trucks, fuel,
power, labor or materials or any other causes, circumstances or
contingencies within or without the United States of America that are
beyond the control of CMGI; provided, however, that CMGI shall use its best
-------- -------
efforts to resume provision of the Services as soon as possible.
Notwithstanding any events operating to excuse performance by CMGI, this
Agreement shall continue in full force for the remainder of its term and
any renewals thereof.

2
<PAGE>

6. Notices. All notices, billings, requests, demands, approvals, consents and
-------
other communications which are required or may be given under this
Agreement shall be in writing and will be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid to the parties at their respective
addresses set forth below:

If to AltaVista: If to CMGI:

AltaVista Company CMGI, Inc.
529 Bryant Street 100 Brickstone Square
Palo Alto, CA 94301 Andover, MA 01810
Attn: Chief Financial Officer Attn: Chief Financial Officer

7. No Assignment. This Agreement shall not be assignable except with the
-------------
prior written consent of the other party to this Agreement.

8. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware applicable to contracts
made and to be performed therein.

9. Amendments. This Agreement and all attachments hereto constitute the
----------
entire agreement between the parties as to the subject matter hereof and
supercede all prior negotiations, undertakings, representations and
agreements, if any, of the parties hereto as to the subject matter hereof.
This Agreement may not be amended orally but may be amended only by a
written instrument signed by all of the parties hereto.

10. Waivers. The failure of either party to require strict performance by the
-------
other party of any provision in this Agreement will not waive or diminish
that party's right to demand strict performance thereafter of that or any
other provision hereof.

11. Paragraph Titles. The paragraph titles used in this Agreement are for
----------------
convenience of reference only and will not be considered in the
interpretation or construction of any of the provisions thereof.

12. Counterparts; Facsimile Signatures. This Agreement may be executed in two
----------------------------------
counterparts, each of which shall be deemed to be an original and both of
which

3
<PAGE>

together shall constitute one and the same document. This Agreement may be
executed by facsimile signatures.

4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

CMGI, INC. ALTAVISTA COMPANY

By____________________________ By_______________________________
Name: Name: Rodney W. Schrock
Title: Title: Chief Executive Officer

5
<PAGE>

Schedule A
----------

Rent and Related Services
-------------------------

- --------------------------------------------------------------------------------
Services Provided by CMGI to AltaVista Allocation of Cost to AltaVista
- -------------------------------------- -------------------------------
- --------------------------------------------------------------------------------
1. Brickstone Square Rent. Provision Allocated based on headcount for
of space located at the Andover AltaVista located at the Andover
Premises. Premises divided by headcount for the
CMGI Companies located at the Andover
Premises.
- --------------------------------------------------------------------------------
2. Facilities. Salary, fringe Allocated based on headcount for
benefits, payroll taxes for the AltaVista located at the Andover
entire facility department. Premises divided by headcount for the
CMGI Companies located at the Andover
Premises.
- --------------------------------------------------------------------------------
3. Mass Electric. Utilities Allocated based on headcount for
provided by Massachusetts Electric. AltaVista located at the Andover
Premises divided by headcount for the
CMGI Companies located at the Andover
Premises.
- --------------------------------------------------------------------------------
4. Office Cleaning/Plant Allocated based on headcount for
Maintenance. AltaVista located at the Andover
Premises divided by headcount for the
CMGI Companies located at the Andover
Premises.
- --------------------------------------------------------------------------------
5. UK Rent and corresponding overhead Allocated based on headcount for
costs. Provision of space located at AltaVista located at the UK Premises
the UK Premises. divided by headcount for the CMGI
Companies located at the UK Premises.
- --------------------------------------------------------------------------------
6. Electric and Other Utilities. Allocated based on headcount for
AltaVista located at the UK Premises
divided by headcount for the CMGI
Companies located at the UK Premises.
- --------------------------------------------------------------------------------
Allocated based on headcount for
- --------------------------------------------------------------------------------

6
<PAGE>

- --------------------------------------------------------------------------------
7. Office Cleaning/Maintenance. AltaVista located at the UK Premises
divided by headcount for the CMGI
Companies located at the UK Premises.
- --------------------------------------------------------------------------------

Defined Terms:
- -------------

Andover Premises - those premises located at 100 Brickstone Square, Andover,
MA 01810 leased by CMGI.

CMGI Companies - those companies that are controlled by CMGI or in which
CMGI holds an equity interest.

headcount - the number of employees employed by a particular CMGI
Company on the last day of a given month.

UK Premises - those premises located at Sygnus Court, Maidenhead,
England

7
<PAGE>

Schedule B
- ----------

Provision of Other Services
- ---------------------------

- --------------------------------------------------------------------------------
Services Provided by CMGI to AltaVista Allocation of Cost to AltaVista
- -------------------------------------- -------------------------------
- --------------------------------------------------------------------------------
1. CMG Europe. All overhead costs for AltaVista is charged 60% of all
CMGI's European office of Marcus costs associated with the European
Bicknell and his staff. office.
- --------------------------------------------------------------------------------
2. Internet Marketing. All overhead AltaVista is one of nine CMGI
costs for Bill White and his assistant Companies that benefits from these
(both at CMGI). services and absorbs 11% of total
costs.
- --------------------------------------------------------------------------------
3. Internet Development. All overhead AltaVista is one of nine CMGI
costs for Dave Andonian and his staff Companies that benefits from these
(all at CMGI). services and absorbs 11% of total
costs.
- --------------------------------------------------------------------------------
4. Enterprise Services. Desktop, Allocated based on headcount for
network services and Y2K support. AltaVista located at the Andover
Premises divided by the headcount
for the CMGI Companies using
desktop and network services
support located at the Andover
Premises.
- --------------------------------------------------------------------------------
5. Federal Express/United Parcel CMGI's Accounts Payable department
Service. codes each individual charge based
on the identity of the sender in
the Andover Premises.
- --------------------------------------------------------------------------------
6. Postage Machine. Mailings from AltaVista is charged actual postage
the Andover Premises and UK costs for mail stamped by the CMGI
Premises. postage machines.
- --------------------------------------------------------------------------------
7. Pepsi/Poland Springs. Allocated based on headcount for
AltaVista located at the Andover
Premises divided by headcount for
the CMGI Companies located at the
Andover Premises.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

8
<PAGE>

- --------------------------------------------------------------------------------
Services Provided by CMGI to AltaVista Allocation of Cost to AltaVista
- -------------------------------------- -------------------------------
- --------------------------------------------------------------------------------
8. Telephone. Provision of Modem, fax and 800 lines are
common, modem, fax and 800 lines. charged to AltaVista or the
individual employee who is designated
to that particular line. Common
inbound and outbound lines are
allocated based on headcount for
AltaVista located at the Andover
Premises and UK Premises divided by
headcount for the CMGI Companies
located at such locations.
- --------------------------------------------------------------------------------
9. MobilComm/Pagenet/Skytel/ Charged back to the person or
Cellular One. department that is assigned that
particular pager or cell phone.
- --------------------------------------------------------------------------------
10. Legal Services. To the extent that legal fees and
expenses of AltaVista are paid for by
CMGI, such fees and expenses will be
allocated based upon the actual use
of the legal services.
- --------------------------------------------------------------------------------
11. KPMG. Preparation of yearly To the extent that legal fees and
income tax returns. expenses of AltaVista are paid for by
CMGI, such fees and expenses will be
allocated based upon the actual use
of KPMG services.
- --------------------------------------------------------------------------------
12. Contract Recruiting Allocated based on actual hours
Salary/Taxes spent filling AltaVista job
requisitions.
- --------------------------------------------------------------------------------

Defined Terms
-------------

Andover Premises - those premises located at 100 Brickstone Square,
Andover, MA 01810 leased by CMGI.

CMGI Companies - those companies that are controlled by CMGI or in which
CMGI holds an equity interest.

headcount - the number of employees employed by a particular CMGI
Company on the last day of a given month.

9
<PAGE>

UK Premises - those premises located at Sygnus Court, Maidenhead,
England

<PAGE>

EXHIBIT 10.19

TAX ALLOCATION AGREEMENT

TAX ALLOCATION AGREEMENT (the "Agreement") is made as of March __, 2000, by
and among CMGI, Inc., a Delaware corporation ("Parent"), and AltaVista Company,
a Delaware corporation ("Sub").

WHEREAS, prior to the Closing Date (as defined below), Sub was a member of
the Parent Group (as defined below);

WHEREAS, Parent will cause to be sold to the former stockholders of Raging
Bull, Inc. a portion of the common stock of Sub pursuant to an Agreement and
Plan of Merger dated November 22, 1999 by and between Sub, Matador Acquisition
Corporation and Raging Bull, Inc. and the Stockholders who are signatory
thereto.

WHEREAS, the parties desire to provide for the allocation of
responsibilities, liabilities and benefits in respect of Taxes (as defined
below).

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DEFINITIONS

"Closing Date" means the close of business on the date on which Sub ceases
to be a member of the Parent Group.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Returns" means any consolidated, combined or unitary Tax
Returns required to be filed by Parent with respect to United States federal,
state or local Taxes imposed or based on net income, net worth or gross
receipts.

"Parent Group" means an affiliated group (within the meaning of Section
1504(a) of the Code and any corresponding provisions of state, local or foreign
tax law) having Parent as its common parent.

"Parent Subsidiary" or "Parent Subsidiaries" mean each corporation of which
Parent owns, directly or indirectly, capital stock representing more than 50% of
the outstanding voting stock. Parent Subsidiary or Parent Subsidiaries shall
not include

1
<PAGE>

Sub or any Sub Subsidiary.

"Returns" means all returns, reports and information statements (including
all exhibits and schedules thereto) required to be filed with a taxing authority
with respect to any Taxes.

"Sub Subsidiary" or "Sub Subsidiaries" means each corporation of which Sub
owns on the Closing Date or thereafter, directly or indirectly, capital stock
representing more than 50% of the outstanding voting stock.

"Sub Taxes" means United States federal, state and local Taxes imposed or
based on net income, net worth or gross receipts (including interest and
penalties relating thereto) attributable to the operations of Sub and Sub
Subsidiaries.

"Taxes" means all federal, state, local and foreign income, profits,
franchise, sales, use, occupation, property, severance, excise, payroll,
withholding and any other taxes (including interest and penalties thereon).

ARTICLE II

REPRESENTATIONS

Section 2.1 Parent represents and warrants to the Sub that all
Consolidated Returns for any taxable year or Tax period ending on or before the
Closing Date have been or shall be timely filed in accordance with all
applicable laws, and all Taxes shown as due on such Consolidated Returns have
been or shall be paid, and any proposed deficiency asserted by any taxing
authority with respect thereto has been paid or properly protested.

Section 2.2 Sub represents and warrants to Parent that all Tax Returns for
any taxable year or Tax period ending on or before the Closing Date with respect
to Sub and Sub Subsidiaries, excluding any Consolidated Returns, have been or
shall be timely filed in accordance with all applicable laws, and all Taxes
shown as due on such Returns have been or shall be paid, and any proposed
deficiency asserted by any taxing authority with respect thereto has been paid
or properly protested.

ARTICLE III

TAX MATTERS

Section 3.1 Parent shall include (to the extent required by

2
<PAGE>

law) in Consolidated Returns the taxable income or loss and all other Tax items
of Sub for the taxable years or Tax periods ending on or before the Closing
Date. For the period commencing on August 1 immediately preceding the Closing
Date and ending on the Closing Date, the following arrangement shall apply to
ensure that the correct

3
<PAGE>

amount of Sub Taxes due in respect of the Consolidated Returns is billed to and
paid by Sub:

(a) An estimate of the amount of such Sub Taxes due, which estimate shall
be determined in good faith and shall reflect amounts, if any, previously paid
by Sub with respect to Sub Taxes through the Closing Date, shall be billed to
Sub and paid to Parent prior to the Closing Date.

(b) Upon filing of the Consolidated Returns for the taxable year which
shall include the period commencing on August 1 and ending on the Closing Date,
either

(c) The unpaid amount, if any, of Sub Taxes due in respect of such
Consolidated Returns shall be billed to Sub, and Sub or its designee shall pay
such amount to Parent within 30 days after receiving written notice from Parent
of such amount, or

(d) If the amount of such Sub Taxes paid to Parent, if any, exceeds the
amount of the Sub Taxes due in respect of such Consolidated Returns, Parent or
its designee shall pay such excess to Sub or its designee within 30 days after
filing the Consolidated Returns for the taxable year which includes the Closing
Date.

(e) Sub Taxes due in respect of Consolidated Returns shall be determined in
accordance with (i) the method set forth in Section 1552(a)(1) of the Code and
U.S. Federal Income Tax Regulation Sections 1.1552-1(a)(1) and 1.1552-1(b), (ii)
one of the three methods of allocation under Section 1.1502-33(d) (sometimes
referred to as the three "Complementary Methods") and (iii) the practices of the
parties for Tax periods ended prior to the Closing Date.

