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As filed with the Securities and Exchange Commission on August 11, 2003

Registration No. 333-    •    

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933

Yahoo! Inc.
(Exact name of Registrant as specified in its charter)

Delaware   7373   77-0398689
(State or other jurisdiction of
incorporation or organization)		   (Primary Standard Industrial
Classification Code Number)		   (I.R.S. Employer
Identification Number)

701 First Avenue
Sunnyvale, California 94089
(408) 349-3300
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Terry S. Semel
Chairman and Chief Executive Officer
701 First Avenue
Sunnyvale, California 94089
(408) 349-3300
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Michael J. Callahan, Esq.
Deputy General Counsel
Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
(408) 349-3300
 
Kenton J. King, Esq.
Celeste E. Greene, Esq.
Skadden, Arps, Slate,
Meagher & Flom LLP
525 University Avenue,
Suite 1100
Palo Alto, California 94301
(650) 470-4500
 
Leonard R. Stein, Esq.
Chief Legal Officer and Corporate Secretary
Overture Services, Inc.
74 N. Pasadena Avenue
Third Floor
Pasadena, California 91103
(626) 685-5600
 
Larry W. Sonsini, Esq.
Martin W. Korman, Esq.
Wilson Sonsini
Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
(650) 493-9300

        Approximate date of commencement of proposed sale to the public:    Upon completion of the merger described herein.

        If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

        If the form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If the form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered

   Amount to
be Registered(1)
   Proposed Maximum
Aggregate
Offering Price(2)
   Amount of
Registration Fee
Common Stock, par value $0.001 per share, and
associated preferred share purchase rights(3)		   50,290,312   $1,369,154,467   $110,764.60
(1)
Based upon the maximum number of shares of common stock, par value $0.001 per share, of Yahoo! Inc., a Delaware corporation, that may be issued in connection with the merger described herein.
(2)
Pursuant to paragraphs (c), (f)(1) and (f)(3) of Rule 457, and estimated solely for purposes of calculating the registration fee, the proposed maximum aggregate offering price is $1,369,154,467, which equals (i) the product of (A) the average of the high and low sales prices of common stock, par value $0.0001 per share, of Overture Services, Inc., of $22.49, as reported on the Nasdaq National Market on August 6, 2003, multiplied by (B) 77,178,944, representing the maximum number of shares of Overture common stock outstanding on August 6, 2003 (including 12,921,183 shares of Overture common stock issuable upon exercise of options outstanding); less (ii) the amount of cash to be paid by the registrant in exchange for shares of Overture common stock, or approximately $367 million.
(3)
The preferred share purchase rights, which are attached to the shares of Yahoo! common stock being registered hereunder, will be issued for no additional consideration. Accordingly, no additional registration fee is payable.

        The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. Yahoo! may not sell these securities until the registration statement filed with the United States Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated August 8, 2003

LOGO

74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
(626) 685-5600

Dear Stockholder:

        I am pleased to deliver the proxy statement/prospectus relating to the proposed acquisition of Overture Services, Inc. by Yahoo! Inc.

        You are cordially invited to attend a special meeting of stockholders of Overture, which will be held at    •    on     •    , 2003 at    •     a.m. local time. At the meeting, holders of Overture common stock will be asked to approve and adopt the merger agreement that Overture has entered into with Yahoo! and July 2003 Merger Corp., a wholly-owned subsidiary of Yahoo!, and approve a merger of Overture and July 2003 Merger Corp. If the merger agreement is approved and adopted and the merger is approved, and the other conditions in the merger agreement are satisfied or waived, Yahoo! will acquire Overture, and each share of outstanding common stock of Overture will be converted into the right to receive 0.6108 of a share of Yahoo! common stock and $4.75 in cash.

        The shares of Yahoo! common stock to be issued in the merger are listed on the Nasdaq National Market under the trading symbol "YHOO." On    •    , 2003, the closing sale price of Yahoo! common stock was $    •    per share.

        After careful consideration, Overture's board of directors has unanimously determined that the merger is fair to and in the best interests of Overture and its stockholders and recommends that you vote for approval and adoption of the merger agreement and approval of the merger.

        The accompanying proxy statement/prospectus provides a detailed description of the proposed merger and the merger agreement. I urge you to read the enclosed materials closely. Please pay particular attention to the risk factors beginning on page 20 for a discussion of risks related to the merger.

        Your vote is important. Because approval and adoption of the merger agreement and approval of the merger require the affirmative vote of holders of at least a majority of the outstanding Overture common stock, a failure to vote will have the same effect as a vote against the merger. Whether or not you intend to vote in person at the special meeting, please complete, sign and date the enclosed proxy card or voting instruction card and return it in the enclosed envelope as soon as possible. You also may be able to grant your proxy by telephone or on the Internet as described on the enclosed proxy card or voting instruction card. Giving your proxy now will not affect your right to vote in person if you wish to attend the special meeting and vote personally.

  Sincerely,

 
Ted Meisel
 President and Chief Executive Officer

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Yahoo! common stock to be issued in the merger or determined if this document is truthful or complete. Any representation to the contrary is a criminal offense.

This document is dated    •    , 2003 and is first being mailed to stockholders on or about    •    , 2003.

LOGO

OVERTURE SERVICES, INC.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
(626) 685-5600


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of Overture Services, Inc.:

        Notice is hereby given that on    •    ,    •    , 2003, Overture Services, Inc. will hold a special meeting of stockholders at    •    . The meeting will begin at    •     a.m., local time, for the following purpose:

        This proposal is described more fully in the proxy statement/prospectus attached to this notice. Please give your careful attention to all of the information in the proxy statement/prospectus.

        Only holders of record of Overture common stock at the close of business on    •    , 2003, the record date, or their proxies can vote at this special meeting or any adjournment(s) or postponement(s) that may take place. Approval and adoption of the merger agreement and approval of the merger require the affirmative vote of the holders of a majority of the shares of Overture's common stock outstanding on the record date.

        Overture stockholders have the right to dissent from the merger and obtain payment in cash of the fair value of their shares of Overture common stock under applicable provisions of Delaware law. In order to perfect and exercise appraisal rights, Overture stockholders must give written demand for appraisal of their shares to Overture before the taking of the vote on the merger at the special meeting and must not vote in favor of the merger. A copy of the applicable Delaware statutory provisions is included as Annex F of the attached proxy statement/prospectus, and a summary of these provisions can be found under "Appraisal Rights" in the attached proxy statement/prospectus.

        Your vote is important. Whether or not you expect to attend the meeting in person, you are urged to sign, date, and return the enclosed proxy card or voting instruction card, or, if available, vote electronically via the Internet or vote by telephone at your earliest convenience. Instructions for voting your shares are included on the enclosed proxy or voting instruction card. If you are a record holder and you send in your proxy and then decide to attend the special meeting to vote your shares in person, you may still do so.

  By Order of the Board of Directors

 
Very truly yours,

 
Leonard R. Stein
 Chief Legal Officer and Corporate Secretary

Pasadena, California
    •    , 2003


TABLE OF CONTENTS

QUESTIONS AND ANSWERS REGARDING THE PROPOSED MERGER   1
SUMMARY   6
  The Merger and
the Merger Agreement		   6
  Parties to the Merger   6
  Special Meeting of Stockholders
of Overture		   7
  Risk Factors   8
  Recommendation of the Overture Board of Directors   8
  Opinion of Overture Financial Advisor Regarding the Merger   8
  Some Overture Directors and Executive Officers Have Interests in the Merger   8
  What Is Needed to Complete
the Merger		   9
  Overture Is Prohibited from Soliciting Other Offers   9
  Yahoo! and Overture May Terminate the Merger Agreement Under Specified Circumstances   9
  Overture May Pay a Termination Fee Under Specified Circumstances   10
  The Merger Is Intended to Qualify as a Reorganization for
United States Federal Income
Tax Purposes		   10
  Accounting Treatment of the Merger   10
  We Have Not Yet Obtained All Required Regulatory Approvals
to Complete the Merger		   11
  Yahoo! Will List Shares of Yahoo! Common Stock on the Nasdaq National Market   11
  Appraisal Rights   11
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF YAHOO!   12
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF OVERTURE   13
SUMMARY SELECTED UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL DATA   15
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA   16
COMPARATIVE PER SHARE
MARKET PRICE DATA		   18
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION   19
RISK FACTORS   20
THE SPECIAL MEETING OF OVERTURE STOCKHOLDERS   55
  Date, Time and Place
of the Special Meeting		   55
  Matter for Consideration   55
  Board of Directors' Recommendation   55
  Record Date; Shares Held
by Directors and
Executive Officers		   55
  Quorum and Vote Required   55
  Adjournment and Postponement   56
  Voting of Proxies   56
  How to Revoke a Proxy   57
  Solicitation of Proxies and Expenses   57
     

i

THE MERGER   58
  Background of the Merger   58
  Overture's Reasons for the Merger   64
  Recommendation of the Merger by the Overture Board of Directors   64
  Opinion of Overture's
Financial Advisor		   67
  Yahoo!'s Reasons for the Merger   74
  Interests of Overture Directors and Executive Officers in the Merger   75
  Material United States
Federal Income Tax Consequences of the Merger		   79
  Accounting Treatment of the Merger   81
  Effect of the Merger
on Overture Stock Plans		   82
  Regulatory Filings and Approvals
Required to Complete the Merger		   83
  Listing of Shares of Yahoo! Common Stock Issued
in the Merger on the Nasdaq
National Market		   83
  Delisting and Deregistration of Overture Common Stock
After the Merger		   83
  Restrictions on Sales of Shares
of Yahoo! Common Stock
Received in the Merger		   83
  Appraisal Rights   84
THE MERGER AGREEMENT   85
VOTING AGREEMENTS   104
MATERIAL CONTACTS BETWEEN YAHOO! AND OVERTURE
PRIOR TO THE MERGER		   106
YAHOO! INC. AND OVERTURE SERVICES, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION   108
COMPARISON OF RIGHTS
OF HOLDERS OF YAHOO!
COMMON STOCK AND OVERTURE
COMMON STOCK		   115
APPRAISAL RIGHTS   122
FUTURE OVERTURE
STOCKHOLDER PROPOSALS		   125
LEGAL MATTERS   126
EXPERTS   126
WHERE YOU CAN FIND
MORE INFORMATION		   126
ANNEX A—Agreement and Plan of Merger   A-1
ANNEX B—Form of Voting Agreement between Yahoo! and certain individual stockholders of Overture   B-1
ANNEX C—Voting Agreement between Yahoo! and Idealab   C-1
ANNEX D—Voting Agreement between Yahoo! and Bill Gross   D-1
ANNEX E—Opinion of Goldman, Sachs & Co.   E-1
ANNEX F—Section 262 of the Delaware General Corporation Law   F-1

ii

        This proxy statement/prospectus incorporates important business and financial information about Yahoo! and Overture from documents that each company has filed with the Securities and Exchange Commission but that have not been included in or delivered with this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled "Where You Can Find More Information" beginning on page 126 of this proxy statement/prospectus.

        Yahoo! will provide you with copies of this information relating to Yahoo! (excluding all exhibits unless Yahoo! has specifically incorporated by reference an exhibit in this proxy statement/prospectus), without charge, upon written or oral request to:

Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
Attention: Investor Relations
(408) 349-3300

        Overture will provide you with copies of this information relating to Overture (excluding all exhibits unless Overture has specifically incorporated by reference an exhibit in this proxy statement/prospectus), without charge, upon written or oral request to:

Overture Services, Inc.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
Attention: Investor Relations
(626) 685-5600

        In order to receive timely delivery of the documents, you must make your requests no later than    •    , 2003.

iii


QUESTIONS AND ANSWERS REGARDING THE PROPOSED MERGER

General Questions And Answers

        The following is important information in a question-and-answer format regarding the special meeting and this proxy statement/prospectus.

Q:
Why am I receiving this proxy statement/prospectus?

A:
Yahoo! has agreed to acquire Overture under the terms of a merger agreement that is described in this proxy statement/prospectus. Please see the section entitled "Merger Agreement" beginning on page 58 of this proxy statement/prospectus. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.
Q:
Why is Yahoo! proposing to acquire Overture?

A:
We believe that combining the strengths of our two companies is in the best interests of each company and its stockholders, users and partners. Yahoo! and Overture share a belief that together the two companies will be able to provide a compelling and diversified suite of integrated marketing solutions around the globe, including branded campaigns, paid placement, graphical ads, text links, multimedia and contextual advertising. With Overture integrated into Yahoo!, we expect the combined company to:

•
Enhance the suite of products available to the combined company's affiliates, advertisers and partners;

•
Provide an improved experience for Yahoo!'s users by making their search experience easier, more effective and faster; and

•
Combine Overture's world class commercial search services platform and web search assets with Yahoo!'s already robust search business in a natural and complementary way, including by providing Overture's product and service offerings throughout the Yahoo! network.
Q:
How does Overture's board of directors recommend that stockholders vote on the merger proposal?

A:
After careful consideration, Overture's board of directors unanimously determined that the merger is advisable, fair to and in the best interests of Overture and its stockholders and approved the

1

Q:
What will I receive in the merger?

A:
If the merger agreement is approved and adopted by Overture's stockholders, the other conditions to the merger are satisfied or waived and the merger is completed, you will receive 0.6108 of a share of Yahoo! common stock and $4.75 in cash for each share of Overture common stock that you own.
Q:
What should I do now?

A:
Please carefully review this proxy statement/prospectus and vote each proxy card and voting instruction card you receive as soon as possible. If you intend to vote using the telephone or the Internet, if available, you must do so no later than 11 p.m. Eastern time on the day before the special meeting in order for your shares to be voted at the special meeting, unless you instead attend and vote at the special meeting.

Q:
Do I need to send in my Overture stock certificate now?

A:
No. You should not send in your Overture stock certificates now. Following the merger, a letter of transmittal will be sent to Overture stockholders informing them where to deliver their Overture stock certificates in order to receive shares of Yahoo! common stock, the cash consideration and any cash in lieu of a fractional share of Yahoo! common stock. You should not send in your Overture common stock certificates prior to receiving this letter of transmittal.

Q:
What vote is required to approve and adopt the merger agreement and approve the merger?

A:
The proposal to approve and adopt the merger agreement and approve the merger requires the affirmative vote of holders of a majority of the outstanding shares of Overture common stock entitled to vote at the Overture special meeting of stockholders.

Q:
Are there any stockholders already committed to voting in favor of the merger?

A:
Yes. The directors and a significant stockholder of Overture have agreed to vote all of their shares of Overture common stock, representing approximately    •    % of the outstanding shares of Overture common stock on    •    , 2003 in favor of approval and adoption of the merger agreement and approval of the merger.

Q:
When do you expect to complete the merger?

A:
Yahoo! and Overture are working toward completing the merger as quickly as possible. The merger is expected to close during the fourth quarter of 2003. However, because completion of the merger is subject to governmental and regulatory approvals and other conditions, we cannot predict the exact timing of the merger or whether the merger will occur at all.

Q:
As an Overture stockholder, will I be able to trade the Yahoo! common stock that I receive in connection with the merger?

A:
The shares of Yahoo! common stock issued in connection with the merger will be freely tradable, unless you are an "affiliate" of Overture (as defined in the Securities Act of 1933, as amended). If you are an affiliate of Overture, you will be required to comply with the applicable restrictions of

2

Q:
Am I entitled to appraisal rights?

A:
Yes. Under Delaware law, because a portion of the merger consideration is being paid in cash, Overture stockholders may exercise appraisal rights in connection with the merger. The provisions of Delaware law governing appraisal rights are complex, and you should study them carefully if you wish to exercise appraisal rights. A stockholder may take actions that prevent that stockholder from successfully asserting these rights, and multiple steps must be taken to properly exercise and perfect the rights. A copy of Section 262 of the Delaware General Corporation Law is attached to this proxy statement/prospectus as Annex F. See the section entitled "Appraisal Rights" beginning on page 122 of this proxy statement/prospectus for information regarding the actions that you must take in order to exercise appraisal rights.

Q:
What will happen to Overture's outstanding options in the merger?

A:
Overture's outstanding options will be assumed by Yahoo! in the merger. Each option so assumed will thereafter represent an option to purchase a number of shares of Yahoo! common stock equal to the number of shares of Overture common stock subject to the option immediately prior to the merger (whether or not vested) multiplied by the option exchange ratio, rounded down to the nearest whole share. The option exchange ratio is equal to:

•
the sum of:

•
$4.75 and

•
0.6108 multiplied by the average closing sales price of Yahoo! common stock as reported on Nasdaq for the five trading days ending on the trading day one day prior to the effective time of the merger,

•
divided by the average closing sales price of Yahoo! common stock as reported on Nasdaq for the five trading days ending on the trading day one day prior to the effective time of the merger.
Q:
How will the merger affect my participation in the Overture employee stock purchase plan?

A:
Overture will terminate the Overture employee stock purchase plan before the merger is completed, and any purchase period then in effect will be shortened. Overture will make adjustments under the Overture employee stock purchase plan to reflect the shortened purchase period. Each outstanding share purchased during the shortened offering period will be converted into the right to receive 0.6108 of a share of Yahoo! common stock and $4.75 in cash in the merger as described above. Following the merger, former Overture employees who become Yahoo! employees will be eligible to participate in Yahoo!'s employee stock purchase plan under the terms of that plan.

Q:
What are the tax consequences of the merger to me?

A:
Yahoo! and Overture each expect the merger to qualify as a reorganization for United States federal income tax purposes. If the merger qualifies as a reorganization, for United States federal

3

Q:
Are there any risks related to the proposed transaction or any risks related to owning Yahoo! common stock?

A:
Yes. You should carefully review the section entitled "Risk Factors" beginning in page 20 of this proxy statement/prospectus.


Questions and Answers About the Overture Special Meeting

Q:
When and where will the Overture special meeting be held?

A:
The special meeting will take place on    •    , 2003, at    •    , commencing at     •     a.m., local time.

Q:
How can I vote?

A:
If you are a stockholder of record, you may submit a proxy for the special meeting by: (1) completing, signing, dating and returning the proxy card in the pre-addressed envelope provided; (2) using the telephone; or (3) using the Internet. For specific instructions on how to use the telephone or the Internet to submit a proxy for the special meeting, please refer to the instructions on your proxy card.
Q:
How will my proxy be exercised with respect to the proposal regarding the merger?

A:
All valid proxies received before the meeting will be exercised. All shares represented by a proxy will be voted, and where a stockholder specifies by means of his or her proxy a choice with respect to the merger proposal, the shares will be voted in accordance with the specification so made.

Q:
How will voting on any other business be conducted?

A:
We do not know of any other business to be considered at the special meeting other than the merger proposal described in this proxy statement/prospectus. If any other business is properly presented at the special meeting, your signed proxy card gives authority to Ted Meisel, Overture's President and Chief Executive Officer, and/or Leonard R. Stein, Overture's Chief Legal Officer and Corporate Secretary, to vote on such matters in their discretion.

4

Q:
What happens if I do not indicate how to vote on my proxy card?

A:
If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be counted as a vote "FOR" approval and adoption of the merger agreement and approval of the merger.

Q:
What happens if I do not return a proxy card or vote?

A:
If you do not sign and send in your proxy card, vote using the telephone or Internet or vote at the special meeting or if you mark the "abstain" box on the proxy card, it will have the same effect of a vote against the approval and adoption of the merger agreement and approval of the merger.

Q:
If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A:
Your broker will vote your shares only if you provide instructions on how to vote. Therefore, you should be sure to provide your broker with instructions on how to vote your shares. Without instructions, your shares will not be voted, which will have the effect of a vote against the approval and adoption of the merger agreement and approval of the merger.

Q:
What should I do if I receive more than one set of voting materials?

A:
Please complete, sign, date and return each proxy card and voting instruction card that you receive. You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If your shares are held in more than one name, you will receive more than one proxy or voting instruction card.

Q:
May I change my vote after I have mailed my signed proxy or voting instruction card or voted using the telephone or Internet if available?

A:
Yes. If you have completed a proxy, you may change your vote at any time before your proxy is voted at the Overture special meeting of stockholders. You can do this one of three ways:

•
First, you can send a written, dated notice to the Secretary of Overture stating that you would like to revoke your proxy.

•
Second, you can complete, date and submit a new later-dated proxy card.

•
Third, you can attend the special meeting and vote in person. Your attendance alone will not revoke your proxy.
Q:
Who can answer my questions about the merger or Overture's special meeting of stockholders?

A:
If you would like additional copies of this proxy statement/prospectus without charge or if you have questions about the merger or Overture's special meeting of stockholders, including the procedures for voting your shares, you should contact:

Overture Services, Inc.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
Attention: Investor Relations
Telephone: (626) 685-5600

5


SUMMARY

        The following is a summary of the information contained in this proxy statement/prospectus. This summary may not contain all of the information about the merger that is important to you. For a more complete description of the merger, we encourage you to read carefully this entire proxy statement/prospectus, including the attached annexes. In addition, we encourage you to read the information incorporated by reference into this proxy statement/prospectus, which includes important business and financial information about Yahoo! and Overture. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled "Where You Can Find More Information" beginning on page 126 of this proxy statement/prospectus.

The Merger and the Merger Agreement (see page 58)

        Yahoo! has agreed to acquire Overture under the terms of a merger agreement between the companies that is described in this proxy statement/prospectus. Under the terms of the merger agreement, it is anticipated that a newly formed, wholly-owned subsidiary of Yahoo! will merge with and into Overture with Overture surviving the merger as a wholly-owned subsidiary of Yahoo! In the alternative, Overture may merge with and into the newly formed wholly-owned subsidiary of Yahoo!, with the newly formed wholly-owned subsidiary surviving the merger and being renamed Overture Services, Inc. In either event, upon completion of the applicable merger, holders of Overture common stock will be entitled to receive 0.6108 of a share of Yahoo! common stock and $4.75 in cash for each share of Overture common stock that they then hold. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus, and we encourage you to read the merger agreement in its entirety.

Parties to the Merger

Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
(408) 349-3300

        Yahoo! is a leading provider of comprehensive Internet products and services, offering a comprehensive network of essential services for Web users around the globe as well as businesses of all sizes. Yahoo! manages its business geographically, and its principal areas of measurement and decision-making are the United States and International.

        Yahoo!'s basic properties and service offerings are available without charge to its users. Yahoo! generates revenues from marketing services, fees and listings, and also offers fee-based premium services that provide its users access to additional content or services. Yahoo!'s properties and services for consumers and businesses reside in five vertical areas:

6

        Yahoo! was incorporated on March 5, 1995 under the laws of California. Yahoo! was subsequently reincorporated on May 14, 1999 under the laws of Delaware. Yahoo!'s Web site is located at http://www.yahoo.com. Information contained in this Web site does not constitute part of this proxy statement/prospectus.

Overture Services, Inc.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
(626) 685-5600

        Overture is a global leader in commercial search services on the Internet. Overture's paid placement search service is comprised of advertiser generated listings, which are screened for relevance and accessed by consumers and businesses through Overture's affiliates, a network of Web properties that have integrated Overture's search service into their Web sites or that direct user traffic to Overture's Web sites. In some cases, consumers and businesses access Overture's search listings directly at Overture's websites. The search listings are ranked according to the advertiser's bid; the higher the bid, the higher the ranking. Advertisers pay Overture the bid price for clicks on the advertiser's search listing (also known as a paid introduction, click-through or a paid click). As of June 30, 2003, Overture and its wholly-owned subsidiaries operated the Overture service in the United States, Ireland, United Kingdom, Germany, France, Italy, Japan and South Korea.

        Overture was incorporated on September 15, 1997 in the state of Delaware and officially launched its operations on June 1, 1998. On October 8, 2001, Overture changed its corporate name from GoTo.com, Inc. to Overture Services, Inc. and changed its Nasdaq Stock Market trading symbol to "OVER." In addition to its headquarters, Overture has additional offices in California, Illinois and New York in the United States, Ireland, United Kingdom, Germany, France, Japan, Norway, Italy, the Netherlands, Spain and South Korea. Overture's Web site can be accessed at http://www.overture.com. Information contained in this Web site does not constitute part of this proxy statement/prospectus.

July 2003 Merger Corp.
701 First Avenue
Sunnyvale, California 94089
(408) 349-3300

        July 2003 Merger Corp. is a newly-formed, wholly-owned subsidiary of Yahoo!. Yahoo! formed July 2003 Merger Corp. solely to effect the merger, and July 2003 Merger Corp. has not conducted any business during any period of its existence.

Special Meeting of Stockholders of Overture (see page 55)

        Overture will hold a special meeting of its stockholders on    •    , 2003, at     •     a.m., local time, at    •    , at which stockholders will be asked to vote upon a proposal to approve and adopt the merger agreement and approve the merger.

7


Risk Factors (see page 20)

        The "Risk Factors" beginning on page 20 of this proxy statement/prospectus, should be considered carefully by Overture stockholders in evaluating whether to approve and adopt the merger agreement and approve the merger. These risk factors should be considered along with any additional risk factors in the reports of Yahoo! and Overture filed with the Securities and Exchange Commission and any other information included in this proxy statement/prospectus.

Recommendation of the Overture Board of Directors (see page 64)

        After careful consideration, the Overture board of directors unanimously determined that the merger is advisable and is fair to and in the best interests of Overture and its stockholders, and unanimously approved the merger agreement. The Overture board of directors unanimously recommends that the Overture stockholders vote "FOR" the proposal to approve and adopt the merger agreement and approve the merger.

Opinion of Overture Financial Advisor Regarding the Merger (see page 66)

        On July 13, 2003 Goldman, Sachs & Co. rendered its oral opinion, subsequently confirmed by delivery of its written opinion dated July 14, 2003, that, as of such date, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be received by the holders of Overture common stock pursuant to the merger agreement is fair from a financial point of view to such holders.

        The full text of the written opinion of Goldman Sachs, dated July 14, 2003, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex E to this proxy statement/prospectus. Overture's stockholders should read the opinion in its entirety. Goldman Sachs provided its opinion for the information and assistance of Overture's Board of Directors in connection with its consideration of the transaction contemplated by the merger agreement, and such opinion is not a recommendation as to how any holder of Overture's common stock should vote with respect to such transaction.

Some Overture Directors and Executive Officers Have Interests in the Merger (see page 75)

        When Overture stockholders consider Overture's board of directors' recommendation that they vote in favor of the proposal to approve and adopt the merger agreement and approve the merger, they should be aware that certain executive officers of Overture and the members of Overture's board of directors have interests in the merger that may be different from, or in addition to, the interests of stockholders generally. These interests include continuation of rights to indemnification and acceleration of options and lapsing of restricted stock repurchase rights with respect to options and restricted stock held by non-employee directors of Overture. Pursuant to change of control severance agreements with Overture, Overture's executive officers are entitled to receive severance benefits (including a cash payment and acceleration of options and lapsing of restricted stock repurchase rights, as well as reimbursement for health insurance premiums) if their employment is terminated following the merger under certain circumstances. In addition, Ted Meisel, the President and Chief Executive Officer of Overture, has accepted a written offer from Yahoo! to continue his employment after the merger, which employment is contingent upon consummation of the merger. Overture's board of directors was aware of and considered these potentially conflicting interests when they approved the merger agreement.

8


What Is Needed to Complete the Merger (see page 97)

        Several conditions must be satisfied or waived before we complete the merger, including those summarized below:

        The following conditions also apply to Yahoo!'s obligation to complete the merger:

        Stockholders of Yahoo! are not required to approve the issuance of shares of Yahoo! common stock in the merger, and accordingly, Yahoo! will not hold a special meeting of its stockholders in connection with the merger.

Overture Is Prohibited from Soliciting Other Offers (see page 91)

        The merger agreement contains detailed provisions that prohibit Overture and its subsidiaries, and their officers and directors, from taking any action to solicit or engage in discussions or participate in negotiations with any person or group with respect to an acquisition proposal as defined in the merger agreement, including an acquisition that would result in the person or group acquiring more than a 15% interest in Overture's total outstanding voting securities, a sale of more than 15% of Overture's assets or a merger or other business combination. Overture is also required to use all reasonable efforts to cause its advisors to comply with these restrictions. The merger agreement does not, however, prohibit Overture or its board of directors from considering, and in the event of a tender or exchange offer made directly to Overture stockholders potentially recommending, an unsolicited bona fide written acquisition proposal from a third party if specified conditions are met.

Yahoo! and Overture May Terminate the Merger Agreement under Specified Circumstances (see page 100)

        Under circumstances specified in the merger agreement, either Yahoo! or Overture may terminate the merger agreement. These circumstances generally include if:

9

        Additionally, Yahoo! may terminate the merger agreement if:

Overture May Pay a Termination Fee under Specified Circumstances (see page 102)

        If the merger agreement is terminated, Overture may be required to pay a termination fee of $65 million to Yahoo! under specified circumstances.

The Merger Is Intended to Qualify as a Reorganization for United States Federal Income Tax Purposes (see page 79)

        Yahoo! and Overture each expect the merger to qualify as a reorganization for United States federal income tax purposes. Consummation of the merger is conditioned upon the receipt of opinions from Yahoo!'s and Overture's respective tax counsels that the merger will qualify as a "reorganization" under section 368(a) of the Internal Revenue Code of 1986, as amended. Assuming the merger qualifies as a reorganization, for United States federal income tax purposes, an Overture stockholder will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of cash received pursuant to the merger and (2) an amount equal to the excess, if any, of (a) the sum of the amount of cash received pursuant to the merger and the fair market value of the Yahoo! common stock received pursuant to the merger over (b) such stockholder's basis in its shares surrendered in exchange therefor. In addition, an Overture stockholder will recognize gain or loss, as the case may be, to the extent they receive cash in lieu of the receipt of a fractional share of Yahoo!'s common stock.

Accounting Treatment of the Merger (see page 81)

        In accordance with United States generally accepted accounting principles, Yahoo! will account for the merger under the purchase method of accounting for business combinations.

10


We Have Not Yet Obtained All Required Regulatory Clearances to Complete the Merger (see page 83)

        The merger is subject to antitrust laws. Yahoo! and Overture are required to make filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission. Yahoo! and Overture are not permitted to complete the merger until the applicable waiting period under the HSR Act has expired or been terminated. In addition, the reviewing agencies or governments, states or private persons may challenge the merger at any time before or after its completion. Yahoo! and Overture have not yet obtained any of the governmental or regulatory clearances required to complete the merger.

Yahoo! Will List Shares of Yahoo! Common Stock on the Nasdaq National Market (see page 83)

        If we complete the merger, stockholders will be able to trade the shares of Yahoo! common stock they receive in the merger on the Nasdaq National Market, subject to restrictions on affiliates described in the section entitled "Restrictions on Sales of Shares of Yahoo! Common Stock Received in the Merger" beginning on page 83 of this proxy statement/prospectus. If we complete the merger, Overture stock will no longer be quoted on the Nasdaq National Market or any other market or exchange.

Appraisal Rights (see page 84)

        Under Delaware law, Overture stockholders are entitled to appraisal rights with respect to the merger and, if the merger is completed, to receive payment in cash for the fair value of their shares of Overture common stock. In general, to preserve their appraisal rights, Overture stockholders who wish to exercise these rights must:

        The text of the Delaware statute governing appraisal rights is attached to this prospectus/proxy statement as Annex F. Your failure to comply with the procedures described in Annex F will result in the loss of your appraisal rights. The text of the Delaware statute governing appraisal rights is very complex and you are urged to read it carefully.

11


SUMMARY SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA OF YAHOO!

        The table below presents a summary of selected historical consolidated financial data with respect to Yahoo! as of the dates and for the periods indicated. The historical consolidated statement of operations data presented below for the fiscal years ended December 31, 2002, 2001 and 2000 and the historical balance sheet data as of December 31, 2002 and 2001 have been derived from Yahoo!'s audited historical consolidated financial statements which are incorporated by reference into this proxy statement/prospectus and which have been audited by PricewaterhouseCoopers LLP, independent accountants. The historical consolidated statement of operations data for the six months ended June 30, 2003 and June 30, 2002 and the historical balance sheet data as of June 30, 2003 and 2002 have been derived from Yahoo!'s unaudited interim condensed historical consolidated financial statements which are incorporated by reference into this proxy statement/prospectus. Operating results of the six months ended June 30, 2003 and June 30, 2002 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2003 or any other period. In the opinion of Yahoo!'s management, the accompanying unaudited financial data included all adjustments (consisting only of normal recurring adjustments) necessary for their fair presentation. The historical consolidated statement of operations data presented below for the fiscal years ended December 31, 1999 and 1998 and the historical balance sheet data as of December 31, 2000, 1999 and 1998 are derived from Yahoo!'s audited historical consolidated financial statements which are not incorporated by reference into this proxy statement/prospectus, and which were also audited by PricewaterhouseCoopers LLP. The historical results are not necessarily indicative of results to be expected for any future period.

        You should read the summary consolidated financial data set forth below in conjunction with Yahoo's annual report on Form 10-K for the fiscal year ended December 31, 2002 and its quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2003 and the financial statements and management's discussion and analysis of such financial statements included therein, all of which are incorporated by reference into this proxy statement/prospectus.

 
   Year Ended December 31,
   Six Months Ended June 30,
 
   1998
   1999
   2000
   2001
   2002
   2002
   2003
 
    
    
    
    
    
   (unaudited)
 
   (in thousands, except per share amounts)
Statement of Operations Data:                                          
Net revenues   $ 245,132   $ 591,786   $ 1,110,178   $ 717,422   $ 953,067   $ 418,457   $ 604,354
Income (loss) before cumulative effect of accounting change   $ (13,641 ) $ 47,811   $ 70,776   $ (92,788 ) $ 106,935   $ 31,869   $ 97,531
Cumulative effect of accounting change     —     —     —     —     (64,120 )   (64,120 )   —
   
 
 
 
 
 
 
Net income (loss)   $ (13,641 ) $ 47,811   $ 70,776   $ (92,788 ) $ 42,815   $ (32,251 ) $ 97,531
   
 
 
 
 
 
 
Income (loss) per share before cumulative effect of accounting change—basic   $ (0.03 ) $ 0.09   $ 0.13   $ (0.16 ) $ 0.18   $ 0.05   $ 0.16
Cumulative effect of accounting change per share—basic     —     —     —     —     (0.11 )   (0.10 )   —
   
 
 
 
 
 
 
Net income (loss) per share—basic   $ (0.03 ) $ 0.09   $ 0.13   $ (0.16 ) $ 0.07   $ (0.05 ) $ 0.16
   
 
 
 
 
 
 
Income (loss) per share before cumulative effect of accounting change—diluted   $ (0.03 ) $ 0.08   $ 0.12   $ (0.16 ) $ 0.18   $ 0.05   $ 0.16
Cumulative effect of accounting change per share—diluted     —     —     —     —     (0.11 )   (0.10 )   —
   
 
 
 
 
 
 
Net income (loss) per share—diluted   $ (0.03 ) $ 0.08   $ 0.12   $ (0.16 ) $ 0.07   $ (0.05 ) $ 0.16
   
 
 
 
 
 
 
Shares used in per share calculation—basic     440,131     516,237     550,657     569,724     593,838     592,809     600,330
   
 
 
 
 
 
 
Shares used in per share calculation—diluted     440,131     599,558     610,678     569,724     610,060     612,781     622,183
   
 
 
 
 
 
 
 
   As of December 31,
   As of June 30,
 
   1998
   1999
   2000
   2001
   2002
   2002
   2003
 
    
    
    
    
    
   (unaudited)
 
   (in thousands)
Balance Sheet Data:                                          
Cash and cash equivalents   $ 240,236   $ 277,136   $ 456,877   $ 372,632   $ 310,972   $ 303,591   $ 1,075,582
Investments in marketable debt securities     395,843     727,164     1,201,789     1,099,361     1,223,066     1,163,099     1,238,382
Restricted cash and restricted long-term investments     —     —     30,000     258,662     —     258,662     —
Working capital     531,032     796,653     979,635     693,016     558,190     565,226     1,341,038
Total assets     790,471     1,520,129     2,269,576     2,379,346     2,790,181     2,725,763     3,921,521
Long-term liabilities     6,930     17,621     32,115     23,806     84,540     89,694     852,374
Mandatorily redeemable convertible preferred stock     9,923     52,173     —     —     —     —     —
Stockholders' equity   $ 676,361   $ 1,251,732   $ 1,896,914   $ 1,967,017   $ 2,262,270   $ 2,198,863   $ 2,556,833

12


SUMMARY SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA OF OVERTURE

        The table below presents a summary of selected historical consolidated financial data with respect to Overture as of the dates and for the periods indicated. The historical consolidated statement of operations data presented below for the fiscal years ended December 31, 2002, 2001 and 2000 and the historical balance sheet data as of December 31, 2002 and 2001 have been derived from Overture's audited historical consolidated financial statements which are incorporated by reference into this proxy statement/prospectus. The historical consolidated statement of operations data for the six months ended June 30, 2003 and June 30, 2002 and the historical balance sheet data as of June 30, 2003 and 2002 have been derived from Overture's unaudited interim condensed historical consolidated financial statements which are incorporated by reference into this proxy statement/prospectus. Operating results of the six months ended June 30, 2003 and June 30, 2002 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2003 or any other period. In the opinion of Overture's management, the accompanying unaudited financial data included all adjustments (consisting only of normal recurring adjustments) necessary for their fair presentation. The historical consolidated statement of operations data presented below for the fiscal years ended December 31, 1999 and 1998 and the historical balance sheet data as of December 31, 2000, 1999 and 1998 have been derived from Overture's audited historical consolidated financial statements which are not incorporated by reference into this proxy statement/prospectus. Certain reclassifications have been made in prior years' financial statements to conform to classifications used in the current year. The historical results are not necessarily indicative of results to be expected for any future period.

        You should read the summary consolidated financial data set forth below in conjunction with Overture's annual report on Form 10-K for the fiscal year ended December 31, 2002 and its quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2003 and the financial statements and management's discussion and analysis of such financial statements included therein, all of which are incorporated by reference into this proxy statement/prospectus.

13

 
   Year Ended December 31,
   Six Months Ended
June 30,
  
 
   1998
   1999
   2000
   2001
   2002
   2002
   2003
  
 
    
    
    
    
    
   (unaudited)

  
 
   (in thousands, except per share amounts)

  
Consolidated Statement of Operations Data                                            
Revenue   $ 822   $ 26,809   $ 103,052   $ 288,133   $ 667,730   $ 295,341   $ 490,057  
Operating Expenses                                            
  Search Serving     1,429     6,213     13,109     20,962     32,723     14,694     30,220  
  Traffic acquisition     —       14,290     66,433     162,072     384,583     158,440     313,130  
  Marketing, sales and service     9,645     20,169     28,098     28,078     55,245     23,867     38,968  
  General and administrative     1,655     12,467     33,798     44,917     75,618     33,631     56,050  
  Product Development     1,232     3,689     13,523     12,811     19,372     9,372     18,030  
  Amortization of deferred compensation and intangibles     1,199     3,585     116,976     2,041     1,753     819     2,016  
  Write-off of acquired in-process research and development     —       —       7,550     —       —       —       —    
  Impairment of intangible assets     —       —       309,253     —       —       —       —    
  Loss on disposition of GoTo Auctions and GoTo Shopping     —       —       —       3,010     —       —       —    
  Loss on litigation ruling     —       —       —       —       8,700     —       (3,941 )
   
 
 
 
 
 
 
 
Total operating expenses     15,160     60,413     588,740     273,891     577,994     240,823     454,473  
   
 
 
 
 
 
 
 
Income (loss) from operations     (14,338 )   (33,604 )   (485,688 )   14,242     89,736     54,518     35,584  
  Interest income, net     316     3,777     5,809     4,260     3,938     1,837     1,231  
  Other income, net     —       566     21,259     2,561     974     847     213  
   
 
 
 
 
 
 
 
Income (loss) before provision for income taxes     (14,022 )   (29,261 )   (458,620 )   21,063     94,648     57,202     37,028  
Provision for income taxes     1     1     1     900     21,501     10,429     18,267  
   
 
 
 
 
 
 
 
Net income (loss)   $ (14,023 ) $ (29,262 ) $ (458,621 ) $ 20,163   $ 73,147   $ 46,773   $ 18,761  
   
 
 
 
 
 
 
 
Basic net income (loss) per share   $ (1.36 ) $ (1.04 ) $ (9.54 ) $ 0.38   $ 1.27   $ 0.81   $ 0.31  
   
 
 
 
 
 
 
 
Diluted net income (loss) per share   $ (1.36 ) $ (1.04 ) $ (9.54 ) $ 0.36   $ 1.23   $ 0.78   $ 0.30  
   
 
 
 
 
 
 
 
 
   As of December 31,
   As of June 30,
 
   1998
   1999
   2000
   2001
   2002
   2002
   2003
 
    
    
    
    
    
   (unaudited)
 
   (in thousands)
Balance Sheet Data                                          
Unrestricted cash, cash equivalents, short and long-term investments   $ 16,357   $ 110,255   $ 54,973   $ 170,287   $ 250,744   $ 200,330   $ 113,431
Working capital     15,215     95,165     52,956     102,874     147,454     146,156     50,125
Total assets     19,969     129,512     121,413     231,927     435,716     332,512     585,042
Long-term obligations     183     768     654     64     1,203     —       859
Total stockholders' equity   $ 16,397   $ 112,774   $ 88,095   $ 179,443   $ 303,538   $ 256,643   $ 410,844

14


SUMMARY SELECTED UNAUDITED PRO FORMA
COMBINED CONSOLIDATED FINANCIAL DATA

        The following selected unaudited pro forma combined consolidated financial data was prepared using the purchase method of accounting.

        The selected unaudited pro forma combined consolidated financial data is based on estimates and assumptions which are preliminary. This data is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial condition of Yahoo! that would have been reported had the merger been completed as of the dates presented, and should not be taken as representative of future consolidated results of operations or financial condition of Yahoo!.

        This selected unaudited pro forma condensed combined consolidated financial data should be read in conjunction with the summary selected historical consolidated financial data and the unaudited pro forma condensed combined consolidated financial statements and accompanying notes contained elsewhere in this proxy statement/prospectus and the separate historical consolidated financial statements and accompanying notes of Yahoo! and Overture incorporated by reference into this proxy statement/prospectus. See the section entitled "Where You Can Find More Information" beginning on page 126 of this proxy statement/prospectus.


YAHOO! AND OVERTURE
Selected Unaudited Pro Forma, Combined Consolidated Financial Data(1)

(in thousands, except per share amounts)

 
   Year Ended
December 31,
   Six Months Ended
June 30,
 
   2002
   2003
Pro Forma Combined Statement of Operations Data:            
Net revenues   $ 1,604,786   $ 994,756
Income (loss) from operations   $ (249,917 ) $ 104,911
Income (loss) before income taxes   $ (188,523 ) $ 137,593
Net income (loss)   $ (164,136 ) $ 80,623

Net income (loss) per share—basic
 
$
(0.26
)
$
0.13
Net income (loss) per share—diluted   $ (0.26 ) $ 0.12

Shares used in per share calculation—basic
 
 
632,914
 
 
639,406
Shares used in per share calculation—diluted     632,914     662,259

Pro Forma Combined Balance Sheet Data:
 
 
 
 
 
 
Cash and cash equivalents         $ 854,835
Investments in marketable debt securities           1,268,675
Working capital           1,062,692
Total assets           5,408,798
Stockholders' equity         $ 3,898,794
(1)
See the section entitled "Yahoo! Inc. and Overture Services, Inc. Unaudited Pro Forma Consolidated Financial Information" beginning on page 108 of this proxy statement/prospectus.

15


COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

        The following table presents certain unaudited historical per share and combined pro forma per share data of Overture and Yahoo! after giving effect to the acquisition of Overture by Yahoo! using the purchase method of accounting. The combined pro forma data includes the effects of the proposed acquisition of Overture by Yahoo! as well as Yahoo!'s completed acquisition of Inktomi and Overture's completed acquisitions of the business of AltaVista Company and the Web search unit of Fast Search & Transfer, ASA. The pro forma data does not purport to be indicative of the results of future operations or the results that would have occurred had the acquisition been consummated at the beginning of the periods presented. The information set forth below should be read in conjunction with the historical consolidated financial statements and notes thereto of Yahoo! and Overture incorporated by reference in this proxy statement/prospectus, and the unaudited pro forma combined condensed financial data included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined and unaudited pro forma equivalent per share data combine the results of operations of Yahoo! and Overture for the year ended December 31, 2002, the results of operations of Yahoo! and Overture for the six months ended June 30, 2003, and Yahoo!'s financial position at June 30, 2003 with Overture's financial position at June 30, 2003. No cash dividends have ever been declared or paid on Yahoo! common stock or Overture common stock.

Yahoo!

 
   Year Ended December 31, 2002
   Six Months Ended June 30, 2003
Historical per common share data:            
Net income per basic share
before cumulative effect of accounting change		   $ 0.18   $ 0.16
Net income per diluted share
before cumulative effect of accounting change		   $ 0.18   $ 0.16
Net book value per share(1)         $ 4.21

Overture

 
   Year Ended December 31, 2002
   Six Months Ended June 30, 2003
Historical per common share data:            
Net income per basic share   $ 1.27   $ 0.31
Net income per diluted share   $ 1.23   $ 0.30
Net book value per share(1)         $ 6.44

See footnote references on page 17.

16

Yahoo! and Overture

 
   Year Ended December 31, 2002
   Six Months Ended June 30, 2003
Pro forma combined per common share data:            
Net income (loss) before cumulative effect of accounting change per combined company's basic share(2)   $ (0.26 ) $ 0.13
Net income (loss) before cumulative effect of accounting change per combined company's diluted share(2)   $ (0.26 ) $ 0.12
Net income (loss) before cumulative effect of accounting change per equivalent Overture basic share(3)   $ (0.16 ) $ 0.08
Net income (loss) before cumulative effect of accounting change per equivalent Overture diluted share(3)   $ (0.16 ) $ 0.07

Net book value per combined company's share(1)
 
 
 
 
$
6.03
Net book value per equivalent Overture share(3)         $ 3.68
(1)
The historical net book value per Yahoo! share is computed by dividing stockholders' equity by the number of shares of common stock outstanding at June 30, 2003. The historical net book value per Overture share is computed by dividing stockholders' equity by the number of shares of common stock outstanding at June 30, 2003. The pro forma net book value per combined company's share is computed by dividing the pro forma stockholders' equity by the pro forma number of shares of Yahoo! common stock outstanding as of June 30, 2003, assuming the merger had occurred as of that date.

(2)
Shares used to calculate unaudited pro forma net income (loss) per basic share were computed by adding 39.1 million shares assumed to be issued in the merger in exchange for the outstanding Overture shares to Yahoo!'s weighted average shares outstanding. Shares used to calculate unaudited pro forma net income per diluted share were computed by adding 39.1 million shares and approximately 1.0 million options (using the treasury stock method) assumed to be issued in the merger to Yahoo!'s weighted average shares outstanding. Shares used to calculate unaudited pro forma net loss per diluted share were computed by adding 39.1 million shares assumed to be issued to Yahoo!'s weighted average shares outstanding.

