SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A)
(AMENDMENT NO. _____)*
Yahoo! Inc.
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(Name of Issuer)
Common Stock, par value $0.00067 per share
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(Title of Class of Securities)
984332-10-6
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(CUSIP Number)
Timothy Koogle
President and CEO
Yahoo! Inc.
3420 Central Expressway, Suite 201
Santa Clara, California 95051
(408) 731-3300
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 14, 1998
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(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(continued on following pages)
(Page 1 of 15 Pages)
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CUSIP NO. 984332-10-6 13D Page 2 of 15 Pages
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1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFTBANK Holdings Inc. I.R.S. Identification No.
95-446-7445
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 14,816,282
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 14,816,282
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
14,816,282
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.74%
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14. TYPE OF REPORTING PERSON
HC, CO
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Page 2 of 15 Pages
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CUSIP NO. 984332-10-6 13D Page 3 of 15 Pages
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1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFTBANK Corp. I.R.S. Identification No. N/A
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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7. SOLE VOTING POWER
NUMBER OF (indirectly through SOFTBANK Holdings Inc.)
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON (indirectly through SOFTBANK Holdings Inc.)
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
(indirectly through SOFTBANK Holdings Inc.)
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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14. TYPE OF REPORTING PERSON
HC, CO
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Page 3 of 15 Pages
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CUSIP NO. 984332-10-6 13D Page 4 of 15 Pages
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1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MAC Inc. I.R.S. Identification No. N/A
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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7. SOLE VOTING POWER
NUMBER OF (indirectly through SOFTBANK Holdings Inc. and
SHARES SOFTBANK Corp.)
BENEFICIALLY -----------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH (indirectly through SOFTBANK Holdings Inc. and
SOFTBANK Corp.)
-----------------------------------------------------
10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
(indirectly through SOFTBANK Holdings Inc.
and SOFTBANK Corp.)
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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14. TYPE OF REPORTING PERSON
HC, CO
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Page 4 of 15 Pages
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CUSIP NO. 984332-10-6 13D Page 5 of 15 Pages
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1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Masayoshi Son I.R.S. Identification No. N/A
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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7. SOLE VOTING POWER
NUMBER OF (indirectly through SOFTBANK Holdings Inc.,
SHARES SOFTBANK Corp. and MAC Inc.)
BENEFICIALLY -----------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH (indirectly through SOFTBANK Holdings Inc.,
SOFTBANK Corp. and MAC Inc.)
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10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
(indirectly through SOFTBANK Holdings Inc.,
SOFTBANK Corp. and MAC Inc.)
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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14. TYPE OF REPORTING PERSON
IN
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Page 5 of 15 Pages
The summary descriptions contained in this Statement of certain
agreements and documents are qualified in their entirety by reference to the
complete texts of such agreements and documents filed as Exhibits hereto and
incorporated herein by reference.
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common Stock, par value
$0.00067 per share (the "Common Stock"), of Yahoo! Inc., a Delaware corporation
(the "Issuer"). The principal executive offices of the Issuer are located at
3420 Central Expressway, Suite 201, Santa Clara, California 95051.
Item 2. Identity and Background.
Item 2(a) through Item 2(c), Item 2(f)
This statement on Schedule 13D is being filed by SOFTBANK Holdings
Inc., a Delaware corporation ("SBH"), SOFTBANK Corp., a Japanese corporation
("Softbank"), MAC Inc., a Japanese corporation ("MAC"), and Mr. Masayoshi Son, a
Japanese citizen, with respect to the Common Stock beneficially owned directly
by SBH and indirectly by Softbank, MAC and Mr. Son.
The Issuer is an Internet media company that offers a network of
globally-branded properties, specialty programming, and aggregated content
distributed primarily on the World Wide Web (the "Web") serving business
professionals and consumers and is among the most widely used guides for
information and discovery on the Web. Under the "Yahoo!" brand, the Company
provides intuitive, context-based guides to online content, Web search
capabilities, aggregated third-party content and community and personalization
features. The Issuer was originally incorporated on March 5, 1995 under the laws
of California.
SBH is a wholly-owned subsidiary of Softbank, which, as of December 31,
1997, was 50.2% owned by Mr. Son, its President, including 43.4% directly held
by Mr. Son's wholly-owned holding company, MAC. The principal business of SBH is
to serve as a holding company for U.S. operations and investments of Softbank.
Softbank's principal businesses include the provision of information and
distribution services as infrastructure for the digital information industry,
the distribution of computer software and the publication of Japanese computer
technology magazines. MAC was formed, and continues its principal business, as a
wholly-owned holding company of Mr. Son.
Annexes A-1, A-2 and A-3 hereto set forth, with respect to each
executive officer and director of SBH, Softbank and MAC, respectively, the
following information: (a) name, (b) residence or business address, (c) present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted,
and (d) citizenship.
(Page 6 of 15 Pages)
Item 2(d) and Item 2(e)
None of SBH, Softbank, MAC or Mr. Son, nor, to the best knowledge and
belief of SBH, Softbank and MAC, any of their respective executive officers or
directors, has during the last five years been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The funds SBH used to make payments for the purchase of the Common
Stock came from working capital. None of the persons listed in the Annexes
hereto contributed any funds or other consideration towards the purchase of the
Common Stock.
Item 4. Purpose of the Transaction.
The Common Stock may be regarded, for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as being beneficially owned by each of SBH,
Softbank, MAC and Mr. Son. SBH acquired 1,363,440 shares of the Common Stock in
a private transaction with the Issuer (the "Private Placement") pursuant to a
Stock Purchase Agreement dated July 7, 1998 between SBH (the "Stock Purchase
Agreement") which is filed as an exhibit hereto and is incorporated by reference
into this Item 4.
As of the date of the filing of this statement, none of SBH, Softbank,
MAC or Mr. Son, nor, to the best knowledge and belief of SBH, Softbank and MAC,
any of their respective executive officers or directors, has any other plan or
proposal which relates to or would result in any of the actions set forth in
parts (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of the date of the filing of this statement, SBH beneficially
owns, and Softbank, MAC and Mr. Son beneficially own indirectly through SBH,
14,816,282 shares of Common Stock, representing approximately 30.72% of the
shares of Common Stock reported to be outstanding as of July 15, 1998. The
percentage of shares of Common Stock beneficially owned by SBH, and indirectly
beneficially owned by Softbank, MAC and Mr. Son through SBH, is based on the
number of shares of Common Stock as reported in the Issuer's Form 10-Q as filed
with the Securities and Exchange Commission (the "SEC") on July 17, 1998 and
which is attached as an exhibit hereto and is hereby incorporated by reference
into this Item 5.
(Page 7 of 15 Pages)
(b) SBH has, and Softbank, MAC and Mr. Son have indirectly through SBH,
power to vote or direct the vote and to dispose or direct the disposition of all
shares of Common Stock beneficially owned by it.
