new century investor lawsuit--$125 million dollars (cash)--proposed settlement
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8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
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Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 1 of 3 Page ID#:10808
1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
2ZET
blblaw.coargm3 LIZH LIN (Bar No. 174663)
([email protected] )4 NIKI L. MENDOZA (Bar No. 214646)
W
[email protected] (Bar No. 211114)
([email protected] )6TAKEO A. KELLAR (Bar No. 234470)
(takeok@blbglaw. com )7 12481 High Bluff Drive, Suite 300
San Diego, CA 921308 Tel: (858 793-0070
Fax: (8583 793-03239and-
SALVATO@
RE J. GRAZI )ANO
10 LAUREN A. MeMILLEN1 1 ^[email protected])285 Avenue of the Am ericas
12 New York, NY 10019Tel: (212) 554-1400
13 Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State T eachers’ Retirement System
15
16NITED STATES DISTRICT COURT
17ENTRA L DISTRICT OF CALIFORNIA
18IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)
19Lead Case)
20OTICE OF UNOPPOSED
1OTION AND UNOPPOSED
MOTION FOR PRELIMINARY
2PPROVAL OF SETTLEMENTS
3ate: August 30, 2010
24ime: 10:00 a.m.
Courtroom: 325udge: Hon. Dean D. Pregerson
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NOTICE OF MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 2 of 3 Page ID#:10809
1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
2LEASE TAKE NOTICE that, on August 30, 2010, at 10:00 a.m. or as soon
3 thereafter as counsel may be heard, Lead Plaintiff New York State Teachers’
4 Retirement System (“NYSTRS”), and plaintiffs Carl Larson and Charles Hooten
5 (collectively, “Plaintiffs”) will and hereby do move this Court before the
6 Honorable Dean D. Pregerson, United States District Judge, at the United States
7 Courthouse, 312 North Spring Street, Courtroom 3, Los Angeles, California 90012,
8 for an Order, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure,
9 granting Plaintiffs’ unopposed motion for preliminary approval of the proposed
10 Settlements of this action and related relief. Please also note that Plaintiffs intend
11 to seek to shorten time to hear the unopposed motion for preliminary approval of
12 the Settlements. In the event the motion to shorten time is not granted, the
13 unopposed motion for preliminary approval of Settlements shall be heard as
14 noticed on August 30, 2010, at 10:00 a.m.
15his motion is premised on the accompanying memorandum of points and
16 authorities, the Stipulations of Settlement submitted herewith, and all prior papers
17 and proceedings in this action.
18he parties have agreed upon a form of [Proposed] Order Preliminarily
19 Approving Settlements And Providing For Notice (“Preliminary Approval Order”),
20 and exhibits thereto, which is submitted herewith.
21
22 Dated: July 30, 2010espectfully submitted,
23ERNSTEIN LITOWITZ BERGER
24GROSSMANN LLP
25s/ Salvatore J. Graziano
26ALVATORE J. GRAZIANO
27LAIR A. NICHOLASELIZABETH LIN
28IKI L. MENDOZA
1OTICE OF MOTION
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Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 3 of 3 Page ID#:10810ENJAMIN GALDSTONTAKEO A. KELLAR
22481 H igh Bluff Drive, Suite 300San Diego, CA 92130
3el: (858) 793-0070Fax: (858) 793-0323
4and-
SALVATO RE J. GRAZIANO5AUREN A. MCMILLEN
1285 Avenu e of the Americas6ew York, NY 10019
Tel: (212) 554-14007ax: (212) 554-1444
8ead Counsel for Lead Plaint ffThe N ew Y ork S tate Teachers Retirem enty stem and the Class
0ARVIN L. FRANK
1 1urray, Frank & Sailer LLP275 M adison Avenue
12ew York, NY 10016Tel: (212) 682-1818
13ax: (212) 682-1892
14Counsel for Plaintiff Carl Larson
15
16EFFREY ZWERLINGZw erling, Schachter & Z werling, LLP
171 Madison AvenueNew Y ork, NY 1001018el: (212) 223-3900
19ax: (212) 371-5969
20ounsel f or Plaintiff Charles Ho oten
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2OTICE OF MOTION
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 1 of 32 Page ID#:10811
1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
2ZET
lairblbglaw.com3 LIZH LIN (Bar No. 174663)
([email protected] )4 NIKI L. MENDOZA (Bar No. 214646)
5AMGALDSTON (Bar No. 211114)([email protected] )
6TAKEO A. KELLAR (Bar No. 234470)(takeok@blbglaw. com )
7 12481 High Bluff Drive, Suite 300San Diego, CA 92130
8 Tel: (858 793-0070Fax: (8583 793-0323
9and-SALVATO
@RE J. GRAZI )ANO
10 LAUREN A. MeMILLEN1 1 [email protected])285 Avenue of the Am ericas
12 New York, NY 10019Tel: (212) 554-1400
13 Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State T eachers’ Retirement System
15
16NITED STATES DISTRICT COURT
17ENTRA L DISTRICT OF CALIFORNIA
18IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)
19Lead Case)
20LAINTIFFS’ MEMOR ANDUM
1F POINTS AND AUTH ORITIESIN SUPPORT OF UNOPPOSED
2OTION FOR PRELIMINARYAPPROVAL OF SETTLEMENTS
23
24ate: August 30, 2010
Time: 10:00 a.m.25ourtroom: 3
26udge: Hon. Dean D. Pregerson
27
28
PRELIMINARY APPROVAL MOTION
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 2 of 32 Page ID#:10812ABLE OF CONTENTSage
3 TABLE OF AUTHORITIESii4 I. PRELIMINARY STATEMENT5 II. OVERVIEW OF THE LITIGATION6. The Consolidated Complaints And
Defendants’ Motions To Dismiss7 B.iscovery8 C. KPMG’s Motion For Summary Judgment9D. The Extensive Negotiations Leading To The
10ettlements11 III. THE SETTLEMENTS12. Summary Of The Settlements13.easons For The Settlements14 IV. THE PROPOSED SETTLEMENTS WARRANT
PRELIMINARY APPROVAL15A. Factors To Be Considered By The Court In
16he Preliminary Approval Of C lass ActionSettlements
171 .he Settlements W ere Vigorousl
18egotiated And A re Supported WyExperienced Counsel119
2.he Substantial Benefits Obtained For20he Class, Especially In Light Of
Serious Risks Of Lesser Or No21ecovery, Support Approval Of T he
Settlements2223.he Stage Of The Proceedings And
23iscovery Completed SupportApproval Of The S ettlements424
B.he Class Should Be C ertified For25ettlement Purposes426.umerosity527.ommonality628.ypicality7-i-RELIMINARY APPROVAL MOTION
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1.dequacy82.omm on Questions Of LawPredominate And A Class Action Is
3he Superior Method Of Adjudication84.he Proposed P lan Of A llocation Is Fair
And Reasonable95D. The Notice To The Class Is Adequate26
V. CONCLUSION47
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 4 of 32 Page ID#:10814ABLE OF AUTHOR ITIESASESAGE( S)
3n re A pplied M icro Circuits Corp. Sec. L itig.,003 U.S. Dist. LE XIS 14 492 (S.D. Cal. July 10, 2003)85
B lack ie v. B arrack,524 F.2d 891 (9th Cir. 197 5)56Class Plaintiff s v . S eattle,
7955 F.2d 126 8 (9th Cir. 1992),10,20
Conn . Ret. Plans and Trust Funds v . A m gen, Inc.,8009 U.S. Dist. LEX IS 7 16 53 (C.D. Cal. Aug. 12, 2009)69n re Consol. Pinnacle W . Sec. L itig.,
01 F.3d 194 (9th Cir. 1995)111 In re Cooper Cos., Inc. Sec. L itig.,254 F.R.D. 6 28 (C.D. Cal. 2009)912 Crossen v . CV Therapeutics,
3005 W L 1910928 (N.D. C al. Aug. 10, 2005)714Duk es v. W al-M art, Inc.
509 F.3d 116 8 (9th C,ir. 2007 )815 In re Em ulex C orp. Sec. L itig. ,
610 F.R.D. 717 (C.D. Cal. 2002)0In re First Capital HoldingsCorp. Fin. Prods. Sec. Litig
7,
1992 U.S.-Dist. LE XIS 14 337 (C.D. Cal. June 10, 1992)218 Fulford v. Lo itech, Inc.,
9010 U.S.-Dist. LE XIS 2904 2 (N.D. Cal. Mar. 5, 2010)1Glass v. UB S Fin. Servs. Inc.,031 Fed. Ap px. 452 (9th Cir. 2009) (unpubl.)0,22
21 Harris v. Palm Springs A lpine Estates, Inc.,
229 F.2d 909 (9th Cir. 196 4)523In re Heritage B ond L itig.,
2005 WL 1594403 (C.D . Cal. June 10, 2005)
224 In re Im m une Response Sec. Liti
597 F. Supp. 2d 1166 (S.D. Caf. 2007)426In re Juniper N etw orks S ec. Litig.,
26 4 F.R.D. 584 (N.D. Cal. 2009)5, 16, 17
27 K irk orian v. B orelli
895 F. Supp. 449 (N.D. C al. 1988)2-iii-RELIMINARY APPROVAL MOTION
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 5 of 32 Page ID#:10815
1n re L DK Solar Sec . Litig.,255 F.R.D. 519 (N.D. C al. 2009)7, 18, 20
2In re Me o Fin. Corp. Sec. Litig.,13 F.3d 454 (9th Cir. 2000)0, 22
4M endoza v. United States,6 23 F.2d 1338 (9th Cir. 1980)25
Of ficers for Justice v. Civ il S erv. Com m ’n,88 F.2d 6 15 (9th Cir. 1982)07n re Om nivision Techs.,559 F. Supp. 2d 1036 (N.D. Cal. 2007 )0, 22
8In re Oracle S ec. L itig.,994 W L 502054 (N.D. Cal. June 18, 1994)210 In re Portal S oftw are, Inc. S ec. L itig.,
2007 W L 417 1201 (N.D. Cal. Nov. 26, 2007)
411R odriguez v . W . Publ’g Corp.,26 3 F.3d 948 (9th Cir. 2009)413 S chaefer v. Ov erland E xpress Fam ily of Funds,
16 9 F.R.D. 124 (S.D. Cal. 1996 )814Schwartz v. Harp,508 F.R.D. 279 (C .D. Cal. 1985)616 S iem er v. A ssocs. First Capital Corp.,
2000 U.S. Dist. LEX IS - 21244 (D . Ariz. Dec. 13, 2000)617 S ilber v. M abon,88 F.3d 1449 (9th Cir. 1994)519 In re T HQ Inc. S ec. Litig
2002U.S. Dist. LEXIS,7753 (C.D. Cal. Mar. 22, 2002)720
T orrisi v. T ucson Elec. Pow er Co.,1F.3d 137 0 (9th Cir. 1993)022V an Bronkhorst v. S afeco Cor .,
529 F.2d 943 (9th Cir. 1976 )23In re V eriSign Inc. Sec. L itig.,4005 U.S. Dist. LE XIS 104 38 (N.D. Cal. Jan. 13, 2005)625 In re V eritas So ftw are Corp. Sec. L itig.,
496 F.3d 962 (9th Cir. 2007)226In re W ireless Facilities, Inc. Sec . L itig.,753 F.R.D. 6 30 (S.D. Cal. 2008)7, 22
28 In re W orldCom , Inc. Sec. L itig.,388 F. Supp. 2d 319 (S.D.N.Y. 2005)0-iv-RELIMINARY APPROVAL MOTION
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 6 of 32 Page ID#:10816
1 TATUTES AND R ULES
2 15 U.S.C.A. §78u-4(a)(7)(A)-(F)33 Fed. R. Civ. P. 23assim
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1 . PRELIMINARY STATEMENTead Plaintiff, the New York State Teachers’ Retirement System
3 (“NYSTRS”), and plaintiffs Carl Larson and Charles Hooton (collectively,
4 “Plaintiffs”), respectfully submit this Memorandum of Points and Authorities in
5 support of their unopposed motion for the entry of an order (i) granting preliminary
6 approval to the proposed Settlements set forth in the Settlement Stipulations filed
7 concurrently herewith 1 ; (ii) certifying the proposed Class for settlement purposes;
8 (iii) approving the form and manner of giving notice of the proposed Settlements to
9 the Class; and (iv) setting a hearing date for final approval of the Settlements (the
10 “Final Settlement Hearing”). The parties have agreed upon a form of [Proposed]
11 Order Preliminarily Approving Settlements And Providing For Notice
12 (“Preliminary Approval Order”) and exhibits thereto, which is submitted herewith.
13s set forth in the Settlement Stipulations, the Settlements provide for the
14 collective payment of approximately $125 million in cash (the “Settlement
15 Amount”) plus any and all interest earned thereon (the “Settlement Fund”) for the
16 benefit of the Class, in exchange for dismissal of claims against all Defendants. 2
1781The three Settlement Stipulations are as follows: (a) Stipulation Of Global
19 Settlement With New Century Officers And Directors (“Global Settlement
Stipulation,” attached as Exhibit 2 hereto), which provides a sum to the Class of
20 $65,077,088 to settle the claims against the New Century director and officer
21 Defendants; (b) Stipulation Of Settlement Between Plaintiffs And KPMG (attached
as Exhibit 3 hereto), which provides a sum of $44,750,000 to settle the claims
22 against auditor Defendant KPMG; and (c) Stipulation Of Settlement Between
23 Plaintiffs And The Underwriter Defendants (attached as Exhibit 4 hereto), which
provides a sum of $15,000,000 to settle the claims against the Underwriter24 Defendants. The three Settlement Stipulations provide for a total recovery for the
25 Class of approximately $125,000,000 in cash before deduction of Court-approved
26 fees, expenses, and costs.
2 The Defendants include the following: (i) “Individual Defendants” who are
27 former officers and directors of New Century, including Robert K. Cole, Brad A.
28 Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael
M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A.
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 8 of 32 Page ID#:10818he proposed Settlements were reached only after extensive litigation and
2 negotiations – including more than eleven in-person mediation sessions and
3 numerous negotiations over the course of more than one year – overseen by an
4 experienced mediator, the Honorable Daniel Weinstein (Ret.) (the “Mediator”),
5 and with the active participation of the Court-appointed Lead Plaintiff NYSTRS,
6 whose General Counsel or Associate General Counsel personally attended each of
7 the mediation sessions. The proposed Settlements represent an outstanding result
8 for Plaintiffs and the Class, particularly in light New Century’s bankruptcy and the
9 risks to the Class if the action continued, including the risks of establishing
10 Defendants’ liability and the Class’s full amount of damages trial and the risks that
11 there would be significantly less funds available to satisfy any judgment or post-
12 trial settlement.