(f) Except as provided in Section 3.7 and the last sentence of this
subsection (d), no party shall have any obligation to make any payments to
another party for the use of such other party's Tax attributes pursuant to U.S.
Federal Income Tax Regulation Section 1.1502-33(d) or otherwise.

Section 3.2 Subject to the provisions of Section 3.1, Parent shall be
liable for any and all Sub Taxes in respect of all Consolidated Returns due or
payable by Parent for any taxable year or Tax period ending on or before the
Closing Date.

Section 3.3 Subject to the provisions of Section 3.1, Sub and Sub
Subsidiaries shall be liable for (i) any and all Sub Taxes in respect of

4
<PAGE>

Consolidated Returns due or payable to Parent by Sub under Section 3.1 and (ii)
any and all Taxes (other than Sub Taxes in respect of Consolidated Returns) due
or payable by Sub or Sub Subsidiaries for any taxable year or Tax period
(whether ending before, on or after the Closing Date).

Section 3.4 Any Taxes (other than ad valorem, personal property and
real property Taxes) for any Tax period beginning before the Closing Date and
ending after the Closing Date shall be apportioned between Sub as a member of
the Parent Group and Sub as a separate company which is not a member of the
Parent Group, respectively, based on the actual operations of Sub and/or Sub
Subsidiaries, as the case may be, during the portion of such period ending on
the Closing Date, and the portion of such period beginning on the day following
the Closing Date, and each portion of such period shall be deemed to be a Tax
period subject to the provisions of Sections 3.2 and 3.3. In the case of ad
valorem, personal property and real property Taxes, such apportionment shall be
on a per diem basis.

Section 3.5 Sub shall file or cause to be filed all required state,
local and foreign non-Consolidated Returns with respect to Sub and Sub
Subsidiaries for the Tax period beginning before the Closing Date and ending
after the Closing Date, and any such unfiled Tax Returns for periods ending on
or before the Closing Date, and Sub shall pay or cause its Subsidiaries to pay
all Taxes shown as due on any such Tax Returns.

Section 3.6 Any refunds or credits of Sub Taxes in respect of
Consolidated Returns for any taxable year or Tax period ending on or before the
Closing Date shall be for the account of Parent and Parent Subsidiaries. Any
refunds or credits of Taxes (other than Sub Taxes in respect of Consolidated
Returns) paid by Sub or Sub Subsidiaries for any taxable year or Tax period
(whether ending before, on or after the Closing Date) shall be for the account
of Sub and its Subsidiaries.

Section 3.7

(a) Parent shall promptly pay to Sub the amount of any incremental Tax
savings generated by (i) a deduction, credit or exclusion that (A) is actually
realized by the Parent Group with respect to Taxes for a taxable period ending
on or before the Closing Date and (B) relates to or is based on an item that is
the basis for a similar deduction, credit or exclusion taken on a Return with
respect to Taxes of Sub or Sub Subsidiaries for a taxable period ending after
the Closing Date that is denied, disallowed, forfeited or accelerated prior to
the Closing Date or (ii) a reduction in the amount of any gross income or
revenue that (A) is actually realized by the Parent Group with respect to Taxes
for a taxable period ending on or before

5
<PAGE>

the Closing Date and (B) relates to, or is based on, a similar item of gross
income or revenue that Sub or Sub Subsidiaries are required to include on a
Return or otherwise required to include in its computation of taxable income as
a result of an audit, other administrative proceeding or otherwise with respect
to Taxes for a taxable period ending after the Closing Date.

(b) Sub shall promptly pay to Parent the amount of any incremental Tax
savings generated by (i) a deduction, credit or exclusion that (A) is actually
realized by the Sub or Sub Subsidiaries with respect to Taxes for a taxable
period ending after the Closing Date and (B) relates to or is based on an item
that is the basis for a similar deduction, credit or exclusion taken on a
Consolidated Return with respect to Taxes for a taxable period ending on or
before the Closing Date that is denied, disallowed, forfeited or deferred until
after the Closing Date or (ii) a reduction in the amount of any gross income or
revenue that (A) is actually realized by Sub or Sub Subsidiaries with respect to
Taxes for a taxable period ending after the Closing Date and (B) relates to, or
is based on, a similar item of gross income or revenue that the Parent Group is
required to include on a Consolidated Return or otherwise required to include in
its computation of taxable income as a result of an audit, other administrative
proceeding or otherwise.

Section 3.8 Parent or Parent designee shall exercise, at Parent's
expense, complete control of the audit, appeal, litigation and/or settlement of
any issues raised in any official inquiry, examination or proceeding that could
result in an official determination with respect to Taxes due or payable by the
Parent Group, Parent Subsidiaries, Sub or Sub Subsidiaries for any taxable year
or Tax period (including a period deemed to be a Tax period under Section 3.4)
ending on or before the Closing Date, except in respect of Taxes for which Sub
or Sub Subsidiaries are responsible in connection with non-Consolidated Returns
required to be filed by Sub or Sub Subsidiaries, in which case Sub shall
exercise, at Sub's expense, complete control of the audit, appeal, litigation
and/or settlement. The parties shall cooperate in any such inquiry, examination
or proceeding.

Section 3.9 Sub irrevocably designates Parent (and shall cause each Sub
Subsidiary to irrevocably designate Parent) as its agent and attorney-in-fact
(and shall execute any necessary powers of attorney) for the purpose of taking
any and all actions necessary or incidental to the filing of Consolidated Tax
Returns. Parent and Sub will each furnish to the other any and all information
which the other may reasonably request in order to carry out the provisions of
this Agreement to determine the amount of any Tax liability.

ARTICLE IV

6
<PAGE>

INDEMNIFICATION

Section 4.1

(a) Except to the extent of any due and unpaid obligations of Sub with
respect to its payment obligations under Article III, Parent (i) shall indemnify
and hold harmless Sub against the amount of any and all liability, loss, expense
or damage Sub may suffer or incur as a result of any or all claims, demands,
costs or expenses (including, without limitation, attorneys' and accountants'
fees), interest, penalties or judgments made against it arising from or incurred
in relation to all Taxes in respect of all Consolidated Returns and (ii) shall
make any payment, remove any lien and take any action reasonably necessary to
prevent Sub from incurring such liabilities, losses, expenses or damages.

(b) Except to the extent of any due and unpaid obligations of Parent with
respect to its payment obligations under Article III, Sub shall indemnify and
hold harmless Parent and each Parent Subsidiary against the amount of any and
all liability, loss, expense or damage any such company may suffer or incur as a
result of any or all claims, demands, costs or expenses (including, without
limitation, attorneys' and accountants' fees), interest, penalties or judgments
made against it arising from or incurred in relation to (i) any failure of Sub
to pay any amount to Parent with respect to Sub's obligations under Article III
and (ii) any and all Taxes (other than Taxes in respect of Consolidated Returns)
due or payable by Sub or Sub Subsidiaries for any taxable year or Tax period
beginning before, on or after the Closing Date.

Section 4.2 Payments under this Agreement shall be due no later than 30
days after the date written demand therefor, with a reasonably detailed
explanation for the basis of the claim, is actually received by Parent or Sub.

Section 4.3 In the event that any party fails to pay any amount owed
pursuant to this Agreement within 10 days after the date when such amount is
due, interest shall accrue on the unpaid amount at the rate applicable to
underpayments of the Tax with respect to which such amount relates from the due
date until such amounts are fully paid.

ARTICLE V

MISCELLANEOUS

Section 5.1 For all purposes of this Agreement, Sub shall be the agent
for each Sub Subsidiary, with full power to give any consent and/or

7
<PAGE>

exercise any right provided for herein on behalf of such Sub Subsidiary.

Section 5.2 Any dispute concerning the calculation or basis of
determination of any payment provided for hereunder shall be resolved by a
nationally recognized law firm or "big five" accounting firm, selected jointly
by Parent and Sub, whose judgment shall be conclusive and binding upon the
parties in the absence of manifest error. The fees and other expenses of such
law or accounting firm shall be paid 50% by Parent and 50% by Sub.

Section 5.3 This Agreement shall be binding upon the parties hereto and
shall inure to the benefit of and be binding upon any of their successors or
assigns; provided, however, that none of Parent, Sub or any of the Sub
Subsidiaries may assign or delegate any of its obligations hereunder without the
consent of Sub (in the case of a proposed assignment or delegation by Parent) or
Parent (in the case of a proposed assignment or delegation by Sub or any of the
Sub Subsidiaries).

Section 5.4 This Agreement embodies the entire understanding between
the parties relating to its subject matter and supersedes and terminates all
prior agreements and understandings among the parties with respect to such
subject matter. Any and all prior correspondence, conversations and memoranda
with respect to such subject matter are merged herein and shall be without
effect hereon. No promises, covenants or representations of any kind, other than
those expressly stated herein, have been made to induce any party to enter into
this Agreement. This Agreement shall not be modified or terminated except by a
writing duly signed by each of the parties (or, in the case of a Sub Subsidiary,
by Sub acting as its agent on its behalf), and no waiver of any provisions of
this Agreement shall be effective unless in a writing duly signed by the party
sought to be bound (or, in the case of a Sub Subsidiary, by Sub acting as its
agent on its behalf).

Section 5.5 Any payment, notice or communication required or permitted
to be given under this Agreement shall be in writing and may be delivered by
hand, first-class mail, facsimile (if confirmed) or overnight courier:

If to Parent, to:

100 Brickstone Square
Andover, Massachusetts 01810
Attention: Mr. Don Combs, Vice President for Finance

If to Sub on its own behalf, or as agent for the Sub Subsidiaries, to:

8
<PAGE>

529 Bryant Street
Palo Alto, California 94301
Attention: General Counsel

or to such other person or address as a party shall furnish in writing to all
the other parties. All such notices and communications shall be effective (i)
when received, if delivered by hand, first-class mail or overnight courier, or
(ii) when transmission is confirmed, if delivered by facsimile.

Section 5.6 This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures.

Section 5.7 This Agreement shall be governed by the laws applicable to
contracts entered into and to be fully performed within the State of Delaware by
residents thereof.

Section 5.8 Each of Parent, Sub and any of the Sub Subsidiaries agree
that, in the event of any legal suit or proceeding arising in connection with
this Agreement and the obligations of the parties hereunder, it shall submit to
the jurisdiction of the United States District Court of Delaware and further
agrees to venue in such court.

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<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed by its respective duly authorized officer as of the date first set
forth above.

CMGI, INC.

By
Name:
Title:

ALTAVISTA COMPANY

By
Name: Rodney W. Schrock
Title: President and Chief
Executive Officer

<PAGE>

EXHIBIT 10.20

MASTER LEASE AND FINANCING AGREEMENT
------------------------------------

This Master Lease and Financing Agreement (together with Exhibits A through E
attached hereto and hereby made a part hereof, this "Master Agreement"), dated
as of November 24, 1999, is entered into by and between Compaq Financial
Services Corporation, a Delaware corporation ("Lessor"), and AltaVista Company,
a Delaware corporation ("Lessee"). Capitalized terms used in this Master
Agreement without definition have the meanings ascribed to them in Section 31.

1. PURPOSE OF MASTER AGREEMENT. The purpose of this Master Agreement is to set
forth the general terms and conditions upon which (a) Lessor shall lease to
Lessee and Lessee shall lease from Lessor items of Hardware, Software or both
(such Hardware and Software being collectively referred to as "Equipment", and
each such lease of Equipment being referred to as a "Lease"), and (b) Lessor
shall provide financing to Lessee (each such financing transaction being
referred to as a "Financing") for software program license fees, maintenance
fees, fees for other services and other one-time charges ("Financed Items")
Lessee desires to finance hereunder. In connection with its execution of this
Master Agreement, Lessee shall deliver to Lessor an Officer's Certificate in
form and substance acceptable to Lessor, executed by a duly authorized officer
of Lessee and certifying as to, among other things, Lessee's authority to enter
into this Master Agreement and Leases and Financings hereunder and the authority
of Lessee's officers or representatives specified therein to execute this Master
Agreement and all other Fundamental Agreements.

