UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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Yahoo! Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Dear Stockholder: April 24, 2017

We cordially invite you to attend a special meeting of the stockholders of Yahoo! Inc., which we refer to as Yahoo or the Company, which will be held at the Santa Clara Marriott, located at 2700 Mission College Boulevard, Santa Clara, California, on June 8, 2017, at 9:00 a.m., local time.

At the special meeting, you will be asked to consider and vote upon a proposal to authorize the proposed sale, which we refer to as the sale transaction, of Yahoo’s operating business to Verizon Communications Inc., which we refer to as Verizon, pursuant to the terms of the Stock Purchase Agreement, dated as of July 23, 2016, as amended as of February 20, 2017, between Verizon and Yahoo, which we refer to as the Stock Purchase Agreement. Specifically, under the Stock Purchase Agreement, we have agreed to sell to Verizon all of the outstanding shares of Yahoo Holdings, Inc., a wholly-owned subsidiary of Yahoo, which we refer to as Yahoo Holdings, and prior to the sale of Yahoo Holdings to cause Yahoo Holdings to sell to a foreign subsidiary of Verizon all of the equity interests in a newly formed foreign subsidiary of Yahoo Holdings that will hold certain foreign subsidiaries relating to Yahoo’s operating business, following the transfer to Yahoo Holdings of all of the assets and liabilities relating to our operating business, other than specified excluded assets and retained liabilities, as set forth in the Reorganization Agreement, dated as of July 23, 2016, as amended as of February 20, 2017, between Yahoo and Yahoo Holdings, which, together with the Stock Purchase Agreement, we refer to as the sale transaction agreements. The purchase price that Verizon will pay or cause to be paid in the sale transaction is $4,475,800,000 in cash, subject to certain adjustments.

Upon completion of the sale transaction, our remaining assets will consist solely of the excluded assets, which include cash and marketable debt securities, our shares in Alibaba Group Holding Limited, our shares in Yahoo Japan Corporation, certain other minority equity investments, and Excalibur IP, LLC (a subsidiary of ours that owns a portfolio of non-core patent assets), and our remaining liabilities will consist solely of the retained liabilities, which include our 0.00% Convertible Senior Notes due 2018, securityholder litigation, 50 percent of certain post-closing cash liabilities related to certain data security incidents and other data breaches incurred by the Company, and certain director and officer indemnification obligations. Following the closing, the Company will continue to be a Delaware corporation publicly traded on the NASDAQ Global Select Market, but will be renamed “Altaba Inc.” and trade under the ticker symbol “AABA.” Because our assets will then consist primarily of our equity investments, short-term debt investments, and cash, upon the closing we will be required to register as an investment company under the Investment Company Act of 1940. Importantly, the completion of the proposed sale transaction will not affect your shares of Yahoo common stock, which will continue to represent shares of common stock of the Company after it has registered as an investment company.

Based upon, among other considerations, a recommendation by an independent committee of our Board of Directors called the Strategic Review Committee, our Board of Directors has (i) determined that the sale transaction agreements and the sale transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the sale transaction agreements and the sale transaction, and (iii) directed that the sale transaction be submitted for consideration by the stockholders at the special meeting. Our Board of Directors recommends that stockholders vote “FOR” the sale transaction.

Following the completion of the sale transaction, the Company will amend the indemnification and exculpation provisions of its certificate of incorporation in order to comply with the Investment Company Act of 1940. Approval of the proposal to authorize the sale transaction will also constitute stockholder approval of this amendment.

The enclosed proxy statement additionally requests stockholder approval of (i) on a non-binding, advisory basis, executive compensation described in the enclosed proxy statement that may be paid or become payable as

a result of the proposed sale transaction and (ii) the grant of authority to our Board of Directors to postpone or adjourn the special meeting for up to 10 business days to solicit additional proxies for the purpose of obtaining stockholder approval of the sale transaction, if our Board of Directors determines in good faith that such postponement or adjournment is necessary or advisable to obtain stockholder approval of the sale transaction or to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure which our Board of Directors has determined, after consultation with outside legal counsel, is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior to the special meeting. Our Board of Directors recommends that stockholders vote “FOR” these additional proposals.

We encourage you to read the enclosed proxy statement and the annexes and exhibits to the proxy statement, including Annex 1, which contains information about the Company after it registers as an investment company, carefully in their entirety.

Your vote is important, regardless of the number of shares you own. We cannot complete the sale transaction unless it is approved by the holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon. Whether or not you plan to attend the special meeting, you are urged to submit your proxy as soon as possible electronically over the Internet, by telephone, or, if you received a printed copy of the proxy materials, by marking, signing, and dating the enclosed proxy card and returning it in the envelope provided today. No postage need be affixed if the proxy card is mailed in the United States. Submitting a proxy will not limit your right to attend the special meeting.

Thank you for your continued support.

Very truly yours,

Marissa A. Mayer

Chief Executive Officer and President

Eric K. Brandt

Chairman of the Board of Directors

The attached proxy statement is dated April 24, 2017 and is first being mailed on or about April 28, 2017 to Yahoo stockholders of record as of the close of business on April 20, 2017.

Yahoo! Inc.

701 First Avenue

Sunnyvale, CA 94089

www.yahoo.com

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on June 8, 2017

TIME: 9:00 a.m. (local time) on June 8, 2017

PLACE: Santa Clara Marriott, located at 2700 Mission College Boulevard, Santa Clara, California

ITEMS OF BUSINESS:

• To consider and vote on a proposal (the “Sale Proposal”) to (a) authorize the sale to Verizon Communications Inc. (“Verizon”), pursuant to the terms and subject to the conditions set forth in the Stock Purchase Agreement, dated as of July 23, 2016, as amended as of February 20, 2017 (the “Stock Purchase Agreement”), between Yahoo! Inc. (“Yahoo,” “the Company,” “we,” or “us”) and Verizon, of all of the outstanding shares of Yahoo Holdings, Inc. (“Yahoo Holdings”), a Delaware corporation and a wholly-owned subsidiary of Yahoo, and prior to the sale of Yahoo Holdings, the sale (the “Foreign Sale Transaction”) by Yahoo Holdings to a foreign subsidiary of Verizon of all of the equity interests in a foreign subsidiary of Yahoo Holdings that will hold certain foreign subsidiaries relating to Yahoo’s operating business (the “Business”), following the transfer to Yahoo Holdings of all of the assets and liabilities relating to the Business, other than specified excluded assets and retained liabilities, as set forth in the Reorganization Agreement, dated as of July 23, 2016, as amended as of February 20, 2017 (the “Reorganization Agreement” and, together with the Stock Purchase Agreement, the “Sale Transaction Agreements”), between Yahoo and Yahoo Holdings (the transfers pursuant to the Reorganization Agreement, together with the sale of all of the outstanding shares of Yahoo Holdings to Verizon and the Foreign Sale Transaction, the “Sale Transaction”) and (b) adopt an amendment to the Company’s certificate of incorporation following completion of the Sale Transaction to provide that the exculpation and indemnification provisions of Articles XI and XII of the certificate of incorporation are subject to the limitations of the Investment Company Act of 1940 with respect to actions taken while the Company is registered as an investment company under the Investment Company Act of 1940;

• To consider and vote on a non-binding, advisory proposal (the “Compensation Proposal”) to approve the compensation that may be paid or become payable to Yahoo’s named executive officers in connection with the completion of the Sale Transaction, as described in the accompanying proxy statement; and

• To consider and vote on a proposal (the “Adjournment Proposal”) to authorize the Board of Directors of Yahoo (the “Board”) to postpone or adjourn the special meeting (i) for up to 10 business days to solicit additional proxies for the purpose of obtaining stockholder approval of the Sale Proposal, if the Board determines in good faith such postponement or adjournment is necessary or advisable to obtain stockholder approval, or (ii) to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure which the Board has determined, after consultation with outside legal counsel, is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior to the special meeting.

The proxy statement accompanying this notice, including its annexes and exhibits, contains additional information with respect to the business to be transacted at the special meeting of Yahoo stockholders, which we

refer to as the special meeting. We urge you to read the proxy statement, including the documents incorporated by reference, and its annexes and exhibits carefully and in their entirety.

BOARD RECOMMENDATION:

Based upon, among other considerations, a recommendation by a special committee of the Board called the Strategic Review Committee, comprised entirely of independent directors, the Board has (i) determined that the Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the Sale Transaction Agreements and the Sale Transaction and (iii) directed that the Sale Transaction be submitted for consideration by the stockholders at the special meeting.

The Board recommends that Yahoo stockholders vote “FOR” each of the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal.

WHO MAY VOTE:

Stockholders of record as of the close of business on April 20, 2017, which we refer to as the record date, are entitled to notice of and to vote at the special meeting. At the close of business on the record date, 958,131,387 shares of Yahoo common stock were outstanding and entitled to vote. We have no other class of stock outstanding.

VOTE REQUIRED FOR APPROVAL:

Your vote is very important. We cannot complete the Sale Transaction without the approval of the Sale Proposal. Approval of the Sale Proposal requires the affirmative vote of the holders of a majority of all outstanding shares of Yahoo common stock entitled to vote thereon. Approval of the Adjournment Proposal and the Compensation Proposal each requires the affirmative vote of the holders of a majority of the outstanding shares of Yahoo common stock present in person or represented by proxy at the special meeting and entitled to vote at the special meeting. However, the stockholder vote regarding the Compensation Proposal is an advisory vote, and therefore is not binding on us, the Board, our compensation committee, or Verizon. Since the compensation and benefits that may be paid or provided in connection with the Sale Transaction are based on the terms of the Sale Transaction Agreements or contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect the obligation to make these payments and these payments may still be made even if our stockholders do not approve, by non-binding, advisory vote, the Compensation Proposal.

Whether or not you plan to attend the special meeting, please submit your voting instructions by calling the toll-free telephone number or by using the Internet as described on the enclosed proxy card (or, if you received the proxy statement by electronic mail, as described in that email). If you received this proxy statement by physical mail, you may also vote by completing, signing, and dating the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope. If your shares are held in street name through a broker, bank, or other nominee, please follow the instructions furnished by your broker, bank, or other nominee.

By Order of the Board of Directors,

Arthur Chong

General Counsel and Secretary

Sunnyvale, California

April 24, 2017

ABOUT THIS PROXY STATEMENT

This proxy statement constitutes a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended.

You should rely only on the information contained in, or incorporated by reference into, this proxy statement. No one has been authorized to provide you with information that is different from the information contained in, or incorporated by reference into, this proxy statement. This proxy statement is dated April 24, 2017. You should not assume that the information contained in, or incorporated by reference into, this proxy statement is accurate as of any date other than that date (or, in the case of incorporated documents, their respective dates). Our mailing of this proxy statement to Yahoo stockholders will not create any implication to the contrary.

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TABLE OF CONTENTS

SUMMARY	1
Information About the Parties to the Sale Transaction	1
The Sale Transaction	2
The Special Meeting of Stockholders	13
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE SALE TRANSACTION	15
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	25
THE SPECIAL MEETING	27
General	27
Time, Place, and Date	27
Purpose	27
Quorum	28
Required Vote	28
Vote and Recommendation	29
Record Date; Who May Vote	29
Votes You Have	29
Number of Holders	29
Voting Procedures for Record Holders	29
Voting Procedures for Shares Held in “Street Name”	30
Revoking a Proxy	30
Tabulation of Votes	31
Solicitation of Proxies	31
RISK FACTORS	32
Risks Related to the Sale Transaction	32
Risks Related to Failure to Complete the Sale Transaction	35
Risks Related to the Fund	36
PROPOSAL 1—THE SALE TRANSACTION	38
Information About the Parties to the Sale Transaction	38
Background of the Sale Transaction	38
Reasons for the Sale Transaction	60
Recommendation of the Board	64
Sale Transaction Overview	65
The Sale Transaction Agreements	67
Opinions of the Financial Advisors	89
Certain Financial Forecasts	103
Regulatory Matters	110
Interests of Our Directors and Executive Officers in the Sale Transaction	110
U.S. Federal Income Tax Consequences of the Sale Transaction	116
Accounting Treatment of the Sale Transaction	117
No Appraisal Rights	117
Legal Proceedings	117
Required Vote	118
Financial Information	118
PROPOSAL 2—COMPENSATION RELATED TO THE SALE TRANSACTION	122
Required Vote	122
Recommendation of the Board	122

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PROPOSAL 3—THE ADJOURNMENT	123
Vote Regarding Adjournment Proposal	123
Required Vote	123
Recommendation of the Board	123
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT	124
INCORPORATION BY REFERENCE	127
OTHER MATTERS	127
FUTURE STOCKHOLDER PROPOSALS	127
WHERE YOU CAN FIND ADDITIONAL INFORMATION	128
ANNEX 1: DESCRIPTION OF THE FUND FOLLOWING THE SALE TRANSACTION	Annex 1-1
ANNEX 2: UNAUDITED COMBINED FINANCIAL STATEMENTS FOR THE BUSINESS	Annex 2-1
EXHIBIT A-1: Stock Purchase Agreement	Exhibit A-1-1
EXHIBIT A-2: Amendment to Stock Purchase Agreement	Exhibit A-2-1
EXHIBIT B-1: Reorganization Agreement	Exhibit B-1-1
EXHIBIT B-2: Amendment to Reorganization Agreement	Exhibit B-2-1
EXHIBIT C: Settlement and Release Agreement	Exhibit C-1
EXHIBIT D: Restated Certificate of Incorporation of Altaba Inc.	Exhibit D-1
EXHIBIT E: Opinion of Goldman, Sachs & Co	Exhibit E-1
EXHIBIT F: Opinion of J.P.Morgan Securities LLC	Exhibit F-1
EXHIBIT G: Opinion of PJT Partners LP	Exhibit G-1

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SUMMARY

This summary highlights selected information contained elsewhere in this proxy statement and may not contain all of the information that is important to you. To understand the sale transaction described below more fully and for a complete description of the legal terms of the sale transaction, you should read this entire proxy statement, the annexes and exhibits to this proxy statement, and the documents incorporated by reference into this proxy statement, carefully before voting. You may obtain the documents and information incorporated by reference into this proxy statement without charge by following the instructions in the section of this proxy statement entitled “Where You Can Find Additional Information.” We have included page references in this summary to direct you to a more complete description of the topics presented in this summary.

Information About the Parties to the Sale Transaction (See page 38)

Yahoo! Inc. (See page 38)

Yahoo! Inc. (“Yahoo,” the “Company,” “we,” or “us”) is a guide to digital information discovery, focused on informing, connecting, and entertaining our users through our search, communications, and digital content products. By creating highly personalized experiences, Yahoo helps users discover the information that matters most to them around the world—on mobile or desktop.

Yahoo creates value for advertisers with a streamlined, simple advertising technology that leverages Yahoo’s data, content, and technology to connect advertisers with their target audiences. Advertisers can build their businesses through advertising to targeted audiences on our online properties and services and a distribution network of third-party entities who integrate our advertising offerings into their websites or other offerings. Our revenue is generated principally from search and display advertising.

We are proud of our rich history that has evolved with the Internet, beginning in 1994 when our founders, Jerry Yang and David Filo, then graduate students at Stanford University, created Jerry and Dave’s Guide to the World Wide Web, a simple directory of websites to help people navigate the Internet. Yahoo was incorporated in 1995 and is a Delaware corporation. We completed our initial public offering on April 12, 1996, and our stock is listed on the NASDAQ Global Select Market (“Nasdaq”) under the symbol “YHOO.” Yahoo is a global company headquartered in Sunnyvale, California.

Additional information about Yahoo and its subsidiaries is included in documents incorporated by reference into this proxy statement. See the section of this proxy statement entitled “Where You Can Find Additional Information.”

Yahoo Holdings, Inc. (See page 38)

Yahoo Holdings, Inc. (“Yahoo Holdings”) was formed by Yahoo in connection with the sale transaction described below. Prior to completion of such sale transaction, Yahoo will transfer to Yahoo Holdings all of the assets and liabilities of Yahoo’s operating business (the “Business”) (other than specified excluded assets and retained liabilities described more fully in the section of this proxy statement entitled “—The Sale Transaction—The Sale Transaction Overview”).

Verizon Communications Inc. (See page 38)

Verizon Communications Inc. (“Verizon”), headquartered in New York City, New York, has a diverse workforce of 160,900 and generated nearly $126 billion in 2016 revenues. Verizon operates America’s most reliable wireless network, with 114.2 million retail connections nationwide. Verizon also provides

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communications and entertainment services over mobile broadband and the nation’s premier all-fiber network, and delivers integrated business solutions to customers worldwide.

The Sale Transaction (See page 65)

The Sale Transaction Overview

Yahoo and Verizon have entered into the Stock Purchase Agreement, dated as of July 23, 2016 (the “Original Stock Purchase Agreement”), as amended by the Amendment to Stock Purchase Agreement, dated as of February 20, 2017 (the “Stock Purchase Agreement Amendment” and, together with the Original Stock Purchase Agreement, the “Stock Purchase Agreement”), pursuant to which Yahoo has agreed to sell, and Verizon has agreed to purchase, all of the outstanding shares of Yahoo Holdings and, prior to the sale of Yahoo Holdings, to cause Yahoo Holdings to sell (the “Foreign Sale Transaction”) to a foreign subsidiary of Verizon all of the equity interests in a newly formed foreign subsidiary of Yahoo Holdings (“Foreign SaleCo”) that will hold certain foreign subsidiaries relating to the Business. Immediately prior to the completion of the transactions contemplated by the Stock Purchase Agreement, Yahoo Holdings will own the Business (other than specified excluded assets and retained liabilities as described more fully in the following paragraph). The purchase price that Verizon will pay or cause to be paid in connection with the Sale Transaction (as defined in the following paragraph) is $4,475,800,000 in cash, subject to adjustments as provided for in the Stock Purchase Agreement (the “Cash Consideration”).

In connection with the execution of the Stock Purchase Agreement, Yahoo and Yahoo Holdings have entered into the Reorganization Agreement, dated as of July 23, 2016 (the “Original Reorganization Agreement”), as amended by the Amendment to Reorganization Agreement, dated as of February 20, 2017 (the “Reorganization Agreement Amendment” and, together with the Original Reorganization Agreement, the “Reorganization Agreement”), pursuant to which Yahoo will transfer to Yahoo Holdings prior to the completion of the transactions contemplated by the Stock Purchase Agreement all of the assets and liabilities of the Business, other than specified excluded assets, which include Yahoo’s cash and marketable debt securities as of the closing, Yahoo’s shares in Alibaba Group Holding Limited (“Alibaba”) (held directly and indirectly), Yahoo’s shares in Yahoo Japan Corporation (“Yahoo Japan”), certain other minority equity investments, and all of the equity of Excalibur IP, LLC (“Excalibur”), which owns a portfolio of patent assets that are not core to Yahoo’s operating business (the “Excalibur IP Assets”), and specified retained liabilities, which include any outstanding 0.00% Convertible Senior Notes due 2018 issued by Yahoo (the “Convertible Notes”), securityholder litigation, 50 percent of certain post-closing cash liabilities related to the Data Breaches (as defined in the paragraph immediately below), and certain director and officer indemnification obligations. We refer to such transfer, together with the sale of all of the outstanding shares of Yahoo Holdings to Verizon and the Foreign Sale Transaction, as the “Sale Transaction.”

As used in this proxy statement, “Data Breaches” means (a) the Security Incidents (as defined in the section of this proxy statement entitled “Proposal 1—Background—Sale Transaction Agreement Amendments”) and certain other matters related to Yahoo’s data security disclosed by Yahoo to Verizon prior to February 20, 2017, in each case including any related matters that may arise from Yahoo’s ongoing investigations thereof and any use or transfer of data obtained as a result of any of the foregoing matters (the matters described in this clause (a), the “User Security Matters”) and (b) any other security breaches sustained by or perpetrated against Yahoo (whether known or unknown) through February 20, 2017 that, in the case of this clause (b), involve any actor that sponsored or perpetrated any User Security Matter.

On February 20, 2017, concurrently with the execution of the Stock Purchase Agreement Amendment and the Reorganization Agreement Amendment, Yahoo, Yahoo Holdings and Verizon entered into a Settlement and Release Agreement (the “Settlement and Release Agreement”), pursuant to which, among other things, Verizon

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released certain claims, subject to certain exceptions, that it (and its affiliates and representatives) may have against Yahoo (or its affiliates and representatives) related to the Data Breaches.

Throughout this proxy statement, we refer to the Original Stock Purchase Agreement and the Original Reorganization Agreement, together, as the “Original Sale Transaction Agreements,” we refer to the Stock Purchase Agreement Amendment and the Reorganization Agreement Amendment, together, as the “Sale Transaction Agreement Amendments,” and we refer to the Stock Purchase Agreement and the Reorganization Agreement, together, as the “Sale Transaction Agreements.”

Copies of the Original Stock Purchase Agreement and the Stock Purchase Agreement Amendment are attached as Exhibits A-1 and A-2, respectively, to this proxy statement. Copies of the Original Reorganization Agreement and the Reorganization Agreement Amendment are attached as Exhibits B-1 and B-2, respectively, to this proxy statement. A copy of the Settlement and Release Agreement is attached as Exhibit C to this proxy statement. Yahoo encourages you to read such documents in their entirety because they are the principal documents governing the Sale Transaction. For more information on the Sale Transaction Agreements, see the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements.”

Upon completion of the Sale Transaction, Verizon will also receive, pursuant to an Amended and Restated Patent License Agreement between Yahoo and Excalibur, which will be assigned by Yahoo to Yahoo Holdings in connection with the transactions contemplated by the Reorganization Agreement (the “Excalibur License Agreement”), dated the date of the Original Sale Transaction Agreements, for its benefit and that of its current and certain of its future affiliates, a non-exclusive, worldwide, perpetual, royalty-free license to the Excalibur IP Assets, which are not being transferred to Yahoo Holdings with the Business.

The Company After the Completion of the Sale Transaction

Upon completion of the Sale Transaction, the Company’s remaining assets will consist solely of the assets excluded from the Sale Transaction, which include its cash and marketable debt securities, its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity in Excalibur (which owns the Excalibur IP Assets), and the Company’s remaining liabilities will consist solely of the liabilities retained in the Sale Transaction, which include the Convertible Notes, securityholder litigation, 50 percent of certain cash liabilities related to the Data Breaches, and certain director and officer indemnification obligations.

Following the completion of the Sale Transaction, the Company will continue to be a Delaware corporation publicly traded on Nasdaq, but will be renamed “Altaba Inc.” and trade under the ticker symbol “AABA.” Because the Company’s assets will then consist primarily of our equity investments, short-term debt investments, and cash, the Company will be required to register as an investment company under the Investment Company Act of 1940 (the “1940 Act”). An investment company is a company that is engaged primarily in the business of investing, reinvesting, or trading in securities. Investment companies are regulated by and subject to certain restrictions and requirements under the 1940 Act to which the Company is not currently subject. These restrictions and requirements relate to, among other things, transactions involving affiliates, the composition of the Company’s board of directors, the Company’s capital structure, compliance policies and procedures, valuation of assets, and the maintenance of investment policies. The principal business of the Company after the Sale Transaction will be to hold investments in Alibaba and Yahoo Japan stock, although the Company will also own certain minority investments, marketable debt securities, and all of the equity interests in Excalibur, a wholly-owned subsidiary of the Company that owns the Excalibur IP Assets. The Company currently intends to seek to sell its minority investments over time, to liquidate marketable debt securities not needed for cash management purposes and, after completion of the Sale Transaction, to sell or license some or all of the Excalibur IP Assets. Please refer to the section of Annex 1 of this proxy statement entitled “Investment Objective and Policies” for a more detailed description of the Company’s business

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after completion of the Sale Transaction. Throughout this proxy statement, we refer to the Company after its registration as an investment company as the “Fund.”

Following the completion of the Sale Transaction, the Company will amend the indemnification and exculpation provisions of its certificate of incorporation (the “Existing Charter”) in order to comply with the 1940 Act. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—Amendment to Yahoo’s Amended and Restated Certificate of Incorporation.”

The completion of the Sale Transaction will not affect your shares of Yahoo common stock, which will continue to represent shares of common stock of the Fund, which will change its name to “Altaba Inc.” after it has registered as an investment company. Yahoo stockholders will not receive any shares of Verizon common stock and will not retain any continuing interest in the Business following completion of the Sale Transaction, other than in connection with the substitution of cash-settled Verizon restricted stock unit awards (each, a “Verizon RSU award”) for unvested Yahoo restricted stock unit awards (each, a “Yahoo RSU award”) held by employees of Yahoo Holdings immediately prior to the closing of the Sale Transaction (the “RSU Substitution”). See the section of this proxy statement entitled “—The Stock Purchase Agreement—Treatment of Certain Yahoo Equity.”

Although Yahoo has no current intention of selling, prior to the closing of the Sale Transaction, any of the assets that are not included in the Sale Transaction, Yahoo reserves the right to sell any such assets prior to the closing of the Sale Transaction. There is no assurance that the Fund’s assets held immediately after the completion of the Sale Transaction (the “Initial Assets”) will consist of all of the assets described above. For additional information about the Fund’s Initial Assets, please refer to the section of Annex 1 to this proxy statement entitled “— Pro Forma Schedule of Investments.” There is also no assurance as to the value of the consideration Yahoo might receive in the event of any such disposition. Additionally, Yahoo and its Board of Directors (the “Board”) reserve the right to distribute any of its cash to investors prior to the closing of the Sale Transaction through repurchases of its common stock or outstanding debt securities or distributions.

The Fund currently intends to return substantially all of its cash to stockholders over time through stock repurchases and distributions, although the Fund will retain sufficient cash to satisfy its obligations to creditors and for working capital. The timing and method of any return of capital will be determined by the Board. Stock repurchases may take place in the open market, including under Rule 10b5-1 plans or in a tender offer, or in privately negotiated transactions, including structured and derivative transactions such as accelerated share repurchase transactions. The Fund currently anticipates that the amount of cash to be retained by the Fund will be at least $1.4 billion, which is the minimum amount necessary to satisfy the Fund’s obligations under the Convertible Notes. However, the Fund’s obligations to creditors and working capital requirements may vary over time and may be materially greater than such amount, depending upon, among other factors, the cost of cash-settling any conversion obligations under the Convertible Notes, the Fund’s potential obligations with respect to other Retained Liabilities (as defined in the section of this proxy statement entitled “The Sale Transaction Agreements—The Reorganization Agreement—Retained Liabilities”), and whether the income from the Fund’s investments is sufficient to cover its expenses.

We have included disclosures relating to the Fund in Annex 1 to this proxy statement, entitled “Description of the Fund Following the Sale Transaction.” Annex 1 includes a description of the Fund, including its manner of operation and anticipated operating expenses, regulation, risks, pro forma financials, and other relevant information. You should read Annex 1 carefully as it contains important information about your interest in the Fund following the completion of the Sale Transaction.

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The structure of the Company currently and immediately after the Sale Transaction is illustrated below:

Current Structure*

* This chart is as of the date of this proxy statement.

** The Business will be transferred to Yahoo Holdings prior to the closing of the transactions contemplated by the Reorganization Agreement.

*** Approximately 24 percent of Yahoo’s shares in Alibaba are held directly by Yahoo and approximately 76 percent are held indirectly through Altaba Holdings Hong Kong Limited (“Altaba HK”).

Structure Immediately Following the Sale Transaction

* Approximately 24 percent of the Fund’s shares in Alibaba will be held directly by the Fund and approximately 76 percent will be held indirectly through Altaba HK.

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Reasons for the Sale Transaction and Recommendation of the Board (See pages 60 and 64)

A special committee of the Board consisting entirely of independent directors, named the Strategic Review Committee, recommended to the Board that the Board approve the Sale Transaction Agreements and the Sale Transaction.

After careful consideration, the Board, based upon, among other considerations, the recommendation of the Strategic Review Committee, (i) determined that the Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the Sale Transaction Agreements and the Sale Transaction, (iii) recommended, subject to the terms of the Stock Purchase Agreement, that the stockholders of Yahoo adopt a resolution authorizing the Sale Transaction, and (iv) directed that the Sale Transaction be submitted for consideration by the stockholders of Yahoo at the special meeting of Yahoo stockholders, which we refer to as the special meeting. For factors considered by the Board in reaching its decision to approve the Sale Transaction Agreements and the Sale Transaction, see the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Reasons for the Sale Transaction.”

The Board recommends that you vote “FOR” the proposal to authorize the Sale Transaction and adopt the Charter Amendment (the “Sale Proposal”).

Opinions of the Financial Advisors (See page 89)

At a special meeting of the Board held on February 20, 2017, each of Goldman, Sachs & Co. (“Goldman Sachs”), J.P. Morgan Securities LLC (“J.P. Morgan”), and PJT Partners LP (“PJT Partners”), the financial advisors to the Strategic Review Committee, rendered their respective opinions to the Strategic Review Committee and the Board, as of the date of such opinions and based upon and subject to the factors set forth therein, as to the fairness, from a financial point of view, to Yahoo of the Cash Consideration, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, as set forth below:

Goldman Sachs

At the February 20, 2017 Board meeting, Goldman Sachs rendered its oral opinion to the Strategic Review Committee and the Board, subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of Goldman Sachs, dated February 20, 2017, which sets forth assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit E to this proxy statement and is incorporated herein by reference. The summary of the opinion of Goldman Sachs set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Strategic Review Committee and the Board in connection with their consideration of the Sale Transaction. The issuance of Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs. The Goldman Sachs opinion does not constitute a recommendation to any Yahoo stockholder as to how such stockholder should vote with respect to the Sale Transaction or any other matter.

J.P. Morgan

At the February 20, 2017 Board meeting, J.P. Morgan rendered its oral opinion to the Strategic Review Committee and the Board, subsequently confirmed by delivery of a written opinion dated February 20, 2017,

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that, as of such date, and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of J.P. Morgan, dated February 20, 2017, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit F to this proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Strategic Review Committee and the Board (in their capacities as such) in connection with and for the purposes of their evaluation of the Sale Transaction. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The J.P. Morgan opinion does not constitute a recommendation to any Yahoo stockholder as to how such stockholder should vote with respect to the Sale Transaction or any other matter.

PJT Partners

At the February 20, 2017 Board meeting, PJT Partners rendered its oral opinion to the Strategic Review Committee and the Board, subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in PJT Partners’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of PJT Partners, dated February 20, 2017, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit G to this proxy statement and is incorporated herein by reference. The summary of the opinion of PJT Partners set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. PJT Partners provided its opinion to the Strategic Review Committee and the Board (in their capacities as such) in connection with and for purposes of their evaluation of the Sale Transaction only and PJT Partners’ opinion is not a recommendation as to any action the Strategic Review Committee or the Board should take with respect to the Sale Transaction or any aspect thereof. The issuance of PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures. The opinion does not constitute a recommendation to any Yahoo stockholder as to how any such stockholder should vote or act with respect to the Sale Transaction or any other matter.

The Stock Purchase Agreement

Purchase Price (See page 68)

Pursuant to the Stock Purchase Agreement, Verizon will pay or cause to be paid to Yahoo, in exchange for all of the outstanding shares of Yahoo Holdings and the shares of Foreign SaleCo transferred in the Foreign Sale Transaction, the Cash Consideration, which is an aggregate cash purchase price equal to $4,475,800,000 (the “Base Purchase Price”), subject to adjustments as provided for in the Stock Purchase Agreement. The Base Purchase Price will be subject to an adjustment for the net working capital of Yahoo Holdings and the other subsidiaries of Yahoo (subject to exceptions) as of the opening of business on the date of the closing. Additionally, the Base Purchase Price will be subject to adjustments for the cash and debt of Yahoo Holdings and its subsidiaries (subject to exceptions) as of the opening of business on the date of the closing, certain transaction expenses, and certain changes in the aggregate value of outstanding unvested Yahoo RSU awards between the execution of the Original Stock Purchase Agreement and the closing.

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Treatment of Certain Yahoo Equity (See page 72)

Restricted Stock Unit Awards. Pursuant to the RSU Substitution, each Yahoo RSU award that is held by an employee of Yahoo Holdings (or a subsidiary thereof) immediately prior to the closing, who will automatically become an employee of Verizon (or a subsidiary thereof) immediately following the closing, and that is outstanding and unvested immediately prior to the closing will be replaced with a cash-settled Verizon RSU award, with the number of shares of Verizon common stock subject to the Verizon RSU award adjusted to reflect the relative value of Yahoo and Verizon shares; however, Verizon may determine to settle Verizon RSU awards held by non-U.S. employees in shares of Verizon common stock in limited circumstances. The Verizon RSU awards will generally be subject to the same vesting and other terms and conditions as the corresponding Yahoo RSU awards.

Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately following the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. The Fund will retain all liabilities and obligations with respect to Yahoo RSU awards held by non-employee directors and individuals who are employees of the Fund as of immediately following the closing.

Stock Options. Each Yahoo stock option outstanding immediately prior to the closing will, if not already vested, become fully vested and exercisable, effective as of the closing, and all Yahoo stock options will remain outstanding in accordance with their terms.

The Fund will retain all liabilities and obligations with respect to all Yahoo stock options.

Conditions to Completion of the Sale Transaction (See page 69)

Conditions to Each Party’s Obligations. Yahoo and Verizon’s obligations to complete the Sale Transaction are subject to the satisfaction of certain conditions, including, among other things:

• adoption of a resolution approving the Sale Proposal by the holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting (the “Stockholder Approval”);

• approvals, expirations, or terminations of waiting periods (including any extensions) required under the antitrust laws of certain jurisdictions, including the United States and the European Union, without the imposition of a Burdensome Condition (as defined in the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Efforts”), unless Verizon expressly agreed in writing to such Burdensome Condition in connection with obtaining such approval, expiration, or termination (each of which approval, expiration, or termination has been obtained or has occurred (see the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Regulatory Matters”));

• the absence of any order restraining, enjoining, or otherwise prohibiting the completion of the Sale Transaction;

• the closing of the transactions contemplated by the Reorganization Agreement; and

• the Excalibur License Agreement remaining in full force and effect.

Conditions to Yahoo’s Obligations. Yahoo’s obligations to effect the Sale Transaction are subject to the satisfaction or waiver of additional conditions, including, among other things:

• the accuracy of Verizon’s representations and warranties; and

• Verizon’s compliance in all material respects with its covenants and agreements.

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Conditions to Verizon’s Obligations. Verizon’s obligations to effect the Sale Transaction are subject to the satisfaction or waiver of additional conditions, including, among other things, other than as waived in respect of the User Security Matters pursuant to the Stock Purchase Agreement:

• the accuracy of Yahoo’s representations and warranties; and

• Yahoo’s compliance in all material respects with its covenants and agreements.

Yahoo cannot be certain when, or if, the conditions to the Sale Transaction will be satisfied or waived, or that the Sale Transaction will be completed.

No Solicitation; Superior Proposal; Termination Fee (See page 72)

From the execution of the Original Stock Purchase Agreement until the earlier of the closing or the termination of the Stock Purchase Agreement, Yahoo will not (and will cause its subsidiaries and their respective directors, officers, and employees not to, and use Yahoo’s reasonable best efforts to cause its and their respective other representatives not to), initiate, solicit, discuss, or negotiate any third party proposals to acquire the Business (including through the acquisition of Yahoo), but may respond to unsolicited proposals under certain circumstances. However, subject to certain other restrictions applicable to Yahoo and the Business prior to the closing (including those described under the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Conduct of Business by Yahoo and the Business Subsidiaries Prior to the Closing”), Yahoo is not restricted from soliciting or taking any action or engaging in any other activity with respect to, and will not be obligated to pay the Termination Fee (as defined in the following paragraph) to Verizon for, any third party proposal (i) to acquire 25 percent or less of Yahoo’s stock or consolidated assets (excluding in both the numerator and denominator for purposes of calculating such percentage of consolidated assets any Excluded Assets (as defined in the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Reorganization Agreement—Excluded Assets”)), (ii) to acquire more than 25 percent of Yahoo’s stock if the proposal would not reasonably be expected to conflict with, delay, impede, or prohibit the completion of the Sale Transaction and is conditioned on the proposed purchaser voting all of Yahoo’s stock owned by it in favor of the Sale Transaction, or (iii) solely with respect to Excluded Assets if the proposal would not reasonably be expected to conflict with, delay, impede, or prohibit the completion of the Sale Transaction.

In some instances, including, among others, if Yahoo terminates the Stock Purchase Agreement in order to accept a Superior Proposal (as defined in the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—No Solicitation; Superior Proposal; Termination Fee—Superior Proposal; Adverse Recommendation Changes”) or Verizon terminates the Stock Purchase Agreement because the Board changes or withdraws its recommendation of the Sale Transaction (including in response to a Superior Proposal), Yahoo is obligated to pay a $134,274,000 termination fee to Verizon (the “Termination Fee”).

In addition, if Verizon terminates the Stock Purchase Agreement due to a breach by Yahoo of the Stock Purchase Agreement that would cause a failure of the conditions to the closing to be satisfied (and such breach is not timely cured), Yahoo is required to reimburse Verizon’s expenses in an amount up to $15,000,000 (which is creditable toward the Termination Fee).

Termination of the Stock Purchase Agreement (See page 75)

The Stock Purchase Agreement may be terminated under certain circumstances, including:

• by mutual written agreement of Yahoo and Verizon;

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• by either Yahoo or Verizon, if

• the closing has not occurred before July 24, 2017 (the “Outside Date”);

• any governmental authority of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining, or otherwise prohibiting or making illegal the completion of the Sale Transaction, and such order or other action has become final and non-appealable; or

• the Stockholder Approval is not obtained;

• by Yahoo, if

• Verizon has breached its representations, warranties, or covenants to a degree that would result in the failure of a condition to the closing, and the breach cannot be cured or, if curable, is not cured by the earlier of the Outside Date and 30 calendar days after Yahoo’s notice of such breach; or

• prior to receipt of the Stockholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal (so long as Yahoo pays the Termination Fee to Verizon simultaneously with or prior to such termination); or

• by Verizon, if

• Yahoo has breached its representations, warranties, or covenants (other than as waived in respect of the User Security Matters pursuant to the Stock Purchase Agreement Amendment) to a degree that would result in the failure of a condition to the closing, and the breach cannot be cured or, if curable, is not cured by the earlier of the Outside Date and 30 calendar days after Verizon’s notice of such breach; or

• prior to receipt of the Stockholder Approval, the Board has made an Adverse Recommendation Change (as defined in the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—No Solicitation; Superior Proposal; Termination Fee—Superior Proposal; Adverse Recommendation Changes”).

Representations and Warranties; Certain Covenants and Agreements (See page 76)

Each of Yahoo and Verizon has made customary representations, warranties, and covenants in the Stock Purchase Agreement. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement.”

The Reorganization Agreement

In connection with the execution of the Stock Purchase Agreement, Yahoo and Yahoo Holdings have entered into the Reorganization Agreement, pursuant to which Yahoo will, prior to the completion of the Sale Transaction, transfer all of the assets and liabilities of its Business, other than the excluded assets and retained liabilities described below, to Yahoo Holdings.

Transferred Assets (See page 84)

Yahoo will transfer all of the assets of the Business, other than those assets specifically excluded from the Sale Transaction, to Yahoo Holdings.

Excluded Assets (See page 85)

Assets that will be retained by the Fund and will not be transferred to Yahoo Holdings include, among others, Yahoo’s cash and marketable debt securities as of the closing (other than cash and cash equivalents held

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in escrow or similar arrangements in connection with certain historic acquisitions by Yahoo), Yahoo’s shares in Alibaba (held directly and indirectly), Yahoo’s shares in Yahoo Japan, certain other minority equity investments, and all of the equity of Excalibur. Additionally, Yahoo has the right to specify certain other assets as “excluded assets” prior to the closing that may be required for the Fund’s operations after the completion of the Sale Transaction.

Assumed Liabilities (See page 85)

Yahoo Holdings will assume all of the liabilities of the Business, other than specified liabilities to be retained by the Fund.

Retained Liabilities (See page 85)

Liabilities that will be retained by the Fund and will not be transferred to Yahoo Holdings include, among others, liabilities related to those assets excluded from the Sale Transaction, including the Convertible Notes and the indenture governing the Convertible Notes, liabilities relating to securityholder litigation, certain director and officer indemnification obligations, certain employee and employment plan liabilities, litigation or liabilities relating to Yahoo’s SEC or Nasdaq reporting, accounting, or compliance obligations as a public company, and 50 percent of certain post-closing cash liabilities related to the Data Breaches.

Termination (See page 87)

The Reorganization Agreement automatically terminates upon termination of the Stock Purchase Agreement and may be terminated at any time prior to the closing of the transactions contemplated by the Reorganization Agreement by mutual written agreement of Yahoo, Yahoo Holdings, and Verizon.

Settlement and Release Agreement (See page 88)

On February 20, 2017, concurrently with the execution of the Stock Purchase Agreement Amendment and the Reorganization Agreement Amendment, Yahoo, Yahoo Holdings and Verizon entered into the Settlement and Release Agreement, pursuant to which, among other things, Verizon released certain claims, subject to certain exceptions, it (and its affiliates and representatives) may have against Yahoo (or its affiliates and representatives) related to the Data Breaches.

The Excalibur License Agreement (See page 88)

Concurrently with the execution of the Original Sale Transaction Agreements, Yahoo and Excalibur entered into the Excalibur License Agreement in order to provide that Excalibur’s grant to Yahoo of a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, fully paid-up license under the Excalibur IP Assets will extend, effective upon the closing of the Sale Transaction, to Verizon and its current and certain of its future affiliates. The Excalibur License Agreement will be assigned by Yahoo to Yahoo Holdings upon the closing of the transactions contemplated by the Reorganization Agreement.

Amendment to Yahoo’s Amended and Restated Certificate of Incorporation (See Page 88)

Following the completion of the Sale Transaction, in order to comply with the 1940 Act, the Company will amend the Existing Charter to provide that the exculpation and indemnification provisions of Articles XI and XII of the Existing Charter are subject to the limitations of the 1940 Act with respect to actions taken while the Company is registered as an investment company under the 1940 Act (the “Charter Amendment”). The proposed certificate of incorporation of the Fund, after giving effect to the Charter Amendment and the change of name of the Company to “Altaba Inc.”, is attached as Exhibit D to this proxy statement.

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Regulatory Matters (See page 110)

The Sale Transaction is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), which provides that certain transactions may not be completed until required information and materials are furnished to the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”), and until certain waiting period requirements have been satisfied. Each of Verizon and Yahoo filed a Pre-merger Notification and Report Form under the HSR Act with the DOJ and the FTC in connection with the Sale Transaction on August 12, 2016. The waiting period expired at 11:59 p.m., Eastern Time, on September 12, 2016.

Yahoo and Verizon derive revenues in other jurisdictions where acquisition control filings or clearances are or may be required or advisable. In addition to the expiration of the applicable waiting period under the HSR Act, the Sale Transaction is conditioned upon antitrust approval from certain jurisdictions, including the European Union. These antitrust approvals were obtained in December 2016.

U.S. Federal Income Tax Consequences of the Sale Transaction (See page 116)

The Sale Transaction will generally be taxable to Yahoo for U.S. federal income tax purposes but not to its stockholders. For a summary of certain U.S. federal income tax considerations for stockholders of the Fund following the Sale Transaction, see the section in Annex 1 to this proxy statement entitled “U.S. Federal Income Tax Considerations.”

Interests of Our Directors and Executive Officers in the Sale Transaction (See page 110)

In considering the recommendation of the Board with respect to the proposal to authorize the Sale Transaction, Yahoo stockholders should be aware that certain directors and executive officers of Yahoo have interests in the Sale Transaction that may be different from or in addition to the interests of Yahoo stockholders generally.

These interests include, among others, the fact that, upon the closing of the Sale Transaction, Yahoo RSU awards held as of immediately prior to the closing by employees of Yahoo Holdings (or a subsidiary thereof), who will automatically become employees of Verizon (or a subsidiary thereof) immediately following the closing, generally will be replaced with cash-settled Verizon RSU awards, with the number of shares subject to the Verizon RSU award adjusted to reflect the relative values of Yahoo and Verizon shares. Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately following the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. Yahoo stock options outstanding immediately prior to the closing will, if not already vested, become fully vested and all Yahoo stock options will remain outstanding in accordance with their terms.

In addition, executive officers may become entitled to severance payments and benefits in the event their employment with Verizon terminates for certain qualifying reasons following the closing.

On March 10, 2017, Thomas J. McInerney, the Chairman of the Strategic Review Committee, entered into an offer letter with the Company, effective upon the closing of the Sale Transaction, pursuant to which Mr. McInerney will become the Chief Executive Officer of the Fund upon the closing of the Sale Transaction and, in such capacity, will receive compensation from the Fund. See the section of Annex 1 of this proxy statement entitled “Management of the Fund—Compensation of Officers and Directors.”

The Sale Transaction Agreements were negotiated under the direction of the Strategic Review Committee, which consisted entirely of independent directors, and which was aware of such interests in recommending that the Board approve the Sale Transaction Agreements and the Sale Transaction. The Board was also aware of these interests and considered them, among other matters, in approving the Sale Transaction Agreements and the Sale Transaction and recommending that the Sale Proposal be approved by Yahoo stockholders.

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For a more detailed description of these interests, see the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Interests of Our Directors and Executive Officers in the Sale Transaction.”

No Appraisal Rights (See page 117)

Neither Delaware law nor the Existing Charter provides Yahoo stockholders with appraisal or dissenters’ rights in connection with the Sale Transaction.

The Special Meeting of Stockholders

Date, Time, Place, and Purpose (See page 27)

The special meeting will be held at the Santa Clara Marriott, located at 2700 Mission College Boulevard, Santa Clara, California, on June 8, 2017 at 9:00 a.m., local time, for the following purposes:

1. to consider and vote on the Sale Proposal;

2. to consider and vote on a non-binding, advisory proposal (the “Compensation Proposal”) to approve the compensation that may be paid or become payable to Yahoo’s named executive officers in connection with the completion of the Sale Transaction; and

3. to consider and vote on a proposal (the “Adjournment Proposal”) to authorize the Board to postpone or adjourn the special meeting (i) for up to 10 business days to solicit additional proxies for the purpose of obtaining stockholder approval of the Sale Proposal, if the Board determines in good faith such postponement or adjournment is necessary or advisable to obtain stockholder approval or (ii) to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure which the Board has determined, after consultation with outside legal counsel, is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior to the special meeting.