13y this Motion, Lead Plaintiff respectfully requests that the Court
14 preliminarily approve the Settlements, based on Lead Plaintiff’s evaluation of the
15 facts and applicable law, and its recognition of the substantial risks and expense of
16 continued litigation. At the Final Settlement Hearing, the Court will have before it
17 more extensive motion papers submitted in support of the proposed Settlements,
18 and will then make an ultimate determination of whether the Settlements are fair,
19 reasonable, and adequate under all of the circumstances surrounding the action. At
20 this juncture, Lead Plaintiff requests only that the Court grant preliminary approval
21 of the Settlements so that Notice of the Settlements may be sent to the Class and
22 the Final Settlement Hearing may be scheduled.
23
245 Zona, Marilyn A. Alexander, David Einhorn, and William J. Popejoy; (ii)
26 “Underwriter Defendants,” including Bear, Stearns & Co. Inc., Deutsche Bank
Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
27 LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.;
28 and (iii) KPMG LLP (“KPMG”). New Century was not named as a defendant due
to its filing of bankruptcy.
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 9 of 32 Page ID#:10819
1 I. OVERVIEW OF THE LITIGATION. The Consolidated ComplaintsAnd D efendants’ Motions To Dismiss
3
4
eginning on February 8, 2007, numerous related class action complaints5 were filed in the Central District of California alleging that the Defendants violated
6 the federal securities laws by misrepresenting and failing to disclose adverse facts
7oncerning New Century’s business condition and financial results.n8 June 26, 2007, the Court entered an Order consolidating all the related actions, and
9 appointed NYSTRS as Lead Plaintiff and Bernstein Litowitz Berger & Grossmann
10 LLP as Lead Counsel. On September 14, 2007, after extensive research and
11nvestigation, Plaintiffs filed a consolidated class action complaint.n12 November 2 and 20, 2007, Defendants filed five separate motions to dismiss.
13 Plaintiffs opposed the motions. Thereafter, on January 31, 2008, the Court
14 dismissed the consolidated complaint with leave to amend.
15n March 24, 2008, Plaintiffs filed an amended complaint, and two days
16 later the Bankruptcy Examiner published his Final Report concerning his
17 investigation of the facts leading to New Century’s bankruptcy. In the interests of
18 judicial economy, the parties agreed to a schedule for filing Plaintiffs’ Second
19 Amended Complaint. On April 30, 2008, Plaintiffs filed the Second Amended
20 Complaint, asserting claims under Sections 10(b) and 20(a) of the Securities
21 Exchange Act of 1934 (“Exchange Act”) and Sections 11 and 15 of the Securities
22 Act of 1933 (“Securities Act”).
23n June 2, 2008, Defendants filed six separate motions to dismiss the
24 Second Amended Complaint. Among other things, the Defendants argued that
25 Plaintiffs did not adequately plead the strong inference of scienter required for the
26 Exchange Act claims and that Plaintiffs failed to adequately plead there was loss
27 causation. Plaintiffs opposed these motions on July 7, 2008, and Defendants filed
28 their reply memoranda on July 28, 2008. On September 22, 2008, the Court heard
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1 oral arguments on the Defendants’ motions to dismiss. On December 3, 2008, the
2 Court issued an order denying Defendants’ motions to dismiss.
3.iscoveryollowing the Court’s December 3, 2008 denial of the Defendants’ motions
5 to dismiss, the discovery stay imposed by the Private Securities Litigation Reform
6 Act of 1995 (“PSLRA”) was automatically lifted. Plaintiffs served dozens of
7 requests for production of documents and subpoenas. Following numerous meet
8 and confers over discovery disputes, including the filing of several discovery
9 motions, Plaintiffs ultimately obtained over 38 million pages of documents from
10 the parties and non-parties in this action.
11mong other things, Plaintiffs received over 35 million pages of documents
12 from the New Century Liquidating Trust, over 2.8 million pages from Defendant
13 KPMG, over 600,000 pages from the Underwriter Defendants, and approximately
14 half a million pages of documents from various third parties. Plaintiffs also
15 produced documents to Defendants, including trade confirmations, brokerage
16 statements, investment manuals, and other materials in their possession concerning
17 New Century. Through their review of these documents, the parties were well
18 informed of the strengths and weaknesses of their positions, their ability to prove
19 their claims and defenses, and they entered into the Settlements having taken these
20 factors into consideration.
21. KPMG’s Motion For Summary Judgment
2n January 13, 2010, Defendant KPMG filed a motion for summary
23 judgment, arguing that Plaintiffs could not establish loss causation in this case for
24 any misstatements concerning the Company’s 2005 financial results. On
25 March 15, 2010, Plaintiffs filed their opposition to KPMG’s motion and a related
26 motion to exclude KPMG’s expert on loss causation. On April 14, 2010, KPMG
27 filed its reply brief as well as three motions to exclude Plaintiffs’ experts on loss
28
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1 causation. KPMG’s motion for summary judgment was pending at the time it
2 reached an agreement in principle to settle with Lead Plaintiff.
3. The Extensive Negotiations Leading To The Settlementshe Settlements are the result of intensive, arm’s-length negotiations
5 between all parties, involving eleven in-person mediation sessions over more than
6 a one-year time period, as well as extensive direct and indirect negotiations
7 between counsel for the parties that occurred before and after those mediations.
8 Settlement negotiations occurred while litigation was ongoing, including the
9 briefing and discovery related to KPMG’s summary judgment motion, and
10 Plaintiffs’ review of over 38 million pages of documents. The negotiations were
11 particularly complex due to the parties’ disputes over the claims and defenses in
12 the action, New Century’s bankruptcy, the number of defendants in this case, and
13 the existence of claims that were made against certain of the Defendants by the
14 New Century Liquidating Trustee (the “Trustee”), plaintiffs in the related action
15 Kodiak Warehouse LLC, et al. v. Brad A. Morrice, et al., Case No. 08-1265-DD P-
16 FMO (“Kodiak”), and the Securities & Exchange Commission (“SEC”). In the
17 end, the parties were able to reach global settlements on all claims, including not
18 only those claims alleged in the instant class action, but also the claims brought by
19 the Trustee, Kodiak, and the SEC which was necessary to achieve a settlement
20 here.
21he negotiations commenced on March 11, 2009, when Plaintiffs and
22 certain of the Defendants participated in in-person mediation sessions before the
23 Honorable Daniel Weinstein. The mediations took place over three separate days,
24 on March 11, 12, and 24, 2009, followed by additional negotiations facilitated by
25 the Mediator on March 31, 2009, and May 8, 2009. A second in-person mediation
26 session took place over two days on June 25 and 26, 2009, followed by calls with
27 the Mediator on July 29, 2009, and August 18, 2009. A third in-person mediation
28 session took place on September 14, 2009, followed by a conference call on
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1 October 1, 2009. A fourth in-person mediation session took place on October 26,
2 2009, followed by conference calls and meetings with the Mediator on December
3 29, 2009, and January 13, 2010. A fifth in-person mediation session took place
4 over two days on January 18 and 19, 2010, followed by conference calls on5 January 19, 2010, January 20, 2010, and February 11, 2010. The parties continued
6 to participate in conference calls with the Mediator thereafter and held final in-
7 person mediation sessions on April 28 and 29, 2010. Although the parties did not
8 fully resolve these matters by April 29, 2010, all parties were close to reaching
9 agreements in principle to settle all of the claims. At that time, Lead Counsel
10 drafted the comprehensive settlement documents. Over May, June, and July 2010,
11 the parties extensively negotiated the specific terms of the settlement documents,
12 including the three Settlement Stipulations, the proposed Preliminary Approval
13 Order, the Class Notice, the Proof of Claim form, the Summary Notice, and the
14 three proposed Judgments.
15 III. THE SETTLEMENTS
16. Summary Of The Settlements
17he parties entered into the Settlement Stipulations to completely resolve the
18 above-captioned action against Defendants. Defendants collectively agreed to pay
19 approximately $125 million in cash to the Class. If the Settlements are approved
20 by the Court, this action will be dismissed with prejudice and Defendants and their
21 related parties will receive the release of claims in the Settlement Stipulations.
22s part of the Settlements, the parties agreed to the certification of a Class
23 defined as:
24ll persons and entities who purchased or otherwise acquired New
25entury common stock, New Century Series A Preferred Stock, New
26entury Series B Preferred Stock, and/or New Century call options
27nd/or who sold New Century put options, during the time period
28rom May 5, 2005, through and including March 13, 2007, either in
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2nd who, upon disclosure of certain facts alleged in the Complaint,
3ere injured thereby. 3
4
he approximately $125 million of settlement proceeds, after payment of5 taxes, costs (including costs of providing notice and claims administration),
6 expenses and attorneys’ fees, will be distributed to Class Members pursuant to a
7 Plan of Allocation to fairly allocate the net proceeds of the Settlements to members
8 of the Class who submit acceptable Proof of Claim forms. The proposed Plan of
9 Allocation is set forth in paragraphs 32 through 85 of the proposed Notice to the
10 Class, attached as Exhibit A-1 to the proposed Preliminary Approval Order.
11he Settlements are documented in three separate Settlement Stipulations
12 entered into by Plaintiffs, on behalf of themselves and the Class, subject to Court
13 approval. 4 First, Plaintiffs have entered into a Settlement Stipulation with
14 Defendant KPMG providing for payment to the Class of $44,750,000. Second,
15 Plaintiffs have entered into a Settlement Stipulation with the Underwriter
16 Defendants for payment to the Class of $15,000,000. Third, Plaintiffs have entered
17 into a Global Settlement Stipulation with the New Century officer and director
18 Defendants providing for payment to the Class of $65,077,088 in cash (as well as
190 3 Excluded from the Class are (a) Defendants; (b) members of the immediate
21 families of the Individual Defendants; (c) the subsidiaries and affiliates of
Defendants; (d) any person or entity who was a partner, executive officer, director22 or controlling person of New Century (including any of its subsidiaries or
23 affiliates) or of any Defendant; (e) any entity in which any Defendant has a
controlling interest; and (f) the legal representatives, heirs, successors and assigns24 of any such excluded party. Also excluded from the Class are any persons who
25 exclude themselves by filing a request for exclusion in accordance with the
requirements set forth in the Notice.26 4 Pursuant to the Settlement Stipulations and as explained in the Notice, the three
27 settlement agreements are closely related and, if one of the three settlements should
28 not become final for any reason, it could affect the finality and enforceability of the
other settlements.
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1 other payments to resolve the other claims brought against these Defendants by the
2 SEC, the Trustee, and Kodiak). 5
3. Reasons For The Settlementslaintiffs entered into the Settlements with a thorough understanding of the
5 strengths and weaknesses of the claims asserted in this action. This understanding
6 is based on Lead Counsel’s prosecution of the action, which included, among other
7 things: (a) drafting of detailed complaints after review and analysis of the SEC
8 filings, press releases and other public statements relating to New Century, media
9 and news reports about New Century, publicly available trading data relating to the
10 price and volume of New Century securities, the Examiner’s Report, and other
11 information; (b) interviews with numerous former employees of New Century; (c)
12 extensive briefing on Defendants’ various motions to dismiss and KPMG’s motion
13 for summary judgment; (d) review and analysis of over 38 million pages of
14 documents produced by Defendants and third parties; (e) consultation with loan
15 underwriting, accounting and damages experts; and (f) the drafting of mediation
16 statements and numerous mediation letters and preparing for and participating in
17 numerous mediation sessions and extensive negotiations. Based on the foregoing,
18 Lead Plaintiff has entered into the Settlements with an in-depth understanding of
19 the strengths and weaknesses of Lead Plaintiff’s claims and damages.
20lthough Lead Plaintiff and Lead Counsel believe that the claims asserted
21 against Defendants have merit, they also recognize that there are serious risks as to
22
235The Global Settlement Stipulation provides for a total of $91,102,331.51 in cash
24 and $944,029.49 in other consideration to be paid to resolve all of the claims
25 against the New Century officers and directors by the Class, the SEC, the Trustee
26 and Kodiak. The Global Settlement Stipulation further provides an agreed-to
allocation of these payments to the Class and the plaintiffs in the other pending
27 actions. The Class is receiving over 70% of the amount paid by the New Century
28 officer and director Defendants in the Global Settlement Stipulation, or
$65,07 7 ,088 in cash.
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1 whether Plaintiffs would ultimately prevail on the merits, including specifically
2 with regard to proving loss causation. Additionally, there was a very substantial
3 risk that, even if Plaintiffs were to prevail on the merits, the Class might not
4 recover as much as the total Settlement Amount on a judgment. Indeed, because5 New Century had filed for bankruptcy, the available funds to satisfy any judgment
6 against the New Century officer and director Defendants were diminishing over
7 time. The Settlements represent a substantial all-cash fund for the Class and will
8 eliminate the significant risk that continued litigation might result in a smaller
9 recovery or possibly no recovery at all. As set forth below, the Settlements include
10 payment of the vast amount of the Director and Officer insurance available to
11 satisfy a judgment in this action along with personal contributions from certain of
12 the New Century officer Defendants.
13or these reasons, Lead Plaintiff and Lead Counsel submit that the
14 Settlements are fair, adequate and reasonable, and warrant preliminary approval.
15 IV. THE PROPOSED SETTLEMENTSW ARRANT PRELIMINARY APPROVAL
16A. Factors To Be Considered By The Court In The
17reliminary Approval Of C lass Action Settlements
18ederal Rule of Civil Procedure 23(e) requires judicial approval for any
19 compromise of claims brought on a class basis. Whether to approve a proposed
20 settlement is within the sound discretion of the district court, which should be
21 exercised in the context of public policy strongly favoring the pretrial settlement of
22 class action lawsuits. See Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir.
23 1992). “[T]here is an overriding public interest in settling and quieting litigation,”
24 and this is “particularly true in class action suits.” V an B ronkhorst v. Safeco Corp.,
25 529 F.2d 943, 950 (9th Cir. 1976).
26ecognizing that a settlement represents an exercise of judgment by the
27 negotiating parties, the Ninth Circuit has held that “the court’s intrusion upon what
28 is otherwise a private consensual agreement negotiated between the parties to a
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1 lawsuit must be limited to the extent necessary to reach a reasoned judgment that
2 the agreement is not the product of fraud or overreaching by, or collusion between,
3 the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable
4 and adequate to all concerned.”Officers for Justice v. Civil Serv. Comm’n,
6885 F.2d 615, 625 (9th Cir. 1982).
6n considering whether to grant preliminary approval of class action
7 settlements, courts make a preliminary evaluation of the fairness of the settlements
8 prior to issuing notice to the class and prior to holding a final settlement hearing.
9 The general standard by which courts are guided when deciding whether to grant
10 preliminary approval of a class action settlement is whether the proposed
11 settlement falls within the range of what could be found “fair, adequate and
12 reasonable,” so that notice may be given to the proposed class and a hearing for
13 final approval can be scheduled. Class Plaintiff s, 955 F.2d at 1276 .