(3)
The equivalent pro forma combined per Overture share is calculated by multiplying the pro forma combined amounts by the exchange ratio of 0.6108 shares of Yahoo! common stock for each share of Overture common stock. The exchange ratio does not include the $4.75 per share cash consideration.

17


COMPARATIVE PER SHARE MARKET PRICE DATA

        Yahoo! common stock trades on the Nasdaq National Market under the symbol "YHOO." Overture common stock trades on the Nasdaq National Market under the symbol "OVER."

        The following table shows the high and low sales prices per share of Yahoo! common stock and Overture common stock, each as reported on the Nasdaq National Market on (1) July 11, 2003, the last full trading day preceding the public announcement that Yahoo! and Overture had entered into the merger agreement, and (2)     •    , 2003, the last full trading day for which high and low sales prices were available as of the date of this proxy statement/prospectus.

        The table also includes the equivalent high and low sales prices per share of Overture common stock on those dates. These equivalent high and low sales prices per share reflect the $4.75 in cash consideration plus the fluctuating value of the 0.6108 of a share of Yahoo! common stock that Overture stockholders would receive in exchange for each share of Overture common stock if the merger was completed on either of these dates.

 
   Yahoo
Common Stock
   Overture
Common Stock
   Equivalent
Price Per Share
 
   High
   Low
   High
   Low
   High
   Low
July 11, 2003   $32.92   $31.60   $21.66   $21.13   $24.86   $24.05
•, 2003   •   •   •   •   •   •

        The above table shows only historical comparisons. These comparisons may not provide meaningful information to Overture stockholders in determining whether to approve and adopt the merger agreement and approve the merger. Overture stockholders are urged to obtain current market quotations for Yahoo! and Overture common stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus in considering whether to approve and adopt the merger agreement and approve the merger. See the section entitled "Where You Can Find More Information" beginning on page 126 of this proxy statement/prospectus.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

        This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions, that, if they never materialize or prove incorrect, could cause the results of Yahoo! and its consolidated subsidiaries, on the one hand, or Overture and its consolidated subsidiaries, on the other, to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including:

        The risks, uncertainties and assumptions referred to above include:

        If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, results of Yahoo! and Overture could differ materially from the expectations in these statements. Yahoo! and Overture are not under any obligation and do not intend to update their respective forward-looking statements.

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RISK FACTORS

        Yahoo! and Overture will operate as a combined company in a market environment that cannot be predicted and that involves significant risks, many of which will be beyond the combined company's control. In addition to the other information contained in, or incorporated by reference into, this proxy statement/prospectus, you should carefully consider the risks described below before deciding how to vote your shares. Additional risks and uncertainties not presently known to Yahoo! and Overture or that are not currently believed to be important to you, if they materialize, also may adversely affect the merger and Yahoo! and Overture as a combined company.


Risks Related to the Merger

Although Yahoo! and Overture expect that the merger will result in benefits to the combined company, the combined company may not realize those benefits because of integration and other challenges.

        The failure of the combined company to meet the challenges involved in integrating the operations of Yahoo! and Overture successfully or otherwise to realize any of the anticipated benefits of the merger could seriously harm the results of operations of the combined company. Realizing the benefits of the merger will depend in part on the integration of technology, operations, and personnel. The integration of the companies is a complex, time-consuming and expensive process that, without proper planning and implementation, could significantly disrupt the businesses of Yahoo! and Overture. The challenges involved in this integration include the following:

        The combined company may not successfully integrate the operations of Yahoo! and Overture in a timely manner, or at all, and the combined company may not realize the anticipated benefits or synergies of the merger to the extent, or in the timeframe, anticipated. The anticipated benefits and synergies are based on projections and assumptions, not actual experience, and assume a successful integration. In addition to the integration risks discussed above, the combined company's ability to realize these benefits and synergies could be adversely impacted by practical or legal constraints on its ability to combine operations.

The shares of Yahoo! common stock that Overture stockholders will receive as part of the merger consideration may not maintain their value.

        At the closing of the merger, each share of Overture common stock will be exchanged for 0.6108 of a share of Yahoo! common stock and $4.75 in cash. There will be no adjustment in the number of shares of Yahoo! common stock or amount of cash distributed to Overture stockholders because of

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changes in the market price of either Yahoo! common stock or Overture common stock. Accordingly, the specific dollar value of Yahoo! common stock that Overture stockholders will receive upon the merger's completion will depend entirely upon the market value of Yahoo! common stock at the time the merger is completed. This value may substantially decrease from the date you submit your proxy. Moreover, completion of the merger may occur some time after Overture stockholder approval has been obtained, so that the specified dollar value of Yahoo! common stock that Overture stockholders will receive upon the merger's completion may substantially decrease from the date of the special meeting of Overture stockholders. In addition, Overture may not terminate the merger agreement or refuse to complete the merger solely because of changes in the market price of Yahoo! common stock or Overture common stock. The share prices of Yahoo! common stock and Overture common stock are by nature subject to the general price fluctuations in the market for publicly-traded equity securities, and the prices of both companies' common stock have experienced volatility in the past. We urge you to obtain recent market quotations for Yahoo! common stock and Overture common stock. Neither Yahoo! nor Overture can predict or give any assurances as to the respective market prices of its common stock at any time before or after the completion of the merger.

Some of the directors and executive officers of Overture have interests and arrangements that could affect their decision to support or approve the merger.

        The directors and executive officers of Overture will receive continuing indemnification against liabilities and some of the directors and executive officers have Overture restricted stock and stock options that provide them with interests in the merger, such as accelerated vesting upon completion of the merger in certain cases, that are different from, or are in addition to, your interests in the merger. In addition, Ted Meisel, the President and Chief Executive Officer of Overture, has entered into an employment agreement with Yahoo!, which is contingent upon, and effective after, the completion of the merger. In addition, Overture's other executive officers are entitled to receive severance benefits pursuant to change of control severance agreements with Overture if their employment is terminated following the merger under certain circumstances. As a result, these directors and officers may be more likely to vote to approve and adopt the merger agreement and approve the merger and recommend that you approve and adopt the merger agreement and approve the merger than if they did not have these interests. All of the directors of Overture, including Mr. Meisel, and a significant stockholder of Overture that is an affiliate of one of Overture's directors have already agreed to vote their shares of Overture common stock, representing approximately    •    % of all outstanding shares of Overture common stock as of close of business on the record date for the special meeting in favor of the proposal to approve and adopt the merger agreement and approve the merger. As of the close of business on the record date Overture officers and directors and their affiliates beneficially owned approximately    •    % of all outstanding shares of Overture common stock entitled to vote at the meeting. For a description of some of these interests, please see the section entitled "—Interests of Overture Directors and Executive Officers in the Merger" beginning on page 75 of this proxy statement/prospectus.

Yahoo! and Overture may be unable to obtain the regulatory approvals required to complete the merger or, in order to do so, the combined company may be required to comply with material restrictions or conditions.

        Yahoo! and Overture may be unable to obtain the regulatory approvals required to complete the transaction or, in order to do so, the combined company may be required to comply with material restrictions or conditions. The merger is subject to review by the Antitrust Division of the United States Department of Justice (DOJ) and the United States Federal Trade Commission (FTC) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act). Yahoo! and Overture are required to make filings under the HSR Act, and the statutory waiting period thereunder must expire or be terminated prior to completing the merger. Each of Yahoo! and Overture may receive a request for additional information and other documentary material from the DOJ or the FTC

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under the HSR Act in connection with the merger, which would extend the waiting period for the merger under the HSR Act until 30 days after both parties substantially comply with the request for additional information. In addition, the merger may be subject to review by the governmental authorities of various other jurisdictions under the antitrust laws of those jurisdictions. Any delay in the completion of the merger could diminish the anticipated benefits of the merger or result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the transaction.

        The reviewing authorities may not permit the merger at all or may impose restrictions or conditions on the merger that may seriously harm the combined company if the merger is completed. These conditions could include a complete or partial license, divestiture, spin-off or the holding separate of assets or businesses. Yahoo! may refuse to complete the merger if restrictions or conditions are required by governmental authorities that would be reasonably likely to materially adversely impact the benefits anticipated to be derived by the merger or the business of Overture as currently conducted or contemplated to be conducted on a combined basis with Yahoo! after the merger.

        Yahoo! and Overture also may agree to restrictions or conditions imposed by antitrust authorities in order to obtain regulatory approval, and these restrictions or conditions could harm the combined company's operations. No additional stockholder approval is expected to be required for any decision by Overture, after the special meeting of Overture stockholders, to agree to any terms and conditions necessary to resolve any regulatory objections to the merger.

        In addition, during or after the statutory waiting periods, and even after completion of the merger, governmental authorities could seek to block or challenge the merger as they deem necessary or desirable in the public interest. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin the merger, before or after it is completed. Yahoo!, Overture or the combined company may not prevail, or may incur significant costs, in defending or settling any action under the antitrust laws.

Yahoo! expects to incur significant costs associated with the merger.

        Yahoo! estimates that it will incur direct transaction costs of approximately $12.5 million associated with the merger, which will be included as part of the total purchase price for financial accounting purposes. In addition, Overture estimates that it will incur direct transaction costs of approximately $14.0 million which will be recognized as expenses as incurred. Yahoo! and Overture believe the combined entity may incur charges to operations, which are not currently reasonably estimable, in the quarter in which the merger is completed or the following quarters, to reflect costs associated with integrating the two companies. There can be no assurance that the combined company will not incur additional material charges in subsequent quarters to reflect additional costs associated with the merger and the integration of the two companies.

        In addition, Overture stockholders who do not wish to accept the Yahoo! common stock to be issued in the merger have the right to have the Delaware Chancery Court determine the "fair value" of their shares by exercising their appraisal rights pursuant to Delaware's appraisal rights statute. If Overture stockholders properly exercise that right, the Chancery Court may award them an amount in excess of the merger consideration.

The stock prices and businesses of Yahoo! and Overture may be adversely affected if the merger is not completed.

        Completion of the merger is subject to several closing conditions, including obtaining requisite regulatory and stockholder approvals, and Yahoo! and Overture may be unable to obtain such approvals on a timely basis or at all. If the merger is not completed, the prices of Yahoo! common stock and Overture common stock may decline to the extent that the current market prices of Yahoo! common stock and Overture common stock reflect a market assumption that the merger will be

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completed. In addition, Overture's operations may be harmed to the extent that advertisers, affiliates and others believe that Overture cannot effectively compete in the marketplace without the merger, or there is uncertainty surrounding the future direction of the product and service offerings and strategy of Yahoo! or Overture on a standalone basis. If the merger is not completed, Yahoo! would not derive the strategic benefits expected to result from the merger. Yahoo! and Overture will also be required to pay significant costs incurred in connection with the merger, including legal, accounting and a portion of the financial advisory fees, whether or not the merger is completed. Moreover, under specified circumstances described in the section entitled "—Payment of Termination Fee" beginning on page 102 of this proxy statement/prospectus, Overture may be required to pay Yahoo! a termination fee of $65 million in connection with the termination of the merger agreement. In addition, pursuant to a search services agreement with Yahoo!, described in the section entitled "Material Contacts Between Yahoo! and Overture Prior to the Merger—Search Services Agreement," in the event of a change of control of Overture involving a party other than Yahoo!, at Yahoo!'s election, Overture may be required to pay additional amounts to Yahoo! in connection with search services or pay Yahoo! certain fees and issue Overture stock to Yahoo!.

Charges to earnings resulting from the application of the purchase method of accounting may adversely affect the market value of Yahoo!'s common stock following the merger.

        In accordance with United States generally accepted accounting principles, the combined company will account for the merger using the purchase method of accounting, which will result in charges to earnings that could have a material adverse effect on the market value of the common stock of Yahoo! following completion of the merger. Under the purchase method of accounting, the combined company will allocate the total estimated purchase price to Overture's net tangible assets and amortizable intangible assets based on their fair values as of the date of completion of the merger, and record the excess of the purchase price over those fair values as goodwill. The combined company will incur amortization expense over the useful lives of amortizable intangible assets acquired in connection with the merger. In addition, to the extent the value of goodwill becomes impaired, the combined company may be required to incur material charges relating to the impairment of that asset. These amortization and potential impairment charges could have a material impact on the combined company's results of operations.

In order to be successful, the combined company must retain and motivate key employees, which will be more difficult in light of uncertainty regarding the merger, and failure to do so could seriously harm the combined company.

        In order to be successful, the combined company must retain and motivate executives and other key employees, including those in managerial and technical positions. Experienced management and technical personnel in the Internet industry are in high demand and competition for their talents is intense. This is particularly the case in Silicon Valley, where Yahoo!'s headquarters is located. Employee retention may be a particularly challenging issue in connection with the merger. Employees of Yahoo! or Overture may experience uncertainty about their future role with the combined company until or after strategies with regard to the combined company are announced or executed. In addition, a portion of Overture's employee options have exercise prices in excess of the current value of the merger consideration. These circumstances may adversely affect the combined company's ability to attract and retain key management and technical personnel. The combined company also must continue to motivate employees and keep them focused on the strategies and goals of the combined company, which may be particularly difficult due to the potential distractions of the merger.

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The market price of the shares of Yahoo! common stock may be affected by factors different from those affecting the shares of Overture common stock.

        Upon completion of the merger, holders of Overture common stock will become holders of Yahoo! common stock. An investment in Yahoo! common stock has different risks than an investment in Overture common stock. Former holders of Overture common stock will be subject to additional risks upon exchange of their shares of Overture common stock for Yahoo! common stock in the merger, some of which are described below in the section entitled "—Risks Related to Yahoo!" beginning on on page 25 of this proxy statement/prospectus. For a discussion of the businesses of Yahoo! and Overture, see the documents incorporated by reference into this document and referred to in the section entitled "Where You Can Find More Information" beginning on page 126 of this proxy statement/prospectus.

Overture depends on a limited number of sources to direct consumers and businesses to its service to conduct searches, and these sources may terminate their agreements with Overture in response to the merger.

        The consumers and businesses who conduct searches using the Overture service come primarily from a limited number of sources. Overture's sources for users conducting searches are members of its affiliate network, including portals, browsers, and other affiliates and its Web site. In any given month, Overture typically depends upon one or a few of these sources for a significant amount of searches conducted on its service. Revenue is generated from paid introductions on advertisers' listings and, generally, the more traffic from any given source, the greater number of paid introductions Overture will generate.

        Unfavorable changes in Overture's relationship with significant affiliates (including, but not limited to a change in implementation or placement permitted under agreements with affiliates) or loss of significant relationships would materially and adversely affect Overture's revenue and results of operations. Yahoo!'s business includes a significant destination portal site that competes with some of Overture's affiliates. To the extent that Overture's other affiliates believe that Yahoo! is a competitor, they may be less likely to do business with Overture. In addition, to the extent that the announcement of the merger creates uncertainty among current and prospective advertisers, vendors and affiliates and they delay decisions pending consummation of the planned merger, Overture's results of operations and profitability could be negatively affected.

        Overture's agreements with its affiliates vary in duration, and depending on the agreement, may be terminable upon the occurrence of certain events, including failure to meet certain service levels, for general breaches of agreement terms, or in some instances, at will. Affiliate agreements representing the traffic that drives a large portion of Overture's revenues from advertisers, including its affiliate agreements with Microsoft, permit the affiliate to terminate the agreement in the event of a change of control of Overture, including the merger. If any of the foregoing termination events occur, the related agreement could terminate earlier than the expiration date, and/or Overture may incur additional obligations, such as additional payments. If we complete the merger without receiving the prior consents of certain affiliates, then these affiliates may have the right to accelerate obligations and terminate contracts. While Overture is using all commercially reasonable efforts to obtain these consents, it is possible that affiliates may not provide consents. Overture depends on its affiliates for searches, and the loss of any of these affiliates could harm its business, ability to generate revenue and operating results.

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Risks Related to Yahoo!

If Yahoo!'s competitors are more successful in attracting and retaining customers and users, then its revenues could decline.

        Yahoo! competes with many other providers of online navigation, Web search, information, entertainment, business, recruitment, community, electronic commerce, and Internet access services. As Yahoo! expands the scope of its Internet offerings, it will compete directly with a greater number of Internet sites, media companies, and companies providing business services across a wide range of different online services, including:

        In order to compete effectively, Yahoo! may need to expend significant internal engineering resources or acquire other technologies and companies to provide or enhance its capabilities. For example, Yahoo!'s recent acquisition of Inktomi Corporation brings it leading technology in Web search, which is an important service Yahoo! provides to its users. If Yahoo! is unable to maintain or expand its customer and user base in the future, its revenues may decline.

Companies such as AOL Time Warner and Microsoft may have a competitive advantage because they have greater access to content, maintain billing relationships with more customers and have access to established distribution networks.

        Yahoo! faces significant competition from AOL Time Warner ("AOL" or "America Online") and Microsoft ("Microsoft" or "MSN"). The combination of America Online and Time Warner provides America Online with content from Time Warner's movie and television, music, books and periodicals, news, sports and other media holdings; access to a network of cable and other broadband delivery technologies; and considerable resources for future growth and expansion. The America Online/Time Warner combination also provides America Online with access to a broad potential customer base consisting of Time Warner's current customers and subscribers of its various media properties. To a less significant extent, Yahoo! also faces competition from other companies that have combined a variety of services under one brand in a manner similar to Yahoo!. In certain cases, most notably AOL and MSN, Yahoo!'s competition has a direct billing relationship with a greater number of their users, through access and other services, than Yahoo! has with users through certain of its premium services. This relationship permits Yahoo!'s competitors to have several potential advantages including the potential to be more effective than Yahoo! in targeting services and advertisements to the specific tastes of their users.

Acquisitions could result in operating difficulties.

        As part of Yahoo!'s business strategy, it acquired Inktomi Corporation in March 2003 and has completed several acquisitions (including its acquisition of Hotjobs.com in February 2002). Yahoo! also recently entered into an agreement to acquire Overture and expects to enter into additional business combinations and acquisitions in the future. Acquisitions may result in dilutive issuances of equity securities, use of Yahoo!'s cash resources, incurrence of debt and amortization of expenses related to

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intangible assets. The acquisitions of HotJobs and Inktomi were accompanied by a number of risks, including:

        Yahoo! may experience similar risks in connection with its future acquisitions, including its pending acquisition of Overture. Yahoo! may not be successful in addressing these risks or any other problems encountered in connection with the acquisition of HotJobs and Inktomi or that it could encounter in pending or future acquisitions, which would harm Yahoo!'s business or cause it to fail to realize the anticipated benefits of its acquisitions.

Yahoo!'s recent acquisition of Inktomi and its pending acquisition of Overture, exposes its business to greater competition in the area of Web search and sponsored search.

        In March 2003, Yahoo! completed its acquisition of Inktomi Corporation, a provider of OEM Web search and paid inclusion services. Following its pending acquisition of Overture, Yahoo! will increase its sponsored search, web search and paid inclusion business through Overture's businesses of AltaVista and the web search unit of Fast Search & Transfer. As a result of these acquisitions Yahoo! will compete directly with other providers of Web search and related search services, including, among others, AskJeeves, Findwhat/eSpotting Media, Google, and LookSmart. Some of these competitors may have longer operating histories focusing on providing Web search services on an OEM basis, larger customer or user bases and greater brand recognition for their Web search businesses. In addition to the general acquisition risks highlighted in these risk factors, Yahoo! is subject to the risk that other companies with greater operational, strategic or financial resources may choose to enter the sponsored search, Web search or paid inclusion spaces by acquisition or internal development, and may create greater competition for customers and users.

Yahoo!'s international segment competes with local Internet service providers that may have a competitive advantage.

        On an international level, Yahoo! competes directly with local providers; they may have several advantages, including greater knowledge about the particular country or local market and access to significant financial or strategic resources in such local markets. Yahoo! must continue to obtain more knowledge about its users and their preferences, deepen its relationships with its users as well as increase its branding and other marketing activities in order to remain competitive and strengthen its international market position.

Yahoo!'s intellectual property rights are valuable and any inability to protect them could dilute Yahoo!'s brand image.

        Yahoo! regards its copyrights, patents, trademarks, trade dress, trade secrets, and similar intellectual property, including Yahoo!'s rights to certain domain names, as important to its success.

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Effective trademark, patent, copyright, and trade secret protection may not be available in every country in which Yahoo!'s products and media properties are distributed or made available through the Internet. Further, the efforts Yahoo! has taken to protect its proprietary rights may not be sufficient or effective. If Yahoo! is unable to protect its trademarks from unauthorized use, its brand image may be harmed. While Yahoo! attempts to ensure that the quality of its brand is maintained by its licensees, Yahoo!'s licensees may take actions that could impair the value of Yahoo!'s proprietary rights or the reputation of Yahoo!'s products and media properties. Yahoo! is aware that third parties have, from time to time, copied significant content available on Yahoo! for use in competitive Internet services. Protection of the distinctive elements of Yahoo! may not be available under copyright law. Any impairment of Yahoo!'s brand image could cause Yahoo!'s stock price to drop. In addition, protecting Yahoo!'s intellectual property and other proprietary rights can be expensive. Any increase in the unauthorized use of Yahoo!'s intellectual property could make it more expensive to do business and consequently harm Yahoo!'s operating results. In turn, this could harm the results of Yahoo!'s business and lower its stock price.

Yahoo! may be subject to intellectual property infringement claims, which are costly to defend and could limit its ability to provide certain content or use certain technologies in the future.

        Many parties are actively developing search, indexing, e-commerce and other Web-related technologies, as well as a variety of online business models and methods. Yahoo! believes that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding the ownership of these technologies and rights associated with online business are likely to arise in the future. In addition to existing patents and intellectual property rights, Yahoo! anticipates that additional third-party patents related to Yahoo!'s services will be issued in the future. From time to time, parties assert patent infringement claims against Yahoo! in the form of letters, lawsuits and other forms of communications. Currently, Yahoo! is engaged in several lawsuits regarding patent issues and has been notified of a number of other potential disputes. Yahoo! expects that it will increasingly be subject to patent litigation as its services expand.

        In addition to patent claims, third parties have asserted and most likely will continue to assert claims against Yahoo!, alleging infringement of copyrights, trademark rights, trade secret rights or other proprietary rights, or alleging unfair competition or violations of privacy rights. Currently, Yahoo!'s subsidiary LAUNCH Media, Inc. ("LAUNCH") is engaged in a lawsuit regarding copyright issues that commenced prior to Yahoo!'s entering into an agreement to acquire LAUNCH. In the event that Yahoo! determines that licensing proprietary rights is appropriate, it cannot guarantee that it will be able to license such proprietary rights on reasonable terms or at all. Yahoo! may incur substantial expenses in defending against third-party infringement claims regardless of the merit of such claims.

        In the event that there is a determination that Yahoo! has infringed third-party proprietary rights such as patents, copyrights, trademark rights, trade secret rights or other third party rights such as publicity and privacy rights, Yahoo! could incur substantial monetary liability, be required to enter into costly royalty or licensing agreements, if available, or be prevented from using the rights, which could require it to change its business practices in the future. As a result, these claims could harm Yahoo!'s business.

Yahoo!'s financial results for any particular period will not predict results for future periods.

        There can be no assurance that the purchasing pattern of customers advertising on the Yahoo! network will not continue to fluctuate, that advertisers will not make smaller and shorter-term purchases, or that market prices for online advertising will not decrease due to competition or other factors. As the percentage of revenues from sources other than advertising increases, it may become more difficult to predict Yahoo!'s financial results based on historical performance. Because of the

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rapidly changing market Yahoo! serves, period-to-period comparisons of operating results are not likely to be meaningful. You should not rely on the results for any period as an indication of future performance.

Yahoo! expects its operating expenses to continue to increase as it attempts to expand the Yahoo! brand, fund product development, develop media properties and acquire other businesses.

        Yahoo! currently expects that its operating expenses will continue to increase as it expands its sales and marketing operations in areas of expected growth, continues to develop and extend the Yahoo! brand, funds greater levels of product development, develops and commercializes additional media properties and premium services and acquires complementary businesses and technologies.

Yahoo! may be required to record a significant charge to earnings if it must reassess its goodwill or amortizable intangible assets.

        Yahoo! is required under generally accepted accounting principles to review its amortizable intangible assets for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of Yahoo!'s amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization, and slower growth rates in Yahoo!'s industry. If Yahoo!'s stock price and market capitalization decline, Yahoo! may be required to record a significant charge to earnings in its financial statements during the period in which any impairment of Yahoo!'s goodwill or amortizable intangible assets is determined. At June 30, 2003, Yahoo!'s goodwill and other amortizable intangible assets were $767.0 million. In the first quarter of 2002, Yahoo! recorded a transitional impairment charge of $64.1 million as a cumulative effect of an accounting change, resulting from the adoption of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets."

Approximately 68% of Yahoo!'s net revenues are derived from marketing services. Demand from current and potential clients for online advertising is difficult to forecast accurately.

        For the three months ended June 30, 2003, approximately 68% of Yahoo!'s net revenues came from advertisements displayed on Yahoo!'s online properties including transaction fees. Yahoo!'s ability to continue to achieve substantial advertising revenue depends upon:


        Yahoo!'s agreements with advertisers and sponsors generally have terms of three years or less and, in many cases, the terms are one year or less. The agreements often have payments contingent on usage or "click-through" levels. Some of Yahoo!'s advertisers are Internet companies, which in certain cases, may lack financial resources to fulfill their commitments. Accordingly, it is difficult to forecast these revenues accurately. However, Yahoo!'s expense levels are based in part on expectations of future revenues and are fixed over the short-term with respect to certain categories. Yahoo! may be unable to adjust spending quickly enough to compensate for any unexpected revenue shortfall.

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If Yahoo! is unable to continue to provide search and directory capabilities on terms which are acceptable to it, its revenue could significantly decline.

        Yahoo! also generates a significant amount of revenue from its search and directory capabilities through an advertiser's purchase of an enhanced placement in Yahoo!'s results. Yahoo! Sponsor Results, offered through keyword search driven inquiries, is currently provided through an agreement with Overture with an initial term ending in April 2005 and options for Yahoo! to extend until April 2011. For the three and six months ended June 30, 2003, Yahoo!'s revenues from its agreement with Overture were approximately 20% of total net revenues. If Yahoo! is unable to provide search and directory services which generate significant traffic to its Web sites, to continue to secure an arrangement with a third party provider such as Overture on terms which are acceptable, or if Yahoo! is unable to develop its own ability to provide this service, including through the pending acquisition of Overture, Yahoo!'s revenue could significantly decline.

The sources of Yahoo!'s advertising revenue are changing and it must adapt to the needs of its changing mix of advertisers to maintain or increase advertising revenues.

        Yahoo! is experiencing a shift in the source of its advertising revenues from Internet companies to companies in more traditional lines of business. These advertisers often have substantially different requirements and expectations than Internet companies with respect to advertising programs. In addition, companies in more traditional lines of business have only recently begun to increase their aggregate commitments to Internet advertising. If Yahoo! is unsuccessful in adapting to the needs of its changing mix of advertisers, its revenues could decline.

Decreases or delays in advertising spending due to general economic downturns could harm Yahoo!'s ability to generate advertising revenue.

        Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. The overall market for advertising, including Internet advertising, has been generally characterized in recent quarters by soft demand and the reduction of marketing and advertising budgets, or the delay in spending of budgeted resources. As a result, advertising spending has decreased. Since Yahoo! derives a large part of its revenues from advertising fees, the decrease in or delay of advertising spending could reduce Yahoo!'s revenues or negatively impact its ability to grow its revenues. Even if economic conditions improve, marketing budgets and advertising spending may not increase from current levels.

Due to intense competition, Yahoo! may not be able to generate substantial revenues from the Internet access market.

        In 2002, Yahoo! launched SBC Yahoo! DSL and SBC Yahoo! Dial, an Internet access service provided through an alliance with SBC Communications Inc. This access service combines customized content and services from Yahoo! (including browser and other communications services) and DSL transport and Internet access from SBC Internet Services (an affiliate of SBC Communications Inc.). This Internet access service competes with many large companies, some of which may have substantially greater market presence (including an existing user base), financial, technical, marketing or other resources than those committed to the product offerings with SBC. This service primarily competes directly or indirectly with established Internet services, such as AOL and MSN; national telecommunications companies and regional Bell operating companies (other than SBC); and broadband Internet access providers such as Earthlink, Comcast, and other cable broadband providers. As a result of these and other competitive forces, this service may not be able to attract, grow or retain a customer base, which would negatively impact Yahoo!'s ability to sell customized content and services through this channel.

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Yahoo!'s success in the Internet access market will depend on technical and customer service issues, which it has limited ability to control.

        Internet access services, including SBC Yahoo! DSL and SBC Yahoo! Dial, are susceptible to natural or man-made disasters such as earthquakes, floods, fires, power loss, or sabotage, as well as interruptions from technology malfunctions, computer viruses or hacker attacks. Other potential service interruptions may result from unanticipated demands on network infrastructure, increased traffic or problems in customer service to Yahoo!'s access customers. Yahoo!'s ability to control technical and customer service issues is further limited by dependence on SBC for connectivity, customer service, joint marketing and technical integration of aspects of Yahoo!'s access service. Significant disruptions in Yahoo!'s access service could harm Yahoo!'s goodwill, the Yahoo! brand and ultimately could significantly and negatively impact the amount of revenue it may earn from its service.

Some of Yahoo!'s sponsorship arrangements may not generate anticipated revenues.

        A key element of Yahoo!'s strategy is to generate advertising revenues through sponsored services and placements by third parties in Yahoo!'s online media properties in addition to banner advertising. Yahoo! typically receives sponsorship fees or a portion of transaction revenues in return for minimum levels of user impressions to be provided by it. These arrangements expose Yahoo! to potentially significant financial risks in the event Yahoo!'s usage levels decrease, including the following:

        Accordingly, any leveling off or decrease of Yahoo!'s user base (or usage by Yahoo!'s existing base), or the failure to generate anticipated levels of shared transaction revenues, could result in a significant decrease in revenues.

Yahoo! has spent considerable amounts of money and resources to provide a variety of communications services, but such services may not prove to be successful in generating significant revenue for it.

        Currently, a substantial portion of the traffic on Yahoo!'s online properties is directed at communications services, such as email, instant messaging and chat rooms, and Yahoo! expects this trend to continue for the foreseeable future. Yahoo! provides these and other basic communications services free of charge to users, as is the case with most of Yahoo!'s competitors. Yahoo! also offers fee-based enhancements to its email service and also depends on the use of other Yahoo! services to generate revenues from communications service. This revenue model and alternative revenue models for communications and electronic commerce services, such as subscription fees and commissions, are relatively unproven and may not generate sufficient revenues to be meaningful. As communications services become an increasingly important part of its total offering, Yahoo! must continue to provide new communications applications that are compelling to users and utilize more sophisticated communications technologies to provide such applications to many types of access devices in addition to the personal computer, while continuing to develop an effective method for generating revenues for such services. In addition, the development of these technologies requires long development cycles and a more significant investment by Yahoo!. If Yahoo! cannot generate revenues from its communications services that are greater than the cost of providing such services, its operating results will be harmed.

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Yahoo! may not be successful in expanding the number of users of its electronic commerce services.

        Yahoo! has focused and intends to continue to focus significant resources on the development and enhancement of its electronic commerce properties. These properties, such as Yahoo! Shopping, link users with a network of retailers with whom Yahoo! has relationships. Through Yahoo!'s electronic commerce properties, Yahoo! does not establish a direct billing relationship with its users as a result of any purchases they may make with the retailers. In addition, a large number of users currently utilize Yahoo!'s online shopping services simply to gather information for future offline purchases. Yahoo! will need to effectively induce information gatherers to make purchases in order for its electronic commerce properties to be successful. Finally, the success of Yahoo!'s electronic commerce properties will also depend on, among other things, its ability to attract and retain well-known brands among its network of retailers. The revenue that Yahoo! derives from its electronic commerce properties is typically in the form of a commission paid by the retailer from whom Yahoo!'s user purchased a product. Users who had a favorable buying experience with a particular retailer may contact that retailer directly for future purchases rather than through Yahoo!'s service. If Yahoo!'s users bypass Yahoo!'s electronic commerce properties, such as Yahoo! Shopping, and contact retailers directly, Yahoo! will not receive any revenue for purchases made through such direct contact. Competing providers of online shopping, including merchants with whom Yahoo! has relationships, may provide a more convenient and comprehensive online shopping experience due to their singular focus on electronic commerce. As a result, Yahoo! may have difficulty competing with those merchants for users of electronic commerce services and as a consequence, its revenue could decline or it could fail to generate significant revenues from electronic commerce. In addition, a decrease in the number of users of Yahoo! Shopping could adversely affect demand for the Yahoo! Store service as a means to market and distribute products online, which could negatively impact the amount of revenue Yahoo! generates from this service.

Yahoo!'s business and enterprise services are costly to develop and may fail to gain increasing market acceptance.

        Yahoo! has invested a significant amount of money and resources in the creation of its Yahoo! Enterprise Solutions offerings, which are comprised of Yahoo!'s Portals and Broadcast Groups. These services may fail to gain increasing market acceptance. Because the market for business and enterprise services is new and evolving, it is difficult to predict the size of this market and its rate of growth, if any. In addition, it is uncertain whether businesses and other organizations will utilize the Internet to any significant degree as a means of broadcasting business conferences and other events. Potential business services customers must increasingly accept audio and video broadcast services over the Internet as a viable alternative to face-to-face meetings, television or audio, audio teleconferences and video conferencing. Yahoo! cannot assure you that the market for business and enterprise services will continue to grow or be sustainable. In addition, with respect to Portal Solutions, Yahoo! competes with many large, well capitalized companies offering a broader range of integrated products, which provides them with a competitive advantage. If the market fails to grow, grows more slowly than expected or becomes more competitive than is currently expected, Yahoo!'s operating results could be harmed.

Yahoo! will continue to operate in international markets in which it has limited experience and is faced with relatively higher costs and is exposed to greater risks.

        A key part of Yahoo!'s strategy is to develop Yahoo!-branded online properties in international markets. Yahoo! has developed, through joint ventures, subsidiaries and branch offices, localized properties in over 20 international countries. To date, Yahoo! has only limited experience in developing localized versions of its products and marketing and operating its products and services internationally. Yahoo! relies on the efforts and abilities of its foreign business partners in such activities.

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        Yahoo! believes that in light of substantial anticipated competition, it needs to expand its operations in international markets quickly in order to obtain market share effectively. However, in a number of international markets, especially those in Europe, Yahoo! faces substantial competition from Internet Service Providers (ISPs) that offer or may offer their own navigational services. Many of these ISPs have a dominant market share in their respective territories. Furthermore, foreign providers of competing online services may have a substantial advantage over Yahoo! in attracting users in their country due to more established branding in that country, greater knowledge with respect to the tastes and preferences of users residing in that country and/or their focus on a single market. Yahoo! has experienced and expects to continue to experience higher costs as a percentage of revenues in connection with the development and maintenance of its international online properties relative to its domestic experience. Yahoo! has selected international markets that may not develop at a rate that supports its level of investment. In particular, international markets typically have been slower than domestic markets in adopting the Internet as an advertising and commerce medium.

Yahoo!'s international operations are subject to increased risks.

        In addition to uncertainty about Yahoo!'s ability to continue to generate revenues from its foreign operations and expand its international presence, there are certain risks inherent in doing business on an international level, including:

        One or more of these factors could harm Yahoo!'s future international operations and consequently, could harm its business, operating results, and financial condition.

If key personnel leave unexpectedly and are not replaced, Yahoo! may not be able to execute its business plan.

        Yahoo! is substantially dependent on the continued services of its key personnel, including its two founders, its chief executive officer, chief financial officer, chief operating officer, chief technical officer, and its executive and senior vice presidents. These individuals have acquired specialized knowledge and skills with respect to Yahoo! and its operations. If any of these individuals were to leave unexpectedly, Yahoo! could face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any such successor obtains the necessary training and experience. Many of Yahoo!'s management personnel have reached or will soon reach the four-year anniversary of their hiring date and, as a result, have become or will shortly become fully vested in their initial stock option grants. While management personnel are typically granted additional stock options subsequent to their hire date, which will usually vest over a period of four years to provide additional incentive to remain at Yahoo!, the initial option grant is typically the largest for a given position, and an employee may be more likely to leave Yahoo!'s employ upon completion of the vesting period for the initial option grant.

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If Yahoo! is unable to hire qualified personnel in designated growth areas, it may not be able to execute its business plan.

        Yahoo! expects that it will need to hire additional personnel in designated growth areas. The competition for qualified personnel can be intense, particularly in the San Francisco Bay Area, where its corporate headquarters are located. At times, Yahoo! has experienced difficulties in hiring personnel with the right training or experience, particularly in technical areas. If it does not succeed in attracting new personnel, or retaining and motivating existing personnel, Yahoo! may be unable to meet its business plan and as a result its stock price may drop.

Yahoo! may have difficulty scaling and adapting its existing architecture to accommodate increased traffic and technology advances or customer requirements.

        Yahoo! is one of the most highly trafficked Websites on the Internet and is regularly serving numbers of users and delivering daily page views which are beyond previous standards for Internet usage. In addition, the services offered by Yahoo! and popular with users and customers have changed significantly in the past, are expected to change rapidly in the future, and are difficult to predict. Rapid increases in the levels or types of use of its online properties and services could result in delays or interruptions in its service. In particular, the architecture utilized for Yahoo!'s email and certain other communication services is highly complex and may not provide satisfactory service in the future, especially as email and certain other communications services become an increasingly important service offering and as the rate of unsolicited email continues to increase in volume and complexity. In the future, Yahoo! may be required to make significant changes to its architecture, including moving to a completely new architecture. If it is required to switch architectures, Yahoo! may incur substantial costs and experience delays or interruptions in its service. These delays or interruptions in its service may cause users and customers to become dissatisfied with its service and move to competing providers of online services. Further, to the extent that demand for Yahoo!'s broadcast services content and other rich media offerings increases, it will need to expand its infrastructure, including the capacity of its hardware servers and the sophistication of its software. This expansion is likely to be expensive and complex, and require additional technical expertise. As Yahoo! acquires users who rely upon it for a wide variety of services, it becomes more technologically complex and costly to retrieve, store and integrate data that will enable it to track each user's preferences. An unanticipated loss of traffic, increased costs, inefficiencies or failures to adapt to new technologies or user requirements and the associated adjustments to its architecture could harm Yahoo!'s operating results and financial condition.

Yahoo!'s competitors often provide Internet access or computer hardware to its users, and its competitors which could make it difficult for its users to access Yahoo!'s services, which in turn, could reduce the number of Yahoo! users.

        Yahoo!'s users must access its services through an Internet service provider, or ISP, with which the user establishes a direct billing relationship using a personal computer or other access device. To the extent that an access provider (other than SBC), such as AOL Time Warner or MSN, or a computer or computing device manufacturer offers online services or properties that are competitive with those of Yahoo!, the user may find it more convenient to use the services or properties of that access provider or manufacturer. In addition, the access provider or manufacturer may make it difficult to access Yahoo!'s services by not listing them in the access provider's or manufacturer's own directory. Also, because the access provider gathers information from the user in connection with the establishment of the billing relationship, the access provider may be more effective than Yahoo! in tailoring services and advertisements to the specific tastes of the user. To the extent that a user opts to use the services offered by an access provider (other than SBC Yahoo! DSL or SBC Yahoo! Dial) or those offered by computer or computing device manufacturers rather than the services provided by it, Yahoo!'s revenues may decline.

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More individuals are utilizing non-PC devices to access the Internet, and Yahoo! may not be successful in developing a version of its service that will gain widespread adoption by users of such devices.

        In the coming years, the number of individuals who access the Internet through devices other than a personal computer, such as personal digital assistants, mobile telephones and television set-top devices, is expected to increase dramatically. Yahoo!'s services are designed for rich, graphical environments such as those available on personal and laptop computers. The lower resolution, functionality and memory associated with alternative devices may make the use of its services through such devices difficult, and Yahoo! may be unsuccessful in its efforts to modify its online properties to provide a compelling service for users of alternative devices. As Yahoo! has limited experience to date in operating versions of its service developed or optimized for users of alternative devices, it is difficult to predict the problems it may encounter in doing so, and it may need to devote significant resources to the creation, support and maintenance of such versions. If Yahoo! is unable to attract and retain a substantial number of alternative device users to its online services, it will fail to capture a sufficient share of an increasingly important portion of the market for online services.

Yahoo! may not be successful in developing marketable advertising services suited for alternative devices.

        As the majority of its revenues are derived through the sale of marketing services optimized for a personal computer screen, Yahoo! may not be successful at developing a viable strategy for deriving substantial revenues from online properties that are directed at the users of alternative devices. Any failure to develop revenue-generating online properties that are adopted by a significant number of alternative device users could harm its business, operating results and financial condition.

Yahoo! relies on the value of the Yahoo! brand, and the costs of maintaining and enhancing its brand awareness are increasing.

        Yahoo! believes that maintaining and expanding the Yahoo! brand (and other vertical brands, including Inktomi and HotJobs) is an important aspect of its efforts to attract and expand its user and advertiser base. Yahoo! also believes that the importance of brand recognition will increase due to the relatively low barriers to entry. It has spent considerable money and resources to date on the establishment and maintenance of the Yahoo! brands. It will spend increasing amounts of money on, and devote greater resources to advertising, marketing and other brand-building efforts to preserve and enhance consumer awareness of the Yahoo! brands. Yahoo! may not be able to successfully maintain or enhance consumer awareness of the Yahoo! brands and, even if Yahoo! is successful in its branding efforts, such efforts may not be cost-effective. If it is unable to maintain or enhance customer awareness of the Yahoo! brands in a cost effective manner, its business, operating results and financial condition would be harmed.

The successful operation of Yahoo!'s business depends upon the supply of critical elements from other companies and any interruption in that supply could cause service interruptions or reduce the quality of product offerings.

        Yahoo! depends upon third parties, to a substantial extent, for several critical elements of its business, including various technology, infrastructure, content development, software and distribution components.

        Technology and Infrastructure.    Yahoo! relies on private third-party providers for its principal Internet connections, co-location of a significant portion of its data servers and network access. Any disruption in the Internet or network access or co-location services provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm Yahoo!'s business, operating results and financial condition. Any financial difficulties for its providers may have negative effects on its business, the nature and extent of which it cannot

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predict. Yahoo! licenses technology and related databases from third parties for certain elements of its properties, including, among others, technology underlying the delivery of news, stock quotes and current financial information, chat services, street mapping and telephone listings, streaming capabilities and similar services. Yahoo! has experienced and expects to continue to experience interruptions and delays in service and availability for such elements. It also relies on a third-party manufacturer for key components of its email service. Furthermore, Yahoo! depends on hardware and software suppliers for prompt delivery, installation and service of servers and other equipment to deliver its products and services. Any errors, failures, interruptions, or delays experienced in connection with these third-party technologies and information services could negatively impact Yahoo!'s relationship with users and adversely affect its brand and its business and could expose it to liabilities to third parties.

        Distribution Relationships.    In addition to Yahoo!'s relationship with SBC, to increase traffic for its online properties and services and make them more available and attractive to advertisers and consumers, Yahoo! has certain distribution agreements and informal relationships with leading Web browser providers, operators of online networks and leading Websites, software developers and computer manufacturers and telecommunications companies. These distribution arrangements typically are not exclusive and do not extend over a significant period of time. Further, some of Yahoo!'s distributors are competitors or potential competitors who may not renew their distribution contracts. Potential distributors may not offer distribution of Yahoo!'s properties and services on reasonable terms, or at all. In addition, as new methods for accessing the Web become available, including through alternative devices, Yahoo! may need to enter into additional distribution relationships. If Yahoo! fails to obtain distribution or to obtain distribution on terms that are reasonable, it may not be able to execute its business plan.

        Streaming Media Software.    Yahoo! relies on the two leading providers of streaming media products, RealNetworks and Microsoft, to license the software necessary to broadcast streaming audio and video content to its users. There can be no assurance that these providers will continue to license these products to Yahoo! on reasonable terms, or at all. Its users are currently able to electronically download copies of the software to play streaming media free of charge, but providers of streaming media products may begin charging users for copies of their player software or otherwise change their business model in a manner that slows the widespread acceptance of these products. In order for Yahoo!'s broadcast services to be successful, there must be a large base of users of these streaming media products. Yahoo! has limited or no control over the availability or acceptance of streaming media software, and to the extent that any of these circumstances occur, the broadcast services portion of its business will be materially adversely affected.

        Content and Search Service.    Yahoo!'s future success depends upon its ability to aggregate compelling content and deliver that content through its online properties. Yahoo! licenses much of the content that attracts users to its online properties, such as news items, stock quotes, weather reports, maps and audio and video content from third parties such as Reuters. Yahoo! also obtains important elements of its search service from its relationship with Google. In particular, Yahoo!'s music and entertainment properties rely on major sports organizations, radio and television stations, record labels, cable networks, businesses, colleges and universities, film producers and distributors, and other organizations for a large portion of the content available on its properties. Yahoo!'s ability to maintain and build relationships with third-party content providers will be critical to its success. It may be unable to enter into or preserve relationships with the third parties whose content it seeks to obtain. Many of Yahoo!'s current licenses for third-party content extend for a period of less than two years and there can be no guarantee that they will be renewed upon their expiration. In addition, as competition for compelling content increases both domestically and abroad, content providers may increase the prices at which they offer their content to Yahoo! and potential content providers may not offer their content on terms agreeable to it. An increase in the prices charged to Yahoo! by third-party content providers could harm its operating results and financial condition. Further, many of its content licenses with third

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parties are non-exclusive. Accordingly, other webcasters may be able to offer similar or identical content. Likewise, most sports and entertainment content available on Yahoo!'s online properties are also available on other media like radio or television. These media are currently, and for the foreseeable future will be, much more widely adopted for listening or viewing such content than the Web. These factors also increase the importance of Yahoo!'s ability to deliver compelling editorial content and personalization of this content for users in order to differentiate Yahoo! from other businesses. If Yahoo! is unable to license or acquire compelling content, if other companies broadcast content that is similar to or the same as the content that it provides, or if it does not develop compelling editorial content or personalization services, the number of users on its online properties may not grow at all or at a slower rate than anticipated, which would decrease its revenue.

As Yahoo! provides more audio and video content, particularly music, it may be required to spend significant amounts of money on content acquisition and content broadcasts.

        In the past, the majority of the content that Yahoo! provided to its users was in print, picture or graphical format and was either created internally or licensed to it by third parties for little or no charge. However, Yahoo! has been providing and intends to continue to provide increasing amounts of audio and video content to its users, such as the broadcast of music, film content, speeches, news footage, concerts and other special events, through its broadcast services and other media and entertainment properties. It believes that users of Internet services such as the Yahoo! online properties will increasingly demand high-quality audio and video content. Such content may require it to make substantial payments to third parties from whom it licenses or acquires such content.

        For example, in order to broadcast music through its online properties, Yahoo! is currently required to pay royalties both on the copyright in the musical compositions and the copyright in the actual sound recordings of the music to be broadcast. The revenue it receives as a result of its audio and video broadcasts may not justify the costs of providing such broadcasts.

Yahoo!'s failure to manage growth and diversification of its business could harm it.

