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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 0-28018
YAHOO! INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0398689
---------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3400 CENTRAL EXPRESSWAY, SUITE 201
SANTA CLARA, CALIFORNIA 95051
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 731-3300
------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days: Yes[X] No[ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 31, 1997
------------------------------ ----------------------------
Common Stock, $0.001 par value 28,597,274
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YAHOO! INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets
at June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations
for the three months ended June 30, 1997 and 1996;
and the six months ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YAHOO! INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------------ ------------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 61,587,000 $ 31,865,000
Short-term investments in marketable securities 37,268,000 60,689,000
Accounts receivable, net 6,716,000 4,648,000
Prepaid expenses 3,912,000 353,000
---------------- ----------------
Total current assets 109,483,000 97,555,000
Long-term investments in marketable securities - 9,748,000
Property and equipment, net 3,286,000 2,223,000
Investment in unconsolidated joint venture 879,000 729,000
Other assets 2,083,000 -
---------------- ----------------
$ 115,731,000 $ 110,255,000
---------------- ----------------
---------------- ----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 803,000 $ 992,000
Accrued expenses and other current liabilities 6,505,000 4,367,000
Deferred revenue 1,752,000 1,229,000
Due to related parties 1,049,000 1,082,000
---------------- ----------------
Total current liabilities 10,109,000 7,670,000
---------------- ----------------
Minority interests in consolidated subsidiaries 660,000 510,000
Shareholders' equity:
Common Stock 18,000 17,000
Additional paid-in capital 128,246,000 105,026,000
Accumulated deficit (23,302,000) (2,968,000)
---------------- ----------------
Total shareholders' equity 104,962,000 102,075,000
---------------- ----------------
$ 115,731,000 $ 110,255,000
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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YAHOO! INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ -------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenues $ 13,520,000 $ 3,274,000 $ 23,035,000 $ 5,007,000
Cost of revenues 2,049,000 520,000 3,276,000 687,000
-------------- ------------- ------------- -------------
Gross profit 11,471,000 2,754,000 19,759,000 4,320,000
-------------- ------------- ------------- -------------
Operating expenses:
Sales and marketing 8,673,000 3,290,000 15,257,000 4,150,000
Product development 2,103,000 1,037,000 4,005,000 1,367,000
General and administrative 1,459,000 762,000 2,619,000 1,249,000
Other - nonrecurring costs 21,245,000 - 21,245,000 -
-------------- ------------- ------------- -------------
Total operating expenses 33,480,000 5,089,000 43,126,000 6,766,000
-------------- ------------- ------------- -------------
Loss from operations (22,009,000) (2,335,000) (23,367,000) (2,446,000)
Investment income, net 1,260,000 969,000 2,649,000 1,161,000
Minority interests in losses from operations
of consolidated subsidiaries 182,000 - 384,000 -
-------------- ------------- ------------- -------------
Loss before income taxes (20,567,000) (1,366,000) (20,334,000) (1,285,000)
Benefit for income taxes (23,000) - - -
-------------- ------------- ------------- -------------
Net loss $ (20,544,000) $ (1,366,000) $ (20,334,000) $ (1,285,000)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Net loss per share ($0.74) ($0.05) ($0.74) ($0.06)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Weighted average common shares 27,792,000 26,456,000 27,493,000 22,887,000
- -----------------------------------------------------------------------------------------------------------------------------------
Pro forma net loss per share
reflecting 3-for-2 stock split (Note 4) ($0.49) ($0.03) ($0.49) ($0.04)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Pro forma weighted average common shares
reflecting 3-for-2 stock split (Note 4) 41,688,000 39,684,000 41,239,500 34,330,500
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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YAHOO! INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------
June 30, June 30,
1997 1996
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (20,334,000) $ (1,285,000)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 621,000 229,000
Minority interests in losses from operations of consolidated
subsidiaries (384,000) -
Non-cash charge 21,245,000 -
Changes in assets and liabilities:
Accounts receivable, net (2,068,000) (1,184,000)
Prepaid expenses and other assets (5,792,000) (910,000)
Accounts payable (189,000) 417,000
Accrued expenses and other current liabilities 1,877,000 1,377,000
Deferred revenue 523,000 227,000
Due to related parties (33,000) (2,000)
------------- --------------
Net cash used in operating activities (4,534,000) (1,131,000)
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (1,606,000) (643,000)
(Purchases) sales and maturites of investments in marketable
securities, net 33,169,000 (39,226,000)
------------- --------------
Net cash provided by (used in) investing activities 31,563,000 (39,869,000)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of capital stock, net 2,093,000 98,785,000
Proceeds from minority investor 600,000 -
Repayment of lease obligations - (128,000)
------------- --------------
Net cash provided by financing activities 2,693,000 98,657,000
------------- --------------
Net change in cash and cash equivalents 29,722,000 57,657,000
Cash and cash equivalents at beginning of period 31,865,000 5,297,000
------------- --------------
Cash and cash equivalents at end of period $ 61,587,000 $ 62,954,000
------------- --------------
------------- --------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
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YAHOO! INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
Yahoo! Inc. (the "Company") 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. The Company was
incorporated in California on March 5, 1995 and commenced operations on that
date. The Company conducts its business within one industry segment.
The accompanying unaudited condensed consolidated financial statements
reflect all adjustments which, in the opinion of management, are necessary
for a fair presentation of the results for the periods shown. The results of
operations for such periods are not necessarily indicative of the results
expected for the full fiscal year or for any future period.
These financial statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. Certain prior
period balances have been reclassified to conform with current period
presentation.
NOTE 2 - COMMITMENTS
NETSCAPE GUIDE BY YAHOO!
During March 1997, the Company entered into certain agreements with
Netscape Communications Corporation (Netscape) under which the Company has
developed and operates an Internet information navigation service called
"NETSCAPE GUIDE BY YAHOO!" (the GUIDE). The Co-Marketing agreement provides
that revenue from advertising on the GUIDE, which is managed by the Company,
is to be shared between the Company and Netscape. Under the terms of the
Trademark License agreement, the Company made a one-time non-refundable
trademark license fee payment of $5,000,000 in March 1997 which is being
amortized over the initial two-year term, which commenced in May 1997. The
Company also provided Netscape with a minimum of $10,000,000 in guarantees
against shared advertising revenues in the first year of the Co-Marketing
agreement and up to $15,000,000 in the second year of the agreement, subject
in the second year to certain minimum levels of impressions being reached on
the GUIDE. In June 1997, an amendment to this agreement was signed whereby
the first year shared advertising revenue guarantee was reduced to
$4,660,000. Actual payments may be higher and will relate directly to the
overall revenue recognized from the GUIDE.
6
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NETSCAPE PREMIER PROVIDER
Also during March 1997, the Company entered into an agreement with
Netscape whereby it was designated as one of four "Premier Providers" of
domestic navigational services within the Netscape Web Site. Under the terms
of the agreement, the Company is required to make minimum payments of
$3,200,000 in cash and is obligated to provide $1,500,000 in the Company's
advertising services in return for certain minimum guaranteed exposures over
the course of the one-year term of the agreement, which commenced in May
1997. As of June 30, 1997, the Company had paid $1,000,000 in cash and an
additional $637,000 was paid in July under the terms of the agreement. To
the extent that the minimum guaranteed exposures are exceeded, the Company is
obligated to remit to Netscape additional payments of cash and the Company's
advertising services. The Company amortizes the total cost of the Premier
Provider agreement over its one year term.
During June 1997, the Company entered into certain agreements with
Netscape whereby it was designated as a Premier Provider of international
search and navigational guide services for the Netscape Net Search program.
Under the terms of the agreements, the Company will provide services in 12
countries, including Australia, Denmark, France, Germany, Italy, Japan,
Korea, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
Under the terms of the agreements, the Company is required to make a cash
payment of $2,900,000 in July 1997 and is obligated to provide $100,000 in
the Company's advertising services in return for certain minimum guaranteed
exposures over the course of the one-year term of the agreements, which
commenced in July 1997. The Company amortizes the total cost of these
agreements over their one year term.
MARKETPLACE RESTRUCTURING
In August 1996, the Company entered into a joint venture arrangement with
Visa Marketplace, Inc. and another party (the "Visa Group") for the
development of an online property relating to electronic commerce. The
arrangements included the creation of a limited liability company (Yahoo!
Marketplace L.L.C.) owned by the Company and the Visa Group, to which the
Company licensed certain trademarks and other intellectual property, and
included other contractual commitments by the Company to Visa. In July 1997,
prior to the completion of significant business activities and public launch
of the property, the Company and Visa entered into an agreement under which
the Visa Group released the Company from certain obligations and claims, and
the Company returned the Visa Group's original equity contribution to the
L.L.C. In connection with this agreement, Yahoo! has issued 466,321 shares
of Yahoo! Common Stock to the Visa Group, for which the Company recorded a
one-time, non-cash, pre-tax charge of $21,245,000 in the second quarter ended
June 30, 1997. On August 4, 1997, the Company filed a Registration Statement
on Form S-3 with respect to the resale of 259,069 Visa Group shares. The
Visa Group has agreed to refrain from the sale of 103,626 shares until July
1998 and the remaining 103,626 shares until July 1999.
7
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NOTE 3 - NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of
common shares outstanding during the period. Common equivalent shares are
excluded from the computation as their effect is antidilutive, except that
for the periods ended June 30, 1996, pursuant to the Securities and Exchange
Commission Staff Accounting Bulletin, the convertible preferred stock (using
the if-converted method) and common equivalent shares (using the treasury
stock method and the assumed public offering price) issued subsequent to
March 5, 1995 through April 11, 1996 have been included in the computation as
if they were outstanding for all periods presented.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings per Share."
This Statement is effective for the Company's fiscal year ending December 31,
1997. The Statement redefines earnings per share under generally accepted
accounting principles. Under the new standard, primary earnings per share is
replaced by basic earnings per share and fully diluted earnings per share is
replaced by diluted earnings per share. The impact of this Statement for the
three and six month periods ended June 30, 1997 and 1996 on the calculation
of primary and fully diluted earnings per share is not material.
NOTE 4 - STOCK SPLIT
During July 1997, the Company's Board of Directors approved a
three-for-two Common Stock split. Shareholders of record on August 11, 1997
(the record date) will be entitled to one additional share for every two
shares held on that date. In accordance with SAB Topic 4-C, the Company has
presented a pro forma earnings per share and weighted average shares on the
face of the statement of operations for all periods presented which reflect
the effect of the split.
NOTE 5 - SUBSEQUENT EVENT
On July 31, 1997, the Company entered into a stock purchase agreement to
acquire all of the outstanding capital stock of NetControls, Inc. for 24,778
shares of the Company's Common Stock. The acquisition will be recorded as a
purchase for accounting purposes and the majority of the purchase price of
approximately $1,400,000 will be amortized over the estimated useful life of
the technology acquired. To date, the financial results of NetControls, Inc.
have been deminimis.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE DISCUSSION IN THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED BELOW, AND THE RISKS DISCUSSED UNDER THE CAPTION, "RISK FACTORS" IN
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996
AND IN THE REGISTRATION STATEMENT FILED ON FORM S-3 ON AUGUST 4, 1997 (COPIES
OF WHICH ARE AVAILABLE AT BIZ.YAHOO.COM/PROFILES/YHOO.HTML OR UPON REQUEST
FROM THE COMPANY).
OVERVIEW
Yahoo! Inc. 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 serving business professionals
and consumers, and is among the most widely used guides for information and
discovery on the Web. The Company was incorporated in California on March 5,
1995 and commenced operations on that date. In August 1995, the Company
commenced selling advertisements on its Web pages and recognized its initial
revenues. In April 1996, the Company completed its initial public offering.
The Company's revenues are derived principally from the sale of
advertisements on short-term contracts. The Company's standard rates for
advertising currently range from $0.02 per impression for general rotation to
$0.08 per impression for highly targeted audiences and properties. To date,
the duration of the Company's advertising commitments has ranged from one
week to one year. Advertising revenues are recognized ratably in the period
in which the advertisement is displayed, provided that no significant Company
obligations remain and collection of the resulting receivable is probable.
Company obligations typically include guarantees of minimum number of
"impressions," or times that an advertisement appears in pages viewed by
users of the Company's online properties. To the extent minimum guaranteed
impressions are not met, the Company defers recognition of the corresponding
revenues until the remaining guaranteed impression levels are achieved.
Deferred revenue is comprised of billings in excess of recognized revenue
relating to advertising contracts.
During March 1997, the Company entered into certain agreements with
Netscape under which the Company has developed and operates an Internet
information navigation service called "NETSCAPE GUIDE BY YAHOO!" (the GUIDE).
The personalized guide has been designed to provide Internet users with a
central comprehensive source of sites, news, and other valuable services on
the Web. NETSCAPE GUIDE BY YAHOO! is accessible through the Netscape Internet
site and from the tool bar of Netscape Communicator. The navigational
service provides users with central access to eight of the most popular
information categories on the Web. The Co-Marketing agreement provides that
revenue from advertising on the GUIDE, which is managed by the Company, is to
be shared between the Company and Netscape. The Company plans to sell the
advertising space on the GUIDE by hiring a significant number of direct sales
personnel. Under the terms of the Trademark License agreement, the Company
made a one-time non-refundable trademark license fee payment
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of $5,000,000 in March 1997 which is being amortized over the initial
two-year term, which commenced in May 1997. The Company also provided
Netscape with a minimum of $10,000,000 in guarantees against shared
advertising revenues in the first year of the Co-Marketing agreement and up
to $15,000,000 in the second year of the agreement, subject in the second
year to certain minimum levels of advertising impressions being reached on
the GUIDE. In June 1997, an amendment to this agreement was signed whereby
the first year shared advertising revenue guarantee was reduced to
$4,660,000. Actual payments may be higher and will relate directly to the
overall revenue recognized from the GUIDE.
Also during March 1997, the Company entered into an agreement with
Netscape whereby it was designated as one of four "Premier Providers" of
domestic navigational services within the Netscape Web Site. Under the terms
of the agreement, the Company is required to make minimum payments of
$3,200,000 in cash and is obligated to provide $1,500,000 in the Company's
advertising services in return for certain minimum guaranteed exposures over
the course of the one-year term of the agreement, which commenced in May
1997. As of June 30, 1997, the Company had paid $1,000,000 in cash and an
additional $637,000 was paid in July under the terms of the agreement. To
the extent that the minimum guaranteed exposures are exceeded, the Company is
obligated to remit to Netscape additional payments of cash and the Company's
advertising services.
During June 1997, the Company entered into certain agreements with
Netscape whereby it was designated as a Premier Provider of international
search and navigational guide services for the Netscape Net Search program.
Under the terms of the agreements, the Company will provide services in 12
countries, including Australia, Denmark, France, Germany, Italy, Japan,
Korea, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
Under the terms of the agreements, the Company is required to make a cash
payment of $2,900,000 in July 1997 and is obligated to provide $100,000 in
the Company's advertising services in return for certain minimum guaranteed
exposures over the course of the one-year term of the agreements, which
commenced in July 1997.
In August 1996, the Company entered into a joint venture arrangement with
Visa Marketplace, Inc. and another party (the "Visa Group") for the
development of an online property relating to electronic commerce. The
arrangements included the creation of a limited liability company (Yahoo!