14t this point, the Court need not answer the ultimate question: whether the
15 Settlements are fair, reasonable and adequate. When the Court makes this ultimate
16 determination at a later point, the Court will be asked to review the following
17 factors: the strength of Plaintiffs’ case; the risk, expense, complexity, and likely
18 duration of further litigation; the risk of maintaining class action status throughout
19 the trial; the amount offered in the Settlements; the extent of discovery completed,
20 and the stage of the proceedings; and the experience and views of counsel. S ee
21 T orrisi v . Tucso n Elec. Powe r Co., 8 F.3d 1370, 1376 (9th Cir. 1993).
22he parties here request only that the Court take the first step in the
23 settlement approval process and grant preliminary approval of the proposed
24 Settlements. The proposed Settlements, which provide approximately $125 million
25 in cash for distribution to eligible Class Members before deduction of Court-
26 awarded fees and expenses, are unquestionably beneficial to the Class. Given the
27 complexities of this action and the continued risks if the parties were to proceed,
28
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1 the Settlements represent a reasonable resolution and eliminate the risk that the
2 Class might recover less or nothing at all.
3s outlined in the proposed Preliminary Approval Order, if the Court grants
4 preliminary approval, Lead Plaintiff, through the Claims Administrator, will notify
5 Class Members of the Settlements by mailing the Notice and Proof of Claim to
6 Class Members. The Notice advises Class Members of the essential terms of the
7 Settlements, information regarding Lead Counsel’s fee and expense application,
8 and the proposed plan for allocating the Settlement proceeds among Class
9 Members. The Notice also sets forth the procedure for objecting to the
10 Settlements, Plan of Allocation or the request for an award of attorneys’ fees and
11 expenses; sets out the procedure for opting out of the Class; and provides specifics
12 on the date, time, and place of the Final Settlement Hearing. The proposed
13 Preliminary Approval Order further requires Lead Plaintiff to cause the Summary
14 Notice to be published once in the national edition of The Wall Street Journal an d
15 over the PR Newswire. Because the Notice and Summary Notice fairly apprise
16 Class Members of their rights with respect to the Settlements, they represent the
17 best notice practicable under the circumstances.
18s summ arized below, and as w ill be detailed further in a subsequent m otion
19 for final approval of the Settlements, a preview of the factors considered by courts
20 in granting final approval of class action settlements demonstrates that these
21 Settlements are well within the range of possible approval.
22.he Settlements W ere Vigorously NegotiatedAnd Are Supported By Experienced Counel
23
24here is an initial presumption that the proposed settlement is fair and
25 reasonable when it is the result of arm’s-length negotiations. See Fulford v.
26 Logitech, Inc., 2010 U.S. Dist. LEXIS 29042, at *6 (N.D. Cal. Mar. 5, 2010)
27 (citing In re Consol. Pinnacle W. Sec. Litig., 51 F.3d 194, 197 n.6 (9th Cir. 1995)).
28 In addition, courts recognize that the opinion of experienced counsel
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1 supporting the settlement is entitled to considerable weight. See, e.g., In re
2First Capital Holdings Corp. Fin. Prods. Sec. Litig., 1992 U.S. Dist. LEXIS
3 14337, at *8 (C.D. Cal. June 10, 1992); Kirkorian v. Borelli, 6 95 F. Supp. 446 , 451
4 (N.D. Cal. 1988). Thus, “the trial judge, absent fraud, collusion, or the like, should5 be hesitant to substitute its own judgment for that of counsel.” In re Heritage
6B ond Litig., 2005 WL 1594403, at *9 (C.D. Cal. June 10, 2005).
7he Settlements are the result of extensive arm’s-length negotiations by
8 experienced counsel which occurred for over one year and through numerous
9 mediation sessions and correspondences facilitated by the Mediator. Based upon
10 Lead Counsel’s familiarity with the factual and legal issues of this action, the
11 investigation performed, the discovery work completed, and the work in preparing
12 for and participating in the mediations, Lead Counsel was ultimately able to
13 negotiate an excellent result for the Class. This result takes into account the
14 defenses of Defendants, and the risks that the action might not survive a motion for
15 summary judgment, that Lead Plaintiff would not prevail at trial or upon appeal, or
16 that there would be less funds available to the Class after a successful result at trial
17 or on appeal than those being agreed to at this time.
18.he Substantial Benefits Obtained For The C lass,Especially In Light Of Serious Risks Of L esser Or
9o Recovery, Support Approval Of T he Settlements
0nder the terms of the Settlements, Defendants agreed to create a fund
21 consisting of approximately $125 million in cash for the Class. This is a
22 significant recovery, particularly in light of the risks of continued litigation. If the
23 action had continued, Lead Plaintiff faced substantial risks, including establishing
24 Defendants’ liability and the full amount of the Class’s damages at summary
25 judgment or trial. In addition, litigating this complex securities class action to
26 completion would result in significant expense and delay.
27he recoveries obtained by L ead C ounsel through global settlements are also
28 particularly extraordinary in light of the multiple parties involved in the
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1 negotiations. For example, as set forth in detail in the Stipulations, Lead Plaintiff
2 was able to obtain substantial sums from the New Century Insurance Carriers that
3 will be allocated to settle the claims asserted by the Class, the Trustee, and the
4 Kodiak plaintiffs. Of those sums, $65,077,088 in cash will be paid to the Class.6
5 In addition, the Settlements provide for payment of additional funds by KPMG
6 ($44,750,000 in cash) and the Underwriter Defendants ($15,000,000 in cash)
7 solely for the benefit of the Class.
8s will be explained in further detail in advance of the Final Settlement
9 Hearing, including through a declaration of Lead Plaintiff’s damages consultant,
10 the total estimated damages calculated by Lead Plaintiff’s damages consultant
11 were in excess of the amounts recovered. In evaluating the Settlements, however,
12 Lead Plaintiff took into account the fact that the Class could have a far less
13 recovery if, for example, KPMG succeeded on its motion for summary judgment
14 because KPMG’s motion threatened to eliminate all claims against KPMG and to
15 greatly reduce damages recoverable against the Underwriter Defendants.
16 Moreover, continued litigation as to the New Century Individual Defendants would
17 have further depleted the available insurance which was the primary source of
18 available recovery as to those Defendants who would have faced continued
19 litigation not only with the Class, but also with the SEC, the Trustee and Kodiak.
20n sum, these recoveries, totaling nearly $125,000,000 and obtained in the
21 face of a lesser recovery or no recovery at all, support approval of the Settlements.
223 6 The break-down of the payments by the Insurance Carriers and the New Centuryofficers, individually, is set forth in paragraphs nine through eleven of the Global
24 Settlement Stipulation. Lead Plaintiff was able to obtain the vast amount of
25 Director and Officer insurance available to satisfy any judgment, millions of which
had already been expended in defense costs. Paragraph eleven also demonstrates
26 that over 70% of the cash settlement funds contributed by the director and officer
27 Defendants (including the insurance contributions), or $65,077,088, is being
28 allocated to the resolution of the Class claims as opposed to those being allocated
to settle the actions brought by the T rustee and Kod iak.
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Complete Support Approval Of The Settlements2
3he stage of the proceedings and discovery completed are additional factors
4 considered by courts when determining the fairness of settlements.See Hanlon v.
5Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Here, prior to the execution
6 of the Settlement Stipulations, Lead Counsel conducted a thorough investigation of
7 the facts and circumstances, having interviewed dozens of witnesses and searched
8 through and analyzed large amounts of the over 38 million pages of documents
9 obtained through discovery. At the time the Settlements were reached, Lead
10 Plaintiff had briefed the opposition to Defendant KPMG’s motion for summary
11 judgment, which was pending before this Court. There can be no question that at
12 the time the Settlements were reached, Lead Counsel had a clear view of the
13 strengths and weaknesses of the Class’s claims. Additionally, Lead Plaintiff, an
14 institutional investor, monitored this case throughout the course of the litigation
15 and participated in the negotiations of the Settlements. Thus, the proposed
16 Settlements are the product of serious, informed, non-collusive negotiations, are
17 well within the range of possible approval, and do not have any obvious
18 deficiencies. For these and all of the foregoing reasons, the Court should grant
19 preliminary approval of the Settlements and direct that notice of the Settlements be
20 given to members of the Class.
21.he Class Should Be CertifiedFor Settlement Purposes
22
23he parties have stipulated that the Court may, for settlement purposes only,
24 certify the Class and appoint Plaintiffs as the Class Representatives, and Lead
25 Counsel as the Class Counsel. See Stipulations, ¶2. The Ninth Circuit has long
26 recognized that class actions may be certified for the purpose of settlement only.
27 See Hanlon, 150 F.3d 1011. Classes for the purpose of settlement are recognized
28
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1 under the general scheme of Rule 23, provided that the class is eventually
2 determined to meet the certification requirements under Rule 23. Id .ederal Rule of Civil Procedure 23(a) sets forth four prerequisites to class
4 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of5 representation. In addition, the class must meet one of the three requirements in
6 Rule 23(b).
7ourts have generally found securities claims to be particularly well-suited
8 for class action status because they allow for the policies behind the securities laws
9 to be enforced in circumstances where there are numerous investors with small
10 individual claims that otherwise would effectively be barred from litigation. See
11 Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir. 1975). This action is no exception
12 and, as explained below, the parties agree that, for purposes of the Settlements, the
13 Class should be certified as satisfying each of the requirements set forth in Rule 23.
14.umerosity
5ule 23(a)(1) requires that the class be so numerous that joinder of all class
16 members is impracticable. For purposes of Rule 23(a)(1), “[i]mpracticable does
17 not mean impossible, only that it would be difficult or inconvenient to join all
18 members of the class.” In re Juniper Networks Sec. Litig., 264 F.R.D. 584, 588
19 (N.D. Cal. 2009) (citing Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909,
20 913-14 (9th Cir. 1964)). “Numerosity does not presume a strict numerical cut-off.
21 Courts have certified classes whose membership sizes range from less than one
22 hundred to over one hundred thousand.” In re VeriSign Inc. Sec. Litig., 2005 U.S.
23 Dist. LEXIS 10438, at *12 (N.D. Cal. Jan. 13, 2005). “In cases involving
24 securities traded on national stock exchanges, numerosity is practically a given.”
25 Id.; see also Juniper, 264 F.R.D. at 588 (“Some courts have assumed that the
26 numerosity requirement is met in securities fraud suits involving nationally traded
27 stocks.”). Mathematical computation of class size is not a prerequisite for class
28 certification, and the court may use common sense assumptions to support a
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1 finding of numerosity when the class is obviously large. See Schwartz v. Harp,
2 108 F.R.D. 279, 281-82 (C.D. Cal. 1985) (“A failure to state the exact number in
3 the proposed class does not defeat class certification.”).
4
ere, millions of shares of New Century securities were traded during the5 Class Period. In addition, beneficial holders of New Century securities are
6 believed to number in the thousands and are geographically located throughout the
7 United States, making joinder of all Class Members impractical. Thus, the
8 numerosity element is satisfied.
9.ommonality
0he commonality requirement is satisfied where, as here, there are
11 “questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). There
12 need be only one issue common to class members. Hanlon, 150 F.3d at 1019.
13 Generally, courts have liberally construed the commonality prerequisite, requiring
14 only that “the named plaintiffs share at least one question of fact or law with the
15 grievances of the proposed class.” Siemer v. Assocs. First Capital Corp., 2000
16 U.S. Dist. LEXIS 21244, at *32 (D. Ariz. Dec. 13, 2000). “[A] few factual
17 variations among the class grievances will not defeat commonality so long as class
18 members’ claims arise from ‘shared legal issues’ or ‘a common core of salient
19 facts.’” Conn. Ret. Plans and Trust Funds v. Amgen, Inc., 2009 U.S. Dist. LEXIS
20 71653, at *13 (C.D. Cal. Aug. 12, 2009).
21ere, questions which are common to the proposed Class include, among
22 others: (i) whether the federal securities laws were violated by Defendants’
23 alleged acts; (ii) whether the Company’s publicly disseminated releases and
24 statements during the Class Period omitted and/or misrepresented material facts;
25 (iii) whether the prices of New Century securities during the Class Period were
26 artificially inflated due to the alleged material nondisclosures and/or
27 misrepresentations; and (iv) whether members of the Class have sustained damages
28 and, if so, what is the appropriate measure of damages. In short, because the core
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1Litig., 2003 U.S. Dist. LEXIS 14492, at *13 (S.D. Cal. July 10, 2003) (typicality
2 satisfied where plaintiff acquired securities inflated by the defendant’s false and
3 misleading statements). Additionally, Plaintiffs are not subject to any unique
4 defenses that could make them atypical members of the Class. Therefore,5 Plaintiffs respectfully submits that this Court should find that Plaintiffs’ claims are
6 typical of the Class.
7.dequacyule 23(a)(4) requires that class representatives “fairly and adequately
9 protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). In the Ninth Circuit,
10 the adequacy requirement is met where, as here, the plaintiffs: (1) “do not have
11 conflicts of interest with the proposed class”; and (2) “are represented by qualified
12 and competent counsel.” Dukes v . W al-Mart, Inc., 509 F.3d 1168, 1185 (9th Cir.
13 2007) (citing Hanlon, 150 F.3d at 1020); see also LDK, 255 F.R.D. at 532. Here,
14 the requirements for adequacy are satisfied.
15ere, as described above, Plaintiffs have claims that are typical of and
16 coextensive with those of the Class. Plaintiffs, like all Class Members, purchased
17 or otherwise acquired New Century securities at artificially inflated prices during
18 the Class Period as a result of the Defendants’ alleged materially false and
19 misleading statements and/or omissions, and were allegedly damaged thereby.
20 Further, Plaintiffs have retained counsel highly experienced in securities class
21 action litigation and which have successfully prosecuted many securities and other
22 complex class actions throughout the United States. Thus, Plaintiffs are adequate
23 representatives of the Class, and their counsel are qualified, experienced and
24 capable of prosecuting this action, in satisfaction of Rule 23(a)(4).
25. Common Questions Of Law Predominate And AClass Action Is The Superior Method O f Adjudication
26
27inally, in addition to the four requirements of Rule 23(a), a class must also
28 satisfy one of the three subparts of Rule 23(b). Here, a class action is superior to
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1 other available methods, as required by Rule 23(b)(3). To ensure that the class
2 action is more efficient than individual actions, Rule 23(b) requires that common
3 issues predominate over issues that are particular to a class representative.
4 Generally, common questions will predominate over any differences between5 individual class members “[w]hen ‘a common nucleus of misrepresentations,
6 material omissions and market manipulations [exists].’” In re Cooper Cos., Inc.
7Sec. Litig., 254 F.R.D. 628, 639-40 (C.D. Cal. 2009). Further, the superiority of
8 class actions to address securities fraud has been consistently upheld. Id. at 642.
