Yahoo 2013 Annual Report Download - page 31

by the stockholders. The rights of the holders of our common stock may be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of
preferred stock may have the effect of delaying, deterring or preventing a change in control of Yahoo without
further action by the stockholders and may adversely affect the voting and other rights of the holders of our
common stock.
Some provisions of our charter documents, including provisions eliminating the ability of stockholders to take
action by written consent and limiting the ability of stockholders to raise matters at a meeting of stockholders
without giving advance notice, may have the effect of delaying or preventing changes in control or changes in
our management, which could have an adverse effect on the market price of our stock and the value of the
$1.4375 billion aggregate principal amount of the 0.00% Convertible Senior Notes we issued in November 2013
(“Notes”). In addition, our charter documents do not permit cumulative voting, which may make it more difficult
for a third-party to gain control of our Board. Further, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which will prohibit us from engaging in a “business
combination” with an “interested stockholder” for a period of three years after the date of the transaction in
which the person became an interested stockholder, even if such combination is favored by a majority of
stockholders, unless the business combination is approved in a prescribed manner. The application of Section 203
also could have the effect of delaying or preventing a change in control of us.
Any of these provisions could, under certain circumstances, depress the market price of our common stock and
the Notes.
Risks Relating to the Notes
The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and
operating results.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to
convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their
Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock
(other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all
of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition,
even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to
reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability,
which would result in a material reduction of our net working capital.
We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to
repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability
to pay cash upon conversion or repurchase of the Notes.
Holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the
occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the Notes to
be repurchased, plus accrued and unpaid special interest, if any. We may not have enough available cash or be
able to obtain financing at the time we are required to make repurchases of Notes surrendered therefore, or pay
cash with respect to Notes being converted if we elect not to issue shares, which could harm our reputation and
affect the trading price of our common stock.
The note hedge and warrant transactions may affect the value of the Notes and our common stock.
In connection with the pricing of the Notes, we entered into note hedge transactions with the option
counterparties. The note hedge transactions are generally expected to reduce the potential dilution upon
conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal
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