Record Date and Quorum (See pages 28 and 29)

The record date for determining the stockholders entitled to receive notice of and to vote at the special meeting is the close of business on April 20, 2017. Beneficial owners as of that date are welcome to attend the special meeting and may vote their shares at the meeting if they obtain, and bring with them to the meeting, a valid legal proxy from the broker, bank, or other nominee that holds their shares to vote the shares at the meeting.

Business may be conducted at the special meeting only if a quorum is present or represented at the meeting, which means that holders of a majority of the outstanding shares of Yahoo common stock entitled to vote on the subject matters of the special meeting must be present in person or represented by proxy at the special meeting. Abstentions will be counted in determining whether a quorum is present.

Required Vote (See pages 118, 122, and 123)

Proposal No. 1: The Sale Proposal

Pursuant to the terms of the Stock Purchase Agreement, Yahoo is required to obtain approval of the Sale Transaction by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting, and such stockholder approval is a condition to the completion of the Sale Transaction. In addition, Yahoo entered into a settlement agreement with Starboard Value LP and certain of its affiliates (the “Starboard Settlement Agreement”), dated April 26, 2016, pursuant to which Yahoo is required to submit the Sale Proposal to Yahoo stockholders for approval. Additionally, pursuant to Delaware law, Yahoo is required to obtain approval of the Charter Amendment by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting.

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Proposal No. 2: The Compensation Proposal

The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the subject matter is required to approve the Compensation Proposal. The stockholder vote regarding the Compensation Proposal is an advisory vote, and therefore is not binding on us, the Board, our compensation committee, or Verizon. Since the compensation and benefits that may be paid or provided in connection with the Sale Transaction are based on the terms of the Sale Transaction Agreements or contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect the obligation to make these payments and these payments may still be made even if our stockholders do not approve, by non-binding, advisory vote, the Compensation Proposal.

Proposal No. 3: The Adjournment Proposal

The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the subject matter is required to approve the Adjournment Proposal.

Board Recommendations (See pages 64, 122, and 123)

The Board recommends that you vote “FOR” each of the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE SALE TRANSACTION

The following are some questions that you, as a stockholder of Yahoo, may have regarding the Sale Transaction and the other matters being considered at the special meeting as well as answers to those questions. Yahoo urges you to read carefully the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the Sale Transaction and the other matters being considered at the special meeting. Additional important information is also contained in the annexes and exhibits to, and the documents incorporated by reference into, this proxy statement. See the section of this proxy statement entitled “Where You Can Find Additional Information.”

THE SPECIAL MEETING

Q: Why am I receiving these materials?

A: The Board is providing these proxy materials to you in connection the special meeting, which will take place on June 8, 2017. As a stockholder of Yahoo as of the close of business on April 20, 2017, you are invited to attend the special meeting and you are entitled to, and requested to, vote your shares on the proposals described in this proxy statement.

Q: What proposals will be voted on at the special meeting?

A: Stockholders will vote on the following three proposals at the special meeting:

• the Sale Proposal;

• the Compensation Proposal; and

• the Adjournment Proposal.

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

A: The special meeting will be held at the Santa Clara Marriott, located at 2700 Mission College Boulevard, Santa Clara, California, on June 8, 2017, at 9:00 a.m., local time.

Q: What vote is required to approve each of the proposals?

A: Pursuant to the terms of the Stock Purchase Agreement, Yahoo is required to obtain approval of the Sale Transaction by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting, and such stockholder approval is a condition to the completion of the Sale Transaction. In addition, pursuant to the terms of the Starboard Settlement Agreement, Yahoo is required to submit the Sale Proposal to Yahoo stockholders for approval. Additionally, pursuant to Delaware law, Yahoo is required to obtain approval of the Charter Amendment by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting.

Approval of the Compensation Proposal and approval of the Adjournment Proposal each requires the affirmative vote of the holders of a majority of the Company’s stock present in person or represented by proxy at the special meeting and entitled to vote thereon.

Note, however, that the vote on the Compensation Proposal will be advisory only and will not be binding. Since the compensation and benefits that may be paid or provided in connection with the Sale Transaction are based on the terms of the Sale Transaction Agreements or contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect our obligation to make these payments.

Q: Why do I need to vote?

A: Your vote is needed to ensure that a quorum is present and sufficient votes are obtained at the special meeting so that the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal can be acted

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upon. We cannot complete the Sale Transaction or the Charter Amendment unless the Sale Proposal is approved by the holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon. Your immediate response on the enclosed proxy card (or your submission of voting instructions by telephone or Internet) will help prevent the need for any further solicitations for a stockholder vote. Your vote is very important to us regardless of the number of shares you own.

As discussed in “—What effect do abstentions and failures to vote have on the proposals?” below, failure to instruct your broker or nominee to vote will have the same effect as votes “AGAINST” the Sale Proposal but will have no effect on the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

Q: How does the Board recommend I vote on these proposals?

A: After careful consideration, the Board approved the Sale Transaction Agreements and the Sale Transaction and determined that Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders. The Board recommends that you vote your shares “FOR” each of the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal.

Q: What is the deadline for voting my shares if I do not attend the special meeting?

A: If you are a stockholder of record, your proxy must be received by telephone or the Internet by 2:00 a.m. Eastern Time on June 8, 2017 in order for your shares to be voted at the special meeting. If you are a stockholder of record, you also have the option of completing, signing, dating, and returning the enclosed proxy card so that it is received by the Company before the polls close at the special meeting in order for your shares to be voted at the meeting. If you are a beneficial owner of shares, please comply with the deadlines included in the voting instructions provided by the broker, bank, or other nominee that holds your shares.

Q: How many shares must be present or represented to conduct business at the special meeting?

A: Business may be conducted at the special meeting only if a quorum is present or represented at the special meeting, which means that holders of a majority of the outstanding shares of Yahoo common stock entitled to vote on the subject matters of the special meeting must be present in person or represented by proxy at the special meeting. Abstentions are counted to determine whether a quorum is present. See the section of this proxy statement entitled “—What effect do abstentions and failures to vote have on the proposals?” below for more information.

Q: What effect do abstentions and failures to vote have on the proposals?

A: Abstentions. Abstentions are counted to determine whether a quorum is present. Abstentions have the same effect as votes “AGAINST” the Sale Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

Failures to Vote. If you are a stockholder of record and you fail to vote, it will have the same effect as voting “AGAINST” the Sale Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

If you hold your shares in “street name,” it is critical that you cast your vote by instructing your bank, broker, or other nominee on how to vote if you want your vote to be counted at the special meeting. Brokers are not permitted to exercise discretionary authority regarding any of the proposals to be voted on at the special meeting. If you are a beneficial owner of Yahoo stock and you fail to instruct your broker, bank, or other nominee how to vote, it will have the same effect as votes “AGAINST” the Sale Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

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Yahoo does not expect any broker non-votes at the special meeting. A broker non-vote occurs on an item when (i) a broker, bank, or other nominee has discretionary authority to vote on at least one routine proposal at a meeting, but under stock exchange rules is not permitted to vote on other non-routine proposals without instructions from the beneficial owner of the shares and (ii) that beneficial owner fails to provide such instructions. Because none of the proposals to be voted on at our special meeting are routine matters, Yahoo does not expect any broker non-votes at this special meeting.

Q: How will my shares be voted if I submit a proxy card without providing specific voting instructions?

A: If you submit a signed proxy card without giving specific voting instructions on one or more matters listed in the notice for the special meeting, your shares will be voted as recommended by the Board on such matters. If you hold shares in “street name” and you submit a signed voting instruction form to your broker, bank, or other nominee without giving specific voting instructions on one or more matters listed in the notice for the meeting, your shares generally will be voted as recommended by our Board on such matters.

Q: What is the difference between a “stockholder of record” and a “beneficial owner”?

A: Whether you are a “stockholder of record” or a “beneficial owner” with respect to your shares of Yahoo common stock depends on how you hold your shares:

• Stockholders of record. If you hold shares directly in your name with our stock transfer agent, Computershare Trust Company, N.A., you are considered the “stockholder of record” with respect to those shares, and a complete set of these proxy materials has been sent directly to you by Yahoo.

• Beneficial owners. Most stockholders of Yahoo hold their shares through a broker, bank, or other nominee (that is, in “street name”) rather than directly in their own names. If you hold shares in street name, you are a “beneficial owner” of those shares and a complete set of these proxy materials will be forwarded to you by your broker, bank, or other nominee.

Q: Can I attend the special meeting? What do I need for admission?

A: You are entitled to attend the special meeting if (1) you were a stockholder of record or a beneficial owner as of the close of business on the record date, April 20, 2017; (2) you are a duly authorized representative of an institutional holder as described below; or (3) you hold a valid legal proxy to vote shares of the Company’s common stock at the special meeting.

All attendees will be asked to present a government-issued photo identification, such as a driver’s license or passport, and must meet the following requirements for admission:

• Stockholders of record. If you are a stockholder of record, the name on your photo ID will be verified against the April 20, 2017 list of stockholders of record prior to your being admitted to the special meeting.

• Beneficial owners. If you are a beneficial owner, you will need to provide proof of your beneficial ownership of Yahoo stock on the record date, such as a brokerage account statement showing that you owned Yahoo stock on April 20, 2017, a copy of the proxy card provided by your broker, bank, or other nominee, or other similar evidence that you owned Yahoo stock on the record date. The name on your photo ID and your proof of ownership must match. Please note, if you are a beneficial owner of shares and you wish to vote your shares in person at the annual meeting, you must also obtain a legal proxy from the broker, bank, or other nominee that holds your shares, giving you the right to vote your shares at the meeting.

• Authorized representatives. Corporations and other stockholders that are not natural persons (“institutions”) may be represented at the meeting only by a duly authorized officer, director, or employee of the institution, or (in the case of limited liability companies and partnerships) a manager

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or partner. Each such representative must provide satisfactory evidence of his or her position with, and due authorization by, the institution. Statements by or on behalf of an institution’s bank or broker will not be sufficient evidence of a representative’s position or authorization. Unless the institution’s name is listed as a stockholder of record, representatives of institutions must also provide proof of the institution’s beneficial ownership of Yahoo stock on the record date as described above. We encourage our institutional stockholders to register their representatives in advance by sending a written request, along with the documentation described above, to Investor Relations, Yahoo! Inc., 701 First Avenue, Sunnyvale CA 94089, or by fax to (408) 349-3400. Please allow sufficient time for Yahoo to process your request. Upon receipt of sufficient documentation, we will send you a confirmation that your representative has been authorized for entry. The name on the representative’s photo ID must match the authorized name.

• Legal proxy holders. If you hold a valid legal proxy to vote shares of the Company’s common stock at the special meeting, you must bring it with you, and the name on your photo ID and legal proxy must match.

If you do not provide a government-issued photo ID and comply with the other procedures outlined above, you will not be admitted to the special meeting. Note that cameras, sound or video recording equipment, smartphones or other similar equipment, electronic devices, large bags, briefcases, or packages may not be allowed (or their use may be restricted) in the special meeting room.

Q: How can I vote my shares without attending the special meeting?

A: You may direct how your shares are voted without attending the special meeting in one of the following ways:

• Internet. You can vote your shares via the Internet by following the instructions on the website identified on your proxy card (or, if you received this proxy statement by electronic mail, as described in that email). You will need the control number provided on your proxy card (or email) to access the voting website.

• Telephone. You can vote your shares by telephone if you call the phone voting number appearing on your proxy card. You will need the control number provided on your proxy card to vote by telephone.

• Mail. If you received this proxy statement by physical mail, you can vote your shares by completing, signing, dating, and returning in the enclosed envelope the proxy card you received.

Q: Are proxy materials for the special meeting available online?

A: Yes. This proxy statement is available online at our investor relations website, investor.yahoo.net.

Q: Who will bear the cost of soliciting votes for the special meeting?

A: The solicitation of proxies will be conducted by mail, and Yahoo will bear the costs. Yahoo has retained Innisfree M&A Incorporated (“Innisfree”) to assist in the solicitation of proxies and provide related services, for a fee estimated to be approximately $25,000 plus an amount to cover expenses. In addition, we have agreed to indemnify Innisfree against certain liabilities arising out of or in connection with the engagement. These costs will include the expense of preparing and mailing proxy solicitation materials for the special meeting and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation materials regarding the special meeting to beneficial owners of Yahoo common stock. Proxies may also be solicited by some of our directors, officers, and employees, personally or by telephone, facsimile, or other means of communication. We also may incur other expenses in connection with the solicitation of proxies for the special meeting.

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Q: Who is the inspector of election?

A: The Board has appointed a representative of Computershare Trust Company, N.A. to act as the inspector of election at the special meeting.

Q: Where can I find the voting results of the special meeting?

A: The preliminary voting results are expected to be announced at the special meeting. In addition, within four business days following certification of the final voting results, Yahoo intends to file the final voting results of the special meeting with the SEC on Form 8-K.

THE SALE PROPOSAL

Q: What are the material terms of the Sale Transaction?

A: Pursuant to the terms of the Sale Transaction Agreements, Verizon will acquire the Business. Specifically, under the Stock Purchase Agreement, we have agreed to sell to Verizon all of the shares of Yahoo Holdings and to effect the Foreign Sale Transaction, following the transfer to Yahoo Holdings of all of the assets and liabilities relating to the Business, other than specified excluded assets and retained liabilities, as set forth in the Reorganization Agreement. The Cash Consideration that Verizon will pay or cause to be paid in connection the Sale Transaction is $4,475,800,000, subject to certain adjustments. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction.”

Q: What are the effects of the Sale Transaction?

A: If the Sale Proposal is authorized by the holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon, and the other conditions to the completion of the Sale Transaction as set forth in the Sale Transaction Agreements are satisfied or waived, we will sell all of the outstanding shares of Yahoo Holdings to Verizon and effect the Foreign Sale Transaction, following the transfer of the Business to Yahoo Holdings, other than specified excluded assets and retained liabilities.

Following the completion of the Sale Transaction, Yahoo will effect the Charter Amendment and will change its name to “Altaba Inc.” and be a publicly traded, non-diversified, closed-end management investment company registered under the 1940 Act. After the closing, the Fund will trade on Nasdaq under the ticker symbol “AABA.” Importantly, however, the completion of the Sale Transaction will not affect your shares of Yahoo common stock, which will continue to represent shares of common stock of the Fund after it has registered as an investment company. Yahoo stockholders will not receive any shares of Verizon common stock and will not retain any continuing interest in the Business following completion of the Sale Transaction, other than in connection with the RSU Substitution. Following completion of the Sale Transaction, the Fund’s remaining assets will consist solely of the assets excluded from the Sale Transaction, including its cash and marketable debt securities, its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity in Excalibur (which owns the Excalibur IP Assets), and the Fund’s remaining liabilities will consist solely of the liabilities retained in the Sale Transaction, including the Convertible Notes, securityholder litigation, 50 percent of certain cash liabilities related to the Data Breaches, and certain director and officer indemnification obligations. Following the completion of the Sale Transaction, the Business will be owned and operated by Verizon, and the Fund will have no interest in, and will receive no income from, the Business.

Q: What is an investment company?

A: An “investment company” is a company with a principal business of investing in securities. Following the Sale Transaction, the Fund’s principal business will be owning shares in Alibaba (held directly and indirectly), shares in Yahoo Japan, and ownership of certain other investments. The Fund may seek to

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monetize its shares in Alibaba, Yahoo Japan, and its other investments, although there can be no assurance it will do so. The Fund has no current intention of selling its shares in Alibaba or Yahoo Japan in response to changes in the market price of those shares, but reserves the right to do so in the future at any time and without prior notice to its stockholders. The Fund will consider the tax consequences of any sale of its investments. See Annex 1 to this proxy statement, entitled “Description of the Fund Following the Sale Transaction,” for additional information about the Fund’s business after the Sale Transaction.

Q: What are the effects of registering under the 1940 Act?

A: Following the completion of the Sale Transaction, the Company will become a publicly traded, non-diversified, closed-end management investment company and register under the 1940 Act. As an investment company registered under the 1940 Act, the Fund will be subject to substantial regulation with respect to its capital structure, management, operations, transactions, and portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters, such as the following:

• The 1940 Act will limit the Fund’s ability to use leverage, enter into transactions with affiliated persons (as defined under the 1940 Act), make certain types of investments, and use equity compensation plans to attract officers and employees to manage the Fund and directors to oversee the Fund.

• The Fund will continue to have a board of directors that will oversee its officers and employees responsible for the Fund’s day to day operations. The Board will be subject to the independence requirements of the 1940 Act.

• As a non-diversified investment company, the Fund’s portfolio of assets will not be subject to any diversification requirements under the 1940 Act. The Fund expects that its portfolio of assets will be highly concentrated in Alibaba shares and Yahoo Japan shares immediately after the Sale Transaction.

• Additionally, the 1940 Act contains various stockholder voting rights. For example, the 1940 Act provides that a registered investment company may not change the nature of its business so as to cease to be an investment company, change from a closed-end fund to an open-end fund, or deviate from fundamental investment policies unless approved by “a majority of its outstanding voting securities,” which is defined in the 1940 Act as the lesser of a majority of the outstanding voting securities or 67 percent or more of the securities voting if holders of a majority of the outstanding voting securities are present in person or represented by proxy. Stockholders will also be entitled to certain voting rights such as electing directors, approving any investment advisory contracts, and terminating the retention of the Fund’s independent public accountant.

• The Fund will be required to send stockholder reports to stockholders semi-annually and to publicly file with the SEC reports of its portfolio holdings after both the first and third fiscal quarters each year. The Fund will no longer be required to file the periodic reports required of operating companies under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as quarterly reports on Form 10-Q, annual reports on Form 10-K, or current reports on Form 8-K.

• As a closed-end management investment company, the Fund’s shares of common stock will continue to trade on Nasdaq and will not be redeemable by stockholders. As a registered investment company, the Fund will calculate the net asset value of its portfolio on a quarterly basis. The Fund’s per share stock price following the Sale Transaction may trade at a discount (i.e., lower) or premium (i.e., higher) to the Fund’s net asset value per share. Shares of closed-end management investment companies frequently trade at a discount from net asset value, which is a risk separate and distinct from the risk that the Fund’s net asset value could decrease as a result of its investment activities. The 1940 Act will also substantially limit the ability of the Fund to issue and sell its common stock at a price below net asset value per share. For risks relating to the Fund following the Sale Transaction, see the section in Annex 1 to this proxy statement entitled “Risk Factors.”

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Though the Company will become an investment company following the completion of the Sale Transaction, the Fund will differ from most investment companies, including in the following ways:

• The Fund will be internally managed by its officers and employees, instead of managed by an external investment adviser, except that Yahoo currently anticipates that the Fund will hire one or more external investment advisers to manage the Fund’s cash, cash equivalents and marketable debt securities (the “Marketable Debt Securities Portfolio”), which would have had an aggregate value of approximately $12 billion immediately after the Sale Transaction if the Sale Transaction had closed on December 31, 2016.

• The Fund will seek to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns after the Sale Transaction is completed. The Fund currently does not intend to sell its Alibaba Shares or Yahoo Japan Shares in response to changes in the market price of those shares, though it reserves the right to do so. The Fund may, however, sell all or a portion of such shares to return capital to its stockholders or to seek to reduce any discount or increase any premium from net asset value at which the Fund’s common stock may trade if the Board believes the benefit to stockholders would outweigh the cost, including any taxes payable by the Fund, of doing so. The Fund also may sell such shares to satisfy its obligations to creditors or to pay expenses. The Board currently believes that it is more likely that capital may be returned from a sale of Yahoo Japan Shares than Alibaba Shares, though no assurance can be given in this regard or that any such shares will be sold to return capital.

• The Fund does not currently anticipate making new investments other than the purchase of short-term investment grade debt securities for ordinary course cash management purposes or to protect or enhance the value of an Initial Asset.

• Unlike most registered investment companies, the Fund will not qualify for pass-through tax status under Subchapter M of the Code and thus will be taxed as a regular C corporation. As a result, the net asset value of the Fund’s common stock will be impacted by the deferred tax liability applicable to any of its assets. The Fund will record a deferred tax liability of approximately $15 billion based on an assumed effective combined federal and state corporate tax rate on capital gains and certain other assumptions, including as to the amount of unrealized appreciation in the Alibaba Shares and the Yahoo Japan Shares. In addition, for U.S. federal income tax purposes, distributions by the Fund of cash or property in respect of the Fund’s common stock will generally be taxable to stockholders. (See the section in Annex 1 to this proxy statement entitled “U.S. Federal Income Tax Considerations.”)

Q: Why is the Charter Amendment proposed as a part of the Sale Proposal?

A: The Charter Amendment is proposed so that the Company’s certificate of incorporation will, following the Company’s registration as an investment company under the 1940 Act, comply with Section 17(h) of the 1940 Act, which provides that the organizational documents of an investment company shall not contain any provision that protects a director or officer against any liability to the investment company or its stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties as director or officer.

Q: What amendments to the Existing Charter are contemplated pursuant to the Charter Amendment?

A: Following the completion of the Sale Transaction, in order to comply with the 1940 Act, the Company will amend the Existing Charter to provide that the exculpation and indemnification provisions of Articles XI and XII of the Existing Charter are subject to the limitations of the 1940 Act with respect to actions taken while the Company is registered as an investment company under the 1940 Act.

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Q: How will the Charter Amendment be approved?

A: The Charter Amendment will be approved automatically if Yahoo obtains approval of the Sale Proposal by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting.

Q: Will Yahoo cease to exist if the Sale Transaction is completed?

A: No. Following the completion of the Sale Transaction, the Company will continue to exist (although it will no longer own or operate the Business or own the rights to the Yahoo name), will change its name to “Altaba Inc.” and will be a publicly traded, non-diversified, closed-end management investment company registered under the 1940 Act, and its shares will trade on Nasdaq under the ticker symbol “AABA.” Following the completion of the Sale Transaction, the Business will be owned and operated by Verizon, and the Fund will have no interest in, and receive no income from, the Business.

Q: What will happen to my shares in Yahoo if the Sale Transaction is completed?

A: Nothing. The completion of the Sale Transaction will not affect your shares of Yahoo common stock, which will continue to represent shares of common stock of the Fund, which will change its name to “Altaba Inc.” after it has registered as an investment company. You will continue to hold those shares you held immediately prior to the Sale Transaction. They will trade on Nasdaq under the ticker symbol “AABA.” Yahoo stockholders will not receive any shares of Verizon common stock and will not retain any continuing interest in the Business following completion of the Sale Transaction, other than in connection with the RSU Substitution.

Q: What will happen to my Yahoo equity awards in connection with the Sale Transaction?

A: Pursuant to the RSU Substitution, if you are an employee of Yahoo Holdings (or a subsidiary thereof) as of immediately prior to the closing, such that you will automatically become an employee of Verizon (or a subsidiary thereof) immediately following the closing, and you hold any Yahoo RSU awards that are outstanding and unvested immediately prior to the closing, you generally will receive in substitution for such award a cash-settled Verizon RSU award, with the number of shares subject to the Verizon RSU award equal to the number of shares of Yahoo common stock subject to the corresponding Yahoo RSU award immediately prior to the closing multiplied by the ratio of the average trading price of Yahoo common stock during the three-day period preceding the day before the closing date over the average trading price of Verizon common stock during the three-day period immediately following the closing date. Verizon may determine, however, that some non-U.S. employees’ replacement Verizon RSU awards will be stock-settled (rather than cash-settled) in limited circumstances. Yahoo RSU awards subject to performance-based vesting will similarly be replaced with cash-settled performance-based Verizon RSU awards, with both the annual target number of shares and the annual maximum number of shares adjusted according to the above ratio; however, shares allocated to the performance year in which the closing occurs will be replaced based on target performance only (and the replacement Verizon RSU awards for that year will not be performance-based) and shares allocated to future performance years will be subject to such performance-based vesting criteria as may be established by Verizon. Your Verizon RSU award will otherwise be subject to the same vesting and other terms and conditions as your corresponding Yahoo RSU award. Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately after the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. If you hold a Yahoo stock option that is outstanding immediately prior to the closing, it will, if not already vested, become fully vested and exercisable, effective as of the closing, and will remain outstanding in accordance with its terms. The Fund, following the closing, will retain all liabilities and obligations with respect to all Yahoo stock options and all Yahoo RSU awards held by non-employee directors and individuals who are employees of the Fund immediately following the closing.

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Q: Will any of the proceeds from the Sale Transaction be distributed to me as a stockholder?

A: All of the proceeds from the Sale Transaction will be paid to the Company. The Fund currently intends to return substantially all of its cash to stockholders over time through stock repurchases and distributions, although the Fund will retain sufficient cash to satisfy its obligations to creditors and for working capital. The timing and method of any return of capital will be determined by the Board. Stock repurchases may take place in the open market, including under Rule 10b5-1 plans or in a tender offer, or in privately negotiated transactions, including structured and derivative transactions such as accelerated share repurchase transactions. The Fund currently anticipates that the amount of cash to be retained by the Fund will be at least $1.4 billion, which is the minimum amount necessary to satisfy the Fund’s obligations under the Convertible Notes. However, the Fund’s obligations to creditors and working capital requirements may vary over time and may be materially greater than such amount, depending upon, among other factors, the cost of cash-settling any conversion obligations under the Convertible Notes, the Fund’s potential obligations with respect to other Retained Liabilities (as defined in the section of this proxy statement entitled “The Sale Transaction Agreements—The Reorganization Agreement—Retained Liabilities), and whether the income from the Fund’s investments is sufficient to cover its expenses.

Q: When will the Sale Transaction be completed?

A: We are working toward completing the Sale Transaction as quickly as possible and currently expect the completion of the Sale Transaction to occur in the second quarter of 2017. However, the exact timing of the completion of the Sale Transaction cannot be predicted because the Sale Transaction is subject to conditions, including approval of the Sale Proposal by our stockholders.

Q: What happens if the Sale Proposal is not approved by Yahoo stockholders?

A: Pursuant to the terms of the Stock Purchase Agreement, if we fail to obtain a stockholder vote in favor of the Sale Proposal or any other conditions to the closing of the Sale Transaction as set forth in the Stock Purchase Agreement are not satisfied or waived, the Sale Transaction will not occur, and, under certain circumstances, we may be required to pay the Termination Fee ($134,274,000) or up to $15,000,000 in expense reimbursements to Verizon (which is creditable toward the Termination Fee), depending on the circumstances surrounding the termination. In such event, the Board would have to evaluate the alternatives available to Yahoo, including a possible reverse spin-off by Yahoo of its operating business. Additionally, if the Sale Proposal is not approved, the Charter Amendment will not be effected.

Q: Are there any risks to the Sale Transaction?

A: Yes. Please read carefully the section of this proxy statement entitled “Risk Factors.”

Q: Do any of Yahoo’s directors or executive officers have interests in the Sale Transaction that may differ from those of Yahoo stockholders generally?

A: In considering the recommendation of the Board with respect to the Sale Proposal, you should be aware that certain of our directors and executive officers may have interests in the Sale Transaction that are different from or in addition to your interests as a stockholder. The Sale Transaction Agreements were negotiated under the direction of the Strategic Review Committee, which consisted entirely of independent directors and which was aware of such interests in recommending that the Board approve the Sale Transaction Agreements and the Sale Transaction. The Board was also aware of these interests and considered them, among other matters, in approving the Sale Transaction Agreements and the Sale Transaction and recommending that the Sale Proposal be approved by Yahoo stockholders. For a description of the interests of our directors and executive officers in the Sale Transaction, see the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Interests of Our Directors and Executive Officers in the Sale Transaction.”

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Q: Will I be subject to any taxes as a result of the Sale Transaction?

A: No. The Sale Transaction will generally be taxable to Yahoo for U.S. federal income tax purposes but not to its stockholders.

Q: Will I be entitled to appraisal rights if I oppose the Sale Transaction?

A: No. You will not be entitled to appraisal or dissenters’ rights in connection with the Sale Transaction.

Q: What are the U.S. federal income tax consequences of the Sale Transaction to Yahoo stockholders?

A: The Sale Transaction will generally be taxable to Yahoo for U.S. federal income tax purposes but not to its stockholders. For a summary of certain U.S. federal income tax considerations for stockholders of the Fund following the Sale Transaction, see the section in Annex 1 to this proxy statement entitled “U.S. Federal Income Tax Considerations.”

OTHER QUESTIONS

Q: What happens if the Compensation Proposal is not approved?

A: The final vote on the Compensation Proposal will not be binding on us, the Board, our compensation committee, or Verizon and is advisory in nature. Since the compensation and benefits that may be paid or provided in connection with the Sale Transaction are based on the terms of the Sale Transaction Agreements or contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect our or Verizon’s obligation to make these payments, and these payments may still be made even if our stockholders do not approve, by non-binding, advisory vote, the Compensation Proposal.

Q: What does it mean if I receive more than one set of proxy materials?

A: If your shares are registered differently or are held in more than one account, you will receive a set of proxy materials for each account. To ensure that all of your shares are voted, please submit your proxy for each account for which you have received a set of proxy materials.

Q: Who can help with my other questions?

A: If you have any questions about the Sale Transaction, the Sale Transaction Agreements, or the proposals set forth in this proxy statement, need assistance in submitting your proxy or voting your shares of Yahoo common stock, or need additional copies of this proxy statement or your proxy card, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, New York, 10022

Stockholders May Call Toll-free: (877) 456-3402

Banks & Brokers May Call Collect: (212) 750-5833

Email: info@innisfreema.com (material requests only)

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements concerning the Sale Transaction, Yahoo’s expected financial performance, Yahoo’s strategic and operational plans, and the Fund. These statements can, in some cases, be identified by the use of terms such as “may,” “will,” “should,” “could,” “would,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” or “continue,” the negative of such terms, or other comparable terminology. Risks and uncertainties may cause actual results to differ materially from the results predicted and reported results should not be considered as an indication of future performance. There is no assurance that the Sale Transaction will be completed in a timely manner or at all. In addition, the anticipated benefits of the Sale Transaction may not be realized. Potential risks and uncertainties related to the Sale Transaction include, among others:

• the inability to complete the Sale Transaction in a timely manner or at all, due to the inability to obtain or delays in obtaining the approval of our stockholders, the necessary regulatory approvals, or satisfaction of other conditions to the closing of the Sale Transaction;

• the existence or occurrence of any event, change, or other circumstance that could give rise to the termination of the Stock Purchase Agreement, which, in addition to other adverse consequences, could result in Yahoo incurring substantial fees, including, in certain circumstances, the payment of the Termination Fee;

• potential adverse effects on our relationships with existing and potential advertisers, suppliers, customers, vendors, distributors, landlords, licensors, licensees, joint venture partners, and other business partners;

• the implementation of the Sale Transaction will require significant time, attention, and resources of our senior management and others within the Company, potentially diverting their attention from the conduct of our business;

• risks related to Yahoo’s ability to retain or recruit key talent;

• costs, fees, expenses, and charges related to or triggered by the Sale Transaction;

• the net proceeds that Yahoo will receive from Verizon is subject to uncertainties as a result of the purchase price adjustments in the Stock Purchase Agreement;

• restrictions on the conduct of our business, including the ability to make certain acquisitions and divestitures, enter into certain contracts, and incur certain indebtedness and expenditures until the earlier of the completion of the Sale Transaction or the termination of the Stock Purchase Agreement;

• potential adverse effects on our business, properties, or operations caused by us implementing the Sale Transaction or forgoing opportunities that Yahoo might otherwise pursue absent the pending Sale Transaction; and

• the initiation or outcome of any legal or regulatory proceedings that have been or may be instituted against us and our directors and/or officers relating to the Sale Transaction as well as certain liabilities arising out of governmental or third party investigations, litigation or claims related to certain data security incidents for which the Company will retain liability following the closing.

All of these risks and uncertainties could potentially have an adverse impact on our business and financial performance, and could cause our stock price to decline.

Forward-looking statements concerning the Fund may include information such as the Fund’s plans, strategies, and goals and the Fund’s beliefs and assumptions concerning future economic and other conditions and the outlook for the Fund, based on currently available information and the fact that, following the closing of the Sale Transaction, the Company will be required to register and be regulated as an investment company under the 1940 Act, which will result in, among other things, the Company having to comply with the regulations

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thereunder, certain stockholders potentially being prohibited from holding or acquiring shares of the Company, and the Company likely being removed from the Standard and Poor’s 500 Index and other indices which could have an adverse impact the Company’s share price following the Sale Transaction.

More information about other potential factors that could affect Yahoo’s business and financial results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yahoo’s Annual Report on Form 10-K for the year ended December 31, 2016, which is on file with the SEC and available on the SEC’s website at www.sec.gov.

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THE SPECIAL MEETING

General

This section contains information about the special meeting of stockholders of Yahoo! Inc. (“Yahoo,” the “Company,” “we,” or “us”) that has been called to consider and vote on the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal (each as defined in “—Purpose” below), which we refer to as the special meeting. This proxy statement is being furnished to Yahoo stockholders in connection with the solicitation of proxies by the Board of Directors of Yahoo for use at the special meeting and for any postponements or adjournments of the special meeting. This proxy statement provides Yahoo stockholders with information about the special meeting and should be read carefully in its entirety.

Time, Place, and Date

The special meeting will be held at the Santa Clara Marriott, located at 2700 Mission College Boulevard, Santa Clara, California, on June 8, 2017, at 9:00 a.m., local time.

Purpose

At the special meeting, holders of our common stock will be asked to consider and vote on the following proposals:

1. To consider and vote on a proposal (the “Sale Proposal”) to (a) authorize the sale to Verizon Communications Inc. (“Verizon”), pursuant to the terms and subject to the conditions set forth in the Stock Purchase Agreement, dated as of July 23, 2016 (the “Original Stock Purchase Agreement”), as amended by the Amendment to Stock Purchase Agreement, dated as of February 20, 2017 (the “Stock Purchase Agreement Amendment” and, together with the Original Stock Purchase Agreement, the “Stock Purchase Agreement”), between Yahoo and Verizon, of all of the outstanding shares of Yahoo Holdings, Inc. (“Yahoo Holdings”), a Delaware corporation and a wholly-owned subsidiary of Yahoo, and prior to the sale of Yahoo Holdings, the sale by Yahoo Holdings (the “Foreign Sale Transaction”) to a foreign subsidiary of Verizon of all of the equity interests in a newly formed foreign subsidiary of Yahoo Holdings (“Foreign SaleCo”) that will hold certain foreign subsidiaries relating to Yahoo’s operating business (the “Business”), following the transfer to Yahoo Holdings of all of the assets and liabilities relating to the Business, other than specified excluded assets and retained liabilities, as set forth in the Reorganization Agreement dated as of July 23, 2016 (the “Original Reorganization Agreement”), as amended by the Amendment to Reorganization Agreement, dated as of February 20, 2017 (the “Reorganization Agreement Amendment” and, together with the Original Reorganization Agreement, the “Reorganization Agreement”), between Yahoo and Yahoo Holdings (the transfers pursuant to the Reorganization Agreement, together with the sale of all of the outstanding shares of Yahoo Holdings to Verizon and the Foreign Sale Transaction, the “Sale Transaction”) and (b) adopt an amendment to the Company’s certificate of incorporation (the “Existing Charter”) following completion of the Sale Transaction to provide that the exculpation and indemnification provisions of Articles XI and XII of the Existing Charter are subject to the limitations of the Investment Company Act of 1940 (the “1940 Act”) with respect to actions taken while the Company is registered as an investment company under the 1940 Act (the “Charter Amendment”);

2. To consider and vote on a non-binding, advisory proposal (the “Compensation Proposal”) to approve the compensation that may be paid or become payable to Yahoo’s named executive officers in connection with the completion of the Sale Transaction, as described in this proxy statement; and

3. To consider and vote on a proposal (the “Adjournment Proposal”) to authorize the Board to postpone or adjourn the special meeting (i) for up to 10 business days to solicit additional proxies for the purpose of obtaining stockholder approval of the Sale Proposal, if the Board determines in good faith such postponement or adjournment is necessary or advisable to obtain stockholder approval, or (ii) to allow

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reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure which the Board has determined, after consultation with outside legal counsel, is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior to the special meeting.

Throughout this proxy statement, we refer to the Original Stock Purchase Agreement and the Original Reorganization Agreement, together, as the “Original Sale Transaction Agreements,” we refer to the Stock Purchase Agreement Amendment and the Reorganization Agreement Amendment, together, as the “Sale Transaction Agreement Amendments,” and we refer to the Stock Purchase Agreement and the Reorganization Agreement, together, as the “Sale Transaction Agreements.”

Quorum

Business may be conducted at the special meeting only if a quorum is present or represented by proxy at the meeting, which means that holders of a majority of the outstanding shares of Yahoo common stock entitled to vote must be present in person or represented by proxy at the special meeting. Abstentions are counted to determine whether a quorum is present. See the section of this proxy statement entitled “Questions and Answers About the Special Meeting and the Sale Transaction—The Special Meeting—What effect do abstentions and failures to vote have on the proposals?” for more information.

If a quorum is not present at the scheduled time of the special meeting, the chairperson of the special meeting is authorized by our bylaws to adjourn the meeting without the vote of the stockholders.

Required Vote

Proposal No. 1: The Sale Proposal

Pursuant to the terms of the Stock Purchase Agreement, Yahoo is required to obtain approval of the Sale Transaction by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting, and such stockholder approval is a condition to the completion of the Sale Transaction. In addition, Yahoo entered into a settlement agreement with Starboard Value LP (“Starboard”) and certain of its affiliates, dated April 26, 2016 (the “Starboard Settlement Agreement”), pursuant to which Yahoo is required to submit the Sale Proposal to Yahoo stockholders for approval. Additionally, pursuant to Delaware law, Yahoo is required to obtain approval of the Charter Amendment by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting.

Proposal No. 2: The Compensation Proposal

The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the subject matter is required to approve the Compensation Proposal. The stockholder vote regarding the Compensation Proposal is an advisory vote, and therefore is not binding on us, the Board, our compensation committee, or Verizon. Since the compensation and benefits that may be paid or provided in connection with the Sale Transaction generally are based on the terms of the Sale Transaction Agreements or contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect the obligation to make these payments, and these payments may still be made even if our stockholders do not approve, by non-binding, advisory vote, the Compensation Proposal.

Proposal No. 3: The Adjournment Proposal

The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the subject matter is required to approve the Adjournment Proposal.

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Vote and Recommendation

You are urged to vote by proxy even if you plan to attend the special meeting. The Board recommends that Yahoo stockholders vote “FOR” each of the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal.

As of the record date for the special meeting, our directors and executive officers beneficially owned approximately 8.9 percent of the total voting power of the outstanding shares of Yahoo common stock.

Record Date; Who May Vote

Stockholders of record as of the close of business on April 20, 2017, which we refer to as the record date, are entitled to notice of and to vote at the special meeting. At the close of business on the record date, 958,131,387 shares of Yahoo common stock were outstanding and entitled to vote. We have no other class of stock outstanding.

Votes You Have

At the special meeting, you will have one vote for each share of our common stock you own as of the close of business on April 20, 2017.

Number of Holders

As of the record date, there were approximately 8,533 record holders of our common stock (which amount does not include the number of stockholders whose shares are held of record by banks, brokers, or other nominees, but instead includes all such institutions as one holder).

Voting Procedures for Record Holders

There are four ways to vote:

• In Person at the Special Meeting. If you attend the special meeting and plan to vote in person, we will provide you with a meeting ballot at the special meeting. If your shares are registered directly in your name, you are considered the stockholder of record, and you have the right to vote in person at the special meeting. If your shares are held in the name of your bank, broker, or other nominee, you are considered the beneficial owner of shares held in street name. As a beneficial owner, if you wish to vote at the special meeting, you will need to bring to the special meeting a legal proxy from your bank, broker or other nominee authorizing you to vote those shares.

• Internet. You can vote your shares via the Internet by following the instructions on the website identified on your proxy card (or, if you received this proxy statement by electronic mail, as described in that email). You will need the control number provided on your proxy card (or email) to access the voting website.

• Telephone. You can vote your shares by telephone if you call the phone voting number appearing on your proxy card. You will need the control number provided on your proxy card to vote by telephone.

• Mail. If you received this proxy statement by physical mail, you can vote your shares by completing, signing, dating, and returning in the enclosed envelope the proxy card you received.

YOUR VOTE IS IMPORTANT. It is recommended that you vote by proxy even if you plan to attend the special meeting. You may change your vote at the special meeting. If a proxy is signed and returned by a record holder without indicating any voting instructions, the shares of Yahoo common stock represented by the proxy will be voted “FOR” the approval of the Sale Proposal, the approval of the Compensation Proposal, and the approval of the Adjournment Proposal.

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If you submit a proxy card on which you indicate that you abstain from voting, it will have the same effect as a vote “AGAINST” the aforementioned proposals.

If you fail to respond, your shares will not be counted as present and entitled to vote for purposes of determining a quorum, and your failure to vote will have the same effect as a vote “AGAINST” the Sale Proposal, but will have no effect on the outcome of the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

The granting of proxies electronically is allowed by Section 212(c)(2) of the Delaware General Corporation Law.

Voting Procedures for Shares Held in “Street Name”

If you are a beneficial owner holding shares in “street name,” you should follow the directions your broker provides you regarding how to vote your shares or when granting or revoking a proxy.

A broker is entitled to vote shares held for a beneficial owner on routine matters without instructions from the beneficial owner of those shares. On the other hand, a broker is not entitled to vote shares held for a beneficial owner on non-routine items absent instructions from the beneficial owner of such shares. Each of the proposals to be considered and voted on at the special meeting (namely, the Sale Proposal, the Compensation Proposal, and the Adjournment Proposal) are considered “non-routine” items. Consequently, if you hold shares in “street name” and you do not submit any voting instructions to your broker, your broker will not vote your shares on any of the proposals. If this occurs, it will have the same effect as a vote “AGAINST” the Sale Proposal, but will have no effect on the outcome of the Compensation Proposal or the Adjournment Proposal, assuming a quorum is present.

If your shares are held in “street name,” you may not vote your shares in person at the special meeting unless you obtain a legal proxy from the broker, bank, or other nominee that holds your shares giving you the right to vote those shares at the meeting using the ballot provided at the meeting. Even if you plan to attend the special meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the special meeting.

Revoking a Proxy

You may change your vote or revoke your proxy at any time before your proxy is voted at the special meeting. If you are a stockholder of record, you may change your vote or revoke your proxy in any one of three ways:

• You may submit an authorized proxy bearing a later date using one of the alternatives described above under “—Voting Procedures for Record Holders.”

• You may timely deliver to Yahoo (Attention: Corporate Secretary), at the address provided on the notice of the special meeting enclosed with this proxy statement, a written notice of revocation of your proxy.

• You may attend the special meeting and vote in person. Attendance at the special meeting in and of itself, without voting in person at the special meeting, will not cause your previously granted proxy to be revoked.

For shares you hold in “street name,” you may change your vote by submitting new voting instructions to your broker, bank, or other nominee or by obtaining a legal proxy from your broker, bank, or other nominee giving you the right to vote your shares at the special meeting.

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Tabulation of Votes

The Board has appointed Computershare Trust Company, N.A. to serve as the inspector of election for the special meeting. The inspector of election will, among other matters, determine the number of shares of Yahoo common stock represented at the special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots, and certify the results of voting on all proposals submitted to Yahoo stockholders.

Solicitation of Proxies

The expense of soliciting proxies will be borne by Yahoo. We have retained Innisfree M&A Incorporated (“Innisfree”), a proxy solicitation firm, to assist in the solicitation of proxies and provide related services, for a fee estimated to be approximately $25,000 plus an amount to cover expenses. In addition, we have agreed to indemnify Innisfree against certain liabilities arising out of or in connection with the engagement. In addition to the mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies. We will also reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners.

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RISK FACTORS

Before deciding whether to vote for the proposals discussed in this proxy statement, you should carefully read and consider the following risk factors associated with the Sale Transaction and ownership of the Company’s common stock following the Sale Transaction. You should also carefully read and consider the other information included and incorporated by reference into this proxy statement, including the matters addressed in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements,” as well as the information set forth under the caption “Risk Factors” in Yahoo’s Annual Report on Form 10-K for the year ended December 31, 2016, which is available on the United States Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov.

Risks Related to the Sale Transaction

The amount of net proceeds that Yahoo will receive is subject to uncertainties.

Pursuant to the Stock Purchase Agreement, the amount of net proceeds that Yahoo will receive from Verizon is subject to uncertainties by virtue of the purchase price adjustments set forth in the Stock Purchase Agreement. Verizon will pay or cause to be paid to Yahoo, in exchange for all of the outstanding shares of Yahoo Holdings and the shares of Foreign SaleCo transferred in the Foreign Sale Transaction, an aggregate base cash purchase price equal to $4,475,800,000, less any applicable withholding taxes. This base purchase price will be subject to an adjustment based on the net working capital, cash, and debt of Yahoo Holdings and the other subsidiaries of Yahoo (subject to exceptions) as of the opening of business on the date of the closing, certain transaction expenses, and certain changes in the aggregate value of outstanding unvested Yahoo restricted stock unit awards (each, a “Yahoo RSU award”) between the execution of the Original Stock Purchase Agreement and the closing. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Purchase Price.”

The Sale Transaction will require significant management resources.

The implementation of the Sale Transaction will require significant time, attention, and resources of our senior management and others within Yahoo, potentially diverting their attention from the conduct of Yahoo’s business.

Yahoo will incur significant transaction costs in connection with the Sale Transaction.

Yahoo has incurred, and expects to incur, significant non-recurring costs associated with the Sale Transaction. These costs and expenses include financial advisory, legal, accounting, consulting, and other advisory fees and expenses, reorganization and restructuring costs, severance and employee benefits-related expenses, public company filing fees and other regulatory expenses, printing expenses, and other related charges. Through the date of this proxy statement, Yahoo has incurred aggregate transaction costs of approximately $51.5 million in connection with the Sale Transaction. Based on information available as of the date of this proxy statement, Yahoo anticipates incurring additional transaction costs of approximately $46.8 million in connection with the Sale Transaction, most of which are contingent upon the completion of the Sale Transaction. Some of these costs are payable by Yahoo regardless of whether the Sale Transaction is completed.