9he predominance test is met in this action and a class action is superior to
10 other available methods. The same set of operative facts applies to each Class
11 Member – each Class Member purchased and/or acquired New Century securities
12 during the Class Period at prices alleged to be artificially inflated as a result of
13 Defendants’ false and misleading statements and/or omissions, and was allegedly
14 harmed when the undisclosed facts came to light. If Plaintiffs and each of the
15 Class Members were to bring individual actions, they would each be required to
16 prove the same wrongdoing by Defendants to establish liability. Accordingly, the
17 foregoing, the requirements of Rule 23(a) and (b) are satisfied and there are no
18 issues which would prevent the Court from certifying the Class for settlement
19 purposes and appointing Plaintiffs as class representatives. See Hanlon, 150 F.3d
20 at 1022 (citing 7A Charles Alan Wright, Arthur R. Miller and Mary Kay Kane,
21 Federal Practice & Procedure § 177 8 (2d ed. 1986)) ; see also LDK, 255 F.R.D. at
22 530; In re Emulex Corp. Sec. Litig., 210 F.R.D. 717, 721 (C.D. Cal. 2002)
23 (granting motion for class certification where “[t]he predominant questions of law
24 or fact at issue in this case are the alleged misrepresentation[s] Defendants made
25 during the Class Period and are common to the class”).
26. The Proposed Plan Of Allocation Is Fair And Reasonable
7plan of allocation should be approved if it is fair, reasonable and adequate.
28 In re Omnivision Techs., 559 F. Supp. 2d 1036, 1045 (N.D. Cal. 2008); Class
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1Plaintiffs, 955 F.2d at 1284-85. “An allocation formula need only have a
2 reasonable, rational basis, particularly if recommended by experienced and
3 competent class counsel.” In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319,
4 344 (S.D.N.Y. 2005) (citation omitted). The goal of an equitable plan of allocation5 is fairness to the class as a whole, taking into consideration the strengths of claims
6 based upon available facts and evidence, as well as the size of the fund to be
7 distributed. See Om nivision, 559 F. Supp. 2d at 1045; see also Glass v. UBS Fin.
8Servs., 331 Fed. Appx. 452, 454 (9th Cir. 2009) (unpubl.); In re Mego Fin. Corp.
9 ec. Litig., 213 F.3d 454, 46 1 (9th Cir. 2000).
10ere, Lead Plaintiff seeks only preliminary approval of the Plan of
11 Allocation so that Notice of the Plan can be sent to Class Members. At the Final
12 Settlement Hearing, the Court will have before it a more complete record,
13 including additional briefing from Lead Plaintiff, a declaration in support of the
14 Plan by Lead Plaintiff’s damages consultant, and any comments from Class
15 Members, before making a final determination on the Plan of Allocation. As set
16 forth below, the proposed Plan of Allocation plainly meets the standards for
17 preliminary approval.
18laintiffs and Lead Counsel have developed the proposed Plan of Allocation
19 set forth in paragraphs 32 through 85 of the Notice, attached as Exhibit A-1 to the
20 proposed Preliminary Approval Order. The Plan of Allocation provides that Class
21 Members who file timely and valid Proof of Claim forms will receive a pro rata
22 share of the settlement funds based on their recognized losses. The Plan of
23 Allocation was developed in consultation with Lead Plaintiff’s damages expert,
24 Professor H. Nejat Seyhun, Ph.D. It calculates each claimant’s “Recognized Loss
25 Claim,” using a formula that reflects the likely provable damages that could have
26 been obtained had this litigation proceeded to trial.
27s set forth in the Notice, the Plan of Allocation is based upon the following
28 premises: (1) the market price of New Century securities was artificially inflated;
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1 (2) the degree of inflation varied throughout the Class Period and decreased with
2 each partial disclosure of adverse information; and (3) the value of the Recognized
3 Loss Amount varies depending on when the claimant bought and/or sold the New
4 Century securities.5he Plan of Allocation also recognizes differences among the claims
6 applicable to the various settling defendants. First, Securities Act claims were
7 brought (and could only be brought) only on behalf of the Preferred Shares, and
8 not on behalf of the other securities, and only against the Underwriter Defendants.
9 Thus, as explained in the Notice, the net settlement amount being paid by the
10 Underwriter Defendants ($15 million) will be distributed only to Authorized
11 Claimants who purchased Preferred Shares, whereas the net settlement amounts
12 being paid by KPMG and the New Century officers and directors will be
13 distributed to all Authorized Claimants who otherwise have a Recognized Loss
14 Claim under the Plan of Allocation. Second, in the view of experienced Lead
15 Counsel and Lead Plaintiff’s damages consultant, in light of the speculative and
16 derivative nature of options securities, the relative risks of prevailing at trial on
17 behalf of purchasers of Call Options and sellers of Put Options were greater than
18 the risks of prevailing on the claims on behalf of purchasers of common stock and
19 Preferred Shares. Taking this factor into account, the Plan of Allocation allocates a
20 limit of 10% of the overall disbursements from the KPMG and New Century
21 director and officer settlements to Call Options and Put Options, representing a
22 50% discount to what those securities would otherwise potentially receive on a pro
23 rata basis. Differences of this nature among class members are common in
24 securities litigation and are commonly addressed by a plan of allocation in class
25 actions. See Glass, 331 Fed. Appx. at 455 (affirming plan for distributing
26 settlement proceeds that treats various class members differently based on
27 differences in recoverable damages); see also In re Oracle Sec. Litig., 1994 W L
28 502054, at *1 (N.D. Cal. June 18, 1994) (finding it is “reasonable to allocate more
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1 of the settlement to class members with stronger claims on the merits”);
2Omnivision, 559 F. Supp. 2d at 1045; Mego Fin., 213 F.3d at 46 1.
3n sum, the Plan of Allocation has a rational basis, is fully supported by
4 Lead Counsel and Plaintiffs and should be preliminarily approved so that Notice of5 the Plan can be disseminated to Class Members.
6. The Notice To The Class Is Adequateotice of a proposed settlement must be given to class members in the most
8 practicable manner under the circumstances, describing “the terms of the
9 settlement in sufficient detail to alert those with adverse viewpoints to investigate
10 and to come forward and be heard.” Mendoza v. United States, 623 F.2d 1338,
11 1352 (9th Cir. 1980); see also Fed. R. Civ. P. 23(c)(2)(B). In addition, “every
12 settlement notice must include a statement explaining a plaintiff’s recovery.”
13 Wireless Facilities, 253 F.R.D. at 636 (citing In re Veritas Software Corp. Sec.
14 Litig., 496 F.3d 96 2, 96 9 (9th Cir. 2007) ).
15ere, the Notice more than satisfies these standards. Among other things,
16 the Notice informs Class Members of: (1) the amount of the Settlements,
17 determined in the aggregate and on an average per-share basis 7 ; (2) the reasons
18 why the parties propose the Settlements; (3) a statement as to the issues on which
1907For example, the Notice explains that assuming that all Class Members
21 participate in the Settlements, Lead Plaintiff’s damages consultant estimates that
the average distribution per damaged share will be approximately $0.69 per share
22 of New Century common stock, approximately $2.08 per share of New Century
23 Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
per Put Option, before deduction of Court-approved fees, expenses and costs. This24 number is calculated by, for each type of security, dividing the relevant gross
25 settlement amount by the number of estimated damages shares or options. This
assumes that 100% of the damaged shares submit valid claim forms. Studies
26 indicate that, in reality however, a substantial percentage of class members may
27 elect to not file claims. To the extent that Class Members do not file claims, the
28 recovery per share for valid claims filed will increase. The actual amount of
recovery per security will depend on how m any valid claims are submitted.
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1 the parties disagree with respect to the amount of damages which would have been
2 recoverable at trial; (4) a statement describing Lead Counsel’s intended fee and
3 expense application and support therefor 8 ; and (5) Lead Counsel’s contact
4 information. See 15 U.S.C.A. §78u-4(a)(7)(A)-(F). The Notice also describes the
5 rights of Class Members, including their rights to exclude themselves from the
6 Class or object to the Settlements. 9
7s detailed in the proposed Preliminary Approval Order and in the Proposed
8 Schedule attached hereto as Exhibit 1, Lead Counsel and the Claims Administrator
9 propose to mail copies of the Class Notice (substantially in the form of Exhibit A-1
10 to the proposed Preliminary Approval Order) and the Proof of Claim form
11 (substantially in the form of Exhibit A-2 to the proposed Preliminary Approval
12 Order) by first class mail to all persons and entities who can be identified from the
13 shareholder lists of New Century, as are in the Trustee’s possession. The Claims
14 Administrator will also mail copies of the Notice to the largest banks and
15 brokerage houses requesting that the Notice be sent to all persons and entities for
167 8The Notice explains that Lead Counsel has not received any payment for its
18 services in pursuing claims against Defendants on behalf of the Class, nor has Lead
19 Counsel been reimbursed for its out-of-pocket expenses. Before the Final
Settlement Hearing, Lead Counsel intends to apply to the Court for an award of
20 attorneys’ fees from the Settlement Fund in an amount not to exceed 12% of the
21 Settlement Amount, and Litigation Expenses not to exceed $4.5 million, plus
interest from the date of funding at the same rate as earned by the Settlement Fund .22 If the Court approves Lead Counsel’s fee and Litigation Expense application, Lead
23 Plaintiff’s damages consultant estimates that the average cost per damaged share
will not exceed approximately $0.11 per share of common stock, approximately24 $0.32 per share of Preferred Stock, approximately $0.02 per Call Option, and
25 approximately $0.04 per Put Option.
9As explained in the Notice, the Individual Defendants, Insurance Carriers,
26 Underwriter Defendants or KPMG may terminate the Settlements if requests for
27 exclusion are received from potential Class Members representing over a certain
28 amount of shares as stated in Supplemental Agreements. Upon request, the
Supplemental Agreements w ill be submitted under seal for the Court’s review.
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1 whom they acted as nominee purchaser of New Century securities. In addition,
2 Lead Counsel intends to publish a Summary Notice (substantially in the form of
3 Exhibit A-3 to the proposed Preliminary Approval Order) in the national edition of
4
The W all Street Journal and over the PR N ewsw ire and provide a link to the Notice5 and the Proof of Claim form, as well as other case documents, on the website
6 created by the Claims Administrator specifically for these Settlements.
7he proposed notice program fulfills the requirements of due process and
8 satisfies Rule 23(e) because it alerts and informs those members of the Class who
9 can be identified through reasonable efforts of the information set forth above.
10 See, e.g., In re Portal Software, Inc. Sec. Litig., 2007 WL 4171201, at *1 (N.D.
11 Cal. Nov. 26, 2007) (approving similar notice regimen); In re Immune Response
12 Sec. Litig., 497 F. Supp. 2d 1166, 1170 (S.D. Cal. 2007); see also Rodriguez v. W .
13 Publ’g Corp., 563 F.3d 948, 962 (9th Cir. 2009) (“Notice is satisfactory if it
14 ‘generally describes the terms of the settlement in sufficient detail to alert those
15 with adverse viewpoints to investigate and to come forward and be heard’”)
16 (citations omitted); Silber v. Mabon, 18 F.3d 1449, 1452-54 (9th Cir. 1994)
17 (approving notice sent by first class mail as the “best notice practicable”).
18 V. CONCLUSION
19or all of the above reasons, Lead Plaintiff respectfully requests that this
20 unopposed motion for preliminary approval of Settlements be granted. A proposed
21 schedule of settlement events is attached hereto as Exhibit 1.
22 Dated: July 30, 2010espectfully submitted,
23ERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP24
25/s/ Salvatore J. Graziano
26ALVATORE J. GRAZIANO
27LAIR A. NICHOLAS
28LIZABETH LINNIKI L. MENDOZA
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Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 31 of 32 Page ID#:10841ENJAMIN GALDSTONTAKEO A. KELLAR
22481 High B luff Drive, Suite 300San Diego, CA 92130
3el: (858) 793-0070Fax: (858) 793-0323
4 -and-5
SALVATO RE J. GRAZIANO6AUREN A. MCMILLEN
1285 Avenu e of the Americas7ew York, NY 10019
Tel: (212) 554-14008ax: (212) 554-1444
9ead Counsel for Lead Plaint ffThe N ew Y ork S tate Teachers Retirem ent
0y stem and the Class
11
12ARVIN L. FRANKMurray, Frank & S ailer LLP
137 5 Madison AvenueNew Y ork, NY 10016
14el: (212) 682-1818
15ax: (212) 682-1892
16ounsel for Plaintiff Carl Larson
1718EFFREY ZWERLING
Zw erling, Schachter & Z werling, LLP191 Madison Avenue
20ew York, NY 10010Tel: (212) 223-3900
21ax: (212) 371-5969
22ounsel f or Plaintiff Charles H ooten
23
24
25
26
27
28
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TABLE OF C ONTENTS TO EXHIBITS TO
PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENTS
EXHIBITITLE
1roposed Schedule2tipulation Of Global Settlement With New Century Officers And Directors(with exhibits thereto)3tipulation Of Settlement Betwee n Plaintiffs And KPM G(with exhibits thereto)
4tipulation Of Settlement B etween Plaintiffs And T he Underwriter Defendants(whexhbshereo
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EXHIBIT 1
TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVALOF SETTLEMENTS
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PROPOSED SCHEDULE
If the Court grants preliminary approval of the proposed Settlements, the
parties respectfully subm it the following sc hedule for the C ourt's consideration:
Eventime for Complianceeadline if
preliminaryapproval grantedAug. 30, 2010
Deadline for m ailing thebusiness days after theeptember 7, 2010Notice to Class Mem bersntry of the Preliminary
("Notice Date")pproval Order
(Preliminary A pproval
Order, ¶6a)
De adline for publishingbusiness days after the September 14, 2010
Summary Noticeotice Date (Preliminary
Approval Order, ¶6b)Filing of briefs in support of8 days before the Finalctober 12, 2010
final approval of thepproval Hearing
Settlements, Plan ofPreliminary Approval
Allocation, and Leadrder, ¶11)
Counsel's fee and expense
requestReceipt Deadline for Requests 21 calendar days beforectober 18, 2010
for Exclusions and Objections the Final Approval
Hearing (PreliminaryApproval Order, T¶ 12,
19)
Filing of reply m emoranda incalendar days beforeovember 1, 2010response to any o bjections tohe Final Approval
the Settlementsearing
Final Approval Hearing00 days following filing November 8, 2010
of Stipulations0:00 a.m.