        Yahoo! has experienced dramatic growth in personnel in recent years and expects to continue to hire additional personnel in selected areas. This growth requires significant time and resource commitments from Yahoo! and its senior management. Further, as a result of recent acquisitions and international expansion, more than one-half of Yahoo!'s employees are based outside of its Sunnyvale, California headquarters. If Yahoo! is unable to effectively manage a large and geographically dispersed group of employees or anticipate its future growth, its business will be adversely affected.

        In addition, Yahoo!'s business has evolved in recent quarters to include, among other initiatives, a variety of fee-based premium services. Regulation of the Internet, including U.S. and foreign laws and regulations relating to user privacy, pricing, advertising, taxation, gambling, sweepstakes, promotions, financial market regulation, consumer protection, content regulation, quality of products and services and intellectual property ownership and infringement, may impact its evolving business in ways Yahoo! has not yet anticipated. Such regulation may impose significant additional costs on Yahoo!'s business or subject it to additional liabilities. Additionally, Yahoo!'s business relies on its financial reporting and data systems (including its systems for billing users of its fee-based services), which have grown increasingly complex in recent quarters due to acquisitions and the diversification and complexity of its business. Yahoo!'s ability to operate its business efficiently depends on these systems and if it is unable to adapt to these changes, its business will be adversely affected.

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Yahoo! is subject to U.S. and foreign government regulation of the Internet, the impact of which is difficult to predict.

        There are currently few laws or regulations directly applicable to the Internet. The application of existing laws and regulations to Yahoo! relating to issues such as user privacy, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, financial market regulation, consumer protection, content regulation, quality of products and services, and intellectual property ownership and infringement can be unclear. In addition, Yahoo! will also be subject to new laws and regulations directly applicable to its activities. Any existing or new legislation applicable to Yahoo! could expose it to substantial liability, including significant expenses necessary to comply with such laws and regulations, and dampen the growth in use of the Web.

        Several federal laws, including the following, could have an impact on Yahoo!'s business. The Digital Millennium Copyright Act is intended, in part, to limit the liability of eligible online service providers for listing or linking to third-party Websites that include materials that infringe copyrights or other rights of others. The Children's Online Protection Act and the Children's Online Privacy Protection Act are intended to restrict the distribution of certain materials deemed harmful to children and impose additional restrictions on the ability of online services to collect user information from minors. In addition, the Protection of Children From Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Such legislation may impose significant additional costs on Yahoo!'s business or subject it to additional liabilities.

        Yahoo! posts its privacy policy and practices concerning the use and disclosure of user data. In addition, GeoCities, a company Yahoo! acquired in 1999, is required to comply with a consent order between it and the Federal Trade Commission (the "FTC"), which imposes certain obligations and restrictions with respect to information collected from users. Any failure by Yahoo! to comply with its posted privacy policy, the consent order, FTC requirements or other privacy-related laws and regulations could result in proceedings by the FTC or others which could potentially have an adverse effect on its business, results of operations and financial condition. In this regard, there are a large number of legislative proposals before the United States Congress and various state legislative bodies regarding privacy issues related to its business. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could materially and adversely affect Yahoo!'s business through a decrease in user registrations and revenues. This could be caused by, among other possible provisions, the required use of disclaimers or other requirements before users can utilize Yahoo!'s services.

        Due to the nature of the Web, it is possible that the governments of other states and foreign countries might attempt to regulate Web transmissions or prosecute Yahoo! for violations of their laws. Yahoo! might unintentionally violate such laws, such laws may be modified and new laws may be enacted in the future. Any such developments (or developments stemming from enactment or modification of other laws) could increase the costs of regulatory compliance for Yahoo! or force it to change its business practices.

Yahoo! may be subject to legal liability for online services.

        Yahoo! hosts a wide variety of services that enable individuals to exchange information, generate content, conduct business and engage in various online activities on an international basis, including public message posting and services relating to online auctions and homesteading. The law relating to the liability of providers of these online services for activities of their users is currently unsettled both within the United States and abroad. Claims have been threatened and have been brought against Yahoo! for defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and content of information that

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Yahoo! provides links to or that may be posted online or generated by its users or with respect to auctioned materials. In addition, Yahoo! was the subject of a claim brought by certain entities in a French court regarding, among other things, the availability of certain content within its services which was alleged to violate French law. Due to the unsettled nature of the law in this area, Yahoo! may be subject to similar actions in domestic or other international jurisdictions in the future. Its defense of any such actions could be costly and involve significant distraction of Yahoo!'s management and other resources. In addition, Yahoo! is aware that governmental agencies are currently investigating the conduct of online auctions.

        Yahoo! also periodically enters into arrangements to offer third-party products, services, or content under the Yahoo! brand or via distribution on various Yahoo! properties, including stock quotes and trading information. It may be subject to claims concerning these products, services or content by virtue of Yahoo!'s involvement in marketing, branding, broadcasting or providing access to them, even if Yahoo! does not itself host, operate, provide, or provide access to these products, services or content. While its agreements with these parties often provide that Yahoo! will be indemnified against such liabilities, such indemnification may not be adequate.

        It is also possible that, if any information provided directly by Yahoo! contains errors or is otherwise negligently provided to users, third parties could make claims against it. For example, Yahoo! offers Web-based email services, which expose it to potential risks, such as liabilities or claims resulting from unsolicited email, lost or misdirected messages, illegal or fraudulent use of email, or interruptions or delays in email service. Investigating and defending any of these types of claims is expensive, even to the extent that the claims do not ultimately result in liability.

Yahoo! issued $750 million of zero coupon senior convertible notes due 2008 which it may not be able to repay in cash, and could result in dilution of its earnings per share.

        In April 2003, Yahoo! issued $750 million of zero coupon senior convertible notes due April 1, 2008. The notes are convertible into Yahoo! common stock at a conversion price of $41.00 per share, which would result in the issuance of an aggregate of 18.3 million shares, subject to adjustment upon the occurrence of specified events. Therefore, each $1,000 principal amount of the notes will initially be convertible into 24.3902 shares of its common stock prior to April 1, 2008 if the sale price of its common stock issuable upon conversion of the notes reaches a specified threshold or specified corporate transactions have occurred. Yahoo! may be required to repurchase all of the notes following a fundamental change of the company, such as a change of control, prior to maturity. Following a fundamental change of the company, Yahoo! may choose to pay the purchase price of the notes in cash, shares of its common stock, shares of common stock of the surviving corporation, or a combination of cash and shares of the applicable common stock. Yahoo! may not have enough cash on hand or have the ability to access cash to pay the notes if presented on a fundamental change or at maturity. In addition, the purchase of its notes with shares of its common stock or the conversion of the notes into its common stock could result in dilution of Yahoo!'s earnings per share.

Yahoo!'s stock price has been volatile historically and may continue to be volatile.

        The trading price of Yahoo!'s common stock has been and may continue to be subject to wide fluctuations. During the second quarter of 2003, the closing sale prices of its common stock on the Nasdaq ranged from $22.79 to $32.90 per share, and the closing sale price on August 7, 2003 was $28.87 per share. Yahoo!'s stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, announcements of technological innovations or new products and media properties by it or its competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock price performance of other companies that investors may deem comparable to Yahoo!, and news reports relating to trends in its markets or general economic conditions.

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        In addition, the stock market in general, and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of its stock, regardless of Yahoo!'s operating performance. Additionally, volatility or a lack of positive performance in its stock price may adversely affect Yahoo!'s ability to retain key employees, all of whom have been granted stock options.

Yahoo!'s operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.

        Yahoo!'s operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, break-ins and similar events. In addition, a significant portion of Yahoo!'s network infrastructure is located in Northern California, an area susceptible to earthquakes. In the past, the western United States (and California in particular) has experienced repeated episodes of diminished electrical power supply. As a result of these episodes, certain of Yahoo!'s operations or facilities may be subject to "rolling blackouts" or other unscheduled interruptions of electrical power. The prospect of such unscheduled interruptions may continue for the foreseeable future and Yahoo! is unable to predict their occurrence, duration or cessation. Yahoo! does not have multiple site capacity for all of its services in the event of any such occurrence. Despite its implementation of network security measures, Yahoo!'s servers are vulnerable to computer viruses, physical and electronic break-ins, and similar disruptions from unauthorized tampering with its computer systems.

Technological or other assaults on Yahoo!'s service could harm its business.

        Yahoo! is vulnerable to coordinated attempts to overload its systems with data, resulting in denial or reduction of service to some or all of its users for a period of time. Yahoo! has experienced a coordinated denial of service attack in the past, and may experience such attempts in the future. Yahoo! does not carry sufficient business interruption insurance to compensate it for losses that may occur as a result of any of these events. Any such event could reduce its revenue and harm its operating results and financial condition.

Anti-takeover provisions could make it more difficult for a third party to acquire Yahoo!.

        Yahoo! has adopted a stockholder rights plan and declared a dividend distribution of one right for each outstanding share of common stock to stockholders of record as of March 20, 2001. Each right entitles the holder to purchase one unit consisting of one one-thousandth of a share of Yahoo!'s Series A Junior Participating Preferred Stock for $250 per unit. Under certain circumstances, if a person or group acquires 15% or more of Yahoo!'s outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be able to purchase, in exchange for the $250 exercise price, shares of its common stock or of any company into which it is merged having a value of $500. The rights expire on March 1, 2011 unless extended by Yahoo!'s board of directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take Yahoo! over without the approval of its board of directors, its rights plan could make it more difficult for a third party to acquire it (or a significant percentage of its outstanding capital stock) without first negotiating with its board of directors regarding such acquisition.

        In addition, Yahoo!'s board of directors has the authority to issue up to 10,000,000 shares of Preferred Stock (of which 2,000,000 shares have been designated as Series A Junior Participating Preferred Stock) and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders.

        The rights of the holders of Yahoo!'s common stock may be subject to, and may be adversely affected by, the rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred Stock may have the effect of delaying, deterring or preventing a change of control

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of Yahoo! without further action by the stockholders and may adversely affect the voting and other rights of the holders of its common stock. Further, certain provisions of its charter documents, including provisions eliminating the ability of stockholders to take action by written consent and limiting the ability of stockholders to raise matters at a meeting of stockholders without giving advance notice, may have the effect of delaying or preventing changes in control or management, which could have an adverse effect on the market price of Yahoo!'s stock. In addition, Yahoo!'s charter documents do not permit cumulative voting, which may make it more difficult for a third party to gain control of its Board of Directors. Further, Yahoo! is subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which will prohibit it from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, even if such combination is favored by a majority of stockholders, unless the business combination is approved in a prescribed manner. The application of Section 203 also could have the effect of delaying or preventing a change of control or management.

Terrorist attacks and the recent outbreak of hostilities in Iraq have contributed to economic instability in the United States and internationally, which could lead to reduced advertising spending by Yahoo!'s customers.

        On September 11, 2001, the United States was the target of terrorist attacks of unprecedented scope, and in March 2003, the United States became involved in hostilities with Iraq. These events, coupled with political instability elsewhere in the world, have caused volatility in the financial markets and uncertainty in the global economy. Under these circumstances, there is a risk that Yahoo!'s existing and potential customers may decrease spending, particularly for marketing services. Because marketing services continue to constitute a majority of its revenues, any such decrease in expenditures could materially and adversely affect Yahoo!'s operating results and financial condition. In addition, the political and economic conditions described above may contribute to increased volatility in stock prices, which may cause its stock price to decline.


Risks Related to Overture

In order for Overture's paid placement business to be successful, Overture must continue to maintain and grow its advertiser, consumer, business, and affiliate constituencies.

        Overture's growth depends, in part, on the maintenance of a critical mass of advertisers, consumers, affiliates and traffic generated by its sites. Such a critical mass encourages increased participation in Overture's paid placement search marketplace and its destination sites. To the extent that Overture experiences a decline in the growth or number of any one or all constituents, the value of its service to one or more of its other constituencies could be harmed, and Overture's revenues or business could be adversely affected. A continued decline would seriously harm Overture's revenues and business.

        Overture's ability to increase the volume of transactions on its service and the amounts bid by its advertisers is dependent upon building and maintaining a substantial base of advertisers and consumers. Many potential advertisers have only limited experience advertising on the Internet and have not devoted a significant portion of their advertising expenditures to Internet advertising. Periodically, Overture introduces new initiatives, service programs or rules that affect the bidding process, search term selection rules, editorial policies and search methodology or other components of its services. Advertisers may dislike the effect of these new initiatives, programs or changes that may cause advertisers to cease advertising with Overture, or reduce their level of spending. Advertisers may dislike new traffic sources Overture adds, or may dislike the quality of traffic, and therefore cease advertising with Overture or reduce their level of spending. Advertiser attrition or reduction in advertiser spending could have a material adverse effect on Overture's business. Overture's affiliates may have specific rules that prohibit some advertisers from participating in its services, which may affect Overture's ability to maintain and grow its advertiser base. In addition, Overture's services may not achieve significant

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acceptance by consumers. Among other things, because Overture's paid placement services prioritize search results based on advertising bids associated with keywords rather than other search and retrieval approaches, consumers may not use this service because they perceive Overture's results to be less objective or not as relevant as those provided by other search methods. Failure to achieve and maintain a large and active base of advertisers and consumers could have a material adverse effect on Overture's business, operating results and financial condition.

        Overture believes that its success in penetrating its target markets depends in part on Overture's ability to further develop and maintain relationships with affiliates, which provide their users with Overture's services on their sites or direct their traffic to Overture's Web site. Overture believes these relationships are important to facilitate broad market acceptance of its services and enhance its sales. Overture's ability to attract users to its services is dependent upon the growth of its affiliate network. Overture's success depends in part on the success of, and its relationships with, its affiliates. As part of Overture's ongoing relationship with its affiliates, Overture may introduce new services, new implementation and/or new variations of its services that its affiliates may not want. In addition, Overture's affiliates may not regard Overture as significant for their own businesses or they may regard Overture as a competitor to their businesses. Therefore, they could reduce their commitment to Overture or terminate their respective relationships with Overture, pursue other partnerships or relationships, or attempt to develop or acquire products or services that compete with Overture's services. Overture's success also depends in part on the success of its affiliates and, in particular, their ability to generate search traffic. New third party software developments and competition from companies with whom Overture does not have a relationship may lead to deterioration of searches supplied to Overture by its affiliates. If Overture is unable to successfully develop and maintain relationships with affiliates and/or its affiliates' search business deteriorates, Overture's business, operating results and financial condition could be materially and adversely affected.

        Since Overture relies on a limited number of affiliates for its paid introductions, consolidation among affiliates or potential affiliates, or an acquisition of one or more affiliates by competitors could harm Overture's operating results, cause Overture to lose its relationships with those affiliates, and reduce Overture's competitive position. For example, if a third party acquires one of Overture's affiliates, Overture may lose its relationship with its affiliate in favor of a competitor. In some cases, these third parties have exclusive relationships with Overture's competitors that would prohibit its affiliate from continuing a relationship with Overture after they are acquired. If one of Overture's existing affiliates combined with another one of its affiliates, it would likely increase the negotiating power of these affiliates relative to Overture and, as a result, Overture's financial results may suffer. Overture believes that consolidation among Internet sites will continue in the future, particularly as smaller firms have difficulty raising capital in a poor economic environment. This consolidation, particularly among search sites, coupled with the recent increase in competition, may place pressure on Overture's margins, which would harm its business.

Overture may not be successful in introducing new products and services.

        In connection with the recent acquisitions of the businesses of AltaVista and Fast's Web search unit, Overture has begun offering algorithmic and paid inclusion search services, both on a stand-alone basis and together with its paid placement search service. Additionally, in June 2003, Overture launched Content Match, its new contextual advertising product that places its search results on relevant content pages of Overture's distribution partner's Web sites. Although complementary to Overture's existing paid placement business, these search services require different technological and marketing capabilities, and present different risks, from Overture's existing business. Overture has limited experience in operating and marketing algorithmic, paid inclusion and content match search service businesses. Overture's success in these new businesses depends in part on its relationships with existing users of such algorithmic, paid inclusion and content match search services and on the quality of such search services, as well as Overture's ability to successfully offer such services to members of its affiliate

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network. If Overture's affiliates or end-users of these search services do not find its search results to be of high quality or do not wish to use such services, Overture's revenues or business could be adversely affected. Overture may not be successful in maintaining the users of its search site. If there is a continuing decline in Overture's users, it may adversely affect its business. In addition, the quality of Overture's algorithmic search service could impact demand for its paid placement search services to the extent that Overture's affiliates choose to do business with only a single search provider. In addition, in order to obtain and maintain demand for Overture's new algorithmic and paid inclusion search services, Overture must continually invest in improving search relevance, speed and other aspects of its technology. If Overture does not continually improve its overall search service, Overture's business could be harmed. Because some of these new products are unproven and rely on new technologies, Overture's forward-looking projections have a higher degree of uncertainty.

        Overture also plans to launch several new products and services including local search and Web analytics in 2003. These initiatives are new and untested. There may not be a demand for such products and services by any or all of Overture's constituents. If such products and services do not achieve market acceptance, Overture's business could be harmed. In addition, the launch of new products may detract from revenue that could be generated by other products.

Overture depends on a limited number of sources to direct consumers and businesses to its service to conduct searches.

        The consumers and businesses that conduct searches on Overture's service come primarily from a limited number of sources. Overture's sources for users conducting searches are members of its affiliate network, including portals, browsers, and other affiliates and Overture's Web sites. Revenue is generated from paid introductions on advertisers' listings and, generally, the more traffic from any given source, the greater number of paid introductions Overture will generate.

        During the three months ended June 30, 2003, Overture earned approximately 63% of its total revenue from advertisers who received Overture's paid introductions as supplied by Microsoft (primarily msn.com and MSN Panel on Microsoft's Internet Explorer) and Yahoo!. Unfavorable changes in Overture's relationship with these affiliates (including, but not limited to, a change in implementation or placement permitted under Overture's agreements with these affiliates) or loss of either relationship would materially and adversely affect Overture's revenue and results of operations.

        The amount of traffic from each of Overture's affiliates has varied, and Overture expects it will continue to vary, from quarter to quarter, sometimes significantly. Moreover, while Overture seeks to align economic incentives, most of its affiliate agreements contain limitations and provide varying levels of discretion to the affiliate in the implementation and placement of Overture's service. In addition, Overture has been, and is likely to be, dependent on searches from a limited number of affiliates. Overture's constituents, including its affiliates, advertisers and consumers may be averse to the implementations Overture enters into with other affiliates or these affiliates' distribution or presentation of Overture's services. Overture's agreements with its affiliates vary in duration, and depending on the agreement, may be terminable upon the occurrence of certain events, including for Overture's failure to meet certain service levels, for material breaches of agreement terms, for changes in control or in some instances, at will. If any of the foregoing termination events occur, the related agreement could terminate earlier than the expiration date, and/or Overture may incur additional obligations. Overture's two largest affiliates, Microsoft and Yahoo! may, in certain circumstances, terminate their agreements with Overture upon a change of control in Overture's ownership. The proposed merger with Yahoo! will constitute a change of control of Overture. Overture may not be successful in renewing any of its affiliate agreements, or if they are renewed, they may not be on as favorable terms. If Overture is unable to replace traffic from any of its large affiliates, or if Overture's relationship with any of its larger affiliates deteriorates, it could seriously harm Overture's business, financial condition and results of operations. Overture depends on its affiliates for searches and the loss

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of any of these affiliates could harm Overture's business, ability to generate revenue and operating results. In addition, Overture may not be successful in entering into agreements with new affiliates on commercially acceptable terms. As a result of the acquisitions of AltaVista and Fast's Web search unit, Overture now operates several destination search sites. If Overture cannot maintain the traffic at these sites, its business could be harmed.

Overture's industry is highly competitive, and it may not be able to compete effectively.

        Overture faces competition in three principal areas: (i) distribution of its services; (ii) demand for its services on Overture's affiliates' Web sites; and (iii) usage of its services by advertisers.

        Overture competes with companies that provide pay-per-click (global search) advertising services and paid search that are similar to Overture's. These companies include Espotting Media, Inc., FindWhat, Google, Inc., PRIMEDIA (About.com), Terra Lycos and Yahoo!. In addition, Overture cannot assure you that another search service will not successfully offer a competitive pay-per-click advertising service. Overture believes it is likely that there will be additional entrants to the pay-per-click search market, including affiliates who are members of the Overture network. These new competitors will likely compete against Overture for affiliate arrangements and could cause Overture to enter into affiliate agreements with less favorable terms or lose current affiliates or not acquire new affiliates, which could reduce Overture's number of click-throughs, increase the amount of revenue shared with affiliates, and reduce total revenues and thereby have a material adverse effect on Overture's business, operating results and financial condition.

        Overture also competes with providers of other search related services including, among others, Espotting Media, Inc., Google, Inc., MSN, Yahoo!, AOL, Ask Jeeves, Infospace and LookSmart, Ltd.

        Both Overture and its affiliates face competition for consumer traffic within the search marketplace, which affects the number of paid click-throughs on its service and the price Overture shares with its affiliates for those click-throughs. If the consumers of these affiliates prefer the services offered by the affiliates' competitors with whom Overture does not have a relationship, the businesses of its affiliates may suffer, which may in turn have a material adverse effect on Overture's business, operating results and financial condition. In addition, many of Overture's affiliates compete with one another, and this may make it difficult for Overture to develop some affiliate relationships.

        Overture also competes with other providers of pay-per-click search services, other search services, internet search providers, other Web sites and advertising networks such as DoubleClick, Inc. and 24/7 Media, Inc., as well as traditional offline media such as television, radio and print and direct marketing companies, for a share of advertisers' total advertising budgets. Accordingly, Overture may face increased pricing pressure for the sale of advertisements and direct marketing opportunities, as well as a decrease in demand for Overture services, which could have a material adverse effect on Overture's business, operating results and financial condition.

        Some of Overture's competitors, as well as potential entrants into Overture's market, have longer operating histories, larger consumer bases, greater brand recognition and significantly greater financial, marketing and other resources than Overture does. Many current and potential competitors can devote substantially greater resources to promotion and Web site and systems development than Overture can. In addition, as the use of the Internet and other online services increases, larger, well-established and well-financed entities may continue to acquire, invest in or form joint ventures with providers of Web directories, search and information services or advertising solutions, and existing providers of Web directories, search and information services or advertising solutions may continue to consolidate. In addition, providers of Internet browsers and other Internet products and services who are affiliated with providers of Web directories and information services in competition with Overture's service may more tightly integrate these affiliated offerings into their browsers or other products or services. Any of

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these trends would increase the competition Overture faces, reduce the demand for its services and could have a material adverse effect on Overture's business, operating results and financial condition.

Overture depends on the growth of the Internet and Internet infrastructure for its future growth.

        Overture is completely dependent on online advertising and consumer search services. The failure of the Internet to continue to develop as a commercial and business medium would have a material adverse effect on Overture's business, operating results and financial condition. The widespread acceptance and adoption of the Internet by traditional businesses for conducting business and advertising is likely only if the Internet provides these businesses with greater efficiencies and improvements.

        The growth in Internet traffic has caused frequent periods of decreased performance, and if Internet usage continues to grow rapidly, the Internet's infrastructure may not be able to support these demands, and its performance and reliability may decline. Consequently, the emergence and growth of the market for Overture's services depend upon improvements being made to the entire Internet, as well as to the individual networking infrastructures of Overture's advertisers, consumers, and affiliates to alleviate overloading and delayed response times.

Overture's acquisitions of AltaVista, Fast's Web search unit, Keylime and other potential acquisitions could be difficult to integrate, disrupt its business, dilute stockholder value and adversely affect Overture's operating results.

        Overture recently completed the acquisitions of the businesses of AltaVista, Fast's Web search unit and Keylime. In addition, Overture may make investments in or acquire other complementary products, services, technologies and businesses. These acquisitions and investments could disrupt Overture's ongoing business, distract its management and employees and increase its expenses. Acquisitions may expose Overture to additional contingent liabilities. Overture could face difficulties in assimilating the personnel and operations of the companies it has recently acquired and those of any future acquisition. In addition, the key personnel of the acquired companies may decide not to work for Overture. Acquisitions of additional services or technologies also involve risks of incompatibility and the need for integration into Overture's existing services and marketing, sales and support efforts. Previous acquisitions have not been successful. In addition, the acquisitions have added approximately 275 employees in several countries. Even assuming successful integration, Overture expects that the acquisitions will not be accretive to its earnings until mid-2004. Overture cannot assure you that it will be able to effectively integrate and operate the businesses of AltaVista and Fast's Web search unit.

        If Overture finances future acquisitions by issuing equity securities, this would dilute its existing stockholders. Any amortization of intangible assets, or other charges resulting from the costs of these acquisitions could have a material adverse effect on Overture's business, operating results and financial condition. In addition, Overture may pay more for an acquisition than the acquired products, services, technology or business is ultimately worth.

Overture may not be able to successfully integrate the technology and sales forces of Keylime, AltaVista and Fast's Web search unit.

        In order to fully recognize the benefits of the acquisitions of Keylime, AltaVista and Fast's Web search unit, Overture must integrate their technology into its existing technology and integrate its sales forces. Overture cannot assure you that it will successfully integrate these technologies and sales forces or that the integration will take place within the planned timeframe and budget. The research and development organizations are located in different locations, which Overture expects will make integration more difficult. The integration of technology and sales forces may distract Overture's management and research and development teams from the day-to-day operations of Overture and may cause disruption in its relationships with affiliates. If Overture fails to effectively integrate the

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technology or is not able to cross sell its products, Overture will not receive the expected benefits of the acquisitions and it could adversely affect Overture's business and financial condition.

Expansion of Overture's business model will require significant investment and it cannot assure you that these investments will be profitable.

        Overture's current strategy involves significant investment, including investment in its existing paid placement business through the introductions of new technologies aimed at improving advertiser acquisition and advertiser results, expansion into additional international territories, expansion of its distribution network of affiliates, both in the United States and internationally, and introduction of new search products. This expansion will require Overture to enter into new markets, continue research and development efforts, hire new personnel and successfully attract new affiliates and advertisers. Overture cannot assure you that the investments it makes in these new strategies will successfully increase its revenues and profits. In addition, the pursuit of multiple initiatives may strain Overture's management and make each of the individual initiatives more risky. If improvements to Overture's existing services and expansion into new businesses are not successful, Overture believes its business will suffer.

Overture's quarterly financial results are subject to significant fluctuations because of many factors.

        Overture believes that quarter-to-quarter comparisons of its operating results are not a good indication of its future performance. Overture's operating results have varied widely in the past, and Overture expects that they will continue to vary widely from quarter to quarter due to variability in a number of factors, including:

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Overture's stock has been volatile and may continue to be volatile in the future, which may limit its operating flexibility.

        Historically, Overture's stock price has been extremely volatile and Overture cannot make assurances that the price of its common stock will not decline or be extremely volatile in the future. It is likely that, in some future quarter, Overture's operating results may be below historical levels, and/or the expectations of public market analysts and investors and, as a result of these or other factors, the price of its common stock may fall and/or significantly fluctuate.

        Since Overture's initial public offering in June 1999, the per share trading price of its common stock has ranged from an intra-day high of $114.50 on November 15, 1999 to an intra-day low of $4.81 on December 21, 2000. Overture's stock price may change due to a variety of factors, including those described above in the risk factor entitled "Overture's Quarterly Financial Results Are Subject To Significant Fluctuations Because Of Many Factors." In addition, short-term changes in Overture's stock price may have little relationship to its financial results. In the past, Overture has experienced significant declines in its stock price following announcements of changes in affiliate relationships, even when the particular affiliate relationship did not provide significant paid introductions or result in a significant amount of revenue from advertisers who received paid introductions through Overture as supplied by such affiliates. If Overture's stock price is low, it may limit Overture's ability to raise capital or pursue strategic opportunities, such as acquisitions. In addition, it may reduce the incentive value of Overture's stock options and harm employee morale.

Overture's limited operating history makes planning for future operations more difficult.

        As a result of Overture's limited operating history, it is difficult to accurately forecast its revenue, and Overture has limited historical financial data upon which to base planned operating expenses. Overture plans to increase its operating expenses to expand internationally, expand its marketing and sales operations, broaden its service, extend revenue generating search efforts and customer support capabilities, as well as diversify its offerings. Overture bases its current and future expense levels on its operating plans and estimates of future revenue. Other than a portion of Overture's affiliate costs, its expenses are relatively fixed. Revenue and operating results are difficult to forecast because they generally depend upon the volume of the searches conducted on Overture's service, the terms users search on, the amounts bid by advertisers for search listings on the service and the number of advertisers that bid on the service, each of which Overture cannot control directly. As a result, Overture may be unable to adjust its spending in a timely manner to compensate for any unexpected

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revenue shortfall or for the loss of a significant revenue source. In addition, Overture has only recently begun to expand internationally and create new and untested products, which makes forecasting revenue, expenses and operating results even more difficult. Overture also may be unable to increase its spending and expand its operations in a timely manner to adequately meet user demand, to the extent such demand exceeds Overture's expectations.

Overture has experienced significant growth in its business and any failure to manage this growth could damage Overture's business.

        Overture's ability to successfully offer products and services and implement its business plan in a rapidly evolving market requires effective planning and management process. Overture has increased, and plans to continue to increase, the scope of its operations and services. These expansion efforts could be expensive and put a strain on management and, if Overture does not manage growth properly, it could adversely affect its business. Overture will need to expand its infrastructure, which will include hiring certain key employees and continuing to increase its headcount, as well as expanding its facilities. Hiring key employees, in particular, has historically been difficult, and Overture cannot assure you that it will be able to successfully attract and retain a sufficient number of qualified personnel. Overture's acquisitions of AltaVista's business and Fast's Web search unit will require Overture to effectively integrate and expand its infrastructure.

        In periods of significant growth, the hardware and software used to operate Overture's services may become obsolete faster than originally anticipated, and Overture may be required to replace this hardware or software. As a result, Overture may incur additional expenses to acquire new systems and may incur unplanned charges for impairment or write-offs of obsolete assets. In addition, as Overture's service grows and new features and services are added to its existing software platforms, Overture may be required to conduct a more significant redesign of its software architecture. Such a redesign could be costly and any significant software redesign presents additional risks of errors or systems failures.

Overture faces new and additional risks in international markets and it may be unable to successfully execute its business model in international markets.

        One component of Overture's strategy is to expand its operations into selected international markets. For example, Overture launched its search service for the United Kingdom in November 2000, its German search service in February 2002, its search service for France in September 2002, its search service for Japan in December 2002, its search service in South Korea in April 2003 and its search service in Italy in May 2003. Overture has plans to launch in several additional international locations. To date, Overture has only operated internationally in a few countries, and Overture may be unable to execute its business model in these markets or new markets. Further, foreign providers of competing online services may have a substantial advantage over Overture in attracting consumers and businesses in their country due to earlier established businesses in that country, greater knowledge with respect to the cultural differences of consumers and businesses residing in that country and/or their focus on a single market. Overture expects to continue to experience higher costs as a percentage of revenues in connection with the development and maintenance of international online services. International markets Overture has selected may not develop at a rate that supports its level of investment; therefore, Overture expects to continue to incur losses in the near term. In particular, international markets typically have been slower than domestic markets in adopting the Internet as an advertising and commerce medium.

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        In pursuing Overture's international expansion strategy, it faces several additional risks, including:


        One or more of these factors could have a material adverse effect on Overture's future international operations and, consequently, on Overture's business, operating results and financial condition.

A significant portion of Overture's revenue is concentrated among a small portion of advertisers.

        If Overture's major advertisers were to substantially cut back their advertising or stop using its services, Overture's business would be adversely affected. Although no one advertiser accounts for a

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material portion of its revenue during any given period, a majority of Overture's total revenue is derived from a small proportion of its advertisers. Overture believes that a substantial amount of revenue from advertising sales in any given future period may come from a relatively small number of advertisers. The agreements Overture has with its advertisers are terminable at any time by the advertiser. As a result, Overture's advertisers are not obligated to purchase advertising from it in the future.

Overture cannot assure you that it will not incur net losses in any particular future period.

        Prior to the three months ended September 30, 2001, Overture had a history of losses and Overture cannot assure you that it will not incur net losses again in any particular future period. Although Overture had net income of $18.8 million for the six months ended June 30, 2003 and net income of $73.1 million and $20.2 million for the years ended December 31, 2002 and 2001, respectively, Overture had net losses of $458.6 million for the year ended December 31, 2000. Because Overture's expense levels are relatively fixed in the short term and include guaranteed payments to some of its affiliates, if Overture's revenues do not keep pace with its expense levels, Overture may not sustain or increase profitability in any particular quarter or Overture may incur losses again. Overture expects to continue to increase its marketing, sales and service, general and administrative, research and development and technology related expenses and Overture cannot be certain that revenue will continue to grow. If Overture's revenue growth does not continue, it may experience a loss in one or more future periods and it may as a result cause Overture's stock price to decline. This may, in turn, impact Overture's ability to implement its business strategy.

Overture faces risks of claims for its services, including trademark infringement and similar claims from third parties.

        Overture's services operate in part by making Internet services and content available to its users. This creates the potential for claims to be made against Overture, either directly or through contractual indemnification provisions with third parties. These claims might, for example, be made for defamation, negligence, copyright, trademark or patent infringement, personal injury, invasion of privacy or other legal theories under different jurisdictions. Allegations are made against Overture from time to time concerning these types of claims.

        For example, Overture is in litigation with companies JR Cigar, Mark Nutritionals, Pets Warehouse, Spreen Inc., McCoy Motor Co., Apaulo Inc., Puente Hills Imports, Superior Auto of Carson LLC and Mycar.com that have alleged that allowing advertisers to bid on certain search terms constitutes trademark infringement.

        The plaintiffs in these cases allege that they have trademark rights in certain search terms and that Overture violates these rights by allowing competitors of the plaintiffs to bid on these search terms. While the amount of damages that are claimed and that, in the worst case, could be awarded in one or more of these lawsuits might have a material effect on Overture's results of operations, cash flow or financial position, Overture believes that it has meritorious defenses to liability and damages in each of these lawsuits and Overture is contesting them vigorously. If Overture was to incur one or more unfavorable judgments that in themselves are not material, or if there was a development in the law in a similar case to which Overture is not a party that was negative to its position, Overture might decide to change the general manner in which it accept bids on certain search terms, and this change might have a material adverse effect upon Overture's results of operations, cash flows or financial position. Moreover, there can be no assurance that courts will agree with Overture's position in these cases.

        If a court were to determine that the sale of advertising related to certain search terms or that Overture's processes to create search results via its business model constitutes trademark infringement or some other form of liability, it could negatively impact Overture's revenues and business and

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Overture might, as a result, decide to change the general manner in which Overture accepts bids on certain search terms or change other practices, and this change might have a material adverse effect upon Overture's results of operations, cash flows or financial position.

        There can be no assurance that Overture's services do not infringe on the intellectual property rights of third parties. A successful claim of infringement against Overture and Overture's failure or inability to license the infringed or similar technology could have a material adverse effect on its business, operating results and financial condition.

Government regulation and legal uncertainties may damage Overture's business.

        The laws and regulations applicable to the Internet, Overture's services and the territorial markets in which Overture operates are evolving. The application to Overture's business is unclear and, depending on how these laws and regulations are changed or applied, could damage its business. There are currently relatively few laws or regulations directly applicable to Internet access, commerce or Internet search. Due to the increasing popularity and use of the Internet, state and federal agencies and foreign governments are currently proposing, and may in the future propose or adopt, additional laws and regulations regarding the Internet or the conduct of business on the Internet. The laws and regulations cover or may in the future cover issues such as user privacy, defamation, database protection, user protection, pricing, taxation, content regulation (including, for example, obscenity and gambling), quality of products and services, and intellectual property ownership and infringement. In addition, Overture might be required to comply with existing laws regulating or requiring licenses for certain businesses of its advertisers including, for example, distribution of pharmaceuticals, alcohol, tobacco or firearms, as well as insurance and securities brokerage and legal services. These laws and regulations could expose Overture to substantial compliance costs and liability, as well as dampen the growth in use of the Internet, decrease the acceptance of the Internet as a communications and commercial medium, or require Overture to incur significant expenses to comply with any new regulations. In response to these laws and regulations, whether proposed or enacted, as well as public opinion, Overture may also elect to limit the types of advertisers or advertisements included in its search service, which could in turn decrease the desirability of its service and reduce its revenues.

        The Federal Trade Commission (FTC), in response to a petition from a private organization, has been reviewing the way in which the search engine industry discloses paid placement or paid inclusion practices to the user. In 2002, the FTC staff issued guidance on the matter in the form of letters to the petitioner and to members of the industry, including Overture and AltaVista Company. The letters stated the staff's position on what disclosures are necessary to avoid misleading users about the effect payments to the search engine may have on the inclusion or ranking of listings in the search results. This guidance may differ from the existing practices of some in the industry, including Overture's practices and those of some of its affiliates. The FTC has not yet taken any enforcement action against Overture or any of its affiliates. If the FTC were to take enforcement action that resulted in changes in the labeling or other disclosure of Overture's paid placement listings, it may reduce the desirability of its services and its business and the business of some of Overture's affiliates could be harmed. In addition, Overture and some of its affiliates have adjusted the nature of the disclosures on a voluntary basis, or are likely to do so in the future, and such disclosures may reduce the desirability of Overture's services, which could adversely affect its business.

Increased security risks of online commerce may deter future use of Overture's services.

        Concerns over the security of transactions conducted on the Internet and the privacy of users may also inhibit the growth of the Internet and other online services generally, and online commerce in particular. Overture's failure to prevent security breaches could significantly harm its business and results of operations. Anyone who is able to circumvent Overture's security measures could misappropriate proprietary information, including advertiser credit card data, cause interruptions in its

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operations, or damage Overture's brand and reputation. Overture does not believe that its data repositories, financial systems and other technology resources are completely secure from security breaches or sabotage, and Overture occasionally experiences attempts at "hacking" or security breaches. Overture may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches. Any well-publicized compromise of Overture's security or the security of any other Internet provider or a change in industry standards, regulations or laws or an adverse judicial determination could result in liability or could deter people from using Overture's services or the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials, which would adversely affect the business of Overture's advertisers and its business.

        In offering Overture's current products and services, Overture collects information from its advertisers, its users, and its advertisers' users. Although users are not required to provide personally identifiable information to initiate a search or view search results, Overture does collect personally identifiable information from its advertisers as part of servicing their account and from users when they initiate contact with Overture. Overture may also have access to personally identifiable information of its advertisers' users, although Overture does not at this time retain or store this personally identifiable information. Additionally, Overture may change the way it collects, stores or uses information it collects from and about third parties as it introduces new products and services. Any well-publicized misuse of third party information Overture collects or has collected by any other Internet provider or a change in industry standards, regulation or laws or an adverse judicial determination could result in liability or deter people from using Overture's services or the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials, or could cause Overture to change the way it conducts its business, which would adversely affect the business of Overture's advertisers and, accordingly, Overture's business.

Overture is exposed to risks associated with credit card fraud, credit payment and sudden loss of advertisers.

        Overture has suffered losses and may continue to suffer losses as a result of orders placed with fraudulent credit card data, even though the associated financial institution approved payment of the orders. Under current credit card practices, a merchant is liable for fraudulent credit card transactions when, as is the case with the transactions Overture processes, that merchant does not obtain a cardholder's signature. A failure to adequately control fraudulent credit card transactions would result in significantly higher credit card-related costs and may ultimately result in advertisers' inability to use credit cards as a means of payment, which would have a material adverse effect on Overture's business, operating results and financial condition.

        Some of Overture's advertisers have limited operating histories, are operating at a loss, have limited cash reserves or have limited access to capital. If an advertiser experiences financial difficulties, the advertiser may stop advertising suddenly or may lack the ability to pay amounts owed to Overture. In addition, in some instances, Overture extends credit to advertisers who may default on their accounts receivable. If any significant part of Overture's advertiser base experiences financial difficulties, is not commercially successful, or is unable to pay Overture's advertising fees for any other reason, Overture's business, operating results and financial condition will be materially and adversely affected.

Overture may incur liabilities for the activities of users of its service.

        The law relating to the liability of providers of online services for activities of their users and for the content of their advertisers' listings is currently unsettled and could damage Overture's business. Overture's insurance policies may not provide coverage for liability for activities of its users or advertisers for the content of Overture's listings. Overture may not successfully avoid civil or criminal liability for unlawful activities carried out by consumers of its service or for the content of Overture's listings. Overture's potential liability for unlawful activities of users of its service or for the content of

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Overture's listings could require Overture to implement measures to reduce its exposure to such liability, which may require Overture, among other things, to spend substantial resources or to discontinue certain service offerings. Any costs incurred as a result of such liability or asserted liability could have a material adverse effect on Overture's business, operating results and financial condition.

Overture's market may undergo rapid technological change and its future success will depend on Overture's ability to meet the changing needs of its industry.

        If new industry standards and practices emerge in the Internet and online advertising industry, Overture's existing services, technology and systems may become obsolete. In particular, the market for algorithmic search is characterized by rapid technology change and innovation. Overture believes its future success will depend on its ability to:

Overture is dependent upon its computer and communication systems.

        Overture's business depends on its ability to provide high capacity data transmission without system downtime and upon its transaction processing systems and network infrastructure. Overture relies on third parties to provide data transmission capacity. Consolidations within this industry, or if Overture's providers experience financial instability or become insolvent, could impact Overture's system availability and could have an adverse effect on its business. Furthermore, Overture relies on many different software applications, some of which have been developed internally. If these hardware and software systems fail, it would adversely affect Overture's business and results of operations. If Overture receives a significant unexpected increase in usage and is not able to rapidly expand its transaction-processing systems and network infrastructure without any systems interruptions, it could seriously harm Overture's business. Overture has experienced occasional systems interruptions in the past and it cannot assure you that it will not incur any such interruption in the future.

Overture's business could be significantly impacted by the occurrence of natural disasters and other catastrophic events.

        Overture's business is susceptible to natural disasters and other catastrophic events. Overture has redundant hardware and software systems supporting its services at an alternate site, which is part of its business continuity plan. A business continuity plan is intended to mitigate interruptions of an indeterminate length of time due to natural disasters and other catastrophic events such as fire, flood, earthquake, power loss, telecommunications failure, or a similar event. Despite these redundant systems, Overture cannot prevent outages and downtime caused by natural disasters and other events out of its control, which could severely damage Overture's business and adversely affect results of operations. Overture's operations depend upon its ability to maintain and protect its computer systems, which are located in California, Ireland and several other domestic and international offsite locations managed by third parties.

        Any system failure, including network or hardware failure, that causes an interruption in Overture's service or its affiliates' service or the security of any other Internet provider, or a decrease in responsiveness could result in reduced traffic and reduced revenue. Although Overture believes that

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the redundant systems implemented are adequate, the back-up servers could fail or cause interruptions in its service and possibly even the termination of one or more affiliate contracts.

        A catastrophe in any of Overture's business centers or serving sites, in particular, those in California, could cause interruption to its service, including but not limited to, the services requiring customer service, editorial, data processing and other managerial functions as a result of incapacitation to people, processes or systems. Overture does not have back-up sites for its main U.S. and European customer operations centers and editorial department that are located in California and Ireland. An interruption in Overture's ability to provide customer support and editorial services would adversely affect its business. The occurrence of a natural disaster or unanticipated problems at Overture's principal headquarters or at a third-party facility could cause interruptions or delays in its business, loss of data or could render Overture unable to provide some services. In addition, failure by the third-party facility to provide the data communications capacity required by Overture, as a result of human error, natural disaster or other operational disruptions, could cause interruptions in its service. Overture's California and Washington State sites exist on or near known earthquake fault zones and a significant earthquake could cause an interruption in its services. The occurrence of any or all of these events could adversely affect Overture's reputation, brand and business, which could have a material adverse effect on its business, operating results and financial condition.

Overture's executive officers and certain key personnel are critical to its business, and these officers and key personnel may not remain with Overture in the future.

        Overture's future success depends upon the continued service of its executive officers and other key technology, marketing, sales and support personnel. None of Overture's officers or key employees is bound by an employment agreement for any specific term. If Overture loses the services of one or more of its key employees, or if one or more of its executive officers or employees decide to join a competitor or otherwise compete directly or indirectly with Overture, this could have a material adverse effect on Overture's business, operating results and financial condition. The announcement of Overture's acquisition by Yahoo! may cause some of Overture's executives to discontinue employment with Overture or some executives may discontinue employment subsequent to the close of the acquisition.

Overture may not be able to protect its Internet domain names or intellectual property rights upon which its business relies.

        Overture's success and ability to compete also are substantially dependent upon its internally developed technology and data resources, which Overture protects through a combination of copyright, trade secret, patent and trademark law. Overture also depends on its trade name and domain names. Overture may not be able to adequately protect its technology and data resources. In addition, intellectual property laws vary from country to country, and it may be more difficult to protect Overture's intellectual property in some foreign jurisdictions.

        Despite Overture's efforts to protect its proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use Overture's services, technology and other intellectual property, and Overture cannot be certain that the steps it has taken will prevent any misappropriation or confusion among consumers and advertisers.

Overture's charter documents, change of control severance agreements with its management and terms of its affiliate agreements may make it more difficult to acquire Overture.

        Overture has adopted a stockholder rights plan and declared a dividend distribution of one right for each outstanding share of common stock to stockholders of record as of March 29, 2002. Each right entitles the holder to purchase one unit consisting of one one-thousandth of a share of Overture's

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Series A Junior Participating Preferred Stock for $200 per unit. Under certain circumstances, if a person or group acquires 15% or more of Overture's outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be able to purchase, in exchange for the $200 exercise price, shares of Overture's common stock or of any company into which Overture is merged, having a value of $400. The rights expire on March 29, 2012 unless extended by Overture's board of directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take Overture over without the approval of its board of directors, Overture's rights plan could make it more difficult for a third party to acquire Overture (or a significant percentage of Overture's outstanding capital stock) without first negotiating with its board of directors regarding such acquisition.

        In addition, provisions of Overture's certificate of incorporation and bylaws could also make it more difficult for a third party to acquire Overture, even if doing so would be beneficial to Overture's stockholders. For example, Overture's board of directors is divided into three classes, with one class being elected each year by its stockholders, which generally makes it more difficult for stockholders to replace a majority of directors and obtain control of Overture's board. In addition, only Overture's board of directors, the chairman of the board and the president may call stockholder meetings. Advance notice is required prior to stockholder proposals, and stockholders may not act by written consent. Further, Overture has authorized preferred stock that is undesignated, making it possible for the board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of Overture. Delaware law also could make it more difficult for a third party to acquire Overture. Specifically, Section 203 of the Delaware General Corporation Law may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by Overture's stockholders.

        Overture has entered into change of control severance agreements with members of its senior management and certain other key employees. These agreements provide for certain benefits, including acceleration of option vesting, to these persons if they are terminated other than for cause following an acquisition of Overture. These agreements could make Overture less attractive to a third party who may want to acquire it, because they will make any replacement of management and other personnel more expensive.

        Agreements with some of Overture's affiliates permit termination at the election of the affiliate in the event of a change of control and, in some cases, may require Overture to incur additional obligations. The existence of these termination rights could make Overture less attractive and/or more costly to a third party who may want to acquire it.