Yahoo will be subject to business uncertainties while the Sale Transaction is pending.

Uncertainties about the completion or effect of the Sale Transaction may affect the relationships between Yahoo and its existing and potential advertisers, suppliers, customers, vendors, distributors, landlords, licensors, licensees, joint venture partners, and other business partners, and may have an adverse effect on Yahoo. These uncertainties may cause Yahoo’s advertisers, suppliers, customers, vendors, distributors, landlords, licensors, licensees, joint venture partners, and other business partners to seek to change existing business relationships with Yahoo, to forego new relationships, or to enter into alternative agreements with Yahoo’s competitors because business partners may perceive that such new relationships are likely to be more stable. If Yahoo fails to complete the Sale Transaction, the failure to maintain existing business relationships, including pursuant to a

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termination or modification of such relationship, or to enter into new business relationships could adversely affect Yahoo’s business, revenues, results of operations, and financial condition, as well as the market price of its common stock. Additionally, Yahoo may be required to obtain consent from certain of these business partners in connection with the Sale Transaction. There is no assurance that such consents will be obtained, and the pursuit of such consents may disrupt Yahoo’s ability to achieve the anticipated benefits of the Sale Transaction.

In addition, Yahoo is dependent on the experience and industry knowledge of its key management personnel and other key employees to operate its business and execute its business plans. Current and prospective employees of Yahoo may experience uncertainty about their roles within Yahoo prior to and following the completion of the Sale Transaction, which may have an adverse effect on the ability of Yahoo to attract or retain key management personnel or other key employees. If key employees depart because of issues related to this uncertainty or a desire not to remain with Yahoo, Yahoo’s business could be negatively impacted. Accordingly, no assurance can be given that Yahoo will be able to attract or retain key management personnel and other key employees to the same extent that Yahoo has previously been able to attract or retain key management personnel or other key employees.

Yahoo cannot participate in a superior proposal for the Business unless Yahoo pays the termination fee to Verizon.

The Stock Purchase Agreement requires Yahoo to pay Verizon a termination fee equal to $134,274,000 (the “Termination Fee”), if, subject to certain requirements set forth in the Stock Purchase Agreement, the Stock Purchase Agreement is terminated prior to the closing by Verizon as a result of the Board changing its recommendation with respect to the Sale Transaction or by Yahoo in order to accept an unsolicited acquisition proposal that the Board determines to be a superior proposal. These provisions may discourage a third party from submitting a strategic proposal to Yahoo during the pendency of the proposed Sale Transaction as well as afterward, should the Sale Transaction not be completed, that might result in greater value to Yahoo than the Sale Transaction. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—No Solicitation; Superior Proposal; Termination Fee.”

Yahoo will be subject to certain other contractual restrictions while the Sale Transaction is pending.

The Stock Purchase Agreement restricts Yahoo from making certain acquisitions and divestitures, entering into certain contracts, incurring certain indebtedness and expenditures, and taking other specified actions until the earlier of the completion of the Sale Transaction or the termination of the Stock Purchase Agreement. These restrictions may prevent Yahoo from pursuing attractive business opportunities that may arise prior to the completion of the Sale Transaction and could have the effect of delaying or preventing other strategic transactions. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Conduct of Business by Yahoo and the Business Subsidiaries Prior to the Closing.”

Yahoo could suffer adverse effects that could be exacerbated by any delays in completion of the Sale Transaction.

Adverse effects arising from the pendency of the Sale Transaction could be exacerbated by any delays in completion of the Sale Transaction or termination of the Sale Transaction Agreements.

Yahoo’s directors and executive officers may have interests in the Sale Transaction that are different from or in addition to those of Yahoo stockholders generally.

Our directors and executive officers negotiated the terms of the Sale Transaction Agreements. A special committee of the Board consisting entirely of independent directors (which was authorized by the Board to consider and evaluate possible strategic transactions involving a sale, merger, investment, or other similar transactions related to the Business, which we refer to as the Strategic Review Committee), and the Board

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recommended that Yahoo stockholders vote in favor of the proposals set forth in this proxy statement. These directors and executive officers may have interests in the Sale Transaction that are different from or in addition to those of Yahoo stockholders generally. These interests include, among others, the fact that, upon the closing of the Sale Transaction, Yahoo RSU awards held as of immediately prior to the closing by employees of Yahoo Holdings (or a subsidiary thereof), who will automatically become employees of Verizon (or a subsidiary thereof) immediately following the closing, generally will be replaced with cash-settled Verizon restricted stock unit awards (each, a “Verizon RSU award”). Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately following the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. In addition, all Yahoo stock options outstanding immediately prior to the closing will, if not already vested, become fully vested, effective as of the closing, and all Yahoo stock options will remain outstanding in accordance with their terms. The Fund, following the closing, will retain all liabilities and obligations with respect to all Yahoo stock options and all Yahoo RSU awards held by non-employee directors and individuals who are employees of the Fund immediately following the closing. In addition, executive officers may become entitled to severance payments and benefits in the event their employment with Verizon terminates for certain qualifying reasons following the closing. On March 10, 2017, Thomas J. McInerney, the Chairman of the Strategic Review Committee, entered into an offer letter with the Company, effective upon the closing of the Sale Transaction, pursuant to which Mr. McInerney will become the Chief Executive Officer of the Fund upon the closing of the Sale Transaction and, in such capacity, will receive compensation from the Fund. See the section of Annex 1 of this proxy statement entitled “Management of the Fund—Compensation of Officers and Directors.” The Strategic Review Committee and the Board were aware of these interests when they determined that the Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo stockholders and recommended that Yahoo stockholders approve the Sale Proposal. Yahoo stockholders should be aware of these interests when they consider the recommendations of the Board that they vote in favor of the Sale Proposal. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Interests of Our Directors and Executive Officers in the Sale Transaction.”

Certain litigation has been initiated related to the Sale Transaction, and Yahoo may be exposed to additional litigation related to the Sale Transaction from our securityholders or from third parties.

Transactions such as the Sale Transaction are often subject to lawsuits by securityholders. See the section of this proxy statement entitled “Legal Proceedings” for a description of certain pending litigation related to the Sale Transaction. Yahoo may become subject to additional litigation related to entering into or failing to complete the Sale Transaction, including direct actions by Yahoo securityholders against the directors and/or officers of Yahoo for alleged breaches of fiduciary duty or derivative actions brought by Yahoo stockholders in the name of Yahoo. Notwithstanding completion of the Sale Transaction, any liabilities arising out of actions by Yahoo securityholders will be retained by Yahoo. Additionally, Yahoo may become subject to additional litigation by third parties related to the Sale Transaction, including actions brought by persons with other business relationships with Yahoo. Lawsuits by securityholders and/or third parties could result in substantial costs and divert our Board’s and our management’s attention from other business concerns.

The opinions of the Strategic Review Committee’s financial advisors will not be updated to reflect changes in circumstances between the date such opinions were delivered and the completion of the Sale Transaction.

Yahoo has not obtained updated opinions from the financial advisors to the Strategic Review Committee as of the date of this proxy statement, and Yahoo does not anticipate asking the Strategic Review Committee’s financial advisors to update their opinions. Changes in the operations and prospects of Yahoo, general market and economic conditions, and other factors that may be beyond Yahoo’s control, and on which the Strategic Review Committee’s financial advisors’ opinions were, in part, based, may significantly alter the information contained in such opinions by the time the Sale Transaction is completed. The opinions do not speak as of the time the Sale Transaction will be completed or as of any date other than the date of such opinions. The Board’s recommendation, however, is as of the date of this proxy statement. For a description of the opinions that the Strategic Review Committee received from its financial advisors, see the sections of this proxy statement entitled

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“Proposal 1—The Sale Transaction—Opinions of the Financial Advisors—Opinion of Goldman Sachs,” “Proposal 1—The Sale Transaction—Opinions of the Financial Advisors—Opinion of J.P. Morgan,” and “Proposal 1—The Sale Transaction—Opinions of the Financial Advisors—Opinion of PJT Partners.”

Holders of Yahoo common stock will not have appraisal or dissenters’ rights in connection with the Sale Transaction.

Neither Delaware law nor the Existing Charter provides Yahoo stockholders with appraisal or dissenters’ rights in connection with the Sale Transaction.

Risks Related to Failure to Complete the Sale Transaction

The Stock Purchase Agreement may be terminated in accordance with its terms and the Sale Transaction may not be completed.

The completion of the Sale Transaction is subject to the satisfaction or waiver of a number of conditions. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Conditions to the Completion of the Sale Transaction.” These conditions to the closing may not be fulfilled and, accordingly, the Sale Transaction may not be completed. In addition, if the Sale Transaction is not completed by July 24, 2017, either Yahoo or Verizon may choose not to proceed with the Sale Transaction, and the parties can mutually decide to terminate the Stock Purchase Agreement at any time prior to the completion of the Sale Transaction, before or after the required Yahoo stockholder approval. In addition, each of Yahoo and Verizon may elect to terminate the Stock Purchase Agreement in certain other circumstances. If the Stock Purchase Agreement is terminated, Yahoo may incur substantial fees in connection with termination of the Stock Purchase Agreement (including, in certain circumstances, the payment of the Termination Fee) and will not recognize the anticipated benefits of the Sale Transaction. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—Termination of the Stock Purchase Agreement.”

Termination of the Stock Purchase Agreement could negatively impact Yahoo.

If the Stock Purchase Agreement is terminated in accordance with its terms and the Sale Transaction is not completed, the ongoing business of Yahoo may be adversely affected by a variety of factors. Yahoo’s business may be impacted by having foregone other strategic opportunities during the pendency of the Sale Transaction, the failure to obtain the anticipated benefits of completing the Sale Transaction, changes to existing business relationships caused by uncertainties pending the Sale Transaction, payment of certain costs relating to the Sale Transaction, and the attention, time, and resources of our senior management and other employees devoted to the Sale Transaction, diverting their attention from the conduct of our business. In addition, if the Stock Purchase Agreement is terminated under certain circumstances, Yahoo may be required to pay the Termination Fee or up to $15,000,000 in expense reimbursements to Verizon (which is creditable toward the Termination Fee), depending on the circumstances surrounding the termination. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—The Stock Purchase Agreement—No Solicitation; Superior Proposal; Termination Fee.” Yahoo may also be negatively impacted if the Stock Purchase Agreement is terminated and the Board is unable to execute an alternative strategic transaction, including, for example, a reverse spin-off transaction, offering equivalent or more attractive benefits than the benefits to be provided in the Sale Transaction.

Prior to the completion of the Sale Transaction, Yahoo may dispose of assets that are currently contemplated to be held by the Fund immediately after the closing.

Under the terms of the Stock Purchase Agreement, Yahoo is generally permitted to seek to sell, and to sell, any of the assets that are excluded from the Sale Transaction without the consent of Verizon and without paying any termination fee or other amount to Verizon. Although Yahoo has no current intention of selling, prior to the

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closing of the Sale Transaction, any of the assets that are not included in the Sale Transaction, Yahoo reserves the right to sell any such assets prior to the closing of the Sale Transaction. There is no assurance that the Fund’s assets held immediately after the completion of the Sale Transaction (the “Initial Assets”) will consist of all of the assets described above. For additional information about the Fund’s Initial Assets, please refer to the section in Annex 1 to this proxy statement entitled “—Pro Forma Schedule of Investments.” There is also no assurance as to the value of the consideration Yahoo might receive in the event of any such disposition. Additionally, Yahoo and the Board reserve the right to distribute any of its cash to investors prior to the closing of the Sale Transaction through repurchases of its common stock or outstanding debt securities or distributions.

Failure to complete the Sale Transaction could cause Yahoo’s stock price to decline.

The failure to complete the Sale Transaction may create doubt as to the value of the Business and about Yahoo’s ability to effectively implement its current business strategies and/or a strategic transaction, which may result in a decline in Yahoo’s stock price.

Risks Related to the Fund

Following the completion of the Sale Transaction, Yahoo’s remaining assets will consist solely of the assets excluded from the Sale Transaction, including, among others, Yahoo’s cash and marketable debt securities, Yahoo’s shares in Alibaba (held directly and indirectly), Yahoo’s shares in Yahoo Japan, certain other minority equity investments, and all of the equity in Excalibur IP, LLC (“Excalibur”), which owns a portfolio of patent assets that are not core to Yahoo’s operating business (the “Excalibur IP Assets”), and Yahoo’s remaining liabilities will consist solely of the liabilities retained in the Sale Transaction, including, among others, Yahoo’s 0.00% Convertible Senior Notes due in 2018 (the “Convertible Notes”), securityholder litigation, 50 percent of certain post-closing cash liabilities related to the Data Breaches (as defined in the section of this proxy statement entitled “Proposal 1—Sale Transaction Overview—The Sale Transaction”), and certain director and officer indemnification obligations. Because Yahoo’s assets will then consist primarily of Yahoo’s equity investments, short-term debt investments, and cash, Yahoo, which will change its name upon the closing to “Altaba Inc.,” will be required to register as an investment company under the 1940 Act. Throughout this proxy statement, we refer to Yahoo after its registration as an investment company as the “Fund.”

Following the closing of the Sale Transaction, the Fund’s share price will be materially impacted by the value of the Fund’s investment assets.

Following the closing of the Sale Transaction, the market price of the Fund’s shares will be materially impacted by the value of the Fund’s investment assets. It is anticipated that, as of the closing, these investment assets would include its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity in Excalibur (which owns the Excalibur IP Assets). These investment assets may decline in value.

Following the Sale Transaction, the Fund will be subject to regulation under the 1940 Act.

Following completion of the Sale Transaction, the Fund will register, and be regulated, as an investment company under the 1940 Act. For information regarding the regulation of the Fund under the 1940 Act, see the section in Annex 1 to this proxy statement entitled “Regulation under the 1940 Act.” Annex 1 includes a description of the Fund, including its investment objective and policies, anticipated operating expenses, regulation, risks, pro forma financials, and other relevant information. You should read Annex 1 carefully so that you understand the risks relating to your investment in the Fund following the completion of the Sale Transaction.

Certain stockholders may be prohibited from holding or acquiring shares of a registered investment company.

The Fund will operate as a registered investment company regulated under the 1940 Act following the completion of the Sale Transaction. A stockholder may be prohibited from holding or acquiring shares of a

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registered investment company pursuant to the 1940 Act, other laws and regulations, or other investment policies that may be applicable to the stockholder. You should consult with your own professional advisors as to the legal, tax, financial, or other matters relevant to the suitability of an investment in the Fund following the Sale Transaction.

The 1940 Act generally prohibits any investment company and any company controlled by an investment company from acquiring in the aggregate more than three percent of the total outstanding voting stock of a registered investment company. In addition, a registered investment company and any company controlled by an investment company may not, in the aggregate, invest more than five percent of its total assets in the securities issued by any one registered investment company or more than 10 percent of its total assets in all other investment companies. In addition, the investment objectives and policies of some investment companies may prohibit them from owning securities in the Fund. For example, an index fund that invests in Yahoo common stock because it is included on an index tracked by the index fund may not be permitted to own shares of the Fund following the Sale Transaction. As a result, the Fund may be more likely to trade at a discount to its net asset value and its market price may be more volatile shortly after the Sale Transaction is completed.

It is likely that the Fund will be removed from the S&P 500 stock index and other indices following the completion of the Sale Transaction, which could have an adverse impact on the Fund’s share price.

Our shares currently are a component of the Standard & Poor’s 500 Index (“S&P 500”) and other indices. We believe it is likely that the S&P 500 would remove the Fund’s shares as a component of the S&P 500 following the completion of the Sale Transaction because, pursuant to the S&P 500 eligibility requirements, closed-end funds are ineligible to be included on the S&P 500. Although we cannot be certain as to when the S&P 500 would take this action, it may be effective immediately following the completion of the Sale Transaction. If the Fund’s common stock is not included as a component of the S&P 500 or other indices or no longer meets the investment criteria of such index funds, institutional investors that are required to track the performance of the S&P 500 or such other indices or index funds that track those indices would be required to sell their Fund common stock immediately, which could adversely affect the price of the Fund’s common stock.

The Fund will have discretion in the use of the net proceeds from the Sale Transaction.

If the Sale Transaction is completed, the purchase price will be paid directly to the Company. The Fund currently intends to return substantially all of its cash to stockholders over time through stock repurchases and distributions, although the Fund will retain sufficient cash to satisfy its obligations to creditors and for working capital. The timing and method of any return of capital will be determined by the Board. Stock repurchases may take place in the open market, including under Rule 10b5-1 plans or in a tender offer, or in privately negotiated transactions, including structured and derivative transactions such as accelerated share repurchase transactions. The Fund currently anticipates that the amount of cash to be retained by the Fund will be at least $1.4 billion, which is the minimum amount necessary to satisfy the Fund’s obligations under the Convertible Notes. However, the Fund’s obligations to creditors and working capital requirements may vary over time and may be materially greater than such amount, depending upon, among other factors, the cost of cash-settling any conversion obligations under the Convertible Notes, the Fund’s potential obligations with respect to other Retained Liabilities (as defined in the section of this proxy statement entitled “The Sale Transaction Agreements — The Reorganization Agreement — Retained Liabilities”), and whether the income from the Fund’s investments is sufficient to cover its expenses.

For additional risks relating to the Fund following the closing, see the section in Annex 1 to this proxy statement entitled “Risk Factors.”

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PROPOSAL 1—THE SALE TRANSACTION

Information About the Parties to the Sale Transaction

Yahoo

Yahoo is a guide to digital information discovery, focused on informing, connecting, and entertaining our users through our search, communications, and digital content products. By creating highly personalized experiences, Yahoo helps users discover the information that matters most to them around the world—on mobile or desktop.

Yahoo creates value for advertisers with a streamlined, simple advertising technology that leverages Yahoo’s data, content, and technology to connect advertisers with their target audiences. Advertisers can build their businesses through advertising to targeted audiences on our online properties and services and a distribution network of third-party entities who integrate our advertising offerings into their websites or other offerings. Our revenue is generated principally from search and display advertising.

We are proud of our rich history that has evolved with the Internet, beginning in 1994 when our founders, Jerry Yang and David Filo, then graduate students at Stanford University, created Jerry and Dave’s Guide to the World Wide Web, a simple directory of websites to help people navigate the Internet. Yahoo was incorporated in 1995 and is a Delaware corporation. We completed our initial public offering on April 12, 1996, and our stock is listed on the NASDAQ Global Select Market (“Nasdaq”) under the symbol “YHOO.” Yahoo is a global company headquartered in Sunnyvale, California.

Yahoo Holdings

Yahoo Holdings was formed by Yahoo in connection with the Sale Transaction. Prior to completion of the Sale Transaction, Yahoo will transfer to Yahoo Holdings all of the assets and liabilities relating to the Business, other than specified excluded assets, including its cash and marketable debt securities, its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity of Excalibur (which owns the Excalibur IP Assets), and specified retained liabilities, including the Convertible Notes, securityholder litigation, 50 percent of certain cash liabilities related to the Data Breaches, and certain director and officer indemnification obligations.

Verizon

Verizon, headquartered in New York City, New York, has a diverse workforce of 160,900 and generated nearly $126 billion in 2016 revenues. Verizon operates America’s most reliable wireless network, with 114.2 million retail connections nationwide. Verizon also provides communications and entertainment services over mobile broadband and the nation’s premier all-fiber network, and delivers integrated business solutions to customers worldwide.

Background of the Sale Transaction

The following chronology summarizes certain key events and contacts that led to the execution of the Stock Purchase Agreement. It does not purport to catalogue every conversation among the Board, the Strategic Review Committee, members of Yahoo’s management or their respective representatives, and other parties.

Equity Interests in Alibaba and Yahoo Japan

In April 1996, Yahoo signed a joint venture agreement with SoftBank Group Corp. (“SoftBank”), as amended in September 1997 and June 2015, pursuant to which Yahoo Japan was formed. Yahoo Japan, which is incorporated in Japan, provides a wide range of online services to Internet users in Japan, from search and information listing to community and e-commerce. As of June 30, 2016, Yahoo owned approximately 36 percent of the outstanding shares of Yahoo Japan, which are listed on the Tokyo Stock Exchange.

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On October 23, 2005, Yahoo acquired approximately 46 percent of the outstanding common stock of Alibaba, which represented approximately 40 percent on a fully diluted basis, in exchange for $1.0 billion in cash, the contribution of Yahoo’s China-based businesses, and direct transaction costs of $8 million. Alibaba, which is incorporated in the Cayman Islands, is an online and mobile commerce company. Alibaba’s businesses are comprised of core commerce, cloud computing, mobile media and entertainment, and other innovation initiatives. Alibaba’s core commerce business is comprised of marketplaces operating in three areas: retail commerce in the People’s Republic of China; wholesale commerce in the People’s Republic of China; and international and cross-border commerce. On September 18, 2012, pursuant to the terms of a repurchase agreement between Alibaba and Yahoo, Alibaba repurchased 523 million of the 1,047 million ordinary shares of Alibaba owned by Yahoo for approximately $7.1 billion in total consideration. Approximately $6.3 billion of the consideration was received in cash and $800 million was received in Alibaba Preference Shares, which Alibaba redeemed for cash on May 16, 2013. On September 24, 2014, Alibaba closed its initial public offering of American Depositary Shares, each of which represents one ordinary share of Alibaba (“Alibaba ADS” and, together with ordinary shares of Alibaba, “Alibaba Shares”). Pursuant to the terms of the repurchase agreement, Yahoo sold 140 million Alibaba Shares in the initial public offering and Yahoo received approximately $9.4 billion in cash (net of underwriting discounts, commissions, and fees of approximately $115 million). Following completion of the sale in Alibaba’s initial public offering, Yahoo retained 383,565,416 Alibaba ordinary shares, representing approximately 15 percent of Alibaba’s outstanding ordinary shares.

For a number of years prior to the execution of the Sale Transaction Agreements, in furtherance of its continuing efforts to maximize stockholder value, the Board explored, together with Yahoo’s management and assistance from a number of internationally recognized investment banks, law firms, and accounting firms, various alternatives with respect its equity stakes in Alibaba and Yahoo Japan, including both tax-efficient and taxable options for monetizing such equity interests. Based on the relative market prices of Alibaba, Yahoo Japan, and Yahoo, as well as Yahoo’s net cash balance, the Board believed that the market was significantly undervaluing Yahoo. The Board believed at that time that separating Yahoo’s equity stakes in Alibaba and Yahoo Japan from its core operating business would create value by, among other things: providing the investor community with greater clarity and focus with respect to the value of Yahoo’s operating business; enabling the management of Yahoo to focus exclusively on its operating business; enhancing Yahoo’s ability to attract, retain, and incentivize management and employees by creating equity-based compensation that more accurately and efficiently reflects the performance of Yahoo’s operating business; and enhancing Yahoo’s ability to pursue strategic acquisitions by creating a more efficient equity currency.

Proposed Spin-Off of Remaining Holdings in Alibaba

As part of Yahoo’s exploration of ways to efficiently separate its equity interests in Alibaba from its operating business, on January 27, 2015, Yahoo announced a plan for a spin-off, which we sometimes refer to as the Aabaco spin-off, of all of Yahoo’s remaining holdings in Alibaba into a newly formed independent registered investment company called Aabaco Holdings, Inc. (“Aabaco”). Under the Aabaco spin-off, the stock of Aabaco was to be distributed pro rata to Yahoo stockholders, resulting in Aabaco becoming a separate publicly traded registered investment company. Upon completion of the transaction, Aabaco would have owned, directly or indirectly, all of Yahoo’s remaining 384 million Alibaba Shares and a 100 percent ownership interest in Aabaco Small Business, LLC, a newly formed entity which would own Yahoo Small Business, an existing operating business of Yahoo that would also have been transferred to Aabaco as part of the transaction. The transaction was initially to be subject to certain conditions, including final approval by the Board, receipt of a favorable ruling from the Internal Revenue Service (the “IRS”) regarding certain aspects of the transaction, and a legal opinion from Yahoo’s legal counsel, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), with respect to the tax-free treatment of the transaction under U.S. federal tax laws and regulations.

In September 2015, the IRS notified a representative of Skadden that it had determined, in the exercise of its discretion, not to grant the ruling requested with respect to certain aspects of the transaction, although the IRS also did not rule adversely on the request. Later that month, the IRS issued a formal “no-rule” policy (i.e., a

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policy of generally not granting a private letter ruling) with respect to certain transactions similar to the Aabaco spin-off and, in a notice released on the same day, indicated that the IRS and U.S. Department of the Treasury were studying the possibility of promulgating new guidance with respect to similar transactions in the future.

The Board, which had met and discussed the progress of the Aabaco spin-off numerous times following the initial announcement of the plan, held a meeting on December 2 and 3, 2015 at Yahoo’s Sunnyvale headquarters to consider recent developments with respect to the Aabaco spin-off and whether to proceed with the transaction. At the meeting, a representative of Skadden confirmed that Skadden expected to be able to deliver a legal opinion as to the tax-free nature of the transaction. Representatives of Goldman, Sachs & Co. (“Goldman Sachs”), J.P. Morgan Securities LLC (“J.P. Morgan”), and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofA Merrill Lynch”), which were acting as financial advisors to Yahoo with respect to the Aabaco spin-off, discussed with the Board the market’s perception of the tax risk of the Aabaco spin-off, which would likely have impaired the trading price of Aabaco shares until resolved. The financial advisors and Skadden also reviewed potential alternatives to the Aabaco spin-off for separating the Alibaba stake and possibly the Yahoo Japan stake from Yahoo’s operating business, including a reverse spin-off by Yahoo of its operating business, whereby the operating business would be spun off in a new company and the existing entity would retain its stakes in Alibaba and Yahoo Japan, which would be more complicated to execute than the Aabaco spin-off but would result in significantly lower tax liability than the Aabaco spin-off if both transactions were treated as taxable. After discussion, the Board determined to suspend work on the Aabaco spin-off and to evaluate alternative transaction structures to separate the Alibaba stake, focusing specifically on a spin-off of Yahoo’s core operating business, which we sometimes refer to as the reverse spin-off.

On December 9, 2015, Yahoo issued a press release announcing the Board’s decision to suspend work on the Aabaco spin-off and to evaluate alternative transaction structures to separate the Alibaba stake, focusing specifically on the reverse spin-off.

Strategic Alternatives Process

Following the December 9, 2015 announcement, Yahoo’s management and advisors continued to evaluate alternative transactions that would separate Yahoo’s stakes in Alibaba and Yahoo Japan from its operating business.

On January 15, 2016, the Board held a telephonic meeting with members of management and representatives of Goldman Sachs, J.P. Morgan, BofA Merrill Lynch, Skadden, and Wilson Sonsini Goodrich & Rosati (“Wilson Sonsini”), legal counsel to the Board, participating for portions of the meeting. Prior to these advisors joining the meeting, members of management presented and the Board approved a strategic operating plan, an earlier version of which had been discussed at the Board’s December 2, 3, and 17, 2015 meetings, designed to simplify Yahoo’s operating business, narrowing its focus on areas of strength to better fuel growth, drive revenue, and increase efficiency. In addition, representatives of Yahoo’s financial advisors and Skadden presented the Board with potential strategic alternatives intended to achieve Yahoo’s objectives of maximizing stockholder value and execution certainty while minimizing time to execution and transaction complexity. The Board and Yahoo’s advisors discussed, among other factors, the feasibility, potential tax implications, and likely timing of these potential alternatives, focusing primarily on a reverse spin-off of Yahoo’s operating business and a sale of that business to a third party, including certain variations of these primary alternatives.

Following the January 15 Board meeting and prior to the engagement of the Financial Advisors by the Strategic Review Committee, BofA Merrill Lynch was not requested to, and did not, provide any further financial advice to Yahoo or the Board and its engagement by Yahoo subsequently expired. BofA Merrill Lynch was engaged by Verizon in March 2016 in connection with Verizon’s participation in the strategic alternatives process described below.

On January 31, 2016, the Board met telephonically, with members of management and representatives of Goldman Sachs, J.P. Morgan, Skadden, and Wilson Sonsini participating. At the meeting, the Board, members of

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management and the advisors present at the meeting discussed the strategic alternatives of the reverse spin-off and a sale of Yahoo’s operating business. The Board also authorized the formation of a special committee of the Board, named the Strategic Review Committee, to be composed of certain independent members of the Board, to

consider and evaluate possible strategic transactions involving Yahoo’s operating business and all matters pertaining thereto on Yahoo’s behalf. The Strategic Review Committee was initially composed of Maynard G. Webb, Jr., who served as Chairman, H. Lee Scott, Jr., and Thomas J. McInerney. The Board resolved that it would not approve or recommend to Yahoo’s stockholders for approval any strategic transaction related to Yahoo’s operating business without a prior favorable recommendation of such transaction by the Strategic Review Committee. The Strategic Review Committee was further authorized to retain, at Yahoo’s expense, such outside counsel, financial advisors, and other outside advisors as the Strategic Review Committee deemed appropriate to assist in its prescribed duties.

Following the Board meeting, the Strategic Review Committee retained Cravath, Swaine & Moore LLP (“Cravath”) as its legal counsel.

On February 2, 2016, concurrently with its announcement of its quarterly and annual financial results for the periods ended December 31, 2015, Yahoo issued a press release announcing its strategic operating plan, which included exploring certain non-strategic asset divestitures. In that press release, Yahoo also indicated that, in addition to continuing to work on a reverse spin-off transaction, the Board would also explore other strategic alternatives for separating Yahoo’s operating business from its Alibaba Shares.

In the days following the February 2, 2016 announcement, Goldman Sachs and J.P. Morgan, as well as members of the Board and Yahoo’s management team, received general indications of interest in investments in or acquisitions of all or part of Yahoo’s operating business from numerous parties, including a senior executive of Verizon approaching Mr. Webb to express Verizon’s interest in a potential transaction with Yahoo. In addition, after Marissa A. Mayer, Yahoo’s Chief Executive Officer and President, acting with approval of the Strategic Review Committee, had contacted representatives of both Yahoo Japan and SoftBank, the controlling shareholder of Yahoo Japan, to inform them that Yahoo was exploring strategic alternatives, a senior executive of SoftBank approached Ms. Mayer to request a meeting to discuss a potential transaction involving Yahoo and Yahoo Japan, subject to Yahoo committing to a 30-day exclusivity period. The Strategic Review Committee was kept informed of each of these indications of interest.

On February 4, 2016, the Strategic Review Committee held a telephonic meeting. Representatives of Cravath reviewed with the members of the Strategic Review Committee their fiduciary duties and other relevant legal considerations, as well as the scope of the authority delegated to the Strategic Review Committee by the Board. The Strategic Review Committee identified a number of investment banks as potential financial advisors to assist it in carrying out its responsibilities. Because the parties potentially interested in acquiring Yahoo’s operating business included financial sponsors, the Strategic Review Committee also advised members of management not to engage in any discussions with interested parties about terms of employment, co-investment, or rollover of equity unless first discussed and authorized by the Strategic Review Committee.

On February 10, February 11, February 12, and February 15, 2016, the Strategic Review Committee held telephonic meetings, with representatives of Cravath participating, during which the Strategic Review Committee considered whether to engage one or more of the investment banks (including Goldman Sachs and J.P. Morgan) that the Strategic Review Committee had identified as potential financial advisors at its February 4, 2016 meeting and subsequently interviewed. The Strategic Review Committee considered the capabilities and experience of the various candidates that it met and reviewed the disclosures provided by the investment banks regarding certain relationships they had with potential bidders for Yahoo or its assets, Yahoo and other parties with whom Yahoo had significant relationships. After considering the information provided by the investment banks in their disclosures and during their interviews, the Strategic Review Committee decided to engage Goldman Sachs and J.P. Morgan, each of which was familiar with Yahoo based on its prior work for Yahoo, including with respect to the suspended Aabaco spin-off and the potential reverse spin-off, and PJT Partners LP (“PJT Partners”), which

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had not previously worked with Yahoo, as its financial advisors. Goldman Sachs, J.P. Morgan, and PJT Partners are referred to as the “Financial Advisors.”

On February 12, 2016, the Board met and discussed the progress of the Strategic Review Committee, including its selection of financial and legal advisors.

Outreach to Potential Bidders

After engaging each of the Financial Advisors, the Strategic Review Committee directed the Financial Advisors to begin reaching out to potential interested parties, including those parties that had contacted representatives of Yahoo, Goldman Sachs, and J.P. Morgan about a potential transaction following the February 2, 2016 earnings announcement, to evaluate their interest in a potential transaction involving Yahoo or its assets.

On February 19, 2016, the Strategic Review Committee updated the Board on its progress. Mr. Webb informed the Board that the Strategic Review Committee had met numerous times and explained its recent activities, including the engagement of, and commencement of work with, the Financial Advisors. He also outlined the outreach process, including work underway by management to prepare a management presentation and potential timing for meetings with interested parties.

Also on February 19, 2016, Yahoo issued a press release announcing the formation of the Strategic Review Committee and that the Strategic Review Committee had engaged the Financial Advisors and Cravath as the Strategic Review Committee’s financial advisors and legal counsel, respectively.

Over the next several weeks, the Financial Advisors communicated with a total of 51 parties to evaluate their interest in a potential transaction. Between February 19 and April 6, 2016, a total of 32 parties signed confidentiality agreements with Yahoo, including 10 strategic parties and 22 financial sponsors. All of these potential bidders received access to a virtual data room, which initially included a management presentation (which included three years of forecasted financial information for Yahoo which had previously been reviewed by the Board) and publicly available documents but was later updated with customary due diligence materials and was further updated regularly throughout the strategic alternatives process in response to due diligence questions and requests from potential bidders.

The Strategic Review Committee discussed the ongoing outreach process with representatives of the Financial Advisors and Cravath at telephonic meetings held on February 25 and March 3, 2016.

On February 25, 2016, Mr. Webb and Ms. Mayer met with representatives of SoftBank. At the February 25 meeting, Mr. Webb and Ms. Mayer received a letter from Yahoo Japan to the Board, dated February 25, 2016, setting forth the material terms of a non-binding proposal for a merger of equals transaction between Yahoo and Yahoo Japan. Yahoo Japan’s proposal, which was subject to due diligence, negotiation of final documentation, and approval by Yahoo Japan’s board of directors, contemplated that Yahoo’s existing stockholders would receive a 50 percent stake in the combined entity and approximately $14.0 billion in cash, reflecting an equity value for Yahoo of $29.05 per fully diluted Yahoo share. Yahoo Japan’s proposal also contemplated a commitment by Alibaba to purchase approximately 50 percent of Yahoo’s stake in Alibaba in six equal annual installments over a six-year period commencing one year after the closing of the transaction. The letter was not signed or acknowledged in writing by Alibaba. The letter conditioned further discussions regarding the proposal on Yahoo’s entry into a 30-day exclusivity agreement on or before March 1, 2016.

On February 26 and February 29, 2016, the Strategic Review Committee held telephonic meetings, with representatives of Cravath and, for certain portions, certain representatives of one of the Financial Advisors and Ms. Mayer participating, to discuss the non-binding proposal set forth in Yahoo Japan’s letter. The Strategic Review Committee subsequently received advice with respect to the Yahoo Japan proposal from each of the Financial Advisors. The Strategic Review Committee considered, among other things, the fact that Yahoo

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Japan’s proposal offered no premium for Yahoo’s shares and that the contemplated repurchase by Alibaba of a portion of its shares would be fully taxable. Members of the Strategic Review Committee also discussed Yahoo Japan’s proposal, and the Strategic Review Committee’s views with respect to such proposal, with each other member of the Board. After careful consideration, the Strategic Review Committee concluded that the terms described in Yahoo Japan’s letter were not compelling and that Yahoo should not enter into the proposed exclusivity agreement, but the Strategic Review Committee would be open to continuing a dialogue with SoftBank and Yahoo Japan about a potential transaction on more attractive terms. After the Strategic Review Committee’s position was communicated orally to SoftBank by a representative of one of the Financial Advisors, SoftBank and Yahoo Japan each declined to enter into a confidentiality agreement in connection with the strategic alternatives process and did not thereafter participate in such process.

On March 8, 2016, Mr. Scott resigned from the Strategic Review Committee given his other responsibilities, including as Chairman of Yahoo’s Nominating and Corporate Governance Committee. At a Board meeting on the same day, Catherine J. Friedman and Eric K. Brandt were appointed as independent directors of Yahoo to fill vacancies created by the recent resignations of two independent directors. The Board also appointed Mr. Brandt to replace Mr. Scott on the Strategic Review Committee.

On March 9 and March 14, 2016, the Strategic Review Committee held telephonic meetings and discussed with its advisors the status of the strategic alternatives process. At the March 14 meeting, the Strategic Review Committee also discussed potential approaches to the Excalibur IP Assets in relation to the strategic alternatives process with a view to most effectively monetizing those assets. The Strategic Review Committee subsequently decided to pursue a separate sale process for the Excalibur IP Assets and to permit bidders for Yahoo’s operating business to participate in the Excalibur IP Assets process as well.

On March 14, 2016, the Board met telephonically, with members of management and representatives of Wilson Sonsini and Cravath participating, to discuss with members of the Strategic Review Committee the proposed management presentation and forecasted financial information to be included in the presentation.

Between March 18 and April 1, 2016, seven potential interested parties, including Verizon, each attended separate half-day in-person management presentations at Skadden’s Palo Alto offices. These potential interested parties were previously selected by the Strategic Review Committee and its advisors as the initial group to receive management presentations based on, among other things, the level of interest they had shown in the process and their perceived viability as potential buyers. The presentations were given by Yahoo’s management team, including, among others, Ms. Mayer, Ken Goldman (Chief Financial Officer), Ronald S. Bell (then General Counsel and Secretary), and Ian Weingarten (Senior Vice President, Corporate Development and Partnerships).

On March 22, 2016, the Strategic Review Committee held a telephonic meeting and reviewed with representatives of Cravath drafts of the engagement letters negotiated with each of the Financial Advisors. Each of the Financial Advisors executed engagement letters with Yahoo, dated March 23, 2016, with respect to its role as a financial advisor to the Strategic Review Committee.

On March 22, 2016, the Board met telephonically, with members of management and a representative of Wilson Sonsini participating, to discuss with members of the Strategic Review Committee the management presentations that were recently made to potential bidders.

During the period from March 23 through April 6, 2016, at the direction of the Strategic Review Committee, the Financial Advisors sent process letters to potential bidders that had executed confidentiality agreements. These process letters set forth guidelines for the submission of a preliminary non-binding indication of interest in the acquisition of or strategic investment in one or more of Yahoo’s assets and established April 11, 2016 as the deadline to submit such preliminary non-binding indications of interest. The process letters noted, among other things, that Yahoo was open to considering proposals for Yahoo’s operating business or its principal non-operating assets, as well as for the whole company.

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On March 24 and March 31, 2016, the Strategic Review Committee held telephonic meetings, with representatives of the Financial Advisors and Cravath participating, to discuss, among other things, the in-person management presentations to date and the response of the initial group of potential bidders that attended such presentations. The Strategic Review Committee subsequently decided, in consultation with Yahoo’s management, that, given the number of additional interested parties and taking into account management’s time, an audio recording of the management presentation would be made available to the interested parties that were not invited to attend in-person management presentations.

On March 24, 2016, Yahoo received notice from Starboard of its intention to nominate nine persons, including Tor R. Braham, Eddy W. Hartenstein, Richard S. Hill, and Jeffrey C. Smith, for election to Yahoo’s Board at its 2016 annual meeting of stockholders and to solicit proxies from stockholders in support of its nominees.

Indications of Interest

From April 1 through April 8, 2016, a total of 19 interested parties that had signed confidentiality agreements with Yahoo attended audio recorded management presentations at the offices of Cravath, in New York, Skadden, in New York or Palo Alto, or certain of the Financial Advisors’ offices. All potential bidders who attended either an in-person or audio recorded management presentation were invited to participate in individualized follow-up question-and-answer sessions with Yahoo’s management team, including Ms. Mayer and Mr. Goldman.

Beginning on April 4, 2016, and on most weekdays thereafter until Yahoo and Verizon entered into the Stock Purchase Agreement, the Strategic Review Committee held a standing daily call with members of Yahoo’s management team, including Ms. Mayer, Mr. Goldman, Mr. Bell, and Mr. Weingarten, and with representatives of the Financial Advisors, Cravath, Skadden, and Wilson Sonsini.

On April 5 and April 7, 2016, the Strategic Review Committee held telephonic meetings, with representatives of the Financial Advisors and Cravath, and, for the April 7 meeting, Skadden participating, and discussed, among other things, feedback from potential bidders and the process for the Strategic Review Committee’s review of the initial indications of interest. The Strategic Review Committee decided to extend the due date for preliminary indications of interest to April 18, 2016. At the April 7 meeting, a representative of Skadden also presented potential structures for separating Yahoo’s operating business from its other assets in connection with a potential transaction. Although the Strategic Review Committee was primarily focusing on the auction process at this time, it was noted that much of the work relating to the potential separation structures would also apply to a reverse spin-off if the Board chose to pursue such a transaction.

Throughout April until April 18, 2016, the potential bidders continued to engage in extensive due diligence discussions with Yahoo’s management team, with the assistance of the Financial Advisors, and to request and receive due diligence updates to the virtual data room.

On April 11, 2016, a strategic party referred to as “Strategic Party A” submitted a preliminary non-binding proposal providing for a $1.0 billion to $2.0 billion strategic investment in Yahoo, after which Yahoo’s operating business would be spun off. After consideration of the proposal and discussion with its advisors, the Strategic Review Committee determined not to pursue it at that time, pending completion of the sale process.

At a Board meeting held at Yahoo’s Sunnyvale headquarters on April 13 and April 14, 2016, members of the Strategic Review Committee and representatives of the Financial Advisors updated the Board on the status of the strategic alternatives process. The Board also discussed with Skadden and Cravath the proposed transaction structure of a sale of Yahoo’s operating business.

On April 18, 2016, 14 parties (in addition to Strategic Party A), including three strategic bidders and 11 financial sponsor bidders, submitted preliminary non-binding indications of interest with respect to a transaction

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with Yahoo. Ten of these proposals contemplated an acquisition of Yahoo’s operating business on a cash-free, debt-free basis (alone or in conjunction with certain of Yahoo’s other assets) for enterprise values as follows:

• proposals that assumed that both the Excalibur IP Assets and a parcel of owned real estate located in Santa Clara, California (the “Excluded Real Estate”) would be included in the transaction from a financial sponsor referred to as “Sponsor A” ($7.5 to $8.0 billion) and from Verizon ($3.75 billion);

• proposals that assumed that the Excalibur IP Assets (but not the Excluded Real Estate) would be included in the transaction from a strategic party referred to as “Strategic Party B” ($4.5 billion), and a financial party that owns a strategic asset referred to as “Sponsor B” ($5.0 to $5.5 billion); and

• proposals that assumed that neither the Excalibur IP Assets nor the Excluded Real Estate would be included in the transaction from financial sponsors referred to as “Sponsor C” and “Sponsor D,” which were working together with the prior consent of the Strategic Review Committee ($5.5 billion), and five other financial sponsors, which are referred to as “Sponsor E,” “Sponsor F,” “Sponsor G,” “Sponsor H,” and “Sponsor I,” respectively ($6.0 billion, $5.0 billion, $5.7 billion, $5.0 to $6.0 billion, and $4.51 billion, respectively).

The remaining four indications of interest included:

• a proposal from a financial sponsor that owned a controlling interest in an Internet company for a Reverse Morris Trust transaction in which Yahoo’s operating business would be spun off and then merged with the smaller Internet company owned by the financial sponsor, the terms of which were based on an indicated enterprise value of $4.379 billion for Yahoo’s operating business;

• an oral offer from a bidding group consisting of two financial sponsors to acquire Yahoo’s operating business for $2.0 billion;

• a proposal to acquire Yahoo’s operating business for $3.0 to $4.0 billion from a group of private equity bidders that had declined to enter into a confidentiality agreement and therefore had not participated in the first-round due diligence process; and

• an indication of interest from a financial sponsor that did not specify an enterprise value or value range and offered to support a third-party transaction.

None of the initial indications of interest received in the process contemplated an acquisition of Yahoo in its entirety.

Between April 18 and April 21, 2016, at the direction of the Strategic Review Committee, representatives of the Financial Advisors contacted the potential bidders, including Verizon, that had submitted proposals contemplating an acquisition of Yahoo’s operating business on a cash-free, debt-free basis to clarify the terms of, and to obtain additional information with respect to, their proposals.

Between April 19 and April 21, 2016, each of the Financial Advisors provided the Strategic Review Committee with updated disclosures regarding certain of its relationships with the potential bidders.

On April 20 and April 21, 2016, the Strategic Review Committee held telephonic meetings, with representatives of the Financial Advisors and Cravath participating, to review and evaluate the first-round proposals and to discuss which bidders would be invited to the next round of the strategic alternatives process. Representatives of Cravath reviewed with members of the Strategic Review Committee their fiduciary duties and other relevant legal considerations. Representatives of the Financial Advisors presented to the Strategic Review Committee their preliminary financial analyses of the initial indications of interest and described their discussions with each potential bidder, including their views on each bidder’s financial capacity to close a transaction, industry experience, level of engagement in the process, and other factors affecting whether to invite such bidder into the next round of the process. The Strategic Review Committee also determined not to pursue

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any of the initial indications of interest contemplating alternative transaction structures, which involved additional complexities and contingencies, concluding that pursuing a sale of Yahoo’s entire operating business through a competitive auction process offered a better chance of maximizing value for Yahoo stockholders and noting the potential to revisit such proposed alternative structures in the future.

Following the Strategic Review Committee meeting on April 20, 2016, the Strategic Review Committee and representatives of the Financial Advisors and Cravath participated in a call with members of Yahoo’s management team to discuss the first-round proposals and the Strategic Review Committee’s analysis of these proposals and to obtain management’s input.

On April 21, 2016, Yahoo entered into a purchase agreement to sell the Excluded Real Estate. Yahoo completed the sale of the Excluded Real Estate for total proceeds of $246 million, net of closing costs of $4 million, on June 16, 2016.

