Vince Bonato, Et Al. V. Yahoo! Inc., Et Al. 11-CV-02732-Declaration Of

Home , Carol Bartz

I THE WEISER LAW FIRM, P.C. KATHLEEN A. HERKENHOFF (168562) 2 12707 High Bluff Drive, Suite 200 San Diego, CA 92130 3 Telephone: 858/794-1441 Facsimile: 858/7941450 4 kahweiserlawfirm.com

5 THE WEISER LAW FIRM, P.C. ROBERT B. WEISER 6 BRETT D. STECKER JEFFREY J. CIARLANTO 7 JOSEPH M. PROFY 121 North Wayne Avenue, Suite 100 8 Wayne, PA 19087 Telephone: 610/225-2677 9 Facsimile: 610/225-2678

10 Attorney for Plaintiff Yahia Tawila and Proposed Co-Lead Counsel

11 [Additional counsel appear on signature page]

12 UNITED STATES DISTRICT COURT 13 NORTHERN DISTRICT OF CALIFORNIA 14 SAN JOSE DIVISION 15 DEBRA SALZMAN, Derivatively on Behalf Case No. CV11-03269-PSG 16 of Nominal Defendant, Action Filed: July 1, 2011 17 Plaintiff, 1 DECLARATION OF KATHLEEN A. 18 vs. HERKENHOFF IN SUPPORT OF MOTION 1 TO CONSOLIDATE RELATED ACTIONS, 19 CAROL A. BARTZ and JERRY YANG, ) APPOINT LEAD PLAINTIFFS AND APPOINT CO-LEAD COUNSEL 20 Defendants, ) DATE: August 16, 2011 21 — and — ) TIME: 10:00 a.m. ) JUDGE: PAUL SINGH GREWAL 22 YAHOO! INC., a Delaware corporation,

23 Nominal Defendant )

24 [Caption continued on next va2e.1 25

1 JANE OH. Derivativel y on Behalf of Herself ) Case No. CV11-03286-HRL 2 and All Others Similarly Situated, ) Action Filed: July 5, 2011 3 Plaintiff,

4 vs. ) 5 CAROL A. BARTZ. JERRY YANG, ROY ) BOSTOCK, PATTCHART, SUSAN JAMES, ) 6 VYOMESEI JOSHI, DAVID KENNY, ) ARTHUR KERN, BRAD SMITH, and GARY 1 7 WILSON,

8 Defendants. )

9 — and —

10 YAHOO! INC., ) ) 11 Nominal Defendant. 1

13 YAHLA TAWILA, Derivatively on Behalf of Case No. CV11-03301-HRL YAHOO! INC., ) 14 ) Action Filed: July 6, 2011 Plaintiff. ) 15 vs. 16 CAROL A. BARTZ. JERRY YANG. ROY ) 1 7 ROSTOCK, PATTI HART,' SUE JAMES, ) VYOMESH JOSHI, DAVID KENNY, 18 ARTHUR KERN, BRAD SMITH, and GARY ) WILSON, ) 19 Defendants, ) 20 — and — 21 ) YAHOO! INC., ) 2? ) Nominal Party. ) ) -)4

28 1 IRON WORKERS MID-SOUTH PENSION j Case No. CV H-03302-PSG FUND, Derivatively on Behalf of YAHOO! ) 2 INC,. ) Action Filed: July 6, 2011

3 Plaintiff, ) ) 4 vs. )

5 CAROL BARTZ, JERRY YANG, ROY J. ) BOSTOCK, PATTI S. HART, SUSAN M. ) 6 JAMES, VYOMESH JOSH!, ARTHUR FL ) KERN, BRAD D. SMITH, GARY L, 7 WILSON and JACK MA, ) ) 8 Defendants,

9 — and —

10 YAHOO! INC.. a Delaware corporation

11 Nominal Defendant. )

28 I, Kathleen A. Herkenhoff, declare as follows:

2 I. I am of counsel to The Weiser Law Firm, P.C. ("The Weiser Firm"), counsel for

3 Plaintiff Yahia Tawila ("Tawila") in Taw!la v. Burt; et al., Case No. CVI1-0330l-HRL (the

4 -Tawila Action -). I am an attorney duly licensed to practice before all courts of the State of

5 California. I submit this declaration in support of the Motion to Consolidate Related Actions,

6 Appoint Lead Plaintiffs and Appoint Co-Lead Counsel (the -Motion"), which Motion has been

7 jointly filed by Tawila and Plaintiff Jane Oh, the named plaintiff in Oh v. Bartz, et al., .Case No.

8 CV11-03286-HRL (the "Oh Action"). I have personal knowledge of the mailers stated herein and, if

9 called upon, I could and would competently testify thereto.

10 2. Currently, the Weiser Firm is serving as co-lead or sole lead counsel in several

11 stockholder derivative actions that could have a significant impact on corporate governance issues

12 nationwide, including several cases based on the failure of corporate boards of directors to amend

13 executive compensation following shareholders' rejection of such compensation in "say on pay"

14 votes. Earlier this year. in In re KeyCory Derivative Litig., No. 1:10-ev-0 786-DAP (N.D. Ohio

15 2010). the Weiser Firm served as lead counsel and produced what it believes to be the first-ever

16 settlement of any such case. The KeyCorp derivative action was based on allegations of misconduct

17 arising from the failure of the KeyCorp Board of Directors to amend the executive compensation

18 awarded for 2009, even though a majority of KeyCorp's voting stockholders rejected such

19 compensation in a -say on pay" vote. The settlement of the KeyCorp case provided for a series of

20 corporate governance measures related to: (a) the ideological underpinnings of compensation

21 principles at k.cyCorp; (b) the actual award of executive compensation at KeyCorp; (c) the

22 disclosure of those decisions and ideology in KeyCorp's financial filings; (d) the composition of the

23 KeyCorp Board, its sub-committees, and their advisors; and (e) KeyCom's and its Board's ongoing

24 relationship with Key Corp shareholders. In addition, pursuant to the settlement, certain of the

25 defendants in the KeyCorp case relinquished highly-valuable economic rights which existed under

26 their respective employment contracts. The Weiser Firm believes that collectively, these measures

27 will save KeyCorp millions (or perhaps tens of millions) of dollars over time.

DECLARATION OF KATHLEEN A. HERKENHOFF IN SUPPORT OF MOTION TO CONSOLIDATE RELATED ACTIONS, APPOINT LEAD PLANITIFFS AND APPOINT CO-LEAD COUNSEL - - 1 -

1 3. In addition, the Weiser Firm very recently obtained extraordinary relief in connection

2 with the settlement of a shareholder derivative action brought on behalf of Vitacost.com , Inc. (Kloss

3 v. Kerker, et al., Case No.: 502010CA018594XXXXN4B,F1. Circuit Ct., 15th Judicial Circuit, Palm

4 Beach Cty.), which actually preserved that company's corporate form and the equity interests of its

5 shareholders. The Vitacost action centered upon Vitacosf s December 7, 2010 announcement that its

6 historical financial statements could not be relied upon due to a failure to adhere to certain critical

7 corporate formalities fourteen years earlier. As a result, trading in Vitacost stock was halted by

8 NASDAQ and Vitacost stockholders held illiquid shares of uncertain legal status. Pursuant to the

9 settlement, the Court entered an Order which: (I) confirmed the number of shares in the Company

10 based on the number of outstanding shares in the Company's initial public offering in 2009 (in

11 effect, "quieting title" to Vitacost shares), thus reassuring Vitacost stockholders and the market that

12 Vitacost's outstanding shares and options were valid; and (2) deemed Vitacost's certificate of

13 incorporation valid and effective. In the absence of this settlement, Vitacost could not have become

14 -current" with respect to its historical financial statements, its stock could not have resumed trading,

15 and Vitacost would have almost certainly been forced to file for bankruptcy. This settlement was

16 unprecedented and historic, and in essence saved the Company and the interests of its stockholders.

17 4. Attached are true and correct copies of the following exhibits:

18 Exhibit A Initial complaint tiled in the Tmvila Action;

Exhibit B Initial complaint filed in the Oh Action;

2 0 Exhibit C Initial complaint filed in Salzman v. Bcu-tz et al., Case No. CV11-03269-PSG (the "Salzman Action); 21 Exhibit D Initial complaint filed in Iron Workers Mid-South Pension Fund v. Bartz, et 22 al., Case No. CV I 1-03302-PSG the -Iron Workers Action");

23 Exhibit E The Weiser Law Firm resume;

24 Exhibit F Glancy Binkow & Goldberg LLP firm resume;

Exhibit G October 26, 2009 Stipulation of Settlement entered by the parties in Gregory v. Tuchman, et al., C.A. No. 3925-CC (Del. Ch.) C`TeleTechTh 26 Exhibit H Relevant excerpts from the January 5, 2010 Settlement Hearing Transcript in 27 TeleTech;

DECLARATION OF KATHLEEN A. HERKENHOFF IN SUPPORT OF MOTION TO CONSOLIDATE RELATED ACTIONS, APPOINT LEAD PLANITIFES AND APPOINT CO-LEAD COUNSEL - - 2 -

I Exhibit 1 Final Judgment Approving Settlement and Order of Dismissal entered on January 5, 2010 in TeleTech., 2 Exhibit J Stipulation Consolidating Actions, Appointing Lead Counsel and Related 3 Matters and Order Thereon entered on August 26, 2010 in King v. Meyer 111, et al.. Civil Action No. 1:10-cv-01786-DAP N.D. Ohio) ("Keycorp"). 4 1 declare under penalty of perjury under the laws of the United States of America that the 5 foregoing is true and correct. Executed this 11th day of July, 2011, at San Diego, California. 6

7 A r

8 E' ;Al am.; KATHLEEN A. ERRE-RPOF ' 9

22 23

DFCLARAFION OF KATHLEEN A. HERKENHOFT IN SUPPORT OF MOTION TO CONSOLIDATE RELATED ACTIONS, APPOINT LEAD PLANITIFFS AND APPOINT CO-LEAD COUNSEL - - 3 - EXHIBIT A 1 THE WEISER LAW FIRM, P.C. KATHLEEN A. HERR'ENHOFF (168562) ' , ' VW 2 12707 High Bluff Drive, Suite 200 5 San Diego, CA 92130 3 Telephone: (858) 794-1441 ! Facsimile: (858) 794-1450 IP" p 44.57 :FL)" / 4 [email protected] okf:ckVie, - , 410415• VVie. 5 Attorney for Plaintiff Yahia Tawila bini,(1.),h1,10:4;19 S an 4„csfoc,;,`-kirr, 6 7 8 UNI1ED STALES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA liTh: 10 SAN JOSE DIVISION

110 YAH1A TAW1LA, Derivatively on Behalf of ) GaYN1 3 3 01 12 YAHOO! INC., ) ) VERIFIED SHAREHOLDER DERIVATIVE 13 Plaintiff, ) COMPLAINT FOR BREACH OF ) FIDUCIARY DUTY, GROSS 14 VS. ) MISMANAGEMENT, ABUSE OF ) CONTROL, CORPORATE WASTE AND 15 CAROL A. BARTZ, JERRY YANG, ROY ) UNJUST ENRICHMENT BOSTOCK, PATH HART, SUE JAMES, ) 16 VYOMESH JOSHI, DAVID KENNY, ) ARTHUR KERN, BRAD SMITH, and GARY) 17 WILSON, ) ) 18 Defendants, ) ) 19 - and - ) ) 20 YAHOO! INC., ) ) 21 Nominal Party. ) ) DEMAND FOR JURY TRIAL 22 23 24 25 26 a3 27 28

1 VERifIED SHAREHOLDER DERIVATIVE COMPLAJNT

2 1. Plaintiff Yahia Tawila ("Plaintiff"), by and through his undersigned attorneys, hereby

3 submits this Verified Shareholder Derivative Complaint (the "Complaint") for the benefit of nominal

4 defendant Yahoo! Inc. ("Yahoo" or the "Company") against certain members of its Board of

5 Directors (the "Board") and executive officers seeking to remedy defendants' breaches of fiduciary

6 duties and unjust enrichment from April 2011 to the present (the "Relevant Period").

7 2. According to its public filings, Yahoo operates as a digital media company that

8 delivers personalized digital content and experiences across devices and worldwide. The Company's

9 communications and communities offerings provide a range of communication and social services to

10 users and small businesses across various devices and through its broadband Internet access partners,

11 Its search and marketplace offerings provide answers to users' information needs by delivering

12 meaningful search, local, and listings experiences on the search results page and across Yahoo.

13 3. During the Relevant Period, defendants issued materially false and misleading

14 statements regarding the Company's business and financial results. Specifically, defendants failed to

15 disclose that an important corporate asset in China had been transferred at much less than market

16 value. As a result of defen its' false statements, Yahoo's stock traded at artificially inflated prices

17 during the Relevant Period, reaching a high of $18.65 per share on May 6, 2011.

18 4. On May 10, 2011, Yahoo shareholders learned for the first time that the Company's

19 $1 billion investment in a strategic partnership with Alibaba Group Holdings Limited ("Alibaba"),

20 China's largest e-conunerce company, likely had been severely impaired by the misappropriation of

21 Alibaba's most valuable asset, Alipay, an e-commerce payment system, from Alibaba to another

22 private company controlled by Alibaba's Chairman, Jack Ma ("Ma").

23 5. On May 15, 2011, defendants caused the Company to issue a press release entitled

24 "Joint Statement from Alibaba Group and Yahoo! Inc. Regarding Aiipay," which stated in part:

25 "Alibaba Group, and its major stockholders Yahoo! Inc. and Sofibank Corporation, are engaged in and committed to productive negotiations to resolve the outstanding 26 issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible." 27

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL CORPORATE WASTE AND UNJUST ENRICHMENT- - 1 - 1 6, On this news, Yahoo's stock collapsed $0.74 per share to close at $15.81 per share on

2 May 16, 2011 -a decline of 15% from its Relevant Period high of $18.65 per share.

3 7. According to news reports, Alibaba received only $46 million for Alipay's assets,

4 which securities analysts valued at $5 billion.

5 8. The true facts, which were known by the defendants, but concealed from the investing

6 public during the Relevant Period, were as follows:

7 (a) Defendants had been informed on March 31, 2011, at the latest, that Alipay's

8 structure had been shifted from Alibaba, reducing the value of Yahoo's investment in Alibaba by

9 billions of dollars; and

10 (b) Chinese regulations regarding forei ownership had been anticipated to

11 change as far back as 2009, which would require Yahoo or Alibaba to divest themselves of Alipay,

12 but defendants had failed to develop a strategy to recover the value Yahoo had in Alibaba.

13 9. As a result of defendants' false statements, Yahoo's stock traded at artificially

14 inflated levels during the Relevant Period, However, after the above revelations seeped into the

15 market, the Company's shares were hammered by massive sales, sending them down over 15% ft um

16 their Relevant Period high.

17 10, Further, as a result of defendants' breaches, the price of the Company's stock still has

18 not recovered and currently trades for under $16 per share.

19 11. Accordingly, as a result of defendants' breaches, the Company has been damaged.

20 JURISDICTION AND VENUE

21 12. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(2) in that

22 Plaintiffs and defendants are citizens of different states and/or countries and the matter in

23 controversy exceeds $75,000.00, exclusive of interests and costs. This Court has supplemental

24 jurisdiction over the state law claims asserted herein pursuant to 28 U.S.C. §1367(a). This action is

25 not a collusive one to confer jurisdiction on a court of the United States which it would not otherwise

26 have.

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT - - 2 -

1 13. Venue is proper in this district because a substantial portion of the II • sactions and

2 wrongs complained of herein, including defendants' primary participation in the wrongful acts

3 detailed herein, occurred in this district. One or more of the defen• : Its either resides in or maintains

4 executive offices in this district, and defeat; its have received substantial compensation in this

5 district by engaging in numerous activities and conducting business here, which had an effect in this

6 disffict.

7 INT • 3 !STRICT ASSIGNMENT

8 14. A substantial part of the events or omissions which give rise to the claims in this

9 action occurred in the City of Sunnyvale, in the County of Santa Clara, and as such this action is

10 properly assigned to the San Jose Division of this Court.

11 THE P ' TIES

12 15. Plaintiff is a current shareholder of Yahoo and has been continuously throughout the

13 Relevant Period. Plaintiff is a citizen of The Arab Republic of Egypt.

14 16. Nominal party Yahoo is a Delaware corporation with its executive offices located at

15 701 First Avenue, Sunnyvale, California 94089. According to its public filings, the Company,

16 together with its consolidated subsidiaries, operates as a digital media company that delivers

17 personalized digital content and experiences, across devices and worldwide,

18 17. Defendant Carol A. Bartz ("Bartz") has served as the Company's Chief Executive

19 Officer ("CEO") since 2009. In addition, defendant Bartz has served as a director of the Company

20 since 2009. Upon information and belief, defendant Bartz is a citizen of California.

21 18. Defendant Jerry Yang ("Yang") has served as a director of the Coma y since 1995.

22 In addition, defendant Yang is a co-founder of the Company and has served in an executive capacity

23 as its Chief Yahoo during the Relevant Period. Upon information and belief, defendant Yang is a

24 citizen of California.

25 19. Defendant Roy Bostock ("Bostock") has sewed as a director of the Corn y since

26 May 2003. In addition, defendant Bostock has served as Chairman of the Board since 2008. Upon

27 infonnation and belief defendant Bostock is a citizen of New York.

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL CORPORATE WASTE AND UNJUST ENRICHMENT- -3- 1 20. Defendant Patti Hart ("Hart") has served as a director of the Company since 2010. In

2 addition, defendant Hart has served as a member of the Board's Audit and Finance Committee (the

3 "Audit Committee") during the Relevant Period. Upon information and belief, defendant Hart is a

4 citizen of Nevada.

5 21. Defendant Sue James ("James") has served as a director of the Company since 2010.

6 In addition, defendant James served on the Audit Committee during the Relevant Period. Upon

7 information and belief, defendant James is a citizen of California.

8 22. Defendant Vyomesh Joshi ("Joshi") has served as a director of the Company since

9 2005. In addition, defendant Joshi served on the Audit Committee during the Relevant Period.

10 Upon information and belief, defendant Joshi is a citizen of California,

11 23. Defendant David Kenny ("Kenny") has served as a director of the Company since

12 April 2011. Upon information and belief, defendant Kenny is a citizen of Massachusetts.

13 24. Defendant Arthur Kern ("Kern") ha c served as a director of the Company since 1996.

14 Upon information and belief, defendant Kern is a citizen of California

15 25. Defendant Brad Smith ("Smith") has served as a director ofthe Company since 2010.

16 Upon information and belief, defendant Smith is a citizen of California,

17 26. Defendant Gary Wilson ("Wilson") has served as a director of the Company since

18 2001. In addition, defendant Wilson has served as a member of the Audit Committee during the

19 Relevant Period. Upon information and belief, defendant Wilson is a citizen of New York,

20 27, Collectively, defendants Bartz, Yang, Bostock, Hart, James, Joshi, Kenny, Kern,

21 Smith, and Wilson shall be collectively referred to herein as the "Defendants."

22 28. Collectively, defendants Hart, James, Joshi, and Wilson shall be collectively referred

23 to herein as "Audit Committee Defendants."

24 DEFENDANTS' DUTIES

25 29. By reason of their positions as officers, directors, and/or fiduciaries of Yahoo and

26 because of their ability to control the business and corporate affairs of Yahoo, Defendants owed

27 Yahoo and its shareholders fiduciary obligations of good faith, loyalty, and candor, and were and are

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT - - 4 - 1 required to use their utmost ability to control and manage Yahoo in a fair, just, honest, and equitable 2 manner, Defendants were and are required to act in furtherance of the best interests of Yahoo and its

3 shareholders so as to benefit all shareholders equally and not in furtherance of their personal interest 4 or benefit Each director and officer of the Company owes to Yahoo and its shareholders the 5 fiduciary duty to exercise good faith and diligence in the administration of the affairs of the 6 Company and in the use and preservation of its property and assets, and the highest obligations of

7 fair dealing,

8 , 30. Defendants, because of their positions of control and authority as directors and/or 9 officers of Yahoo, were able to and did, directly and/or indirectly, exercise control over the wrongful 10 acts complained of herein. Because of their advisory, executive, managerial, and directorial 11 positions with Yahoo, each of the Defendants had knowledge of material non-public information

12 regarding the Company. 13 31. To discharge their duties, the officers and directors of Yahoo were required to 14 exercise reasonable and prudent supervision over the management, policies, practices and controls of 15 the Company. By virtue of such duties, the officers and directors of Yahoo were required to, among

16 other things;

17 (a) Exercise good faith to ensure that the affairs of the Company were conducted 18 in an efficient, business-like manner so as to make it possible to provide the highest quality 19 performance of their business; 20 (b) Exercise good faith to ensure that the Company was operated in a diligent, 21 honest and prudent manner and complied with all applicable federal and state laws, rules, regulations 22 and requirements, and all contractual obligations, including acting only within the scope of its legal 23 authority; and 24 (e) When put on notice of problems with the Company's business practices 25 and operations, exercise good faith in taking appropriate action to correct the misconduct and 26 prevent its recurrence,

27 28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- - 5 -

1 32. Pursuant to the Audit Committee's Charter, the members of the Audit Committee are

2 required, inter alia, to:

3 (a) Review the Company's annual audited and quarterly financial statements;

4 (b) Review critical accounting policies and such other accounting policies of the

5 Company as are deemed appropriate for review prior to the filing of any annual or quarterly financial

6 statements with the SEC;

7 (c) Review the effect of regulatory and accounting initiatives on the financial

8 statements of the Company;

9 (d) Review the Company's earnings press releases, as well as financial

10 information and earnings guidance provided by the Company to analysts and rating agencies;

11 (e) Recommend to the Board whether to include the audited annual financial

12 statements in the Company's annual report on Form 10-K to be filed with the SEC; and

13 (f) Review with management any significant deficiencies and material

14 weaknesses in the design or operation of the Company's internal controls.

15 SUBSTANTIVE ALLEGATIONS

16 33. According to its public filings, Yahoo, based in Sunnyvale, California, is a global

17 digital media company. Despite its global brand, Yahoo's business has languished for the past

18 several years, as the Company has largely failed to keep up with Google and struggled to grow in

19 highly regulated and politicized fast-growing markets like China.

20 34. To overcome this situation, in 2005, Defendants caused the Company to invest $1

21 billion for a 40% interest in Alibaba, China's largest e-commerce company, and one seat on

22 Alibaba's four-person board of directors. As apart of their strategic partnership, Yahoo also turned

23 over operation of Yahoo China to Alibaba.

35. In a shareholder report discussing the Yahoo-Alibaba strategic partnership, and

25 heralding the transaction as a great opportunity for Yahoo to expand its business in China,

26 Defendants stated:

27 Through this transaction, the Company has combined its leading search capabilities with Alibaba's leading online marketplace and online payment system and Alibaba's 28 strong local presence, expertise and vision in the China market. These factors VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL CORPORATE WASTE AND UNJUST ENRICHMENT - - 6- 1 contributed to a purchase price in excess of the Company's share of the fair value of Aliababa's net tangible and intangible assets acquired resulting in goodwill. 2 36. As the remainder of the decade unfolded, Alibaba grew rapidly. By 2011, Yahoo's 3 40% stake in Alibaba had grown significantly in importance to Yahoo and, in fact, had become, 4 according to many industry experts, Yahoo's most valuable corporate asset, accounting for as much 5 as two-thirds of Yahoo's entire $21 billion market capitalization. 6 37. For example, as famed hedge fund manager David Einhom's Greenlight Capital 7 wrote about Yahoo in April 2011, "We would not be surprised if [Yahoo's] 40% stake in Alibaba 8 Group alone was ultimately worth [Yahoo's] entire current market value." Greenlight Capital 9 continued: 10 We believe that Yahoo's most valuable asset is its 40% stake in Alibaba Group's 11 still-private holdings, which are separate and distinct from its ownership in the publicly-traded Alibaba.com , which we are essentially getting for free. 12 38. Until recently, one of Alibaba's most profitable "still-private holdings" was Alipay, 13 an e-commerce payment system similar to eBay Inc.'s PayPal. As China's economy grew rapidly 14 during the late 2000s, so did Alipay's profits. According to U.S. securities analysts, including Brett 15 Hariss of Bagelli rt Co., Alipay is worth more than $5 billion. But most importantly for Yahoo and 16 its shareholders, Yahoo, as Alibaba's largest shareholder, had a direct connection to the profits 17 stemming from Alipay's fast- wing and lucrative online payment system. 18 39. Doing business in China can be complex and difficult for U.S. companies. Yahoo's 19 experience in China has been no different. But, unlike other large U.S. publicly traded companies, 20 Yahoo's single most valuable corporate asset is an investment tied up in a foreign corporation 21 located in China, more than 4,000 miles away from Yahoo's corporate headquarters located in 22 Sunnyvale, California. 23 40. Yahoo's counterparts in China had been consulting with Yahoo for months and 24 months on anticipated changes to Chinese regulations regarding foreign ownership. Defendants 25 failed to address this issue and ultimately in 2010, Alibaba transferred ownership in Alipay to 26 Alibaba CEO Ma for $46 million. This was made known to Defendants on March 31, 2011, at the 27

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT - - 7 -

1 latest However, in an effort to make Yahoo attractive to hedge funds and other investors,

2 Defendants continued to conceal this information.

3 DEFENDANTS' FALSE AND MISLEADING STATEMENTS ISSUED DURING THE RELEVANT PERIOD 4 41. On April 19, 2011, Defendants caused the Company to issue a press release 5 announcing its first quarter 2011 financial results. Defendants reported earnings of $223 million, or 6 $0.17 diluted earnings per share, and revenue of $1,064 million. The release stated in part: 7 "We are solidly executing toward our plan for returning Yaho& to sustainable 8 revenue and profit growth," said Carol Bartz, CEO of Yahoo!. "During the quarter, we beat the midpoint of revenue guidance while continuing to deliver on the bottom 9 line. We continued to extend our lead as the world's premier digital media compan y with users to Yahoo! branded properties increasing 15% year over year and minutes 10 spent increasing 17%." II 42. These were positive results and statements (with never a word about the Alipay 12 fiasco), and Yahoo's stock reacted favorably, increasing to $16.87 per share

13 THE TRUtH FINALLY EMERGES 14 43. On May 10, 2011, Yahoo shareholders learned for the first time that the Company's 15 $1 billion investment in its strategic partnership with Alibriba likely had been severely impaired by

16 the misappropriation of Alibaba's most valuable asset, Alipay, from Alibaba to another private 17 company controlled by Alibaba's Chairman, Ma.

18 44. On this news, Yahoo's stock fell by 7%, to close at $17.20 per share. 19 45, On May 12, 2011, Defendants caused the Company to issue a press release entitled 20 "Yahoo! Inc, Releases Statement Regarding Alipay," which stated in part:

21 On March 31, 2011, Yahoo! and Sofibank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group 22 board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010, The second was the deconsolidation of Alipay effective in the first 23 quarter of 2011. 24 Yahoo! disclosed this restructuring in its l 0-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation. 25 Yahoo! continues to work closely with Alibaba and Softbank to protect economic 26 value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all 27 stakeholders

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- -8- 1 46. According to news reports, Alibaba received only $46 million for Alipay's assets,

2 which securities analysts valued at $5 billion. Additionally, Defendants reportedly were aware of

3 Ma's misappropriation of Alipay, failing to prevent the usurpation of Yahoo's valuable financial

4 interest in Alipay, and then concealing the entire episode from Yahoo shareholders for six months.

5 47. On May 15, 2011, Defendants caused the Company to issue a press release entitled

6 "Joint Statement from Alibaba Group and Yahoo! Inc. Re:. • ing Alipay," which s i in part:

7 "Alibaba Group, and its major stockholders Yahoo! Inc. and Sofibank Corporation, are en:: ged in and committed to productive negotiations to resolve the outstanding 8 issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible." 9 48. On this news, Yahoo's stock collapsed $0.74 per share to close at $15.81 per share on 10 May 16, 2011 a decline of 15% from its Relevant Period high of $18.65 per s . 11 49. The true facts, which were known by Defendants, but concealed from the investing 12 public during the Relevant Period, were as follows: 13 (a) Defendants had been informed on March 31, 2011, at the latest, that Alipay's 14 structure had been shifted from Alibaba, reducing the value of Yahoo's investment in Alibaba by 15 billions of dollars; and 16 (b) Chinese regulations regarding foreign ownership had been anticipated to 17 change as far back as 2009, which would require Yahoo or Alibaba to divest themselves of Alipay, 18 but defendants had failed to develop a strategy to recover the value Yahoo had in Alibaba. 19 50. Further, as a result of Defendants' breaches, the price of the Company's stock still has 20 not recovered and currently trades for under $16 per share. 21 51. Accordingly, as a result of Defendants' breaches, the Company has been damaged 22 DERIVATIVE A 3 DE ND ALLEGATIONS 23 52. Plaintiff brings this action derivatively in the right and for the benefit of Yahoo to 24 redress the breaches of fiduciary duty and other violations of law by Defem its. 25 53. Plaintiff will adequately and fairly represent the interests of Yahoo and its 26 shareholders in enforcing and prosecuting its rights. 27

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- -9-

1 54. The Board currently consists of the following ten (10) directors: defendants Bartz,

2 Yang, Bostock, Hart, James, Joshi, Kenny, Kern, Smith, and Wilson. Plaintiff has not made any

3 demand on the present Board to institute this action because such a demand would be a futile,

4 wasteful and useless act, for the following reasons:

5 (a) During the Relevant Period, defendants Hart, James, Joshi, and Wilson served

6 as members of the Audit Committee. Pursuant to the Company's Audit Committee Charter, the

7 members of the Audit Committee were and are responsible for, inter cilia, reviewing the Company's

8 annual and quarterly financial reports and reviewing the integrity of the Company's internal controls.

9 Defendants Hart, James, Joshi, and Wilson breached their fiduciary duties of due care, loyalty, and

10 good faith, because the Audit Committee, inter cilia, allowed or permitted the Company to

11 disseminate false and misleading statements in the Company's SEC filings and other disclosures and

12 caused the above-discussed internal control failures. Therefore, defendants Hart, James, Joshi, and

13 Wilson each face a substantial likelihood of liability for their breach of fiduciary duties and any

14 demand upon them is futile;

15 (b) The principal professional occupation of defendant Bartz is her employment

16 with Yahoo as its CEO, pursuant to which she has received and continues to receive substantial

17 monetary com sation and other benefits. In addition, according to the Company's Proxy

18 Statement filed on April 29, 2011, Defendants have admitted that defendant Bartz is not

19 independent. Thus, defendant Bartz lacks independence from demonstrably interested directors,

20 rendering her incapable of impartially considering a demand to commence and vigorously prosecute

21 this action; and

22 (c) The principal professional occupation of defendant Yang is his employment

23 with Yahoo as its Chief Yahoo, pursuant to which he has received and continues to receive

24 substantial monetary compensation and other benefits. In addition, according to the Company's

25 Proxy Statement filed on April 29, 2011, Defendants have admitted that defendant Yang is not

26 independent. Thus, defendant Y L lacks independence from demonstrably interested directors,

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- - 10 -

I rendering him incapable of impartially considering a demand to commence and vigorously ja osecute 2 this action. 3 COUNT I

4 Against All Defendants for Breach of Fiduciary Duty for Disseminating False and Misleading Information 5 55, Plaintiff incorporates by reference and realleges each and every allegation set forth 6 above, as though fully set forth herein. 7 56, As alleged in detail herein, each of the Defendants (and particularly the Audit 8 Committee Defendants) had a duty to ensure that Yahoo disseminated accurate, truthful and 9 complete information to its shareholders. 10 57. Defendants violated their fiduciary duties of care, loyalty, and good faith by causing 11 or allowing the Company to disseminate to Yahoo shareholders materially misleading and inaccurate 12 information through, inter cilia, SEC filings, press releases, conference calls, and other public 13 statements and disclosures as detailed herein. These actions could not have been a good faith 14 exercise of prudent business judgment. 15 58, As a direct and proximate result of Defendants' foregoing breaches of fiduciary 16 duties, the Company has suffered sip. Ticant damages, as alleged herein. 17 COUNT II 18 Against All Defendants for Breach of Fiduciary Duties for Failing 19 - to Maintain Internal Controls 20 59. Plaintiff incorporates by referencealiprecedingand subsequent 9: ohs as if fully 21 set forth herein. 22 60. As alleged herein, each of the Defendants (and particularly the Audit Committee 23 Defendants) had a fiduciary duty to, among other things, exercise good faith to ensure that the 24 Company's financial statements were prepared in accordance with GAAP, and, when put on notice 25 of problems with the Company's business practices and operations, exercise good faith in taking 26 appropriate action to correct the misconduct and prevent its recurrence.

27 28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- -11-

1 61. Defendants willfully ignored the obvious and pervasive problems with Yahoo's 2 internal controls and practices and procedures and failed to make a good faith effort to correct these

3 problems or prevent their recurrence.

4 62. As a direct and proximate result of the Defendants' foregoing breaches of fiduciary 5 duties, the Company has sustained damages.

6 COUNT III 7 Against All Defendants for Breach of Fiduciary Duties for Failing to Properly Oversee And Manage the Company 8 63. Plaintiff incorporates by reference and realleges each and every allegation contained 9 above, as though filly set forth herein. 10 64. Defendants owed and owe Yahoo fiduciary obligations. By reason of their fiduciary 11 relationships, Defendants specifically owed and owe Yahoo the highest obligation of good faith, fair 12 dealing, loyalty and due care. 13 65. Defendants, and each of them, violated and breached their fiduciary duties of care, 14 loyalty, reasonable inquiry, oversight, good faith and supervision. 15 66. As a direct and proximate result of Defendants' failure to perform their fiduciary 16 obligations, Yahoo has sustained significant damages, not only monetarily, but also to its corporate 17 image and goodwill. 18 67. As a result of the misconduct alleged herein, Defendants are liable to the Company. 19 68. Plaintiff, on behalf of Yahoo, has no adequate remedy at law. 20 COUNT IV 21 Against All Defendants for Unjust Enrichment 22 69. Plaintiff incorporates by reference and realleges each and every allegation set forth 23 above, as though fully set forth herein. 24 70. By their wrongful acts and omissions, Defendants were unjustly enriched at the 25 expense of and to the detriment of Yahoo. 26 71. Plaintiff, as a shareholder and representative of Yahoo, seeks restitution from 27 Defendants, and each of them, and seeks an order of this Court disgorging all profits, benefits, and 28 VERJFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL CORPORATE WASTE AND UNJUST ENRICHMENT- - 12 -

1 other compensation obtained by Defendants, and each of them, as a result of their wrongful conduct

2 and fiduciary breaches.

3 COUNTY

4 Against All Defendants for Abuse of Control

5 72. Plaintiff incorporates by reference and realleges each and every allegation contained

6 above, as though fully set forth herein.

7 73. Defendants' misconduct alleged herein constituted an abuse of their ability to control

8 and influence Yahoo, for which they are legally responsible. In particular, Defendants abused their

9 positions of authority by causing or allowing Yahoo to misrepresent material facts regarding its

10 financial position and business prospects.

11 74, As a direct and proximate result of Defendants' abuse of control, Yahoo has sustained

12 situ 'ficant • . Ages.

13 75. As a result of the misconduct alleged herein, Defendants are liable to the Company.

14 76, Plaintiff, on behalf of Yahoo, has no adequate remedy at law.

15 COUNTY!

16 Against All Defendants for Gross Mismanagement

17 77. Plaintiff incorporates by reference and realleges each and every allegation set forth

18 above, as though fully set forth herein.

19 78. Defen. t ts had a duty to Yahoo and its shareholders to prudently supervise, manage

20 and control the operations, business and internal financial accounting and disclosure controls of

21 Yahoo,

22 79. Defendants, by their actions and by engs sing in the wrongdoing described herein,

23 as : I dotted and abdicated their responsibilities and duties with regard to prudently managing the

24 businesses of Yahoo in a manner consistent with the duties imposed upon them by law, By

25 committing the misconduct alleged herein, Defendants breached their duties of due care, diligence

26 and candor in the management and administration of Yahoo's affairs and in the use and preservation

27 of Yahoo's assets.

28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH DF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- - 13-

1 80. During the course of the discharge of their duties, Defendants knew or recklessly

2 disregarded the unreasonable risks and losses associated with their misconduct, yet Defen. s

3 caused Yahoo to engage in the scheme complained of herein which they knew had an unreasonable

4 risk of damage to Yahoo, thus breaching their duties to the Company. As a result, Defer' ' . ts

5 grossly mismanaged Yahoo.

6 COUNT VII

7 Against All Defendants for Waste of Corporate Assets

8 81. Plaintiff incorporates by reference and realleges each and every allegation contained

9 above, as though fully set forth herein.

10 82. Ma result of the misconduct described above, and by failing to properly consider the

11 interests of the Company and its public shareholders, Defendants have caused Yahoo to incur (and

12 Yahoo may continue to incur) significant legal liability and/or legal costs to defend itself as a result

13 of Defendants' misconduct and unlawful actions.

14 83. As a result of this waste of corporate assets, Defendants are liable to the Company.

15 84. Plaintiff, on behalf of Yahoo, has no adequate remedy at law.

16 P ' • YER FOR RELIEF

17 WHEREFORE, Plaintiff demands judgment as follows:

18 A. Against all Defendants and in favor of the Company for the amount of damages

19 sustained by the Company as a result of Defen.its' breaches of fiduciary duties;

20 B. Directing Yahoo to take all necessary actions to reform and improve its corporate

21 governance and internal procedures to comply with applicable laws and to protect the Company and

22 its shareholders from a repeat of the damaging events described herein, including, but not limited to,

23 putting forward for shareholder vote resolutions for amendments to the Company's By-Laws or

24 Articles of Incorporation and taking such other action as may be necessary to place before

25 shareholders for a vote a proposal to strengthen the Board's supervision of operations and develop

26 and implement procedures for greater shareholder input into the policies and guidelines of the Board;

28 VERIF1ED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY. GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- - 14-

1 C. Awarding to Yahoo restitution from Defendants, and each of them, and ordering 2 disgorgement of all profits, benefits and other compensation obtained by the Defendants; 3 D. Awarding to Plaintiff the costs and disbursements of the action, including reasonable 4 attorneys' fees, accountants' and experts' fees, costs, and expenses; and 5 E. Granting such other and further relief as the Court deems just and proper.

6 JURY DE 7 Plaintiff demands a trial by jury. 8 DATED: July6 2011 THE WEISER LAW FIRM, P.C. KATHLEE A. HERKENHOFF (168562) 9 10 40- ALL a..04b. A III N AL _ _ 11 !CATHLEEN A„ r mcEt.