Overture may need additional capital, which could dilute the ownership interest of investors.

        Overture requires substantial working capital to fund its business. In addition, Overture's new business initiatives will require significant capital outlays relating to integration of acquired businesses and research and development related to new product offerings. If Overture raises additional funds through the issuance of equity, equity-related or convertible debt securities, these securities may have rights, preferences or privileges senior to those of the rights of its common stock, and Overture's stockholders may experience additional dilution. Overture cannot be certain that additional financing will be available to it on favorable terms when required, or at all. Overture experienced negative cash flow from operations from its inception through the first quarter of 2001, and it could experience negative cash flow from operations in the future. Overture currently anticipates that its available funds will be sufficient to meet its anticipated needs for working capital and capital expenditures at least through the next 12 months. However, Overture may choose to raise additional funds in the future.

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THE SPECIAL MEETING OF OVERTURE STOCKHOLDERS

        This proxy statement/prospectus is being sent to you as an Overture stockholder in order to provide you with important information regarding the proposed merger in connection with the solicitation of proxies by Overture's board of directors for use at the special meeting of its stockholders and at any adjournment or postponement of the special meeting.

Date, Time and Place of the Special Meeting

        Overture will hold a special meeting of its stockholders on    •    , 2003, at     •     a.m., local time, at    •    .

Matter for Consideration

        At the Overture special meeting, Overture stockholders will be asked to consider and vote upon a proposal to approve and adopt the merger agreement and to approve the merger. Overture does not currently contemplate that any other matters will be presented at the special meeting. Overture's bylaws provide that no matter may be brought before a special meeting which is not stated in the notice of the special meeting. If, however, other matters are properly brought before the Overture special meeting or any adjournment or postponement of the Overture special meeting, the persons named as proxy holders, Ted Meisel and Leonard R. Stein, will have discretion to act on those matters, including to vote the proxies to adjourn or postpone the Overture special meeting.

Board of Directors' Recommendation

        After careful consideration, the Overture board of directors has unanimously approved the merger agreement and the merger. The Overture board of directors believes that the merger is fair to and in the best interests of Overture and its stockholders and that the merger is advisable. The Overture board of directors unanimously recommends that the Overture stockholders vote "FOR" the proposal to approve and adopt the merger agreement and to approve the merger.

Record Date; Shares Held by Directors and Executive Officers

        The record date for determining the Overture stockholders entitled to vote at the special meeting is    •    , 2003. Only holders of record of Overture common stock as of the close of business on that date are entitled to vote at the special meeting. As of the record date, there were    •     shares of Overture common stock issued and outstanding, held by approximately    •    stockholders of record. Each share of Overture common stock issued and outstanding as of the record date entitles its holder to cast one vote at the special meeting.

        As of the record date, the directors and executive officers of Overture and their affiliates held    •    outstanding shares, or approximately     •    % of the total outstanding shares, of Overture common stock. The directors of Overture and an affiliate of one of the directors have entered into voting agreements with respect to    •    % of the shares of Overture common stock outstanding on the record date pursuant to which those stockholders have granted to Yahoo! a proxy to vote their shares in favor of approval and adoption of the merger agreement and approval of the merger. See the section entitled "Voting Agreements" beginning on page 104 of this proxy statement/prospectus.

Quorum and Vote Required

        In order to conduct business at the special meeting, a quorum must be present. The holders of a majority of the common stock outstanding on the record date for the meeting present in person or represented by proxy at the special meeting constitutes a quorum under Overture's bylaws. Overture will treat shares of common stock represented by a properly signed and returned proxy, including

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abstentions and broker non-votes, as present at the meeting for purposes of determining the existence of a quorum.

        The affirmative vote of a majority of the shares of Overture's common stock outstanding on the record date in favor of the proposal to approve and adopt the merger agreement and to approve the merger is required in order for the proposal to pass. The inspector of elections appointed for the special meeting will tabulate the votes.

Adjournment and Postponement

        If a quorum is not present or represented at a meeting, Overture's bylaws permit a majority of the stockholders entitled to vote at the special meeting, present in person or represented by proxy, to adjourn the meeting, without notice other than announcement at the meeting, until a quorum is present or represented. If sufficient votes to constitute a quorum or to approve and adopt the merger agreement and to approve the merger are not received by the date of the special meeting, we anticipate that the persons named as proxies may propose one or more adjournments of the meeting to permit further solicitation of proxies and would generally exercise their authority to vote in favor of adjournment.

Voting of Proxies

        The Overture proxy accompanying this proxy statement/prospectus is solicited on behalf of the Overture board of directors for use at the Overture special meeting.

        Shares represented by a properly signed and dated proxy or properly voted by Internet or telephone will be voted at the special meeting in accordance with the instructions indicated on the proxy or given by Internet or telephone. Proxies that are properly signed and dated but which do not contain voting instructions will be voted "FOR" the proposal to approve and adopt the merger agreement and to approve the merger. The proxy holder may vote the proxy in its discretion as to any other matter that may properly come before the Overture special meeting.

        Overture will count a properly executed proxy marked "ABSTAIN" as present for purposes of determining whether a quorum is present, but the shares represented by that proxy will not be voted at the special meeting. Because the affirmative vote of a majority of the outstanding shares of Overture common stock is required to approve and adopt the merger agreement and to approve the merger, if you mark your proxy "ABSTAIN," it will have the effect of a vote against the proposal to approve and adopt the merger agreement and to approve the merger.

        If your shares are held in street name, your broker will vote your shares for you only if you provide instructions to your broker on how to vote your shares. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Your broker cannot vote your shares of Overture common stock without specific instructions from you. Because the affirmative vote of a majority of the outstanding shares of Overture common stock is required to approve and adopt the merger agreement and to approve the merger, if you do not instruct your broker how to vote, it will have the effect of a vote against the proposal to approve and adopt the merger agreement and to approve the merger. If your shares are registered in the name of a bank or brokerage firm, you may be eligible to vote your shares by telephone or Internet. Please review the

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voting instruction card provided with this proxy statement/prospectus or contact your bank or brokerage firm for information.

        If your shares are held in street name and you wish to vote those shares in person at the special meeting, you must obtain from your broker holding your Overture common stock a properly executed legal proxy identifying you as an Overture stockholder, authorizing you to act on behalf of the nominee at the special meeting and identifying the number of shares with respect to which the authorization is granted.

How to Revoke a Proxy

        If you submit a proxy, you may revoke it at any time before it is voted by:

        Notices to the Corporate Secretary of Overture should be addressed to Corporate Secretary, Overture Services, Inc., 74 N. Pasadena Avenue, Third Floor, Pasadena, California 91103.

        If you hold your shares in street name, you must give new instructions to your broker prior to the special meeting or obtain a signed "legal proxy" from the broker to revoke your prior instructions and vote in person at the meeting.

Solicitation of Proxies and Expenses

        Overture will pay its own costs of soliciting proxies for the special meeting. Certain directors, officers and employees of Overture may solicit proxies, without additional remuneration, by telephone, facsimile, electronic mail, telegraph and in person. Overture expects that the expenses of this special solicitation will be nominal. Following the mailing of this proxy statement/prospectus, Overture will request brokers, custodians, nominees and other record holders to forward copies of this proxy statement/prospectus to persons for whom they hold shares of common stock and to request authority for the exercise of proxies. In such cases, Overture, upon the request of the record holder, will reimburse such holder for their reasonable expenses.

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THE MERGER

        The following is a description of the material aspects of the merger, including the merger agreement. While we believe that the following description covers the material terms of the merger, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire proxy statement/prospectus, including the merger agreement attached to this proxy statement/prospectus as Annex A, for a more complete understanding of the merger.

Background of the Merger

        Yahoo! and Overture began their commercial relationship in November 2001, when Overture began to provide its sponsored search results to Yahoo! as one of Overture's commercial affiliates. Since that time the relationship between Overture and Yahoo! has grown significantly. Under the terms of a search services agreement and related agreements originally effective as of May 1, 2002, Overture provides its search results to Yahoo! and pays Yahoo! a portion of its revenues generated from those search results, and under the terms of a marketing services agreement originally effective as of November 18, 2002, Overture provides its search results to Yahoo! Japan and pays Yahoo! Japan a portion of its revenues generated from those search results, as described in the section entitled "Material Contacts Between Yahoo! and Overture Prior to the Merger."

        In April, May and June of 2002, Terry Semel, Chairman and Chief Executive Officer of Yahoo!, and Ted Meisel, President and Chief Executive Officer of Overture, had several conversations about the existing business relationship between Overture and Yahoo!. On May 25, 2002, Mr. Semel met with Mr. Meisel in Los Angeles to discuss the business strategies of Overture and Yahoo!. At that meeting, Mr. Semel mentioned the possibility of a business combination between Overture and Yahoo!. After the May 25 meeting, Mr. Semel and Mr. Meisel continued their conversations regarding the existing business relationship between Overture and Yahoo!, and these discussions included occasional mention of the potential benefits of a business combination and related issues.

        On June 21, 2002, Mr. Semel, Susan Decker, Yahoo!'s Executive Vice President, Finance and Administration and Chief Financial Officer, and Jerry Yang, Yahoo!'s Co-Founder, Chief Yahoo! and a member of Yahoo!'s board of directors, together with other Yahoo! representatives, met with Mr. Meisel and Todd Tappin, Overture's Chief Financial Officer. At the meeting, the parties discussed, among other things, the potential benefits of a business combination.

        On July 1, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Jaynie Studenmund, Overture's Chief Operating Officer, and representatives of Wilson Sonsini Goodrich & Rosati, Professional Corporation, outside counsel to Overture, also attended this meeting. Mr. Meisel apprised the board of directors of Yahoo!'s approach regarding a potential acquisition of Overture. Mr. Meisel informed the board of directors that no pricing discussions had yet transpired. A representative of Wilson Sonsini Goodrich & Rosati then discussed with the members of the board of directors their fiduciary obligations regarding their consideration of a proposed business combination transaction with Yahoo! and other possible strategic alternatives for Overture. After discussion, the board of directors authorized management to engage in further discussions with Yahoo! and directed management to apprise the board of directors of further developments.

        On July 11, 2002, Mr. Semel and Ms. Decker met with Mr. Meisel and Mr. Tappin. At that meeting, the participants discussed a proposed process for conducting due diligence and other aspects of a possible transaction.

        On July 17, 2002, Yahoo! and Overture entered into a confidentiality agreement in connection with a possible business combination transaction. Also on July 17, 2002, Mr. Tappin met with Ms. Decker and other members of Yahoo!'s management team to discuss, among other things, Overture's business and financial statements.

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        On July 17, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund and a representative of Wilson Sonsini Goodrich & Rosati also participated at this meeting. Mr. Meisel gave an update to the board of directors regarding recent conversations with Yahoo! about a possible acquisition of Overture by Yahoo!. The Board discussed this possibility and other possible strategic alternatives, including continuing to operate as an independent company.

        From July through November 2002, Mr. Semel and Mr. Meisel had periodic conversations to discuss Overture's existing commercial relationship with Yahoo!. On November 14, 2002, in the course of a conversation concerning Overture and Yahoo!'s commercial relationship, Mr. Semel again raised the possibility of a business combination.

        On November 25, 2002, Yahoo! sent a letter to Overture indicating its interest in proceeding with a business combination and containing a preliminary indication of valuation for Overture, subject to due diligence and corporate and board approvals.

        On November 26, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund and representatives of Wilson Sonsini Goodrich & Rosati also participated in this meeting. At the meeting, the board of directors discussed the letter proposal received by Overture from Yahoo!. On November 27, 2002 Mr. Meisel spoke with Mr. Semel by telephone and conveyed that the Overture board had reviewed and was considering Yahoo!'s offer.

        By an engagement letter dated November 27, 2002, Overture retained Goldman Sachs to act as its financial advisor in connection with the possible business combination transaction.

        On November 29, 2002, Yahoo! delivered a term sheet for the proposed transaction, a due diligence request and a proposed exclusivity agreement, which was never executed, to Overture and its advisors.

        On December 4 and 5, 2002, members of Yahoo!'s and Overture's management teams as well as representatives from their respective financial advisors and Wilson Sonsini Goodrich & Rosati assembled for meetings at the Los Angeles offices of Goldman, Sachs & Co. to conduct due diligence and discuss related issues in connection with a potential business combination.

        On December 7, 2002, Yahoo! delivered proposed drafts of the merger agreement and voting agreement for the proposed business combination.

        From December 9 through December 14, 2002, working groups comprised of Yahoo!'s and Overture's management teams and their respective outside counsel and financial advisors met to conduct due diligence and review due diligence documents.

        On December 11, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund, Alex Cory, Overture's Executive Vice President, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. A representative of Wilson Sonsini Goodrich & Rosati initiated a discussion of the potential strategic transaction with Yahoo! by presenting an overview of the board of directors' fiduciary duties when considering the proposed transaction. Mr. Meisel updated the board of directors on recent conversations with management of Yahoo! and the due diligence process. Overture management and Goldman Sachs discussed the financial aspects of the transaction. The board of directors then discussed the transaction and other alternatives available to Overture. A representative of Wilson Sonsini Goodrich & Rosati then led a discussion of the terms of the definitive merger agreement proposed by Yahoo!.

        On December 13, 2002, Overture delivered comments to the proposed merger agreement to Yahoo!.

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        On December 14, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also attended this meeting. The board of directors discussed the status of the Yahoo! transaction. The board of directors determined that management should conduct further due diligence on Yahoo!. Also on December 14, 2002, Mr. Tappin and Ms. Decker spoke over the telephone to discuss the terms of the proposed definitive merger agreement.

        On December 15, 2002, the Overture board of directors convened a meeting. Ms. Studenmund, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. A representative of Goldman Sachs discussed the financial aspects of the proposed transaction with the board of directors. The board of directors directed Overture's management to continue discussions with Yahoo!.

        On December 16, 2002, members of Yahoo!'s and Overture's management teams convened a meeting at Yahoo!'s headquarters in Sunnyvale to discuss Overture's due diligence on Yahoo!. Also on December 16 and 17th, 2002, Mr. Tappin, a representative of Yahoo! and representatives of Wilson Sonsini Goodrich & Rosati, and Skadden, Arps, Slate, Meagher & Flom LLP, outside counsel to Yahoo!, met to negotiate the terms of the proposed definitive agreements.

        On December 17, 2002, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. Mr. Meisel presented the board of directors with an update on the status of the potential transaction with Yahoo!. The board of directors considered Overture's possible responses to the terms proposed by Yahoo! and authorized management of Overture to continue discussions with Yahoo!.

        On December 17, 2002, Mr. Meisel and Mr. Semel spoke by telephone to discuss the proposed valuation of Overture and other aspects of the proposed transaction.

        From December 17 through December 24, 2002, and again from January 3 to January 13, 2003, Messrs. Semel, Meisel and Tappin and Ms. Decker had conversations regarding valuation and other issues with respect to the proposed business combination.

        From January 12 through February 2, 2003, members of Yahoo!'s and Overture's management teams and their financial and legal advisors met from time to time to further conduct due diligence and discuss valuation and other issued related to the proposed transaction and also exchanged proposed drafts and negotiated the terms of the definitive agreements.

        On January 16, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund, and a representative of Wilson Sonsini Goodrich & Rosati also attended this meeting. The board of directors discussed Overture's future strategy and the potential advantages and disadvantages of pursuing the business combination transaction with Yahoo! and other strategic alternatives.

        On January 23, 2003, Mr. Semel and Mr. Meisel met to discuss valuation and other issues related to the proposed transaction.

        On January 25, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Ms. Studenmund, representatives of Wilson Sonsini Goodrich & Rosati and a representative of Goldman Sachs also participated in this meeting. Mr. Meisel reported to the board of directors the results of his meeting with Mr. Semel on January 23, 2003 and the terms of the potential transaction then being proposed by Yahoo!. Representatives of Goldman Sachs and Wilson Sonsini Goodrich & Rosati also reviewed with the board of directors their discussions during the past week with Yahoo!'s advisors, including timing and the status of the proposed definitive agreement. Mr. Meisel led the board of directors in a discussion of Overture's stand-alone strategy, and Mr. Tappin updated the board

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of directors on Overture's financial outlook. Discussion then ensued regarding possible strategic alternatives for Overture, including the then current Yahoo! proposal, Overture's stand-alone prospects and other potential business combinations that Overture could pursue. The board of directors then discussed a proposed response to the Yahoo! proposal and authorized Mr. Meisel, in consultation with Robert Kavner, Chairman of Overture's board of directors, to respond to Yahoo!.

        From January 26 through January 30, 2003, Messrs. Semel and Meisel had conversations regarding the terms of the proposed business combination and the process to move forward with a business combination.

        From January 31 through February 2, 2003, Mr. Semel and Mr. Meisel also had conversations regarding the status of the business combination and the outstanding issues, including valuation of Overture. During that time, financial and legal advisors to Yahoo! and Overture also had conversations regarding the proposed terms of the business combination and outstanding issues.

        On February 2, 2003, Yahoo! and Overture failed to reach agreement on terms for a business combination and ceased negotiations and due diligence regarding the transaction.

        On February 18, 2003, Overture entered into a definitive agreement to purchase the business of AltaVista Company, and completed the purchase on April 25, 2003. On February 25, 2003, Overture entered into a definitive agreement to purchase certain assets of Fast Search & Transfer ASA, which transaction was completed on April 21, 2003.

        From February 19 through May 28, 2003, Mr. Semel, Daniel Rosensweig, Yahoo!'s Chief Operating Officer, and Mr. Meisel occasionally had informal conversations regarding the general state of business affairs at their respective companies and the existing commercial relationship of Yahoo! and Overture.

        On May 29, 2003, Mr. Semel communicated to Mr. Meisel that Yahoo! was again interested in pursuing a potential acquisition of Overture.

        On June 2, 2003, Yahoo! presented a written offer to Overture to consummate a business combination. Mr. Semel and Mr. Meisel discussed the proposal by Yahoo!.

        On June 6, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Leonard Stein, Overture's Chief Legal Officer and Corporate Secretary, Ms. Studenmund, a representative of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also attended this meeting. Representatives of Goldman Sachs led the board of directors in a discussion of valuation matters. A representative of Wilson Sonsini Goodrich & Rosati discussed the board of directors' fiduciary duties when considering the proposed transaction and other alternatives. Mr. Meisel then briefed the board of directors on various strategic opportunities available to Overture, including the offer from Yahoo!.

        In meetings with Mr. Semel on June 6, 2002 and Mr. Semel and Ms. Decker on June 8, 2002, Mr. Meisel conveyed Overture's views on the proposed terms in Yahoo!'s June 2, 2003 offer.

        On June 25, 2003, in response to Overture's views on the June 2, 2003 offer, Yahoo! delivered a revised written offer to consummate a business combination.

        On June 27, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Mr. Stein, a representative of Wilson Sonsini Goodrich & Rosati and a representative of Goldman Sachs also participated in this meeting. Mr. Meisel presented an overview of the proposed business combination based on Yahoo!'s revised written offer and the board of directors discussed the merits of proceeding with the transaction. The board of directors authorized Mr. Meisel to proceed with negotiations with Yahoo! regarding the business combination.

        On June 30, 2003, Mr. Semel and Mr. Meisel had a telephonic meeting to discuss Yahoo!'s revised offer and the potential for a business combination transaction.

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        On July 1, 2003, members of management of Yahoo!, Mr. Meisel, Mr. Tappin and representatives of Goldman Sachs met at the offices of Yahoo! in Sunnyvale, California to discuss the business combination and Overture's due diligence on Yahoo!.

        Also on July 1, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also attended this meeting. Mr. Meisel presented an update as to the status of the proposed transaction with Yahoo!. After discussion and consideration of the proposed terms of the transaction, the board of directors authorized Mr. Meisel to continue negotiating the terms of the business combination.

        From July 1 through July 9, 2003, Messrs. Semel, Kavner, and Meisel had several conversations about the proposed business combination and its terms, the process for completing the transaction and potential ways to integrate the two companies.

        On July 4, 2003, Yahoo! delivered a new draft of a proposed definitive merger agreement in connection with the business combination to Overture.

        On July 5, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. Mr. Meisel presented an overview of the terms of the proposed transaction proposed by Yahoo!. A representative of Goldman Sachs updated the board of directors on the financial aspects of the latest offer made by Yahoo!. Next, a representative of Wilson Sonsini Goodrich & Rosati led the board of directors in a discussion of the proposed definitive agreement in connection with the business combination. The board of directors discussed the merits of an acquisition by Yahoo!, the general terms of the current offer by Yahoo!, including the proposed valuation of Overture, and the necessary conditions to consummation of the proposed transaction.

        On July 6, 2003, Yahoo! and Overture executed an amendment to extend the term of the original confidentiality agreement between the parties.

        Also on July 6, 2003, members of management from Yahoo! and Overture met at the Los Angeles offices of Goldman Sachs to conduct due diligence. In addition, on July 6, 2003, Overture delivered comments to the draft definitive merger agreement to Yahoo! and Yahoo! delivered a draft voting agreement to Overture.

        From July 7 through July 13, 2003, members of management from Yahoo!, together with its outside legal and financial advisors, conducted due diligence and document review in Los Angeles and Palo Alto, California. Also from July 7 through July 13, 2003, members of Yahoo!'s and Overture's management and their respective financial and legal advisors had numerous meetings and conversations in connection with negotiation of the terms of the definitive agreements necessary to consummate the business combination.

        On July 10, 2003, the Overture board of directors convened a meeting. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. At the meeting, Mr. Meisel advised the board of directors regarding the progress of negotiations with Yahoo!. Mr. Tappin reviewed the status of the due diligence efforts with Yahoo! and Overture's expected financial results for the quarter. Mr. Stein presented an overview of the status of the merger agreement negotiations. A representative of Goldman Sachs discussed the financial aspects of the proposed transaction. Mr. Meisel also discussed potential synergies to be derived from the transaction. A representative of Wilson Sonsini Goodrich & Rosati advised the board of directors regarding legal considerations related to the transaction. Following a discussion of the proposed transaction and the proposed valuation, Overture's board of directors authorized Mr. Meisel to proceed with negotiations regarding the business combination.

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        From July 11 through July 13, 2003, Mr. Semel had conversations with Messrs. Meisel and Kavner regarding the terms of the proposed acquisition of Overture and the valuation of Overture in the proposed business combination.

        On July 12, 2003, the Overture board of directors convened two meetings, one in the morning and one in the evening. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in these meetings. Mr. Meisel presented updates as to the status of the proposed transaction with Yahoo!. The board of directors provided management with guidance on proceeding with negotiations.

        On July 12 through 13, 2003, Overture and Yahoo! finalized the definitive agreements for the transaction and the final valuation of Overture. In addition, from July 12 through July 13, 2003, Yahoo! presented and finalized an employment offer for Mr. Meisel.

        On July 13, 2003, at 2:00 p.m. Pacific Time, the Overture board of directors convened a meeting. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. Mr. Kavner and Mr. Meisel presented the board of directors with an update on the status of negotiations with Yahoo!. Mr. Meisel also described to the board discussions between him and Yahoo! regarding his employment with Yahoo! following the merger. Mr. Kavner and Mr. Meisel then led the board of directors in a discussion regarding Yahoo!'s proposed valuation of Overture and the remaining open issues in connection with the transaction. Next, a representative of Wilson Sonsini Goodrich & Rosati led the board of directors in a discussion of their legal obligations and fiduciary duties with respect to consideration of the business combination and a review of the terms of the proposed definitive merger and voting agreements. Representatives of Goldman Sachs reviewed with the board of directors financial aspects of the combination based on a range of proposed valuations of Overture, including Yahoo!'s then proposed valuation. After discussion, the board of directors provided instructions to Mr. Kavner, management and outside counsel to negotiate the remaining open issues with respect to the proposed business combination.

        Following the 2:00 p.m. board meeting, Mr. Kavner had a conversation with Mr. Semel regarding the terms of the proposed business combination, including the consideration proposed to be received by the stockholders of Overture.

        On July 13, 2003, at 7:00 p.m. Pacific Time, the Overture board of directors convened another meeting. Mr. Tappin, Mr. Stein, representatives of Wilson Sonsini Goodrich & Rosati and representatives of Goldman Sachs also participated in this meeting. Mr. Kavner updated the board of directors on the status of negotiations with Yahoo! regarding the proposed business combination, including the final merger consideration proposed by Yahoo! of 0.6108 of a share of Yahoo! common stock and $4.75 in cash per share of Overture common stock. A representative of Wilson Sonsini Goodrich & Rosati updated the board of directors on the status of negotiations with representatives of Yahoo! with respect to the proposed merger agreement and voting agreements. Next, representatives of Goldman Sachs presented their financial analysis of the proposed transaction, and Goldman Sachs rendered its oral opinion subsequently confirmed by delivery of its written opinion dated July 14, 2003, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the merger consideration to be received by the holders of Overture common stock pursuant to the merger agreement was fair from a financial point of view to such holders. After discussion and consideration, the board of directors of Overture unanimously determined that the merger on the terms discussed at the meeting was fair to, and in the best interests of, Overture and its stockholders and declared the merger to be advisable, approved the merger agreement, resolved to recommend that the stockholders of Overture approve the transaction and directed that the merger agreement and the merger be submitted to Overture's stockholders at a meeting of Overture stockholders.

        On July 14, 2003, Yahoo! and Overture executed the merger agreement and issued a joint press release announcing the merger.

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        Also on July 14, 2003 all of the directors of Overture as well as an affiliated entity of one of the directors entered into voting agreements with Yahoo! and July 2003 Merger Corp., and Mr. Meisel accepted a written offer from Yahoo! to continue employment following the merger, conditioned upon the completion of the merger. For a discussion of these agreements and the employment offer, see the section entitled "Voting Agreements" beginning on page 104 of this proxy statement/prospectus and the section entitled "—Yahoo! Offer of Employment to Ted Meisel" beginning on page 76 of this proxy statement/prospectus.

Overture's Reasons for the Merger

        Overture's board of directors has unanimously approved the merger agreement and has determined that the merger agreement and the merger are fair to and in the best interests of Overture and its stockholders and that the merger is advisable. In reaching its decision, the Overture board identified several reasons for, and potential benefits to Overture stockholders of, the merger. Overture believes there are a number of potential benefits of the proposed merger including, among others:

Recommendation of the Merger by the Overture Board of Directors

        At a meeting held on July 13, 2003, the Overture board of directors unanimously:

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        In reaching its decision to approve the merger agreement, the Overture board of directors consulted with Overture's management, Overture's legal counsel regarding the legal terms of the merger and Overture's financial advisor regarding the financial aspects of the merger and the fairness, from a financial point of view, of the merger consideration to holders of Overture common stock. The factors the Overture board of directors considered in reaching its determination include, but are not limited to, the following:

        In addition, the Overture board of directors also identified and considered a variety of potentially negative factors in its deliberations concerning the merger, including, but not limited to, the following:

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        In addition, Overture's board of directors considered the interests that its officers and directors may have with respect to the merger in addition to their interests as Overture stockholders. See the section entitled "Interests of Overture Directors and Officers in the Merger" beginning on page 75 of this proxy statement/prospectus for a more complete discussion of these interests.

        After due consideration, the Overture board of directors concluded that the potential benefits of the merger outweighed the risks associated with the merger.

        The above discussion of the material factors considered by the Overture board of directors is not intended to be exhaustive, but does set forth the principal factors considered by the Overture board of directors. The Overture board of directors collectively reached the unanimous conclusion to approve the merger agreement in light of the various factors described above and other factors that each member of the Overture board of directors felt were appropriate. In view of the wide variety of factors considered by the Overture board of directors in connection with the evaluation of the merger and the complexity of these matters, the Overture board of directors did not consider it practical, and did not attempt to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. Rather, the Overture board of directors made its recommendation based on the totality of information presented to it and the investigation conducted by it. In considering the factors discussed above, individual directors may have given different weights to different factors.

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Opinion of Overture's Financial Advisor

        On July 13, 2003, Goldman Sachs rendered its oral opinion, subsequently confirmed by delivery of its written opinion dated July 14, 2003, to Overture's board of directors that, as of such date, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be received by holders of Overture common stock pursuant to the merger agreement is fair from a financial point of view to such holders.

        The full text of the written opinion of Goldman Sachs, dated July 14, 2003, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex E to this proxy statement/prospectus. Overture stockholders should read the opinion in its entirety. Goldman Sachs provided its opinion for the information and assistance of Overture's board of directors in connection with its consideration of the transaction contemplated by the merger agreement, and such opinion is not a recommendation as to how any holder of Overture common stock should vote with respect to such transaction.

        In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

        Goldman Sachs also held discussions with members of the senior managements of Overture and Yahoo! regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction contemplated by the merger agreement and the past and current business operations, financial condition, and future prospects of their respective companies, including discussions with senior management of Overture with regard to the competitive dynamics of attracting and retaining its commercial affiliates. In addition, Goldman Sachs reviewed the reported price and trading activity for Overture's common stock and Yahoo!'s common stock, compared certain financial and stock market information for Overture and Yahoo! with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the Internet industry specifically and in other industries generally and performed such other studies and analyses as it considered appropriate.

        Goldman Sachs relied upon the accuracy and completeness of all of the financial, accounting and other information discussed with or reviewed by it and assumed such accuracy and completeness for purposes of rendering the opinion described above. In that regard, Goldman Sachs assumed with Overture's consent that the internal financial analyses and forecasts for Overture and Yahoo! prepared by Overture's management described above were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Overture. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any derivative or off-balance-sheet assets and liabilities) of Overture or Yahoo! or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs also assumed that all material governmental, regulatory or other consents and approvals necessary for consummation of the transaction contemplated by the merger agreement will be obtained without any adverse effect on

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Overture or Yahoo! or on the expected benefits of the transaction contemplated by the merger agreement. The opinion of Goldman Sachs does not address the relative merits of the transaction contemplated by the merger agreement as compared to any alternative business transaction that might be available to Overture, nor does it address the underlying business decision of Overture to engage in the transaction contemplated by the merger agreement.

        The following is a summary of the material financial analyses used by Goldman Sachs in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs. The order of analyses described does not represent the relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs' financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before July 11, 2003 and is not necessarily indicative of current market conditions.

        Goldman Sachs reviewed the historical trading prices and volumes for Overture's common stock for the one year period ended July 11, 2003. In addition, Goldman Sachs analyzed the consideration to be received by holders of Overture common stock pursuant to the merger agreement based on the closing price of Yahoo! common stock on July 11, 2003 in relation to the closing price of the Overture common stock on July 11, 2003 and the latest 5 day, 10 day, 20 day, 30 day, 60 day, 90 day, 180 day and one year average market prices of the Overture common stock.

        This analysis indicated that the price per share to be received by the holders of Overture common stock pursuant to the merger agreement based on the closing price of Yahoo! common stock on July 11, 2003 represented:

        Goldman Sachs reviewed the historical stock prices for Overture common stock and Yahoo! common stock on the basis of their respective closing prices per share on July 11, 2003 and the respective period averages for the prior five days, 10 days, 20 days, 30 days, 60 days, 90 days, 180 days and one year. The following table presents:

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Date or Period
   Implied Exchange Ratio
   Premium Over Implied
Exchange Ratio
  
July 11, 2003   0.668 x 13 %
5 day average   0.639   19  
10 day average   0.599   27  
20 day average   0.575   32  
30 day average   0.579   31  
60 day average   0.542   40  
90 day average   0.588   29  
180 day average   1.008   (25 )
1 year average   1.294   (41 )

        Goldman Sachs calculated various financial ratios based on the merger consideration to be received by the holders of Overture common stock pursuant to the merger agreement, information it obtained from SEC filings, estimates of Overture's revenues, earnings before interest, taxes, depreciation and amortization, or EBITDA, and earnings per share, or EPS, for calendar year 2003 and 2004 prepared by Overture management and selected Wall Street research estimates. For purposes of the multiples analyses summarized below, the stock portion of the per share merger consideration was valued based on the closing market price of the Yahoo! common stock as of July 11, 2003. Using Overture management estimates:

        Using selected Wall Street research estimates:

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        Goldman Sachs reviewed and compared certain financial information for Overture and Yahoo! to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the Internet industry:

Internet Search Companies
   Other Internet Companies
Ask Jeeves, Inc.   AOL Time Warner Inc.
DoubleClick Inc.   eBay Inc.
FindWhat.com   Microsoft Corporation
LookSmart, Ltd.   InterActiveCorp

        Although none of the selected companies is directly comparable to Overture and Yahoo!, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of Overture and Yahoo!.

        Goldman Sachs also calculated and compared various financial multiples and ratios based on financial data as of July 11, 2003, information it obtained from SEC filings and Institutional Brokers Estimate System, or IBES, estimates. The multiples and ratios of Overture, Yahoo! and the selected companies were calculated using their respective closing prices on July 11, 2003 and IBES estimates. With respect to the selected companies, Goldman Sachs calculated:

        The results of these analyses are summarized as follows:

 
   Selected Internet Search
Companies
   Other Selected Internet
Companies
    
    
 
   Overture
   Yahoo!
 
   Range
   Median
   Range
   Median
Levered Market Capitalization as a multiple of:                        
  Estimated CY 2003 Revenue   2.2x-10.4x   6.0x   2.5x-17.4x   6.1x   1.3x   15.5x
  Estimated CY 2004 Revenue   1.6x-6.4x   3.6x   2.4x-12.4x   5.6x   1.0x   11.8x
  Estimated CY 2003 EBITDA   17.4x-41.2x   29.9x   11.4x-48.7x   18.3x   13.1x   52.6x
  Estimated CY 2004 EBITDA   13.8x-24.2x   18.6x   10.6x-35.6x   15.4x   9.4x   35.9x
Ratio of stock price to:                        
  Estimated CY 2003 EPS   48.9x-95.7x   75.1x   26.0x-76.9x   45.2x   55.2x   97.5x
  Estimated CY 2004 EPS   35.4x-61.1x   39.7x   24.7x-53.8x   36.6x   31.2x   67.1x
5 Year EPS CAGR   20%-49%   28.8%   10%-45%   17%   20%   30%
CY 2004 PEG   0.7x-3.1x   1.4x   1.2x-3.2x   2.0x   1.6x   2.2x

        Goldman Sachs performed a discounted cash flow analysis on Overture using certain estimates developed by Overture management. Goldman Sachs calculated implied net present values of free cash

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flows for Overture for the six months ended December 31, 2003 and the years 2004 through 2007 using discount rates ranging from 12% to 24%. Goldman Sachs calculated illustrative implied terminal values in the year 2007 based on multiples ranging from 6.0x EBITDA to 10.0x EBITDA. These implied terminal value indications were then discounted to an implied present value as of June 30, 2003, using discount rates ranging from 12% to 24%. This analysis indicated an illustrative range of implied present values of $12.24 to $23.38 per share of Overture common stock.

        Goldman Sachs performed a sensitivity analysis to the discounted cash flow analysis by applying certain ranges of deviations to the annual sales growth estimates and earnings before interest and taxes, or EBIT, margin estimates of Overture's management. The sensitivity analysis assumed a discount rate of 18% and a terminal value multiple of estimated EBITDA of 8.0x. The annual sales growth deviations ranged from (10.0)% to 10.0% and the EBIT margin deviations ranged from (3.0)% to 3.0%. This analysis indicated an illustrative range of implied present values of $10.03 to $27.75 per share of Overture common stock.

        Goldman Sachs also performed a sensitivity analysis to the discounted cash flow analysis based on different levels of Overture's success in attracting and retaining its commercial affiliates in future years. The sensitivity analysis assumed a discount rate of 18% and a terminal value multiple of estimated EBITDA of 8.0x. This analysis indicated an illustrative range of implied present values of $14.02 to $21.97 per share of Overture common stock.

        Goldman Sachs also considered Overture's enterprise value, which is the market value of its common equity plus the book value of debt less cash, as a multiple of its last twelve months, or LTM, EBITDA as of July 11, 2003 and for the latest 30 day, 60 day and 180 day periods. This analysis indicated:

        Goldman Sachs performed a discounted cash flow analysis on Yahoo! using certain estimates developed by Overture management. Goldman Sachs calculated implied net present values of free cash flows for Yahoo! for the six months ended December 31, 2003 and the years 2004 through 2007 using discount rates ranging from 12% to 20%. Goldman Sachs calculated illustrative implied terminal values in the year 2007 based on multiples ranging from 10.0x EBITDA to 20.0x EBITDA. These implied terminal value indications were then discounted to an implied present value as of June 30, 2003, using discount rates ranging from 12% to 20%. This analysis indicated an illustrative range of implied present values of $25.03 to $45.89 per share of Yahoo! common stock.

        Goldman Sachs performed a sensitivity analysis to the discounted cash flow analysis for Yahoo! by applying certain ranges of deviations to the annual revenue growth estimates and changes in contribution margin on revenue growth estimates relating to Yahoo! provided by Overture's management. The sensitivity analysis assumed a discount rate of 16% and a terminal value multiple of estimated EBITDA of 15.0x. The annual sales growth deviations ranged from (10.0)% to 10.0% and the contribution margin deviations ranged from (10.0)% to 10.0%. This analysis indicated a range of illustrative implied present values of $25.30 to $47.51 per share of Yahoo! common stock.

        Goldman Sachs also considered the enterprise value of Yahoo! as a multiple of its LTM EBITDA as of July 11, 2003 and for the latest 30 day, 60 day and 180 day periods. This analysis indicated:

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        Goldman Sachs performed a present value analysis of Overture's future share price using Overture management estimates. Goldman Sachs calculated illustrative implied future share prices of Overture common stock for year 2004 based on estimated price to earnings multiples of 17.5x and 22.5x and estimates of EPS ranging from $0.76 to $1.16 and illustrative implied share prices of Overture common stock for year 2005 based on estimated price to earnings multiples of 17.5x and 22.5x and estimates of EPS ranging from $0.95 to $1.35. These implied future share prices were then discounted to an implied present value as of June 30, 2003, using discount rates ranging from 12% to 24%. The results of this analysis are as follows:


        Goldman Sachs performed a sensitivity analysis to the present value of the future share price of Overture common stock in year 2005 based on different levels of Overture's success in attracting and retaining its commercial affiliates in future years. The sensitivity analysis assumed a discount rate of 18%, an estimated price to earnings multiple of 20 in year 2005 and estimates of EPS ranging from $0.84 to $1.70 in year 2005. This analysis indicated an illustrative range of implied present values of $12.06 to $24.43 per share of Overture common stock.

        Goldman Sachs prepared pro forma analyses of the financial impact of the merger using publicly available information, estimates prepared by Overture management and selected Wall Street research estimates. Using Overture management estimates for both Overture and Yahoo!, for each of the fiscal years 2004 and 2005, Goldman Sachs analyzed the impact of the transaction on Yahoo!'s estimated EPS (excluding intangible write-up amortization impact or additional write-up depreciation) and estimated EBITDA. For each of the years 2004 and 2005, Goldman Sachs compared the estimated EPS and EBITDA of Yahoo! on a stand-alone basis to the estimated EPS and EBITDA of the combined company. Based on that analysis, the proposed merger would be:

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        Using selected Wall Street research estimates for Overture and Yahoo!, for each of the fourth fiscal quarter of fiscal year 2003 and fiscal years 2004 and 2005, Goldman Sachs analyzed the impact of the transaction on Yahoo!'s estimated EPS (excluding intangible write-up amortization impact or additional write-up depreciation) and estimated EBITDA. For each of the fourth quarter of fiscal year 2003 and years 2004 and 2005, Goldman Sachs compared the estimated EPS and EBITDA of Yahoo! on a stand-alone basis to the estimated EPS and EBITDA of the combined company. Based on that analysis, the proposed merger would be:

        The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company used in the above analyses as a comparison is directly comparable to Overture or Yahoo!.

        The analyses summarized above do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Overture, Yahoo!, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

        As described above, Goldman Sachs' opinion to Overture's board of directors was one of many factors taken into consideration by Overture's board of directors in making its determination to approve the contemplated transaction. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex E to this proxy statement/prospectus.

        Goldman Sachs, as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities and private placements as well as for estate, corporate and other purposes. Goldman Sachs has acted as financial advisor to Overture in connection with, and has participated in certain of the negotiations leading to, the merger agreement. In addition, Goldman Sachs has provided certain investment banking services to Overture from time to time, including having acted as its financial advisor in connection with its acquisition of the business of AltaVista Company, a subsidiary of CMGI, Inc., in February 2003. Goldman Sachs also has provided certain investment banking services to Yahoo! from time to time, including having acted as Yahoo!'s financial advisor in connection with its acquisition of HotJobs.com, Ltd., in February 2002. Goldman Sachs also may provide investment

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banking services to Yahoo! in the future. In connection with the above-described investment banking services Goldman Sachs has received, and may receive, compensation.

        The Overture board of directors selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the contemplated transaction.

        Goldman Sachs provides a full range of financial advisory, financing and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold long and short positions in securities, including derivative securities, of Overture or Yahoo! for its own account and for the accounts of customers.

        Pursuant to a letter agreement dated November 27, 2002, Overture engaged Goldman Sachs to act as its financial advisor in connection with the contemplated transaction. Pursuant to the terms of this engagement letter, Overture has agreed to pay Goldman Sachs a transaction fee equal to 0.65% of the aggregate consideration paid in the merger, which is payable upon consummation of the merger. In addition, Overture has agreed to reimburse Goldman Sachs for its reasonable expenses, including attorneys' fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Yahoo!'s Reasons for the Merger

        Yahoo! believes that its proposed acquisition of Overture is a natural extension of Yahoo!'s robust brand advertising business and supports its mission to be the most relevant and essential Internet service for users and businesses worldwide. Yahoo! is acquiring Overture for the following reasons:

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Interests of Overture Directors and Executive Officers in the Merger

        In considering the recommendation of Overture's board of directors that you, as an Overture stockholder, vote to approve and adopt the merger agreement and approve the merger, you should be aware that some of Overture's executive officers and directors have interests in the transaction that are different from, or in addition to, your interests as an Overture stockholder. The Overture board of directors was aware of these interests and took these interests into account in approving the merger agreement and the merger. These interests are summarized below.

        Overture has entered into change of control severance agreements with Ted Meisel, Todd Tappin, Brian Steel, Leonard R. Stein and Jaynie Studenmund, who are executive officers of Overture. The merger constitutes a change of control for purposes of these agreements. However, Mr. Meisel has agreed to waive the benefits to which he is entitled under the change of control severance agreement in favor of benefits to be received through his acceptance of an offer of employment by Yahoo!, described below. Thus, he will not be entitled to receive any payments or benefits under his change of control severance agreement with Overture if the merger is completed. See the section entitled "—Yahoo! Offer of Employment to Ted Meisel" beginning on page 76 of this proxy statement/prospectus.

        These change in control severance agreements provide that, in the event of the executive's "involuntary termination" without "cause" within eighteen months after a change of control of Overture, the executive will be entitled to:

        The change of control severance agreements generally define an "involuntary termination" as any of the following events that occur without the executive's express written consent:

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        The change of control severance agreements generally define "cause" as any of the following events:

        The change of control severance agreements provide that if payments to an executive are "parachute payments" under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and subject to excise tax under Code Section 4999, the payments will be reduced to a level that will not be subject to the excise tax if such reduced payments would result in a greater after-tax benefit to the executive.

        In the event that a non-employee director's membership on Overture's board of directors terminates within twelve months following a change of control of Overture, any stock options previously granted by Overture and held by such director will vest in full and be immediately exercisable. The merger constitutes a change of control for this purpose. In addition, pursuant to the restricted stock purchase agreement entered into between Overture and those directors that receive restricted stock, in the event that any such director ceases to be a member of the board of directors within twelve months following a change of control of Overture, such as the merger, any shares of restricted stock subject to repurchase by Overture held by such director will be released from such repurchase option in full. None of the current directors of Overture is expected to remain a director of Overture following the merger, and accordingly all stock options owned by the non-employee directors will vest and become immediately exercisable, and all shares of restricted stock held by the non-employee directors will be released from the repurchase option in full following the completion of the merger. As of the record date, the non-employee directors of Overture owned a total of     •    options and    •    shares of restricted stock.

        In connection with the proposed merger, Ted Meisel, Overture's President and Chief Executive Officer, accepted a written offer from Yahoo! to continue employment following the merger as President of Overture (which will be a wholly-owned subsidiary of Yahoo! following the merger) and Senior Vice President of Yahoo!. This offer of employment is conditioned upon the completion of the merger.

        Pursuant to the terms of the offer of employment, Mr. Meisel's annual base salary will be $375,000, which is subject to review during Yahoo!'s focal review cycle. For calendar year 2004, Mr. Meisel will be eligible for an annual executive incentive bonus of not less than 100% of his starting annual base salary for 2004, payable in the first quarter of 2005. The payment of this incentive bonus is conditioned on Mr. Meisel's continued employment until the payment of such bonus, and the bonus

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amount may be increased based upon Mr. Meisel's individual performance and the performance of Overture. In the event Overture does not pay Mr. Meisel a bonus for which he is eligible in calendar year 2003, Yahoo! may make a special bonus payment, solely at the discretion of Yahoo!, to Mr. Meisel. In the event that Overture pays Mr. Meisel a pro-rated portion of his 2003 bonus prior to his commencement of employment with Yahoo! then Yahoo!, in its discretion, may award him a pro-rated bonus under the executive incentive plan of Yahoo! for the remainder of 2003, which would be payable in the first quarter of 2004.

        Upon the closing of the merger and subject to Mr. Meisel's continuing employment, Yahoo! management will propose to the compensation committee of the board of directors of Yahoo! that Mr. Meisel be granted 80,000 shares of restricted stock. Of these 80,000 shares, 35,000 shares will become non-forfeitable upon satisfaction of certain pre-established performance objectives determined at the time of grant, and consistent with other senior executives of Yahoo! with financial targets similar to other senior executives within Mr. Meisel's business unit, subject to Mr. Meisel remaining employed by Yahoo! at the time the performance goals are satisfied. However, if such objectives are satisfied prior to the first anniversary of the date of grant of the restricted stock, then the 35,000 shares will become non-forfeitable on the first anniversary of the date of grant, subject to Mr. Meisel remaining employed by Yahoo! at that time. The remaining 45,000 shares will become non-forfeitable on the third anniversary of the date of grant, subject to Mr. Meisel remaining employed by Yahoo! at that time.

        Additionally, Yahoo! management will recommend that the compensation committee of the board of directors of Yahoo! grant Mr. Meisel an option to purchase 150,000 shares of Yahoo! common stock. The exercise price per share will be the fair market value of Yahoo! common stock on the date of grant, and the stock options will vest as to one-third of the shares subject to the option on the first anniversary of the date of grant and in quarterly installments over the following two years, subject in each case to Mr. Meisel remaining employed by Yahoo! at the time of vesting.

        In the event Mr. Meisel's employment is terminated by Yahoo! or Overture without cause before the expiration of twelve months following his first day of employment, he will be entitled to receive the following:

        In the event Mr. Meisel's employment is terminated without cause after the expiration of twelve months but prior to the expiration of eighteen months from the first day of his employment, he will be entitled to receive the benefits and payments described above with the exception of the $375,000 lump-sum payment.