Marketplace L.L.C.) owned by the Company and the Visa Group, to which the
Company licensed certain trademarks and other intellectual property, and
included other contractual commitments by the Company to Visa. In July 1997,
prior to the completion of significant business activities and public launch
of the property, the Company and Visa entered into an agreement under which
the Visa Group released the Company from certain obligations and claims, and
the Company returned the Visa Group's original equity contribution to the
L.L.C. In connection with this agreement, Yahoo! has issued 466,321 shares
of Yahoo! Common Stock to the Visa Group, for which the Company recorded a
one-time, non-cash, pre-tax charge of $21,245,000 in the second quarter ended
June 30, 1997.
Yahoo! has a limited operating history and its prospects are subject to
the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for Internet products and services,
including the Web-based advertising market. Specifically, such risks
include, without limitation, the failure to continue to
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develop and extend the "Yahoo!" brand, the failure to develop new media
properties, the rejection of the Company's services by Web consumers and/or
advertisers, the inability of the Company to maintain and increase the levels
of traffic on YAHOO! properties, the development of equal or superior
services or products by competitors, the failure of the market to adopt the
Web as an advertising medium, the failure to successfully sell Web-based
advertising through the Company's recently developed internal sales force,
potential reductions in market prices for Web-based advertising as a result
of competition or other factors, the inability of the Company to effectively
integrate the technology and operations or any other acquired businesses or
technologies with its operations, and the inability to identify, attract,
retain and motivate qualified personnel. There can be no assurance that the
Company will be successful in addressing such risks.
As of June 30, 1997, the Company had an accumulated deficit of
$23,302,000. The extremely limited operating history of the Company and the
uncertain nature of the markets addressed by the Company make the prediction
of future results of operations difficult or impossible and, therefore, the
recent revenue growth experienced by the Company should not be taken as
indicative of the rate of revenue growth, if any, that can be expected in the
future. The Company believes that period to period comparisons of its
operating results are not meaningful and that the results for any period
should not be relied upon as an indication of future performance. The
Company currently expects to significantly increase its operating expenses to
expand its sales and marketing operations, to fund greater levels of product
development and to develop and commercialize additional media properties.
The Company also has remaining guaranteed payments of up to $19,660,000 in
advertising revenue guarantees to Netscape over the next two years in
connection with the NETSCAPE GUIDE BY YAHOO! agreement. As a result of these
factors, there can be no assurance that the Company will not incur
significant losses on a quarterly and annual basis for the foreseeable future.
As a result of the Company's limited operating history, the Company does
not have historical financial data for a significant number of periods on
which to base planned operating expenses. The Company derives substantially
all of its revenues from the sale of advertisements under short-term
contracts, which are difficult to forecast accurately. The Company's expense
levels are based in part on its expectations concerning future revenue and to
a large extent are fixed. The Company also has fixed expenses in the form of
advertising revenue guarantees of up to $19,660,000 over the next two years
relating to the NETSCAPE GUIDE BY YAHOO!, which subject the Company to
additional risk in the event that advertising revenues from this property are
not sufficient to offset guaranteed payments and related operating expenses.
Quarterly revenues and operating results depend substantially upon the
advertising revenues received within the quarter, which are difficult to
forecast accurately. Accordingly, the cancellation or deferral of a small
number of advertising contracts could have a material adverse effect on the
Company's business, results of operations and financial condition. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall, and any significant shortfall in revenue in
relation to the Company's expectations would have an immediate adverse effect
on the Company's business, operating results and financial condition. In
addition, the Company plans to continue to significantly increase its
operating expenses to expand its sales and marketing operations,
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to continue to develop and extend the "Yahoo!" brand, to implement and
operate the NETSCAPE GUIDE BY YAHOO!, to fund greater levels of product
development and to develop and commercialize additional media properties. To
the extent that such expenses precede or are not subsequently followed by
increased revenues, the Company's business, operating results and financial
condition will be materially and adversely affected.
The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside the Company's
control. These factors include the level of usage of the Internet, demand
for Internet advertising, seasonal trends in Internet usage and advertising
placements, the addition or loss of advertisers, the level of user traffic on
YAHOO! and the Company's other online media properties, the advertising
budgeting cycles of individual advertisers, the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's
operations, the introduction of new products or services by the Company or
its competitors, pricing changes for Web-based advertising, the timing of
initial set-up, engineering or development fees that may be paid in
connection with larger advertising and distribution arrangements, technical
difficulties with respect to the use of YAHOO! or other media properties
developed by the Company, incurrence of costs relating to acquisitions,
general economic conditions, and economic conditions specific to the Internet
and online media. As a strategic response to changes in the competitive
environment, the Company may from time to time make certain pricing, service
or marketing decisions or business combinations that could have a material
adverse effect on the Company's business, results of operations and financial
condition. The Company also has experienced, and expects to continue to
experience, seasonality in its business, with user traffic on YAHOO! and the
Company's other online media properties being lower during the summer and
year-end vacation and holiday periods, when usage of the Web and the
Company's services typically experience slower growth or decline.
Additionally, seasonality may also affect the amount of customer advertising
dollars placed with the Company in the first and third calendar quarters as
advertisers historically spend less during these quarters.
From time to time, the Company enters into agreements with sponsors and
content providers under which the Company is entitled to receive a share of
revenue received from the purchasers of goods and services from users of the
Company's online properties. Such revenue arrangements, if significant,
would expose the Company to additional risks and uncertainties, including
(without limitation) seasonal variations associated with the markets for such
products and services, competitive and other business factors relating to
such markets, and potential liabilities to consumers of such products and
services.
Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's Common Stock
would likely be materially and adversely affected.
12
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RESULTS OF OPERATIONS
NET REVENUES
Net revenues increased 313% and 360% in the second quarter and first half
of fiscal 1997, respectively, as compared to the corresponding periods in
fiscal 1996. The increases were due primarily to an increase in the number
of advertisers, from 230 during the quarter ended June 30, 1996 to over 900
in the quarter ended June 30, 1997. Most of the Company's customers purchase
advertisements on a short-term basis. There can be no assurance that
customers will continue to purchase advertising on the Company's Web pages.
Advertising purchases by SOFTBANK, a 34% shareholder of the Company at June
30, 1997, and its related companies accounted for approximately 5% and 7% of
net revenues in the second quarter and first half of fiscal 1997,
respectively, as compared to 2% and 1% in the corresponding periods in fiscal
1996. Contracted prices on these orders are comparable to those given to
other major customers of the Company. No one customer accounted for 10% or
more of revenues during the three or six month periods ended June 30, 1997
and 1996. International revenues were not significant during the three and
six month periods ended June 30, 1997 and 1996. Barter revenues represented
less than 10% of net revenues during those periods.
COST OF REVENUES
Cost of revenues consists of the expenses associated with the production
and usage of the Company's online navigational guides. These costs primarily
consist of fees paid to third parties for content included in the guides,
Internet connection charges, equipment depreciation, and compensation. Cost
of revenues were 15% and 14% of net revenues in the second quarter and first
half of fiscal 1997, respectively, as compared to 16% and 14% in the
corresponding periods in fiscal 1996. The absolute dollar increase in cost
of revenues from the year ago periods was primarily attributable to increases
in the quantity and quality of content available on the Company's online
navigational guide YAHOO! and its other Internet navigational services, and
increased usage of YAHOO! branded properties and the Company's other Internet
navigational services. The Company anticipates that its content and Internet
connection expenses will continue to increase with the quantity and quality
of content available on the Company's Internet navigational services, and
increased usage of Company's Internet navigational services. As measured in
page views (defined as electronic page displays), the Company delivered an
average of 38 million page views per day in June 1997, compared to an average
of approximately 9 million page views per day in June 1996.
13
<PAGE>
OPERATING EXPENSES
The Company's operating expenses have increased significantly since the
Company's inception. This trend reflects the costs associated with the
formation of the Company, the development of the corporate infrastructure,
the marketing and promotion of the Company's brand name, and increased
efforts to develop and commercialize the Company's products and services.
The Company believes that continued expansion of its operations is essential
to enhance and extend the YAHOO! main site, establish branded properties in
targeted markets, and expand the Company's user and advertising base. As a
consequence, the Company intends to continue to significantly increase
expenditures in all operating areas.
SALES AND MARKETING
Sales and marketing expenses were $8,673,000 for the quarter ended June
30, 1997, or 64% of net revenues as compared to $3,290,000, or 100% of net
revenues for the quarter ended June 30, 1996. For the six months ended June
30, 1997, sales and marketing expenses were $15,257,000, or 66% of net
revenues as compared to $4,150,000, or 83% of net revenues for the six months
ended June 30, 1996. The absolute dollar increase from the year ago periods
is primarily attributable to an increase in commissions associated with the
increase in revenues, costs associated with the NETSCAPE GUIDE BY YAHOO!, an
increase in advertising costs associated with the Company's aggressive brand
building strategy, and additional compensation expense associated with an
increase in sales and marketing personnel related to the addition of a direct
sales force which the Company began building in the fourth quarter of 1996.
The Company anticipates that sales and marketing expenses will increase in
future periods in absolute dollars as it continues to pursue an aggressive
brand building strategy and continues to build a direct sales organization.
PRODUCT DEVELOPMENT
Product development expenses were $2,103,000 for the quarter ended June
30, 1997, or 16% of net revenues as compared to $1,037,000, or 32% of net
revenues for the quarter ended June 30, 1996. For the six months ended June
30, 1997, product development expenses were $4,005,000, or 17% of net
revenues as compared to $1,367,000, or 27% of net revenues for the six months
ended June 30, 1996. The increase in absolute dollars from the year ago
periods is primarily attributable to the development of new online media
properties and the addition of engineers. Product development expenses
consist primarily of employee compensation relating to developing and
enhancing the features and functionality of YAHOO! and other online media
properties. To date, all product development costs have been expensed as
incurred. The Company believes that significant investments in product
development are required to remain competitive. As a consequence, the
Company intends to incur increased product development expenditures in
absolute dollars in future periods.
14
<PAGE>
GENERAL AND ADMINISTRATIVE
General and administrative expenses were $1,459,000 for the quarter ended
June 30, 1997, or 11% of net revenues as compared to $762,000, or 23% of net
revenues for the quarter ended June 30, 1996. For the six months ended June
30, 1997, general and administrative expenses were $2,619,000, or 11% of net
revenues as compared to $1,249,000, or 25% of net revenues for the six months
ended June 30, 1996. The increase in absolute dollars from the year ago
periods is primarily attributable to increases in personnel and professional
services. The Company believes that the absolute dollar level of general and
administrative expenses will increase in future periods, as a result of
increased staffing, fees for professional services, and costs associated with
registering the Company's trademarks in various countries.
OTHER - NONRECURRING COSTS
In July 1997, the Company and Visa entered into an agreement under which
the Visa Group released the Company from certain obligations and claims, and
the Company returned the Visa Group's original equity contribution to Yahoo!
Marketplace L.L.C. In connection with this agreement, Yahoo! has issued
466,321 shares of Yahoo! Common Stock to the Visa Group, for which the
Company recorded a one-time, non-cash, pre-tax charge of $21,245,000 in the
second quarter ended June 30, 1997.
INVESTMENT INCOME, NET
Investment income, net of investment expense, was $1,260,000 for the
quarter ended June 30, 1997. For the quarter ended June 30, 1996, investment
income was $969,000. Investment income for the six months ended June 30,
1997 was $2,649,000 as compared to $1,161,000 for the six months ended June
30, 1996. The increase in investment income from the year ago periods was
attributable to a higher average investment balance as a result of private
and public offering proceeds received during March and April of 1996.
Investment income in future periods may fluctuate as a result of fluctuations
in average cash balances maintained by the Company and changes in the market
rates of its investments.
MINORITY INTERESTS IN OPERATIONS OF CONSOLIDATED SUBSIDIARIES
During the second half of 1996, the Company entered into joint venture
agreements whereby the Company holds a majority interest in the subsidiaries
under the agreements. Minority interests in losses from operations of these
consolidated subsidiaries were $182,000 for the quarter ended June 30, 1997
and $384,000 for the first half of fiscal 1997. The joint venture agreement
for Yahoo! Marketplace was been terminated and the Yahoo! Europe subsidiaries
are still in the early stages of development, therefore, minority interests
in operations of consolidated subsidiaries will continue to fluctuate in
future periods as a function of the results from consolidated subsidiaries.
15
<PAGE>
INCOME TAXES
Based on the current estimate of expected operating results and certain
other factors, the Company currently expects its effective tax rate to be 0%
through fiscal year 1997. The Company believes sufficient uncertainty exists
regarding the realizability of its deferred tax assets such that a valuation
allowance continues to be required.
NET LOSS
The Company recorded a net loss of $20,544,000 or $0.74 per share for the
quarter ended June 30, 1997. Excluding the effect of the one-time, non-cash,
pre-tax charge of $21,245,000, the Company earned $610,000 or $0.02 per
share. For the year ago quarter ended June 30, 1996, the Company recorded a
net loss of $1,366,000 or $0.05 per share. For the six month period ended
June 30, 1997, the Company recorded a net loss of $20,334,000 or $0.74 per
share. Excluding the effect of the one-time, non-cash, pre-tax charge of
$21,245,000, the Company earned $820,000 or $0.03 per share. For the year ago
six month period ended June 30, 1996, the Company recorded a net loss of
$1,285,000 or $0.06 per share.
LIQUIDITY AND CAPITAL RESOURCES
Yahoo! invests predominantly in instruments that are highly liquid, of
high quality investment grade, and predominantly have maturities of less than
one year with the intent to make such funds readily available for operating
purposes. At June 30, 1997, the Company had cash and cash equivalents and
investments totaling $98,855,000 comprised of $61,587,000 in cash and cash
equivalents, and $37,268,000 in short-term investments.
For the six months ended June 30, 1997, cash used in operating activities
of $4,534,000 was primarily due to increases in prepaid expenses and other
assets, which resulted primarily from a $5,000,000 one-time non-refundable
license payment to Netscape under the NETSCAPE GUIDE BY YAHOO! agreement and
a $1,000,000 payment to Netscape under the Premier Provider agreement. For
the six months ended June 30, 1996, $1,131,000 of cash was used in operating
activities.
Cash provided by investing activities was $31,563,000 for the six months
ended June 30, 1997. Sales and maturities (net of purchases) of investments
in marketable securities during the period were $33,169,000 and capital
expenditures totaled $1,606,000. Capital expenditures have generally been
comprised of purchases of computer hardware and software as well as leasehold
improvements related to leased facilities, and are expected to increase in
future periods. For the six months June 30, 1996, $39,869,000 was used in
investing activities. Purchases (net of sales and maturities) of investments
in marketable securities during the period were $39,226,000 and capital
expenditures totaled $643,000.
For the six months ended June 30, 1997, cash provided by financing
activities of $2,693,000 was due to $2,093,000 from the issuance of Common
Stock pursuant to the exercise of stock options and $600,000 of proceeds
received from a minority investor. For the six months ended June 30, 1996,
cash provided by financing activities of $98,785,000 was primarily due to the
March 1996 issuance of 5,100,000 shares of Mandatorily Redeemable Convertible
Series C Preferred Stock for aggregate proceeds of $63,750,000 and the April
1996 initial public offering of 2,990,000 shares of Common Stock for net
proceeds of $35,043,000.
