Viacom International, Inc. et al v. Youtube, Inc. et al

Filing 219

DECLARATION of William M. Hohengarten (Part Nine) Ex. 287 - Part 3 in Support re: 176 MOTION for Partial Summary Judgment /Viacom's Notice of Motion for Partial Summary Judgment on Liability and Inapplicability of the Digital Millennium Copyright Act Safe Harbor Defense.. Document filed by Country Music Television, Inc., Paramount Pictures Corporation, Viacom International, Inc., Black Entertainment Television, LLC, Comedy Partners. (Attachments: # 1 Exhibit 287 - Part 4, # 2 Exhibit 287 - Part 5, # 3 Exhibit 287 - Part 6, # 4 Exhibit 287 - Part 8, # 5 Exhibit 287 - Part 8, # 6 Exhibit 288, # 7 Exhibit 289, # 8 Exhibit 290, # 9 Exhibit 291, # 10 Exhibit 292, # 11 Exhibit 293, # 12 Exhibit 294, # 13 Exhibit 295, # 14 Exhibit 296, # 15 Exhibit 297, # 16 Exhibit 298)(Kohlmann, Susan)

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CSSU 001867

Per User

Acquisitians
MySpace
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Price Users· Valuation
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Per User Public Co's EV Users Valuation

CNET VVebMD Yahoo!

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116 31 402

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*At time of acguisition

HIGHLY

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001868

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Stonn

Duncan

From: Sent: To:
Subject:

Duncan. Storm Thursday, October 05, 2006 5:35 PAII 'stor~duncan.net'
F~ snowmass materia~

!

Storm

Duncan

Managing
Credit

Dj~ctor
Suisse

650 San

California Francisco,

Street, 33rd CA. 94108

Floor

-

-----Original
From: Salman To: Boutros,

Message----Ullah George <

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CC: Duncan,
View)]
Sent: Thu Oct

Storm
com>
2006 05 20:22:47

De~Rpsey, Sean
material

[GODGLE, INC. (Mountain

<dempsey@google, Re:
more data:

Subject:
same

snawmass

Traffic:
the
a more

They are continuing
they believe
as

to experience
are getting
of weekend a form

dramatic
out of

growth in playbacks.
adopter mode and are
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Yesterday's
being used by
distribution:

peak for the week was about 180 million.
weekend;
general

The peak usage has shifted
early
entertainment.

from the weekdays-to

they

audience

155-165M Cturing the week, 170M on Friday, 180M on Saturday). Growth over the past month has been about 5% week over week (the range for the first week in September was about 130150M.
the whole

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month.

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pages

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results

pages

is

about

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mid-September.

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101K uploads yesterday

(range for the week 85-101K).

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uploads,
from

17K were from first timers. Uploads per uploader are Interestingly, the number· of what they call "imbeds," other sites, mostly myspace and eBay, was 22M (of the

running at about 1.7-1.8. that is traffic originating 180M). Less than I thought.

Community Features: User comments are holding steady at about 260K per day. An increasing number, now between 2-3K daily, are in the form of video responses, with folks actually taking the time to film upload their own video to make a conanent. Although he did not provide specific data, he said that the recently launched participatory video ads

are gaining
weeks ago,
FINANCIALS

traction
is running

as well.
from 1,000

Musician channel sign-ups,
to 1,900 per day.

which they launched

a couple of

Revenue by month: pages

two mid-level salespeople they hired from Yahoo,· selling banners on the home and search
(no monetization of playback pages due to current DMCA policy).

June-

550K; July

850K; Aug- 2.4M; Sept.

3.5M.

They are doina

this

with

Gross margin in August was 218. Cost of goods includes for their machines, and fees to use DART serve ads. to

data center expenses, depreciation They're paying $0.04 CPMland ran

HIGHLY CONFIDENTIAL

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Thanks Sa~man. We will need to spend a couple of hours wi~h Y, will be painless I promise.