2. ALTERNATIVE COMMENCEMENT PROCEDURES. Subject to the other terms and
conditions contained in this Master Agreement and the applicable Schedule or
Advance Pricing Agreement, Lessee may, at its option, enter into individual
Leases and Financings with Lessor under either or both of the following
procedures:

A. TRADITIONAL PROCEDURE. (a) Execution of Schedule. Lessor and Lessee
---------------------
mutually agree to enter into a Lease, a Financing or both by executing a
Schedule in the form of Exhibit A with such changes as Lessor and Lessee shall
have mutually agreed upon in writing as conclusively evidenced by their
execution thereof. Each such Schedule shall specifically identify (by serial
number or other identifying characteristics) the items of Equipment to be leased
under such Schedule (other than items of System Software, which shall be deemed
to be items of Software leased under the Schedule pursuant to which the related
items of Hardware are leased), and the Financed Items to be financed under such
Schedule. Each Schedule, when executed by both Lessee and Lessor, together with
this Master Agreement, shall constitute a separate and distinct Lease, a
separate and distinct Financing, or a separate and distinct Lease and a separate
and distinct Financing, as the case may be, enforceable according to its terms.
In the event of any conflict between the terms of this Master Agreement and such
Schedule, the provisions of the Schedule shall govern.

(b) Acceptance; Initial Term of Leases and Term of Financings. Lessee shall
---------------------------------------------------------
accept the Equipment subject to a Lease and the Financed Items subject to a
Financing in accordance with Section 3. The Initial Term of each Lease and, if
applicable, the Term of any related Financing evidenced by a Schedule executed
pursuant to this Section 2.A shall begin on the Acceptance Date of the Equipment
subject to such Lease and shall continue for the period described in the
applicable Schedule. The Term of each Financing evidenced by a Schedule
executed pursuant to this Section 2.A that is unrelated to any Lease shall begin
on the Acceptance Date for the related Financed Items and shall continue for the
period described in the applicable Schedule.

(c) Adjustments to Schedule. Lessee acknowledges that the Total Cost of
-----------------------
Equipment and Financed Items and the related Rent payments set forth in any
Schedule executed pursuant to this Section 2.A may be estimates, and if the
final invoice from the Seller specifies a Total Cost that is more or less than
the estimated Total Cost set forth in the Schedule, Lessee hereby authorizes
Lessor to adjust the applicable Total Cost and Rent payment on the Schedule to
reflect the final invoice amount (the "Final Invoice Amount"). However, if the
Final Invoice Amount exceeds the estimated Total Cost by more than 1%, Lessor
will notify Lessee and obtain Lessee's prior written approval of the
aforementioned adjustments. If Lessee fails to so approve any such adjustments
within 15 business days of Lessor's request, then the affected Schedule shall
terminate without penalty to either Lessor or Lessee and Lessee shall be solely
responsible for all obligations arising under the applicable Purchase Documents,
including, without limitation, the obligation to purchase Equipment and pay
Financed Items. All references in this Master Agreement and any Schedule to
Total Cost and Rent shall mean the amounts thereof specified in the applicable
Schedule, as adjusted pursuant to this paragraph. Lessee also acknowledges that
the Equipment and Financed Items described in a Schedule may differ from the
description of the Equipment and Financed Items set forth in the related
Acceptance Certificate and actually accepted by Lessee. Lessee hereby
authorizes Lessor to conform the description of the Equipment and Financed Items
set forth in any Schedule to the description thereof in the related Acceptance
Certificate. All references in the Master Agreement and any Schedule to the
Equipment subject to a Lease and the Financed Items subject to a Financing shall
mean the Equipment and Financed Items described in the applicable Schedule, as
conformed to the related Acceptance Certificate pursuant to this paragraph.

B. FUNDING CONSOLIDATION PROCEDURE. (a) Execution of Advance Pricing
----------------------------
Agreement. Lessor and Lessee mutually agree to enter into one or more Leases,
- ---------
Financings or both by executing, from time to time, an Advance Pricing Agreement
in the form of Exhibit B with such changes as Lessor and Lessee shall have
mutually agreed upon in writing as conclusively evidenced by their execution
thereof. Subject to the following provisions of this Section 2.B, such Advance
Pricing Agreement shall constitute a commitment on the part of Lessor, during
the Commitment Period specified therein (i) to purchase Equipment of the type(s)
described therein and enter into one or more Leases of the same with Lessee at
the lease rates set forth therein, and (ii) to fund Financed Items of the
type(s) described therein and enter into one or more Financings of the same with
Lessee at the financing rates set forth therein; provided, however, that Lessor
shall under no circumstances be obligated to purchase Equipment or fund Financed
Items if (x) such purchase or funding would require Lessor to expend moneys in
excess of the Amount Available specified in the Advance Pricing Agreement less
the aggregate amount previously paid or committed to be paid by Lessor to
acquire Equipment or fund Financed Items during such Commitment Period, or (y)
any Lessee Default shall have occurred and be continuing under any Lease or
Financing or any event shall have occurred and be continuing which, with the
giving of notice or the passage of time or both, would constitute a Lessee
Default under any Lease or Financing, or (z) Lessee shall have failed to deliver
to Lessor any financial statements in accordance with the provisions of
paragraph (f) below or any material adverse change shall have occurred in
Lessee's financial or operating condition, as determined by Lessor in its sole
discretion, after the date of the last financial statements of Lessee delivered
to Lessor prior to the execution and delivery of such Advance Pricing Agreement.

(b) Lessor's Purchase of Equipment and Funding of Financed Items. Subject to
------------------------------------------------------------
the provisions of this Section 2.B and the applicable Advance Pricing Agreement,
Lessor shall, at Lessee's request made during the Commitment Period specified in
such Advance Pricing Agreement (i) purchase Equipment of the type(s) described
therein and enter into a Lease of such Equipment with Lessee, and (ii) fund
Financed Items of the type(s) described therein and enter into a Financing with
Lessee relating to such Financed Items. Until such time as Lessee shall have
executed and delivered to Lessor a Consolidating Schedule in accordance with
paragraph (d) below, each such Lease or Financing shall be governed by the terms
of this Master Agreement, the applicable Advance Pricing Agreement and the
Acceptance Certificate executed and delivered to Lessor by Lessee pursuant to
paragraph (c) below. Each such Acceptance Certificate shall specifically
identify (by serial number or other identifying characteristics) the items of
Equipment to be leased thereunder (other than items of System Software, which
shall be deemed to be items of Software leased together with the related items
of Hardware) and the Financed Items to be financed thereunder. Until Lessee
shall have executed and delivered to Lessor a Consolidating Schedule, each such
Acceptance Certificate, when executed and delivered by Lessee and accepted by
Lessor, together with this Master Agreement and the applicable Advance Pricing
Agreement, shall constitute a separate and distinct Lease, a separate and
distinct Financing, or a separate and distinct Lease and a separate and distinct
Financing, as the case may be, enforceable according to its terms. In the event
of any conflict among the terms of such documents, the provisions of such
Acceptance Certificate shall control over conflicting provisions in such Advance
Pricing Agreement or this Master Agreement and the provisions of such Advance
Pricing Agreement shall control over conflicting provisions in this Master
Agreement.

(c) Acceptance; Initial Term of Leases and Term of Financings. Lessee shall
---------------------------------------------------------
accept the Equipment subject to a Lease and the Financed Items subject to a
Financing in accordance with Section 3. The Initial Term of each Lease and, if
applicable, the Term of any related Financing evidenced by an Advance Pricing
Agreement and an Acceptance Certificate shall begin on the Acceptance Date of
the Equipment subject to such Lease and shall continue for the period

1
<PAGE>

determined pursuant to such Advance Pricing Agreement. The Term of each
Financing evidenced by an Advance Pricing Agreement and an Acceptance
Certificate that is unrelated to any Lease shall begin on the Acceptance Date
for the related Financed Items and shall continue for the period determined
pursuant to such Advance Pricing Agreement.

(d) Periodic Consolidation of Leases and Financings. All Leases and
-----------------------------------------------
Financings commenced during a Consolidation Period (as specified in the
applicable Advance Pricing Agreement) pursuant to this Section 2.B shall be
consolidated into a single Schedule (a "Consolidating Schedule") in the form of
Exhibit C with such changes as Lessor and Lessee shall have agreed to as
conclusively evidenced by their execution thereof. Lessor shall prepare and
deliver to Lessee a Consolidating Schedule as of the close of each applicable
Consolidation Period. Lessee agrees to execute and deliver each Consolidating
Schedule to Lessor within 10 days after its receipt thereof from Lessor. From
and after Lessee's execution and delivery to Lessor of a Consolidating Schedule,
the Consolidating Schedule shall supersede the applicable Acceptance
Certificates and the Advance Pricing Agreement with respect to all Leases and
Financings commenced during the Consolidation Period to which such Consolidating
Schedule relates, and all such Leases shall be deemed to be a single, separate
and distinct Lease and all such Financings shall be deemed to be a single,
separate and distinct Financing, in each case governed by such Consolidating
Schedule and this Master Agreement and enforceable in accordance with its terms.
In the event of any conflict between the terms of this Master Agreement and such
Consolidating Schedule, the provisions of the Consolidating Schedule shall
govern.

(e) Failure of Lessee to Deliver Consolidating Schedule. If Lessee fails to
---------------------------------------------------
execute and deliver to Lessor any Consolidating Schedule within 10 days after
its receipt thereof, Lessor may exercise its rights and remedies under Section
21 and 22 of this Master Agreement arising as a result of such failure, either
immediately or at any time during the Initial Term of the Leases or the Term of
the Financings to which such Consolidating Schedule relates. No delay in
exercising such rights or remedies shall operate as a waiver thereof. Lessee
acknowledges and agrees that Rent with respect to such Leases and Financings
shall be payable in the amounts and at the times determined pursuant to the
applicable Advance Pricing Agreement and Acceptance Certificates, regardless of
whether Lessee shall have received such Consolidating Schedule from Lessor or
executed and delivered the same to Lessor as of the time any such payment is
due.

(f) Financial Statements. Lessee shall, at all times during which any Advance
--------------------
Pricing Agreement is effective, deliver to Lessor its quarterly and annual
financial statements no later then 45 days after the end of each of Lessee's
fiscal quarters or 90 days after the end of each of Lessee's fiscal years, as
applicable. Such annual financial statements shall be audited and certified by
Lessee's independent certified public accountants.

3. ACCEPTANCE OF EQUIPMENT AND FINANCED ITEMS. (a) General. Lessee shall
-------
unconditionally and irrevocably accept all Equipment under a Lease and, if
applicable, all related Financed Items subject to a Financing as soon as such
Equipment is delivered and inspected by Lessee or, if acceptance requirements
for such Equipment, related Financed Items or both are specified in the
applicable Purchase Documents, as soon as such requirements are met. Lessee
shall evidence such acceptance by executing and delivering to Lessor a properly
completed Acceptance Certificate in substantially the form of (i) Exhibit D if
the Lease or the Lease and the related Financing, as the case may be, is
evidenced by a Schedule executed pursuant to Section 2.A, or (ii) Exhibit E if
the Lease or the Lease and the related Financing, as the case may be, is being
commenced pursuant to an Advance Pricing Agreement executed pursuant to Section
2.B. Lessee agrees (y) to inspect all Equipment as soon as reasonably
practicable after the delivery thereof to Lessee or, if acceptance requirements
for such Equipment or any related Financed Items are specified in the applicable
Purchase Documents, as soon as reasonably practicable after being advised by the
Supplier that such requirements have been met, and (z) to complete, execute and
deliver to Lessor such Acceptance Certificate as soon as reasonably practicable
after its satisfactory completion of such inspection. In the case of a
Financing of Financed Items unrelated to any Equipment subject to a Lease,
Lessee shall unconditionally and irrevocably accept such Financed Items as soon
as it shall have become liable to pay for such Financed Items, and shall
complete, execute and deliver to Lessor an Acceptance Certificate in
substantially the form of Exhibit D or Exhibit E (as applicable) as soon as
reasonably practicable thereafter.