On April 22, 2016, the Board held a telephonic meeting, with members of management and representatives of the Financial Advisors, Cravath, Skadden, and Wilson Sonsini participating, during which members of the Strategic Review Committee and representatives of its advisors discussed with the other directors the first-round proposals and the Financial Advisors presented preliminary financial analyses of Yahoo and its assets.

Later on April 22, 2016, the Strategic Review Committee had a meeting, with representatives of the Financial Advisors, Cravath, and Skadden participating. The Strategic Review Committee decided to invite into the next round of the process nine bidders that had submitted initial indications of interest: Verizon, Strategic Party B, the Sponsor C / Sponsor D bidding group, Sponsor A, Sponsor B, a bidding group consisting of Sponsor E and Sponsor F, which, at the recommendation of the Strategic Review Committee to enable them to submit a more competitive bid, were working together, Sponsor G, Sponsor H, and Sponsor I. On behalf of the Strategic Review Committee, the Financial Advisors invited these bidders into the next round of the strategic alternatives process.

From April 23 until July 18, 2016, numerous due diligence meetings and calls were held among representatives of Yahoo and its advisors, the potential bidders, including Verizon, and their advisors, and the Strategic Review Committee’s advisors. During this period, additional documents were posted to the virtual data room, including in response to potential bidders’ due diligence requests.

On April 26, 2016, Yahoo entered into the Starboard Settlement Agreement with Starboard and certain of Starboard’s affiliates to settle the proxy contest pertaining to the election of directors at Yahoo’s 2016 annual meeting. Pursuant to the Starboard Settlement Agreement, the Board appointed Messrs. Braham, Hartenstein, Hill, and Smith to the Board effective April 26, 2016, and Yahoo agreed to nominate the Starboard designees for election to the Board at the 2016 annual meeting. Also pursuant to the Starboard Settlement Agreement, Mr. Smith was appointed to the Strategic Review Committee in place of Mr. Webb, and Mr. McInerney became chair of the Strategic Review Committee. However, as provided by the Starboard Settlement Agreement, Mr. Webb was invited to continue to attend, and participate in, all Strategic Review Committee meetings. Thereafter, Mr. Webb attended most meetings of the Strategic Review Committee. The Starboard Settlement Agreement also required Yahoo to submit to a stockholder vote any decision recommended by the Strategic Review Committee and approved by the Board to sell Yahoo’s operating business or any similar transaction.

Between April 28 and May 17, 2016, representatives of each of the remaining potential bidders, including Verizon, and their advisors participated in meetings with Yahoo’s management, including Ms. Mayer, Mr. Goldman, Mr. Bell, Lisa Utzschneider (Chief Revenue Officer), and Mr. Weingarten, at its Sunnyvale headquarters as part of their due diligence. Also during this period, certain bidders, including Verizon, requested and subsequently participated in calls and meetings with representatives of Yahoo, Skadden, and Cravath to discuss issues related to legal and financial considerations with respect to the transaction, including considerations relating to Yahoo’s capitalization structure.

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On May 2, 2016, at Verizon’s request, Mr. Webb met with Lowell McAdam, Chairman and Chief Executive Officer of Verizon. During the meeting Mr. McAdam discussed Verizon’s interest in a potential transaction involving Yahoo’s operating business. Mr. Webb suggested that Verizon raise any specific issues with the Strategic Review Committee and its advisors.

On May 5, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors, Cravath, and Skadden participating, during which the representatives of Skadden and Cravath reviewed with the Strategic Review Committee the key proposed terms of the initial drafts of the purchase agreement and reorganization agreement prepared by Skadden in consultation with Cravath.

On May 11, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors and Cravath participating, during which the representatives of Cravath reviewed with the Strategic Review Committee revised drafts of the purchase agreement and reorganization agreement prepared by Skadden, and the Strategic Review Committee discussed the timeline for the next round of the process, including a potential interim bid date of June 6, 2016.

On May 12, 2016, after the Strategic Review Committee interviewed several prospective intellectual property advisors and discussed them with members of Yahoo’s intellectual property team and Mr. Bell. Yahoo, on behalf of the Strategic Review Committee, entered into an engagement letter with Black Stone IP, LLC as an advisor in connection with a possible transaction to monetize the Excalibur IP Assets, either with a buyer of Yahoo’s operating business or another third party.

Also on May 12, 2016, initial drafts of the purchase agreement and the reorganization agreement were made available to potential bidders through the virtual data room. To minimize the liabilities that would be retained by Yahoo post-closing, the initial draft purchase agreement was structured similar to a typical purchase agreement in a public company acquisition, with no post-closing indemnity by Yahoo and limited closing conditions. In addition, the initial draft purchase agreement provided, in the case of a strategic buyer, that Yahoo’s unvested employee equity awards would be assumed or substituted for comparable buyer equity awards, and, in the case of a financial sponsor buyer, that these awards would be accelerated at closing. The draft purchase agreement also provided that Yahoo would be required to pay the buyer a termination fee equal to 2.5 percent of the base purchase price if, among other reasons, the purchase agreement was terminated by the purchaser after the Board changed its recommendation for the transaction or by Yahoo to accept a superior proposal (the “Yahoo termination fee”), and, in the case of a financial sponsor buyer, that Yahoo would be entitled to a reverse termination fee equal to 7.5 percent of the base purchase price if the buyer did not consummate the transaction as a result of its debt financing not being available (the “reverse termination fee”), and to specific performance if the buyer’s debt financing was available.

Interim Proposals

On May 13, 2016, the Financial Advisors provided each of the nine remaining bidders with a process letter setting forth the process and guidelines for the submission of interim non-binding proposals for the acquisition of Yahoo’s operating business and establishing June 6, 2016 as the due date for interim proposals. The process letter instructed bidders to submit as part of their interim proposals a list of the key issues they had identified in the draft transaction agreements. Bidders were instructed to assume that the transaction would exclude the Excalibur IP Assets and that any sale of the Excalibur IP Assets would be subject to a royalty-free license to the Excalibur IP Assets solely for the benefit of Yahoo’s operating business.

On May 19, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors and Cravath participating, to discuss the feedback received from bidders and to receive an update on the ongoing due diligence process.

Between May 20 and May 30, 2016, representatives of Cravath, Skadden, and the Financial Advisors participated in calls with representatives of certain of the remaining bidders, including Verizon, and their

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respective legal counsel, to discuss their approach to the ongoing strategic alternatives process and the transaction agreements. The representatives of the Strategic Review Committee’s advisors and Skadden stressed that, in addition to focusing on value, the Strategic Review Committee was seeking proposals that would provide high certainty of closing and leave the post-closing entity with limited liabilities unrelated to the assets retained by Yahoo.

During the week of May 23, 2016, with the approval of the Strategic Review Committee, representatives of each of Verizon and Strategic Party B met separately with Yahoo’s management team, including Ms. Mayer, Mr. Goldman, Mr. Bell, and Mr. Weingarten, at its Sunnyvale headquarters to discuss potential revenue and cost synergies as part of their due diligence investigation.

On May 24, May 26, and May 27, 2016, the Strategic Review Committee held telephonic meetings, with representatives of the Financial Advisors and Cravath participating, to discuss the progress of the strategic alternatives process and feedback received from the bidders.

On May 31, 2016, the Board held a meeting, with members of management and representatives of the Financial Advisors, Cravath, Skadden, and Wilson Sonsini participating, at which the Board received an update on the strategic alternatives process, including the key terms of the initial drafts of the purchase agreement and reorganization agreement, the status of the bidders’ due diligence, and the proposed schedule for the remainder of the strategic alternatives process. They also described the status of a process to potentially sell the Excalibur IP Assets.

Also on May 31, 2016, Yahoo and Excalibur entered into a patent assignment, pursuant to which, among other things, Yahoo assigned to Excalibur all right, title, and interest to the Excalibur IP Assets. Concurrently, Yahoo and Excalibur entered into a patent license agreement, pursuant to which, among other things, Excalibur granted to Yahoo and certain affiliates a non-exclusive license under the Excalibur IP Assets solely for the Yahoo operating business.

Between May 23, 2016 and June 2, 2016, representatives of Sponsor G, Sponsor H, and Sponsor I communicated to representatives of the Financial Advisors that they were withdrawing from the process.

On June 2, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors and Cravath participating, to discuss the process for review of the second-round bids due on June 6, 2016.

On June 3, at Sponsor B’s request, Mr. Webb met with representatives of Sponsor B. During the meeting the representatives of Sponsor B discussed Sponsor B’s interest in a potential transaction involving Yahoo’s operating business. Mr. Webb suggested that Sponsor B raise any specific issues with the Strategic Review Committee and its advisors.

On June 6, 2016, Yahoo received non-binding interim proposals to acquire Yahoo’s operating business, including lists of the key issues identified in the draft transaction agreements, from each of Verizon, Strategic Party B, the Sponsor C / Sponsor D bidding group, Sponsor A, Sponsor B, and the Sponsor E / Sponsor F bidding group. The six interim proposals included the following base purchase prices and key terms, among others:

• Verizon proposed a $3.85 billion base purchase price. Its proposal contemplated that (i) the Excalibur IP Assets would be excluded from the acquired assets, but a royalty-free license to the Excalibur IP Assets would be granted for the benefit of Verizon and its current and future affiliates, (ii) Verizon would substitute cash-settled restricted stock units having equivalent value for unvested Yahoo RSU awards, but Yahoo would bear 50 percent of the cost of the Yahoo RSU awards and Verizon would not assume or grant options in substitution for any Yahoo options, (iii) Yahoo would indemnify Verizon for breaches of representations and warranties under the purchase agreement, and (iv) the Yahoo termination fee would be 4 percent of the base purchase price.

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• Strategic Party B proposed a $3.75 billion base purchase price. Its proposal contemplated that (i) the Excalibur IP Assets would be included in the acquired assets, (ii) Strategic Party B would issue Strategic Party B restricted stock units and options having equivalent value for unvested Yahoo RSU awards and unvested Yahoo options, respectively, (iii) Yahoo would indemnify the buyer for breaches of representations and warranties under the purchase agreement, and (iv) the Yahoo termination fee would be five percent of the base purchase price.

• Sponsor A proposed a $5.0 billion base purchase price if the Excalibur IP Assets and certain minority investments were included in the acquired assets or a $4.7 billion base purchase price if the Excalibur IP Assets and certain minority investments were excluded from the acquired assets. Its proposal contemplated that (i) the cost of Yahoo equity awards would generally be retained by Yahoo, (ii) there would be no indemnification for breaches of representations and warranties under the purchase agreement, (iii) the Yahoo termination fee would be 3.5 percent of the base purchase price, and (iv) the reverse termination fee would be 5 percent of the base purchase price, with Yahoo being entitled to specific performance if the debt financing was available.

• Sponsor B proposed a base purchase price of $4.0 billion to $4.5 billion. Its proposal contemplated that (i) the Excalibur IP Assets would be included in the acquired assets, (ii) the cost of Yahoo equity awards would generally be retained by Yahoo, (iii) there would be no indemnification for breaches of representations and warranties under the purchase agreement, and (iv) the sole termination remedies would be liquidated damages in amounts to be negotiated, with no provision for specific performance.

• The Sponsor C / Sponsor D bidding group proposed a $2.75 billion base purchase price. This proposal contemplated that (i) the Excalibur IP Assets would be excluded from the acquired assets and (ii) Yahoo would retain the cost of equity awards. The Sponsor C / Sponsor D bidding group did not submit a list of key issues identified in the draft transaction agreements.

• The Sponsor E / Sponsor F bidding group proposed a $5.25 billion base purchase price. This proposal contemplated that (i) the Excalibur IP Assets would be excluded from the acquired assets, (ii) the cost of Yahoo equity awards would generally be retained by Yahoo, (iii) there would be no indemnification for breaches of representations and warranties under the purchase agreement, but the buyer would purchase representation and warranty insurance at Yahoo’s cost, and (iv) Yahoo would be entitled to specific performance if the debt financing was available and the buyer failed to consummate the closing when required; otherwise, a reverse termination fee of an unspecified amount would be the remedy.

Between June 6 and June 8, 2016, representatives of the Financial Advisors had numerous discussions with the six bidders who submitted second-round proposals to clarify the terms of and obtain additional information with respect to their proposals, including the reasons for any significant changes from the valuations they had provided in their initial indications of interest.

On June 8, 2016, the Strategic Review Committee met, with representatives of the Financial Advisors and Cravath participating, to review the interim proposals, including the bidders’ issues lists and the additional feedback received from the bidders, and to discuss next steps. Representatives of the Financial Advisors provided an overview of the second round of the strategic alternatives process and provided their preliminary financial analyses of the interim proposals. Representatives of Cravath reviewed with the Strategic Review Committee the transaction agreement issues lists submitted by the bidders. The Strategic Review Committee preliminarily decided that, because the price offered by the Sponsor C / Sponsor D bidding group was significantly lower than the prices indicated in the other bidders’ proposals, and representatives of the Sponsor C / Sponsor D bidding group had indicated that they did not expect further due diligence or partnering opportunities would meaningfully change their valuation, the Sponsor C / Sponsor D bidding group would not be invited to the next round of the strategic alternatives process.

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On June 9, 2016, the Strategic Review Committee and representatives of the Financial Advisors and Cravath participated in a conference call with Mr. Webb, certain members of Yahoo management, including Ms. Mayer and Mr. Bell, and representatives of Skadden and Wilson Sonsini to review the interim proposals.

On June 10, 2016, the Board held a telephonic meeting, including certain members of management, to discuss the interim proposals and other matters discussed at the Strategic Review Committee’s June 8, 2016 meeting. Representatives of the Financial Advisors, Cravath, and Skadden provided the Board with an overview of the interim proposals and the Financial Advisors presented their analyses of each of the bids. Following the Board meeting, and taking into account the Board’s discussion and direction, the Strategic Review Committee decided to invite to the next round of the strategic alternatives process each of the remaining five bidders: Verizon, Strategic Party B, Sponsor A, Sponsor B, and the Sponsor E / Sponsor F bidding group. At the Strategic Review Committee’s direction, the Financial Advisors communicated the Strategic Review Committee’s decision to the bidders and began to arrange calls to provide the bidders and their advisors with feedback on their transaction agreements issues lists.

On June 12 and 13, 2016, Yahoo uploaded revised transaction agreements and draft disclosure schedules, respectively, to the virtual data room, reflecting the corporate structure of Yahoo Holdings.

On June 13, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors and Cravath participating, to discuss the bidders’ ongoing due diligence requests and discuss certain issues relating to the transaction agreements.

Between June 13 and June 19, 2016, representatives of Skadden and Cravath held conference calls with representatives of each of the remaining bidders, including their legal advisors, during which the representatives of Skadden and Cravath provided feedback to each of the bidders on the transaction agreement issues lists they had submitted with their interim bids. The Strategic Review Committee’s advisors also advised the bidders that mark-ups of the transaction agreements would be due on June 20, 2016, and, for financial bidders, near-final drafts of debt commitment letters would be due on June 30, 2016.

On June 16, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors and Cravath participating, at which the Financial Advisors updated the Strategic Review Committee on, among other things, the feedback received from each of the bidders regarding remaining due diligence items and their expected timing for completion of their due diligence review. The Strategic Review Committee expressed a desire for bidders to be guided to submit final mark-ups of the transaction agreements that would enable Yahoo to be in a position to enter into definitive transaction agreements with the winning bidder as soon as possible after final bids were received.

Initial Mark-Ups

Between June 20 and June 24, 2016, each of the remaining five bidders submitted initial mark-ups of the transaction agreements. Verizon’s mark-up of the purchase agreement improved certain of the terms previously indicated in the issues list it submitted on June 6, 2016. In particular, Verizon’s mark-ups did not contemplate indemnification for breaches of representations, warranties, and pre-closing covenants under the purchase agreement (although it did include indemnification for pre-closing taxes) and provided that Verizon would assume the full cost of unvested Yahoo RSU awards. The mark-ups submitted by Strategic Party B, Sponsor A, Sponsor B, and Sponsor F were generally consistent with the key issues lists previously submitted by those bidders.

On June 24, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Financial Advisors, Cravath, and Skadden participating, to discuss issues raised by the transaction agreement mark-ups the bidders had submitted. The Strategic Review Committee also discussed the timeline for the remainder of the sale process.

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Interim Mark-Ups and Final Proposals

On June 21, 2016, principals of Sponsor E and Sponsor F informed Mr. McInerney and representatives of one of the Financial Advisors that Sponsor E intended to withdraw from the auction process, but that Sponsor F continued to be interested in acquiring Yahoo’s operating business and wished to remain in the process. In the following days, members of the Strategic Review Committee and representatives of the Financial Advisors had numerous discussions with principals of Sponsor F to discuss whether it was feasible for Sponsor F to obtain equity financing without Sponsor E’s participation. Based on these discussions, the Strategic Review Committee ultimately determined to permit Sponsor F to remain in the process.

Between June 26 and July 1, 2016, representatives of Skadden, Cravath, and the Financial Advisors participated in conference calls with representatives of each of the five remaining bidders to provide them with initial feedback on their mark-ups of the transaction agreements submitted the previous week, as well as to obtain clarification from the bidders with respect to certain of their changes to the initial drafts.

On June 27, 2016, at the direction of the Strategic Review Committee, representatives of the Financial Advisors distributed to the five remaining bidders a process letter setting out the process and guidelines for the submission of final acquisition proposals and establishing July 18, 2016 as the final bid deadline. The process letter provided for submission of interim mark-ups of the transaction agreements on July 6, 2016, and, based on feedback to be provided by Skadden and Cravath on such interim mark-ups, the submission of final mark-ups of the transaction agreements on July 14, 2016. The process letter further requested that the bidders submit executed debt and equity financing commitment letters (if applicable) with their final proposals, and noted that the Strategic Review Committee would attach considerable importance to the certainty of the financing commitments in its evaluation of the final proposals.

On June 27, 2016, at Verizon’s request, members of the Strategic Review Committee, together with a representative of one of the Financial Advisors, met with Mr. McAdam and other members of Verizon’s management team to discuss Verizon’s participation in the sale process and Verizon’s interest in a potential transaction involving Yahoo’s operating business.

On June 29, 2016, the Board held a meeting at Yahoo’s Sunnyvale headquarters, with members of management and representatives of the Financial Advisors, Cravath, Skadden, and Wilson Sonsini present, to discuss, among other things, the strategic alternatives process. At the meeting, members of the Strategic Review Committee reviewed the interim proposals received from the five continuing bidders, and the Financial Advisors presented the Board with a comparison of the financial aspects of the bids, as well as their preliminary financial analysis with respect to Yahoo’s operating business, including the relative advantages and disadvantages, as well as the expected timing, of a reverse spin-off compared to a sale of Yahoo’s operating business. The representatives of Cravath and Skadden reviewed with the Board potential issues raised by the bidders’ mark-ups of the transaction agreements. A representative of Wilson Sonsini reviewed the Board’s fiduciary duties and other legal considerations. The Board also expanded the Strategic Review Committee’s authority, by authorizing it to consider, evaluate, and make recommendations to the Board regarding the potential monetization of the Excalibur IP Assets, consideration of a reverse spin-off, capitalization and initial investment objectives of Yahoo following a sale of its operating business or a reverse spin-off, the disposition of the Alibaba Shares and the Yahoo Japan Shares, and the repatriation of cash to Yahoo’s stockholders.

Yahoo held its annual stockholders meeting on June 30, 2016. At the annual meeting, Yahoo’s stockholders elected each of Yahoo’s director nominees to the Board.

On July 1, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of its advisors and Skadden participating, to review the discussions held with the bidders regarding their initial transaction agreement mark-ups, as well as the status of the bidders’ due diligence review and the financial sponsor bidders’ progress in securing equity and debt financing commitments.

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On July 6, 2016, Yahoo received interim mark-ups of the transaction agreements from Verizon, Strategic Party B, Sponsor A, and Sponsor F. In its interim transaction agreement mark-ups, Verizon further improved the terms of its bid by, among other things, eliminating the pre-closing tax indemnity (with certain exceptions) and lowering the Yahoo termination fee from 4.0 percent to 3.5 percent. The transaction agreement mark-ups from Strategic Party B, Sponsor A, and Sponsor F that submitted interim mark-ups at that time were generally less favorable to Yahoo than Verizon’s mark-ups on non-price terms, including indemnification, closing conditions, the Yahoo termination fee, and, where applicable, the reverse termination fee.

On July 7 and July 11, 2016, representatives of Skadden and Cravath held telephonic meetings with representatives of each of the four bidders that had submitted interim mark-ups on July 6, 2016 to clarify certain terms of, and provide feedback on, their interim mark-ups, consistent with the guidance provided by the Strategic Review Committee.

On July 7, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of its advisors participating, to discuss the status of the sale process and the discussions with each of the five remaining bidders and to receive an update from Cravath on the most significant issues raised by the interim mark-ups of the transaction agreements received so far. At the meeting, the Strategic Review Committee discussed Sponsor F’s request to have discussions with David Filo, a director and co-founder of Yahoo, its Chief Yahoo, and its largest individual stockholder, regarding the possibility of Mr. Filo providing equity financing in a bid by Sponsor F. Following discussion, in order to enable Sponsor F to present the best possible bid, the Strategic Review Committee decided that it would permit the bidder to have discussions with Mr. Filo regarding his potential participation in a bid by Sponsor F, so long as Mr. Filo was willing to enter into such discussion and, if so, that he recuse himself from all further Board discussions regarding the sale process and not receive any further information about the bidding process for as long as Mr. Filo contemplated such participation. On behalf of the Strategic Review Committee, a representative of Wilson Sonsini discussed with Mr. Filo whether he would be willing to have discussions with Sponsor F on these terms. Mr. Filo indicated that he would be willing to discuss a potential equity participation in a bid by Sponsor F or, if requested, by another financial sponsor bidder if it would help to facilitate maximizing stockholder value in the strategic alternatives process. The Strategic Review Committee also determined that if any other bidders requested to have discussions with Mr. Filo going forward, the Strategic Review Committee would evaluate those requests on a case-by-case basis. Throughout the week of July 11, 2016, the Strategic Review Committee had numerous discussions with representatives of Cravath, Wilson Sonsini, and the Financial Advisors regarding Mr. Filo’s potential equity participation in a bid by Sponsor F. Mr. Filo agreed to the restrictions on his access to discussions and information proposed by the Strategic Review Committee.

On July 10, 2016, the Strategic Review Committee had a conference call with representatives of the Financial Advisors, Cravath, and Skadden to review issues raised by the interim mark-ups of the transaction agreements submitted by the bidders. At the meeting, the Strategic Review Committee provided Skadden and Cravath with guidance with respect to the feedback they would deliver to the bidders in accordance with the process outlined in the process letter.

On July 11, 2016, Sponsor B submitted its interim mark-ups of the transaction agreements, which did not contain significant improvements compared to Sponsor B’s prior mark-ups. The next day, principals of Sponsor B met with Mr. Webb to discuss its interest in pursuing a potential acquisition of Yahoo’s operating business.

On July 14, 2016, representatives of Skadden and Cravath held a conference call with representatives of Sponsor B to provide them with feedback on their interim mark-ups of the transaction agreements.

Also on July 14, 2016, Verizon, Strategic Party B, Sponsor A, and Sponsor F submitted revised, final mark-ups of the transaction agreements.

On July 18 and 19, 2016, all five bidders submitted to the Strategic Review Committee their final acquisition proposals, and Sponsor B also provided revised mark-ups of the transaction agreements and executed

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equity and debt financing commitment letters. Sponsor A and Sponsor F did not submit executed financing commitments. The final proposals included the following terms, among others:

• Verizon increased its base purchase price to $4.8258 billion. Its final proposal (i) continued to exclude the Excalibur IP Assets from the acquired assets and narrowed the scope of the royalty-free license to the Excalibur IP Assets that would be granted for the benefit of Verizon and its current and certain future affiliates, (ii) continued to provide generally for the substitution of cash-settled Verizon restricted stock units for unvested Yahoo RSU awards and no assumption or substitution of any Yahoo options, (iii) continued to provide for no indemnification for breaches of representations and warranties under the purchase agreement, and (iv) lowered the Yahoo termination fee to 3.0 percent of the base purchase price.

• Strategic Party B lowered its base purchase price to $2.9 billion. Its proposal (i) excluded the Excalibur IP Assets from the acquired assets, but provided that Strategic Party B and its controlled affiliates would be granted a full license to the Excalibur IP Assets, (ii) continued to provide for the substitution of Strategic Party B restricted stock units and options for unvested Yahoo RSU awards and unvested Yahoo options, (iii) continued to provide that Yahoo would indemnify the buyer for, among other things, breaches of representations and warranties, and (iv) revised the Yahoo termination fee to 3 percent of the base purchase price, subject to escalation by 1/30 of 0.5 percent each day (i.e., 0.5 percent per month) if the stockholder meeting was not held within six months following the announcement of a transaction.

• Sponsor A reduced its base purchase price to $4.0 billion. Its proposal provided (i) that the Excalibur IP Assets would be excluded from the acquired assets, (ii) that the cost of equity awards would generally be retained by Yahoo, (iii) that Yahoo would bear severance costs of terminating a certain number of employees (which Sponsor A estimated to be $200 million to $300 million), (iv) for indemnification for breaches of representations and warranties under the purchase agreement regarding the business in the reorganization agreement, and (v) a Yahoo termination fee and a reverse termination fee of 3.25 percent and 5.5 percent, respectively, of the base purchase price. Sponsor A also proposed an alternative transaction, pursuant to which the majority of the assets of Yahoo’s operating business would be separated from a liquidating trust holding the remainder of the operating assets, including all of Yahoo’s physical assets, as well as certain legacy liabilities, and the liquidating trust would be acquired by Sponsor A through a combination of equity and vendor financing provided by Yahoo, though no purchase price for the liquidating trust was specified.

• Sponsor B proposed a $4.05 billion base purchase price. Its proposal provided (i) that the Excalibur IP Assets would be included in acquired assets, (ii) that the cost of equity awards would generally be retained by Yahoo, (iii) that Yahoo would implement an employee reduction plan prior to the closing and a portion of the related severance would be borne by Yahoo, (iv) for no indemnification for breaches of representations and warranties under the purchase agreement, (v) a Yahoo termination fee and a reverse termination fee each equal to 4.0 percent of the base purchase price, and (vi) that a reverse termination fee would be the exclusive termination remedy of Yahoo, meaning that Yahoo would not have the right to cause the buyer to close if its debt financing was available.

• Sponsor F reduced its base purchase price to $4.35 billion. Its proposal provided (i) that the Excalibur IP Assets would be excluded from the acquired assets, (ii) that the cost of equity awards would generally be retained by Yahoo, (iii) for no indemnification for breaches of representations and warranties under the purchase agreement, and (iv) a Yahoo termination fee and a reverse termination fee equal to 3.75 percent and 7.5 percent, respectively, of the base purchase price.

On July 18 and July 19, 2016, the Strategic Review Committee had multiple conference calls with its advisors to discuss the final proposals. The Strategic Review Committee considered that (i) Verizon’s bid offered the highest base purchase price, (ii) Verizon had submitted the transaction agreement mark-ups that were most responsive to the Strategic Review Committee’s concerns regarding value, certainty of closing, and leaving the

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post-closing entity with limited liabilities unrelated to the assets retained by Yahoo, (iii) Verizon had sufficient funds to finance the transaction, whereas the financing of the financial sponsor bidders was less certain, and (iv) Verizon had substantially completed its due diligence review, whereas the financial sponsors needed additional time to complete their due diligence review. In light of these and other factors, the Strategic Review Committee recommended that Yahoo should proceed to negotiate definitive transaction agreements with Verizon on an expedited basis. The Strategic Review Committee also determined, after reviewing proposals received to date for the Excalibur IP Assets, to recommend to the Board that Yahoo should retain the Excalibur IP Assets at that time.

Also on July 18 and July 19, 2016, the Financial Advisors contacted each of the other four bidders to obtain additional information with respect to their proposals, and to discuss whether they could enhance their prices for Yahoo’s operating business.

Later in the evening on July 19, 2016, the Board, with members of management, representatives of the Strategic Review Committee’s advisors, Skadden, and Wilson Sonsini present, convened to discuss the final proposals received by the Strategic Review Committee. As previously arranged, Mr. Filo did not participate in this Board meeting or any other subsequent Board meetings relating to the proposed transaction and was not given access to materials for the meeting, including the final proposals. At the meeting, representatives of the Financial Advisors reviewed with the Board each of the final proposals. Representatives of Skadden and Cravath then reviewed with the Board the key issues raised by the final mark-ups of the transaction agreements submitted by the bidders. After discussion, considering the factors differentiating Verizon’s bid described above, the Board determined that Yahoo should proceed to negotiate definitive transaction agreements with Verizon on an expedited basis.

Skadden distributed revised versions of the transaction agreements to Verizon and Wachtell, Lipton, Rosen & Katz (“Wachtell”), Verizon’s legal counsel, early on the morning of July 20, 2016. Yahoo Holdings was also formed on July 20, 2016. Beginning later on July 20, 2016, and through the evening of July 22, 2016, Skadden and Wachtell exchanged revised drafts of the transaction agreements, and representatives of Skadden, in consultation with representatives of Cravath, and representatives of Wachtell negotiated the terms of the transaction agreements. Also during this time, the parties negotiated the terms of the Excalibur License Agreement.

In the evening of July 20, 2016, members of the Board, with members of management and representatives of the Strategic Review Committee’s advisors, Skadden, and Wilson Sonsini present, received a telephonic update on the status of the negotiations with Verizon and its advisors.

Also on July 21, 2016, the Strategic Review Committee held a telephonic meeting, with representatives of the Strategic Review Committee’s advisors participating, to discuss the status of discussions with Verizon. Representatives of Cravath reviewed with the Strategic Review Committee the material open items in the transaction agreements and the Strategic Review Committee provided feedback on certain of those matters.

In the afternoon on July 22, 2016, the Strategic Review Committee, together with representatives of its advisors, held a telephonic meeting. Representatives of Cravath reviewed with the Strategic Review Committee its fiduciary duties and other relevant legal considerations in connection with recommending a potential transaction to the Board. The representatives of Cravath also reviewed with the Strategic Review Committee the terms of the proposed transaction agreements to be entered into with Verizon and provided the Strategic Review Committee with an update on the status of negotiations. Representatives of the Financial Advisors then each reviewed with the Strategic Review Committee their financial analyses of Yahoo and its operating business. The Strategic Review Committee also discussed with its advisors a communication received by Mr. Webb from the principal of Sponsor B reiterating Sponsor B’s interest in an acquisition.

After the Strategic Review Committee’s meeting, on July 22, 2016, members of the Strategic Review Committee had a call with a principal of Sponsor B, during which the principal indicated that the Strategic

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Review Committee should expect to receive the revised proposal within the next few hours, but did not disclose any specific monetary terms of the revised proposal. Later that evening, just prior to the scheduled start of a Board meeting, the Strategic Review Committee received from Sponsor B a revised proposal to acquire Yahoo’s operating business for an enterprise value of $4.8 billion contingent on, among other things, Yahoo retaining the cost of its equity awards and Yahoo and Sponsor B agreeing on a key employee reduction plan to be executed prior to closing, on the allocation between Yahoo and Sponsor B of the severance costs related to the reduction plan, as well as several other contract concessions.

In the evening of July 22, 2016, the Board held a telephonic meeting, with members of management and representatives of the Strategic Review Committee’s advisors, Skadden, and Wilson Sonsini participating. All of the members of the Board were in attendance, except for Mr. Filo. A representative of Wilson Sonsini reviewed with the directors their fiduciary duties, as well as the scope of the authority delegated by the Board to the Strategic Review Committee. A representative of Skadden then reviewed with the Board the terms and conditions of the proposed transaction with Verizon contained in the purchase agreement and related transaction agreements. Representatives of Skadden and Cravath also updated the Board on the status of the negotiations. The Board then discussed with the Strategic Review Committee’s advisors, Skadden, and Wilson Sonsini Sponsor B’s revised proposal. The Board considered, among other things, that the price offered in Sponsor B’s revised proposal was lower than the price offered by Verizon and that Sponsor B’s proposal did not assume the Yahoo RSU awards, the certainty of the Verizon bid, the risk of losing the Verizon bid if Yahoo were to delay signing and pursue further discussions with Sponsor B, and the fact that Sponsor B’s offer was subject to confirmatory due diligence and the negotiation of definitive transaction agreements. The Board concluded that the risks of delaying signing a transaction with Verizon for an inferior offer from Sponsor B outweighed any potential benefit of pursuing further negotiations and noted that, in the proposed transaction with Verizon, the Board retained a customary “fiduciary out” to pursue an unsolicited potentially superior proposal that emerged after signing the transaction agreements. Representatives of J.P. Morgan and Goldman Sachs then described certain hedge and warrant transactions relating to the Convertible Notes, with respect to which J.P. Morgan and Goldman Sachs are counterparties to the Company, noting that these interests had been disclosed to, discussed with, and considered by the Strategic Review Committee and the Board in connection with their respective engagements as financial advisors to the Strategic Review Committee. They also discussed with the Board the potential impact of the proposed Sale Transaction on the hedge and warrant transactions, including the value that Goldman Sachs and J.P. Morgan could potentially receive under various assumptions as a result of their interest in the hedge and warrant transactions, based on theoretical models. Representatives of the Financial Advisors then jointly reviewed with the Board their joint financial analysis of the purchase price to be paid by Verizon to Yahoo in connection with the Sale Transaction (the “Original Cash Consideration”), which is $4,825,800,000 in cash, subject to adjustments as provided for in the purchase agreement, together with the general substitution of cash-settled Verizon RSU awards for unvested Yahoo RSU awards held by employees of Yahoo Holdings immediately prior to the closing of the Sale Transaction (the “RSU Substitution”). At this meeting, each of the Financial Advisors then rendered its oral opinion to the Strategic Review Committee and the Board, each of which were subsequently confirmed by delivery of a written opinion, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in such Financial Advisor’s written opinion, the Original Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the purchase agreement, was fair, from a financial point of view, to Yahoo.

The Board meeting was then recessed and the Strategic Review Committee held an executive session, during which the Strategic Review Committee unanimously recommended to the Board that the Board approve the purchase agreement and the reorganization agreement negotiated with Verizon and the transactions contemplated by those agreements. The Board meeting was reconvened immediately thereafter and, after receiving the recommendation of the Strategic Review Committee, the Board, by unanimous vote of all directors present at the meeting (which excluded Mr. Filo), (i) determined that the Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the Sale Transaction Agreements and the Sale Transaction, (iii) recommended, subject to the terms of the Stock Purchase Agreement, that the Yahoo stockholders adopt a resolution authorizing the Sale Transaction, and (iv) directed that the Sale Transaction be submitted for consideration by the stockholders at the special meeting.

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Following the meeting, until early morning on July 23, 2016, representatives of Skadden, in consultation with Cravath, Weil, Gotshal & Manges LLP (which acted as intellectual property counsel to Yahoo), and Wachtell finalized the terms of the Original Sale Transaction Agreements, and on the morning of July 23, 2016, Yahoo and Verizon executed the Original Stock Purchase Agreement, Yahoo and Yahoo Holdings executed the Original Reorganization Agreement, and Yahoo and Excalibur executed the Excalibur License Agreement.

On July 25, 2016, Yahoo and Verizon issued a joint press release announcing the transaction and the execution of the Original Sale Transaction Agreements.

Sale Transaction Agreement Amendments

On September 22, 2016, Yahoo publicly disclosed that a copy of certain user account information for approximately 500 million user accounts was stolen from Yahoo’s network in late 2014 (the “2014 Security Incident”), and that it believed the user account information was stolen by a state-sponsored actor. Yahoo disclosed that the account information included names, email addresses, telephone numbers, dates of birth, hashed passwords and, in some cases, encrypted or unencrypted security questions and answers. Yahoo’s forensic investigation indicated that the stolen information did not include unprotected passwords, payment card data, or bank account information. In a statement issued on the same day, Verizon stated that it had limited information and understanding of the impact of the 2014 Security Incident and would evaluate it as the investigation continued through the lens of overall Verizon interests, including consumers, customers, shareholders and related communities.

The Board formed an independent committee (the “Independent Committee”) to investigate the 2014 Security Incident and related matters, including the scope of knowledge within the Company in 2014 of access to Yahoo’s network by the state-sponsored actor responsible for the theft and related incidents, and Yahoo’s internal and external reporting processes and remediation efforts related to the 2014 Security Incident and related incidents.

On October 5, 2016, the Board met at Yahoo’s Sunnyvale headquarters, with members of management and representatives of Skadden and Wilson Sonsini present, to discuss, among other things, the 2014 Security Incident and related matters. A representative of Wilson Sonsini reviewed with the directors their fiduciary duties. The Board also reviewed with Skadden the implications of the 2014 Security Incident under the Original Sale Transaction Agreements. Also at the October 5 Board meeting, the Board increased the size of the Strategic Review Committee to five directors and appointed Mr. Braham and Ms. Friedman as additional members of the committee.

Throughout October and November 2016, each of the Strategic Review Committee and the Board met periodically to discuss the pending sale of the Business to Verizon in light of the 2014 Security Incident and related matters, and the Independent Committee, with the assistance of independent legal counsel and a forensic expert, continued to investigate the 2014 Security Incident and related matters.

On October 24, 2016, the Board held a telephonic meeting, with members of management and representatives of Cravath, Skadden and Wilson Sonsini participating for relevant portions of the meeting, to discuss potential implications of the 2014 Security Incident for the pending sale of the Business to Verizon and potential claims Verizon could assert in connection with the 2014 Security Incident, including under the Original Sale Transaction Agreements. The Board also discussed potential legal risks and claims and related costs that might result from the 2014 Security Incident, including, among other things, the possibility of user class-action lawsuits and regulatory actions. In response to the risks to the pending Sale Transaction posed by the 2014 Security Incident, the Board authorized the Strategic Review Committee to engage in discussions with Verizon regarding a possible agreement under which Yahoo would retain liability for a portion of certain costs and expenses arising from the 2014 Security Incident.

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On November 1, 2016, Messrs. McInerney and Smith, accompanied by a representative of Cravath, met with Mr. McAdam, Marni Walden, Verizon’s Executive Vice President and President of Product Innovation and New Businesses, and Craig Silliman, Verizon’s General Counsel and Executive Vice President – Public Policy, to discuss potential resolutions of possible claims including under the Original Sale Transaction Agreements, in connection with the 2014 Security Incident and related matters.

On November 3, 2016, the Board held a telephonic meeting at which, among other things, the directors discussed the 2014 Security Incident. Messrs. McInerney and Smith briefed the Board on their meeting with representatives of Verizon and possible next steps were discussed.

On November 5, 2016, Mr. McInerney had a further conversation with Mr. McAdam and later that day briefed the Strategic Review Committee on his discussion with Mr. McAdam. On November 7, 2016, the Board held a telephonic meeting and received a briefing on communications with representatives of Verizon.

On November 8, 2016, Mr. McInerney and Mr. McAdam spoke by telephone regarding possible modifications to the Sale Transaction and reached a preliminary understanding, subject to negotiation of mutually acceptable documentation and approval by the Board and Verizon’s board of directors, on the key elements of a potential resolution of issues relating to the 2014 Security Incident. Under the terms discussed, Yahoo and Verizon would split evenly certain liabilities arising out of the 2014 Security Incident and potentially other data breaches in consideration for Verizon’s waiver and release of certain possible claims, including, among other things, rights to refuse to close the Sale Transaction or to terminate the Original Stock Purchase Agreement as a result of the 2014 Security Incident and related matters.

On November 9, 2016, Yahoo disclosed in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 that its outside forensic experts were investigating the creation of forged cookies that could allow an intruder to access users’ accounts without a password (the “Cookie Forging Activity”). Yahoo also disclosed in such Quarterly Report that it was investigating with the assistance of outside forensic experts certain data files provided to Yahoo by law enforcement which a third party claimed contained Yahoo user account data.

Between November 9 and November 13, 2016, representatives of Cravath had multiple conversations with representatives of Verizon and Wachtell regarding the terms of potential amendments to the Original Sale Transaction Agreements and a settlement of potential claims.

On November 14, 2016, representatives of Wachtell sent to representatives of Cravath drafts of amendments to the Original Sale Transaction Agreements. On November 18, 2016, representatives of Cravath sent comments on the documents provided by Wachtell, as well as a draft settlement and release agreement to be entered into between Yahoo and Verizon. Between November 14 and December 2, 2016, representatives of the Strategic Review Committee, Yahoo management, Verizon, Cravath and Wachtell had multiple conference calls regarding, and exchanged multiple revised drafts of, these documents. Also during this period, the Board met periodically and received updates from the Strategic Review Committee regarding the status of ongoing negotiations with Verizon regarding the draft amendments to the Original Sale Transaction Agreements and settlement and release agreement.

On December 2, 2016, representatives of Yahoo updated representatives of Verizon on Yahoo’s investigation of the data files provided by law enforcement. Shortly thereafter, the representatives of Verizon advised the representatives of Yahoo that Verizon would defer reaching any conclusions regarding a potential settlement with Yahoo until Yahoo had made further progress in the investigation and had completed any necessary user notification requirements.

On December 6 and 7, 2016, the Board met at Yahoo’s Sunnyvale headquarters, with representatives of management, Cravath, Skadden and Wilson Sonsini present for relevant portions of the meeting. At the meeting, among other things, the Board received an update on the status of the Independent Committee’s investigation and discussed Verizon’s decision to defer reaching any conclusions regarding a potential settlement with Yahoo.

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On December 14, 2016, Yahoo publicly disclosed that, based on its outside forensic experts’ analysis of data files provided to it in November 2016 by law enforcement, Yahoo believed an unauthorized third party had stolen data associated with more than one billion user accounts in August 2013 (the “2013 Security Incident” and, collectively with the 2014 Security Incident and the Cookie Forging Activity, the “Security Incidents”). Yahoo disclosed that it had not been able to identify the intrusion associated with this theft, and that Yahoo believed this incident was likely distinct from the 2014 Security Incident. Yahoo also disclosed that the stolen information did not include passwords in clear text, payment card data, or bank account information. In a public statement made on the same day, Verizon stated that it would evaluate the situation as Yahoo continued its investigation and would review the impact of the new development before reaching any final conclusions.

Throughout the months of December 2016 and January 2017, the Independent Committee, with the assistance of independent counsel and a forensic expert, continued its investigation. In addition, the Strategic Review Committee continued to meet periodically to, among other things, receive updates from Yahoo’s management regarding the impact of the Security Incidents and related matters. The Board also continued to meet periodically to discuss, among other things, the status of communications with Verizon, the Security Incidents and the findings of the Independent Committee’s investigation.

Also during this period, Yahoo’s management analyzed the impact of the Security Incidents and related matters on the Business and provided the Board and the Strategic Review Committee with periodic updates with respect to the results thereof. Verizon was provided with periodic updates with respect to these matters in January and February 2017.

On January 9, 2017, Yahoo announced that immediately following the closing, the size of the Board will be reduced to five directors, that Mr. Braham, Mr. Brandt, Ms. Friedman, Mr. McInerney and Mr. Smith will continue to serve as directors of the Fund following the Closing, with Mr. Brandt serving as Chairman of the Board, and that each of Mr. Filo, Mr. Hartenstein, Mr. Hill, Ms. Mayer, Jane E. Shaw and Mr. Webb had indicated that he or she intends to resign from the Board effective upon the closing of the Sale Transaction. (Mr. Smith subsequently also indicated that he intends to resign from the Board effective upon the closing of the Sale Transaction.) Also on that date, to facilitate the transition of Yahoo to an investment company following the closing of the Sale Transaction, Mr. Brandt became Chairman of the Board and Mr. Webb became Chairman Emeritus of the Board.

On February 1, 2017, Mr. McInerney and a representative of Cravath participated in a conference call with Mr. McAdam and other representatives of Verizon to discuss the status of Verizon’s evaluation of the impact of the Security Incidents on the Business. During the call, the representatives of Verizon indicated that Verizon needed to review additional information in order to complete its assessment and that it could take several months for Verizon to finalize such review. Mr. McAdam proposed that the parties could proceed in one of three ways: Verizon could complete its evaluation of the impact of the Security Incidents on the Business over the next several months, after which Verizon would decide how to proceed and whether to assert any legal rights against Yahoo; Yahoo could agree to, among other things, a purchase price reduction in return for Verizon’s release of potential rights and claims in respect of the data security incidents; or the parties could mutually agree to terminate the Sale Transaction. Mr. McInerney asked Mr. McAdam the magnitude of the purchase price reduction being requested and Mr. McAdam noted that Verizon was still formulating a view but that a purchase price reduction as high as $925 million could be appropriate.

Later in the day on February 1, 2017, the Strategic Review Committee held a telephonic meeting, with representatives of Cravath participating, to discuss Verizon’s proposal. The Board held a telephonic meeting on February 2, 2017, with members of management and representatives of Cravath, Skadden and Wilson Sonsini present, at which Mr. McInerney reviewed with the Board the alternatives proposed by Verizon.

The Strategic Review Committee met again telephonically on February 3, 2017, with representatives of Cravath and the Financial Advisors participating. The Strategic Review Committee discussed, among other things: the alternatives raised by Verizon, including the proposed reduction in the purchase price; the parties’

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rights and obligations under the Original Sale Transaction Agreements and potential legal bases on which Verizon could seek to refuse to close the Sale Transaction and the merits of such potential claims; the expected timeline of potential litigation in the event Verizon refused to close the Sale Transaction and the costs, risks and uncertainties associated with such litigation; and Yahoo’s potential alternatives to the Sale Transaction if the Original Sale Transaction Agreements were to be terminated, including, among other things, a spin-off of the Business. The Strategic Review Committee also discussed, with input from the Financial Advisors, the prospect that proposals received in the original sale process would continue to be available in the event the Sale Transaction were to be terminated.

On February 6, 2017, the Board held a meeting at Wilson Sonsini’s Palo Alto offices, with the Financial Advisors, Cravath, Skadden, Wilson Sonsini and the Independent Committee’s independent legal counsel participating in person or telephonically in the relevant portions of the meeting, to discuss, among other things, the Security Incidents, potential claims that could be raised by Verizon and the merits of such potential claims, the timing, costs and risks associated with any litigation with Verizon regarding such potential claims, the status of the negotiations with Verizon, including the purchase price reduction proposed by Verizon, and potential options available to Yahoo and the risks and uncertainties inherent in each. The representatives of the Financial Advisors presented certain preliminary financial analyses, and the Board discussed, among other things, with input from the Financial Advisors and legal counsel, whether it was feasible for Yahoo to pursue alternative transactions, including a reverse spin-off of the Business, in the event that the Original Sale Transaction Agreements were to be terminated. Following discussion, the Board authorized the Strategic Review Committee to continue discussions with Verizon regarding a potential resolution relating to the Security Incidents and related matters and to seek to negotiate more favorable terms.