12 12707 High Bluff Drive, Suite 200 San Diego, CA 92130 13 H Telephone: 858-794-1441 Facsimile: 858-7944450 14 THE WEISER LAW FIRM, P.C. 15 ROBERT B. WEISER BRETT D. SUCKER 16 JEFFREY J. CIAMANTO 17 JOSEPH 51 PROEM 121 North Wayne Avenue, Suite 100 18 Wayne, PA 19087 Telephone (610) 225-2677 19 Facsimile: (610) 225-2678

20 Attorneys for Plaintiff 21 22 23 24

25 26 27 28 VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, GROSS MISMANAGEMENT, ABUSE OF CONTROL, CORPORATE WASTE AND UNJUST ENRICHMENT- - 15 -

YAIIOOWC V 1 CATION

Mo ad Ta ° ° in my capacity asattomeyintt Sr Yabia Tawila

t to a duly -. of a ,Jiby ° 1 am. laminar -with the

allegations in the Complaint, and that I have authorized the filing of the Complaint,

that the foregoing is true and correct to the best of my knowlmtge, °on, and

belief

4-3o. P: Verb s f 11 If gams EXHIBIT B

Case5 11-cv-03286-HRL Documentl Filed07105111 Pagel of 26 :

A . . Is : , 4 : .) 1 LIONEL Z. GLANCY (#134180) 44/VG ' MICHAEL GOLDBERG (11188669) 01 . 2 EX KANO S. SAMS II (#192936) GLANCY B1NKOW & GOLDBERG LLP 3 ) I 1801 Avenue of the Stars, Suite 311 Piz 4 Los Angeles, California 90067 n toe , / t•. 1 • Telephone: (310) 201-9150 5 Facsimile: (310) 201-9160 ilt 049/04d4/1, 0a 41 / p info@glancylaw. corn 0,91,0 Ayr Ark, 420 , 6 844; et, , If 1 0 kk, .• GNINgervive M Op 0041 . 7 Attorneys for Plaintiff Jane Oh c't Ckipelip • , Oa% 8 [Additional Counsel on Signature Page] • 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA H R 1, 11 JANE OH, Derivatively on Behalf of Herself and aserAio 12 All Others Similarly Situated, t) V 11 — 0 1JJ—I 32 8 6 = cc 13 Plaintiff, x .tc SHAREHOLDER DERIVATIVE LI o COMPLAINT ).-, 14 vs. . CD 09 2 H 15 CAROL A. BARTZ, JERRY YANG, ROY DEMAND FOR JURY TRIAL ._= ctzi– BOSTOCK, PATH HART, SUSAN JAMES, i = 16 VYOMESH JOSHI, DAVID KENNY, ARTHUR =cc KERN, BRAD SMITH, AND GARY WILSON 0. 17 18 Defendants, -and- 19 YAHOO! INC., 20 21 Nominal Defendant. n ' 22 23 24 25 26 27 . 28 SHAREHOLDER DERIVATIVE COMPLAINT

Case5:11-cv-03286-HRL Document1 Filed07105111 Page2 of 26

1 INTRODUCTION 2 1. Plaintiff, by and through her attorneys, brings this action derivatively on behalf • 3 of nominal defendant Yahoo!, Inc. ("Yahoo" or the "Company") and alleges upon personal 4 knowledge as to herself and her own acts, and as to all other matters based upon the 5 6 investigation conducted by her attorneys which included, among other things, a review of

7 Securities and Exchange Commission ("SEC") filings, documents, analyst reports, news reports,

8 press releases, and other publicly available information regarding the Company, as follows: 9 2. This is a shareholder derivative action brought on behalf of the Company against 10 the members of its Board of Directors ("Board") and certain of its executive officers seeking to 11 12 remedy defendants' breaches of fiduciary duties and other violations of the law that occurred

13 from at least April 19, 2011 through May 13, 2011 ("Relevant Period").

14 3. During the Relevant Period, Defendants participated in the drafting, preparation, 15 and/or approval of the various public, shareholder and investor reports and other 16 17 communications complained of herein and were aware of, or recklessly disregarded, the

18 misstatements contained therein and omissions therefrom, and were aware of their materially

19 false and misleading nature. Because of their Board membership and/or executive and

20 managerial positions with Yahoo, each of the Individual Defendants had access to the adverse 21 undisclosed information about Yahoo's financial condition and performance as particularized 22 23 herein• and knew (or recklessly disregarded) that these adverse facts rendered the positive

24 representations made by or about Yahoo and its business or adopted by the Company materially

25 false and misleading.

26 JURISDICTION AND VENUE

27 4. This Court has jurisdiction pursuant to 28 U.S.C. §1332(a)(2), as plaintiff and 28 ; SHAREHOLDER DERIVATIVE COMPLAINT -1- ?

Case5:11-cv-03286-HRL Document1 Filed07105111 Page3 of 26

1 defendants are citizens of different states and the amount in controversy exceeds $75,000,

2 exclusive of interests and costs. This action is not a collusive action designed to confer

3 jurisdiction on a court of the United States that it would not otherwise have.

4 5. This Court has jurisdiction over each defendant because each defendant is either a 5 corporation that conducts business in, and maintains operations in, this District, or is an individual • 6 who has sufficient minimum contacts with this District so as to render the exercise of jurisdiction 7 8 by the District courts permissible under traditional notions of fair play and substantial justice.

9 6. Venue is proper in this Court under 28 U.S.C. §1391(a) because: (1) one or more

10 defendants either reside in, or maintain executive offices in, this District; (2) a substantial portion 11 of the transactions and wrongs complained of herein, including the defendants' primary 12 13 participation in the wrongful acts detailed herein, occurred within this District, and (3) defendants

14 have received substantial compensation in this District by conducting business herein and by

15 engaging in numerous activities that have had an effect in this District

16 PARTIES 17 7. Plaintiff Jane Oh is a current shareholder of Yahoo and has been a shareholder of 18 19 the Company during the Relevant Period. Plaintiff is a citizen of the State of Connecticut.

8. Nominal Defendant Yahoo is a digital media company that delivers personalized 20 21 digital content and experiences across devices and worldwide. Yahoo is incorporated in the State

22 of Delaware and is headquartered in Sunnyvale, California. 23 9. Defendant Canal A. Bartz ("Bartz") is, and at all relevant times was Chief Executive 24 Officer ("CEO") and a director of Yahoo. Bartz has served as the Company's CEO and as a 25 26 member of the Board since January 2009. Bartz served as the Executive Chairman of the Board

27 of Autodesk, Inc. ("Autodesk"), a computer-aided design software provider, from May 2006 to

28 SHAREHOLDER DERIVATIVE COMPLAINT -2-

Case5:11-cv-03286-HRL Document1 Filed07/05111 Page4 of 26

1 February 2009, as Chairman, President and CEO of Autodesk from April 1992 to April 2006, and

as a director of Autodesk from April 1992 to February 2009. From 1983 to April 1992, Bartz

served in a number of positions at Sun Microsystems, Inc., a provider of computer systems,

4 software and services (now a subsidiary of Oracle Corporation), including as Vice President of 5 Worldwide Field Operations and as an executive officer. Currently, Bartz also serves as the lead 6 director of Cisco Systems, Inc. ("Cisco"), a networking technology company, as a director of the 7 8 National Medals of Science and Technology Foundation, and as trustee of the Paley Center for

9 Media. Bartz previously served as a director of BEA Systems, Inc., a provider of database-related

10 software (now a subsidiary of Oracle Corporation), Intel Corp., a semiconductor chip design and 11 manufacturing company, and NetApp, Inc., a provider of data-storage and data-management 12 13 tools. Plaintiff is informed and believes, and thereupon alleges, that Bartz is a citizen of the State

14 of California.

15 10. Defendant Jerry Yang ("Yang") founded Yahoo and at all relevant times has been a

16 director of the Company. Yang has served as a member of the Company's Board since March 17 1995 Yang served as the Company's CEO from June 2007 to January 2009 Yang co-developed 18 19 Yahoo! in 1994, while he was working towards his Ph.D. in electrical engineering at Stanford

20 University. Currently, Yang also serves as a director of Cisco, Yahoo Japan Corporation, and

21 Alibaba Group Holding Limited, a privately-held company which manages investments in several

22 Asia-based internet businesses ("Alibaba"). Plaintiff is informed and believes, and thereupon 23 alleges, that Yang is a citizen of the State of California. 24 11. Defendant Roy Bostock ("Bostock") is, and at all relevant times was, Chairman of 25 • the board of directors of Yahoo. Bostock has served as the Chairman of the Company's Board 26 27 since January 2008, and has been a member of Yahoo's Board since May 2003. Bostock has

28 SHAREHOLDER DERIVATIVE COMPLAINT - 3 - Case5 . 11-cv-032867HRL Document1 Filed07105111 Page5 of 26

1 served as Vice Chairman of the Board of Delta Air Lines, Inc. since October 2008, and as a

2 principal of Sealedge Investments, LLC, a diversified private investment firm, since 2002.

3 Bostock also serves as Chairman Emeritus of The Partnership at Drugfree.org (formerly The

4 , Partnership for a Drug-Free America), and served as its Chairman of the Board from December. 5 2002 until February 2010. Bostock joined the board of directors of Northwest Airlines 6 Corporation, the parent of Northwest Airlines, Inc., in April 2005, and served as the Chairman of 7 8 its Board from May 2007 until its merger with Delta Air Lines, Inc. in October 2008. Bostock

9 also sewed as Chairman of the Board of the Committee for Economic Development, a

10 Washington, D.C.-based public policy group, from 2002 to 2005. Bostock served as Chairman of 11 the Board of BCom3 Group, Inc., a global advertising agency group (now part of Publicis Groupe 12 S.A., a global marketing services holding company), from January 2000 to mid 2001. From July 13 14 1990 to January 2000, Bostock sewed as Chairman and CEO of D'Arcy Masius Benton &

15 Bowles, Inc., an advertising and marketing services firm, and its successor company, The

16 MacManus Group, Inc. Currently, Bostock also serves as a director of Morgan Stanley, a 17 financial services firm. Plaintiff is informed and believes, and thereupon alleges, that Bostock is a 18 citizen of the State of New York. 19 12. Defendant Patti Hart ("Hart") is, and at all relevant times was, a director of Yahoo. 20 21 Hart has served as a member of our Board since June 2010. Hart was appointed President and

22 CEO of International Game Technology ("JUT), a global provider of electronic gaming

23 equipment and systems products, in April 2009, and has served on its board of directors since 24 June 2006. Prior to joining IGT, Hart was the Chairman and CEO of Pinnacle Systems, Inc., a 25 26 digital video hardware and software company (now a subsidiary of Avid Technology, Inc.), from

27 2004 to 2005, and of Excite@Home, Inc., a high-speed broadband Internet service provider, from

28 SHAREHOLDER DERIVATIVE COMPLAINT -4 -

Case5:11-cv-03286-HRL Document1 Filed07105111 Page6 of 26

2001 to 2002. Hart previously served as a director of Korn/Ferry International, Inc., an executive 1 2 search firm, Lin TV Corporation, a television station holding company, Plantronics, Inc., a

3 consumer electronics manufacturer, and Spansion LLC, a flash-memory chip manufacturer.

4 Plaintiff is informed and believes, and thereupon alleges, that Hart is a citizen of the State of 5 Nevada. 6 13. Defendant Sue James ("James") is, and at all relevant times was, a director of 7 8 Yahoo. James has served as a member of the Company's Board since January 2010. James

9 joined Ernst & Young LLP, a global accounting services firm, in 1975, serving as a partner from

10 1987 until her retirement in June 2006, and as a consultant from June 2006 to December 2009. 11 During her tenure with Ernst & Young, Junes was the lead partner or partner-in-charge of audit 12 13 work for a number of significant technology companies, including Intel Corporation, Sun

14 Microsystems, Amazon.com, Inc., Autodesk and Hewlett-Packard Company ("HP"), a consumer

15 electronics company, as well as for the Ernst & Young North America Global Account Network.

16 James also served on the Ernst & Young Americas Executive Board of Directors from January

17 2002 through June 2006. Currently, James serves as a director of Applied Materials, Inc., a 18 19 supplier of nanotechnology materials, and Coherent, Inc., a laser and optical component

20 manufacturer. James is a certified public accountant and a member of the American Institute of

21 Certified Public Accountants. Plaintiff is informed and believes, and thereupon alleges, that

22 James is a citizen of the State of California.

23 • 14. Defendant Vyomesh Joshi ("Joshi") is, and at all relevant times was, a director of 24 . Yahoo. Joshi has served as a member of the Company's Board since July 2005. Joshi has served 25 26 as an officer of HP since 2001 including as Executive Vice President of I-W's Imaging and

27 Printing Group since 2002. Jot served as Chairman of Phogenix Imaging LLC, a joint venture

28 SHAREHOLDER DERIVATIVE COMPLAINT -5- Case5 . 11-cv-03286-HRL Document1 Filed07/05/11 Page7 of 26

1 between HP and Eastman Kodak Company, from 2000 until May 2003. Plaintiff is informed and

2 believes, and thereupon alleges, that Joshi is a citizen of the State of California.

3 15. Defendant David Kenny ("Kenny") is, and at all relevant times was, a director of

4 Yahoo Kenny has served as a member of the Company's Board since April 2011. Kenny has 5 •served as President of Akamai Technologies, Inc., a service provider for accelerating and 6 improving the delivery of content and applications over the Internet, since September 2010 and as 7 8 a director since July 2007. From June 2008 to June 2010, Kenny was Managing Partner of

• 9 VivaKi, which is the media and digital arm of Publicis. Kenny served on the Directoire

• 10 (Management Board) of Publicis from January 2008 to June 2010. From August 1997 to May • 11 2008, Kenny was CEO of Digitas, Inc ("Digjtas"), a relationship marketing services firm which 12 13 was acquired by Publicis in 2007. Kenny was also a director of Digitas from 1997 to 2007, and

14 Chairman and CEO from 1999 to 2007. Kenny currently serves as a director of Teach For

15 America, and was a director of The Corporate Executive Board Company, which provides

16 research and analysis on corporate strategy and operations, from February 1999 to August 2010. 17 .. Plaintiff is informed and believes, and thereupon alleges, that Kenny is a citizen of the State of , 18 - Massachusetts. 19 16. Defendant Arthur Kern ("Kern") is, and at all relevant times was, a director of 20 21 Yahoo. Kern has served as a member of the Company's Board since January 1996. Kern was

22 also co-founder and CEO of American Media, Inc., a group owner of commercial radio stations

• 23 sold to AMFM (now part of Clear Channel Communications, Inc.) in October 1994. Kern 24 previously served as a director of Digitas. Plaintiff is informed and believes, and thereupon 25 6 alleges, that Kern is a citizen of the State of California. • 2 27 28 • SHAREHOLDER DERIVATIVE COMPLAINT -6-

Case5 . 11-cv-03286-HRL Document1 Filed07105111 Page8 of 26

17. Defendant Brad Smith ("Smith") is, and at all relevant times was, a director of 1 2 Yahoo. Smith has served as a member of the Company's Board since June 2010. Smith has

3 served as President and CEO of Intuit Inc., a provider of business and financial management

4 software, and as member of its board of directors since January 2008. Additionally, Smith was 5 Senior Vice President and General Manager of Intuit's Small Business Division from May 2006 6 to December 2007 and Senior Vice President and General Manager of Intuit's QuickBooks from 7 8 May 2005 to May 2006. Smith also served as Senior Vice President and General Manager of

9 Intuit's Consumer Tax Group from March 2004 until May 2005 and as Vice President and

10 General Manager of Intuit's Accountant Central and Developer Network from February 2003 to 11 March 2004. Prior to joining Intuit in 2003, Smith was Senior Vice President of Marketing and 12 13 Business Development of Automatic Data Processing, Inc., a provider of business outsourcing

14 solutions, where he held several executive positions from 1996 to 2003. Plaintiff is informed and

15 believes, and thereupon alleges, that Smith is a citizen of the State of California.

16 18. Defendant Gary Wilson ("Wilson") is, and at all relevant times was, a director of 17 Yahoo. Wilson has served as a member of the Company's Board since November 2001. Wilson 18 is a private investor and has been General Partner of Manhattan Pacific Partners, a private equity 19 20 company, since May 2009. Wilson served as Chairman of the Board of Northwest Airlines

21 Corporation, the parent of Northwest Airlines, Inc., from April 1997 to May 2007, as Co-

22 Chairman of the Board from 1991 to 1997, and as a director from 1989 to May 2007. Wilson also 23 served as Executive Vice President and Chief Financial Officer ("CFO") of the Walt Disney 24 Company, a media and entertainment company, from 1985 to 1989, and served as a director from 25 26 1985 to 2006. Prior to that time, Wilson served for 11 years in various executive positions at

27 Marriott Corp., an airline food service provider and operator of hotels, restaurants and theme

28 SHAREHOLDER DERIVATIVE COMPLAINT -7-

Case5:11-cv-03286-HRL Document1 Filed07105111 Page9 of 26

parks, including as Executive Vice President and CFO. Currently, Wilson also serves as a director

• 2 of CB Richard Ellis Group, Inc., a Trustee Emeritus of Duke University, a member of the Board • 3 of Overseers of the Keck School of Medicine of the University of Southern California, and a

4 member of the board of directors of Millennium Promise. Plaintiff is informed and believes, and

thereupon alleges, that Wilson is a citizen of the State of Pennsylvania. • 6 19. Defendants Bartz, Yang, Bostock, Hart, James, Joshi, Kenny, Kern, Smith, and 7 8 Wilson are referred to herein as the "Individual Defendants."

9 DUTIES OF THE INDIVIDUAL DEFENDANTS

10 20. By reason of their positions as officers and directors of the Company, and because 11 of their ability to • control the business and corporate affairs of the Company, the Individual 12 Defendants owed the Company and its shareholders the fiduciary obligations of good faith, trust, 13 .1 14 loyalty, and due care, and were, and are, required to use their utmost ability to control and manage

15 the Company in a fair, just, honest, and equitable manner. The Individual Defendants were, and

16 are, required to act in furtherance of the best interests of the Company and its shareholders so as to

17 benefit all shareholders equally and not in furtherance of their personal interests or benefit. 18 21. Each director and officer owed to the Company and its shareholders the fiduciary 19 20 duty to exercise good faith and diligence in the administration of the affairs of the Company and

21 in the use and preservation of its property and assets, and the highest obligations of fair dealing.

22 In addition, as officers and directors of a publicly held company, the Individual Defendants had a 23 • duty to promptly disseminate accurate and truthful information concerning the Company's 24 revenue, margins, operations, performance, management, projections, and forecasts, so that the 25 26 market price of the Company's stock would be based 'on truthful and accurate information.

27 28 SHAREHOLDER DERIVATIVE COMPLAINT -8-

Case5 . 11-cv-03286-HRL Documentl led07/05/11 Pagel 0 of 26

• 22. The Individual Defendants, because of their positions of control and authority as . • 1 2 directors and/or officers, were able to, and did, directly and/or indirectly, exercise control over the

3 wrongful acts complained of herein, as well as the contents of the various public statements issued

4 by the Company. Because of their executive, managerial, and/or directorial positions within the 5 Company, each of the Individual Defendants had access to adverse, non-public information about 6 the financial condition, operations, and misrepresentations made. 7

8 • 23. At all times relevant hereto, each of the Individual Defendants was the agent of the 9 other Individual Defendants and of the Company, and was at all times acting within the course

10 and scope of such agency. 11 24. To discharge their duties, the Individual Defendants were required to exercise 12 13 reasonable and prudent supervision over the management, policies, practices and controls of the

14 financial affairs of the Company. By virtue of such duties, the Individual Defendants were

15 required to, among other things:

16 a. manage, conduct, supervise and direct the business affairs of the 17 , Company in accordance with all applicable laws; 18 b. neither violate, nor knowingly permit any officer, director or employee of 19 20 the Company to violate, applicable laws, rules and regulations;

21 c. establish and maintain systematic and accurate records and reports of the

22 business and affairs of the Company and procedures for the reporting of the business and affairs 23 to the Board and to periodically investigate, or cause independent investigation to be made of, 24 said reports and records; 25 d. neither engage in self-dealing, nor knowingly permit any officer, director 26 27 or employee of the Company to engage in self-dealing;

28 SHAREHOLDER DERIVATTVE COMPLAINT - 9 -

Case5:11-cv-03286-HRL Documentl led07/05/11 Page 1 1 of 26

e. ensure that the Company complied with its legal obligations and 1 2 requirements, including acting only within the scope of its legal authority and disseminating

3 truthful and accurate statements to the SEC and the investing public;

4 • f. conduct the affairs of the Company in an efficient, business-like manner • 5 so as to make it possible to provide the highest quality performance of its business, to avoid 6 wasting the Company's assets, and to maximize the value of the Company's stock; 7 8 g. properly and accurately guide investors and analysts regarding the true 9 financial condition of the Company at any given time, including making accurate statements

10 about the Company's financial results and prospects, and ensuring that the Company maintained 11 an adequate system of financial controls such that the Company's financial reporting would be • 12 true and accurate at all times; and 13 14 h. remain informed regarding how the Company conducted its operations, 15 and, upon receipt of notice or information of imprudent or unsound conditions or practices, to • 16 make reasonable inquiry in connection therewith, and to take steps to correct such conditions or 17 practices and make such disclosures as necessary to comply with applicable laws. 18 25. F-ah Individual Defendant, by virtue of his or her position as a director and/or 19 20 officer, owed to the Company and its shareholders the fiduciary duties of loyalty, good faith, the

21 exercise of due care and diligence in the management and administration of the affairs of the

22 Company, as well as in the use and preservation of its property and assets. The conduct of the 23 Individual Defendants alleged herein involves a violation of their obligations as directors and/or 24 officers of the Company; the absence of good faith on their part, and a reckless disregard for 25 26 their duties to the Company and its shareholders that the Individual Defendants were aware, or

21 should have been aware, posed a risk of serious injury to the Company. The conduct of the

28 SHAREHOLDER DERIVATIVE COMPLAINT -10-

Case 5: 11 -cv-03286-H R L Document1 led07/05/11 Page 12 of 26 -

• Individual Defendants, who were also officers and/or directors of the Company, has been 1 2 ratified by the remaining defendants.

3 26. The Individual Defendants breached their duties of loyalty and good faith by

4 allowing defendants to cause, or by themselves causing, the Company to misrepresent its 5 financial results and prospects, as detailed herein, and by failing to prevent employees and/or 6 officers of the Company from taking such illegal actions. In addition, the Company is now the 7 8 subject of class action litigation alleging violation of federal securities laws, which necessitates

9 the Company to incur excess costs arising from the Individual Defendants' wrongful course of

10 conduct. 11 27. Additionally, the Company has established a Code of Ethics ("Code") that 12 13 applies to all employees of the Company. The conduct of the Individual Defendants alleged

f4 herein constitutes a violation of the Company's Code. The Code provides, among.other things,

15 the following:

16 Accurate and reliable business records are critical to meeting our fmancial, legal, and business obligations. If you are responsible for creating and maintaining 17 Yahoo's financial records, you must do so in accordance with applicable legal 18 requirements and generally accepted accounting practices. Disclosure in reports 1 and documents filed with or submitted to the U.S. Securities and Exchange 19 Commission and in other public communications made by Yahoo! must be full, fair, accurate, timely, and understandable. 20 21 BACKGROUND 22 28. Yahoo, based in Sunnyvale, California, is a global digital media company.

23 Despite its global brand, Yahoo's business has languished for the past several years, as the 24 Company has largely failed to keep up with Google and struggled to grow in highly regulated 25 26 and politicized fast-growing markets like China.

27 29. To overcome this situation, in 2005, Yahoo invested $1 billion for a 40% interest in • 28 Alibaba, China's largest e-commerce company, and one seat on Alibaba's four-person board of • SHAREHOLDER DERIVATIVE COMPLAINT -11-

Case5:11-cv-03286-HRL Document1 Filed07/05/11 Page13 of 26

directors. As a part of their strategic partnership, Yahoo also turned over operation of Yahoo 1 2 China to Alibaba. In a shareholder report discussing the Yahoo-Alibaba strategic partnership,

3 and heralding the trawrtion as a great opportunity for Yahoo to expand its business in China,

4 Yahoo stated: 5 "Through this transaction, the Company has combined its leading search 6 capabilities with Alibaba's leading online marketplace and online payment system _ and Alibaba's strong local presence, expertise and vision in the China market These 7 factors contributed to a purchase price in excess of the Company's share of the fair 8 value of Alibaba's net tangible and intangible assets acquired resulting in goodwill."

• 9 30. As the remainder of the decade unfolded, Alibaba grew rapidly. By 2011, 10 Yahoo's 40% stake in Alibaba had grown significantly in importance to Yahoo and, in fact, had 11 become, according to many industry experts, Yahoo's most valuable corporate asset, accounting 12 for as much as two-third of Yahoo's entire $21 billion market capitalization. 13 31. For example, as famed hedge find manager David Einhom's Greenlight Capital 14 15 wrote about Yahoo in April 2011, "We would not be surprised if [Yahoo's] 40% stake in

16 Alibaba Group alone was ultimately worth [Yahoo's] entire current market value." Greenlight

17 Capital continued: 18 "We believe that Yahoo's most valuable asset is its 40% stake in Alibaba Group's 19 still-private holdings, which are separate and distinct from its ownership in the publicly-traded Alibaba.com , which we are essentially getting for free." 20 21 • 32. Until recently,. one of Alibaba's most profitable "still-private holdings" was 22 Alipay, an e-commerce payment system similar to eBay Inc.'s PayPal. As China's economy

23 grew rapidly during the late 2000s, so did Alipay's profits. According to U.S. securities 24 analysts, including Brett Hariss of Bagelli & Co., Alipay is worth more than $5 billion. But

25 most importantly for Yahoo and its shareholders, Yahoo, as Alibaba's largest shareholder, had a 26 27 direct connection to the profits stemming from Alipay's fast-growing and lucrative online

28 payment system. SHAREHOLDER DERIVATIVE COMPLAINT -12-

Case5 . 11-cv-03286-HRL Docume nt1 FUed07105111 Page14 of 26

33. Doing business in China can be complex and difficult for U.S. companies. 1 2 Yahoo's experience in China has been no different. But, unlike other large U.S. publicly traded 3 companies, Yahoo's single most valuable corporate asset is an investment tied up in a foreign 4 corporation located in China, more than 4,000 miles away from Yahoo's corporate headquarters 5 located in Sunnyvale, California. 6 34. Yahoo's counterparts in China had been consulting with Yahoo for months and 7 8 months on anticipated changes to Chinese regulations regarding foreign ownership. Yahoo failed to 9 address this issue and ultimately in 2010, Alibaba transferred ownership in Alipay to Alibaba 10 CEO Ma for $46 million. This was made known to Yahoo on March 31, 2011, at the latest. 11 However, in an effort to make Yahoo attractive to hedge funds and other investors, defendants 12 concealed this information. 13 14 THE COMPANY'S FALSE AND MISLEADING STATEMENTS 15 35. On April 19, 2011, Yahoo issued a press release announcing its first quarter 2011 16 financial results. The Company reported earnings of $223 million, or $0.17 diluted earnings per 17 share, and revenue of $1,064 million. The release stated in part: 18 "We are solidly executing toward our plan for returning Yahoo! to sustainable 19 revenue and profit growth," said Carol Bartz, CEO of Yahoo!. "During the quarter, we beat the midpoint of revenue guidance while continuing to deliver on 20 the bottom line. We continued to extend our lead as the world's premier digital 21 media company with users to Yahoo! branded properties increasing 15% year over year and minutes spent increasing 17%." 22 These were positive results and statements (with never a word about the Alipay 23 36. 24 fiasco), and Yahoo's stock reacted favorably, increasing to $16.87 per share, up from the 25 previous day close of $16.35 per share. 26 37. Later, on May 2, 2011, Greenlight Capital's investment was revealed, causing 27 Yahoo's stock to increase to $18.14 per share. 28 SHAREHOLDER DERIVATIVE COMPLAINT - 13 -

Case5:11-cv-03286-HRL Document1 Filed07/05111 Page15 of 26 ..

• •

• 38. On May 10, 2011, Yahoo shareholders learned for the first time that the 1 2 Company's $1 billion investment in its strategic partnership with Alibaba likely had been 1

3 'severely impaired by the misappropriation of Alibaba's most valuable asset, Alipay, from

4 Alibaba to another private company controlled by Alibaba's Chairman, Jack Ma. 5 39. On this news, Yahoo's stock fell by 7%, to close at $17.20 per share. 6 • 40. On May 12, 2011, Yahoo issued a press release entitled "Yahoo! Inc. Releases 7 8 Statement Regarding Alipay," which stated in part:

9 "Yahoo! Inc. issued the following statement in response to recent media reports regarding the timing of the restructuring of Alipay: 10 On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two 11 transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of 12 Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011. 13 Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group 14 and obtaining a better understanding of this complex situation. Yahoo! tontinues to work closely with Alibaba and Soflbank to protect economic 15 value for all interested parties. We believe ongoing negotiations among all of the 16 parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders." 17 41. According to news reports, Alibaba received only $46 million for Alipay's assets, 18 19 which securities analysts valued at $5 billion. Additionally, defendants reportedly were aware of

20 Jack Ma's misappropriation of Alipay, failing to prevent the usurpation of Yahoo's valuable

21 financial interest in Alipay, and then concealing the entire episode from Yahoo shareholders for six 22 months. 23 42. On May 15, 2011, Yahoo issued a press release entitled "Joint Statement from 24 25 Alibaba Group and Yahoo! Inc. Regarding Alipay," which stated in part:

26 Yahoo! Inc. and ALibaba Group issued the following statement regarding Alipay:

27 "Alibaba Group, and its major stockholders Yahoo! Inc and Softbank 28 Corporation, are engaged in and committed to productive negotiations to resolve SHAREHOLDER DERIVATIVE COMPLAINT '

Case5:11-cv-03286-HRL Document1 Filed07/05/11 Page16 of 26 •

the outstanding issues related to Alipay in a manner that serves the interests of all 1 shareholders as soon as possible." 2 43. On this news, Yahoo's stock collapsed $0.74 per share to close at $15.81 per share .1 3 on May 16, 2011 — a decline of 15% from its Class Period high of $18.65 per share. 4 The true facts, which were known by the Individual Defendants but concealed 5 44. 6 from the investing public during the Class Period, were as follows:

7 a. Yahoo management had been informed on March 31, 2011, at the latest,

8 that Alipay's structure had been shifted from Alibaba, reducing the value of Yahoo's investment 9 in Alibaba by billions of dollars; and 10 , b. Chinese regulations regarding foreign ownership had been anticipated to 11 12 change as far back as 2009, which would require Yahoo or Alibaba to divest them of Alipay,

13 but Yahoo hact failed to develop a strategy to recover the value it had in Alibaba. 14 45. As a result of Yahoo's false statements, Yahoo stock traded at artificially inflated 15 levels during the Class Period. However, after the above revelations seeped into the market, the 16 17 Company's shares were hammered by massive sales, sending them down 15% from their Class

is Period high.

19 DERIVATIVE AND DEMAND EXCUSED ALLEGATIONS

20 46. Plaintiff brings this action derivatively in the right and for the benefit of Yahoo 21 to redress injuries suffered, and to be suffered, by Yahoo as a direct result of the breaches of 22 23 fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust

24 enrichment as well as the aiding and abetting thereof, by the Individual Defendants. Yahoo is

25 named as a nominal defendant solely in a derivative capacity. This is not a collusive action to

26 confer jurisdiction in this Court that it would not otherwise have. 27 28 SHAREHOLDER DERIVATIVE COMPLAINT - 15 - ,

Case5:11-cv-03286-HRL Document1 led07/05/11 Page17 of 26

47. Plaintiff will adequately and fairly represent the interests of Yahoo and its 1 2 shareholders in enforcing and prosecuting its rights.

3 48. Plaintiff is the owner of Yahoo common stock and was the owner of Yahoo

4 common stock at all times relevant to the Individual Defendants' wrongful course of conduct 5 alleged herein. 6 49. At the lime that this action was commenced, the Yahoo Board consisted of the 7 8 following directors: defendants Bartz, Yang, Bostock, Hart, James, Joshi, Kenny, Kern, Smith,

9 and Wilson.

10 50. As a result of the facts set forth herein, plaintiff has not made any demand on the 11 Yahoo Board to institute this action against the Individual Defendants. Such demand would be 12 13 a futile and useless act with respect to each and every one of the Individual Defendants because

14 they are incapable of making an independent and disinterested decision to institute and 15 vigorously prosecute this action for the following reasons:

16 a. The Company has admitted that Defendant Bartz and Yang were not 17 independent directors pursuant to the requirements of the listing standards of the NYSE and the 18 Director Independence Categorical Standards ("Categorical Standards"). Specifically, Bartz 19 20 currently serves as CEO and a director of Yahoo, and Yang was CEO of the Company from

21 June 2007 to January 2009, and is currently an employee of the Company;

22 b. The Company engaged in transactions with entities for which defendants 23 Jot, Kenny, and Smith served as executive officers or employees. Thus, these defendants are 1 24 25hopelessly conflicted in making any supposedly independent determination whether to sue

26' themselves;

27 c. The Company provided aggregate payments greater than, or equal to, 28 SHAREHOLDER DERIVATIVE COMPLAINT -16-

Case5:11-cv-03286-HRL Document1 Filed07/05/11 Page18 o126

$10,000 to companies or subsidiaries for which Bostock, Wilson, and James served as non- 1 2 employee directors. Thus, these defendants are hopelessly conflicted in making any supposedly

3 independent determination whether to sue themselves;

4 d. The Company provided a discretionary charitable contribution of 5 advertising to a non-profit entity with which defendant Wilson is affiliated. Thus, defendant 6 Wilson is additionally hopelessly conflicted in making any supposedly independent 7 8 determination whether to sue himself;

9 e. Defendant Bartz has served as the Executive Chairman of the Board of

10 Autodesk, a computer-aided design software provider, from May 2006 to February 2009, as 11 Chairman, President and CEO of Autodesk from April 1992 to April 2006, and as a director of 12 13 Autodesk from April 1992 to February 2009. Additionally, during her tenure with Ernst &

14 Young, defendant James was the lead partner or partner-in-charge of audit work for Auto desk.

15 Accordingly, because of the close business and personal relationship between Bartz and James,

16 they are unable to impartially consider a demand upon the Board; 17 f Defendant Bartz also serves as the lead director of Cisco, a networking 18 technology company, where defendant Yang also serves as a director. Accordingly, becnuse of 19 20 the close business and personal relationship between Bartz and Yang, they are unable to

21 impartially consider a demand upon the Board;

22 g. Defendant Joshi has served as an officer of HP since 2001, including as .

23 Executive Vice President of HP's Imaging and Printing Grout; since 2002. Additionally, during 24 her tenure with Ernst & Young, defendant James was the lead partner or partner-in-charge of 25 26 audit work for HP. Accordingly, because of the close business and personal relationship

27 28 SHAREHOLDER DERIVATIVE COMPLAINT -17- ,

Case 5: 11 -cv-03286-H R L Documentl FUed97105111 Pagel9 of 26

1 between defendants Joshi and James, they are unable to impartially consider a demand upon the

2 Board;

3 h. Defendant Bostock served as Chairman of the Board of BCom3 Group,

4 Inc., a global advertising agency group (now part of Publicis Groupe S.A., a global marketing 5 services holding company), from January 2000 to mid 2001. From June 2008 to June 2010, 6 moreover, defendant Kenny was Managing Partner of VivaKi, which is the media and digital 7 8 [ arm of Publicis. Kenny also served on the Directoire (Management Board) of Publicis from

9 January 2008 to June 2010, and from August 1997 to May 2008, Kenny was CEO of Digitas,

•Inc., a relationship marketing services firm which was acquired by Publicis in 2007. • 11 Accordingly, because of the close business and personal relationship between defendants 12 13 I3ostock and Kenny, they are unable to impartially consider a demand upon the Board;

14 i. From August 1997 to May 2008, Kenny was CEO of Digitas, a 15 relationship marketing services firm which was acquired by Publicis in 2007. Kenny was also a

16 director of Digitas from 1997 to 2007, and Chairman and CEO from 1999 to 2007. 17 Additionally, defendant Kern previously served as a director of Digitas. Accordingly, because 18 19 of the close business and personal relationship between defendants Kenny and Kern, they are

20 unable to impartially consider a demand upon the Board;

21 j. Defendants face a substantial likelihood of being held liable for breaching • 22 their fiduciary duties of loyalty and good faith as alleged herein, and are therefore incapable of

23 disinterestedly and independently considering a demand to commence and vigorously prosecute 24 this action; 25 k. Yahoo's non-employee directors have received, and continue to receive, 26 27 substantial compensation in the form of cash and stock option awards. These defendants are

28 SHAREHOLDER DERIVATIVE COMPLAINT -18- . _ Case5:11-cv-03286-HRL Documentl Filed07/05/11 Page20 of 26

1 interested in maintaining their positions, on the Board so as to safeguard their substantial

2 compensation and stock options, which demonstrates that demand upon such individuals would

3 be futile:

4 2010 DIRECTOR COMPENSATION : FEES EARNED OTHER 5 STOCK OR PAID IN - COMPENSATI TOTAL - DIRECTOR AWARDS - 6 CASH ON 1 Carlo A. Bartz $1,000,000 $6,626,995 $4,319,839 $11,946,834 ., -, 7 Roy J. Bostock $0.00 $513,815 $0.00 $513,815 .; 8 Arthur H. Kern $0 $219,988 $88,861 $308,849 Susan M. James $111,806 $320,034 $1,000 $432,840 9 Vyomesh I. Joshi $0 $309,947 $0 $309,947 Patti S. Hart $0 $267,887 $0 $267,887 10 •.. Brad D. Smith $41,538 $219,988 $0 $261,526 11 Jerry Yang $0 $0 $1 $1 Gary L. Wilson $0 $309,947 $0 $309,947 12 13 Each of the key officers and directors knew of and/or directly benefited I.; 1. , 14 1.'.' from the wrongdoing complained of herein thereby rendering demand futile;

. 16 m. The Individual Defendants approved and/or permitted the wrongs alleged 17 herein to have occurred and participated in efforts to conceal or disguise those wrongs from ' I 18 Yahoo's stockholders or recklessly and/or negligently disregarded the wrongs complained of , 19 .• herein, and are therefore not disinterested parties; •. • ,- 20 ., n. In order to bring this suit, all of Yahoo's directors would be forced to sue .. 21 22 themselves and persons with whom they have extensive business and personal entanglements,

23 which they will not do, thereby excusing demand;

• 24 o. The acts complained of constitute violations of the fiduciary duties owed 25 by Yahoo's officers and directors and these acts are incapable of ratification; 26 p. Any suit by the Company's current directors to remedy these wrongs 27 - • 28 would likely expose the Individual Defendants and Yahoo to further violations of the securities

SHAREHOLDER DERIVATIVE COMPLAINT -19- •.• . .

, Case5:11-cv-03286-HRL Docume nt1 led07/05/11 Page21 of 26

laws that would result in civil actions being filed against one or more of the Individual • 1 2 Defendants, thus, they are hopelessly conflicted in making any supposedly independent

3 determination whether to sue themselves;

4 q. Yahoo has been, and will continue to be, exposed to significant losses 5 due to the wrongdoing complained of herein, yet the Individual Defendants have not filed any 6 lawsuits against themselves or others who were responsible for that wrongful conduct to

8 attempt to recover for Yahoo any part of the damages Yahoo suffered and will suffer thereby;

9 and

10 r. If the current directors were to bring this derivative action against 11 themselves, they would thereby expose their own misconduct, which underlies allegations 12 against them contained in a class action complaint for violations of securities law, which 13 14 admissions would impair their defense of the class action and greatly increase the probability of 15 their personal liability in the class action, in an amount likely to be in excess of any insurance

16 coverage available to the Individual Defendants. Thus, the Individual Defendants would be • 17 forced to take positions contrary to the defenses they will likely assert in the securities class 18 action. 19 51. Moreover, despite the Individual Defendants having knowledge of the claims 20 21 and causes of action raised by plaintiff, the current Board has failed and refused to seek to

22 recover for Yahoo for any of the wrongdoing alleged by plaintiff herein. 23 52. Plaintiff, moreover, has not made any demand on shareholders of Yahoo to 24 institute this action since demand would be a futile and useless act for the following reasons: 25 a. Yahoo is a publicly held company with over 10 billion shares outstanding, and 26 27 thousands of shareholders;

• 28 SHAREHOLDER DERIVATIVE COMPLAINT • - 20 -

Case 5: 11 -cv-03286-H R L Documentl led07/05/11 Pag e 22 of 26

• K Making demand on such a number of shareholders would be impossible for 1 2 plaintiff who has no way of finding out the names, addresses of phone numbers of shareholders;

3 and

4 c. Making demand on all shareholders would force plaintiff to incur huge expenses, 5 assuming all shareholders could be individually identified. 6 53. Furthermore, the conduct complained of herein could not have been the product 7 8 of good faith business judgment, and each of these directors faces a substantial likelihood of

• 9 liability for breaching their fiduciary duties because, through their intentional misconduct, they

10 have subjected Yahoo to substantial damages. Through their intentional misconduct, Individual 11 Defendants have subjected the Company to potential costs, fines, and judgments associated with 12 the securities class action. Such actions by the Individual Defendants cannot be protected by 13 p.1 14 the business judgment rule. Accordingly, making a pre-suit demand on the Individual

15 Defendants would be f-utile.

16 COUNT I (AGAINST THE INDIVIDUAL DEFENDANTS FOR BREACH OF FIDUCIARY DUTY) 17 18 54. Plaintiff incorporates by reference each of the preceding paragraphs as though

19 they were set forth in full herein. 20 55. Defendants owed a fiduciary duty to Yahoo to supervise the issuance of the 21 22 Company's press releases and public filings to ensure that they were truthful and accurate and • 23 that such filings conformed to applicable securities laws. Defendants, however, breached their

• 24 fiduciary duties by failing to properly supervise and monitor the adequacy of Yahoo's internal 25 controls and by allowing the Company to issue and disseminate misleading statements and 26 filings. 27 28

SHAREHOLDER DERIVATIVE COMPLAINT • -21-

Case5 . 11-cv-03286-HRL Document1 Filed07/05/11 Page23 of 26

56. Defendants have engaged in a sustained and systematic failure to exercise their 1 • 2 oversight responsibilities and to ensure that Yahoo complied with applicable laws, rules and

3 regulations.