(c) Except as described in this Schedule 13D, none of SBH, Softbank,
MAC or Mr. Son, nor, to the best knowledge and belief of SBH, Softbank, MAC and
Mr. Son, any of their respective executive officers or directors, has effected
any transaction in the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Softbank and the Issuer entered into a Second Amended and Restated
Investor Rights Agreement, dated as of March 12, 1996 (the "Investor Rights
Agreement"), which is filed as an exhibit hereto and is incorporated by
reference into this Item 6. The Investor Rights Agreement provides Softbank with
the right to require the Issuer to register any or all of the Common Stock held
by it in a public offering pursuant to the Securities Act of 1933, as amended
(the "Securities Act"). Such registration is subject to the right of the Issuer
to delay any exercise by Softbank of this right for a period of up to 180 days
if, in the Issuer's judgment, the Issuer or any financing, acquisition,
corporate reorganization or other material transaction by the Issuer or any of
its subsidiaries then being conducted or about to be conducted would be
adversely affected. Pursuant to the Investor Rights Agreement, Softbank also has
the right to "piggyback" or include its Common Stock in any registration of
Common Stock made by the Issuer. The Amendment to Second Amended and Restated
Investor Rights Agreement dated July 7, 1998, which is filed as an exhibit
hereto and is incorporated by reference into this Item 6, specifically includes
the shares purchased pursuant to the Stock Purchase Agreement in the rights
granted to Softbank under the Investor Rights Agreement.
All expenses, other than underwriters' discounts and commissions and
fees and disbursements of counsel to such underwriters, incurred in connection
with such demand or piggyback registration pursuant to the Investor Rights
Agreement are to be paid by the Issuer. The Issuer agreed to indemnify and hold
harmless Softbank, its officers, directors, employees, partners, shareholders
agents, any underwriter, selling broker, dealer manager and similar securities
industry professionals participating in the distribution, and each person
controlling any of the foregoing, against certain liabilities under the
Securities Act or the securities laws of any state or country in which
securities of the Issuer are sold pursuant to the Investor Rights Agreement.
(Page 8 of 15 Pages)
Eric Hippeau is a Director of the Issuer and Ziff-Davis, Inc., an
affiliate of SBH.
Except as described in this Schedule 13D, or in the exhibits hereto,
none of SBH, Softbank, MAC or Mr. Son, nor, to the best knowledge and belief of
SBH, Softbank, MAC and Mr. Son, any of their respective directors or executive
officers, is a party to any other contract, arrangement, understanding or
relationship with respect to any securities of the Issuer.
Item 7. Material to be filed as Exhibits.
1. Stock Purchase Agreement, dated July 7, 1998 between the Issuer and
SOFTBANK Holdings, Inc.
2. Form 10-Q of Yahoo! Inc. filed on July 17, 1998.
3. Second Amended and Restated Investor Rights Agreement, dated as
of March 12, 1996, among Yahoo! Inc., and the Purchasers (as defined
therein).
4. Amendment to Second Amended and Restated Investor Rights
Agreement, dated as of July 7, 1998, between Yahoo! Inc. and the
Holders (as defined therein).
(Page 9 of 15 Pages)
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 24, 1998
SOFTBANK HOLDINGS INC.
By: /s/ Masayoshi Son
-------------------------------------
Masayoshi Son
Chairman
SOFTBANK CORP.
By: /s/ Masayoshi Son
-------------------------------------
Masayoshi Son
President and CEO
MAC INC.
By: /s/ Masayoshi Son
-------------------------------------
Masayoshi Son
President
MASAYOSHI SON
/s/ Masayoshi Son
----------------------------------------
Masayoshi Son
(Page 10 of 15 Pages)
ANNEX A-1
The name, position and present principal occupation of each director and
executive officer of SOFTBANK Holdings Inc. are set forth below.
The business address for each of the executive officers and directors listed
below is SOFTBANK Holdings Inc., 10 Langley Road, Suite 403, Newton Center, MA
02159.
All executive officers and directors listed below are United States citizens,
except Mr. Son and Yoshitaka Kitao, who are citizens of Japan.
Name Position Present Principal Occupation
- ------------------- ----------------------------- ----------------------------
Masayoshi Son Chairman, President and President and Chief Executive
Director Officer of SOFTBANK Corp.
Yoshitaka Kitao Director Executive Vice President and
Chief Financial Officer of
SOFTBANK Corp.
Ronald D. Fisher Vice Chairman Vice Chairman of SOFTBANK
Holdings Inc.
Gary Rieschal Senior Vice President Managing Partner, SOFTBANK
Technology Ventures
Stephen A. Grant Secretary Partner, Sullivan & Cromwell
Thomas L. Wright Vice President and
Treasurer
Louis DeMarco Vice President - Tax
Charles R. Lax Vice President
(Page 11 of 15 Pages)
ANNEX A-2
The name, position and present principal occupation of each director and
executive officer of SOFTBANK Corp. are set forth below.
The business address for each of the executive officers and directors listed
below is SOFTBANK Corp., 24-1 Nihonbashi-Hakozakicho, Chuo-Ku, Tokyo 103-8501,
Japan.
All executive officers and directors listed below are Japanese citizens, except
Ronald D. Fisher and Eric Hippeau, who are citizens of the United States.
Name Position Present Principal Occupation
- ------------------- ----------------------------- ----------------------------
Masayoshi Son President, President and Chief Executive
Chief Executive Officer Officer of SOFTBANK Corp.
and Director
Yoshitaka Kitao Executive Vice President, Executive Vice President and
Chief Financial Officer and Chief Financial Officer of
Director SOFTBANK Corp.
Ken Miyauchi Executive Vice President, Executive Vice President,
Software & Network Software & Network Products
Products Division and Division of SOFTBANK Corp.
Director
Makoto Okazaki Executive Vice President, Executive Vice President,
Publishing Division and Publishing Division of
Director SOFTBANK Corp.
Norikazu Ishikawa Executive Vice President, Executive Vice President,
Human Resources & Human Resources & General
General Affairs Division Affairs Division of SOFTBANK
and Director Corp.
Takashi Eguchi Director President, Chief Executive Officer
of PASONA SOFTBANK Inc.
Masahiro Inoue Director President, Chief Executive Officer
of Yahoo Japan Corporation
(Page 12 of 15 Pages)
Ronald D. Fisher Director Vice Chairman of SOFTBANK
Holdings Inc.
Eric Hippeau Director Chairman and Chief Executive
Officer, Ziff-Davis Inc.
Mitsuo Sano Full-Time Corporate Full-Time Corporate Auditor of
Auditor SOFTBANK Corp.
Katsura Sato Corporate Auditor Corporate Auditor of SOFTBANK
Corp.
Saburo Kobayashi Corporate Auditor Full-Time Corporate Auditor of
Heiwa Corporation
Hidekazu Kubokawa Corporate Auditor Certified Public Accountant,
Licensed Tax Accountant
(Page 13 of 15 Pages)
ANNEX A-3
The name, position and present principal occupation of each director and
executive officer of MAC Inc. are set forth below.
The business address for each of the executive officers and directors listed
below is 4-3-2 Toranomon, Minato-Ku, Tokyo (105-0001).
All executive officers and directors listed below are Japanese citizens.
Name Position Present Principal Occupation
- ------------------- ----------------------------- ----------------------------
Masayoshi Son President President and Chief Executive
Officer of SOFTBANK Corp.
(Page 14 of 15 Pages)
EXHIBIT INDEX
Edgar
Exhibit Description Exhibit No.