On February 9, 2017, Mr. McInerney and Mr. McAdam met at Verizon’s offices in New York City. At such meeting, Mr. McInerney informed Mr. McAdam that the Board was unwilling to agree to a purchase price reduction at the high end of the range previously discussed. After further discussion, Mr. McAdam and Mr. McInerney each agreed to review with their respective boards of directors a proposal that included a purchase price reduction in the amount of $350 million.

Later in the afternoon on February 9, 2017, the Strategic Review Committee held a meeting at which Mr. McInerney briefed the other members of the Strategic Review Committee on his conversation with Mr. McAdam. In the evening of February 9, 2017, the Board held a telephonic meeting, with representatives of Cravath, Skadden and Wilson Sonsini participating, to, among other things, receive an update from Mr. McInerney regarding his discussions with Verizon. Following discussion of, among other things, the Security Incidents, alternatives proposed by Verizon, including the proposed purchase price reduction, and potential options available to Yahoo and the risks and uncertainties inherent in each, including the risk of an adverse outcome and the potential delay associated with a litigation process, the Board determined that Yahoo should seek to finalize a potential resolution with Verizon on the basis of Verizon’s revised proposal.

Also in the evening of February 9, 2017, following the Board meeting, representatives of Yahoo indicated to representatives of Verizon that Yahoo was prepared to proceed on the basis of the proposal discussed by Mr. McInerney and Mr. McAdam. Thereafter, representatives of Wachtell sent representatives of Cravath revised drafts of the proposed amendments to the Original Sale Transaction Agreements and the settlement and release agreement, reflecting, among other things, a reduction in the cash consideration to be paid by Verizon in connection with the Sale Transaction to $4,475,800,000, subject to adjustment as provided in the Original Stock Purchase Agreement (the “Cash Consideration”). Between February 9, 2017 and the execution of the Sale Transaction Agreement Amendments on February 20, 2017, representatives of Yahoo, Verizon, Cravath and Wachtell had multiple telephone conferences to negotiate the terms, and exchanged additional revised drafts, of the amendments to the Original Sale Transaction Agreements and the settlement and release agreement.

On February 13, 2017, the Board held a telephonic meeting, with representatives of management, Cravath, Skadden and Wilson Sonsini participating. At the meeting, the Board, among other things, reviewed updated forecasted financial information for the years 2017 and 2018 and forecasted financial information for the year

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2019, in each case prepared by Yahoo’s management for purposes of the Financial Advisors’ financial analyses and fairness opinions. The Board approved the forecasted financial information for use by the Financial Advisors in performing their financial analyses in connection with their rendering of fairness opinions with respect to the Sale Transaction.

The Strategic Review Committee met telephonically, with representatives of Cravath participating, on February 14, 2017, to discuss the status of the negotiations with Verizon, including the open issues in the amendments to the Original Sale Transaction Agreements and the settlement and release agreement, and related matters. On February 15, 2017, Mr. McInerney and Mr. Silliman further discussed the terms of the draft documents.

On February 19, 2017, the Board held a telephonic meeting, with members of management and representatives of Cravath, Skadden, Wilson Sonsini and the Financial Advisors participating in the relevant portions of the meeting. At the meeting, among other things, a representative of Cravath reviewed with the Board the terms and conditions of the proposed amendments to the Original Sale Transaction Agreements and the settlement and release agreement and updated the Board on the status of the negotiations. Representatives of the Financial Advisors reviewed with the Board their financial analyses of the revised consideration proposed to be paid by Verizon to Yahoo. The Board deferred taking any action with respect to the amendments and agreement pending resolution of all remaining open issues.

In the morning of February 20, 2017, Mr. McInerney and Mr. Silliman discussed the remaining open issues in the drafts of the amendments to the Original Sale Transaction Agreements and the settlement and release agreement and, over the course of the day, representatives of the Strategic Review Committee, Verizon, Cravath and Wachtell finalized the terms of the Sale Transaction Agreement Amendments and the Settlement and Release Agreement.

Later on February 20, 2017, the Board held a telephonic meeting, with members of management and representatives of Cravath, Skadden, Wilson Sonsini and the Financial Advisors participating in the relevant portions of the meeting. A representative of Wilson Sonsini reviewed with the directors their fiduciary duties. Each of the Financial Advisors then rendered its oral opinion to the Strategic Review Committee and the Board, each of which was subsequently confirmed by delivery of a written opinion, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in such Financial Advisor’s written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo. The Strategic Review Committee then recommended to the Board that the Board approve the Sale Transaction Agreement Amendments and the Settlement and Release Agreement and the transactions contemplated thereby. After receiving the recommendation of the Strategic Review Committee, the Board, by unanimous vote of all directors voting (with Mr. Filo abstaining), (i) determined that the Sale Transaction Agreements, as amended by the Sale Transaction Agreement Amendments, and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the Sale Transaction Agreement Amendments, the Settlement and Release Agreement, and the Sale Transaction, (iii) recommended, subject to the terms of the Stock Purchase Agreement, as amended by the Sale Transaction Agreement Amendments, that the Yahoo stockholders adopt a resolution authorizing the Sale Transaction, and (iv) directed that the Sale Transaction be submitted for consideration by the stockholders.

Following the meeting, Yahoo and Verizon executed the Sale Transaction Agreement Amendments. On February 21, 2017, Yahoo and Verizon issued a joint press release announcing the execution of the Sale Transaction Agreement Amendments and the Settlement and Release Agreement.

Reasons for the Sale Transaction

The Strategic Review Committee recommended to the Board that the Board approve the Sale Transaction Agreements and the Sale Transaction. In arriving at its recommendation, the Strategic Review Committee

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consulted with its outside legal and financial advisors and the Company’s senior management team, reviewed a significant amount of information, and considered a number of factors.

After careful consideration, the Board, based upon, among other considerations, the recommendation of the Strategic Review Committee, (i) determined that the Sale Transaction Agreements and the Sale Transaction are expedient and for the best interests of Yahoo and its stockholders, (ii) approved the Sale Transaction Agreements and the Sale Transaction, (iii) recommended, subject to the terms of the Stock Purchase Agreement, that the stockholders of Yahoo approve the Sale Transaction, and (iv) directed that the Sale Transaction be submitted for consideration by the stockholders of Yahoo at the special meeting. In arriving at its determination, the Board consulted with the Company’s senior management team, as well as with outside legal and financial advisors to the Board, the Strategic Review Committee, and the Company, reviewed a significant amount of information and considered a number of factors. These factors included, but were not limited to, the following factors which each of the Strategic Review Committee and the Board viewed as supporting its respective determination:

• the financial analyses reviewed and discussed with the Strategic Review Committee and the Board by representatives of each of the Financial Advisors, including that the Cash Consideration, together with the value to Yahoo of the RSU Substitution, generally exceeded or was within the range of standalone enterprise values of the Business implied by such financial analyses, which is described in the section of this proxy statement entitled “—Opinions of the Financial Advisors—Summary of the Financial Analyses of the Financial Advisors”;

• the oral opinion of Goldman Sachs rendered to the Strategic Review Committee and the Board on February 20, 2017, which was subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of such date, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo, as more fully described in the sections of this proxy statement entitled “—Opinions of the Financial Advisors—Opinion of Goldman Sachs” and “—Opinions of the Financial Advisors—Summary of the Financial Analyses of the Financial Advisors”;

• the oral opinion of J.P. Morgan rendered to the Strategic Review Committee and the Board on February 20, 2017, which was subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of such date, and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo, as more fully described in the sections of this proxy statement entitled “—Opinions of the Financial Advisors—Opinion of J.P. Morgan” and “—Opinions of the Financial Advisors—Summary of the Financial Analyses of the Financial Advisors”;

• the oral opinion of PJT Partners rendered to the Strategic Review Committee and the Board on February 20, 2017, which was subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of such date, and based upon and subject to the factors and assumptions set forth in PJT Partners’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo, as more fully described in the sections of this proxy statement entitled “—Opinions of the Financial Advisors—Opinion of PJT Partners” and “—Opinion of the Financial Advisors—Summary of the Financial Analyses of the Financial Advisors”;

• the fact that the Strategic Review Committee conducted a thorough and diligent sale process, including communicating with over 50 potential bidders regarding the potential sale of the Business, executing non-disclosure agreements with 32 of these potential bidders, and receiving indications of interest from 15 of these potential bidders;

• the fact that at the conclusion of the sale process Verizon’s proposal was more favorable than the other acquisition proposals submitted for the Business and the Strategic Review Committee’s and the

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Board’s belief that Verizon’s proposal was more favorable than the expected value of pursuing a reverse spin-off or retaining the Business and continuing to operate it in conjunction with its ownership of its shares in Alibaba (held directly and indirectly) and Yahoo Japan;

• the Strategic Review Committee’s and the Board’s belief that the purchase price to be paid to Yahoo in connection with the Sale Transaction represents the full valuation of the Business, including Yahoo Holdings and the assets to be transferred to it, and the liabilities to be assumed by it, pursuant to the Reorganization Agreement;

• the Strategic Review Committee’s and the Board’s belief that stockholder value is more likely to be increased by effecting the Sale Transaction than it would if Yahoo pursued other alternatives, including a reverse spin-off or retaining the Business and continuing to operate it in conjunction with its ownership of its shares in Alibaba (held directly and indirectly) and Yahoo Japan;

• the Strategic Review Committee’s and the Board’s view that following the execution of the Sale Transaction Agreement Amendments, the Sale Transaction has a high likelihood of being completed in a timely manner given the commitment of both parties to complete the Sale Transaction pursuant to their respective obligations under the Stock Purchase Agreement, the limited nature of the closing conditions under the Stock Purchase Agreement, and the fact that Verizon’s obligation to complete the Sale Transaction is not conditioned on Verizon obtaining financing (coupled with the financial resources of Verizon, which had a market capitalization of approximately $200 billion on the date the Strategic Review Committee made its recommendation and the Board made its determination); and

• in connection with the Strategic Review Committee’s and the Board’s consideration of the Sale Transaction Agreement Amendments:

• the potential cost, duration and impact on the Business of potential litigation with Verizon arising out of potential claims that Verizon could have sought to assert with respect to the Original Sale Transaction Agreements as a result of the Security Incidents;

• the estimated timetable to complete the Sale Transaction compared with any potential alternative; and

• the fact that Verizon agreed to waive certain closing conditions and termination rights under the Stock Purchase Agreement and to waive and release certain claims relating to the Data Breaches pursuant to the Settlement and Release Agreement;

• the Strategic Review Committee’s and the Board’s view that the following terms and conditions of the Stock Purchase Agreement were favorable to the Company:

• that Yahoo will receive cash consideration in connection with the Sale Transaction, and, in particular, the certainty of value and liquidity of such cash consideration;

• the ability of the Board, subject to the Stock Purchase Agreement, to evaluate competing acquisition proposals that the Company may receive, and the Company’s ability, subject to certain provisions of the Stock Purchase Agreement, to terminate the Stock Purchase Agreement (and pay the Termination Fee upon certain circumstances) if the Board determines that such a competing acquisition proposal is more favorable from a financial point of view to Yahoo and its stockholders than the Sale Transaction and is reasonably likely to be completed on the terms proposed;

• subject to other restrictions applicable to Yahoo and the Business prior to the closing (including those described under the section of this proxy statement entitled “—The Sale Transaction Agreements—The Stock Purchase Agreement—Conduct of Business by Yahoo and the Business Subsidiaries Prior to the Closing”), the ability of the Board, without the payment of a fee, to solicit and agree to (i) proposals for 25 percent or less of Yahoo’s stock or consolidated assets (excluding in both the numerator and denominator for purposes of calculating such percentage of

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consolidated assets any Excluded Assets (as defined in the section of this proxy statement entitled “—The Sale Transaction Agreements—The Reorganization Agreement—Excluded Assets”)), (ii) proposals to acquire more than 25 percent of Yahoo’s stock if the proposal would not reasonably be expected to conflict with, delay, impede or prohibit the completion of the Sale Transaction and is conditioned on the proposed purchaser voting all of Yahoo’s stock owned by it in favor of the Sale Transaction (a “Permitted Whole-Co Transaction”), and (iii) proposals solely with respect Excluded Assets that would not reasonably be expected to conflict with, delay, impede, or prohibit the completion of the Sale Transaction;

• the non-survival of the representations, warranties, and covenants (other than post-closing covenants and certain obligations with respect to the User Security Matters (as defined in the section of this proxy statement entitled “Proposal 1—Sale Transaction Overview—The Sale Transaction”)) and agreements in the Stock Purchase Agreement; and

• the RSU Substitution, pursuant to which Verizon RSU awards will be generally cash-settled and otherwise will be subject to the same vesting and other terms and conditions as the Yahoo RSU awards;

• the fact that Yahoo will retain the Excalibur IP Assets and will be able to seek to monetize the Excalibur IP Assets before or after completion of the Sale Transaction;

• the fact that Yahoo stockholders (other than those stockholders who may be prohibited by the 1940 Act, other applicable laws and regulations, or other investment policies from holding interests in the Fund) will continue to own shares in the Fund which will own, among other things, shares in Alibaba (held directly and indirectly) and shares in Yahoo Japan, which, as of February 20, 2017, had an aggregate market value in excess of $48 billion; and

• the Board’s and the Strategic Review Committee’s knowledge of Yahoo’s business, operations, financial condition, earnings, and prospects.

The Strategic Review Committee and the Board also considered potential uncertainties, drawbacks, and risks relating to the Sale Transaction, including the following potential risks and potentially negative factors, but determined that these potential risks and potentially negative factors were outweighed by the expected benefits of the Sale Transaction:

• the lack of availability of appraisal rights under Delaware law for Yahoo stockholders;

• the restrictions on the Company’s operation of its business between the date of the Original Stock Purchase Agreement and the completion of the Sale Transaction;

• the risks relating to Yahoo’s ability to retain or recruit key management personnel or other key employees;

• the risks and costs to the Company if the Sale Transaction does not close, including the diversion of management and employee attention, potential disruption in Yahoo’s customer and distributor relationships, other potential operational and performance uncertainties, and the continued impact, including increased legal complications, of Yahoo’s shares in Alibaba (held directly and indirectly) and Yahoo Japan not being separated from the Business;

• the possibility that certain of Yahoo’s directors and executive officers may have interests with respect to the Sale Transaction that are different from or in addition to their interests as Yahoo stockholders generally (see the section of this proxy statement entitled “—Interests of Our Directors and Executive Officers in the Sale Transaction”);

• the fact that, under the terms of the Stock Purchase Agreement, Yahoo must pay Verizon the Termination Fee if the Stock Purchase Agreement is terminated in certain circumstances, although the Strategic Review Committee and the Board were of the view that the amount of the Termination Fee

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($134,274,000) was reasonable in the context of termination and similar fees payable in other transactions and in light of the overall terms of the Stock Purchase Agreement, and that the Termination Fee would not preclude another party from making a competing acquisition proposal (see the section of this proxy statement entitled “—The Sale Transaction Agreements—The Stock Purchase Agreement—No Solicitation; Superior Proposal; Termination Fee”);

• the fact that, under the terms of the Stock Purchase Agreement, Yahoo must reimburse Verizon’s expenses in an amount up to $15,000,000 (which is creditable toward the Termination Fee) if Verizon terminates the Stock Purchase Agreement due to a breach by Yahoo of the Stock Purchase Agreement that would cause a failure of the conditions to the closing to be satisfied (and such breach is not timely cured);

• in connection with the Strategic Review Committee’s and the Board’s consideration of the Sale Transaction Agreement Amendments:

• the difficulty of estimating the potential impact of putative class actions filed against Yahoo and the Board, investigations by the SEC and other governmental authorities, and other potential actions relating to or that may arise as a result of the Data Breaches; and

• the fact that the cash consideration payable in the Sale Transaction was reduced and that the Company will share certain liabilities relating to the Data Breaches that would have been assumed by Yahoo Holdings under the Original Sale Transaction Agreements;

• the fact that a terminated sale of the Business could delay a future sale to a third party or another strategic transaction, including, for example, a reverse spin-off;

• the fact that the Sale Transaction will generally be taxable to Yahoo for U.S. federal income tax purposes;

• the fact that the Company will be required to register and be regulated under the 1940 Act as a publicly traded, non-diversified, closed-end management investment company;

• the fact that, because the Fund will be a registered investment company, certain current Yahoo stockholders may be prohibited by the 1940 Act or other applicable laws and regulations from holding shares of the Fund; and

• the other factors described under “Risk Factors.”

The foregoing discussion of the factors considered by the Strategic Review Committee and the Board is not intended to be exhaustive, but rather includes material factors considered by the Strategic Review Committee and the Board. The Strategic Review Committee also considered other factors in deciding to recommend the Sale Transaction for approval to the Board, and the Board also considered other factors in deciding to approve and recommend that Yahoo stockholders authorize the Sale Transaction. In reaching its decision and recommendation to the Board the Strategic Review Committee did not, and in reaching its decision and recommendation to Yahoo stockholders the Board did not, quantify or assign any relative weights to the factors considered and individual directors may have given different weights to different factors.

This explanation of the Strategic Review Committee’s and the Board’s reasons for the Sale Transaction and other information presented in this section is forward-looking in nature and should be read in light of the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Recommendation of the Board

The Board recommends that stockholders vote “FOR” the Sale Proposal.

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Sale Transaction Overview

This proxy statement highlights selected information related to the Sale Transaction. This proxy statement therefore may not contain all of the information that is important to you. To understand the Sale Transaction more fully and for a complete description of the legal terms of the Sale Transaction, you should read this entire proxy statement, the annexes and exhibits to this proxy statement, and the documents we incorporate by reference into this proxy statement carefully before voting. You may obtain the documents and information incorporated by reference into this proxy statement without charge by following the instructions under the section of this proxy statement entitled “Where You Can Find Additional Information.”

The Sale Transaction

Yahoo and Verizon have entered into the Stock Purchase Agreement, pursuant to which Yahoo has agreed to sell, and Verizon has agreed to purchase, all of the outstanding shares of Yahoo Holdings and pursuant to which Yahoo and Verizon will effect the Foreign Sale Transaction. Immediately prior to the completion of the Sale Transaction, Yahoo Holdings will own the Business, other than specified excluded assets and retained liabilities as described more fully in the following paragraph. The purchase price that Verizon will pay or cause to be paid in connection with the Sale Transaction is $4,475,800,000 in cash, subject to adjustments as provided in the Stock Purchase Agreement.

In connection with the execution of the Stock Purchase Agreement, Yahoo and Yahoo Holdings have entered into the Reorganization Agreement pursuant to which Yahoo will transfer to Yahoo Holdings prior to the completion of the transactions contemplated by the Stock Purchase Agreement all of the assets and liabilities of the Business, other than specified excluded assets, which include its cash and marketable debt securities as of the closing, its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity of Excalibur (which owns the Excalibur IP Assets), and specified retained liabilities, which include the Convertible Notes, securityholder litigation, 50 percent of certain post-closing cash liabilities related to the Data Breaches, and certain director and officer indemnification obligations.

As used in this proxy statement, “Data Breaches” means (a) the Security Incidents and certain other matters related to Yahoo’s data security disclosed by Yahoo to Verizon prior to February 20, 2017, in each case including any related matters that may arise from Yahoo’s ongoing investigations thereof and any use or transfer of data obtained as a result of any of the foregoing matters (the matters described in this clause (a), the “User Security Matters”) and (b) any other security breaches sustained by or perpetrated against Yahoo (whether known or unknown) through February 20, 2017 that, in the case of this clause (b), involve any actor that sponsored or perpetrated any User Security Matter.

On February 20, 2017, concurrently with the execution of the Stock Purchase Agreement Amendment and the Reorganization Agreement Amendment, Yahoo, Yahoo Holdings and Verizon entered into a Settlement and Release Agreement (the “Settlement and Release Agreement”), pursuant to which, among other things, Verizon released certain claims, subject to certain exceptions, it (and its affiliates and representatives) may have against Yahoo (or its affiliates and representatives) related to the Data Breaches.

Upon completion of the Sale Transaction, Verizon will also receive, pursuant to an Amended and Restated Patent License Agreement between Yahoo and Excalibur, which will be assigned by Yahoo to Yahoo Holdings in connection with the transactions contemplated by the Reorganization Agreement (the “Excalibur License Agreement”), dated the date of the Original Sale Transaction Agreements, for its benefit and that of its current and certain of its future affiliates, a non-exclusive, worldwide, perpetual, royalty-free license to the Excalibur IP Assets, which are not being transferred to Yahoo Holdings with the Business.

The Company After the Completion of the Sale Transaction

Upon the completion of the Sale Transaction, the Company’s remaining assets will consist solely of the assets excluded from the Sale Transaction, which include, among others, its cash and marketable debt securities

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as of the closing, its shares in Alibaba (held directly and indirectly), its shares in Yahoo Japan, certain other minority equity investments, and all of the equity in Excalibur (which owns the Excalibur IP Assets), and the Company’s remaining liabilities will consist solely of the liabilities retained in the Sale Transaction, which include, among others, the Convertible Notes, securityholder litigation, 50 percent of certain cash liabilities related to the Data Breaches, and certain director and officer indemnification obligations. Following the completion of the Sale Transaction, the Business will be owned and operated by Verizon, and the Company will have no interest in, and receive no income from, the Business.

Following the completion of the Sale Transaction, the Company will continue to be a Delaware corporation publicly traded on Nasdaq but will be renamed “Altaba Inc.” and trade under the ticker symbol “AABA.” Because the Company’s assets will then consist primarily of its equity investments, short-term debt investments, and cash, the Company will be required to register as an investment company under the 1940 Act.

Following the completion of the Sale Transaction, in order to comply with the 1940 Act, the Company will amend the Existing Charter to provide that the exculpation and indemnification provisions of Articles XI and XII of the Existing Charter are subject to the limitations of the 1940 Act with respect to actions taken while the Company is registered as an investment company under the 1940 Act. See the section of this proxy statement entitled “Proposal 1—The Sale Transaction—The Sale Transaction Agreements—Amendment to Yahoo’s Amended and Restated Certificate of Incorporation” for additional information.

The completion of the Sale Transaction will not affect your shares of Yahoo common stock, which will continue to represent shares of common stock of the Fund after it has registered as an investment company. Yahoo stockholders will not receive any shares of Verizon common stock and will not retain any continuing interest in the Business following completion of the Sale Transaction, other than in connection with the RSU Substitution. See the section of this proxy statement entitled “The Sale Transaction Agreements—The Stock Purchase Agreement—Treatment of Certain Yahoo Equity.”

Although Yahoo has no current intention of selling, prior to the closing of the Sale Transaction, any of the assets that are not included in the Sale Transaction, Yahoo reserves the right to sell any such assets prior to the closing of the Sale Transaction. There is no assurance that the Fund’s Initial Assets will consist of all of the assets described above. There is also no assurance as to the value of the consideration Yahoo might receive in the event of any such disposition. Additionally, Yahoo and the Board reserve the right to distribute any of its cash to investors prior to the closing of the Sale Transaction through repurchases of its common stock or outstanding debt securities or distributions.

The Fund currently intends to return substantially all of its cash to stockholders over time through stock repurchases and distributions, although the Fund will retain sufficient cash to satisfy its obligations to creditors and for working capital. The timing and method of any return of capital will be determined by the Board. Stock repurchases may take place in the open market, including under Rule 10b5-1 plans or in a tender offer, or in privately negotiated transactions, including structured and derivative transactions such as accelerated share repurchase transactions. The Fund currently anticipates that the amount of cash to be retained by the Fund will be at least $1.4 billion, which is the minimum amount necessary to satisfy the Fund’s obligations under the Convertible Notes. However, the Fund’s obligations to creditors and working capital requirements may vary over time and may be materially greater than such amount, depending upon, among other factors, the cost of cash-settling any conversion obligations under the Convertible Notes, the Fund’s potential obligations with respect to other Retained Liabilities (as defined in the section of this proxy statement entitled “The Sale Transaction Agreements—The Reorganization Agreement—Retained Liabilities), and whether the income from the Fund’s investments is sufficient to cover its expenses.

We have included disclosures relating to the Fund in Annex 1 to this proxy statement, entitled “Description of the Fund Following the Sale Transaction.” Annex 1 includes a description of the Fund, including its manner of operation and anticipated operating expenses, regulation, risks, pro forma financials, and other relevant information. You should read Annex 1 carefully as it contains important information about your interest in the Fund following the completion of the Sale Transaction.

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The structure of the Company currently and immediately after the Sale Transaction is illustrated below:

Current Structure*

* This chart is as of the date of this proxy statement.

** The Business will be transferred to Yahoo Holdings prior to the closing of the transactions contemplated by the Reorganization Agreement.

*** Approximately 24 percent of Yahoo’s shares in Alibaba are held directly by Yahoo and approximately 76 percent are held indirectly through Altaba Holdings Hong Kong Limited (“Altaba HK”).

Structure Immediately Following the Sale Transaction

* Approximately 24 percent of the Fund’s shares in Alibaba will be held directly by the Fund and approximately 76 percent will be held indirectly through Altaba HK.

The Sale Transaction Agreements

The Stock Purchase Agreement and the Reorganization Agreement are attached as exhibits to this proxy statement to provide stockholders with information regarding their terms. The Sale Transaction Agreements

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contain representations and warranties by each of the parties to the Sale Transaction Agreements. These representations and warranties (i) are not intended to be treated as categorical statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may have been qualified in the Sale Transaction Agreements by confidential disclosure schedules that were delivered to the other party thereto in connection with the signing of the Sale Transaction Agreements, such disclosure schedules containing information that modifies, qualifies, and creates exceptions to the representations, warranties, and covenants set forth in the Sale Transaction Agreements, (iii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to stockholders, and (iv) were made only as of the date of the applicable Original Sale Transaction Agreement or such other date or dates as may be specified in such Sale Transaction Agreement. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Original Sale Transaction Agreements, and may or may not be fully reflected in public disclosures by Yahoo or Verizon. Accordingly, you should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Yahoo or Verizon.

The summaries of the Sale Transaction Agreements and the Settlement and Release Agreement contained in this proxy statement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Sale Transaction Agreements. Copies of the Original Stock Purchase Agreement and the Stock Purchase Agreement Amendment are attached as Exhibits A-1 and A-2, respectively, to this proxy statement. Copies of the Original Reorganization Agreement and the Reorganization Agreement Amendment are attached as Exhibits B-1 and B-2, respectively, to this proxy statement. A copy of the Settlement and Release Agreement is attached as Exhibit C to this proxy statement.

This section is not intended to provide you with any other factual information about Yahoo. Such information can be found elsewhere in this proxy statement and in the public filings Yahoo makes with the SEC, as described in the section of this proxy statement entitled “Where You Can Find Additional Information.”

The Stock Purchase Agreement

Purchase Price

Pursuant to the Stock Purchase Agreement, Verizon will pay or cause to be paid to Yahoo, in exchange for all of the outstanding shares of Yahoo Holdings and the shares of Foreign SaleCo transferred in the Foreign Sale Transaction, an aggregate cash purchase price equal to $4,475,800,000, less any applicable withholding taxes and subject to the following adjustments:

• plus or minus the amount by which the net working capital of Yahoo Holdings and the other subsidiaries of Yahoo (other than Altaba HK, Excalibur, and certain other minority investments) (collectively, the “Business Subsidiaries”) as of the opening of business on the date of closing exceeds or is less than, respectively, the target working capital (being negative $56,000,000);

• plus all domestic cash, cash equivalents, and marketable securities with remaining maturities of less than 12 months, and up to $250,000,000 of foreign cash, cash equivalents, and marketable securities with remaining maturities of less than 12 months, of the Business Subsidiaries as of the opening of business on the date of closing, other than cash and cash equivalents held in escrow or similar arrangements in connection with certain historic acquisitions by Yahoo (the “Acquisition Holdback Cash”);

• minus the amount of all debt of the Business Subsidiaries as of the opening of business on the date of closing;

• minus the amount of all transaction expenses incurred by the Business Subsidiaries in connection with the Sale Transaction that remain unpaid at the closing (including certain severance costs); and

• plus or minus 60 percent of the decrease or increase, respectively, in the aggregate value between the execution of the Original Stock Purchase Agreement and the closing of any outstanding unvested Yahoo RSU awards held by employees of Yahoo Holdings (and its subsidiaries).

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Closing Date

Subject to the satisfaction or waiver of the conditions contained in the Stock Purchase Agreement (see the section of this proxy statement entitled “—Conditions to Completion of the Sale Transaction”), the closing will take place at 10:00 a.m., local time, on the third business day following the satisfaction or waiver of all of the conditions contained in the Stock Purchase Agreement (other than conditions that by their terms cannot be satisfied until the closing, but subject to the satisfaction or waiver of such conditions). We currently expect the closing to occur in the second quarter of 2017.

Conditions to Completion of the Sale Transaction

Conditions to Each Party’s Obligations

Yahoo’s and Verizon’s obligations to complete the Sale Transaction are subject to the satisfaction of the following conditions:

• adoption of a resolution approving a proposal to authorize the Sale Transaction by the holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting (the “Stockholder Approval”);

• approvals, or expirations or terminations (including any extensions) of waiting periods, required under the antitrust laws of certain jurisdictions, including the United States and the European Union, without the imposition of a Burdensome Condition (as defined below), unless Verizon expressly agreed in writing to such Burdensome Condition in connection with obtaining such approval, expiration, or termination;

• no governmental authority of competent jurisdiction having enacted, issued, promulgated, enforced, or entered any order which is then in effect and has the effect of restraining, enjoining, or otherwise prohibiting the completion of the Sale Transaction;

• the closing of the transactions contemplated by the Reorganization Agreement in accordance with the terms and conditions thereof in all respects (or, so long as not and not reasonably expected to be adverse (other than in a de minimis respect) to the Business Subsidiaries, the Business, Verizon or any of its subsidiaries (in a manner related to the Sale Transaction, including from a tax perspective), or the Sale Transaction, in all material respects); and

• the Excalibur License Agreement remaining in full force and effect.

Conditions to Yahoo’s Obligations

Yahoo’s obligations to complete the Sale Transaction are subject to the satisfaction or waiver of the following additional conditions:

• the representations and warranties made by Verizon contained in the Stock Purchase Agreement:

• regarding Verizon’s organization, corporate authority, and the absence of any undisclosed broker’s fees, in each case being true and correct in all material respects both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (unless made as of a specific date, in which case as of such specific date only); and

• other than the representations and warranties in respect of the matters described in the bullet above, without giving any effect to any materiality, material adverse effect, or similar qualifications set forth in the Stock Purchase Agreement, being true and correct both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (unless made as of a specific date, in which case as of such specific date only), except for failures of such representations and warranties to be true and correct as would

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not, individually or in the aggregate, reasonably be expected to materially and adversely affect the ability of Verizon to carry out its obligations under, and to complete the transactions contemplated by, the Stock Purchase Agreement;

• Verizon’s compliance in all material respects with its covenants and agreements contained in the Stock Purchase Agreement to be complied with on or before the closing; and

• Yahoo’s receipt from Verizon of a certificate signed on behalf of Verizon by an officer of Verizon, stating that the above conditions to Yahoo’s obligations to complete the Sale Transaction have been satisfied.

Conditions to Verizon’s Obligations

Verizon’s obligations to complete the Sale Transaction are subject to the satisfaction or waiver of the following additional conditions:

• the representations and warranties made by Yahoo contained in the Stock Purchase Agreement:

• regarding Yahoo’s and the Business Subsidiaries’ organization and corporate authority; obligations with respect to issuing or selling any equity in, or other securities of, any Business Subsidiary (other than Yahoo Holdings and Foreign SaleCo (as defined in the section of this proxy statement entitled “—Foreign Sale Transaction”)) and the existence of any voting agreements related to equity of Yahoo or any Business Subsidiary (other than Yahoo Holdings and Foreign SaleCo); Yahoo RSU awards and certain information related thereto; and the absence of any undisclosed broker’s fees, in each case being true and correct in all material respects both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (unless made as of a specific date, in which case as of such specific date only);

• regarding capitalization of Yahoo and Yahoo Holdings and title to Yahoo Holdings’ shares; obligations with respect to issuing or selling any equity in, or other securities of, Yahoo Holdings or Foreign SaleCo and the existence of any voting agreements related to equity of Yahoo Holdings or Foreign SaleCo; certain voting rights of any indebtedness of Yahoo or any Business Subsidiary; and the property of Excalibur, in each case being true and correct in all but de minimis respects both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (unless made as of a specific date, in which case as of such specific date only);

• regarding the absence since December 31, 2015 of any Business Material Adverse Effect (as defined below), being true and correct in all respects both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (disregarding the User Security Matters and any losses arising therefrom (the “Excluded Matters”), other than a breach of Yahoo’s representation regarding certain user engagement data); and

• other than the representations and warranties in respect of the matters described in the three bullets above, without giving any effect to any materiality, “Business Material Adverse Effect,” or similar qualifications set forth in the Stock Purchase Agreement, being true and correct both at and as of the signing date of the Original Stock Purchase Agreement and at and as of the closing date as if made on the closing date (unless made as of a specific date, in which case as of such specific date only), except for failures of such representations and warranties to be true and correct as would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect (disregarding the Excluded Matters, other than to the extent resulting from a breach of Yahoo’s representation regarding certain user engagement data);

• Yahoo’s compliance in all material respects with its covenants and agreements contained in the Stock Purchase Agreement to be complied with on or before the closing (disregarding the Excluded Matters); and

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• Verizon’s receipt from Yahoo of a certificate signed on behalf of Yahoo by an officer of Yahoo, stating that the above conditions to Verizon’s obligations to complete the Sale Transaction have been satisfied.

For purposes of the Stock Purchase Agreement and as used in this proxy statement, “Business Material Adverse Effect” means any circumstance, event, development, effect, change, or occurrence that, individually or in the aggregate:

• would, or would reasonably be expected to, prevent, materially delay or materially impede the ability of Yahoo to complete the Sale Transaction; or

• has had, or would or would reasonably be expected to have, a material adverse effect on the business, assets, properties, results of operation, or financial condition of the Business, taken as a whole; however, the following are excluded in determining whether a Business Material Adverse Effect has occurred or would reasonably be expected to occur for the purposes of this clause:

• changes in general economic, financial market, or U.S. or global political conditions (except to the extent the Business is disproportionately affected compared to similarly situated businesses);

• general changes or developments in any of the industries or markets in which Yahoo (to the extent related to the Business) and the Business Subsidiaries operate (except to the extent the Business is disproportionately affected compared to similarly situated businesses);

• changes in any applicable laws or applicable accounting regulations or principles, including generally accepted accounting principles in the United States (“GAAP”), or official or judicial interpretations thereof (except to the extent the Business is disproportionately affected compared to similarly situated businesses);

• any change in the price or trading volume of Yahoo’s securities (but the underlying cause of any such change shall not be excluded from determining whether a Business Material Adverse Effect has occurred or would reasonably be expected to occur);

• any failure by Yahoo to meet published analyst estimates or expectations of Yahoo’s revenues, earnings, or other financial performance or results of operations for any period (but the underlying cause of any such failure shall not be excluded from determining whether a Business Material Adverse Effect has occurred or would reasonably be expected to occur);

• any failure by Yahoo to meet its internal or published projections, budgets, plans, or forecasts of its revenues, earnings, or other financial performance or results of operations (but the underlying cause of any such failure shall not be excluded from determining whether a Business Material Adverse Effect has occurred or would reasonably be expected to occur);

• any outbreak or escalation of hostilities or war or any act of terrorism, or any acts of God or natural disasters or other force majeure events (except to the extent the Business is disproportionately affected compared to similarly situated businesses);

• (A) the announcement, consummation, or existence of the Stock Purchase Agreement and the Sale Transaction, including the threat of or the initiation of any stockholder litigation with respect to the Stock Purchase Agreement, or any termination of, reduction in, or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners, or employees of Yahoo (related to the Business) and the Business Subsidiaries, in each case due to the announcement and performance of the Stock Purchase Agreement or the identity of the parties thereto or (B) the monetization of the Excalibur IP Assets (but this clause will not apply with respect to any representation or warranty contained in the Stock Purchase Agreement to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of the Stock Purchase Agreement or the completion of the Sale Transaction or the performance of obligations under the Stock Purchase Agreement or the monetization of the Excalibur IP Assets);

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• any specific action taken by Yahoo, or which Yahoo causes to be taken by any of the Business Subsidiaries, in each case expressly required by the Stock Purchase Agreement;

• any specific action taken (or omitted to be taken) at the written request of, or expressly consented to in writing by, Verizon; or

• any of the Excluded Matters (other than a breach of Yahoo’s representation regarding certain user engagement data).

Treatment of Certain Yahoo Equity

Restricted Stock Units

Pursuant to the RSU Substitution, each Yahoo RSU award that is held as of immediately prior to the closing by an employee of Yahoo Holdings (or a subsidiary thereof), who will automatically become an employee of Verizon (or a subsidiary thereof) immediately following the closing, and that is outstanding and unvested immediately prior to the closing, will be replaced with a cash-settled Verizon RSU award, with the number of shares of Verizon common stock subject to the Verizon RSU award equal to the number of shares of Yahoo common stock subject to the corresponding Yahoo RSU award immediately prior to the closing multiplied by the ratio of the average trading price of Yahoo common stock during the three-day period preceding the day before the closing date over the average trading price of Verizon common stock during the three-day period immediately following the closing date; however, Verizon may determine to settle Verizon RSU awards held by non-U.S. employees in shares of Verizon common stock in limited circumstances. Yahoo RSU awards subject to performance-based vesting will similarly be replaced with performance-based cash-settled Verizon RSU awards, with both the annual target number of shares and the annual maximum number of shares adjusted according to the above ratio; however, shares allocated to the performance year in which the closing occurs will be replaced based on target performance only (and the replacement Verizon RSU awards for that year will not be performance-based) and shares allocated to future performance years will be subject to such performance-based vesting criteria as may be established by Verizon. The Verizon RSU awards will otherwise be subject to the same vesting and other terms and conditions as the corresponding Yahoo RSU Awards.

Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately following the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. The Fund will retain all liabilities and obligations with respect to Yahoo RSU awards held by non-employee directors and individuals who are employees of the Fund immediately following the closing.

Stock Options

Each Yahoo stock option outstanding immediately prior to the closing will, if not already vested, become fully vested and exercisable, effective as of the closing, and all Yahoo stock options will remain outstanding in accordance with their terms. The Fund will retain all liabilities and obligations with respect to all Yahoo stock options.

Acquisition Holdback Stock

Following the closing, Yahoo will remain responsible for delivering Yahoo common stock to settle holdback arrangements in connection with certain historic acquisitions by Yahoo (such shares of Yahoo, the “Acquisition Holdback Stock”).

No Solicitation; Superior Proposal; Termination Fee

No Solicitation

Pursuant to the Stock Purchase Agreement, Yahoo has agreed that, from the execution of the Original Stock Purchase Agreement, Yahoo will (and will cause its subsidiaries and their respective directors, officers, and

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employees to, and use reasonable best efforts to cause its and their respective other representatives to), except as otherwise permitted by the Stock Purchase Agreement:

• immediately cease and cause to be terminated any existing solicitation of, or discussions or negotiations with, any third party relating to a Competing Proposal (as defined below) or any inquiry, discussion, offer, or request that would reasonably be expected to lead to a Competing Proposal;

• request the prompt return from, or destruction by, all such third parties of all confidential information previously provided by Yahoo, its subsidiaries, or their representatives; and

• terminate access to any physical or electronic data rooms relating to a possible Competing Proposal.

Pursuant to the Stock Purchase Agreement, Yahoo has agreed that, from the execution of the Original Stock Purchase Agreement until the earlier of the closing or the termination of the Stock Purchase Agreement, Yahoo will not (and will cause its subsidiaries and their respective directors, officers, and employees not to, and use reasonable best efforts to cause its and their respective other representatives not to), directly or indirectly, except as otherwise permitted by the Stock Purchase Agreement:

• initiate, solicit, or knowingly facilitate or encourage a Competing Proposal or any inquiries regarding, or submission of proposals or offers constituting or reasonably expected to lead to, a Competing Proposal;

• engage or participate in any negotiations or discussions with, or furnish any material non-public information to, any third party related to a Competing Proposal or any inquiry reasonably expected to lead to a Competing Proposal;

• approve, enter into, or recommend any Competing Proposal or other agreement providing for or constituting a Competing Proposal; or

• resolve, agree, or publicly propose to do any of the foregoing.

In the event that the Board determines in good faith (after consultation with outside legal counsel) that the failure to do so could reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law, Yahoo is permitted to grant a waiver of or terminate any “stand-still” obligation of a third party to allow such third party to submit a Competing Proposal (and must also waive or terminate any “standstill” obligation applicable to Verizon and its affiliates pursuant to its confidentiality agreement with Yahoo).

For purposes of the Stock Purchase Agreement and as used in this proxy statement, a “Competing Proposal” means any bona fide proposal or offer made by any third party to purchase, directly or indirectly, (i) beneficial ownership of more than 25 percent of any class of equity of Yahoo (other than a Permitted Whole-Co Transaction) or (ii) assets or businesses of Yahoo and the Business Subsidiaries constituting more than 25 percent of the consolidated assets of Yahoo (excluding in both the numerator and denominator for purposes of calculating such percentage of consolidated assets any Excluded Assets). Any proposal solely with respect to Excluded Assets will not constitute a “Competing Proposal” so long as such proposal does not, and would not reasonably be expected to, conflict with, impede, delay, or prohibit the completion of the Sale Transaction.

Superior Proposal; Adverse Recommendation Changes

Pursuant to the Stock Purchase Agreement, Yahoo has agreed that, from the execution of the Original Stock Purchase Agreement and prior to the date the Stockholder Approval is obtained, if Yahoo receives a written Competing Proposal that did not result from a material breach of the non-solicitation provisions contained in the Stock Purchase Agreement, (i) Yahoo may contact such third party to obtain clarification of the terms thereof and (ii) Yahoo and the Board (including any duly authorized committee) and its representatives may engage in negotiations with, or furnish any information or access to, such third party and its representatives, affiliates, and prospective financing sources if the Board determines in good faith, after consultation with financial advisors and outside legal counsel, that the proposal constitutes a Superior Proposal (as defined below) and failure to take such action could reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law.

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Additionally, unless otherwise provided in the Stock Purchase Agreement, the Board is not permitted to (i) withdraw, modify, or qualify (or propose publicly to withdraw, modify, or qualify), in a manner adverse to Verizon, the Seller Recommendation (as defined below); (ii) endorse, recommend, declare advisable, or approve or propose publicly to endorse, recommend, declare advisable, or approve, any Competing Proposal; (iii) fail to include in this proxy statement the Seller Recommendation; or (iv) fail to recommend against any Competing Proposal that is a tender or exchange offer subject to Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 within 10 business days after the commencement of such tender offer or exchange offer (any action described in clauses (i) through (iv) above, an “Adverse Recommendation Change”).

Yahoo is required to notify Verizon within 48 hours of the receipt of any Competing Proposal, and disclose to Verizon the identity of the third party making the Competing Proposal and the material terms thereof (including by providing unredacted copies of any written materials). Yahoo is also required to notify Verizon within 48 hours of any material developments regarding such Competing Proposal (including by providing unredacted copies of any written materials).

Yahoo is required to provide Verizon with four business days’ notice of its intention to (i) make an Adverse Recommendation Change in response to a Competing Proposal or a material intervening event (other than a Competing Proposal) that was not known or reasonably foreseeable to the Board at the time of the execution of the Original Stock Purchase Agreement (an “Intervening Event”) or (ii) terminate the Stock Purchase Agreement in order to enter into a definitive agreement with respect to a Superior Proposal. During such four business day period (plus two additional business days for each material change to the facts or circumstances relating to the Intervening Event or material modification to a Competing Proposal), Yahoo is required to negotiate with Verizon to revise the terms of the Sale Transaction so that the Competing Proposal would no longer constitute a Superior Proposal or to remedy the effects of an Intervening Event (Verizon’s “matching right”).

Following the conclusion of Verizon’s matching right, after taking into account any revisions to the terms of the Stock Purchase Agreement and/or the Sale Transaction to which Verizon would agree, the Board may (i) make an Adverse Recommendation Change in response to a Competing Proposal that the Board has determined in good faith, after consultation with outside legal counsel and financial advisors, constitutes a Superior Proposal in circumstances not involving a material breach of the non-solicitation provisions contained in the Stock Purchase Agreement or in response to an Intervening Event or (ii) terminate the Stock Purchase Agreement in order to enter into a definitive agreement with respect to a Superior Proposal in circumstances not involving a material breach of the non-solicitation provisions contained in the Stock Purchase Agreement, but in the case of either clause (i) or clause (ii) only if the Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such action could reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law. Verizon may also terminate the Stock Purchase Agreement in response to an Adverse Recommendation Change. In the event of any such termination, Yahoo must pay the Termination Fee to Verizon.

For purposes of the Stock Purchase Agreement and as used in this proxy statement, a “Superior Proposal” means a Competing Proposal (with all references to 25 percent in the definition of Competing Proposal being replaced with 65 percent) made by a third party on terms that the Board determines in good faith, after consultation with Yahoo’s financial and legal advisors, and considering such factors the Board deems appropriate, are more favorable from a financial point of view to Yahoo and its stockholders than the Sale Transaction (including any revisions to the terms of the Stock Purchase Agreement and the Sale Transaction committed to by Verizon to Yahoo in writing in response to such Competing Proposal) and that the Board determines is reasonably likely to be completed on the terms proposed.