From: Cc:

Salman

Ullah
5:05 PM

Sent: Thursday, October OS, 2006 To: George Boutros; Storm Duncan

Dem_qsey, Sean
snowmass

[GOOGLE, INC.
material

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HIGHLY

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tlhl~le jn:~ I~r~? .nJnpi·ltt~eatreParkway
~~~u,saln V~w. CA 930?13

Coogle

#ain 650 253.0000 Far 650 253.0001
www.google.com

Oetober4,2006

YoaTube, inc.

71ETbit~~Avcwe~2ndFtoor
San MaGo, CA oddOi nnm Chgd~iuiteyandStevenChsn
Dear Chad and Steven

We are pleased to present you with the attached Tern Sheet setting fbrtf~ the basic ta~ns and conditions of the pmgosed aeqnisidon of YouTube, Inc. (Ohe"Companyn) by Ooogle hao. or one of its subsidieriao ~Google~.

The acqnisidon eontetnplated in this Term Sheet is subject to Google's lega2 bmmhd end businessdne dihgenee and to the preparatiom, exec\rtionand deliveayof de~nitive pmehase docomm$. This Term Sheet is non-binding and doesmotcollstimte sgkerise toany~egallybindingcommitme~(nordaesitconstiQdeanof~ertotnt~into a legelly binding commibneat) exEeptfa de provisions regardingPubhe DisclosPrc,CompanyNo Shop, Tennination, Governing Law, and Expeases and Fcts. Googleand the Companynnderstand that die Tcnn Sheet is intended to set forth the fundamentals of the proposed ~cquisi~ion, that the f;regoing intenli~ans be revised but may and new issues may be prrsented upon fhrther investigationand due diligence by Google or the Company.
Please isignia thespacesprovided belowto aclmowiectge youragreementto thetenas set tiahin theTermSheetap

the basis on which we will prepare defiaitive agreements and your agreementto be bound by die Public Disclosure, Company No Shop, Temnimation, GoverningLaw,and E~Jtpeases Fees provisions contained in die Term Sheet and
Regards,

Name:

OavhlDrmmmmd

Title: Senior Vice President Cbrporatt Development
Acltnowledged and agreed as of
the date hirst written above:

YOUTUBE, ~NC.

By:
Name: Title:

CoaRdcdhl

PleetoTS

No~-Mn~ll~Lc~a orfntcl(

HIGHLYCONFIDENTIAL

-

CSSU 001949

COFJPIIDE;NTIAL
Term Sheet

For the Aeqnlshlon of Yon~be, lae. ByCeogtelne
October 4~U~Bb

i·

~Acpei~tt~loa~ Iak(Ifia of~oo~e. *Compuy*? Inc. ons s~iPbsidiaries by Googls or ofits ~600~1P~j.
St~petare:
& a defiinitive agmement conPaining mpmsentations, wanaaties, coanants, type(dm"Agreement"). ibrmoftbetrrmsection beamager. The will

This smeet term (Tcrn SBoeY? fbrthffit mts principal and tenns conditions proposed ofthe acquisition

Google acqoire Company theeoPlsideration below will the fcr setforth pursuant

legal opiaions, conditioas indemnities and eustd~sry a tr;lutsaction for of this The t·cpresmtatioPs theCompany bemade theComprmy reptding will by and
the pinoipal stockholdersof the Company.

within naeaning Section 368(a) thetaxcodeandthattaxcounsel the of of of of
theCompany renderan opinionto thateffect will

Google tbsCompany thatthetraasacticn bea "nwganization" and intend win

Aeqnisftion Consideration: Subject to60qlt's additional chK diligencetothe and and terms conditions of
this Term Shaet,in eonsidemtion ah of dm issuedand oatstandineshsces, for

optio~s (inelnding options any assuned substitutedcommcotionthe or in with AcquisitionX awi wansntr other equity im4ests Company, closing of atthe of
Class A CommonStock~Shued3 equal to One BillionSix H~mdred Fifty
Acquisition (the "Consideratlon").

theAcqnisition "Closlng") (the Google issue n\rmber shares Goog~ will a of of

Million Dollars (31,6M,O00,000) ontheavcagedaily based closing ofthe price Shares~fi~s thirty(30) days irmnediately the preceding closingof the the

Regkbatlon IUghts:

privatePlacement;

TheShares be issued the Company will to stockbolde~r pursuant the to

unde~ Securities of 1933,as amended.aoogle shallprovideCompany the Act stockholders rmstomsry with regis~atioR rightsfor a tmnsaction oftbis natnt, whichwillinchude covenant Googleto ti~ta resalerogistr60n ste~anent a by a
onForm S~ within 30 days ofthe Closing.

exemption byRule ofReeulation ~pplicable) provided 506 D(if promulgated

~mployee Eqnity:

Subject Gookle's ditigence to due review, optiong purchase ah to Company capital outstanding stock inmnefiateiy to theClosing, vested prior both end
Imvested teach,an "Option~ wilf.beassumed Googleand convertedinto by equivalent rights to acquin a numberof Sharesbased on the total eachrtltge ratio appEcetife the Acquisition, snchrigbtecontinuing be subjectto to with to vestingon currenttanns. Unvested.options sharesthat are returneddue to and the termination arq~oyment of prior to.theone year anniversary the Closing of willbe redistributed acrosstbe cap tablein a nuaanr to be agreed the parhes. by
for the awidanca of doub2 the amounts paid or issued to holders of Company

Optionswill be considered part of the Consideration the Consideration C~

paid to the Company stockholders be raduced the extentof Share will to

issuances inrespect Comprmy made ofthe Options).
In addition to the accelemtion provisions fu certain key employeesthat exist as
coatiautw P~e~olS Nobbf·di9gTa~nSbat

HIGHLY

CONFIDENTIAL

·

CSSU

001950

of tbe dateof thisTermSfsett, Googte disooss pIoviniag certain will the of

additional accelcmtion paovisioplsothra employeesbe ageedby lbr hey to GoogtcsndtbeComp~ny. Ioadditio~tothet~i.~tea~taotatready~l"vi~edinthe nkvantCo~impe~y doa~mentatio~ subject theacceleration and to provisions dntt agned bythe am to parties discussed Google seek iadude as above, may to spitabfe ntentiop provisions mspect the enrpfoyees. with to hey
Employment Arnngements:

that It shah be a eodiidon to Goo~fe's obligationto close the Accmisition

will employmentGoogle shah entemd Googfe's with and have iato standard Informatiw Inventions sad Employment O&r Ltt~Lersad pzoprietary
Assignment Agreement

certain Comp~my cnVJnyecs identified 0ooBIe have tobe by ShaJf accepted at-

Non-Competltlmr
Agnements:

bei~enti~edGoogle have by shah entered a noaconpetitton into agnemeaf
which pohibasuchCompaay will stockholder competing the fom with Co~pany's business aperiod fix dtwoycan,ftom Closing the date. TheAgreament contain will closing conditions customary a transaction for of thisnntur4 inchnhng, withont ~imi~ation, no injtmction, or other that order allrequired copposte govermnental end consents sanhmieatiws be end (10 wawaties parties theAgrcancnt have tNeandcmmct ah orthe in will been in material respects made atClosing; covenantstheparties the when sad all of in Agmementreqtrhed tobesatisfied toClosing have satis~ed; prim will been and
themshallbe no mateaiat adverse changeto Company's business @rovided that tha deiiaiti~ of'nsateial adversec~mge"will exclude,amongother thiags,

itsban beacaaditiora Closing certain also tothe that Company stockholders to

andCovenants:

prlhrelpal aoaing C~ndltio~

action be ineffect anygoverrnnental prohibiting Acrlnisition; will by agency the

.i

speci~ied Agreement) been inthe will have received;rppsentations the and

anychange arising of disclosed out copyright inchding risks, lawsuits the or
thmat themof).

TheAgnemelot contain win covenants cnstomary a transaction this f~ of
m, fiduciary wt

nahae,inc~tudio& lindtstion, withont oovenrmr, relating Ore to conduct the of Company's business between sinning closing, no-shop and and provisions With

Signing Closing I)ate; Ikte:
PoMk Mseiosme:

soonas re9sonably practicable fbllowing dateof this TermSheet the

The parties' objectivetoexecute Agreement close Acquisition is the and the as
(otherthanto its legaland accolintiog advisois) regarding Acq~isition, the incladhrg applicable, termination the reasons if its end theref~ without the
consentof the other party, except that Google may issue any statementor
eommuoicationto the GXf~fif determines it necessary or appropriate in light of applicclbk~ms, ndes and neunaatons.

Neitherparty shell issue any statementor communication any third party to

Company Shop: No

execution delivery the Agreement all of the parties11~ or (C) the and of by dale on whichGoogleadvisesthe Company writingthat Googtt &oesnot in wish to proceed with dirmssions in respect of the proposed Acquisition (inchding by terminatingthis Term Sheet),neither Cdmpanynor any of

Untlthe earlier thirty days thedate of(A) (30) ~om oflhis Sheet the Tenn ~

