According to several sources close to the situation, barring any unforeseen delay, a deal to settle the Skype imbroglio is likely to be announced around the time the markets open tomorrow.

[UPDATE: The paperwork is taking longer than expected, so sit tight, said sources.]

While the massive agreement–which will settle three aggressive lawsuits lobbed by Skype co-founders Niklas Zennström and Janus Friis at a wide range of prominent Silicon Valley players–is not yet officially signed, sources said lawyers are apparently putting the finishing touches on the paperwork and have signature papers completed by both sides to be able to wrap it up quickly.

So, while nothing is ever over until it is over, it looks like it is over.

Sources also said that as part of the deal to end the legal madness, Zennström and Friis will get 10 percent of Skype back for rights to key software technology they control, an option to pay $83 million for another three percent of the Internet telephony service and two seats on the 23-member board.

Also, BoomTown has learned that a partridge in a pear tree will be thrown in to guarantee a lasting peace.

All kidding aside, the settlement is proof that squeaky wheels–especially if they hire the combative litigators of Skadden Arps–get the grease.

As has been previously reported, one of the investors in the consortium that won the bidding to buy 65 percent of Skype from eBay (EBAY)–which itself had bought it in 2005 from Zennström and Friis–has withdrawn its investment and involvement as part of the settlement.

That would be London-based Index Ventures, which was a smaller player in the group with–ironically–a three percent stake.

Nonetheless, Index had an outsized fight going on with Zennström and Friis.

That’s due to their ire, aimed at Index’s Mike Volpi, who was CEO of Joost, the failed online video site the pair founded.

After Zennström and Friis lost their own bid to buy back Skype, they quickly sued Index and Volpi via tech companies they control, Joltid and Joost, in Delaware.

The pair alleged that Volpi used confidential information gleaned from his time as Joost CEO to unfairly help the winning consortium acquire Skype.

The lawsuit was particularly vindictive, using embarrassing emails and making pointed accusations about Volpi plotting all kinds of nefarious schemes, like Lady Macbeth on steroids, on his way out of Joost.

I am not sure what law one can break for wanting to leave a job or how much damage one can do to an already failing business, but that did not stop Zennström and Friis from trying to pin some specious accusations on Volpi.

(I wouldn’t have been surprised if they had accused Volpi of being responsible for Balloon Boy.)

But such legal attacks obviously worked, making Index loath to stay in an economically less attractive deal with lessened influence over Skype.

And eBay and the other investors obviously wanted closure, so they could get on with the work of turbocharging Skype.

The fighting between Index and the Skype founders was just one part of the legal morass.

Zennström and Friis had already been in a battle over software licensing issues with eBay in London courts.

They also filed suit again in California against Skype and eBay for copyright violations.

For good measure, the pair added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board, in that lawsuit.

(In legalese–and in honor of the Yankees winning the World Series tonight–such massive lawsuit-making is called covering all your bases!)

Of course, Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Presumably, those same mouthpieces–who have been slagging the other side for weeks–will now be at the ready with honeyed tales of reconciliation tomorrow.

Call me cynical, but we’ll see how long that lasts.

“[Zennström and Friis] got what they wanted by using Volpi as a pawn and the lawsuits as a club,” said one person close to the situation. “Everyone is moving on, but not everyone is going to forget what they did to get what they wanted.”

In what should come as a shock to almost no one, the detailed negotiations to complete the Microsoft and Yahoo search and online advertising final agreement are more complicated than its authors anticipated and are taking longer than expected to complete.

Relax, folks–they’ll get done.

But here’s a more important thing that should wrap up sooner than later: Yahoo CEO Carol Bartz’s seemingly never-ending gibes about former CEO and co-founder Jerry Yang’s tenure.

First, let’s deal with the issues around the agreement, which is a monster document.

That’s why MicroHoo missed the deadline yesterday to execute its definitive agreement on the transaction struck in July.

In a filing with the U.S. Securities and Exchange Commission, Yahoo (YHOO) said:

“The Letter Agreement specified that the parties would execute definitive agreements by October 27, 2009, but given the complex nature of the transaction, there remain some details to be finalized.”

Added Microsoft (MSFT) in a long statement:

“Microsoft and Yahoo! are committed to this agreement and believe this is a highly competitive deal that is good for consumers, advertisers and publishers. We have made good progress in finalizing the definitive agreements. Given the complex nature of this transaction there remain some issues that need some additional clarity and definitive details. So, the teams at Yahoo! and Microsoft are continuing to work on the remaining details, and we have mutually agreed to extend the period to negotiate and execute the agreement. We plan to do this as expeditiously as possible. Both companies are optimistic that we will be able to close this deal by early 2010.”