- ------- ----------- -----------
1 Stock Purchase Agreement, dated July 7, 1998 4.1
between the Issuer and SOFTBANK Holdings, Inc.
2 Form 10-Q of Yahoo! Inc. filed on July 17, 1998. --
3 Second Amended and Restated Investor Rights 4.2
Agreement, dated as of March 12, 1996, among
Yahoo! Inc., and the Purchasers (as defined
therein).
4 Amendment to Second Amended and Restated Investor 4.3
Rights Agreement, dated as of July 7, 1998,
between Yahoo! Inc. and the Holders (as defined
therein).
(Page 15 of 15 Pages)
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STOCK PURCHASE AGREEMENT
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by and between
YAHOO! INC.
(the "COMPANY")
and
SOFTBANK HOLDINGS INC.
(the "PURCHASER")
Dated as of July 7, 1998
YAHOO! INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of July 7,
1998, by and among YAHOO! INC., a California corporation (the "COMPANY"), and
SOFTBANK Holdings Inc., a Delaware corporation (the "PURCHASER").
THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
AUTHORIZATION AND SALE OF STOCK
Section 1.1 Authorization of the Shares. On or before the Closing Date
(as defined in Section 2.1 below), the Company will have authorized the issuance
and sale of 1,363,440 shares of Common Stock of the Company, par value $0.00067
per share (the "SHARES"), pursuant to this Agreement.
Section 1.2 Sale of the Shares. Subject to the terms and conditions
hereof, on the Closing Date the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, the Shares at a purchase price
of $183.36 per share for a total purchase price of $250,000,358.40.
ARTICLE II
CLOSING DATE; DELIVERY
Section 2.1 Closing Date. The consummation of the purchase and sale of
the Shares hereunder (the "CLOSING") shall be held at the offices of Venture Law
Group, A Professional Corporation, 2800 Sand Hill Road, Menlo Park, California
94025 at 10:00 a.m., on July 14, 1998 or at such other time and place as the
Company and the Purchaser mutually agree upon in writing (the "CLOSING DATE").
Section 2.2 Delivery. At the Closing, the Purchaser shall deliver
payment of the purchase price for the Shares by check or by wire transfer.
Within three (3) days after the Closing Date, the Company shall deliver to the
Purchaser certificate(s) representing the Shares.
Section 2.3 Consummation of Closing. All acts, deliveries and
confirmations comprising the Closing regardless of chronological sequence shall
be deemed to occur contemporaneously and simultaneously upon the occurrence of
the last act, delivery or confirmation of the Closing and none of such acts,
deliveries or confirmations shall be effective unless and until the last of same
shall have occurred.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, at and as
of the date of this Agreement and at and as of the Closing Date, as follows:
Section 3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power to own, lease and operate its property and
to carry on its business as now being conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the failure to be so qualified or licensed would have a material adverse effect
on the business, assets (including intangible assets), liabilities, condition
(financial or otherwise), prospects, property or results or operations (a
"MATERIAL ADVERSE EFFECT") of the Company.
Section 3.2 Valid Issuance of Common Stock. The Shares, when issued and
paid for in accordance with this Agreement will be duly authorized, validly
issued, fully paid, and non-assessable and issued in compliance with all
applicable federal or state securities laws.
Section 3.3 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company, and constitutes
the valid and binding obligation of the Company, enforceable in accordance with
its terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
(b) The execution and delivery by the Company of this Agreement
does not, and consummation of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of any
provision of the Articles of Incorporation or Bylaws of the Company, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which the
Company is a party or by which any of its properties or assets may be bound, or
(iii) conflict or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its properties or assets, except in the case of (ii) and (iii)
for any such conflicts, violations, defaults, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state
-2-
securities laws and the laws of any foreign country, and (iii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, could be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
Section 3.4 Commission Filings; Financial Statements.
(a) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") and made available to the Purchaser or its
representatives all forms, reports and documents required to be filed by the
Company with the Commission since December 31, 1997 (collectively, the "COMPANY
COMMISSION REPORTS"). The Company Commission Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, (the "SECURITIES ACT"), and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the financial statements (including, in each case, any
related notes) contained in the Company Commission Reports, including any such
Report filed after the date of this Agreement until the Closing, complied as to
form in all material respects with the applicable published rules and
regulations of the Commission with respect thereto, was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the Commission) and fairly presented the consolidated financial
position of the Company and its subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
Section 3.5 Compliance with Laws. The Company has complied with, is not
in violation of, and has not received any notices of violation with respect to,
any federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business,
including but not limited to statutes, laws or regulations relating to the
protection of the environment or concerning the handling, storage, disposal or
discharge of toxic materials (collectively, "ENVIRONMENTAL LAWS"), except for
failures to comply or violations which would not have a Material Adverse Effect
on the Company and its subsidiaries, taken as a whole.
Section 3.6 Shareholders Consent. No consent or approval of the
shareholders of the Company is required or necessary for the Company to enter
into this Agreement or to consummate the transactions contemplated hereby and
thereby.
Section 3.7 Litigation. Except as otherwise disclosed in the Company
Commission Reports, (i) there is no private or governmental action, suit,
proceeding, claim, arbitration or
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investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the knowledge of the Company or any of its subsidiaries, threatened
against the Company or any of its properties or any of its officers or directors
(in their capacities as such), which, if determined adversely to the Company,
would have a Material Adverse Effect on the Company and its subsidiaries, taken
as a whole, and (ii) there is no judgment, decree or order against the Company,
or, to the knowledge of the Company, any of its respective directors or officers
(in their capacities as such) relating to the business of the Company, the
presence of which would have Material Adverse Effect with respect the Company
and its subsidiaries, taken as a whole.
Section 3.8 Intellectual Property. Except as disclosed in the Company
Commission Reports, the Company owns or possesses, or can acquire on
commercially reasonable terms, adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights, technology,
software, know-how and trade secrets necessary to conduct the business now or
proposed to be conducted by the Company, and the Company has not received any
notice of infringement of or conflict with (and knows of no such infringement of
or conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights, technology, know-how or
trade secrets that would result in a Material Adverse Effect; and, to the
Company's knowledge, the discoveries, inventions, products, services or
processes used in the Company's business do not, infringe or conflict with any
right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
which infringement or conflict would result in a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company, at and as
of the date of this Agreement and at and as of the Closing, as follows:
Section 4.1 Authority. The Purchaser is a corporation and is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Purchaser has now, and will have at the Closing Date, all
requisite legal and corporate power to enter into this Agreement, to purchase
the Shares hereunder, and to perform its obligations under the terms of this
Agreement.
Section 4.2 Authorization. All corporate action on the part of the
Purchaser necessary for the purchase of the Shares and the performance of the
Purchaser's obligations hereunder has been taken or will be taken prior to the
Closing Date. This Agreement when executed and delivered by the Purchaser will
constitute a valid and legally binding obligation of the Purchaser, enforceable
in accordance with its terms, except as enforcement may be limited by applicable
bankruptcy laws or other similar laws affecting creditors' rights generally, and
except insofar as the availability of equitable remedies may be limited.
Section 4.3 Purchase Entirely for Own Account. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the
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Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the
Shares to be acquired by the Purchaser will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Shares. The Purchaser has not been formed for the specific purpose of acquiring
the Shares.