4' 57. As members of the Yahoo Board, the Individual Defendants were directly 5 responsible for authorizing, permitting the authorization of, or failing to monitor the practices • 6 that resulted in violations of applicable laws as alleged herein. Each of them had knowledge of 7 8 and actively participated in, approved, and/or acquiesced in the wrongdoing alleged herein or

9 abdicated his or her responsibilities with respect to this wrongdoing. The alleged acts of

10 wrongdoing have subjected the Company to unreasonable risks of loss and expenses. 11 58. Earh of defendants' acts in causing or permitting the Company to disseminate 12 13 material misrepresentations and omissions to the investing public and abdicating his or her

14 oversight responsibilities to the Company have subjected the Company to liability for violations

15 of applicable laws, and therefore were not the product of a valid exercise of business judgment,

16 constituting a complete abdication of their duties as officers and/or directors of the Company. 17 As a result of defendants' breaches, Yahoo is the subject of a major securities fraud class action 18 19 lawsuit by defrauded investors, and the Company's reputation in the business community and

20 financial markets has been irreparably tarnished.

21 COUNT II (AGAINST THE INDIVIDUAL DEFENDANTS FOR GROSS MISIVIANGEMENT) 22 59. Plaintiff incorporates by reference each of the preceding paragraphs as though • 23 • 24 they were set forth in full herein. 25 60. Defendants had a duty to Yahoo and its shareholders to prudently supervise,

26 manage, and control the operations, business, and internal financial accounting and disclosures 27 of the Company Defendants, however, by their actions and by engaging in the wrongdoing 28 SHAREHOLDER DERIVATIVE COMPLAINT - 22 - - Case5:11-cv-03286-HRL Document1 Filed07/05/11 Page24 of 26

alleged herein, abandoned and abdicated their responsibilities and duties with regard to 1 2 prudently managing the business of Yahoo in a manner consistent with the duties imposed upon

3 them by law. By committing the misconduct alleged herein, defendants breached their duties of

4 due care, diligence, and candor in the management and administration of Yahoo's affairs and in • 5 the use and preservation of the Company's assets. 6 •I 61. During the course of the discharge of their duties, defendants were aware of the 7 8 unreasonable risks and losses associated with their misconduct. Nevertheless, defendants

9 caused Yahoo to engage in the scheme described herein which they knew had an unreasonable

.• 10 risk of damage to the Company, thus breaching their duties to the Company. As a result, 11 defendants grossly mismanaged Yahoo, thereby causing damage to the Company. 12 COUNT III 13 (AGAINST THE INDIVIDUAL DEFENDANTS FOR CONTRIBUTION AND 14 1NDE1VDFICATION1 15 62. Plaintiff incorporates by reference each of the preceding paragraphs as though

16 they were set forth in fill herein. 17 63. Yahoo is alleged to be liable to various persons, entities and/or classes by virtue 18 of the facts alleged herein that give rise to defendants' liability to the Company. 19 64. Yahoo's alleged liability on account of the wrongful acts, practices, and related 20 21 misconduct alleged arises, in whole or in part, from the knowing, reckless, disloyal and/or bad

•. 22 faith acts or omissions of defendants, and the Company is entitled to contribution and

23 indemnification from each defendant in connection with all such claims that have been, are, or 24 may in the future be asserted against Yahoo, by virtue of the Individual Defendants' 25 26 misconduct.

27 28 SHAREHOLDER DERIVATIVE COMPLAINT - 23 -

Case5:11-cv-03286-1-IRL Document1 Filed07/05/11 Page25 of 26

COUNT W • 1 (AGAINST THE INDIVIDUAL DEFENDANTS FOR ABUSE OF CONTROL) 2 65. Plaintiff incorporates by reference each of the preceding paragraphs as though 3 they were set forth in fill herein. 4 The Individual Defendants' conduct, as alleged herein, constituted an abuse of 5 66. 6 their control over Yahoo. 7 67. As a direct and proximate result of the hidividual Defendants' abuse of control, 8 the Company has suffered, and will continue to suffer, damages for which the Individual 9 • Defendants are liable. Plaintiff, moreover, has no adequate remedy at law. 10 COUNT V 11 (AGAINST THE INDIVIDUAL DEFENDANTS FOR 12 WASTE OF CORPORATE ASSETS) 13 68. Plaintiff incorporates by reference each of the preceding paragraphs as though

14 they were set forth in hill herein. 15 69. The Individual Defendants' conduct, as alleged herein, constituted a waste of the 16 17 corporate assets of Yahoo.

18 70. As a direct and proximate result of the Individual Defepdants' abuse of control, 19 the Company has suffered, and will continue to suffer, damages for which the Individual

20 Defendants are liable. Plaintiff, moreover, has no adequate remedy at law. 21 PRAYER FOR RELIEF 22 23 WHEREFORE, Plaintiff prays for judgment as follows: 24 A. Agpinst all of the Individual Defendants and in favor of the Company for the

amount of damages sustained by the Company as a result of the Individual Defendants' 26 breaches of fiduciary duties; 27 • 28 SHAREHOLDER DERIVATIVE COMPLAINT - 24 -

Case5:11-cv-03286-HRL Docume nt1 FUed07105111 Page26 of 26

B. Awarding to plaintiff the costs and disbursements of the action, including 1 • 2 reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses; and

3 C. Granting such other and further relief as the Court deems just and proper.

4 • JURY DEMAND 5 Plaintiff demands a trial by jury. 6

DATED: July 5, 2011 GLANCY BLNKOW & GOLDBERG LLP 8 9 By: — EX A OS. 'AMSII 10 LIONEL Z. GLANCY MICHAEL GOLDBERG 11 1801 Avenue of the Stars, Suite 311 Los Angeles, California 90067 12 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 13 THE BRISCOE LAW FIRM, PLLC 14 WILLIE C BRISCOE 15 BILLY J BRISCOE 8117 Preston Road, Suite 300 16 Dallas, Texas 75225 Telephone: 214-706-9314 17 Fascimile: 214-706-9315 lg POWERS TAYLOR 19 PATRICK POWERS MARK TAYLOR 20 PEYTON HEALEY Campbell Centre II 21 8150 North Central Expy., Suite 1575 22 Dallas, Texas 75206 1 23 Attorneys for Plaint:if Jane Oh 24 25 26 27 28 SHAREHOLDER DERIVATIVE COMPLAINT - 25 -

, Case5:11-cv-03286-HRL Documentl -1 Filed07/051.11 Pagel of.2 , .

• 1 •th IS 44 (Rm, 12/07) (CAND Rev 1/10) CIVIL COVER SHEET The TS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided • by local rules of cant This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clef* of Court for die purpose of initiating . the civil docket sheet (SEE INSTRUCTIONS ON PAGE TWO OF THE FORM.) L (a) PLAINTIFFS DEFENDANTS • JANE OH, Derivatively on Behalf of Herself and All Others Similarly Carol it Bartz [See Attachment for Additional Defendants] Situated ' (b) County of Residence of First Listed Plaintiff Tulsa County, Oklahoma County of Residence of First Listed Defendant • (EXCEPT IN U.S. PLAINTIFF CASES) (TN US. PLAINTIFF CASES ONLY) NOTE: IN LANDCONDEMNATION CASES, US E TEE LOCATION OF THE 6. NO/SOLVED. ., (C) Attorney's (Firm Name, Address, and TelephoCv10 1 1 .'•-• Cior3 (ao 6 4; r , 0 ' rr.."' . EX KANO S. SAMS II (SBN 192936) t. :.; L,..j i i GLANCY B1NKOW & GOLDBERG LLP 1801 Avenue of the Stars, Suite 311 ; Los AngeleS, California 90067; Telephone: (310) 201-9150 E-FUNG H A L : .2. ..•. U. BASIS OF JURISDICTION (Place an "X" M One Box only) ILL CITIZENSHIP OF PRINCIPAL PARTIES (Place RR '1r in One Box for Plaintiff • "•.. (For Diversity Cases Only) old One Box for Defendant) . PTF DEF PT? DEE • 10 1 U.S. Govemmeirt 1X1 3 Federal Question Citizen of This Slate p 1 0 1 Incorporated orPrincipal Place ICI 4 0 4 Plaintiff (U.S. Govarnucnt Not a Party) °famine& In This State 0 2 US. Govenimmt 0 4 Diversity Citizen of Another Sane 0 2 0 2 Incorporated and Pm' mind Place 0 5 0 5 Defendant (Indicate CilizenshM of Parties h Item Ill) of Business In Another State

. . Citizen at-Subject all 0 3 0 3 Foreign Nation 0 6 0 6 : Foreign Country - IV. NATURE OF SUIT (Place an 9C in One Box Only u.iin CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES ItO Insurance PERSONAL INJURY PERSONAL INJURY 1=1611/ Agriculture =122 Appeal 28 USC 158 =400 State Reapportionment cc I= 120 Marine ' M310 Airplane 1=1362 Personal homy— I=620 Mu Food & Ding =423 Withdrawn =410 Antitrust _, I= 130 Miller Act =315 Airplane Product med. Malpractice 0625 Drag Related Seizure 2S USC 157 =430 Banks and Banking X .Tc r= 140 Negotiable hntmment Liability =365 Personal Injury — &Property 21 USC 881 —1450 Commerce ts.< U Em 150 Recovery of Overpayment =320 Assault, Um! & Product Liability 1=630Liquor laws PROPERTY RICH'S'S 1=1460 Deportation >•- _1o & Enforcement ofJudgment Slander 1=3611 Asbestos Pommel =16411RR. & Truck t_J470Racketecrinfluenced and co E:1 151 Medicare Act Injury Prude& =1650 AirlineRegs. =820 CoPYrighle Corrupt Organizations =330 Federal Employers' =830 Patent 0 .o 0 152Recovery of Defaulted Liability Liability 1=660 Occupational 1=1480 Grammer Credit Lu I— Student Loans =MO Trademark -a 1— =340Marinc PERSONAL PROPERTY Safety/Hearn, I= 490 Cable/Sat TV (Excl. Veterans) =810 Selective Service [Z Z =345 Minna Pmdwt =370 Other Forint 0690 Other < 1=1 153 Recovery of Overpay nt =850 &amities/Commodities/ Liability 0371 Truth in Lending = of Veteran's BencEts LABOR SOCIAL SECURITY Exchange =350 Molar Vehicle 1=1380 Other Personal (1)cc 1013 160 Slockhoklers' Suits =355 Motor Vehicle property Damage =710 Fair Labor Mandan& =861 11/A(1395(0 =875 Customer Challenge 12 USC 3410 z 1=1 190 Other Contract Product Liability 1=1385Pmperty Damage Act =862 Black Lung (923) 0- I= 195 Contract Prodnettiability =169 Other Personal Injury product liability = 720 Labor/Mgmt. Relations =863 DIWC/D1WW (405(g)) =890 Other S ratably Actions it 196 Franchise ---1 730 LabortMgmt.Reporiing =864 SSIDTitle XV/ = 891 Agricultural Acts PRISONER =892 Economic Stabilization Mt REAL PROPERTY & Disclosure Act =885 REI (405(10) • CIVIL RIGHTS PETITIONS --"J 740 Railway Labor Mt I= 893 Environmental Metros CI 894 &logy Allocation Act .•. I= 210 Land Condemnation =141 Voting =510 Motions to Vacate =790 Other Labor Litigation . . .. =791 Eric!. Rot Inc. =895 Freedom of Information .1 1=1 220 Foreclosure =1442 Employment Sentence FEDERAL TAX SUITS I= 230 Rent Lease& Ejectment =443 Rousing/ ashe n Corm: Security Act Act .• I= 240 Toni to Ismd Accommodations = 530 Gann/ =870 Taxes (US. Plaintiff n900APPeal of Fee Determination '. =1245 TortPmduct-Liabitity =535 Death Penalty or Defendant) ., =444 Welfare UnderEqual Access • 1=I 290 All Other RealProperty Asset ThforgoRATSC=871 IRS—Third Party ,- =445 w/Disabilities - =540 Mandamus & Other .. Ermloyment =550 Civil Rights 26 USC 7609 to Justice ...• . =462Nainrakzabon Apo/wagon I=1950 Constitutionality of . =446 Amer. us/Disabilities -= 555 Prison Condition =463 Habeas Corpus - . Other State Statutes : . Alien DetelEICC :.. =440 Other Civil Rights ..• = 465 Other Immigration ,- Actims -- V. ORIGIN (Pace grew in One Box Only) Transferred from Appeal to District Removed Judge .,, WI Original 02 from 0 3 Remanded from 1=14 Reinstated or 05 another district 06 Multidistrict 0 7 from -.. . Proceeding State Court Appellate Court Reopened (specify) Litigation Magistrate . .•Judgment. 1. • • Cite the U.S. Civil Statute under which you are filing (Do net cite Jurlsdiedonal statutes unless diversity): .• • . .• 28 U.S.C. §1332(aX2) and 28 U.S.C. §1391(a) -•• VI. CAUSE-OF ACTION ,..'. Brief description of cause: ... Breach of Fid. Duty, Gross Mismanagement, Contribution & Indemnification, Abuse of Control & Waste of Corp. Assets VIL REQUESTED IN Cl CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint: . COMPLAINT: UNDER F.R.C.P. 23 JURY DEMAND: 1=1 Yes= No • VIII. RELATED CASE® PLEASE REFER TO CIVIL Lit 3-12 CONCERNING REQUIREMENT TO FILE IF ANY . "NOTICE OF RELATED CASE". ' . . IX DIVISIONAL ASSIGNMENT (CIVIL EFL 3-2) . (PLACE AND "X" IN ONE BOX ONLY) SAN FRANCISCO/OAKLAND IN SAN JOSE CI EUREKA : 0 DATE SIGNATUREOF -ATTORNEY OF RECORD ,. July 1, 2011 _ jr • _xi* -L-•--...n------a-- . •

• :. . .• . . •

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ATTACHMENT TO CIVIL COVER SHEET

, ADDITIONAL DEFENDANTS

JERRY YANG, ROY BOSTOCK, PATH HART, SUSAN JAMES, VYOMESH JOSIII, DAVID KENNY, ARTHUR KERN, BRAD SMITH, GARY WILSON AND YAHOO! INC., NOMINAL DEFENDANT.

•

' •

• •

•

• EXHIBIT C Case5 11-ov-03269-PSG Documentl Aled07/01/11 Pagel of 21 11

Q. David N. Lake, Esq., State Bar No. 180775 LAW OFFICES F DAVID N. LAKE, ADA) •2 A Professional Corporation 16130 Ventura Boulevard, Suite 650 3 •Encino, California 91436 RUNG Telephone: (818) 788-5100 a 4 Facsimile: (818) 788-5199 PILED a david©lakelawpc.com 5 JUL 0 20// V IV vv f I 6 Attorneys for Plaintiff ivontHER4Dis‘ficroouirr°LEAK 1/8 DIST—S(INC4 ' mg OF CALIFORNIA /S/ 7 j. 8 UNITED STATES DISTRICT COURT PSI) 9 NORTHERN DISTRICT OF CALIFORNIA 10 — I 6 DE131aViLZMAISTErivatively Case No. —11- -on-behalf of the Nominal Defendant, - 12 Plaintiff; SHAREHOLDER DERIVATIVE COMPLAINT FOR: 13 v. 1) CONTRIBUTION PURSUANT 14 TO SECTIONS 10(B) AND 21D CAROL BARTZ and JERRY YANG, OF THE EXCHANGE ACT; 15 Defendants, 2) BREACH OF FIDUCIARY 16 DUTY AND WASTE; and 17 and 3) BREACH OF THE DUTY OF FULL DISCLOSURE AND 18 COMPLETE CANDOR 19 YAHOO! INC., a Delaware corporation, JURY TRIAL DEMANDED 20 Nominal Defendant. 21 22 23 24

25 • 26

27 28

Complaint

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1 Plaintiff, by her attorneys, submits this shareholder's derivative complaint against the 2 individual defendants named herein. The allegations are asserted on information and belief 3 after due investigation of counsel, except as to those matters which relate to plaintiff and her 4 own acts, which are asserted on personal knowledge.

5 NATURE OF THE ACTION 6 1. This is a shareholder's derivative action on behalf of Yahoo! Inc. ("Yahoo" 7 or the "Company") against its Chief Executive Officer, defendant Carol Bath and co- 8 founder Jerry Yang (together, the "Individual Defendants"), for breach of fiduciary duty 9 and corporate waste. , 11, Yahou eholders-learned-forthe-first • ------11 Company's $1 billion investment -in a strategic partnership with Alibaba, China's 12 largest e-commerce company, likely had been severely impaired by the claimed 13 misappropriation of Alibaba's most valuable asset, Alipay, an e-commerce payment 14 system, from Alibaba to another private company controlled by Alibaba's Chairman, 15 Ma. On this news, over the next several days the trading price of Yahoo common 16 stock declined by over 10%, wiping out $3 billion in market capitalization. The 17 Individual Defendants reportedly were aware of Ma's planned transfer of Alipay, failed

18 to prevent its occurrence without due compensation, and then concealed the entire 19 episode from Yahoo shareholders for six months. 20 3. On June 6, 2011, a class action complaint was filed against Yahoo, Carol 21 Bartz and Jerry Yang in the United States District Court for the Northern District of

22 California, alleging violation of the federal securities laws arising out of the Alipay 23 debacle, entitled Bonato v. Yahoo! Inc. et aL, 11-cv-2732 (CRB). According to the Class 24 Action Complaint, during the Class Period (April 19, 2011 through May 13, 2011), 25 defendants issued materially false and misleading statements regarding the Company's 26 business and financial results. Specifically, defendants failed to disclose that an important

27 corporate asset in China had been transferred at much less than market value. As a result 28

-2- Complaint

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1 of defendants' allegedly false statements, Yahoo's stock traded at artificially inflated prices 2 during the Class Period, reaching a high of $18.65 per share on May 6, 2011. 3 4. On May 10, 2011, Yahoo issued its Quarterly Report on form 10-Q for the 4 period ending March 31, 2011. On page 8, it is stated: 5 To expedite obtaining an essential regulatory license, the ownership of Alibaba Group's online payment business, Alipay, was restructured so that 6 100 percent of its outstanding shares are held by a Chinese domestic 7 company which is majority owned by Alibaba Group's chief executive officer. Alibaba Group's management and its principal shareholders, Yahoo! 8 and Softbank Corporation, are engaged in ongoing discussions regarding the terms of the restructuring and the appropriate commercial arrangements 9 related to the online payment business. 10 5. On May12, 2011, Yahoo-issued-a-press-release-which-stated. 11 12 Yahoo! Inc. (NASDAQ:YHOO), issued the following statement in response to recent media reports regarding the timing of the restructuring of Alipay: 13 On March 31, 2011, Yahoo! and Sofibank were notified by Alibaba Group of 14 two transactions that occurred without the knowledge or approval of the 15 Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation 16 of Afipay effective in the first quarter of 2011. 17 Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation. 18 Yahoo! continues to work closely with Alibaba and Softbank to protect 19 economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome 20 in the best interest of all stakeholders. 21 6. On May 13, 2011, Alibaba Group issued a press release which stated 22 in relevant part:

23 Alibaba Group Clarification with Respect to Alipay Status and Related 24 Statements by Yahoo! HONG KONG--Alibaba Group management has taken actions to comply 25 with Chinese law governing payment companies in order to secure a license 26 to continue operating Alipay. The Alibaba Group board discussed at numerous board meetings over the past three years the impending imposition 27 of new regulatory requirements on the online payment industry, including 28 ownership structures, as they were being developed in China, and was told in

-3- Complaint

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1 a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership. The actions taken by Alibaba Group 2 management to comply with the licensing regulations and to ensure 3 continuation of operations are in the best interests of the company and its shareholders. The continued operation of Alipay is essential to the 4 preservation and enhancement of the value of Alibaba Group's businesses 5 such as Taobao, as Alipay is the payments platform for e-commerce in these businesses. 6 7. On May 15, 2011, Yahoo issued a press release entitled "Joint Statement 7 from Alibaba Group and Yahoo! Inc. Regarding Alipay," which stated in part: 8 Yahoo! Inc and Alibaba Group issued the following statement regarding Alipay: 9 " s • • sa-Grouprand-its-major-stocicholdem-Yahoa! Inc-an • •• —C rporationrare-engagedo committed-to-productive-negotiations_to 11 resolve the outstanding issues related to Alipay in a manner that serves the 12 interests of all shareholders as soon as possible." 13 8. According to news reports, Alibaba received only $46 million for Alipay's 14 assets, which securities analysts valued in the billions. There is strong circumstantial 15 evidence that the Individual Defendants did not inform the Yahoo Board of the need for a 16 change of control in the ownership of Alipay, and did not inform the Yahoo Board that the 17 transfer had in fact been effected long before March 2011, although the Individual 18 Defendants were aware of that fact. Given Alipay's obvious value to the Company, the fact 19 that Defendant Wang was on the Alibaba Board of Directors, and the belated Yahoo 20 disclosures all indicate that Yahoo Management was not forthcoming with the public and 21 the Yahoo Board. 22 9. Both Individual Defendants had motive to conceal the facts. Yang, a co- 23 founder, did not want to be perceived as a fool for having recommending the Company's 24 expansion into Asia, when he was the Chief Executive Officer. Defendant Bartz did not 25 want a major crisis impinging on her efforts to turn the Company around, but hoped that 26 she could announce the transfer and fair compensation for Alipay to avoid a market melt- 27 down and save her position. Given the magnitude of the disaster presently affecting the 28

-4- Complaint

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1 Company, both Defendants have been strangely quiet which also strongly suggests that 2 they have not been completely forthcoming. 3 10. The Class Action alleges that Yahoo management had been informed on 4 March 31, 2011, at the latest, that Alipay's structure had been shifted from Alibaba, 5 reducing the value of Yahoo's investment in Alibaba by billions of dollars. Chinese 6 regulations regarding foreign ownership had been anticipated to change as far back as 7 2009, which would require Yahoo or Alibaba to divest themselves of Alipay, but Yahoo 8 had failed to develop a strategy to recover the value it had in Alibaba. 9 11. The Yahoo board of directors ("Board") has not, and will not conunence 1 I 'figation-against-the4ndividuat-defendantsrlet-alone-vigorously-prosecute-such-claim., n because the Company faces a substantial likelihood of liability in the Class Action, and the 12 Yahoo Board cannot at the same time be defending the Class Action on one hand and 13 seeking damages from the individual defendants. Since this dichotomy sterilizes the Yahoo 14 Board from fairly addressing a demand, a pre-suit demand upon the Yahoo Board is a 15 useless and fittile act, and plaintiff may bring this action to vindicate Yahoo's rights against 16 the two wayward fiduciaries. 17 12. Yahoo management, in defendants Bartz and Yang, have refused to fully 18 explain what has occurred, or comment on what the outcome will be. While claiming that 18 management knew nothing of what was going on with Alipay, the language from the Form 20 10-Q indicates that the transfer of the affiliate was a necessary and anticipated act. Further, 21 since defendant Yang is a long time member of the Alibaba Board, it strains credulity for 22 Yahoo management to claim that they knew nothing of the key developments, given that it 23 was their job to know what was occurring, and that Chinese regulations required a transfer 24 of Alipay. What is clear is that the innocent shareholders are being asked to foot the bill for 25 this gross breach of the conduct by the Individual Defendants. 26 13. Plaintiff brings this action to seek recompense from the fiduciaries to the benefit 27 of the Company for this debacle which has grievously injured the Company by reducing its 28 assets by potentially billions of dollars.

-5- • complaint

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1 JURISDICTION AND VENUE 2 14. This Court has jurisdiction over this action pursuant to 28 U.S.0 1331 3 (federal question jurisdiction) insofar as this action arises under both Section 10(b) of the 4 Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. 78j(b), pursuant to 5 which there is a private right of action for contribution, and Section 21D of the Private 6 Securities Litigation Reform Act, 15 U.S.C. 78u-4, which governs the application of any 7 private right of action for contribution asserted pursuant to the Exchange Act. Prior to 8 Congress having enacted an express provision for contribution under Section 21D of the 9 Exchange Act, the United States Supreme Court recognized that a federal cause of action

existed-for-contributiotrpursuant-to-Seetiorr-IG(b)-of the Exchange Aet-and-Rule 10b- . —

-11- See-Musick Peeler & Garrnett Employers-Insurance of Wausau, 508 U.S. 286 (1993). 12 Thus, pursuant to federal statutory law and Supreme Court authority, this Court has 13 original federal question jurisdiction over the Federal contribution claim alleged herein. 14 This Court also has subject matter jurisdiction over the pendent state law claims asserted 15 herein pursuant to 28 U.S.C. 1367 (supplemental jurisdiction), since this statute provides 16 that the district court has supplemental jurisdiction over all other claims where, as here, 17 they are so related to claims in the action within the original jurisdiction of the Court, that

18 they form part of the same case or controversy. This Court also has jurisdiction over this 19 action pursuant to 28 U.S.C. 1332 (Diversity of Citizenship). Plaintiff is a citizen of New 20 York and each defendant is a citizen of a state other than New York. The matter in 21 controversy is in excess of $75,000, exclusive of interest and costs. 22 15. This action is not a collusive one designed to confer jurisdiction on a court 23 of the United States which it would not otherwise have. 24 16. Venue is proper in this judicial district pursuant to 28 U.S.C. 1391(b). A 25 number of the wrongful acts and practices contained of herein occurred in this District. 26 Nominal defendant Yahoo maintains its headquarters in this District. 27 17. In connection with the violations of law alleged herein, the defendants used 28 the means and instrumentalities of interstate commerce including the United States mail,

Complaint

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1 interstate wire and telephone facilities, the facilities of the national securities markets and 2 the Internet to distribute the false and misleading statements complained of herein. 3 4 PARTIES 5 18. Plaintiff Debra Salzman ("Plaintiff") is, and was at all relevant times, a 6 shareholder of nominal defendant Yahoo and a citizen of the State of New York. 7 19. Nominal defendant Yahoo is a Delaware corporation, with its executive 8 offices betted at 701 First Avenue, Sunnyvale, California 94089. According to its SEC 9 filings, Yahoo is a digital media company that delivers personalized digital content and 11 er4ences;-aeross-deviees-and-around-the-globe;-to-vast-audienee&-Yahoo-fra-eitize 11 the states of California and Delaware. 12 20. Defendant Carol Bartz ("Bartz") has been Chief Executive Officer of Yahoo 13 since 2009. At all relevant times, Yahoo's most valuable corporate asset, accounting for as 14 much as two-thirds of its entire market capitalization according to some financial experts, 15 was its investment in Alibaba. Defendant Bartz therefore knew, or was reckless in not 16 knowing, that protecting the value of Yahoo's investment in Alibaba was critically 17 important to Yahoo's business, finances and prospectus for future growth and success. 18 Nevertheless, defendant Bartz failed to cause Yahoo to adopt and maintain internal 19 controls and systems designed to protect Yahoo's assets and, in particular, shield Yahoo's 20 material investment in Alibaba from unnecessary risks of loss, including misappropriation 21 of assets and/or usurpation of Alibaba's corporate opportunities by Ma and/or other 22 Alibaba insiders. Defendant Bartz also owed Yahoo and its shareholders a duty to speak 23 the whole truth. However, defendant Bartz did not speak the truth when addressing 24 Yahoo's investment in Alibaba and/or the status thereof. Defendant Bartz is therefore liable 25 to Yahoo for breach of candor and loyalty. Defendant Bartz is a citizen of the State of 26 California. 27 21. Defendant Jerry Yang ("Yang") was a co-founder of the Company, has been 25 the Chief Yahoo and Yahoo director since 1995. At all relevant times, Yahoo's most

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1 valuable corporate asset, accounting for a substantial portion of its market capitalization 2 according to some financial experts, was its investment in Alibaba. Defendant Yang 3 therefore knew, or was reckless in not knowing, that protecting the value of Yahoo's 4 investment in Alibaba was critically important to Yahoo's business, finances and 5 prospectus for future growth and success. Nevertheless, defendant Yang failed to cause 6 Yahoo to adopt and maintain internal controls and systems designed to protect Yahoo's 7 assets and, in particular, shield Yahoo's material investment in Alibaba from unnecessary 8 risks of loth, including misappropriation of assets and/or usurpation of Alibaba's corporate 9 opportunities by Ma and/or other Alibaba insiders. Defendant Yang also owed Yahoo and • areholders-a-dutoflo-speak-the-whole iruthz-Howeveroziefendant-Yang-did-not-sp . 11 the truth when addressing Yahoo's investment in Alibaba and/or the status thereof. 12 Defendant Yang is therefore liable to Yahoo for breach of candor and loyalty. Defendant 13 Yang is a citizen of the State of California. 14 THE MISSTATEMENTS AND OMISSIONS OF MATERIAL FACT 15 IN VIOLATION OF THE SECURITIES EXHANGE ACT 16 ALLEGED IN THE CLASS ACTION

17 22. Yahoo, based in Sunnyvale, California, is a global digital media company. 18 Despite its global brand, Yahoo's business has languished for the past several years, as the 19 Company has largely failed to keep up with Google and struggled to grow in highly 20 regulated and politicized fast-growing markets like China. 21 23. ; To overcome this situation, in 2005, Yahoo invested $1 billion for a 40% 22 interest in Alibaba, China's largest e-commerce company, and one seat on Alibaba's four- 23 person board of directors. As a part of their strategic partnership, Yahoo also turned over 24 operation of Yahoo China to Alibaba. In a shareholder report discussing the Yahoo-Alibaba 25 strategic partnership, and heralding the transaction as a great opportunity for Yahoo to 26 expand its business in China, Yahoo stated: 27 24. Through this transaction, the Company has combined its leading search 28 capabilities' with Alibaba's leading online marketplace and online payment system and

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1 Alibaba's strong local presence, expertise and vision in the China market. These factors 2 contributed to a purchase price in excess of the Company's share of the fair value of 3 Aliababa's net tangible and intangible assets acquired resulting in goodwill. 4 25. As the remainder of the decade unfolded, Alibaba grew rapidly. By 2011, 5 Yahoo's 40% stake in Alibaba had grown significantly in importance to Yahoo and, in fact, 6 had become, according to many industry experts, Yahoo's most valuable corporate asset, 7 accounting for a substantial portion of Yahoo's $21 billion market capitalization. 8 26. Until recently, one of Alibaba's most profitable "still-private holdings" was 9 Alipay, an e-commerce payment system similar to eBay Inc.'s PayPal. As China's economy :idly-Awing-the late-20000rsrnlid-Alipayls-profits:Aecording-to U.S. sec • 11 analysts, including-Brett-Hariss of Bagelli & Co., Alipay is worth more than $5 billion. But 12 most importantly for Yahoo and its shareholders, Yahoo, as Alibaba's largest shareholder, 13 had a direct connection to the profits stemming from Alipay's fast-growing and lucrative 14 online payment system. 15 27. Doing business in China can be complex and difficult for U.S. companies. 16 Yahoo's experience in China has been no different. But, unlike other large U.S. publicly 17 traded companies, Yahoo's single most valuable corporate asset is an investment tied up in a 18 foreign corporation located in China, more than 4,000 miles away from Yahoo's corporate 19 headquarters located in Sunnyvale, California. 20 28. Yahoo's counterparts in China had been consulting with Yahoo for months and

21 months on anticipated changes to Chinese regulations regarding foreign ownership. Yahoo 22 failed to address this issue and ultimately in 2010, Alibaba transferred ownership in Alipay 23 to Alibaba CEO Ma for $46 million. This was made known to Yahoo on March 31, 2011, at 24 the latest, and perhaps as early as 2008. However, in an effort to make Yahoo attractive to 25 hedge funds and other investors, defendants concealed this information. 26 /// 27

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1 DEFENDANTS' FALSE AND MISLEADING STATEMENTS 2 ISSUED DURING THE CLASS PERIOD 3 29. On April 19, 2011, Yahoo issued a press release announcing its first quarter 4 2011 financial results. The Company reported earnings of $223 million, or $0.17 diluted 5 earnings per share, and revenue of $1,064 million. The release stated in part: 6 "We are solidly executing toward our plan for returning Yahoo! to sustainable revenue and profit growth," said Carol Bartz, CEO of Yahoo!, "During the 7 quarter, we beat the midpoint of revenue guidance while continuing to deliver 8 on the bottom line. We continued to extend our lead as the world's premier digital media company with users to Yahoo! branded properties increasing 9 15% year over year and minutes spent increasing 17%." 14 30. These were positive results and statements with never a word about the 11 Alipay fiasco), and Yahoo's stock reacted favorably, increasing to $16.87 per share. 12 31. Later, on May 2, 2011, Greenlight Capital's investment was revealed, causing 13 Yahoo's stock to increase to $18.14 per share. 14 32. On May 10, 2011, Yahoo shareholders learned for the first time that the 15 Company's $1 billion investment in its strategic partnership with Alibaba likely had been 16 severely impaired by the misappropriation of Alibaba's most valuable asset, Alipay, from 17 Alibaba to another private company controlled by Alibaba's Chairman, Jack Ma. 18 33. On this news, Yahoo's stock fell by 7%, to close at $17.20 per share. 19 34. On May 12, 2011, Yahoo issued a press release entitled "Yahoo! Inc. Releases 20 Statement Regarding Alipay," which stated in part: 21 Yahoo! Inc. issued the following statement in response to recent media reports 22 regarding the timing of the restructuring of Alipay:

23 On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of 24 two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of 25 ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011. 26 Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba 27 Group and obtaining a better understanding of this complex situation. 28

-10- Complaint

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1 Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations 2 among all of the parties provide the best opportunity to achieve an outcome in 3 the best interest of all stakeholders

4 35. According to news reports, Alibaba received only $46 million for Alipay's 5 assets, which securities analysts valued at $5 billion. Additionally, defendants reportedly 6 were aware of Jack Ma's misappropriation of Alipay, failing to prevent the usurpation of 7 Yahoo's valuable financial interest in Alipay, and then concealing the entire episode from 8 Yahoo shareholders for six months. 9 36. On May 15, 2011, Yahoo issued a press release entitled "Joint Statement from ii - -I', • • if otrirtautTaktsa t.TiCitegarding l Aiipay; w s - • m p • : 11 Yahoo! Inc. and Alibaba Group issued the followmg statement regarding 12 Alipay: 13 "Alihaba Group, and its major stockholders Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to 14 resolve the outstanding issues related to Alipay in a manner that serves the 15 interests of all shareholders as soon as possible."

16 37. On this news, Yahoo's stock collapsed $0.74 per share to close at $15.81 per 17 share on May 16, 2011 — a decline of 15% from its Class Period high of $18.65 per share. 18 38. The true facts, which were known by the defendants but concealed from the 19 investing public during the Class Period, were as follows: 20 , (a) Yahoo management had been informed on March 31, 2011, at the 21 latest, that Alipay's structure had been shifted from Alibaba, reducing the value of Yahoo's 22 investment in Alibaba by billions of dollars; and 23 (b) Chinese regulations regarding foreign ownership had been anticipated 24 to change as far back as 2009, which would require Yahoo or Alibaba to divest themselves 25 of Alipay, but Yahoo had failed to develop a strategy to recover the value it had in Alibaba. 26 39. As a result of defendants' false statements, Yahoo stock traded at artificially 27 inflated levels during the Class Period. However, after the above revelations seeped into the 28

-11- Complaint

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1 market, the Company's shares were hammered by massive sales, sending them down 15% 2 from their Class Period high. 3 LOSS CAUSATION 4 40. During the Class Period, as detailed herein, the defendants made false and 5 misleading statements and engaged in a scheme to deceive the market and a course of 6 conduct that artificially inflated the price of Yahoo common stock and operated as a fraud or 7 deceit on Class Period purchasers of Yahoo common stock by misrepresenting the 8 Company's China business and Alibaba investment. Later, when defendants' prior 9 misrepresentations and fraudulent conduct became apparent to the market, the price of 10—Yahoe,cemmertsteek-fellras-the-prior-artifieial-inflatien-eame-outofthe-priee-ever time. As 11 a result of-their purchases of Yahoo common-stock during the Class Period, plaintiff-and 12 other members of the Class suffered economic loss, i.e., damages, under the federal 13 securities Iws.

14 NO SAFE HARBOR 15 41. Yahoo's verbal "Safe Harbor" warnings accompanying its oral forward- 16 looking statements issued during the Class Period were ineffective to shield those statements 17 from liability. 18 42. The Individual Defendants are also liable for any false or misleading Forward- 19 Looking-Sthement pleaded because, at the time each Forward-Looking-Statement was 20 made, the speaker knew the Forward-Looking-Statement was false or misleading and the 21 Forward-Looking-Statement was authorized and/or approved by an executive officer of 22 Yahoo who knew that the Forward-Looking-Statement was false. None of the historic or 23 present tense statements made by defendants were assumptions underlying or relating to any 24 plan, projection or statement of future economic performance, as they were not stated to be 25 such assumptions underlying or relating to any projection or statement of future economic 26 performance when made, nor were any of the projections or forecasts made by defendants 27 expressly related to or stated to be dependent on those historic or present tense statements 28 when made.

