Yahoo Inc. and Google Inc. have sent the Justice Department a revised version of their search-advertising agreement, shrinking its scope as regulators prepare to bring suit against the agreement if a deal isn't reached, according to people familiar with the matter.

The new plan, which the online-ad giants submitted over the weekend, comes as the companies face mounting pressure to ditch or revise the pact. The companies struck a fairly open-ended agreement in June that allowed Yahoo to display search ads sold by Google and share the revenue. Under that agreement, Yahoo was able to select how many Google-sold search ads it could show and for which search terms.

But under the revision, the companies agreed to cap the revenue Yahoo can generate from the deal to 25% of Yahoo's search revenue and to shorten the length of the agreement to two years from up to 10 years, according to the people familiar with the situation. Previously, there was no revenue cap. The new plan also specifies that Google advertisers can opt out of having their ads displayed on Yahoo sites.

Google spokesman Adam Kovacevich reiterated the Mountain View, Calif., company's statement that it continues to "have cooperative discussions with the Department of Justice about this arrangement."

Separately, Yahoo on Monday announced it has hired Jeff Dossett, an executive from Microsoft Corp., to take over its online media properties. Mr. Dossett fills a position being vacated by Scott Moore, who would be departing, Yahoo said, for other opportunities. "I had a great run at Yahoo but it is time to do something different," said Mr. Moore in an interview, adding he remains enthusiastic about online media and plans to stick with the industry.

It's unclear whether the changes to the search-advertising deal will appease regulators, who have been building a case to block the deal amid concerns that it would give Google an unfair monopoly over the online advertising industry. Also unknown is whether the changes will appease advertisers concerned that the deal could distort prices.

Yahoo, on the other hand, has been banking on the deal to help turn around its struggling business. The Sunnyvale, Calif., company needs the agreement to restore the confidence of investors who have driven its stock price down 45% this year. Yahoo board member and investor Carl Icahn appeared Monday on CNBC again arguing that Yahoo and Microsoft ought to pursue a search deal.

The companies repeatedly insisted that the deal is good for competition, noting that it was nonexclusive and that online- advertising prices are set through an auction. But they agreed to delay implementing the deal for several months to allow regulators to review it.

As the review continued, the companies agreed to extend that delay and began talking to regulators about possible revisions. As of last week, the companies and the Justice Department had reached something of a stalemate, according to people familiar with the discussions.

With the revised plan submitted over the weekend, Yahoo appears to be willing to accept certain limits on the upside from the deal, which it had estimated to be in the hundreds of millions of dollars of additional annual revenue, in order to ensure it goes through. Striking an agreement would help Google avoid a potentially thorny legal battle over its market power.

Yahoo, meanwhile, continues to face headwinds, including a wave of executive departures it keeps trying to plug. Lately, Yahoo has hired senior executives from outside the company, but the departures of executives like Mr. Moore continue and are having ripple effects.

Alan Warms, general manager of Yahoo News, is planning to leave and will be succeeded by Yahoo News's vice president of programming and development, Neeraj Khemlani. Mr. Khemlani will continue to oversee the company's original programming efforts, which include the creation of online-only shows like Yahoo's TechTicker.

The departures of Messrs. Moore and Warms were reported on the AllThingsD.com Web site, which is owned by Dow Jones & Co., publisher of The Wall Street Journal.

Mr. Dossett will assume oversight of Yahoo's media properties, which include flagship sites like Yahoo News, Yahoo Finance and Yahoo Sports. Those properties continue to generate heavy traffic but revenue growth has been pressured by competition from other sites and more recently, the weak economy.