Thus, the deadline has been pushed back indefinitely, which is very common in such larger and complicated deals.

Yahoo and Microsoft had already done a pretty hefty binding letter agreement (here is a picture of Yahoo’s Bartz and Microsoft CEO Steve Ballmer holding it, in fact).

Getting approval from regulators is also part of the deal, and it is likely to happen in the U.S. just after the new year.

International regulatory approval is another story, especially in Europe, which could further delay the implementation of the partnership, since it is unlikely the pair would move forward without clearance globally.

But perhaps most of all, what seems more likely to never end and probably should is the proclivity of Yahoo’s Bartz to use sharp-tongued analogies to talk about just how bad Yahoo had been doing and how it is now poised to make a comeback.

In her very first press conference when she got the job, in fact, she noted that Yahoo, “frankly, could use a little management.”

Bartz was right then and even more correct to say it out loud, but she has not stopped the criticism.

And, like clockwork, at an analyst day at Yahoo HQ in Sunnyvale, Calif., today, Bartz trotted out a yet another in a long series of backhanded insults to former CEO Jerry Yang and his crew.

Said Bartz at the event about the Silicon Valley icon:

“We have fallen and we really want to get back up. If you haven’t had good times and bad times, you don’t know what you’re doing. We prefer the good times. We have passion to get back there. Today is the start of that.”

Today is the start? Didn’t Yahoo declare a version of the same theme when the MicroHoo deal was announced in July? And at the the launch of the new homepage in September? And the more recent rollout of its massive marketing campaign?

It seems to me that since she has been there almost a year, much like the Obama administration, Bartz should not be looking backward anymore and keep announcing that it is time to get back on track.

Because she is most definitely in charge now at Yahoo and should be the one to get all praise and all blame from here on out.

So, as someone who has definitely been very tough on Yang while CEO, it’s time to stop knocking him over now, because it is starting to feel like a very cheap shot.

The legal high jinks in the contentious battle over the fate of Skype got worse this afternoon, as former Joost CEO Michelangelo Volpi and Index Ventures filed a motion to dismiss a lawsuit brought by the founders of Skype–Niklas Zennström and Janus Friis, via Joost and Joltid–against them.

It’s yet another chess move among a group of well-known tech players, who used to work together closely and are now at odds.

In a filing in the U.S. District Court in Delaware, Volpi and the London-based Index–where Volpi now works–noted, referring to a bid Zennström and Friis made to regain control of Skype, which they sold to eBay (EBAY) years ago:

“Instead of accepting the fact that their bid failed in the marketplace, Friis and Zennström are now using inflammatory and highly-charged litigation–through companies that have no relationship to the Skype purchase–to try to achieve their personal business goals.”

A spokesman for Joost and Joltid did not agree with Volpi’s assessment:

“Mr. Volpi’s latest motion appears to have been prepared prior to Defendants receiving Plaintiffs’ Motion for Preliminary Injunction, which is filled with evidence supporting Plaintiffs’ claims. In light of this strong showing of substantive evidence, much of it from Mr. Volpi’s own correspondence, there is no basis for Mr. Volpi’s assertion that Plaintiffs have somehow failed to state a claim upon which relief can be granted.”

Index was a small player within a group that won Skype, putting in $75 million, in a $2 billion deal that is set to close in the next few weeks.

The motion to dismiss the filing is not surprising given that Joost and Joltid filed a motion for preliminary injunction against Volpi and Index yesterday.

They are asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have already been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost have also sued Volpi personally, as well as Index, making serious allegations about his behavior as Joost CEO.

Here are several key legal filings to peruse, for all you “Law & Order” types:

Motion to Dismiss _00302105_ –

Opposition to Motion For Expedition _00302104_ –

Volpi Opening Brief 10.15.09 _00302101_ –

Although it is not a particular surprise, because Microsoft and Yahoo execs had previously said they expected as much, the Justice Department lobbed in a “second request” for information about the search and online advertising partnership the pair struck earlier this summer.

A Microsoft spokesman confirmed the request to BoomTown.

“As expected Microsoft and Yahoo received an additional request about the agreement, as we said when this agreement was announced,” said Microsoft’s Jack Evans. “We anticipated this deal would be closely reviewed and we continue to be hopeful that it will be approved by early 2010.”