(Preliminary Approval
Order, ¶ 10)
Deadline for submitting Proofs 120 calendar daysanuary 5, 2011
of Claimollowing the Notice
Date (Preliminary
Approval Oder, ¶16)
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EXHIBIT 2TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
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1
2
3
4
5
6
7
8
STIPULATION OF GLOBA L SETTLEMENT9ITH NEW CENTURY OFFICERS AND DIRECTORS
10
11
12
13
14
15
16
17
18
19
20
21
22
23
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25
26
27
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1his Stipulation of Settlement (all capitalized terms are defined in parag raph
2below) is entered into as of July 23, 2010, between and among: Class Plaintiffs
3on behalf of themselves and the Class), the Trustee, and Kodiak, on the one hand;
4 and Class Individual Defendants, Trustee Litigation Defendants, Kodiak Litigation
5Defendants, and David Kenneally, on the other hand, by and through their
6 respective counsel to resolve the following actions:
7 Avi Gold v. Brad A. Morrice et al., a/k/a, In re New Century, Case
8o. 2:07-cv-00931-DDP-FMO (C.D. Cal.);
• The New Century Liquidating Trust and Reorganized New Century
9arehouse Corporation v. Robert K Cole, et al. (In re New Century
10RS Holdings, Inc.), Case No. 09-50882-KJC (Bankr. D. Del.); and
• Kodiak Warehouse LL C, et al. v . Brad A. Morrice, et al., Case No. 08-
11265-DDP-FMO (C.D. Cal.)
12
This Stipulation will be subm itted in the Con solidated Class A ction pursuant13
to Rule 23 of the Fede ral Rules of C ivil Procedure, and is subject to the approval of1 4
the Consolidated Class Action Court. This Stipulation embodies a global15
settlement among the Parties, and is intended by the Parties to settle all Settled16
C lass Claims, all Settled Trustee C laims, and all Settled Kodiak C laims against the17
Settling Individuals. The settlement of the Trustee Litigation and the Kodiak18
subject to the approval of the courts hearing such litigations, but
19
both settleme nts are conditioned upo n the occurrence of the Effective Da te.20
WHEREAS:21
A.ew Century was founded in 1995 and operated through its22
subsidiaries as a m ortgage finance company from 1995 through 2007;23
B.n February 7, 2007, New Century announced publicly that it needed24
to restate its earnings for the first three qua rters of 2006 ;25
C.
eginning on or about February 8, 2007, securities class action
26complaints were filed in the United States District Court for the Central District of
27California and the actions w ere conso lidated into the Co nsolidated C lass Action by
28order dated June 26 , 2007;
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1.n April 2, 2007, New Century and the other Debtors filed for
2bankruptcy in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code;
3.y Order dated June 26, 2007, the Consolidated Class Action Court
4appointed the Lead Class Plaintiff for the Consolidated Class Action and approved5he selection of Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel for
6he Class;
7
.
n September 14, 2007, Class Plaintiffs filed their complaint in the
8Consolidated Class Action asserting claims against Class Defendants under the
9Excha nge Act and the Sec urities Act on behalf of the Class;10.eginning on November 2, 2007, Class Defendants filed motions to
11dismiss the complaint in the Consolidated Class Action, which Class Plaintiffs
12 opposed on Decem ber 14, 2007;
1 3
.
y Order dated January 31, 2008, the Consolidated Class Action
14Co urt granted the motions to dismiss with leave to ame nd the complaint;
1 5.n March 24, 2008, Class Plaintiffs filed their Amended Class
16Com plaint, alleging claims against C lass D efendants pursuant to the Securities Act
17 and the Exchange Act;
1 8
.
ursuant to stipulation, on April 30, 2008, Class Plaintiffs filed their
19Second Amended Class Complaint, alleging claims against the Class Defendants
20 pursuant to the Securities Act and the Ex change A ct;
21.eginning on June 2, 2008, Class Defendants filed motions to dismiss
22 the Second Amended Class Complaint, which Class Plaintiffs opposed on July 7,
23 2008;
24
.
n July 2008, the Bankruptcy Court approved a plan of liquidation of
25 the Debtors' assets, which was later modified with the Bankruptcy Court's
26 approv al. Pursuant to the plan of liquidation, the Trust was crea ted and the Trustee
27was appointed to liquidate the Debtors' assets, including the claims asserted in the
28Trustee Litigation;
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1. On November 7, 2008, Kodiak commenced the Kodiak Litigation;
2.ollowing a hearing, by Order dated December 3, 2008, the
3 Conso lidated C lass Action Co urt substantially denied Class D efendants' motions to
4ismiss;
5
.
eginning on January 26, 2009, Class Defendants answered the
6econd Amended C lass Complaint;
7
.
n April 1, 2009, the Trustee commenced the Trustee Litigation in the
8 Bankruptcy Court against the Trustee Litigation Defendants for alleged breach of
9iduciary duty, waste of corporate assets, unjust enrichment, and claims under
10 Chapter 5 of the Bankruptcy Code;
1 1
.
ursuant to successive stipulations and orders of the Bankruptcy
12Co urt, the parties to the Trustee Litigation agreed to a forbearanc e of discovery an d
13any other litigation activity and to an extension of the time for the Trustee
14 Litigation Defendants to move, answer or otherwise respond to the complaint in
15 the Trustee Litigation to allow the parties the opportunity to explore a consensual
16 resolution of the Trustee Litigation;
1 7.he Parties have participated in mediation sessions and additional
18 discussions before the Honorable Daniel Weinstein, and subsequently were able to
19 reach agreements in principle to settle the Officer And Director Litigations, on the
20 erms set forth in this Stipulation;
21.he Settling Individuals deny any wrongdoing whatsoever and this
22Stipulation shall in no event be construed or deemed to be evidence of or an
23admission or concession on the part of any Settling Individual with respect to any
24claim or of any fault or liability or wrongdoing or damage whatsoever, or any
25nfirmity in the defenses that the Settling Individuals have or could have asserted.
26The Officer And Director Litigations are being settled voluntarily after receiving
27 ufficient advice o f counse l, and the P arties believe tha t the tenns of the Settleme nt
28are fair, adequate and reasonable. This Stipulation shall not be construed or
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1 deemed to be a concession by any Plaintiff of any infirmity in the claims asserted
2n the Officer And D irector Litigations;
3.ounsel for Plaintiffs have each conducted an extensive investigation
4nd/or thorough discovery relating to its respective clients' (or client's) claims and
5he underlying events and transactions alleged in the Officer And Director
6 Litigations. Such counsel has each analyzed the evidence it has adduced through
7discovery or otherwise and has researched the applicable law with respect to the
8laims asserted and the potential defenses thereto;
9.ased upon their investigation and/or discovery as set forth above,
10Plaintiffs and their counsel have each concluded that the terms and conditions of
11 this Stipulation are fair, reasonable and adequate including, with respect to Class
12 Plaintiffs and their counsel, to the other members of the Class, and in their best
13 interests, and each agreed to settle its claims in the Officer And Director Litigations
14 pursuant to the terms and provisions of this Stipulation, after considering (1) the
15benefits that the Plaintiffs will receive from the Settlement, (2) the attendant risks
16 of litigation, and (3) the desirability of permitting the Settlement to be
17consum mated a s provided by the terms of this Stipulation; and
18
.
he recitals and prefatory phrases and paragraphs set forth above are
1 9 incorporated in full and made part of this Stipulation.
20OW THEREFORE, without any admission or concession on the part of
21Plaintiffs of any lack of merit of the Officer And Director Litigations whatsoever,
22and without any admission or concession of any liability or wrongdoing or lack of
23merit in the defenses whatsoever by the Settling Individuals, it is hereby
24STIPUL ATED AN D A G REED , by and among the Parties, through their respective
25counsel, subject where applicable to approval of the Consolidated Class Action
26Court pursuant to FRCP 23(e), in consideration of the benefits flowing to the
27Pa rties from the Se ttleme nt, that all Settled Claims as a gainst the Release d Officers
28And Directors and all Settling Individuals' Claims as against the Class Plaintiffs
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1and all other Class Members, the Trust, the Trustee, Alan M. Jacobs individually,
2he Debtors, the Debtors' Estates, the Plan Advisory Committee, and Kodiak shall
3be compromised, settled, released and dismissed with prejudice, upon and subject
4o the following terms and conditions:
5
EFINITIONS
6
.
s used in this Stipulation, the following terms have the following
7 meanings:
8)Amended Class Complaint" means the amended consolidated
9class action com plaint filed by the Class P laintiffs in the Con solidated Class Ac tion
10Court.
11
)
Authorized Claimant" means a Class Member who submits a
12timely and valid Proof of Claim Form and all required documentation to the
13Claims Administrator, in accordance with the requirements established by the Plan
14 of Allocation approved by the Consolidated Class Action Court, that is approved
15or payment from the Class Ne t Settlement Fund.
1 6)Bankruptcy C ode" means Title 1 1 o f the United States Code.
1 7)Bankruptcy Court" means the United States Bankruptcy Court
18for the District of Delaware before which the Debtors filed for bankruptcy and
1 9 hich is hea ring the Trustee Litigation.
20
)
Claim" means a completed and signed Proof of Claim Form
21submitted to the Claims Administrator in accordance with the instructions on the
22Proof of Claim Form.
23)Claim Form" or "C laim F orm and Re lease" or "Proof of Claim
24Form" means the form, substantially in the form attached hereto as Exhibit 2 to
25Exhibit A, that a Claimant or Class M emb er must com plete should that Claimant or
26Class M embe r seek to share in a distribution of the C lass Net Settlement Fund.
27
28
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)
Claimant" means a person or entity that submits a Claim Form
2o the Claims Administrator seeking to share in the proceeds of the Class Net
3 Settlement Fund.
4)Claims Administrator" means the firm of Analytics
5ncorporated.
6
)
Class" means all persons and entities who purchased or
7therwise acquired New Century common stock, New Century Series A Preferred
8Stock, New Century Series B Preferred Stock, and/or New Century call options
9nd/or who sold New Century put options, during the time period from May 5,
1.02005, through and including March 13, 2007, either in the Offerings, pursuant to a
11registration statement, or in the market, and who, upon disclosure of certain facts
12alleged in the Complaint, were injured thereby. Excluded from the Class are (a)
13 Class Defendants; (b) members of the immediate families of the Class Individual
14Defendants; (c) the subsidiaries and affiliates of Class Defendants; (d) any person
15or entity who was a partner, executive officer, director or controlling person of
16 New Century (including any of its subsidiaries or affiliates) or of any Class
17 Defendant; (e) any entity in which any Class Defendant has a controlling interest;
18and (f) the legal representatives, heirs, successors and assigns of any such excluded
19party. Also excluded from the Class are any persons who exclude themselves by
20 iling a request for exclusion in accordance with the requirements set forth in the
21Notice.
22)Class Defendants" means the Underwriter Defendants, KPMG
23and the Class Individual Defendants.
24
)
Class Distribution Order" means an order entered by the
25Consolidated Class Action Court authorizing and directing that the Class Net
26Settleme nt Fund be distributed, in whole or in part, to Authorized Claimants.
27)Class Escrow Account" means an account maintained to hold
28he C lass Settlement F und, which shall be controlled exclusively by L ead C ounsel,
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1hall be deemed to be in the custody of the Consolidated Class Action Court, and
2hall remain subject to the jurisdiction of the C onsolidated Class A ction Cou rt until
3uch time as the funds are distributed or returned pursuant to the terms of this
4tipulation and /or further order of the C onsolidated Class A ction Court.
5
) "Class Individual Defendants" means Robert K. Cole, Brad A.
6 Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael
7M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A.
8 Zona, M arilyn A. Alexander, David Einhorn, and William J. Popej oy.
9)Class Member" means a person or entity that is a member of
10 the Class and does not exclude himself, herself or itself by filing a request for
11 xclusion in accordance with the requireme nts set forth in the No tice.12
)
Class Net Settlement Fund" means the Class Settlement Fund
13 ess: (i) any Taxes; (ii) any Notice and Administration Costs associated with the
14Consolidated Class Action; (iii) any attorneys' fees awarded by the Consolidated
15Class A ction C ourt; and (iv) any Litigation Ex penses aw arded by the C onsolidated
16Class Action Court.
1 7)Class Officer And Director Settlement Amount" means the
18um of $6 5 ,077,088 which shall be paid into the Class Escrow A ccount as set forth
19 in paragraph 11 c below.
20)Class Period" means the period from May 5, 2005, through
21and including M arch 13, 200 7.
22)Class Plaintiffs" means Lead Class Plaintiff New York State
23Teachers' Retirement System and plaintiffs Carl Larson and Charles Hooten, on
24behalf of themselves and the Class.
25
)
Class Plaintiffs' Counsel" means Lead Counsel and all other
26ounsel who, at the direction and under the supervision of L ead C ounsel, represent
27Class M embers in the Consolidated C lass Action.
28
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1
)
Class Settlement Fund" means the Class Officer And Director
2ettlement Am ount, and any and a ll interest earned thereon, wh ich interest shall be
3 paid into the Class Escrow Account as set forth in paragraphs 11 and 12 below.
4)Consolidated Class Action" means A vi Gold a Brad A .
5Morrice, et al., a/k/a, In re New Century, Case No. 2:07-cv-00931-DDP-FMO
6 (C.D. Ca l.), and case s consolidated therein.
7
)
Consolidated Class Action Court" means the United States
8District Court for the Central District of California hearing the Consolidated Class
9Action.
1 0) "DCP Distributions" means the deferred compensation amounts
11 referenced under the DC P Settlement Agreem ent as Target Distributions and which12 pursuant to that agreement have been held by the Trustee pending the resolution
13 and conclusion of the Trustee Litigation.
14)DCP Settlement Agreement" means the settlement agreement
15entered into as o f July 2009 by and am ong the Trustee, on the one hand, and the Ad
16Hoc Committee of Beneficiaries of the New Century Financial Corporation
17Deferred Compensation Plan and SERP, on the other hand.
1 8
)
DCP Settlement Contributions" means those payments set
19 forth below in paragraphs 9b and 11.
20)Debtors" means New Century Financial Corporation (f/k/a
21New Century REIT, Inc.), a Maryland corporation; New Century TRS Holdings,
22nc. (f/k/a New Century Financial Corporation), a Delaware corporation; New
23 Century Mortgage Corporation (f/k/a JBE Mortgage) (d/b/a NCMC Mortgage
24Corporate, New Century Corporation, and New Century Mortgage V entures, LLC),
25a California corporation; NC Capital Corporation, a California corporation;
26Home123 Corporation (f/k/a The Anyloan Corporation, 1800anyloan.com , and
27Anyloan.com), a California corporation; New Century Credit Corporation (f/k/a
28Worth Funding Incorporated), a California corporation; NC Asset Holding, L.P.
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1 f/k/a NC Residual II Corporation), a Delaware limited partnership; NC Residual
2II Corporation, a D elaware corporation; NC Residual IV Co rporation, a Delaware
3orporation; New Century R.E.O. Corp., a California corporation; New Century
4 R.E.O. II Corp., a California corporation; New Century R.E.O. III Corp., a
5California corporation; New Century Mortgage Ventures, LLC (d/b/a Summit
6Resort Lending, Total Mortgage Resource, Select Mortgage Group, Monticello
7Mortgage Services, Ad Astra Mortgage, Midwest Home Mortgage, TRATS
8Financial Services, Elite Financial Services, and Buyers Advantage Mortgage), a
9Delaware limited liability company; NC Deltex, LLC, a Delaware limited liability
10 company; NCoral, L.P., a Delaware limited partnership; and New Century
11Warehouse Corporation, a California corporation.12
a) "Debtors' Estates" means the bankruptcy estates of the Debtors
13created as a result of the Debtors' petitions under Chapter 11 of Title 11 of the
14United States Bankruptcy Code.