-12- Complaint

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1 DERIVATIVE ALLEGATIONS 2 43. Plaintiff brings this action as a derivative action pursuant to Federal Rules of 3 Civil Procedure 23.1 on behalf of and for the benefit of Yahoo. 4 44. Plaintiff will fairly and adequately represent the interests of Yahoo in 5 enforcing and prosecuting its rights, and has retained competent counsel experienced in 6 this type of litigation to prosecute this action. 7 DEMAND IS EXCUSED FOR FUTILITY 8 45. Demand on Yahoo to bring this action has not been made and is not 9 necessary because such demand would be fiitile. The Board of Yahoo at the time suit 111 was-filed consisted -af-the-following individuals:-Roy-Bostock, Patti Hart,-Sue_James, 11 Vyomesh Joshi, David Kenny, Arthur Kern, Brad Smith, Gary Wilson and Defendants 12 Bartz and Yang. 13 46. Yahoo is a defendant in the Securities Class Action which alleges that the 14 wrongful acts of Defendants Bartz and Yang have caused the Company to violate the 15 16 federal securities laws, resulting in the substantial risk of a huge damage award against the Company. The Company and its Board must defend that action and contend that the 17 Individual Defendants did not violate the federal securities laws and thus the Company 18 cannot be deemed liable. Therefore, the Yahoo Board, at the same time cannot fairly 19 20 consider a demand to bring suit against the Individual Defendants for conduct which includes the same wrongs, since the Board must contend that Bartz and Yang did nothing 21 wrong. Accordingly, the Company's Directors are sterilized from fairly considering a pre- 22 suit demand, given the overriding obligation to defend the Securities Class Action, and 23 take positions consistent with such defense. 24 FIRST CLAIM FOR RELIEF 25 (Against The Individual Defendants for Contribution Pursuant to 26 Sections 10(b) and 21D of the Exchange Act) 27 47. Plaintiff repeats and re-alleges all previous allegations set forth above in 28

-13- Complaint

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1 paragraphs 1 through 46 as though they were fully set forth herein. 2 48. The Individual Defendants had a duty not to defraud the investing 3 public by the dissemination of materially false and misleading press releases and the 4 dissemination of materially false and misleading financial information and 5 projections. 6 49. The Individual Defendants have been sued in the Class Action alleging 7 that the Individual Defendants caused the Company to issue false and misleading 8 statements as alleged above and, as a result, the Company and these defendants 9 violated Section 10(b) of the Exchange Act. O. It is allegect4n-the-Class-Action4hat-4he4n4ivi4ual-Defendants-a- 11 with scienter-in that they knew that the public documents and statements issued-or 12 disseminated in the name of the Company were materially false and misleading; knew that 13 such statements or documents would be issued or disseminated to the investing public; and 14 knowingly and substantially participated or acquiesced in the issuance or dissemination of

25 such statements or documents as primary violations of the federal securities laws. These 16 Defendants, by virtue of their receipt of information reflecting the true facts regarding 17 Yahoo, their control over, and/or receipt and/or modification of Yahoo's allegedly 18 materially misleading misstatements and/or their associations with the Company that made 19 them privy to confidential proprietary information concerning Yahoo, participated in the 20 fraudulent scheme alleged herein. 21 51. These Individual Defendants knew and/or recklessly disregarded the 22 falsity and misleading nature of the information which they caused to be 23 disseminated to the investing public. 24 52. During the Class Period, it is alleged in the Class Action that the Class 25 Action Individual Defendants carried out a plan, scheme and course of conduct that was 26 intended to and, throughout the Class Period which caused plaintiff and other members of 27 the Class to purchase Yahoo common stock at artificially inflated prices. As alleged in 28 the Class Action, these defendants made untrue statements of material fact and/or

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1 omitted to state material facts necessary to make the statements not misleading that 2 operated as a fraud and deceit upon the purchasers of the Company's common stock in an 3 effort to maintain artificially high market prices for Yahoo's common stock in violation of 4 Section 10(b) of the Exchange Act and Rule 10b-5. 5 53. In addition to the duties of full disclosure imposed on these defendants 6 as a result of their making of affirmative statements and reports, or participation in 7 the making of affirmative statements and reports to the investing public, they each 8 had a duty to disseminate truthful information promptly that would be material to 9 investors in compliance with the integrated disclosure provisions of the SEC as 10 embodied in SEC Regulation S X (17 C.F.R. § 210.04-et-seq.)-and-S-1(41-7-Ca • 11 229A 0 et seq.) and other SEC regulations, including accurate and truthful 12 information with respect to the Company's business, so that the market prices of the 13 Company's publicly traded securities would be based on truthful, complete and 14 accurate information. 15 54. It is alleged in the Class Action that the Individual Defendants, by the 16 use of the mails or other means or instrumentalities of interstate commerce, engaged 17 and participated in a continuous course of conduct to conceal adverse material

18 information about the business, business practices, and future prospects of Yahoo as 19 specified herein. These Defendants are alleged to have employed devices, schemes 20 and artifices to defraud, while in possession of material adverse non-public 21 information and engaged in acts, practices, and a course of conduct as alleged herein 22 in an effort to assure investors of Yahoo's value and future profitability. This 23 included the making of, or the participation in the making of, untrue statements of 24 material facts and omitting to state material facts necessary in order to make the 25 statements made about Yahoo and its business, operations and future prospects, in 26 the light of the circumstances under which they were made, not misleading, and 27 engaging in transactions, practices and a course of business which operated as a 28 fraud and deceit upon the purchasers of Yahoo securities during the Class Period.

-15- Complaint

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1 55. As alleged in the Class Action, as a result of the dissemination of the 2 materially false and misleading information and failure to disclose material facts, as 3 set forth above, the market price of Yahoo's securities was artificially inflated during 4 the Class Period. Unaware of the fact that the market price of Yahoo's shares was 5 artificially inflated, and relying directly or indirectly on the false and misleading 6 statements made by these defendants, or upon the integrity of the market in which the 7 securities trade, and/or on the absence of material adverse information that was 8 known to or recklessly disregarded by these defendants but not disclosed in public 9 statements during the Class Period, Class members acquired Yahoo's securities 0uring4heClass-Perio4-at-artifizially hi gh-prizes-and.were-ciamaged-thereb 11 56 As alleged in the Class Action, at the time of said misrepresentations 12 and omissions, the Class members were unaware of their falsity, and believed them 13 to be true. Had the members of the Class and the marketplace known of the true 14 performance, business practices, future prospects and intrinsic value of Yahoo, 15 which were not disclosed by these defendants, members of the Class would not have 16 purchased or otherwise acquired their Yahoo securities during the Class Period, or, 17 if they had acquired such securities during the Class Period, they would not have 18 done so at the artificially inflated prices which they paid. 19 57. As alleged in the Class Action, by virtue of the foregoing, these 20 Individual Defendants each violated Section I0(b) of the Exchange Act and Rule 21 10b-5. 22 58. It is further alleged in the Class Action that the Company participated 23 in the wrongful conduct and is equally liable for violation of Section 10(b) of the 24 Exchange Act. Assuming that the Company is liable, these Individual Defendants 25 caused the Company to violate Section 10(b) of the Exchange Act, and incur 26 liability for damages for violation of the federal securities laws. 27 /// 28

-16- Complaint Case5:11-cv-03269-PSG Document1 Filed07/01/11 Page17 of 21

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1 59. If the Company is deemed to have violated the federal securities laws, 2 and incurs damages therefore, the Individual Defendants are liable to the Company 3 for contribution pursuant to sections 10(b) and 21(D) of the Exchange Act. 4 SECOND CLAIM FOR RELIEF 5 (Against the Individual Defendants for Breach of Fiduciary Duty and Waste) 6 60. Plaintiff repeats and re-alleges all previous allegations set forth above in 7 paragraphs 1 through 59 as though they were fully set forth herein. 8 61. The Class Action Individual Defendants owed and owe Yahoo fiduciary 9 obligations. By reason of their fiduciary relationships, the Class Action Individual 10 Dcfendanti-owed-and-owe-Yahoo-the-highest--obligations-of-gooel-faithrfair-dea • 11 loyalty and due care. 12 62. These Defendants breached their fiduciary duties of care, loyalty, 13 reasonable inquiry, oversight, good faith and supervision. 14 63. The Individual Defendants concealed material information from the 15 Yahoo Board and the investing public because they believed it was in their personal 16 interest to do so. This concealment appears to have had negative effects on their 17 attempts to resolve the compensation issue over Alipay, and their actions may well 18 will cause Yahoo to obtain less compensation then had the business issue been 19 pioperly handled. Such conduct actions was not a good faith exercise of prudent 20 business judgment 21 64. As a direct and proximate result of the Class Action Individual 22 Defendants' misconduct, Yahoo has suffered and will continue to suffer significant 23 damages. As a result of the misconduct alleged herein, the Individual Defendants are 24 liable to the Company. 25 /// 26 /// 27 28

-17- Complaint

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1 THIRD CLAIM FOR RELIEF 2 (Against The Individual Defendants for Breach of the Duty 3 of Full Disclosure and Complete Candor) 4 65. Plaintiff repeats and re-alleges all previous allegations set forth above in 5 paragraphs 1 through 64 as though they were fully set forth herein. 6 66. Whenever directors communicate publicly or directly with shareholders 7 about the corporation's affairs, with or without a request for shareholder action, directors 8 have a fiduciary duty to shareholders to exercise due care, good faith and loyalty. When 9 directors communicate publicly or directly with shareholders about corporate matters the 18— -sine-qua-non-of-directore-fiduciary-tty-ta-sliarehelders4s-honesty:--Moreoverra-fiducia 11 who lens that her-earlier communications to her beneficiaries were false and nonetheless 12 knowingly and in bad faith remains silent even as the beneficiaries continue to rely on 13 those earlier statements also breaches his duty of loyalty and of full and fair disclosure. 14 67. Each of the Individual Defendants has breached his/her duty of full 15 disclosure and complete candor by knowingly and/or recklessly disregarding the falsity 16 and misleading nature of the information which they caused it to be disseminated to the 17 investing public. 18 68. In addition to the duties of full disclosure imposed on the Individual 19 Defendants as a result of their making affirmative statements and reports, or participation 20 in the making of affirmative statements and reports to the investing public, they each had a 21 duty to disseminate truthfid information promptly that would be material to investors in 22 compliance with the integrated disclosure provisions of the SEC regulations, including 23 accurate and truthful information with respect to the Company's business, so that the 24 market prices of the Company's publicly traded securities would be based on truthful, 25 complete and accurate information. 26 69. As a direct and proximate result of the Individual Defendants' breach of full 27 disclosure and complete candor, Yahoo has sustained significant damages arising out of 28 ///

-18- Complaint Case5 11-ov-03269-PSG Documentl Filed07/01/11 Page20 of 21 II

1 the alleged material misstatements to the investing public, and these Individual Defendants 2 are liable tc the Company. 3 JURY DEMAND 4 70. Plaintiff demands a trial by jury. 5 6 WHEREFORE, plaintiff prays for judgment as follows: 7 A. Against the Individual Defendants for contribution pursuant to Sections 8 10(b) and 21(D) of the Exchange Act; 9 B. Against all of the Individual Defendants for the damages sustained by It- -Yahoo-as a-result-of-the- - • -. - = - - - ; • II set forth-herein; 12 C. Equitable and/or injunctive relief as permitted by law; 13 D. Restitution and disgorgement of unjust enrichment; 14 E. Attorneys' fees and costs; and 15 F. Any such other and further relief as the Court deems just and proper. 16

17 Dated; June 30, 2011 18 LAW OFFIC S OF DAVID N. LAKE 19 20 By 21 David N. Lake, Esq. Attorney for Plaintiff 22 23 Of Counsel:

24 Kenneth A. Elan, Esq LAW OFFICES OF KENNETH A. ELAN 217 Broadway, Suite 606 26 New York, NY 10007 Telephone: (212) 619-0261 27 Facsimile: (212) 385-2707 28 Email: [email protected]

-19- • Complaint Case5:11-cv-03269-PSG Document1 Filed07/01/11 Page21 of 21

VERIFICATION

Kenneth Elan, under pain and penalty of perjury under the laws of the United States,

avers that as one of plaintiff's counsel herein I verify that I he have reviewed the foregoing

Shareholder's Derivative Complaint, and that the allegations are true and correct to the best of

my information, knowledge and belief.

Dated: June 27, 2011

Kennet Jan

Case5:11-cv-03269-PSG Documentl -1 Filed07/01/11 Pagel of 2

t, IS 44 (Rev. 12/07)(CAND Rev 1/10) CIVIL COVER SHEET The JS 44 civil cover sheet and the information contained herein neither replace nor suppkment the Mum and service of pleadings or other papers as required by law, except as provided by local rules of court This 10t111, approved by the Judicial Conference of the United States in September 1974, as required for the use of the Clerk of Coon forthe purpose of initiating the civil docket sheet (SEE INSTRUCTIONS ON PAGE TWO OF THE FORM.) L (a) PLAINTIFFS DEFENDANTS DEBRA SALZMAN, an individual CAROL BARTZ, an individual; JERRY YANG, an individual

(b) County of Residence of First Listed Plaintiff New York County County of Residence of First Listed Defendant (EXCEPT IN US. PLAINTIFF CASES) (IN US. PLAINT/FE CASES ONLY) Nyjyp. IN LAND CONDEMNATION CAS EESLUSFE TIHELLOCI a\AT1 I GON OF THE LAND INVOLVED. (e) Attorney's (Finn Name. Address. and Telephone Number) Attorneys Of Known) David N. Lake, Esq., Law Offices of David N. A 16130 VenturaBoulevard, Suite 650 11 0 3 2 6 A Encino, CA 91436 _... PSG 818 7885100 ° A D I-1 IL BASIS OF JURISDICTION (Place an ''X' in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Piece an "IC' mOne Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) PT14 DEF PTF DER 0 I US. Government 13 :i Federal potation Citizen of This State [3 I 0 / Immo:teed or PoncipalPlace Ej 4 13 4 Plaintiff (U.& Government Not a Pony) of BtainCSS laths Sate 0 2 U.S. Government 4 Diversity Cirmen of Another State El 2 [.] 2 bromoratcd and Principal Place 1:0 5 0 $ Defendant ,(Indicate Citizenship of Parties in Item In) of Dus boss In Another State Citizen or Snbject of a Eirn 3 Foreign Nation 0 6 0 6 Foreign Country IV—NATURE OF_SUIT_Onaa tx- ill OM BaYtthily) CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHERSTATUTES - 1=/ 1101nstrance PERSONAL INJURY PERSONAL1NJURY__,C1610 Agriculture =422 APper128 USC 156 1=400 Stole Reapportionment I= 120 Marine =310 Alt/dant =362 Personal Injury— I=620 Other Fool & Drug =423 Withdramd 0410 Antitrust I3 130 Miller Act =315 Airplane Product mak maipactat 0625 Drug Related Semite 2g USC 157 =430 Banks and Banking = 1401Jegoliable Instrument Liability =365 Personal Injury — etProperty 21 'USG Ma "1450 Commerce ED 150 Recovery of Ortmayment =20 Assaub, Laid& Product Liability 0630 Liquor Laws PROPERTY RIGHTS 1=460 Deportation &Enforcement ofJudgment slander 1=368 Asbestos Personal =1640E4i- & Truck __1470 Racketeer Influenced and CI 151 Meditate Act =330 FederalEmployers* Injury Product =650 Airline Reps. =320 Copyrights Corrupt Organizations =1330 Patent 1=1430 Comm= Credit I=1 1521/teovery of Defaulted Liability Liability Cry 6600eetmotianal =g40Trad0mailt Student Loans =40 Marine . PERSONAL PROPERTY Seel/Akan 0490CablerSat TV (Excl. Veterans) =345 Marine Product =370 Other Proud C16900ther =810 St/cense Service. q L=1 153 Recovery oftiverparnent LiabiblY =371 Troth in Lending of VnlerniS BellefitS =350 Motor Vehicle LABORsociALsEcuRITY .25°Steec‘milieeticsiSeCainniad it31 I = 160 Stockholders Seas =355 Motor Velucte 031100thapmpely Penenal D0,686 =710 Fan LaborStandards =861 171A (1395(0 ‘6=g15Dustonler Dludlenge = 190 Other Contract= (923) 12 USC 3410 Peaduct Liability nyg3 plot ny Oaniage Act 862 Black I= 195 Contract Product Liability =360 Other Pomona' Minty "---1 r- 6,466 1 babtlity.- =720 Lob or/Saw. Relations =563 DIWC/D1WW (405(g)) cage mu sumnoly Actions fl 196 Franchise —1730 Latror/Mmetillegonmg =$64 SS1D Title XVI tr.1291 Agricultural Acts PRISONER A Dielosure Act 865R51 (405(g)) C1$922 Economic Stablhzation Act REAL PROPERTY CIVIL RIGHTS PETITIONS — 1740Railway Labor Act 0803 Environmental Matters Litigation In 594 Enemy Allocation Act (= 210 Land Condemnation =441 Voting =510 motions to vacate =790 Mr; Labor 1195 Freedoofm Information 17.3 ' 220 Foreclosure =442 Ettmloyment Sentence =791 EmplFEDERAL Ret TAX /no.C SUITS 1=1 230 Rena Least & Ejectment =443 Housing/ Habeas Corpus: Steady Act Act En 240 Tout to Land Accommodations = 530 General M870 Taxes (US. Plaintiff 1=900APPeal of Fa 245 Ton Product Liability =444 Welfare or Defendant) Detantination fn =535 Death Penalty Under Equal Access Cl 290 All Otha Real PmPerlY =445 Amer eiDisabilities - =240 Mandamus& Other IMMIGRATION Oil IRS--. Third Puny to Justice Emplownent =550 Call RIghtS n••••n - - 26 BSC 7609 .....1462/4anualrzabon Application =950 Constitutionality of =444 toner vs/Disabilities =555 PrisonCondition =463 Habeas, all.pth _ State Statutes Other Alien MINIM =440 Other Civil Rights =465 Other limidgralliall A41001 V. ORIGIN (Place an "X" in One Box Only) Transferred front Appeal 10 District at original CD 2 Removed from CI 3 Remanded from 04 Reinstated Or OS another district 06 Multidtstriet 0 7.Itickg from Proceeding State Court Appellate Court Reopened (specify) Litigation Magistrate Judgment Cote the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): IS USC §781(b), 15 USC §78n-4, 28 IJSC§ 1332 VI CAUSE OF ACTION Thief description of cause; Breach of fiduciary duty and contribution VIL REQUESTED IN En CHECK IF THIS IS A CLASS ACTION DEMAND S 575,000+ CHECK YES only if demanded in complaird: COMPLAINT: IJNDER F.R.C.P. 23 JURY DEMAND:. CI Vest= No VIII RELATED CASE(S) PLEASE REFER TO IKL KR, 3-12 CONCERNING REQUIREMENT TO FILE IF ANY "NOTICE OF REL ED ASE". IX. DIVISIONAL ASSIGNMENT (CIVIL L.R. 3 ) (PLACE AND "X" IN ONE BOX ONLY) ED SAN FRANCISCO/OAKLAND ral SAN JOSE CI EUREKA DATE S 'NATURE OF ATTORNEY OF RECORD 7/1/11

- -

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.1S 44 Reverse (Rev. 12/07) INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM .IS 44

Authority For Civil Cover Sheet

The 15 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk ofCourt for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I. (a) PlaintifEr-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the finll name or standard abbreviations. If the plaintiff or defendant is an official within a govenunent agency, identi6 , first the agency and then the official, giving both name and title. (b)County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.) (c)Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section "(see attachment)". IL Jurisdiction. The basis ofjuris' diction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis ofjurisdiction, precedence is given in the order shown below. United States plaintiff. (I) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the -----Constitutimun-actof Congress ora treaty-of the-United-Staterbrcasenhere the U.S:tapanyoheUtplaintiffordefendant code takes precedence, and box I or 2 should be marked. — Diversity of citizenship. (4)This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is cheered, the cifizenship of the different parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was Indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. V. Origin. Place an "X" in one of the seven boxes. Original Pnaceedings. (I) Cases which originate in the United States district courts. Removed fiom State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, die& this box. Remanded from Appellate Court. (3) .Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, clo not check (5) above. Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge's decision. VI. Cause of Acfion. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statues unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the dollar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS 44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet.

• EXHIBIT D Case5 11-cv-03302-PSG Documentl Aled07/06/11 Pagel of 29

r7 b 11 1 ROBBINSUMEDAIJ.P F-9 Mtn BRIAN J. ROBBINS (190264) P V Ll 2 [email protected] CRAIG W. SMITH (164886) 3 gsmith®robbinsumada.com SHANE P. SANDERS (237146) 4 ssanders®robbinsumeda.00m G/NA STASSI (261263) 5 gstassi®robbinsumeda.cora FILED 6003 Street, Suite 1900 6 gan Diego, CA 92101 JUL. 0 6 2011 Telephone: (619) 525-3990 7 Facsimile: (619) 525-3991 NORVERRRIPKN'tiou0T ):6TRWOIDT :TaLleirrORNIA 8 Attorneys for Plaintiff I dif:4 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN JOSE DIVISION PSG 12 IRON WORKERS MID-SOUTH PENSION Vq al. - 0 3 3 0 2 13 FUND, Derivatively on Behalf of YAHOO! INC., ) -VERIFIED SHAREHOLDER 14 Plaintiff ) DERIVATIVE COMPLAINT FOR vs. ) BREACH OF FIDUCIARY DUTY, 15 ) UNJUST ENRICHMENT, WASTE OF CAROL BARTZ, JERRY YANG, ROY J. ) CORPORATE ASSETS, AND 16 BOSTOCK, PATTI S. HART, SUSAN M. ) VIOLATIONS OF CALIFORNIA JAMES, VYOMESH JOSHI, ARTHUR H. ) CORPORATIONS CODE 17 KERN, BRAD D. SMITH, GARY L. WILSON, ) and JACK MA, ) 18 ) Defendants, ) 19 ) -and- ) 20 ) YAHOO! INC., a Delaware corporation, ) 21 ) Nominal Defendant. ) 22 ) DEMAND FOR JURY TRIAL 23 24 25 26 27 28

VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT BY FAX Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page2 of 29

1 INTRODUCTION 2 1. This is a shareholder derivative action brought by plaintiff, a shareholder of 3 Yahoo! Inc. ("Yahoo" or the "Company"), on behalf of the Company against certain of its 4 officers and directors for breathes of fiduciary duties and violations of law. These wrongs 5 resulted in millions of dollars in damages to Yahoo's reputation, goodwill, and standing in the 6 business community. Moreover, these actions have exposed the Company to millions of dollars 7 in potential liability for violations of federal law. Most notably, however, is that the actions of 8 the Individual Defendants (as defined herein) have cost the Company an asset worth billions of 9 dollars. 10 2. The matter arises out of the Chief Executive Officer ("CEO") of Alibaba Group 11 Holding Limited ("Alibaba"), defendant Jack Ma's ("Ma"), transfer of Alibaba's valuable e- 12 commerce payment system, Alipay, to another entity he controlled. AO-Abe is China's largest e- 13 commerce Company, and Alipay is the method that customers purchase goods (similar to eBay 14 Inc.'s PayPal function in the United States). Alipay is a necessary part of Alibaba, and some 15 analysts have valued it at $5 billion. Despite its tremendous value, according to reports, 16 defendant Ma paid Alibaba only $46 million for Alipay. 17 3. Though Alibaba is a separate Company, Yahoo acquired a 40% stake in it for $1 18 billion in 2005. Defendant Ma's acquisition of Alipay has been disastrous for Yahoo. In 19 addition, in exchange for this $1 billion investment, Yahoo received the right to name two 20 members to Alibaba's board of directors, though for reasons that remain unexplained, it only 21 named one, Yahoo's founder, defendant Jerry Yang ("Yang"). 22 4. While Yahoo has seen its importance in the U.S. market diminish, Alibaba has 23 exploded. In fact, Alibaba is now Yahoo's most valuable corporate asset, accounting for as much 24 as two-thirds of Yahoo's entire $21 billion market capitalization. Defendant Ma's acquisition of 25 Alibaba's $5 billion asset for a de minimis sum has had a direct and immediate impact on Yahoo. 26 Since Yahoo has revealed Alipay's ownership transfer, the Company's market capitslinaion has 27 fallen by $3.5 billion, or 15%. That defendant Ma was able to accomplish this scheme is a 28 testament to Yahoo's woefully inadequate internal control systems and ilure of the members of - I - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

Case5 . 11-cv-03302-PSG Document1 Filed07/06111 Page3 of 29

1 the Company's Board of Directors (the "Board") to act in accordance with their duties of loyalty 2 to protect Yahoo's valuable assets 3 5. Just as bad as defendant Ma's self-dealing ownership transfer, however, is the 4 manner in which the Board members have treated their duty of candor to the Company's 5 shareholders. Despite Alibaba's board of directors learning about the ownership transfer in July 6 of 2009, Yahoo made no mention of it until an almost hidden disclosure in a quarterly report 7 filed with the U.S. Securities Exchange Commission ("SEC") in May 2011. By Yahoo's own 8 admission, the Company learned about Ma's ownership transfer on March 31, 2011, (and 9 according to Alibaba, actually learned about it much earlier). Nevertheless, three weeks later, 10 the Company announced positive quarterly results without mentioning the Alipay ownership 11 transfer. In short, the Board was aware of Ma's planned misappropriation of Alipay, failed to 12 prevent the usurpation of Yahoo's valuable financial interest in Alipay, and then concealed the 13 entire ugly episode from Yahoo shareholders. Further, as a result of the Individual Defendants' 14 actions, the Company is being sued by an investor in a securities fraud class action. 15 6. According to reports, Yahoo and Alibaba have reached an agreement on the 16 ownership transfer of Alipay. Instead of demanding the return of Alipay to Alibaba, as would be 17 expected, defendant Ma will instead promise not use Alipay to hurt the value of Taobao, an 18 Alibaba owned e-commerce website. This promise hardly compensates Yahoo for the damage 19 Ma has caused the Company.' It is now apparently clear that the Board will not act to protect the 20 Company. Accordingly, plaintiff now brings this action to remedy the harms caused by the 21 Individual Defendants. 22 23 24 25 These reports also stated that defendant Ma's controlled company which now owns Alipay 26 "could also inclzule plans for Mr. Ma's new company to further compensate Alibaba Group for the Alipay transfer, in part to take into consideration future revenue from processing fees it 27 extracts from websites other than TaobEva." 28 - 2 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

Case5 . 11-cv-03302-P SG Document1 Filed07/06/11 Page4 of 29

1 JURISDICTION AND VENUE 2 7. This Court has jurisdiction over all causes of action asserted herein pursuant to 28 3 U.S.C. §1332(a) in that plaintiff and defendants are citizens of different states and the amount in 4 controversy exceeds $75,000, exclusive of interest and costs. Defendants are citizens of 5 California, Nevada, New York, and China. Plaintiff is not a citizen of any of these states and is 6 not a citizen of a foreign country. This action is not a collusive action designed to confer 7 jurisdiction on a court of the United States that it would not otherwise have. 8 8. This Court has jurisdiction over each defendant named herein becauve each 9 defendant is either a corporation that conducts business in and maintains operations in this

10 District, or is an individual who has sufficient minimum contacts with this District so as to 11 render the exercise of jurisdiction by the District courts permissible under traditional notions of 12 fair play and substantial justice. 13 9. Venue is proper in this Court pursuant to 28 U.S.C. §1391(a) because a 14 substantial portion of the transactions and wrongs complained of herein, including the 15 defendants' primary participation in the wrongful acts detailed herein, and aiding and abetting 16 and conspiracy in violation of fiduciary duties owed to Yahoo, occurred in this District

17 INTRADISTRICT ASSIGNMENT 18 10. A substantial portion of the transactions and wrongdoings which give rise to the 19 oinims in this action occurred in the county of Santa Clara, and as such, this action is properly

20 assigned to the Sal/ Jose division of this Comt 21 THE PARTIES 22 11. Plaintiff Iron Workers Mid-South Pension Fund purchased Yahoo stock on June 23 8, 2010, and has continuously been a shareholder since that lime. Plaintiff is a citizen of 24 Oklahoma, Louisiana, Mississippi, and Texas.

25 12. Nominal defendant Yahoo is a Delaware corporation with principal executive 26 offices located at 701 First Avenue, Sunnyvale, California. Yahoo is a leading digital media 27 company that delivers personalized digital content and experiences, across devices and around 28 - 3 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page5 of 29

1 the globe, to vast audiences. Yahoo provides engaging and innovative canvases for advertisers 2 and online properties and services to users. 3 13. Defendant Carol Bartz (Tart") is Yahoo's CEO and a director and has been 4 since January 2009. Bartz is also Yahoo's President and has been since April 2009. Bartz 5 knowingly, recklessly, or with gross negligence: (1) made improper statements regarding the 6 Company's business health, operations, and future; and (ii) failed to implement an effective 7 system of internal and financial controls to ensure the Company's assets, in particular its most 8 valuable asset, Alibaba, were protected. Finally, on information and beliet Bartz has agreed in 9 principle to an arrangement with defendant Ma that would not result in him returning Ahpay to 10 Alibaba or him paying Alibeha fair value for Alipay. Bartz is named as a defendant in a 11 sectuities class action complaint that alleges she violated sections 10(b) and 20(a) of the 12 Securities Exchange Act of 1934. Bartz is a citizen of California. 13 14. Defendant Yang is a Yahoo director and has been since March 1995. Yang was 14 also Yahoo's CEO Officer from June 2007 to January 2009. Yang co-founded Yahoo in 1994. 15 Yang is also a director of Alibaba, a privately-held Company which manages investments in

16 several Asia-based Internet businesses, and has been Since 2005. Yang knowingly or recklessly: 17 (i) made improper statements regarding the Company's business health, operations, and future; 18 and (ii) failed to implement an effective system of internal and financial controls to ensure the 19 Company's assets, in particular its most valuable asset, Alibaba, were protected. Finally, on 20 information and ballet Yang has agreed to principle to an arrangement with defendant Ma that 21 would not result in him returning Alipay to Alibaba or him paying Alibaba fair value for Alipay. 22 Yang is also named as a defendant in a securities class action complaint that alleges he violated 23 sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Yang is a citizen of California. 24 15. Defendant Roy J. Bostock (13ostock") is Yahoo's Chairman of the Board and has 25 been since January 2008 and a director and has been since May 2003. Bostock knowingly or 26 reckleasly. (i) made improper statements regarding the Company's business health, operations, 27 and future, and (ii) failed to implement an effective system of internal and financial controls to 28 ensure the Company's assets, in particular its most valuable asset, Alibaba, were protected. - 4 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page6 of 29

1 Finally, on information and ballet Bostock has agreed in principle to an arrangement with 2 defendant Ma that would not result in him returning Alipay to Alibaba or him paying Alibaba 3 fair value for Alipay. Rostock is a citizen of New York. 4 16. Defindant Patti S. Hart ("Hart") is a Yahoo director and has been since June 5 2010. Hart is also a member of Yahoo's Audit Committee and has been since June 2010. Hart 6 knowingly or recklessly: (1) made improper statements regarding the Company's business health, 7 operations, and future; and (ii) failed to implement an effective system of internal and financial 8 controls to ensure the Company's assets, in particular its most valuable asset, Alibaba, were 9 protected. Finally, on information and belief; Hart has agreed in principle to an arrangement 10 with defendant Ma that would not result in him returning Alipay to Alibaba or him paying 11 Alibaba fair value for Alipay. Hart is a citizen of Nevada. 12 17. Defendant Susan M. James ("James") is a Yahoo director and has been since 13 January 2010. James is also Chair of Yahoo's Audit Committee and has been since January 14 2010. James knowingly or recklessly: (1) made improper statements regarding the Company's 15 business health, operations, and future; and (ii) failed to implement an effective system of 16 internal and financial controls to ensure the Company's assets, in particular its most valuable 17 asset, Alibaba, were protected. Finally, on information and belief; James has agreed in principle 18 to an arrangement with defendant Ma that would not result in him returning Alipay to Alibaba or 19 him paying Alibaba fair value for Alipay. James is a citizen of California. 20 18. Defendant Vyomesh Jot ("Josh?) is a Yahoo director and has been since July 21 2005. Jot is also a member of Yahoo's Audit Committee and has been since at least June 2008 22 and a member of the Transactions and Strategic Planning Committee and has been since at least 23 April 2011. Jot knowingly or recklessly: (i) made improper statements regarding the 24 Company's business health, operations, and future; and (ii) failed to implement an effective 25 system of internal and financial controls to ensure the Company's assets, in particular its most 26 valuable asset, Alibaba, were protected. Finally, on information and belief; Joshi has agreed in 27 principle to an arrangement with defendant Ma that would not result in him returning Alipay to 28 Alibaba or him paying Alibaba fair value for Alipay. Jot is a citizen of California.

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1 19. Defendant Arthur H. Kern ("Kern") is a Yahoo director and has been since 2 January 1996. Kern knowingly or recklessly: (i) made improper statements regarding the 3 Company's business health, opera/ions, and fixture; and (ii) failed to implement an effective 4 system of internal and financial controls to ensure the Company's assets, in particular its most 5 valuable asset, Alibaba, were protected. Finally, on information and belief, Kern has agreed in 6 principle to an arrangement with defendant Ma that would not result in him retaining Alipay to 7 Alibaba or him paying Alibaba fair value for Alipay. Kern is a citizen of California. 8 20. Defendant Brad D. Smith ("Smith") is a Yahoo director and has been since June 9 2010. Smith is also a member of Yahoo's Transactions and Strategic Planning Committee and 10 has been since at least April 2011. Smith knowingly or recklessly (i) made improper statements 11 regarding the Company's business health, operations, and fixture; and (ii) failed to implement an 12 effective system of internal and financial controls to ensure the Company's assets, in particular 13 its most valuable asset, Alibaba, were protected. Finally, on information and belief, Smith has 14 agreed in principle to an arrangement with defendant Ma that would not result in him returning 15 Alipay to Alibaba or him paying Alibaba fair value for Alipay. Smith is a citizen of California. 16 21. Defendant Gary L. Wilson ("Wilson") is a Yahoo director and has been since 17 November 2001. Wilson is also a member of Yahoo's Audit Committee and has been since at 18 least June 2008. Wilson knowingly or recklessly (i) made improper statements regarding the 19 Company's business health, operations, and future; and (ii) failed to implement an effective 20 system of internal and financial controls to ensure the Company's assets, in particular its most 21 valuable asset, Alibaba, were protected. Finally, on information and belief, Wilson has agreed in 22 principle to an arrangement with defendant Ma that would not result in him returning Alipay to

23 Alibaba or him paying ALibaba Thir value for Alipay. Wilson is a citizen of California. 24 22. Defendant Ma is Alibaba's Chairman and CEO and has been since 1999, Ma is 25 also a director of SOFTBANK Corp. ("SOFTBANK"), a leading digital information Company 26 and investor in Alibaba, and has been since June 2007. Defendant Ma caused Alibaba to transfer 27 its entire equity interest in Mipay to another private Company he controlled for only $46 million. 28 - 6 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 By doing so, Ma usurped Alibaba's interest in Alipay and Yahoo's valuable financial interest in

2 Alipay at a blatantly inadequate and unfair price. Ma is a citizen of China.

3 23. The defendants identified in iiN13-14 are refound to herein as the "Officer

4 Defendants." The defendants identified in W13-21 are referred to herein as the "Director

5 Defendants." The defendants identified in W16-18, 21 are referred to herein as the "Audit 6 Committee Defendants." The defendants identified in 111113-21 are referred to herein as the 7 'Yahoo Defendants." The defendants identified in W13-22 are referred to herein as the 8 "Individual Defendants."

9 DUTIES OF THE YAHOO DEFENDANTS 10 Fiduciary Duties 11 24. By reason of their positions as officers, directors, and/or fiduciaries of Yahoo and 12 because of their ability to control the business and corporate affairs of Yahoo, the Yahoo 13 Defendants owed and owe Yahoo and its shareholders fiduciary obligations of trust, loyalty, 14 good faith, and due care, and were and are required to use their utmost ability to control and 15 manage Yahoo in a fair, just, honest, and equitable manner. The Yahoo Defendants were and are 16 required to act in furtherance of the best interests of Yahoo and its shareholders so as to benefit 17 all shareholders equally and not in furtherance of their personal interest or benefit

18 25. Each officer and director of the Company owes to Yahoo and its shareholders the 19 fiduciary duty to exercise good faith and diligence in the administration of the affairs of the 20 Company and in the use and preservation of its property and assets, and the highest obligations 21 of fair dealing. In addition, as officers and/or directors of a publicly held company, the Yahoo 22 Defendants had a duty to promptly disseminate accurate and truthful information with regard to 23 the Company's operations, performance, management, projections, and forecasts so that the 1 24 market price of the Company's stock would be based on truthful and accurate information. 25 Additional Dudes of the Audit Committee Defendants 26 26. In addition to these duties, under the Company's Audit Committee Charter in 27 effect since at least 2010, the Audit Committee Defendants, Hart, James, Joshi, and Wilson, 28 owed specific duties to Yahoo to oversee the Company's accounting and financial reporting - 7 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 process. In particular, the Audit Committee was and is charged with reviewing the Companys 2 earnings press releases, guidance, and quarterly and annual financial statements. 3 27. The Audit Committee's Charter also expressly provides that the Audit Committee

4 must review and discuss with management and the independent auditors, periodically, the 5 following: 6 (a) all significant deficiencies in the design or operation of internal controls 7 which could adversely affect the Company's ability to record, process, summarize, and report 8 financial date, including any material weaknesses in internal controls identified by the 9 Company's independent auditors; 10 (b) any fraud, whether or not material, that involves management or other 11 employees who have a significant role in the Company's internal controls; and

12 (c) any significant changes in internal controls or in other factors that could 13 significantly affect internal controls, including any corrective actions with regard to significant 14 deficiencies and material weaknesses. 15 Control, Access, and Authority 16 28. The Yahoo Defendants, because of their positions of control and authority as 17 officers and/or directors of Yahoo, were able to and did, directly and/or indirectly, exercise 18 control over the wrongful acts complained of herein, as well as the contents of the various public 19 statements issued by the Company. 20 29. Because of their advisory, executive, managerial, and directorial positions with 21 Yahoo, each of the Yahoo Defendants had access to adverse, non-public information about the 22 financial condition, operations, and growth prospects of Yahoo. While in possession of this 23 material, non-public information, the Yahoo Defendants made improper representations 24 regarding the Company, including information regarding Yahoo's relationship with Alibaba and 25 Alipay. 26 30. At all times relevant hereto, each of the Yahoo Defendants was the agent of each 27 of the other Yahoo Defendants and of Yahoo, and was at all times acting within the course and 28 scope of such agency. - 8 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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I Reasonable and Prudent Supervision 2 31. To discharge their duties, the officers and directors of Yahoo were required to 3 exercise reasonable and prudent supervision over the management, policies, practices, and 4 controls of the financial affairs of the Company. By virtue of such duties, the officers and 5 directors of Yahoo were required to, among other things- 6 (a) properly and accurately guide investors and analysts as to the true 7 financial condition of the Company at any given time, including making accurate statements 8 about the Company's financial health; 9 (b) ensure that the Company complied with its legal obligations and 10 requirements, inclnding acting only within the scope of its legal authority and disseminating 11 truthful and accurate statements to the investing public; 12 (e) refrain from acting upon material, inside corporate information to benefit 13 themselves; 14 (d) conduct the affairs of the Company in an efficient, business-like manner 15 so as to make it possible to provide the highest quality performance of its business, to avoid 16 wasting the Company's assets, and to maximize the value of the Company's stock; 17 (e) remain informed as to how Yahoo conducted its operations, and, upon 18 receipt of notice or information of imprudent or unsound conditions or practices, make 19 reasonable inquiry in connection therewith, and take steps to correct such conditions or practices 20 and make such disclosures as necessary to comply with securities laws; and 21 (f) ensure that the Company was operated in a diligent, honest, and prudent 22 manner in compliance with all applicable laws, rules, and regulations. 23 Breaches of Duties 24 32. Each Yahoo Defendant, by virtue of his or her position as a director and/or 25 officer, owed to the Company and to its shareholders the fiduciary duty of loyalty and good faith 26 and the exercise of due care and diligence in the management and administration of the affairs of 27 the Company, as well as in the use and preservation of its property and assets. The conduct of 28 the Yahoo Defendants complained of herein involves a knowing and culpable violation of their - 9 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 • 11-cv-03302-PSG Documentl Filed07/06/11 Pagel 1 of 29

1 obligations as officers and directors of Yahoo, the absence of good faith on their part, and a 2 reckless disregard for their duties to the Company and its shareholders that the Yahoo 3 Defendants were aware or should have been aware posed a risk of serious injury to the 4 Company. The conduct of the Yahoo Defendants who were also officers and/or directors of the 5 Company have been ratified by the remaining Yahoo Defendants who collectively comprised all 6 of Yahoo's Board. 7 33. The Yahoo Defendants breached their duty of loyalty and good faith by allowing 8 defendants to cause, or by themselves causing, the Company to make improper statements. The 9 Yahoo Defendants also failed to prevent the other Yahoo Defendants from taking such illegal 10 actions. The Yahoo Defendants also breached their duty of loyalty by failing to properly monitor 11 and set up internal controls to monitor the Company's most important asset, Alibaba. In 12 addition, as a result of defendants' illegal actions and course of conduct, the Company is now the 13 subject of a class action lawsuit that alleges violations of securities laws. As a result, Yahoo has 14 expended, and will continue to expend, significant sums of money. 15 CONSPIRACY, AIDING AM) ABETTING, AND CONCERTED ACTION 16 34. In committing the wrongful acts alleged herein, the Yahoo Defendants have 17 pursued, or joined in the pursuit of a common course of conduct, and have acted in concert with 18 and conspired with one another in furtherance of their common plan or design. In addition to the 19 wrongful conduct herein alleged as giving rise to primary liability, the Yahoo Defendants further 20 aided and abetted and/or assisted each other in breaching their respective duties. 21 35. During all times relevant hereto, the Yahoo Defendants, collectively and 22 individually, initiated a course of conduct that was designed to and did: (i) deceive the investing 23 public, including shareholders of Yahoo, regarding the Yahoo Defendants' management of 24 Yahoo's operations; and (ii) enhance the Yahoo Defendants' executive and directorial positions at 25 Yahoo and the profits, power, and prestige that the Yahoo Defendants enjoyed as a result of 26 holding these positions. In furtherance of this plan, conspiracy, and course of conduct, the 27 Yahoo Defendants, collectively and individually, took the actions set forth herein. 28 - 10 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5:11-cv-03302-PSG Document1 Filed07/06/11 Pagel 2 of 29

1 36. The Yahoo Defendants engaged in a conspiracy, common enterprise, and/or 2 common •course of conduct. During this time, the Yahoo Defendants caused the Company to 3 issue improper financial statements. 4 37. The purpose and effect of the Yahoo Defendants' conspiracy, common enterprise, 5 and/or common course of conduct was, among other things, to disguise the Yahoo Defendants' 6 violations of law, breaches of fiduciary duty, waste of corporate assets, and unjust enrichment; 7 and to conceal adverse infornaation concerning the Company's operations, financial condition, 8 and future business prospects 9 38. The Yahoo Defendants accomplished their conspiracy, common enterprise, and/or 10 common course of conduct by causing the Company to purposefully or recklessly release 11 improper statements. Because the actions described herein occurred under the authority of the 12 Board, each of the Yahoo Defendants was a direct, necessary, and substantial participant in the 13 conspiracy, common enterprise, and/or common course of conduct complained of herein. 14 39. Each of the Yahoo Defendants aided and abetted and rendered substantial 15 assistance in the wrongs complained of herein. In taking such actions to substantially assist the 16 commission of the wrongdoing complained of herein, each Yahoo Defendant acted with 17 knowledge of the primary wrongdoing, substantially assisted in the accomplishment of that 18 wrongdoing, and was aware of' his or her overall contribution to and furtherance of the 19 wrongdoing. 20 BACKGROUND ON YAHOO AND ALIBABA 21 40. Yahoo, based in Sunnyvale, California, is a global digital media Company. 22 Despite its global brand, Yahoo's business has languished for the past several years, as the 23 Company has largely failed to keep up with Google Inc. and struggled to grow in highly 24 regulated and politicized fast-growing markets like China. 25 41. To overcome this situation, in 2005, Yahoo invested $1 billion for a 40% interest 26 in Alibaha, China's largest c-commerce company, and one seat on Alibaha's four-person board of 27 directors. As a part of their strategic partnership, Yahoo also turned over operation of Yahoo 28 China to Alibaha. In a shareholder report discussing the Yahoo-Alibaba strategic partnership, - 11 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 and heralding the transaction as a great opportunity for Yahoo to expand its business in China, 2 Yahoo stated:

3 Through this transaction, the Company has combined its leading search capabilities with Alibaba's leading online marketplace and online payment 4 systems and Alibaba's strong local presence, expertise and vision in the China 5 market. These factors contributed to a purchase price in excess of the Company's share of its fair value of Aliababa's net tangible and intangible assets acquired 6 resulting in goodwilL 7 42. As the remainder of the decade unfolded, Alibaba grew rapidly, but Yahoo not so 8 much. Thus, by 2011, Yahoo's 40% stake in Alibaba had grown significantly in importance to 9 Yahoo and, in fact, had become, according to many industry experts, Yahoo's most valuable 10 corporate asset, accounting for as much as two-thuds of Yahoo's entire $21 billion market 11 capitalization. 12 43. For example, as famed hedge fund manager David Einhorri's Greenlight Capital 13 wrote about Yahoo in April 2011, "Me would not be surprised if YHOO's 40% stake in Alibaba 14 Group alone was ultimately worth YHOO's entire current market value." Greenlight Capital 15 continued

16 We believe that Yahoo's most valuable asset is its 40% stake in Alibaba Group's still-private holdings, which are separate and distinct fowl its ownership in the 17 publicly-traded Alibaba.com, which we are essentially getting for free .... 18 44. Until recently, one of Alibaba's most profitable "still-private holdings" was 19 Alipay, an e-commerce payment system similar to eBay Inc.'s PayPal, As China's economy 20 grew rapidly during the late 2000s, so did Alipay's profits. According to U.S. securities analysts, 21 including Brett Harriss of Gabelli & Co, Alipay is worth more than $5 billion. But most 22 importantly for Yahoo and its shareholders, Yahoo, as Alibaba's largest shareholder, had a direct, 23 connection to the profits stemming from Alipay's fast-growing and lucrative online payment 24 system.