Simply put, the Justice Department wants more information about the 10-year deal and will do more investigation before approving it–or not.

This kind of review is typical in deals of this magnitude, although it is unlikely to be as fraught as Yahoo’s attempt last year to form a similar partnership with Google.

That deal collapsed after regulators indicated that they would oppose the arrangement, which caused Google to pull out.

At the time the partnership was announced in July, execs at both Microsoft (MSFT) and Yahoo (YHOO) said a lot of scrutiny was likely from Justice, although they were also confident that it would go through.

And, indeed, there seem to be no major objections from publishers and advertisers, as was the case with Yahoogle, even though a privacy group has raised some concerns.

Even Google (GOOG) has been unusually quiet about the deal, perhaps because its nearly 70 percent of the search market makes it the behemoth. Together, Yahoo and Microsoft have close to a 30 percent market share.

The deal must also be approved by European regulators, according to the terms negotiated by Yahoo and Microsoft. But since Google’s share there is even higher, roadblocks seem unlikely.

Meanwhile, according to numerous sources, Microsoft and Yahoo are separately working on transition plans in order to move quickly once it gains regulatory approval.

While they cannot work together as yet at a detailed level, Microsoft will eventually be absorbing hundreds of Yahoo search engineers as part of the deal.

So as we all wait in breathless anticipation, enjoy this hysterical video version of the famous gruel scene in the movie, “Oliver,” with the lines speeded up and then slowed down:

As BoomTown promised earlier today, here’s the first of many filings related to the Yahoo-Microsoft online search and advertising deal announced last week.

The 8-K filing was made with the Securities and Exchange Commission by Yahoo.

Some highlights, although most of them are not that new:

* No termination fee.

* There is a $50 million annual payment to Yahoo (YHOO) by Microsoft (MSFT) for three years, for unspecified “transition and implementation costs” beyond the agreement.

(Personally, I think it’s for extra Advil needed for the headaches engendered organizing this circus.)

* At least 400 Yahoo employees will be hired by Microsoft, which will also provide funds for retention packages to keep 150 more Yahoos motivated during the transition.

* The “Definitive Agreement” between the Silicon Valley company and the Redmond, Wash., software giant needs to be sketched out by October 27, 2009.

But why don’t you read all the niggling details yourself, including about Google (GOOG), below (I stripped away only minor SEC legalese and fill-in-the-blank details):

Item 1.01. Entry into a Material Definitive Agreement.

Binding Letter Agreement–General Terms

On July 29, 2009, Yahoo! Inc., a Delaware corporation (”Yahoo!”), and Microsoft Corporation, a Washington corporation (”Microsoft”), entered into a binding letter agreement (the “Letter Agreement”), pursuant to which the parties will negotiate and execute a Search and Advertising Services and Sales Agreement and a License Agreement (the “Definitive Agreements”), each reflecting and supplementing the provisions of such Definitive Agreements as set forth in annexes to the Letter Agreement, the material provisions of which are summarized below.

Negotiation and Execution of the Definitive Agreements

Pursuant to the terms of the Letter Agreement, the parties will negotiate and execute the Definitive Agreements as soon as practicable but in any event by October 27, 2009 (the “Negotiation Period”). If the Definitive Agreements are not executed during the Negotiation Period, the parties will submit any disputes regarding the final terms of the Definitive Agreements to an arbitration panel. The arbitration panel will render its decision based upon the terms of the Letter Agreement, the nature of the commercial relationship to be created thereunder, and the submissions and presentations of the parties at a hearing conducted by the arbitration panel. The arbitration panel will render a decision by choosing the final proposed contractual language of either Microsoft or Yahoo! without modification, subject to a final review process to resolve any potential inconsistencies. The decision of the arbitration panel will be binding on the parties, and the parties agree to execute Definitive Agreements as determined by the arbitration panel within three (3) days of the receipt of the arbitration panel’s final decision.

Regulatory Review

Microsoft and Yahoo! agree to use their respective best efforts to cooperate in connection with all necessary regulatory filings. In addition, as soon as practicable after July 29, 2009, Microsoft and Yahoo! will make all filings required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 as amended (the “HSR Act”) and by any applicable foreign antitrust laws. Microsoft further agrees to use its best efforts to obtain any consents, clearances or approvals required under or in connection with the HSR Act or any other applicable antitrust law, including offering, negotiating or committing to any restrictions on the activities of Microsoft and its subsidiaries in search and paid search and contesting and defending any threatened or pending litigation, investigation or proceeding under applicable antitrust laws.

