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Yahoo! and Google sign online ad deal

Deal will give Yahoo! extra revenue from search through Google ads, but deal can be cancelled with financial penalty, if Yahoo! board changes

Yahoo! and Google have signed an agreement to include Google adverts alongside Yahoo! search results in the US and Canada.

The deal will see Yahoo! use Google's AdSense advertising programs as part of its search, which could be worth up to $800 million per year for Yahoo!

The agreement could be subject to cancellation however, if the majority of the Yahoo! board are removed by third part action. Yahoo! still faces a proxy fight from investor Carl Icahn, and the clause would effectively remove any obligation on Google's part if Icahn was able to force a change. Yahoo! would also be liable for a $250 million penalty if the agreement is cancelled for this reason within 24 months.

Yahoo! President Sue Decker commented: "This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising and advance our starting point objectives with users. It enhances competition by promoting our ability to compete in the marketplace where we are especially well positioned: in the convergence of search and display."

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