25 45. Doing business in China can be complex and difficult for U.S. companies. 26 Yahoo's experience in China has been no different But, unlike other large U.S. publicly traded 27 companies, Yahoo's single most valuable corporate asset is an investment tied up in a foreign 28 - 12 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 11-cv-03302-PSG Document1 Filed07/06/11 Pagel 4 of 29

1 corporation located in China, more than 4,000 miles away from Yahoo's corporate headquarters 2 located in Sunnyvale, California. 3 46. Because of this unique and delicate risk specific to Yahoo, the Yahoo Defendants, 4 as Yahoo's directors owed the Company a fiduciary obligation to safeguard Yahoo's investment 5 in Alibaba and, at all times, to shield it against unnecessary risks of loss, including from 6 misappropriation of assets or usurpation of corporation opportunities by Alibaba's insiders, 7 including defendant Ma, Alibaba's Chairman and CEO. However, as detailed, below, the Yahoo 8 Defendants utterly failed to implement the internal controls and systems for protecting Yahoo's 9 material investment in Alibaba, with disastrous results for Yahoo and its shareholders

10 THE ALEPAY OWNERSHIP TRANSFER AND THE YAHOO DEFENDANTS' IMPROPER STATEMENTS 11

12 47. According to Alibaba, over the past three years the Alibaba board of directors 13 (which defendant Yang was a member) repeatedly discussed new regulatory requirements in 14 China that could require the transfer of Alipay into different ownership. At a July 2009 Alibaba 15 board of director's meeting, Alibaba management told the board of directors that it would 18 transfer Alipay to Chinese ownership. In August 2010, Alibaba transferred Alipay's equity to 17 another private Company controlled by defendant Ma by August 2010. Thereafter, Alipay was / 8 deconsolidated, leaving Alibaba without any ownership interest in Alipay, and Yahoo without

19 any connection to the profits stemming from Alipay's lucrative e-COMIIIICIte payment system. 20 According to some reports, Ma paid Alibaba only $46 million for Alipay, despite its estimated 21 market value of $5 billion. 22 48. Between at least August 2010 and April 2011, the Yahoo Defendants caused the 23 Company to issue a series of reports to shareholders that failed to disclose that defendant Ma 24 transferred Ali-babas ownership in Alipay to another private Company he controlled. For 25 example, in Yahoo's SEC report on Form 10-Q for the quarter ended September 30, 2010, filed 28 on November 8, 2010, when discussing Yahoo's investment in Alibaba and its impact on Yahoo's ' 27 business, the Company stated: 28 - 13 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 11-cv-03302-PSG Document1 Filed07/06/11 Page15 of 29

Equity Investment in Alibaba Group. The investment in Alibaba Group Holding 1 Limited ("Alibaba Group") is accounted for using the equity method, and the total 2 investment, including net tangible assets, identifiable intangible assets and goodwill, is classified as part of investments in equity interests on the Companys 3 condensed consolidated balance sheets. The Company records its share of the results of Alibaba Group, and its consolidated subsidiaries, and any related 4 amortization expense, one quarter in arrears, within earnings in equity interests in the condensed consolidated statements of income. 5 * * 6 7 The loss from operations of $71 million for the nine months ended June 30, 2010 is primarily due to Alibaba Group's impairment loss of $192 million on goodwill 8 related to the business that Yahoo! contributed to Alibaba Group. This impairment does not impact Yahool's earnings in equity interests as Yahool's 9 investment balance related to this contributed business was carried over at cost and therefore Yahoo! has no basis in the impaired goodwill. 10 11 The Company also has commercial arrangements with Ali-baba Group to provide technical, development, and advertising services. For the three and nine months 12 ended September 30, 2009 and 2010, these transactions were not material.

13 49. Similarly, in Yahoo's Annual Report on Form 10-K for the year ended December 14 31, 2010, filed with the SEC on February 28, 2011, defendants Bartz, Bostock, Hart, James, 15 Jot, Kern, Smith, Wilson, and Yang failed to disclose any facts regarding the transfer of Alipay 16 from Alibaba by defendant Ma. Instead, in the 2010 Form 10-K stated:

17 Equity Investment in Allbaba Group. On October 23, 2005, the Company 18 acquired approximately 46 percent of the outstanding common stock of Alibaba Group, which represented approximately 40 percent on a fully diluted basis, in 19 exchange for $1.0 billion in cash, the contribution of the Company's China-based businesses, including 3721 Network Software Company Limited ("Yahoo! 20 China"), and direct transaction costs of $8 million. Another investor in Alibaba Group is SOFTBANK. Alibaba Group is a privately-held Company. Through its 21 investment in Alibaba Group, the Company has combined its search capabilities 22 with Alibaba Group's leading online marketplace and online payment system and Alibaba Group's strong local presence, expertise, and vision in the China market_ 23 These factors contributed to a purchase price in excess of the Company's share of the fair value of Alibaba Group's net tangible and intangible assets acquired 24 resulting in goodwill. 25 The investment in Alibaba Group is being accounted for using the equity method, 26 and the total investment, including net tangible assets, identifiable intangible assets and goodwill, is classified as past of investments in equity interests on the 27 Company's consolidated balance sheets. The Company records its share of the results of Alibaba Group and any related amortization expense, one quarter in 28 - 14 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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arrears, within earnings in equity interests in the consolidated statements of 1 income. 2 The Company's initial purchase price was based on acquiring a 40 percent equity 3 interest in Alibaba Group on a fully diluted basis; however, the Company acquired a 46 percent interest based on outstanding shares. In allocating the 4 initial excess of the carrying value of the investment in Alibaba Group over its proportionate share of the net assets of Alibaba Group, the Company allocated a 5 portion of the excess to goodwill to account for the estimated reductions in the 6 carrying value of the investment in Alibaba that may occur as the Company's equity interest is diluted to 40 percent. As of December 31, 2009 and 2010, the 7 Company's ownership interest in Alihaba Group was approximately 44 percent and 43 percent, respectively.

In the initial public offering ("IRO") of Alibaha.com on November 6, 2007, 9 Alibaba Group sold an approximate 27 percent interest in Alibaba.com through the issuance of new Alibaba.00rn shares, the sale of previously held shares in 10 Alibaba.com, and the exchange of certain Alibaba Group shares previously held 11 by Alibaba Group employees for shares in Alihaba.com, resulting in a gain on disposal of interests in Alibaba.com . Accordingly, in the first quarter of 2008, the 12 Company recorded a non-cash gain of $401 million, net of tax, within earnings in equity interests representing the Company's share of Alibaba Group's gain, and 13 the Company's ownership interest in Alibaba Group increased approximately 1 percent from 43 percent to 44 percent. 14 * * * 15 16 Since acquiring its interest in Alibaba Group, the Company has recorded, in retained earnings, cumulative earnings in equity interests of $308 million and 17 $350 million, respectively as of December 31, 2009 and 2010. 18 The Company also has commercial arrangements with Alibaba Group to provide technical, development, and advertising services. For the years ended December 19 31, 2009 and 2010, these transactions were not material. 20 Equity Investment in Alibaba.com Limited. As part of the LPO of Alibabasom, 21 the Company purchased an approximate 1 percent interest in the common stock of Alibaba.com. This investment was accounted for using the equity method, 22 consistent with the Company's investment in Alibaba Group, which holds the controlling interest in Alibaba.corn. In September 2009, the Company sold its 23 direct investment in Alibaba.com for net proceeds of $145 million and recorded a 24 pre-tax gain of $98 million in other income, net

25 50. On April 19, 2011, Yahoo issued a press release announcing its first quarter 2011 26 financial results. The Company reported earnings of $223 million, or $0.17 diluted earnings per 27 28 - 15 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5:11-cv-03302-PSG Documentl Filed07106111 Pagel 7 of 29

1 share, and revenue of $1,064 million. Notably absent from these were positive results was any 2 mention of defendant Ma's transfer of Alipay.

3 DEFENDANT MA'S TRANSFER OF ALIPAY TO HIMSELF IS REVEALED 4 51. On May 10, 2011, Yahoo revealed, buried in the text of its Quarterly Report on 5 Form 10-Q for the quarter ended March 31, 2011, that "the ownership of Alibaba Group's online 6 payment business, Aftpay, was restructured so that 100 percent of its outstanding shares are held 7 by a Chinese domestic Company which is majority owned by Alibaba Group's chief executive 8 officer, [defendant Ma]." 9 52. On this news, the trading price of Yahoo shares collapsed, wiping out more than 10 $3 billion in valuable shareholders' equity, as shareholders feared that Yahoo's stake in Alibaba 11 could be weakened by the misappropriation of Alipay by defendant Ma. Yahoo's shareholders' 12 equity still has not recovered. 13 53. On May 12, 2011, Yahoo issued a press release entitled "Yahoo! Inc. Releases 14 Statement Regarding Alipay." It was in this press release that the Company revealed that it knew 15 about the Alipay ownership transfer since at least March 31, 2011, almost three weeks before the 16 Company announced its positive first quarter financial results. In particular, the press release 17 stated:

18 On March 31, 2011, Yahoo! and SOFTBANK were notified by Alibaba Group of 19 two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership 20 of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011. 21 Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba 22 Group and obtaining a better understanding of this complex situation.

23 Yahoo! continues to work closely with Alibaba and Softbank to protect economic 24 value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of 25 all stakeholders. 26 54. Alibaba responded to Yahoo's press release on May 13, 2011, refuting the • 27 allegation that the Yahoo Board was surprised by the Alipay ownership transfer. In particular, 28 Aftbaba stated that its board of directors had been meeting over the past three years to discuss - 16 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 Alipay's ownership structure, and was told in July 2009 that Alipay would be transferred to 2 Chinese ownership. The press release stated:

3 Alibaba Group management has taken actions to comply with Chinese law 4 governing payment companies in order to secure a license to continue operating Alipay. The Alibaha Group board discussed at numerous board meetings over the 5 past three years the impending imposition of new regulatory requirements on the online payment industry, including ownership structures, as they were being 6 developed in China, and was told in a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership. The actions 7 taken by Alibaba Group management to comply with the licensing regulations and to ensure continuation of operations are in the best interests of the Company and its shareholders The continued operation of Alipay is essential to the 9 preservation and enhancement of the value of Alibaba Group's businesses such as Taobao, as Alipay is the payments platform for e-commerce in these businesses. 10 11 55. On May 15, 2011, Yahoo issued a press release entitled "Joint Statement from 12 Alibaba Group and Yahoo! Inc. Regarding AliPsYrn which stated in Part: 13 "Alibaba Group, and its major stockholders Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to resolve 14 the outstanding issues related to Alipay in a manner that serves the interests of all 15 shareholders as soon as possible." 16 56. Stunned by the Alipay transfer, Yahoo shareholders and financial analysts alike 17 questioned why the Yahoo Defendants had not paid closer attention to the possible change in 18 ownership of Alipay over the years and why the Yahoo Defendants elected not to detail the 19 situation in its April 2011 earnings press release call. For example, on May 13, 2011, The Wall 20 Street Journal quoted Stifel, Nicolaus & Company analyst Jordan Robert stating: 21 "If Yahoo knew of this transaction yet failed to disclose it, for whatever reason, investors could lose faith in other Yahoo disclosure;" Stifel Nicolaus analyst 22 Jordan Rohan said in a note to clients. "If Yahoo did not know about it, trust issues loom even larger, as one could conclude that other material transactions 23 may have occurred and were not disclosed." 24 57. Similarly, on May 23, 2011, Bloomberg quoted Gamco Investors Inc. portfolio 25 manager Larry Haverty stating: • 26 If an asset disappears, that's a risk.... This disappearance apparently took place 27 long before it was announced. That would indicate to me the corporation's risk- control procedures, which are a board responsibility, were not operating in the 28 way that they should have. - 17 - VERIFIED SHAREHOLDER DERIVATWE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Pagel 9 of 29

1 58. On May 31, 2011, reports began to surface that Yahoo and defendant Ma reached 2 an agreement in principle over the ownership transfer of Alipay. According to these reports, as 3 part of the resolution, Alibaba and Ma would promise not to hurt the value of Taobao, an e- 4 commerce site owned by Ahlaba. In addition, the resolution may include plans for the Ma- 5 controlled entity to provide some sort of additional compensation to Alibaba for the Alipay 6 transfer. This agreement, as reported, is woefully in adequate to compensate Yahoo for the 7 billions of dollars in lost in the Alipay transfer or the billions of dollars in liability it now faces.

8 DAMAGES TO YAHOO 9 59. As a result of the Individual Defendants' improprieties, Yahoo disseminated 10 improper public statements concerning its business health and prospects, in light of the loss of its 11 ownership in Alipay. These improper statements have devastated Yahoo's credibility as reflected 12 by the Company's $3.57 billion, or almost 15%, market capitalization loss. 13 60. Further, as a direct and proximate result of the Individual Defendant& actions, 14 Yahoo has expended, and will continue to expend, significant sums of money, including costs 15 incurred from defending and paying any settlement in the class action for violations of federal 16 securities laws and benefits and bonuses paid to the Yahoo Defendants even while they were 17 breaching their fiduciary duties to the Company. 18 61. Finally, Alibaba reportedly only received $46 million for an asset worth $5 19 billion. Based on Yahoo's 40% ownership interest in Alibaba, the Company has lost an asset 20 worth $2 billion to it

21 DERIVATIVE AND DEMAND FUTILITY ALLEGATIONS 22 62. Plaintiff incorporates by reference and rea/leges each and every allegation 23 contained above as though fully set forth herein. 24 63. Plaintiff brings thic action derivatively in the right and for the benefit of Yahoo to 25 redress injuries suffered, and to be suffered, by Yahoo as a direct result of the breaches of 26 fiduciary duty, gross mismanagement, abuse of control, waste of corporate assets, and unjust 27 28 - 18 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

Ca se5. 11-cv-03302-PSG Documentl Filed07/06/11 Page20 of 29

1 enrichment, as well as the aiding and abetting thereof, by the Yahoo Defendants. Yahoo is 2 named as a nominal defendant solely in a derivative capacity. 3 64. Plaintiff will adequately and fairly represent the interests of Yahoo in enforcing 4 and prosecuting its rights. 5 65. Plaintiff was a Yahoo shareholder at the time of the wrongdoing of which he 6 complains, and is currently a Yahoo shareholder 7 66. At the time plaintiff filed this case, the Board of Yahoo consisted of the following 8 ten individnals: David Kenny, and defendants Bartz, Bostock, Hart, James, Joshi, Kern, Smith, 9 Wilson, and Yang. Plaintiff has not made any demand on the present Board to institute this 10 action because such a demand would be a futile, wasteful, and useless act, as set forth below. 1/ 67. Defendants Bartz, Rostock, Hart, James, Joshi, Kern, Smith, Wilson, and Yang 12 have known about defendant Ma's transfer of Alipay to himself from Alibaba since at least 13 March 31, 2011, yet have not instituted litigation against Ma. Further, according to reports, 14 Yahoo has reached an agreement in principle with Ma over the Alipay transfer that does not 15 involve him returning it to Alibaba, and on information and belief, the potential payment he is 16 considering is not close to the actual value of Alipay. Rather, the main consideration defendant 17 Ma is offering is merely a promise not to hurt one of Alibaba's other key assets, Taobao, an 18 obligation Ma is already under since he is CEO of Alibaba. In other words, the Board is set to 19 allow Ma to essentially take a $5 billion asset from Alibaba in exchange for a promise to do 20 something he is already required to do. The Board's decision to essentially give away an asset 21 worth billions of dollars is not a decision protected by the business judgment rule and 22 demonstrates the futility of making a demand upon the Board. 23 68. In addition to being the founder and "Chief Yahoo!" of the Company, defendant 24 Yang sits on the Board of Alibaba. Over the past three years, Yang was told about new 25 regulatory requirements in China concerning the online payment industry regarding ownership 26 structure of the payment entities dining Board meetings. On information and ballet the potential 27 transfer of Alipay to defendant Ma was discussed at these meetings. Moreover, at the July 2009 28 Alibaba board of directors meeting, Alibaba informed its directors, including Yang, about the - 19 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 decision to transfer Alipay ownership to Ma. Nevertheless, he did not disclose the Alipay 2 transfer to the public and made improper statements concerning the Company's business for 3 almost two years. Therefore, Yang aces a substantial likelihood of liability, raising a reasonable 4 doubt about his ability to disinterestedly consider a demand. 5 69. Moreover, defendant Yang, as Yahoo's representative on the Alibaba board of 6 directors was charged with monitoring Alibaba and its largest asset, Alipay. Thus, Yang had a 7 strict fiduciary duty to ensure that Yahoo's best interests were being represented by the Alibaba 8 board of directors. Nevertheless, Yang oversaw Alibaba's transfer of its $5 billion asset to

9 defendant Ma for only $46 million. This complete abdication of duties subjects Yang to a 10 substantial likelihood of liability; raising a reasonable doubt about his ability to disinterestedly 11 consider a demand. 12 70. Demand is futile as to defendant Bartz because she faces a substantial likelihood 13 of liability. Defendant Bartz, as the Company's CEO and President was ultimately responsible 14 for the Company's operations, financial statements, and internal controls. As detailed herein, 15 Bartz, however, made a number of improper statements concerning the Company's business 16 health and prospects that failed to reveal defendant Ma's self-dealing transfer of Alipay to 17 himself Instead, Bartz continued to present Yahoo's investment in Alibaba as if it still owned 18 Alipay. 19 71. Defendants Bartz, Bostock, Hart, James, Joslai, Kern, Smith, Wilson, and Yang all 20 face a substantial likelihood of liability by patently failing in their duty to implement adequate 21 internal controls to monitor and protect Yahoo and its assets, including its most important assets, 22 its ownership interests in Alipay. One specific example of their failure to implement adequate 23 internal controls and protect the Company's assets is defendants Bartz, Bostock, Hart, James, 24 Jot, Kern, Smith, Wilson, and Yang's troubling decision to only appoint one director to the 25 board of directors of Alibaba. As The Wall Street Journal reported on May 31, 2011, Yahoo had • 26 the option of placing two board members of Alibaba's board, stating: "Yahoo might have been 27 better informed had it filled the second seat on Mibaba's board to which it was entitled.... Two 28 seats would give you more attention paid." This failure to take advantage of a key monitoring - 20 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page22 of 29

1 1 and decision making role concerning Yahoo's most valuable asset represents a complete 2 abdication of fiduciary duty by defendants Bartz, Bostock, Hart, James, Joshi, Kern, Smith, 3 Wilson, and Yang. Defendant Bartz, Rostock, Hart, James, Joshi, Kern, Smith, Wilson, and 4 Yang's failure significantly harmed Yahoo when defendant Ma transfellad Alipay to himself for

5 a patently inadequate amount According, demand upon defendants Bartz, Rostock, Hart, James, 6 Joshi, Kern, Smith, Wilson, and Yang is futile. 7 72. Defendants Bartz, Bostock, Hart, James, Jot, Kern, Smith, Wilson, and Yang 8 also face a substantial likelihood of liability for making improper statements about the 9 Company's business health and prospects. In particular, since at least August 2010 through May 10 2011, Yahoo issued improper statements concerning Yahoo's investment in Alibaba and its status 11 and impact on Yahoo's business and affairs. Defendants Bartz, Rostock, Hart, James, Joshi, 12 Kern, Smith, Wilson, and Yang all made improper statements during this time because they

13 either knew OT in reckless disregard for the fiduciary duties did not know that Alibaba had 14 transferred ownership to an entity controlled by defendant Ma. Further, it is undisputed that 15 since at least March 31, 2011, the Board knew about Alibaba's transfer of ownership of Alipay to 16 defendant Ma. Despite knowing about this transfer, the Board allowed Yahoo to issues its April 17 19, 2011, press release announcing its first quarter financial results without disclosing the Alipay 18 ownership transfer. Defendants Bartz, Bostock, Hart, James, Joshi, Kern, Smith, Wilson, and 19 Yang knowing complete and total disregard for their duty of candor cannot be a decision 20 protected by the business judgment rule and furthermore is in violation of their fiduciary duties 21 of loyalty. Accordingly, demand upon defendants Bartz, Bostoelc, Hart, James, Jot, Kern, 22 Smith, Wilson, and Yang is futile. 23 73. Defendants Hart, James, Joshi, and Wilson, as members of the Audit Committee, 24 had additional and heightened responsibilities, including reviewing and discussing: (1) the 25 Company's earnings press releases, as well as financial information and earnings guidance 26 provided by the Company to analysts and rating agencies; and (ii) the Company's internal 27 controls. Thus, the Audit Committee was responsible for overseeing and directly participating in

28 Yahoo's financial reporting process, as well as the governance of Yahoo's financial assets, - 21 - VERINED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page23 of 29

1 including Mamba. Nevertheless, defendants Hart, James, Joshi, and Wilson utterly failed to act 2 in accordance with their duties. Defendants Hart, James, Joshi, and Wilson each reviewed and 3 approved the improper public statements concerning the Company's business health and 4 prospects. The most blatant example of defendants Hart, James, Jot, and Wilson's failure to 5 abide by their duties is their review and approval of the April 19, 2011, press release announcing 6 the Company's first quarter 2011 financial results, which made no mention of the Alipay 7 ownership transfer. In addition, defendants Hart, James, Joshi, and Wilson, as members of the 8 Audit Committee, utterly failed to maintain adequate internal controls over Yahoo's most 9 valuable asset and participated in the preparation of improper financial statements and earnings 10 press releases that contained false and/or misleading material information about this asset 11 Accordingly, defendants Hart, James, Josh, and Wilson face a substantial likelihood of liability, 12 creating a reasonable doubt that making a demand upon them would have been futile. 13 74. Any suit by the current directors of Yahoo to remedy these wrongs would likely 14 expose the Yahoo Defendants to further violations of the securities laws that would result in civil 15 actions being filed against one or more of the Yahoo Defendants, and thus, they are hopelessly 16 conflicted in making any supposedly independent determination whether to sue themselves. 17 75. Yahoo has been and will continue to be exposed to significant losses due to the 18 wrongdoing complained of herein, yet the Yahoo Defendants and current Board have not filed 19 any lawsuits against themselves or others who were responsible for that wrongful conduct to 20 attempt to recover for Yahoo any part of the damages Yahoo suffered and will suffer thereby. 21 76. If the current directors were to bring this derivative action against themselves, 22 they would thereby expose their own misconduct, which underlies allegations against them 23 contained in class action complaints for violations of securities law, which admissions would 24 impair their defense of the class actions and greatly increase the probability of their personal 25 liability in the class actions, in an amount likely to be in excess of any insurance coverage 26 available to the Yahoo Defendants. In essence, they would be forced to take positions contrary 27 to the defenses they will likely assert in the securities class actions. This they will not do. Thus, 28 demand is futile.

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1 77. If Yahoo's current and past officers and directors are protected against personal 2 liability for their acts of mismanagement, and breach of fiduciary, duty alleged in this Complaint 3 by directors and officers' liability insurance, they caused the Company to purchase that insurance 4 for their protection with corporate funds, i.e., monies belonging to the stockholders of Yahoo. 5 However, due to certain changes in the language of directors' and officers' liability insurance 6 policies in the past few years, the directors' and officers' liability insurance policies covering the 7 defendants in this case contain provisions that eliminate coverage for any action brought directly 8 by Yahoo against these defendants, known as, inter alt., the "insured versus insured exclusion." 9 As a result, if these directors were to sue themselves or certain of the officers of Yahoo, there

10 would be no directors and officent insurance protection and thus, this is a further reason why

11 they will not bring such a suit. On the other hand, if the suit is brought derivatively, as this 12 action is brought, such insurance coverage exists and will provide a basis for the Company to

13 effectuate recovery. If there is no directors and officers' liability insurance at all, then the current 14 directors will not cause Yahoo to sue them, since they will face a large uninsured liability. 15 COUNT I 16 Against the Yahoo Defendants for Breach of Hsinchu,/ Duty 17 78. Plaintiff incorporates by reference and realleges each and every allegation

18 contained above, as though fully set forth herein. 19 79. The Yahoo Defendants, owed and owe Yahoo fiduciary obligations. By reason of 20 their fiduciary relationships, the Yahoo Defendants owed and owe Yahoo the highest obligation 21 of good faith, fair dealing, loyalty, and due care. 22 80. The Yahoo Defendants and each of them, violated and breached their fiduciary 23 duties of, care candor, good faith, and loyalty. More specifically, the Yahoo Defendants violated 24 their duty of good faith by consciously failing to prevent to Company from engaging in the 25 unlawful act complained of herein. 26 8 / . The Officer Defendants either knew, were reckless, or were grossly negligent in 27 failing to protect Yahoo's most valuable asset, Alibaba, including by failing to implement 28 adequate internal controls to monitor and secure Alibaba's assets. Further, the Officer - 23 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page25 of 29

1 Defendants either knew, were reckless is not knowing, or were grossly negligence in cause 2 Yahoo to make improper statements about Yahoo's business and affairs that failed to disclose 3 that Alipay was no longer part of Alibaba. 4 82. The Director Defendants, as directors of the Company, owed Yahoo the highest 5 duty of loyalty. These defendants breathed their duty of loyalty by recklessly permitting the 6 improper activity concerning the transfer of Alipay to defendant Ma. The Director Defendants 7 either knew or were reckless in not knowing that Ma transferred Alipay to himself and caused 8 Yahoo to make improper statements regarding Yahoo's business that failed to reveal this fact. 9 The Director Defendants also breached their duty to implement an internal controls system to

10 protect Yahoo's most valuable asset — its investment in Alibaba — from known and/or reasonably 11 anticipated risks of loss, including the misappropriation of Alibaba's assets by Ma. The Director 12 Defendants' failures to implement internal controls were conscious, and contrary to their duty to 13 act. Accordingly, the Director Defendants breached their duty of loyalty to the Company.

14 83. The Audit Committee Defendants, defendants Hart, James, Joshi, and Wilson, 15 breached their fiduciary duty of loyalty by approving the statements described herein which were 16 made during their tenure on the Audit Committee, which they knew or were reckless in not 17 knowing contained improper statements and omissions. The Audit Committee Defendants 18 completely and utterly failed in their duty of oversight, and defendants Hart, James, Jot, and 19 Wilson failed in their duty to appropriately review financial results, as required by the Audit 20 Committee Charter in effect at the time 21 84. As a direct and proximate result of the Yahoo Defendants' breathes of their 22 fiduciary obligations, Yahoo has sustained significant damages, as alleged herein. As a result of 23 the misconduct alleged herein, these defendants are liable to the Company.

24 85. Plaintiff on behalf of Yahoo, has no adequate remedy at law.

25 COUNT II 26 Against the Yahoo Defendants for Waste of Corporate Assets 27 86. Plaintiff incorporates by reference and realleges each and every allegation 28 contained above, as though fully set forth herein. - 24 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

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1 87. As a result of the Yahoo Defendants failure to conduct proper supervision, Yahoo 2 has wasted its assets by paying improper compensation and bonuses to certain of its executive 3 officers and directors that breached their fiduciary duty. 4 88. As a result of the waste of corporate assets, the Yahoo Defendants are liable to the 5 Company. 6 89. Plaintiff, on behalf of Yahoo, has no adequate remedy at law. 7 COUNT HI 8 Against the Individual Defendants for Unjust Enrichment 9 90. Plaintiff incorporates by reference and realleges each and every allegation 10 contained above, as though fully set forth herein. 11 91. By their wrongful acts and omissions, the Individual Defendants were unjustly 12 enriched at the expense of and to the detriment of Yahoo. The Yahoo Defendants were unjustly 13 enriched as a result of the compensation and director remuneration they received while breaching 14 fiduciary duties owed to Yahoo. 15 92 Defendant Ma was unjustly enriched because he caused Alibaba's ownership of 16 Alipay to be transferred to another private Company that Ma controls. This transfer impaired 17 Yahoo's investment in Alibaba and constitutes misappeapriation of corporate assets. 18 93. Plaintiff; as a shareholder and Irv' ebentative of Yahoo, seeks restitution from 19 these defendants, and each of them, and seeks an order of this Court disgorging all profits, 20 benefits, and other compensation obtained by these defendants, and each of them, from their 21 wrongful conduct and fiduciary breaches. 22 94. Plaintiffi on behalf of Yahoo, has no adequate remedy at law.

23 PRAYER FOR RELIEF 24 WHEREFORE, plaintiff, on behalf of Yahoo, demands judgment as follows: 25 A. Against all of the defendants and in favor of the Company for the amount of 26 damages sustained by the Company as a result of the defendant& breaches of fiduciary duties, 27 waste of corporate assets, and unjust enrichment 28 - 25 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 . 11-cv-03302-PSG Document1 Filed07/06/11 Page27 of 29

1 B. Directing Yahoo to take all necessary actions to reform and improve its corporate 2 governance and internal procedures to comply with applicable laws and to protect Yahoo and its 3 shareholders from a repeat of the damaging events described herein, including, but not limited to, 4 putting forward for shareholder vote, resolutions for amendments to the Company's By-Laws or 5 Articles of Incorporation and taking such other action as may be necessary to place before 6 shareholders for a vote of the following Corporate Governance Policies: 7 1. a proposal to strengthen the Company's controls over reporting of the 8 Company's business health and prospects, including its relationship and business dealings with 9 Alibaba; 10 2. a proposal to strengthen the Board's supervision of operations and 11 develop and implement procedures for greater shareholder input into the policies and guidelines 12 of the Board; 13 3. a pmvision to permit the shareholders of Yahoo to nominate at least three 14 candidates for election to the Board; and

15 4. a proposal to strengthen Yahoo's oversight of its disclosure procedures; 16 C. Extraordinary equitable and/or injunctive relief as permitted by law, equity, and 17 state statutory provisions sued hereunder, inchviiag attaching, impounding, imposing a 18 constructive trust on, or otherwise restricting the proceeds of defendants' trading activities or 19 their other assets so as to assure that plaintiff on behalf of Yahoo has an effective remedy; 20 D. Awarding to Yahoo restitution flow defendants, and each of them, and ordering 21 disgorgement of all profits, benefits, and other compensation obtained by the defendants;

22 E. Ordering the transfer of ownership of Alipay back to Alibaba from defendant Ma; 23 F. Awarding to plaintiff the costs and disbursements of the action, including 24 reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses; and

25 G. Granting such other and further relief as the Court deems just and proper. 26 27 28 - 26 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT

Case5 11-cv-03302-PSG Document1 Aled07/06/11 Page28 of 29

1 JURY DEMAND

2 Plaintiff demands a trial by jury.

3 Dated: July 5, 2011 ROBBINS LIMEDA LLP BRIAN J. ROBBINS 4 CRAIG W. S a. SHANE P.JI"--r S 5 GINA S 11rt° - BRIAN J. ROBBINS 7 600 B Street, Suite 1900 8 San Diego, CA 92101 Telephone: (619) 525-3990 9 Facsimile: (619) 525-3991 brobbins®robbinsumeda.com 10 [email protected] [email protected] 11 gstassi©robbinsumeda.corn 12 Attorneys for Plaintiff 13 14

15 16 17 18 19 20 21 22 23 24 25 26

27 625544 28 - 27 - VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT Case5 11-cv-03302-PSG Document1 Filed07/06/11 Page29 of 29

VERIFICATION I, Christina Carroll, hereby declare as follows: I am counsel for Iron Workers Mid-South Pension Fund, a shareholder of Yahoo! Inc. Iron Workers Mid-South Pension Fund has been a shareholder continuously since June 8, 2010. Iron Workers Mid-South Pension Fund has retained competent counsel and is ready, willing, and able to pursue its action vigorously on behalf of the Company. I have reviewed the Verified Shareholder Derivative Company for Breach of Fiduciary Duty, Unjust Enrichment, Waste of Corporate Assets, and Violations of California Corporations Code (the "Complaint"). Based upon discussions with and reliance upon my counsel, and as to those facts of which I have personal knowledge, the Complaint is true and correct to the best of my knowledge, information, and belief. I declare under penalty of perjury that the foregoing is true and correct Signed and Accepted:

Dated: 7 TC I

eiteet-— egArLs:)-17 CHRISTINA CARROLL EXHIBIT E THE WEISER LAW FIRM, P.C.

A LEADING NATIONAL SHAREHOLDER LITIGATION FIRM DEDICATED EXCLUSIVELY TO PROTECTING INDIVIDUAL AND INSTITUTIONAL SHAREHOLDERS' INTERESTS AND PROMOTING IMPROVED CORPORATE GOVERNANCE PRACTICES

FIRM BIOGRAPHY

The Weiser Law Firm, P.C., a national shareholder litigation firm, was founded by its two principals, Patricia C. Weiser and Robert B. Weiser, in December, 2004. Prior to December, 2004,

Ms. Weiser and Mr. Weiser had both managed litigation groups at one of the nation's largest shareholder litigation firms. The Weiser Law Firm is devoted to protecting the interests of individual and institutional investors in shareholder class, derivative and ERISA actions in state and federal courts nationwide. The attorneys at The Weiser Law Firm devote a large percentage of their time to addressing complex corporate governance issues. PATRICIA C. WEISER

Ms. Weiser, a founding member of the firm, received her law degree from the Widener

University School of Law in Wilmington, Delaware. While in law school, she served as an intern for the Honorable Clarence J. Newcomer, U.S.D.J. for the Eastern District of Pennsylvania. She is licensed to practice law in Pennsylvania and New Jersey and has been admitted to practice before the United States District Court for the Eastern District of Pennsylvania and the United

States District Court for the Eastern District of Michigan.

Ms. Weiser's practice is focused on shareholder class action litigation challenging management misconduct in connection with corporate takeovers and disputed contests for corporate control. Ms. Weiser participated as lead or co-lead counsel in the following notable cases where significant financial benefits were achieved for shareholders:

In re Atlas Energy, Inc. Shareholder Litigation (Delaware Chancery Court) in which Class Counsel were solely responsible for an aggregate benefit to the shareholder class of more than $7 million and the additional disclosure of over forty pages of significant material information to shareholders concerning the transaction. In re Mediacom Communications Corp. Shareholders Litigation (Delaware Chancery Court) in which Class Counsel were solely responsible for obtaining an aggregate benefit to the shareholder class of more than $10 million and the additional disclosure of significant material information to shareholders concerning the transaction.

In re Storage USA Shareholder Litigation (Shelby County Chancery Court, Tennessee), in which Class Counsel were solely responsible for an aggregate financial benefit to the class of $10.5 million in connection with the acquisition of the company by its controlling shareholder;

In re Sodexho Marriot Shareholders Litigation (Delaware Chancery Court), in which Class Counsel shared responsibility for creating an aggregate financial benefit of approximately $166 million for members of the class, in connection with the acquisition of the company by its controlling shareholder, Sodexho Alliance, S.A.;

In re Travelocity.com Shareholder Litigation, (Delaware Chancery Court), in which Class Counsel shared responsibility for creating an aggregate financial benefit of approximately $75 million for members of the class, in connection with the acquisition of the company by its controlling shareholder, Sabre Holdings;

In re Delhaize America Shareholder Litigation (North Carolina Business Court), in which Class Counsel shared responsibility for creating an aggregate financial benefit of approximately $225 million for the members of the class in connection with the acquisition of the company by it controlling shareholder; and

Lieb, et al. v. Unocal Corporation, et al. (Los Angeles Superior Court), in which Class Counsel shared responsibility for creating a $500 million benefit via the increased consideration paid by Chevron Corp. to Unocal shareholders in the merger. In addition, Co-Lead Counsel caused defendants to issue important additional disclosures relating to the proposed merger with Chevron prior to the shareholder vote on the merger.

