Yahoo! files Microsoft agreement terms with SEC

Microsoft and Yahoo! will comply with all antitrust regulations, and both parties will negotiate and execute definitive agreements as soon as practicable but no later than October 27th, failing which any disputes will be submitted to an arbitration panel. The decision of the arbitration panel will be binding, and both parties agree to execute such definitive agreements within three days.

The agreement may be terminated by mutual consent on or before end-July 2010. Should the deal not receive antitrust approval by end-July 2010, it can either be terminated or Yahoo! can extend the termination date by another six months.

The ten-year partnership agreement has a number of ‘out' clauses covering agreement breeches, inability to provide services, or lower than expected click rates or ad revenue.

Should the agreement be terminated in the US, the entire agreement may be terminated. However, if such termination occurs outside the US, it is limited to the specific country or countries in which the event occurs.

Should Microsoft decide to sell all or any of the agreement-related services, Yahoo! has the rights of first refusal and last offer to purchase.

Microsoft will be Yahoo!'s exclusive technology provider for algorithmic and paid search services, and Microsoft will provide contextual advertising to Yahoo! on a non-exclusive basis.

Yahoo! will be the exclusive worldwide relationship sales force for Yahoo!'s and Microsoft's premium search advertisers.

Microsoft will provide services on all web sites, applications and other online digital properties owned or operated by or on behalf of Yahoo!, its subsidiaries and joint ventures.

Microsoft will also provide services on software applications developed or distributed by Yahoo!, its subsidiaries and syndication partners that provide access to or enable algorithmic search services or paid search services.

Web page design and content is Yahoo's call.

Yahoo! will be entitled to receive 88% of the resulting search revenues during the first five years of the agreement term. The parties then have a number of options regarding the termination or retention of Yahoo!'s sales exclusivity for premium search advertisers, with each option dictating Yahoo!'s revenue share rate which could rise to 93% or drop to 83%.

During the first three years of the agreement, Microsoft will pay Yahoo! $50 million each year. Microsoft will also hire no less than 400 Yahoo! employees.

Microsoft will provide Yahoo! with all data it collects as a result of its implementation of the services, and, subject to Yahoo!'s privacy policies and applicable law, Yahoo! may use such data without contractual restriction in connection with its businesses.

Microsoft may also obtain and use such data, but only for the purpose of operating and enhancing the services, and not for other Microsoft products and services.

For the duration of the agreement, Yahoo! will grant Microsoft a worldwide licence under copyrights and trade secrets relating to specified Yahoo! algorithmic and paid search technology. On termination or expiration of the agreement, the technology licence will remain in effect but will become non-exclusive.

Microsoft will also have an option to purchase from Yahoo! a worldwide, non-exclusive license under Yahoo!'s patents in order to provide online services with its own and third party-operated websites. This option will expire on July 29th, 2011 or six months after the agreement commencement date, whichever occurs first.

Such patent licence will terminate on termination of the search agreement, or if Microsoft files an infringement action against Yahoo!, its subsidiaries or joint ventures.

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