Item 1.01
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Entry into a Material Definitive Agreement.
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As previously disclosed in Yahoo!
Inc.s (Yahoo or the Company) Current Report on Form
8-K
filed with the U.S. Securities and Exchange Commission (the SEC) on July 25, 2016, Yahoo and Verizon
Communications Inc. (Verizon) entered into a Stock Purchase Agreement (the Original Stock Purchase Agreement) on July 23, 2016, pursuant to which Yahoo has agreed to sell, and Verizon has agreed to purchase (the
Sale), all of the outstanding shares of Yahoo Holdings, Inc., a wholly-owned subsidiary of Yahoo (Yahoo Holdings) (and prior to the Sale to cause Yahoo Holdings to sell to a foreign subsidiary of Verizon all of the equity
interests in a foreign subsidiary of Yahoo Holdings that will hold certain foreign subsidiaries relating to the Operating Business (as defined below) of Yahoo), which, immediately prior to the completion of the Sale, will own the Operating Business.
Also as previously announced, concurrently with the execution of the Original Stock Purchase Agreement, Yahoo and Yahoo Holdings entered into a Reorganization Agreement (the Original Reorganization Agreement), pursuant to which Yahoo
will transfer to Yahoo Holdings prior to the consummation of the Sale all of its assets and liabilities relating to the operating business of Yahoo (the Operating Business), other than specific excluded assets and retained liabilities.
On February 20, 2017, Yahoo and Verizon entered into an Amendment to Stock Purchase Agreement amending the Original Stock Purchase
Agreement (the SPA Amendment and, together with the Original Stock Purchase Agreement, the Amended Stock Purchase Agreement), and, concurrently with the execution of the SPA Amendment, Yahoo and Yahoo Holdings entered into an
Amendment to Reorganization Agreement amending the Original Reorganization Agreement (the RA Amendment and, together with the Original Reorganization Agreement, the Amended Reorganization Agreement). Additionally,
concurrently with the execution of the SPA Amendment and the RA Amendment, Yahoo, Yahoo Holdings and Verizon entered into a Settlement and Release Agreement (the Settlement and Release Agreement and, together with the SPA Amendment and
the RA Amendment, the Amendment Documents, and the transactions contemplated by the Amended Stock Purchase Agreement, the Amended Reorganization Agreement, and the Settlement and Release Agreement, the Revised Transactions).
Pursuant to the terms of the SPA Amendment, among other things, (a) the consideration to be paid by Verizon to Yahoo in connection
with the Sale is reduced by $350,000,000 to $4,475,800,000 in cash, subject to certain adjustments as provided in the Amended Stock Purchase Agreement; (b) the termination fee to be paid by Yahoo to Verizon in certain circumstances is reduced
to $134,274,000; (c) the date after which each of Yahoo and Verizon may terminate the Amended Stock Purchase Agreement if the Closing (as defined in the Amended Stock Purchase Agreement) has not occurred has been extended to July 24, 2017; and
(d) certain data security incidents to which Yahoo has been subject will be disregarded, subject to certain exceptions, for purposes of determining whether the conditions to Closing relating to breaches by the Company of its representations,
warranties, and covenants in the Amended Stock Purchase Agreement have been satisfied and whether a Business Material Adverse Effect under the Amended Stock Purchase Agreement has occurred.
Pursuant to the terms of the RA Amendment, among other things, (a) upon and after the Closing, the Company will retain certain
post-closing cash liabilities arising out of governmental or third party investigations, litigations or other claims related to certain data security incidents and other data breaches incurred by the Company that were to be assumed by Yahoo Holdings
under the Original Reorganization Agreement; (b) Verizon will indemnify the Company for 50 percent (with the Company being responsible for the remaining 50 percent) of any such liabilities that have not been finally determined and entered
or stipulated against the Company prior to the Closing; and (c) the Company will be responsible for 100 percent of any such liabilities that are finally determined and entered or stipulated against the Company or its subsidiaries prior to
the Closing.
Pursuant to the terms of the Settlement and Release Agreement, among other things, Verizon released certain claims, subject
to certain exceptions, it (and its affiliates and representatives) may have against the Company (or its affiliates and representatives) relating to certain data security incidents and other data breaches incurred by the Company.
Additional Information
Other than as
expressly modified pursuant to the Amendment Documents, the Original Stock Purchase Agreement and the Original Reorganization Agreement, which were previously filed as Exhibit 2.1 and Exhibit 2.2, respectively, to Yahoos Current Report on Form
8-K
filed with the SEC on July 25, 2016, remain in full force and effect.
The Amendment Documents are attached as Exhibits to this Current Report on Form
8-K
to provide stockholders with information regarding their terms. They are not intended to provide any other factual information about Yahoo. The Amendment Documents contain representations and warranties by
each of the parties to the applicable Amendment Documents. These representations and warranties were made solely for the benefit of the other parties to each such Amendment Document and (i) are not intended to be treated as categorical
statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may have been qualified in the Amendment Documents by confidential disclosure schedules that were delivered to the
other parties thereto in connection with the signing of the Amendment Documents, which disclosure schedules contain information that modifies, qualifies, and creates exceptions to the representations, warranties, and covenants set forth in the
Amendment Documents, (iii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to stockholders, and (iv) were made only as of the date of the applicable agreement or such
other date or dates as may be specified in such Amendment Document. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Amendment Documents, which subsequent
information may or may not be fully reflected in public disclosures by Yahoo or Verizon. Accordingly, you should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts
or condition of Yahoo or Verizon.
The foregoing summaries of the SPA Amendment, the RA Amendment, and the Settlement and Release
Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the SPA Amendment, the RA Amendment, and the Settlement and Release Agreement, respectively, copies of which are attached to this
Current Report on Form
8-K
as Exhibit 2.1, Exhibit 2.2, and Exhibit 10.1, respectively, and are incorporated herein by reference.