In addition, the Weiser Law Firm has participated as lead or co-lead counsel in cases achieving significant therapeutic benefits to shareholders in connection with M&A transactions, including In re Art Technology Group, Inc., Shareholders Litig., where Class Counsel secured a preliminary injunction in Delaware Chancery Court, enjoining the close of a $1 billion merger transaction for defendants' failure to disclose information concerning potential conflicts of interest suffered by the target company's financial advisor as a result of certain fees previously paid to that advisor by the buyer in the transaction.

In Weigard v. Hicks, et al., No. 5732-VCS ("Health Grades"), the Weiser Firm and co- counsel successfully demonstrated to the Delaware Chancery Court that the defendants had likely breached their fiduciary duties to the company's shareholders by failing to maximize value as required by Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986). In

Health Grades, the Class Counsel were successful in reaching a settlement in which defendants agreed to, among other things, modify the merger agreement, including by reducing the termination fee, imposing a "majority of the minority" requirement, reducing the period of notice to the buyer before Health Grades could enter into a superior proposal, extending the tender offer so as to allow other potential bidders an opportunity to make a competing bid, as well as to create and empower an independent committee. The settlement also required Health Grades to issue a "Fort Howard' press release.

Moreover, at the preliminary injunction hearing in Health Grades, Vice Chancellor Strine

"applaud[ed]" counsel for their preparation and the extraordinary high-quality of the work:

I want to applaud the lawyers today for being so well prepared. And I particularly want to applaud the plaintiffs for being not only well prepared but exceedingly measured and logical in their argument. I really -- in a world where we all read briefs and letters and probably read e-mails to each other where l-y words are there and everybody is saying outrageous, the plaintiffs have really focused their claims -- you know, the claims they pressed in the injunction in a reasonable way. They haven't thrown hand grenades; but they've made some, frankly, very potent arguments about the reasonableness of the board's process without, frankly, making wildly speculative -- often we see sinister motives thrown around without basis. Mr. Jenkins and his team admirably really focused on the core of the matter and in a very skillful way.

Ms. Weiser was also part of the litigation team that won an injunction in the seminal

Delaware Chancery Court case In re Pure Resources Shareholder Litigation, forcing changes to certain terms of the proposed transaction as well as the public disclosure of significant additional information concerning the transaction, and, ultimately being partially responsible for an aggregate financial benefit of approximately $41 million for the shareholder class. ROBERT B. WEISER

Mr. Weiser, a founding member of the firm, received his law degree from the Villanova

University School of Law. While in law school, he also served as a law clerk for the Honorable

Clarence J. Newcomer, U.S.D.J. for the Eastern District of Pennsylvania. He is licensed to practice law in Pennsylvania and New Jersey and has been admitted to practice before the

United States District Court for the Eastern District of Pennsylvania and the United States

District Court for the District of New Jersey. Mr. Weiser's practice is focused on shareholder derivative litigation and ERISA class action litigation. While employed at his prior firm, Mr.

Weiser managed the firm's shareholder derivative litigation practice, with a particular focus on corporate governance matters. Mr. Weiser has been involved in some of the most successful shareholder derivative actions in the history of corporate litigation. Over the past several years,

Mr. Weiser has been among the nationwide-leaders in prosecuting "option backdating cases" on a derivative basis. In addition to being among the attorneys that developed the central pleading theory in the backdating cases (which in turn produced some of the ground-breaking decisions in this area of law), Mr. Weiser (along with his co-counsel) successfully prosecuted backdating cases which caused the subject corporations to cumulatively receive tens of millions of dollars in benefits. More recently, Mr. Weiser has launched a wave of actions that challenge the executive compensation awarded at the nation's largest banks which received federal "bailout" funds. A sampling of the notable cases in which Mr. Weiser has served as lead or co-lead counsel include:

In re Oracle Corp. Derivative Litig., 824 A.2d 917 (Del. Ch. 2003). Mr. Weiser was co-lead counsel in the Oracle action. In that case, plaintiffs challenged certain multi-million dollar stock sales made by Oracle's senior officers, including Larry Ellison, Oracle's founder. Oracle's board of directors appointed a "special litigation committee" to investigate plaintiffs' claims, and after a lengthy investigation, the committee moved to dismiss the case, having concluded that plaintiffs' claims lacked merit. Among other things, plaintiffs' challenged the independence of the committee members, their good faith, and their ultimate conclusion. The court denied the committee's motion, which allowed the action to proceed to trial. At the time it was issued, the Oracle decision was one of only four reported Delaware cases where a special litigation committee's motion to dismiss was denied by a Delaware chancellor and many commentators view the Oracle case as a landmark decision for shareholders. For example, the Wall Street Journal called the seminal decision "one of the most far-reaching ever on corporate governance." This case eventually settled for $100 million on the eve of trial. Mr. Weiser believes that the $100 million recovery was the second largest derivative settlement ever. The Oracle case, and its impact on corporate governance matters nationwide, is the subject of numerous scholarly articles and treatises. In re Affiliated Computer Services Derivative Litig., USDC for the ND of TX, No. 3:06-cv-1110. In this option backdating action, plaintiffs challenged the stock option grants received by ACS' officers & directors over a multi-year period. Plaintiffs in a related action purported to settle these claims for approximately $1.8 million, a paltry sum which Mr. Weiser and his co-counsel believed was far less than they were worth. After objecting to the settlement of the related action, and engaging in a contentious discovery battle, Mr. Weiser and his co-counsel were able to materially enhance the settlement by securing a $30 million recovery for ACS. Mr. Weiser believes that this is the largest derivative recovery in an action litigated in Texas.

In re KB Home Derivative Litigation, Superior Court of the State of CA, Los Angeles County, Master File No. BC355179. Mr. Weiser was co-lead counsel in this action. In this option backdating action, plaintiffs challenged the stock option grants received by KB Home's officers & directors over a multi-year period. In addition to obtaining valuable corporate governance enhancements for KB, Mr. Weiser and his co-lead counsel settled this action for benefits worth at least $30 million to KB, making it one of the largest derivative settlements in the history of California corporate litigation.

David, et al., v. Woffen, et al., Superior Court of the State of CA, Orange County, Lead Case No. 01-CC-03930 (the "Broadcom Derivative Action"). Mr. Weiser was co-lead counsel in the Broadcom Derivative Action. Like the Oracle case, the Broadcom Derivative Action was also produced a ground-breaking settlement. In connection with the eventual settlement of the Broadcom Derivative Action, plaintiffs were able to compel Broadcom to make sweeping, substantial changes to its corporate governance practices which included a provision which allows Broadcom's shareholders to nominate directors to Broadcom's Board. In particular, the shareholder-nominated director provision was thought to be a highly significant and unusual achievement for Broadcom's shareholders. As the Associated Press reported in commenting on the settlement: "[in contrast to the Broadcom settlement] the Securities and Exchange Commission has met fierce resistance to a proposal just to allow shareholder nominations under very limited circumstances." This type of corporate governance relief has only been achieved in a handful of shareholder derivative actions, and it became a model for corporate governance settlements that followed.

Barry v. Cotsakos, CV 49084 (San Mateo County, CA) (the "Etrade Derivative Litigation"). Mr. Weiser was co-lead counsel in the Etrade Derivative Litigation. Mr. Weiser believes that the Etrade Derivative Litigation is one of the most successful executive compensation cases ever brought against a publicly traded corporation's board of directors. In that case, the plaintiff challenged the payment of excessive compensation awarded to Etrade's then-current Chief Executive Officer. As a result of the settlement of the case, Etrade's Chief Executive Officer returned approximately $25 million to the Company, and he also agreed to forego other valuable financial benefits. The Etrade settlement also provided for sweeping changes to the company's corporate governance practices and the structure of its Board. These measures, and the resulting change in the public's perception of Etrade, were profiled in a September 8, 2003 Wall Street Journal article entitled "How One Firm Uses Strict Governance To Fix Its Troubles." Since the time of the Etrade settlement, Etrade added independent directors to its Board, who have since forced out the company's Chief Executive Officer. In response to these changes, the Company's stock increased more than 300% in the 18 months following the settlement and the "new" Etrade was the subject of several positive media reports.

Klotz v. Parfet, et aL, Case No. 03-06483-CK (In the Circuit Court of Jackson County, Michigan) (the "CMS Derivative Litigation"). Mr. Weiser was co-lead counsel in the CMS Derivative Litigation. In that case, plaintiff alleged that CMS' Board of Directors failed to develop and implement adequate corporate governance practices and internal controls. Plaintiff alleged that the Board's internal control failures caused the Company to suffer enormous damages to its reputation and prestige. In settling the CMS Derivative Litigation, the Weiser Firm was able to recover $12 million for the Company, and the Board agreed to adopt what one commentator called "some of the most substantial corporate governance reforms" ever undertaken by a publicly traded corporation. Mr. Weiser believes that the CMS derivative settlement is the largest in the history of Michigan corporate litigation.

Gebhardt v. Allumbaugh, eta!, Case No. 2002-13602 (Harris County, Texas)(the "El Paso Derivative Litigation"). Mr. Weiser was lead counsel in the El Paso Derivative Litigation. This action centered on the Company's alleged anti- competitive conduct in California during that the state's energy crisis of 2001-02. In addition to making sweeping changes to the Board's structure and the Company's corporate governance practices, Mr. Weiser was able to secure a $16.75 million recovery for the Company. Mr. Weiser believes that the El Paso Derivative Litigation was either the first or second largest derivative settlement in Texas history at the time it was agreed to.

Eliasoph v. Johnson, C.A. No. 05-CVS-3698 (North Carolina General Civil Litigation Court)(the "SPX Derivative Litigation"). Mr. Weiser was lead counsel in the SPX Derivative Litigation. Like the Etrade Derivative Litigation, Mr. Weiser believes that the SPX Derivative Litigation is among the most successful executive compensation cases ever brought against a publicly traded corporation's board of directors. In this case, the plaintiff challenged the fairness of the Company's entire executive compensation structure. In connection with the settlement of the SPX action, the Company's board of directors agreed to adopt a new executive compensation plan which was designed in part, with plaintiff's counsel and her expert. The new compensation plan more closely aligned shareholder and management interests and it was estimated that the new plan would save the Company at least $25 million.

In Re Staples, Inc. Shareholders Litigation, 792 A.2d 934 (Del. Ch. June 5, 2001). Mr. Weiser was one of three lead counsel in the Staples action. In that case, plaintiffs secured a financial benefit worth at least $12 million to Staples by winning an injunction preventing Staples from holding a shareholder vote on an improperly disclosed recapitalization plan that would have unfairly benefitted Staples' insiders at the expense of the Company and its stockholders. Wanstrath v. Doctor R. Crants, et al., C.A. No. 99-1719-III (Tenn. Chan. Ct., 20th Judicial District, 1999)(the "Prison Realty Derivative Litigation"). In the Prison Realty Derivative Litigation, plaintiff challenged the transfer of assets from Prison Realty to a private entity owned and controlled by several of the Company's top executives. Plaintiffs also alleged that the proposed transaction would have crippled the Company's liquidity. Plaintiffs were able to halt the planned transaction, which prevented the Company from suffering a $120 million loss, which was a highly significant victory in light of the Company's then-precarious financial position. As a result of the settlement of the case, the members of the Company's top management were removed, the composition of the Board of Directors was significantly altered and important corporate governance provisions were also put in place to prevent future abuse. Notably, all of these corporate benefits occurred at a time when the Company was facing near-certain bankruptcy which would have wiped out shareholders' equity in the Company. Because the Company had adopted these significant changes, it was able to renegotiate the terms of its credit facility with its lenders and it never had to file for bankruptcy protection. Since the time the case was settled, the Company's new management has led the Company, now-named Corrections Corporation of America, to profitability, and the price of the common stock increased more than 400% in the two years following the settlement.

Huscher v. Curley, et. at , No. 00 Civ. 21379 (Mich. Cir. Ct., 2000) (the "Sotheby's Derivative Litigation"). In the Sotheby's Derivative Litigation, plaintiffs alleged that the Company's Chief Executive Officer had entered into illegal price-fixing agreements with the Company's leading purported competitor, Christie's International PLC. As a result of the settlement of this case, the Company received the return of certain monetary benefits which had been provided to the Chief Executive Officer that were worth approximately $12 million to the Company. In addition, significant changes in the Company's top management and Board of Directors were achieved in conjunction with the settlement of the case.

Mr. Weiser has been a frequent commentator on corporate governance matters and has lectured on corporate governance issues in both this country and abroad.

BRETT D. STECKER

Mr. Stecker is a graduate of Franklin & Marshall College and of Villanova University School of Law. While in college, Mr. Stecker earned a B.A. in Government and served as a legislative intern for United States Senator Alfonse M. D'Amato. While in law school, Mr. Stecker served as an Executive Member of the Moot Court Board and represented Villanova in national competitions.

Upon graduation from law school, Mr. Stecker was an associate with the Litigation Department of Blank Rome LLP in Philadelphia, PA. After two years at that firm, Mr. Stecker moved to Weir &

Partners, LLP, a boutique commercial litigation firm in Philadelphia, where he focused his practice

on banking litigation in cases dealing with consumer lending, check fraud, and the enforcement of

guarantee and other security agreements. At The Weiser Law Firm, Mr. Stecker concentrates his

practice on shareholder derivative and ERISA litigation.

JEFFREY J. CIARLANTO

Mr. Ciarlanto is a graduate of The Pennsylvania State University and Villanova University

School of Law. While in college, Mr. Ciarlanto earned Bachelor of Arts degrees in Economics and

Political Science and graduated with honors. During law school, Mr. Ciarlanto served as the

Business Editor of Villanova Law's Sports and Entertainment Law Journal. Mr. Ciarlanto also

served as a judicial extern for the Honorable Matthew D. Carrafiello of the Philadelphia Court of

Common Pleas. Mr. Ciarlanto is licensed to practice law in Pennsylvania and New Jersey. Prior to joining The Weiser Law Firm, Mr. Ciarlanto was an associate at Marks, O'Neill, O'Brien &

Courtney, P.C., where he focused his practice on labor and employment law. At The Weiser Law

Firm, Mr. Ciarlanto concentrates his practice on shareholder derivative and ERISA litigation.

HENRY J. YOUNG

Mr. Young is a graduate of the University of Sheffield, England and of William Mitchell

College of Law, Minnesota. Mr. Young earned a B.A. in Archaeology and worked as an

archaeologist before moving to the United States and attending law school. During law school, Mr.

Young received the 2000 Kennedy Scholarship for Public Service and the 1997 Founders'

Scholarship. He was also a guest student at Brooklyn Law School specializing in International

Law. Mr. Young has devoted almost his entire legal career to representing investors harmed by

corporate fraud and executive malfeasance. At The Weiser Law Firm, he concentrates his practice

on protecting the interests of investors in corporate mergers and acquisitions.

KATHLEEN A. HERKENHOFF

Ms. Herkenhoff joined The Weiser Law Firm in January 2010, opening the firm's San

Diego, California office. As detailed below, Ms. Herkenhoff has been exclusively litigating securities actions for 16 years, first at the Securities and Exchange Commission ("SEC") and most recently

as a Partner at Coughlin Stoia Geller Rudman & Robbins LLP in San Diego. Ms. Herkenhoff

earned her Bachelor of Arts degree in English Literature from the University of California (Berkeley)

in 1989. She earned her Juris Doctor degree from Pepperdine University School of Law in 1993, where she was on the Dean's Honor List and received American Jurisprudence Awards in both

Constitutional Law and Agency-Partnership. Following law school, Ms. Herkenhoff worked at the

SEC's Los Angeles office, investigating and prosecuting complex securities fraud and insider trading actions.

In 1997, Ms. Herkenhoff joined Milberg Weiss Bershad Hynes & Lerach LLP in Los

Angeles, California, and ultimately moved to the firm's San Diego office, where she served as a

Partner from 2002 to 2009 (the San Diego office became known as Coughlin Stoia). Over the past

12 years at Coughlin Stoia, Ms. Herkenhoff has practiced in all areas of securities class and

derivative litigation, working tirelessly to achieve nearly one billion in settlement recoveries for victimized shareholders. Many of these settlements also include sweeping corporate governance

improvements negotiated by Ms. Herkenhoff. A sample of notable settlements includes:

• $618 million in opt-out litigation against AOL Time Warner, Inc.

• $122 million in class action against Mattel, Inc.

• $100 million in class action against Honeywell International, Inc.

• $30+ million in derivative stock option backdating cases

Ms. Herkenhoff continues her nearly two decades of securities litigation experience by joining the firm's extensive M&A and derivative practice groups. Ms. Herkenhoff is licensed to practice law in

all California state and federal courts, as well as in the District of Colorado. JOSEPH M. PROFY

Mr. Profy is a 1991 graduate of the University of Notre Dame and earned his Juris Doctor

degree Cum Laude from the Dickinson School of Law in 1995. He is licensed to practice law in the

Commonwealth of Pennsylvania and the State of New Jersey and has been admitted to practice in the

United States District Court for Eastern District of Pennsylvania, The Third Circuit Court of Appeals and the United States Supreme Court. From 1995 to 1997, Mr. Profy served as a law clerk to the

Honorable John P. Fullam, United States District Court for the Eastern District of Pennsylvania. From

1997 to 2002, Mr. Profy was an associate with Reed Smith LLP. In 2002, Mr. Profy joined Blank Rome

LLP as an associate and in 2006 he was elevated to partner at Blank Rome LLP. In June of 2011, Mr.

Profy joined the Weiser Law Firm. EXHIBIT F GLANCY BINKOW & GOLDBERG LLP ATTORNEYS AT LAW

New York Office 1801 AVENUE OF THE STARS, SUITE 311 SAN FRANCICSO OFFICE LOS ANGELES, CALIFORNIA 90067 1430 BROADWAY ONE EMBARCADERO CENTER SUITE 1603 SUITE 760 NEW YoRK, NY 10018 SAN FRANosco, CA94105 TELEPHONE (212) 382-2221 TELEPHONE (310) 201-9150 TELEPHONE (415)972-8160 FACSIMILE (212) 382-3944 FAcswELE (310) 201-9160 FACSIIVI[LE (415) 972-8166 [email protected]

FIRM RESUME

Glancy Binkow & Goldberg LLP has represented investors, consumers and employees in federal and state courts throughout the United States for sixteen years. Based in Los Angeles, California and with offices in New York, New York and San Francisco, California, Glancy Binkow & Goldberg has developed expertise prosecuting securities fraud, antitrust and complex commercial litigation. As Lead Counsel or as a member of Plaintiffs' Counsel Executive Committees, Glancy Binkow & Goldberg has recovered in excess of $1 billion for parties wronged by corporate fraud and malfeasance. The firm's efforts on behalf of individual investors have been the subject of articles in such publications as The Wall Street Journal, The New York Times and The Los Angeles Times. Appointed as Lead or Co-Lead Counsel by federal judges throughout the United States, Glancy Binkow & Goldberg has achieved significant recoveries for class members, including:

In re Mercury Interactive Corporation Securities Litigation USDC Northern District of California, Case No. 05-3395, in which Glancy Binkow & Goldberg served as Co-Lead Counsel and achieved a settlement valued at over $117 million.

In re Real Estate Associates Limited Partnership Litigation, USDC Central District of California, Case No. 98-7035 DDP, in which the firm served as local counsel and plaintiffs achieved a $184 million jury verdict after a complex six week trial in Los Angeles, California and later settled the case for $83 million.

In re Lumenis, Ltd. Securities Litigation USDC Southern District of New York, Case No.02-CV- 1989, in which Glancy Binkow & Goldberg served as Co-Lead Counsel and achieved a settlement valued at over $20 million.

Page 1 In re Heritage Bond Litigation, USDC Central District of California, Case No. 02-ML-1475-DT, where as Co-Lead Counsel, Glancy Binkow & Goldberg recovered in excess of $28 million for defrauded investors and continues to pursue additional defendants.

In re ECI Telecom Ltd. Securities Litigation USDC Eastern District of Virginia, Case No. 01-913- A, in which Glancy Binkow & Goldberg served as sole Lead Counsel and recovered almost $22 million for defrauded ECI investors.

Jenson v. First Trust Corporation USDC Central District of Californaia, Case No. 05-cv-3124-ABC, in which the firm was appointed sole lead counsel and achieved an $8.5 million settlement in a very difficult case involving a trustee's potential liability for losses incurred by investors in a Ponzi scheme. Kevin Ruf of the firm also successfully defended in the 9th Circuit Court of Appeals the trial court's granting of class certification in this case.

Yaldo v. Airtouch Communications State of Michigan, Wayne County, Case No. 99-909694-CP, in which Glancy Binkow & Goldberg served as Co-Lead Counsel and achieved a settlement valued at over $32 million for defrauded consumers.

In re Infonet Services Corporation Securities Litigation USDC Central District of California, Case No. CV 01-10456 NM, in which as Co-Lead Counsel, Glancy Binkow & Goldberg achieved a settlement of $18 million.

In re Musicmaker.com Securities Litigation USDC Central District of California, Case No. 00- 02018, a securities fraud class action in which Glancy Binkow & Goldberg was sole Lead Counsel for the Class and recovered in excess of $13 million.

In re ESC Medical Systems, Ltd. Securities Litigation, USDC Southern District of New York, Case No. 98 Civ. 7530, a securities fraud class action in which Glancy Binkow & Goldberg served as sole Lead Counsel for the Class and achieved a settlement valued in excess of $17 million.

In re Lason, Inc. Securities Litigation USDC Eastern District of Michigan, Case No. 99 76079, in which Glancy Binkow & Goldberg was Co-Lead Counsel and recovered almost $13 million for defrauded Lason stockholders.

In re Inso Corp. Securities Litigation USDC District of Massachusetts, Case No. 99 10193, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement valued in excess of $12 million.

In re National TechTeam Securities Litigation USDC Eastern District of Michigan, Case No. 97- 74587, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement valued in excess of $11 million.

Page 2 In re Ramp Networks, Inc. Securities Litigation USDC Northern District of California, Case No. C-00-3645 JCS, a securities fraud class action in which Glancy Binkow & Goldberg served as Co- Lead Counsel for the Class and achieved a settlement of nearly $7 million.

In re Gilat Satellite Networks, Ltd. Securities Litigation USDC Eastern District of New York, Case No. 02-1510 CPS, a securities fraud class action in which Glancy Binkow & Goldberg served as Co- Lead Counsel for the Class and achieved a settlement of $20 million.

Taft v. Ackermans (KPNQwest Securities Litigation) USDC Southern District of New York, Case No. 02-CV-07951, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement worth $11 million.

Ree v. Procom Technologies Inc., USDC Southern District of New York, Case No. 02CV7613, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of $2.7 million.

Capri v. Comerica, Inc. USDC Eastern District of Michigan, Case No. 02CV60211 MOB, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of $6.0 million.

Tatz v. Nanophase Technologies Corp. USDC Northern District of Illinois, Case No. 01C8440, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of $2.5 million.

In re Livent, Inc. Noteholders Litigation USDC Southern District of New York, Case No. 99 Civ 9425, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of over $27 million.

Plumbing Solutions Inc. v. Plug Power Inc., USDC Eastern District of New York, Case No. CV 00 5553 (ERK) (RML), a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of over $5 million.

Schleicher v. Wendt (Conseco Securities Litigation), USDC Southern District of Indiana, Case No. 02-1332 SEB, a securities fraud class action in which Glancy Binkow & Goldberg served as Lead Counsel for the Class and achieved a settlement of over $41 million.

Lapin v. Goldman Sachs USDC Southern District of New York, Case No. 03-0850-KJD, a securities fraud class action in which Glancy Binkow & Goldberg served as Co-Lead Counsel for the Class and achieved a settlement of $29 million.

Page 3 Glancy Binkow & Goldberg filed the initial landmark antitrust lawsuit against all of the major NASDAQ market makers and served on Plaintiffs' Counsel's Executive Committee in In re Nasdaq Market-Makers Antitrust Litigation USDC Southern District of New York, Case No. 94 C 3996 (RWS), MDL Docket No. 1023, which recovered $900 million for investors in numerous heavily traded Nasdaq issues.

The firm currently serves as Lead or Co-Lead Counsel in numerous securities fraud and consumer fraud actions throughout the United States, including, among others:

Senn v. Sealed Air Corporation USDC New Jersey, Case No. 03-cv4372, in which the firm acts as co-lead counsel (the case has tentatively settled).

Shah v Morgan Stanley Co. USDC Southern District of New York, Case No. 03 Civ. 8761 (RJH)

Payne v. IT Group Inc., USDC Western District of Pennsylvania, Case No. 02-1927

Winer Family Trust v. Queen (Pennexx Securities Litigation) USDC Eastern District of Pennsylvania, Case No. 2:03-cv-04318 JP

In re ADC Telecommunications Inc. Securities Litigation USDC District of Minnesota, Case No. 03-1194 (JNE/JGL)

In re Simon Transportation Services, Inc. Securities Litigation, USDC District of Utah, Case No. 2:98 CV 0863 K

The firm has also previously acted as Class Counsel in obtaining substantial benefits for shareholders in a number of actions, including:

In re F & M Distributors Securities Litigation, Eastern District of Michigan, Case No. 95 CV 71778 DT (Executive Committee Member) ($20.25 million settlement)

James F. Schofield v. McNeil Partners, L.P. Securities Litigation, California Superior Court, County of Los Angeles, Case No. BC 133799

Resources High Equity Securities Litigation, California Superior Court, County of Los Angeles, Case No. BC 080254

The firm has served and currently serves as Class Counsel in a number of antitrust class actions, including:

Page 4 In re Nasdaq Market-Makers Antitrust Litigation USDC Southern District of New York, Case No. 94 C 3996 (RWS), MDL Docket No. 1023

In re Brand Name Prescription Drug Antitrust Litigation, USDC Northern District of Illinois, Eastern Division, Case No. 94 C 897

The firm has served and currently serves as Class Counsel in a number of wage and hour class actions, including:

Smith v. L'Oreal, Los Angeles Superior Court, Case No. BC 284690, in which firm partner Kevin Ruf successfully argued before the California Supreme Court and achieved the reversal of lower court holdings which could have curtailed employee rights to prompt payment of wages.

Mathews v. American Laser Centers, USDC Eastern District of Michigan, Case No. 2:08-cv-10638, in which the firm represents employees of ALC who contend they are entitled to unpaid overtime and other benefits.

Baldwin v. Johnny Rockets, Los Angeles Superior Court, Case No. BC 385539, in which the firm represents a class of restaurant managers who contend they are entitled to overtime and other benefits because they were improperly classified by their employer as "exempt" from such benefits.

Jenkin v. Sunglass Hut, USDC Central District of California, Case No. CV08-5394, in which the firm represents Sunglass Hut employees who contend they were denied meal and rest breaks and other compensation.

Bousquet v. Cerritos Ford, Los Angeles Superior Court, Case No. BC 354026, in which the firm represents mechanics claiming unpaid overtime.

Paredes v. Pacific Ford, Los Angeles Superior Court, Case No. BC 372598, in which the firm represents mechanics claiming unpaid overtime.

The firm currently also serves as Interim Co-Lead Counsel in In re Nokia, Inc. ERISA Litigation, USDC Southern District of New York, Case No. 10-CV-03306-PKC. This consolidated action is brought pursuant to the Employee Retirement Income Security Act of 1974 on behalf of participants and beneficiaries of the Nokia Retirement Savings and Investment Plan from January 1, 2008 through the present seeking to recover losses to the Plan as a result of its investments in Nokia stock.

The firm has represented, or currently represents, numerous plaintiffs in shareholder derivative actions, including, among others:

Page 5 In re Acura Pharmaceuticals, Inc. In the Circuit Court of Cook County, Illinois, County Department - Chancery Division, Case No. 10CH46380;

Diep v. Chen et al. USDC Southern District of New York, Case No. 11-CV-3210

Dulberg v. Plastina, et al. USDC Central District of California, Case No. 8:11-cv-00351 JVS (RNBx);

Garay v. Gamache et al. USDC Northern District of Illinois, Case No. 11-cv-04412;

Markowitz v. Duprey, et al. In the Circuit Court of Cook County, Illinois, County Department - Chancery Division, Case No. 11-CH-11048

Oh v. Bartz, et al. USDC Northern District of California, Case No. 11-cv-03286; and

Surloff v. Georgiopoulos, et al. USDC Southern District of New York, Case No. 11-CV-1855-RJH

Glancy Binkow & Goldberg LLP has been responsible for obtaining favorable appellate opinions which have broken new ground in the class action or securities fields, or which have promoted shareholder rights in prosecuting these actions. Glancy Binkow & Goldberg successfully argued the appeals in a number of cases. In Smith v. L'Oreal 39 Ca1.4th 77 (2006), firm partner Kevin Ruf established ground- breaking law when the California Supreme Court agreed with the firm's position that waiting penalties under the California Labor Code are available to any employee after termination of employment, regardless of the reason for that termination.

Other notable firm cases are: Silber v. Mabon I 957 F.2d 697 (9th Cir. 1992) and Silber v. Mabon II 18 F.3d 1449 (9th Cir. 1994), which are the leading decisions in the Ninth Circuit regarding the rights of opt-outs in class action settlements. In Rothman v. Gregor 220 F.3d 81 (2d Cir. 2000), Glancy Binkow & Goldberg won a seminal victory for investors before the Second Circuit Court of Appeals, which adopted a more favorable pleading standard for investors in reversing the District Court's dismissal of the investors' complaint. After this successful appeal, Glancy Binkow & Goldberg then recovered millions of dollars for defrauded investors of the GT Interactive Corporation. The firm also argued Falkowski v. Imation Corp., 309 F.3d 1123 (9th Cir. 2002), as amended, 320 F.3d 905 (9th Cir. 2003) and favorably obtained the substantial reversal of a lower court's dismissal of a cutting edge, complex class action initiated to seek redress for a group of employees whose stock options were improperly forfeited by a giant corporation in the course of

Page 6 its sale of the subsidiary at which they worked. The revived action is currently proceeding in the California state court system.

The firm is also involved in the representation of individual investors in court proceedings throughout the United States and in arbitrations before the American Arbitration Association, National Association of Securities Dealers, New York Stock Exchange, and Pacific Stock Exchange. Mr. Glancy has successfully represented litigants in proceedings against such major securities firms and insurance companies as A.G. Edwards & Sons, Bear Stearns, Merrill Lynch & Co., Morgan Stanley, PaineWebber, Prudential, and Shearson Lehman Brothers.

One of firm's unique skills is the use of "group litigation" - the representation of groups of individuals who have been collectively victimized or defrauded by large institutions. This type of litigation brought on behalf of individuals who have been similarly damaged often provides an efficient and effective economic remedy that frequently has advantages over the class action or individual action devices. The firm has successfully achieved results for groups of individuals in cases against major corporations such as Metropolitan Life Insurance Company, and Occidental Petroleum Corporation.

Page 7 Glancy Binkow & Goldberg LLP currently consists of the following attorneys:

THE FIRM'S PARTNERS LIONEL Z. GLANCY, a graduate of the University of Michigan Law School, is the founding partner of the firm. After serving as a law clerk for United States District Judge Howard McKibben, he began his career as an associate at Patterson Belknap Webb & Tyler LLP, concentrating in securities litigation. Thereafter, he started a boutique law firm specializing in securities litigation, and other complex litigation, from the Plaintiffs perspective. Mr. Glancy has established a distinguished career in the field of securities litigation over the last fifteen years, appearing as lead counsel on behalf of aggrieved investors in securities class action cases throughout the country. He has appeared and argued before dozens of district courts and several appellate courts, and has recovered billions of dollars in settlement proceeds for large classes of shareholders. Well known in securities law, he has lectured on its developments and practice at CLE seminars and law schools.

PETER A. BINKOW, a partner in Glancy Binkow & Goldberg, was born in Detroit, Michigan on August 16, 1965. Mr. Binkow earned his degree in English Literature from the University of Michigan in1988 and attended law school at the University of Southern California (J.D., 1994). Mr. Binkow joined the Law Offices of Lionel Z. Glancy upon graduation and became a partner in 2002.

Mr. Binkow has prosecuted lawsuits on behalf of consumers and investors in state and federal courts throughout the United States. He has served as Lead or Co-Lead Counsel in many class action cases, including In re Mercury Interactive Corp Securities Litigation ($117.5 million recovery), In re Lumenis Ltd Securities Litigation ($20.1 million recovery), In re Heritage Bond Litigation ($28 million recovery), In re National Techteam Securities Litigation ($11 million recovery), In re Credit Acceptance Corporation Securities Litigation ($2.5 million recovery), In re Lason Inc. Securities Litigation ($12.68 million recovery), In re ESC Medical Systems, Ltd. Securities Litigation ($17 million recovery) In re UT Interactive Securities Litigation ($3 million recovery) and many others. Mr. Binkow has prepared and/or argued appeals before the Ninth Circuit, Sixth Circuit and Second Circuit Courts of Appeals.

Mr. Binkow is admitted to practice before the state of California, the United States District Courts for the Central, Northern and Southern Districts of California, the United States District Court for the Eastern District of Michigan and the Ninth Circuit Court of Appeals. He is a member of the Los Angeles County Bar Association and the American Bar Association.

MICHAEL GOLDBERG, a partner in Glancy Binkow & Goldberg, specializes in federal securities, federal and state antitrust, and consumer fraud class action lawsuits. He has successfully litigated numerous cases which resulted in multi-million dollar recoveries for investors, consumers and businesses.

Mr. Goldberg was born in New York on April 27, 1966. He earned his B.A. degree in 1989 from Pitzer College - The Claremont Colleges, and his J.D. degree in 1996 from Thomas M. Cooley Law

Page 8 School. After graduation from law school, Mr. Goldberg joined the Law Offices of Lionel Z. Glancy and became a partner of Glancy Binkow & Goldberg in 2003. He was admitted to both the California and Florida bars in 1997 and is admitted to practice in numerous courts.

SUSAN G. KUPFER, a partner of Glancy Binkow & Goldberg LLP, joined the firm in 2003, where she established its antitrust practice. She is a native of New York City and received her A.B. degree from Mount Holyoke College in 1969 and her J.D. from Boston University School of Law in 1973. She did graduate work at Harvard Law School. In 1977, she was named Assistant Dean and Director of Clinical Programs at Harvard, where she supervised that program of legal practice and taught its related academic components: Introduction to Advocacy (a NITA-style workshop), Lawyering Process and Professional Responsibility.

For much of her legal career, Ms. Kupfer has been a professor of law. She subsequently taught at Hastings College of the Law, Boston University School of Law, Golden Gate University School of Law and Northeastern University School of Law. From 1991 to 2002, she was a lecturer on law at University of California, Berkeley, Boalt Hall, teaching Civil Procedure and Conflict of Laws. Her areas of academic expertise are Civil Procedure, Federal Courts, Conflict of Laws, Constitutional Law, Legal Ethics and Jurisprudence. Her publications include articles on federal civil rights litigation, legal ethics and jurisprudence. She has also taught various aspects of practical legal and ethical training, including trial advocacy, negotiation and legal ethics, to both law students and practicing attorneys.

Ms. Kupfer previously served as corporate counsel to The Architects Collaborative in Cambridge and San Francisco and was the executive director of the Massachusetts Commission on Judicial Conduct. She returned to the practice of law in San Francisco with Morgenstein & Jubelirer and Berman DeValerio Pease Tabacco Burt & Pucillo before joining the Glancy Firm. Her practice is concentrated in antitrust, securities and consumer complex litigation. She has been a member of the lead counsel team which achieved significant settlements in the following cases: In re Sorbates Antitrust Litigation ($96.5 million settlement), In re Pillar Point Partners Antitrust Litigation ($50 million settlement), In re Critical Path Securities Litigation ($17.5 million settlement).

Ms. Kupfer is a member of the Massachusetts and California State Bars and the United States District Courts for the Northern, Central and Southern districts of California, the District of Massachusetts, the First and Ninth Circuits Courts of Appeal and the U.S. Supreme Court. She was named one of Northern California's Super Lawyers of the Year in 2004, 2005, and 2006 in antitrust litigation.

Ms. Kupfer is currently serving in leadership positions in the following cases:

In re Korean Air Lines Co., Ltd. Antitrust Litigation U.S.D.C., Central District of California, MDL 1891, No. 07-5107, Interim Co-Lead Counsel

Page 9 In re: Urethane Antitrust Litigation U.S.D.C., District of Kansas, No. 2:04-md-01616, Co-Lead Counsel.

In re: Western States Wholesale Natural Gas Antitrust Litigation, U.S.D.C., District of Nevada, No. 2:03-cv-01431, Co-Lead Counsel.

Sullivan et al v. DB Investments, Inc., et al., U.S.D.C, District of New Jersey, No. 3:04-cv-02819, Counsel for Reseller Subclass.

KEVIN F. RUF, a partner in Glancy Binkow & Goldberg LLP, was born in Wilmington, Delaware on December 7, 1961. Mr. Ruf graduated from the University of California at Berkeley in 1984 with a B.A. in Economics and earned his J.D. from the University of Michigan in 1987. Mr. Ruf was admitted to the State Bar of California in 1988. Mr. Ruf was an associate at the Los Angeles firm Manatt Phelps and Phillips from 1988 until 1992, where he specialized in commercial litigation and was a leading trial lawyer among the associates there. In 1993 he joined the firm Corbin & Fitzgerald in order to gain experience in criminal law. There he specialized in white collar criminal defense work, including matters related to National Medical Enterprises, Cynergy Film Productions and the Estate of Doris Duke. Mr. Ruf joined Glancy Binkow & Goldberg in 2001 and has taken a lead trial lawyer role in many of the firm's cases. In 2006, Mr. Ruf argued before the California Supreme Court in the case Smith v. L'Oreal and achieved a unanimous reversal of the lower court rulings; the case established a fundamental right of all California workers to immediate payment of all earnings at the conclusion of employment. In 2007, Mr. Ruf took an important case before the Ninth Circuit Court of Appeals, convincing the Court to affirm the lower court's certification of a class action in a fraud case (fraud cases have traditionally faced difficulty as class actions because of the requirement of individual reliance). Mr. Ruf has extensive trial experience, including jury trials, and considers his courtroom and oral advocacy skills to be his strongest asset as a litigator. Mr. Ruf currently acts as the Head of the Firm's Labor and Consumer Practice, and has extensive experience in Securities cases as well. Mr. Ruf also has experience in real estate law and has been a Licensed California Real Estate Broker since 1999.

MARC L. GODINO has extensive experience successfully litigating complex, class action lawsuits as a plaintiffs' lawyer. Marc has played a primary role in cases resulting in settlements of more than $100 million. He has prosecuted securities, derivative, merger & acquisition, and consumer cases throughout the country in both State and Federal court as well as represented defrauded investors at FINRA arbitrations. Marc supervises the firm's consumer class action department.

While an associate with Stull Stull & Brody, Marc was one of the two primary attorneys involved in Small v. Fritz Co., 30 Cal. 4th 167 (April 7, 2003) in which the California Supreme Court created new law in the state of California for shareholders that held shares in detrimental reliance on false statements made by corporate officers. The decision was widely covered by national media including The National Law Journal, Los Angeles Times, New York Times, and the New York Law Journal, among others and was heralded as a significant victory for shareholders.