15b) "Distribution Defendants" means Kevin M. Cloyd, Stergios
16Theologides, Joseph F. Ecluoth, Jr., Brad A. M orrice and Patti M. Do dge.
17c) "Dodge Credit" means a $45,000 credit for Patti M. Dodge
18 representing the release of her affirmative claims, including a priority claim, under
19 this Stipulation.
2 0d) "Effective Date" means the date on which all the following
21shall have occurred: (a) payment of the monies into the Global Escrow Account
22has been made pursuant to paragraph 9a below; (b) the Consolidated Class Action
23Court has entered the Officer And Director Judgment, substantially in the form
24annexed hereto as Exhibit B, which has become Final; (c) the Consolidated Class
25Action Court has entered the KPMG Judgment and the Underwriter Judgment,
26which have become Final; (d) a judgment has been entered by the court in the
27separate action entitled Securities and Exchange Commission a Morrice, et al.,
28SAC V 09-01 426 (C.D . Cal. Santa Ana); and (e) notices of dismissal with prejudice
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1 nd without costs to any pa rty have bee n exec uted in the Trustee Litigation and the
2Kodiak Litigation and delivered to counsel designated by the Kodiak Litigation
3De fendants and the Trustee Litigation D efendants to be held pursuant to paragraph
43 .
5
e) "Escrow Agent" means the financial institution selected by
6Lead Counsel, with the consent of the Trustee, which consent shall not be
7 unreasonably withheld, to serve as escrow agent.
8oEscrow Agreement(s)" means the agreement(s) (1) among (1)
9 Lead Counsel and the Trustee and (ii) the Escrow Agent setting forth the terms
10 under which the Escrow Agent shall maintain the Global Escrow Account, and (2)11 between (i) Lead Counsel and (ii) the Escrow Agent setting forth the terms under
12which the Escrow Age nt shall maintain the Class Escrow Acc ount.
13
g) "Exchange Act" means the Securities Exchange Act of 1934.
14h) "Final" means: (i) that the time for appeal or appellate review
15of the order or judgm ent has ex pired; or (ii) if there ha s been an app eal, (a) that the
16appeal has been decided without causing a material change in the order or
17 judgment; or (b) that the order or judgment has been upheld on appeal and is no
18 longer subject to app ellate review by further appeal o r writ of certiorari.
1 9
i)
G lobal Escrow Ac count" means an account maintained to hold
20he Global Officer And Director Settlement Amount, which shall be controlled
21exclusively by Lead Counsel and the Trustee and deemed to be in the custody of
22he Consolidated Class Action Court and shall remain subject to the jurisdiction of
23 he Consolidated Class Action Court until such time as the funds are distributed or
24eturned pursuant to the terms of this Stipulation and/or further order of the
25Consolidated C lass Action Court.
26
j)
Global Officer And Director Settlement" or "Settlement"
27means the settlement em bodied in this Stipulation O f G lobal Settlement W ith N ew
2 8 entury Officers And Directors ("G lobal Officer And Director Stipulation").
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k) "Global Officer And Director Settlement Amount" means the
2um of $92,046,361 as set forth in paragraph 9 below, as Settlement of the
3Co nsolidated Class A ction, the Trustee L itigation, and the Ko diak Litigation.
41 )Insurance Carriers" means the following insurance carriers
5 who issued the indicated policies of insurance ("Policies") to New Century and/or
6 its various subsidiaries, affiliates, directors, officers and other "Insureds" or
7 "Assureds" as defined in the Policies:
81) American Specialty Lines Insurance Co.pursuant to policy number 672-43-8 5;
9(2) ACE American Insurance Company
1 0ursuant to policy numbers DU XG 216120A 002 and DOX G21661338001;
1 1(3) Those Underwriters at Lloyd's of London
12
nd Companies subscribin to Policy
numbers FD06 04467 and FD004994;1 3
(4) Axis Reinsurance Company, pursuant to1 4olicy numbers RNN 72718 3 and RNN
727184;1 5
(5 )tarr Excess Liability Insurance Com pany,1 6td., pursuant to policy num ber 41 21)07 ;
1 76) XL Specialty Insurance Co. pursuant to
policy number ELU092906-06;1 8
(7 )
iberty Mutual Insurance C ompany
1 9
ursuant to policy number 0735p5 1-01 6;
208) Navigators Insurance Compa pursuant toy yDolicy numbers NY06DOL I 577NV and
21Y06DOL149583NV;
229) Arch Insurance Company pursuant to policynumber AID0016066-00;
23(10) Continental Casualty Company pursuant to
24
olicy number 38935 5; and
25
11) The Hartford (Twin City Fire Insurance
Co.),pursuant to policy number 00 DA26
234015-06.
27 "Insurance Carriers" also includes the present, former and future parents, divisions,
28 subsidiaries and affiliates of the insurance carriers listed above, and any of their
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1past, present or future owners, assigns, administrators, directors, partners,
2principals, officers, employees, agents, receivers, trustees, attorneys, insurers,
3 reinsurers, and their respective predecessors, successors and assigns, and
4epresentatives of any of them, and all persons acting by, through, under or in
5concert with any of them with respect to their respective Policies. Insurance
6Carriers and Policies do not include Philadelphia Indemnity Insurance Company
7nder policy number PHSD219056.
8m) "Kodiak" means Kodiak Warehouse LLC, Kodiak Warehouse
9 JPM Capital LLC, Kodiak CDO1 Ltd., Kodiak CDO Management LLC, and
10Kodiak Funding LP.
1 1
n) "Kodiak Litigation" means the action Kodiak Warehouse LLC,
12et al. v. Brad A . Morrice, et al. (Case No. 08-1265-DDP-FMO) commenced on
13November 7, 2008, against the Kodiak Litigation Defendants by Kodiak in the
14United States D istrict Court for the Ce ntral District of C alifornia.
1 5o) "Kodiak Litigation Defendants" means Robert K. Cole, Brad A.
16M orrice, Estate of E dward G otschall, Patti M. D odge, and Jeffrey D . G oldberg.
17p) "Kodiak Settlement Amount" means the sum of $6,000,000
18which shall be paid to K odiak as set forth below in paragraph 11 a.
1 9
q) "KPMG" means KPMG LLP.
20r) "KPMG Judgment" means a judgment entered in the
21Consolidated Class Action Court which, among other things, includes a release by
22KPMG and the other Released Auditor Parties of any and all claims and causes of
23action of every nature and de scription, whether known or Unknow n C laims a gainst
24any of the Settling Individuals, whether arising under federal, state, common or
25oreign law, that arise out of or relate in any way to the institution, prosecution, or
26settlement of the claims which were asserted in the Officer And Director
2 7 itigations, or that arise out of or relate in any way to New Century (including any
2 8 f its subsidiaries and a ffiliates), the Trust, the Trustee, the D ebtors, or the D ebtors'
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1 Estate, except for (1) an allowed priority claim in the amount of $5,000 pursuant to
2proof of claim no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against
3Debtors' Estates and (ii) any and all claims arising out of or in connection with the
4defense and subse quent settlement of the Schroeder v. N ew Century Holdings, Inc.
5Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity
6 Arbitration, including, but not limited to (a) claims for benefits under any
7nsurance programs or policies to which the Settling Individuals are entitled, (b)
8 claims for advancement, indemnification, contribution, reimbursement or other
9 payments whether based on law, the Debtors' certificate or articles of
10ncorporation, bylaws, or other contract or agreement.
1 1
s) "Lead Class Plaintiff' means the New York State Teachers'
12Retirement System.
1 3
t)
Lead Counsel" means the law f-nn of Bernstein Litowitz
14Berger & G rossmann LLP.
1 5u) "Litigation. Expenses" means the costs and expenses incurred
16 by Class Plaintiffs' Counsel in connection with commencing and prosecuting the
17Consolidated Class Action, for which Lead Counsel intends to apply to the
18Consolidated Class Action Court for reimbursement from the Class Settlement
19 Fund.
20v) "New Century" means New Century Financial Corporation.
21w) "Notice" means the Notice of Pendency of Class Action and
22Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees
23and Reimbursement of Litigation Expenses, substantially in the form attached
24hereto as Ex hibit 1 to E xhibit A, which is to be sent to mem bers of the C lass.
25
x) "Notice and Administration Costs" means the costs, fees and
26expenses that are incurred by the Claims Administrator and Lead Counsel in
27connection with (i) providing notice to the Class; and (ii) administering the claims
28process in connec tion with the Conso lidated Class A ction.
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1y) "Offerings" means the public offerings pursuant to which New
2Century Series A and B Preferred Stock were offered to the public in June 2005
3nd August 2006 .
4z) "Officer And Director Judgment' means the judgment,
5ubstantially in the form attached hereto as Exhibit B, to be entered pursuant to
6 Rule 54(b) of the Federal Rules of Civil Procedure approving the Settlement.
7
aa) "Officer And Director Litigations" means the Consolidated
8Class A ction, Trustee Litigation, and Ko diak Litigation.
9bb) "Parties" means the Plaintiffs and the Settling Individuals.
10cc) "Philadelphia Indemnity Arbitration" means the claims filed
11 with the American Arbitration Association by the Trustee against Philadelphia
12ndemnity Insurance C ompany to pay and indemnify, in accordance with the terms
13of the applicable insurance policy, New Century, its successor-in-interest, the New
14Century Liquidating Trust, and Harold A. Black, Fredric J. Forster, Donald E.
15Lange, and Michael M. Sachs, the full amount of defense costs that each have
16 incurred in the defense and subsequent settlement of S chroeder v. N ew Century
17Holdings, Inc. (Adversary Proceeding No. 07-51598 (KJC)), and to pay and
I s eimburse their other insurable losses as agree d to in said insurance policy.
1 9
dd) "Plaintiffs" means Class Plaintiffs, the Trustee, and Kodiak.
20ee) "Plan Advisory Committee" means the post confirmation
21committee, and its current and former members in their capacity as such, formed in
22accordance with Second Amended Joint Chapter 11 Plan of Liquidation of the
23Debtors and the Official Committee of Unsecured Creditors dated as of April 23,
242008 , and modified as of September 30, 2009.
25
ff) "Plan of Allocation" means the proposed plan of allocation of
26he C lass Net Settlement Fund set forth in the Notice.
27gg) "Preliminary Approval Order" means the order, substantially in
28 the form attached hereto as Exhibit A, to be entered by the Consolidated Class
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1Action Court preliminarily approving the Global Officer And Director Settlement
2 and directing notice to be provided to the Class.
3hh) "Released Auditor Parties" means KPMG and its affiliates,4 heirs, predecessors, successors, assigns, partners, employees and agents.
5
ii) "Released Officers And Directors" means: (i) the Settling
6 Individuals; and (ii) all directors, officers, employees, and other natural persons
7affiliated with New Century (including any of its subsidiaries and affiliates)
8ncluded in the definition of "Assured" or "Insured" as defined in the Policies and
9 any and all of their respective heirs, executors, administrators, predecessors,
10 successors and assigns, employees, agents and retained professionals. "Released
11 Officers And Directors" does not include KPMG or the Underwriter Defendants.1 2
jj) "Released Underwriter Parties" means the Underwriter
1 3efendants and any and all of their respective parent companies, subsidiaries,
14affiliates, heirs, executors, administrators, predecessors, successors and assigns,
15 and any and all of their current and former officers, directors, employees, agents
16 and attorneys. "Released Underwriter Parties" does not include any Defendants
17 other than the Underwriter Defendants..
1 8
d^,) "Second Amended Class Complaint" or "Complaint" means the
19econd amended consolidated class action complaint filed by the Class Plaintiffs in
20 the Consolidated Class Action Court on or about April 30, 2008.
211 1 )Securities Ac t" means the Securities Act of 1933.
22mm) "Series A Preferred Stock" means New Century 9.125%
23 Series A Cumulative Redeemable Preferred Stock.
24
nn) "Series B Preferred Stock" means New Century 9.75% Series B
25 Cumulative Redeemable Preferred Stock.
26
00) "Settled Claims" means the Settled Class Claims, Settled
27 Trustee Claims, and Settled Kodiak Claims, but does not include claims relating to
28 the enforcement of the Settlement.
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pp) "Settled Class Claims" means any and all claims and causes of
2 action of every nature and description, whether known or Unknown Claims,
3whether a rising under fede ral, state, comm on or foreign law, that Class P laintiffs or
4 any other member of the Class (a) asserted in the Consolidated Class Action, or (b)
5ould have a sserted in any forum that arise out of or are based upo n the allegations,
6ransactions, facts, matters or occurrences, representations or omissions involved,
7et forth, or referred to in the Consolidated Class Action, and that arise out of or
8elate to the purchase of New Century common stock, New Century Series A
9Preferred Stock, New Century Series B Preferred Stock, and/or New Century call
10options and/or the sale of New Century put options during the Class Period.
11Settled Class Claims does not include claims relating to the enforcement of the
12Settlement.
13
qq) "Settled Kodiak Claims" means any and all claims and causes
14of action of every nature and description, whether known or Unknown Claims,
15whether arising under federal, state, common or foreign law, that Kodiak (a)
16asserted in the Kodiak Litigation, or b) could have asserted in any forum that arise
17out of or are based up on the allegations, transac tions, facts, matters or occurren ces,
18 representations or omissions involved, set forth, or referred to in the Kodiak
19Litigation, or that arise out of or relate in any way to New Century (including any
20of its subsidiaries and affiliates), the Debtors or the Debtors' Estates. Settled
21Kodiak Claims does not include claims relating to the enforcement of the
22Settlement.
23rr) "Settled Trustee Claims" means any and all claims and causes
24of action of every nature and description, whether known or Unknown Claims,
25whether arising under federal, state, common or foreign law, that the Trustee (a)
26asserted in the Trustee Litigation; (b) could have asserted in any forum that arise
27out of or are based up on the allegations, transac tions, facts, matters or occurren ces,
28epresentations or omissions involved, set forth or referred to in the Trustee
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1Litigation or that arise out of or relate in any way to New Century (including any
2 f its subsidiaries and a ffiliates), the Trust, the Trustee, the D ebtors, or the D ebtors'
3Estates, except that the Settled Trustee C laims expressly excludes claims or c auses
4of action (i) asserted in, arising from, in connection with, or in any way related to
5he P hiladelphia Indemnity Arbitration; (ii) asserted by or that ma y in the future be
6asserted by the Trustee and Trust against the Released Officers And Directors
7(other than the Settling Individuals) that do not arise from and are not based upon
8any actual or alleged Wrongful Act, as that term is defined in the Policies,
9ncluding the A dversary Proceeding Alan M. Jacobs, as Liquidating Trustee of the
10N ew Cen tury L iquidating Trust a Daniel R S ussm an, e t al . (In re N ew Cen tury T RS
11Holdings, Inc. (Adv. Proc. No. 09-50883 (KJC)); or (iii) asserted by the Trust and12Trustee against Carl A. Vernon, Gregory J. Schroeder, and Daniel P. Sussman; or
13(c) ever had, now has, claims to have or may in the future have against the
1.4Insurance Carriers arising from, in connection with or in any way related to the
15Policies.ettled Trustee Claims does not include claims relating to the
16enforcement of the Settlement.
