YAHOO! INC.
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
March 12, 1996
TABLE OF CONTENTS
Page
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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 Xxxxxxx Xxxxxx.
(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.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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Attention: President
with a copy to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx
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]
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IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Investor Rights Agreement.
COMPANY:
YAHOO! INC.,
a California corporation
By:
-------------------------------
Xxxxxxx Xxxxxx, President & CEO
PURCHASERS:
Name:
-----------------------------
By:
-----------------------------
Title:
-----------------------------
Address:
-----------------------------
-----------------------------
Dated:
-----------------------------
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SCHEDULE A
SERIES A INVESTORS
NAME/ADDRESS NO. OF SHARES
Sequoia Capital VI 2,218,125
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
cc: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxx, Phleger & Xxxxxxxx,
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Sequoia Technology Partners VI 121,875
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Sequoia XXIV 97,500
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Xxxx Xxxxxxx, Trustee of The Xxxx Xxxxxxx 62,500
Seperate Property Trust U/T/D 2/26/93
c/o Sequoia Capital
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Xxxxxxx Xxxxxx 50,000
c/o Yahoo!, Inc.
000 Xxxxxxx Xxx, Xxxxx X
Xxxxxxxx Xxxx, XX 00000
VLG Investments 1995 21,250
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxx X. Xxxxxxx 21,250
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxx X. Xxxxx 3,750
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
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Tae Xxx Xxxx 3,750
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
TOTAL: 2,600,000
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SCHEDULE B
SERIES B INVESTORS
NAME/ADDRESS NO. OF SHARES
SOFTBANK Holdings Inc. 507,614
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
cc: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Sequoia Capital VI 230,965
0000 Xxxx Xxxx Xxxx
Xxxxx 000, Xxxx. 0
Xxxxx Xxxx, XX 00000
Sequoia Technology Partners VI 12,690
0000 Xxxx Xxxx Xxxx
Xxxxx 000, Xxxx. 0
Xxxxx Xxxx, XX 00000
Sequoia 1995 10,152
0000 Xxxx Xxxx Xxxx
Xxxxx 000, Xxxx. 0
Xxxxx Xxxx, XX 00000
Reuters NewMedia Inc. 253,807
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
cc: Xxxxxxx XxXxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Capital Management Services, Inc. 126,904
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Open Text U.S.A. Inc. 126,904
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX X0X 0X0
XXXXXX
TOTAL 1,269,036
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SCHEDULE C
SERIES C INVESTORS
NAME/ADDRESS NO. OF SHARES
SOFTBANK Holdings Inc. 2,550,000
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
cc: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
TOTAL 2,550,000
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