Section 4.4 Investment Experience. Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Purchaser is aware
of the Company's business affairs and financial condition and has had access to
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Shares. Purchaser has such business
and financial experience as is required to give it the capacity to protect its
own interests in connection with the purchase of the Shares. Purchaser is not a
"broker" or a "dealer" as defined in the Exchange Act
Section 4.5 Restricted Securities. The Purchaser understands that the
Shares are characterized as "restricted securities" under applicable U.S.
federal and state securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that, pursuant to
these laws and applicable regulations, the Purchaser must hold the Shares
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, and
on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy. In this connection, Purchaser represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
Section 4.6 Legends. The Purchaser understands that the Shares, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
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(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Purchaser's Obligations. The obligation
of the Purchaser to purchase the Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Article
III hereof shall be true and correct when made, and shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of such date, subject to changes contemplated by this Agreement; and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing Date.
(b) Compliance Certificate. The President of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Section 5.1(a) have been fulfilled and stating that
there shall have been no material adverse change in the business, operations,
properties, assets or financial condition of the Company since the date of this
Agreement.
(c) Opinion of Company's Counsel. The Purchaser shall have
received from Venture Law Group, A Professional Corporation, counsel to the
Company, an opinion addressed to the Purchaser, dated the Closing Date,
substantially in the form of Exhibit A attached hereto.
(d) Qualifications. The offer and sale of the Shares to the
Purchaser pursuant to this Agreement shall be exempt from qualification under
the California Corporate Securities Law of 1968, as amended. All other
authorizations, approvals or permits of any other governmental authority that
are required in connection with the lawful issuance and sale of the Shares shall
have been duly obtained and shall be effective on and as of the Closing Date.
(e) Registration Rights. The Second Amended and Restated Investor
Rights Agreement dated March 12, 1996 shall have been amended to include the
Shares as Registrable Securities (as defined therein).
Section 5.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties of the Purchaser in Article IV
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of such date; and the Purchaser shall have performed all obligations and
conditions herein required to be performed by it on or prior to the Closing
Date.
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(b) Qualifications. The offer and sale of the Shares to the
Purchaser pursuant to this Agreement shall be exempt from qualification under
the California Corporate Securities Law of 1968, as amended. All other
authorizations, approvals or permits of any other governmental authority that
are required in connection with the lawful issuance and sale of the Shares shall
have been duly obtained and shall be effective on and as of the Closing Date.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California.
Section 6.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
Section 6.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
Section 6.4 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement among the parties with regard to the subjects hereof and thereof.
Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Purchaser.
Section 6.5 Notices and Other Communications. Every notice or other
communication required or contemplated by this Agreement by either party shall
be delivered either by (i) personal delivery, (ii) postage prepaid return
receipt requested registered or certified mail or the equivalent of registered
or certified mail under the laws of the country where mailed, (iii) nationally
recognized overnight courier, such as Federal Express or UPS, or (iv) facsimile
with a confirmation copy sent simultaneously by postage prepaid, return receipt
requested, registered or certified mail, in each case addressed to the Company
or the Purchaser as the case may be at the following address:
To the Company: Yahoo! Inc.
3420 Central Expressway
Santa Clara, CA 95051
Attn: Timothy Koogle
Facsimile: (408) 731-3301
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With a copy at the same address to the attention of the General
Counsel and Secretary, and a copy to:
Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, California 94025
Attn.: James L. Brock
Facsimile: (415) 233-8386
To the Purchaser: SOFTBANK Holdings Inc.
10 Langley Road, Suite 403
Newton Center, MA 02159
Attn: Ronald D. Fisher
Facsimile: (617) 928-9301
With a copy to: Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attn: Stephen A. Grant
Facsimile: (212) 558-3588
or at such other address as the intended recipient previously shall have
designated by written notice to the other party (with copies to counsel as may
be indicated on the signature page). Notice by registered or certified mail
shall be effective on the date it is officially recorded as delivered to the
intended recipient by return receipt or equivalent, and in the absence of such
record of delivery, the effective date shall be presumed to have been the fifth
(5th) business day after it was deposited in the mail. All notices delivered in
person or sent by courier shall be deemed to have been delivered to and received
by the addressee and shall be effective on the date of personal delivery;
notices delivered by facsimile with simultaneous confirmation copy by registered
or certified mail shall be deemed delivered to and received by the addressee and
effective on the date sent. Notice not given in writing shall be effective only
if acknowledged in writing by a duly authorized representative of the party to
whom it was given.
Section 6.6 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent
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specifically set forth in such writing. All remedies either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
Section 6.7 Separability of Agreements; Severability of this Agreement.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 6.8 Finder's Fees.
(a) The Company (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchaser harmless
of and from any liability for commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company, or any of its employees or representatives, is responsible.
(b) The Purchaser (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Company harmless
of and from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Purchaser, or any of its employees or representatives, is responsible.
Section 6.9 California Corporate Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
Section 6.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party. Such facsimile copies shall constitute enforceable original
documents.
Section 6.11 Attorneys' Fees. If any action or proceeding shall be
commenced to enforce this Agreement or any right arising in connection with this
Agreement, the prevailing party in such action or proceeding shall be entitled
to recover from the other party, the reasonable attorneys' fees, costs and
expenses incurred by such prevailing party in connection with such action or
proceeding or negotiation to avoid such action or proceeding.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth in the heading hereof.
YAHOO! INC.
By: /s/ TIMOTHY KOOGLE
--------------------------------------
Timothy Koogle, President & CEO
SOFTBANK HOLDINGS INC.
By: /s/ RONALD D. FISHER
--------------------------------------
Ronald D. Fisher, Vice Chairman
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EXHIBIT A
LEGAL OPINION
YAHOO! INC.
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
March 12, 1996
TABLE OF CONTENTS
Page
----
Section 1..................................................................Amendment 1
1.1................................................................Procedure 1
1.2........................................................Rights of Holders 2
Section 2........................................................Registration Rights 2
2.1..............................................................Definitions 2
2.2...................................................Requested Registration 3
2.3.....................................................Company Registration 4
2.4...............................................Obligations of the Company 4
2.5......................................................Furnish Information 6
2.6..............Expenses of Requested Registration and Company Registration 6
2.7................................................Underwriting Requirements 6
2.8.................................................No Delay of Registration 7
2.9..........................................................Indemnification 7
2.10...........................Reports Under Securities Exchange Act of 1934 9
2.11...................................................Form S-3 Registration 9
2.12.......................................Assignment of Registration Rights 10
2.13....................................... ...."Market Stand-Off" Agreement 11
2.14......................................Termination of Registration Rights 11
Section 3......................................................Financial Information 11
3.1.........................................Annual and Quarterly Information 11
3.2...................................................Additional Information 12
3.3...............................................................Inspection 12
3.4............................Transfer of Information and Inspection Rights 12
3.5.................................................Termination of Covenants 13
Section 4..........................................................Additional Rights 13
4.1.....................................................Right of First Offer 13
4.2..............................................................Termination 14
4.3...............................................................Assignment 14
Section 5..............................................................Miscellaneous 15
5.1...............................................................Assignment 15
5.2............................................................Third Parties 15
5.3............................................................Governing Law 15
5.4.............................................................Counterparts 15
5.5..................................................................Notices 15
5.6.............................................................Severability 16
5.7......................................................Delays or Omissions 16
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YAHOO! INC.