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Termination Fee; Expense Reimbursement

Yahoo is required to pay Verizon the Termination Fee in the event that:

• Yahoo terminates the Stock Purchase Agreement, prior to receipt of the Stockholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal;

• Verizon terminates the Stock Purchase Agreement, prior to receipt of the Stockholder Approval, because an Adverse Recommendation Change has occurred; or

• following the termination of the Stock Purchase Agreement because (i) the Outside Date (as defined below) has been reached, (ii) Yahoo has breached the Stock Purchase Agreement to a degree that would cause a failure of the conditions to the closing (and such breach is not timely cured), or (iii) the Stockholder Approval has not been obtained, and, in any such case (A) a Competing Proposal has been made and (B) within 12 months of termination of the Stock Purchase Agreement, Yahoo enters into a definitive agreement for, or consummates, any Competing Proposal (with all references to 25 percent in the definition of Competing Proposal being replaced with 50 percent).

As discussed more fully in “—No Solicitation” above, subject to certain other restrictions applicable to Yahoo and the Business prior to the closing (including those described under the section of this proxy statement entitled “—Conduct of Business by Yahoo and the Business Subsidiaries Prior to the Closing”), Yahoo is not restricted from soliciting or taking any action or other activity with respect to, and will not be obligated to pay the Termination Fee to Verizon for, any third party proposal (i) to acquire 25 percent or less of Yahoo’s stock or consolidated assets (excluding in both the numerator and denominator for purposes of calculating such percentage of consolidated assets any Excluded Assets), (ii) that constitutes a Permitted Whole-Co Transaction, or (iii) solely with respect to Excluded Assets if the proposal would not reasonably be expected to conflict with, delay, impede, or prohibit the completion of the Sale Transaction.

If Verizon terminates the Stock Purchase Agreement due to a breach by Yahoo of the Stock Purchase Agreement that would cause a failure of the conditions to the closing to be satisfied (and such breach is not timely cured), Yahoo is required to reimburse Verizon’s expenses in an amount up to $15,000,000 (which is creditable toward the Termination Fee).

Termination of the Stock Purchase Agreement

The Stock Purchase Agreement may be terminated under certain circumstances, including:

• by mutual written agreement of Yahoo and Verizon;

• by either Yahoo or Verizon, if:

• the closing has not occurred before July 24, 2017 (the “Outside Date”);

• any governmental authority of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining, or otherwise prohibiting or making illegal the completion of the Sale Transaction, and such order or other action has become final and non-appealable; or

• the Stockholder Approval is not obtained;

• by Yahoo, if:

• Verizon has breached its representations, warranties, or covenants to a degree that would result in the failure of a condition to the closing, and the breach cannot be cured or, if curable, is not cured by the earlier of the Outside Date and 30 calendar days after Yahoo’s notice of such breach; or

• prior to receipt of the Stockholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal (so long as Yahoo pays the Termination Fee to Verizon simultaneously with or prior to such termination); or

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• by Verizon, if:

• Yahoo has breached its representations, warranties, or covenants to a degree that would result in the failure of a condition to the closing (disregarding the Excluded Matters, other than a breach of Yahoo’s representation regarding certain user engagement data), and the breach cannot be cured or, if curable, is not cured by the earlier of the Outside Date and 30 calendar days after Verizon’s notice of such breach; or

• prior to receipt of the Stockholder Approval, the Board has made an Adverse Recommendation Change.

Representations and Warranties

The Stock Purchase Agreement contains a number of representations and warranties made by Yahoo. Such representations and warranties are subject to qualifications and exceptions set forth in the Stock Purchase Agreement or in the confidential disclosure schedule provided by Yahoo to Verizon pursuant to the Stock Purchase Agreement, and relate to, among other things, the following:

• due organization, valid existence and good standing, and other corporate matters;

• authorization, execution, delivery, and enforceability of the Sale Transaction Agreements;

• capitalization and title;

• Business Subsidiaries;

• conflicts or violations under organizational documents, contracts, or law;

• governmental consents and approvals;

• documents filed with or furnished to the SEC, including financial statements;

• undisclosed liabilities;

• disclosure controls and procedures;

• material litigation and material orders;

• compliance with applicable laws;

• taxes;

• employee benefits;

• employee and employment matters;

• real property;

• intellectual property;

• environmental matters;

• absence of certain material changes or events;

• material contracts;

• rights and obligations with respect to the Business;

• Yahoo stockholder approval requirements to complete the Sale Transaction;

• information contained in this proxy statement;

• state takeover statutes;

• brokerage or finders’ fees with respect to the Sale Transaction;

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• insurance; and

• user engagement data.

The Stock Purchase Agreement also contains a number of representations and warranties made by Verizon. Such representations and warranties are subject to qualifications and exceptions set forth in the Stock Purchase Agreement and relate to, among other things, the following:

• due organization, valid existence and good standing, and other corporate matters;

• authorization, execution, delivery, and enforceability of the Stock Purchase Agreement;

• conflicts or violations under organizational documents, contracts, or law;

• governmental consents and approvals;

• material litigation and material orders;

• investment purpose;

• information contained in this proxy statement;

• brokerage or finders’ fees with respect to the Sale Transaction;

• availability of funds to complete the Sale Transaction; and

• investigation and analysis of the business, assets, condition, operations, and prospects of Yahoo, Yahoo Holdings, and the Business.

Conduct of Business by Yahoo and the Business Subsidiaries Prior to the Closing

Under the Stock Purchase Agreement, Yahoo has agreed that, subject to exceptions set forth in the Stock Purchase Agreement (with notable examples thereof set forth below), between the execution of the Original Stock Purchase Agreement and the closing, Yahoo (to the extent related to the Business, unless the act or omission in question would or would reasonably be expected to be adverse (other than in a de minimis respect) to the Business Subsidiaries, the Business, Verizon or any of Verizon’s subsidiaries (in a manner relating to the Sale Transaction including from a tax perspective or otherwise), or the Sale Transaction) will, and will cause the Business Subsidiaries to, carry on the Business in all material respects in the ordinary course and use reasonable best efforts to preserve intact the Business’ organization, goodwill, and material third-party Business relationships. Yahoo also agreed that, subject to exceptions set forth in the Stock Purchase Agreement (with notable examples thereof set forth below), Yahoo will not, and will cause the Business Subsidiaries not to, take the following actions (or announce, authorize, or enter into any commitment to do so):

• amend a Business Subsidiary’s organizational documents;

• split, combine, subdivide, reclassify, purchase, or redeem or acquire, issue, sell, pledge, dispose, encumber, or grant any shares of a Business Subsidiary’s capital stock or securities convertible into or exchangeable for any such shares of capital stock;

• issue, sell, pledge, dispose, encumber, or grant any shares of Yahoo’s capital stock or securities convertible into or exchangeable for any such shares of capital stock, other than in a public offering where, to Yahoo’s knowledge, no third party acquires beneficial ownership of more than five percent of Yahoo’s equity unless the acquirer expressly permits the completion of the Sale Transaction and agrees to vote for the Sale Transaction;

• issue, grant, acquire, purchase, redeem, or repurchase any equity-based award tied to Yahoo’s common stock (subject to exceptions for the exercise, settlement, or forfeiture of, or tax withholding with respect to, existing Yahoo RSU awards, options, and Acquisition Holdback Stock, among others);

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• declare, set aside, authorize, make or pay any non-cash dividend or other distribution with respect to Yahoo’s or any Business Subsidiary’s stock, other than to another Business Subsidiary or if payable in cash, Excluded Assets, or equity of Yahoo;

• acquire (by merger, lease, acquisition, or otherwise), directly or indirectly, any assets, securities, properties, interests, or businesses, other than any of the following:

• supplies, equipment, bandwidth, or other assets to be used in the ordinary course;

• pursuant to pre-existing contracts;

• leases or subleases entered into in the ordinary course by Yahoo or a Business Subsidiary as a tenant or subtenant with total expenditures of no more than $10 million over the life of such lease or sublease; and

• acquisitions for no more than $25 million individually or $50 million in the aggregate (but any proposed acquisition over $10 million individually requires consultation with Verizon);

• sell, license, lease, or otherwise transfer, or incur a lien or other encumbrance on, any assets, securities, properties, interests, or businesses, other than any of the following:

• inventory or obsolete equipment in the ordinary course;

• sales for no more than $15 million individually or $30 million in the aggregate (but any proposed sale over $10 million individually requires consultation with Verizon);

• pursuant to pre-existing contracts;

• capital stock of Yahoo Japan, subject to certain restrictions (see the section of this proxy statement entitled “—Yahoo Japan”);

• certain permitted encumbrances; and

• non-exclusive licenses or sublicenses or covenants not to sue with respect to any intellectual property owned by Yahoo or the Business Subsidiaries or other ordinary course intellectual property of the Business;

• change any financial accounting methods, except as required by GAAP;

• unless required pursuant to a current benefit plan or applicable law or pursuant to any action for which Verizon and the Business Subsidiaries would not be liable (e.g., actions with respect to employees not transferring to Verizon) and subject to certain exceptions:

• increase compensation, severance, or other benefits payable or to become payable to any employee, officer, director, or independent contractor;

• pay or award, or agree to pay or award, any bonus or other incentives (including equity-based compensation);

• adopt, enter into, or establish any benefit plan (other than employment agreements or offer letters without signing or retention bonuses, severance benefits, or change in control payments);

• amend, modify, or terminate any benefit plan, employment agreement, individual consulting agreement, collective bargaining agreement, bonus or other incentive compensation plan, health or other welfare, pension, retirement, severance, deferred compensation or other compensation or benefit plan, or other similar plan, other than amendments in the ordinary course of business consistent with past practice that would not materially increase related annual costs;

• amend any outstanding equity-based awards;

• take any action to accelerate the vesting or payment of, or fund, any compensation (including equity-based) or benefits under any benefit plan (other than exceptions with respect to Acquisition Holdback Stock);

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• make or forgive any loans to directors, officers, or employees; and

• hire any employee, officer, or independent contractor with an annual cash compensation over $225,000 (other than to fill a vacancy arising in the ordinary course of business consistent with past practice so long as the cash compensation is no more than 110 percent of the annual cash compensation of the applicable employee, officer, or independent contractor whose employment or service has terminated);

• incur, assume, endorse, guarantee, or otherwise become liable with respect to, or modify in any material respects the terms of, any indebtedness for borrowed money, or offer, issue, or sell any debt securities or rights to acquire any debt securities, except for indebtedness solely among wholly-owned Business Subsidiaries in the ordinary course or for no more than $50 million in the aggregate;

• redeem, repurchase, prepay, defease, guarantee, cancel, or otherwise acquire for value any indebtedness;

• make any loans, advances (other than ordinary course accounts receivable), or capital contributions to or investments in another person (other than to another Business Subsidiary) of more than $25 million in the aggregate;

• terminate, modify, waive, or amend the Excalibur License Agreement;

• terminate, modify, or amend in any material respect any Material Contract (as defined in the Stock Purchase Agreement) or material lease in a manner adverse to the Business, other than terminations in connection with expiration or (in the case of a Material Contract) automatic renewal (however, automatic renewals are not permitted if they are for a term of greater than two years or involve a Material Contract of certain types as specified in the Stock Purchase Agreement);

• enter into any contract that would have been a Material Contract or material lease if entered into prior to the execution of the Original Stock Purchase Agreement (replacing any $25 million threshold in the definition of Material Contract with $10 million and disregarding the exception for revenue sharing agreements for certain expenditure contracts);

• waive in any material respect any material term of, or waive any material default under, any Material Contract, or material lease;

• enter into any contract that contains a change of control, anti-assignment, or similar provision that would require the consent or waiver of, or payment to, the applicable counterparty in connection with the Sale Transaction;

• make, change, adopt, or revoke any material tax election, method of tax accounting, or tax accounting period;

• amend any material tax return;

• except in the ordinary course of business consistent with past practice, extend or waive the application of any statute of limitations for any material claim, assessment, or collection relating to taxes;

• settle or compromise any material claim or material assessment relating to taxes or any refund of material taxes in excess of any accrual or reserve reflected in Yahoo’s financial statements in respect of such claim, or assessment, except to the extent such settlement or compromise would or would reasonably be expected to have an adverse effect on, or increase the tax liability of, Verizon or any of its affiliates (including the Business Subsidiaries after the closing) or the Business, the Transferred Assets (as defined in the section of this proxy statement entitled “—The Reorganization Agreement—Transferred Assets”), and/or the Assumed Liabilities (as defined in the section of this proxy statement entitled “—The Reorganization Agreement—Assumed Liabilities”), in each case after the closing;

• enter into any closing agreement with, or submit any request for rulings to, any governmental authority;

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• except as required by applicable law, file any material tax return in a manner, or reflecting a position, materially inconsistent with past practices (to the extent applicable) of Yahoo or its relevant subsidiary, as applicable, if the filing of such tax return would or would reasonably be expected to have an adverse effect on, or increase the tax liability of, Verizon or any of its affiliates (including the Business Subsidiaries after the closing) or the Business, the Transferred Assets, and/or the Assumed Liabilities, in each case, after the closing;

• make any entity classification election for U.S. federal income tax purposes with respect to Yahoo Holdings or any Business Subsidiary, other than as required in connection with the Foreign Sale Transaction;

• incur any capital expenditures, other than those in a capital expenditures plan previously agreed with Verizon and other capital expenditures of not more than $75 million in the aggregate (any material deviation from such pre-agreed capital expenditures plan requires consultation with Verizon);

• adopt or enter into a plan for Yahoo’s or any Business Subsidiary’s complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization (other than with respect to certain subsidiaries that have no assets or operations, so long as such subsidiaries continue to have no more than de minimis assets or operations);

• commence, settle, pay, discharge, or satisfy any litigation, other than stockholder litigation, routine immaterial matters in the ordinary course, or litigation involving only payments of monetary damages not more than $17.5 million individually or $40 million in the aggregate (excluding amounts paid pursuant to third party indemnification or covered by an insurance policy (to the extent such amounts are actually received)) and that does not impose non-monetary restrictions on the Business in any material respect;

• sell, assign, divest, transfer, exclusively license, or dispose of any material application, registration, or issuance included in the registered owned intellectual property owned by the Business;

• intentionally permit to lapse, cancel, or abandon any material application, registration, or issuance included in the registered intellectual property owned by the Business;

• make any material change to its privacy or data security policies, unless required by law or in the ordinary course in all material respects; or

• enter into any new line of business materially different from existing lines of business.

The general conduct requirements and specific restrictions on the operations set forth above are not applicable to the following:

• certain actions reasonably necessary for Yahoo’s post-closing operations for which the related assets or liabilities will not be transferred to Verizon in connection with the transaction and which would not reasonably be expected to delay the Sale Transaction;

• actions taken to comply with applicable law;

• actions otherwise specifically required under the Stock Purchase Agreement;

• the transactions expressly contemplated by the Reorganization Agreement;

• a tender offer and/or consent solicitation with respect to the Convertible Notes (see the section of this proxy statement entitled “—Convertible Notes”);

• a sale of any of the Excalibur IP Assets;

• a Permitted Whole-Co Transaction in and of itself; and

• any action consented to in writing by Verizon.

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Proxy Statement; Special Meeting

Verizon and Yahoo have agreed to certain obligations with respect to this proxy statement:

• subject to Yahoo’s timely receipt from Verizon of certain information and cooperation related to this proxy statement (as described more fully below), Yahoo was required to prepare and file the preliminary version of this proxy statement with the SEC as promptly as reasonably practicable following the date of the Original Stock Purchase Agreement;

• Verizon is required to provide Yahoo with any information that may be reasonably requested by Yahoo in connection with this proxy statement and otherwise assist Yahoo in connection with the preparation of this proxy statement and the resolution of SEC comments related to this proxy statement;

• Verizon is required to cause the information in this proxy statement relating to Verizon and its affiliates not to be untrue or misleading;

• subject to the Board’s ability to make an Adverse Recommendation Change, the Board is required to include its recommendation to Yahoo stockholders that they adopt a resolution authorizing the Sale Transaction (the “Seller Recommendation”) in this proxy statement;

• Yahoo is required to promptly notify Verizon upon receipt of any comments or requests from the SEC, provide Verizon with copies of all correspondence between Yahoo and its representatives and the SEC, and provide Verizon with a reasonable opportunity to review and comment on any response from Yahoo to the SEC, which comments Yahoo is required to consider in good faith (other than with respect to a Superior Proposal or an Adverse Recommendation Change);

• Yahoo is required to use its reasonable best efforts to respond as promptly as reasonably practicable to any comments from the SEC with respect to this proxy statement, have this proxy statement cleared by the SEC as soon as reasonably practicable after filing it, and cause this proxy statement to be mailed to Yahoo stockholders as promptly as practicable thereafter; and

• Yahoo is required to promptly inform Verizon in the event that, prior to the closing, any event or circumstance relating to Yahoo or the Business Subsidiaries or their respective officers or directors is discovered by Yahoo which, pursuant to the Exchange Act, should be set forth in an amendment or supplement to this proxy statement.

In accordance with Yahoo’s organizational documents, applicable law, and the rules and regulations of Nasdaq, Yahoo has agreed to, as promptly as practicable, establish a record date for, duly call, give notice of, convene, and hold a special meeting of Yahoo stockholders for the purpose of obtaining the Stockholder Approval and, if Yahoo deems necessary or advisable, stockholder approval for actions reasonably necessary to comply with the requirements of the 1940 Act following the Fund’s registration as a registered investment company at or after the closing. Yahoo may postpone or adjourn the special meeting (i) for up to 10 business days to solicit additional proxies for the purpose of obtaining the Stockholder Approval, if Yahoo determines in good faith that such a postponement or adjournment is necessary or advisable to obtain the Stockholder Approval and (ii) to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure necessary under applicable law for review by Yahoo stockholders prior to the special meeting.

Efforts

Yahoo and Verizon have agreed to use their respective reasonable best efforts to complete the Sale Transaction, cause the conditions to the closing to be satisfied, and obtain or deliver all required or necessary governmental and third party consents, including in connection with obtaining antitrust approvals for the Sale Transaction. Verizon is required to take all necessary actions to avoid or eliminate all impediments under applicable antitrust laws, but is not required (nor is Yahoo permitted without Verizon’s consent) to make divestitures or take other actions that would have, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Verizon or the Business (in each case measured on a scale relative to the Business) (a “Burdensome Condition”). These antitrust approvals were obtained in December 2016.

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Change of Name

Yahoo is required to file appropriate documentation to change as promptly as practicable after the closing, and in any event (i) within five business days of the closing, the corporate names of Yahoo and the subsidiaries retained by Yahoo and (ii) within 60 days after the closing, any “doing business as” names, trade names, or other corporate identifiers of Yahoo and the subsidiaries retained by Yahoo, in each case to a name that does not contain any of the Business’s names and marks, including, among others, “Yahoo” and “Yahoo!”.

Post-Closing Employee Matters

For a 12-month period after the closing, Verizon will provide each employee of the Business that transfers to Verizon at the closing:

• base salary or base wage rates and annual cash bonus opportunities that are no less favorable than those provided prior to the closing;

• equity incentive compensation opportunities that are no less favorable than those provided to similarly situated employees of AOL; and

• 401(k), medical, and other welfare benefits that are no less favorable, in the aggregate, than those provided to similarly situated employees of AOL.

In addition, for a 12-month period after the closing, Verizon will provide each employee of the Business who transfers to Verizon at the closing with severance payments and benefits that are no less favorable than the severance payments and benefits for which such employee would have been eligible under Yahoo’s severance plans, policies, and agreements immediately following the closing.

Each employee will receive service credit for purposes of determining eligibility to participate and vesting, and for purposes of vacation accrual and level of severance benefits, for his or her service with Yahoo and its Business Subsidiaries under analogous plans that are maintained by Verizon or its subsidiaries as of the closing and in which such employee is eligible to participate.

Verizon will use commercially reasonable efforts to (1) waive any pre-existing condition exclusions, evidence of insurability requirements, and waiting periods under the benefit plans it maintains to the extent waived or not included under the analogous Yahoo benefit plan and (2) provide credit for any co-payments, deductibles, and other out-of-pocket expenses that were paid prior to the closing under the analogous Yahoo benefit plan.

Foreign Sale Transaction

On December 20, 2016, Verizon requested, pursuant to the Reorganization Agreement, that Yahoo cause the equity interests in certain Business Subsidiaries conducting foreign operations of the Business to be transferred to Foreign SaleCo. Therefore, pursuant to the Stock Purchase Agreement, immediately prior to Yahoo transferring all of the outstanding shares of Yahoo Holdings to Verizon, Yahoo Holdings will transfer all of the outstanding shares of Foreign SaleCo to a foreign subsidiary of Verizon in exchange for an amount of cash equal to the portion of the base purchase price attributable to such shares and distribute such cash to Yahoo.

Survival

The representations, warranties, covenants, and agreements of any person in the Stock Purchase Agreement (and any certificate delivered pursuant thereto) generally terminate at the closing or upon the termination of the Stock Purchase Agreement (except for certain expense reimbursement and indemnification obligations of the parties relating to financing cooperation and the Convertible Notes), other than any covenants or agreements of the parties which contemplate performance or survival post-closing or post-termination of the Stock Purchase Agreement and certain obligations of Yahoo with respect to the User Security Matters.

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Amendments

The Stock Purchase Agreement may not be amended unless in writing signed by Yahoo and Verizon. Subject to applicable law, either Yahoo or Verizon may (1) extend the time for the performance of obligations or other acts of the other party, (2) waive any inaccuracies in the representations and warranties of the other party contained in the Stock Purchase Agreement or any document delivered pursuant to the Stock Purchase Agreement, and (3) waive compliance by the other party with any of the agreements or conditions contained in the Stock Purchase Agreement.

Specific Performance

Yahoo and Verizon agree that irreparable damage would occur if any of the provisions of the Stock Purchase Agreement were not performed in accordance with their specific terms and therefore each party will be entitled to specific performance of the terms of the Stock Purchase Agreement in addition to any other remedy to which it is entitled at law or in equity.

Transaction Litigation

Yahoo will control the defense of any litigation brought by Yahoo stockholders against Yahoo and/or its directors relating to the Sale Transaction. Yahoo must promptly provide Verizon with copies of related proceedings and correspondence, give Verizon the opportunity to consult with Yahoo regarding the defense or settlement of such litigation, and not compromise or settle such litigation without Verizon’s prior written consent (not to be unreasonably withheld, conditioned, or delayed), unless such settlement would not affect Verizon or the Business in any material respect post-closing, including settlements for solely monetary damages to be paid by Yahoo or entirely from Yahoo’s insurance.

Convertible Notes

Under the Stock Purchase Agreement, the parties acknowledge and agree that, except as may be required pursuant to the Stock Purchase Agreement as described below, the Convertible Notes will not be assumed by Yahoo Holdings or Verizon and will constitute Retained Liabilities (as defined in the section of this proxy statement entitled “—The Reorganization Agreement—Retained Liabilities”). Yahoo may, in its reasonable discretion, conduct a tender offer and/or consent solicitation to amend the indenture (the “Indenture”), dated as of November 26, 2013, between Yahoo and the Bank of New York Mellon Trust Company, N.A., as trustee, so long as Yahoo keeps Verizon reasonably informed regarding such tender offer and/or consent solicitation.

If a court determines in a final non-appealable judgment or a judgment Yahoo determines not to appeal that the Sale Transaction constitutes a sale, conveyance, transfer, or lease of all or substantially all of Yahoo’s properties and assets to another person, Yahoo and Yahoo Holdings will, among other things, enter into a supplemental indenture which satisfies the requirements of the Indenture, including causing Yahoo Holdings to assume all of Yahoo’s obligations under the Indenture and the Convertible Notes. The obligations to take such actions will be null and void if the Indenture is amended to permit the Sale Transaction without assumption of the Convertible Notes by Yahoo Holdings, Verizon, or any of their affiliates or if a court determines that the Sale Transaction is not a sale, conveyance, transfer, or lease of all or substantially all of Yahoo’s properties and assets. Under the terms of the Stock Purchase Agreement, any payment due by Verizon under the Convertible Notes at maturity or on conversion (including if in Fund shares) will be provided by the Fund, including in the form of a purchase price reduction, and the Fund will indemnify Verizon for any losses or liabilities resulting from the Convertible Notes.

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Yahoo Japan

Yahoo and its subsidiaries may not, without Verizon’s consent, to the extent within Yahoo’s control, and except as may result in a violation by Yahoo or any of its directors, officers, or employees of applicable law (including fiduciary duties):

• prior to the closing of the Sale Transaction amend or waive any provision of, or grant any consent under, the license agreement between Yahoo Japan and Yahoo (the “Yahoo Japan License Agreement”) or any other agreement with Yahoo Japan that constitutes a Transferred Asset;

• amend or waive any provision of, or grant any consent under, Yahoo’s joint venture agreement with SoftBank relating to Yahoo Japan or any other agreement with Yahoo Japan or SoftBank relating directly to Yahoo Japan that constitutes an Excluded Asset if such amendment, waiver, or consent would reasonably be expected to cause the termination of, or give Yahoo Japan the right to terminate, the Yahoo Japan License Agreement; or

• sell its shares in Yahoo Japan or consent to an acquisition of Yahoo Japan or all or substantially all of Yahoo Japan’s assets if such action would reasonably be expected to cause the termination of, or give Yahoo Japan the right to terminate, the Yahoo Japan License Agreement.

Yahoo and its subsidiaries may not implement or effect any of the transfers under the Reorganization Agreement in a manner that would cause a breach or default under, cause the termination of, or give Yahoo Japan the right to terminate the Yahoo Japan License Agreement.

User Security Matters

Yahoo and Verizon have agreed that the Excluded Matters shall be disregarded when determining whether the conditions to Verizon’s obligations to complete the Sale Transaction related to (i) other than with respect to its representation regarding certain user engagement data, the accuracy of certain of Yahoo’s representations and warranties in the Stock Purchase Agreement (including its representation relating to the absence of a Business Material Adverse Effect), and (ii) Yahoo’s compliance in all material respects with its covenants in the Stock Purchase Agreement have been satisfied, and Verizon has waived any rights to not close the Sale Transaction or to terminate (or exercise other rights or remedies under) the Stock Purchase Agreement on the basis of any such Excluded Matter.

Governing Law

The Stock Purchase Agreement is governed by the laws of the State of Delaware, without regard to any conflict of law principles.

The Reorganization Agreement

Transferred Assets

Yahoo will transfer all of the assets of Yahoo, other than the Excluded Assets, to Yahoo Holdings (the “Transferred Assets”), including:

• shares owned directly by Yahoo in any entity other than Alibaba, Altaba HK, Yahoo Japan, Excalibur, and certain other minority investments;

• the Yahoo Japan License Agreement;

• domestic and foreign benefit plan assets;

• the Excalibur License Agreement;

• Yahoo’s rights with respect to the Acquisition Holdback Cash; and

• claims and defenses related to the Transferred Assets.

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Excluded Assets

Assets to be retained by the Fund, and which will not be transferred to Yahoo Holdings (the “Excluded Assets”), include the following:

• other than any Acquisition Holdback Cash, cash and marketable securities of Yahoo (and not of the Business Subsidiaries);

• shares owned directly by Yahoo in Alibaba, Altaba HK, Yahoo Japan, Excalibur, and certain other minority investments and certain related agreements (including Yahoo’s joint venture agreement and consulting agreement with Yahoo Japan);

• Yahoo’s rights with respect to the Acquisition Holdback Stock;

• claims and defenses related to the other Excluded Assets; and

• the Indenture.

Additionally, Yahoo has the right to specify as “Excluded Assets” prior to the closing newly acquired assets that (i) are not used, held for use, intended to be used in, otherwise necessary to operate or related to the Business and (ii) are reasonably necessary to facilitate the Fund’s operations after the completion of the Sale Transaction.

Assumed Liabilities

Yahoo Holdings will assume all of the liabilities of Yahoo, other than the Retained Liabilities (the “Assumed Liabilities”), including:

• liabilities to the extent resulting from or related to the Business or the Transferred Assets, whether arising prior to, on, or after the closing;

• liabilities related to current and former employees and benefit plans of Yahoo and its subsidiaries relating to the Business, whether arising prior to, on, or after the closing, other than the retained employee liabilities (as described below); and

• liabilities arising out of litigation related to the Transferred Assets and the Assumed Liabilities, other than the retained securityholder litigation (as described below).

Retained Liabilities

Liabilities to be retained by the Fund (and which will not be assumed to Yahoo Holdings), referred to as “Retained Liabilities,” include the following:

• liabilities to the extent resulting from or related to the Excluded Assets, including Yahoo’s maintenance, status, and function as a publicly traded company;

• liabilities relating to the Indenture and the Convertible Notes and related hedge and warrant transactions;

• any securityholder litigation;

• D&O indemnification obligations relating to current and former directors and officers of Yahoo or the Business Subsidiaries, or any other person, resulting from Excluded Assets and other Retained Liabilities and, with respect to current and former directors, officers, or employees of Yahoo, in their respective capacities with Yahoo;

• any obligation to deliver shares of the Fund’s common stock in connection with (1) all Yahoo stock options, (2) any Yahoo RSU awards that vest upon or prior to the closing, and (3) any Acquisition Holdback Stock;

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• liabilities relating to a limited number of employees who may stay with the Fund, whether arising or accruing prior to, on, or after the closing;

• litigation or liabilities relating to or arising out of Yahoo’s SEC or Nasdaq reporting, accounting, or compliance obligations as a public company; and

• cash liabilities resulting from any third-party action or imposed by any governmental authority to the extent resulting from any Data Breaches (collectively, the “User Security Liabilities”).

With respect to the User Security Liabilities, Yahoo Holdings and Yahoo will each be responsible for 50 percent of any such liabilities arising after the closing, and Yahoo will be responsible for 100 percent of any such liabilities that are finally determined and entered or stipulated against Yahoo or any of its subsidiaries prior to the closing.

Consideration

In consideration for the Transferred Assets, Yahoo Holdings will, effective as of the closing of the transactions contemplated by the Reorganization Agreement, assume and agree to satisfy the Assumed Liabilities.

Closing Date

Subject to the satisfaction or waiver of the conditions contained in the Reorganization Agreement (see the section of this proxy statement entitled “—Conditions to Completion of the Reorganization”) and unless otherwise agreed between Yahoo and Yahoo Holdings pursuant to the terms of the Reorganization Agreement, the closing will take place at 10:00 a.m., local time, immediately prior to the completion of the Sale Transaction pursuant to the terms of the Stock Purchase Agreement (see the sections of this proxy statement entitled “—The Stock Purchase Agreement—Closing Date” and “—The Stock Purchase Agreement—Conditions to Completion of the Sale Transaction”). We currently expect the Sale Transaction to close in the second quarter of 2017.

Tax Matters

In general, the Reorganization Agreement will govern the respective rights, responsibilities, and obligations of Yahoo and Yahoo Holdings with respect to taxes and tax benefits, the preparation and filing of tax returns, the control of tax contests and audits, and certain other tax matters.

Pursuant to the Reorganization Agreement, Yahoo Holdings will generally bear, and indemnify Yahoo and each of its affiliates against, both pre-closing and post-closing taxes attributable to (1) the Business, the Transferred Assets, and the Assumed Liabilities and (2) former operations of Yahoo and its affiliates. Yahoo will generally bear, and indemnify Yahoo Holdings and each of its affiliates against, (1) both pre-closing and post-closing taxes attributable to the Excluded Assets and the Retained Liabilities and (2) any taxes (including transfer taxes) incurred in connection with the Sale Transaction (except that Yahoo and Yahoo Holdings will each be responsible for 50 percent of all taxes imposed on or borne by Yahoo and any of its subsidiaries to the extent such taxes result solely from, and would not have been imposed but for, any of the pre-closing transfers to Yahoo of the equity interests in the Business Subsidiaries to be sold separately to a foreign subsidiary of Verizon pursuant to the Foreign Sale Transaction or the contribution of such equity interests to Foreign SaleCo).

Each of Yahoo and Yahoo Holdings will generally be entitled to any refunds of taxes for which such party is responsible under the Reorganization Agreement. If Yahoo or Yahoo Holdings realizes a tax benefit as a result of an adjustment with respect to taxes for which the other party is responsible under the Reorganization Agreement, the party that realizes the tax benefit will be required to pay the amount of the tax benefit to the other party.

To the extent certain tax attributes attributable to the Excluded Assets and the Retained Liabilities are utilized to reduce taxes for which Yahoo Holdings is responsible under the Reorganization Agreement, Yahoo

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Holdings will generally be required to pay Yahoo for the resulting tax benefit. To the extent certain tax attributes attributable to the Business, the Transferred Assets, and the Assumed Liabilities are utilized to reduce taxes for which Yahoo is responsible under the Reorganization Agreement, Yahoo will generally be required to pay Yahoo Holdings for the resulting tax benefit. However, any tax attributes of Yahoo and its affiliates (including the Business Subsidiaries) existing immediately before the Sale Transaction will be utilized first to offset any taxable income or gain recognized by Yahoo in connection with the Sale Transaction, and Yahoo will not be required to make any payments to Yahoo Holdings in respect of such tax attributes.

Following the Sale Transaction, Yahoo Holdings will generally be responsible for preparing (1) all tax returns that include both Yahoo (or any of its affiliates after the Sale Transaction) and any of the Business Subsidiaries, including the U.S. federal income tax return of Yahoo for the year of the Sale Transaction, and (2) all other tax returns required to be filed by or with respect to the Business Subsidiaries. Except for tax returns required to be prepared by Yahoo Holdings, Yahoo will generally be responsible for preparing all tax returns required to be filed by or with respect to Yahoo (or any of its affiliates after the Sale Transaction). The non-preparing party will have certain review and comment rights with respect to tax returns that reflect taxes for which such party is responsible under the Reorganization Agreement.

Each of Yahoo and Yahoo Holdings will generally have the right to control all tax proceedings, including tax audits, for which such party is reasonably expected to bear the greater tax liability (taking into account the parties’ indemnification obligations under the Reorganization Agreement). To the extent a tax proceeding controlled by Yahoo or Yahoo Holdings could reasonably be expected to materially affect the amount of taxes for which the other party is responsible under the Reorganization Agreement, the non-controlling party will have certain participation and consent rights in connection with the conduct and settlement of such tax proceeding.

Pursuant to the Reorganization Agreement and the Stock Purchase Agreement, Yahoo and Verizon will, and will cause their relevant affiliates to, make joint elections under Section 338(h)(10) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), with respect to the acquisition of any Business Subsidiaries selected by Verizon with respect to which such election is available under applicable law (except for specified Business Subsidiaries).

Conditions to Completion of the Transactions Contemplated by the Reorganization Agreement

Yahoo and Yahoo Holdings’ obligations under the Reorganization Agreement are subject to the prior or substantially concurrent satisfaction or waiver of each of the conditions to the completion of the Sale Transaction set forth in the Stock Purchase Agreement (other than the condition contained in the Stock Purchase Agreement that the transactions contemplated by the Reorganization Agreement have been completed and conditions that cannot by their terms be satisfied until the completion of the Sale Transaction, which conditions Yahoo and Yahoo Holdings are reasonably satisfied will be satisfied or waived at the completion of the Sale Transaction). See the section of this proxy statement entitled “—The Stock Purchase Agreement—Conditions to Completion of the Sale Transaction.”

Transition Services

In the event that Yahoo or Verizon identifies any services provided by Yahoo to the Business, or by the Business to Yahoo, in the six months prior to the closing date of the transactions contemplated by the Reorganization Agreement, that are necessary for the operations of the Fund or the Business following the closing of the transactions contemplated by the Reorganization Agreement, then Yahoo or Verizon may request, and will use commercially reasonable efforts to negotiate and agree upon, a customary post-closing transition services agreement.

Termination and Amendment of the Reorganization Agreement

The Reorganization Agreement automatically terminates upon termination of the Stock Purchase Agreement and may be terminated at any time prior to the closing of the transactions contemplated by the Reorganization

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Agreement by mutual written agreement of Yahoo, Yahoo Holdings, and Verizon. The Reorganization Agreement may not be amended unless in writing signed by Yahoo and Yahoo Holdings, subject to Verizon’s right to consent to such amendment in the event that such amendment would be adverse to the Business, Verizon or any of its subsidiaries, or the Sale Transaction (unless the adverse impact is reasonably expected to be de minimis, in which case only good faith consultation with Verizon is required).

Specific Performance

Yahoo and Yahoo Holdings agree that irreparable damage would occur if any of the provisions of the Reorganization Agreement were not performed in accordance with their specific terms and therefore each party will be entitled to specific performance of the terms of the Reorganization Agreement in addition to any other remedy to which it is entitled at law or in equity.

Settlement and Release Agreement

On February 20, 2017, concurrently with the execution of the Sale Transaction Agreement Amendments, Yahoo, Yahoo Holdings, and Verizon entered into the Settlement and Release Agreement, pursuant to which Verizon (on its own behalf and on behalf of its affiliates and representatives) released any claims it may have against Yahoo (or its affiliates and representatives) arising out of or relating to the Data Breaches. The waiver and release provided for by the Settlement and Release Agreement does not include (i) obligations under the Settlement and Release Agreement or under the provisions of the Stock Purchase Agreement governing the User Security Matters or certain access rights of Verizon relating to certain user engagement data, (ii) indemnification or other obligations with respect to the User Security Liabilities under the Reorganization Agreement, or (iii) any claims under the Stock Purchase Agreement that any Data Breaches (other than Excluded Matters) constitute a Business Material Adverse Effect, or any rights Verizon may have not to close the Sale Transaction or to terminate (or exercise other rights or remedies under) the Stock Purchase Agreement as a result of any Data Breaches (other than Excluded Matters).

The Excalibur License Agreement

Concurrently with the execution of the Original Sale Transaction Agreements, Yahoo and Excalibur entered into the Excalibur License Agreement. The Excalibur License Agreement supersedes and replaces a prior patent license agreement between Yahoo and Excalibur, pursuant to which Excalibur had granted Yahoo and certain other affiliates of Yahoo a non-exclusive license under the Excalibur IP Assets, which had been assigned by Yahoo to Excalibur.

The Excalibur License Agreement supersedes the prior patent license agreement between Yahoo and Excalibur in order to provide that Excalibur’s grant to Yahoo of a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, fully paid-up license under the Excalibur IP Assets will extend, effective upon the closing of the Sale Transaction, to Verizon and its current and certain of its future affiliates. The Excalibur License Agreement will be assigned by Yahoo to Yahoo Holdings upon the closing of the transactions contemplated by the Reorganization Agreement.

Amendment to Yahoo’s Amended and Restated Certificate of Incorporation

The Existing Charter limits the liability of the Company’s directors for monetary damages to the extent permitted under Delaware law. The Existing Charter also authorizes the Company to indemnify its agents to the extent permitted by applicable law, subject only to the limits created by applicable Delaware law. The 1940 Act contains additional restrictions on exculpation and indemnification for certain disabling conduct of a director or officer of an investment company. In particular, Section 17(h) of the 1940 Act provides that the organizational documents of an investment company shall not contain any provision that protects a director or officer against any liability to the Fund or its stockholders by reason of willful misfeasance, bad faith, gross negligence or

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reckless disregard of his or her duties as director or officer. Following the completion of the Sale Transaction, in order to comply with the 1940 Act, the Company will amend the Existing Charter to provide that the exculpation and indemnification provisions of Articles XI and XII of the Existing Charter are subject to the limitations of the 1940 Act with respect to actions taken while the Company is registered as an investment company under the 1940 Act. The proposed certificate of incorporation of the Fund, after giving effect to the Charter Amendment and the change of name of the Company to “Altaba Inc.”, is attached as Exhibit D to this proxy statement.

The Charter Amendment will be approved automatically if Yahoo obtains approval of the Sale Proposal by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting. If the Sale Proposal is not so approved, the Charter Amendment will not be effected.

After careful consideration, the Board has declared that the Charter Amendment is advisable. The Board recommends that you vote in favor of the Charter Amendment by voting “FOR” the Sale Proposal.

Opinions of the Financial Advisors

Pursuant to separate engagement letters, each dated March 23, 2016, the Company retained Goldman Sachs, J.P. Morgan, and PJT Partners as financial advisors to the Strategic Review Committee in connection with its consideration of strategic alternatives. Each of the engagement letters between Yahoo and the Financial Advisors provides for a transaction fee of $15,000,000 payable to the applicable Financial Advisor in connection with the Sale Transaction, $5,000,000 of which was payable to each Financial Advisor upon the earlier of the public announcement of the Sale Transaction and the delivery by such Financial Advisor of its opinion, and the remainder of which is contingent upon the closing of the Sale Transaction. The initial $5,000,000 payment was made to each of the Financial Advisors upon their delivery of their respective opinions to the Strategic Review Committee and the Board in July 2016 in connection with the execution of the Original Sale Transaction Agreements. In addition, at the sole discretion of the Strategic Review Committee, a discretionary fee of up to $2,500,000 may be payable to each of the Financial Advisors. Yahoo has agreed to reimburse each Financial Advisor for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify each Financial Advisor against certain liabilities arising out of such Financial Advisor’s engagement.

At a special meeting of the Board held on February 20, 2017, Goldman Sachs, J.P. Morgan, and PJT Partners rendered their respective opinions to the Strategic Review Committee and to the Board, as of the dates of such opinions and based upon and subject to the factors set forth therein, as to the fairness, from a financial point of view, to Yahoo of the Cash Consideration, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, as described in more detail below:

Opinion of Goldman Sachs

At the February 20, 2017 Board meeting, Goldman Sachs rendered its oral opinion to the Strategic Review Committee and the Board, subsequently confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of such date, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of Goldman Sachs, dated February 20, 2017, which sets forth assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit E to this proxy statement and is incorporated by reference herein. The summary of the opinion of Goldman Sachs set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Strategic Review Committee and the Board in connection with their consideration of the Sale Transaction.

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The issuance of Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs. The opinion does not constitute a recommendation to any Yahoo stockholder as to how such stockholder should vote with respect to the Sale Transaction or any other matter.

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

• the Sale Transaction Agreements and the Settlement and Release Agreement;

• the preliminary proxy statement of the Company with respect to the Sale Transaction contemplated by the Original Stock Purchase Agreement filed on Schedule 14A with the SEC on September 9, 2016;

• annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five fiscal years ended December 31, 2015;

• certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;

• certain other communications from the Company to its stockholders;

• certain publicly available research analyst reports for the Company;

• certain historical financial information relating to Yahoo’s operating business prepared by the management of the Company;

• certain internal financial analyses and forecasts for Yahoo’s operating business prepared by the management of the Company for use by Goldman Sachs in performing its financial analysis in connection with its opinion delivered to the Strategic Review Committee and the Board in connection with the execution of the Original Sale Transaction Agreements; and

• certain updated internal financial analyses and forecasts for Yahoo’s operating business prepared by the management of the Company, defined as the “Forecasts” and summarized in the section of this proxy statement entitled “—Certain Financial Forecasts,” as approved for Goldman Sachs’ use by Yahoo.

Goldman Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition, and future prospects of Yahoo’s operating business, including regarding their assessment of the potential financial impact of the User Security Matters and Data Breaches; compared certain financial information for Yahoo’s operating business and certain financial and stock market information for the Company with similar financial and stock market information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the digital media industry; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the Strategic Review Committee and the Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting, and other information provided to, discussed with, or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Strategic Review Committee and the Board that the Forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company and the Strategic Review Committee. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative, or other off-balance-sheet assets and liabilities) of the Company or any of its subsidiaries, including Yahoo Holdings or Yahoo’s operating business and, except for being furnished with appraisals of certain real estate assets of the Company, Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory, or other consents and approvals necessary for the consummation of the Sale Transaction will be obtained without any adverse effect on the Company or on the expected benefits of the Sale Transaction in any way meaningful to its analysis. Goldman Sachs assumed that the Sale Transaction will be consummated on the terms set forth in the Stock Purchase Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

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Goldman Sachs’ opinion does not address the underlying business decision of the Company to engage in the Sale Transaction, including its decision to enter into the Stock Purchase Agreement Amendment, the Reorganization Agreement Amendment or the Settlement and Release Agreement, or the relative merits of the Sale Transaction as compared to any other strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the Company, as of the date thereof, of the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the Sale Transaction Agreements, the Settlement and Release Agreement or the Sale Transaction or any term or aspect of any other agreement or instrument contemplated by the Sale Transaction Agreements or the Settlement and Release Agreement or entered into or amended in connection with the Sale Transaction, the Indenture, any indemnification or other ongoing obligations of the Company, including in respect of the User Security Matters and Data Breaches or any expenses related thereto, any allocation of the consideration (including between the Cash Consideration and the RSU Substitution), the fairness of the Sale Transaction to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors, or employees of the Company or Yahoo Holdings, or any class of such persons, in connection with the Sale Transaction, whether relative to the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which the shares of the Company’s common stock will trade at any time or as to the impact of the Sale Transaction on the solvency or viability of the Company, Yahoo Holdings, or Verizon or the ability of the Company, Yahoo Holdings, or Verizon to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market, and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising, or reaffirming its opinion based on circumstances, developments, or events occurring after the date of its opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the Strategic Review Committee and the Board in connection with their consideration of the Sale Transaction and its opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the Sale Transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The terms of the Sale Transaction were determined through arm’s-length negotiations between the Company and Verizon and were recommended by the Strategic Review Committee for approval by, and were approved by the Board. Goldman Sachs provided advice to the Company during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Company, the Strategic Review Committee, or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Sale Transaction.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management, and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold, or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps, and other financial instruments of the Company, Verizon, any of their respective affiliates, and third parties or any currency or commodity that may be involved in the Sale Transaction. Goldman Sachs has acted as financial advisor to the Strategic Review Committee in connection with, and has participated in certain of the negotiations leading to, the Sale Transaction. Goldman Sachs has provided certain financial advisory and/or underwriting services to the Company and/or its affiliates from time to time for which Goldman Sachs’ Investment Banking Division has received, and may receive, compensation. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Verizon and/or its affiliates from time to time for which Goldman Sachs’ Investment Banking Division has received, and may receive, compensation, including having acted as a lead dealer manager with respect to 18 private offers to exchange specified series of debt

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securities of Verizon for new debt securities of Verizon and cash in February 2017; as joint bookrunner with respect to a public offering by Verizon of $400,000,000 of Floating Rate notes due 2019, $1,000,000,000 of 1.375% Notes due 2019, $1,000,000,000 of 1.750% Notes due 2021, $2,250,000,000 of 2.625% Notes due 2026, and $1,500,000,000 of 4.125% Notes due 2046 in August 2016; as a lead dealer manager and a lead solicitation agent with respect to three cash tender offers on behalf of Verizon and certain of its subsidiaries in April 2016; as financial advisor to AOL in connection with its acquisition of Millennial Media in October 2015; as a lead dealer manager with respect to seven private offers to exchange specified series of debt securities of Verizon and one of its subsidiaries for new debt securities of Verizon and cash in March 2015; as a co-lead underwriter with respect to a public offering by Verizon of 2.625% Notes due 2031 (aggregate principal amount of €1,000,000,000) and 1.625% Notes due 2024 (aggregate principal amount of €1,400,000,000) in December 2014; and as a dealer in respect of Verizon’s commercial paper program commencing in 2006. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to the Company, Verizon, Yahoo Holdings and their respective affiliates for which Goldman Sachs’ Investment Banking Division may receive compensation. During the two year period ended February 20, 2017, Goldman Sachs has received compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Verizon and/or its affiliates of approximately $27.2 million and to Yahoo and/or its affiliates of approximately $9.5 million.