The Company currently has no material commitments other than those under
the Netscape Co-Marketing agreement, the Netscape Premier Provider
agreements, and operating lease agreements. Under the terms of the amended
Co-Marketing agreement, the Company has provided Netscape with $4,660,000 in
guarantees against shared advertising revenues in the first year of the
agreement and up to $15,000,000 in the
16
<PAGE>
second year of the agreement, subject in the second year to certain minimum
levels of advertising impressions being reached on the GUIDE. Under the terms
of the Premier Provider agreements, the Company has remaining minimum
payments to Netscape at June 30, 1997 of $5,100,000 in cash and $1,225,000 in
the Company's advertising services which are due during the one-year terms of
the agreements, of which $3,537,000 in cash was paid in July 1997. The
Company experienced a substantial increase in its capital expenditures and
operating lease arrangements in 1996 and the first half of 1997 consistent
with increased staffing and anticipates that this will continue in the
future. Additionally, the Company will continue to evaluate possible
acquisitions of or investments (including through joint ventures) in
businesses, products, and technologies that are complementary to those of the
Company, which may require the use of cash. Management believes existing
cash and investments will be sufficient to meet the Company's operating
requirements for at least the next twelve months. Thereafter, the Company
may sell additional equity or debt securities or obtain credit facilities.
The sale of additional equity or convertible debt securities could result in
additional dilution to the Company's shareholders.
17
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company has been, and expects to continue to be,
subject to legal proceedings and claims in the ordinary course of its
business, including, among others, contractual disputes with advertisers and
content or distribution providers, and claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by the
Company and its licensees. Such claims, even if not meritorious, could result
in the expenditure of significant financial and managerial resources.
Although the Company cannot predict the outcome of any proceeding, the
Company is not currently aware of any legal proceedings or claims that the
Company believes will have, individually or in the aggregate, a material
adverse effect on the Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. The exhibits listed in the accompanying Index to Exhibits are
filed as part of this Report on Form 10-Q.
b. No reports on Form 8-K were filed by the Company during the
period covered by this Report on Form 10-Q.
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
YAHOO! INC.
Dated: August 6, 1997 By: /s/ GARY VALENZUELA
---------------------------------
Senior Vice President, Finance
and Administration, and Chief
Financial Officer
(Principal Financial Officer)
Dated: August 6, 1997 By: /s/ JAMES J. NELSON
---------------------------------
Vice President, Finance
(Principal Accounting Officer)
19
<PAGE>
YAHOO! INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
TITLE EXHIBIT NO.
- ----- -----------
<S> <C>
Amended and Restated Articles of Incorporation (to be effective
August 11, 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Amendment One to the Co-Marketing Agreement, dated June 30,
1997 between Yahoo! Inc. and Netscape Communications Corporation. . . . . . 10.1
International Net Search Program Services Agreement, dated June 30,
1997 between Yahoo! Inc. and Netscape Communications Corporation. . . . . . 10.2
Trademark License Agreement, dated June 30, 1997 between
Yahoo! Inc. and Netscape Communications Corporation . . . . . . . . . . . . 10.3
Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
20
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
YAHOO! INC.
TIMOTHY KOOGLE and JOHN PLACE certify that:
1. They are the President and Secretary, respectively, of YAHOO! INC., a
California corporation.
2. The Articles of Incorporation of this corporation are amended and
restated to read in their entirety as follows:
"I.
The name of this corporation is YAHOO! INC.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporation Code.
III.
(a) This corporation is authorized to issue two classes of shares
designated "Preferred Stock" and "Common Stock", respectively. The total
number of shares which this corporation shall have authority to issue is Two
Hundred Thirty Five Million (235,000,000), par value of $0.00067 per share.
The number of shares of Preferred Stock authorized to be issued is Ten
Million (10,000,000), and the number of shares of Common Stock authorized to
be issued is Two Hundred Twenty Five Million (225,000,000). Upon the
effective date of the filing of these Amended and Restated Articles of
Incorporation, each two (2) shares of the corporation's outstanding Common
Stock shall be converted and reconstituted into three (3) shares of Common
Stock (the "Stock Split").
No fractional shares shall be issued as a result of the Stock Split.
Each holder entitled to receive a fraction of a share of Common Stock as a
result of the Stock Split, when all shares of
1
<PAGE>
Common Stock held by such holder are aggregated together, shall, in lieu of a
fractional share, receive cash in an amount equal to the fair market value of
the Company's Common Stock on the date of the filing of these Amended and
Restated Articles of Incorporation, as determined by the corporation's Board
of Directors, multiplied by the fraction of a share of Common Stock to which
such holder would otherwise be entitled.
(b) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations
and restrictions stated in these Articles of Incorporation to determine or
alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and the number of
shares constituting any such series and the designation thereof, or any of
them; and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
IV.
Shareholders shall not be entitled to cumulate their votes for the
election of directors of the corporation.
This Article IV shall become effective only when the corporation
becomes, and only for so long as the corporation remains, a listed
corporation within the meaning of Section 301.5 of the California
Corporations Code.
V.
No action shall be taken by the shareholders of the corporation other
than at an annual or special meeting of the shareholders, upon due notice and
in accordance with the provisions of the corporation's bylaws.
VI.
(a) On or prior to the date on which the corporation first provides
notice of an annual meeting of the shareholders following the date this
Article VI shall have become effective (and provided that the authorized
number of directors of the corporation shall be not less than six), the Board
of Directors of the corporation shall divide the directors into two classes,
as nearly equal in number as reasonably possible with the term of office of
the first class to expire at the 1997 annual meeting of shareholders or any
special meeting in lieu thereof and the term of office of the second class to
expire at the 1998 annual meeting of shareholders or any special meeting in
lieu thereof. At each annual meeting of shareholders or special meeting in
lieu thereof following such initial classification, directors elected to
succeed those directors whose terms expire shall be elected for a term of
office to expire at the second succeeding annual meeting of shareholders or
special meeting in lieu thereof after their election and until their
successors are duly elected and qualified.
2
<PAGE>
(b) Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the Board
of Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a majority vote of
the directors then in office even though less than a quorum, or by a sole
remaining director. In the event of any increase or decrease in the
authorized number of directors, (i) each director then serving as such shall
nevertheless continue as a director of the class of which he or she is a
member until the expiration of his or her current term or his or her prior
death, retirement, removal or resignation and (ii) the newly created or
eliminated directorships resulting from such increase or decrease shall, if
reasonably possible, be apportioned by the Board of Directors between the two
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest
dates following such allocation and newly eliminated directorships shall be
subtracted from those classes whose terms of office are to expire at the
earliest dates following such allocation, unless otherwise provided for from
time to time by resolution adopted by a majority of the directors then in
office, although less than a quorum. In the event of a vacancy in the Board
of Directors, the remaining directors, except as otherwise provided by law,
may exercise the powers of the full Board of Directors until the vacancy is
filled.
(c) This Article VI shall become effective only when the corporation
becomes, and only for so long as the corporation remains, a listed
corporation within the meaning of Section 301.5 of the California
Corporations Code.
VII.
Section 1. LIMITATION OF DIRECTORS' LIABILITY. The liability of the
directors of the corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
Section 2. INDEMNIFICATION OF CORPORATE AGENTS. This corporation is
authorized to provide indemnification of agents (as defined in Section 317 of
the California Corporations Code) through bylaw provisions, agreements with
agents, vote of shareholders or disinterested directors or otherwise, in
excess of the indemnification otherwise permitted by such Section 317 of the
California Corporations Code, subject only to the applicable limits set forth
in Section 204 of the California Corporations Code with respect to actions
for breach of duty to the corporation and its shareholders.
Section 3. REPEAL OR MODIFICATION. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any
right or protection of a director of the corporation existing at the time of
such repeal or modification.
3. The foregoing amendment and restatement of these Articles of
Incorporation has been duly approved by the Board of Directors.
3
<PAGE>
4. In accordance with Sections 902(c) and 903(a)(2) of the California
General Corporation Law, the foregoing amendment may be adopted with approval
by the Board of Directors alone and does not require approval by the
outstanding shares.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in the foregoing certificate are
true of our own knowledge. Executed at Santa Clara, California on July 29,
1997.
/s/ Timothy Koogle
------------------------------
TIMOTHY KOOGLE, President and
Chief Executive Officer
/s/ John Place
------------------------------
JOHN PLACE, Secretary
4
<PAGE>
AMENDMENT ONE
TO THE
CO-MARKETING AGREEMENT
BETWEEN
YAHOO! INC.
AND
NETSCAPE COMMUNICATIONS CORPORATION
This Amendment One ("Amendment One") is entered into by and between Netscape
Communications Corporation, a Delaware corporation, with principal offices at
501 E. Middlefield Road, Mountain View, California 94043 ("Netscape"), and
Yahoo! Inc., a California corporation with its principal place of business at
3400 Central Expressway, Suite 201, Santa Clara, California 95051 ("Yahoo")
and is effective as of the effective date set forth below ("Effective Date").
WHEREAS, the parties have entered into a Co-Marketing Agreement dated March
17, 1997 (the "Agreement");
WHEREAS, due to Yahoo's initial start-up costs associated with the Service
(as defined in the Agreement) and later than expected commercial availability
of Netscape Communicator, the parties wish to modify and supplement the
provisions of such Agreement;
NOW, THEREFORE, the parties, in consideration of the terms and conditions
herein, agree as follows:
1. CAPITALIZED TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING IN
THIS AMENDMENT ONE AS IN THE AGREEMENT.
2. EXCEPT AS EXPLICITLY MODIFIED, ALL TERMS, CONDITIONS AND PROVISIONS OF
THE AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT.
3. Section 14.1 shall be deleted in its entirety and replaced with the
following:
"14.1 PAYMENT AMOUNTS. For the benefits and services provided by
Netscape to Yahoo during the Term, Yahoo shall remit to Netscape a total
of Nineteen Million Six Hundred Sixty Thousand Dollars ($19,660,000) as
the Payment, comprised of the following components:
Four Million Six Hundred Sixty Thousand Dollars ($4,660,000) as a
guarantee against advertising revenue in the first year of the
Term ending March 31, 1998, adjusted for Section 17.1, plus
Fifteen Million Dollars ($15,000,000) as a guarantee against advertising
revenue for the remainder of the term, provided Netscape delivers
the Netscape traffic requirements as described in Section 15."
[X] CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
4. The payment provisions of Section 14.2 shall be amended as follows:
a. The $1,500,000 payment due to Netscape on June 15, 1997 shall be
reduced to $1,160,000 and shall be due and payable on June 30,
1997; and
b. The $2,250,000 payment due to Netscape on September 30, 1997 and the
$2,750,000 payment due to Netscape on December 31, 1997, each of
which is specified in Section 14.2, shall be cancelled. All other
payments specified in the Agreement shall remain due as set forth
in the Agreement.
5. Section 17.1 is revised in its entirety to read as set forth in Attachment
A-1 hereto.
The Effective Date of this Amendment One is 6/30/97, 1997.
YAHOO! INC. NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Jeffrey A. Mallett By: /s/ Michael Homer
-------------------------------- -------------------------------
Name: Jeffrey A. Mallett Name: Michael Homer
------------------------------ ---------------------------
Title: SR. VP. Business Operations Title: SVP of Marketing
----------------------------- ---------------------------
-2-
[X] CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
ATTACHMENT A-1
17.1 ALLOCATION. "Interim Net Revenues" shall be defined as the gross
recognized revenues received from: (i) advertising sales (other than
revenues received in connection with the sale of advertising on the What's
New Page and What's Cool Page, as such advertising revenues are described in
Section 16 of the Agreement); (ii) fees paid by Content Providers; and (iii)
revenues from other sources; less barter, bad debt (provided that charges
against bad debt do not exceed three percent (3%) of the gross recognized
revenues), and cost of sales (at twenty percent (20%) of gross recognized
revenues). [XXXX] has been achieved, after which time the Interim Net
Revenues will be allocated [XXXX] for the remainder of the Term. Yahoo may
keep an ongoing reserve of three percent (3%) for bad debt, and actual bad
debt shall be reconciled at the conclusion of each twelve (12) month period.
To the extent that the accrued Interim Net Revenues as of [XXXX],
thirty-three percent (33%) of the difference between the actual Interim Net
Revenues as of December 31, 1997 and [XXXX] shall be credited towards Yahoo's
March 31, 1998 minimum payment of [XXXX].
-3-
[X] CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
NETSCAPE COMMUNICATIONS CORPORATION
INTERNATIONAL NET SEARCH PROGRAM
SERVICES AGREEMENT
OBJECTIVE: To direct users of a Netscape client software Internet browser
product ("Browser") to local-language Internet search and directory services.
TERMS AND CONDITIONS:
1. PREMIER PROVIDER. The entity ("Premier Provider") named on the
signature page to this agreement ("Agreement") will be a premier search and
directory service for the collection of HTML pages which Netscape maintains
as certain of Netscape's local, non-U.S.-English web sites and language- and
geographically-targeted mirror sites, in the languages and geographic targets
as set forth below (referred to individually as a "Netscape Local Web Site"
and collectively as "Netscape Local Web Sites"). Each Netscape Local Web
Site shall include an HTML page providing local-language and/or
geographic-targeted Internet search and directory functionality (such HTML
page being referred to individually as a "Local Page" and collectively as the
"Local Pages"). (Each language- and geographically-targeted combination
listed under "Netscape Local Web Site" is referred to as a "Territory".) The
Local Pages shall be accessible by the public via the Internet at the URLs
specified below, or such other URLs as Netscape may designate from time to
time in writing:
<TABLE>
<CAPTION>
NETSCAPE LOCAL WEB SITE URL FOR LOCAL PAGE
- ----------------------- ------------------
<S> <C>
Brazilian Portuguese - Brazil http://home.netscape.com/pt/escapes/internet_search.html
Danish - Denmark http://home.netscape.com/da/escapes/internet_search.html
Dutch - The Netherlands http://home.netscape.com/nl/escapes/internet_search.html
French - France http://home.netscape.com/fr/escapes/internet_search.html
German - Germany http://home.netscape.com/de/escapes/internet_search.html
Italian - Italy http://home.netscape.com/it/escapes/internet_search.html
[X] CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Japanese - Japan http://home.netscape.com/ja/escapes/internet_search.html
Korean - Korea http://home.netscape.com/ko/escapes/internet_search.html
Spanish - Spain http://home.netscape.com/es/escapes/internet_search.html
Swedish - Sweden http://home.netscape.com/se/escapes/internet_search.html
Australian Mirror Site - Australia http://home.netscape.com/au/escapes/internet_search.html
U.K. Mirror Site - United Kingdom http://home.netscape.com/uk/escapes/internet_search.html
</TABLE>
The Local Pages may also be accessed by Internet users of a
Netscape-distributed local-language version of the Browser by pressing or
"clicking" on the Net Search Button or such other methods as Netscape may
specify from time to time. Notwithstanding the foregoing, Netscape reserves
the right to determine other means whereby users may access Local Pages which
provide Internet search and directory services on Netscape Local Web Sites,
including, but not limited to, the use of mirror sites and pointers based on
a user's IP address, and which localized pages are separate and distinct from
the Local Pages described in this Agreement.