Conditions to Commencement and Termination Prior to Commencement

The obligations of each party to commence performance of their obligations under the Definitive Agreements (the “Commencement Date”) are only subject to (a) termination or expiration of the HSR Act waiting period and receipt of certain required foreign antitrust approvals and (b) the accuracy of the party’s representations and warranties in the Letter Agreement as of the time immediately prior to the Commencement Date and performance by the other party of its obligations required to be performed by it in connection with the Letter Agreement and the Definitive Agreements at or prior to the Commencement Date, except where the failure of such representations and warranties to be true and accurate or the failure of such performance would not, individually or in the aggregate, have a material adverse effect with respect to such party.

Prior to the Commencement Date, the Letter Agreement and Definitive Agreements may be terminated only by (a) mutual consent, (b) if a breach renders a condition incapable of being satisfied by the Termination Date (as defined below), or (c) if the conditions to commencement have not been satisfied by July 29, 2010 (the “Termination Date”); provided that Yahoo!, in its sole discretion, has the right to extend the Termination Date by six (6) months if the required antitrust approvals have not yet been obtained.

Search and Advertising Services and Sales Agreement

Pursuant to the Letter Agreement, the parties have agreed to enter into a global Search and Advertising Services and Sales Agreement (“Search Agreement”), which will include, among other provisions, the terms summarized below.

General Services

For a period of ten (10) years beginning on the Commencement Date (the “Term”), Microsoft will be Yahoo!’s exclusive technology provider for algorithmic and paid search services and Microsoft will provide contextual advertising to Yahoo! on a non-exclusive basis. Yahoo! will be the exclusive worldwide relationship sales force for Yahoo!’s and Microsoft’s premium search advertisers.

The services provided by Microsoft under the Search Agreement will be provided on all web sites, applications and other online digital properties owned or operated by or on behalf of (a) Yahoo!, Yahoo! subsidiaries and Yahoo! joint venture relationships, as well as on software applications developed or distributed by Yahoo! or Yahoo! subsidiaries that provide access to or enable algorithmic search services or paid search services (”Yahoo! Properties”) and (b) Yahoo! Syndication Partners (as defined below), as well as software applications developed or distributed by Yahoo!’s Syndication Partners that provide access to or enable algorithmic search services or paid search services from Yahoo! (”Syndication Properties”). “Syndication Partner” means a third party with whom Yahoo! has contracted to provide algorithmic search services or paid search services.

Subject to certain specified restrictions, Yahoo! will have full flexibility with respect to the user experience, content and look and feel on all of its web pages, and will also be entitled to use the paid search services and algorithmic search services for non-internet search queries with minimal restriction.

The scope of the services to be provided by Microsoft under the Search Agreement are limited to web sites, applications and other online digital properties designed for use and consumption on personal computers. In addition, Yahoo! may at its option elect to receive Microsoft’s mapping services and mobile search services. Yahoo! may implement each of the mapping services and the mobile search services on a non-exclusive or an exclusive basis. Yahoo! also has the option to work with Microsoft to implement the services on other platforms. If Yahoo! elects to receive services for other platforms, it must receive such services on an exclusive basis.

Revenue Share Payments and Other Payments

During the first five years of the Term, Yahoo! will be entitled to receive 88% of the net revenues generated from Microsoft’s services on Yahoo! Properties (the “Revenue Share Rate”). Yahoo! will also be entitled to receive its share (at the Revenue Share Rate) of the net revenues generated on Syndication Properties after the Syndication Partner’s share of net revenues is deducted. For new Syndication Properties during the Term, and for all Syndication Properties after the first five years of the Term, Yahoo! will receive its share (at the Revenue Share Rate) of the net revenues generated from Microsoft’s services on Syndication Properties after the Syndication Partner’s share of net revenues and certain Microsoft costs are deducted.

On the fifth anniversary of the Commencement Date, Microsoft will have the option to terminate Yahoo!’s sales exclusivity for premium search advertisers. If Microsoft exercises its option, the Revenue Share Rate will increase to 93% for the remainder of the Term, unless Yahoo! exercises its option to retain its sales exclusivity, in which case the Revenue Share Rate would be reduced to 83% for the remainder of the Term. If Microsoft does not exercise such option, the Revenue Share Rate will be 90% for the remainder of the Term.