        Mr. Meisel will also be entitled to the benefits described above if during the applicable period there is:

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        "Cause" is defined as:

        The payments and benefits described above that are triggered upon Mr. Meisel's termination of employment with Yahoo! are conditioned upon Mr. Meisel signing a release of claims. Such payments and benefits will be reduced by any severance owed by Yahoo! or Overture, including any payments required by applicable law.

        The offer of employment from Yahoo! supersedes any and all prior agreements Mr. Meisel may have with Overture with respect to his employment and severance rights, including, but not limited to, Mr. Meisel's change of control severance agreement with Overture. As a result, Mr. Meisel will not be entitled to receive any payments or benefits pursuant to the change of control severance agreement between him and Overture if the merger is completed.

        Yahoo! will, and has agreed to cause the company surviving the merger to, honor all of the indemnification obligations of Overture to its directors, officers and employees that exist immediately prior to completion of the merger, whether pursuant to Overture's certificate of incorporation, Overture's bylaws or an indemnification agreement previously disclosed to Yahoo!. For six years after the completion of the merger, the certificate of incorporation and bylaws of the company surviving the merger will contain provisions with respect to exculpation and indemnification that are at least as favorable to the directors, officers and employees who were indemnified by Overture immediately prior to completion of the merger as the exculpation and indemnification provisions that were contained in the restated certificate of incorporation and bylaws of Overture in effect at the time the merger agreement was executed. The certificate of incorporation and bylaws of each of Yahoo! and Overture generally provide the directors and officers of the respective companies indemnification to the fullest extent permitted by applicable law.

        For a period of six years after the completion of the merger, Yahoo! also will cause the company surviving the merger to use all reasonable efforts to maintain directors' and officers' liability insurance covering those directors and officers of Overture who are currently covered by Overture's directors' and officers' liability insurance on terms comparable to those applicable to the current directors and officers. However, the company surviving the merger will not be required to pay, in total, an annual premium for the insurance described in this paragraph in excess of 150% of the current annual

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premium paid by Overture for its existing insurance coverage prior to the merger. If the annual premiums of such insurance coverage exceed that amount, the company surviving the merger will use all reasonable efforts to cause to be maintained the maximum amount of coverage as is available for 150% of the current annual premium.

        As a result of the interests described above, certain executive officers and directors of Overture may be more likely to vote for, and recommend a vote for, the proposal to approve and adopt the merger agreement and approve the merger, than Overture's stockholders generally or than they would if they did not hold these interests.

        In connection with the merger agreement, Yahoo! entered into voting agreements with each of Steve Alesio, Frank Biondi, Jr., William Elkus, Bill Gross, Balakrishnan Iyer, Terrell Jones, Robert Kavner, Linda Fayne Levinson, Ted Meisel and Idealab, who with the exception of Idealab, are Overture directors. For a discussion of these voting agreements, see the section entitled "Voting Agreements" beginning on page 104 of this proxy statement/prospectus.

Material United States Federal Income Tax Consequences

        In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP and Wilson Sonsini Goodrich & Rosati, Professional Corporation, the following summary discusses the material United States federal income tax consequences of the merger applicable to a holder of shares of Overture common stock (the "Shares") that converts such Shares into cash and Yahoo! common stock (the "Merger Consideration") pursuant to the merger. This discussion is based upon the Code, Treasury Regulations, judicial authorities, published positions of the Internal Revenue Service (the "IRS") and other applicable authorities, all as in effect on the date of this document and all of which are subject to change or differing interpretations (possibly with retroactive effect). This discussion is limited to United States residents and citizens that hold their Shares as capital assets for United States federal income tax purposes (generally, assets held for investment). This discussion does not address all of the tax consequences that may be relevant to a particular holder of Shares, including non-U.S. holders or holders who exercise appraisal rights, or to a holder of Shares that is subject to special treatment under United States federal income tax laws. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences set forth below.

HOLDERS OF SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER, AS WELL AS THE EFFECTS OF STATE, LOCAL AND NON-UNITED STATES TAX LAWS.

        Under the terms of the merger agreement, July 2003 Merger Corp. will merge with and into Overture (the "Reverse Merger"), if the Reverse Merger would satisfy the opinion condition, as discussed below under the heading "Opinion Condition", that the Reverse Merger qualify as a "reorganization" within the meaning of Section 368(a) of the Code. If the Reverse Merger would not satisfy such opinion condition, then Overture will merge with and into July 2003 Merger Corp. (the "Forward Merger"), subject to the same opinion condition. The qualification of the Reverse Merger or the Forward Merger as a reorganization will result in the following United States federal income tax consequences:

        A holder of Shares that has Shares converted into Merger Consideration pursuant to the merger will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of cash received

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pursuant to the merger and (2) an amount equal to the excess, if any, of (a) the sum of the amount of cash received pursuant to the merger and the fair market value of the Yahoo! common stock received pursuant to the merger over (b) the holder's tax basis in its Shares surrendered in exchange therefor. For this purpose, a holder of Shares must calculate gain or loss separately for each identifiable block of Shares exchanged by such stockholder, and a holder of Shares cannot offset a loss recognized on one block of such shares against a gain recognized on another block of such shares. The gain recognized will be capital gain unless the receipt of cash by the holder has the effect of a distribution of a dividend, in which case such gain will be treated as ordinary dividend income to the extent of the holder's ratable share of accumulated earnings and profits as calculated for United States federal income tax purposes. For purposes of determining whether the receipt of cash by the holder has the effect of a distribution of a dividend, a holder will be treated as if the holder first exchanged all of its Shares solely for Yahoo! common stock and then Yahoo! immediately redeemed a portion of such stock for the cash that such holder actually received pursuant to the merger. The IRS has indicated in rulings that any reduction in the interest of a minority stockholder that owns a small number of shares in a publicly and widely held corporation and that exercises no control over corporate affairs would result in capital gain (as opposed to dividend) treatment. In determining the interest of a stockholder in a corporation, certain constructive ownership rules must be taken into account. Any capital gain will be long-term if the holder's holding period for its Shares is more than one year.

        A holder of Shares will have an aggregate tax basis in Yahoo! common stock received pursuant to the merger (other than a fractional share) equal to the holder's aggregate tax basis in its Shares surrendered pursuant to the merger, (1) reduced by (a) the portion of the holder's tax basis in its Shares surrendered in the merger that is allocable to a fractional share of Yahoo! common stock for which cash is received and (b) the amount of cash received by the holder pursuant to the merger (other than cash received in lieu of a fractional share), and (2) increased by the amount of gain (including any portion of such gain that is treated as a dividend as described above), if any, recognized by the holder in the merger (but not by gain recognized upon the receipt of cash in lieu of a fractional share of Yahoo! common stock).

        The holding period for Yahoo! common stock received by a holder of Shares pursuant to the merger will include the holding period of the Shares surrendered in the merger.

        If a holder of Shares receives cash in lieu of a fractional share of Yahoo! common stock in the merger, the holder will generally recognize capital gain or loss equal to the difference between the amount of cash received in lieu of the fractional share and the portion of the holder's tax basis in its Shares surrendered in the merger that is allocable to the fractional share. The capital gain or loss will be long-term if the holder's holding period for the portion of the Shares deemed exchanged for the fractional share is more than one year.

        No gain or loss will be recognized by Yahoo!, July 2003 Merger Corp., or Overture as a result of the merger.

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        The completion of the merger is conditioned upon the delivery of an opinion by each of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Yahoo!, and Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to Overture, that the merger will constitute a reorganization for United States federal income tax purposes within the meaning of Section 368(a) of the Code. Yahoo! and Overture expect to be able to obtain the tax opinions if, as expected:

        Neither Yahoo! nor Overture will request a ruling from the IRS regarding the tax consequences of the merger to Overture stockholders. The tax opinions do not bind the IRS and do not prevent the IRS from asserting, or a court from sustaining, a position contrary to such tax opinions. In addition, if any of the representations or assumptions upon which the opinions are based are inconsistent with the actual facts, the tax consequences of the merger could be adversely affected. The determination by counsel as to whether the proposed merger will be treated as a "reorganization" within the meaning of Section 368(a) of the Code will depend upon the facts and law existing at the effective time of the proposed merger. It is possible that Yahoo! and Overture will not be able to obtain the tax opinions.

Accounting Treatment of the Merger

        In accordance with United States generally accepted accounting principles, Yahoo! will account for the merger using the purchase method of accounting. Under this method of accounting, Yahoo! will record the market value (based on an average of the closing prices of Yahoo! common stock for a range of trading days from two days before and after July 14, 2003, the announcement date) of its common stock issued in connection with the merger, the amount of cash consideration to be paid to holders of Overture common stock, the fair value of the options to purchase shares of Overture common stock assumed in connection with the merger and the amount of direct transaction costs associated with the merger as the estimated purchase price of acquiring Overture. Yahoo! will allocate the estimated purchase price to the net tangible and amortizable intangible assets acquired (including developed and core technology and patents, advertiser contracts and lists, and affiliate agreements), based on their respective fair values at the date of the completion of the merger. Any excess of the estimated purchase price over those fair values will be accounted for as goodwill.

        Amortizable intangible assets, currently estimated at $322 million, will generally be amortized over useful lives not exceeding five years, resulting in an estimated accounting charge for amortization attributable to these items of approximately $76 million on an annual basis. Goodwill resulting from the business combination will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). The amount of the estimated purchase price allocated to goodwill which is based on certain assumptions, is estimated to be approximately

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$1.2 billion. If Yahoo! management should change the assumptions used in the allocation of the purchase price, amounts allocated to intangible assets with definite lives may increase significantly, which could result in a material increase in amortization of intangible assets.

        In the event that the management of the combined company determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made. The amounts listed in the above paragraph are only preliminary estimates, however, actual amounts may differ from these estimates.

Effect of the Merger on Overture Stock Options

        When the merger is completed, Yahoo! will assume outstanding options to purchase shares of Overture common stock granted to employees, consultants and non-employee directors under Overture's 1998 Stock Plan, the Cadabra Inc. 1998 Stock Option Plan, and any other stock option plan, program or agreement of Overture or its subsidiaries except for options outstanding under Overture's employee stock purchase plan, and will convert these options into options to purchase shares of Yahoo! common stock. The assumed options will have the same terms and conditions (including vesting schedules and option periods) under the plans from which they were granted prior to their assumption, adjusted as necessary to reflect the substitution of Yahoo! stock for Overture stock. Prior to the effective time of the merger, the Overture employee stock purchase plan will be terminated. Any offering period then underway under the Overture employee stock purchase plan will be shortened by setting a new exercise date that is prior to the effective time of the merger, and each participant's option to purchase Overture common stock under the employee stock purchase plan will be exercised automatically on the new exercise date. See the sections entitled "—Treatment of Overture Stock Options" and "—Treatment of Rights under the Overture Employee Stock Purchase Plan" beginning on page 94.

        Yahoo! intends to file a registration statement on Form S-8 with the Securities and Exchange Commission to the extent available and applicable as soon as practicable following the completion of the merger but not later than 20 business days following the completion of the merger in connection with the shares underlying the assumed and outstanding Overture options.

        With respect to restricted stock awards that are unvested or are subject to a repurchase option, risk of forfeiture or other conditions under Overture's stock plans or any applicable restricted stock agreement or other agreement with Overture, then (i) the shares of Yahoo! common stock issued in exchange for these shares will also be unvested and subject to the same repurchase option, risk of forfeiture or other conditions and (ii) the per share cash consideration in respect of these shares will be paid to the holder of the restricted stock award over time upon satisfaction of the vesting requirements associated with the applicable restricted stock schedule.

        With respect to grants to each non-employee director under Overture's 2001 and 2002 director compensation programs, options (which were granted under Overture's 1998 Stock Plan) will become exercisable and vested, and restrictions on grants of restricted stock will lapse, in each case, upon such non-employee director ceasing to be a member of Overture's board of directors within 12 months following the merger. None of the current directors of Overture is expected to remain a director of Overture following the merger, and accordingly all stock options owned by the non-employee directors are expected to vest and be immediately exercisable and all shares of restricted stock held by the non-employee directors will be released from the repurchase option in full following the completion of the merger. See the section entitled "—Interests of Overture Directors and Executive Officers in the Merger—Non-Employee Directors' Options and Restricted Stock" beginning on page 76 of this proxy statement/prospectus.

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        Overture has entered into change of control severance agreements with certain of its employees, including its executive officers, and Yahoo! has entered into an agreement with Mr. Meisel, the benefits of which supersede his change of control severance agreement with Overture. Under these various agreements, if the employee's employment is terminated for certain reasons within a period of time following the merger, some or all of the employee's options will accelerate and remain exercisable for specified periods and some or all restrictions on restricted stock will lapse. For a description of the agreements with the executive officers, see the section entitled "—Change of Control Severance Agreements" beginning on page 75 of this proxy statement/prospectus.

Regulatory Filings and Approvals Required to Complete the Merger

        The merger is subject to review by the United States Federal Trade Commission, or FTC, and the Antitrust Division of the United States Department of Justice, or DOJ, under the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, under which a transaction cannot be completed until required information and materials are furnished to the DOJ and the FTC and the waiting period under the HSR Act expires or is terminated. Yahoo! and Overture are required to make filings with the DOJ and the FTC, and will not be permitted to complete the merger until the applicable waiting period has expired or has been terminated. In addition, the Overture acquisition may also be subject to review by the governmental authorities of various other jurisdictions under the antitrust laws of those jurisdictions.

        There can be no assurance that the governmental reviewing authorities will permit the applicable statutory waiting periods to expire, terminate the applicable statutory waiting periods or clear the merger at all or without restrictions or conditions that would have a materially adverse effect on the combined company if the merger is completed. These restrictions and conditions could include a complete or partial license, divestiture, spin-off or the holding separate of assets or businesses.

        In addition, during or after the statutory waiting periods and clearance of the merger, and even after completion of the merger, either the DOJ, the FTC or other governmental authorities could challenge or seek to block the merger under the antitrust laws, as it deems necessary or desirable in the public interest. Other competition agencies with jurisdiction over the merger could also initiate action to challenge or block the merger. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin the merger, before or after it is completed. Yahoo! and Overture cannot be sure that a challenge to the merger will not be made or that, if a challenge is made, Yahoo! and Overture will prevail.

Listing of Shares of Yahoo! Common Stock Issued in the Merger on the Nasdaq National Market

        Yahoo! will use all reasonable efforts to cause the shares of Yahoo! common stock issued in connection with the merger to be authorized for listing on the Nasdaq National Market before the completion of the merger, subject to official notice of issuance.

Delisting and Deregistration of Overture Common Stock After the Merger

        When the merger is completed, Overture common stock will be delisted from the Nasdaq National Market and deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Restrictions on Sales of Shares of Yahoo! Common Stock Received in the Merger

        The shares of Yahoo! common stock to be issued in connection with the merger will be registered under the Securities Act of 1933 and will be freely transferable, except for shares of Yahoo! common stock issued to any person who is deemed to be an "affiliate" of Overture prior to the merger. Persons who may be deemed to be "affiliates" of Overture prior to the merger include individuals or entities

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that control, are controlled by, or are under common control of Overture, prior to the merger, and may include officers and directors, as well as principal stockholders of Overture, prior to the merger. Affiliates of Overture will be notified separately of their affiliate status.

        Persons who may be deemed to be affiliates of Overture prior to the merger may not sell any of the shares of Yahoo! common stock received by them in connection with the merger except pursuant to:

        Yahoo!'s registration statement on Form S-4, of which this proxy statement/prospectus forms a part, does not cover the resale of shares of Yahoo! common stock to be received in connection with the merger by persons who may be deemed to be affiliates of Overture prior to the merger.

Appraisal Rights

        Even if the merger is approved by Overture's stockholders, any Overture stockholder who does not vote in favor of the merger and who has previously taken necessary steps under Delaware law may exercise rights of appraisal under Delaware law, rather than receive the merger consideration in the merger.

        The provisions of Delaware law governing appraisal rights are complex, and you should study them carefully if you wish to exercise appraisal rights. A stockholder may take actions that prevent that stockholder from successfully asserting these rights, and multiple steps must be taken to properly perfect the rights. A copy of Section 262 of the Delaware General Corporation Law is attached to this proxy statement/prospectus as Annex F. A detailed discussion of appraisal rights under Delaware law is contained in the section entitled "Appraisal Rights" beginning on page 122 of this proxy statement/ prospectus.

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THE MERGER AGREEMENT

        The following summary describes the material provisions of the merger agreement. The provisions of the merger agreement are complicated and not easily summarized. This summary may not contain all of the information about the merger agreement that is important to you. The merger agreement is attached to this proxy statement/prospectus as Annex A and is incorporated by reference into this proxy statement/prospectus, and we encourage you to read it carefully in its entirety for a more complete understanding of the merger agreement.

        The merger agreement provides for the merger of July 2003 Merger Corp., a newly formed, wholly-owned subsidiary of Yahoo!, with and into Overture with Overture surviving the merger as a wholly-owned subsidiary of Yahoo! or, if necessary in connection with the delivery of tax opinions to the effect that the merger will qualify as a reorganization for federal income tax purposes, the merger of Overture with and into July 2003 Merger Corp. with July 2003 Merger Corp. surviving the merger as a wholly-owned subsidiary of Yahoo!. If July 2003 Merger Corp. survives the merger, it will be renamed "Overture Services, Inc."

        We will complete the merger when all of the conditions to completion of the merger contained in the merger agreement described in the section entitled "—Conditions to Completion of the Merger" beginning on page 97 of this proxy statement/prospectus are satisfied or waived, including approval and adoption of the merger agreement and approval of the merger by the stockholders of Overture. The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware.

        We are working to complete the merger as quickly as possible. We currently plan to complete the merger in the fourth quarter of 2003. Because completion of the merger is subject to governmental and regulatory approvals and other conditions, however, we cannot predict the exact timing of the merger or whether the merger will occur at all.

        Upon completion of the merger, each share of Overture common stock (including, with respect to each share of Overture common stock, the associated preferred stock purchase right described in the section entitled "—Stockholder Rights Plan" beginning on page 120 of this proxy statement/prospectus) outstanding immediately prior to the effective time of the merger (other than shares held by holders seeking dissenters' rights, which will be treated as described in "—Dissenting Shares" below) will be canceled and extinguished and automatically converted into the right to receive 0.6108 of a share of Yahoo! common stock (including, with respect to each whole share of Yahoo! common stock issued, the associated preferred stock purchase right described in the section entitled "—Stockholder Rights Plan" beginning on page 120 of this proxy statement/prospectus) and $4.75 in cash upon surrender of the certificate representing such share of Overture common stock in the manner provided in the merger agreement. Upon completion of the merger, Yahoo! also will assume outstanding options to purchase Overture common stock as described in the section entitled "—Treatment of Overture Stock Options" beginning on page 94 of this proxy statement/prospectus.

        The merger consideration (i.e., 0.6108 of a share of Yahoo! common stock and $4.75 in cash for each share of Overture common stock) also will be adjusted to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Yahoo! common stock or Overture common stock), reorganization, recapitalization, reclassification or other like change with respect to Yahoo! common stock or Overture common stock having a record

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date on or after July 14, 2003 and prior to completion of the merger. The merger consideration will also be adjusted to reflect the effect of any declaration, payment or distribution by Yahoo! of any dividend or distribution (whether in cash or other property) in respect of Yahoo! common stock having a record date on or after July 14, 2003 and prior to completion of the merger.

        Each share of Overture common stock held by Overture or owned by Yahoo! or any of their direct or indirect wholly-owned subsidiaries immediately prior to the merger will be automatically canceled and extinguished, and none of Overture, Yahoo! or any of their direct or indirect subsidiaries will receive any securities of Yahoo! or other consideration in exchange for those shares.

        Based on the exchange ratio and the number of shares of Overture common stock and options to purchase Overture common stock outstanding as of the record date, a total of approximately     •    shares of Yahoo! common stock will be issued in connection with the merger to holders of Overture common stock and a total of approximately    •    shares of Yahoo! common stock will be reserved for issuance upon the exercise of options to purchase Overture common stock assumed by Yahoo! in connection with the merger.

        Yahoo! will not issue any fractional shares of common stock in connection with the merger. Instead, each holder of Overture common stock exchanged in connection with the merger who would otherwise be entitled to receive a fraction of a share of common stock of Yahoo! will receive cash, without interest, in an amount equal to the fraction multiplied by the average closing sale price of one share of Yahoo! common stock for the ten most recent trading days that Yahoo! common stock has traded ending on the trading day one day prior to the date the merger is completed, as reported on the Nasdaq National Market.

        Promptly following completion of the merger, Yahoo! will cause              •              , the exchange agent for the merger, to mail to each record holder of Overture common stock a letter of transmittal and instructions for surrendering the record holder's stock certificates in exchange for a certificate representing Yahoo! common stock and the cash portion of the merger consideration. Those holders of Overture common stock who properly surrender their Overture stock certificates in accordance with the exchange agent's instructions will receive (1) the number of whole shares of Yahoo! common stock that the holder is entitled to receive pursuant to the merger agreement, (2) the cash portion of the merger consideration, (3) cash in lieu of any fractional share of Yahoo! common stock, and (4) any dividends or other distributions, if any, to which they are entitled under the terms of the merger agreement. The surrendered certificates representing Overture common stock will be canceled. After the effective time of the merger, each certificate representing shares of Overture common stock that has not been surrendered will represent only the right to receive each of items (1) through (4) enumerated in this paragraph. Following the completion of the merger, Overture will not register any transfers of Overture common stock on its stock transfer books.

        Holders of Overture common stock should not send in their Overture stock certificates until they receive a letter of transmittal from     •    , the exchange agent for the merger, with instructions for the surrender of Overture stock certificates.

        Shares of Overture common stock outstanding immediately prior to completion of the merger that are held by a holder who has not voted in favor of the merger and who has demanded appraisal rights in accordance with the Delaware General Corporation Law (such shares being referred to as "dissenting shares") will not be converted into the right to receive the merger consideration, unless the

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holder fails to perfect, withdraws or is otherwise deemed not to have appraisal rights. If after the completion of the merger the holder of such shares fails to perfect, withdraws or loses its right to appraisal, or if it is determined that such holder does not have appraisal rights, then such shares will be treated as if they had been converted at the completion of the merger into the right to receive the merger consideration. See the section entitled "Appraisal Rights" beginning on page 122 of this proxy statement/prospectus for more information regarding dissenting shares.

        Holders of Overture common stock are not entitled to receive any dividends or other distributions on Yahoo! common stock until the merger is completed. After the merger is completed, holders of Overture common stock will be entitled to dividends and other distributions declared or made after completion of the merger with respect to the number of whole shares of Yahoo! common stock which they are entitled to receive upon exchange of their Overture stock certificates, but they will not be paid any dividends or other distributions on the Yahoo! common stock until they surrender their Overture stock certificates to the exchange agent in accordance with the exchange agent instructions.

        Yahoo! will issue (1) shares of Yahoo! common stock, (2) cash consideration, (3) cash in lieu of a fractional share and (4) any dividends or distributions that may be payable in a name other than the name in which a surrendered Overture stock certificate is registered only if the person requesting such exchange presents to the exchange agent all documents required to show and effect the unrecorded transfer of ownership and to show that such person paid any applicable stock transfer taxes. If an Overture stock certificate is lost, stolen or destroyed, the holder of such certificate may need to deliver an affidavit or bond prior to receiving the merger consideration payable with respect to such stock.

        Overture made a number of representations and warranties to Yahoo! in the merger agreement regarding aspects of its business, financial condition and structure, as well as other facts pertinent to the merger, including representations and warranties relating to the following subject matters:

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        Yahoo! and July 2003 Merger Corp. each made a number of representations and warranties to Overture in the merger agreement, including representations and warranties relating to the following subject matters:

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        The representations and warranties contained in the merger agreement are complicated and not easily summarized. You are urged to read carefully Articles II and III of the merger agreement attached as Annex A entitled "Representations and Warranties of the Company" and "Representations and Warranties of Parent and Merger Sub."

        Under the merger agreement, Overture has agreed that, until the earlier of the completion of the merger or termination of the merger agreement, or unless Yahoo! consents in writing, it will use all reasonable efforts to carry on its business, in all material respects, in the usual, regular and ordinary course, in substantially the same manner as previously conducted, and will use all reasonable efforts to preserve intact its present business organization and continue to manage in the ordinary course its business relationships with third parties.

        Under the merger agreement, Overture has also agreed that, until the earlier of the completion of the merger or termination of the merger agreement, or unless Yahoo! consents in writing, it will conduct its business in compliance with a number of specific restrictions and will not (and not permit its subsidiaries to), subject to specified exceptions:

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        Under the terms of the merger agreement, subject to certain exceptions described below, Overture has agreed that it will not, and each of its subsidiaries, officers and directors and the officers and directors of its subsidiaries will not, directly or indirectly:

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        In addition, Overture agreed to use all reasonable efforts to cause its and its subsidiaries' employees, agents and representatives (including any retained investment banker, attorney or accountant) not to do any of the foregoing.

        An acquisition proposal is any offer or proposal relating to any transaction or series of related transactions (other than the merger) involving:

        Under the merger agreement, Overture agreed to cease, as of July 14, 2003, all then-existing activities, discussions or negotiations by Overture and its subsidiaries with any third parties with respect to any acquisition proposal.

        Overture is obligated to promptly notify Yahoo! orally and in writing upon receipt of any type of acquisition proposal described above or any request for nonpublic information or inquiry it reasonably believes would lead to an acquisition proposal. The notice must include the material terms and conditions of the acquisition proposal, request or inquiry, the identity of the person or group making the acquisition proposal, request or inquiry and a copy of all written materials provided in connection with the acquisition proposal, request or inquiry. Following delivery of an initial notice to Yahoo!, Overture must also promptly notify Yahoo! orally and in writing of all information as is reasonably necessary to keep Yahoo! informed in all material respects of the status and details of the acquisition proposal, request or inquiry. Overture further agreed to generally provide Yahoo! with 48 hours' notice (or such lesser prior notice as is provided to the members of its board of directors) of any meeting of its board of directors at which its board of directors is reasonably expected to consider any acquisition proposal.

        Notwithstanding the prohibitions contained in the merger agreement with respect to the type of acquisition proposals described above, if Overture receives an unsolicited bona fide written acquisition proposal that its board of directors concludes in good faith, following the receipt of the advice of its outside legal counsel and its financial advisor, satisfies, or is reasonably likely to result in an acquisition proposal that satisfies, each of the following criteria that constitute a superior offer:

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then Overture may furnish nonpublic information to, and engage in negotiations with, the third party making the acquisition proposal, but only if and to the extent that its board of directors concludes in good faith, following the receipt of advice of its outside legal counsel, that failure to do so is reasonably likely to result in a breach of its fiduciary obligations under applicable law.

        In the event that Overture furnishes nonpublic information to a third party making an acquisition proposal, it is required to give Yahoo! concurrent written notice of such action and a copy of the information furnished to the potential third party acquiror. It also must enter into a confidentiality agreement with the third party on terms which are at least as restrictive as the terms contained in the confidentiality agreement entered into between Yahoo! and Overture. In addition, in the event that Overture enters into negotiations with a third party making an acquisition proposal, it is required to give Yahoo! concurrent written notice of its intention to enter into negotiations with the third party.

        Obligations of the Overture Board of Directors with Respect to Its Recommendation and Holding a Meeting of Its Stockholders

        Overture agreed to call, hold and convene a meeting of its stockholders as promptly as practicable after the registration statement of which this proxy statement/prospectus forms a part is declared effective by the Securities and Exchange Commission, and to use all reasonable efforts to solicit from its stockholders proxies in favor of the approval and adoption of the merger agreement and approval of the merger, and to take all other action necessary or advisable to secure the vote of its stockholders required by Nasdaq rules or the Delaware General Corporation Law to obtain such approvals. The Overture board of directors agreed to recommend the approval and adoption of the merger agreement and approval of the merger to its stockholders. Notwithstanding the Overture board of directors' obligations described in this paragraph, in response to a third party acquisition proposal deemed by the board of directors to be a superior offer, the board of directors of Overture may withhold, withdraw, amend or modify its recommendation to its stockholders in favor of the merger and, in the case of a superior offer that is a tender or exchange offer made directly to its stockholders, may recommend that its stockholders accept the tender or exchange offer if the following conditions are met:

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        After delivering notice of its intended change in recommendation, Overture must provide Yahoo! with a reasonable opportunity to make adjustments in the terms and conditions of the merger agreement and negotiate in good faith to enable Overture to proceed with its recommendation of the merger agreement and the merger to its stockholders. Regardless of whether the board of directors of Overture has received an acquisition proposal or has withheld, withdrawn, amended or modified its recommendation to its stockholders to vote "for" the proposal to approve and adopt the merger agreement and approve the merger, Overture is obligated under the terms of the merger agreement to call, give notice of, convene and hold a special meeting of its stockholders to consider and vote upon the proposal to approve and adopt the merger agreement and approve the merger. Overture is not permitted under the merger agreement to submit to the vote of its stockholders any third-party acquisition proposal, or propose to do so.

        Notwithstanding the obligations described in the preceding paragraphs, the Overture board of directors is permitted to take such actions so as to comply, solely to the extent required to comply, with its duties of disclosure and candor to its stockholders under applicable law. In addition, Overture and its board of directors may take and disclose to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act, provided, however, that the content of the disclosure is governed by the terms of the merger agreement and the Overture board of directors may not change its recommendation to stockholders to vote in favor of approval and adoption of the merger agreement and approval of the merger except in accordance with the procedures described in the preceding paragraphs.

        When the merger is completed, Yahoo! will assume outstanding options to purchase shares of Overture common stock. Under the terms of the merger agreement, these options will be converted into options to purchase shares of Yahoo! common stock. Each assumed Overture option will be converted into an option to purchase that number of shares of Yahoo! common stock equal to the number of shares of Overture common stock purchasable pursuant to the Overture option immediately prior to the effective time of the merger, multiplied by the option exchange ratio, rounded down to the nearest whole number of shares of Yahoo! common stock. The exercise price per share will be equal to the exercise price per share of Overture common stock divided by the option exchange ratio, rounded up to the nearest whole cent.

        The option exchange ratio is equal to:

        Each assumed option will be subject to all other terms and conditions set forth in the applicable documents evidencing each Overture option immediately prior to the effective time of the merger, including any repurchase rights or vesting provisions. As of the record date, options for approximately    •    shares of Overture common stock were outstanding in the aggregate under various Overture stock option plans.

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        The conversion of options that are intended to be "incentive stock options," as defined in Section 422 of the Code will be effected in a manner consistent with the applicable provisions of the Code for purposes of preserving incentive stock option treatment where appropriate.

        Yahoo! will file a registration statement on Form S-8 with the Securities and Exchange Commission, to the extent available and applicable, for the shares of Yahoo! common stock issuable with respect to Overture options assumed by Yahoo! in connection with the merger as soon as practicable after the merger but not later than 20 business days following completion of the merger.

        Overture's employee stock purchase plan permits eligible Overture employees to purchase Overture common stock at a discount pursuant to such employees' participation in the Overture employee stock purchase plan. Prior to the effective time of the merger, the Overture employee stock purchase plan will be terminated. Any offering period then underway under the Overture employee stock purchase plan will be shortened by setting a new exercise date under the employee stock purchase plan which is prior to the effective time of the merger, and each participant's option to purchase Overture common stock under the employee stock purchase plan will be exercised automatically on the new exercise date. Each shortened offering period will otherwise be treated as a fully effective and completed offering period for all purposes under the Overture employee stock purchase plan.

        If requested by Yahoo!, Overture will terminate its 401(k) savings plan prior to the effective time of the merger, and Overture employees will have the right to elect to receive a distribution of all or a portion of his or her account balance in the 401(k) savings plan in accordance with the plan and applicable law.

        In the merger agreement, Yahoo! has agreed to use all reasonable efforts to give continuing Overture employees credit for prior service with Overture or its subsidiaries for purposes of (1) eligibility and vesting under any Yahoo! employee benefit plan and (2) determination of benefits levels under any Yahoo! vacation or severance plan at which the employees are eligible to participate in following the effective time of the merger. However, if Overture maintains a comparable employee benefit, vacation or severance plan, then the employees will only be credited under the Yahoo! plan to the extent that service was or would have been credited under the comparable Overture plan. Yahoo! has agreed to give credit under its welfare benefit plans to continuing Overture employees for co-payments, credits toward deductibles and out-of-pocket maximums, and time accrued against applicable waiting periods, for the welfare plan year in which the merger occurs. Yahoo! has also agreed to waive the requirements for evidence of insurability and pre-existing conditions under Yahoo! benefit plans in which the employees are eligible to participate, but if Overture or any of its subsidiaries maintains a comparable benefit plan, only to the extent that the requirements and conditions were not applicable to a particular employee under such comparable benefit plan.

        Under the merger agreement, no Overture employee or other person or entity other than Overture has any rights of enforcement relating to the statements, and no Overture employee or other person or entity other than Overture is intended to be a contractual beneficiary of the statements.

        Yahoo! has agreed to cause the company surviving the merger to honor all of the indemnification obligations of Overture to its directors, officers and employees that exist immediately prior to

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completion of the merger, whether pursuant to Overture's certificate of incorporation, Overture's bylaws or an indemnification agreement previously disclosed to Yahoo!. For six years after the completion of the merger, the certificate of incorporation and bylaws of the company surviving the merger will contain provisions with respect to exculpation and indemnification that are at least as favorable to the directors, officers and employees who were indemnified by Overture immediately prior to completion of the merger as the exculpation and indemnification provisions that were contained in the restated certificate of incorporation and bylaws of Overture in effect at the time the merger agreement was executed.

        For a period of six years after the completion of the merger, Yahoo! also will cause the company surviving the merger to use all reasonable efforts to maintain directors' and officers' liability insurance covering those directors and officers of Overture who are currently covered by Overture's directors' and officers' liability insurance on terms comparable to those applicable to the current directors and officers. However, the company surviving the merger will not be required to pay, in total, an annual premium for the insurance described in this paragraph in excess of 150% of the current annual premium paid by Overture for its existing insurance coverage prior to the merger. If the annual premiums of such insurance coverage exceed that amount, the company surviving the merger will use all reasonable efforts to cause to be maintained the maximum amount of coverage as is available for 150% of such annual premium.

        Each of Yahoo!, July 2003 Merger Corp. and Overture agreed to coordinate and cooperate with one another and use all reasonable efforts to comply with, and refrain from actions that would impede compliance with, applicable laws, regulations and any other requirements of any governmental entity. Yahoo!, July 2003 Merger Corp. and Overture also agreed to make all filings and submissions required by any governmental entity in connection with the merger and the other transactions contemplated by the merger agreement including the following:


        Except as prohibited or restricted by applicable law, each of Yahoo!, July 2003 Merger Corp. and Overture generally agreed to do the following:

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        Subject to the provisions described in the sections entitled "—Overture Prohibited from Soliciting Other Offers" beginning on page 91 of this proxy statement/prospectus "—Obligations of the Overture Board of Directors with Respect to its Recommendation and Holding a Meeting of its Stockholders" beginning on page 93 of this proxy statement/prospectus and "Limitation on Reasonable Efforts to Obtain Regulatory Approvals" immediately following this paragraph, each of Yahoo! and Overture have agreed to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to complete and make effective the merger and the other transactions contemplated by the merger agreement in the most expeditious manner practicable.

        Neither Yahoo! nor Overture nor any of their respective subsidiaries or affiliates is required to litigate or agree to litigate against any governmental entity at any time after the termination of the merger agreement. In addition, neither Yahoo! nor Overture nor any of their respective subsidiaries or affiliates is required to take any of the following actions, if these actions would be reasonably likely to either materially and adversely impact the benefits expected to be derived by Yahoo! as a result of the merger or have a material adverse impact on the business of Overture and its subsidiaries as currently conducted or as contemplated to be conducted on a combined basis with Yahoo! and its subsidiaries following the merger:

        The respective obligations of Yahoo! and July 2003 Merger Corp., on the one hand, and Overture, on the other, to complete the merger and the other transactions contemplated by the merger agreement are subject to the satisfaction or waiver of each of the following conditions before completion of the merger:

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        In addition, individually, the respective obligations of Yahoo! and July 2003 Merger Corp. on the one hand, and Overture on the other, to effect the merger and the other transactions contemplated by the merger agreement are subject to the satisfaction or waiver of the following additional conditions:

        Yahoo!'s obligation to complete the merger is also subject to the satisfaction or waiver by Yahoo! of the following additional conditions:

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        Under the terms of the merger agreement, a material adverse effect on either Yahoo! or Overture is defined to mean any change, event, violation, inaccuracy, circumstance or effect, individually or when taken together with all other effects that have occurred during the applicable measurement period prior to the date of determination of the occurrence of the material adverse effect, that is or is reasonably likely to (a) be materially adverse to the business, assets (including intangible assets), capitalization, financial condition or results of operations of the company taken as a whole with its subsidiaries or (b) materially impede the authority of the company to complete the transactions contemplated by the merger agreement. However, under the terms of the merger agreement, with respect to clause (a), none of the following will be taken into account in determining whether there has been or will be, a material adverse effect on Yahoo! or Overture, as the case may be:

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        As a result, any of the foregoing exceptions to the definition of "material adverse effect", alone or in combination, may occur with respect to Overture without:

        The merger agreement may be terminated in accordance with its terms at any time prior to completion of the merger, whether before or after the approval and adoption of the merger agreement and approval of the merger by Overture stockholders:

100

101

        Under the terms of the merger agreement, Overture has agreed to pay to Yahoo! a termination fee of $65 million within two (2) business days of the termination of the merger agreement if the merger agreement is terminated by Yahoo! because of the occurrence of a triggering event with respect to Overture as described in the section entitled "—Termination of the Merger Agreement" beginning on page 100 of this proxy statement/prospectus.

        In addition, Overture must pay the termination fee of $65 million to Yahoo! if all of the following conditions are met:

        The termination fee must be paid within two (2) business days following the acquisition of Overture.

        Under the terms of the merger agreement, an acquisition of Overture, for the purposes of these termination provisions, is any of the following:

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        Payment of the termination fee is not in lieu of damages incurred by Yahoo! in the event of breach of the merger agreement. If Overture fails to pay when due the termination fee and Yahoo! has to make a claim against Overture and such claim results in a judgment against Overture, Overture will also have to pay Yahoo!'s reasonable costs and expenses in connection with the suit together with interest on the unpaid termination fee.

        Yahoo! and Overture may amend the merger agreement before completion of the merger by mutual written consent.

        Either Yahoo! or Overture may extend the other's time for the performance of any of the obligations or other acts under the merger agreement, waive any inaccuracies in the other's representations and warranties and waive compliance by the other with any of the agreements or conditions contained in the merger agreement.

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THE VOTING AGREEMENTS

        Contemporaneously with the execution and delivery of the merger agreement, all of the directors of Overture and an affiliated entity of one of the directors entered into voting agreements with Yahoo!. Approximately    •    of the shares of Overture common stock outstanding on the record date are subject to the voting agreements. We refer to these shares as the "subject Overture shares."

        The following is a summary description of the voting agreements. The voting agreements are attached as Annex B, C and D to this proxy statement/prospectus and are hereby incorporated by reference into this proxy statement/prospectus.

Agreement to Vote and Irrevocable Proxy

        The Overture stockholders who have entered into voting agreements have granted to Yahoo! an irrevocable proxy and irrevocably appointed two officers of Yahoo! as such stockholders' attorney and proxy to vote their subject Overture shares at the special meeting of Overture stockholders (and any adjournment or postponement thereof) as follows:

        In addition, each such stockholder has agreed to vote the subject Overture shares as set forth above at the special meeting of Overture stockholders (and any adjournment or postponement thereof) if the stockholder has received written notice from Yahoo! within a reasonable period of time prior to any such meeting that Yahoo! is unable to vote the subject Overture shares subject to the irrevocable proxy at the meeting. Nothing in the voting agreement limits or restricts the stockholder from acting in his or her capacity as a director of Overture.

Transfer Restrictions

        In addition, these Overture stockholders agreed to certain restrictions on the transfer of their subject Overture shares. Under their respective voting agreements, Steve Alesio, Frank Biondi, Jr., William Elkus, Balakrishnan Iyer, Terrell Jones, Robert Kavner, Linda Fayne Levinson and Ted Meisel may not transfer any of such stockholder's subject Overture shares during the period commencing on July 14, 2003 and ending the earliest of (i) the termination of the merger agreement; (ii) the agreement of each of the parties to a voting agreement to terminate the voting agreement; or (iii) the effective time of the merger, except that each such stockholder may transfer such shares:

        Under their respective voting agreements, Bill Gross and Idealab may, in addition to the exceptions to the restrictions on transfers identified above, also transfer their subject Overture shares:

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        Each of the voting agreements for Bill Gross and Idealab terminates on the earliest of (i) the termination of the merger agreement; (ii) the agreement of the parties to the voting agreement to terminate such agreement; (iii) the effective time of the merger; or (iv) March 31, 2004.

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MATERIAL CONTACTS BETWEEN YAHOO! AND
OVERTURE PRIOR TO THE MERGER

        Yahoo! and Overture have had a commercial relationship since November 2001, when Overture began to provide its search results to Yahoo! and Yahoo! become one of Overture's affiliates. The material contacts between Yahoo! and Overture since November 2001 are described below, other than contacts relating to the merger agreement and the merger, which are described in the section entitled "Background of the Merger" beginning on page 58 of this proxy statement/prospectus.

Search Services Agreement

        Effective as of May 1, 2002 and amended as of October 1, 2002, January 13, 2003 and April 25, 2003, Overture and Yahoo! entered into a pay-for-performance search services agreement, under which Overture provides Yahoo! with sponsored search results in response to search inquiries and shares revenue with Yahoo! generated from those search results. Pursuant to such agreement, the parties agreed to certain restrictions with respect to search listings. Subject to payments by Yahoo! for certain licenses, Overture has granted Yahoo! certain non-exclusive licenses to Overture's intellectual property for Overture's and Yahoo!'s search results on the Yahoo! platform. The search services agreement expires April 30, 2005, but Yahoo! has the option to extend the term of the agreement for two additional periods of two or three years each. The search services agreement may be terminated earlier upon the occurrence of various termination events. In the event of a change of control of Overture, Yahoo! may choose to either require Overture to pay additional amounts to Yahoo! in connection with search services or terminate such agreement and require Overture to pay Yahoo! a termination fee equal to $5,000,000 in cash and two percent of Overture's outstanding common stock on a fully diluted basis using the treasury method, or in the case of certain designated acquirors, $10,000,000 in cash and three percent of Overture's outstanding common stock on a fully diluted basis using the treasury method. Yahoo! would also be entitled to customary resale registration rights with respect to the Overture common stock. Overture is entitled at its option to elect to pay the stock portion in cash based on the average trading price of Overture for the for the ten trading days ending on the day that is two trading days prior to the change of control. In addition, on May 1, 2002, Yahoo! and Overture entered into an advertising agreement, pursuant to which Overture provides certain advertising services to Yahoo!. Yahoo! and Overture also entered into a Referral Agreement effective as of October 30, 2002, whereby the parties appoint each other as a non-exclusive sales representative.

Marketing Services Agreement

        Effective as of November 18, 2002, Overture's Japanese subsidiary and Yahoo! Japan entered into a marketing services agreement, under which Overture provides Yahoo! Japan with sponsored search results in response to search inquiries. Pursuant to this marketing services agreement, Yahoo! Japan delivers search queries to Overture and displays Overture results as provided by Overture. The marketing services agreement contains various provisions that provide for restrictions regarding search listings. The marketing services agreement provides for minimum payments to Yahoo! Japan and the parties entered into a guaranty agreement whereby Overture guarantees the payment of all financial obligations owed to Yahoo! Japan. The term of the marketing services agreement is eighteen months from the effective date of the agreement. The marketing services agreement may also be terminated earlier upon the occurrence of various termination events, including a change of control of Overture. Under certain conditions, the marketing services agreement will renew for a specified term. As of March 30, 2003, Yahoo! owned approximately 33.5% of Yahoo! Japan.

Information Services Agreement

        Effective as of April 30, 1998 and last amended as of June 2, 2003, Overture and Inktomi Corporation entered into an information services agreement whereby Inktomi provides international

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and domestic algorithmic search engine services to Overture. Pursuant to the information services agreement, Overture pays quarterly service fees based upon various search metrics and has certain minimum payment obligations. The information services agreement expires April 30, 2004, but may be terminated earlier upon the occurrence of various termination events. Yahoo! acquired Inktomi in March 2003.

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YAHOO! INC. AND OVERTURE SERVICES, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

        The following unaudited pro forma combined condensed consolidated financial statements have been prepared to give effect to the proposed merger using the purchase method of accounting, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed consolidated financial statements. These pro forma statements were prepared as if the merger had been completed as of January 1, 2002 for statements of operations purposes and as of June 30, 2003 for balance sheet purposes.

        These unaudited pro forma combined condensed consolidated financial statements include pro forma statements of operations which are prepared by combining pro forma statements of operations for both Yahoo! and Overture which are presented in Exhibit 99.1(ii) and Exhibit 99.1(iii), respectively, included in the Yahoo! Form 8-K/A filed on August 8, 2003. The Yahoo! pro forma statements of operations included in Exhibit 99.1(ii) included in the Yahoo! Form 8-K/A filed on August 8, 2003 are prepared to give effect to Yahoo!'s completed acquisition of Inktomi Corporation, which was consummated on March 19, 2003. The Overture pro forma statements of operations included in Exhibit 99.1(iii) included in the Yahoo! Form 8-K/A filed on August 8, 2003 are prepared to give effect to Overture's completed acquisitions of the business of AltaVista Company and the Web search unit of Fast Search & Transfer, ASA, which were consummated on April 25, 2003 and April 21, 2003, respectively.

        The unaudited pro forma combined condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have actually been reported had the merger occurred on January 1, 2002 for statements of operations purposes and as of June 30, 2003 for balance sheet purposes, nor is it necessarily indicative of the future financial position or results of operations. The pro forma combined condensed consolidated financial statements include adjustments, which are based upon preliminary estimates, to reflect the allocation of purchase price to the acquired assets and assumed liabilities of Overture. The final allocation of the purchase price will be determined after the completion of the merger and will be based upon actual net tangible and intangible assets acquired and liabilities assumed. The preliminary purchase price allocation for Overture is subject to revision as more detailed analysis is completed and additional information on the fair values of Overture's assets and liabilities becomes available. Any change in the fair value of the net assets of Overture will change the amount of the purchase price allocable to goodwill. Additionally, changes in Overture's working capital, including the results of operations from June 30, 2003 through the date the merger is completed, will change the amount of goodwill recorded. The final purchase price is dependent on the actual amount of cash to be paid, the actual number of shares of Yahoo! common stock issued, the actual number of options assumed and actual direct merger costs. The final purchase price will be determined upon completion of the merger. Final purchase accounting adjustments may differ materially from the pro forma adjustments presented herein.