Page 10 Recent successes with the firm include: In reMagma Design Automation, Inc. Securities Litigation, Case No. 05-2394 (N.D.Cal.) ($13,500,000.00 cash settlement for shareholders); (In re Hovnanian Enterprises, Inc. Securities Litigation, Case No. 08-cv-0099 (D.N.J.) ($4,000,000.00 cash settlement for shareholders); In re Skilled Healthcare Group, Inc. Securities Litigation, Case No. 09-5416 (C.D.Cal.) ($3,000,000.00 cash settlement for shareholders); In re Youbet.com, Inc. Shareholder Litigation, Case No. BC426144 (L. A. Sup. Ct.) (settlement provided supplemental disclosures to shareholders in this merger action); Burth v. MSC Software Corp., et al., Case No. 30-2009- 00282743 (Orange Cty. Sup. Ct.) (settlement provided supplemental disclosures to shareholders in this merger action)Shin et al., v. BMW of North America, 2009 WL 2163509 (C.D.Cal. July 16, 2009) (after defeating a motion to dismiss, the case settled on very favorable terms for class members including free replacement of cracked wheels); Payday Advance Plus, Inc. v. MIVA, Inc., Case No. 06-1923 (S.D.N. Y.) ($3,936,812 cash settlement for class members); Villefranche v. HSBC Bank Nevada, NA., Case No. 09-3693 (C.D.Cal.) (after defeating a motion to dismiss, the case resulted in 100% recovery to class members).

Other published decisions include: In re 2TheMart.com Securities Litigation, 114 F.Supp 2d 955 (C.D.Ca 2002); In re Irvine Sensors Securities Litigation, 2003 U.S. Dist. LEXIS 18397 (C.D.Ca 2003).

The following represent just a few of the cases that Marc is currently litigating in a leadership position: In re Toyota Motor Corp. Hybrid Brake Marketing, Sales Practices and Products Liability Litigation, MDL 02172 (C.D. Ca.), Co-Lead Counsel In re Stec, Inc. Derivative Litigation, Case No. 10-00667 (C.D. Ca.), Co-Lead Counsel Sabbag v. Akeena Solar, Inc., et al., Case No. 10-002735 (N.D. Ca.), Co-Lead Counsel Conroy v. Citibank, NA., et al., Case No. 10-4930 (C. D. Cal.), Co-Lead Counsel

Marc received his undergraduate degree from Susquehanna University with a bachelor of science degree in Business Management. He received his J.D from Whittier Law School in 1995.

Marc is admitted to practice before the state of California, the United States District Courts for the Central, Northern and Southern Districts of California, the District of Colorado, and the Ninth Circuit Court of Appeals.

OF COUNSEL

ROBIN BRONZAFT HOWALD, a native of Brooklyn, New York, returned home in 2001 to open the firm's New York City office. Ms. Howald graduated magna cum laude from Barnard College in 1980, with a B.A. in psychology. In 1983, she received her J.D. from Stanford Law School, where she served as an Articles Editor for the Stanford Law Review. In addition to her current focus on securities fraud and consumer class action matters, during her 20-year career Ms. Howald has handled cases in many different practice areas, including commercial disputes, professional malpractice, wrongful termination, bankruptcy, patent and construction matters. As outside counsel

Page 11 for the City of Torrance, California, she also handled a number of civil rights and land use matters, as well as a ground-breaking environmental action concerning Mobil Oil's Torrance refinery. Ms. Howald has experience in pre-trial and trial procedure and has successfully prosecuted post-trial motions and appeals.

Mrs. Howald is a member of the bar of both California (1983) and New York (1995), and is admitted to practice in all federal judicial districts in California, the Southern and Eastern Districts of New York, and the United States Supreme Court. She co-authored "Potential Tort Liability in Business Takeovers" (California Lawyer, September 1986), was a speaker and contributing author at the Eighth Annual Current Environmental and Natural Resources Issues Seminar at the University of Kentucky College of Law (April 1991), and served as a Judge Pro Tem for the Los Angeles County Small Claims Court (1996-1997). Married in 1985, Mrs. Howald and her husband have two sons. An avid runner, Mrs. Howald has completed six marathons.

EX KANO S. SAMS II earned his Bachelor of Arts degree in Political Science from the University of California Los Angeles in 1993. Mr. Sams earned his Juris Doctor degree from the University of California Los Angeles School of Law in 1996, where he served as a member of the UCLA Law Review. Since graduating from UCLA Law School, he has dedicated his entire career exclusively to representing plaintiffs in large-scale class action and complex civil litigation matters.

After law school, Mr. Sams practiced class action civil rights litigation on behalf of plaintiffs in cases involving employment discrimination, housing discrimination, and sexual harassment. Subsequently, Mr. Sams was a partner at Coughlin Stoia Geller Rudman & Robbins LLP (currently Robbins Geller Rudman & Dowd LLP), where his practice focused on securities and consumer class actions. While at Coughlin Stoia and its predecessor, he worked in the firm's San Diego, San Francisco, and Los Angeles offices.

Mr. Sams has served as lead counsel in dozens of securities class actions throughout the country. In one securities fraud class action that he actively litigated, Mr. Sams assisted in a successful appeal before a Fifth Circuit panel that included former United States Supreme Court Justice Sandra Day O'Connor sitting by designation, in which the court vacated the lower court's denial of class certification, reversed the lower court's grant of summary judgment, and issued an important decision on the issue of loss causation in securities litigation: Alaska Electrical Pension Fund v. Flowserve Corp., 572 F.3d 221 (5th Cir. 2009). The case eventually settled for $55 million. Mr. Sams also worked on a securities fraud class action where lead counsel obtained a settlement that represented approximately 78% of the likely recoverable damages in the case. He has also led large litigation teams in securities class actions and has prepared massive summary judgment oppositions, drafted and argued numerous motions, worked closely with expert witnesses, and has taken and defended dozens of depositions.

Mr. Sams has also successfully represented consumers in class action litigation. Mr. Sams worked on nationwide litigation and a trial against major tobacco companies and in statewide tobacco litigation that resulted in a $12.5 billion recovery for California cities and counties in a landmark

Page 12 settlement. He also was a principal attorney in a consumer class action against one of the largest banks in the country that resulted in a recovery of over 80% of the compensatory damages and a change in the company's business practices. Additionally, Mr. Sams has also handled several complex environmental matters. Mr. Sams participated in settlement negotiations on behalf of national environmental organizations along with the United States Department of Justice and the Ohio Attorney General's Office that resulted in a consent decree requiring the company to conduct wide-ranging remediation measures to ameliorate the effects of air and water pollution and to pay civil penalties. He also participated in discovery and trial preparation in an unfair business practices action that led to a favorable settlement near the eve of trial providing for monetary relief for a public water provider against the threat of groundwater contamination.

Mr. Sams is admitted to practice law in the State of California. He is also admitted to practice before the United States Courts of Appeals for the Fifth, Sixth, Eighth, Ninth, Tenth, and Eleventh Circuits and before the district courts for the Northern, Southern, Eastern, and Central Districts of California, the Northern District of Illinois, the Eastern District of Michigan, and the District of Colorado. Mr. Sams is a member of the Los Angeles County Bar Association, the John M. Langston Bar Association, and the Consumer Attorneys of California.

JALA AMSELLEM has been engaged in the private practice of civil ligation for over ten years. She has handled a broad variety of cases in the areas of corporate commercial, family law, personal injury and entertainment litigation. Jala is also a former legal writing professor who taught legal skills for twelve years. In her last academic position she was the Associate Director of the legal writing program at The George Washington School of Law. Recently, Jala founded The Bar Coach, a company dedicated to assisting bar takers pass the California Bar Exam.

Jala received her undergraduate degree from New York University in 1982 and her J.D. from Touro Law School in 1985. At Touro, Jala was the Senior Editor of the law review. Jala is admitted to the bars of California, New York, New Jersey, Michigan and the District of Columbia.

ASSOCIATES

DALE MacDIARMID is a native of Los Angeles, California. He holds a B.A. in Journalism (with Distinction) from the University of Hawaii, and a J. D. from Southwestern University School of Law, where he was a member of the Board of Governors of the Trial Advocacy Honors Program. He is admitted to practice in California, before the United States District Courts for the Southern, Central and Northern Districts of California and the District of Colorado. Dale is a member of Kappa Tau Alpha, the national journalism honor society, and before joining Glancy Binkow & Goldberg he was a writer and editor for newspapers and magazines in Honolulu and Los Angeles.

Page 13 ANDY SOHRN joined Glancy Binkow & Goldberg LLP in 2006. He was admitted to the California Bar in January 2006 after receiving his J.D. from the University of California Los Angeles School of Law in May 2005. While attending law school, Andy was the Managing Editor of the Pacific Basin Law Journal, participated in Moot Court and was a Teaching Assistant for the Lawyering Skills program. He also holds a B.A. in Economics and Mathematics from Yale University (class of 2002).

COBY MARIE TURNER joined Glancy Binkow and Goldberg LLP in 2010. Coby was a Regent's Scholar at the University of California, Santa Barbara, and holds a B.A. in Business Economics and Political Science. She received her J.D. from the University of Southern California, Gould School of Law. During law school, Coby was an editor of the Hale Moot Court Honors Program, the President of the International Law and Relations Organization, and an extern for Mental Health Advocacy Services in Los Angeles, California. Coby was admitted to the California State Bar in 2009.

ROBERT V. PRONGAY is an associate in the Firm's Los Angeles office, where he focuses on the investigation, initiation, and litigation, of complex securities cases brought on behalf of institutional and individual investors.

Mr. Prongay earned his Bachelor of Arts degree in Economics from the University of Southern California in 2005 and earned his Juris Doctor degree from Seton Hall University School of Law in 2008. While attending law school, Mr. Prongay worked as a summer associate at the Firm, and interned for a federal magistrate judge for the United States District Court for the District of New Jersey. Mr. Prongay is admitted to the State Bar of California, as well as the United States District Courts for the Central, Northern and Southern Districts of California, and the District of Colorado.

LOUIS BOYARSKY joined Glancy Binkow & Goldberg LLP in 2010. Louis received his JD/MBA from Loyola Law School, Los Angeles and Loyola Marymount University's Graduate School of Business. While in law school, Louis served as a staff writer for the Loyola of Los Angeles Entertainment Law Review. The Law Review published his article: Stealth Celebrity Testimonials of Prescription Drugs: Placing the Consumer in Harm's Way and How the FDA has Dropped the Ball. Additionally, while in law school, Louis externed for the Honorable Suzanne H. Segal, magistrate judge for the Central District of California.

Louis is a member of the St. Thomas More Legal Honor Society, the Alpha Sigma Nu National Jesuit Honor Society and the Beta Gamma Sigma Business Honor Society. Louis is admitted to practice before the state of California and the United States District Court for the Central District of California.

Page 14 CASEY E. SADLER is a native of New York, New York. After graduating from the University of Southern California, Gould School of Law, Mr. Sadler joined Glancy Binkow & Goldberg LLP in 2010. While attending law school, Mr Sadler externed for the Enforcement Division of the Securities and Exchange Commission, spent a summer working for P.H. Parekh & Co, one of the leading appellate law firms in New Delhi, India, and was a member of USC's Hale Moot Court Honors Program. Mr. Sadler holds a B.A. in Political Science from Emory University and was admitted to the State Bar of California in December 2010.

ELIZABETH M. GONSIOROWSKI graduated with honors from Vassar College, where she received a BA in Cognitive Science. As a student at Brooklyn Law School, she interned with the Honorable Ramon Reyes in the Eastern District of New York. After graduating from Brooklyn Law in 2008, she was awarded a fellowship to work with the World Intellectual Property Organization at the United Nations. She is admitted to practice in California, New York and New Jersey.

Page 15 EXHIBIT G I N THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SUSAN M. GREGORY, • Plaintiff, • vs.

KENNETH D. TUCHMAN, JAMES E. • BARLETT, WILLIAM A. • LINNENBRINGER, RUTH C, LIPPER, SHRIKANT MEHTA, SHIRLEY YOUNG, . ROD DAMMEYER, GEORGE C. HEILMEIER, JOHN T. MCLENNAN, MORTON MEYERSON, ALAN : C.A. No.:3925-CC SILVERMAN, MARK C. THOMPSON, SHARON A. O'LEARY, DENNIS J. LACEY, : JOHN SIMON, ALAN SCHUTZMAN, BRIAN DELANEY, JOHN TROIKA, LARRY KESSLER, MICHAEL E. FOSS, and MARGOT O'DELL,

Defendants,

and

TELETECH HOLDINGS, INC.,

Nominal Defendant

STIPULATION OF SETTLEMENT

This Stipulation of Settlement (the "Stipulation") is dated as of October 26, 2009, and

is entered into by and between the following parties to the above-captioned stockholder's

derivative action (the "Action"): (a) Susan M. Gregory ("PlaintifP') in her capacity as a

shareholder of TeleTech Holdings, Inc, ("TeleTech" or the "Company"); (b) Kenneth D.

Tuchman, James E. Barlett, William A. Linnenbringer, Ruth C. Lipper, Shrikant Mehta,

Shirley Young, Rod Dammeyer, George C. Heilmeier, John T. McLennan, Morton Meyerson,

N I-3471800-1 Alan Silverman, Mark C. Thompson, Sharon A. O'Leary, Dennis .1 Lacey, John Simon, Alan

Shutzman, Brian Delaney, John Troka, Larry Kessler, Michael E. Foss, and Margot O'Dell

(collectively, "Defendants"); and (c) nominal defendant TeleTech, on the terms and conditions herein. Plaintiff, Defendants, and Teletech are referred to as the "Settling Parties," as defined in

Section V.

I. FACTUAL BACKGROUND OF THE ACTION

On November 8, 2007, the Company announced that the Audit Committee (the "Audit

Committee") of the Board of Directors (the "Board") had commenced an "independent" internal

investigation into the Company's historical stock option granting practices between 1996 and

2007. The Company also announced that it would not be able to timely file its quarterly report

on Form 10-Q for the second quarter ended September 30, 2007 due to the ongoing stock option

investigation.

Several months later, on February 20, 2008, the Company disclosed for the first time that

the Audit Committee had found "instances of selecting option grant dates with some hindsight."

Further, on that same day, the Board revealed for the first time that grants issued in previous

years to defendants Tuchman and Barlett exceeded the annual limits expressly set by the terms of

the Company's stock option plans (the "Plans").

Plaintiff initiated the Action on July 28, 2008, when she filed a shareholder derivative

complaint in the Court of Chancery of the State of Delaware (the "Court"). Generally, Plaintiff

alleged that certain of the Company's current and former officers and directors breached their

fiduciary duties to the Company because, infer alio, they allegedly caused backdated or

otherwise manipulated stock options to be granted to several of the Company's senior officers

KU:1-3474800-1 and directors over a multi-year period. Further, Plaintiff alleged that Defendants violated the express terms of the Plans by exceeding the annual individual limits imposed therein..

On January 25, 2008, the first of several class actions initiated pursuant to the Federal securities laws was filed against TeleTech in the United States District Court for the Southern

Dishict of New York. The cases were eventually consolidated into one action, (the "Class

Action"), which is being resolved in connection with resolution of the Action.

On November 19, 2008, Defendants filed three motions to dismiss: (1) a motion to dismiss pursuant to Court of Chancery Rule 231 filed by Nominal Defendant Teletech and

Individual Defendants Linnenbringer, Lipper, Mehta and Young; (2) a motion to dismiss pursuant to Court of Chancery Rules 12(b)(2), 12(b)(4), 12(6)(5), 23.1 and 12(b)(6) filed by

Defendants O'Leary, Lacey, Simon, Schutzman, Delaney, Troka, Kessler, Foss and O'Dell; and

(3) a motion to dismiss pursuant to Court of Chancery Rules 231 and 12(6)(6) filed by

Defendants Tuchman, Barlett, Dammeyer, lieilmeier, McLennan, Meyerson, Silverman and

Thompson (collectively, the "Motions to Dismiss"). In the Motions to Dismiss, Defendants argued, inter al/a, that Plaintiff had failed to: (1) either make a demand on the Board or,

alternatively, adequately plead that such a demand would have been futile; (2) make any claim

for which relief could be granted; (3) adequately plead that the Board had failed to act within

their business judgment; (4) sufficiently allege that any of Plaintiff's challenged grants were

backdated; and (5) sufficiently allege that the challenged grants allegedly in excess of individual

plan limits were outside the power and scope of the Compensation Committee to confirm.

Defendants also asserted that certain of Plaintiff's claims were time-barred by applicable statutes

of limitations.

io..r13474800-1 After exchanging certain information, on December 2, 2008 the Settling Parties, along with parties in the Class Action, participated in a formal joint mediation before JAMS mediators the Hon. (Ret.) Daniel Weinstein ("Judge Weinstein") and Jed D. Me'nick, Esq. in New York,

NY. Although the Settling Parties made some progress at the mediation, neither the Action nor the Class Action settled at that time. The mediation, however, served as springboard for continued settlement discussions which occurred throughout the winter and spring of 2009.

During the slimmer of 2009, Plaintiffs reviewed tens of thousands of documents that were produced by the Company in connection with the ongoing settlement discussions. With the substantial assistance of Judge Weinstein and Mr. Me!nick, the Settling Parties weie able to reach an agreement-in-principle on the settlement terms herein, which ultimately culminated in the proposed settlement (the "Settlement") reflected in this Stipulation.

IL INVESTIGATION AND RESEARCH CONDUCTED BY PLAINTIFF'S COUNSEL

Plaintiffs Counsel (as that term is defined in Section V hereof) believe that they have conducted an extensive investigation during the development and prosecution of the Action.

This investigation has included, infer alio, (i) inspecting, reviewing and analyzing the

Company's public filings; (ii) preparing a detailed amended complaint; (iii) performing a detailed internal analysis of Defendants' stock options; (iv) researching the applicable law with respect to the claims asserted in the Action and the potential defenses thereto (v) researching corporate governance issues; (vi) preparing a mediation brief; (vii) attending formal mediation and participating in numerous telephonic meetings with Defense Counsel, Judge Weinstein and

Mr. Melnick; (vii); employing a financial expert to conduct an analysis of the stock option grants at issue; and (vi) reviewing Defendants' non-public documents.

Rtr1-3474500-1 III. NO ACKNOWLEDGMENT OF WRONGDOING OR LIABILITY

Without conceding the merit of any of Plaintiff's allegations, or the lack of merit of any of Defendants' defenses, and solely in order to avoid the potentially protracted time, expense, and uncertainty associated with continued litigation, Defendants have concluded that it is desirable that the Action be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation. Defendants have denied and continue to deny each and all of the claims and contentions alleged by the Plaintiff in the Action. Defendants have denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Action.

Each of the Defendants denies and continues to deny the allegations concerning any alleged breach of fiduciary duty. Defendants have further asserted and continue to assert that at all relevant times, they acted in good faith and in a manner they reasonably believed to be in the

best interests of the Company and its stockholders.

IV. CLAIMS OF THE PLAINTIFF AND BENEFITS OF SETTLEMENT

Plaintiff's Counsel believe that the claims asserted in the Action have merit and that their

investigation supports the claims asserted. Without conceding the merit of any of Defendants'

defenses or the lack of merit of any of their allegations, and solely in order to avoid the

potentially protracted time, expense, and uncertainty associated with continued litigation,

including potential trial and appeals, Plaintiff has concluded that it is desirable that the Action be

fully and finally settled in the manner and upon the terms and conditions set forth in this

Stipulation. Based on these considerations, among others, Plaintiff's Counsel believe that the

Settlement set forth in this Stipulation confers substantial benefits upon TeleTech and Current

TeleTech Stockholders (as that term is defined in Section V below).

ItL F 1-3474800-I V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among

Plaintiff, on behalf of herself and derivatively on behalf of TeleTech, and Defendants, by and through their respective counsel, that, subject to the approval of the Court, the Action and the

Released Claims shall be finally and fully compromised, settled and released, and the Action shall be dismissed with prejudice, as to Defendants, upon and subject to the terms and conditions of the Stipulation, as follows:

I. Definitions

As used herein, the following terms have the meanings specified below:

1.1. "Current TeleTech Stockholder" means any record or beneficial holder of

TeleTech common stock as of October 26, 2009, and their successors in interest.

1.2. "Defendants" means Kenneth D. Tuchman, James E. Barlett, William A.

Linnenbringer, Ruth C. Lipper, Shrikant Mehta, Shirley Young, Rod Dammeyer, George C.

Heilmeier, John T. McLennan, Morton Meyerson, Alan Silverman, Mark C. Thompson,

Sharon A. O'Leary, Dennis J. Lacey, John Simon, Alan Shutzman, Brian Delaney, John

Troka, Larry Kessler, Michael E. Foss, and Margot O'Dell.

1.3. "Defense Counsel" means counsel of record who represent the

Defendants and TeleTech in the Action and include Dewey & LeBoeuf LLP, Brownstein

Hyatt Farber Schreck, McDermott Will & Emery LLP and Richards Layton & Finger, P.A

IA. "Effective Date" means the date that the Final Judgment and Order approving the Settlement in accordance with this Stipulation becomes Final within the meaning of Section 1.6 hereof

RI III-34748001

1.5. "Final" means that with respect to any court order, including but not

limited to the Final Judgment and Order, that such order represents a final and binding

determination of all issues within its scope and is not subject to further review on appeal or

otherwise. Without limitation, an order (including the Final Judgment and Order) becomes

"Final" when: (a) the date as of which the time to appeal the Court's order has expired without

any appeal having been sought or taken or (b) if an appeal is filed, sought or taken, the date as of

which such appeal shall have been finally determined in such a manner as to affirm the Court's

original order without any material change thereto and the time, if any, for commencing any

further appeal has expired. For purposes of this definition, an "appeal" includes appeals as of

right, discretionary appeals, interlocutory appeals, proceedings involving writs of certiorari,

mandamus, or prohibition, and any other proceedings of like kind. Any appeal or other

proceeding pertaining to any order issued in respect of any application by Plaintiff's Counsel for

attorneys' fees and/or expenses, shall not in any way delay or preclude the Final Judgment Order

from becoming Final.

1,6. "Final Judgment and Order" means the Final judgment and Order of

Dismissal to be rendered by the Court, substantially in the form attached hereto as Exhibit C.

1.7. "Person" means an individual, corporation, limited liability company,

professional corporation, joint venture, limited liability partnership, partnership, limited

partnership, association, joint stock company, estate, legal representative, trust, unincorporated

association, government Or any political subdivision or agency thereof, and any business or legal

entity and their spouses, heirs, predecessors, successors, representatives, or assignees

1.8. "Plaintiff" means Susan M. Gregory, together with any of her agents,

heirs, assigns, predecessors and/or successors.

I34 74800-I 1.9. "Plaintiffs Counsel" means counsel who represent the Plaintiff in the

Action and include The Weiser Law Firm, P.C., The Shuman Law Firm, and Rosenthal, Monhait

& Goddess, P.A.

1.10 "Plaintiffs Settlement Counsel" means The Weiser Law Firm, P.C.

1.11. "Related Parties" means each of a Defendant's past or present directors, families, officers, managers, employees, partners, members, principals, agents, underwriters, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, banks or investment banks, associates, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, spouses, heirs, executors, administrators, related or affiliated entities, any entity in which a Defendant has a controlling interest, any members of their immediate families, or any trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/or member(s) of his or her family.

1.12. "Released Claims" shall collectively mean any and all claims (including

"Unknown Claims" as defined in 1.16 hereof), debts, demands, rights, liabilities, damages, actions, losses, obligations, judgments, suits, fees, expenses, costs, any other relief of any nature whatsoever, matters, issues and causes of action of any and every kind, nature or description whatsoever, whether known or unknown, under state, federal, local, common, foreign Of statutory law or any other law, rule or regulation, contingent or absolute, suspected or

unsuspected, disclosed or undisclosed, concealed or hidden, or matured or unmatured, direct or

derivative that were or could have been asserted in the Action Or in the future could be asserted

in any court, tribunal or proceeding by Plaintiff, TeleTech or by any Current TeleTech

Stockholder ( claiming, derivatively or otherwise, in the right of or on behalf of, the Company),

against any of the Released Persons, which have arisen, could have arisen, arise now or hereafter

In I' 1-34 7480U- I arise out of, are based upon or relate in any manner to the allegations, matters, acts, facts, circumstances, transactions, events, occurrences, disclosures, statements, representations, misrepresentations, omissions, acts or failures to act, or any other matter, thing or cause whatsoever, or any series thereof, arising out of, embraced, involved or set forth in, or referred to or otherwise related, directly or indirectly, in any way to, the Action or the subject matter or allegations of the Action, including, without limitation, claims for negligence, gross negligence, breach of fiduciary duty, including without limitation the duties of care and/or loyalty, fraud, constructive fraud, self:dealing, misrepresentation (whether intentional, negligent or innocent), omission (whether intentional, negligent or innocent), concealment (whether intentional, negligent Or innocent), mismanagement, gross mismanagement, abuse of control, waste, money damages, unjust enrichment, breach of contract, or violations of any federal, state, local Or

foreign law, or any other rule, law, Or regulation, or any other source of legal or equitable obligation of any kind or description in whatever forum or allegations that could have been made

in the Action,

1,13. "Released Persons" means each and all of the Defendants and their

respective Related Parties,

1.14, "Settlement" means the proposed settlement and compromise of the

Action as provided for herein.

1.15, "Settling Parties" means, collectively, each of the Defendants and the

Plaintiff on behalf of herself and derivatively on behalf of TeleTech, and Teletech

1.16. "Unknown Claims" means any Released Claims which Plaintiff,

TeleTech, or any Current TeleTech Stockholder does not know or suspect to exist in his, her or

its favor at the time of the release of the Released Persons which, if known by him, her or it,

Fl 74800-1 might have affected his, her or its settlement with and release of the Released Petsons, or might have affected his, her or its decision not to object to this Settlement. Plaintiff, TeleTech, or

Current TeleTech Stockholders may hereafter discover facts in addition to oi different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but Plaintiff, TeleTech, or Current TeleTech Stockholders shall expressly, upon the Effective Date, be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Plaintiff and TeleTech acknowledge, and Current TeleTech Stockholders shall be deemed by operation of the Final

Judgment and Order to have acknowledged, that the foregoing waiver was separately bargained

for and a key element of the Settlement of which this release is a material and essential part and

expressly waive (i) the benefits of the provisions of Section 1542 of the California Civil Code,

which provides that

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR;" and (ii) the benefits of any comparable law, statute, regulation or legal principle of any other

jurisdiction.

I' I -347,1800-1 2. The Settlement

As a result of the filing, prosecution and Settlement of the Action, the Company received the monetary relief described at section V.2.A, below, Defendants have also agreed that the

Company and/or the Board will adopt the corporate governance provisions described at section

V,2..B, below.

A. Monetary Relief

To resolve the Action, the Company shall receive 6,5 million to be paid on behalf of the

Defendants' by the Company's directors & officers' insurance cornet(s),

B. Corporate Governance Relief

Within 90 days of the issuance of an order approving the settlement the Board will adopt resolutions, amend appropriate committee charters, and take other steps required to ensure adherence to the following Corporate Governance Policies. The Company further agrees that the

governance provisions included herein will become effective no later than twelve (12) months

after the date of the adoption of the above resolutions and will remain in effect for no less than

three (3) years; provided, however, that if the Company ceases to be a publicly traded company

prior to the end of such thtee (3) year pet iod, such governance provisions shall expire on the date

and at the time the Company ceases to be a publicly traded company,

1. Policies and Procedures

a. The Compensation Committee of the Board shall annually examine the

Company's director and executive officer compensation policies. The Compensation Committee

shall recommend that the Board shall establish a comprehensive and responsible set of

assumptions, policies and procedures for determining executive compensation policies and

procedures for determining executives' and directors' compensation.

Pr F1-3474800-1 b. The Compensation Committee's Charter will be amended to provide for the retention of outside counsel to provide legal advice to the Compensation Committee.

c. The Company shall adopt a process to protect against the untimely filing of the required forms with the United States Securities and Exchange Commission ("SEC") by Section

16 officers and directors who are recipients of option grants, RSU grants and warrants.

d. Re-pricing of "underwater" stock options shall be prohibited absent express stockholder approval.

e. The Compensation Committee shall engage recognized experts to advise the

Compensation Committee regarding executive compensation plans and their compliance with legal requirements for proper documentation, disclosure and accounting.

2. Stock Option Plans

a. The Compensation Committee shall annually examine the Company's existing policies and procedures for determining executive and director compensation. Equity award plans shall provide an objective, measurable and good faith mechanism for pricing equities

awarded thereunder.

b. All equity award plans shall clearly define the method for determining the

exercise price, the grant date and the fair market value of stock (e.g., the closing price on a

specified date, or the average closing price over a specified period). The fair market value of

TeleTech stock on a grant date shall be the closing price for a share of TeleTech common stock

on such day as reported on the NASDAQ Stock Market or other primary exchange on which the

Company's shares are traded or, if no sales prices are reported on that date, on the last preceding

date on which such prices of TeleTech stock are so reported.

RI. I' I-3474800-1 c. The Compensation Committee shall include a provision in any current and/or subsequent equity award plans, whether subject to stockholder approval or not, to the effect that the date of grant of an option shall, for all purposes, be the date on which the Board or

Compensation Committee makes the final determination granting such option and all conditions and requirements for the issuance of such option grant are satisfied. Notice of the determination shall be given to each employee or consultant to whom an option is so granted no more than one week after the date of such grant.

d. The Compensation Committee shall ensure that equity award plans shall not permit stock options to be issued with an exercise price below the fair market value on the date of the grant.

e. The Compensation Committee shall ensure that its executive compensation plans,

policies or procedures shall designate a Company employee who is responsible for ensuring

compliance with the terms and conditions of the equity award plans, NASDAQ (or other primary

exchange on which the Company's shares are traded) guidelines and applicable laws and

regulations concerning equity award plans (e.g., timely and accurate filing of SEC Forms 3, 4

and 5). This designated Company employee shall prepare an annual report for the Compensation

Committee's review which details all stock option and RSUs granted during the applicable six-

month period and which otherwise summarizes the Company's compliance with this paragraph,

f. Retroactive awards of stock grants or Rals in excess of the annual limits

imposed by the terms of the Company's equity award plans shall be prohibited. This limitation

shall not preclude the Company's ability to modify annual limits. However, any such

modifications of annual limits will require unanimous written approval by the Compensation

Committee and notice to stockholders before any such modifications are to become effective.

RI F I-3,174800-1 3. Granting of Stock Option Awards

a. Authority to grant stock option awards should be limited to the full Board or a

Compensation Committee constituted according to SEC and NASDAQ (or other primary exchange on which the Company's shares are traded) rules and regulations.

b. All grants that require Board or Compensation Committee approval shall be made only at a meeting of the Board or Compensation Committee, respectively, or by any duly authorized delegation procedures and not by unanimous written consent. The reporter for any and all meetings where options are granted shall promptly prepare minutes of the meeting.

c. The Compensation Committee shall ensure that the authorized body for awarding

TeleTech equity compensation awards shall be specified in the Compensation Committee

Charter and any current and/or subsequent equity award plans, whether subject to stockholder approval or not,

d. For grants made to the Company's "named executive officers" within the

meaning of the SEC's proxy rules, the Company will provide an appropriate description in the

CD&A in the annual proxy statement of how such equity compensation grant dates were chosen.

e. The grant date shall be the same date the Board or Compensation Committee

takes final action to grant the option or such later date as may be specified by the Board or

Compensation Committee in the granting resolutions. Written documentation identifying

grantees, amounts, and prices of all stock options granted on a particular date shall be prepaied

and distributed to Grantees for signature on the date of grant or within fifteen (15) business days

thereafter. This signed documentation shall be transmitted to the Company's legal and

accounting departments on the date of grant or within fifteen (15) business days thereafter

RIF I -3474800-1 The Company's senior officers shall be prohibited from determining the date of any option award,

4. Director Independence

a. A majority of the Board and all of the Compensation Committee shall be comprised of independent directors,

b. The Company agrees to continue to comply with NASDAQ (or other primary exchange on which the Company's shares are traded) and SEC rules and regulations regarding the number, duties and qualifications for independent directors

c. Since the Action was initiated, the Board added a new independent director,

5. Director Nomination Procedures

a, If there is a vacancy on the Board requiring the appointment of a new independent director, the Nominating and Governance Committee shall establish a procedure, to be overseen

by the Chairman of the Nominating and Governance Committee, to nominate new directors to

the Board,

b. The procedure for identifying and nominating new directors shall provide for:

Objective criteria to assist in conducting the canvassing efforts detailed

below.

An appropriate review, including background information and interviews

of pi ospective candidates that will be conducted and after which qualified candidates will

be sent to the Nominating and Governance Committee for review.

Identification of candidates from those submitted for review, based on the

Nominating and Governance Committee's business judgment as to the most qualified

candidate(s) for the open independent director position(s) on the Board.

R I' 1-347480(1-1 c. Once the Nominating and Governance Committee recommends the new independent director for election to the Board, the Board, subject to its fiduciary duties, shall move to fill the vacancy in a manner consistent with the Company's Charter and Bylaws.

Defendants agree that the Settlement, including foregoing monetary payments and corporate governance measures provide substantial benefits to TeleTech and Current Teletech

Stockholders.

VI. HEARING ORDER AND SETTLEMENT HEARING

6.1. Within five (5) days of the execution of this Stipulation, the Settling Parties shall jointly submit this Stipulation together with its Exhibits to the Court and shall apply for entry of

an order (the "Hearing Order"), substantially in the form of Exhibit A attached hereto, providing

for the scheduling of a hearing on the Settlement set forth in this Stipulation, and approval for the

mailing and publication of a Notice of Settlement of the Action (the "Notice"), substantially in

the form of Exhibit B attached hereto. Within ten (10) days of the entry of the Hearing Order,

TeleTech shall cause the Notice to be mailed to all Current Teletech Stockholders that can be

identified using reasonable efforts. Additionally, within ten (10) days of the entry of the Hearing

Order, TeleTech shall cause the Notice (and this Stipulation) to be published on its corporate

website.

6.2. TeleTech shall pay for the costs associated with disseminating Notice. Prior to

the Settlement Hearing, Teletech's Counsel shall file with the Court an appropriate declaration

with respect to the preparation, publication and mailing of the Notice.

VU. RELEASES

7.1. Upon the Effective Date, as defined in Section V, 11 1.4, Plaintiff and Plaintiffs

Counsel, on their own behalf and derivatively on behalf of TeleTech (as nominal defendant).

TeleTech and COMM TeleTech Stockholders shall be deemed to have, and by operation of the

Final Judgment and Order shall have fully, finally, and forever released, relinquished,

extinguished, and discharged all Released Claims (including Unknown Claims as defined in

Section V, 11 1,6) against each and all of the Released Persons and shall be permanently barred

and enjoined from instituting, commencing, or prosecuting or asserting any Released Claim

against any of the Released Persons.

7.2. Upon the Effective Date, as defined in Section V. 111, ,l, Teletech and each of the

Released Persons shall be deemed to have, and by operation of the Final Judgment and Order

shall have, fully, finally, and forever released, relinquished, extinguished, and discharged

Plaintiff and Plaintiff's Counsel from all claims (including Unknown Claims as defined in

Section V, 11 1,16), arising out of, relating to, or in connection with the institution, prosecution,

assertion, Settlement or resolution of the Action or the Released Claims,

VIII. PLAINTIFF'S COUNSEL'S ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES

8.1. TeleTech, on behalf of all Defendants, has agreed, subject to approval by the

Court, to pay a total sum of $1,500,000 to Plaintiffs Counsel for their fees and expenses

Defendants shall not object to this request.

8.2. Such sum as the Court awards Plaintiffs' Counsel (the "Fee Award") shall be paid

to Plaintiff's Settlement Counsel, within 10 days after the entry of the Final Judgment and Order,

Or any other order making the Fee Award . In the event that Order concerning the Fee Award is

reversed or modified, and in the event that the Fee Award has been paid to any extent, then

Plaintiffs Settlement Counsel shall within five (5) business days from the reversal or

modification refund the Fee Award (or such portion as the modification may require) plus

interest thereon at a rate of 3% per annum simple interest to Telerech. Plaintiff s Counsel, as a

RI_ F1-3474800-I condition of receiving the Fee Award, on behalf of themselves and each partner and/or

shareholder of their respective law firms, agree that each of their respective law firms and its

partners and/or shareholders are subject to the jurisdiction of the Court for the purpose of

enforcing the provisions of this paragraph.,

8..3. Approval of Plaintiff's Counsels' request for the Fee Award shall not be a

condition of the Settlement. Any order or proceedings relating to Plaintiff's Counsels' request

for the Fee Award or any appeal from any order relating thereto or modification thereof shall not

operate to terminate or cancel this Stipulation, and shall not affect the Final Judgment and Order

approving this Stipulation or prevent the Settlement from becoming Final.

8.4. Based on the benefits that Plaintiff's Counsel believes that Plaintiff has achieved

through her prosecution of the Action, Plaintiff's Counsel intends to seek Court approval for an

award in the amount of $2,000 (the "Special Award") for Plaintiff Defendants will not object to

a request for Court approval of the Special Award. The Special Award shall be paid out of the

Fee Award to the extent that application is approved by the Court.

IX. CONDITIONS OF SETTLEMENT, EFFECT OF NON-APPROVAL, CANCELLATION OR TERMINATION

9.1, The Effective Date shall be conditioned on the occurrence of all of the following

events:

A. The Court has entered the Hearing Order, substantially similar in form to Exhibit A,

attached hereto;

B. The Company has received $6.5 million pursuant to the Settlement;

C. The Court has entered the Judgment substantially in the form of Exhibit C;

D. The Judgment has become Final, as defined in Section V, 1.5; and

E The final judgment and order approving the settlement of the Class Action is rendered

R I -3474800-1 by the United States District Court and such order is not subject to further review on

appeal or otherwise.

9.2. If all of the conditions specified in II 9.1 are not met, then the Stipulation shall be canceled and terminated, unless Plaintiffs Settlement Counsel and Defense Counsel mutually agree in writing to proceed with the Stipulation.

93 If the Effective Date does not occur, Or if the Stipulation is not approved by the

Court or the Settlement set forth in the Stipulation is terminated or fails to become effective in accordance with its terms, the Settling Parties shall be restored to their respective positions in the

Action as of the date of execution of this Stipulation. In such event, the terms and provisions of the Stipulation, shall have no further force and effect with respect to the Settling Parties and shall not be used in the Action Or in any other proceeding for any purpose, and any Judgment or order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated,

171111C prO 11177C.

9.4. If the Effective Date does not Occur Or if the Stipulation is not approved by the

Court or the Settlement set forth in the Stipulation is terminated or fails to become effective in

accordance with its terms, the monetary provision of the Settlement shall be refunded by the

Company to its insurance carrier(s) within five (5) days of the entry of any such order that would

prevent the Effective Date from occurring.

X. MISCELLANEOUS PROVISIONS

10,1.. The Settling Parties (a) acknowledge that it is their intent to consummate this

agreement; and (b) agree to cooperate to the extent reasonably necessary to effectuate and

implement all terms and conditions of the Stipulation and to exercise their good faith best efforts

to accomplish the foregoing terms and conditions of the Stipulation,

RI. F1-3474890-1 10.2. The Settling Parties intend this Settlement to be a final and complete resolution of all disputes between them with respect to the Action and their subject matter. The Settling

Parties agree that the Settlement was negotiated in good-faith by the Settling Parties and reflects a Settlement that was reached voluntarily after consultation with experienced counsel.

10.3. Pending Court approval of the Stipulation and the Settlement, (i) Plaintiff agrees not to initiate any proceedings other than those incident to the Settlement itself; and (ii)

Defendants may seek to prevent or stay any other action or claims brought seeking to assert any

Released Claim. If any action that would be barred by the releases contemplated by this

Stipulation is commenced against any of the Released Persons prior to the entry of Final

Judgment, and such action is not dismissed prior to the Settlement Hearing contemplated by this

Stipulation, any Defendant may, at his, her or its sole option, withdraw from the Settlement prior to the Settlement Hearing. The Settlement shall remain binding as to the remaining parties thereto, if any.