2. PREMIER PERIOD. Netscape will maintain Premier Provider's Premier
Graphic, as defined below, on the Local Pages for the period beginning on the
Start Date and ending on the End Date below, except with respect to the Local
Page for Japan, which Premier Graphic shall be maintained on the Local Page
for Japan beginning on August 1, 1997, and ending on the End Date
(collectively, the "Premier Period"):
Start Date: July 1, 1997
End Date: June 30, 1998
3. SERVICES PROVIDED BY NETSCAPE.
3.1 PREMIER GRAPHIC. Each of the participants, including
Premier Provider, in this International Net Search Program (the
"Participants") will supply Netscape with HTML and/or GIF files, or files of
such other format as may be designated from time to time in writing by
Netscape, which conform to the specifications in EXHIBIT A (each of such
files comprise a "Premier Graphic"), for each of the languages for the
Netscape Local Web Sites listed in Section 1, which Netscape will place on
the applicable Local Pages during the Premier Period. Premier Provider shall
retain all right, title and interest in and to the Premier Provider's Premier
Graphic (including the copyright ownership thereof), and Premier Provider
hereby grants
-2-
[X] CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Netscape a royalty-free worldwide license, without payment or
other charge therefor, to use, display, perform, reproduce and distribute
Premier Provider's Premier Graphic, and such other licenses with respect to
Premier Provider's Premier Graphic necessary to fulfill the intention of this
Agreement. Premier Provider's Premier Graphic shall contain a functional
search field and, if available, directory tree. The specifications of the
Premier Graphics and the placement on the Local Pages of the Premier Graphics
are set forth on EXHIBIT A hereto. Premier Provider's compliance with the
content as well as the language, technical, visual and functional
specifications set forth in EXHIBIT A are a material obligation of Premier
Provider under this Agreement. Netscape may, upon notice to Premier
Provider, revise EXHIBIT A, provided that the display of the Premier Graphics
shall remain the largest and most prominent category of search graphics on
the Local Pages.
3.2 STACK. Netscape will produce the Local Pages as set forth on
EXHIBIT A. The Premier Graphic of each of the Participants on any Local Page
will appear to be overlapped in a stack (the "Stack"). A Premier Graphic
other than the Premier Graphic currently being displayed will be accessible
by the end user by pressing or "clicking" on a tab for the relevant
Participant's service. Netscape will produce the Local Pages such that when
an end user presses or "clicks" on hypertext links ("Premier Links") placed
by Premier Provider on Premier Provider's Premier Graphic, the end user's
Browser will access Premier Provider's applicable HTML pages located at the
applicable URLs ("Premier URLs") for such pages on the collection of
local-language HTML documents Premier Provider maintains as its web site in
the applicable local language ("Premier Provider's Local Web Site" or, as
appropriate, "Premier Provider's Local Web Sites"). In the event the Premier
Provider's Local Web Site for a particular Territory is not fully operational
on the first day of the Premier Period, Netscape shall include Premier
Provider's Premier Graphic for such Territory in the Stack on the Local Page
for such Territory, provided that: (i) such Premier Graphic shall link to
Premier Provider's U.S. English language Web site or such other relevant
Premier Provider Internet search service as specified by Premier Provider,
except with respect to the Premier Graphic for France; (ii) such link to
Premier Provider's Web site shall include a notification to the end user to
"stay tuned" for Premier Provider's Local Web Site for such Territory; (iii)
any such views of Premier Provider's Premier Graphic shall be counted as an
"Exposure" as defined in Section 6.1; and (iv) Premier Provider shall use
best efforts to launch a fully operational Local Web Site for such Territory
as soon after the Effective Date as practicable.
3.3 ROTATION. Netscape will rotate the display of the Premier
Graphic to be displayed on the top of the Stack when each Local Page is
served to an end user who has not selected a Premier Graphic as a default, as
described in Section 3.4. Subject to the provisions of Section 3.4, Premier
Provider's Premier Graphic will appear on the top of the Stack of each Local
Page [XXXX]("Rotation Percentage") of the time in which the Local Page is
served up to end users who have not selected a particular Premier Graphic or
selected a default Premier Graphic when accessing the particular Local Page.
Premier Provider acknowledges that the above-stated rotation percentage is a
quarterly target. Netscape shall use reasonable commercial efforts to serve
up the Premier Graphic at such rotation frequency with a variance of plus or
minus one percent (+/-1%) throughout the Premier Period.
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3.4 END USER DEFAULT. Netscape shall produce each Local Page
such that the end user may select which Premier Graphic, including, without
limitation, Premier Provider's Premier Graphic, the end user would prefer to
have displayed on the top of the Stack upon the calling up of each Local Page
by such end user. If an end user selects a default Premier Graphic, the
Premier Graphic selected by the end user will be displayed on top of the
Stack when that end user accesses such Local Page. If an end user has
elected to have a particular Premier Graphic appear on top of the Stack on a
default basis, the other Premier Graphics, including, without limitation,
Premier Provider's Premier Graphic, to the extent Premier Provider's Premier
Graphic is not selected as such default, will not appear on the top of the
Stack unless selected by the end user. Netscape plans to make the
functionality described in this Section 3.4 available by July 31, 1997.
3.5 LOCAL PAGE SPECIFICATIONS. The specifications of each of the
Premier Graphics, including, without limitation, Premier Provider's Premier
Graphic, the Stacks, and their placement on the Local Pages are set forth on
EXHIBIT A hereto; provided, however, that Netscape may, upon notice to
Premier Provider, (i) change the location of the Stacks or the Premier
Graphics on the Local Pages, (ii) redesign or reconfigure the Stacks, the
Local Pages, Netscape's Local Web Sites, and/or the manner in which an end
user interacts with any of the pages of Netscape's Local Web Sites, or (iii)
revise EXHIBIT A, and Premier Provider shall promptly, and in any event,
within no more than thirty (30) days following receipt of the notice, supply
Netscape with a revised Premier Provider Premier Graphic which conforms to
the specifications of the revised EXHIBIT A. In the event that Netscape
revises EXHIBIT A and Premier Provider must supply conforming materials, such
conforming materials shall be received by Netscape and fully functional no
later than five (5) days (excluding holidays) prior to the date Netscape
specifies for the posting of the revised Premier Provider Premier Graphic or
Stack on Netscape's Local Web Sites. If Netscape has not received such
revised and conforming materials no later than five (5) days prior to the
date Netscape specifies for the posting of the revised Premier Provider
Premier Graphic or Stack on Netscape's Local Web Sites, or if the materials
supplied by Premier Provider do not function in accordance with the
specifications set by Netscape, then Netscape shall either (i) post previous
versions of Premier Provider's supplied materials, or (ii) make such changes
as necessary to bring the materials into conformity with the new
specifications, until such time as the specifications of EXHIBIT A are again
revised.
3.6 UPDATE OF PREMIER GRAPHIC. Premier Provider may elect to
revise or update its Premier Graphic, provided that such Premier Graphic
complies with the specifications of EXHIBIT A. Netscape shall provide
Premier Provider with a schedule of material due dates and planned Local Page
updates.
3.7 EMERGENCY ENGINEERING SUPPORT. Netscape will provide, free
of charge, up to an aggregate of three (3) hours of emergency engineering
support services time per update to help Premier Provider service any newly
revised Premier Provider Premier Graphic so that such Premier Graphic
complies with the new specifications. Netscape will use reasonable
commercial efforts promptly to remedy any material malfunctioning of the
tabbing mechanism for Premier Provider's Premier Graphic or material
malfunctioning of the Premier Links under the control of Netscape, provided
Premier Provider will fully cooperate with Netscape to remedy
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any such material malfunctioning or misplacement, and provided further that
Netscape shall not incur liability for any failure to remedy such material
malfunctioning or misplacement if such remedy is not within the reasonable
control of Netscape. Premier Provider may report malfunctions to Netscape at
the email address [email protected]. Notwithstanding the foregoing,
Netscape has no obligation to perform services in connection with
malfunctions resulting from software not supplied by Netscape.
4. JOINT SERVICES. If the parties so mutually agree, Netscape and
Premier Provider shall operate a co-branded search and display service
consisting of customizing search results served up from Premier Provider's
Local Web Sites in conjunction with Netscape's premier search and directory
service described herein (collectively, the "Co-Branded Service"). The
Co-Branded Service name shall be mutually agreed upon by Netscape and Premier
Provider. Premier Provider shall not independently use the Co-Branded Service
Name without Netscape's prior written consent, unless such use occurs in
connection with Premier Provider's promotional efforts on behalf of the
Co-Branded Service. The Co-Branded Service name may only be displayed on
search results pages generated by Premier Provider in connection with the
Co-Branded Service. Premier Provider shall have the right to use the
Co-Branded Service name as described in this Section 4 during the Premier
Period. Premier Provider may not use the Co-Branded Service name for any
other purpose.
5. ADDITIONAL PREMIER PROVIDER BENEFITS.
5.1 ADVERTISING SERVICES. During the Premier Period, Premier
Provider may purchase additional advertising on Netscape's Local Web Sites
for advertising that will run during the Premier Period for the service of
Premier Provider at a discount of ten percent (10%) off Netscape's then
standard rates for such advertising. Premier Provider shall execute
Netscape's standard sponsorship agreement for online advertising with respect
to postings of Premier Provider's advertisement ("Premier Provider's
Advertisement"). Premier Provider and Netscape shall mutually agree to the
schedule and the placement of Premier Provider's Advertisement on Netscape's
Local Web Sites. Premier Provider shall supply Netscape with the graphic
files and other materials and information within the timeframes and as set
forth in the specifications of the applicable Netscape advertising program
and as reasonably requested by Netscape to produce the Premier Provider's
Advertisement. Premier Provider's Advertisement shall not contain any
Internet search or directory functionality as such Premier Provider's
Advertisement is served to end users.
5.2 LIMIT ON PREMIER PROVIDERS. Netscape shall limit the number
of companies whose tabs appear on the Stack at any one time to a total of
[XXXX]entities, except with respect to: (i) the Netscape Local Web Site in
France, which shall contain a total of [XXXX] entities on the Stack through
July 1997, and (ii) the Netscape Local Web Site in Japan, which shall contain
a total of [XXXX] entities on the Stack through July 1997.
5.3 PRESET BOOKMARK. Netscape will use reasonable commercial
efforts to include a graphic HTML link to Premier Provider's URL ("Premier
Provider's Bookmark") in the bookmark section of the local-language version
of Netscape Communicator client software
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versions 4.x. Although Netscape may decide to include Premier Provider's
Bookmark in certain local-language shipping versions of Netscape Communicator
4.x, Premier Provider's Bookmark may be reconfigured, customized or deleted
by an end user. Premier Provider may redirect, at its option, traffic to
Premier Provider's Bookmark to other Premier Provider Internet search
services.
6. EXPOSURE GUARANTEE.
6.1 An exposure ("Exposure") occurs upon the serving up to an end
user of: (i) the HTML page displaying Premier Provider's Premier Graphic on
the top of a Stack, (ii) if Netscape includes a bookmark link to Premier
Provider, the page on Premier Provider's Local Web Site linked to Premier
Provider's Bookmark, (the "Bookmarked Local Page") in conjunction with the
program described in this Agreement, or (iii) other Premier Provider content
as a consequence of an end user accessing a promotional page on Netscape's
Local Web Sites if the parties agree that such promotional page traffic shall
constitute an Exposure. Premier Provider's Premier Graphics may be served on
the top of the Stack to an end user by the following means: (i) Premier
Provider's Premier Graphics is displayed as part of the Stack rotation, as
described in Section 3.3, (ii) Premier Provider's Premier Graphics has been
set as an end user's default selection, as described in Section 3.4 or (iii)
an end user selects or clicks on Premier Provider's Premier Graphic tab in
the Stack.
6.2 MINIMUM GUARANTEED EXPOSURES. Netscape guarantees, during
the Premier Period:
(i) a combined total of [XXXX] for the following
Territories: Brazil, Denmark, The Netherlands, France,
Germany, Italy, Spain, Sweden and the United Kingdom;
(ii) [XXXX] for the Japanese Territory;
(iii) [XXXX] for the Korean Territory; and
(iv) [XXXX] for the Australian Territory.
Each Territory or group of Territories described in Sections 6.2(i)-(iv)
above shall be defined as a "Region," and each number of minimum guaranteed
exposures for each Region shall be defined as the "Minimum Guaranteed
Exposures" with respect to such Region; provided, however, that the number of
Minimum Guaranteed Exposures for a Region shall be reduced by the Reduction
Amount, as defined below, in the event that, as of the first day of the
Premier Period, or for any period during the Premier Period, Premier Provider
has not launched or is not operating a fully-functional, language- and
geographically-targeted Internet search and directory service for each of the
French-France, German-Germany, Japanese-Japan, and English-United Kingdom
Territories (collectively, the "Primary Territories"). As used in this
Section 6.2, the "Reduction Amount" means the product of (a) and (b) below:
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(a) Minimum Guaranteed Exposures for the Region in which the
Primary Territory's Internet search and directory service is not operating.
(b) the fraction equal to
(1) number of days during the Premier Period (a) that
Premier Provider does not operate for general use on the World Wide Web
fully-functional, language- and geographically-targeted Internet search and
directory services for the Primary Territories and (b) for which Premier
Provider has not provided to Netscape a Premier Graphic corresponding to each
of such services pursuant to Section 3.1 of this Agreement; divided by
(2) The number of days in the Premier Period.
Netscape shall apply the Reduction Amount to the Region in which the Primary
Territory's Internet search and directory service is not operating (i.e. if
the United Kingdom service is not operating, the Reduction Amount shall be
applied against the Minimum Guaranteed Exposures listed in Section 6.2(i)).
6.3 MAKE-GOOD. If, at the end of the Premier Period, Premier
Provider's content has not, in the aggregate, received total Exposures equal
to or greater than the Minimum Guaranteed Exposures for any of the four
Regions described in Section 6.2(i)-(iv) above, and provided that Premier
Provider has complied with its obligations hereunder, Netscape will, at its
discretion: (i) continue to place Premier Provider's Premier Graphic on the
Local Pages (as specified in this Section 3) of the particular Region in
which there is a shortage of Exposures beyond the end of the Premier Period
until such time as the Minimum Guaranteed Exposures for such Region have been
achieved; (ii) deliver to Premier Provider a mutually agreed upon program as
a remedy for the shortfall in Exposures; or (iii) purchase from Premier
Provider mutually agreed upon advertising and inventory services. If the
parties are unable to mutually agree upon a program or advertising and
inventory services as described in this Section 6.3(ii) and 6.3(iii), then
Netscape shall continue to place Premier Provider's Premier Graphic on the
Local Pages as specified in this Section 6.3(i). The remedy set forth in
this Section 6.3 shall be Premier Provider's sole and exclusive remedy, and
Netscape's sole and exclusive obligation, regarding Netscape's obligation set
forth in Section 6.2 in the event, by the end of the Premier Period, any of
the Minimum Guaranteed Exposures have not been achieved.