1 7ss) "Settlement" or "Global Officer And Director Settlement"
18means the settlement embodied in this Stipulation of Global Settlement with New
19Ce ntury Officers and Directors ("G lobal Officer And D irector Stipulation").
20tt) "Settlement Hearing" or "Final Approval Hearing" means the
21hearing set by the Consolidated Class Action Court under Rule 23(e)(1)(c) of the
22Fede ral Rules of Civil Proce dure to consider final approval of the Settleme nt.
23uu) "Settling Individuals" means Class Individual Defendants,
24Trustee Litigation Defenda nts, Kodiak Litigation Defenda nts, and David Ke nneally
25and any and all of their respective heirs, executors, administrators, predecessors,
26uccessors and assigns, employees, agents and retained professionals (other than
27KPM G and the Underwriter Defendants).
28
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1vv) "Settling Individuals' Claims" means any and all claims and
2auses of action of every nature and description, whether known or Unknown
3Claims, whether arising under federal, state, common or foreign law, that arise out
4f or relate in any way to the institution, prosecution, or settlement of the claims
5which were asserted in the Officer And Director Litigations against the Settling
6 Individuals, or that arise out of or relate in any way to New Century (including any
7f its subsidiaries and a ffiliates), the Tnist, the Trustee, the D ebtors, or the D ebtors'
8Estates, except for (i) an allowed priority claim in the amount of $5,000 pursuant
9 to proof of claim no. 2385 filed by Fredric J. Forster in the Bankruptcy Court
10against Debtors' Estates and (ii) any and all claims arising out of or in connection
11with the defense and subsequent settlement of the Schroeder a New Century
12Holdings, Inc. (Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia
13ndemnity Arbitration, including, but not limited to (a) claims for benefits under
14any insuranc e program s or policies to which the Se ttling Individuals are entitled, or
15 b) claims for advancement, indemnification, contribution, reimbursement or other
16 payments whether based on law, the Debtors' certificate or articles of
17ncorporation, bylaws, or other contract or agreement. Settling Individuals' Claims
18does no t include claims relating to the enforcem ent of the Settlement.
19
ww)"Stipulation" or "Stipulation of Settlement" means this
20Stipulation of Settlement.
21xx) "Summary Notice" means the publication notice, substantially
22n the form a ttached he reto as Ex hibit 3 to Exh ibit A, to be published as set forth in
23 he Preliminary Approval Order.
24
yy) "Supplemental Agreement" means the supplemental agreement
25between Lead Class Plaintiff and the Class Individual Defendants referenced in
26paragraph 39-40 below.
27zz) "Taxes" means: (1) all federal, state and/or local taxes of any
28kind on any income earned by the funds contained in the Global Escrow Account
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1 nd/or Class Escrow Account; and (ii) the reasonable expenses and costs incurred
2 by Lead Counsel in connection with determining the amount of, and paying, any
3axes owed on the interest earned on the funds in the Global Escrow Account
4nd/or Class Escrow Account (including, without limitation, reasonable expenses
5f tax attorneys and accountants).
6
aaa) "Trust" means the New Century Liquidating Trust and
7Reorganized New Century Warehouse C orporation.
8bbb) "Trustee" means Alan M. Jacobs, as Liquidating Trustee of the
9New Century Liquidating Trust and Plan Administrator of the Reorganized New
10 Century Warehouse Corporation.
1 1
ccc) "Trustee Litigation" means the adversary proceeding T he N ew
12Ce ntury Liquidating Trust and R eorganized N ew C entury W arehouse Corp. by and
13hrough Alan M. Jacobs, Liquidating Trustee and Plan Administrator v. Robert K
14Cole, et al. (In re New Century TRS Holdings, Inc) (Adv. Proc. No. 09-50882
15KJC)) commenced on April 1, 2009, against the Trustee Litigation Defendants by
16he Trustee in the Bankruptcy Co urt.
17ddd) "Trustee Litigation Defendants" mea ns Robert C. C ole, Brad A.
18Morrice, the Estate of Edward Gotschall, Marilyn A. Alexander, Harold A. Black,
19Fredric J. Forster, Donald E. Lange, William J. Popejoy, Michael M. Sachs,
20Richard A. Zona, David Einhom, Patrick Flanagan, Kevin M. Cloyd, Patti M.
21D odge, Joseph F. Eckroth, Jr., and Stergios Theologides.
22eee) "Trustee Settlement Amount" means the sum of $20,969,273
23which sh all be paid to the Trustee as se t forth below in paragraph l lb.
24
fff) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now
25 known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
26& Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
27M organ Stanley & Co., Inc., and Jefferies & Com pany, Inc.
28
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1
ggg) "Underwriter Judgment" means a judgment entered in the
2Consolidated Class Action Court which, among other things, includes a release by
3Underwriter Defendants and the other Released Underwriter Parties of each and
4every claim against any of the Settling Individuals, whether arising under federal,
5tate, common or foreign law, arising out of or based upon the allegations,
6ransactions, facts, matters or occurrences, representations or omissions involved,
7et forth, or referred to in the Conso lidated Class Action.
8hhh) "Unknown Claims" means any and all Settled Claims that (i)
9 Class Plaintiffs or any Class Member; (ii) the Trustee; or (iii) Kodiak does not
10 know or suspect to exist in his, her or its favor at the time of the release of the
11 Released Officers And Directors and the Insurance Carriers, and any Settling
12ndividuals' Claims that any Settling Individual does not know or suspect to exist
13n his, her or its favor, which if known by him, her or it might have affected his,
14her or its decision(s) with respect to the Settlement. With respect to any and all
15Settled Claims a nd Settling Individuals' Claims, the Pa rties stipulate and agree that
16 upon the Effective Date, the Class Plaintiffs and each Class Member, the Trustee,
17Kodiak, and the Settling Individuals shall expressly waive and each shall be
18deemed to have waived, and upon the Consolidated Class Action Court's issuance
19 of the Officer And Director Judgment shall have expressly waived, any and all
20provisions, rights and benefits conferred by any law of any state or territory of the
21United States, or principle of common law, that is similar, comparable, or
22equivalent to Cal. Civ. Code § 1 5 42, which provides;
2 3general release does not extend to claims which the
24
reditor does not know or suspect to exist in his or her
25
avor at the time of e xecuting the release, which if known
26
y him or her must have materially affected his or her
27ettleme nt with the debtor.
28
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1Class Plaintiffs, the Trustee, K odiak, and the Settling Individuals acknow ledge, and
2ach Class Member by operation of law shall be deemed to have acknowledged,
3hat the inclusion of "Unknown Claims" in the definitions of Settled Class Claims,
4Settled Trustee Claims, Settled Kodiak Claims, and Settling Individuals' Claims
5was se parately bargained for and was a key eleme nt of the Settlement.
6LASS CERTIFICATION OF CONSOLIDATED CLASS ACTION
7
.
lass Plaintiffs and the Class Individual Defendants stipulate and
8gree to: (a) certification of the Consolidated Class Action as a class action
9 pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure on
10behalf of the Class; (b) appointment of Class Plaintiffs as representatives of the
11Class; and (c) appointment of Lead Counsel as counsel for the Class pursuant to
12Rule 23(g) of the Federal Rules of Civil Procedure. Following execution of this
13Stipulation, Class Plaintiffs, with the consent of the Class Defendants, shall apply
14 to the Consolidated Class Action Court for entry of the Preliminary Approval
15Order, which will certify the Consolidated Class Action to proceed as a class
16action. The Class Defendants shall have the right to withdraw their consent to
17class certification and the appointment of representatives and counsel for the Class
18n the event that the Officer And D irector Judgme nt does not becom e Final.
19ELEASE OF CLAIMS
20.he Parties understand and agree that the obligations incurred
21pursuant to this Stipulation shall be in full and final disposition of the Officer And
22Director Litigations; and, upon the Effective Date, shall fully and finally release
23any and all Settled Claims as against all Released Officers and Directors and the
24nsuranc e Ca rriers and shall also release as a gainst the Class P laintiffs and all other
25Class Members, the Trust, the Trustee, Alan M. Jacobs individually, the Debtors,
26he Debtors' Estates, the Plan Advisory Committee, and Kodiak, any and all
27Settling Individuals' Claims, and shall also fully and finally release other claims as
28et forth below.
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.
pon the Effective Date, Class Plaintiffs and members of the Class,
2he Trustee, and Kodiak hereby release, waive, discharge and dismiss each and
3very of the Settled Class Claims, Settled Trustee Claims, and Settled Kodiak
4Claims, respectively, as against each and every Re leased Officer And D irector and
5he Insurance Carriers, and shall be deemed by this agreement and/or operation of
6aw to forever be enjoined from prosecuting any or all of the Settled Class Claims,
7Settled Trustee Claims and Settled Kodiak Claims, respectively, against each and
8very Released O fficer And D irector and the Insurance Carriers.
9.pon the Effective Date, the Settling Individuals hereby release,
10waive, discharge and dismiss, and shall be deemed by this agreement and/or
11 operation of law to forever be enjoined from prosecuting each and every of the
12Settling Individuals' Claims against Class Plaintiffs and all other Class Members,
13 the Trust, the Trustee, Alan M. Jacobs individually, the Debtors, the Debtors'
14Estates, the Plan Advisory Committee, and Kodiak, and their respective heirs,
15predeces sors, successors, assigns, employees, agents and retained professionals.
1 6.pon the Effective Date, the .Settling Individuals hereby release,
17waive, discharge and dismiss, and shall be deemed by this agreement and/or
18operation of law to forever be enjoined from prosecuting each and every Settling
19ndividuals' Claim a gainst KPM G and the other Re leased Auditor Parties, provided
20and conditioned upon the Settling Individuals receiving substantively reciprocal
21 eleases from K PM G and the Released Auditor Parties, and conditioned on KP M G
22being required pursuant to the KPMG Judgment to promptly offer to other former
23New Century officers or directors with whom KPMG has entered into a tolling
24agreement related to New Century substantially similar substantively reciprocal
25eleases.
26
.
pon the Effective Date, the Settling Individuals hereby release,
27waive, discharge and dismiss, and shall be deemed by this agreement and/or
28operation of law to forever be enjoined from prosecuting any claim against any and
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1ll of the Underwriter Defendants and the other Released Underwriter Parties
2hether arising under federal, state, com mo n or foreign law, arising out of or based
3 upon the allegations, transactions, facts, matters or occurrences, representations or
4omissions involved, set forth, or referred to in the Consolidated Class Action,
5provided and conditioned upon the Settling Individuals receiving substantively
6eciprocal releases from the Underwriter Defendants and the other Released
7 Underwriter Parties.
8.pon the Effective Date, Kodiak hereby releases, waives, discharges
9 and dismisses, and shall be deemed by this agreement and/or operation of law to
1.0forever be enjoined from prosecuting each and every of the Settled Kodiak Claims
11 as against KPMG and the other Released Auditor Parties, provided and conditioned12 upon Kodiak receiving substantively reciprocal releases from KPMG.
1 3
HE SETTLEMENT CONSIDERATION
14.he Global Officer And Director Settlement Amount shall be paid as
15ollows:
16. Within fourteen (14) calendar days after entry of the Preliminary
1 7pprova l Order, the Settling Individuals shall pay and/or caus e to be paid
is
nto the Global Escrow Account a total of $91,102,331.51 in cash as
1 9
ollows:
20
) The Settling Individuals shall cause the Insurance Carriers to
21ay the amount of $90,960,516 in cash. This amount includes a
22250,000 credit to Morrice, a $450,000 credit to Dodge, and a
23150,000 credit to Kenneally in partial satisfaction of amounts
24
wed pursuant to any prospective SEC judgments in SEC v.
25orrice, et al., Case No. 09-1426-DDP (the "SEC Action").
26hese credits, however, shall not be applied towards penalties
27wed pursuant to the referenced SE C judgme nts;
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1
) David Kenneally shall pay $32,500 pursuant to any prospective
2udgment entered in the SEC A ction; and
3) Two of the Settling Individuals (neither of whom is a Class
4ndividual Defendant) shall pay a com bined total of $109,315 .51 in
5
ash (in allocated amounts agreed upon and communicated to the
6
rustee), which shall be designated as part of the consideration for
7
ettlement of the Trustee Litigation.
8. Upon the Effective Date, an additional $944,029.49 shall be paid as
9ollows:
10) A total of $541,345 shall be released from the DCP Distribution of
1 1
rad M orrice;
12
) A total of $100,000 shall be paid by or on behalf of Patti Dodge as
13
ollows:
1 4. $55,000 shall be released from the DCP Distribution of Patti15odge; and
16. The Dodge Credit shall be applied; and
1 7) A total of $302,684.49 shall be released from the DCP
18
istributions o f three other Settling Individuals (none o f whom is a
1 9
lass Individual Defendant), pursuant to an allocation agreed upon
20mong themselves and communicated to the Trustee, which shall
21e designated as part of the consideration for settlement of the
22rustee Litigation.
230. Upon the Effective Date, and simultaneous with the release by the
24Trustee of the DCP Settlement Contributions pursuant to paragraph 9b, the
25balance, if any, of the DCP Distribution for each Distribution Defendant (after
26deducting such Distribution Defendant's DCP Settlement Contribution) will be
27distributed to each Distribution Defendant, net of taxes withheld by reason of both
28he DCP Settlement Contribution and the balance, if any, of the DCP Distribution.