        These unaudited pro forma combined condensed consolidated financial statements are based upon the respective historical consolidated and pro forma combined condensed consolidated financial statements of Yahoo! and Overture and should be read in conjunction with the historical consolidated and pro forma combined condensed consolidated financial statements of Yahoo! and Overture and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference herein and contained in the reports and other information Yahoo! and Overture have on file with the SEC including the Yahoo! Form 8-K/A filed on August 8, 2003.

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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2003

(In thousands)

 
   Historical
   Pro Forma
  
 
   Yahoo!
   Overture
   Adjustments
   Combined
  
ASSETS                          
  Current assets:                          
    Cash and cash equivalents   $ 1,075,582   $ 83,138   $ (303,885 )(a) $ 854,835  
    Short-term investments in marketable securities     497,400     23,099     —     520,499  
    Accounts receivable, net     142,372     56,096     (23,468 )(b)   175,000  
    Prepaid expenses and other current assets     103,407     23,555     —     126,962  
    Prepaid traffic acquisition expense     —     37,576     —     37,576  
   
 
 
 
 
      Total current assets     1,818,761     223,464     (327,353 )   1,714,872  
 
Long-term investments in marketable securities
 
 
744,237
 
 
7,194
 
 
—
 
 
751,431
 
  Restricted investments     —     8,535     —     8,535  
  Property and equipment, net     371,794     73,143     —     444,937  
  Goodwill     636,434     187,303     (187,303 )(c)   1,795,774  
                  1,159,340 (c)      
 
Intangible assets, net
 
 
130,939
 
 
34,049
 
 
(34,049
)(c)
 
452,539
 
                  321,600 (c)      
  Long-term prepaid traffic acquisition costs     —     38,366     (30,000 )(b)   8,366  
  Other assets     219,356     12,988     —     232,344  
   
 
 
 
 
      Total assets   $ 3,921,521   $ 585,042   $ 902,235   $ 5,408,798  
   
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY                          
  Current liabilities:                          
    Accounts payable   $ 19,086   $ 124,260   $ (1,876 )(b) $ 141,470  
    Accrued expenses and other current liabilities     302,640     29,938     (21,592 )(b)   337,486  
                  12,500 (d)      
                  14,000 (d)      
    Deferred revenue     155,997     19,141     (1,914 )(e)   173,224  
   
 
 
 
 
      Total current liabilities     477,723     173,339     1,118     652,180  
 
Long-term debt
 
 
750,000
 
 
—
 
 
—
 
 
750,000
 
  Other liabilities     102,374     859     (30,000 )(b)   73,233  
  Minority interests in consolidated subsidiaries     34,591     —     —     34,591  
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Common stock     624     6     (6 )(f)   663  
                      39 (i)      
    Additional paid-in capital     2,623,520     795,775     (795,775 )(f)   4,012,076  
                      1,388,556 (i)      
    Treasury stock     (159,988 )   —     —     (159,988 )
    Retained earnings (accumulated deficit)     90,038     (389,955 )   389,955 (f)   90,038  
    Deferred compensation, net     (1,960 )   (818 )   818 (f)   (48,594 )
                  (46,634 )(j)      
    Accumulated other comprehensive income     4,599     5,836     (5,836 )(f)   4,599  
   
 
 
 
 
      Total stockholders' equity     2,556,833     410,844     931,117     3,898,794  
   
 
 
 
 
      Total liabilities and stockholders' equity   $ 3,921,521   $ 585,042   $ 902,235   $ 5,408,798  
   
 
 
 
 

The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements.

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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2002

(In thousands, except per share amounts)

 
   Pro Forma
   Combined Pro Forma
  
 
   Yahoo!(1)
   Overture(2)
   Adjustments
   Combined
  
Net revenues   $ 1,023,740   $ 724,454   $ (143,408 )(b) $ 1,604,786  

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cost of revenues     185,022     50,485     (2,965 )(b)   236,263  
                  3,721 (j)      
  Traffic acquisition     —     368,843     (134,673 )(b)   234,170  
  Sales and marketing     470,087     93,281     (5,770 )(b)   568,085  
                  10,487 (j)      
  Product development     179,538     41,749     9,472 (j)   230,759  
  General and administrative     118,781     94,977     10,149 (j)   223,907  
  Amortization of intangibles     36,653     5,472     70,827 (h)   112,952  
  Restructuring costs     115,668     8,087     —     123,755  
  Loss on litigation ruling     —     8,700     —     8,700  
  Impairment of goodwill and other intangibles     8,440     —     —     8,440  
  Impairment of property, plant and equipment     107,040     632     —     107,672  
   
 
 
 
 
    Total operating expenses     1,221,229     672,226     (38,752 )   1,854,703  
   
 
 
 
 

Income (loss) from operations
 
 
(197,489
)
 
52,228
 
 
(104,656
)
 
(249,917
)

Other income, net
 
 
83,413
 
 
(6,185
)
 
(14,283
)(a)
 
62,945
 
Minority interests in operations of consolidated subsidiaries     (1,551 )   —     —     (1,551 )
   
 
 
 
 

Income (loss) before income taxes
 
 
(115,627
)
 
46,043
 
 
(118,939
)
 
(188,523
)

Provision (benefit) for income taxes
 
 
5,409
 
 
4,248
 
 
(34,044
)(g)
 
(24,387
)
   
 
 
 
 

Income (loss) from continuing operations
 
$
(121,036
)
$
41,795
 
$
(84,895
)
$
(164,136
)
   
 
 
 
 

Income (loss) per share from continuing operations—basic
 
$
(0.20
)
$
0.67
 
 
 
 
$
(0.26
)
   
 
       
 

Income (loss) per share from continuing operations—diluted
 
$
(0.20
)
$
0.65
 
 
 
 
$
(0.26
)
   
 
       
 

Shares used in per share calculation—basic
 
 
593,838
 
 
61,949
 
 
(22,873
)
 
632,914
 
   
 
 
 
 
Shares used in per share calculation—diluted     593,838     63,878     (24,802 )   632,914  
   
 
 
 
 
(1)
Yahoo! and Inktomi pro forma combined condensed consolidated statement of operations are included in Exhibit 99.1(ii) included in the Yahoo! Form 8-K/A filed with the SEC on August 8, 2003.

(2)
Overture, AltaVista and Fast pro forma combined condensed consolidated statement of operations are included in Exhibit 99.1(iii) included in the Yahoo! Form 8-K/A filed with the SEC on August 8, 2003.

The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements.

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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2003

(In thousands, except per share amounts)

 
   Pro Forma
   Combined Pro Forma
  
 
   Yahoo!(1)
   Overture(2)
   Adjustments
   Combined
  
Net revenues   $ 619,285   $ 502,792   $ (127,321 )(b) $ 994,756  

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cost of revenues     94,078     36,356     (1,533 )(b)   129,543  
                  642 (j)      
  Traffic acquisition     —     307,046     (119,929 )(b)   187,117  
  Sales and marketing     237,861     47,087     (5,859 )(b)   280,899  
                  1,810 (j)      
  Product development     86,733     23,935     1,634 (j)   112,302  
  General and administrative     66,739     60,254     1,751 (j)   128,744  
  Amortization of intangibles     17,135     3,137     35,012 (h)   55,284  
  Restructuring costs     —     (103 )   —     (103 )
  Reversal of loss on litigation ruling     —     (3,941 )   —     (3,941 )
   
 
 
 
 
    Total operating expenses     502,546     473,771     (86,472 )   889,845  
   
 
 
 
 

Income from operations
 
 
116,739
 
 
29,021
 
 
(40,849
)
 
104,911
 

Other income, net
 
 
41,952
 
 
(2,574
)
 
(3,662
)(a)
 
35,716
 

Minority interests in operations of consolidated subsidiaries
 
 
(3,034
)
 
—
 
 
—
 
 
(3,034
)
   
 
 
 
 

Income before income taxes
 
 
155,657
 
 
26,447
 
 
(44,511
)
 
137,593
 

Provision for income taxes
 
 
59,150
 
 
13,290
 
 
(15,470
)(g)
 
56,970
 
   
 
 
 
 

Income from continuing operations
 
$
96,507
 
$
13,157
 
$
(29,041
)
$
80,623
 
   
 
 
 
 

Income per share from continuing operations—basic
 
$
0.16
 
$
0.21
 
 
 
 
$
0.13
 
   
 
       
 

Income per share from continuing operations—diluted
 
$
0.16
 
$
0.20
 
 
 
 
$
0.12
 
   
 
       
 

Shares used in per share calculation—basic
 
 
600,330
 
 
63,639
 
 
(24,563
)
 
639,406
 
   
 
 
 
 
Shares used in per share calculation—diluted     622,183     64,707     (24,631 )   662,259  
   
 
 
 
 
(1)
Yahoo! and Inktomi pro forma combined condensed consolidated statement of operations are included in Exhibit 99.1(ii) included in the Yahoo! Form 8-K/A filed with the SEC on August 8, 2003.

(2)
Overture, AltaVista and Fast pro forma combined condensed consolidated statement of operations are included in Exhibit 99.1(iii) included in the Yahoo! Form 8-K/A filed with the SEC on August 8, 2003.

The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements.

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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Pro Forma Presentation

        On July 14, 2003, Yahoo! announced the signing of a definitive agreement to acquire Overture, a provider of commercial search services on the Internet. Under the terms of the agreement, each share of Overture common stock outstanding upon the effective date will be exchanged for 0.6108 of a share of Yahoo! common stock and $4.75 in cash. Based on the number of shares outstanding of Overture common stock and options outstanding as of July 9, 2003, Yahoo! would make a cash payment of approximately $304 million, issue approximately 39.1 million shares of Yahoo! common stock and issue options to purchase approximately 8.5 million shares of Yahoo! common stock. Together with direct merger costs this will result in an aggregate purchase price of approximately $1.7 billion. The actual amount of cash to be paid and Yahoo! shares and options to be issued will be determined on the effective date of the merger based on the number of shares of Overture common stock and options actually outstanding on such date. Yahoo! will account for the merger under the purchase method of accounting.

        The unaudited pro forma combined condensed consolidated balance sheet at June 30, 2003 is presented to give effect to the proposed merger of Yahoo! and Overture as if the merger had been consummated on that date. The unaudited pro forma combined condensed consolidated balance sheet at June 30, 2003 has been prepared by combining the historical unaudited consolidated balance sheet data of Yahoo! and Overture as of June 30, 2003 and giving effect to certain pro forma adjustments contained therein. The unaudited pro forma combined condensed consolidated statements of operations of Yahoo! and Overture for the year ended December 31, 2002 and the six-months ended June 30, 2003 are presented as if the merger and the significant acquisitions of Yahoo! and Overture which were consummated during the period from January 1, 2002 through June 30, 2003 had been consummated on January 1, 2002 and giving effect to certain pro forma adjustments contained therein. The unaudited pro forma combined condensed consolidated statements of operations of Yahoo! and Overture for the year ended December 31, 2002 and the six-months ended June 30, 2003 have been prepared using the unaudited pro forma consolidated statement of operations data for Yahoo! and Overture for the year ended December 31, 2002 and the six-months ended June 30, 2003 which present the historical consolidated results of operations of Yahoo! and Overture and the results of significant acquisitions consummated by Yahoo! and Overture during the period from January 1, 2002 through June 30, 2003. These pro forma consolidated financial statements are incorporated by reference to this filing.

2.     Preliminary Purchase Price

        The unaudited pro forma combined condensed consolidated financial statements reflect an estimated purchase price of approximately $1.7 billion. The preliminary cash payment was determined based on the number of outstanding shares of Overture common stock as of July 9, 2003. The preliminary fair value of the Yahoo! common stock to be issued was based on the current shares of Overture common stock outstanding, the exchange ratio and the average market price of the Company's common stock for a range of trading days from two days before and after July 14, 2003, the announcement date of the proposed merger. The preliminary fair value of Yahoo! options to be issued was determined using the Black-Scholes model and the number of outstanding Overture options as of July 9, 2003. As the actual amount of common stock to be issued and cash to be paid and Yahoo! options to be issued will be determined on the effective date of the merger based on the number of shares of Overture common stock and options actually outstanding on such date, the final amount of common stock to be issued, cash to be paid and Yahoo! options to be issued will not be determined

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until that date. The estimated total purchase price of the proposed Overture merger is as follows (in thousands):

Cash   $ 303,885
Fair value of Yahoo! common stock to be issued     1,259,011
Fair value of Yahoo! options to be issued     129,584
Estimated direct merger costs     12,500
   
  Total estimated purchase price   $ 1,704,980
   

        The final purchase price is dependent on the actual amount of cash to be paid, the actual number of shares of Yahoo! common stock issued, the actual number of options assumed and actual direct merger costs. The final purchase price will be determined upon completion of the merger. Under the purchase method of accounting, the total estimated purchase price is allocated to Overture's net tangible and intangible assets based upon their estimated fair value as of the date of completion of the merger. Based upon the estimated purchase price and the preliminary valuation, the preliminary purchase price allocation, which is subject to change based on Yahoo!'s final analysis, is as follows (in thousands):

Cash acquired   $ 83,138  
Tangible assets acquired     280,552  
Amortizable intangible assets:        
  Existing technology and patents     125,400  
  Affiliate contracts and related relationships     144,100  
  Advertiser contracts and related relationships     35,800  
  Trade name, trademark, domain name     16,300  
Goodwill     1,159,340  
   
 
  Total assets acquired     1,844,630  

Liabilities assumed
 
 
(186,284
)
Deferred stock-based compensation     46,634  
   
 
 
Net assets acquired
 
$
1,704,980
 
   
 

        A preliminary estimate of $322 million has been allocated to amortizable intangible assets consisting of existing technology, patents, affiliate and advertiser contracts and related relationships, trade names, trademarks and domain names with useful lives not exceeding five years.

        Tangible assets acquired of $281 million includes long-term prepaid traffic acquisition costs paid by Overture to Yahoo! of approximately $30 million. Liabilities assumed of $186 million includes a current liability for traffic acquisition costs owed by Overture to Yahoo! of approximately $23 million.

        A preliminary estimate of $1.2 billion has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair market value of the net tangible and amortizable intangible assets acquired. Goodwill will not be amortized and will be tested for impairment at least annually. The preliminary purchase price allocation for Overture is subject to revision as more detailed analysis is completed and additional information on the fair values of Overture's assets and liabilities becomes available. Any change in the fair value of the net assets of Overture will change the amount of the purchase price allocable to goodwill. Final purchase accounting adjustments may therefore differ materially from the pro forma adjustments presented here.

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3.     Pro Forma Adjustments

        Certain reclassifications have been made to conform Overture's historical and pro forma amounts to Yahoo!'s financial statement presentation.

        The accompanying unaudited pro forma combined condensed consolidated financial statements have been prepared as if the merger was completed on June 30, 2003 for balance sheet purposes and as of January 1, 2002 for statements of operations purposes and reflect the following pro forma adjustments:

(a)
To reflect the estimated cash portion for the proposed merger of $4.75 per outstanding Overture share and resulting decrease in interest income.

(b)
To eliminate intercompany revenues, expenses and balance sheet amounts arising from transactions between Yahoo! and Overture.

(c)
To eliminate the Overture existing intangible assets and to establish amortizable intangible assets and non-amortizable goodwill resulting from the proposed merger.

(d)
To record estimated direct merger costs of approximately $12.5 million to be incurred by Yahoo! and $14.0 million of estimated merger costs to be incurred by Overture directly related to the proposed acquisition by Yahoo!. Actual amounts could differ significantly upon close of the proposed merger.

(e)
To adjust Overture deferred revenue to estimated fair value.

(f)
To eliminate the historical stockholders' equity of Overture.

(g)
To adjust the provision (benefit) for taxes to reflect the impact of the pro forma adjustments using the federal and state statutory tax rates.

(h)
To eliminate the amortization of Overture's historical intangibles and reflect amortization of the amortizable intangible assets on a straight-line basis resulting from the proposed merger. The weighted average life of amortizable intangible assets approximates 4 years.

(i)
To record the estimated fair value of Yahoo! shares of common stock and options to be issued in the proposed merger.

(j)
To record the deferred compensation based on the intrinsic value related to Yahoo! options issued in connection with the proposed merger and to reflect the amortization of the deferred compensation calculated using an accelerated amortization method. The weighted average remaining vesting period of unvested employee stock options approximates 3 years.

4.     Pro Forma Combined Net Income (Loss) Per Share

        Shares used to calculate unaudited pro forma net income (loss) per basic share were computed by adding 39.1 million shares assumed to be issued in exchange for the outstanding Overture shares to Yahoo!'s weighted average shares outstanding. Shares used to calculate unaudited pro forma net income per diluted share were computed by adding 39.1 million shares and approximately 1.0 million options (using the treasury stock method) assumed to be issued to Yahoo!'s weighted average shares outstanding. Shares used to calculate unaudited pro forma net loss per diluted share were computed by adding 39.1 million shares assumed to be issued to Yahoo!'s weighted average shares outstanding.

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COMPARISON OF RIGHTS OF HOLDERS OF
YAHOO! COMMON STOCK AND OVERTURE COMMON STOCK

        Upon completion of the merger, the stockholders of Overture will become stockholders of Yahoo!, and the Yahoo! certificate of incorporation and the Yahoo! bylaws will govern the rights of former Overture stockholders. The rights of Yahoo! stockholders are currently governed by Delaware law, Yahoo!'s certificate of incorporation and Yahoo!'s bylaws. The rights of Overture stockholders are currently governed by Delaware law, Overture's certificate of incorporation and Overture's bylaws. Both companies are Delaware corporations, so many of the rights of Overture stockholders will be similar to their rights as Yahoo! stockholders. The following is a summary of material differences between the rights of Overture stockholders and the rights of Yahoo! stockholders. It is not a complete statement of the provisions affecting, and the differences between, the rights of Overture stockholders and Yahoo! stockholders. The summary is qualified in its entirety by reference to Delaware law, Yahoo!'s certificate of incorporation, Yahoo!'s bylaws, Overture's certificate of incorporation and Overture's bylaws.

Authorized Capital Stock

        The authorized capital stock of Yahoo! consists of 5,000,000,000 shares of Yahoo! common stock and 10,000,000 shares of preferred stock, par value $0.001 per share.

        The authorized capital stock of Overture consists of 200,000,000 shares of Overture Common Stock and 10,000,000 shares of preferred stock, par value $0.0001 per share.

Size of the Board of Directors

        The number of directors on Yahoo!'s board may be determined by the board or stockholders, or it may be fixed by a bylaw or amendment thereof adopted by the board. Yahoo! currently has an authorized board of ten directors.

        The number of directors on Overture's board is determined in the bylaws and may be changed by an amendment to the certificate of incorporation or amendment to the bylaws adopted by a resolution of the majority of the total number of directors that the corporation would have if there were no vacancies. The number of directors authorized by Overture's bylaws is nine. Overture's board currently consists of nine directors.

Cumulative Voting

        The stockholders of each of Yahoo! and Overture are not entitled to cumulate votes in connection with the election of their respective directors.

Classes of Directors

        Yahoo! has one class of directors and Yahoo!'s certificate of incorporation does not provide for a classified board of directors. Yahoo!'s directors are elected for a term of one year.

        Overture's certificate of incorporation provides for a classified board of directors consisting of three classes of directors, each serving a staggered three-year term.

Filling Vacancies on the Board

        For Yahoo!, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in the office, although less than a quorum, or by a sole remaining officer, although less than a quorum, or by a sole remaining director. Notwithstanding the above, a vacancy created by the removal of a director by the vote of the stockholders or by court

115


order may be filled only the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present.

        For Overture, vacancies and newly created directorships resulting from any increase in the authorized number of directors that are elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Furthermore, whenever the holders of any class or classes of stock or series of stock which are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

Removal of Directors

        Yahoo!'s bylaws provide that any director of Yahoo!, or the entire Yahoo! board, may be removed with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors.

        Overture's bylaws provide that any director or all of the directors of Overture may be removed from the board, but only for cause and only by the holders of at least two-thirds of the shares then entitled to vote at an election of directors, voting as a single class.

Nomination of Directors for Election

        Yahoo!'s bylaws allow stockholders to nominate candidates for election to Yahoo!'s board of directors at any annual stockholder meeting at which the board of directors has determined that directors will be elected. However, nominations may only be made by a stockholder who has given timely written notice to the Secretary of Yahoo! before the annual stockholder meeting.

        For nominations by stockholders to be timely, the nominations must be mailed and received at Yahoo!'s principal executive offices no less than 60 days and no more than 90 days before the meeting. If, however, stockholders are given less than 60 days prior notice of the meeting, then to be timely, nominations must be received no later than the tenth day following the date on which notice was first mailed to stockholders or publicly disclosed.

        A stockholder's notice to Yahoo! must set forth all of the following:

        Overture's bylaws provide that nominations of persons for election to the board of directors of the corporation may be made at any meeting of stockholders only (a) pursuant to the corporation's notice of meeting, (b) by or at the direction of the board of directors or (c) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice, who is entitled to vote at the meeting and who complies with the notice procedures set forth in the bylaws and, for purposes of

116


this clause (c), only at an annual meeting of stockholders or at any meeting at which directors are to be elected.

        For nominations to be properly brought before a stockholders meeting by a stockholder pursuant to clause (c) of the preceding sentence, the stockholder must have given timely notice of the nomination in writing to the secretary of the corporation. To be timely, a stockholder's notice shall be delivered (i) no less than 90 days or more than 120 days prior to the first anniversary of the preceding year's annual meeting, or (ii) no less than 45 days or more than 75 days prior to the first anniversary of the date on which the corporation first mailed its proxy materials for the preceding year's annual meeting, which ever period described in clause (i) or (ii) of this sentence first occurs. In the event that the date of the annual meeting is more than 30 days before or more than 60 days after the first anniversary of the prior year's annual meeting, and in respect of nominations to be brought before a special meeting, notice by the stockholder to be timely must be so delivered no more than 120 days prior to the meeting and no later than the later of (x) the 90th day prior to the meeting and (y) the 10th day following the day on which public announcement of the date of the meeting is first made by Overture.

        A stockholder's notice must set forth all of the following:

        If the stockholder has provided Overture with a notice as described above, the stockholder must also have delivered a proxy statement and form of proxy to holders of a sufficient number of shares to elect such nominee in order for the nomination to be effective.

Stockholder Action Without a Meeting

        The respective certificates of incorporation of each of Yahoo! and Overture provide that stockholders have no right to take any action by written consent without a meeting.

Calling Special Meetings of Stockholders

        Yahoo!'s bylaws provide that a special meeting of stockholders may be called at any time by Yahoo!'s board of directors, by the chairman of the board or by the president. Yahoo!'s stockholders do not have the ability to call a special meeting of the stockholders.

        Overture's bylaws provide that special meetings of the stockholders may be called at any time only by the board of directors, or by the chairman of the board, or by the president. Only such business shall be considered at a special meeting of stockholders as shall have been stated in the notice for such meeting. Overture's stockholders do not have the ability to call a special meeting of the stockholders.

117


Submission of Stockholder Proposals

        Yahoo!'s bylaws allow stockholders to propose business to be brought before any annual stockholder meeting. However, proposals may only be made by a stockholder who has given timely written notice to the Secretary of Yahoo! before the annual or special stockholder meeting.

        Under Yahoo!'s bylaws, to be timely, notice of stockholder proposals to be made at an annual stockholder meeting must be received by the Secretary of Yahoo! no less than 60 days, nor more than 90 days before the first anniversary of the preceding year's annual meeting of stockholders. If the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary of the preceding year's annual stockholder meeting, notice will be timely if delivered no earlier than the 90th day before the annual meeting and not later than the later of the 60th day before the before the annual meeting or the 10th day following the day on which the meeting is first publicly announced.

        The proposal must also set forth a brief description of the business the stockholder proposes to bring before the meeting, the reasons for conducting that business at that meeting and any material interest of the stockholder in the business proposed.

        Overture's bylaws provide that the proposal of business to be considered by the stockholders may be made at any meeting of stockholders only (a) pursuant to the corporation's notice of meeting, (b) by or at the direction of the board of directors or (c) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice provided for in Overture's bylaws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in the bylaws and, for purposes of this clause (c), only at an annual meeting of stockholders.

        For business to be properly brought before a stockholders meeting by a stockholder pursuant to clause (c) of the preceding sentence, the stockholder must have given timely notice thereof in writing to the secretary of the corporation and such business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered (i) no less than 90 days or more than 120 days prior to the first anniversary of the preceding year's annual meeting, or (ii) no less than 45 days or more than 75 days day prior to the first anniversary of the date on which the corporation first mailed its proxy materials for the preceding year's annual meeting, which ever period described in clause (i) or (ii) of this sentence first occurs. In the event that the date of the annual meeting is more than 30 days before or more than 60 days after the first anniversary of the prior year's annual meeting, and in respect of nominations to be brought before a special meeting, notice by the stockholder to be timely must be so delivered no more than 120 days prior to the meeting and no later than the later of (x) the 90th day prior to the meeting and (y) the 10th day following the day on which public announcement of the date of the meeting is first made by Overture.

        A stockholder's notice must set forth all of the following:

        If the stockholder has provided Overture with a notice as described above, the stockholder must have delivered a proxy statement and form of proxy to holders of a sufficient number of shares to carry such proposal.

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Dividends

        Yahoo!'s bylaws provide that the board of directors may declare and pay dividends upon the shares of Yahoo!'s capital stock, subject to the limitations of law and the certificate of incorporation. Dividends may be paid in cash, in property, or in shares of Yahoo!'s capital stock.

        Overture's bylaws provide that the board of directors may declare and pay dividends upon the shares of its capital stock subject to the General Corporation Law of Delaware and the certificate of incorporation. Dividends may be paid in cash, in property, or in shares of Overture's capital stock.

Indemnification

        The Delaware General Corporation Law permits a corporation to indemnify officers and directors for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal action, which they had no reasonable cause to believe was unlawful.

        Yahoo!'s certificate of incorporation and bylaws provide that any person who was or is a party, or is threatened to be a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative, because that person is or was a director or officer, or is or was serving at the request of Yahoo! as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, will be indemnified against expenses, including attorney's fees, and held harmless by Yahoo! at the fullest extent permitted by the Delaware General Corporation Law. The indemnification rights conferred by Yahoo! are not exclusive of any other right to which persons seeking indemnification may be entitled under any statute, Yahoo!'s certificate of incorporation or bylaws, any agreement, vote of stockholders or disinterested directors or otherwise. In addition, Yahoo! is authorized to purchase and maintain insurance on behalf of its directors and officers.

        Additionally, Yahoo! may pay expenses incurred by directors or officers in defending a civil or criminal action, suit or proceeding because that person is a director or officer, in advance of the final disposition of that action, suit or proceeding. However, such payment will be made only if Yahoo! receives an undertaking by or on behalf of that director or officer to repay all amounts advanced if it is ultimately determined that he or she is not entitled to be indemnified by Yahoo!, as authorized by Yahoo!'s certificate of incorporation and bylaws.

        Overture's bylaws provide that each person who was or is a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative because that person is or was a director or officer of Overture, or is or was serving at the request of the Overture as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, will be indemnified and held harmless by Overture to the fullest extent authorized by the General Corporation Law of Delaware against all expense, liability and loss reasonably incurred in connection therewith. This indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his heirs, executors and administrators. Overture will indemnify a person seeking indemnification in connection with a proceeding initiated by that person only if the proceeding was authorized by the board of directors. The indemnification rights conferred in the bylaws are not exclusive of any other right to which persons seeking indemnification may be entitled under any statute, Overture's certificate of incorporation or bylaws, any agreement, vote of stockholders or disinterested directors or otherwise. In addition, Overture is authorized to purchase and maintain insurance on behalf of its directors and officers.

        The right to indemnification includes the right to be paid by Overture the expenses incurred in defending a proceeding in advance of its final disposition. However, if the General Corporation Law of Delaware requires, the payment of expenses in advance of the final disposition of a proceeding will be

119


made only upon delivery of an undertaking on behalf of the officer or director to repay all amounts advanced if it is ultimately determined that the officer or director is not entitled to be indemnified under the bylaws or otherwise.

        Overture may also indemnify all employees and agents against any expenses, judgments, fines, settlements, and other amounts reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of Overture.

Charter Amendments

        The respective certificates of incorporation of each of Yahoo! and Overture contain no provisions requiring a vote greater than that required by Delaware law to amend its certificate of incorporation.

Amendment of Bylaws

        Yahoo!'s certificate of incorporation authorizes the board of directors to make, alter or repeal Yahoo!'s bylaws.

        Overture's bylaws provide that the bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote. Overture's certificate of incorporation also confers the power to adopt, amend or repeal bylaws upon the directors. However, amendment or deletion by the stockholders of the corporation of specified sections of the bylaws pertaining to stockholder meetings, election and removal of directors and indemnification requires the affirmative vote of 662/3% of the outstanding shares entitled to vote on the amendment.

Stockholder Rights Plan

        In March 2001, Yahoo! adopted a Stockholder Rights Plan. Under this plan, Yahoo! declared a dividend distribution of one right for each outstanding share of Yahoo! common stock. Each right entitles the holder to purchase from Yahoo! a unit consisting of one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $.001 per share, at a purchase price of $250 per unit.

        The rights agreement provides that a distribution date will occur upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated persons has acquired beneficial ownership of 15% or more of the outstanding shares of Yahoo! common stock, or the date a person has entered into an agreement or arrangement with Yahoo! or a subsidiary of Yahoo! providing for (x) a merger, consolidation or similar transaction as a result of which stockholders of Yahoo! will no longer own a majority of the outstanding shares of Yahoo! common stock or another publicly traded entity which controls Yahoo! or, if appropriate, the entity into which may be merged, consolidated or otherwise combined, (y) a purchase or other acquisition of all or a substantial portion of the assets of yahoo! and its subsidiaries, or (z) a purchase or other acquisition of securities representing 15% or more of the shares of Yahoo! common stock then outstanding, or (ii) 10 business days following commencement of a tender offer or exchange offer, the completion of which would result in a person or group of affiliated persons acquiring beneficial ownership of 15% or more of the outstanding shares of Yahoo! common stock.

        On a distribution date, rights certificates will be mailed to holders of record of Yahoo! common stock as of the close of business on the distribution date and, thereafter, the separate rights certificates alone will represent the rights. Each holder of a right other than an acquiring person described in the preceding paragraph will, in such event, have the right to receive shares of Yahoo! common stock having a value equal to two times the exercise price of the right, unless the independent directors of Yahoo! determine the acquisition is fair and not inadequate and otherwise in the best interests of Yahoo! and its stockholders.

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        The rights are not exercisable until the earlier of such date described above and will expire on March 1, 2011, unless such date is extended or the rights are earlier redeemed or exchanged by Yahoo! at a price of $.001 per right.

        On March 8, 2002, Overture adopted a rights agreement. Under this agreement, Overture declared a dividend distribution of one preferred share purchase right for each outstanding share of Overture common stock. Each right entitles the holder to purchase from Overture a unit consisting of one one-hundredth of a share of Series A Junior Participating Preferred Stock, at a purchase price of $200 per unit.

        The rights agreement provides that a distribution date will occur upon the earlier of (i) 10 days after the public announcement that a person or group has become an "acquiring person" by obtaining beneficial ownership of 15% or more of Overture's outstanding common stock and (ii) 10 business days (or a later date determined by Overture's board of directors before any person or group becomes an acquiring person) after a person or group begins a tender or exchange offer which, if completed, would result in that person or group becoming an acquiring person.

        On a distribution date, the rights will separate from the common stock and be evidenced by book-entry credits or by rights certificates that we will mail to all eligible holders of common stock. If a person or group becomes an acquiring person, all holders of rights except the acquiring person may, for $200, purchase shares of Overture's common stock with a market value of $400, based on the market price of the common stock prior to such acquisition. Furthermore, if Overture is later acquired in a merger or similar transaction after a distribution date, all holders of rights except the acquiring person may, for $200, purchase shares of the acquiring corporation with a market value of $400; based on the market price of the acquiring corporation's stock, prior to such merger. Any rights held by an acquiring person are void and may not be exercised.

        The rights are not exercisable until the distribution date described above and will expire on March 29, 2012, unless the rights are earlier redeemed or exchanged by Overture at a price of $.001 per right.

        On July 14, 2003, Overture amended its rights agreement. That amendment (i) provides that neither Yahoo! nor any of its subsidiaries will be deemed an acquiring person by virtue of the execution of the merger agreement, or by the consummation of the transactions contemplated by the merger agreement and (ii) specifies that no distribution date will be deemed to have occurred by reason of the execution of the merger agreement or the consummation of the transactions contemplated by the merger agreement.

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APPRAISAL RIGHTS

        Under the Delaware General Corporation Law, Overture stockholders may object to the merger and demand in writing that the company surviving the merger pay the fair value of their shares. Determination of fair value is based on all relevant factors, but excludes any appreciation or depreciation resulting from the anticipation or accomplishment of the merger. Stockholders who elect to exercise appraisal rights must comply with all of the procedures to preserve those rights. A copy of Section 262 of the Delaware General Corporation Law, which sets forth the appraisal rights, is attached as Annex F to this proxy statement/prospectus.

        Section 262 sets forth the procedures a stockholder requesting appraisal must follow. These procedures are complicated and must be followed completely. Failure to comply with these procedures may cause you to lose your appraisal rights. The following information is only a summary of the required procedures and is qualified in its entirety by the provisions of Section 262. Please review Section 262 for the complete procedures. Neither Yahoo! nor Overture will give you any notice of your appraisal rights other than as described in this document and as required by the Delaware General Corporation Law.

General Requirements

        Section 262 generally requires the following:

Requirements for Written Demand for Appraisal

        A written demand for appraisal of Overture stock is only effective if it is signed by, or for, the stockholder of record who owns the shares at the time the demand is made. The demand must be signed as the stockholder's name appears on its stock certificate(s). If you are a beneficial owner of Overture stock but not a stockholder of record, you must have the stockholder of record for your shares sign a demand for appraisal on your behalf.

        If you own Overture stock in a fiduciary capacity, such as a trustee, guardian or custodian, you must disclose the fact that you are signing the demand for appraisal in that capacity.

        If you own Overture stock with one or more other persons, such as in a joint tenancy or tenancy in common, all of the owners must sign, or have signed for them, the demand for appraisal. An authorized agent, which could include one or more of the owners, may sign the demand for appraisal for a stockholder of record; however, the agent must expressly disclose who the stockholder of record is and that he or she is signing the demand as that stockholder's agent.

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        If you are a record owner, such as a broker, who holds Overture stock as a nominee for others, you may exercise a right of appraisal with respect to the shares held for one or more beneficial owners, while not exercising that right for other beneficial owners. In such a case, you should specify in the written demand the number of shares as to which you wish to demand appraisal. If you do not specify the number of shares, it will be assumed that your written demand covers all the shares of Overture stock that are in your name.

        If you are an Overture stockholder, you should address the written demand to Overture Corporation, 74 N. Pasadena Avenue, Third Floor, Pasadena, California 91103, Attention: Corporate Secretary. Overture must receive your written demand before the vote concerning the merger is taken or you will lose your appraisal rights. As explained above, this written demand should be signed by, or on behalf of, the stockholder of record. The written demand for appraisal should specify the stockholder's name and mailing address, the number of shares of stock owned, and that the stockholder is thereby demanding appraisal of such stockholder's shares.

Written Notice

        Within 10 days after the closing of the merger, the company surviving the merger must give written notice of the date that the merger became effective to each stockholder who has fully complied with the conditions of Section 262. Except as required by law, you will not be notified of any dates by which appraisal rights must be exercised.

Petition with the Chancery Court

        Within 120 days after the closing of the merger, the company surviving the merger or any stockholder who has complied with the conditions of Section 262 may file a petition in the Delaware Court of Chancery. This petition should request that the Chancery Court determine the value of the shares of Overture stock held by all of the stockholders who are entitled to appraisal rights. If you intend to exercise your rights of appraisal, you should file a petition in the Chancery Court. Neither Overture nor Yahoo! have any intention at this time to file a petition. Because neither Overture nor Yahoo! have an obligation to file a petition, if you do not file such a petition within 120 days after the closing, you will lose your rights of appraisal.

Withdrawal of Demand

        If you change your mind and decide you no longer want an appraisal, you may withdraw your demand for appraisal at any time within 60 days after the closing of the merger. You may also withdraw your demand for appraisal after 60 days after the closing of the merger, but only with the written consent of Yahoo!. If you withdraw your demand for appraisal, you will receive the merger consideration provided in the merger agreement.

Request for Appraisal Rights Statement

        If you have complied with the conditions of Section 262, you will be entitled to receive a statement setting forth the number of shares for which appraisal rights have been exercised and the number of stockholders who own those shares. In order to receive this statement, you must send a written request to Yahoo! within 120 days after the closing of the merger. After the merger, Yahoo! will have 10 days after receiving a request to mail the statement to the stockholder.

Chancery Court Procedures

        If you properly file a petition for appraisal in the Chancery Court and deliver a copy to Yahoo!, Yahoo! will then have 20 days to provide the Chancery Court with a list of the names and addresses of all stockholders who have demanded appraisal and have not reached an agreement with Yahoo! as to the value of their shares. If the Chancery Court decides it is appropriate, it will then send notice to all of the stockholders who have demanded appraisal. The Chancery Court has the power to conduct a

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hearing to determine whether the stockholders have fully complied with Section 262 of the Delaware General Corporation Law and whether they are entitled to appraisal under that section. The Chancery Court may also require you to submit your stock certificates to the Registry in Chancery so that it can note on the certificates that an appraisal proceeding is pending. If you do not follow the Chancery Court's directions, you may be dismissed from the proceeding.

Chancery Court Appraisal of Overture Shares

        After the Chancery Court determines which stockholders are entitled to appraisal rights, the Chancery Court will appraise the shares of stock. To determine the fair value of the shares, the Chancery Court will consider all relevant factors except for any appreciation or depreciation resulting from the anticipation or accomplishment of the merger. After the Chancery Court determines the fair value of the shares, it will direct Yahoo! to pay that value to the stockholders who are entitled to appraisal. The Chancery Court can also direct Yahoo! to pay interest, simple or compound, on that value if the Chancery Court determines that interest is appropriate. In order to receive the fair value for your shares, you must surrender your stock certificates to Yahoo!.

        The Chancery Court could determine that the fair value of shares of Overture stock is more than, the same as, or less than the merger consideration. In other words, if you demand appraisal rights, you could receive less consideration than you would under the merger agreement.

Costs and Expenses of Appraisal Proceeding

        The costs and expenses of the appraisal proceeding may be assessed against the company surviving the merger and the stockholders participating in the appraisal proceeding, as the Chancery Court deems equitable under the circumstances. You can request that the Chancery Court determine the amount of interest, if any, that the company surviving the merger should pay on the value of stock owned by stockholders entitled to the payment of interest. You may also request that the Chancery Court allocate the expenses of the appraisal action incurred by any stockholder pro rata against the value of all of the shares entitled to appraisal.

Loss of Stockholder's Rights

        If you demand appraisal, after the closing of the merger you will not be entitled to:

        However, you can regain these rights if no petition for an appraisal is filed within 120 days after the closing of the merger, or if you deliver to Yahoo! a written withdrawal of your demand for an appraisal and your acceptance of the merger, either within 60 days after the closing of the merger or with the written consent of Yahoo!. As explained above, these actions will also terminate your appraisal rights. However, an appraisal proceeding in the Chancery Court cannot be dismissed without the Chancery Court's approval. The Chancery Court may condition its approval upon any terms that it deems just.

        If you fail to comply strictly with these procedures you will lose your appraisal rights. Consequently, if you wish to exercise your appraisal rights, you are strongly urged to consult a legal advisor before attempting to exercise your appraisal rights.

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FUTURE OVERTURE STOCKHOLDER PROPOSALS

        Overture intends to hold a stockholder meeting in 2004 only if the merger is not completed. In order for a stockholder proposal to be considered for inclusion in Overture's proxy statement for the 2004 annual meeting (if it is held), in accordance with the standards contained in Rule 14a-8 under the Exchange Act and Overture's bylaws, stockholder proposals must be received no later than December 19, 2003. However, if the date of Overture's 2004 annual meeting is moved before April 22, 2004 or after June 21, 2004, the deadline for inclusion in Overture's proxy statement is a reasonable time before Overture begins to print and mail its proxy materials.

        In order for a stockholder proposal or stockholder nomination for director to be presented at Overture's 2004 annual meeting (if it is held) from the floor, the stockholder must deliver to the Secretary of Overture at Overture's principal executive office written notice of such proposal or nomination not later than the close of business on February 22, 2004 nor earlier than the close of business on January 23, 2004. If, however, the 2004 annual meeting is held before April 22, 2004, or after July 21, 2004 written notice of such proposal or nomination must be received no earlier than the close of business 120 days prior to the meeting and not later than the later to occur of the following two dates:

        In addition, in order to raise a proposal from the floor, the stockholder must comply with Overture's bylaws, including requirements to have delivered a proxy statement and form of proxy to holders of a sufficient number of shares of Overture common stock to approve the proposal and to provide specified information. In addition, Overture's bylaws provide that a nomination for director must include a statement by the nominee acknowledging that he or she will owe a fiduciary duty exclusively to the corporation and its stockholders.

        You may contact Overture's Corporate Secretary at Overture's principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates.

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LEGAL MATTERS

        Skadden, Arps, Slate, Meagher & Flom LLP will pass upon the validity of the shares of Yahoo! common stock offered by this proxy statement/prospectus and certain federal income tax consequences of the merger for Yahoo!.

        Wilson Sonsini Goodrich & Rosati, Professional Corporation, will pass upon certain federal income tax consequences of the merger for Overture.


EXPERTS

        The consolidated financial statements of Yahoo! Inc. incorporated in this proxy statement/prospectus by reference to Yahoo! Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

        The consolidated financial statements of Inktomi Corporation incorporated in this proxy statement/prospectus by reference to Exhibit 99.3 of Yahoo! Inc.'s Current Report on Form 8-K/A filed May 27, 2003 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

        The consolidated financial statements of Overture Services, Inc. incorporated by reference in Overture Services, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 2002, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The combined financial statements of the Internet business unit of Fast Search & Transfer ASA for the fiscal year ended December 31, 2002 incorporated herein by reference from Yahoo! Inc.'s Current Report on Form 8-K/A filed on August 8, 2003 and Overture's Current Report on Form 8-K/A filed on May 19, 2003 have been audited by Deloitte & Touche AS, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

        The consolidated financial statements of AltaVista Company and subsidiaries as of July 31, 2002 and July 31, 2001, and for the years ended July 31, 2002 and July 31, 2001 and for the period from August 19, 1999 to July 31, 2000 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the July 31, 2002, consolidated financial statements contains an explanatory paragraph that states that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


WHERE YOU CAN FIND MORE INFORMATION

        This proxy statement/prospectus incorporates documents by reference which are not presented in or delivered with this proxy statement/prospectus. You should rely only on the information contained in this proxy statement/prospectus and in the documents that we have incorporated by reference into this proxy statement/prospectus. We have not authorized anyone to provide you with information that is different from or in addition to the information contained in this document and incorporated by reference into this proxy statement/prospectus.

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        The following documents, which were filed by Yahoo! with the Securities and Exchange Commission, are incorporated by reference into this proxy statement/prospectus:

        The following documents, which were filed by Overture with the Securities and Exchange Commission, are incorporated by reference into this proxy statement/prospectus:

        In addition, all documents filed by Yahoo! and Overture pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of this proxy statement/prospectus and before the date of the Overture special meeting are deemed to be incorporated by reference into, and to be a part of, this proxy statement/prospectus from the date of filing of those documents.

        Any statement contained in this proxy statement/prospectus or in a document incorporated or deemed to be incorporated by reference into this proxy statement/prospectus will be deemed to be modified or superseded for purposes of this proxy statement/prospectus to the extent that a statement contained in this proxy statement/prospectus or any other subsequently filed document that is deemed

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to be incorporated by reference into this proxy statement/prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this proxy statement/prospectus.

        Yahoo! has supplied all information contained or incorporated by reference in this proxy statement/prospectus about Yahoo!, and Overture has supplied all information contained or incorporated by reference in this proxy statement/prospectus about Overture.

        The documents incorporated by reference into this proxy statement/prospectus are available from us upon request. We will provide a copy of any and all of the information that is incorporated by reference in this proxy statement/prospectus (not including exhibits to the information unless those exhibits are specifically incorporated by reference into this proxy statement/prospectus) to any person, without charge, upon written or oral request.

        Overture stockholders may request a copy of information incorporated by reference into this proxy statement/prospectus by contacting the investor relations department for each of Yahoo! and Overture at:

 
    
For information relating to Yahoo:   For information relating to Overture:

Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
Attention: Investor Relations
(408) 349-3300
 
Overture Services, Inc.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
Attention: Investor Relations
(626) 685-5600

        Yahoo! and Overture file annual, quarterly and current reports, proxy and information statements and other information with the Securities and Exchange Commission. Copies of the reports, proxy and information statements and other information filed by Yahoo! and Overture with the Securities and Exchange Commission may be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at:

450 Fifth Street, N.W.
Washington, D.C. 20549

        Reports, proxy and information statements and other information concerning Yahoo! and Overture may be inspected at:

Nasdaq Stock Market
1735 K Street, NM
Washington, D.C. 20006

        Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a Website that contains reports, proxy statements and other information regarding each of us. The address of the Securities and Exchange Commission Web site is http://www.sec.gov.

        Yahoo! has filed a registration statement on Form S-4 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to Yahoo!'s common stock to be issued to Overture stockholders in connection with the merger. This proxy statement/prospectus constitutes the prospectus of Yahoo! filed as part of the registration statement. This proxy statement/prospectus does not contain all of the information set forth in the registration statement because certain parts of the registration statement are omitted in accordance with the rules and regulations of the Securities and Exchange

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Commission. The registration statement and its exhibits are available for inspection and copying as set forth above.

        Overture stockholders with questions about the merger should contact:

Overture Services, Inc.
74 N. Pasadena Avenue, Third Floor
Pasadena, California 91103
Attention: Investor Relations
Telephone: (626) 685-5600

        Any Overture stockholder who needs additional copies of this proxy statement/prospectus or voting materials should contact Overture's Investor Relations Department as described above or send e-mail to investorrelations@overture.com.

        This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of an offer or proxy solicitation in such jurisdiction. Neither the delivery of this proxy statement/prospectus nor any distribution of securities pursuant to this proxy statement/prospectus shall, under any circumstances, create any implication that there has been no change in the information set forth or incorporated into this proxy statement/prospectus by reference or in our affairs since the date of this proxy statement/prospectus.

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ANNEX A


AGREEMENT AND PLAN OF MERGER

BY AND AMONG

YAHOO! INC.

JULY 2003 MERGER CORP.

AND OVERTURE SERVICES, INC.