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this
"Agreement") is made and entered into as of March 12, 1996, by and among Yahoo!
Inc., a California corporation (the "COMPANY"), the persons and entities listed
on Schedule A hereto (the "SERIES A INVESTORS"), the persons and entities listed
on Schedule B hereto (the "SERIES B INVESTORS") and the entity listed on
Schedule C hereto (the "SERIES C INVESTOR"). The Series A Investors, Series B
Investors and Series C Investor are referred to herein individually as a
"PURCHASER" and collectively as the "PURCHASERS."
RECITALS
A. The Company, the Series A Investors and the Series B Investors have
entered into an Amended and Restated Investor Rights Agreement dated as of
November 22, 1995, as amended, (the "RIGHTS AGREEMENT").
B. Concurrent with the execution of this Agreement, the Series C
Investor is purchasing from the Company shares of Series C Preferred Stock
pursuant to a Series C Preferred Stock Purchase Agreement of even date herewith
(the "SERIES C AGREEMENT").
C. In connection with such investment, the parties desire to amend and
restate the provisions of the Rights Agreement in accordance with Section 1.1
thereof.
In consideration of these premises and the mutual covenants, terms and
conditions contained herein and in the Series C Agreement, the parties hereto
agree that the Rights Agreement is hereby amended and restated to read in its
entirety as follows:
1. Amendment.
1.1 Procedure. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
Notwithstanding the foregoing, any provision of this Agreement may be amended,
waived, discharged or terminated upon the written consent of the Company and the
holders of a majority of the outstanding Registrable Securities (as defined
below), determined on the basis of assumed conversion of all Series A Shares,
Series B Shares and Series C Shares (as defined below) into Registrable
Securities. Each holder of Registrable Securities acknowledges that the holders
of a majority of the outstanding Registrable Securities will thereby have the
right and power to diminish or eliminate all rights of the Purchasers pursuant
to this Agreement, without liability to any Purchaser. Notwithstanding the
provisions of this Section 1.1, any amendment, waiver, discharge or termination
of this Agreement that adversely affects the holders of Series B Preferred Stock
or Series C Preferred Stock in a manner
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different than the holders of Series A Preferred Stock shall require the
approval of the holders of a majority of the shares of Series B Preferred Stock
or Series C Preferred Stock, as the case may be, then outstanding.
1.2 Rights of Holders. Each holder of Registrable Securities shall
have the absolute right to exercise or refrain from exercising any right or
rights that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
2. Registration Rights.
2.1 Definitions. As used in this Agreement:
(a) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "SECURITIES ACT")
and the subsequent declaration or ordering of the effectiveness of such
registration statement.
(b) The term "REGISTRABLE SECURITIES" means:
(i) The shares of Common Stock issuable or issued upon
conversion of the Series A Shares, Series B Shares and Series C Shares (the
Series A Shares, the Series B Shares and the Series C Shares sometimes
collectively referred to as the "STOCK"); and
(ii) Any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his or her rights under this Agreement are not assigned;
provided, however, that Common Stock or other securities shall only be treated
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale.
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock or
other securities outstanding which are, and the number of shares of Common Stock
or other securities issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.
(d) The term "HOLDER" means any holder of outstanding
Registrable Securities who, subject to the limitations set forth in Section 2.12
below, acquired such
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Registrable Securities in a transaction or series of transactions not involving
any registered public offering.
(e) The term "FORM S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(f) The term "SERIES A SHARES" means the Series A Preferred
Stock of the Company issued pursuant to the Series A Preferred Stock Purchase
Agreement dated as of April 7, 1995 and the Subscription Agreement between the
Company and Timothy Koogle.
(g) The term "SERIES B SHARES" means the Series B Preferred
Stock of the Company issued pursuant to the Series B Preferred Stock Purchase
Agreement dated as of November 22, 1995 and any other shares of Series B
Preferred Stock issued hereafter.
(h) The term "SERIES C SHARES" means the Series C Preferred
Stock of the Company issued pursuant to the Series C Agreement and any other
shares of Series C Preferred Stock issued hereafter.
2.2 Requested Registration.
(a) If the Company shall receive at any time after the earlier
of (i) March 30, 1999, or (ii) one hundred eighty (180) days after the effective
date of the first registration statement for a public offering of securities of
the Company (the "INITIAL PUBLIC OFFERING") (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or to an SEC Rule 145
transaction), a written request from the Holders of at least forty percent (40%)
of the Registrable Securities then outstanding that the Company file a
registration statement under the Securities Act for the sale of Registrable
Securities for an aggregate public offering price of at least ten million
dollars ($10,000,000), the Company shall notify within ten (10) days of receipt
thereof, in writing, all Holders of Registrable Securities of such request, and
shall use its best efforts to effect as soon as practicable the registration
under the Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 5.5.
(b) If the Holders initiating the registration request hereunder
("INITIATING HOLDERS") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to this Section 2.2 and the Company
shall include such information in the written notice referred to in subsection
2.2(a). In such event, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their Registrable
Securities
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through such underwriting shall (together with the Company as provided in
subsection 2.4(e)) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 2.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 2.2.
(d) Notwithstanding the foregoing, if the Company shall furnish
to Holders requesting a registration statement pursuant to this Section 2.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company for such registration statement to be filed, the
Company shall have the right to defer such filing for a period of not more than
one hundred eighty (180) days after receipt of the request of the Initiating
Holders; provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period.
2.3 Company Registration. If (but without any obligation to do so)
at any time after the Initial Public Offering the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its Common Stock or other securities
under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating either to the
sale of securities to participants in a Company stock option, stock purchase or
similar plan or to an SEC Rule 145 transaction, or a registration on any form
which does not include substantially similar information as would be required to
be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after the mailing of such notice by the Company in
accordance with Section 5.5, the Company shall, subject to the provisions of
Section 2.7, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
2.4 Obligations of the Company. Whenever required under this Section
2 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
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(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for one hundred twenty (120) days, or such
shorter period ending when all shares covered thereby have been sold.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such reasonable numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 2, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 2, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering,
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addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
2.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
2.6 Expenses of Requested Registration and Company Registration. All
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Section 2.2
and Section 2.3, including (without limitation), all registration, filing and
qualification fees, printers and accounting fees, fees and disbursements of
counsel for the Company and, in connection with registrations pursuant to
Section 2.2 hereof, the reasonable fees and disbursements of one (but only one)
counsel for all the selling Holders in the event that it is not reasonably
practicable or appropriate for counsel to the Company also to represent such
Holders, will be paid for by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2.2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating Holders shall bear
such expenses) unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one of the requested registrations pursuant to
Section 2.2, provided further, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to Section 2.2.