(b) E-mail Acceptance. For its convenience and at its option, Lessee may
-----------------
accept Equipment and Financed Items by electronic mail in accordance with this
paragraph, in lieu of the execution and physical delivery of Acceptance
Certificates provided for in paragraph (a) above. Subject to the terms and
conditions set forth below, a Valid E-mail Acceptance Certificate shall
constitute an original and authentic written Acceptance Certificate, duly
executed and delivered by an authorized representative of Lessee. A "Valid E-
mail Acceptance Certificate" means an electronic facsimile of an Acceptance
Certificate in substantially the form of Exhibit D or Exhibit E (as applicable)
properly completed and sent by an Authorized Lessee Representative from his or
her Authorized Lessee E-mail Address to an Authorized Lessor E-mail Address by
an electronic mail message confirming Lessee's acceptance of the Equipment or
Financed Items described therein. Lessor shall provide to Lessee electronic file
copies of Exhibits D and E for Lessee's use under this paragraph. The
Authorized Lessee Representatives and their corresponding Authorized Lessee E-
mail Addresses and the Lessee Acceptance Confirmation Fax Number are as
specified in Section 29 or as designated by Lessee in a written notice executed
by a duly authorized officer of Lessee and delivered to Lessor in accordance
with Section 29. The Authorized Lessor E-mail Address(es) are specified in
Section 29. Lessee may unilaterally modify any of the Authorized Lessee
Representatives and Authorized Lessee E-mail Addresses and the Lessee Acceptance
Confirmation Fax Number by written notice of the modification executed by a duly
authorized officer of Lessee and delivered to Lessor in accordance with Section
29. Lessor may unilaterally modify any Authorized Lessor E-mail Address by
written notice of the modification executed by a duly authorized officer of
Lessor and delivered to Lessee in accordance with Section 29. Upon Lessor's
receipt of a Valid E-mail Acceptance Certificate from Lessee, Lessor shall
transmit to Lessee by confirmed facsimile transmission to the Lessee Acceptance
Confirmation Fax Number, a notice acknowledging Lessor's receipt of the Valid E-
mail Acceptance Certificate from Lessee. A Valid E-mail Acceptance Certificate
shall become effective and constitute Lessee's unconditional and irrevocable
acceptance of the Equipment or Financed Items described therein, as of the
Acceptance Date specified therein, at the end of the second business day
following the day on which Lessor shall have transmitted such notice unless
Lessee shall have delivered a written notice to Lessor in accordance with
Section 29 revoking such Valid E-mail Acceptance Certificate prior to the end of
such second business day. Lessor's transmission of such notice shall constitute
Lessor's acknowledgement and acceptance of the Valid E-mail Acceptance
Certificate. Lessee expressly waives any claim or defense that any Valid E-mail
Acceptance Certificate which was sent and became effective in accordance with
the above procedures does not constitute an original and authentic written
Acceptance Certificate, duly executed and delivered by Lessee.

4. LESSEE'S END-OF-LEASE-TERM OPTIONS; AUTOMATIC EXTENSION. Lessee shall have
the following options in respect of each Lease at the end of each of the Initial
Term, any Renewal Term and any optional extension of the Initial Term or any
Renewal Term:

A. Purchase Option. Lessee may elect, by delivering to Lessor an End-of-Term
Notice at least 90 days prior to the expiration of the Initial Term, any Renewal
Term or any optional extension of the Initial Term or any Renewal Term, to
purchase any or all Units of Equipment then subject to such Lease (other than
items of Software that may not be sold by Lessor under the terms of any
applicable License Agreement) for an amount equal to the Fair Market Value of
such Units of Equipment as of the end of the Then Applicable Term, provided no
Lessee Default shall have occurred and be continuing. In the event of such an
election, Lessee shall pay such amount to Lessor, in immediately available
funds, on or before the last day of the Then Applicable Term. If Lessee shall
have so elected to purchase any of the Units of Equipment, shall have so paid
the applicable purchase price and shall have fulfilled the terms and conditions
of this Master Agreement, then on the last day of the Then Applicable Term (i)
the Lease with respect to such Units of Equipment shall terminate and, except as
provided in Section 27, Lessee shall be relieved of all of its obligations in
favor of Lessor with respect to such Units of Equipment, and (ii) Lessor shall
transfer all of its interest in such Units of Equipment to Lessee "AS IS, WHERE
IS," without any warranty, express or implied, from Lessor, other than the
absence of any liens or claims by or through Lessor. In the event Lessor and
Lessee are unable to agree on the Fair Market Value of any Units of Equipment,
then the Fair Market Value of the Equipment shall be determined by a panel of
three appraisers, one chosen by each party with the third chosen by the other
two appraisers and all at the shared cost of Lessor and Lessee. Lessor and
Lessee shall implement the appraisal process expeditiously in order to complete
the purchase on or before the expiration date of the Lease. In particular, the
appraisers will be instructed to provide a written determination of Fair Market
Value within twenty (20) days after the selection of the panel, said selection
to be accomplished not less than seventy-five (75) days prior to the expiration
date of the Lease. The purchase price of the Equipment will be determined by
taking the average of the two appraisals arithmetically closest or if one
appraisal is the arithmetic average of the other two, then that appraisal shall
be determined to be the price. If the FairMarket Value has not been determined
at least fifty-five (55) days prior to the expiration date of the Lease or if it
is unacceptable to Lessee, Lessee reserves the

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right to revoke or alter its election to purchase at any time at least fifty
(50) days prior to the expiration date of the Lease.

B. Renewal Option. Lessee may elect, by delivering to Lessor an End-of-Term
Notice at least 90 days prior to the expiration of the Initial Term, any Renewal
Term, or any optional extension of the Initial Term or any Renewal Term, to
renew the Lease with respect to any or all Units of Equipment then subject to
such Lease (other than items of Software that may not be re-released by Lessor
under the terms of any applicable License Agreement) for an amount equal to the
Fair Rental Value of such Units of Equipment as of the end of the Then
Applicable Term. In the event of such an election, Lessee shall enter into a
mutually agreeable renewal agreement with Lessor ("Renewal Agreement") on or
before the last day of the Then Applicable Term confirming the Units of
Equipment as to which the Lease is to be renewed, the period for which the Lease
is to be renewed (the "Renewal Term"), and the amount of Rent and the times at
which such Rent is to be payable during the Renewal Term. In the event Lessor
and Lessee are unable to agree on the Fair Rental Value of any Units of
Equipment, Lessor shall, at Lessee's expense, select an independent appraiser to
conclusively determine such amount.

C. Return. Lessee may elect, by delivering to Lessor an End-of-Term Notice
at least 60 days prior to the expiration of the Initial Term, any Renewal Term
or any optional extension of the Initial Term or any Renewal Term, to return any
or all of the Units of Equipment then subject to such Lease in accordance with
Section 9 of this Master Agreement.

D. Optional Extension. Lessee may elect, by omitting to deliver to Lessor an
End-of-Term Notice at least 90 days prior to the expiration of the Initial Term
or any Renewal Term, to extend the Initial Term or such Renewal Term, as the
case may be. In that event, the Initial Term or such Renewal Term shall,
without any additional notice or documentation, be automatically extended for
successive calendar months with respect to all items of Equipment then subject
to such Lease through the end of the calendar month falling at least 90 days
after the date Lessee shall have delivered to Lessor an End-of-Term Notice with
respect to such Lease. For each calendar month that the Then Applicable Term of
such Lease is so extended, Lessee shall pay to Lessor Rent in an amount equal to
the monthly Rent payment in effect immediately prior to such extension (or the
appropriate pro rata portion of the Rent payment then in effect in the case of
Rent payable other than on a monthly basis), and all other provisions of this
Master Agreement and the applicable Schedule shall continue to apply.

If Lessee shall have delivered to Lessor an End-of-Term Notice with respect to
a Lease, but shall have subsequently failed to comply with its obligations
arising from its elections specified therein (e.g., Lessee shall have failed, on
or before the last day of the Then Applicable Term (i) to pay Lessor the
purchase price for Equipment to be purchased in accordance with Section 4.A
above, (ii) to execute a Renewal Agreement with respect to Equipment as to which
the Lease is to be renewed in accordance with Section 4.B above, or (iii) to
return to Lessor Equipment to be returned in accordance with Section 4.C above),
then the Then Applicable Term of such Lease shall, without any additional notice
or documentation, be automatically extended for successive calendar months with
respect to all items of Equipment as to which Lessee shall have so failed to
comply with its obligations through the end of the calendar month in which
Lessee shall have complied with such obligations. For each calendar month that
the Then Applicable Term of any Lease is so extended, Lessee shall pay to Lessor
Rent in an amount equal to the monthly Rent payment in effect immediately prior
to such extension (or the appropriate pro rata portion of the Rent payment then
in effect in the case of Rent payable other than on a monthly basis), and all
other provisions of this Master Agreement and the applicable Schedule shall
continue to apply. Notwithstanding any of the provisions of this Section 4 to
the contrary, if any Lessee Default shall have occurred and be continuing at any
time during the last 90 days of the Then Applicable Term of any Lease, Lessor
may cancel any Renewal Term or optional or other automatic extension of the Then
Applicable Term immediately upon written notice to Lessee.

5. RENT; LATE CHARGES; ADVANCE RENT. As rent ("Rent") for the Equipment under
any Lease and the Financed Items under any Financing, Lessee agrees to pay the
amounts specified in the applicable Schedule on the due dates specified in the
applicable Schedule. Lessee agrees to pay Lessor interest on any Rent payment
or other amount due hereunder that is not paid within 10 days of its due date,
at the rate of 1% per month (or such lesser rate as is the maximum rate
allowable under applicable law). Lessee shall pay to Lessor, with respect to
each Lease or Financing, the Advance Rent specified on the applicable Schedule,
if any. Any payment of Advance Rent shall be credited against the first Rent
payment payable by Lessee under the applicable Schedule and any excess Advance
Rent will be credited against the last Rent payment(s) payable by Lessee with
respect to the Initial Term of the applicable Lease or Financing. Advance Rent
shall be refunded to Lessee without interest only if Lessor declines to sign the
applicable Schedule.

6. LEASES AND FINANCINGS NON-CANCELABLE; NET LEASES; WAIVER OF DEFENSES TO
PAYMENT. IT IS SPECIFICALLY UNDERSTOOD AND AGREED THAT EACH LEASE AND
FINANCING HEREUNDER SHALL BE NON-CANCELABLE, AND THAT EACH LEASE HEREUNDER IS A
NET LEASE. LESSEE AGREES THAT IT HAS AN ABSOLUTE AND UNCONDITIONAL OBLIGATION
TO PAY ALL RENT AND OTHER AMOUNTS WHEN DUE. LESSEE IS NOT ENTITLED TO ABATE OR
REDUCE RENT OR ANY OTHER AMOUNT DUE, OR TO SET OFF ANY CHARGE AGAINST ANY SUCH
AMOUNT. LESSEE HEREBY WAIVES ANY RECOUPMENT, CROSS-CLAIM, COUNTERCLAIM OR ANY
OTHER DEFENSE AT LAW OR IN EQUITY TO ANY RENT PAYMENT OR OTHER AMOUNT DUE WITH
RESPECT TO ANY LEASE OR FINANCING, WHETHER ANY SUCH DEFENSE ARISES OUT OF THIS
MASTER AGREEMENT, ANY SCHEDULE, ANY CLAIM BY LESSEE AGAINST LESSOR, LESSOR'S
ASSIGNEES OR SUPPLIER, OR OTHERWISE. IF THE EQUIPMENT OR ANY FINANCED ITEM IS
NOT PROPERLY INSTALLED, DOES NOT OPERATE OR INTEGRATE AS REPRESENTED OR
WARRANTED BY SUPPLIER OR IS UNSATISFACTORY FOR ANY REASON WHATSOEVER, LESSEE
SHALL MAKE ANY CLAIM ON ACCOUNT THEREOF SOLELY AGAINST SUPPLIER AND SHALL
NEVERTHELESS PAY ALL SUMS DUE WITH RESPECT TO EACH LEASE AND EACH FINANCING.

7. ASSIGNMENT OF PURCHASE DOCUMENTS. Lessee assigns to Lessor all of Lessee's
right, title and interest in and to (a) the Equipment described in each
Schedule, and (b) the Purchase Documents relating to such Equipment. Such
assignment of the Purchase Documents is an assignment of rights only; nothing in
this Master Agreement shall be deemed to have relieved Lessee of any obligation
or liability under any of the Purchase Documents, except that, as between Lessee
and Lessor, Lessor shall pay for the Equipment within 20 days after Lessee's
delivery to Lessor of a properly completed and executed Acceptance Certificate
and all other documentation necessary to establish Lessee's acceptance of such
Equipment under the related Lease. Lessee represents and warrants that it has
reviewed and approved the Purchase Documents. In addition, if Lessor shall so
request, Lessee shall deliver to Lessor a document acceptable to Lessor whereby
Seller acknowledges and provides any required consent to such assignment. For
the avoidance of doubt, Lessee covenants and agrees that it shall at all times
during the Total Term of each Lease comply in all respects with the terms of any
License Agreement relating to any Equipment leased thereunder. IT IS ALSO
SPECIFICALLY UNDERSTOOD AND AGREED THAT NEITHER SUPPLIER NOR ANY SALESPERSON OF
SUPPLIER IS AN AGENT OF LESSOR OR LESSEE, NOR ARE THEY AUTHORIZED TO WAIVE OR
ALTER ANY TERMS OF THIS MASTER AGREEMENT OR ANY SCHEDULE.