Microsoft will also pay Yahoo! a payment of $50 million annually during the first three (3) years of the Search Agreement. Yahoo! may use these payments to partially cover transition and implementation costs not otherwise covered under the Search Agreement.

Microsoft will provide in each country an 18-month guarantee for the gross revenue per search (the “RPS”) for Yahoo! Properties. The guarantee will be based on the RPS average for the trailing 12-month period prior to the initial implementation of paid search services in such country.

Termination Provisions

In addition to the termination rights described in the Letter Agreement above, the Search Agreement may only be terminated as follows (each, a “Termination Event”): (a) either party may terminate upon repeated material breaches of material provisions of the Search Agreement such that it is unlikely that the breaching party is willing or able to continue to perform its obligations under the Search Agreement without continuing to materially breach it; (b) Yahoo! may terminate if Microsoft attempts to exit the business of algorithmic search or search monetization, either by ceasing to offer the services or by selling or attempting to sell all or substantially all of either its algorithmic search services business or paid search services business to an unaffiliated third party; (c) Yahoo! may terminate the Search Agreement if the trailing 12-month average of the RPS in the United States (the “U.S. RPS”) of Yahoo! and Microsoft’s combined queries falls below a specified percentage of Google Inc.’s (”Google”) estimated RPS measured on a comparable basis or if the combined Yahoo! and Microsoft query market share in the United States falls below a specified percentage; (d) on the fifth anniversary of the Search Agreement, and any time thereafter, Yahoo! has the right to terminate the Search Agreement if the trailing 12-month average of Yahoo!’s U.S. RPS is less than a specified percentage of Google’s estimated RPS; or (e) subject to exceptions, either party may terminate if a law, regulation or order would have a significant, adverse impact on a primary aspect of such party’s intended benefit of the Search Agreement.

If a Termination Event occurs in the United States, the entire Search Agreement may be terminated. If a Termination Event does not occur in the United States a party’s termination right is limited to the specific country or countries in which the event occurs.

If Microsoft proposes or attempts to sell all or substantially all of either its algorithmic search services business or paid search services business to an unaffiliated third party, Yahoo! will have a right of first refusal and right of last offer to purchase such businesses.

Service Level Agreements

The Search Agreement will provide (a) for service parity under which applicable application programming interfaces (”Microsoft API”) will be made available to Yahoo! at full parity with that which is made available to Microsoft’s internal teams; (b) for ranking and content parity under which Microsoft will provide the same algorithmic and paid search results in the same order as would be provided in response to the same inputs on web sites that are owned or operated by or for Microsoft, its subsidiaries and its joint venture relationships (”Microsoft O&O Properties”) in a particular country, including any content that is included in Microsoft’s algorithmic index; (c) for prioritization parity, under which Yahoo! will have full visibility into Microsoft product roadmap and parity with Microsoft’s internal teams in the product update prioritization process; and (d) for advertising parity under which neither party will allow advertisers to designate paid listings from Microsoft’s paid search or encourage advertisers to designate paid listings from Microsoft’s contextual advertising services to be displayed exclusively on Microsoft’s or Yahoo!’s respective results web pages. Furthermore, Microsoft will not treat Yahoo! or Yahoo!’s Syndication Partners less favorably than Microsoft and Microsoft’s partners in connection with its delivery and operation of the services.

Microsoft will optimize the delivery of paid listings by evaluating performance across all Microsoft O&O Properties and the Yahoo! Properties. The paid listings provided by Microsoft for Yahoo! will be optimized at parity with Microsoft’s optimization for Microsoft O&O Properties. Yahoo! may further optimize based on its own desired implementation.

Yahoo! may, at its option, elect to have Microsoft deliver the algorithmic search services and paid search services through a search results page hosted by Microsoft (the “White Label Solution”) on a country by country basis (if the United States is also a White Label Solution country), instead of through the Microsoft API. The White Label Solution will be in all material respects the same as Microsoft’s search results pages. Yahoo! may substitute Yahoo! applications or services for Microsoft applications or services within the White Label Solution.

Data Provisions

Microsoft will provide Yahoo! all data it collects as a result of its implementation of the services on Yahoo! Properties and Syndication Properties and, subject to Yahoo!’s privacy policies and applicable law, Yahoo! may use such data without contractual restriction in connection with its businesses. Microsoft will also use commercially reasonable efforts to enable Yahoo! and its Syndication Partners to obtain any other data that Yahoo! currently collects with respect to its own algorithmic search services and paid search services. Microsoft may obtain and use the data it collects as a result of its implementation of the services (including any derivative information that results from this data) only for the purpose of operating and enhancing the services and not for other Microsoft products and services.