2.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 2.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters, adversely
affect the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters reasonably believe would not adversely affect
the success of the offering, then the Company shall be required to include in
the offering only that number of such securities, including Registrable
Securities, which the underwriters believe will not adversely affect the success
of the offering (the securities so included to be apportioned first to the
Company, then pro rata among the selling Holders according to the total amount
of Registrable Securities entitled to be included therein owned by each selling
Holder and then to all other selling shareholders, or in such other proportions
as shall mutually be agreed to by such selling shareholders); it being
understood that with respect to the Company's initial public offering, all
Registrable Securities may be excluded from the registration on this basis
(provided that no other shareholder's securities are included in the
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registration), but that with respect to any subsequent offering, no exclusion
may reduce the total number of Registrable Securities to less than fifteen
percent (15%) of the total number of securities subject to the registration. For
purposes of the preceding parenthetical concerning apportionment, for any
selling shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
2.8 No Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "1934 ACT"), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law; and the Company will pay, as incurred,
to each such Holder, underwriter or controlling person, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 2.9(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
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(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 2.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 2.9(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder; provided that in no event shall any indemnity
under this subsection 2.9(b) exceed the gross proceeds (less underwriter's
discounts and commissions) from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, 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 such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.9 (to the extent of such prejudicial
effect), but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.9.
(d) No indemnifying party, in the defense of any claim arising
out of a Violation 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 to such
claim or litigation and, in the event the terms of such judgment or settlement
include any term other than the payment by the indemnifying party of money
damages, the indemnifying party shall not so consent or enter into such a
settlement without the consent of
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each indemnified party (which will not be unreasonably withheld) whether or not
the terms thereof include such a release.
(e) The obligations of the Company and Holders under this
Section 2.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 2, and otherwise.
2.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the public;
(b) Take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(d) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
2.11 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders owning in the aggregate at least 20% of the Registrable
Securities a written request or requests that the Company effect a registration
on Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
will:
(a) Promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
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(b) As soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 2.11, (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts and commissions) of less than $1,000,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the president of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than one hundred (180) days after receipt of the request of
the Holder or Holders under this Section 2.11; provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period; or (iv) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
Notwithstanding anything to the contrary herein, the Company shall not be
obligated to effect more than one registration pursuant to this Section 2.11 in
any twelve (12) month period.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to this Section 2.11, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling Holder
or Holders and counsel for the Company, shall be borne pro rata by the Holder or
Holders participating in the Form S-3 Registration and, if it participates, the
Company (on a pro rata basis based upon the number of shares sold).
Registrations effected pursuant to this Section 2.11 shall not be counted as
requests for registration or registrations effected pursuant to Section 2.2 or
2.3.
2.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may only
be assigned by a Holder to a transferee who acquires at least 50,000 shares of
Registrable Securities (subject to appropriate adjustment for any stock split,
reverse stock split, stock dividend, recapitalization or similar transaction) or
all of such Holder's shares, if less, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee; and provided, further, that such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act. The foregoing 50,000 share limitation shall not apply,
however, to transfers by a Purchaser to constituent affiliates, or constituent
partners (including any constituent of a
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constituent) of the Purchaser (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) if all such transferees or
assignees agree in writing to be bound by the terms of this Agreement and
appoint a single representative as their attorney in fact for the purpose of
receiving any notices and exercising their rights under this Section 2.
2.13 "Market Stand-Off" Agreement. Each Purchaser hereby agrees that
during the one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act in
connection with the Company's initial public offering of Securities, it shall
not, to the extent requested by the Company and the Company's underwriter, sell,
offer to sell, or otherwise transfer or dispose of any Common Stock of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, that (i) each then current officer and director
of the Company, and (ii) shareholders of the Company holding in the aggregate at
least ninety percent (90%) of all outstanding shares of Common Stock of the
Company (on an as converted basis), shall have entered into similar agreements
(either at the time of the public offering or at the time of any such
shareholder's purchase of shares). To enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of the Purchaser (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period. Each Holder
agrees to execute the form of such market stand-off agreement as may be
reasonably requested by the underwriters.
2.14 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided for in this Agreement (a) after seven (7) years
following the closing of the Initial Public Offering (other than an offering
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction) or (b) at such time following the Company's Initial Public Offering
and for so long as such Holder may sell all of such Holder's Registrable
Securities in any single three (3) month period pursuant to Rule 144 (or such
successor rule as may be adopted).
3. Financial Information.
3.1 Annual and Quarterly Information. The Company will mail the
following reports to each Holder for so long as such Holder is a holder of any
Series A Shares, Series B Shares or Series C Shares or shares of Common Stock
issued upon conversion thereof:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 120 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income, consolidated statements of changes in
financial position and consolidated statements of shareholders' equity of the
Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited and certified by independent public accountants of nationally
recognized standing selected by the Company.
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(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company and in
any event within 45 days thereafter, an unaudited consolidated balance sheet of
the Company and its subsidiaries, if any, as of the end of each such quarterly
period, and unaudited consolidated statements of income, unaudited consolidated
statements of cash flow and unaudited consolidated statements of shareholders'
equity of the Company and its subsidiaries, if any, for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes and subject to normal
year-end audit adjustments), all in reasonable detail.
3.2 Additional Information. As long as a Purchaser (together with
any affiliates of such Purchaser) holds not less than 250,000 Series A Shares,
Series B Shares or Series C Shares (as adjusted for any combinations,
consolidations, stock dividends, stock splits or recapitalizations) (or an
equivalent number of shares of Common Stock issued upon conversion of the Series
A Shares, Series B Shares or Series C Shares), the Company will mail the
following reports to such Purchaser:
(a) As soon as practicable after the end of each fiscal month,
and in any event within 30 days thereafter, an unaudited consolidated balance
sheet of the Company and its subsidiaries, if any, as at the end of such month,
and unaudited consolidated statements of income, unaudited consolidated
statements of cash flow and unaudited consolidated statements of shareholders'
equity of the Company and its subsidiaries, if any, for such month and for the
current fiscal year to date. Such financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied
(other than for accompanying notes and subject to normal year-end audit
adjustments), all in reasonable detail.
(b) As soon as practicable, but in any event within 30 days
after the end of each fiscal year, an operating plan for the next fiscal year,
prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other plans or budgets prepared by the Company.
3.3 Inspection. As long as a Purchaser (together with any affiliates
of such Purchaser) holds not less than 250,000 Series A Shares, Series B Shares
or Series C Shares, (as adjusted for any combinations, consolidations, stock
dividends, stock splits or recapitalizations) (or an equivalent number of shares
of Common Stock issued upon conversion of the Series A Shares, Series B Shares
or Series C Shares), the Company shall permit each such Purchaser, at such
Purchaser's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Purchaser; provided, however, that the Company shall not be obligated
pursuant to this Section 3.3 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
3.4 Transfer of Information and Inspection Rights. The information
rights set forth in Sections 3.1, 3.2 and 3.3 may be transferred in any
nonpublic transfer of Series A Shares, Series B Shares or Series C Shares (or
Common Stock issued upon conversion of the Shares),
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provided that the Company is given prompt written notice of such transfer, and
provided further that the right to receive the information and other rights set
forth in Section 3.2 and 3.3 may only be transferred to a holder of, or
affiliated holders who in the aggregate hold, at least 250,000 Series A Shares,
Series B Shares or Series C Shares (as adjusted for any combinations,
consolidations, stock dividends, stock splits or recapitalizations) (or an
equivalent number of shares consisting of Common Stock issued upon conversion of
the Series A Shares, Series B Shares or Series C Shares). In the event that the
Company reasonably determines that provision of information to a transferee
pursuant to this Section 3.4 would materially adversely affect its proprietary
position, such information may be edited in the manner necessary to avoid such
effect.
