It looks like Barry Zito is off the table as ESPN's Peter Gammons is reporting that Zito has agreed to a seven-year contract from the Giants.

The $126 million deal averages approximately $18 million per season.
...
The deal, agreed to late Wednesday night, includes an $18 million option for 2014 that could increase the value to $144 million, an unidentified source told The Associated Press.
...
In addition, sources told Gammons that the Yankees never made a formal offer.

Wow. I was surprised by the money being thrown around and now, I've gotten to the point where I'm just dumbfounded. That's a lot of money for Zito and not only that, it's a ton of years. Heck of a risk the Giants are taking, don't you think?