8. ASSIGNMENT OF SUPPLIER WARRANTIES. To the extent permitted, Lessor hereby
assigns to Lessee, for the Total Term of any Lease, all Equipment warranties
provided by any Supplier in the applicable Purchase Documents. Lessee shall
have the right to take any action it deems appropriate to enforce such
warranties provided such enforcement is pursued in Lessee's name and at its
expense. In the event Lessee is precluded from enforcing any such warranty in
its name, Lessor shall, upon Lessee's request, take reasonable steps to enforce
such warranty. In such circumstances, Lessee shall, promptly upon demand,
reimburse Lessor for all out-of-pocket expenses incurred by Lessor in enforcing
the Supplier warranty. Any recovery resulting from any such enforcement efforts
shall be divided among Lessor and Lessee as their interests may appear.

9. EQUIPMENT RETURN REQUIREMENTS. On or before the last day of the Total Term
of each Lease (and any other time Lessee is required to return Equipment to
Lessor under the terms of this Master Agreement or any Schedule), Lessee shall
pack the Equipment to be returned to Lessor in accordance with the
manufacturer's guidelines and deliver such Equipment to Lessor at any
destination within the continental United States designated by Lessor. All
dismantling, packaging, transportation, in-transit insurance and shipping
charges shall be borne by Lessee, provided that Lessee shall not be responsible
for costs of shipping the Equipment more than 1500 miles from its location at
Lease expiration All Equipment shall be returned to Lessor in the same
condition and working order as when delivered to Lessee, reasonable wear and
tear excepted. One measure of reasonable wear and tear shall include but not be
limited to whether the returned Equipment would qualiy for maintenance service
by the Supplier at its then standard rates for Equipment of that age, if
available. Lessee shall be responsible for, and shall reimburse Lessor

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promptly on demand for, any cost incurred by Lessor to return the Equipment to
good working condition.

10. EQUIPMENT USE AND MAINTENANCE. Lessee is solely responsible for the
selection, installation, operation and maintenance of the Equipment and all
costs related thereto, including shipping charges. Lessee shall at all times
operate and maintain the Equipment in good working order, repair, condition and
appearance, and in accordance with the manufacturer's specifications and
recommendations. On prior notice to Lessee, on such timeframe as mutually
agreed by Lessor and Lessee to be reasonable, but in any event no less than 14
days beyond Lessor's request, Lessor and Lessor's agents shall have the right,
during Lessee's normal business hours, to enter the premises where the Equipment
is located for the purpose of inspecting the Equipment and observing its use.
If Lessor shall have provided to Lessee any tags or identifying labels, Lessee
shall, at its expense, affix and maintain in a prominent position on each item
of Equipment such tags or labels to indicate Lessor's ownership of the
Equipment. Except in the case of PC Equipment and Software, Lessee shall, at
its expense, enter into and maintain and enforce at all times during the Total
Term of each Lease a maintenance agreement to service and maintain the related
Equipment, upon terms and with a provider reasonably acceptable to Lessor.

11. EQUIPMENT OWNERSHIP; LIENS; LOCATION. As between Lessor and Lessee, Lessor
is the sole owner of the Equipment and has sole title thereto. Lessee shall not
make any representation to any third-party inconsistent with Lessor's sole
ownership of the Equipment. Lessee covenants that it will not pledge or
encumber the Equipment or Lessor's interest in the Equipment in any manner
whatsoever nor create or permit to exist any levy, lien or encumbrance thereof
or thereon except those created by or through Lessor. The Equipment shall
remain Lessor's personal property whether or not affixed to realty and shall not
become a fixture or be made to become a part of any real property on which it is
placed without Lessor's prior written consent. Lessee shall maintain the
Equipment so that it may be removed from any building in which it is placed
without any damage to the building or the Equipment. Lessee may relocate any
Equipment from the Equipment Location specified in the applicable Schedule to
another of its business locations within the United States, provided Lessee
remains in possession and control of the Equipment and notifies Lessor within no
more than thirty (30) days of such move specifying the new Equipment Location.
Notwithstanding the foregoing, Lessor agrees that computer equipment usable
outside of a fixed office environment, such as laptops, notebooks or palm pilots
may be relocated from the Equipment Location without notice or consent, provided
that (i) such relocation is made by the primary employee of Lessee in the
custody and control of such Equipment, (ii) the primary employee remains in
possession and control of the Equipment; and (iii) the primary employee's
principal office is the Equipment Location.

12. ALTERATIONS AND ADDITIONS TO EQUIPMENT. Lessee shall make no alterations
or additions to the Equipment, except those that (a) will not void any warranty
made by the Supplier of the Equipment, result in the creation of any security
interest, lien or encumbrance on the Equipment or impair the value or use of the
Equipment either at the time made or at the end of the Total Term of the
applicable Lease, and that are readily removable without damage to the Equipment
("Optional Additions"), or (b) are required by any applicable law, regulation or
order. All additions to the Equipment or repairs made to the Equipment, except
Optional Additions, become a part thereof and Lessor's property at the time
made; Optional Additions which have not been removed prior to the return of the
Equipment shall become Lessor's property upon such return.

13. INSURANCE. Lessee agrees to keep the Equipment insured at Lessee's
expense against all risks of loss from any cause whatsoever, including without
limitation, theft and damage. Lessee agrees that such insurance shall name
Lessor as a loss payee and cover not less than the Stipulated Loss Value of the
Equipment. Lessee also agrees that it shall carry commercial general liability
insurance in an amount not less than $2,000,000 total liability per occurrence
and cause Lessor and its affiliates to be named additional insureds under such
insurance. Each policy shall provide that the insurance cannot be canceled
without at least 30 days prior written notice to Lessor. Lessee shall provide
to Lessor (a) on or prior to the Acceptance Date for each Lease, and from time
to time thereafter, certificates of insurance evidencing such insurance coverage
throughout the Total Term of each Lease, and (b) upon Lessor's request, copies
of the insurance policies. If Lessee fails to provide Lessor with such
evidence, then Lessor will have the right, but not the obligation, to purchase
such insurance protecting Lessor at Lessee's expense. Lessee's expense shall
include the full premium paid for such insurance and any customary charges,
costs or fees of Lessor. Lessee agrees to pay such amounts in substantially
equal installments allocated to each Rent payment (plus interest on such amounts
at the rate of 1% per month or such lesser rate as is the maximum rate allowable
under applicable law).

14. RISK OF LOSS. In the event any Casualty Loss shall occur, on the next Rent
payment date Lessee shall, at its option (a) pay Lessor the Stipulated Loss
Value of the Equipment suffering the Casualty Loss, or (b) substitute and
replace each item of Equipment suffering the Casualty Loss with an item of
Substitute Equipment. If Lessee shall elect to pay the Stipulated Loss Value of
the Equipment suffering a Casualty Loss, upon Lessor's receipt in full of such
payment the applicable Lease shall terminate as it relates to such Equipment
and, except as provided in Section 27, Lessee shall be relieved of all
obligations under the applicable Lease as it relates to such Equipment. If
Lessee shall elect to replace Equipment suffering a Casualty Loss with items of
Substitute Equipment (i) the applicable Lease shall continue in full force and
effect without any abatement of Rent with such Substitute Equipment thereafter
being deemed to be Equipment leased thereunder, and (ii) Lessee shall deliver to
Lessor a bill of sale or other documentation, in either case in form and
substance satisfactory to Lessor, in which Lessee shall represent and warrant
that it has transferred to Lessor good and marketable title to all Substitute
Equipment, free and clear of all liens, encumbrances and claims of others. Upon
Lessor's receipt of such payment of Stipulated Loss Value in full, or such bill
of sale or other documentation, as the case may be, Lessor shall transfer to
Lessee all of Lessor's interest in the Equipment suffering the Casualty Loss "AS
IS, WHERE IS," without any warranty, express or implied, from Lessor, other than
the absence of any liens or claims by or through Lessor. In the event of any
repairable damage to any Equipment, the Lease shall continue with respect to
such Equipment without any abatement of Rent and Lessee shall at its expense
promptly cause such Equipment to be repaired to the condition it is required to
be maintained in pursuant to Section 10. Lessee shall notify Lessor of any
Casualty Loss or repairable damage to any Equipment as soon as reasonably
practicable after the date of any such occurrence.

15. TAXES. Lessor shall report and pay all Taxes now or hereafter imposed or
assessed by any governmental body, agency or taxing authority upon the purchase,
ownership, delivery, installation, leasing, rental, use or sale of the
Equipment, the Rent or other charges payable hereunder, or otherwise upon or in
connection with any Lease or Financing, whether assessed on Lessor or Lessee,
other than any such Taxes required by law to be reported and paid by Lessee.
Lessor and Lessee agree that the valuation of Equipment for personal property
tax filings shall be based upon assessments or valuations that are reasonable.
Lessee shall promptly reimburse Lessor for all such Taxes paid by Lessor,
together with any penalties or interest in connection therewith attributable to
Lessee's acts or failure to act, excluding (a) Taxes on or measured by the
overall gross or net income or items of tax preference of Lessor, (b) as to any
Lease or the related Equipment, Taxes attributable to the period after the
return of such Equipment to Lessor, and (c) Taxes imposed as a result of a sale
or other transfer by Lessor of any portion of its interest in any Lease or
Financing or in any Equipment except for a sale or other transfer to Lessee or a
sale or other transfer occurring after and during the continuance of any Lessee
Default.

16. GENERAL INDEMNITY. Lessee shall indemnify and hold harmless Lessor, its
employees, officers, directors, agents and assignees and, if requested by
Lessor, defend Lessor, its employees, officers, directors, agents and assignees,
from and against any and all Claims arising directly or indirectly out of or in
connection with any matter involving this Master Agreement, the Equipment or any
Lease or Financing, including but not limited to (a) the selection, manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, financing,
possession, maintenance, use, condition, return or operation of any Equipment or
Financed Items or the enforcement of Lessor's rights under any Lease or
Financing; (b) any latent defect or other defect in any Equipment or Financed
Item, whether or not discoverable by Lessor or by Lessee; (c) any patent,
trademark or copyright infringement involving any Equipment or Financed Item;
(d) the condition of any Equipment or Financed Item arising or existing at any
time during the Total Term of any Lease or the Term of any Financing; and (e)
any breach by Lessee of any representation, warranty or covenant contained in
any Fundamental Agreement. Notwithstanding the foregoing, Lessee shall have no
obligation to indemnify or defend against any Claim arising solely as a result
of Lessor's gross negligence or willful misconduct.

17. TAX BENEFIT INDEMNITY. Each Lease is entered into on the assumption that
Lessor is the owner of the Equipment for tax purposes and is entitled to certain
federal and state tax benefits available to an owner of Equipment (collectively,
"Tax Benefits"), including without limitation, accelerated cost recovery system
deductions for 5-year property and deductions

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for interest incurred by Lessor to finance the purchase of Equipment available
under the Code. Lessee represents, warrants and covenants to Lessor that (a)
Lessee is not a tax-exempt entity (as defined in Section 168(h) of the Code),
[(b) all Equipment will be used solely within the United States, and (c) Lessee
will take no position inconsistent with the assumption that Lessor is the owner
of the Equipment for federal and state tax purposes. If, due to any act or
omission of Lessee or any party acting through Lessee, or the breach or
inaccuracy of any representation, warranty or covenant of Lessee contained in
any Fundamental Agreement, Lessor reasonably determines that it cannot claim, is
not allowed to claim, loses or must recapture any or all of the Tax Benefits
otherwise available with respect to the Equipment subject to any Lease (a "Tax
Loss"), then Lessee shall, promptly upon demand, pay to Lessor an amount
sufficient to provide Lessor the same after-tax rate of return and aggregate
after-tax cash flow through the end of the Then Applicable Term of such Lease
that Lessor would have realized but for such Tax Loss.

18. COVENANT OF QUIET ENJOYMENT. So long as no Lessee Default exists, and no
event shall have occurred and be continuing which, with the giving of notice or
the passage of time or both, would constitute a Lessee Default, neither Lessor
nor any party acting or claiming through Lessor, by assignment or otherwise,
will disturb Lessee's quiet enjoyment of the Equipment during the Total Term of
the related Lease.