7. PREMIER PROVIDER OBLIGATIONS. In addition to the other obligations
set forth herein, Premier Provider shall:
7.1 NETSCAPE NOW. Premier Provider shall display the "Netscape
Now" button prominently [XXXX], and use reasonable commercial efforts to
include the following statement (or a statement designated by Netscape and
generally used by Netscape as a successor to the following statement or in
connection with any successor program to Netscape's Netscape Now program)
next to the Netscape Now button: "This site is best viewed with Netscape
Communicator. Download Netscape Now!" (or such higher non-beta version as is
then available). Premier Provider will produce the page such that when an
end user presses or clicks
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on the Netscape Now button (or such other button used in connection with any
successor program to the Netscape Now program), the end user's Internet
client software will access the applicable HTML page located at a URL
supplied by Netscape. On any page on which the Netscape Now button, or a
successor button, is displayed, the Netscape Now button shall be [XXXX] or
"push" content delivery system other than dedicated function software in the
appropriate topical area (e.g., personal finance). Premier Provider shall
use reasonable commercial efforts promptly to remedy any misplacement of the
Netscape Now button on its home page or other pages or any malfunctioning of
the button, provided Netscape will fully cooperate with Premier Provider to
remedy any such misplacement or malfunctioning, and provided further that
Premier Provider shall not incur liability for any failure to remedy such
misplacement or malfunctioning if such remedy is not within the reasonable
control of Premier Provider. In the event that Netscape replaces the
Netscape Now program with a successor program, Netscape shall advise Premier
Provider and Premier Provider shall produce the page to conform to such
successor program, provide Premier Provider's obligations under such
successor program shall not be materially increased. Netscape hereby grants
Premier Provider a nonexclusive, nontransferable, nonassignable,
nonsublicensable license to perform and display the Netscape Now button
directly in connection with fulfilling the foregoing obligation. Premier
Provider's use of the Netscape Now button shall be in accordance with
Netscape's reasonable policies regarding advertising and trademark usage as
established from time to time by Netscape, including the guidelines of the
Netscape Now Program published on Netscape's U.S. English-language Web Site.
Premier Provider acknowledges that the Netscape Now button is a proprietary
logo of Netscape and contains Netscape's trademarks. In the event that
Netscape determines that Premier Provider's use of the Netscape Now button is
inconsistent with Netscape's quality standards, then Netscape shall have the
right to suspend immediately such use of the Netscape Now button. Premier
Provider understands and agrees that the use of the Netscape Now button in
connection with this Agreement shall not create any right, title or interest
in or to the use of the Netscape Now button or associated trademarks and that
all such use and goodwill associated with the Netscape Now button and
associated trademarks will inure to the benefit of Netscape. Premier
Provider agrees not to register or use any trademark that is similar to the
Netscape Now button. Premier Provider further agrees that it will not use the
Netscape Now button in a misleading manner or otherwise in a manner that
could tend to reflect adversely on Netscape or its products. If Premier
Provider fails to honor the commitment set forth in this Section 7.1,
Netscape shall be relieved of its obligations described in Section 6.3;
7.2 SERVER SOFTWARE. In order to showcase the close
relationship between Premier Provider and Netscape and highlight Premier
Provider's endorsement of Netscape's products, Premier Provider shall use at
least one (1) current version of Netscape core Web server software product
(currently comprised of Netscape Enterprise Server and Netscape FastTrack
Server) to maintain Premier Provider's Web Sites provided that Netscape has
released a localized Web server software product suitable for the respective
language-geography in the Territory. Premier Provider shall use commercially
reasonable efforts to deploy such Web server software upon release by
Netscape, and, if requested, provide Netscape with evidence of such use;
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7.3 SITE FEATURES. Implement at least one of HTML Frames,
layers, dynamic HTML pages, Java, JavaScript, absolute positioning, cascading
style sheets or the then current client software technology (or subsequent
features displayable by the Browser, within the beta testing period of the
availability of such features) ("Site Features") for display with those
Internet software clients capable of displaying the Site Features on (i)
Premier Provider's Local Web Sites, provided that Premier Provider shall use
reasonable commercial efforts to implement the Site Features on Premier
Provider's Local Web Sites in a location and in a fashion as Netscape may
agree, and (ii) at least one (1) HTML page located at each Premier URL (or on
an HTML page located further down the directory tree from the page located at
the Premier URL; provided Premier Provider will use reasonable efforts to
implement the Site Features as high in such directory tree structure as
possible), and, where appropriate, on all other HTML pages of Premier
Provider's primary Web site; and provided Premier Provider shall not be
required to implement the Site Features on pages of any secondary Web site of
Premier Provider that Premier Provider is required to construct to satisfy
Premier Provider's obligations under any third party contract existing as of
the date of this Agreement. Netscape shall use reasonable commercial efforts
to help Premier Provider implement changes in order to comply with new Site
Features;
7.4 MAILTO LINK. Include on the page served to an end user in
conjunction with the results of the end user's search query on Premier
Provider's service a "mailto" link which users of Premier Provider's service
can use to direct questions or help requests to Premier Provider. Netscape
shall also include such a "mailto" link on the page. Premier Provider will
use reasonable efforts to reply promptly to any such question or help request;
7.5 NO DISABLING. Not provide or implement any means or
functionality which would (i) alter or modify, or enable end users to alter
or modify, the Browser standard user interface or configuration, (ii) disable
any functionality of the Browser or any other Internet browser software, or
(iii) modify the functioning of pages served form Netscape's Local Web Site.
If Premier Provider fails to honor the commitment set forth in this Section
7.5, Netscape be relieved of its obligations described in Section 6.3;
7.6 USE OF PREMIER GRAPHIC SPACE. Not use, or assign the right
to use, the space allotted the Premier Graphic, or links therein, for the
benefit of a third party without first obtaining Netscape's prior written
consent therefor, not produce the Premier Graphic such that it includes
comparisons of Premier Provider's services with other services, and shall
maintain the Premier Graphic for the purpose of promoting Premier Provider's
Internet search and directory services; and
7.7 PREFERENCE FOR NETSCAPE PRODUCTS AND SERVICES. Use
commercially reasonable judgment to accord, in light of the intent of the
parties to highlight their strategic relationship as evidenced by the terms
and conditions of this Agreement, in Premier Provider's Local Web sites,
Netscape's products and services a position of overall prominence at least as
great as the positioning accorded any third-party Internet client software
provider.
8. PAYMENT TO NETSCAPE.
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8.1 PAYMENT. Premier Provider shall pay Netscape a total of
Three Hundred Thousand Dollars $300,000 (the "Payment") comprised of the
following:
Participation in the International Net Search Program $ [XXXX]
Engineering Fee $ [XXXX]
Localization Fee $ [XXXX]
8.2 CURRENCY; NET 30 DAYS; INTEREST. All amounts payable
hereunder are denominated in U.S. Dollars, and all amounts payable to
Netscape hereunder shall be paid in U.S. Dollars. Except as otherwise set
forth herein, all amounts payable by Premier Provider hereunder are payable
within thirty (30) days after receipt by Premier Provider of the
corresponding invoice submitted by Netscape. Any portion of the Cash Payment
or the Overage Payments which has not been paid to Netscape within the
applicable time set forth above shall bear interest at the lesser of (i) one
percent (1%) per month, or (ii) the maximum amount allowed by law.
8.3 TAXES.
a. EXCLUSIVE OF TAX. The Payment and Overage Payments
are exclusive of any tax. Premier Provider shall pay or reimburse Netscape
for all value-added, sales, use, consumption, property, ad valorem and
similar taxes, all customs duties, import fees or similar charges, stamp
duties, license fees and similar costs, and all other mandatory payments to
any government agencies of whatever kind imposed with respect to products or
services provided by Netscape under this Agreement or with respect to this
Agreement except taxes imposed on the net income of Netscape. If the
transaction is exempt from tax, Premier Provider shall provide Netscape with
a valid exemption certificate or other evidence or such exemption in a form
acceptable to Netscape. Premier Provider shall, at its own expense, use
reasonable efforts to recover refundable or recoverable taxes. Each party
shall cooperate with the other in minimizing applicable tax.
b. NO WITHHOLDING. All payments by Premier Provider to
Netscape pursuant to this Agreement shall be made without any withholding or
deduction of any withholding tax or other tax or mandatory payment to
government agencies. If Premier Provider is legally required to make any
such withholding or deduction from any payment due to Netscape under this
Agreement, the sum payable by Premier Provider upon which such withholding or
deduction is based shall be increased to the extent necessary to ensure that,
after such withholding or deduction, Netscape receives and retains, free from
liability for such withholding or deduction, a net amount equal to the amount
Netscape would have received and retained in the absence of such required
withholding or deduction.
c. PROVIDE RECEIPTS. In order to assist Netscape in
obtaining tax credits or deductions, Premier Provider shall provide to
Netscape, in a form acceptable to
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Netscape, original or certified copies of all tax payment receipts or other
evidence or payment of taxes by Premier Provider with respect to transactions
or payments under this Agreement.
d. SURVIVAL OF OBLIGATIONS. Premier Provider's
obligations under this Section shall survive any termination of this
Agreement.
8.4 CREDIT AGAINST PAYMENT. Premier Provider shall provide
Netscape with committed advertising inventory and services valued at [XXXX]
for Premier Provider's Local Web Sites, such inventory and services to be
valued based upon a mutually agreed upon rate. Netscape will provide to
Premier Provider a total credit of [XXXX] to be applied against the Payment
otherwise due under this Agreement as described in Section 8.1, as such
credit is determined by the value of the advertising services Netscape
receives from Premier Provider based on a mutually agreed upon rate. Such
advertising inventory and services shall be mutually agreed upon by the
parties including placement and available advertising key words or other
value added targeting services.
9. USAGE REPORTS.
9.1 PROVIDE USAGE REPORTS. Netscape and Premier Provider will
each provide the other, via email to the email address set forth below, with
usage reports ("Usage Reports") containing the information and in the format
set forth in Exhibit B hereto. The Usage Reports shall cover each one-month
time period of the Premier Period, and the parties shall use reasonable
commercial efforts to deliver the Usage Reports within fifteen (15) days
following the end of each month. If, due to technical problems, a party is
unable to provide any portion of a Usage Report in any given month, the
following data shall be used for each day for which data is missing: ninety
percent (90%) of the usage figures reported for the same day of the week most
recently reported (e.g. if data for the day seven (7) days prior is
available, ninety percent (90%) of the usage figures for such day; if not
available, the data for the day fourteen (14) days prior, and so on). The
parties may, by mutual written agreement, alter the content and format of the
Usage Reports. Once every quarter during the Premier Period, Netscape shall
engage an independent auditor to audit the Usage Reports submitted to Premier
Provider hereunder. During Netscape's normal business hours and upon
reasonable written notice and at Premier Provider's expense, Premier Provider
shall have the right to audit Netscape's Usage Reports during the Premier
Period and for two months after the end of the Premier Period. If such audit
shows that Premier Provider has overpaid at the end of the Premier Period,
such overpayment shall be corrected by Premier Provider's presence on the
Page being extended after the Premier Period for such time until Premier
Provider has received the Exposures which are commensurate with the total
amount, including credits, paid to Netscape hereunder.
9.2 NO LIABILITY. NETSCAPE AND PREMIER PROVIDER WILL USE
REASONABLE COMMERCIAL EFFORTS TO ENSURE THE TIMELY DELIVERY, ACCURACY AND
COMPLETENESS OF THE USAGE REPORTS, BUT NEITHER PARTY WARRANTS THAT THE USAGE
REPORTS WILL CONFORM TO ANY PUBLISHED NUMBERS AT ANY GIVEN TIME. NEITHER
PARTY SHALL BE HELD LIABLE FOR ANY CLAIMS AS THEY RELATE TO UNAUDITED USAGE
REPORTS.
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10. TERMINATION OR EXPIRATION.
10.1 METHODS OF TERMINATION.
a. TERM AND TERMINATION. This Agreement shall commence
as of the date hereof and, unless sooner terminated pursuant to this Section
10.1, shall terminate as of the end of the Premier Period.
b. TERMINATION ON BREACH. Either party may terminate
this Agreement if the other party materially breaches its obligations
hereunder and such breach remains uncured for fifteen (15) days following
notice to the breaching party of the breach or as otherwise provided in
Section 11.
10.2 EFFECT OF TERMINATION OR EXPIRATION. Except as specifically
provided otherwise in this Agreement, upon the expiration or termination of
the Agreement, all rights and obligations hereunder shall cease, including
Premier Provider's right to use the Co-Branded Service name as described in
Section 4 above (other than Premier Provider's payment obligations hereunder
to the extent accrued on or prior to the termination date or as otherwise
provided in this Section 10.2), and each party will promptly and at the
direction of the other party, either return or destroy, and will not take or
use, any items of any nature that belong to the other party and all items
containing or related to Confidential Information (as defined in EXHIBIT C)
of the other party. Notwithstanding the foregoing, if this Agreement expires
or is terminated for any reason, other than by Premier Provider as a result
of Netscape's material breach of the terms of this Agreement or by Netscape
for its convenience pursuant to Section 10.1(c), Premier Provider shall
remain liable for the value of the payments which are due or, but for such
expiration or termination, would otherwise become due and payable under the
terms of this Agreement. The following provisions shall survive the
expiration or termination of this Agreement for any reason: Section 8.3
(Taxes), Section 9.2 (No Liability), Section 10.2 (Effect of Termination),
Section 10.3 (No Compensation), Section 12 (Responsibility), Section 13
(Limitation of Liability), and Section 14 (General). In addition, to the
extent that any credit provided by Premier Provider to Netscape pursuant to
Section 8.4 shall not be applied against advertising services provided by
Premier Provider to Netscape during the Premier Period, Section 8.4 shall
survive the expiration or termination of this Agreement until all such
credits shall be applied against such services.
10.3 NO COMPENSATION. Premier Provider shall not be entitled to
any compensation, damages or payments in respect to goodwill that has been
established or for any damages on account of prospective profits or
anticipated sales, and Premier Provider shall not be entitled to
reimbursement in any amount for any training, advertising, market
development, investments, leases or other costs that shall have been expended
by either party before the expiration or termination of this Agreement,
regardless of the reason for or method of termination of this Agreement.
Premier Provider hereby waives its rights under applicable laws for any such
compensation, reimbursement or damages.
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11. RIGHT TO REFUSE. Netscape will have the right to review the
contents and format of Premier Provider's Premier Graphic, the Bookmarked
Local Page and Premier Provider's Advertisement. If Netscape, in its
reasonable discretion, at any time determines that Premier Provider's Premier
Graphic, the Bookmarked Local Page, the portion of the search results page on
Premier Provider's Local Websites under the control of Premier Provider and
accessed within one (1) click away from Premier Provider's Premier Graphic,
or Premier Provider's Advertisement contains any material, or presents any
material in a manner that Netscape deems inappropriate for any reason,
Netscape will inform Premier Provider of the reason Netscape has made such
determination and may (i) refuse to include Premier Provider's Premier
Graphic in the Local Pages or Premier Provider's Advertisement on Netscape's
Local Web Sites, and/or (ii) immediately terminate this Agreement if Premier
Provider has not revised to Netscape's reasonable satisfaction Premier
Provider's Premier Graphic, the Bookmarked Local Page or Premier Provider's
Advertisement within seven (7) business days of written notice from Netscape.
If Netscape, in its reasonable discretion, at any time determines that,
within one (1) click away from the Premier Provider's Premier Graphic portion
of Netscape's Local Web Sites, Premier Provider's Local Web Sites contain any
material, or present any material in a manner, that Netscape deems
inappropriate for any reason, Netscape may immediately terminate this
Agreement if Premier Provider has not revised such material or presentation
within seven (7) business days of written notice from Netscape. Netscape
reserves the right to refuse to include Premier Provider's Premier Graphic in
the Local Pages if such Premier Graphic does not completely conform to the
specifications set forth in EXHIBIT A, and any Premier Provider's
Advertisement that does not completely conform to the specifications of the
applicable advertising program.