3.5 Termination of Covenants. The covenants set forth in this
Section 3 shall terminate upon the earlier of (i) the consummation of the
Company's initial public offering of securities pursuant to an effective
registration statement filed under the Securities Act, or (ii) the registration
by the Company of a class of its equity securities under Section 12(b) or 12(g)
of the Exchange Act.
4. Additional Rights.
4.1 Right of First Offer. Subject to the terms and conditions
specified in this Section 4.1, the Company hereby grants to each Purchaser a
right of first offer with respect to future sales by the Company of its New
Securities (as hereinafter defined). Each Purchaser shall be entitled to
apportion the right of first offer hereby granted among itself and its partners,
shareholders and affiliates in such proportions as it deems appropriate.
(a) In the event the Company proposes to issue New Securities,
it shall give each Purchaser written notice (the "NOTICE") of its intention
stating (i) a description of the New Securities it proposes to issue, (ii) the
number of shares of New Securities it proposes to offer, (iii) the price per
share at which, and other terms on which, it proposes to offer such New
Securities and (iv) the number of shares that the Purchaser has the right to
purchase under this Section 4.1, based on the Purchaser's Percentage (as defined
below); provided that the Company shall not be obligated to offer any New
Securities to SOFTBANK Holdings Inc. or its affiliates to the extent that
purchase of such New Securities would cause the number of shares of the
Company's capital stock beneficially owned by SOFTBANK Holdings Inc. and its
affiliates to exceed the amount permitted under the Standstill and Voting
Agreement as of even date herewith.
(b) Within twenty (20) days after the Notice is given (in
accordance with Section 5.5), the Purchaser may elect to purchase, at the price
and on the terms specified in the Notice, up to the number of shares of the New
Securities proposed to be issued that the Purchaser has the right to purchase as
specified in the Notice. An election to purchase shall be made in writing and
must be given to the Company within such twenty (20) day period (in accordance
with Section 5.5). The closing of the sale of New Securities by the Company to
the participating Purchaser upon exercise of its rights under this Section 4.1
shall take place simultaneously with the closing of the sale of New Securities
to third parties.
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(c) The Company shall have ninety (90) days after the last date
on which the Purchaser's right of first offer lapsed to enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within forty-five (45) days from the execution thereof) to sell the
New Securities which the Purchaser did not elect to purchase under this Section
4.1, at or above the price and upon terms not more favorable to the purchasers
of such securities than the terms specified in the initial Notice given in
connection with such sale. In the event the Company has not entered into an
agreement to sell the New Securities within such ninety (90) day period (or sold
and issued New Securities in accordance with the foregoing within forty-five
days from the date of said agreement), the Company shall not thereafter issue or
sell any New Securities without first offering such New Securities to the
Purchaser in the manner provided in this Section 4.1.
(d) (i) "NEW SECURITIES" shall mean any shares of, or securities
convertible into or exercisable for any shares of, any class of the Company's
capital stock; provided that "NEW SECURITIES" does not include: (A) the Series A
Shares, Series B Shares or Series C Shares or the Common Stock issuable upon
conversion thereof; (B) securities issued pursuant to the acquisition of another
strategic licensing transaction business entity by the Company by merger,
purchase of substantially all of the assets of such entity, or other
reorganization whereby the Company owns at least a majority of the voting power
of such entity; (C) shares, or options to purchase shares, of the Company's
Common Stock and the shares of Common Stock issuable upon exercise of such
options, issued pursuant to any arrangement approved by the Board of Directors
to employees, officers and directors of, or consultants, advisors or other
persons performing services for, the Company; (D) shares of the Company's Common
Stock or Preferred Stock of any series issued in connection with any stock
split, stock dividend or recapitalization of the Company; (E) Common Stock
issued upon exercise of warrants, options or convertible securities if the
issuance of such warrants, options or convertible securities was subject to the
right of first offer granted under this Section 4.1; (F) capital stock or
warrants or options for the purchase of shares of capital stock issued by the
Company to financial institutions or lessors in connection with the extension of
credit to the Company or the purchase financing of personal property by the
Company, and (G) a bona fide, firmly underwritten public offering of shares of
Common Stock.
(ii) The applicable "PERCENTAGE" for the Purchaser shall be
the number of shares of New Securities calculated by dividing (A) the total
number of shares of Common Stock issued or issuable upon conversion of all
Series A Shares, Series B Shares and Series C Shares held by such Purchaser by
(B) all of the Company's Common Stock then outstanding plus all shares of Common
Stock issuable upon conversion of all outstanding shares of Preferred Stock.
4.2 Termination. The right of first offer granted under this Section
shall not apply to and shall expire upon the closing of the Company's initial
public offering of securities; provided that all shares of the Company's
Preferred Stock are converted into shares of Common Stock prior to or in
connection with such offering.
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4.3 Assignment. The right of first offer granted under this Section
may be assigned by a Purchaser to (i) a transferee or assignee of such
Purchaser's shares acquiring at least 250,000 shares of the Purchaser's shares
of the Company's Common Stock (treating all shares of Preferred Stock for this
purpose as though converted into Common Stock and as appropriately adjusted for
any stock splits, reverse stock splits, stock dividends, recapitalizations or
similar transactions) or, if less, all of the Purchaser's remaining shares of
the Company's stock, or (ii) a transferee or assignee of the Purchaser's shares
that is a constituent affiliate, or constituent partner (including any
constituent of a constituent) of the Purchaser (including spouses and ancestors,
lineal descendants and siblings of such partners or spouses who acquire
Registrable Securities by gift, will or intestate succession) if all such
transferees or assignees appoint a single representative as their attorney in
fact for the purpose of receiving any notices and exercising their rights under
this Section 4. It shall be a condition to any transfer or assignment pursuant
to this Section 4.3, that the Company shall be, within ninety (90) days
following such transfer, furnished with written notice of the name and address
of such transferee, and such transferee agrees in writing to be bound by the
terms of this Agreement.
5. Miscellaneous.
5.1 Assignment. Subject to the provisions of Section 2.12, Section
3.3 and Section 4.3 hereof, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto.
5.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California, without reference to conflicts of
laws principles.
5.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.5 Notices.
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the respective parties as follows:
To the Company: Yahoo! Inc.
635 Vaqueros Avenue
Sunnyvale, CA 94086
Telephone: (408) 328-3300
Telecopy: (408) 328-3301
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Attention: President
with a copy to:
Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
Telephone: (415) 854-4488
Telecopy: (415) 233-8386
Attention: James L. Brock
To a Shareholder: At such Shareholder's address as set forth on
Schedule A hereto (with a copy to counsel as
indicated on such Schedule).
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.
(c) Any party may, by written notice (in accordance with this
Section 5.5) to the other, alter its address or respondent.
5.6 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
5.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any Holder, shall be
cumulative and not alternative.
[SIGNATURE PAGE FOLLOWS]
-16-
IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Investor Rights Agreement.
