Yahoo 2013 Annual Report Download - page 113

such companies. The Company maintains director and officer insurance, which may cover certain liabilities
arising from its obligation to indemnify its directors and officers, and former directors and officers of acquired
companies, in certain circumstances. It is not possible to determine the aggregate maximum potential loss under
these indemnification agreements due to the limited history of prior indemnification claims and the unique facts
and circumstances involved in each particular agreement. Such indemnification agreements might not be subject
to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations
under these agreements and it has not accrued any liabilities related to such indemnification obligations in the
Company’s consolidated financial statements.
As of December 31, 2013, the Company did not have any relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. Accordingly, the Company is not exposed to any financing, liquidity, market, or credit risk that
could arise if the Company had engaged in such relationships. In addition, the Company identified no variable
interests currently held in entities for which it is the primary beneficiary.
See Note 19—“Search Agreement with Microsoft Corporation” for a description of the Company’s Search
Agreement and License Agreement with Microsoft.
Legal Contingencies
Intellectual Property and General Matters. From time to time, third parties assert patent infringement claims
against the Company. Currently, the Company is engaged in lawsuits regarding patent issues and has been
notified of other potential patent disputes. In addition, from time to time, the Company is subject to other legal
proceedings and claims in the ordinary course of business, including claims of alleged infringement of
trademarks, copyrights, trade secrets, and other intellectual property rights, claims related to employment
matters, and a variety of other claims, including claims alleging defamation, invasion of privacy, or similar
claims arising in connection with the Company’s e-mail, message boards, photo and video sites, auction sites,
shopping services, and other communications and community features.
Stockholder and Securities Matters. On June 14, 2007, a stockholder derivative action was filed in the United
States District Court for the Central District of California by Jill Watkins against members of the board of
directors (“Board”) and selected officers. The complaint filed by the plaintiff alleged breaches of fiduciary duties
and corporate waste, similar to the allegations in a former class action relating to stock price declines during the
period April 2004 to July 2006, and alleged violation of Section 10(b) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). On July 16, 2009, the plaintiff Watkins voluntarily dismissed the action against
all defendants without prejudice. On July 17, 2009, plaintiff Miguel Leyte-Vidal, who had substituted in as
plaintiff prior to the dismissal of the federal Watkins action, re-filed a stockholder derivative action in Santa
Clara County Superior Court against members of the Board and selected officers. The Santa Clara County
Superior Court derivative action purports to assert causes of action on behalf of the Company for violation of
specified provisions of the California Corporations Code, for breaches of fiduciary duty regarding financial
accounting and insider selling and for unjust enrichment. On October 23, 2013, the California Court of Appeal
affirmed the Superior Court’s judgment in favor of all defendants following dismissal of plaintiff’s third
amended complaint without leave to amend. The plaintiff did not pursue any further appeals and the judgment in
Yahoo’s favor is final.
Since May 31, 2011, several related stockholder derivative suits were filed in the Santa Clara County Superior
Court (“California Derivative Litigation”) and the United States District Court for the Northern District of
California (“Federal Derivative Litigation”) purportedly on behalf of the Company against certain officers and
directors of the Company and third parties. The California Derivative Litigation was filed by plaintiffs Cinotto,
Lassoff, Zucker, and Koo, and consolidated under the caption In re Yahoo! Inc. Derivative Shareholder
Litigation on June 24, 2011 and September 12, 2011. The Federal Derivative Litigation was filed by plaintiffs
111