Company's aflihatcs shall(norwin theypermit,as applicable, of their any
o~icers,directon,memberq' stoc~olders, agents,representatives af~iliates or co~directly indirectly, anyof the following or take actiomwithany party other than Googleand its desigaees: O solicit,initiate,participate or ewnuage in anynegotiations discussions respectto any offi~or proposal acqnhe or with to
Caanecaust PageBols 1Yon-b~·ding~cnnSbecC

HIGHLY

CONFIDENTIAL

CSSU

001951

illl;Y of theCompany's Fstioa bpsinees propgties anyshares ad a of CoIPBanY stock any toacqaire shams CIIPilBI Or tights any ofCompany spital
sdoclg whether aigger, by pUfEhlLSe puchase hmmisofshares Of89Li~tS, or or

rightsacquire to shares,te4des' otheawise, ~6,jr~snrti·iitutsc~~C~ort~, o~t~er a ore&ct (n~disc~Qeeaa~yinfbrmatiw~~8otcustomeritydiecl~osed~edypenonconce~m Company's and business propsties af~oldany or m person areaQity to access its I~aopatics,boolzs (iii~ a coopeaaaeanypersoa ormeads, assist with t6·~meke any proposalpinchsee shares Company stock lights to any of capital or to acqfdn shams Company stock say say of capital a portiontheCompany's of osPets,0l enter anyagreement anypersoa (iV) into with Inoviding the fa acqnishion of Caapany fwhetha wayof me%er, by purchase sPsets, of pmcbaseissuance sbares rights aeqaire of of or to shaaes, offer tends or
o~e~wise~theevent In CompanymyofCaapany's or armiatr~ receive shall any orproposal, orindirectly,thetype offs directly of refbrcd inclanso to (i~

(iit~ (iv) or above, any a request disclossesss p~asuent tit? for or a clanse
above, Comprmysuch or aftiliate immediately Ooogk to the shall infPan se
existtnct any snchoffs or proposal willcoopeatewithGoogleby of and

ii

fiani~biog infanlatiw may any it reasonably indlndin& notlimited ~queat, bet to, the nameof the pattymaking o8t~ or propuPet, written snch all dccnmentationmlatingoffer tosuch orpropossl a surmaarythtprincipal sad of
terms anymchoffer proposal iPmt made writiak. of or that in

TeriniaPtfen:

tt~amiaatian party byany hcrtto thedlterparties to he~eso;~Cdovidtd thatthe proviaioas regarding Public Disclosnm, Company Sh~p,Tewinatioli No Govemiag andExpenses peesshah Law, and survive webtsmination any in
accordance with the tenns thereot

Tbis Temn shalttermiilate the written Sheet upoll notibcadon each of

Due Diligence:

signing Agreement,Company provide the tbe shall GoogIe reasonable with
access an membtss Company's to of madagement. entering of the Tb6 into

hunandco~P~ete investigationthe Company's of business, intellectual poperty,techndogy, employs legal financial, and af~fi~irs. inaddition, to prior

As 88 mon practicable the bereof, shall pemnitted ails date Googte be tomake

Agreement be subject thesatisfactory shall to emnpletion,Cioqle'ssole in
discretiorzof Google's due diligence on Company

~e~Ipeases and Fees:

by Googte. fees and expenses the Cwapanyand the Company AU of
stockholdcn in connectionwith the Acquisition,including broker or finder lees,

All and fees expenses ofGooglecormectioathe in with Acquisition paid will be
theAcquisitioncompleted, is Google paynp to T~n, shah Hrmdrwl pipy
Thousand Dollars(S250,000) the reasonable docnmeoted and of and fees
Acquisition.

willbe paidby theCompany stockholdss. Notwhhstanding fiweg~oing, the if

expenses the Company's 6ounscl of legal inaurod cnmeotion the in with

Indemnmilkatfon ofGoo%e: Indcmniticatioa Company each theCompany The and of stockholders will
tosses liabilities maybe suffncdby Google to anyiaaccuracies a or that due in

jointtu severatly and indenmifil. holdGoogle its affiliates, their and end and respective officers, directors,employees agents,hsmless andagainst and hem brtachcs repnscntatio~s, of warranties covenants sayother and or provision of theAgreement anyancillary or do~ument. additfon, Company each In the and of theCompany stockholder~s indemnify holdGoogle will and harmless fiom anylass orliabifities (including fees) regal relating copyright to lawsuits fitcd against Company Google, the or d~aing period the beginning thedateof this on