19. DISCLAIMERS AND LESSEE WAIVERS. LESSEE LEASES THE EQUIPMENT FROM LESSOR
"AS IS, WHERE IS". IT IS SPECIFICALLY UNDERSTOOD AND AGREED THAT (A) EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 18, LESSOR MAKES ABSOLUTELY NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE DESIGN, COMPLIANCE WITH
SPECIFICATIONS, QUALITY, OPERATION, OR CONDITION OF ANY EQUIPMENT OR FINANCED
ITEMS (OR ANY PART THEREOF), THE MERCHANTABILITY OR FITNESS OF EQUIPMENT OR
FINANCED ITEMS FOR A PARTICULAR PURPOSE, OR ISSUES REGARDING PATENT
INFRINGEMENT, TITLE AND THE LIKE; (B) LESSOR SHALL NOT BE DEEMED TO HAVE MADE,
BE BOUND BY OR LIABLE FOR, ANY REPRESENTATION, WARRANTY OR PROMISE MADE BY THE
SUPPLIER OF ANY EQUIPMENT OR FINANCED ITEMS (EVEN IF LESSOR IS AFFILIATED WITH
SUCH SUPPLIER); (C) LESSOR SHALL NOT BE LIABLE FOR ANY FAILURE OF ANY EQUIPMENT
OR FINANCED ITEMS OR ANY DELAY IN THE DELIVERY OR INSTALLATION THEREOF; (D)
LESSEE HAS SELECTED ALL EQUIPMENT AND FINANCED ITEMS WITHOUT LESSOR'S
ASSISTANCE; AND (E) LESSOR IS NOT A MANUFACTURER OF ANY EQUIPMENT. IT IS
FURTHER AGREED THAT LESSOR SHALL HAVE NO LIABILITY TO LESSEE, LESSEE'S
CUSTOMERS, OR ANY THIRD PARTIES FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THIS MASTER AGREEMENT OR ANY SCHEDULE OR
CONCERNING ANY EQUIPMENT OR FINANCED ITEMS, OR FOR ANY DAMAGES BASED ON STRICT
OR ABSOLUTE TORT LIABILITY OR, EXCEPT TO THE EXTENT CONSTITUTING A LESSOR
DEFAULT, LESSOR'S NEGLIGENCE; PROVIDED, HOWEVER, THAT NOTHING IN THIS MASTER
AGREEMENT SHALL DEPRIVE LESSEE OF ANY RIGHTS IT MAY HAVE AGAINST ANY PERSON
OTHER THAN LESSOR. LESSOR AND LESSEE AGREE THAT THE LEASES AND THE FINANCINGS
SHALL BE GOVERNED BY THE EXPRESS PROVISIONS OF THIS MASTER AGREEMENT AND THE
OTHER FUNDAMENTAL AGREEMENTS AND NOT BY THE CONFLICTING PROVISIONS OF ANY
OTHERWISE APPLICABLE LAW. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, LESSEE WAIVES ANY RIGHTS AND REMEDIES CONFERRED UPON A LESSEE BY ARTICLE 2A
OF THE UCC (INCLUDING, BUT NOT LIMITED TO, LESSEE'S RIGHTS, CLAIMS AND DEFENSES
UNDER UCC SECTIONS 2A-303 AND 2A-508 THROUGH 2A-522) AND THOSE RIGHTS NOW OR
HEREAFTER CONFERRED BY STATUTE OR OTHERWISE, IN EITHER CASE THAT ARE
INCONSISTENT WITH OR THAT WOULD LIMIT OR MODIFY LESSOR'S RIGHTS SET FORTH IN
THIS MASTER AGREEMENT.

20. LESSEE WARRANTIES. Lessee represents, warrants and covenants to Lessor
that: (a) ALL EQUIPMENT WILL BE USED FOR BUSINESS PURPOSES ONLY AND NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES; (b) Lessee is a corporation duly
organized, validly existing and in good standing under applicable law; (c)
Lessee has the power and authority to enter into each of the Fundamental
Agreements; (d) all Fundamental Agreements are enforceable against Lessee in
accordance with their terms and do not violate or create a default under any
instrument or agreement binding on Lessee; (e) there are no pending or
threatened actions or proceedings before any court or administrative agency that
could have a material adverse effect on Lessee or any Fundamental Agreement,
unless such actions are disclosed to Lessor and consented to in writing by
Lessor; (f) Lessee shall comply in all material respects with all laws and
regulations the violation of which could have a material adverse effect upon the
Equipment or Lessee's performance of its obligations under any Fundamental
Agreement; (g) each Fundamental Agreement shall be effective against all
creditors of Lessee under applicable law, including fraudulent conveyance and
bulk transfer laws, and shall raise no presumption of fraud; and (h) all
financial statements and other related information furnished by Lessee shall be
prepared in accordance with generally accepted accounting principles and shall
fairly present Lessee's financial position as of the dates given on such
statements.

21. DEFAULT. Any of the following shall constitute a default by Lessee (a
"Lessee Default") under this Master Agreement and all Leases and Financings: (a)
Lessee fails to pay any Rent payment or any other amount payable to Lessor under
this Master Agreement or any Schedule within 10 business days after its due
date; or (b) Lessee defaults on or breaches any of the other terms and
conditions of any Material Agreement, and fails to cure such breach within 10
business days after written notice thereof from Lessor; or (c) any
representation or warranty made by Lessee in any Material Agreement proves to be
incorrect in any material respect when made or reaffirmed; or (d) Lessee or
Guarantor sells or otherwise disposes of all or substantially all of its assets,
consolidates with or merges with or into any entity or incurs a substantial
amount of indebtedness other than in the ordinary course of its business (unless
consented to in advance by Lessor which consent shall not be unreasonably
delayed or unreasonably withheld if the Lessor determines that the credit
strength of the proposed successor or survivor of such transaction would be
substantially equal to or greater than the credit strength of Lessee as
originally approved for financing by Lessor; or (e) Lessee or Guarantor
dissolves or otherwise terminates its existence, ceases to do business, or
becomes insolvent or fails generally to pay its debts as they become due; or (f)
any Equipment is levied against, seized or attached; or (g) Lessee or Guarantor
makes an assignment for the benefit of creditors; or (h) a proceeding under any
bankruptcy, reorganization, arrangement of debt, insolvency or receivership law
is filed by or against Lessee or Guarantor (and, if such proceeding is
involuntary, it is not dismissed within 60 days after the filing thereof) or
Lessee or Guarantor takes any action to authorize any of the foregoing matters;
or (i) any letter of credit or guaranty issued in support of a Lease or
Financing is revoked, breached, cancelled or terminated (unless consented to in
advance by Lessor); or (j) any Guarantor fails to fulfil its obligations in
favor of Lessor pursuant to its guaranty.

Any of the following shall constitute a default by Lessor (a "Lessor Default")
under this Master Agreement and (i) the applicable Lease(s) or Financing(s) in
the case of a Lessor Default described in clauses (w) or (x) below, or (ii) all
Leases and Financings in the case of a Lessor Default described in clauses (y)
or (z) below: (w) Lessor breaches its covenant of quiet enjoyment set forth in
Section 18 and fails or is unable to cure such breach within 10 days after
written notice thereof from Lessee; or (x) Lessor fails to pay Seller (or in the
case of Financed Items, Lessee or such other party as Lessee or Seller shall
have directed in writing) for any Equipment or Financed Items within 30 days
after Lessor's receipt of a properly completed and executed Acceptance
Certificate and all other documentation necessary to establish Lessee's
acceptance of such Equipment or Financed Items under a Lease or Financing,
respectively, and such failure continues for more than 10 days after written
notice thereof from Lessee; or (y) Lessor makes an assignment for the benefit of
creditors; or (z) a proceeding under any bankruptcy, reorganization, arrangement
of debt, insolvency or receivership law is filed by or against Lessor (and, if
such proceeding is involuntary, it is not dismissed within 60 days after the
filing thereof).

22. REMEDIES. If a Lessee Default occurs, Lessor may, in its sole discretion,
exercise one or more of the following remedies: (a) declare all amounts due and
to become due under any or all Leases and Financings to be immediately due and
payable; or (b) terminate this Master Agreement or any Lease or Financing; or
(c) take possession of, or render unusable, any Equipment wherever the Equipment
may be located, without demand or notice and without any court order or other
process of law in accordance with Lessee's reasonable security procedures, and
no such action shall constitute a termination of any Lease; or (d) require
Lessee to deliver the Equipment to a location specified by Lessor; or (e)
declare the Stipulated Loss Value for any or all Equipment to be due and payable
as liquidated damages for loss of a bargain and not as a penalty and in

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lieu of any further Rent payments under the applicable Lease or Leases; or (f)
proceed by court action to enforce performance by Lessee of any Lease or
Financing and/or to recover all damages and expenses incurred by Lessor by
reason of any Lessee Default; or (g) terminate any other agreement that Lessor
may have with Lessee; or (h) exercise any other right or remedy available to
Lessor at law or in equity. Also, Lessee shall pay Lessor all costs and expenses
that Lessor may incur to maintain, safeguard or preserve the Equipment, and
other expenses incurred by Lessor in enforcing any of the terms, conditions or
provisions of this Master Agreement (including reasonable legal fees and
collection agency costs). Upon repossession or surrender of any Equipment,
Lessor shall lease, sell or otherwise dispose of the Equipment in a commercially
reasonable manner, with or without notice and at public or private sale, and
apply the net proceeds thereof to the amounts owed to Lessor hereunder, but only
after deducting (i) in the case of a sale, the estimated Fair Market Value of
the Equipment sold as of the scheduled expiration of the Then Applicable Term of
the related Lease, (ii) in the case of a lease, the rent due for any period
beyond the scheduled expiration of the Then Applicable Term of the related
Lease, and (iii) in either case, all expenses (including reasonable legal fees
and costs) reasonably incurred by Lessor in connection therewith; provided,
however, that Lessee shall remain liable to Lessor for any deficiency that
remains after any sale or lease of such Equipment. Any proceeds of any sale or
lease of such Equipment in excess of the amounts owed to Lessor hereunder shall
be retained by Lessor. Lessee agrees that with respect to any notice of a sale
required by law to be given, 10 days' notice shall constitute reasonable notice.
Upon payment of all past due Rent and the Stipulated Loss Value as provided in
clause (e) above, together with interest at the rate of 1-1/2% per month (or
such lesser rate as is the maximum rate allowable under applicable law) from the
date declared due until paid, Lessor will transfer to Lessee all of Lessor's
interest in the Equipment for which such Rent and Stipulated Loss Value has been
paid, which transfer shall be on an "AS IS, WHERE IS" basis, without any
warranty, express or implied, from Lessor, other than the absence of any liens
or claims by or through Lessor. These remedies are cumulative of every other
right or remedy given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise, and may be enforced concurrently therewith or from
time to time.

If a Lessor Default occurs, Lessee's sole and exclusive remedies shall be
either (i) in the case of a Lessor Default as defined in Section 21 (x) of this
Master Agreement, to terminate the applicable Schedule as to any unpaid
Equipment after 15 days written notice to Lessor and Lessor has failed to remit
payment; or (ii) for any other Lessor Default, to recover by appropriate legal
proceedings any direct damages suffered by Lessee as a result of such Lessor
Default and any reasonable and necessary expenses (including, without
limitation, court costs and reasonable legal fees) incurred by Lessee in
connection therewith.

23. PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to perform any of
its obligations hereunder, Lessor may perform any act or make any payment that
Lessor deems reasonably necessary for the maintenance and preservation of the
Equipment and Lessor's interests therein; provided, however, that the
performance of any act or payment by Lessor shall not be deemed a waiver of, or
release Lessee from, the obligation at issue. All sums so paid by Lessor,
together with expenses (including legal fees and costs) incurred by Lessor in
connection therewith, shall be paid to Lessor by Lessee immediately upon demand.

24. TRUE LEASE; SECURITY INTEREST; MAXIMUM RATE. Each Lease is intended to be
a "Finance Lease" as defined in Article 2A of the UCC, and Lessee hereby
authorizes Lessor to file a financing statement to give public notice of
Lessor's ownership of the Equipment. Lessee, by its execution of each Schedule,
acknowledges that Lessor has informed it that (a) the identity of Seller is set
forth in the applicable Schedule, (b) Lessee is entitled under Article 2A to the
promises and warranties, including those of any third party, provided to Lessor
in connection with, or as a part of, the applicable Purchase Documents, and (c)
Lessee may communicate with Seller and receive an accurate and complete
statement of the promises and warranties, including any disclaimers and
limitations of them or of remedies. If (i) notwithstanding the express
intention of Lessor and Lessee to enter into a true lease, any Lease is ever
deemed by a court of competent jurisdiction to be a lease intended for security,
or (ii) Lessor and Lessee enter into a Lease with the intention that it be
treated as a lease intended as security by so providing in the applicable
Schedule, or (iii) Lessor and Lessee enter into a Financing, then to secure
payment and performance of Lessee's obligations under this Master Agreement and
all Leases and Financings, Lessee hereby grants Lessor a purchase money security
interest in the related Equipment and Financed Items and in all attachments,
accessories, additions, substitutions, products, replacements, rentals and
proceeds (including, without limitation, insurance proceeds) thereto as well as
a security interest in any other equipment financed pursuant to this Master
Agreement or any other agreement between Lessor and Lessee (collectively, the
"Collateral"). In any such event, notwithstanding any provisions contained in
this Master Agreement or in any Schedule, neither Lessor nor any Assignee shall
be entitled to receive, collect or apply as interest any amount in excess of the
maximum rate or amount permitted by applicable law. In the event Lessor or any
Assignee ever receives, collects or applies as interest any amount in excess of
the maximum amount permitted by applicable law, such excess amount shall be
applied to the unpaid principal balance and any remaining excess shall be
refunded to Lessee. In determining whether the interest paid or payable under
any specific contingency exceeds the maximum rate or amount permitted by
applicable law, Lessor and Lessee shall, to the maximum extent permitted under
applicable law, characterize any non-principal payment as an expense or fee
rather than as interest, exclude voluntary prepayments and the effect thereof,
and spread the total amount of interest over the entire term of this Master
Agreement and all Leases and Financings.