COMPANY:
YAHOO! INC.,
a California corporation
By:
-------------------------------
Timothy Koogle, President & CEO
PURCHASERS:
Name:
-----------------------------
By:
-----------------------------
Title:
-----------------------------
Address:
-----------------------------
-----------------------------
Dated:
-----------------------------
-18-
SCHEDULE A
SERIES A INVESTORS
NAME/ADDRESS NO. OF SHARES
Sequoia Capital VI 2,218,125
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
cc: Bradford F. Shafer, Esq.
Brobeck, Phleger & Harrison,
One Market, Spear Street Tower
San Francisco, CA 94105
Sequoia Technology Partners VI 121,875
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
Sequoia XXIV 97,500
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
Fred Gibbons, Trustee of The Fred Gibbons 62,500
Seperate Property Trust U/T/D 2/26/93
c/o Sequoia Capital
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
Timothy Koogle 50,000
c/o Yahoo!, Inc.
110 Pioneer Way, Suite F
Mountain View, CA 94041
VLG Investments 1995 21,250
2800 Sand Hill Road
Menlo Park, CA 94025
Craig W. Johnson 21,250
2800 Sand Hill Road
Menlo Park, CA 94025
James L. Brock 3,750
2800 Sand Hill Road
Menlo Park, CA 94025
-18-
Tae Hea Nahm 3,750
2800 Sand Hill Road
Menlo Park, CA 94025
TOTAL: 2,600,000
-19-
SCHEDULE B
SERIES B INVESTORS
NAME/ADDRESS NO. OF SHARES
SOFTBANK Holdings Inc. 507,614
846 University Avenue
Norwood, MA 02062-2666
cc: Stephen A. Grant, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Sequoia Capital VI 230,965
3000 Sand Hill Road
Suite 280, Bldg. 4
Menlo Park, CA 94025
Sequoia Technology Partners VI 12,690
3000 Sand Hill Road
Suite 280, Bldg. 4
Menlo Park, CA 94025
Sequoia 1995 10,152
3000 Sand Hill Road
Suite 280, Bldg. 4
Menlo Park, CA 94025
Reuters NewMedia Inc. 253,807
1700 Broadway, 40th Floor
New York, NY 10019
cc: Richard DeGolia, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Capital Management Services, Inc. 126,904
333 South Hope Street
Los Angeles, CA 90071
Open Text U.S.A. Inc. 126,904
180 Columbia Street West
Waterloo, ON N2L 3L3
CANADA
TOTAL 1,269,036
-20-
SCHEDULE C
SERIES C INVESTORS
NAME/ADDRESS NO. OF SHARES
SOFTBANK Holdings Inc. 2,550,000
846 University Avenue
Norwood, MA 02062-2666
cc: Stephen A. Grant, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
TOTAL 2,550,000
-21-
YAHOO! INC.
AMENDMENT TO SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS AMENDMENT TO SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
(the "AMENDMENT") is made and entered into as of July 7, 1998, by and among
Yahoo! Inc., a California corporation (the "COMPANY"), and the undersigned
holders (the "HOLDERS") of the outstanding Registrable Securities (as defined in
the Rights Agreement) listed on EXHIBIT A hereto to amend the Second Amended and
Restated Investor Rights Agreement dated March 12, 1996 ("RIGHTS AGREEMENT") by
and among the Company and certain persons and entities listed on SCHEDULE A,
SCHEDULE B and SCHEDULE C thereto. Capitalized terms not defined herein shall
have the meaning assigned in the Rights Agreement.
RECITALS
A. Pursuant to the terms of the Rights Agreement, any provision of the
Rights Agreement may be amended, waived, discharged or terminated upon the
written consent of the Company and the holders of a majority of the outstanding
Registrable Securities.
B. Concurrent with the execution of this Amendment, the SOFTBANK
Holdings, Inc., a Holder, is purchasing from the Company shares of the Company's
Common Stock pursuant to a Stock Purchase Agreement of even date herewith (the
"STOCK PURCHASE AGREEMENT").
C. In connection with such investment, the undersigned Holders
constituting the holders of a majority of the outstanding Registrable Securities
desire to amend and restate certain provisions of the Rights Agreement as set
forth herein.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Section 2.1 (b) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"(b) The term "REGISTRABLE SECURITIES" means:
(i) The shares of Common Stock issuable or issued upon
conversion of the Series A Shares, Series B Shares and Series C Shares (the
Series A Shares, the Series B Shares, the Series C Shares and the SOFTBANK
Shares are sometimes collectively referred to as the "STOCK"); and
(ii) 1,363,440 shares of Common Stock (the "SOFTBANK SHARES")
issued to SOFTBANK Holdings, Inc. ("SOFTBANK"), pursuant to the Stock Purchase
Agreement dated July 7, 1998 by and between the Company and SOFTBANK.
(iii) Any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his or her rights under this Agreement are not assigned;
provided, however, that Common Stock or other securities shall only be treated
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale."
2. Section 2.1 is amended by the addition of the following subsection
at the end of Section 2.1:
"(i) The term "Initial Public Offering" means the initial
offering to the public of securities of the Company."
3. Section 2.2(a) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"2.2 Requested Registration.
(a) If the Company shall receive at any time a written
request from the Holders of Registrable Securities having market value (based on
the average closing price of the Common Stock on the principal trading exchange
or system for the ten (10) trading days preceding the date of the request)
exceeding three hundred million dollars ($300,000,000) that the Company file a
registration statement under the Securities Act for the sale of Registrable
Securities for an aggregate public offering price of at least ten million
dollars ($10,000,000), the Company shall notify within ten (10) days of receipt
thereof, in writing, all Holders of Registrable Securities of such request, and
shall use its best efforts to effect as soon as practicable the registration
under the Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 5.5."
4. Except as provided herein, the Rights Agreement shall remain in full
force and effect. If one or more provisions of this Amendment are held to be
unenforceable under applicable law, such provision shall be excluded from this
Amendment and the balance of this Amendment shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
5. Nothing in this Amendment, express or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Amendment, except as expressly provided herein.
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6. This Amendment shall be governed by and construed under the laws of
the State of California in the United States of America as applied to agreements
among California residents entered into and to be performed entirely within
California.
7. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, the parties have executed this Amendment.
COMPANY:
YAHOO! INC.
By: /s/ TIMOTHY KOOGLE
---------------------------------
Timothy Koogle, President & CEO
HOLDERS:
SOFTBANK HOLDINGS INC.
By: /s/ RONALD D. FISHER
---------------------------------
Ronald D. Fisher, Vice Chairman
SEQUOIA CAPITAL VI
By: /s/ MICHAEL MORITZ
------------------------------
Name: Michael Moritz
---------------------------
Title: General Partner
---------------------------
SEQUOIA TECHNOLOGY PARTNERS VI
By: /s/ MICHAEL MORITZ
------------------------------
Name: Michael Moritz
---------------------------
Title: General Partner
---------------------------
-4-
EXHIBIT A
LIST OF HOLDERS
SOFTBANK Holdings Inc.
846 University Avenue
Norwood, MA 02062-2666
cc: Stephen A. Grant, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Sequoia Capital VI
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
cc: Bradford F. Shafer, Esq.
Brobeck, Phleger & Harrison,
One Market, Spear Street Tower
San Francisco, CA 94105
Sequoia Technology Partners VI
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California 94025