12. RESPONSIBILITY. Premier Provider is solely responsible for any
legal liability arising out of or relating to (i) Premier Provider's Premier
Graphic, Premier Provider's Bookmark, the Bookmarked Local Page or Premier
Provider's Advertisement, and/or (ii) any material to which users can link
within one (1) click away through Premier Provider's Premier Graphic, Premier
Provider's Bookmark, the Bookmarked Local Page and Premier Provider's
Advertisement but not including search results. Premier Provider represents
and warrants that it holds the necessary rights to permit the use of Premier
Provider's Premier Graphic, the Premier URLs, the Premier Links, Premier
Provider's Bookmark, the Bookmarked Local Page and Premier Provider's
Advertisements by Netscape for the purpose of this Agreement; and that the
permitted use, reproduction, distribution, or transmission of Premier
Provider's Premier Graphic, Premier Provider's Bookmark, the Bookmarked Local
Page, Premier Provider's Advertisements and any material to which users can
link within one (1) click away through Premier Provider's Premier Graphic,
Premier Provider's Bookmark, the Bookmarked Local Page or Premier Provider's
Advertisements will not violate any criminal laws or any rights of any third
parties, including, but not limited to, infringement or misappropriation of
any copyright, patent, trademark, trade secret, music, image, or other
proprietary or property right, false advertising, unfair competition,
defamation, invasion of privacy or rights of celebrity, violation of any
antidiscrimination law or regulation, or any other right of any person or
entity, or otherwise violate any applicable local, state, national or
international law. Premier Provider agrees to indemnify Netscape and to hold
Netscape harmless from any and all liability, loss, damages,
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claims, or causes of action, including reasonable legal fees and expenses
that may be incurred by Netscape, arising out of or related to Premier
Provider's breach of any of the foregoing representations and warranties. In
connection with such indemnification, Netscape will (i) promptly notify
Premier Provider in writing of any such claim and grant Premier Provider
control of the defense and all related settlement negotiations, and (ii)
cooperate with Premier Provider, at Premier Provider's expense, in defending
or settling such claim; provided that if any settlement results in any
ongoing liability to, or prejudices or detrimentally impacts Netscape, and
such obligation, liability, prejudice or impact can reasonably be expected to
be material, then such settlement shall require Netscape's written consent.
In connection with any such claim, Netscape may have its own counsel in
attendance at all public interactions and substantive negotiations at its own
cost and expense.
13. LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE
TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, AND
WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
THE LIABILITY OF EITHER PARTY FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER
(EXCEPT FOR DAMAGES OR ALLEGED DAMAGES ARISING UNDER SECTION 12) WHETHER IN
CONTRACT OR TORT OR ANY OTHER LEGAL THEORY IS LIMITED TO AND SHALL NOT EXCEED
THE PAYMENT PAID OR PAYABLE BY PREMIER PROVIDER HEREUNDER.
14. GENERAL.
14.1 GOVERNING LAW. This Agreement shall be subject to and
governed in all respects by the statutes and laws of the State of California
without regard to the conflicts of laws principles thereof. The Superior
Court of Santa Clara County and/or the United States District Court for the
Northern District of California shall have exclusive jurisdiction and venue
over all controversies in connection herewith, and each party hereby consents
to such exclusive and personal jurisdiction and venue.
14.2 ENTIRE AGREEMENT. This Agreement, including the exhibits
and attachments referenced on the signature page hereto, constitutes the
entire Agreement and understanding between the parties and integrates all
prior discussions between them related to its subject matter. No
modification of any of the terms of this Agreement shall be valid unless in
writing and signed by an authorized representative of each party.
14.3 ASSIGNMENT. Neither party may assign this Agreement, in
whole or in part, without the other party's written consent; provided,
however, that either party may assign this Agreement without such consent in
connection with any merger, consolidation, sale of all or substantially all
of such party's assets or any other transaction in which more than fifty
percent (50%) of such party's voting securities are transferred (such events
being collectively referred to as a "Change in Control"), provided that: (i)
such Change in Control shall not occur with respect to a prospective assignee
who is in a directly competitive relationship with the other party, and (ii)
in the case of a Change of Control of Premier Provider, the assignee shall
affirmatively agree
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in writing to honor all commitments hereunder. Premier Provider hereby
warrants and represents that it is not currently in discussion, and has no
current plans to enter into discussions, with third parties concerning an
event which could give rise to a Change of Control of Premier Provider. A
breach of the foregoing representation is grounds for termination. If, after
a Change of Control of Premier Provider, the number of Exposures received by
Premier Provider during the subsequent quarter following such assignment
decreases by fifteen percent (15%) or more compared to the previous quarter,
Netscape shall have the right to terminate this Agreement.
14.4 NOTICES. All notices required or permitted hereunder shall
be given in writing addressed to the respective parties as set forth below
and shall either be (i) personally delivered or (ii) transmitted by
internationally-recognized private express courier, and shall be deemed to
have been given on the date of receipt if delivered personally, or the day on
which such notice is delivered to the recipient as evidenced by the delivery
records of such courier, but in no case later than five (5) days after
deposit with such courier. Either party may change its address for purposes
hereof by written notice to the other in accordance with the provisions of
this Subsection. The addresses for the parties are as follows:
Premier Provider: Netscape:
_______________________ Netscape Communications Corporation
_______________________ 501 East Middlefield Road, MV-002
_______________________ Mountain View, CA 94043
_______________________ Fax: (415) 528-4123
Attn:___________________ Attn: General Counsel
14.5 CONFIDENTIALITY. All disclosures of proprietary and/or
confidential information in connection with this Agreement, as well as the
contents of this Agreement shall be governed by the terms of the Mutual
Confidential Disclosure Agreement either entered into previously by the
parties or entered into concurrently with this Agreement, a copy of which is
attached hereto as EXHIBIT C. The information contained in the Usage Reports
provided by each party hereunder shall be deemed the Confidential Information
of the disclosing party. Notwithstanding the foregoing, Netscape may, in its
sole discretion, make publicly available client software market share
information contained in the Usage Reports submitted by Premier Provider,
provided that Netscape shall not indicate that Premier Provider is the source
of the information except as having participated in supplying a portion of
aggregated data. Netscape shall provide Premier Provider with notice prior
to using Premier Provider's name in connection with the release of any
information received by Premier Provider in a Usage Report.
14.6 FORCE MAJEURE. Neither party will be responsible for any
failure to perform its obligations under this Agreement due to causes beyond
its reasonable control, including but not limited to, acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods or accidents.
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14.7 WAIVER. The waiver, express or implied, by either party of
any breach of this Agreement by the other party will not waive any subsequent
breach by such party of the same or a different kind.
14.8 HEADINGS. The headings to the Sections and Subsections of
this Agreement are included merely for convenience of reference and shall not
affect the meaning of the language included therein.
14.9 INDEPENDENT CONTRACTORS. The parties acknowledge and agree
that they are dealing with each other hereunder as independent contractors.
Nothing contained in this Agreement shall be interpreted as constituting
either party the joint venturer, employee or partner of the other party or as
conferring upon either party the power of authority to bind the other party
in any transaction with third parties.
14.10 SEVERABILITY. In the event any provision of this Agreement
is held by a court or other tribunal of competent jurisdiction to be
unenforceable, such provision shall be reformed only to the extent necessary
to make it enforceable, and the other provisions of this Agreement will
remain in full force and effect.
14.11 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. For purposes hereof,
a facsimile copy of this Agreement, including the signature pages hereto,
shall be deemed to be an original.
14.12 YAHOO JAPAN. Upon Yahoo's request, Netscape and Yahoo!
Japan KK shall execute a separate agreement upon mutually agreeable terms
substantially the same as provided for in this Agreement, and execute an
amendment to this Agreement as necessary.
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This Agreement shall be effective as of the later of the two (2) dates set
forth below.
Premier Provider: Netscape:
YAHOO! INC. NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Jeffrey A. Mallett By: /s/ Michael Homer
-------------------------------- ----------------------------------
Print Name: Jeffrey A. Mallett Print Name: Michael Homer
------------------------ --------------------------
Title: SR. VP. Business Operations Title: SVP of Marketing
----------------------------- -------------------------------
Date: 6/30/97 Date: 6/30/97
------------------------------ --------------------------------
Premier Provider Address: Netscape Address:
3400 Central Expressway, Suite 201 501 East Middlefield Road, MV-002
Santa Clara, CA 95051 Mountain View, California 94043
USA
Attention: Attention: General Counsel
-------------------------
Facsimile: 408-731-3510 Facsimile: 415-528-4123
-------------------------- ---------------------------
Email: Email: [email protected]
------------------------------ -------------------------------
Attached Exhibits:
EXHIBIT A: Specifications of the Local Pages
EXHIBIT B: Usage Reports
EXHIBIT C: Mutual Confidential Disclosure Agreement
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EXHIBIT A
Specifications of the Local Page
As of June 1, 1997, Net Search will support Netscape Navigator versions
2, 3 and 4 (on both the Macintosh and PC ("Wintel") platforms), and Microsoft
Internet Explorer 3.0 (PC only). (See Net Search Premier Graphics Test
Specification, External for complete list). All other browsers will be
routed to a simple version of the Local Page which encourages users to
download a more current version of Netscape's browser. Netscape will spend
up to one hour of engineering time per sampler per month to integrate a
Premier Graphic into the Net Search Local Page if available. If more
engineering or QA time than is available becomes necessary to fix bugs
discovered, or if the necessary changes to fix any bugs include changes to
the appearance of Premier Provider's Premier Graphic, Premier Provider's
Premier Graphic will be returned for revision. The specifications are as
follows:
- - Size. All Premier Provider materials should be exactly 468 by 165 pixels.
Text and interactive forms included in Premier Provider's Premier Graphic
should be of a default font size of 12 points (Be aware, however, that
text and forms may resize on your audience's browsers as they change their
default font sizes.) Keep in mind that the < FONT SIZE= > tag is not
implemented in early versions of web browsers.
A Premier Graphic is measured by taking a screen shot on a system
configured as follows: A PC running Windows 95, with the settings
configured for small fonts, and an NEC MultiSync XV17+ (17 inch) monitor.
The screen shot will be taken of Netscape Navigator Gold version 3.1, with
the Proportional Font set at 12pt Times New Roman, and the Fixed Font set
at 10pt Courier New. The measurement will be taken in Paintbrush.
Netscape will provide "measurement services," if needed, for companies
that don't have the specified platform configuration.
- - HTML Quirks. We have found a few less-than-obvious quirks which cause
some browsers to crash, which we thought would be helpful to pass on:
1. < FORM > tags must follow IMMEDIATELY AFTER your sampler's first
< TABLE > tag. Any variation of this whatsoever will cause a
significant number of users to crash.
2. Any empty < TD > tags should be separated by a carriage return.
HTML should read as follows:
< TD >
< /TD >
as opposed to
< TD >< /TD >
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3. If text appears without any spacing between words (for instance,
in a sentences as opposed to in a table), any text that falls
closer than 50 pixels to the edge of Premier Provider's Premier
Graphic should be tested on a Unix machine. Often, this text
will be cut off on that platform.
4. Interleaving HTML tags will cause several browsers to crash.
Tags should be ordered as follows:
< H3 >< FONT COLOR="#000055" >Text here< /FONT >< /H3 >
as opposed to
< H3 >< FONT COLOR="#000055" >Text here< /H3 >< /FONT >.
- - Tables. In order to maintain the robustness of the Local Page, please do
not include any more than one nested table, for a total of two tables per
sampler. Any more than one nested table will cause crashes for a
significant number of users. One simple table is ideal, as even one
nested table may cause some implementation problems when integrated with
the Net Search Local Page. If you are nesting a table, please test
carefully.
- - Image Maps. Only a client-side image map is necessary, since browsers
which don't support client-side maps will not be directed to the main Net
Search Local Page.
- - File Sizes. To keep the user's load time low, we request that Premier
Provider files in total do not exceed 20K unless cleared by the
International Search production manager at [email protected].
- - Animated GIFs. Due to the large number of users whose browsers do not
support animated GIFs, and their typically large file size, we are not
implementing animated GIFs at this time.
- - JavaScript. JavaScript tends to cause older browsers to behave
unpredictably and in many cases crash, and there is delicate technology
in place to implement Site Sampler functionality. As a result, the
implementation of Java Script in a Premier Graphic is not an option at
this time.
- - Delivery. Content providers should email files to Netscape at
[email protected]. If you are providing multiple files, you
should place them in a folder labeled with the content provider's name.
For the best possible results, deliver a Premier Graphic that is already
integrated into a copy of the Net Search Local Page.
- - Filenames. It is important that filenames be in the following format:
search_providername.fmt (for example, search_premprov.gif,
search_premprov.htm). If there are two or more files of a certain format,
filenames should be in the following format: search_providername#.fmt
(for example, search_premprov.gif, search_premprov.gif). When
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you update your Premier Graphic, continue to increment the number to
help avoid caching issues.
- - Format. All content providers need to provide HTML files that include the
layout for their materials. All HTML should be uppercase. Please include
the TARGET=" _top" attribute in all HREF tags. Height and width tags need
to be specified for all images. Graphics files should be in GIF format;
all other formats should be cleared with the Destinations production
manager at [email protected].
- - Graphics. By limiting the number of individual graphics (server calls) in
your Premier Graphic, you will improve overall Local Page performance and
allow the Local Page to load more quickly. Cropping as close as possible
to the image, leaving no white space around them, will also allow the
Local Page to load more quickly. To minimize dithering and insure that
the users across all platforms see what you expect them to see, we
recommend use of the Netscape Color Palette.
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EXHIBIT B
Usage Reports
Sample report provided by Premier Provider to Netscape each month.
For the week of: 6/1/97 - 6/7/97
NETSCAPE BROWSERS ALL BROWSERS
----------------- ------------
NSCP 4.x - 5% NSCP Total - 75%
3.x - 40%
2.x - 5%
1.x - 2%
Total, basic - 52%
NSCP Gold 3.x - 25%
Total, Gold - 25%
NSCP Int'l 4.x - 2%
3.x - 18%
2.x - 3%
1.x - 0%
Total, Int'l - 23%
Total All - 100%
Premier Provider shall also provide Netscape with I/Pro audits, or
audits from reputable third party Internet auditors, the top 100 search terms
and the number of searches on each term.
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Sample report provided by Netscape to Premier Provider each month.
For the month of June 1997
(1) (2) (3) (4) (5)
Rotated Default Total first User total
Exposures Exposures Exposures Selected Exposures
(1+2) Exposures (3+4)
June 1 1M 200K 1.2M 400K 1.6M
June 2 1.1M 210K 1.31M 500K 1.81M
June 3 1.2M 220K 1.42M 600K 2.02M
...
...
June 31 1.8M 280K 2.08M 800K 3.08M
Total
A running total of the Exposures will also be included.
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EXHIBIT C
Mutual Confidential Disclosure Agreement
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MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT
WHEREAS, Netscape Communications Corporation ("Netscape") has developed
unique and proprietary computer programs; and
WHEREAS, YAHOO! INC. ("Company") and Netscape wish to discuss a proposed
business relationship between Netscape and Company.
NOW, THEREFORE:
Each party (the "Receiving Party") understands that the other party (the
"Disclosing Party") has disclosed or may disclose information (including,
without limitation, computer programs, code, algorithms, names and expertise
of employees and consultants, know-how, formulas, processes, ideas,
inventions (whether patentable or not), schematics and other technical,
business, financial and product development plans, forecasts, strategies and
information) which, to the extent previously, presently, or subsequently
disclosed to the Receiving Party is hereinafter referred to as "Proprietary
Information" of the Disclosing Party. All Proprietary Information disclosed
in tangible form by the Disclosing Party shall be marked "confidential" or
"proprietary" and all Proprietary Information disclosed orally or otherwise
in intangible form by the Disclosing Party shall be designated as
confidential or proprietary at the time of disclosure and shall be reduced to
a writing marked "confidential" or "proprietary" and delivered to the
Receiving Party within thirty (30) days following the date of disclosure.