Dated as of July 14, 2003



INDEX OF DEFINED TERMS

Acquisition   A-50
Acquisition Proposal   A-36
Action of Divestiture   A-42
affiliates   A-52
Agreement   A-1
Assignee   A-55
Balance Sheet Date   A-11
Certificate of Merger   A-2
Certificates   A-4
Change of Recommendation   A-36
Change of Recommendation Notice   A-36
Closing   A-2
Closing Date   A-2
COBRA   A-19
Code   A-1
Commercial Affiliate   A-53
Commercial Affiliate Agreement   A-53
Company   A-1
Company 401(k) Savings Plan   A-44
Company Balance Sheet   A-11
Company Board of Directors   A-1
Company Common Stock   A-3
Company Disclosure Letter   A-7
Company Employee Plan   A-19
Company Financial Statements   A-11
Company Intellectual Property Rights   A-15
Company Option   A-42
Company Options   A-42
Company Permits   A-19
Company Preferred Stock   A-8
Company Registered Intellectual Property   A-15
Company Rights   A-8
Company Rights Agreement   A-8
Company SEC Reports   A-11
Company Stockholders' Meeting   A-38
Computer Software   A-15
Confidentiality Agreement   A-38
Continuing Employees   A-44
Copyrights   A-15
Current Annual Premium Amount   A-45
DGCL   A-1
Dissenting Shares   A-6
DOJ   A-40
DOL   A-19
Domain Names   A-15
Effect   A-53
Effective Time   A-2
Employee   A-19
     

A-i

Employee Agreement   A-20
End Date   A-48
Enumerated Option Plans   A-42
ERISA   A-20
ERISA Affiliate   A-20
ESPP   A-43
Exchange Act   A-10
Exchange Agent   A-4
Exchange Fund   A-4
Exchange Ratio   A-3
Extending Transaction Event   A-53
FMLA   A-20
Forward Merger   A-2
FTC   A-40
Goldman Sachs   A-26
Governmental Entity   A-10
group   A-36
Hazardous Material   A-23
Hazardous Materials Activities   A-24
HSR Act   A-10
Inbound License Agreements   A-15
Indebtedness   A-25
Indemnified Parties   A-45
Intellectual Property Rights   A-15
IRS   A-20
Joint Ventures   A-7
Knowledge   A-53
Legal Requirement   A-10
License Agreements   A-15
Licensed Intellectual Property Rights   A-15
Liens   A-8
Material Adverse Effect   A-53
Merger   A-2
Merger Consideration   A-3
Merger Sub   A-1
Merger Sub Common Stock   A-3
Multiemployer Plan   A-20
Multiple Employer Plan   A-20
Nasdaq   A-4
Necessary Consents   A-10
New Exercise Date   A-43
Option Exchange Ratio   A-43
Option Plan   A-42
Option Plans   A-42
Outbound License Agreements   A-15
Parent   A-1
Parent Benefit Plan   A-43
Parent Common Stock   A-3
Parent Disclosure Letter   A-27
Parent Financial Statements   A-30
Parent Market Price   A-43
     

A-ii

Parent Preferred Stock   A-28
Parent Rights   A-28
Parent Rights Agreement   A-28
Parent SEC Reports   A-29
Patents   A-15
Pension Plan   A-20
Per Share Cash Consideration   A-3
person   A-54
Prospectus/Proxy Statement   A-26
Registered Intellectual Property   A-15
Registration Statement   A-26
Representatives   A-39
Returns   A-13
Reverse Merger   A-1
Section 16 Person   A-43
Securities Act   A-11
Shares   A-3
Subsidiary   A-54
Superior Offer   A-37
Surviving Corporation   A-2
Tax   A-13
Tax Claim   A-14
Taxes   A-13
Termination Fee   A-50
Top Commercial Affiliate Agreements   A-25
Trade Secrets   A-15
Trademarks   A-15
Triggering Event   A-49
Voting Agreements   A-1
WARN Act   A-23
WHCRA   A-20

A-iii


TABLE OF CONTENTS

ARTICLE I THE MERGER   A-1
  1.1   The Merger   A-1
  1.2   Effective Time; Closing   A-2
  1.3   Effect of the Merger   A-2
  1.4   Certificate of Incorporation and Bylaws   A-2
  1.5   Directors and Officers   A-3
  1.6   Effect on Capital Stock   A-3
  1.7   Surrender of Certificates   A-4
  1.8   Dissenting Shares   A-6
  1.9   No Further Ownership Rights in Company Common Stock   A-6
  1.10   Lost, Stolen or Destroyed Certificates   A-7
  1.11   Tax Consequences   A-7
  1.12   Further Action   A-7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY   A-7
  2.1   Organization of the Company   A-7
  2.2   Company Capital Structure   A-8
  2.3   Obligations With Respect to Capital Stock   A-9
  2.4   Authority; Non-Contravention; Necessary Consents   A-9
  2.5   SEC Filings; Company Financial Statements   A-10
  2.6   Absence of Certain Changes or Events   A-11
  2.7   Taxes   A-13
  2.8   Title to Properties; Absence of Liens and Encumbrances   A-14
  2.9   Intellectual Property; Privacy   A-15
  2.10   Compliance with Laws; Permits; Restrictions   A-18
  2.11   Litigation   A-19
  2.12   Employee Benefit Plans   A-19
  2.13   Environmental Matters   A-23
  2.14   Agreements, Contracts and Commitments   A-24
  2.15   Information in Registration Statement and Prospectus/Proxy Statement   A-25
  2.16   Rights Plan   A-26
  2.17   State Takeover Statutes   A-26
  2.18   Board Approval   A-26
  2.19   Brokers' and Finders' Fees   A-26
  2.20   Opinion of Financial Advisor   A-26
  2.21   Insurance   A-27
  2.22   Personnel   A-27
  2.23   Potential Conflict of Interest   A-27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB   A-27
  3.1   Organization of Parent and Merger Sub   A-27
  3.2   Authority; Non-Contravention; Necessary Consents   A-28
  3.3   Parent Capital Structure   A-28
  3.4   Information in Registration Statement and Prospectus/Proxy Statement   A-29
  3.5   SEC Filings; Parent Financial Statements   A-29
  3.6   Absence of Certain Changes   A-30
  3.7   Litigation   A-30
  3.8   Brokers' and Finders' Fees   A-30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME   A-31
  4.1   Conduct of Business by the Company   A-31
         

A-iv

  4.2   Acquisition Proposals   A-34
ARTICLE V ADDITIONAL AGREEMENTS   A-37
  5.1   Prospectus/Proxy Statement; Registration Statement   A-37
  5.2   Meeting of Company Stockholders; Board Recommendation   A-38
  5.3   Confidentiality; Access to Information   A-38
  5.4   Public Disclosure   A-39
  5.5   Company Affiliates; Restrictive Legend   A-40
  5.6   Regulatory Filings; Reasonable Efforts   A-40
  5.7   Notification of Certain Matters   A-42
  5.8   Company Option Plans; Employee Stock Purchase Plan   A-42
  5.9   Form S-8   A-44
  5.10   Nasdaq Listing   A-44
  5.11   Company Rights Plan   A-44
  5.12   Consents of Accountants   A-44
  5.13   Subsequent Financial Statements   A-45
  5.14   Conveyance Taxes   A-45
  5.15   Indemnification   A-45
  5.16   Treatment as Reorganization   A-45
  5.17   Merger Sub Compliance   A-46
ARTICLE VI CONDITIONS TO THE MERGER   A-46
  6.1   Conditions to the Obligations of Each Party to Effect the Merger   A-46
  6.2   Additional Conditions to the Obligations of the Company   A-46
  6.3   Additional Conditions to the Obligations of Parent   A-47
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER   A-48
  7.1   Termination   A-48
  7.2   Notice of Termination; Effect of Termination   A-49
  7.3   Fees and Expenses   A-50
  7.4   Amendment   A-51
  7.5   Extension; Waiver   A-51
ARTICLE VIII GENERAL PROVISIONS   A-51
  8.1   Non-Survival of Representations and Warranties   A-51
  8.2   Notices   A-51
  8.3   Interpretation; Certain Defined Terms.   A-52
  8.4   Counterparts   A-54
  8.5   Entire Agreement; Third Party Beneficiaries   A-54
  8.6   Severability   A-54
  8.7   Other Remedies; Specific Performance   A-54
  8.8   Governing Law   A-54
  8.9   Rules of Construction   A-55
  8.10   Assignment   A-55
  8.11   No Waiver; Remedies Cumulative   A-55
  8.12   Waiver of Jury Trial   A-55

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INDEX OF EXHIBITS

Exhibit A   Form of Voting Agreement

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AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is entered into as of July 14, 2003 by and among Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and a direct, wholly-owned Subsidiary of Parent ("Merger Sub"), and Overture Services, Inc., a Delaware corporation (the "Company").


RECITALS

        A.    The Board of Directors of each of Parent, Merger Sub and the Company has approved, and deems it advisable and in the best interests of its respective stockholders to consummate, the business combination between the Company and Parent upon the terms and subject to the conditions set forth herein.

        B.    The Board of Directors of each of Parent, Merger Sub and the Company has approved this Agreement and the transactions contemplated hereby, including the Merger (as defined in Section 1.1), in accordance with the Delaware General Corporation Law ("DGCL") and upon the terms and subject to the conditions set forth herein. The Board of Directors of each of the Company (the "Company Board of Directors"), Parent and Merger Sub, has approved this Agreement and the transactions contemplated hereby, including the Merger.

        C.    The Company Board of Directors has resolved to recommend to its stockholders approval and adoption of this Agreement and approval of the Merger and the transactions contemplated hereby.

        D.    Parent, as the sole stockholder of Merger Sub, has approved and adopted this Agreement and approved the Merger.

        E.    Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent's and Merger Sub's willingness to enter into this Agreement, certain stockholders of the Company are entering into Voting Agreements in the form attached hereto as Exhibit A (the "Voting Agreements").

        F.     Parent, Merger Sub and the Company each desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.

        G.    For United States federal income tax purposes, the parties intend that the Merger qualify as a "reorganization" under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code"), and the parties intend, by executing this Agreement, to adopt a "plan of reorganization" within the meaning of Treasury Regulations, Section 1.368-2(g).

        NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements, representations and warranties set forth herein, the parties agree as follows:


ARTICLE I

THE MERGER

        1.1    The Merger.    At the Effective Time (as defined in Section 1.2) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the DGCL, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (the "Reverse Merger"); provided, however, that if at the Effective Time, the Reverse Merger would not satisfy the conditions set forth in Section 6.1(e) hereof, then at the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the DGCL, the Company shall be merged with and

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into Merger Sub, the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving corporation (the "Forward Merger") (either the Reverse Merger or the Forward Merger, as applicable, shall sometimes be referred to herein as the "Merger"). The Company (in the case of the Reverse Merger) and Merger Sub (in the case of the Forward Merger), as the surviving corporation after the Merger, is hereinafter sometimes referred to as the "Surviving Corporation".

        1.2    Effective Time; Closing.    Subject to the provisions of this Agreement, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL (the "Certificate of Merger") (the time of such filing with the Secretary of State of the State of Delaware (or such later time as may be agreed in writing by the Company and Parent and specified in the Certificate of Merger) being the "Effective Time") as soon as practicable on or after the Closing Date (as defined below). The closing of the Merger (the "Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, located at 525 University Avenue, Palo Alto, California, at a time and date to be specified by the parties, which shall be no later than the second business day after the satisfaction or waiver of the conditions set forth in Article VI (other than those conditions which by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof), or at such other time, date and location as the parties hereto agree in writing (the "Closing Date").

        1.3    Effect of the Merger.    At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL.

        1.4    Certificate of Incorporation and Bylaws.    

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        1.5    Directors and Officers.    The initial directors of the Surviving Corporation shall be the directors of Merger Sub immediately prior to the Effective Time, until their respective successors are duly elected or appointed and qualified. The initial officers of the Surviving Corporation shall be the officers of Merger Sub immediately prior to the Effective Time, until their respective successors are duly appointed.

        1.6    Effect on Capital Stock.    Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any shares of capital stock of the Company, the following shall occur:

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        1.7    Surrender of Certificates.    

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        1.8    Dissenting Shares.    Notwithstanding Section 1.6, Shares outstanding immediately prior to the Effective Time and held by a holder of shares of Company Common Stock who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with the DGCL (the "Dissenting Shares") shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses its rights to appraisal or it is determined that such holder does not have appraisal rights in accordance with the DGCL. If after the Effective Time such holder fails to perfect or withdraws or loses its right to appraisal, or if it is determined that such holder does not have an appraisal right, such Shares shall be treated as if they had been converted as of the Effective Time into the right to receive in exchange for each Share the Merger Consideration. The Company shall give Parent and Merger Sub prompt notice of any demands received by the Company for appraisal of Shares, and Parent and Merger Sub shall have the right to participate in all negotiations and proceedings with respect to such demands except as required by applicable law. The Company shall not, except with prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, unless and to the extent required to do so under applicable law.

        1.9    No Further Ownership Rights in Company Common Stock.    All shares of Parent Common Stock issued, all cash paid upon the surrender for exchange of shares of Company Common Stock in accordance with the terms hereof (including any cash paid in respect thereof pursuant to Section 1.6(f)) and any dividends or distributions payable pursuant to Section 1.7(d) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to such shares of Company Common Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I.

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        1.10    Lost, Stolen or Destroyed Certificates.    In the event any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue and pay in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration, cash for fractional shares, if any, as may be required pursuant to Section 1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d); provided, however, that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent, the Company or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

        1.11    Tax Consequences.    It is intended by the parties hereto that the Merger shall constitute a "reorganization" within the meaning of Section 368(a) of the Code. The parties hereto adopt this Agreement as a "plan of reorganization" within the meaning of Treasury Regulations, Section 1.368-2(g).

        1.12    Further Action.    At and after the Effective Time, the officers and directors of Parent and the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company and Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company and Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.


ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to Parent and Merger Sub, subject to the exceptions specifically disclosed in writing in the disclosure letter delivered by the Company to Parent dated as of the date hereof and certified by a duly authorized officer of the Company (the "Company Disclosure Letter"), as set forth below.

        2.1    Organization of the Company.    

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        2.2    Company Capital Structure.    The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.0001 per share, ("Company Preferred Stock"), 2,000,000 of which shares have been designated Series A Junior Participating Preferred Stock, all of which will be reserved for issuance upon the exercise of preferred stock purchase rights (the "Company Rights") issuable pursuant to the Rights Agreement between the Company and Mellon Investor Services LLC, dated as of March 20, 2002 (the "Company Rights Agreement"). At the close of business on July 9, 2003, (i) 63,975,810 shares of Company Common Stock were issued and outstanding (none of which were held by the Company in its treasury) and (ii) no shares of Company Preferred Stock were issued and outstanding. All of the outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company or any agreement or document to which the Company is a party or by which it or its assets is bound. As of the date hereof, (i) the Company had reserved an aggregate of 3,950,347 shares of Company Common Stock for future issuance pursuant to the Option Plans and (ii) at the close of business on July 9, 2003 there were (x) outstanding Company Options to purchase an aggregate of 11,608,105 shares of Company Common Stock pursuant to the Enumerated Option Plans (as defined in Section 5.8(a)), and (y) no outstanding Company Options to purchase shares of Company Common Stock pursuant to Option Plans other than the Enumerated Option Plans. As of the date hereof, the Company has reserved an aggregate of 2,800,892 shares of Company Common Stock for future issuance pursuant to the ESPP. All shares of Company Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. All of such Company Options have been granted to employees or directors of the Company in the ordinary course of business. Since March 31, 2003 and until the date hereof, the Company has not granted any Company Options to officers or directors of the Company. Section 2.2 of the Company Disclosure Letter identifies (i) the name and location of each person who held Company Options as of July 9, 2003, (ii) the particular Option Plan pursuant to which such Company Option was granted, (iii) the date on which such Company Option was granted, (iv) the exercise or base price of such Company Option, (v) the number of shares of Company Common Stock subject to such Company Option or value covered thereby, (vi) the number of shares of Company Common Stock as to which such Company Option had vested at such date, (vii) the applicable vesting schedule for such Company Option and whether the exercisability or vesting of such Company Option will be accelerated in any way by the Merger or the transactions contemplated hereby, and (viii) the date on which such Company Option expires. As of the date hereof, there are no commitments or agreements of any character to which the Company is bound obligating the Company

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to accelerate the vesting or exercisability of any Company Option as a result of the Merger, either alone or upon the occurrence of any additional subsequent events.

        2.3    Obligations With Respect to Capital Stock.    Except as otherwise set forth in Section 2.2, as of the date hereof, there are no equity securities, partnership interests or similar ownership interests of any class of Company equity security, or any securities exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as contemplated by this Agreement or as set forth in Section 2.2, as of the date hereof, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or any of its Subsidiaries is a party or by which it is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. As of the date hereof, there are no registration rights and, except as otherwise contemplated by the Voting Agreements, there is no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding to which the Company is a party or by which it is bound with respect to any equity security of any class of the Company or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its Subsidiaries. As of the date hereof, there are no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which stockholders may vote (or convertible into or exchangeable for, securities having such rights) of the Company or any of its Subsidiaries issued and outstanding. There are no outstanding contractual commitments of the Company or any of its Subsidiaries which obligate the Company or its Subsidiaries to make any investment (in the form of a loan, capital contribution or otherwise) in any other person. The Company has delivered or made available to Parent complete and correct copies of the Option Plans and all forms of Company Options.

        2.4    Authority; Non-Contravention; Necessary Consents.    

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        2.5    SEC Filings; Company Financial Statements.    

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        2.6    Absence of Certain Changes or Events.    

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        2.7    Taxes.    

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        2.8    Title to Properties; Absence of Liens and Encumbrances.    

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        2.9    Intellectual Property; Privacy.    For the purposes of this Agreement, the following terms have the following definitions:

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        2.10    Compliance with Laws; Permits; Restrictions.    

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        2.11    Litigation.    As of the date hereof, there are no claims, suits, actions, charges, inquiries, proceedings or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the Knowledge of the Company, threatened against, relating to or affecting the Company or any of its Subsidiaries, or that seek to restrain or enjoin the consummation of the Merger or which would reasonably be expected, either individually or in the aggregate with all such claims, actions or proceedings, to have a Material Adverse Effect on the Company or the Surviving Corporation following the Merger or have a material adverse effect on the ability of the parties hereto to consummate the Merger and the transactions contemplated hereby. No Governmental Entity has at any time challenged or questioned the legal right of the Company or any of its Subsidiaries to design, market, offer or sell any of its services or products in the present manner or style thereof.

        2.12    Employee Benefit Plans.    

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        2.13    Environmental Matters.    

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        2.14    Agreements, Contracts and Commitments.    

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        2.15    Information in Registration Statement and Prospectus/Proxy Statement.    None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the registration statement on Form S-4 (or similar successor form) to be filed with the

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SEC by Parent in connection with the issuance of Parent Common Stock in the Merger (including amendments or supplements thereto) (the "Registration Statement") will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Prospectus/Proxy Statement to be filed with the SEC as part of the Registration Statement (the "Prospectus/Proxy Statement"), will, at the time the Prospectus/Proxy Statement is mailed to the stockholders of the Company, at the time of the Company Stockholders' Meeting or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Prospectus/Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein about Parent or Merger Sub supplied by Parent or Merger Sub for inclusion or incorporation by reference in the Registration Statement or the Prospectus/Proxy Statement.

        2.16    Rights Plan.    The Company has taken all action so that (i) Parent shall not be an "Acquiring Person" under the Company Rights Agreement solely by virtue of the entering into of this Agreement and the performance of the transactions contemplated hereby, including the Merger, and (ii) the entering into of this Agreement and the Merger and the performance of the transactions contemplated hereby will not result in the grant of any rights to any person under the Company Rights Agreement or enable or require the Company Rights to be exercised, distributed or triggered.

        2.17    State Takeover Statutes.    The action taken by the Company Board of Directors constitutes approval of the Merger and the transactions contemplated hereby by the Company Board of Directors under Section 203 of the DGCL, and, to the Company's Knowledge, no other state takeover statute is applicable to the Merger and the transactions contemplated hereby.

        2.18    Board Approval.    The Company Board of Directors, at a meeting duly called and held at which all Directors were present, has unanimously (i) duly and validly approved and taken all corporate action required to be taken by the Company Board of Directors to authorize the consummation of the Merger and the transactions contemplated hereby, and (ii) resolved that the Merger is fair to, and in the best interests of, the Company and its stockholders and declared the Merger to be advisable, and (iii) resolved to recommend that the stockholders of the Company approve and adopt this Agreement and the Merger, and directed that such matter be submitted to the Company's stockholders at the Company Stockholders' Meeting. As of the date hereof, none of the aforesaid actions by the Company Board of Directors has been amended, rescinded or modified.

        2.19    Brokers' and Finders' Fees.    Except for fees payable to Goldman Sachs & Co. Inc. ("Goldman Sachs") pursuant to its engagement letter with the Company dated November 27, 2002, the Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby. A copy of such engagement letter with the Company has been previously made available to Parent. No such engagement letter obligates the Company to continue to use the services of Goldman Sachs following the Merger or pay the fees or expenses of Goldman Sachs in connection with any transaction other than the Merger following consummation of the Merger.

        2.20    Opinion of Financial Advisor.    The Company has received the opinion of Goldman Sachs, to the effect that, as of the date hereof, the Merger Consideration is fair from a financial point of view to the holders of Company Common Stock.

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        2.21    Insurance.    Section 2.21(a) of the Company Disclosure Letter sets forth a complete and accurate list of all primary, excess and umbrella policies, bonds and other forms of insurance owned or held by or on behalf of and/or providing insurance coverage to the Company and its Subsidiaries and their respective business, properties and assets (and each of the directors, officers, salespersons, agents or employees of the Company or any of its Subsidiaries for which the Company or such Subsidiary is a beneficiary or pays the premium). To the extent not already provided in the Company Disclosure Letter, the Company will provide, promptly following the date hereof, the following information for each such policy: (a) type(s) of insurance coverage provided; (b) name of insurer; (c) effective date; (d) policy number; (e) per occurrence and annual aggregate deductibles or self-insured retention; (f) per occurrence and annual aggregate limits of liability and the extent, if any, to which the limits of liability have been exhausted; and (g) annual premium. Section 2.21(b) of the Company Disclosure Letter sets forth a complete and accurate summary of all of the self-insurance coverage provided by the Company and its Subsidiaries.

        2.22    Personnel.    Section 2.22 of the Company Disclosure Letter sets forth a true and complete list, as of the date hereof, of (a) the names and current base salaries of all directors and elected and appointed officers of each of the Company and its Subsidiaries, and (b) the number of shares of Company Common Stock owned beneficially or of record, or both, by each such person and the immediate family relationships, if any, among such persons.

        2.23    Potential Conflict of Interest.    Except as stated in the Company SEC Reports filed prior to the date hereof, since the Balance Sheet Date and through the date hereof, there have been no transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and their respective affiliates, including without limitation their directors and officers, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act (except for amounts due as normal salaries and bonuses and in reimbursements of ordinary expenses of the members of the Company Board of Directors). As of the date hereof, only the directors of the Company identified in Section 2.23 of the Company Disclosure Letter are not "independent" directors under the rules of Nasdaq. No officer or director of the Company or any Company Subsidiary or Joint Venture has asserted any claim, charge, action or cause of action against the Company or any Company Subsidiary or Joint Venture, except for immaterial claims for accrued vacation pay, accrued benefits under any employee benefit plan and similar matters and agreements existing on the date hereof.


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

        Parent and Merger Sub represent and warrant to the Company, subject to the exceptions specifically disclosed in writing in the disclosure schedules delivered by Parent to the Company dated as of the date hereof and certified by a duly authorized officer of Parent (the "Parent Disclosure Letter"), as set forth below.

        3.1    Organization of Parent and Merger Sub.    Each of Parent, Merger Sub and Parent's other Subsidiaries (i) is an entity duly organized, validly existing and, to the extent applicable, in good standing under the laws of the jurisdiction in which it is organized; (ii) has the corporate or other power and authority to own, lease and operate its assets and property and to carry on its business as now being conducted; and (iii) is duly qualified or licensed to do business in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except, in the case of (ii) and (iii) above, where such failure to have such power or authority or to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect on Parent.

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        3.2    Authority; Non-Contravention; Necessary Consents.    

        3.3    Parent Capital Structure.    The authorized capital stock of Parent consists of 5,000,000,000 shares of Parent Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share ("Parent Preferred Stock"), 2,000,000 of which shares have been designated Series A Junior Participating Preferred Stock, all of which will be reserved for issuance upon the exercise of preferred stock purchase rights (the "Parent Rights") issuable pursuant to the Rights Agreement between Parent and Equiserve Trust Company, N.A., dated as of March 15, 2001 (the "Parent Rights Agreement"). At the close of business on July 11, 2003, (i) 608,331,741 shares of Parent Common Stock were issued and

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outstanding, (ii) 16,458,620 shares of Parent Common Stock were held by Parent in its treasury and (iii) no shares of Parent Preferred Stock were issued or outstanding. As of July 11, 2003, (i) Parent had reserved an aggregate of 326,885,729 shares of Parent Common Stock for issuance pursuant to its option plans (excluding Parent's employee stock purchase plans) and (ii) at the close of business on July 11, 2003, there were (x) outstanding options to purchase an aggregate of 116,680,063 shares of Parent Common Stock (excluding rights to purchase Parent Common Stock under Parent's employee stock purchase plans) and (y) 7,600,000 shares of Parent Common Stock reserved for issuance under Parent's employee stock purchase plans. All outstanding shares of Parent Common Stock are, and all shares of Parent Common Stock which may be issued pursuant to this Agreement will be, when issued in accordance with the terms hereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it or its assets is bound. Except as disclosed in Parent SEC Reports filed prior to the date hereof, there is no holder or group of holders that beneficially owns greater than 1% of the shares of Parent Common Stock outstanding (including for this purpose any shares convertible into Parent Common Stock on a fully diluted as converted basis, whether or not vested) who have registration rights with respect to any such securities. Except as otherwise set forth in this Section 3.3, there are no equity securities of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in the aggregate, represent in excess of 2% of outstanding shares of Parent Common Stock, on a fully diluted as converted basis.

        3.4    Information in Registration Statement and Prospectus/Proxy Statement.    None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in the Registration Statement will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of Parent and Merger Sub for inclusion or incorporation by reference in the Prospectus/Proxy Statement, will, at the time the Prospectus/Proxy Statement is mailed to the stockholders of the Company, at the time of the Company Stockholders' Meeting or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Prospectus/Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein about the Company supplied by the Company for inclusion or incorporation by reference in the Registration Statement or the Prospectus/Proxy Statement.

        3.5    SEC Filings; Parent Financial Statements.    Parent has filed all forms, reports and documents required to be filed by Parent with the SEC since January 1, 2001 and has made available to the Company such forms, reports and documents in the form filed with the SEC. All such required forms, reports and documents are referred to herein as the "Parent SEC Reports." As of their respective dates, the Parent SEC Reports (i) were prepared in accordance with the requirements of the Securities Act, or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Parent SEC Reports and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date hereof, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact or disclose any matter or proceeding required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Parent SEC Reports

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(the "Parent Financial Statements"), (i) was prepared in accordance with GAAP, (ii) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (iii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q, Form 8-K or any similar or successor form under the Exchange Act) and (iv) fairly presented the consolidated financial position of Parent and its Subsidiaries as of the respective dates thereof and the consolidated results of Parent's operations and cash flows for the periods indicated, except that the unaudited interim financial statements may not contain footnotes and were or are subject to normal and recurring year-end adjustments.

        3.6    Absence of Certain Changes.    

        3.7    Litigation.    Except as set forth in Item 1 of Part II of Parent's Form 10-Q for the quarterly period ended March 31, 2003, as of the date hereof there are no claims, suits, actions, charges, inquiries, proceedings or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the Knowledge of Parent, threatened against, relating to or affecting Parent or any of its Subsidiaries, or that seek to restrain or enjoin the consummation of the Merger or which would reasonably be expected, either individually or in the aggregate with all such claims, actions or proceedings, to have a Material Adverse Effect on Parent or the Surviving Corporation following the Merger or have a material adverse effect on the ability of the parties hereto to consummate the Merger and the transactions contemplated hereby.

        3.8    Brokers' and Finders' Fees.    Except for fees payable to Credit Suisse First Boston LLC, the fees and expenses of which shall be paid by Parent, Parent has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

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ARTICLE IV

CONDUCT PRIOR TO THE EFFECTIVE TIME

        4.1    Conduct of Business by the Company.    During the period from the date hereof and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Company and each of its Subsidiaries shall, except to the extent that Parent shall otherwise consent in writing, use all reasonable efforts to carry on its business, in all material respects, in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance in all material respects with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and use all reasonable efforts to (i) preserve intact its present business organization and (ii) continue to manage in the ordinary course its business relationships with third parties.

        In addition, without limiting the generality of the foregoing, except as permitted by the terms of this Agreement and except as provided in Section 4.1 of the Company Disclosure Letter, without the prior written consent of Parent, during the period from the date hereof and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Company shall not do any of the following and shall not permit its Subsidiaries to do any of the following:

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        4.2    Acquisition Proposals.    

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After delivering the Change of Recommendation Notice, the Company shall provide Parent a reasonable opportunity to make such adjustments in the terms and conditions of this Agreement, and negotiate in good faith with respect thereto, as would enable the Company to proceed with its recommendation to stockholders without making a Change of Recommendation.

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ARTICLE V

ADDITIONAL AGREEMENTS

        5.1    Prospectus/Proxy Statement; Registration Statement.    As promptly as practicable after the execution of this Agreement, Parent and the Company will prepare and file with the SEC the Prospectus/Proxy Statement, and Parent will prepare and file with the SEC the Registration Statement in which the Prospectus/Proxy Statement is to be included as a prospectus. Parent and the Company will provide each other with any information which may be required in order to effectuate the preparation and filing of the Prospectus/Proxy Statement and the Registration Statement pursuant to this Section 5.1. Each of Parent and the Company will respond to any comments from the SEC, will use all reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger and the transactions contemplated hereby. Each of Parent and the Company will notify the other promptly upon the receipt of any comments from the SEC or its staff in connection with the filing of, or amendments or supplements to, the Registration Statement and/or the Prospectus/Proxy Statement. Whenever any event occurs which is required to be set forth in an amendment or supplement to the Prospectus/Proxy Statement and/or the Registration Statement, Parent or the Company, as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the SEC or its staff, and/or mailing to stockholders of the Company, such amendment or supplement. The Company shall cooperate and provide the other (and its counsel) with a reasonable opportunity to review and comment on any amendment or supplement to the Registration Statement and Prospect/Proxy Statement prior to filing such with the SEC, and will provide each other with a copy of all such filings made with the SEC. The Company will cause the Prospectus/Proxy Statement to be mailed to its stockholders at the earliest practicable time after the Registration Statement is declared effective by the SEC. Parent shall also use all reasonable efforts to

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take any action required to be taken by it under any applicable state securities laws in connection with the issuance of Parent Common Stock in the Merger and the conversion of the Company Options into options to acquire Parent Common Stock, and the Company shall furnish any information concerning the Company and the holders of the Company Common Stock and the Company Options as may be reasonably requested in connection with any such action.

        5.2    Meeting of Company Stockholders; Board Recommendation.    

        5.3    Confidentiality; Access to Information.    

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        5.4    Public Disclosure.    The initial press release concerning the Merger shall be a joint press release and, thereafter, neither Parent, Merger Sub nor the Company will disseminate any press release or other announcement concerning the Merger, this Agreement or the transactions contemplated hereby to any third party without the prior written consent of each of the other parties hereto (which consent shall not be unreasonably withheld), except as may be required by any Legal Requirement or any listing agreement with Nasdaq or any other applicable national or regional securities exchange, provided, that the parties will consult with each other and use all reasonable efforts to agree on any such required press release or public statement in advance. The parties have agreed to the text of the joint press release announcing the execution of this Agreement.

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        5.5    Company Affiliates; Restrictive Legend.    The Company will use all reasonable efforts to deliver or cause to be delivered to Parent, as promptly as practicable on or following the date hereof, from each person who may reasonably be deemed to be an affiliate of the Company for purposes of Rule 145 promulgated under the Securities Act an executed affiliate agreement pursuant to which such affiliate shall agree to be bound by the provisions of Rule 145 promulgated under the Securities Act in a form provided by Parent and reasonably acceptable to the Company. Parent will give stop transfer instructions to its transfer agent with respect to any Parent Common Stock received pursuant to the Merger by any stockholder of the Company who may reasonably be deemed to be an affiliate of the Company for purposes of Rule 145 promulgated under the Securities Act and there will be placed on the certificates representing such Parent Common Stock, or any substitutions therefor, a legend stating in substance that the shares were issued in a transaction to which Rule 145 promulgated under the Securities Act applies and may only be transferred (i) in conformity with Rule 145 or (ii) in accordance with a written opinion of counsel, reasonably acceptable to Parent, in form and substance that such transfer is exempt from registration under the Securities Act.

        5.6    Regulatory Filings; Reasonable Efforts.    

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        5.7    Notification of Certain Matters.    

        5.8    Company Option Plans; Employee Stock Purchase Plan.    

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        5.9    Form S-8.    Parent agrees to file with the SEC as soon as practicable but no later than twenty (20) business days following the Effective Time a registration statement on Form S-8 under the Securities Act covering, to the extent applicable, the shares of Parent Common Stock to be issued upon the exercise of Company Options assumed by Parent.

        5.10    Nasdaq Listing.    Prior to the Effective Time, Parent agrees to use all reasonable efforts to authorize for listing on Nasdaq, the shares of Parent Common Stock issuable, and those required to be reserved for issuance, in connection with the Merger, subject to official notice of issuance. Parent agrees to promptly make such other additional filings with Nasdaq as may be required in connection with the consummation of the transactions contemplated by this Agreement.

        5.11    Company Rights Plan.    The Company shall not redeem the Company Rights or amend or modify (including by delay of the "Distribution Date" thereunder) or terminate the Company Rights Plan prior to the Effective Time unless, and only to the extent that: (a) it is required to do so by order of a court of competent jurisdiction, or (b) its Board of Directors has concluded in good faith, after receipt of advice of its outside legal counsel, that, the failure to effect such amendment, modification or termination is reasonably likely to result in a breach of its Board of Directors' fiduciary obligations to its stockholders under applicable law.

        5.12    Consents of Accountants.    Parent and the Company will each use all reasonable efforts to cause to be delivered to each other consents from their respective independent auditors, in form reasonably satisfactory to the recipient and customary in scope and substance for consents delivered by independent public accountants in connection with registration statements on Form S-4 under the Securities Act.

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        5.13    Subsequent Financial Statements.    The Company shall, if practicable, consult with Parent prior to making publicly available its financial results for any period after the date of this Agreement and prior to filing any Company SEC Documents after the date of this Agreement, it being understood that Parent shall have no liability by reason of such consultation.

        5.14    Conveyance Taxes.    Parent, Merger Sub and the Company shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer or stamp taxes, any transfer, recording, registration or other fees or any similar taxes which become payable in connection with the transactions contemplated by this Agreement that are required or permitted to be filed on or before the Effective Time.

        5.15    Indemnification.    

        5.16    Treatment as Reorganization.    None of Parent, Merger Sub or the Company shall, and they shall not permit any of their respective Subsidiaries to, take any action prior to or following the Closing which would reasonably be expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

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        5.17    Merger Sub Compliance.    Parent shall cause Merger Sub to comply with all of Merger Sub's obligations under or relating to this Agreement. Prior to the Effective Time, Merger Sub shall not engage in any business which is not in connection with the merger with and into the Company pursuant to this Agreement.


ARTICLE VI

CONDITIONS TO THE MERGER

        6.1    Conditions to the Obligations of Each Party to Effect the Merger.    The respective obligations of each party to this Agreement to effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of the following conditions:

        6.2    Additional Conditions to the Obligations of the Company.    The obligation of the Company to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date

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of each of the following conditions, any of which may be waived, in writing, exclusively by the Company:

        6.3    Additional Conditions to the Obligations of Parent.    The obligations of Parent and Merger Sub to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Parent and Merger Sub:

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ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

        7.1    Termination.    This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, and except as provided below, whether before or after the requisite approval of the stockholders of the Company:

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        For the purposes of this Agreement, a "Triggering Event," with respect to the Company, shall be deemed to have occurred if: (i) its Board of Directors or any committee thereof shall for any reason have withdrawn or shall have amended or modified in a manner adverse to Parent its recommendation in favor of, the adoption and approval of the Agreement or the approval of the Merger, (ii) it shall have failed to include in the Prospectus/Proxy Statement the recommendation of its Board of Directors in favor of the adoption and approval of the Agreement and the approval of the Merger, (iii) its Board of Directors fails to reaffirm (publicly, if so requested) its recommendation in favor of the adoption and approval of the Agreement and the approval of the Merger within ten (10) business days after the other party hereto requests in writing that such recommendation be reaffirmed, (iv) its Board of Directors or any committee thereof shall have approved or recommended any Acquisition Proposal, or (v) a tender or exchange offer relating to its securities shall have been commenced by a person unaffiliated with Parent and it shall not have sent to its securityholders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) business days after such tender or exchange offer is first published, sent or given, a statement disclosing that the Company Board of Directors recommends rejection of such tender or exchange offer.

        7.2    Notice of Termination; Effect of Termination.    Any termination of this Agreement under Section 7.1 above will be effective immediately upon the delivery of a valid written notice of the terminating party to the other party hereto. In the event of the termination of this Agreement as provided in Section 7.1, this Agreement shall be of no further force or effect, except (i) as set forth in Section 5.3(a), this Section 7.2, Section 7.3 and Article VIII, each of which shall survive the termination of this Agreement and (ii) nothing herein shall relieve any party from liability for any intentional breach of this Agreement. No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.

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        7.3    Fees and Expenses.    

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        7.4    Amendment.    Subject to applicable law, this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval and adoption of this Agreement and the approval of the Merger by the Company's stockholders, provided, after any such approval, no amendment shall be made which by law or the rules of Nasdaq requires further approval by such stockholders without such further stockholder approval. This Agreement may not be amended except by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company.

        7.5    Extension; Waiver.    At any time prior to the Effective Time any party hereto, by action taken or authorized by their respective Board of Directors, may, to the extent legally allowed: (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Delay in exercising any right under this Agreement shall not constitute a waiver of such right.


ARTICLE VIII

GENERAL PROVISIONS

        8.1    Non-Survival of Representations and Warranties.    The representations and warranties of the Company, Parent and Merger Sub contained in this Agreement shall terminate at the Effective Time, and only the covenants that by their terms survive the Effective Time shall survive the Effective Time.

        8.2    Notices.    All notices and other communications hereunder shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally, (ii) on the date of confirmation of receipt (or, the first business day following such receipt if the date is not a business day) of transmission by telecopy or telefacsimile, or (iii) on the date of confirmation of receipt (or, the first business day following such receipt if the date is not a business day) if delivered by a nationally recognized courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a)   if to Parent or Merger Sub:

 
 
Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
Attention: Chief Executive Officer
Telephone: (408) 349-3300
Facsimile: (408) 349-7721
         

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with a copy at the same address to the attention of the General Counsel and Secretary and with a copy to:

 
 
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1100
Palo Alto, California 94301
    Attention:   Kenton J. King
Celeste E. Greene
    Telephone: (650) 470-4500
Facsimile: (650) 470-4570

(b)
 
if to the Company:

 
 
Overture Services, Inc.
74 North Pasadena Avenue, 3rd Floor
Pasadena, California 91103
Attention: Chief Executive Officer
Telephone: (626) 685-5600
Facsimile: (626) 685-5601

 
 
with copies at the same address to the attention of the Chief Financial Officer and General Counsel and with a copy to:

 
 
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
    Attention:   Martin W. Korman
Bradley L. Finkelstein
    Telephone: (650) 493-9300
Facsimile: (650) 493-6811

        8.3    Interpretation; Certain Defined Terms.    

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        8.4    Counterparts.    This Agreement may be executed in two or more counterparts, and by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

        8.5    Entire Agreement; Third Party Beneficiaries.    This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Letter and the Parent Disclosure Letter (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) are not intended to confer upon any other person any rights or remedies hereunder, except as specifically provided in Section 5.15.

        8.6    Severability.    In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

        8.7    Other Remedies; Specific Performance.    Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

        8.8    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable

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principles of conflicts of law thereof. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a state court sitting in the State of Delaware.

        8.9    Rules of Construction.    The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

        8.10    Assignment.    This Agreement shall not be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that Merger Sub may assign, in its sole discretion and without the consent of any other party, any or all of its rights, interests and obligations hereunder to (i) Parent, (ii) to Parent and one or more direct or indirect wholly-owned Subsidiaries of Parent incorporated as corporations in the State of Delaware, or (iii) to one or more direct or indirect wholly-owned Subsidiaries of Parent incorporated as corporations in the State of Delaware (each, an "Assignee"); provided that such Assignee shall in each case be substituted for Merger Sub with respect to, and bound by, each of the representations, warranties and covenants of Merger Sub contained herein. Any such Assignee may thereafter assign, in its sole discretion and without the consent of any other party, any or all of its rights, interests and obligations hereunder to one or more additional Assignees. Subject to the preceding sentence, but without relieving any party hereto of any obligation hereunder, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

        8.11    No Waiver; Remedies Cumulative.    No failure or delay on the part of any party hereto in the exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive to, and not exclusive of, any rights or remedies otherwise available.

        8.12    Waiver of Jury Trial.    EACH OF PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

*****

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized respective officers as of the date first written above.

    YAHOO! INC.

 
 
By:
 
/s/  TERRY S. SEMEL      

 
 
Name:
 
Terry S. Semel

 
 
Title:
 
Chief Executive Officer

 
 
JULY 2003 MERGER CORP.

 
 
By:
 
/s/  DANIEL L. ROSENSWEIG      

 
 
Name:
 
Daniel L. Rosensweig

 
 
Title:
 
Chief Executive Officer and President

 
 
OVERTURE SERVICES, INC.

 
 
By:
 
/s/  TED MEISEL      

 
 
Name:
 
Ted Meisel

 
 
Title:
 
President and Chief Executive Officer

[SIGNATURE PAGE TO MERGER AGREEMENT]

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ANNEX B


FORM OF VOTING AGREEMENT

        THIS VOTING AGREEMENT (this "Agreement"), is entered into as of July 14, 2003, by and among Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and the undersigned stockholder ("Stockholder") of Overture Services, Inc., a Delaware corporation (the "Company").

WITNESSETH:

        WHEREAS, concurrently with the execution of this Agreement, Parent, Merger Sub and the Company are entering into an Agreement and Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which the parties thereto have agreed, upon the terms and subject to the conditions set forth therein, to merge Merger Sub with and into the Company or, alternatively, merge the Company with and into Merger Sub (the "Merger"); and

        WHEREAS, as of the date hereof, Stockholder is the Beneficial Owner (as defined hereinafter) of Existing Shares (as defined hereinafter) of the common stock, $0.0001 par value, of the Company (the "Company Common Stock"); and

        WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has requested that Stockholder enter into this Agreement.

        NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

        Section 1.    Certain Definitions.    In addition to the terms defined elsewhere herein, capitalized terms used and not defined herein have the respective meanings ascribed to them in the Merger Agreement. For purposes of this Agreement:

        Section 2. Representations And Warranties of Stockholder. Stockholder represents and warrants to Parent and Merger Sub as follows:

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        Section 3.    Representations And Warranties of Parent And Merger Sub.    Each of Parent and Merger Sub hereby, jointly and severally, represents and warrants to Stockholder as follows:

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        Section 4.    Disclosure.    Stockholder hereby agrees to permit Parent to publish and disclose in the Registration Statement and the Prospectus/Proxy Statement (including all documents and schedules filed with the Securities and Exchange Commission), and in any press release or other disclosure document in which Parent reasonably determines in its good faith judgment that such disclosure is required by law, including the rules and regulations of the Securities and Exchange Commission, or appropriate, in connection with the Merger and any transactions related thereto, Stockholder's identity and ownership of the Company Common Stock and the nature of Stockholder's commitments, arrangements and understandings under this Agreement.

        Section 5.    Transfer And Other Restrictions.    Prior to the termination of this Agreement, Stockholder agrees not to, directly or indirectly:

        Section 6.    Voting of the Company Common Stock.    Stockholder hereby agrees that, during the period commencing on the date hereof and continuing until the first to occur of (a) the Effective Time or (b) termination of this Agreement in accordance with its terms, at any meeting (whether annual or special and whether or not an adjourned or postponed meeting) of the holders of the Company Common Stock, however called, or in connection with any written consent of the holders of the Company Common Stock, Stockholder (in his or her capacity as such) will, provided that Stockholder has received written notice from Parent within a reasonable period of time prior to any such meeting that Parent is unable to vote the Securities subject to the irrevocable proxy in the form attached hereto as Annex I (the "Proxy") at the meeting, appear at the meeting or otherwise cause the Securities to be

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counted as present thereat for purposes of establishing a quorum and vote or consent (or cause to be voted or consented) the Securities:

        Section 7.    Irrevocable Proxy.    Concurrently with the execution of this Agreement, Stockholder agrees to deliver to Parent the Proxy, which shall be irrevocable to the fullest extent permitted by applicable law, with respect to the Securities.

        Section 8.    Stop Transfer; Legending of Shares.

        Section 9.    Termination.    This Agreement shall terminate on the earliest of (a) termination of the Merger Agreement, (b) the agreement of the parties hereto to terminate this Agreement, and (c) the Effective Time.

        Section 10.    Miscellaneous.

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* * * * * *

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        IN WITNESS WHEREOF, Parent, Merger Sub and Stockholder have caused this Agreement to be duly executed as of the day and year first written above.

    YAHOO! INC.

 
 
By:
    
        Name:
        Title:

 
 
JULY 2003 MERGER CORP.

 
 
By:
    
        Name:
        Title:

 
 
By:
    
        Name:

 
 
Shares beneficially owned:
shares of Company Common Stock (and associated Company Rights)
shares of Company Common Stock issuable upon exercise of Company Options

 
 
Address:

 
 
    

 
 
    

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ANNEX I

IRREVOCABLE PROXY

        The undersigned Stockholder of Overture Services, Inc., a Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent permitted by applicable law) appoints Jonathan K. Sobel and Susan L. Decker and each of them individually, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and re-substitution, to the full extent of the undersigned's right, with respect to the Securities (as defined in the Voting Agreement dated as of the date hereof (the "Voting Agreement") between Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and the undersigned Stockholder of the Company) until the termination of the Voting Agreement pursuant to its terms. Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Voting Agreement. Upon the execution hereof, all prior proxies given by the undersigned with respect to the matters set forth in clauses (A), (B) and (C) below are hereby revoked and no subsequent proxies will be given.

        This proxy is irrevocable to the fullest extent permitted by applicable law, is granted pursuant to the Voting Agreement and is granted in consideration of Parent entering into the Merger Agreement. This proxy is executed and intended to be irrevocable to the fullest extent permitted by law in accordance with the provisions of Section 212(c) of the Delaware General Corporation Law. The attorneys and proxies named above are empowered to exercise all voting rights (including, without limitation, the power to execute and deliver written consents with respect to the Securities) of the undersigned at any time prior to termination of the Voting Agreement at every annual, special or adjourned meeting of the stockholders of the Company and in every written consent in lieu of such meeting as follows:

The attorneys and proxies named above may not exercise this Proxy on any other matter except as provided in clauses (A), (B) and (C) above. The undersigned Stockholder may vote the Securities on all other matters.

Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned.

        This Proxy is coupled with an interest and is irrevocable to the fullest extent permitted by law.

Dated: July 14, 2003   Signature of Stockholder:

 
 
    
    Print Name of Stockholder:

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ANNEX C


VOTING AGREEMENT

        THIS VOTING AGREEMENT (this "Agreement"), is entered into as of July 14, 2003, by and among Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and the undersigned stockholder ("Stockholder") of Overture Services, Inc., a Delaware corporation (the "Company").

WITNESSETH:

        WHEREAS, concurrently with the execution of this Agreement, Parent, Merger Sub and the Company are entering into an Agreement and Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which the parties thereto have agreed, upon the terms and subject to the conditions set forth therein, to merge Merger Sub with and into the Company or, alternatively, merge the Company with and into Merger Sub (the "Merger"); and

        WHEREAS, as of the date hereof, Stockholder is the Beneficial Owner (as defined hereinafter) of Existing Shares (as defined hereinafter) of the common stock, $0.0001 par value, of the Company (the "Company Common Stock"); and

        WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has requested that Stockholder enter into this Agreement.

        NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

        Section 1.    Certain Definitions.    In addition to the terms defined elsewhere herein, capitalized terms used and not defined herein have the respective meanings ascribed to them in the Merger Agreement. For purposes of this Agreement:

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        Section 2.    Representations And Warranties of Stockholder.    Stockholder represents and warrants to Parent and Merger Sub as follows:

        Section 3.    Representations And Warranties of Parent And Merger Sub.    Each of Parent and Merger Sub hereby, jointly and severally, represents and warrants to Stockholder as follows:

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        Section 4.    Disclosure.    Stockholder hereby agrees to permit Parent to publish and disclose in the Registration Statement and the Prospectus/Proxy Statement (including all documents and schedules filed with the Securities and Exchange Commission), and in any press release or other disclosure document in which Parent reasonably determines in its good faith judgment that such disclosure is required by law, including the rules and regulations of the Securities and Exchange Commission, or appropriate, in connection with the Merger and any transactions related thereto, Stockholder's identity and ownership of the Company Common Stock and the nature of Stockholder's commitments, arrangements and understandings under this Agreement.

        Section 5.    Transfer And Other Restrictions.    Prior to the termination of this Agreement, Stockholder agrees not to, directly or indirectly:

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Notwithstanding anything to the contrary in this Agreement, any Securities Transferred in a manner permitted by Section 5(a) hereof shall be Transferred free and clear of any voting restriction and of the Proxy (as defined below), in each case except to the extent specifically provided by Section 5(a)(iv).

        Section 6.    Voting of the Company Common Stock.    Stockholder hereby agrees that, during the period commencing on the date hereof and continuing until the first to occur of (a) the Effective Time or (b) termination of this Agreement in accordance with its terms, at any meeting (whether annual or special and whether or not an adjourned or postponed meeting) of the holders of the Company Common Stock, however called, or in connection with any written consent of the holders of the Company Common Stock, Stockholder (in his or her capacity as such) will, provided that Stockholder has received written notice from Parent within a reasonable period of time prior to any such meeting that Parent is unable to vote the Securities subject to the irrevocable proxy in the form attached hereto as Annex I (the "Proxy") at the meeting, appear at the meeting or otherwise cause the Securities which are eligible to vote and which are held of record or over which Stockholder has sole voting power to be counted as present thereat for purposes of establishing a quorum and vote or consent (or cause to be voted or consented) the Securities which are eligible to vote and which are held of record or over which Stockholder has sole voting power:

        Except as otherwise permitted under Section 5(a) hereof, Stockholder may not enter into any agreement or understanding with any person the effect of which would be inconsistent with or violative of any provision contained in this Section 6. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict Stockholder from acting in Stockholder's capacity as a director of the Company (it being understood that this Agreement shall apply to Stockholder solely in Stockholder's capacity as a stockholder of the Company) or voting in Stockholder's sole discretion on any matter other than those matters referred to in subsections (A), (B) and (C) above.

        Section 7.    Irrevocable Proxy.    Concurrently with the execution of this Agreement, Stockholder agrees to deliver to Parent the Proxy, which shall be irrevocable to the fullest extent permitted by applicable law, with respect to the Securities except as otherwise contemplated by Section 5(a) hereof; provided, that, the Proxy shall terminate and be revoked with respect to any Securities concurrently with the Transfer of such Securities in accordance with Section 5(a) without any notice or action by Stockholder, the transferee or any other person.

        Section 8.    Stop Transfer; Legending of Shares.

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        Section 9.    Termination.    This Agreement shall terminate on the earliest of (a) termination of the Merger Agreement, (b) the agreement of the parties hereto to terminate this Agreement, (c) the Effective Time and (d) March 31, 2004; provided, however, that this Agreement shall earlier terminate with respect to any Securities Transferred by Stockholder in accordance with Section 5(a) hereof upon such Transfer.

        Section 10.    Miscellaneous.

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* * * * * *

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        IN WITNESS WHEREOF, Parent, Merger Sub and Stockholder have caused this Agreement to be duly executed as of the day and year first written above.

    YAHOO! INC.

 
 
By:
/s/  JONATHAN K. SOBEL      
        Name:    Jonathan K. Sobel
        Title:    Senior Vice President, General Counsel and Secretary

 
 
JULY 2003 MERGER CORP.

 
 
By:
/s/  JONATHAN K. SOBEL      
        Name:    Jonathan K. Sobel
        Title:    Secretary

 
 
IDEALAB

 
 
By:
/s/  BILL GROSS      
        Name:    Bill Gross, CEO

 
 
Shares beneficially owned:

 
 
3,079,915 shares of Company Common Stock (and associated Company Rights)
0 shares of Company Common Stock issuable upon exercise of Company Options

 
 
Address:

 
 
130 West Union Street
Pasadena, CA 91103

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ANNEX I

IRREVOCABLE PROXY

        The undersigned Stockholder of Overture Services, Inc., a Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent permitted by applicable law) appoints Jonathan K. Sobel and Susan L. Decker and each of them individually, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and re-substitution, to the full extent of the undersigned's right, with respect to the Securities (as defined in the Voting Agreement dated as of the date hereof (the "Voting Agreement") between Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and the undersigned Stockholder of the Company) which the undersigned Stockholder Beneficially Owns (as defined in the Voting Agreement) until the termination of the Voting Agreement pursuant to its terms (including terminations of the Voting Agreement with respect to Securities Transferred (as defined in the Voting Agreement) in accordance with Section 5(a) thereof). Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Voting Agreement. Upon the execution hereof, all prior proxies given by the undersigned with respect to the matters set forth in clauses (A), (B) and (C) below are hereby revoked and no subsequent proxies will be given.

        This proxy is irrevocable to the fullest extent permitted by applicable law, is granted pursuant to the Voting Agreement and is granted in consideration of Parent entering into the Merger Agreement. This proxy is executed and intended to be irrevocable to the fullest extent permitted by law in accordance with the provisions of Section 212(c) of the Delaware General Corporation Law. The attorneys and proxies named above are empowered to exercise all voting rights (including, without limitation, the power to execute and deliver written consents with respect to the Securities) of the undersigned at any time prior to termination of the Voting Agreement at every annual, special or adjourned meeting of the stockholders of the Company and in every written consent in lieu of such meeting as follows:

The attorneys and proxies named above may not exercise this Proxy on any other matter except as provided in clauses (A), (B) and (C) above. The undersigned Stockholder may vote the Securities on all other matters.

Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned; provided, however, that this Proxy shall terminate and be revoked with respect to any Securities Transferred (as defined in the Voting Agreement) in accordance with Section 5(a) of the Voting Agreement upon such Transfer without any notice or action by Stockholder, the transferee or any other person, and shall thereafter have no further force or effect with respect to such Securities.

        This Proxy is coupled with an interest and is irrevocable to the fullest extent permitted by law.

    IDEALAB

Dated: July 14, 2003
 
/s/  BILL GROSS      
Bill Gross, CEO

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ANNEX D


VOTING AGREEMENT

        THIS VOTING AGREEMENT (this "Agreement"), is entered into as of July 14, 2003, by and among Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and the undersigned stockholder ("Stockholder") of Overture Services, Inc., a Delaware corporation (the "Company").

WITNESSETH:

        WHEREAS, concurrently with the execution of this Agreement, Parent, Merger Sub and the Company are entering into an Agreement and Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which the parties thereto have agreed, upon the terms and subject to the conditions set forth therein, to merge Merger Sub with and into the Company or, alternatively, merge the Company with and into Merger Sub (the "Merger"); and

        WHEREAS, as of the date hereof, Stockholder is the Beneficial Owner (as defined hereinafter) of Existing Shares (as defined hereinafter) of the common stock, $0.0001 par value, of the Company (the "Company Common Stock"); and

        WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has requested that Stockholder enter into this Agreement.

        NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

        Section 1.    Certain Definitions. In addition to the terms defined elsewhere herein, capitalized terms used and not defined herein have the respective meanings ascribed to them in the Merger Agreement. For purposes of this Agreement:

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        Section 2.    Representations And Warranties of Stockholder.    Stockholder represents and warrants to Parent and Merger Sub as follows:

        Section 3.    Representations And Warranties of Parent And Merger Sub.    Each of Parent and Merger Sub hereby, jointly and severally, represents and warrants to Stockholder as follows:

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        Section 4.    Disclosure.    Stockholder hereby agrees to permit Parent to publish and disclose in the Registration Statement and the Prospectus/Proxy Statement (including all documents and schedules filed with the Securities and Exchange Commission), and in any press release or other disclosure document in which Parent reasonably determines in its good faith judgment that such disclosure is required by law, including the rules and regulations of the Securities and Exchange Commission, or appropriate, in connection with the Merger and any transactions related thereto, Stockholder's identity and ownership of the Company Common Stock and the nature of Stockholder's commitments, arrangements and understandings under this Agreement.

        Section 5.    Transfer And Other Restrictions.    Prior to the termination of this Agreement, Stockholder agrees not to, directly or indirectly:

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Notwithstanding anything to the contrary in this Agreement, any Securities Transferred in a manner permitted by Section 5(a) hereof shall be Transferred free and clear of any voting restriction and of the Proxy (as defined below), in each case except to the extent specifically provided by Section 5(a)(iv).

        Section 6.    Voting of the Company Common Stock.    Stockholder hereby agrees that, during the period commencing on the date hereof and continuing until the first to occur of (a) the Effective Time or (b) termination of this Agreement in accordance with its terms, at any meeting (whether annual or special and whether or not an adjourned or postponed meeting) of the holders of the Company Common Stock, however called, or in connection with any written consent of the holders of the Company Common Stock, Stockholder (in his or her capacity as such) will, provided that Stockholder has received written notice from Parent within a reasonable period of time prior to any such meeting that Parent is unable to vote the Securities subject to the irrevocable proxy in the form attached hereto as Annex I (the "Proxy") at the meeting, appear at the meeting or otherwise cause the Securities which are eligible to vote and which are held of record or over which Stockholder has sole voting power to be counted as present thereat for purposes of establishing a quorum and vote or consent (or cause to be voted or consented) the Securities which are eligible to vote and which are held of record or over which Stockholder has sole voting power:

        Except as otherwise permitted under Section 5(a) hereof, Stockholder may not enter into any agreement or understanding with any person the effect of which would be inconsistent with or violative of any provision contained in this Section 6. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict Stockholder from acting in Stockholder's capacity as a director of the Company (it being understood that this Agreement shall apply to Stockholder solely in Stockholder's capacity as a stockholder of the Company) or voting in Stockholder's sole discretion on any matter other than those matters referred to in subsections (A), (B) and (C) above.

        Section 7.    Irrevocable Proxy.    Concurrently with the execution of this Agreement, Stockholder agrees to deliver to Parent the Proxy, which shall be irrevocable to the fullest extent permitted by applicable law, with respect to the Securities except as otherwise contemplated by Section 5(a) hereof; provided, that, the Proxy shall terminate and be revoked with respect to any Securities concurrently with the Transfer of such Securities in accordance with Section 5(a) without any notice or action by Stockholder, the transferee or any other person.

        Section 8.    Stop Transfer; Legending of Shares.

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        Section 9.    Termination.    This Agreement shall terminate on the earliest of (a) termination of the Merger Agreement, (b) the agreement of the parties hereto to terminate this Agreement, (c) the Effective Time and (d) March 31, 2004; provided, however, that this Agreement shall earlier terminate with respect to any Securities Transferred by Stockholder in accordance with Section 5(a) hereof upon such Transfer.

        Section 10.    Miscellaneous.

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D-6

* * * * * *

D-7

        IN WITNESS WHEREOF, Parent, Merger Sub and Stockholder have caused this Agreement to be duly executed as of the day and year first written above.

    YAHOO! INC.

 
 
By:
/s/  TERRY SEMEL      
        Name:    Terry Semel
        Title:    Chief Executive Officer

 
 
JULY 2003 MERGER CORP.

 
 
By:
/s/  MICHAEL J. CALLAHAN      
        Name:    Michael J. Callahan
        Title:    Assistant Secretary

 
 
/s/  BILL GROSS      
Bill Gross (individually)

 
 
Shares beneficially owned:
2,000 shares of Company Common Stock (and associated Company Rights)
80,000 shares of Company Common Stock issuable upon exercise of Company Options

 
 
Address:

 
 
130 West Union Street
Pasadena, CA 91103

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ANNEX I
IRREVOCABLE PROXY

        The undersigned Stockholder of Overture Services, Inc., a Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent permitted by applicable law) appoints Jonathan K. Sobel and Susan L. Decker and each of them individually, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and re-substitution, to the full extent of the undersigned's right, with respect to the Securities (as defined in the Voting Agreement dated as of the date hereof (the "Voting Agreement") between Yahoo! Inc., a Delaware corporation ("Parent"), July 2003 Merger Corp., a Delaware corporation and the undersigned Stockholder of the Company) which the undersigned Stockholder Beneficially Owns (as defined in the Voting Agreement) until the termination of the Voting Agreement pursuant to its terms (including terminations of the Voting Agreement with respect to Securities Transferred (as defined in the Voting Agreement) in accordance with Section 5(a) thereof). Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Voting Agreement. Upon the execution hereof, all prior proxies given by the undersigned with respect to the matters set forth in clauses (A), (B) and (C) below are hereby revoked and no subsequent proxies will be given.

        This proxy is irrevocable to the fullest extent permitted by applicable law, is granted pursuant to the Voting Agreement and is granted in consideration of Parent entering into the Merger Agreement. This proxy is executed and intended to be irrevocable to the fullest extent permitted by law in accordance with the provisions of Section 212(c) of the Delaware General Corporation Law. The attorneys and proxies named above are empowered to exercise all voting rights (including, without limitation, the power to execute and deliver written consents with respect to the Securities) of the undersigned at any time prior to termination of the Voting Agreement at every annual, special or adjourned meeting of the stockholders of the Company and in every written consent in lieu of such meeting as follows:

The attorneys and proxies named above may not exercise this Proxy on any other matter except as provided in clauses (A), (B) and (C) above. The undersigned Stockholder may vote the Securities on all other matters.

Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned; provided, however, that this Proxy shall terminate and be revoked with respect to any Securities Transferred (as defined in the Voting Agreement) in accordance with Section 5(a) of the Voting Agreement upon such Transfer without any notice or action by Stockholder, the transferee or any other person, and shall thereafter have no further force or effect with respect to such Securities.

        This Proxy is coupled with an interest and is irrevocable to the fullest extent permitted by law.

Dated: July 14, 2003   /s/  BILL GROSS      
Bill Gross (Individually)

D-9


ANNEX E

July 14, 2003

Board of Directors
Overture Services, Inc.
74 North Pasadena Avenue
Pasadena, CA 91103

Madame and Gentlemen:

        You have requested our opinion as to the fairness from a financial point of view to the holders of the outstanding shares of Common Stock, par value $0.0001 per share (the "Shares"), of Overture Services, Inc. (the "Company") of the Merger Consideration (as defined below) to be received by such holders pursuant to the Agreement and Plan of Merger, dated as of July 14, 2003 (the "Agreement"), by and among YAHOO! INC. ("YAHOO!"), July 2003 Merger Corp., a wholly-owned subsidiary of YAHOO! ("Merger Sub"), and the Company. The Agreement provides that Merger Sub will be merged with the Company (the "Merger") and each outstanding Share will be converted into 0.6108 shares of Common Stock, par value $0.001 per share (the "YAHOO! Common Stock"), of YAHOO! (the "Stock Consideration") and $4.75 in cash (the "Cash Consideration"; together with the Stock Consideration, the "Merger Consideration").

        Goldman, Sachs & Co., as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities and private placements as well as for estate, corporate and other purposes. We have acted as financial advisor to the Company in connection with, and have participated in certain of the negotiations leading to, the Agreement. We expect to receive fees for our services in connection with the Merger, all of which fees are contingent upon the consummation of the Merger, and the Company has agreed to indemnify us against certain liabilities arising out of our engagement. In addition, we have provided certain investment banking services to the Company from time to time, including having acted as its financial advisor in connection with its acquisition of AltaVista Company, a subsidiary of CMGI, Inc., in February 2003. We also have provided certain investment banking services to YAHOO! from time to time, including having acted as YAHOO!'s financial advisor in connection with its acquisition of HotJobs.com, Ltd. in February 2002. We may provide investment banking services to YAHOO! in the future. In connection with the above-described investment banking services we have received, and may receive, compensation. Goldman, Sachs & Co. provides a full range of financial advisory, financing and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold long and short positions in securities, including derivative securities, of the Company or YAHOO! for its own account and for the accounts of customers.

        In connection with this opinion, we have reviewed, among other things, the Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the Company for the three years ended December 31, 2002 and of YAHOO! for the five years ended December 31, 2002; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company and YAHOO!; certain other communications from the Company and YAHOO! to their respective stockholders; certain internal financial analyses and forecasts for the Company and YAHOO! prepared by the management of the Company (the "Forecasts"); and certain cost savings and operating synergies projected by the management of the Company to result from the transaction contemplated by the Agreement. We also have held discussions with members of the senior managements of the Company and YAHOO! regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction contemplated by the Agreement and the past and current business operations, financial condition and future prospects of their respective companies, including discussions with senior management of the

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Board of Directors
Overture Services, Inc.
July 14, 2003
Page Two

Company with regard to the competitive dynamics of attracting and retaining its commercial affiliates. In addition, we have reviewed the reported price and trading activity for the Shares and the YAHOO! Common Stock, compared certain financial and stock market information for the Company and YAHOO! with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the Internet industry specifically and in other industries generally and performed such other studies and analyses as we considered appropriate.

        We have relied upon the accuracy and completeness of all of the financial, accounting and other information discussed with or reviewed by us and have assumed such accuracy and completeness for purposes of rendering this opinion. In that regard, we have assumed with your consent that the Forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities (including any derivative or off-balance-sheet assets and liabilities) of the Company or YAHOO! or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We also have assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the transaction contemplated by the Agreement will be obtained without any adverse effect on the Company or YAHOO! or on the expected benefits of the transaction contemplated by the Agreement. Our opinion does not address the relative merits of the transaction contemplated by the Agreement as compared to any alternative business transaction that might be available to the Company, nor does it address the underlying business decision of the Company to engage in the transaction contemplated by the Agreement. In addition, we are not expressing any opinion herein as to the prices at which the Shares or the shares of YAHOO! Common Stock will trade at any time. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the transaction contemplated by the Agreement and such opinion does not constitute a recommendation as to how any holder of Shares should vote with respect to such transaction.

        Based upon and subject to the foregoing and based upon such other matters as we consider relevant, it is our opinion that, as of the date hereof, the Merger Consideration to be received by the holders of Shares pursuant to the Agreement is fair from a financial point of view to such holders.

Very truly yours,
 		   

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ANNEX F


DELAWARE GENERAL CORPORATION LAW

APPRAISAL RIGHTS

SECTION 262. APPRAISAL RIGHTS.

        (a)   Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to Section 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

        (b)   Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to Section 251 (other than a merger effected pursuant to Section 251(g) of this title), Section 252, Section 254, Section 257, Section 258, Section 263 or Section 264 of this title:

F-1

        (c)   Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.

        (d)   Appraisal rights shall be perfected as follows:

F-2

        (e)   Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later.

        (f)    Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

        (g)   At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.

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        (h)   After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.

        (i)    The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

        (j)    The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

        (k)   From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just.

        (l)    The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation hall have the status of authorized and unissued shares of the surviving or resulting corporation.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.    Indemnification of Directors and Officers.

        Our Amended Bylaws provide generally for indemnification of our officers, directors, agents and employees to the extent authorized by the General Corporation Law of the State of Delaware ("DGCL"). Pursuant to Section 145 of the DGCL, a corporation generally has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are, or are threatened to be made, a party by reason of their serving in such positions so long as they acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of a corporation, and with respect to any criminal action, they had no reasonable cause to believe their conduct was unlawful. With respect to suits by or in the right of a corporation, however, indemnification is not available if such person is adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless the court determines that indemnification is appropriate. In addition, a corporation has the power to purchase and maintain insurance for such person. The statute also expressly provides that the power to indemnify that it authorizes is not exclusive of any rights granted under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

        As permitted by Section 102 of the DGCL, our stockholders have approved and incorporated provisions into Article XII of our Amended and Restated Certificate of Incorporation and Article VI of our Amended Bylaws eliminating a director's personal liability for monetary damages to us and our stockholders arising from a breach of a director's fiduciary duty, except for liability under Section 174 of the DGCL or liability for any breach of the director's duty of loyalty to us or its stockholders, for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law or for any transaction in which the director derived an improper personal benefit. Yahoo! has also entered into agreements with its directors and certain of its officers that will require Yahoo!, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors to the fullest extent not prohibited by law.


Item 21.    Exhibits and Financial Statement Schedules.

        (a)   Exhibits

Exhibit
Number
   Description
2.1   Agreement and Plan of Merger dated as of June 27, 2000 by and among the Registrant, Hermes Acquisition Corporation and eGroups, Inc. (incorporated by reference into this registration statement from Exhibit 2.8 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).

2.2
 
Agreement and Plan of Merger, dated as of December 27, 2001 by and among the Registrant, HJ Acquisition Corp. and HotJobs.com, Ltd. (incorporated by reference into this registration statement from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on December 27, 2001).

2.3
 
Agreement and Plan of Merger dated as of December 23, 2002 by and among the Registrant, December 2002 Acquisition Corp. and Inktomi Corporation (incorporated by reference into this registration statement from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on January 8, 2003).
     

II-1


2.4
 
Agreement and Plan of Merger dated as of July 14, 2003 by and among the Registrant, July 2003 Merger Corp., and Overture Services, Inc. (included as Annex A to the proxy statement/prospectus forming a part of this registration statement).

3.1
 
Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference into this registration statement from Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).

3.2
 
Amended Bylaws of Registrant (incorporated by reference into this registration statement from Exhibit 4.9 to the Registrant's Registration Statement on Form S-8 filed on March 5, 2002).

4.1
 
Form of Senior Indenture (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.2
 
Form of Subordinated Indenture (incorporated by reference into this registration statement from Exhibit 4.2 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.3
*
Form of Senior Note.

4.4
*
Form of Subordinated Note.

4.5
*
Form of Certificate of Designation for Preferred Stock (together with Preferred Stock certificate).

4.6
 
Form of Deposit Agreement (together with Depository Receipt) (incorporated by reference into this registration statement from Exhibit 4.6 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.7
*
Form of Warrant Agreement (together with form of Warrant Certificate).

4.8
 
Rights Agreement, dated as of March 15, 2001, between the Registrant and Equiserve Trust Company, N.A., as Rights Agent, including the form of Rights Certificate as Exhibit B and the summary of Rights to Purchase Preferred Stock as Exhibit C (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed March 19, 2001 and incorporated herein by reference).

4.9
 
Rights Agreement, dated as of March 15, 2001, between the Registrant and EquiServe Trust Company, N.A., as Rights Agent, including the form of Rights Certificate as Exhibit B and the summary of Rights to Purchase Preferred Stock as Exhibit C (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on March 19, 2001).

4.10
 
Registration Rights Agreement, dated August 28, 2002, by and among Yahoo! Inc., Acqua Wellington Private Placement Fund Ltd. and Acqua Wellington Opportunity I Limited (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's registration statement on Form S-3 filed on October 3, 2002).

4.11
 
Registration Rights Agreement, dated as of April 9, 2003, by and between Yahoo! Inc. and Credit Suisse First Boston LLC (incorporated by reference into this registration statement from Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on April 10, 2003).
     

II-2


4.12
 
Indenture, dated as of April 9, 2003, by and between Yahoo! Inc. and U.S. Bank National Association (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on April 10, 2003).

5.1
 
Opinion regarding legality by Skadden, Arps, Slate, Meagher & Flom LLP.

8.1
**
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding material federal income tax consequences of the merger.

8.2
**
Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation regarding material federal income tax consequences of the merger.

23.1
 
Consent of PricewaterhouseCoopers LLP, independent accountants of Yahoo! Inc.

23.2
 
Consent of PricewaterhouseCoopers LLP, independent accountants of Inktomi Corporation.

23.3
 
Consent of Ernst & Young LLP, independent accountants of Overture Services, Inc.

23.4
 
Consent of Deloitte & Touche AS, independent accountants of Fast Search & Transfer ASA

23.5
 
Consent of KPMG LLP, independent accountants of AltaVista Company

23.6
 
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).

23.7
**
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1).

23.8
**
Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 8.2).

24.1
 
Power of Attorney (see the signature page of this Form S-4 registration statement).

99.1
 
Form of Voting Agreement, dated as of July 14, 2003, by and between Registrant, July 2003 Merger Corp. and each of certain individual stockholders of Overture Services, Inc. (included as Annex B to the proxy statement/prospectus forming a part of this registration statement).

99.2
 
Voting Agreement, dated as of July 14, 2003, by and between Yahoo! Inc., July 2003 Merger Corp. and Idealab (included as Annex C to the proxy statement/prospectus forming a part of this registration statement).

99.3
 
Voting Agreement, dated as of July 14, 2003, by and between Yahoo! Inc., July 2003 Merger Corp. and Bill Gross (included as Annex D to the proxy statement/prospectus forming a part of this registration statement).

99.4
 
Opinion of Goldman, Sachs & Co. regarding the fairness of the merger (included as Annex E to the proxy statement/prospectus forming a part of this registration statement).

99.5
**
Employment Letter, dated July 14, 2003, between Yahoo! Inc. and Ted Meisel.

99.6
 
Form of Overture Proxy Card.

99.7
 
Form of Consent of Goldman, Sachs & Co.
*
To be filed by a report on Form 8-K pursuant to Item 601 of Regulation S-K or, where applicable, incorporated herein by reference from a subsequent filing in accordance with Section 305(b)(2) of the Trust Indenture Act of 1939

**
To be filed by amendment.

II-3


Item 22.    Undertakings.

        The undersigned registrant hereby undertakes:

        (a)   (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

        (b)   The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (c)   (1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

II-4

        (d)   Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.

        (e)   The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

        (f)    The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-5


SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, Yahoo! Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on August 8, 2003.

    YAHOO! INC.

 
 
By:
 
/s/  TERRY SEMEL      
Terry Semel
 Chairman and Chief
Executive Officer


POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Susan Decker and Terry Semel, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Registration Statement on Form S-4, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement, has been signed by the following persons in the capacities indicated on this 8th day of August 2003.

Signature
   Title

 
 
 
/s/  TERRY SEMEL      
Terry Semel		   Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)

/s/  SUSAN DECKER      
Susan Decker
 
Executive Vice President, Finance and
Administration and Chief Financial Officer
(Principal Accounting Officer)

/s/  PATRICIA CUTHBERT      
Patricia Cuthbert
 
Vice President and Corporate Controller
(Principal Accounting Officer)

Roy Bostock
 
Director

/s/  RONALD BURKLE      
Ronald Burkle
 
Director

/s/  ERIC HIPPEAU      
Eric Hippeau
 
Director
     

II-6


/s/  ARTHUR KERN      
Arthur Kern
 
Director

Robert Kotick
 
Director

/s/  EDWARD KOZEL      
Edward Kozel
 
Director

/s/  GARY WILSON      
Gary Wilson
 
Director

/s/  JERRY YANG      
Jerry Yang
 
Director

II-7


EXHIBIT INDEX

Exhibit
Number
   Description
2.1   Agreement and Plan of Merger dated as of June 27, 2000 by and among the Registrant, Hermes Acquisition Corporation and eGroups, Inc. (incorporated by reference into this registration statement from Exhibit 2.8 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).

2.2
 
Agreement and Plan of Merger, dated as of December 27, 2001 by and among the Registrant, HJ Acquisition Corp. and HotJobs.com, Ltd. (incorporated by reference into this registration statement from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on December 27, 2001).

2.3
 
Agreement and Plan of Merger dated as of December 23, 2002 by and among the Registrant, December 2002 Acquisition Corp. and Inktomi Corporation (incorporated by reference into this registration statement from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on January 8, 2003).

2.4
 
Agreement and Plan of Merger dated as of July 14, 2003 by and among the Registrant, July 2003 Merger Corp., and Overture Services, Inc. (included as Annex A to the proxy statement/prospectus forming a part of this registration statement).

3.1
 
Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference into this registration statement from Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).

3.2
 
Amended Bylaws of Registrant (incorporated by reference into this registration statement from Exhibit 4.9 to the Registrant's Registration Statement on Form S-8 filed on March 5, 2002).

4.1
 
Form of Senior Indenture (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.2
 
Form of Subordinated Indenture (incorporated by reference into this registration statement from Exhibit 4.2 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.3
*
Form of Senior Note.

4.4
*
Form of Subordinated Note.

4.5
*
Form of Certificate of Designation for Preferred Stock (together with Preferred Stock certificate).

4.6
 
Form of Deposit Agreement (together with Depository Receipt) (incorporated by reference into this registration statement from Exhibit 4.6 to the Registrant's Registration Statement on Form S-3, Registration No. 333-46458, filed September 22, 2000 and incorporated herein by reference).

4.7
*
Form of Warrant Agreement (together with form of Warrant Certificate).

4.8
 
Rights Agreement, dated as of March 15, 2001, between the Registrant and Equiserve Trust Company, N.A., as Rights Agent, including the form of Rights Certificate as Exhibit B and the summary of Rights to Purchase Preferred Stock as Exhibit C (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed March 19, 2001 and incorporated herein by reference).
     

4.9
 
Rights Agreement, dated as of March 15, 2001, between the Registrant and EquiServe Trust Company, N.A., as Rights Agent, including the form of Rights Certificate as Exhibit B and the summary of Rights to Purchase Preferred Stock as Exhibit C (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on March 19, 2001).

4.10
 
Registration Rights Agreement, dated August 28, 2002, by and among Yahoo! Inc., Acqua Wellington Private Placement Fund Ltd. and Acqua Wellington Opportunity I Limited (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's registration statement on Form S-3 filed on October 3, 2002).

4.11
 
Registration Rights Agreement, dated as of April 9, 2003, by and between Yahoo! Inc. and Credit Suisse First Boston LLC (incorporated by reference into this registration statement from Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on April 10, 2003).

4.12
 
Indenture, dated as of April 9, 2003, by and between Yahoo! Inc. and U.S. Bank National Association (incorporated by reference into this registration statement from Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on April 10, 2003).

5.1
 
Opinion regarding legality by Skadden, Arps, Slate, Meagher & Flom LLP.

8.1
**
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding material federal income tax consequences of the merger.

8.2
**
Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation regarding material federal income tax consequences of the merger.

23.1
 
Consent of PricewaterhouseCoopers LLP, independent accountants of Yahoo! Inc.

23.2
 
Consent of PricewaterhouseCoopers LLP, independent accountants of Inktomi Corporation.

23.3
 
Consent of Ernst & Young LLP, independent accountants of Overture Services, Inc.

23.4
 
Consent of Deloitte & Touche AS, independent accountants of Fast Search & Transfer ASA

23.5
 
Consent of KPMG LLP, independent accountants of AltaVista Company

23.6
 
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).

23.7
**
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1).

23.8
**
Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 8.2).

24.1
 
Power of Attorney (see the signature page of this Form S-4 registration statement).

99.1
 
Form of Voting Agreement, dated as of July 14, 2003, by and between Registrant, July 2003 Merger Corp. and each of certain individual stockholders of Overture Services, Inc. (included as Annex B to the proxy statement/prospectus forming a part of this registration statement).

99.2
 
Voting Agreement, dated as of July 14, 2003, by and between Yahoo! Inc., July 2003 Merger Corp. and Idealab (included as Annex C to the proxy statement/prospectus forming a part of this registration statement).

99.3
 
Voting Agreement, dated as of July 14, 2003, by and between Yahoo! Inc., July 2003 Merger Corp. and Bill Gross (included as Annex D to the proxy statement/prospectus forming a part of this registration statement).

99.4
 
Opinion of Goldman, Sachs & Co. regarding the fairness of the merger (included as Annex E to the proxy statement/prospectus forming a part of this registration statement).
     

99.5
**
Employment Letter, dated July 14, 2003, between Yahoo! Inc. and Ted Meisel.

99.6
 
Form of Overture Proxy Card.

99.7
 
Form of Consent of Goldman, Sachs & Co.
*
To be filed by a report on Form 8-K pursuant to Item 601 of Regulation S-K or, where applicable, incorporated herein by reference from a subsequent filing in accordance with Section 305(b)(2) of the Trust Indenture Act of 1939

**
To be filed by amendment.


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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
QUESTIONS AND ANSWERS REGARDING THE PROPOSED MERGER General Questions And Answers
Questions and Answers About the Overture Special Meeting
SUMMARY
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF YAHOO!
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF OVERTURE
SUMMARY SELECTED UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL DATA
YAHOO! AND OVERTURE Selected Unaudited Pro Forma, Combined Consolidated Financial Data(1) (in thousands, except per share amounts)
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
COMPARATIVE PER SHARE MARKET PRICE DATA
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
RISK FACTORS
Risks Related to the Merger
Risks Related to Yahoo!
Risks Related to Overture
THE SPECIAL MEETING OF OVERTURE STOCKHOLDERS
THE MERGER
THE MERGER AGREEMENT
THE VOTING AGREEMENTS
MATERIAL CONTACTS BETWEEN YAHOO! AND OVERTURE PRIOR TO THE MERGER
YAHOO! INC. AND OVERTURE SERVICES, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2003 (In thousands)
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002 (In thousands, except per share amounts)
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands, except per share amounts)
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
COMPARISON OF RIGHTS OF HOLDERS OF YAHOO! COMMON STOCK AND OVERTURE COMMON STOCK
APPRAISAL RIGHTS
FUTURE OVERTURE STOCKHOLDER PROPOSALS
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
AGREEMENT AND PLAN OF MERGER BY AND AMONG YAHOO! INC. JULY 2003 MERGER CORP. AND OVERTURE SERVICES, INC. Dated as of July 14, 2003
INDEX OF DEFINED TERMS
TABLE OF CONTENTS
INDEX OF EXHIBITS
AGREEMENT AND PLAN OF MERGER
RECITALS
ARTICLE I THE MERGER
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME
ARTICLE V ADDITIONAL AGREEMENTS
ARTICLE VI CONDITIONS TO THE MERGER
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
ARTICLE VIII GENERAL PROVISIONS
FORM OF VOTING AGREEMENT
ANNEX I IRREVOCABLE PROXY
VOTING AGREEMENT
ANNEX I IRREVOCABLE PROXY
VOTING AGREEMENT
ANNEX I IRREVOCABLE PROXY
DELAWARE GENERAL CORPORATION LAW APPRAISAL RIGHTS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
EXHIBIT INDEX

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EXHIBIT 5.1

[Skadden, Arps, Slate, Meagher & Flom LLP letterhead]

August    , 2003

Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089

Ladies and Gentlemen:

        We have acted as special counsel to Yahoo! Inc., a Delaware corporation (the "Company"), in connection with the Company's Registration Statement on Form S-4 (the "Registration Statement") being filed by the Company with the Securities and Exchange Commission (the "Commission") for the purpose of registering under the Securities Act of 1933, as amended (the "Securities Act") up to 50,290,312 shares ("Shares") of common stock, par value $0.001 per share, of the Company, together with the associated rights to purchase shares of Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company issuable pursuant to the Rights Agreement (the "Rights Agreement") dated as of March 15, 2001 between the Company and Equiserve Trust Company, N.A., as Rights Agent (together, the "Common Stock"), issuable upon consummation of the merger of July 2003 Merger Corp., a Delaware corporation and a direct, wholly-owned subsidiary of the Company ("Merger Sub") with and into Overture Services, Inc., a Delaware corporation ("Overture") or the merger of Overture with and into Merger Sub (the "Merger") pursuant to the terms of the Agreement and Plan of Merger, by and among the Company, Merger Sub and Overture, dated as of July 14, 2003 (the "Merger Agreement").

        This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act").

        In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement; (ii) an executed copy of the Merger Agreement; (iii) the Rights Agreement; (iv) a specimen certificate representing the Shares; (v) the Amended and Restated Certificate of Incorporation of the Company, as certified by the Secretary of State of the State of Delaware, as amended to date and currently in effect; (vi) the Amended and Restated Bylaws of the Company, as amended to date and currently in effect; and (vii) certain resolutions of the Board of Directors of the Company, dated July 13, 2003, relating to the issuance of the Shares and certain related matters. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.

        In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified, or photostatic copies and the authenticity of the originals of such copies. In making our examination of executed documents or documents to be executed, we have assumed that the parties thereto, other than the Company, had or will have the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. We have also assumed that the Company has complied with all aspects of applicable laws of jurisdictions other than the United States of America and the General Corporation Law of the State of Delaware in connection with the transactions contemplated herein. As to any facts material to the opinions expressed herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the Company and others and of public officials.

        Members of our firm are admitted to the bar in the State of Delaware, and we do not express any opinion as to laws of any jurisdiction other than the corporate laws of the State of Delaware, and we do not express any opinion as to the effect of any other laws on the opinion stated herein. The opinions expressed herein are based on laws in effect on the date hereof, which laws are subject to change with possible retroactive effect.

        Based upon and subject to the foregoing, we are of the opinion that upon (i) receipt of the requisite stockholder vote and the consummation of the Merger pursuant to the Merger Agreement and (ii) issuance of the Shares and delivery of the certificates representing the Shares in the form of the specimen certificate examined by us, manually signed by an authorized officer of the transfer agent and registrar of the Common Stock in the manner contemplated in the Merger Agreement, the Shares will be validly issued, fully paid and nonassessable.

        We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.

Very truly yours,

/s/  SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP      



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EXHIBIT 23.1


CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of our report dated January 15, 2003, except for Note 14, which is as of March 19, 2003, relating to the consolidated financial statements and financial statement schedule, which appears in Yahoo! Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002. We also consent to the references to us under the headings "Experts" and "Summary Selected Historical Consolidated Financial Data of Yahoo!" in such Registration Statement.

San Jose, California
August 8, 2003



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CONSENT OF INDEPENDENT ACCOUNTANTS

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EXHIBIT 23.2


CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of Yahoo! Inc. of our report dated October 23, 2002 (except as to recently issued accounting pronouncements in Note 2, discontinued operations in Note 3, and subsequent events listed in Note 1 and 19, which are as of December 27, 2002) relating to the consolidated financial statements of Inktomi Corporation, which appears in Exhibit 99.3 of the Current Report on Form 8-K/A of Yahoo! Inc. filed May 27, 2003. We also consent to the incorporation by reference of our report dated October 23, 2002 (except as to recently issued accounting pronouncements in Note 2 and as to the subsequent events listed in Note 19, which are as of December 27, 2002) relating to the financial statement schedule of Inktomi Corporation, which appears in Inktomi Corporation's Annual Report on Form 10-K for the year ended September 30, 2002, which is incorporated by reference in the Current Report on Form 8-K of Yahoo! Inc. filed February 13, 2003. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

San Jose, California
August 8, 2003



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EXHIBIT 23.3


CONSENT OF INDEPENDENT AUDITORS

        We consent to the reference of our firm under the caption "Experts" and the use of our report dated January 30, 2003, with respect to the financial statements of Overture Services, Inc. incorporated by reference in the Registration Statement (Form S-4 No. 333-xxxxx) and related Prospectus of Yahoo! Inc. for the registration of 50,290,312 shares of common stock.

 
    
    /S/ ERNST AND YOUNG LLP
Los Angeles, CA
August 8, 2003


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EXHIBIT 23.4


CONSENT OF INDEPENDENT AUDITORS

        We consent to the incorporation by reference in this Registration Statement of Yahoo! Inc. on Form S-4 of our report dated March 25, 2003 (except for Note 10 which is as of April 21, 2003), with respect to the combined financial statements of the Internet Business Unit of Fast Search & Transfer ASA for the year ended December 31, 2002 appearing in the Current Report on Form 8-K/A of Yahoo! Inc. and Current Report on Form 8-K/A of Overture Services, Inc. and to the reference to us under the heading "Experts" in the Prospectus which is part of such Registration Statement.

 
    
/S/ DELOITTE & TOUCHE AS
Oslo, Norway
August 8, 2003		    


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EXHIBIT 23.5


INDEPENDENT AUDITORS' CONSENT

The Board of Directors
AltaVista Company:

        We consent to the incorporation by reference in this registration statement on Form S-4 of Yahoo! Inc. of our report dated April 16, 2003, with respect to the consolidated balance sheets of AltaVista Company and subsidiaries as of July 31, 2002 and July 31, 2001, and the related consolidated statements of operations, changes in owners' equity (deficit), and cash flows for the years ended July 31, 2002 and July 31, 2001 and for the period from August 19, 1999 to July 31, 2000, incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus.

        Our report dated April 16, 2003 contains an explanatory paragraph that states that the Company has suffered recurring losses from operations and has a net capital deficiency, which raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

    /s/ KPMG LLP
Mountain View, California
August 7, 2003
 		   


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EXHIBIT 99.6

The Board of Directors recommends a vote "FOR" item 1.   Please Mark Here for Address Change or Comments
SEE REVERSE SIDE		   [        ]

 
 
 
 
FOR
[        ]
 
AGAINST
[        ]
 
ABSTAIN
[        ]
1.   Proposal to approve and adopt the Agreement and Plan of Merger, dated as of July 14, 2003, among Overture Services, Inc., Yahoo! Inc. and July 2003 Merger Corp., and approve the merger contemplated by the Agreement and Plan of Merger            
    Dated:                                                              , 2003

 
 
 
   
Signature

 
 
Signature if held jointly

 
 
PLEASE SIGN exactly as your name appears at left. Joint owners should each sign. Executors, administrators, trustees, etc. should so indicate when signing. If signer is a corporation, please sign full name by duly authorized officer.

FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11 PM Eastern Time
the day prior to the Special Meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card.

Internet: http://
         
   Telephone 1-800-•
         
   Mail
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. You will be prompted to enter your control number, located in the box below, to create and submit an electronic ballot  

OR		   Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. You will be prompted to enter your control number, located in the box below, and then follow the directions given.  

OR		   Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.

If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.

OVERTURE SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS
    •    , 2003

        The undersigned stockholder(s) of Overture Services, Inc., a Delaware corporation, hereby acknowledge(s) receipt of the Notice of Special Meeting of Stockholders and Proxy Statement/Prospectus, each dated    •    , 2003, and hereby appoints Ted Meisel and Leonard R. Stein, and each of them, proxies and attorneys-in-fact, with full power of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Special Meeting of Stockholders of Overture Services, Inc., to be held on    •    , 2003, at    •     a.m., local time, at     •    , and at any adjournment(s) or postponement(s) thereof, and to vote all shares of Overture Common Stock which the undersigned would be entitled to vote if then and there personally present as follows:

        The shares represented by this proxy when properly executed will be voted with respect to item 1 in the manner directed herein by the undersigned stockholder(s). If no direction is indicated, this proxy will be voted FOR item 1. If any other matters properly come before the special meeting or any adjournment or postponement of the special meeting, the persons named in this proxy will vote in their discretion.

(continued, and to be signed and dated on reverse side)

Address Change/Comments (Mark the corresponding box on the reverse side)






o    FOLD AND DETACH HERE    o
You can now access your Overture Services, Inc. account online.

Access your Overture Services, Inc. shareholder account online via Investor ServiceDirect® (ISD).

Mellon Investor Services LLC, agent for Overture Services, Inc., now makes it easy and convenient to get current information on your shareholder account. After a simple, and secure process of establishing a Personal Identification Number (PIN), you are ready to log in and access your account to:

 
    
•    View account status   •    View payment history for dividends

•    View certificate history
 
•    Make address changes

•    View book-entry information
 
•    Obtain a duplicate 1099 tax form

 
 
•    Establish/change your PIN

Visit us on the web at http://www.melloninvestor.com and
follow the instructions shown on this page.

Step 1: FIRST TIME USERS—Establish a PIN    You must first establish a Personal Identification Number (PIN) online by following the directions provided in the upper right portion of the web screen as follows. You will also need your Social Security Number (SSN) or Investor ID available to establish a PIN.

 The confidentiality of your personal information is protected using secure socket layer (SSL) technology.

•    SSN or Investor ID
•    PIN
•    Then click on the Establish PIN button		   Step 2: Log in for Account Access    You are now ready to log in. To access your account please enter your:

•    SSN or Investor ID
•    PIN
•    Then click on the Submit button

 If you have more than one account, you will now be asked to select the appropriate account.		   Step 3: Account Status Screen    You are now ready to access your account information. Click on the appropriate button to view or initiate transactions.

•    Certificate History
•    Book-Entry Information
•    Issue Certificate
•    Payment History
•    Address Change
•    Duplicate 1099

        Please be sure to remember your PIN, or maintain it in a secure place for future reference.

For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time



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EXHIBIT 99.7

[FORM OF CONSENT OF GOLDMAN, SACHS & CO.]

Board of Directors
Overture Services, Inc.
74 North Pasadena Avenue
Pasadena, CA 91103

Re:    Registration Statement on Form S-4 of YAHOO! INC. (File No. 333-            )

Madame and Gentlemen:

Reference is made to our opinion letter, dated July 14, 2003, with respect to the fairness from a financial point of view to the holders of the outstanding shares of Common Stock, par value $0.0001 per share, of Overture Services, Inc. (the "Company") of the Merger Consideration (as defined therein) to be received by such holders pursuant to the Agreement and Plan of Merger, dated as of July 14, 2003 (the "Merger Agreement"), by and among YAHOO! INC. ("YAHOO!"), July 2003 Merger Corp., a wholly owned subsidiary of YAHOO!, and the Company.

The foregoing opinion letter is provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the transaction contemplated therein and is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any registration statement, proxy statement or any other document, except in accordance with our prior written consent. We understand that the Company has determined to include our opinion in the above-referenced Registration Statement.

In that regard, we hereby consent to the reference to our opinion under the captions "Summary," "The Merger-Background of the Merger," "The Merger-Recommendation of the Merger by the Overture Board of Directors" and "The Merger-Opinion of Overture's Financial Advisor" and to the inclusion of the foregoing opinion in the Proxy Statement/Prospectus included in the above-mentioned Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the rules and regulations of the Securities and Exchange Commission thereunder.



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