Transition and Implementation Plan

As promptly as practicable, Yahoo! and Microsoft will agree on a detailed transition and implementation plan and schedule for implementing Microsoft’s algorithmic search services and paid search services on all Yahoo! Properties and Syndication Properties. The transition and implementation plan will be for a period of no longer than 24 months from the Commencement Date, subject to an extension for up to three additional months if the end of the 24-month period ends during the fourth quarter of a calendar year. The parties intend that the transition and implementation plan will be either set forth in a separate transition services agreement or as part of the Search Agreement.

Following the Commencement Date, Microsoft will hire not less than 400 Yahoo! employees (the “Transferred Employees”) and will offer the Transferred Employees market competitive compensation packages. In addition, Yahoo! and Microsoft will mutually agree on a retention plan to be paid for by Microsoft to assist in retaining the Transferred Employees and an additional 150 Yahoo! employees to be mutually agreed upon between Microsoft and Yahoo! to assist with providing the transition services.

License Agreement

Pursuant to the Letter Agreement, the parties have agreed to enter into a License Agreement (the “License Agreement”), which will include, among other provisions, the terms summarized below.

Exclusive Technology License

During the Term (as defined in the summary of the Search Agreement above), Yahoo! will grant to Microsoft a worldwide license (the “Technology License”) under copyrights and trade secrets relating to specified Yahoo! algorithmic and paid search technology for Microsoft to use in connection with providing specified algorithmic search, paid search and contextual advertising services (the “Field of Use”). The Technology License will be exclusive (even as to Yahoo!) as to certain algorithmic search and paid search services in the Field of Use. Upon termination or expiration of the Search Agreement, the Technology License will remain in effect but will become non-exclusive.

Limited Non-Exclusive Patent Cross License

During the Term, Yahoo! will grant to Microsoft a worldwide, non-exclusive limited patent license solely for Microsoft to provide services in the Field of Use to Yahoo!; and Microsoft will grant to Yahoo! a worldwide, non-exclusive limited patent license for Yahoo! to use and implement the services provided by Microsoft, as contemplated by the Search Agreement (the “Limited Patent Cross License”). The Limited Patent Cross License terminates upon the termination of the Search Agreement.

Patent License Option

Microsoft will also have an option to obtain from Yahoo! a worldwide, non-exclusive license under Yahoo!’s patents for Microsoft to provide online services in the Field of Use both with Microsoft’s owned and operated websites and to third parties (”Patent License”). The option will expire upon the earlier of July 29, 2011 and the date six (6) months following the Commencement Date. Should Microsoft exercise its option to obtain the Patent License, Microsoft will pay for such Patent License at a specified discount from fair market value. Such Patent License will also terminate upon termination of the Search Agreement.

Yahoo! may terminate the Patent License if Microsoft files an infringement action against Yahoo!, Yahoo! subsidiaries or Yahoo! joint venture relationships. Termination of the Patent License does not affect Microsoft’s obligations under the Search Agreement.

Assignment and Transfer

Microsoft may not assign the License Agreement without Yahoo!’s permission. Assignment or transfer of the licensed technology will be subject to the licenses. Neither party is prevented or restricted from licensing, selling or otherwise disposing of any of its patent assets, and Microsoft’s option to obtain the Patent License will not apply to any patents sold or otherwise disposed of by Yahoo! prior to the exercise of the option.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

YAHOO! INC. (Registrant)
By: /s/ Michael J. Callahan
Name: Michael J. Callahan
Title: Executive Vice President, General Counsel and Secretary
Date: August 4, 2009

After the markets closed today, Yahoo (YHOO) filed its extremely redacted version of the agreement it made with Google (GOOG) for outsourcing some of its search advertising.

The agreement has been a controversial sticking point amidst the Yahoo-Microsoft (MSFT) takeover battle, and has even seen action in Congress.

Here’s the top of the agreement with a link below to the rest.

More on what it means, soon…

SERVICES AGREEMENT

NOW, THEREFORE, in consideration of the promises, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are expressly acknowledged, the Parties hereto, intending to be legally bound, agree as follows:

Here’s the rest of the very long and (not very) detailed document filed.