In consideration of the parties' discussions and any access the
Receiving Party may have to Proprietary Information of the Disclosing Party,
the Receiving Party hereby agrees as follows:
1. The Receiving Party agrees (i) to hold the Disclosing Party's
Proprietary Information in confidence and to take all necessary precautions
to protect such Proprietary Information, (ii) not to divulge any such
Proprietary Information or any information derived therefrom to any third
person, (iii) not to make any use whatsoever at any time of such Proprietary
Information except to evaluate internally whether to enter into the currently
contemplated business relationship with the Disclosing Party, (iv) not to
remove or export any such Proprietary Information from the country of the
Disclosing Party, and (v) not to copy or reverse engineer, reverse compile or
attempt to derive the composition or underlying information of any such
Proprietary Information. The Receiving Party shall limit the use of and
access to the Disclosing Party's Proprietary Information to the Receiving
Party's employees who need to know such Proprietary Information for the
purpose of such internal evaluation and shall cause such employees to comply
with the obligations set forth herein. The Receiving Party shall treat the
Proprietary Information with at least the same degree of care and protection
as it would use with respect to its own proprietary information. The
foregoing obligations shall survive for a period of three (3) years from the
date of disclosure of the Proprietary Information. Without granting any right
or license, the Disclosing Party agrees that the foregoing shall not apply
with respect to information that (i) is in the public domain and is available
at the time of disclosure or which thereafter enters the public domain and is
available, through no improper action or inaction by the Receiving Party or
any affiliate, agent or employee of the Receiving Party, or
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(ii) was in the Receiving Party's possession or known by it prior to receipt
from the Disclosing Party, or (iii) was rightfully disclosed to the Receiving
Party by another person without restriction, or (iv) is independently
developed by the Receiving Party without access to such Proprietary
Information, or (v) is required to be disclosed pursuant to any statutory or
regulatory authority, provided the Disclosing Party is given prompt notice of
such requirement and the scope of such disclosure is limited to the extent
possible, or (vi) is required to be disclosed by a court order, provided the
Disclosing Party is given prompt notice of such order and provided the
opportunity to contest it.
2. Immediately upon (i) the decision by either party not to enter into
a business relationship, or (ii) a request by the Disclosing Party at any
time, the Receiving Party will turn over to the Disclosing Party all
Proprietary Information of the Disclosing Party and all documents or media
containing any such Proprietary Information and any and all copies or
extracts thereof. The parties understand that nothing herein (i) requires
the disclosure of any Proprietary Information, which shall be disclosed, if,
at all, solely at the option of the Disclosing Party, or (ii) requires either
party to proceed with any proposed transaction or relationship in connection
with which Proprietary Information may be disclosed.
3. Except to the extent required by law, neither party shall disclose
the existence or subject matter of the negotiations or business relationship
contemplated by this Agreement.
4. The Receiving Party acknowledges and agrees that due to the unique
nature of the Disclosing Party's Proprietary Information, there may be no
adequate remedy at law for any breach of its obligations. The Receiving
Party further acknowledges that any such breach may allow the Receiving Party
or third parties to unfairly compete with the Disclosing Party resulting in
irreparable harm to the Disclosing Party and, therefore, that upon any such
breach or any threat thereof, the Disclosing Party shall be entitled to seek
appropriate equitable relief in addition to whatever remedies it may have at
law. The Receiving Party will notify the Disclosing Party in writing
immediately upon the occurrence of any such unauthorized release or other
breach.
5. Neither party acquires any intellectual property rights under this
Agreement or through any disclosure hereunder, except the limited right to
use such Proprietary Information in accordance with this Agreement. No
warranties of any kind are given with respect to the Proprietary Information
disclosed under this Agreement or any use thereof, except as may be otherwise
agreed to in writing.
6. This Agreement supersedes all prior discussions and writings with
respect to the subject matter hereof, and constitutes the entire agreement
between the parties with respect to the subject matter hereof. No waiver or
modification of this Agreement will be binding upon either party unless made
in writing and signed by a duly authorized representative of each party and
no failure or delay in enforcing any right will be deemed a waiver. In the
event that any of the provisions of this Agreement shall be held by a court
or other tribunal of competent jurisdiction to be unenforceable, the
remaining portions hereof shall remain in full force and effect. This
Agreement shall be governed by the laws of the State of California without
regard to conflicts of
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laws provisions thereof and each party submits to the jurisdiction and venue
of any California State or federal courts generally serving the Santa Clara
County area with respect to the subject matter of this Agreement.
NETSCAPE COMMUNICATIONS YAHOO! INC.
CORPORATION ----------------------------
(Company)
By: /s/ Jennifer Bailey By: /s/ Timothy P. Brady
-------------------------- -------------------------
Address: Address:
501 East Middlefield Road 3400 Centennial Expressway
Mountain View, CA 94043 Suite 201
Santa Clara, CA 95051
Date: March 21, 1997 Date: 3/21/97
------------------------ ------------------------
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TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement ("Agreement") is effective as of the 30TH day
of June, 1997 ("Effective Date") and is entered into by and between Netscape
Communications Corporation ("Netscape"), a Delaware corporation located at
501 East Middlefield Road, Mountain View California 94043, and Yahoo! Inc.
("Yahoo"), a California corporation located at 3400 Central Expressway,
Ste. 201, Santa Clara, California 95051.
RECITALS
A. Netscape owns the trade names, trademarks, and servicemark NETSCAPE and
NETSCAPE NET SEARCH, and U.S. federal trademark registrations and
applications therefor, including U.S. Reg. No. 2,027,552 used in
connection with its Internet-related software products, services and
technology;
B. Yahoo produces Web sites and performs other Internet-related services;
C. Yahoo desires to use the trademark NETSCAPE NET SEARCH ("the Mark") in
connection with certain Internet-related services as defined herein; and
D. Netscape is willing to permit such use of the Mark under the terms and
conditions set forth in this Agreement.
NOW THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS
1.1 "TERRITORY" means the geographic and language specific Netscape
websites identified in Exhibit A.
1.2 "SERVICES" means the delivery of web page results generated by
Yahoo's search engines in response to end user queries initiated
from Netscape websites in the Territory which are jointly
identified as Yahoo and Netscape search services.
1.3 "RESULTS PAGES" means the web pages generated by Yahoo's search
engines in response to end user queries initiated from Netscape
websites in the Territory.
1.4 "TITLE" means the phrase "Netscape Net Search by Yahoo!".
2. GRANT OF LICENSE
2.1 GRANT OF LICENSE. Netscape hereby grants to Yahoo a
non-exclusive, nontransferable, license to use the Mark solely as part of the
Title used on the Results Pages displayed to end users as part of the
Services. Yahoo may only use the Mark as a collective whole and shall not
separately use any element or elements of the Mark. Notwithstanding the
<PAGE>
foregoing, Netscape acknowledges that it shall not seek to prevent Yahoo from
using the word "Net Search" separate and apart from the Mark. Yahoo shall
have the right to sublicense the rights provided under this Agreement to the
entities listed on Exhibit C attached hereto, provided that any such
sublicense contains the same terms and protections included in this
Agreement. Yahoo may sublicense the rights provided under this Agreement to
entities not listed in Exhibit C only upon Netscape's prior written consent
which shall not be unreasonably withheld.
2.2 RESERVATION OF RIGHTS. Netscape hereby reserves any and all
rights not expressly and explicitly granted in this Agreement, including
Netscape's right to authorize or license use of the Mark or any other
trademarks or names containing NETSCAPE, to any third party for use in
connection with any goods and services, including, but not limited to,
Internet navigation, search, and directory services. Without limiting the
rights reserved in the preceding sentence, Netscape hereby reserves any and
all rights to use, authorize use or license use of the Mark or any other
trademarks or names containing NETSCAPE in any geographic territory listed in
EXHIBIT A in a language or language(s) different from the language listed
next to such geographic territory in EXHIBIT A. No right is provided herein
to use any other Netscape trademark, including, without limitation, the
Netscape Horizon Logo.
3. LICENSE FEE. For the rights granted to Yahoo herein, Yahoo shall pay
Netscape, within thirty (30) days of the Effective Date of this Agreement, a
one-time non-refundable license fee of Two Million, Seven-hundred Thousand
Dollars ($2,700,000) at the time of the execution of this Agreement. The
license fee due hereunder is exclusive of any applicable taxes. Yahoo shall
be responsible for all applicable national, state and local taxes, value
added or sales taxes, exchange, interest, banking, collection and other
charges and levies and assessments pertaining to payments other than U.S.
taxes based on Netscape's net income. If Yahoo is required by law to make
any deduction or to withhold from any sum payable to Netscape by Yahoo
hereunder, (i) Yahoo shall effect such deduction or withholding, remit such
amounts to the appropriate taxing authorities and promptly furnish Netscape
with tax receipts evidencing the payments of such amounts, and (ii) the sum
payable by Yahoo upon which the deduction or withholding is based shall be
increased to the extent necessary to ensure that, after such deduction or
withholding, Netscape receives and retains, free from liability for such
deduction or withholding, a net amount equal to the amount Netscape would
have received and retained in the absence of such required deduction or
withholding.
4. OWNERSHIP OF MARK.
4.1 NETSCAPE OWNERSHIP. Yahoo hereby acknowledges that Netscape is
the owner of the Mark, and any trademark applications and/or registrations
thereto, agree that it will do nothing inconsistent with such ownership and
agrees that all use of the Mark by Yahoo shall inure to the benefit of
Netscape. Yahoo agrees that nothing in this Agreement shall give Yahoo any
right, title or interest in the Mark other than the right to use the Mark in
accordance with this Agreement. Yahoo agrees not to register or attempt to
register the Mark as a trademark, service mark, Internet domain name, trade
name, or any similar trademarks or name, with any domestic or foreign
governmental or quasi-governmental authority which would be likely to cause
-2-
<PAGE>
confusion with the Mark. The provisions of this paragraph shall survive the
expiration or termination of this Agreement.
4.2 OWNERSHIP BY YAHOO. Netscape acknowledges that Yahoo is the owner
of Yahoo's trademarks and/or registrations thereto and agrees that it will do
nothing inconsistent with such ownership. Yahoo's trademarks include the
name Yahoo and any derivative Yahoo-based mark and the Yahoo logo.
5. USE OF THE MARK; PROTECTION OF THE MARK.
5.1 PROPER USE. Yahoo agrees that all use of the Mark shall only
occur in connection with the Services and shall be in strict compliance with
the terms of this Agreement. Yahoo may use the Mark as set forth in Section
2.1 Yahoo shall use the Mark in conformance with Netscape's trademark
guidelines ("Trademark Guidelines"), set forth in Exhibit B, which Trademark
Guidelines may be revised by Netscape from time to time. Yahoo agrees not to
use any other trademark or service mark in combination with the Mark other
than as described in Section 2.1. Except as provided in Section 2.1, Yahoo
has no right to sublicense, transfer or assign the use of the Mark or use the
Mark for any other purpose other than the purpose described herein. The Mark
shall always be used in the English language; however, the "Net Search"
portion of the Mark may be translated, upon approval by Netscape, to the
languages set forth in EXHIBIT A. Yahoo may not use the Mark in connection
with, or for the benefit of, any third party's products or services. Yahoo
further agrees not to use the Mark in connection with n any products or
services that are deemed by Netscape, in its reasonable judgment, to be
directly, explicitly or maliciously disparaging of Netscape or its products,
or products that are themselves unlawful or whose purpose is to encourage
unlawful activities by others. Yahoo further agrees not to display
promotional materials, graphics, or advertisements client or server software
competitive with Netscape's client and server software products on the Search
Results pages rendered in connection with the Services, if and where, the
Mark is used pursuant to Section 2.1.
5.2 QUALITY STANDARDS. Yahoo agrees to maintain a consistent level of
quality of the Services performed in connection with the Mark substantially
equal to that found in Yahoo's existing Web site services. Yahoo further
agrees to maintain a level of quality in connection with its use of the Mark
that is consistent with general industry standards.
5.3 MONITORING BY NETSCAPE. Yahoo acknowledges that Netscape has no
further obligations under this Agreement other than the right to periodically
monitor Yahoo's use of the Mark in conjunction with the Services. Upon
request by Netscape, Yahoo shall provide Netscape with representative samples
of each such use prior to the time the Mark are first published on the
Internet. If Netscape determines that Yahoo is using the Mark improperly,
outside the scope of Section 2.1, or in connection with Services which do not
meet the standards set forth in Section 5.1 or Section 5.2, Netscape shall
notify Yahoo, and Yahoo shall remedy the improper use within two (2) business
days following receipt of such notice from Netscape. Use of the Mark outside
of the scope of Section 2.1, on goods or services other than the Services or
the promotion of the Services, or in a manner inconsistent with the Trademark
Guidelines, shall constitute material breach of this Agreement. If such
material breach has not been cured within
-3-
<PAGE>
two (2) business day following receipt of notice form Netscape, this
Agreement shall be terminated.
5.4 LEGEND; DISCLAIMER. Yahoo shall include with any use of the Mark
with the Services the subscript trademark notice "-Registered Trademark-"
immediately following Netscape; and 2) shall include with any Legal Notices
associated with the Services a trademark legend indicating that the Mark is
owned by Netscape, used under license, and a disclaimer that Yahoo and not
Netscape has produced the Services and is responsible for the content thereof.
5.5 SERVICES. If Netscape reasonably determines that the Services
contains or presents any material that constitutes an infringement of
Netscape's trademark, patents, copyrights or trade secrets, Netscape may
immediately terminate the license grant described in Section 2.1 if Yahoo has
not revised, removed or delinked to such material to Netscape's reasonable
satisfaction within seven (7) business days of written notice from Netscape.
If Netscape reasonably determines that the Services contain or present any
material that could reasonably constitute a clear and unambiguous
infringement of a third party's copyright, trademark, patents or trade
secrets, Netscape and Yahoo shall confer and mutually agree on a proper
course of action.
6. CONFIDENTIAL INFORMATION AND DISCLOSURE. Unless required by law, and
except to assert its rights hereunder or for disclosures to its own employees
on a "need to know" basis, Yahoo agrees not to disclose the terms of this
Agreement or matters relating thereto without the prior written consent of
Netscape, which consent shall not be unreasonably withheld.
7. TERMINATION.
7.1 TERM AND TERMINATION. This Agreement and the term of the license
granted herein shall be perpetual unless terminated as provided in Section
5.3, Section 5.5 or this Section 7.1. Netscape shall have the right to
terminate this Agreement upon the occurrence of one or more of the following:
(a) any material breach by Yahoo of its obligations under this Agreement
which remains uncured for thirty (30) days or more following written notice
of such breach from Netscape, or (b) use of the Mark by Yahoo in a manner
which is directly, explicitly or maliciously disparaging of Netscape or its
products and services and which remains uncured for two (2) days following
notice from Netscape.
7.2 EFFECT OF TERMINATION. Upon termination of the Agreement, Yahoo
agrees it shall immediately cease any and all use of the Mark.