In addition, Goldman Sachs, acting as principal, is a counterparty to the Company with respect to convertible note hedge transactions entered into in connection with the Company’s sale of its Convertible Notes (aggregate principal amount of approximately $1.4 billion) and with respect to issuer warrant transactions entered into contemporaneously with such Convertible Note hedge transactions. Assuming that the note hedge and warrant transactions are not otherwise terminated pursuant to their terms, the issuer warrant transactions may be adjusted by Goldman Sachs, as calculation agent, if Goldman Sachs determines that an event has occurred that gives it the right to make an adjustment and an adjustment is necessary to preserve the fair value of the issuer warrant transactions to Goldman Sachs in light of the effect of the announcement and/or completion of the Sale Transaction on the theoretical value of the Company’s shares or such issuer warrant transactions. Such adjustments may compensate Goldman Sachs for any diminution in the value of the issuer warrant transactions to it that would otherwise result from the announcement and/or completion of the Sale Transaction.

In connection with such Convertible Note hedge and issuer warrant transactions, Goldman Sachs has exposure to market fluctuations in the price of the Company’s common stock. Goldman Sachs’ ordinary practice is to hedge its net market exposure to the price of the common stock underlying private derivative transactions with issuers of such common stock such as the Convertible Note hedge and issuer warrant transactions. In connection with such transactions, Goldman Sachs and its affiliates have engaged, and will continue to engage, in hedging and other market transactions (which may include purchasing or selling the Company’s common stock and the entering into or unwinding various derivative transactions with respect to the Company’s common stock) that are generally intended to substantially neutralize Goldman Sachs’ risk exposure as a result of the Convertible Note hedge and issuer warrant transactions. At the close of business on April 20, 2017, Goldman Sachs’ hedge positions in respect of the Convertible Note hedge and issuer warrant transactions included approximately 1.7 million shares of Yahoo common stock, as well as other derivatives referencing Yahoo securities. Goldman Sachs is expected to continue to engage in hedging activities in accordance with applicable law to mitigate its exposure to market fluctuations in the price of the Company’s common stock resulting from the Convertible Note hedge and issuer warrant transactions.

Such hedging activity has been, and will be, at Goldman Sachs’ own risk and may result in a gain or loss to Goldman Sachs that may be greater than or less than the contractual benefit to Goldman Sachs under the Convertible Note hedge and issuer warrant transactions. The amount of any such gain or loss will not be known until the Convertible Note hedge and issuer warrant transactions have been fully exercised, expired, or terminated in accordance with their terms and Goldman Sachs and its affiliates have completed all of their unwind activities. Goldman Sachs informed the Company that a portion of the amount of any such gain or loss, including any termination payment, may be shared with Goldman Sachs’ Investment Banking Division.

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Whether the Sale Transaction results in adjustments, exercises, and/or terminations of the Convertible Note hedge and issuer warrant transactions and the amount of payments or deliveries to be made upon ultimate exercise, expiration, or termination of the Convertible Note hedge and issuer warrant transactions will depend on a number of factors, including how the Sale Transaction is treated under the Convertible Note hedge and issuer warrant transactions as documented. As such factors change, and as Goldman Sachs has hedged its position under such transactions, the completion of the Sale Transaction could result in ultimate payments to or from Goldman Sachs that are greater than, equal to, or less than the amount of the payments that would have been received or paid by Goldman Sachs upon exercise, expiration, or termination of the Convertible Note hedge and issuer warrant transactions in the absence of the Sale Transaction.

In accordance with industry practice, Goldman Sachs maintains customary institutional information barriers reasonably designed to prevent the unauthorized disclosure of confidential information by personnel in its Investment Banking Division to the personnel in its Securities Division who are undertaking these hedging and other market transactions. Notwithstanding the foregoing, as a result of preparation of disclosures to the Company of Goldman Sachs’ Investment Banking Division’s economic interests in the Convertible Note hedge and issuer warrant transactions, persons in Goldman Sachs’ Investment Banking Division may have received or may receive input into how to model, or reports of historical measures or estimates of, Goldman Sachs’ and/or Goldman Sachs’ Investment Banking Division’s profit and/or loss over certain measurement periods related to the Convertible Note hedge and issuer warrant transactions.

Prior to the determinations by the Strategic Review Committee and the Board with respect to approval of the Sale Transaction, Goldman Sachs also provided the Company and the Board with certain estimates and analyses concerning the impact of the Sale Transaction on the Convertible Note hedge and issuer warrant transactions, based on theoretical models and various assumptions concerning the terms of the Sale Transaction and market conditions and other information available at the time. Such estimates and analyses were prepared by the Investment Banking Division of Goldman Sachs without consultation with the derivatives trading personnel responsible for Goldman Sachs’s position as principal in the Convertible Note hedge and issuer warrant transactions.

The Strategic Review Committee selected Goldman Sachs as one of its financial advisors because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Sale Transaction, as well as its and its familiarity and prior experience with the Company, including with respect to the Aabaco spin-off.

Opinion of J.P. Morgan

At the February 20, 2017 Board meeting, J.P. Morgan rendered its oral opinion to the Strategic Review Committee and the Board that, as of such date, and based upon and subject to the factors and assumptions set forth in its written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo. J.P. Morgan confirmed its February 20, 2017 oral opinion by delivering its written opinion to the Strategic Review Committee and the Board, dated February 20, 2017, that, as of such date, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of J.P. Morgan dated February 20, 2017, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit F to this proxy statement and is incorporated by reference herein. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Strategic Review Committee and the Board (in their capacities as such) in connection with and for the purposes of their evaluation of

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the Sale Transaction. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any Yahoo stockholder as to how such stockholder should vote with respect to the Sale Transaction or any other matter.

In connection with preparing its opinion, J.P. Morgan, among other things:

• reviewed the Original Sale Transaction Agreements and drafts of the Sale Transaction Agreement Amendments and the Settlement and Release Agreement, each dated February 18, 2017;

• reviewed certain publicly available business and financial information concerning Yahoo’s operating business and the industries in which it operates;

• compared the proposed financial terms of the Sale Transaction with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

• compared the financial and operating performance of Yahoo’s operating business with publicly available information concerning certain other public companies J.P. Morgan deemed relevant, and reviewed the current and historical market prices of the Company’s common stock and certain publicly traded securities of such other companies;

• reviewed certain internal financial analyses and forecasts prepared by the management of the Company relating to Yahoo’s operating business for use by J.P. Morgan in performing its financial analysis in connection with its opinion delivered to the Strategic Review Committee and the Board in connection with the execution of the Original Sale Transaction Agreements;

• reviewed the Forecasts, as more fully described in the section of this proxy statement entitled “—Certain Financial Forecasts”; and

• performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of the Company with respect to certain aspects of the Sale Transaction, and the past and current business operations of Yahoo’s operating business, the financial condition and future prospects and operations of Yahoo’s operating business, including making inquiries of certain members of the management of the Company regarding their assessment of the potential financial impact of the User Security Matters and Data Breaches, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Company or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with the Company, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct or, with the exception of being provided with appraisals of certain real estate assets (which J.P. Morgan did not use in giving its opinion), was not provided with, any valuation or appraisal of any assets or liabilities, nor has J.P. Morgan evaluated the solvency of the Company, Yahoo Holdings, or Verizon under any state or federal laws relating to bankruptcy, insolvency, or similar matters.

In relying on financial analyses and Forecasts provided to the Financial Advisors or derived therefrom, J.P. Morgan assumed that they had been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Yahoo’s operating business to which such analyses or Forecasts relate. J.P. Morgan expressed no view as to such analyses or Forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the Sale Transaction and the other transactions contemplated by the Sale Transaction Agreements will have the tax consequences described in discussions with, and materials furnished to J.P. Morgan by, representatives of the

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Company and will be consummated as described in the Sale Transaction Agreements and that the Sale Transaction Agreement Amendments and the Settlement and Release Agreement will not differ in any material respects from the drafts thereof furnished to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by the Company and Verizon in the Sale Transaction Agreements are and will be true and correct in all respects material to its analysis, that the Company will have no exposure under any indemnification obligations contained within the Sale Transaction Agreements, including in respect of the User Security Matters and Data Breaches, in any amount material to its analysis, and that the adjustments to the cash consideration as provided in the Stock Purchase Agreement based on the value of the Yahoo RSU awards outstanding on the business day immediately preceding the closing of the Sale Transaction and the amounts of Yahoo Holdings’ working capital, cash, indebtedness, and transaction expenses as set forth in the Stock Purchase Agreement will not result in any adjustment to the consideration that is material to J.P. Morgan’s analysis. J.P. Morgan is not a legal, regulatory, or tax expert and has relied on the assessments made by advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory, or other consents and approvals necessary for the completion of the Sale Transaction will be obtained without any adverse effect on the Company, Yahoo Holdings or Yahoo’s operating business, or on the contemplated benefits of the Sale Transaction.

J.P. Morgan’s opinion is necessarily based on economic, market, and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of its opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion and that J.P. Morgan does not have any obligation to update, revise, or reaffirm its opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, and J.P. Morgan expressed no opinion as to the fairness of any consideration paid in connection with the Sale Transaction to the holders of any class of securities, creditors or other constituencies of the Company or Yahoo Holdings or as to the underlying decision by the Company to engage in the Sale Transaction. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Sale Transaction, or any class of such persons relative to the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, or with respect to the fairness of any such compensation.

The terms of the Sale Transaction Agreements were determined through arm’s-length negotiations between the Company and Verizon and were recommended by the Strategic Review Committee for approval by, and were approved by the Board, and the decision to enter into the Sale Transaction Agreements was solely that of the Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Strategic Review Committee and the Board in their evaluation of the Sale Transaction and should not be viewed as determinative of the views of the Strategic Review Committee, the Board, or the Company’s management with respect to the Sale Transaction or the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise the Strategic Review Committee in connection with its consideration of strategic alternatives on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity and prior experience with the Company and the industries in which it operates.

During the two year period ended February 20, 2017, J.P. Morgan and its affiliates have had commercial or investment banking relationships with the Company and Verizon, for which J.P. Morgan and its affiliates have received compensation for services to Verizon and/or its affiliates of approximately $32 million and to Yahoo and/or its affiliates of approximately $12 million. Such services during such period have included acting as financial advisor to the Company in connection with its strategic planning in 2015 and have included acting as a joint bookrunner on Verizon’s bond offering in October 2016, and acting as financial advisor to Verizon in connection with its sale of a portfolio of cellphone towers to American Tower in February 2015.

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In addition, as J.P. Morgan previously advised the Strategic Review Committee and the Company, one of J.P. Morgan’s affiliates (x) sold to the Company convertible note hedge options relating to the Company’s common stock in connection with the Company’s sale of the Convertible Notes and (y) purchased from the Company warrants relating to the Company’s common stock contemporaneously with the sale of such convertible note hedge options. J.P. Morgan’s affiliate entered into these transactions, and is acting thereunder, as principal for its own account and not as an advisor to the Company. Assuming that the note hedge and warrant transactions are not otherwise terminated pursuant to their terms, the warrants may be adjusted by J.P. Morgan’s affiliate, as calculation agent, if J.P. Morgan’s affiliate determines that an event has occurred that gives it the right to make an adjustment and an adjustment is necessary to preserve the fair value of the issuer warrant transactions to such affiliate in light of the effect of the announcement and/or completion of the Sale Transaction on the theoretical value of the Company’s shares or such issuer warrant transactions. Such adjustments may compensate J.P. Morgan’s affiliate for any diminution in the value of the issuer warrant transactions to it that would otherwise result from the announcement and/or completion of the Sale Transaction.

In connection with such convertible note hedge options and warrants, J.P. Morgan’s affiliate has exposure to market fluctuations in the price of the Company’s common stock. Such affiliate’s ordinary practice is to hedge its net market exposure to the price of the common stock underlying private derivative transactions with issuers of such common stock such as the Convertible Note hedge and issuer warrant transactions. In connection with such transactions, J.P. Morgan and its affiliates have engaged, and will continue to engage, in hedging and other market transactions (which may include purchasing or selling the Company’s common stock and the entering into or unwinding various derivative transactions with respect to the Company’s common stock) that are generally intended to substantially neutralize J.P. Morgan’s affiliate’s risk exposure as a result of the Convertible Note hedge options and issuer warrants. J.P. Morgan and its affiliates are expected to continue to engage in hedging activities in accordance with applicable law to mitigate their exposure to market fluctuations in the price of the Company’s common stock resulting from the Convertible Note hedge options and issuer warrants.

Such hedging activity has been, and will be, at J.P. Morgan’s own risk and may result in a gain or loss to J.P. Morgan and its affiliates that may be greater than or less than the contractual benefit to J.P. Morgan and its affiliates under the Convertible Note hedge options and issuer warrants. The amount of any such gain or loss will not be known until such transactions have been fully exercised, expired, or terminated in accordance with their terms and J.P. Morgan and its affiliates have completed all of their unwind activities. J.P. Morgan informed the Company that a portion of the amount of any such gain or loss, including any termination payment, may be shared with J.P. Morgan’s Investment Banking Division.

Whether the Sale Transaction results in adjustments, exercises, and/or terminations of the Convertible Note hedge and issuer warrant transactions and the amount of payments or deliveries to be made upon ultimate exercise, expiration, or termination of the Convertible Note hedge options and issuer warrants will depend on a number of factors, including how the Sale Transaction is treated under the Convertible Note hedge and issuer warrant transactions as documented. As such factors change, and as J.P. Morgan’s affiliate has hedged its position under such transactions, the completion of the Sale Transaction could result in ultimate payments to or from J.P. Morgan’s affiliate that are greater than, equal to, or less than the amount of the payments that would have been received or paid by J.P. Morgan’s affiliate upon exercise, expiration, or termination of such Convertible Note hedge and issuer warrant transactions in the absence of the Sale Transaction.

In accordance with industry practice, J.P. Morgan maintains customary institutional information barriers reasonably designed to prevent the unauthorized disclosure of confidential information by investment banking personnel to the personnel who are undertaking these hedging and other market transactions.

Prior to the Company’s entry into the Stock Purchase Agreement, J.P. Morgan also provided the Company and the Board with certain estimates and analyses concerning the impact of the proposed transaction on the Convertible Note hedge options and issuer warrants, based on theoretical models and various assumptions concerning the terms of the proposed transaction and market conditions and other information available at the

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time. Such estimates and analyses were prepared by investment banking personnel without consultation with the derivatives trading personnel responsible for J.P. Morgan’s affiliate’s position as principal in the Convertible Note hedge options and issuer warrants.

In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Verizon, for which it receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than one percent of the outstanding common stock of each of the Company and Verizon. In the ordinary course of J.P. Morgan’s businesses, J.P. Morgan and is affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company or Verizon for its own account or for the accounts of customers and, accordingly, J.P. Morgan may at any time hold long or short positions in such securities or other financial instruments.

Opinion of PJT Partners

At the February 20, 2017 Board meeting, PJT Partners rendered to the Strategic Review Committee and the Board its oral opinion, which was confirmed by delivery of a written opinion dated February 20, 2017, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in PJT Partners’ written opinion, the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, was fair, from a financial point of view, to Yahoo.

The full text of the written opinion of PJT Partners, dated February 20, 2017, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Exhibit G to this proxy statement and is incorporated by reference herein. The summary of the opinion of PJT Partners set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Yahoo stockholders are urged to read the opinion in its entirety. PJT Partners provided its opinion to the Strategic Review Committee and the Board (in their capacities as such) in connection with and for purposes of their evaluation of the Sale Transaction only and PJT Partners’ opinion is not a recommendation as to any action the Strategic Review Committee or the Board should take with respect to the Sale Transaction or any aspect thereof. The issuance of PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures. The opinion does not constitute a recommendation to any Yahoo stockholder as to how any such stockholder should vote or act with respect to the Sale Transaction or any other matter.

In arriving at its opinion, PJT Partners, among other things:

• reviewed certain publicly available information concerning the business and financial condition of Yahoo’s operating business and the industries in which it operates;

• reviewed certain internal information concerning the business and financial condition of Yahoo’s operating business prepared and furnished to PJT Partners by the management of the Company;

• reviewed certain internal financial analyses, estimates and forecasts relating to the Business prepared by the management of the Company;

• held discussions with the management of the Company concerning, among other things, Yahoo’s operating business, the operating and regulatory environment of Yahoo’s operating business, and the financial condition, prospects, and strategic objectives of Yahoo’s operating business, including making inquiries of certain members of the management of the Company regarding their assessment of the potential financial impact of the User Security Matters and Data Breaches (in each case, as defined in the Reorganization Agreement);

• compared the financial and operating performance of Yahoo’s operating business with publicly available similar information for certain other public companies that PJT Partners deemed to be

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relevant, and reviewed the stock market information for certain other public companies that PJT Partners deemed to be relevant;

• reviewed the publicly available financial terms of certain other business combination transactions that PJT Partners deemed to be relevant;

• reviewed (i) the Original Sale Transaction Agreements and (ii) drafts of the Sale Transaction Agreement Amendments and the Settlement and Release Agreement, each dated February 18, 2017; and

• performed such other financial studies, analyses, and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.

In preparing its opinion, with the consent of the Strategic Review Committee and the Board, PJT Partners relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by PJT Partners, without independent verification thereof. For purposes of PJT Partners’ opinion delivered on July 22, 2016, in connection with the Original Stock Purchase Agreement, the Financial Advisors were provided by the management of the Company with certain internal financial analyses, estimate and forecasts and certain terminal year assumptions relating to Yahoo’s operating business, which the Financial Advisors were directed to use by the Strategic Review Committee. In connection with preparing PJT Partners’ opinion delivered on February 20, 2017, the Financial Advisors were provided by the management of the Company with the Forecasts and certain terminal year assumptions relating to Yahoo’s operating business, which the Financial Advisors were directed to use by the Board. PJT Partners assumed with the consent of the Strategic Review Committee and the Board that such Forecasts and the assumptions underlying such Forecasts, and all other financial analyses, estimates and forecasts provided to the Financial Advisors by the management of the Company, have been reasonably prepared in accordance with industry practice and represent management’s best currently available estimates and judgments as to the business and operations and future financial performance of Yahoo’s operating business. PJT Partners assumed no responsibility for and expressed no opinion as to the Forecasts, the assumptions upon which they are based, or any other financial analyses, estimates, and forecasts provided to the Financial Advisors by the management of the Company. PJT Partners also assumed that there had been no material changes in the assets, financial condition, results of operations, business, or prospects of Yahoo’s operating business since the respective dates of the last financial statements made available to the Financial Advisors. PJT Partners relied on representations and/or projections provided by the management of the Company regarding taxable income, standalone net operating loss utilization, and other tax attributes of Yahoo’s operating business. PJT Partners further relied with the consent of the Strategic Review Committee and the Board upon the assurances of the management of the Company that they are not aware of any facts that would make the information and projections provided by them inaccurate, incomplete, or misleading.

PJT Partners was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by PJT Partners, nor was PJT Partners furnished with any such verification and PJT Partners did not assume any responsibility or liability for the accuracy or completeness thereof. PJT Partners did not conduct a physical inspection of any of the properties or assets of the Company or Yahoo Holdings. PJT Partners did not make an independent evaluation or appraisal of the assets or the liabilities (including any contingent, derivative, or off-balance sheet assets and liabilities) of the Company, nor, with the exception of being furnished with appraisals of certain real estate assets (which PJT Partners did not use in preparing its opinion), was PJT Partners furnished with any such evaluations or appraisals, nor has PJT Partners evaluated the solvency of the Company, Yahoo Holdings, or Verizon under any applicable laws.

PJT Partners also assumed with the consent of the Strategic Review Committee and the Board that the final executed forms of the Sale Transaction Agreement Amendments would not differ in any material respects from drafts reviewed by PJT Partners and the completion of the Sale Transaction will be effected in accordance with the terms and conditions of the Sale Transaction Agreements, without waiver, modification, or amendment of any material term, condition, or agreement, and that, in the course of obtaining the necessary regulatory or third party

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consents and approvals (contractual or otherwise) for the Sale Transaction, no delay, limitation, restriction, or condition will be imposed that would have an adverse effect on the Company, Yahoo Holdings or Yahoo’s operating business or the contemplated benefits of the Sale Transaction. PJT Partners also assumed that the Company will have no exposure under any indemnification obligations contained in the Sale Transaction Agreements, including in respect of the User Security Matters and Data Breaches, in any amount material to its analysis, and that the adjustments to the consideration based on the value of the Yahoo RSU awards outstanding on the business day immediately preceding the closing of the Sale Transaction and the amounts of the Yahoo Holdings’ working capital, cash, indebtedness, and transaction expenses as set forth in the Stock Purchase Agreement will not result in any adjustment to the consideration that is material to PJT Partners’ analysis. PJT Partners did not express any opinion as to any tax or other consequences that might result from the Sale Transaction, nor does PJT Partners’ opinion address any legal, tax, regulatory, or accounting matters, as to which PJT Partners understood that the Company obtained such advice as it deemed necessary from qualified professionals. PJT Partners are not legal, tax, or regulatory advisors and have relied upon without independent verification the assessment of the Company and its legal, tax, and regulatory advisors with respect to such matters.

In arriving at its opinion, PJT Partners did not consider the relative merits of the Sale Transaction as compared to any other business plan or opportunity that might be available to the Company, or the effect of any other arrangement in which the Company might engage, and PJT Partners’ opinion does not address the underlying decision by the Company to engage in the Sale Transaction, including its decision to enter into the Sale Transaction Agreement Amendments or the Settlement and Release Agreement. PJT Partners’ opinion is limited to the fairness as of the date thereof, from a financial point of view, to Yahoo of the Cash Consideration to be paid in the Sale Transaction, together with the RSU Substitution, pursuant to the Stock Purchase Agreement, and PJT Partners’ opinion does not address any other aspect or implication of the Sale Transaction, the Sale Transaction Agreements, the Settlement and Release Agreement or any other agreement or understanding entered into in connection with the Sale Transaction or otherwise. PJT Partners further expressed no opinion or view as to the fairness of the Sale Transaction to the holders of any class of securities, creditors, or other constituencies of the Company or as to the underlying decision by the Company to engage in the Sale Transaction. PJT Partners also expressed no opinion as to the fairness of the amount or nature of the compensation to any of the Company’s or Yahoo Holdings’ officers, directors, or employees, or any class of such persons, relative to the consideration or otherwise. PJT Partners’ opinion is necessarily based upon economic, market, monetary, regulatory, and other conditions as they exist and can be evaluated, and the information made available to it, as of the date of its opinion. PJT Partners expressed no opinion as to the prices or trading ranges at which the shares of the Company’s common stock will trade at any time.

PJT Partners’ opinion does not constitute a recommendation to any Yahoo stockholder as to how any such stockholder should vote or act with respect to the Sale Transaction or any other matter. PJT Partners assumes no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of its opinion. PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures.

As part of its investment banking business, PJT Partners is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes and other valuations for corporate and other purposes. PJT Partners was selected as a financial advisor to the Strategic Review Committee with respect to the Sale Transaction on the basis of PJT Partners’ experience and its familiarity with the industry in which the Company operates.

In the ordinary course of PJT Partners and its affiliates’ businesses, PJT Partners and its affiliates may provide investment banking and other financial services to the Company or Verizon and may receive compensation for the rendering of these services. During the two year period ending on the date of its opinion, PJT Partners acted as financial advisor to Verizon in connection with its sale of a portfolio of wireline assets to Frontier Communications Corporation announced in February 2015, its acquisition of Telogis Inc. announced in June 2016, and its acquisition of Fleetmatics Group, PLC announced in August 2016. For its financial advisory

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services to Verizon in connection with these transactions, PJT Partners received compensation in an aggregate amount of approximately $19 million. PJT Partners may also in the future provide investment banking and other financial services to the Company, Yahoo Holdings, Verizon, and their respective affiliates for which it may receive compensation.

Summary of the Financial Analyses of the Financial Advisors

The following is a summary of the material financial analyses presented by the Financial Advisors to the Strategic Review Committee and the Board on February 19, 2017 in connection with rendering their respective opinions described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by the Financial Advisors, nor does the order of analyses described represent relative importance or weight given to those analyses by the Financial Advisors. 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 the Financial Advisors’ 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 February 17, 2017 and is not necessarily indicative of current market conditions.

The analyses described below were jointly prepared by the Financial Advisors for purposes of each of the Financial Advisors’ providing the opinions to the Strategic Review Committee and the Board described above. Those analyses do not purport to be appraisals nor do they 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 those analyses. Because those 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 the Company, the Board, the Strategic Review Committee, the Financial Advisors, or any other person assumes responsibility if future results are materially different from those forecast.

For purposes of this section of this proxy statement, the Financial Advisors assumed total consideration to be received in the Sale Transaction by the Company of $5,142 million, which was calculated as the sum of (i) an amount equal to the base purchase price plus (ii) the tax adjusted value of the unvested Yahoo RSU awards to be replaced with Verizon RSU awards pursuant to the Stock Purchase Agreement based on an assumed 40 percent tax rate and the trailing-three day volume weighted average price of the Company’s common stock as of July 22, 2016.

Goldman Sachs also assumed that the estimated amounts of Yahoo Holdings’ working capital, cash, indebtedness, and transaction expenses relied upon by Goldman Sachs in connection with its financial analyses reflected the then best currently available estimates and judgments of the management of the Company, which estimates would not result in any adjustment to the Cash Consideration to be paid to the Company in the Sale Transaction material to Goldman Sachs’ analysis.

Selected Trading Multiples

The Financial Advisors reviewed and compared certain financial information for Yahoo’s operating business to corresponding financial information, ratios, and public market multiples for the following publicly traded Internet companies (collectively, the “Selected Companies”):

• IAC/InterActiveCorp (excluding Match Group Inc.)

• Groupon Inc.

• GoDaddy Inc.

• XO Group Inc.

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• Bankrate, Inc.

• eBay Inc.

• Web.com Group, Inc.

• WebMD Health Corp.

Although none of the Selected Companies is directly comparable to Yahoo’s operating business, the companies included were chosen because they are publicly traded companies with operations that for purposes of the Financial Advisors’ analysis may be considered similar to certain operations of Yahoo’s operating business.

The Financial Advisors also calculated and compared various financial multiples and ratios based on financial data as of February 17, 2017 and information it obtained from SEC filings. The multiples and ratios of Yahoo’s operating business were calculated using information provided by the Company’s management. The multiples and ratios for each of the Selected Companies were calculated using the most recent publicly available information. With respect to the Selected Companies, the Financial Advisors calculated:

• implied firm value as a multiple of the estimated earnings before interest, taxes and depreciation and amortization (“EBITDA”) for the calendar year 2017 (“2017 EBITDA”);

• implied firm value as a multiple of EBITDA, adjusted to exclude stock-based compensation, for the calendar year 2017 (“2017 EBITDA Minus SBC”); and

• implied firm value as a multiple of EBITDA, adjusted to exclude capital expenditures, for the calendar year 2017 (“2017 EBITDA Minus Capex”).

The results of these analyses are summarized as follows:

Firm Value as a multiple of:	Selected Companies
	Range	Median
2017 EBITDA	8.4x - 17.4x		10.0x
2017 EBITDA Minus SBC	9.7x - 27.3x		13.1x
2017 EBITDA Minus Capex	9.6x - 27.7x		12.1x

For purposes of the analysis, (i) certain non-recurring items consisting of (a) patent licensing contributions expiring in 2019 and (b) marketing services revenue from Yahoo Japan expiring in August 2017 (collectively, the “Non-Recurring Items”) were excluded from Yahoo’s operating business’ 2017 EBITDA, 2017 EBITDA Minus SBC, and 2017 EBITDA Minus Capex (for more information on the amount of each Non-Recurring Item, see the section of this proxy statement entitled “—Certain Financial Forecasts”) and (ii) each range of illustrative standalone enterprise values was adjusted to include the net present value of the Non-Recurring Items. The Financial Advisors calculated the net present value of the Non-Recurring Items by applying a discount rate of 10 percent to the Non-Recurring Items provided by the Company. Using the results of this analysis and the Financial Advisors’ professional judgment and experience, the Financial Advisors selected a 2017 EBITDA reference range of 5.0x to 8.0x for Yahoo’s operating business. This multiple reference range was applied to Yahoo’s operating business’ 2017 EBITDA provided by the Company’s management to the Financial Advisors to derive a range of illustrative standalone enterprise values for Yahoo’s operating business of $3,850 million to $6,100 million. Using the results of this analysis and the Financial Advisors’ professional judgment and experience, the Financial Advisors selected a 2017 EBITDA Minus SBC reference range of 8.0x to 11.0x for Yahoo’s operating business. This multiple reference range was applied to Yahoo’s operating business’ 2017 EBITDA Minus SBC provided by the Company’s management to the Financial Advisors to derive a range of illustrative standalone enterprise values for Yahoo’s operating business of $2,850 million to $3,850 million. Using the results of this analysis and the Financial Advisors’ professional judgment and experience, the Financial Advisors selected a 2017 EBITDA Minus Capex reference range of 8.0x to 11.0x for Yahoo’s operating business. This multiple reference range was applied to Yahoo’s operating business’ 2017 EBITDA Minus Capex provided by the Company’s management to the Financial

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Advisors to derive a range of illustrative standalone enterprise values for Yahoo’s operating business of $3,700 million to $5,025 million. In each case, the standalone enterprise values were rounded to the nearest $25 million.

Illustrative Discounted Cash Flow Analysis

Using the Forecasts and certain terminal year assumptions relating to Yahoo’s operating business provided by management (and approved by, and used by the Financial Advisors at the direction of, the Board), the Financial Advisors performed an illustrative discounted cash flow analysis on Yahoo’s operating business. Using discount rates, in the case of J.P. Morgan and PJT Partners, ranging from 8.75 percent to 10.75 percent and, in the case of Goldman Sachs, ranging from 9.5 percent to 11.5 percent, in each case, reflecting estimates of Yahoo’s operating business’ weighted average cost of capital, the Financial Advisors discounted to present value as of December 31, 2016 (i) estimates of EBITDA less stock based compensation, less cash taxes, less capital expenditures, less change in net working capital, plus the Non-Recurring Items (“Unlevered Free Cash Flow”) for Yahoo’s operating business for the years January 1, 2017 through December 31, 2019 as reflected in the Forecasts and (ii) a range of illustrative terminal values for Yahoo’s operating business, which were calculated by applying perpetuity growth rates ranging from two percent to four percent, to the calendar year 2019 estimate of revenue (excluding the Non-Recurring Items)) to be generated by Yahoo’s operating business to determine free cash flow, reflecting the assumptions provided by management of the Company. The Financial Advisors derived ranges of illustrative enterprise values for Yahoo’s operating business by adding the present values derived pursuant to clause (i) and clause (ii) of the preceding sentence. J.P. Morgan’s and PJT Partners’ analysis derived a range of illustrative standalone enterprise values for Yahoo’s operating business of $2,025 million to $3,750 million. Goldman Sachs’ analysis derived a range of illustrative standalone enterprise values for Yahoo’s operating business of $1,875 million to $3,250 million. In each case, the standalone enterprise values were rounded to the nearest $25 million.

Selected Transactions Analysis

The Financial Advisors analyzed certain information relating to the following selected transactions involving public Internet companies with a transaction value over $1 billion since January 2012.

Announcement Date	Acquirer	Target
November 2, 2015	Activision Blizzard, Inc.	King Digital Entertainment plc
May 12, 2015	Verizon Communications Inc.	AOL Inc.
October 22, 2012	Permira	Ancestry.com Inc.

For each of the selected transactions, the Financial Advisors calculated and compared the target’s enterprise value as a multiple of the target’s estimated EBITDA for the forward-looking 12-month period immediately following the date the relevant transaction was announced (“NTM EBITDA”), and the target’s enterprise value as a multiple of the target’s estimated EBITDA, adjusted to exclude stock-based compensation, for the forward-looking 12-month period immediately following the date the relevant transaction was announced (“NTM EBITDA Minus SBC”). While none of the companies that participated in the selected transactions are directly comparable to Yahoo’s operating business, the companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of Yahoo’s operating business’ results, market size, and product profile.

The following table presents the results of this analysis:

Enterprise Value as a Multiple of:	Selected Transactions
	Range	Median
NTM EBITDA	6.8x - 8.4x		8.3x
NTM EBITDA Minus SBC	8.3x - 9.6x		9.3x

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For purposes of the analysis, (i) the Non-Recurring Items were excluded from Yahoo’s operating business’ NTM EBITDA and NTM EBITDA Minus SBC (for more information on the amount of each Non-Recurring Item, see the section of this proxy statement entitled “—Certain Financial Forecasts,”) and (ii) each range of illustrative standalone enterprise values was adjusted to include the net present value of the Non-Recurring Items. The Financial Advisors calculated the net present value of the Non-Recurring Items by applying a discount rate of 10 percent to the Non-Recurring Items provided by the Company. Using the results of this analysis, the Financial Advisors applied the NTM EBITDA multiple range for the selected transactions to Yahoo’s operating business’ NTM EBITDA estimate provided by management of the Company to the Financial Advisors and derived a range of illustrative standalone enterprise values for Yahoo’s operating business of $5,200 million to $6,375 million. Using the results of this analysis, the Financial Advisors applied the NTM EBITDA Minus SBC multiple range for the selected transactions to Yahoo’s operating business’ NTM EBITDA Minus SBC estimate provided by management of the Company to the Financial Advisors and derived a range of illustrative standalone enterprise values for Yahoo’s operating business of $2,950 million to $3,375 million. In each case, the standalone enterprise values were rounded to the nearest $25 million.

Certain Financial Forecasts

Yahoo does not, as a matter of course, develop or publicly disclose long-term projections due to, among other reasons, the unpredictability and uncertainty of the underlying assumptions and estimates. However, at the Board’s request, in connection with its review of strategic alternatives, Yahoo’s management prepared three years of forecasted financial information for the Company. Such forecasted financial information was presented to and reviewed by the Board on March 14, 2016 and was thereafter provided to potential bidders in connection with their due diligence review of a potential transaction. Yahoo’s management updated such forecasted financial information in July 2016, based on more recent information, to (i) reduce capital expenditure amounts for 2016 from $450 million to $350 million, based on actual expenditures during 2016 and (ii) reduce stock-based compensation (“SBC”) for 2018 from $452 million to $400 million. Yahoo provided this updated information to the Financial Advisors for purposes of the financial analyses and fairness opinions provided to the Strategic Review Committee and the Board in connection with their consideration of the Original Sale Transaction Agreements. In connection with the Strategic Review Committee’s and the Board’s consideration of the Sale Transaction Agreement Amendments and the Settlement and Release Agreement, Yahoo’s management further updated such forecasted financial information in February 2017, (i) to remove forecasted financial information for 2016, as that year had been completed and actual results were known, (ii) to reflect more recent information with respect to 2017 and 2018 given that more than six months had passed since the execution of the Original Sale Transaction Agreements, and (iii) to include forecasted financial information for fiscal year 2019, and provided such updated information to the Financial Advisors. This updated information did not include estimates of potential non-recurring costs and expenses related to the Security Incidents.

The February 2017 updated forecasted financial information differed from the forecasted financial information provided to the Financial Advisors in July 2016 as follows:

• total revenue (ex-traffic acquisition costs) (“ex-TAC”) for 2017 was reduced from $3,507 million to $3,460 million and for 2018 was reduced from $3,688 million to $3,550 million;

• revenue (ex-TAC) (excluding selected non-recurring items) for 2017 was reduced from $3,361 million to $3,303 million and for 2018 was reduced from $3,619 million to $3,480 million;

• EBITDA (excluding SBC) for 2017 was increased from $850 million to $900 million and for 2018 remained at $950 million;

• recurring EBITDA (excluding selected non-recurring items and SBC) for 2017 was increased from $704 million to $743 million and for 2018 remained at $880 million;

• SBC for 2017 was reduced from $430 million to $406 million and for 2018 was reduced from $400 million to $350 million;

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• capital expenditures for 2017 were reduced from $400 million to $300 million and for 2018 were reduced from $400 million to $350 million;

• earnings before interest after taxes for 2017 increased from negative $153 million to negative $91 million and for 2018 increased from $61 million to $101 million; and

• free cash flow for 2017 increased from $20 million to $139 million and for 2018 increased from $143 million to $149 million.

Based on this information and additional input from Yahoo’s management, the Financial Advisors prepared terminal year forecasts, which were reviewed by Yahoo’s management and the Strategic Review Committee. The updated forecasted financial information and the terminal year forecasts (the “Forecasts”) were approved by Yahoo’s management, the Strategic Review Committee and the Board for use by the Financial Advisors in performing their financial analyses, which were presented to the Strategic Review Committee and the Board by the Financial Advisors and are summarized in the section of this proxy statement entitled “—Opinions of the Financial Advisors.” The Forecasts were reviewed by Yahoo’s management with, and considered by, the Strategic Review Committee and the Board in connection with their evaluation, recommendation, and approval of the Sale Transaction.

The Forecasts were not prepared with a view to public disclosure and the summary thereof is included in this proxy statement only because such information was made available as described above. The Forecasts were not prepared with a view to compliance with GAAP, the published guidelines of the SEC regarding projections and forward-looking statements, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Furthermore, PricewaterhouseCoopers LLP, our independent auditor, has not examined, reviewed, compiled, or otherwise applied procedures to, the Forecasts and, accordingly, assumes no responsibility for, and expresses no opinion on, them. The PricewaterhouseCoopers LLP report included in Yahoo’s Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this proxy statement, relates to the Company’s historical financial information. It does not extend to the forecasted financial information and should not be read to do so. The Forecasts were prepared solely for internal use of Yahoo and the Financial Advisors and are subjective in many respects.

Although the Forecasts are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events that our management believed were reasonable at the time the Forecasts were prepared, taking into account the relevant information available to our management at the time. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the Forecasts not to be achieved include general economic conditions, accuracy of certain accounting assumptions, changes in actual or projected cash flows, competitive pressures, and changes in tax laws. As the Forecasts are forward-looking statements, see also the section of this proxy statement entitled “Cautionary Statement Concerning Forward-Looking Statements.” In addition, the Forecasts do not take into account any circumstances or events occurring after the date that they were prepared and do not give effect to the Sale Transaction. As a result, there can be no assurance that the Forecasts will be realized, and actual results may be materially better or worse than those contained in the Forecasts. The inclusion of this information should not be regarded as an indication that the Strategic Review Committee, the Board, Yahoo, the Financial Advisors, or any other recipient of this information considered, or now considers, that actual future results will necessarily reflect the Forecasts. The Forecasts are not included in this proxy statement in order to induce any stockholder to vote in favor of the Sale Proposal or any of the other proposals to be voted on at the special meeting or to influence any stockholder to make any investment decision with respect to the Sale Transaction.

The Forecasts should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Yahoo contained in our public filings with the SEC.

Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the Forecasts to reflect circumstances existing after the date the

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Forecasts were prepared or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the Forecasts are shown to be in error.

In light of the foregoing factors and the uncertainties inherent in the Forecasts, Yahoo stockholders are cautioned not to unduly rely on the Forecasts included in this proxy statement.

Certain of the measures included in the Forecasts may be considered non-GAAP financial measures, as noted below. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Yahoo may not be comparable to similarly titled amounts used by other companies.

Forecasted Financial Information

($ in millions)

Revenue and EBITDA Reconciliation (2017-2019)

	2017E			2018E			2019E
Total revenue (ex-TAC)	$	3,460		$	3,550		$	3,612
% growth		(1.7	%)		2.6	%		1.7	%
Less: Contribution of patent licensing		(86	)		(70	)		(26	)
Less: Yahoo Japan marketing services revenue		(71	)		—			—
Total selected non-recurring items	$	(157	)	$	(70	)	$	(26	)
Revenue (ex-TAC) (excl. selected non-recurring items)	$	3,303		$	3,480		$	3,586
% growth		(0.4	%)		5.4	%		3.0	%
EBITDA (excl. SBC)	$	900		$	950		$	1,000
% of revenue (ex-TAC)		26.0	%		26.8	%		27.7	%
Less: Contribution of patent licensing		(86	)		(70	)		(26	)
Less: Yahoo Japan marketing services revenue		(71	)		—			—
Total selected non-recurring items	$	(157	)	$	(70	)	$	(26	)
EBITDA (excl. selected non-recurring items and SBC)	$	743		$	880		$	974
% of revenue (ex-TAC) (excl. selected non-recurring items)		22.5	%		25.3	%		27.2	%

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Free Cash Flow Forecast ($ in millions)

	2017E			2018E			2019E			Terminal Year
Total revenue (ex-TAC)	$	3,460		$	3,550		$	3,612		$	3,694
% growth		(1.7	%)		2.6	%		1.7	%		2.3	%
Revenue (ex-TAC) (excl. selected non-recurring items)	$	3,303		$	3,480		$	3,586		$	3,694
% growth		(0.4	%)		5.4	%		3.0	%		3.0	%
EBITDA (excl. selected non-recurring items and SBC)	$	743		$	880		$	974		$	1,003
% of revenue (ex-TAC) (excl. selected non-recurring items)		22.5	%		25.3	%		27.2	%		27.2	%
Less: SBC	($	406	)	($	350	)	($	350	)	($	350	)
% of revenue (ex-TAC) (excl. selected non-recurring items)		12.3	%		10.1	%		9.8	%		9.5	%
Less: Depreciation	($	390	)	($	329	)	($	308	)	($	343	)
Earnings before interest and taxes (incl. SBC) (“EBIT”)	($	53	)	$	201		$	316		$	310
% of revenue (ex-TAC) (excl. selected non-recurring items)		(1.6	%)		5.8	%		8.8	%		8.4	%
Less: Taxes	($	38	)	($	100	)	($	127	)	($	113	)
% tax rate (1)		37.0	%		37.0	%		37.0	%		36.5	%
Earnings before interest after taxes	($	91	)	$	101		$	189		$	197
Plus: Depreciation	$	390		$	329		$	308		$	343
% of capital expenditures		130.0	%		94.0	%		88.0	%		98.0	%
Less: Capital expenditures	($	300	)	($	350	)	($	350	)	($	350	)
% of revenue (ex-TAC) (excl. selected non-recurring items)		9.1	%		10.1	%		9.8	%		9.5	%
Less: Change in net working capital	($	17	)	($	1	)	($	1	)	$	0
Plus: Selected non-recurring items	$	157	(2)	$	70	(3)	$	26	(4)	$	0
Free cash flow	$	139		$	149		$	172		$	190

(1) Taxes are calculated based on a percentage of EBIT including SBC and non-recurring items. EBIT including SBC and non-recurring items is in an amount equal to $104 million for the calendar year 2017, $271 million for the calendar year 2018, $342 million for the calendar year 2019, and $310 million for the terminal year.

(2) Patent-licensing contributions in an amount equal to $86 million and Yahoo Japan marketing services revenue in an amount equal to $71 million are non-recurring items for the calendar year 2017.

(3) Patent-licensing contributions in an amount equal to $70 million is a non-recurring item for the calendar year 2018.

(4) Patent-licensing contributions in an amount equal to $26 million is a non-recurring item for the calendar year 2019.

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Reconciliations between Non-GAAP Forecasted Financial Metrics and Comparable GAAP Metrics

The following table presents reconciling items between certain of the forecasted non-GAAP metrics above and the most comparable GAAP metrics:

Reconciliations and Reconciling Items 2017E-2019E* ($ in millions)

	2017E			2018E			2019E
Revenue ex-TAC (and Revenue ex-TAC excl. selected non-recurring items):
GAAP revenue	$	5,204		$	5,227		$	5,322
% growth		1	%		0	%		2	%
Cost of revenue-TAC		1,744			1,677			1,710
Revenue ex-TAC		3,460			3,550			3,612
Contribution of patent licensing		86			70			26
Yahoo Japan marketing services revenue		71			0			0
Revenue ex-TAC (excl. selected non-recurring items)	$	3,303		$	3,480		$	3,586
EBITDA (excl. SBC)(1)	$	900		$	950		$	1,000
Depreciation		390			329			308
Amortization		76			55			30
SBC		406			350			350
Taxes		38			100			127
EBITDA (excl. SBC and selected non-recurring items)(1)	$	743		$	880		$	974
Depreciation		390			329			308
Amortization		76			55			30
SBC		406			350			350
Taxes		38			100			127
Contribution of patent licensing		86			70			26
Yahoo Japan marketing services revenue		71			0			0
EBIT (incl. SBC)(2)	$	(53	)	$	201		$	316
Taxes		38			100			127
Earnings before interest after taxes(3)	$	(91	)	$	101		$	189
Free cash flow(4)(5)	$	139		$	149		$	172
Acquisition of property and equipment, net		300			350			350
SBC		406			350			350

* The Forecasts also present estimates of a “terminal year,” which is a hypothetical year used for purposes of discounted cash flow analysis rather than an estimated calendar year; accordingly, it is not possible to reconcile the terminal year estimates to any comparable forward-looking GAAP metric without unreasonable effort.