25. ASSIGNMENT. Lessor shall have the unqualified right to sell, assign,
pledge, transfer, mortgage or otherwise convey any part of its interest in this
Master Agreement, any Schedule or any Equipment, in whole or in part, without
prior notice to or the consent of Lessee. If any Lease is assigned, Lessee
shall (a) unless otherwise specified by Lessor and the Assignee, pay all amounts
due under the applicable Schedule to such Assignee, notwithstanding any defense,
setoff or counterclaim whatsoever that Lessee may have against Lessor or
Assignee; (b) not permit the applicable Schedule to be amended or the terms
thereof waived without the prior written consent of the Assignee; (c) not
require the Assignee to perform any obligations of Lessor, other than those that
are expressly assumed in writing by such Assignee; and (d) execute such
acknowledgments thereto as may be requested by Lessor or the Assignee. It is
further agreed that (i) each Assignee shall be entitled to all of Lessor's
rights, powers and privileges under the applicable Lease or Financing, to the
extent assigned; (ii) any Assignee may reassign its rights and interests under
the applicable Lease or Financing with the same force and effect as the
assignment described herein; and (iii) any payments received by the Assignee
from Lessee with respect to the assigned portion of the Lease or Financing
shall, to the extent thereof, discharge the obligations of Lessee to Lessor with
respect to the assigned portion of the Lease or Financing. Lessee acknowledges
that any assignment or transfer by Lessor or any Assignee shall not materially
change Lessee's obligations under the assigned Lease or Financing.

Upon Lessor's prior written consent, which shall not be unreasonably withheld,
Lessee may sublet the Equipment to another end user other than another leasing
company or other competitor of Lessor. No such sublease shall relieve Lessee of
its obligations under the Lease and Lessee shall be responsible for all costs
and expenses associated with such sublease, including, without limitation,
additional Taxes or any Tax Loss suffered by Lessor. Lessee may permit use of
the Equipment by its affiliates or independent contractors at the Equipment
Location provided it does not relinquish possession and control of the
Equipment. Any corporation which directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with,
Lessee (a "Lessee Affiliate"), may enter into a Lease or Financing under and
subject to the terms and conditions of this Master Agreement by executing a
Schedule incorporating this Master Agreement by reference, in which case such
Lessee Affiliate shall be deemed, for purposes of such Lease or Financing to be
the "Lessee" under this Master Agreement. The undersigned Lessee hereby
unconditionally guarantees to Lessor the full and prompt payment, observance and
performance when due of all obligations of all Lessee Affiliates (collectively,
"Guaranteed Obligations") under all such Leases or Financing. The foregoing
guarantee is absolute, continuing, unlimited and independent and shall not be
affected, diminished or released for any reason whatsoever. The undersigned
Lessee waives diligence, presentment, demand for payment, protest or notice of
any Lessee Default or nonperformance by any Lessee Affiliate, all affirmative
defenses, offsets and counterclaims against Lessor, any right to the benefit of
any security or statute of limitations, and any requirement that Lessor proceed
first against a Lessee Affiliate or any collateral security. Until the
Guaranteed Obligations shall have been paid in full, Lessee shall have no right
of subrogation. In addition, Lessee shall have the right to assign its rights
with respect to any Lease or Financing, or sublease the Equipment leased
pursuant to any Lease or Financing, to any Lessee Affiliate without the consent
of Lessor; provided that any such sublease shall (i) expressly provide that the
sublessee's rights thereunder are subject and subordinate to the rights of
Lessor hereunder, and (ii) not contain any provisions which would constitute or
result in any Lessee Default hereunder. No such assignment or sublease shall
relieve Lessee of any of its obligations under the applicable Schedule or this
Master Agreement. Lessee shall promptly notify Lessor of any such assignment or
sublease and shall execute and deliver to Lessor or any Assignee, at Lessee's
expense, such documentation as Lessor or such Assignee may reasonably

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require, including documentation to evidence and put third parties on notice of
Lessor's or such Assignee's interest in the Equipment. Lessee may not assign,
transfer or otherwise dispose of this Master Agreement, any Lease or Financing,
any Equipment or any interest therein.

26. FURTHER ASSURANCES. Lessee agrees to promptly execute and deliver to
Lessor such further documents and take such further action as Lessor may require
in order to more effectively carry out the intent and purpose of this Master
Agreement and any Schedule. Without limiting the generality of the foregoing,
Lessee agrees (a) to furnish to Lessor from time to time, its certified
financial statements, officer's certificates and appropriate resolutions,
opinions of counsel and such other information and documents as Lessor may
reasonably request, and (b) to execute and timely deliver to Lessor any
financing statements or other documents that Lessor deems necessary to perfect
or protect Lessor's security interest in the Collateral or to evidence Lessor's
interest in the Equipment. If Lessee fails to execute any document referred to
in clause (b) of the preceding sentence, Lessor or Lessor's agent is hereby
authorized to sign and file the same as Lessee's agent. It is also agreed that
Lessor or Lessor's agent may file as a financing statement, any lease document
(or copy thereof, where permitted by law) that Lessor deems appropriate to
perfect or protect Lessor's security interest in the Collateral or to evidence
Lessor's interest in the Equipment. Upon demand, Lessee will promptly reimburse
Lessor for any filing or recordation fees or expenses (including legal fees and
costs) incurred by Lessor in perfecting or protecting its interests in the
Equipment.

27. TERM OF MASTER AGREEMENT; SURVIVAL. This Master Agreement shall commence
and be effective upon the execution hereof by both parties and shall continue in
effect until terminated by either party by 30 days' prior written notice to the
other. However, no termination of this Master Agreement pursuant to the
preceding sentence shall be effective with respect to any Lease or Financing
that commenced prior to such termination until the expiration or termination of
such Lease or Financing and the satisfaction by Lessee of all of its obligations
hereunder with respect thereto. All representations, warranties and covenants
made by Lessee hereunder shall survive the termination of this Master Agreement
and shall remain in full force and effect. All of Lessor's rights, privileges
and indemnities under this Master Agreement or any Lease or Financing, to the
extent they are fairly attributable to events or conditions occurring or
existing on or prior to the expiration or termination of such Lease or
Financing, shall survive such expiration or termination and be enforceable by
Lessor and Lessor's successors and assigns.

28. WAIVER OF JURY TRIAL. LESSEE AND LESSOR HEREBY EXPRESSLY WAIVE ANY RIGHT
TO DEMAND A JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY
LESSOR OR LESSEE IN CONNECTION WITH THIS MASTER AGREEMENT OR ANY FUNDAMENTAL
AGREEMENT.

29. NOTICES. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Master Agreement or any other
Fundamental Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally or mailed via certified mail or a nationally
recognized overnight courier service, or sent by confirmed facsimile
transmission, addressed as follows (or such other address or fax number as
either party shall so notify the other):

If to Lessor:
- ------------

Compaq Financial Services Corporation
100 Woodbridge Center Drive, Suite 202
Woodbridge, New Jersey 07095
Attn: Vice President, Operations and Credit
Fax: (888) 202-4271

Authorized Lessor E-mail Address:
[email protected]
- -------------------------------

If to Lessee:
- ------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
Attn:
--------------------------------------------------------------------------
Fax:
--------------------------------------------------------------------------

Authorized Lessee Representatives and Authorized Lessee E-mail Addresses:

- -------------------------------------------------------------------------------
Lessee Acceptance Confirmation Fax Number:
-------------------------------------

30. MISCELLANEOUS.
(a) Governing Law. THIS MASTER AGREEMENT AND EACH LEASE AND FINANCING SHALL BE
GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE
STATE OF NEW YORK.

(b) Consent to Jurisdiction. Lessor and Lessee consent to the jurisdiction of
any local, state or Federal court located within the State of New York, and
waive any objection relating to improper venue or forum non conveniens to the
conduct of any proceeding in any such court.

(d) Captions and References. The captions contained in this Master Agreement
and any Schedule are for convenience only and shall not affect the
interpretation of this Master Agreement. All references in this Master
Agreement to Sections and Exhibits refer to Sections hereof and Exhibits hereto
unless otherwise indicated.

(e) Entire Agreement; Amendments. This Master Agreement and all other
Fundamental Agreements executed by both Lessor and Lessee constitute the entire
agreement between Lessor and Lessee relating to the leasing of the Equipment and
the financing of Financed Items, and supersede all prior agreements relating
thereto, whether written or oral, and may not be amended or modified except in a
writing signed by the parties hereto.

(f) No Waiver. Any failure of either party to require strict performance by the
other party, or any written waiver by either party of any provision hereof,
shall not constitute consent or waiver of any other breach of the same or any
other provision hereof.

(g) Lessor Affiliates. Lessee understands and agrees that Compaq Financial
Services Corporation or any affiliate or subsidiary thereof may, as lessor,
execute Advance Pricing Agreements and Schedules under this Master Agreement, in
which event the terms and conditions of the applicable Advance Pricing Agreement
or Schedule and this Master Agreement as it relates to the lessor under such
Advance Pricing Agreement or Schedule shall be binding upon and shall inure to
the benefit of such entity executing such Advance Pricing Agreement or Schedule
as lessor, as well as any successors or assigns of such entity.

(h) Invalidity. If any provision of this Master Agreement or any Schedule shall
be prohibited by or invalid under law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Master Agreement
or such Schedule.

(i) Counterparts. This Master Agreement may be executed in counterparts, which
collectively shall constitute one document.

31. DEFINITIONS. All capitalized terms used in this Master Agreement have the
meanings set forth below or in the Sections of this Master Agreement referred to
below:

"Acceptance Date" means, as to any Lease or Financing, the date Lessee shall
have accepted the Equipment or Financed Items subject to such Lease or Financing
in accordance with Section 3.

"Advance Pricing Agreement" means an Advance Pricing Agreement executed by
Lessor and Lessee pursuant to Section 2.B.

"Advance Rent" means, as to any Lease, Rent paid by Lessee in advance of the
Acceptance Date for the related Equipment or otherwise intended to be treated as
"Advance Rent" under this Master Agreement and the applicable Schedule.

"Amount Available" has the meaning specified in an Advance Pricing Agreement.

"Assignee" means any assignee of all or any portion of Lessor's interest in
this Master Agreement, any Schedule or any Equipment, whether such assignee
received the assignment of such interest from Lessor or a previous assignee of
such interest.

"Casualty Loss" means, with respect to any Equipment, the condemnation,
taking, loss, destruction, theft or damage beyond repair of such Equipment.

"Casualty Value" means, as to any Equipment, an amount determined as of the
date of the Casualty Loss or Lessee Default in question pursuant to a "Table of
Casualty Values" attached to the applicable Schedule or, if no "Table of
Casualty Values" is attached to the applicable Schedule, an amount equal to the
sum of (i) the present value as of the date of the Casualty Loss or Lessee
Default in question (discounted at 5% per annum, compounded monthly) of all Rent
payments payable after such date through the scheduled date of expiration of the
Then Applicable Term, plus (ii) the present value as of the date of the Casualty
Loss or Lessee Default in question (discounted at 5% per annum, compounded
monthly, from the scheduled date of expiration of the Then Applicable Term) of
an amount determined by multiplying the applicable

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casualty percentage specified below by the Total Cost of such Equipment. The
applicable casualty percentage shall be 35% for Equipment having an Initial Term
of less than 24 months; 30% for Equipment having an Initial Term of 24 months or
greater, but less than 36 months; 25% for Equipment having an Initial Term of 36
months or greater, but less than 48 months; and 20% for Equipment having an
Initial Term of 48 months or greater.

"Claims" means all claims, actions, suits, proceedings, costs, expenses
(including, without limitation, court costs, witness fees and attorneys' fees),
damages, obligations, judgments, orders, penalties, fines, injuries, liabilities
and losses, including, without limitation, actions based on Lessor's strict
liability in tort.

"Code" means the Internal Revenue Code of 1986, as amended.

"Collateral" has the meaning specified in Section 24.