8. GENERAL.
8.1 GOVERNING LAW. This Agreement shall be subject to and
governed in all respects by the statutes and laws of the State of California
without regard to the conflicts of laws principles thereof. The Superior
Court of Santa Clara County and/or the United States District Court for the
Northern District of California shall have exclusive jurisdiction and venue
over all controversies in connection herewith, and each party hereby consents
to such exclusive and personal jurisdiction and venue.
-4-
<PAGE>
8.2 ENTIRE AGREEMENT. This Agreement, including Exhibit A and
Exhibit B, constitutes the entire Agreement and understanding between the
parties and integrates all prior discussions between them related to its
subject matter. No modification of any of the terms of this Agreement shall
be valid unless in writing and signed by an authorized representative of each
party.
8.3 ASSIGNMENT. Neither party may assign this Agreement, in
whole or in part, without the other party's written consent; provided
however,, that either party may assign this Agreement without such consent in
connection with any merger, consolidation, sale of all or substantially all
of such party's assets or any other transaction in which more than fifty
percent (50%) of such party's voting securities are transferred (such events
being collectively referred to as a "Change in Control"), provided that (i)
such Change in Control shall not occur with respect to a prospective assignee
who is in a directly competitive relationship with the other party, and (ii)
in the case of a Change of Control of Yahoo, the entity managing the Service
subsequent to such Change in Control shall affirmatively agree in writing to
honor all commitments concerning the Mark. Yahoo recognizes and acknowledges
that an assignment of this Agreement to an entity who is in a directly
competitive relationship with Netscape will cause Netscape irreparable damage
which cannot be readily remedied in monetary damages in an action at law, and
Netscape shall be entitled to immediate injunctive relief to prevent such
irreparable harm in addition to any other remedies available. Yahoo hereby
warrants and represents that it is not currently in discussion, and has no
current plans to enter into discussions, with third parties concerning an
event which could give rise to a Change of Control of Yahoo.
8.4 NOTICES. All notices required or permitted hereunder shall
be given in writing addressed to the respective parties as set forth below
and shall either be (a) personally delivered; (b) transmitted by postage
prepaid certified mail, return receipt requested; or (c) transmitted by
nationally-recognized private express courier, and shall be deemed to have
been given on the date of receipt if delivered personally, or two (2) days
after deposit in mail or express courier. Either party may change its
address for purposes hereof by written notice to the other in accordance with
the provisions of this Subsection. The addresses for the parties are as
follows:
YAHOO: NETSCAPE:
Yahoo! Inc. Netscape Communications Corporation
3400 Central Expressway, Ste. 201 501 East Middlefield Road
Santa Clara, CA 95051 Mountain View, CA 94043
Fax: (408) 731-3510 Fax: (415) 528-4123
Attn: General Counsel Attn: General Counsel
8.5 FORCE MAJEURE. Neither party will be responsible for any
failure to perform its obligations under this Agreement due to causes beyond
its reasonable control, including but not limited to acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods or accidents.
-5-
<PAGE>
8.6 WAIVER. Any waiver, either expressed or implied, by either
party of any default by the other in the observance and performance of any of
the conditions, covenants of duties set forth herein shall not constitute or
be construed as a waiver of any subsequent or other default.
8.7 HEADINGS. The headings to the Sections and Subsections of
this Agreement are included merely for convenience of reference and shall not
affect the meaning of the language included therein.
8.8 INDEPENDENT CONTRACTORS. The parties acknowledge and agree
that they are dealing with each other hereunder as independent contractors.
Nothing contained in the Agreement shall be interpreted as constituting
either party the joint venture or partner of the other party or as conferring
upon either party the power of authority to bind the other party in any
transaction with third parties.
8.9 SURVIVAL. The provisions of Section 2.2 (Reservation of
Rights), 4 (Ownership of Mark), 5.4 (Legend; Disclaimer), 6 (Confidential
Information and Disclosure), 7.2 (Effect of Termination) and 8 (General) will
survive any termination of this Agreement.
8.10 EQUITABLE RELIEF. Yahoo recognizes and acknowledges that a
breach by Yahoo of this Agreement will cause Netscape irreparable damage
which cannot be readily remedied in monetary damages in an action at law, and
may, in addition thereto, constitute an infringement of the Mark. In the
event of any default or breach by Yahoo that could result in irreparable harm
to Netscape or cause some loss or dilution of Netscape's goodwill,
reputation, or rights in the Mark, Netscape shall be entitled to immediate
injunctive relief to prevent such irreparable harm, loss, or dilution in
addition to any other remedies available.
8.11 SEVERABILITY. Except as otherwise set forth in this
Agreement, the provisions of this Agreement are severable, and if any one or
more such provisions shall be determined to be invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability
of any of the remaining provisions or portions thereof shall not in any way
be affected thereby and shall nevertheless be binding between the parties
hereto. Any such invalid, illegal or unenforceable provision or portion
thereof shall be changed and interpreted so as to best accomplish the
objectives of such provision or portion thereof within the limits of
applicable law.
8.12 ATTORNEY'S FEES. In the event of any action, suit, or
proceeding brought by either party to enforce the terms of this Agreement,
the prevailing party shall be entitled to receive its costs, expert witness
fees, and reasonable attorneys fees and expenses, including costs and fees on
appeal.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
YAHOO! INC. NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Jeffrey A. Mallett By: /s/ Michael Homer
--------------------------- -----------------------------
Name: Jeffrey A. Mallet Name: Michael Homer
------------------------- ------------------------------
Title: SR. VP. Business O Title: SVP of Marketing
------------------------ -----------------------------
Date: 6/30/97 Date: 6/30/97
------------------------- ------------------------------
Exhibit A: Territory
Exhibit B: Netscape Trademark Usage Guidelines
Exhibit C: Yahoo Sublicensees
-7-
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
TERRITORY
LANGUAGE & GEOGRAPHIC TERRITORY URL FOR LOCAL PAGE
- ------------------------------- ------------------
<S> <C>
Brazilian Portuguese - Brazil http://home.netscape.com/pt/escapes/internet_search.html
Danish- Denmark http://home.netscape.com/da/escapes/internet_search.html
Dutch - The Netherlands http://home.netscape.com/nl/escapes/internet_search.html
French - France http://home.netscape.com/fr/escapes/internet_search.html
German - Germany http://home.netscape.com/de/escapes/internet_search.html
Italian - Italy http://home.netscape.com/it/escapes/internet_search.html
Japanese - Japan http://home.netscape.com/ja/escapes/internet_search.html
Korean - Korea http://home.netscape.com/ko/escapes/internet_search.html
Spanish - Spain http://home.netscape.com/es/escapes/internet_search.html
Swedish - Sweden http://home.netscape.com/se/escapes/internet_search.html
Australian Mirror Site - Australia http://home.netscape.com/au/escapes/internet_search.html
U.K. Mirror Site - United Kingdom http://home.netscape.com/uk/escapes/internet_search.html
</TABLE>
<PAGE>
EXHIBIT B
NETSCAPE COMMUNICATIONS CORPORATION
TRADEMARK USAGE GUIDELINES
GENERAL TERMS AND CONDITIONS
You must comply with the following guidelines in order to avoid any breach of
the terms and conditions under which you have been authorized or licensed to
use Netscape's logos and trademarks:
- - All logos and trademarks under which Netscape markets and/or promotes its
products and services are, and shall remain, the exclusive property of
Netscape Communications Corporation.
- - Advertising for Netscape, its products, its services or its programs must
not be in violation of any United States federal or state laws, municipal
ordinances or administrative agency regulations, or the laws, rules and
regulations of any other country.
- - Advertising for Netscape, its products, its services or its programs must
not be misleading in price, features or specifications.
Netscape may modify these guidelines from time to time and you will be bound to
comply with the material contained in the updated guidelines, provided Netscape
has provided you with the updated guidelines sufficiently in advance to permit
you to comply with the requirements.
TRADEMARK USAGE GUIDELINES
All Netscape trademarks must be used as adjectives (product or service name)
modifying nouns (generic term such as software or program). Trademarks must
not be used as nouns or verbs. Trademarks must never appear in plural or
possessive form. In addition, the full trademark (as shown in the list
below) must be used, not an abbreviated version of the name.
EXAMPLES:
INCORRECT
---------
- COMMUNICATOR'S FEATURES INCLUDE OPEN EMAIL, GROUPWARE, EDITING,
CALENDARING, AND BROWSING.
- THE ENTERPRISE SERVER IS DISTRIBUTED BY NETSCAPE COMMUNICATIONS
CORPORATION.
- NETSCAPE NAVIGATORS CAN BE DEPLOYED THROUGHOUT AN ENTERPRISE.
CORRECT
-------
- NETSCAPE-Registered Trademark- COMMUNICATOR CLIENT SOFTWARE PROVIDES
OPEN EMAIL, GROUPWARE, EDITING, CALENDARING, AND BROWSING FUNCTIONS.
<PAGE>
- NETSCAPE-Registered Trademark- ENTERPRISE SERVER SOFTWARE IS
DISTRIBUTED BY NETSCAPE COMMUNICATIONS CORPORATION.
- NETSCAPE NAVIGATOR-Registered Trademark- SOFTWARE CAN BE DEPLOYED
THROUGHOUT AN ENTERPRISE.
After the first use of a trademark as an adjective followed by a noun, and if
needed for ease of writing, you may leave out the generic noun in some of the
subsequent uses where it is clearly understood to be implied from the
context, so long as the trademark is not pluralized or made possessive and
the trademark is followed by the generic noun at least once per page.
You may not use our trademarks, whether design or words marks, in the
following ways:
- In a non-Netscape product name or publication title
- In, as, or as part of, your own trademarks
- To identify products or services that are not ours
- In connection with activities, products, or services outside the
scope of your license from Netscape
- In a manner likely to cause confusion
- In a manner that implies inaccurately that we sponsor or endorse
your activities, products, and services
- In a manner disparaging of Netscape
All materials must include a trademark attribution statement for Netscape
products and services. The attribution statement that we request you use is:
NETSCAPE AND NETSCAPE NAVIGATOR ARE REGISTERED TRADEMARKS OF NETSCAPE
COMMUNICATIONS CORPORATION IN THE UNITED STATES AND OTHER COUNTRIES.
NETSCAPE'S LOGOS AND NETSCAPE PRODUCT AND SERVICE NAMES ARE ALSO TRADEMARKS
OF NETSCAPE COMMUNICATIONS CORPORATION, WHICH MAY BE REGISTERED IN OTHER
COUNTRIES. As additional trademarks are registered by the US Patent and
Trademark Office, the specific wording of the attribution statement will
change. Please check the trademark information available on our home page
frequently for updates.
TRADEMARKS
Following is a list of Netscape trademarks. The list is not exhaustive, and
Netscape may own other trademarks. Please check the trademark information
available on our home page frequently for updates to this list. Collabra,
Collabra Share, Netscape, and Netscape Navigator are registered trademarks of
Netscape in the United States. The following list of our trademarks shows
the proper placement of the -Registered Trademark- in our trademarks.
<TABLE>
<CAPTION>
<S> <C>
Collabra-Registered Trademark- Netscape-Registered Trademark- FastTrack Server
Collabra Share-Registered Trademark- Netscape Insight
CoolTalk Netscape-Registered Trademark- Internet Applications
In-Box Direct Netscape-Registered Trademark- Internet Foundation Classes
Live 3D Netscape Internet Learning Academy
LiveCall Netscape-Registered Trademark- Istore
LiveConnect Netscape-Registered Trademark- LiveMedia
Live Objects Netscape-Registered Trademark- LivePayment
-2-
<PAGE>
LiveType Netscape-Registered Trademark- Mail Server
LiveWire Netscape-Registered Trademark- Mail
LiveWire Pro Netscape-Registered Trademark- Media Converter
Mozilla Netscape-Registered Trademark- Media Player
Netscape-Registered Trademark- Netscape-Registered Trademark- Media Server
Netscape-Registered Trademark-
Administration Kit Netscape-Registered Trademark- Merchant System
Netscape AffiliatePlus Netscape-Registered Trademark- Messaging Server
Netscape Alliance Netscape-Registered Trademark- Messenger
Netscape-Registered Trademark- AppFoundry Netscape-Registered Trademark- Migration Toolkit
Netscape-Registered Trademark- AutoAdmin Netscape Navigator-Registered Trademark-
Netscape-Registered Trademark- Calendar Netscape Navigator-Registered Trademark- with FORTEZZA
Netscape-Registered Trademark-
Calendar Server Netscape Navigator-Registered Trademark- Gold
Netscape-Registered Trademark-
Cash Register Netscape Navigator-Registered Trademark- News
Netscape-Registered Trademark-
Catalog Server Netscape Navigator-Registered Trademark- Personal Edition
Netscape-Registered Trademark-
Certificate Server Netscape-Registered Trademark- News Server
Netscape Charters Program Netscape-Registered Trademark- ONE
Netscape-Registered Trademark- Chat Netscape-Registered Trademark- Payment Kit
Netscape-Registered Trademark-
Collabra-Registered Trademark- Netscape-Registered Trademark- Power Pack
Netscape-Registered Trademark-
Collabra-Registered Trademark- Server Netscape-Registered Trademark- Proxy Server
Netscape-Registered Trademark-
Commerce Server Netscape-Registered Trademark- Proxy Server with FORTEZZA
Netscape-Registered Trademark-
Commercial Applications Netscape-Registered Trademark- Publishing System
Netscape-Registered Trademark-
Communications Server Netscape Site Sampler
Netscape-Registered Trademark-
Communicator Netscape-Registered Trademark- SuiteTools
Netscape-Registered Trademark-
Community System Netscape SupportEdge
Netscape-Registered Trademark-
Composer Netscape Update
Netscape-Registered Trademark-
Conference Netsite
Netscape DevEdge ONE Stop Software
Netscape DevEdge Online PowerStart
Netscape Direct Secure Courier
Netscape-Registered Trademark-
Directory Server SmartMarkss
Netscape Enterprise News SuiteSolutions
Netscape-Registered Trademark-
Enterprise Server SuiteSpot
Netscape-Registered Trademark-
Enterprise Server with FORTEZZA TechVision
</TABLE>
Guidelines on the use of the Netscape N logo are contained in the Netscape
Corporate Signature Kit. Your use of any other Netscape logo(s) that you
have been licensed to use by Netscape is governed by the usage guidelines for
that logo.
-3-
<PAGE>
EXHIBIT C
Yahoo Japan Corporation
Yahoo! France SARL
Yahoo! UK, Ltd.
Yahoo! GmbH
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE YAHOO!
INC. FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 61,587,000
<SECURITIES> 37,268,000
<RECEIVABLES> 7,749,000
<ALLOWANCES> 1,033,000
<INVENTORY> 0
<CURRENT-ASSETS> 109,483,000
<PP&E> 4,277,000
<DEPRECIATION> 991,000
<TOTAL-ASSETS> 115,731,000
<CURRENT-LIABILITIES> 10,109,000
<BONDS> 0
0
0
<COMMON> 18,000
<OTHER-SE> 104,944,000
<TOTAL-LIABILITY-AND-EQUITY> 115,731,000
<SALES> 0
<TOTAL-REVENUES> 23,035,000
<CGS> 0
<TOTAL-COSTS> 3,276,000
<OTHER-EXPENSES> 43,126,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (20,334,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,334,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,334,000)
<EPS-PRIMARY> (.74)
<EPS-DILUTED> (.74)
</TABLE>