(1) Yahoo has not provided full reconciliations between its adjusted EBITDA forecasts—EBITDA (excl. SBC) and EBITDA (excl. SBC and selected non-recurring items)—and the comparable forward-looking GAAP financial measure, net income (loss) attributable to Yahoo (“Net Earnings”), because a reconciliation is not available without unreasonable effort. The reconciling items for which Yahoo can provide a forward-looking estimate are shown above. The reconciling items for which Yahoo is unable to provide a forward-looking estimate without unreasonable effort include: restructuring; other expense, net; earnings in equity interests; and net income attributable to noncontrolling interests. Certain factors that are materially significant to Yahoo’s ability to estimate these items are out of the Company’s control and/or cannot be reasonably predicted.

(2) Yahoo has not provided a full reconciliation between its EBIT (incl. SBC) forecast and the comparable forward-looking GAAP financial measure, Net Earnings, because a reconciliation is not available without

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unreasonable effort. The reconciling item for which Yahoo can provide a forward-looking estimate is shown above. The reconciling items for which Yahoo is unable to provide a forward-looking estimate without unreasonable effort include: restructuring; other expense, net; earnings in equity interests; and net income attributable to noncontrolling interests. Certain factors that are materially significant to Yahoo’s ability to estimate these items are out of the Company’s control and/or cannot be reasonably predicted.

(3) Yahoo has not reconciled its earnings before interest after taxes forecast to the comparable forward-looking GAAP financial measure, Net Earnings, because a reconciliation is not available without unreasonable effort. The reconciling items for which Yahoo is unable to provide a forward-looking estimate without unreasonable effort include: restructuring; other expense, net; earnings in equity interests; and net income attributable to noncontrolling interests. Certain factors that are materially significant to Yahoo’s ability to estimate these items are out of the Company’s control and/or cannot be reasonably predicted.

(4) For purposes of the Forecasts, “free cash flow” is defined differently than the free cash flow that appears in Yahoo’s earnings announcements and periodic reports filed with the SEC. Specifically, for purposes of the Forecasts, free cash flow is presented net of SBC expense. By contrast, SBC is not included as a cash cost in Yahoo’s historical presentations of free cash flow. The Forecasts’ definition presented above therefore yields a result that is lower (by the amount of SBC) than the result yielded by Yahoo’s traditional definition.

(5) The Forecasts present free cash flow by reference to earnings before interest after taxes, whereas the reconciliation table above presents reconciling items between free cash flow and net cash provided by operating activities (which Yahoo considers to be the most comparable GAAP measure). Yahoo has not provided a full reconciliation between the free cash flow forecast and net cash provided by operating activities because a reconciliation is not available without unreasonable effort. The reconciling items for which Yahoo can provide a forward-looking estimate are shown above. The reconciling items for which Yahoo is unable to provide a forward-looking estimate without unreasonable effort include: excess tax benefits from stock based awards, and dividends received from equity investees. Certain factors that are materially significant to Yahoo’s ability to estimate these items are out of the Company’s control and/or cannot be reasonably predicted.

Revenue ex-TAC

Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue less TAC that has been recorded as a cost of revenue. TAC consists of payments made to Yahoo’s distribution network of third-party entities who integrate Yahoo’s advertising offerings into their websites or other offerings as well as payments made to companies that direct consumer and business traffic to Yahoo’s online properties and services. TAC is recorded either as a reduction to revenue or as cost of revenue.

In general, Yahoo presents revenue ex-TAC in its earnings announcements and in the periodic reports it files with the SEC in order to provide investors a metric used by Yahoo for evaluation and decision-making purposes and to provide investors with comparable revenue numbers when comparing to its historical reported financial information. A limitation of revenue ex-TAC is that it is a measure Yahoo defined for internal and investor purposes that may be unique to it, and therefore it may not enhance the comparability of Yahoo’s results to those of other companies in its industry who have similar business arrangements but address the impact of TAC differently. Management compensates for these limitations by also relying on the comparable GAAP financial measures of revenue and cost of revenue—TAC.

EBITDA (excl. SBC) and EBITDA (excl. SBC and selected non-recurring items)

EBITDA (excl. SBC) is a non-GAAP financial measure defined as net income (loss) attributable to Yahoo before taxes, depreciation, amortization of intangible assets, SBC expense, restructuring, other income (expense), net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests. EBITDA (excl. SBC) is a metric Yahoo uses for evaluation and decision-making purposes and is similar to the “Adjusted EBITDA” metric Yahoo reports in its earnings announcements and in the periodic reports it files with the SEC. EBITDA (excl. SBC and selected non-recurring items) also excludes selected income streams that will

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expire prior to the end of the final period presented above, namely contribution of patent licensing and Yahoo Japan marketing services revenue.

EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for results reported under GAAP. These limitations include: EBITDA does not reflect tax payments and such payments reflect a reduction in cash available to Yahoo; EBITDA does not reflect the periodic costs of certain capitalized tangible and intangible assets used by Yahoo in generating revenues in its businesses; EBITDA (excl. SBC) does not include stock-based compensation expense related to Yahoo’s workforce; EBITDA also excludes other income (expense), net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests, and these items may represent a reduction or increase in cash available to Yahoo; and the adjusted EBITDA metrics are measures that may be unique to Yahoo, and therefore may not enhance the comparability of Yahoo’s results to other companies in its industry. Management compensates for these limitations by also relying on the comparable GAAP financial measure of net income (loss) attributable to Yahoo, which includes taxes, depreciation, amortization, stock-based compensation expense, restructuring, other income (expense), net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests.

Free Cash Flow

Free cash flow is a non-GAAP financial measure. The Forecasts present free cash flow by reference to earnings before interest after taxes (which is presented net of SBC expense), whereas the reconciliation table above presents reconciling items between free cash flow and net cash provided by operating activities (which Yahoo considers to be the most comparable GAAP measure).

In relation to net cash provided by operating activities, the forecasted free cash flow would be defined as net cash provided by (used in) operating activities (adjusted to include excess tax benefits from stock-based awards), less SBC, acquisition of property and equipment, net (i.e., acquisition of property and equipment less proceeds received from disposition of property and equipment, including land) and dividends received from equity investees.

For purposes of the Forecasts, “free cash flow” is defined differently than the free cash flow that appears in Yahoo’s earnings announcements and periodic reports filed with the SEC. Specifically, for purposes of the Forecasts, free cash flow is presented net of SBC expense. By contrast, SBC is not included as a cash cost in Yahoo’s historical presentations of free cash flow. The Forecasts’ definition presented above therefore yields a result that is lower (by the amount of SBC) than the result yielded by Yahoo’s traditional definition.

In general, Yahoo presents free cash flow (a liquidity measure) in its earnings announcements and in the periodic reports it files with the SEC in order to provide investors a metric used by it for evaluation and decisionmaking purposes and to provide investors with information about the amount of cash generated by business operations, after deducting its net payments for acquisitions and dispositions of property and equipment, which cash can then be used for strategic opportunities or other business purposes including, among others, investing in its business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in Yahoo’s consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

EBIT and Earnings Before Interest After Taxes

The forecasted financial information presented above also includes the non-GAAP measures of EBIT (earnings before interest and taxes), which is net of SBC expense, and earnings before interest after taxes, which is also net of SBC expense. Historically, Yahoo has not presented these measures in its earnings announcements

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or periodic SEC reports, but they are included above because they were provided to the Financial Advisors for purposes of their financial analyses.

Regulatory Matters

General

Yahoo and Verizon agreed to use their respective reasonable best efforts to obtain antitrust approvals for the Sale Transaction. These approvals include the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and certain regulatory clearances and approvals in certain jurisdictions, including the European Union. Yahoo and Verizon’s obligations to complete the Sale Transaction are subject to the approval, expiration, or termination of waiting periods (including any extensions) required under the antitrust laws of certain jurisdictions, including the United States and the European Union, without the imposition of a Burdensome Condition, unless Verizon expressly agrees in writing to such Burdensome Condition in connection with obtaining such approval, expiration, or termination. All such approvals, expirations, or terminations have been obtained or have occurred, as applicable.

U.S. Antitrust Matters

The Sale Transaction is subject to the requirements of the HSR Act, which provides that certain transactions may not be completed until required information and materials are furnished to the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”), and until certain waiting period requirements have been satisfied. Each of Verizon and Yahoo filed a Pre-merger Notification and Report Form under the HSR Act with the DOJ and the FTC in connection with the Sale Transaction on August 12, 2016. The waiting period expired at 11:59 p.m., Eastern Time, on September 12, 2016.

Although the applicable waiting period has expired or terminated, the DOJ, the FTC, state attorneys general, and others still may challenge the Sale Transaction on antitrust grounds. Accordingly, at any time before or after the completion of the Sale Transaction, any of the DOJ, the FTC, or others could take action under the antitrust laws, including, without limitation, seeking to enjoin the completion of the Sale Transaction or permitting completion subject to regulatory concessions or conditions. Neither Verizon nor Yahoo believes that the Sale Transaction violates U.S. antitrust laws, but there can be no assurance that a challenge to the Sale Transaction on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

Foreign Antitrust Matters

Yahoo and Verizon derive revenues in other jurisdictions where acquisition control filings or clearances are or may be required or advisable. In addition to the expiration of the applicable waiting period under the HSR Act, the Sale Transaction is conditioned upon the antitrust approval from certain jurisdictions, including the European Union. These approvals were obtained in December 2016.

Interests of Our Directors and Executive Officers in the Sale Transaction

In considering the recommendations of the Board with respect to the Sale Proposal, Yahoo stockholders should be aware that certain directors and executive officers of Yahoo have interests in the Sale Transaction that may be different from or in addition to the interests of Yahoo stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the Sale Transaction Agreements and in recommending that you approve the Sale Proposal. For purposes of all of the agreements and plans described below, the completion of the Sale Transaction will constitute a change of control, change in control, or term of similar meaning. See the section of this proxy statement entitled “—Background of the Sale Transaction” and the section of this proxy statement entitled “—Reasons for the Sale Transaction.” These interests are described in more detail below, and certain of them are quantified in the narrative and the table below. The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date.

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Indemnification of Officers and Directors

Section 145 of the Delaware General Corporation Law permits a corporation to indemnify its officers, directors, and certain other persons to the extent and under the circumstances set forth in such section.

The Existing Charter provides that, to the fullest extent permitted by the Delaware General Corporation Law, a director shall not be personally liable to Yahoo or its stockholders for monetary damages for breach of fiduciary duty as a director. To the fullest extent permitted by applicable law, Yahoo is also authorized to provide indemnification of (and advancement of expenses to) agents (and any other persons to which Delaware law permits Yahoo to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors, or otherwise, in excess of the indemnification and advancement of expenses otherwise permitted by Section 145 of the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of a duty to Yahoo, its stockholders, and others. The Fund will retain liability for all indemnification obligations with respect to current and former directors and officers of Yahoo and current and former directors and officers of Yahoo Holdings and its subsidiaries (i) arising from acts and omissions relating to the Excluded Assets or Retained Liabilities or (ii) in their respective capacities as directors and/or officers of Yahoo. This indemnification and related insurance coverage is further described in the section of this proxy statement entitled “—D&O Indemnification and Insurance.”

Treatment of Yahoo Equity Awards

With the exception of our founder David Filo, all of Yahoo’s directors and executive officers hold one or more options to purchase shares of Yahoo common stock (which we refer to as “Yahoo stock options”) and/or Yahoo RSU awards, as shown in the table below. Yahoo stock options and Yahoo RSU awards will be treated as follows:

Restricted Stock Units

Under the terms of the Stock Purchase Agreement, each Yahoo RSU award that, immediately prior to the closing, is outstanding, unvested, and held by an employee of Yahoo Holdings (or a subsidiary thereof), who will automatically become an employee of Verizon (or a subsidiary thereof) immediately following the closing, generally will be replaced with a cash-settled Verizon RSU award. The number of shares of Verizon common stock subject to each Verizon RSU award will be equal to the number of shares of Yahoo common stock subject to the corresponding Yahoo RSU award multiplied by the ratio of the average trading price of Yahoo common stock during the three-day period preceding the day before the closing date over the average trading price of Verizon common stock during the three-day period immediately following the closing date. Verizon may determine, however, that some non-U.S. employees’ replacement Verizon RSU awards will be stock-settled (rather than cash-settled) in limited circumstances. Yahoo RSU awards subject to performance-based vesting will similarly be replaced with performance-based cash-settled Verizon RSU awards, with both the annual target number of shares and the annual maximum number of shares adjusted according to the above ratio; however, shares allocated to the performance year in which the closing occurs will be replaced based on target performance only (and the replacement Verizon RSU awards for that year will not be performance-based) and shares allocated to future performance years will be subject to such performance-based vesting criteria as may be established by Verizon. All replacement Verizon RSU awards will otherwise be subject to the same vesting and other terms and conditions as the corresponding Yahoo RSU awards.

Yahoo RSU awards held by Yahoo non-employee directors and individuals who are employees of the Fund as of immediately following the closing will not be replaced with Verizon RSU awards and will instead vest in full in accordance with the terms of the applicable Yahoo equity plan governing such awards. The Fund will retain all liabilities and obligations with respect to all Yahoo RSU awards held by non-employee directors and individuals who are employees of the Fund as of immediately following the closing.

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Under the terms of their Yahoo RSU award agreements, each of our executive officers will generally be entitled to full vesting of his or her Yahoo RSU awards (or full vesting of the replacement Verizon RSU awards, as applicable) if he or she experiences a qualifying termination (as described below in “—Other Arrangements with Executive Officers”).

Stock Options

Under the terms of the Stock Purchase Agreement, all Yahoo stock options outstanding immediately prior to the closing will, if not already vested, become fully vested and exercisable, effective as of the closing and will remain outstanding in accordance with their terms.

The Fund will retain all liabilities and obligations with respect to all Yahoo stock options.

Quantification of Outstanding Equity Awards

The following table presents the number of shares underlying the Yahoo stock options and Yahoo RSU awards, in each case whether vested or unvested, held by each of our directors and executive officers as of April 3, 2017 (which is the assumed closing date of the Sale Transaction solely for purposes of this disclosure) and includes shares underlying such awards that could become subject to the acceleration cap upon a qualifying termination of employment, as described in the section of this proxy statement entitled “—Equity Award Agreements.” The table also presents the estimated value of such equity awards, calculated by multiplying the number of underlying shares by $38.59 (which is the average closing market price of Yahoo common stock over the first five business days following the first public announcement of the transaction on July 25, 2016), less the applicable exercise price in the case of Yahoo stock options (but not less than zero). Performance-based awards are presented at target.

The amounts presented in the table below do not attempt to forecast the vesting events that will occur, or any grants, dividends, or forfeitures of Yahoo equity awards that may occur, between April 3, 2017 and the closing. Therefore, the actual number and value of Yahoo stock options and Yahoo RSU awards held by directors and executive officers at the closing will differ from the amounts set forth below.

	Yahoo Stock Options				Yahoo RSU Awards				Total Value of Yahoo Stock Options and RSU Awards
Name	Shares		Value		Shares		Value
Non-Employee Directors
Tor R. Braham		—	$	0		6,389	$	246,552	$	246,552
Eric K. Brandt		—	$	0		6,389	$	246,552	$	246,552
Catherine J. Friedman		—	$	0		8,545	$	329,752	$	329,752
Eddy W. Hartenstein		—	$	0		8,629	$	332,993	$	332,993
Richard S. Hill		—	$	0		7,434	$	286,878	$	286,878
Thomas J. McInerney		—	$	0		6,389	$	246,552	$	246,552
Jane E. Shaw, Ph.D.		—	$	0		13,005	$	501,863	$	501,863
Jeffrey C. Smith		—	$	0		9,789	$	377,758	$	377,758
Maynard G. Webb, Jr.		61,679	$	568,077		11,497	$	443,669	$	1,011,746
Executive Officers
Marissa A. Mayer		2,879,991	$	56,793,423		517,527	$	19,971,367	$	76,764,790
Ken Goldman		558,794	$	11,019,418		274,061	$	10,576,014	$	21,595,432
David Filo		—	$	0		—	$	0	$	0
Lisa Utzschneider		—	$	0		486,319	$	18,767,050	$	18,767,050
Ronald S. Bell(1)		—	$	0		—	$	0	$	0

(1) On March 1, 2017, Ronald S. Bell resigned as the Company’s General Counsel and Secretary and from all other positions with the Company. No payments are being made to Mr. Bell in connection with his resignation or otherwise in connection with the Sale Transaction.

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Awards to Members of the Strategic Review Committee

The members of the Strategic Review Committee, Eric K. Brandt, Thomas J. McInerney, and Jeffrey C. Smith, each was granted a cash or equity award for their service on the Strategic Review Committee. Specifically, on August 4, 2016, Mr. McInerney, as committee chair, received a cash award of $100,000 and Mr. Brandt received a cash award of $50,000. Mr. Smith was also granted a $50,000 award, but such amount was granted in the form of Yahoo RSU awards on September 30, 2016, pursuant to a current election by Mr. Smith to receive Yahoo RSU awards in lieu of cash fees.

Other Arrangements with Executive Officers

Change-in-Control Plan. Each of Yahoo’s executive officers is covered by the Company’s Amended and Restated Change in Control Employee Severance Plan for Level I and Level II Employees, as amended (the “Change-in-Control Plan”), which provides that if the executive’s employment with Yahoo (or any subsidiary or successor of Yahoo) is terminated without cause or is terminated by the executive for good reason (as these terms are defined in the Change-in-Control Plan), in either case, within one year after a change in control of Yahoo (which would include the closing of the Sale Transaction), the executive will generally be entitled to receive the following severance benefits:

• Continuation of the employee’s annual base salary, as severance pay, over 24 months following the employee’s severance date;

• Reimbursement for outplacement services for 24 months following the employee’s severance date, subject to a maximum reimbursement amount of $15,000;

• Continued group health and dental plan coverage for 24 months; and

• Accelerated vesting of all stock options, RSU awards, and any other equity-based awards previously granted or assumed by Yahoo and outstanding as of the severance date (unless otherwise set forth in the applicable award agreement for awards made after February 12, 2008).

Payment of the severance benefits described above is conditioned upon the executive’s execution and non-revocation of a release of claims in favor of Yahoo (or any successor, as applicable) and the executive’s compliance with his or her confidentiality, proprietary information, and assignment of inventions obligations.

The Change-in-Control Plan will continue to cover executive officers of Yahoo Holdings until the first anniversary of the closing. Pursuant to the Reorganization Agreement, Yahoo Holdings will also assume the Change-in-Control Plan (and its various non-U.S. sub-plans), and such assumed plan (and sub-plans) will survive the closing and will apply to employees of Yahoo Holdings and its subsidiaries according to its (and their) terms.

Equity Award Agreements. Each of the award agreements governing outstanding and unvested Yahoo RSU awards and Yahoo stock options held by our executive officers provides that if the executive officer’s employment is terminated without cause or if the executive officer resigns for good reason, in either case within one year after a change in control of Yahoo (which would include the closing of the Sale Transaction), then the entire unvested portion of the award will vest in full (at target in the case of performance-based awards), except that such acceleration is capped for purposes of the equity awards granted to our executive officers in March 2016 and such acceleration is absent from the March 2017 awards. For the March 2016 time-based awards, such acceleration is capped at the number of shares otherwise scheduled to vest during the 24 months following the employment termination, and for the March 2016 performance-based awards, such acceleration is capped at the target number of shares for the performance year in which the termination occurs and the immediately following performance year, if any.

Severance Agreements. We have entered into letter agreements with certain of our named executive officers, including Ms. Mayer, Mr. Goldman, and Ms. Utzschneider. Each executive officer’s letter agreement provides him or her with a right to severance benefits in the event of a qualifying termination. We refer to this letter agreement (as amended) for each such executive officer as the “Severance Agreement.”

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Pursuant to the Severance Agreement, if the executive officer’s employment is terminated without cause (as defined in the agreement), the executive officer will be entitled to a severance benefit consisting of:

• one year of base salary (paid as a lump sum);

• one year’s target annual bonus;

• if the termination occurs after the end of a fiscal year and before the Company’s bonus payments for that fiscal year, the executive officer’s bonus for the completed fiscal year;

• payments equal to the premiums required to continue medical benefits under COBRA for up to twelve months after termination;

• the executive officer will have six months to exercise any vested Yahoo stock options; and

• six months’ accelerated vesting of time-based Yahoo stock options and time-based Yahoo RSU awards (other than grants that by their terms are excluded from the coverage under the Severance Agreements).

The Severance Agreement provides that the executive officer will be entitled to the cash severance and health benefit continuation payments provided under either the Severance Agreement or the Change-in-Control Plan (if applicable), whichever is greater.

Notwithstanding the terms of the Change-in-Control Plan, the equity award agreements, and the Severance Agreement, the Stock Purchase Agreement provides that all Yahoo stock options that are outstanding immediately prior to the closing will, if not already vested, become fully vested and exercisable, effective as of the closing, and will remain outstanding in accordance with their terms.

Golden Parachute Compensation

The following table presents the value of the benefits that each of Yahoo’s named executive officers would receive in connection with the Sale Transaction, assuming that the Sale Transaction were consummated and each executive officer experienced a qualifying termination on April 3, 2017 (which is the assumed closing date of the Sale Transaction solely for purposes of this transaction-related compensation disclosure). On March 1, 2017, Ronald S. Bell resigned as the Company’s General Counsel and Secretary and from all other positions with the Company. No payments are being made to Mr. Bell in connection with his resignation or otherwise in connection with the Sale Transaction. The amounts below are based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table. As a result of the foregoing assumptions, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

Name	Cash ($)(1)		Equity ($)(2)		Benefits ($)(3)		Total ($)
Marissa A. Mayer	$	3,015,000	$	19,971,367	$	25,081	$	23,011,448
Ken Goldman	$	1,215,000	$	7,735,173	$	35,317	$	8,985,490
David Filo	$	15,002	$	0	$	51,666	$	66,668
Lisa Utzschneider	$	1,215,000	$	14,409,159	$	51,666	$	15,675,825
Ronald S. Bell(4)	$	0	$	0	$	0	$	0

(1) The values in this column represent the cash payments to which the executive officer would be entitled under either the Change-in-Control Plan or under the Severance Agreement, whichever is greater. Amounts for Mr. Goldman, Mr. Filo, and Ms. Utzschneider reflect benefits under the Change-in-Control Plan and amounts for Ms. Mayer reflect benefits under the Severance Agreement. Cash benefits under the Change-in-Control Plan are equal to the sum of (i) 24 months of annual base salary and (ii) reimbursement of outplacement services in the maximum amount of $15,000. Ms. Mayer’s cash benefits under the Severance Agreement are equal to the sum of (a) one year of base salary; (b) one year’s target annual bonus (plus any unpaid bonus from the prior year, which would not be applicable in the case of a hypothetical April 3, 2017

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termination); and (c) payments equal to the premiums required to continue medical benefits under COBRA for twelve months after termination (for presentation purposes, the benefit described in this clause (c) is presented under “Benefits” above). These amounts are payable upon any qualifying termination under the Severance Agreement, whether before or after a change in control. Payments under the Severance Agreement are neither “single trigger” (i.e., payable upon a change of control) or “double-trigger” (i.e., payable upon a qualifying termination that occurs within 12 months after a change of control) because they are not contingent on the occurrence of a change in control but are included in this table because the amounts payable to Ms. Mayer under the Severance Agreement are greater than the amounts that would be payable to her under the Change-in-Control-Plan, which does provide for “double-trigger” benefits. For Ms. Mayer, Ms. Utzschneider, and Mr. Goldman, cash amounts also include reimbursement of outplacement services in the maximum amount of $15,000, which are “double-trigger.” For Mr. Filo, all of the amounts in this column are “double-trigger” payments. Amounts in the cash column are calculated as follows:

Name	Base Salary		Bonus Payment		Outplacement Services		Value of All Cash Payments
Marissa A. Mayer	$	1,000,000	$	2,000,000	$	15,000	$	3,015,000
Ken Goldman	$	1,200,000	$	0	$	15,000	$	1,215,000
David Filo	$	2	$	0	$	15,000	$	15,002
Lisa Utzschneider	$	1,200,000	$	0	$	15,000	$	1,215,000
Ronald S. Bell(4)	$	0	$	0	$	0	$	0

(2) This column reports the intrinsic value of the portions of the executive officer’s unvested Yahoo stock options and Yahoo RSU awards that would accelerate in the circumstances described above, which do not include any already vested portions of any such awards, as of the presumed closing date. This value is calculated by multiplying the number of shares subject to the accelerated portion of each award by $38.59 (which is the average closing market price of Yahoo common stock over the first five business days following the first public announcement of the transaction on July 25, 2016), less the applicable exercise price in the case of the unvested Yahoo stock options. Upon a qualifying termination described above in “—Other Arrangements with Executive Officers,” unvested Yahoo stock options and unvested time-based Yahoo RSU awards would accelerate in full (other than the March 2017 time-based RSU awards, which do not provide for acceleration), and unvested performance-based Yahoo RSU awards would accelerate at target (other than the March 2017 performance-based RSU awards, which do not provide for acceleration), subject to a cap in the case of the Yahoo RSU awards granted in March 2016. For time-based Yahoo RSU awards granted in March 2016, acceleration is capped at the number of shares otherwise scheduled to vest during the 24 months following the employment termination, and for performance-based Yahoo RSU awards granted in March 2016, acceleration is capped at the target number of shares for the performance year in which the termination occurs and the immediately following performance year, if any. The Yahoo RSU acceleration is a “double-trigger” benefit, as described above. Under the terms of the Stock Purchase Agreement, the Yahoo stock option acceleration is a “single-trigger” benefit.

Name	Value of Stock Option Acceleration		Value of RSU Acceleration		Value of All Equity Acceleration
Marissa A. Mayer	$	0	$	19,971,367	$	19,971,367
Ken Goldman	$	0	$	7,735,173	$	7,735,173
David Filo	$	0	$	0	$	0
Lisa Utzschneider	$	0	$	14,409,159	$	14,409,159
Ronald S. Bell(4)	$	0	$	0	$	0

(3) The values in this column represent the estimated premiums required to continue medical benefits under COBRA for 12 months (in the case of Ms. Mayer) or for 24 months (in the case of the other named executive officers) covering each executive officer and all of his or her eligible dependents receiving coverage as of the assumed closing date. For Ms. Mayer, this benefit would be payable in cash upon any qualifying termination under the Severance Agreement, whether before or after a change in control (as explained in note (1) above).

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For the other named executive officers, these are “double-trigger” benefits as described above and would be provided in the form of continued coverage under their employer’s group health and dental plans, if practicable, or with equivalent health and dental benefits under an alternative arrangement.

(4) On March 1, 2017, Ronald S. Bell resigned as the Company’s General Counsel and Secretary and from all other positions with the Company. No payments are being made to Mr. Bell in connection with his resignation or otherwise in connection with the Sale Transaction.

D&O Indemnification and Insurance

Prior to the closing, Yahoo will purchase a six-year director and officer (“D&O”) “tail” insurance policy covering the current and former directors and officers of Yahoo and the Business Subsidiaries for any pre-closing claims. The D&O tail policy will have terms and conditions that are no less favorable than the coverage provided under Yahoo’s existing D&O insurance policies. Verizon will pay 50 percent (but not more than $5 million) of the premium for the D&O tail policy.

Following the closing, Yahoo Holdings will indemnify, as the primary source of indemnification, the current and former directors and officers of Yahoo Holdings and the other Business Subsidiaries (but not in the capacity of any roles with Yahoo) for pre-closing acts or omissions. Yahoo Holdings will not provide indemnification for acts or omissions relating to the Excluded Assets or Retained Liabilities.

The Fund will retain liability for all indemnification obligations with respect to current and former directors and officers of Yahoo and current and former directors and officers of Yahoo Holdings and the other Business Subsidiaries (i) arising from acts and omissions relating to the Excluded Assets or Retained Liabilities or (ii) in their respective capacities as directors and/or officers of Yahoo.

Appointment of Certain Executive Officers

On March 10, 2017, Thomas J. McInerney, the Chairman of the Strategic Review Committee, entered into an offer letter with the Company, effective upon the closing of the Sale Transaction, pursuant to which Mr. McInerney will become the Chief Executive Officer of the Fund upon the closing of the Sale Transaction and, in such capacity, will receive compensation from the Fund.

On March 10, 2017, Arthur Chong became the General Counsel and Secretary of the Company, and will continue in that capacity following the closing of the Sale Transaction, pursuant to an offer letter under which he will receive compensation from the Company. See the section of Annex 1 of this proxy statement entitled “Management of the Fund—Compensation of Officers and Directors.”

U.S. Federal Income Tax Consequences of the Sale Transaction

The following discussion is a summary of certain U.S. federal income tax consequences of the Sale Transaction. This discussion is based on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicial opinions, and published positions of the Internal Revenue Service, all as in effect as of the date of this document. Such authorities are subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements in this proxy statement. This discussion does not address any U.S. federal tax considerations other than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerations or any tax reporting requirements.

The Sale Transaction will not result in any immediate U.S. federal income tax consequences to Yahoo stockholders.

The Sale Transaction will generally be taxable to Yahoo for U.S. federal income tax purposes, and it is expected that Yahoo will recognize income and gain for U.S. federal income tax purposes as a result of the Sale

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Transaction. It is anticipated that certain tax attributes of Yahoo and its affiliates will be available to offset a portion of any such income, gain, and taxes otherwise resulting from the Sale Transaction for U.S. federal income tax purposes. The determination of whether and to what extent such tax attributes will be available is highly complex and is based in part upon facts that will not be known until after the completion of the Sale Transaction, including the existence and amount of available losses, deductions, credits, and other tax attributes arising in the taxable year in which the Sale Transaction occurs (and in prior taxable years). It is currently anticipated that the Sale Transaction will give rise to a U.S. federal income tax liability to Yahoo after any such tax attributes are utilized, and Yahoo will generally be responsible for such taxes under the Reorganization Agreement.

For a summary of certain U.S. federal income tax considerations for stockholders of the Fund following the Sale Transaction, see the section in Annex 1 to this proxy statement entitled “U.S. Federal Income Tax Considerations.”

Accounting Treatment of the Sale Transaction

The proposed sale of the Business is expected to be accounted for as a sale of net assets. The results of operations will be treated as discontinued operations.

No Appraisal Rights

Neither Delaware law nor the Existing Charter provides Yahoo stockholders with appraisal or dissenters’ rights in connection with the Sale Transaction.

Legal Proceedings

On February 16, 2017, a stockholder derivative action captioned Summer v. Marissa Mayer, et al., was filed in the U.S. District Court for the Northern District of California purportedly on behalf of Yahoo against certain of its current and former directors and officers. On February 17, 2017, a substantially identical stockholder derivative action captioned Bowser v. Marissa Mayer, et al., was filed in the U.S. District Court for the Northern District of California against the same defendants. The complaints allege that defendants failed to disclose the Security Incidents discussed under “Security Incidents Contingencies” in Annex 2 of this proxy statement and caused or allowed Yahoo to issue materially false and misleading statements in its public filings and other public statements. The complaints assert derivative claims, purportedly on behalf of Yahoo, for breach of fiduciary duty, unjust enrichment, and violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934. The complaints seek unspecified damages, to enjoin defendants from proceeding with, consummating, or closing the transactions contemplated by the Original Stock Purchase Agreement, disgorgement of profits and compensation obtained by the defendants, an award of attorneys’ fees and costs, and other related injunctive and equitable forms of relief.

On March 7, 2017, a stockholder derivative and class action captioned Spain v. Marissa Mayer, et al., was filed in the Superior Court of California for the County of Santa Clara. On March 16, 2017, a similar stockholder derivative and class action captioned Westgaard v. Marissa Mayer, et al., was filed in the Superior Court of California for the County of Santa Clara. The complaints assert claims for breach of fiduciary duty, purportedly on behalf of Yahoo, against certain of Yahoo’s current and former directors and officers. The complaints allege that defendants failed to prevent and disclose the Security Incidents discussed under “Security Incidents Contingencies” in Annex 2 of this proxy statement and caused or allowed Yahoo to issue materially false and misleading statements in its public filings and other public statements. The complaints also assert claims of insider trading, purportedly on behalf of Yahoo, against certain defendants under California Corporations Code sections 25402 and 25403. The complaints also assert direct claims, purportedly on behalf of all current Yahoo stockholders, against the individual defendants for breach of fiduciary duty relating to the disclosures in this proxy statement concerning the negotiation and approval of the Stock Purchase Agreement and against Verizon for aiding and abetting the individual defendants’ alleged breach of fiduciary duty. The complaints seek class certification, unspecified damages, to enjoin defendants from consummating the transactions contemplated by the

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Stock Purchase Agreement, an award of attorneys’ fees and costs, and other related injunctive and equitable forms of relief.

Required Vote

Pursuant to the terms of the Stock Purchase Agreement, Yahoo is required to obtain approval of the Sale Transaction by holders of a majority of the outstanding shares of Yahoo common stock entitled to vote thereon at the special meeting, and such stockholder approval is a condition to the completion of the Sale Transaction. In addition, pursuant to the terms of the Starboard Settlement Agreement, Yahoo is required to submit the Sale Proposal to Yahoo stockholders for approval.

Financial Information

Unaudited Combined Financial Statements of the Business

See Annex 2 to this proxy statement, entitled “Unaudited Combined Financial Statements of the Business,” for the unaudited combined financial statements of the Business.

Unaudited Pro Forma Consolidated Financial Information

The following unaudited pro forma consolidated financial information has been derived from the historical financial statements of Yahoo, adjusted to give effect to the Sale Transaction. This unaudited pro forma consolidated financial information should be read in conjunction with the accompanying notes, the historical consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this proxy statement, and the remaining sections of this proxy statement.

The unaudited pro forma consolidated statement of income of Yahoo for the year ended December 31, 2016, and the unaudited pro forma consolidated balance sheet of Yahoo, as of December 31, 2016, give effect to the Sale Transaction, pursuant to operating company accounting principles. We have included unaudited pro forma consolidated financial information of the Fund for the same periods, reflecting adjustments in presenting the Fund’s operations pursuant to investment company accounting principles, in Annex 1 to this proxy statement.

The unaudited pro forma consolidated statement of income for the year ended December 31, 2016 is based on Yahoo’s historical audited consolidated financial statements for the year ended December 31, 2016, which were filed with the SEC on March 1, 2017.

The unaudited pro forma consolidated statement of income of Yahoo for the year ended December 31, 2016 assumes that the Sale Transaction was completed as of January 1, 2016. The unaudited pro forma consolidated balance sheet of Yahoo, as of December 31, 2016 assumes that the Sale Transaction was completed as of December 31, 2016, that the Alibaba Shares were valued at the closing price of Alibaba ADS on December 31, 2016, and that the Yahoo Japan Shares were valued at their closing price on December 31, 2016 and converted into dollars based on the Yen/USD foreign exchange rate on such date.

The unaudited pro forma consolidated financial information and pro forma adjustments are based upon information available as of the date of this proxy statement and have been presented solely for informational purposes and are not necessarily indicative of the consolidated balance sheet or statement of income that would have been realized had the Sale Transaction occurred as of the dates indicated, nor is it meant to be indicative of any future consolidated financial position or future results of operations that the Fund will experience.

The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma consolidated financial information to give effect to pro forma events that are (1) directly attributable to the

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Sale Transaction, (2) factually supportable, and (3) with respect to the unaudited pro forma consolidated statements of income, are expected to have a continuing impact on the financial results of the Fund following the Sale Transaction. Accordingly, the accompanying unaudited pro forma consolidated statements of income do not include realized gains from the Sale Transaction. The adjustments presented are based on currently available information and reflect certain estimates and assumptions. Therefore, actual results may differ from the pro forma adjustments.

Unaudited Pro Forma Consolidated Statement of Income of Yahoo Giving Effect to the Sale Transaction

(In thousands, except per share amounts)

	Twelve Months Ended December 31, 2016
	Historical			Adjustments(1)			Pro Forma
Revenue	$	5,169,135		$	(5,169,135	)	$	—
Operating expenses:
Cost of revenue-traffic acquisition costs		1,650,786			(1,650,786	)		—
Cost of revenue-other		1,068,108			(1,068,108	)		—
Sales and marketing		881,521			(881,521	)		—
Product development		1,055,462			(1,055,462	)		—
General and administrative		650,708			(594,126	)		56,582
Amortization of intangibles		58,302			(58,302	)		—
Restructuring charges, net		88,629			(88,629	)		—
Goodwill impairment charge		394,901			(394,901	)		—
Intangibles asset impairment charge		87,335			(87,335	)		—
Gains on sale of land and patents		(121,559	)		121,559			—
Total operating expenses		5,814,193			(5,757,611	)		56,582
Loss from operations		(645,058	)		588,476			(56,582	)
Other expense, net		(53,916	)		(4,092	)		(58,008	)
Loss before income taxes and earnings in equity interests		(698,974	)		584,384			(114,590	)
Benefit for income taxes		126,228			33,152			159,380
Earnings in equity interests		363,283			(0	)		363,283
Net income (loss)		(209,463	)		617,536			408,073
Less: net income attributable to non-controlling interests		(4,858	)		4,858			—
Net income (loss) attributable to Yahoo	$	(214,321	)	$	622,394		$	408,073
Net income (loss) attributable to Yahoo common stockholders per share - basic	$	(0.23	)				$	0.43
Net income (loss) attributable to Yahoo common stockholders per share - diluted	$	(0.23	)				$	0.43
Shares used in per share calculation - basic		949,843						949,843
Shares used in per share calculation - diluted		949,843						949,843

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information of Yahoo.

(1) Represents adjustments to give effect to the disposal of Yahoo’s operating business.

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Unaudited Pro Forma Consolidated Balance Sheet of Yahoo Giving Effect to the Sale Transaction

(In thousands, except per share amounts)

	As at December 31, 2016
	Historical			Adjustments(1)			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	1,119,469		$	4,188,300	(2)	$	5,307,769
Short-term marketable securities		5,700,925			—			5,700,925
Accounts receivable, net		1,084,267			(1,084,267	)		—
Prepaid expenses and other current assets		221,499			(191,809	)		29,690
Total current assets		8,126,160			2,912,224			11,038,384
Long-term marketable securities		1,089,707			—			1,089,707
Property and equipment, net		1,209,937			(1,209,937	)		—
Goodwill		415,809			(415,809	)		—
Intangible assets, net		161,644			(161,644	)		—
Other long-term assets and investments		206,059			(76,181	)		129,878
Investment in Alibaba equity securities		33,680,879			—			33,680,879
Investments in equity interests		3,192,884			—			3,192,884
Total assets	$	48,083,079		$	1,048,653		$	49,131,732
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	171,520		$	(171,520	)	$	—
Other accrued expenses and current liabilities		1,006,676			(868,650	)(3)		138,026
Deferred revenue		109,228			(109,228	)		—
Total current liabilities		1,287,424			(1,149,398	)		138,026
Convertible notes		1,299,945			—			1,299,945
Long-term deferred revenue		39,583			(39,583	)		—
Other long-term liabilities		95,597			(95,597	)		—
Deferred tax liabilities related to investment in Alibaba		13,633,988			—			13,633,988
Deferred and other long-term tax liabilities, net		642,466			584,823	(4)		1,227,289
Total liabilities		16,999,003			(699,755	)		16,299,248
Common stock		969			—			969
Additional paid-in capital		9,125,459			1,585,413			10,710,872
Treasury stock at cost		(908,996	)		—			(908,996	)
Retained earnings		4,353,958			1,785,907	(4)		6,139,865
Accumulated other comprehensive income		18,477,893			264,483			18,742,376
Net Parent company investment		—			(1,852,602	)		(1,852,602	)
Total Yahoo! Inc. stockholders’ equity		31,049,283			1,783,201			32,832,484
Noncontrolling interests		34,793			(34,793	)		—
Total equity		31,084,076			1,748,408			32,832,484
Total liabilities and equity	$	48,083,079		$	1,048,653		$	49,131,732

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information of Yahoo.

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Notes to the Unaudited Pro Forma Consolidated Financial Information of Yahoo

(1) Represents adjustments to give effect to the disposal of the Business.

(2) Reflects Yahoo’s remaining cash and cash equivalents upon closing of the Sale Transaction after taking into account the disposal of cash and cash equivalents held by the Business Subsidiaries. The net cash proceeds of approximately $4.5 billion have been reduced by the Financial Advisors’ fees associated with the Sale Transaction.

(3) For purposes of determining the estimated taxes payable reflected in the unaudited pro forma consolidated statement of assets and liabilities of the Fund, an estimated assumed blended tax rate of 37.4 percent was applied to Yahoo’s taxable gain of $345 million on disposal taking into account Yahoo’s $4.1 billion tax basis in the Business resulting in cash taxes to be paid of $129 million. Yahoo’s tax rate differs from the Fund’s estimated tax rate based on Yahoo’s specific tax profile at a particular year. The Fund’s rate as a separate taxpayer may differ depending on its ultimate composite state tax rate. The Fund will not qualify for pass-through status under Subchapter M of the Code and will thus be taxed as a corporation. See the unaudited combined financial statements of the Business in Annex 2 to this proxy statement, together with the notes thereto.

(4) This adjustment reflects the GAAP gain on disposal of $1.8 billion which is calculated using proceeds of $4.5 billion less disposed net assets of $1.6 billion less taxes of $1.1 billion using an estimated assumed blended tax rate of 37.4 percent. This estimated GAAP gain has not been reflected in the unaudited pro forma consolidated statement of operations as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Stock Purchase Agreement.

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PROPOSAL 2—COMPENSATION RELATED TO THE SALE TRANSACTION

Non-Binding Advisory Vote Regarding Compensation

Our “named executive officers” are the named executive officers listed in the summary compensation table of our most recent annual meeting proxy statement which was filed with the SEC on May 23, 2016: Marissa A. Mayer (our Chief Executive Officer and President), Ken Goldman (our Chief Financial Officer), David Filo (our Co-Founder and Chief Yahoo), Lisa Utzschneider (our Chief Revenue Officer), and Ronald S. Bell (then our General Counsel and Secretary).

We are seeking our stockholders’ approval of the compensation that will or may become payable to our named executive officers in connection with the Sale Transaction, which is disclosed in the section of this proxy statement entitled “Proposal 1—The Sale Transaction—Interests of Our Directors and Executive Officers in the Sale Transaction—Golden Parachute Compensation,” including the accompanying footnotes.

In general, the various plans and arrangements pursuant to which these compensation payments may be made have previously formed part of Yahoo’s overall compensation program for our named executive officers and generally have been previously disclosed to stockholders as part of the “Compensation Discussion and Analysis” and related sections of our annual proxy statements. These historical arrangements were adopted and approved by the Compensation and Leadership Committee of the Board (the “Compensation Committee”) and are believed to be reasonable and in line with marketplace norms. Each member of the Compensation Committee is an independent director within the meaning of the Nasdaq listing standards and is a “non-employee director” under Exchange Act Rule 16b-3.

Accordingly, we are seeking approval of the following resolution at the special meeting:

“RESOLVED, that the stockholders of Yahoo! Inc. approve, on an advisory, non-binding basis, the compensation that will or may become payable to Yahoo! Inc.’s named executive officers that is based on or otherwise relates to the Sale Transaction as disclosed pursuant to Item 402(t) of Regulation S-K in the section of this proxy statement captioned “Proposal 1—The Sale Transaction—Interests of Our Directors and Executive Officers in the Sale Transaction—Golden Parachute Compensation,” including the accompanying footnotes.”

Stockholders should note that this proposal is not a condition to completion of the Sale Transaction, and, as an advisory vote, the result will not be binding on Yahoo, the Board, or the Compensation Committee or on Verizon, its board of directors, or its compensation committee. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the Sale Transaction is completed our named executive officers will be eligible to receive the compensation that is based on or that otherwise relates to the Sale Transaction in accordance with the terms and conditions applicable to those payments.

Required Vote

Approval of the Compensation Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Yahoo common stock present in person or represented by proxy and entitled to vote on the subject matter.

Recommendation of the Board

The Board recommends that you vote “FOR” the Compensation Proposal.

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PROPOSAL 3—THE ADJOURNMENT

The Adjournment Proposal will authorize the Board to postpone or adjourn the special meeting (i) for up to 10 business days to solicit additional proxies for the purpose of obtaining stockholder approval of the Sale Proposal, if the Board determines in good faith such postponement or adjournment is necessary or advisable to obtain stockholder approval, or (ii) to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure which the Board has determined, after consultation with outside legal counsel, is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior to the special meeting.

Vote Regarding Adjournment Proposal

If, at the special meeting, the Board determines it is necessary or appropriate to adjourn the special meeting, we intend to move to vote on the Adjournment Proposal. For example, the Board may make such a determination if the number of shares of our common stock represented and voting in favor of the Sale Proposal at the special meeting is insufficient to adopt the Sale Proposal, in order to enable the Board to solicit additional proxies in respect of the Sale Proposal. If the Board determines that it is necessary or appropriate, we will ask our stockholders to vote only upon the Adjournment Proposal and not the Sale Proposal or the Compensation Proposal.

In this proposal, we are asking you to authorize the holder of any proxy solicited by the Board to vote in favor of the Adjournment Proposal. If our stockholders approve the Adjournment Proposal, we could adjourn the special meeting and any adjourned session of the special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously voted. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against the Sale Proposal to defeat that proposal, we could adjourn the special meeting without a vote on the Sale Proposal and seek to convince the holders of those shares to change their votes to votes in favor of the Sale Proposal. Additionally we may seek to adjourn the special meeting if a quorum is not present or otherwise at the discretion of the chairman of the special meeting (in all cases, subject to the terms and conditions of the Stock Purchase Agreement).

Required Vote

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Yahoo common stock present in person or represented by proxy and entitled to vote on the subject matter.

Recommendation of the Board

The Board recommends that you vote “FOR” the Adjournment Proposal.

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BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table presents the number of shares of our common stock that were beneficially owned as of April 3, 2017 (except where another date is noted) by (1) known beneficial owners of five percent or more of our common stock, (2) each current director, (3) each named executive officer, and (4) all current directors and current executive officers of the Company as a group.

Beneficial Owner	Amount and Nature of Beneficial Ownership(1)		Percent of Common Stock Outstanding(2)
TCI Fund Management Limited(3)		86,224,273		9.0	%
7 Clifford Street London, W1S 2FT, United Kingdom
David Filo		70,666,390		7.4	%
701 First Avenue Sunnyvale, CA 94089
The Vanguard Group(4)		55,924,468		5.8	%
100 Vanguard Blvd. Malvern, PA 19355