IDEALAB! STOCKHOLDER AGREEMENT
This Stockholder Agreement (this 'Agreement') is made as of March 3, 2000
by and between Bill Gross' idealab!, a California corporation ('BGIL'), and
GoTo.com, Inc., a Delaware corporation (the 'Company').
WHEREAS, the Company and BGIL desire to make certain covenants and
agreements with one another pursuant to this Agreement
NOW THEREFORE, in consideration of the covenants and promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
Note: certain capitalized terms used herein are defined in Article III
1.1 BGIL Covenants.
(a) Until March 3, 2002, BGIL will not, and will cause its Affiliates
not to, directly or indirectly, except with the prior written consent of the
Company's Board of Directors and, without limitation, a majority of the
Independent Directors (as defined in Section 2.3):
(i) become a Beneficial Owner of 35% or more of the outstanding
(ii) transfer Beneficial Ownership of any Common Stock of the
Company except (A) pursuant to the terms of a merger, consolidation or
liquidation of, or tender offer or other business combination transaction with
respect to, the Company, in each case approved by the Company's Board of
Directors and, without limitation, by a majority of the Independent Directors,
(B) pro rata distributions by ICP of shares of Common Stock currently held by it
to its limited partners consistent with past practice, or (C) other transfers to
third parties, provided that any such third party (together with any of its
Affiliates and Associates) would not, to BGIL's knowledge after inquiry,
following the completion of such transfer, Beneficially Own 15% or more of the
outstanding Common Stock of the Company; or
(iii) knowingly assist or advise, or knowingly provide or arrange
financing to facilitate, another Person, or group of Persons acting in concert,
to become the Beneficial Owner of 15% or more of the outstanding Common Stock.
(b) Until March 3, 2002, BGIL shall use good faith reasonable efforts
to notify the
Company of any proposed amendment to BGIL's Schedule 13D at least 2 business
days prior to such amendment.
(c) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not prohibit or restrict in any way any of the following: (i)
actions taken by BGIL's nominees or designees on the Board of Directors of the
Company in their capacity as directors, and (ii) the exercise by BGIL and its
Affiliates and Associates of their voting rights with respect to any shares of
Common Stock of the Company or other voting securities of the Company that they
are permitted to Beneficially Own pursuant to the terms of this Agreement.
1.2 Company Covenants. Until March 3, 2002, so long as BGIL is the
Beneficial Owner of at least 20% of the outstanding Common Stock, the Company
will not, without the prior written consent of BGIL, adopt a 'shareholder rights
plan' (commonly referred to as a 'poison pill'); provided, however, that if, in
the good faith judgment of the Board of Directors of the Company, after
consideration of its fiduciary duties, adoption of such a shareholder rights
plan would be in the best interests of the shareholders of the Company, the
Company may adopt such a shareholder rights plan without the consent of BGIL so
long as the percentage thresholds set forth therein are no more restrictive to
BGIL than the terms of this Agreement. If the Company adopts a shareholder
rights plan, this Agreement shall terminate and be of no further force or
effect. The Company hereby represents that, as of the date of this Agreement, it
has no intention of currently adopting a 'shareholder rights plan.'
2.1 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of Delaware.
2.2 Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors and
2.3 Entire Agreement; Amendment. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof. Except as expressly provided herein, neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought, including on behalf of
the Company, approval by a majority of the members of the Board of Directors
that are not, and have not for the then previous twelve (12) months been,
Affiliates of BGIL or any of its Affiliates or Associates (other than the
Company) (such members of the Board of Directors, the 'Independent Directors').
2.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) If to BGIL, to:
Bill Gross' idealab!
130 West Union Street
Pasadena, California 91103
Attn: General Counsel
(Telephone) (626) 535-2828
(Facsimile) (626) 535-2703
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attn: Paul D. Tosetti, Esq.
(Telephone) (213) 485-1234
(Facsimile) (213) 891-8763
(b) If to the Company, to:
72 North Pasadena Avenue
Pasadena, CA 91103
Attn: Chief Financial Officer
(Telephone) (626) 685-6890
(Facsimile) (626) 685-5601
With a copy to:
Wilson Sonsini Goodrich & Rosati
Two Palo Alto Square
Palo Alto, CA 94306
Attn: Martin W. Korman, Esq.
Michael D. Weisberg, Esq.
(Telephone) (650) 493-9300
(Facsimile) (650) 493-6811
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, if sent by facsimile, the first business day after the
date of confirmation that the facsimile has been successfully transmitted to the
facsimile number for the party notified, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
2.5 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to a party under this
Agreement, shall impair any such right, power or remedy nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.
2.6 Expenses. The Company and BGIL shall bear their own expenses incurred
with respect to this Agreement and the transactions contemplated hereby.
2.7 Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that such damage would not be compensable in money
damages and that it would be extremely difficult or impracticable to measure the
resultant damages. It is accordingly agreed that any party hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of the Agreement and to enforce specifically the terms and provisions hereof, in
addition to any other remedy to which it may be entitled at law or equity, and
such party that is sued for breach of this Agreement expressly waives any
defense that a remedy in damages would be adequate and expressly waives any
requirement in an action for specific performance for the posting of a bond by
the party bringing such action.
2.8 Further Assurances. The parties hereto shall do and perform or cause to
be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as any
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated hereby. Neither the Company nor BGIL shall voluntarily undertake
any course of action inconsistent with satisfaction of the requirements
applicable to them set forth in this Agreement and each shall promptly do all
such acts and take all such measures as may be appropriate to enable them to
perform as early as practicable the obligations herein and therein required to
be performed by them.
2.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
2.10 Severability. In the event that any provision of .this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided, that no such severability shall be effective
if it materially changes the economic impact of this Agreement on any party.
2.11 Captions. Headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be relied upon in
construing this Agreement. Use of any gender herein to refer to any person shall
be deemed to comprehend masculine, feminine, and neuter unless the context
clearly requires otherwise.
2.12 Attorneys' Fees. In any action at law or suit in equity in relation to
this Agreement, the prevailing party in such action or suit shall be entitled to
receive a reasonable sum for its attorneys' fees and all other reasonable costs
and expenses incurred in such action or suit.
2.13 Publicity. The parties hereto shall act in good faith to coordinate
any public announcements concerning the matters set forth herein.
For the purpose of this Agreement, the following terms shall have the
meanings specified with respect thereto below:
'Affiliate' and 'Associate' shall have the respective meanings set forth in
Rule 12b-2 of the rules and regulations promulgated under the Exchange Act.
A person or entity (either, a 'Person') shall be deemed the 'Beneficial
Owner' of and shall be deemed to 'beneficially own' any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of the
Exchange Act and Rule 13d-3 thereunder (or any comparable or successor law or
(ii) which a Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed to be the Beneficial Owner of, or to beneficially own, (1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (2) securities which a
Person or any of such Person's Affiliates or Associates may be deemed to have
the right to acquire pursuant to any merger or other acquisition agreement
between the Company and such Person (or one or more of its Affiliates or
Associates) if such agreement has been approved in advance by the Board of
Directors of the Company; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other person or entity (or any Affiliate or Associate thereof) with which a
Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding, whether or not in writing (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting or disposing of any securities of the
'Common Stock' shall mean shares of the Common Stock of the Company.
'Exchange Act' shall mean the Securities Exchange Act of 1934, as amended.
'ICP' shall mean any of idealab! Capital Partners I-A, L.P., a Delaware
limited partnership, or idealab! Capital Partners I-B, L.P., a Delaware limited
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BILL GROSS' IDEALAB!