tenn sheet and endingone year followingthe Closing,arising out of the Company's business "CopyrightLitigation"). (the

Coanaonnst

PoSs~o~5

Nor-Medh%TumShett

HIGHLY CONFIDENTIAL

·

·

CSSU

001952

and oftbe Companyand the Company re~esentationr, waoraaties covcoa~t~ provided that:

survival

of dPe investiatiom, the ~ubjest to the msnhs Google's diligence

stocldioldns contained Agnement ~urvivc~ indm shall theClasiPg, the with
(a) related bmm ~rrvive to shed IherepllesentatioP~sandwananties until60 theapplicabft statnte oflimitations; daysaAertheexpirationof
indefinitely,awt

swiving onlyherone yearaAer Closing; the represcoaations wci~aaties and

(b! the repnsentationswarranties toca9aatizstionsbauslirvive end rdated
or (C) dBimS fiau~ule~ intentional wllfit brashes of representation for andwarranties smwive shah inc~efinitely

:I

(cdlectivety,tae "Sluvlving Repntont~tto~s~fiability of ~E· Tbs Company Ip~ockhofderY' for breaches the Company represaaatioPs wanramties be limited to 123% of the aggregate and will
againstthe related to the Copyright Litigation win be limitedto a drawdown escrow,~s set forthbelow.
~B~g~E~

Consideratio~ nosuch shah with except cap apply respectany to breaches of theSwviving Repatsentatiorrs, The Company sboc~olders' forlosses liability

liable indemnitication aggregate oflosses far until the amoPnt exceeds One .P~i~ion O1,000,000)~hnshold~provided (a)once Dopers (the that the
will Threshold has been met, Ule Company stoc~ho~ders be liatdefor the fall shallnotbe spbject theThresltold to
E~s;now. rl.~ofthe

~wi~i~,~

theCompany stoef~hPlderswillnotbc

amount ah losses, of including which tbose comprised portion the any of auesbol4 ~ losses tobreaches Surviving and related ofthe Representafions
Consideration otherwise payable at Closingwill be fo,~ year8s non-exclusive security the for Qeposi~ea escrowby Googlt in
thw:Cop~I·iehtLitigstiolL

beused reimburse fmlosses to Google related to 59~oofthtCo~oside~atio&) may Voting AlpPo~n~nt

Company stocimolders' obligations. indemnity Aportionthe of escrow m tnp
membersof management Concurrently t~eexecutionof tbs Agre~ment, an agreement vote with endcertain stockholders be determined exeoute to win to

theirshams favwof theAcquisition to nottransfatheirsharesor ~y in and
interest thereia

Governing Law:

ThisTtnnSheet theletter whichit is attachedshah be goveraedby and to
California wtbout law regard thatstate's to choice lawprovisinss. of

leND OF TERM SHEETI

CeldMeatisl

PapSoi5

Ns··bl~ding sLect Tum

HIGHLY CONFIDENTIAL

CSSU 001953

Proiect Snowmass
October 2006

·

CONFIDENTIAL

Preliminary Diligence Request List

·

Organizational chart including employeesby functionand location including cash flowdetail,operationalbreak-eveneand futurefinancingrequirements

· Historical projected and financial information (through 2008E beyond, available), and if
·
·

Revenue breakdown by segment or type: advertising, sponsorship / partner revenue,
subscriptions, etc.
Pricing strategy

·
~d

Sitetraffic metrics including: uniquevisitors, registered members, subscriptions, et~.

Video statistic including:total ofvideos website, total ofuploads detail (i) # on (ii) # and
# Ofuploadsper day,(iii) average# ofvideos viewed dayand (iv)averagelengthof per · Segmentation video.content (i)category, type(commercial non-commercial) of by (ii) vs.
(iii)# of videosviewedon Yellow websitevs. partner websites, (iv)publicvs. privateand
(v) estimate of % of video content that is copyn'ghted · · · Platform scafability metrics; capital expenditure requirements Detailed capitalization table including description of all terms of outstanding common,

~dF3 I

ToOC~L_ viewed videos

~preferred (liquidaiion, participation, other preferences),and commonequivalents
Schedule of options, warrants, rights and any other potentially dilutive securities by

exercise pricetranche and vested vs. unvested. Impactof change of controlon each
security including options · · List and terms of any employee agreements Review of threatened or pending litigation

HIGHLY CONFIDENTIAL

.

CSSU 001954

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