"Commitment Period" means the period during which Lessor will purchase
Equipment and fund Financed Items and enter into a Lease or Financing of the
same with Lessee pursuant to Section 2.B and an Advance Pricing Agreement at the
rates set forth in such Advance Pricing Agreement, which period shall be
specified in such Advance Pricing Agreement.

"Consolidating Schedule" has the meaning specified in Section 2.B(d).

"Consolidation Period" has the meaning specified in an Advance Pricing
Agreement.

"Daily Rent" means, as to any Lease or Financing, an amount equal to the per
diem Rent payable under the applicable Schedule (calculated on the basis of a
360 day year and 30 day months).

"End-of-Term Notice" means, as to any Lease, a written notice delivered by
Lessee to Lessor at least 90 days prior to the end of the Initial Term, any
Renewal Term or any optional extension of the Initial Term or any Renewal Term
setting forth Lessee's elections pursuant to Section 4 with respect to the
Equipment subject to such Lease. Each End-of-Term Notice shall specify with
particularity the Units of Equipment to be purchased by Lessee (if any), as to
which the Lease is to be renewed (if any) and that are to be returned to Lessor
(if any).

"Equipment Location" means, as to any Equipment, the address at which such
Equipment is located from time to time, as originally specified in the
applicable Schedule and as subsequently specified in a notice delivered to
Lessor pursuant to Section 11, if applicable.

"Equipment" has the meaning specified in Section 1.

"Fair Market Value" means the total price that would be paid for any specified
Equipment in an arm's length transaction between an informed and willing buyer
(other than a used equipment dealer) under no compulsion to buy and an informed
and willing seller under no compulsion to sell. Such total price shall not be
reduced by the costs of removing such Equipment from its current location or
moving it to a new location.

"Fair Rental Value" means the amount of periodic rent that would be payable
for any specified Equipment in an arm's length transaction between an informed
and willing lessee and an informed and willing lessor, neither under compulsion
to lease. Such amount shall not be reduced by the costs of removing such
Equipment from its current location or moving it to a new location.

"Final Invoice Amount" has the meaning set forth in Section 2.A (c).

"Financed Item" has the meaning specified in Section 1.

"Financing" has the meaning specified in Section 1.

"First Payment Date" means, as to any Lease or Financing, the date the first
Rent payment with respect to the Initial Term of such Lease or the Term of such
Financing (as applicable) is due, as determined pursuant to the terms of the
applicable Schedule.

"Fundamental Agreements" means, collectively, this Master Agreement, each
Advance Pricing Agreement, each Schedule and Acceptance Certificate and all
other related instruments and documents.

"Funding Date" means, with respect to any Financed Item, the date Lessor makes
funds available to the Seller of such Financed Item to pay for the same or to
Lessee to reimburse Lessee for its payment of the same.

"Guarantor" means any guarantor of all or any portion of Lessee's obligations
under this Master Agreement or any Lease or Financing.

"Hardware" means items of tangible equipment.

"Initial Term" means, as to any Lease, the initial term thereof as specified
in the related Schedule.

"Lease" has the meaning specified in Section 1.

"Lessee" has the meaning specified in the preamble hereof.

"Lessee Default" has the meaning specified in Section 21.

"Lessor" has the meaning specified in the preamble hereof.

"Lessor Default" has the meaning specified in Section 21.

"License Agreement" means any license agreement or other document granting the
purchaser the right to use Software or any technical information, confidential
business information or other documentation relating to Hardware or Software, as
amended, modified or supplemented by any other agreement between the licensor
and Lessor.

"Master Agreement" has the meaning specified in the preamble hereof.

"Material Agreements" means, collectively, all Fundamental Agreements, all
other material agreements by and between Lessor and Lessee, and any application
for credit, financial statement, or financial data required to be provided by
Lessee in connection with any Lease or Financing with lessor.

"Optional Additions" has the meaning specified in Section 12.

"PC Equipment" means, collectively, personal computers (e.g., workstations,
desktops and notebooks) and related items of peripheral equipment (e.g.,
monitors, printers and docking stations).

"Purchase Documents" means, as to any Equipment, any purchase order, contract,
bill of sale, License Agreement, invoice and/or other documents that Lessee has,
at any time, approved, agreed to be bound by or entered into with any Supplier
of such Equipment relating to the purchase, ownership, use or warranty of such
Equipment.

"Renewal Agreement" has the meaning specified in Section 4.

"Renewal Term" has the meaning specified in Section 4.

"Rent" has the meaning specified in Section 5.

"Schedule" means, unless the context shall otherwise require (a) in the case
of a Lease or Financing commenced pursuant to Section 2.A, a Schedule executed
by Lessor and Lessee pursuant to Section 2.A(a), and (b) in the case of a Lease
or Financing commenced pursuant to Section 2.B, (i) prior to Lessee's execution
and delivery to Lessor of a Consolidating Schedule pursuant to Section 2.B(d)
relating to such Lease or Financing, the applicable Certificate of Acceptance
together with the applicable Advance Pricing Agreement, and (ii) from and after
Lessee's execution and delivery to Lessor of a Consolidating Schedule pursuant
to Section 2.B(d) relating to such Lease or Financing, such Consolidating
Schedule.

"Seller" means, as to any Equipment, the seller of such Equipment, and as to
any Financed Item, the provider thereof, in either case as specified in the
applicable Schedule.

"Software" means copies of computer software programs owned or licensed by
Lessor.

"Stipulated Loss Value" means, as to any Equipment, an amount equal to the sum
of (i) all Rent and other amounts due and owing with respect to such Equipment
as of the date of payment of such amount, plus (ii) the Casualty Value of such
Equipment.

"Substitute Equipment" means, as to any item of Hardware or Software subject
to a Lease, a substantially equivalent or better item of Hardware or Software
having equal or greater capabilities and equal or greater Fair Market Value
manufactured or licensed by the same manufacturer or licensor as such item of
Hardware or Software subject to a Lease. The determination of whether any item
of Equipment is substantially equivalent or better than an item of Equipment
subject to a Lease shall be based on all relevant facts and circumstances, but
shall minimally require, in the case of a computer, that each of processor,
hard-drive, random access memory and CD ROM drive, if applicable, be equivalent
or better.

"Supplier" means (a) as to any Equipment, the Seller and the manufacturer or
licensor of such Equipment collectively, or where the context requires, any of
them, and (b) as to any Financed Item, the Seller thereof.

"System Software" means an item of Software that is pre-loaded on an item of
Hardware purchased by Lessor for lease hereunder for which the relevant Purchase
Documents specify no purchase price separate from the aggregate purchase price
specified for such items of Hardware and Software.

"Taxes" means all license and registration fees and all taxes, fees, levies,
imposts, duties, assessments, charges and withholding of any nature whatsoever,
however designated (including, without limitation, any value added, transfer,
sales, use, gross receipts, business, occupation, excise, personal property,
real property, stamp or other taxes).

"Tax Benefits" has the meaning specified in Section 17.

"Tax Loss" has the meaning specified in Section 17.

"Term" means, as to any Financing, the term thereof as specified in the
related Schedule.

"Then Applicable Term" means, as to any Lease, the term of the Lease in effect
at the time of determination, whether it be the Initial Term, any Renewal Term
or any optional or other automatic extension of the Initial Term or any Renewal
Term pursuant to Section 4.

"Total Cost" means (a) as to any Lease, the total acquisition cost to Lessor
of the Equipment subject to such Lease as set forth in the applicable Purchase
Documents, including related delivery, installation, taxes and other charges
which Lessor has agreed to pay and treat as a portion of such acquisition cost,
if any, and (b) as to any Financing, the total amount of the Financed Items
subject to such Financing.

"Total Term" means, as to any Lease, the aggregate term of such Lease,
including the Initial Term, any Renewal Term and any optional or other automatic
extension of the Initial Term or any Renewal Term pursuant to Section 4.

8
<PAGE>

"UCC" means the Uniform Commercial Code as enacted and in effect in any
applicable jurisdiction.

"Unit of Equipment" means, as to the Equipment leased pursuant to any Schedule
(a) each individual item of PC Equipment leased pursuant to such Schedule, and
(b) all Equipment leased pursuant to such Schedule other than PC Equipment taken
as a whole.

"Valid E-mail Acceptance Certificate" has the meaning specified in Section
3(b).

32. Lessee acknowledges that neither this Master Agreement nor any other
Fundamental Agreement may be amended or modified except by a writing signed by
Lessor and Lessee. Lessee Initials: _________________.

IN WITNESS WHEREOF, LESSOR AND LESSEE HAVE EXECUTED THIS MASTER AGREEMENT ON THE
DATES SPECIFIED BELOW.

LESSOR:

COMPAQ FINANCIAL SERVICES CORPORATION

BY:
-----------------------------------

-----------------------------------
Name and Title

-----------------------------------
Date

LESSEE:

ALTAVISTA COMPANY

BY:
-----------------------------------

-----------------------------------
Name and Title

-----------------------------------
Date

<PAGE>

EXHIBIT 10.21

AMENDMENT NUMBER 1 TO MASTER LEASE AND FINANCING AGREEMENT

THIS AMENDMENT NUMBER 1 TO MASTER LEASE AND FINANCING AGREEMENT (this
"Amendment") is dated as of this ____ day of January, 2000, by and between
Compaq Financial Services Corporation, a Delaware corporation ("Lessor"), and
AltaVista Company, a Delaware corporation ("Lessee").

WITNESSETH:
WHEREAS:

A. Lessor and Lessee have entered into that certain Master Lease and
Financing Agreement Number 100749 dated November 24, 1999 (the "Master
Agreement") pursuant to which Lessor is willing to purchase and lease to Lessee,
certain equipment listed on Schedules thereto executed by Lessor and Lessee from
time to time. Capitalized terms used in this Amendment without definition have
the meanings assigned to them in the Master Agreement to which this Amendment is
attached and hereby made part thereof.

B. Lessee has requested, and Lessor has agreed to, certain modifications
to the Master Agreement.

C. The parties are entering into this Amendment for the purposes of
effecting such modifications.

NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Modifications to Master Agreement.
----------------------------------

(A) Exhibit A.

The last sentence of Section 3 shall be deleted.

(B) Exhibit B.

(a) The last sentence of Section 4 shall be deleted.
(b) The last sentence of Section 5 shall be deleted.

The last sentence of Section 4 shall be deleted.

(2) Definitions. Unless otherwise defined herein, words and expressions
-----------
defined in the Master Agreement, as amended hereby, shall bear the same
meanings when used herein.

(3) No Other Amendment. All other terms and conditions of the Master Agreement
------------------
and any applicable Schedule shall remain in full force and effect and the
Lease shall be read and construed as if the terms of this Amendment were
included therein.
<PAGE>

(4) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers, and delivered the day and
year first written above.

LESSEE: LESSOR:
ALTAVISTA COMPANY COMPAQ FINANCIAL SERVICES
CORPORATION

By:__________________________ By:_____________________________
Name: _______________________ Name: __________________________
Title: ______________________ Title: _________________________

<PAGE>

EXHIBIT 16.1

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We have read the statements made by AltaVista pursuant to Item 11 (i) of Form
S-1 contained in the second paragraph in the section entitled "Experts" of the
Company's Registration Statement on Form S-1 dated December 17, 1999. We agree
with the statements concerning our Firm in such Form S-1.

Very truly yours,

PRICEWATERHOUSECOOPERS LLP

San Jose, California
March 8, 2000

<PAGE>

Exhibit 23.1

The Board of Directors
The AltaVista Business:

The audits referred to in our report dated February 22, 2000, included the
related financial statement schedule as of July 31, 1999, and for the seven-
month period then ended, and as of August 18, 1999, included in the
registration statement. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits. In our
opinion, such financial statement schedule, when considered in relation to the
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

San Francisco, California

March 9, 2000

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in this Amendment No. 3 of AltaVista Company
on Form S-1 of our report, dated June 17, 1997, except for Note 6, for which
the date is June 9, 1999, relating to the financial statements of
Shopping.com. We also consent to the reference to our Firm under the caption
"Experts" in the prospectus, which is part of this Registration Statement.

/s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Singer Lewak Greenbaum & Goldstein LLP

Los Angeles, California

March 9, 2000

<PAGE>

Exhibit 23.3

Consent of Independent Accountants

We hereby consent to the use in this Amendment No. 3 to the Registration
Statement on Form S-1 of our reports dated as follows:

. June 29, 1999 relating to financial statements and financial statement
schedule of AltaVista,

. April 2, 1999 relating to the financial statements of Zip2 Corporation, and

. June 9, 1999, except as to Note 12, which is as of July 2, 1999, relating
to the financial statements of Shopping.com

which appear in such Registration Statement. We also consent to the references
to us under the headings "Experts" and "Selected Financial Data" in such
Registration Statement.

PricewaterhouseCoopers LLP

San Jose, California

March 8, 2000