10.4. Neither the Stipulation nor the Settlement, nor any act performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity or invalidity of any

Released Claim, or of any wrongdoing or liability or lack thereof of the Defendants and Released

Persons; or (b) is or may be deemed to be or may be used as an admission of, or evidence of, any

fault or omission or lack thereof of any of the Defendants and Released Persons in any civil,

criminal or administrative proceeding in any court, administrative agency or other tribunal.

Defendants and Released Persons may file the Stipulation and/or the Judgment in any action that

may be brought against them in order to support a defense or counterclaim based on principles of

res judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any

RLF1-34748t10-1 other theory of claim preclusion or issue preclusion or similar defense or counterclaim.

Defendants have denied and continue to deny each and all of the claims alleged in the Action.

Plaintiff, TeleTech or any Current TeleTech Stockholder, may file the Stipulation in any proceeding brought to enforce any of its terms or provisions. The Settling Parties and their counsel, and each of them, agree, to the extent permitted by law, that all agreements made and orders entered during the course of the Action relating to the confidentiality of information shall survive this Stipulation.

10.5. Plaintiff agrees not to institute, join in, or cooperate in any way in any threatened, pending, or future litigation, lawsuit, claim or action against the Released Persons, or any of them, alleging, prosecuting, regarding, concerning, relating to, referring to or arising out of in any way the Released Claims.

10.6, Plaintiff warrants and represents that she has not assigned or transferred or

attempted to assign or transfer to any person or entity any Released Claim or any portion thereof

or interest therein,

10.7. Plaintiff hereby represents and warrants that she has adequate information

regarding the terms of this Settlement, the scope and effect of the releases set forth herein, and

all other matters encompassed by this Stipulation to make an informed and knowledgeable

decision with regard to entering into this Stipulation, and that she has independently and without

reliance upon the Defendants made her own analysis and decision to enter into this Stipulation.

10.8. Defendants hereby represent and warrant that they have adequate information

regarding the terms of this Settlement, the scope and effect of the releases set forth herein, and

all other matters encompassed by this Stipulation to make an informed and knowledgeable

decision with regard to entering into this Stipulation, and that they have independently and

RL 1:1-3,171800-1 without reliance upon the Plaintiff made their own analysis and decision to enter into this

Stipulation. Defendants acknowledge and hereby verify that the Plaintiff has not made any representation or warranty and has no duty or obligation to them, whether express or implied, of any kind or character, except as expressly set forth herein.

10.9. This Stipulation has been jointly drafted by the parties at arm's length. No provision or ambiguity in this Stipulation shall be construed or interpreted against any party by virtue of its participation in the drafting of this Stipulation. The Stipulation shall in all cases be construed as a whole, according to its fair meaning and not strictly for or against any of the parties.

10..10.. The covenants contained in this Stipulation provide good and sufficient consideration for every promise, duty, release, obligation, agreement and right contained in this

Stipulation.

10.11. Any failure by any party to insist upon the strict performance by any other party

of any of the provisions of the Stipulation shall not be deemed a waiver of any of the provisions,

and such party, notwithstanding such failure, shall have the right thereafter to insist upon the

strict performance of any and all of the provisions of the Stipulation to be performed by such

other party.

10.12. All of the Exhibits to the Stipulation are material and integral parts hereof and are

fully incorporated herein by reference.

10.13. The Stipulation may be amended or modified only by a written instrument signed

by or on behalf of all Settling Parties or their respective successors-in-interest.

1014k The Stipulation and the Exhibits attached hereto constitute the entire agreement

between Plaintiff and Defendants and no representations, warranties or inducements have been

RI. F1-3474800-1 made to any party concerning the Stipulation or its Exhibits other than the representations, warranties and covenants contained and memorialized in such documents. Except as otherwise provided herein, each party shall bear its own costs,

10,15. Each counsel or other Person executing the Stipulation or any of its Exhibits on behalf of any party hereto hereby warrants that such Person has the full authority to do so,

1016. The Stipulation may be executed in one or more counterparts.. All executed counterparts and each of them shall be deemed to be one and the same instrument. A complete set of original executed counterparts shall be filed with the Court.

10.17. The Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the parties hereto.

1018, The Court shall retain jurisdiction with respect to implementation and enforcement of the terms of the Stipulation, and all parties hereto submit to the jurisdiction of the

Court for purposes of implementing and enforcing the Settlement embodied in the Stipulation and for any matters arising out of, concerning, or relating thereto,

10,19. The Stipulation and the Exhibits hereto shall be considered to have been negotiated, executed and delivered, and to be wholly performed, in the State of Delaware, and the rights and obligations of the parties to the Stipulation shall be construed and enforced in accordance with, and governed by, the internal, substantive laws of the State of Delaware without giving effect to that State's choice of law principles.

1020. FN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed, by their duly authorized attorneys.

1211: I -1174800-1 Dated: October 26, 2009

Respectfully submitted,

/31 NO111(117 lvi. AiOnhail Rosenthal, Monbait & Goddess, P.A. Norman M. Monhait (41040) 919 Market Street, Suite 1401 P.O. Box 1070 Wilmington, DE 19899-1070 Phone: (302) 656 4433 Fax: (302) 658-7567

Counsel for Plaintiff

The Weiser Law Firm, P.C. Robert B. Weiser Brett D. Stecker Jeffrey J. Ciarlanto 121 N. Wayne Avenue, Suite 100 Wayne, PA 19087 Phone: (610) 225-2677 Fax: (610) 225-2678

The Shuman Law Firm Kip B. Shuman Rusty E. Glenn 801 Fast 17th Avenue Denver, CO 80218 Phone: (303) 861-3003 Fax: (303) 830-6920

/s/ Brock E. Czeschin Richards Layton & Finger, P.A. Allen M. Terrell, Jr., Esquire (# 709) Brock E. Czeschin, Esquire (# 3938) One Rodney Square 920 North King Street Wilmington, DE 19801

RM-3474800-1 Counsel for defendants Kenneth D Tuchnicm, James E Barlett, Rod Dammeyer, George H Heihneier, John T McLennan, Morton Meyerson, Alan Silverman, Mark C Thompson, Sharon A O'Lecny, Dennis]. Lacey, John Simon, Alan Schutzman, Brian Delaney John Troka, Larry Kessler, Michael E Foss, and Margot O'Dell, and nominal defendant Tele Tech Holdings, Inc

OF COUNSEL

Dewey & LeBoeul LLP Ralph C. Ferrara Geoffrey H. Coll 1101 New York Avenue, N.W. Suite 1100 Washington, DC 20005 Phone: (202) 346-8000 Fax: (202) 346-8102

Counsel for Nominal Defendant

Brownstein Hyatt Farber Schreck Timothy R. Beyer Zhonette M. Brown 410 Seventeenth Street Suite 2200 Denver, CO 80202 Phone: (303) 223-1116 Fax: (303) 223-1111

Counsel for Defendants James E Baden, William A. Linnenbringer, Ruth C Lipper, Shrikant Mehta, Shirley Young, Rod Dammeyer, George H Heihneier, John T McIetlI7C111, Morton Meyerson, Alan Silverman, Mark C. Thompson, Sharon A. O'Leary, Dennis J Lacey, John Simon, Alan Schutzman, Brian Delaney, John C Thoka, Larry

RL F -3471800-I Kessler, Michael E Foss and Margot O'Dell

McDermott Will & Emery LLP Laurence Berman Matt Oster 2049 Century Park East, 38th Floor Los Angeles, CA 90067 Phone: (310) 277-4110 Fax: (310) 277-4730

Counsel for Defendant Kenneth D TI1C17117CM

121.1: I -317=4800- I EXHIBIT H IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SUSAN M. GREGORY, • • Plaintiff, • vs. : Civil Action : No. 3925-CC KENNETH D. TUCHMAN, JAMES E. BARLETT, WILLIAM A. • LINNENBRINGER, RUTH C. LIPPER, SHRIKANT MEHTA, SHIRLEY YOUNG, ROD DAMMEYER, GEORGE C. HEILMEIER, JOHN T. MCLENNAN, • MORTON MEYERSON, ALAN • SILVERMAN, MARK C. THOMPSON, SHARON A. O'LEARY, DENNIS J. • LACEY, JOHN SIMON, ALAN • SCHUTZMAN, BRIAN DELANEY, JOHN TROKA, LARRY KESSLER, MICHAEL E. FOSS and MARGOT O'DELL, • • Defendants, • and • TELETECH HOLDINGS, INC., • Nominal Defendant. - - - Chancery Court 34 The Circle Georgetown, Delaware Tuesday, January 5, 2010 2:30 p.m.

- - - BEFORE: HON. WILLIAM B. CHANDLER III, CHANCELLOR.

- - - SETTLEMENT HEARING - - -

CHANCERY COURT REPORTERS 410 Federal Street Dover, Delaware 19901 (302) 739-3934

1 APPEARANCES: (By telephone): 2 NORMAN M. MONHAIT, ESQ. 3 Rosenthal, Monhait & Goddess, P.A. -and- 4 ROBERT B. WEISER, ESQ. BRETT D. STECKER, ESQ. 5 JEFFREY J. CIARLANTO, ESQ. of the Pennsylvania bar 6 The Weiser Law Firm, P.C. -and- 7 KIP B. SHUMAN, ESQ. of the Colorado bar 8 The Shuman Law Firm for Plaintiff 9

10 BROCK E. CZESCHIN, EQ. Richards, Layton & Finger, P.A. 11 -and- • TIMOTHY R. BEYER, ESQ. 12 of the Colorado bar Brownstein, Hyatt, Farber, Schreck 13 for Defendants Kenneth D. Tuchman, James Barlett, Rod Dammeyer, George Heilmeier, 14 John McLennan, Morton Meyerson, Alan Silverman, Mark Thompson, Sharon O'Leary, 15 Dennis Lacey, John Simon, Alan Schutzman, Brian Delaney, John Troka, Larry Kessler, 16 Michael Foss Margot O'Dell and Nominal Defendant TeleTech Holdings, Inc. 17 -and- GEOFFREY H. COLL, ESQ. 18 Dewey & LeBoeuf, LLP for Nominal Defendant 19

21 - - - 22

CHANCERY COURT REPORTERS

1 THE COURT: Good afternoon, counsel.

2 Do you have any trouble hearing me?

3 MR. MONHAIT: No. I hear you fine.

4 Can others hear the Chancellor?

5 THE COURT: All right. I have you on

6 speaker phone. I am in the courtroom, and the only

7 person present in the courtroom besides my clerk and

8 my staff is a member of the press, Jeff Feely, and

9 there is no one else here. It is past the hour of

10 2:30 at which this settlement hearing was scheduled,

11 which is Gregory versus Tuchman, et al, Civil Action

12 Number 3925.

13 So if there are introductions, please

14 feel free to do that. If not, whoever is going to

15 present the settlement to me should feel free to

16 begin.

17 MR. MONHAIT: Your Honor, good

18 afternoon. This is Norm Monhait. Thank you very much

19 for agreeing to conduct this hearing by phone.

20 I have on the line with me Robert

21 Weiser and Kip Shuman who have been the principal

22 counsel on behalf of the plaintiff in this action, and

23 Mr. Weiser will be speaking in support of the

24 settlement. Your Honor has granted his pro hac vice

CHANCERY COURT REPORTERS

1 motion this morning.

2 THE COURT: Very well then.

3 Mr. Weiser, where are you? Are you in New York or

4 here in Wilmington?

5 MR. WEISER: Neither, Your Honor. I

6 am in Wayne, Pennsylvania which is one of the western

7 suburbs of Philadelphia.

8 THE COURT: I'm sorry. I now look and

9 see that your office is in Wayne. My apologies.

10 MR. WEISER: None needed.

11 MR. CZESCHIN: Brock Czeschin from

12 Richards, Layton on behalf of the defendants, and I

13 have on the phone Geoffrey Coll from Dewey & LeBoeuf

14 representing the nominal defendant Teletech, and

15 Mr. Timothy Beyer of Brownstein, Hyatt, Farber,

16 Schreck in Denver who represents all the individual

17 defendants other than Mr. Tuchman.

18 THE COURT: Very well then. Welcome

19 to all. I'm glad you're able to make it by telephone.

20 Hopefully that is a little more convenient for all.

21 MR. MONHAIT: It is, thank you.

22 MR. WEISER: Your Honor, thank you.

23 As Your Honor knows, we are here on a

24 final unopposed motion for final settlement approval.

CHANCERY COURT REPORTERS

1 MR. COLL: Geoff Coll on behalf of the

2 nominal defendants, but we are also happy to rest on

3 the submissions.

4 THE COURT: All right.

5 Well, counsel, thank you very much for

6 being available on by telephone. This, I know, is

7 convenient for you, but it also is convenient to the

8 Court to do it this way.

9 I have read the brief that was

10 submitted and the affidavits, of course, by Mr. Weiser

11 and his firm and Mr. Monhait's firm and the others, so

12 I am familiar with the issues and with the terms of

13 the settlement.

14 Let me say at the outset that it is

15 comforting to know that this litigation was mediated

16 and that Judge Weinstein was involved in that. That

17 is something that I do recognize and get comfort from. 1 18 Secondly, I have to tell you, having

19 had a number of options dating, backdating and excess

20 grant cases in my career, I think I am the only judge

21 perhaps on this Court who can say this, but I think

22 every one of my cases has successfully settled in a [ 23 way that has resulted in very generous settlements

24 that were highly beneficial to the companies involved

CHANCERY COURT REPORTERS

1 and to their stockholders.

2 So I take some, I don't know, personal

3 pride in that I am glad that that has worked out in

4 each of these cases, and this one in particular, as

5 well as the Ryan versus Gifford involving Maxim. I am

6 happy about that and glad that you were able to

7 achieve this result, and I compliment all counsel

8 involved, those who represent the company and

9 represent the individual defendants as well as counsel

10 for the plaintiffs.

11 So having said that, let me turn then

12 to what I think I am obliged to do at this point.

13 First, a Court, in reviewing the proposed settlement

14 of a derivative litigation, looks primarily at whether

15 the settlement is fair, reasonable and adequate.

16 There is no real litmus test or a blueprint for how

17 courts arrive at what is a fair, reasonable and

18 adequate settlement, but we tend to focus on a number

19 of different factors which include the risks of

20 establishing liability in the litigation and the risks

21 of recovering or establishing any damages as a result ;

22 of any liability that is found.

23 In this particular case, Mr. Weiser

24 talked about the damages issue at length, and I don't

CHANCERY COURT REPORTERS

; 32

1 shortly.

2 THE COURT: Thank you, Mr. Czeschin.

3 Everyone, have a very good day.

6 (The teleconference concluded at

7 3:20 p.m.)

CHANCERY COURT REPORTERS

• 33

CERTIFICATE

I, MAUREEN M. McCAFFERY, Official Court

Reporter of the Chancery Court, State of Delaware, do

hereby certify that the foregoing pages numbered

3 through 32 contain a true and correct transcription

of the proceedings as stenographically reported by me at the hearing in the above cause before the

Chancellor of the State of Delaware, on the date therein indicated.

IN WITNESS WHEREOF, I have hereunto set my hand at Dover, this 8th day of

January, 2010.

/s/Maureen M. McCaffery

Maureen M. McCaffery Official Court Reporter of the Chancery Court State of Delaware

Certification Number: 201-RPR Expiration: 1/31/11

CHANCERY COURT REPORTERS EXHIBIT I EFiled: Jan 5 2010 4316119ittcest-li‘ to" 4145i GRANTED 132'nitittIC Transaction ID 287937'4 vytea.: nen &Se Nu. OV40-GC W1-11 ASI 4AVe IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

X SUSAN M. GREGORY, • Plaintiff, • • VS.

KENNETH D. TUCHMAN, JAMES E. BARLETT, WILLIAM A. LINNENBRINGER, RUTH C. LIPPER, SHRIKANT MEHTA, SHIRLEY YOUNG, ROD DAMMEYER, GEORGE C. HEILMEIER, JOHN T. MCLENNAN, C.A. No. 3925-CC MORTON MEYERSON, ALAN SILVERMAN, MARK C. THOMPSON, SHARON A. O'LEARY, DENNIS J. LACEY, JOHN SIMON, ALAN SCHUTZMAN, BRIAN DELANEY, JOHN TROKA, LARRY KESSLER, MICHAEL E. FOSS, and MARGOT O'DELL,

Defendants,

and •

TELETECH HOLDINGS, INC., •

Nominal Defendant • X

FINAL JUDGMENT APPROVING SETTLEMENT AND ORDER OF DISMISSAL

A hearing having been held before this Court (the "Court") on January 5, 2010, pursuant

to the Court's Hearing Order dated October 27, 2009 (the "Hearing Order"), upon a Stipulation

of Settlement filed on October 26, 2009 (the "Stipulation") in the above-captioned action (the

"Action") brought derivatively on behalf of TeleTech Holdings, Inc. ("TeleTech"), it appearing

RLF1 3474899v.1 that due notice of said hearing was given in accordance with the Hearing Order and that said

notice was adequate and sufficient; and the Parties having appeared by their attorneys of record;

and the attorneys for the respective Parties having been heard in support of the Settlement of the

Action, and an opportunity to be heard having been given to all other Persons desiring to be

heard as provided in the Notice; and the entire matter of the Settlement having been considered

by the Court;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED, this 5th day of January

2010, as follows:

1. Unless otherwise defined herein, all defined terms shall have the meanings

as set forth in the Stipulation.

2. The Notice, annexed as Exhibit B to the Stipulation, has been

disseminated by TeleTech pursuant to and in the manner directed by the terms of the Hearing

Order,; proof of the dissemination of the Notice was filed with the Court; and full opportunity to

be heard has been offered to all Parties and all Persons in interest. The form and manner of the

Notice is hereby determined to have been the best notice practicable under the circumstances and to have been given in full compliance with each of the requirements of Court of Chancery Rule

23.1 and due process, and it is further determined that all Current TeleTech Stockholders are

bound by the Judgment herein.

3. The Court finds that the Stipulation and the terms of the Settlement set

forth therein are fair, reasonable and adequate and in the best interests of TeleTech and Current

TeleTech Stockholders. The Settlement is hereby approved pursuant to Court of Chancery Rule

23.1. The Parties to the Stipulation are hereby authorized and directed to comply with and to

- 2 - RLF1 3474899v.1 consummate the Settlement in accordance with its terms and provisions, and the Clerk of Court is directed to enter and docket this Judgment.

4. This Judgment shall not constitute any evidence or admission by any Party herein that any acts of wrongdoing have been committed by any of the Parties to the Action and should not be deemed to create any inference that there is any liability therefore.

5. The Action (as well as all claims contained therein and all of the Released

Claims) is hereby dismissed on the merits and with prejudice, with each party to bear his, her, or its own costs except as detailed in the Stipulation.

6. Plaintiff (acting on her own behalf individually and derivatively on behalf of TeleTech), Current TeleTech Stockholders, and Plaintiffs' Counsel shall be deemed to have, and by operation of this Final Judgment and Order have fully, finally, and forever compromised, settled, released, discharged and dismissed all Released Claims (including "Unknown Claims," as defined in the Stipulation) and any and all claims arising out of, relating to, or in connection with the defense, settlement or resolution of the Action against the Released Persons, and shall be forever enjoined from instituting, commencing, or prosecuting or asserting these claims, except that this agreement shall have no effect on any and all rights or claims Individual

Defendants and/or TeleTech may have under any policies of insurance or for indemnification.

7. TeleTech and each of the Released Persons shall be deemed to have, and by operation of the Judgment have, fully, finally, and forever compromised, settled, released and discharged Plaintiff and Plaintiff's Counsel from all claims (including Unknown Claims) arising out of, relating to, or in connection with their institution, prosecution, assertion, settlement or resolution of the Action or the Released Claims.

- 3 - RLF1 3474899v.1 8. Neither the Stipulation nor the Settlement, nor any act performed or

document produced or executed pursuant to or in furtherance of the Stipulation or the Settlement:

(a) is or may be deemed to be or may be offered, attempted to be offered or used in any way by the Settling Parties or any other person as a presumption, a concession or any admission of, or

evidence of, any fault, wrongdoing or liability of the Individual Defendants or of the validity of

any Released Claims; or (b) is intended by the Settling Parties to be offered or received as

evidence or used by any other person in any other actions or proceedings, whether civil, criminal

or administrative. The Released Parties may file the Stipulation and/or this Judgment in any

action that may be brought against them in order to support a defense or counterclaim based on

principles of res judzcata, collateral estoppel, full faith and credit, release, good faith settlement, judgment bar or reduction, or any other theory of claim preclusion or issue preclusion or similar

defense or counterclaim.

9. This Court further finds that the Settlement has been entered into and

made in good faith through arm's-length negotiations, and that Plaintiff and Plaintiff's Counsel

have fairly and adequately represented the interests of Current TeleTech Stockholders in

connection with the Action.

10. Plaintiff's Counsel are hereby awarded attorneys' fees and expenses in the

amount of $1,500,000.00 (the "Fee Award"), which sum the Court finds to be fair and reasonable

and which shall be paid to Plaintiff's Counsel in accordance with the terms of the Stipulation.

11. Plaintiff is hereby awarded $2,500.00 (the "Special Award") based on the

benefits that Plaintiff has achieved through her prosecution of the Action. The Special Award

shall be paid out of the Fee Award in accordance with the terms of the Stipulation.

- 4 - RLF1 3474899v.1 12. In the event that the Settlement of the Action does not become effective as

set forth in the Stipulation for any reason, then, without the need for any further action by any

Party thereto or by the Court, the Stipulation and this Judgment shall become null and void and

of no further force or effect, and shall not be used or referred to for any purpose whatsoever. In that event, the Stipulation, this Judgment and all negotiations and proceedings relating thereto

shall be withdrawn without prejudice as to the rights of all Parties thereto, who shall be restored to their respective positions existing prior to the execution of the Stipulation and this Judgment.

13. All other relief not expressly granted in this Judgment is denied.

14. Without affecting the finality of this Judgment in any way, this Court

reserves jurisdiction over all matters relating to the administration and consummation of the

Settlement, including but not limited to (a) implementation of this settlement; and (b) construing,

enforcing and administering the Stipulation.

SO ORDERED.

Signed this 5th day of January, 2010.

CHANCELLOR WILLIAM B. CHANDLER III

- 5 - RLF1 3474899v.1 This document constitute,: a riding of the &tun and should be heated as such Court: DE Court of Chancery Civil Action Judge: William B Chandler File & Serve Transaction ID: 28791044

Current Date: Jan 05, 2010

Case Number: 3925-CC Case Name: CONF ORDER Gregory, Susan M vs Kenneth D Tuchman TeleTech Holdings Inc et al

/s/ Judge William B Chandler EXHIBIT J Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 1 of 8. PagelD #: 125

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

• JAMES T. KING, derivatively on behalf of : Civil Action No. 1:10-cv-01786-DAP KEYCORP,

Plaintiff, . v.

HENRY L. MEYER, III, WILLIAM G. BARES, PETER G. TEN EYCK, II, CAROL A. CARTWRIGHT, EDWARD P. CAMPBELL, BILL R. SANFORD, ALEXANDER M. CUTLER, THOMAS C. STEVENS, EDUARDO R. MENASCE, JEFFREY B. WEEDEN, LAURALEE E. MARTIN, H. JAMES DALLAS, BETH E. MOONEY, JOSEPH A. CARRABBA, RUTH ANN M. GILLIS, KRISTEN L. MANOS, and MERCER, INC.,

Defendants, and • • KEYCORP, • Nominal Defendant.

-1- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 2 of 8. PagelD #: 126

IRVING LASSOFF, derivatively on behalf : Civil Action No. 1:10-cv-01813-JG of KEYCORP,

Plaintiff, v. • HENRY L. MEYER, III, WILLIAM G. BARES, PETER G. TEN EYCK, II, CAROL A. CARTWRIGHT, EDWARD P. CAMPBELL, BILL R. SANFORD, ALEXANDER M. CUTLER, THOMAS C. STEVENS, EDUARDO R. MENASCE, JEFFREY B. WEEDEN, LAURALEE E. MARTIN, H. JAMES DALLAS, BETH E. MOONEY, JOSEPH A. CARRABBA, RUTH ANN M. GILLIS, KRISTEN L. • MANOS, and MERCER, INC., • Defendants, and •

KEYCORP,

Nominal Defendant. •

STIPULATION CONSOLIDATING ACTIONS, APPOINTING LEAD COUNSEL AND RELATED MATTERS AND ORDER THEREON WHEREAS, there are presently two related shareholder derivative actions against certain of the officers and directors of KeyCorp pending in this Court;

WHEREAS, the two KeyCorp shareholder derivative actions arise out of the same alleged transactions and occurrences and involve the same or substantially similar alleged issues of fact and law, and, therefore, should be consolidated for all purposes;

WHEREAS, in an effort to assure consistent rulings and decisions and the avoidance of unnecessary duplication of effort, all of the undersigned counsel, on behalf of parties to this stipulation in the related KeyCorp shareholder derivative actions currently pending in this Court, enter into this stipulation. The counsel are: (1) The Weiser Law Firm, P.C., Hutton Law Group, and Landskroner Grieco Madden, LLC on behalf of plaintiff James T. King; (2) Ryan &

-2- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 3 of 8. PagelD #: 127

Maniskas, LLP and Landskroner Grieco Madden, LLC on behalf of plaintiff Irving Lassoff; (3)

Jones Day on behalf of individual defendants Henry L. Meyer III ("Meyer"), Thomas C. Stevens

("Stevens"), Jeffrey B. Weeden ("Weeden"), and Beth E. Mooney ("Mooney"); (4) Calfee, Halter & Griswold LLP on behalf of individual defendants William G. Bares ("Bares"), Peter G.

Ten Eyck II ("Ten Eyck"), Carol A. Cartwright ("Cartwright"), Edward P. Campbell

("Campbell"), Bill R. Sanford ("Sanford"), Alexander M. Cutler ("Cutler"), Eduardo R. Menasce ("Menasce"), Lauralee E. Martin ("Martin"), H. James Dallas ("Dallas"), Joseph A. Carraba

("Carraba"), Ruth Ann M. Gillis ("Gillis"), and Kristen L. Manos ("Manos"); 1 (5) Vorys, Sater,

Seymour & Pease LLP on behalf of defendant Mercer, Inc. ("Mercer"); and (6) Baker & Hostetler LLP on behalf of nominal party KeyCorp;

WHEREAS, KeyCorp, Mercer, and the Individual Defendants take no position at the

present time as to the appointment of (a) The Weiser Law Firm, P.C. as lead counsel for plaintiffs; and (b) Landskroner Grieco Madden, LLC as liaison counsel for plaintiffs;

WHEREAS, the plaintiffs, KeyCorp, Mercer, and the Individual Defendants agree that it

would be duplicative and wasteful of the Court's resources for defendants named in plaintiffs' shareholder derivative actions to have to respond to the individual complaints prior to the agreed-

upon consolidation Therefore, the plaintiffs, KeyCorp, Mercer, and the Individual Defendants

agree that no response is necessary to the individual complaints that have already been filed until after the KeyCorp shareholder derivative actions have been consolidated and a consolidated

complaint has been filed. * * *

Now, therefore, the parties hereto stipulate and the Court ORDERS as follows:2

1 Collectively, defendants Meyer, Stevens, Weeden, Mooney, Bares, Ten Eyck, Cartwright, Campbell, Sanford, Cutler, Menasce, Martin, Dallas, Carraba, Gillis, and Manos shall be referred to herein as the "Individual Defendants." 2 By virtue of this stipulation and order, no party waives or otherwise compromises any of its potential arguments, rights or defenses with respect to and including, among other things, jurisdiction, venue, or choice of law. -3- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 4 of 8. PagelD #: 128

I. CONSOLIDATION OF THE RELATED SHAREHOLDER DERIVATIVE ACTIONS The following shareholder derivative actions are hereby related and consolidated for all

purposes, including pre-trial proceedings and trial: Abbreviated Case Name Case Number Date Filed King v. Meyer, et al., 1 : 10- cv-01786-DAP July 6, 20103 Lassoff v. Meyer, et al., 1:10-cv-01813-JG August 17, 2010

II. CAPTION OF CASES Every pleading filed in these consolidated actions, or in any separate action included

herein, shall bear the following caption:

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

IN RE KEYCORP DERIVATIVE ) Lead Case No. 1:10-cv-01786-DAP LITIGATION ) ) This Document Relates to: ) ) ALL ACTIONS ) ) III. MASTER DOCKET The files of these consolidated actions shall be maintained in one file under Master File

No. 1:10-cv-01786-DAP.

IV. PLEADINGS AND MOTIONS Plaintiffs shall file a consolidated complaint (the "Consolidated Complaint") no later than

60 days from the date of entry of this Order, unless otherwise agreed between the parties and

approved by the Court, which shall be deemed the operative complaint, superseding all complaints filed in any of the actions consolidated hereunder. Defendants shall have up to 45

days after the filing of the Consolidated Complaint to move, answer or otherwise respond to the

3 The KeyCorp shareholder derivative action captioned King v. Meyer, et al., Case No. 1:10-cv- 01786-DAP (the "King Action"), was filed on July 6, 2010 in the Court of Common Pleas of Cuyahoga County, Ohio, Case No. CV-10-730994. On August 12, 2010, certain of the defendants removed the King Action to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. -4- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 5 of 8. PagelD #: 129

Consolidated Complaint. Plaintiffs shall file their opposition to any motion(s) to dismiss within

45 days after the filing of Defendants' motion(s). Defendants shall file any replies to plaintiffs'

opposition within 30 days after plaintiffs' filing of the opposition. V. ORGANIZATION OF COUNSEL

Lead Counsel for plaintiffs for the conduct of these consolidated actions is:

THE WEISER LAW FIRM, P.C. ROBERT B. WEISER BRETT D. STECKER JEFFREY J. CIARLANTO 121 N. Wayne Avenue, Suite 100 Wayne, PA 19087 Telephone: (610) 225-2677 Facsimile: (610) 225-2678

Each counsel's appearance and service in these capacities is subject to approval of a pro

hac vice application to be filed within 60 days.

Lead Counsel shall have authority to speak for plaintiffs in matters regarding pre-trial procedure, trial and settlement negotiations and shall make all work assignments in such manner

as to facilitate the orderly and efficient prosecution of this litigation and to avoid duplicative or

unproductive effort. Lead Counsel shall be responsible for coordinating all activities and appearances on

behalf of plaintiffs and for the dissemination of notices and orders of this Court. No motion,

request for discovery, or other pre-trial or trial proceedings shall be initiated or filed by any plaintiffs except through plaintiffs' Lead Counsel.

Lead Counsel also shall be available and responsible for communications to and from this

Court, including distributing orders and other directions from the Court to counsel. Lead Counsel shall be responsible for creating and maintaining a master service list of all parties and their respective counsel. Service on Lead Counsel shall be sufficient as notice to plaintiffs in this

consolidated action. Liaison counsel for plaintiffs for the conduct of these consolidated actions is:

-5- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 6 of 8. PagelD #: 130

LANDSKRONER GRIECO MADDEN, LLC JACK LANDSKRONER DREW LEGANDO 1360 West 9th Street, Suite 200 Cleveland, OH 44113 Telephone: (216) 522-9000 Facsimile: (216) 522-9007 VI. NEWLY FILED OR TRANSFERRED ACTIONS This Order shall apply to each case arising out of the same or substantially the same transactions or events as these cases, which is subsequently filed in or transferred to this Court.

When a case which properly belongs as part of the In re KeyCorp Derivative Litigation, Lead Case No. 1: 10-cv-01786-DAP, is hereafter filed in this Court or transferred here from

another court, this Court requests the assistance of counsel in calling to the attention of the clerk

of the Court the filing or transfer of any case which might properly be consolidated as part of the In re KeyCorp Derivative Litigation, Lead Case No. 1:10-cv-01786-DAP, and counsel are to

assist in assuring that counsel in subsequent actions receive notice of this Order.

IT IS SO STIPULATED.

DATED: August 19, 2010 THE WEISER LAW FIRM, P.C. ROBERT B. WEISER BRETT D. STECKER JEFFREY J. CIARLANTO 121 N. Wayne Avenue, Suite 100 Wayne, PA 19087 Telephone: (610) 225-2677 Facsimile: (610) 225-2678

By: s/ Robert B. Weiser (with permission) ROBERT B. WEISER

[Proposed] Lead Counsel and Counsel for Plaintiff James T. King

RYAN & MANISKAS, LLP KATHARINE M. RYAN RICHARD A. MANISKAS 995 Old Eagle School Rd. Suite 311 Wayne, PA 19087 Telephone: (484) 588-5516 Facsimile: (484) 450-2582 -6- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 7 of 8. PagelD #: 131

Counsel for Plaintiff Irving Lassoff

LANDSKRONER GRIECO MADDEN, LLC JACK LANDSKRONER (Ohio Bar Registration No. 0059227) DREW LEGANDO (Ohio Bar Registration No. 0084209) 1360 West 9th Street, Suite 200 Cleveland, OH 44113 Telephone: 216-522-9000 216-522-9007 (fax)

By: s/ Jack Landskroner (with permission) JACK LANDSKRONER

[Proposed] Liaison Counsel and Counsel for Plaintiffs James T. King and Irving Lassoff

Dated: August 19, 2010 JONES DAY JOHN M. NEWMAN, JR. (Ohio Bar Registration No. 0005763) GEOFFREY J. RITTS (Ohio Bar Registration No. 0062603) MICHAEL A. PLATT (Ohio Bar Registration No. 0082926) 901 Lakeside Avenue Cleveland, OH 44114 Telephone: 216-586-3939 Fax: 216-579-0212

By: s/ Michael A. Platt MICHAEL A. PLATT

Counsel for defendants Henry L. Meyer III, Thomas C. Stevens, Jeffrey B. Weeden, and Beth E. Mooney

Dated: August 19, 2010 CALFEE, HALTER & GRISWOLD LLP MITCHELL G. BLAIR (Ohio Bar Registration No. 0010892) KIMBERLY M. MOSES (Ohio Bar Registration No. 0029601) 1400 KeyBank Center 800 Superior Avenue Cleveland, OH 44114 Telephone: 216-622-8361 Fax: 216-241-0816 -7- Case: 1:10-cv-01786-DAP Doc #: 5 Filed: 08/26/10 8 of 8. PagelD #: 132

By: s/ Mitchell G. Blair (with permission) MITCHELL G. BLAIR

Counsel for defendants William G. Bares, Peter G. Ten Eyck II, Carol A. Cartwright, Edward P. Campbell, Bill R. Sanford, Alexander M. Cutler, Eduardo R. Menasce, Lauralee E. Martin, H. James Dallas, Joseph A. Carraba, Ruth Ann M Gillis, and Kristen L. Manos

Dated: August 19, 2010 VORYS, SATER, SEYMOUR & PEASE LLP DAVID J. TOCCO (Ohio Bar Registration No. 0037266) LAURA G. KUYKENDALL (Ohio Bar Registration No. 0012591) 2100 One Cleveland Center 1375 East Ninth Street Cleveland, OH 44114 Telephone: 216-479-6113 Fax: 216-479-6060

By: s/ Laura G. Kuykendall (with permission) LAURA G. KUYKENDALL

Counsel for defendant Mercer, Inc.

Dated: August 19, 2010 BAKER & HOSTETLER LLP DANIEL R. WARREN (Ohio Bar Registration No. 0054595) 3200 PNC Center 1900 East Ninth Street Cleveland, OH 44114 Telephone: 216-861-7145 Fax: 216-696-0740

By: s/ Daniel R. Warren (with permission) DANIEL R. WARREN

Counsel for nominal party KeyCorp

ORDER

PURSUANT TO STIPULATION, IT IS SO ORDERED.

Date: 8/26/10 /s/Dan Aaron Polster -8-

1 CERTIFICATE OF SERVICE

2 I hereby certify that onJuly 11, 2011,1 authorized the electronic filing of the foregoing with

3 the Clerk of the Court using the CM/ECF system which will send notification of such filing to the

4 e-mail addresses denoted on the attached Electronic Mail Notice List. I hereby certify that I caused

5 to be hand delivered the foregoing document or paper to the non CM/ECF participants indicated on

6 the attached Manual Notice List that are noted by a double asterisk (**). I also certify that I caused

7 to he mailed the foregoing document or paper via the United States Postal Service to the non-

8 CM/ECF participants indicated on the attached Manual Notice List that are noted by a single asterisk

9 (*). 10 I further certify that 1 caused this document to be forwarded to the following Designated

11 Internet Site at: http://securities.stanford.edu.

12 I certify under penalty of perjury under the laws of the United States of America that the

13 foregoing is true and correct. Executed on July 11,

14 / 41, a 11. ATHLFE 15 THE WEISER LAW Ft • , . 16 12707 High Bluff Drive, Suite 200 San Diego, CA 92130 17 Telephone: 858/794-1441 Facsimile: 858/794-1450 18

19 E-mail: kah0weiserlawfirm.com

28 YAHOO Service List *THE WEISER LAW FIRM, P.C. **ROBBINS UMEDA LLP KATHLEEN A. HERKENHOFF BRIAN J. ROBBINS 12707 High Bluff Drive, Suite 200 CRAIG W. SMITH San Diego, CA 92130 SHANE P. SANDERS Telephone: 858/794-1441 GINA STASSI Facsimile: 858/794-1450 600 B Street, Suite 1900 [email protected] San Diego, CA 92101 Telephone: 619/525-3990 — and — Facsimile: 619/525-3991 [email protected] *THE WEISER LAW FIRM, P.C. [email protected] ROBERT B. WEISER [email protected] BRETT D. STECKER [email protected] JEFFREY J. CIARLANTO JOSEPH M. PROFY 121 N. Wayne Avenue, Suite 100 Attorneys for Plaintiff Iron Workers Mid- Wayne, PA 19087 South Pension Fund Telephone: 610/225-2677 Facsimile: 610/225-2678 [email protected] [email protected] [email protected] [email protected]

Attorneys for Plaintiff & Movant Yahia Tawila

*GLANCY BINKOW & GOLDBERG LLP *THE BRISCOE LAW FIRM, PLLC LIONEL Z. GLANCY WILLIE C. BRISCOE MICHAELGOLDBERG BILLY J. BRISCOE EX KANO SAMS II 8117 Preston Road, Suite 300 1801 Avenue of the Stars, Suite 311 Dallas, TX 75225 Los Angeles, CA 90067 Telephone: 214/706-9314 Telephone: 310/201-9150 Facsimile: 214/706-9315 Facsimile: 310/201-9160 [email protected]

Attorneys for Plaintiff & Movant Jan Oh Attorneys for Plaintiff & Movant Jane Oh *POWERS TAYLOR **LAW OFFICES OF DAVID N LAKE PATRICK POWERS DAVID N. LAKE MARK TAYLOR 16130 Ventura Boulevard, Suite 650 PEYTON HEALEY Encino, CA 91436 Campbell Centre II [email protected] 8150 North Central Expy., Suite 1575 Dallas, TX 75206 Telephone: 214/239-8900 Facsimile: 214/239-8901 [email protected] Attorneys for Plaintiff Debra Salzman Attorneys for Plaintiff & Movant Jane Oh

• *LAW OFFICES OF ETH A. ELAN TH A. ELAN 217 Broadway, Suite 606 New York, NY 10007 Telephone: 212/619-0261 Facsimile: 212/385-2707 [email protected]

Attorneys for Plaintiff Debra Salzman

Defendants **MO • • SON & FOERSTER LLP MARK FOSTER 425 Market Sheet San Francisco, CA 94105 Telephone: 415/268-6335 Facsimile: 415/276-7349 [email protected]

Attorneys for Yahoo, Inc., Carol A. Bartz, Jerry Yang, Roy Bostock, Patti Hart, Susan James, Vyomesh Joshi, David Kenny, Arthur Kern, Brad Smith, and Gary Wilson

*Defendant Jack Ma 24/F, Jubilee Center 18 Fenwick Street Wanchai, Hong Kong, China

-2-