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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
Since February 1, 2008, five separate stockholder lawsuits were filed in the California Superior Court, Santa
Clara County, against Yahoo! Inc., members of the Board and selected former officers by plaintiffs Edward
Fritsche, the Thomas Stone Trust, Tom Turberg, Congregation Beth Aaron, and the Louisiana Municipal Police
Employees’ Retirement System (collectively, the “California Lawsuits”). The California Lawsuits were
consolidated, and on March 12, 2008, a Consolidated Amended Class Action and Derivative Complaint was
filed, captioned In re Yahoo! Inc. Shareholder Litigation, in Santa Clara County Superior Court. The
Consolidated Amended Class and Derivative Complaint alleges that the Board breached fiduciary duties in
connection with Microsoft’s unsolicited proposal to acquire Yahoo!. The Consolidated Amended Class and
Derivative Complaint seeks declaratory and injunctive relief, as well as an award of plaintiffs’ attorneys’ fees
and costs. On March 28, 2008, the Santa Clara County Superior Court granted defendants’ motion to stay the
Consolidated Amended Class Action and Derivative Complaint pending resolution of similar proceedings
pending in the Delaware Court of Chancery described below.
One of the California Lawsuits (by plaintiff Congregation Beth Aaron) was voluntarily dismissed by the plaintiff
without prejudice, and re-filed in the U.S. District Court for the Northern District of California on December 3,
2008. The complaint in this federal suit alleges claims for breach of fiduciary duty and corporate waste in
connection with Yahoo!’s consideration of proposals by Microsoft to purchase all or a part of Yahoo!, adoption
of severance plans, and the June 12, 2008 agreement between Google Inc. and Yahoo!. The complaint also
alleges claims under Section 14(a) of the Exchange Act for alleged false statements or omissions in Yahoo!’s
June 9, 2008 proxy statement regarding the severance plans and for control person liability under Section 20(a)
of the Exchange Act. The complaint seeks unspecified compensatory damages, injunctive relief, and an award of
plaintiffs’ attorneys’ fees and costs. Defendants have not responded to the complaint as of this date.
Since February 11, 2008, five separate stockholder lawsuits were filed in the Delaware Court of Chancery against
Yahoo! Inc. and members of the Board by plaintiffs The Wayne County Employees’ Retirement System, Ronald
Dicke, and The Police and Fire Retirement System of the City of Detroit along with The General Retirement
System of the City of Detroit, Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund, and
Vernon A. Mercier (the “Delaware Lawsuits”). Two of the Delaware Lawsuits (by plaintiff Wayne County and
by plaintiff Plumbers and Pipefitters Local Union) were voluntarily dismissed with prejudice. The remaining
Delaware Lawsuits were consolidated (lead plaintiff is the Police and Fire Retirement System of the City of
Detroit) and lead counsel was appointed. On November 18, 2008, plaintiffs filed an amended motion for leave to
amend and supplement its complaint. In connection with the amended motion for leave to amend, plaintiff
submitted a proposed Second Amended and Supplemental Consolidated Complaint (the “Second Amended
Complaint”).
The Second Amended Complaint generally alleges that defendants breached fiduciary duties in connection with
the consideration of proposals by Microsoft to purchase all or part of Yahoo!, adoption of severance plans, the
June 12, 2008 agreement between Google Inc. and Yahoo! and purports to state claims relating to alleged false
and misleading statements and omissions in Yahoo!’s proxy statement. Plaintiffs allege that the proxy statement
contained false and misleading statements and omissions related to the severance plans, including statements and
omissions with respect to the purpose of the plans, the reasons for adopting the plans, the benefits provided to
employees under the plans, the role played by outside compensation consultants and the information provided by
them and the total cost of the plans. The Second Amended Complaint seeks unspecified compensatory damages,
declaratory and injunctive relief, as well as an award of plaintiffs’ attorneys’ fees and costs.
On December 10, 2008, plaintiffs in the Delaware Lawsuits, Yahoo! and the Individual Defendants entered into a
Stipulation and Agreement of Settlement (the “Settlement Agreement”) that, if approved by the Delaware Court
of Chancery, will settle and resolve all claims that were or could have been asserted by the plaintiffs or members
of the settlement class, consisting of all persons who held Yahoo! common stock at any time between January 31
103