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1The Trustee shall issue or cause to be issued a form W-2 or 1099, as appropriate,
2with respect to such distribution (including the DCP Settlement Contribution)
3made to or on behalf of each Distribution Defendant, The Distribution Defendants
4nd Trustee agree that such distributions (including the DCP Settlement
5Contributions) for tax purposes shall be treated as payment of compensation. Each
6Distribution Defendant agrees that the distributions (including the DCP Settlement
7Contributions) will be subject to the appropriate bonus tax rate for all appropriate
8 federal, state and local taxes related to such distributions. All taxes arising from
9he DCP Distributions shall be borne by the Distribution Defendants; the Trustee
10 and the Trust shall have no liability for any taxes associated with these
11distributions.12
1. The settlement funds deposited in the Global Escrow Account
13pursuant to paragraph 9a shall be held until the Effective Date, at which time the
14unds in the Global Escrow Account and the DCP Settlement Contributions shall
15be released and the Global Officer And Director Settlement Amount shall be
16allocated and distributed as follows:
1 7. $6,000,000 of the Global Officer And Director Settlement Amount shall
18
e paid to Kodiak from the Global Escrow Account and designated as
19
onsideration for settlement of Kodiak's claims against the Kodiak
20itigation D efendants in the Kodiak Litigation;
21. $20,969,273 of the Global Officer And Director Settlement Amount shall
22e paid to the Trustee, consisting both of $20,025,243.5 1 from the G lobal
23scrow Account and $944,029.49 from the DCP Settlement
24
ontributions (including the Dodge Credit), and designated as
25
onsideration for the settlement of the Trustee's claims against the
26
rustee Litigation D efendants in the Trustee Litigation; and
27. $6 5 ,077,088 of the G lobal Officer And Director Settlement Am ount shall
28e transferred from the Global Escrow Account into the Class Escrow
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ccount and designated as consideration for the settlement of the Class
2laintiffs' claims against the Class Individual Defendants in the
3onsolidated Class Action.
4. Included in the amounts set forth in this paragraph is a total of
5
1,523,845 paid by or on behalf of Morrice ($791,345), Dodge
6
$550,000), and Kenneally ($182,500) in satisfaction of amounts owed
7
ursuant to any prospective SEC judgments in the SEC Action and which
8ill be distributed pursuant to this Stipulation of Settlement.
92. Interest that accrues on the funds held in the Global Escrow Account
10prior to their distribution to the Plaintiffs hereunder shall be allocated pro rata
11amo ng the Plaintiffs based on funds distributed from the G lobal Escrow Ac count to12such Plaintiffs pursuant to paragraph 11 a-c. Escrow fees, Taxes and tax
13preparation fees and costs incurred under the Escrow Agreement for the Global
14Escrow Account shall be allocated pro rataamong the Plaintiffs in the same
15manne r as interest.
1 63. If any portion of the Global Officer And Director Settlement Amount
17s not paid in the timeframe as designated above in paragraph 9a, Plaintiffs shall,
18upon their unanimous agreement, have the option to: (i) terminate the Global
19 Officer And Director Settlement; or (ii) seek to enforce this Stipulation of
20Settleme nt, including seeking interest on unpaid portions of the G lobal Officer And
21Director Settlement Amount, as against those Parties or Insurance Carriers who
22have not complied with their payment obligations as set out in paragraph 9a. Any
23Party or Insurance Carrier may seek the assistance of the Hon. Daniel Weinstein
24or resolution of any disputes relating to this paragraph, but seeking or not seeking
25 such assistance does not preclude all otherwise available legal remedies.
26
4. The costs of all Taxes and tax preparation and escrow fees and related
27 ees in connection with the Global Officer And Director Settlement Amount while
28t is in the Global Escrow Account may be paid directly out of the Global Escrow
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1Account without further order of the Court in accordance with the Escrow
2Agreement for the G lobal Escrow Account.
3SE OF CLASS SETTLEMENT FUNDS
45. The Class Settlement Fund shall be used to pay: (i) any Taxes payable
5n the Class Settlement Fund; (ii) any Notice and Administration Costs; (iii) any
6 attorneys' fees awarded by the Consolidated Class Action Court; and (iv) any
7Litigation Ex penses aw arded by the C onsolidated C lass Action Court. The balance
8emaining in the Class Settlement Fund, after payment of items (I)-(iv), shall be
9 distributed to Authorized Claimants as provided below.
106. The Escrow Agent shall invest any funds in the Global Escrow
11 Account and the Class Escrow Account in United States Treasury Bills (or a
12 mutual fund invested solely in such instruments) and shall collect and reinvest all
13nterest accrued thereon, except that any residual cash balances of less than
14$100,000 may be invested in money m arket mutual funds com prised exclusively of
15 investments secured by the full faith and credit of the United States.
1 67. The Class Plaintiffs and the Class Defendants agree that the Class
17Settlement Fund is intended to be a Qualified Settlement Fund within the meaning
18 of Treasury Regulation § 1.46813-1 and that Lead Counsel, as administrator of the
19 Class Settlement Fund within the meaning of Treasury Regulation § 1.46813-
20 2(k)(3), shall be solely respo nsible for filing or caus ing to be filed all informa tional
21and other tax returns as may be necessary or appropriate (including, without
22imitation, the returns described in Treasury Regulation § 1.468B-2(k)) for the
23Class Settlement Fund. Such returns shall be consistent with this paragraph and in
24all events shall reflect that all Taxes on the income earned on the Class Settlement
25Fund shall be paid out of the Class Settlement Fund as provided by paragraph 18
26below. Lead Counsel shall also be solely responsible for causing payment to be
27made from the Class Settlement Fund of any Taxes owed with respect to the Class
28Settlement Fund. Upon written request, the Class Individual Defendants will
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1provide promptly to Lead Counsel any statements or information required for tax
2purposes, including the statement described in Treasury Regulation § 1.46 8 B-3(e).
3Lead Counsel, as adm inistrator of the Class Se ttlement Fund w ithin the meaning of
4Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as are
5necessary or advisable to carry out this paragraph, including, as necessary, making
6a "relation back election," as described in Treasury Regulation § 1.468B-10), to
7ause the Qualified Settlement Fund to come into existence at the earliest
8llowable date, and shall take or cause to be taken all actions as may be necessary
9 or appropriate in connection therewith.
108. All Taxes on the Class Settlement Fund shall be paid out of the Class
11Settlement Fund, and shall be timely paid by the Escrow Agent pursuant to the
12disbursement instructions to be set forth in the Escrow Agreement between Lead
13 Counsel and the Escrow Agent, and without prior Order of the Consolidated Class
14Action Court. Any tax returns prepared for the Class Settlement Fund (as well as
15he elec tion set forth therein) shall be con sistent with the prev ious paragra ph and in
16all events shall reflect that all Taxes (including any interest or penalties) on the
17ncome earned by the Class Settlement Fund shall be paid out of the Class
18Settlement Fund as provided herein. The Class Settlement Fund shall indemnify
19 and hold all Settling Individuals and Insurance Carriers harmless for any Taxes and
20 elated expenses of any kind whatsoever (including without limitation, taxes
21payable by reason of any such indemnification), if any, payable by the Settling
22ndividuals or the Insurance Carriers by reason of any income earned on the Class
23Settlement Fund. The Settling Individuals and the Insurance Carriers shall notify
24he Escrow Agent promptly if they receive any notice of any claim for Taxes
25elating to the Class Settlement Fund and, for the avoidance of doubt, in such case
26he Settling Individuals and the Insurance Carriers will have no recourse against
27he Trust, Trustee, Alan M. Jacobs individually, the Debtors, the Debtors' Estates,
28he P lan Advisory C ommittee, or Ko diak.
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1
9. This is not a claims-made settlement. Once the Effective Date occurs,
2neither the Settling Individuals, the Insurance Carriers, nor any other Settling
3ndividuals nor any other person or entity that contributed to the Global Officer
4And Director Settlement Amount on their behalf, will have the right or ability to
5et back any o f the G lobal Officer And D irector Settlement Am ount or any interest
6ccrued thereon, irrespective of the number of Claims filed, the collective amount
7f losses of Authorized Claimants, the percentage of recovery of losses, or the
8 amounts to be paid to Authorized Claimants from the Class Net Settlement Fund.
90. The Claims Administrator shall discharge its duties under Lead
10 Counsel's supervision and subject to the jurisdiction of the Consolidated Class
11Action Court. Except as otherwise provided herein, no other Party shall have12esponsibility whatsoever for the administration of the Global Officer And Director
13Settlement, and no other Party shall have liability whatsoever to any person,
14ncluding, but not limited to, the Class Members, in connection with any such15administration. Lead Counsel shall cause the Claims Administrator to mail the
16 Notice and Proof of Claim Form to those members of the Class at the address of
17each suc h person as set forth in the records of N ew Century or its transfer agent(s),
18or who otherwise may be identified through further reasonable effort. Lead
19Counsel will cause to be published the Summary Notice pursuant to the terms of
20he Preliminary Approval Order or whatever other form or manner might be
21ordered by the Consolidated Class Action Court. For the purpose of identifying
22and providing notice to the Class, promptly upon execution of this Stipulation, the
23Trustee shall provide to the Claims Administrator (at no cost to the Global Escrow
24Account, Lead Counsel or the Claims Administrator) any New Century shareholder
25ists in his posses sion as app ropriate for providing notice to the Class, in electronic
26onn (if available). The Trustee shall make no representation as to the accuracy or
27com pleteness of such shareh older lists.
28
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11. Lead Counsel may pay from the Global Escrow Account or the Class
2Escrow Account, without further approval from the other Parties or further order of
3he C onsolidated C lass Action Co urt, the N otice a nd A dministration C osts actually
4ncurred. Such amounts will be deducted as expenses from the Class Officer And
5Director Settlement Amount. Such costs and expenses shall include, without
6imitation, the actual costs of publication, printing and mailing the Notice,
7eimbursements to nominee owners for forwarding the Notice to their benefi
8wners of New Century securities, the administrative expenses incurred and fees
9harged by the Claims Administrator in connection with providing Notice and
10 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
11event that the G lobal Officer A nd D irector Settlement is terminated pursuant to the12erms of this Stipulation, all amounts contributed to the Global Escrow Account
13 shall be returned or repaid to the Settling Individuals, Insurance Carriers and all
14 ther persons and entities who or which contributed to the G lobal Escrow Account
15 n their behalf, less all No tice and Ad ministration C osts paid or incurred, including
16 any related fees, as set forth in paragraph 41 below.
1 7LASS ATTORNEYS' FEES AND LITIGATION EXPENSES
18
2. Lead Counsel will apply to the Consolidated Class Action Court for a
19ollective award of attorneys ' fees to C lass Plaintiffs' Counse l related to settlement
20of the Consolidated Class Action. Lead Counsel also will apply to the
21Conso lidated C lass Action Co urt for reimbursement of Litigation E xpenses, which
22may include reimbursement of the expenses of Class Plaintiffs in accordance with
2315 U.S.C. § 78u-4(a)(4). No other Party shall ta pe any position with respect to
24Lead Counsel's applications or awards discussed in this paragraph. Such matters
25are not the subject of any agreement between the Parties other than what is set
26orth in this Stipulation. Lead Counsel will not calculate attorneys' fees based
27upon, or seek attorneys' fees or expenses with respect to, any disgorgement or
28penalties obtained by the Securities and Exchange C omm ission in the SEC A ction.
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1
3. Any attorneys' fees and Litigation Expenses that are awarded by the
2Conso lidated Class Ac tion C ourt shall be paid from the G lobal Escrow Account to
3Lead Counsel, with the Consolidated Class Action Court's approval, immediately
4upon award, notwithstanding the existence of any timely filed objections thereto,
5r potential for appeal therefrom, or collateral attack on the Settlement or any part
6hereof, subject to Lead Counsel's obligation to pay back any such amount if, as a
7esult of any appeal, further proceeding or successful collateral attack, the
8ttorneys' fee or Litigation Expense award is amended, modified or does not
9become Final, or if the Effective Date does not occur or the Settlement is
10erminated for any reason. Such amounts will be deducted from the Class Officer
11And D irector Settlement A mount. Lead Co unsel shall make the appropriate refund12or repayment in full no later than ten (10) business days after receiving from the
13Settling Individuals' counsel or from a court of appropriate jurisdiction notice of
14 the termination of the Settlement or notice of any reduction of the award of
15attorneys' fees and/or Litigation. Expenses. An award of attorneys' fees and/or
16 Litigation Expenses is not a necessary term of this Stipulation and is not a
17 ondition of this Stipulation.
18
4. Lead Counsel shall have the sole authority to allocate the
19 Consolidated Class Action Court-awarded attorneys' fees among Class Plaintiffs'
20Counsel in a manner which it, in good faith, believes reflects the contributions of
21such counsel to the prosecution and settlement of the Consolidated Class Action.
22The Settling Individuals shall have no responsibility for any such allocation and
23 hall not be liable for any c laims relating to suc h allocation.
24
5. The attorneys' fees and Litigation Expenses discussed herein are
25exclusive of any attorneys' fees or litigation expenses related to the settlement of
26he Trustee Litigation or Kodiak Litigation. Each side and each party in the
27Trustee Litigation and the Kodialc Litigation shall bear his, her or its own
28 attorneys' fees and costs.
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1LAIMS ADMINISTRATOR O F THE CLASS SETTLEMENT FUND
26. The Claims Administrator shall administer the process of receiving,
3 reviewing and approving or denying Claims of Class Members under Lead
4Counsel's supervision and subject to the jurisdiction of the Consolidated Class
5Action Court. Other than the Trustee's obligation to provide New Century's
6 shareholder lists, as provided herein, none of the Settling Individuals, nor the
7Trustee, nor Kodiak, shall have any responsibility for, involvement in or liability
8or providing notice to the Class, the administration of the Class claims in the
9Conso lidated Class A ction, or the allocation of the Class N et Settlement F und. The
10Parties and their respective counsel shall cooperate in the administration of the
11Settlement to the extent reasonably nec essary to effectuate its terms.12
7. The allocation of the Class Net Settlement Fund among Authorized
13Claimants shall be subject to a Plan of Allocation to be proposed by Lead Counsel
14and approved by the Consolidated Class Action Court. Class Individual
15De fendants shall take no position with respect to such propose d P lan of Allocation;
16 such Plan of Allocation is a matter separate and apart from the proposed Settlement
17herein, and any decision by the Consolidated Class Action Court concerning the
18Plan of Allocation shall not affect the validity or finality of the proposed
19Settlement.
2 08. The Claims Administrator shall receive Claims and determine first,
21whether the Claim is a valid Claim, in whole or part, and second, each Authorized
22Claimant's pro ratashare of the Class Net Settlement Fund as set forth in the Plan
23of Allocation set forth in the Notice attach ed here to as Exh ibit 1 to E xhibit A, or in
24uch other plan of allocation as the Co nsolidated Class Action Court approve s.
25
9. The Plan of Allocation proposed in the Notice is not a necessary term
26of this Stipulation and it is not a condition of this Stipulation that any particular
27 plan of allocation be approved by the Consolidated Class Action Court.
28
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1
0. Any Class Member who does not submit a valid Claim Form will not
2be entitled to receive any distribution from the Class Net Settlement Fund but will
3therwise be b ound by all of the terms o f this Stipulation and Settleme nt, including
4he terms of the Officer And Director Judgment to be entered in the Consolidated
5Class Action and the releases provided for herein, and will be permanently barred
6 and enjoined from bringing any action, claim, or other proceeding of any bind
7 against any Released Officer And Director concerning any Settled Claim.
81. Lead Counsel shall be responsible for supervising the administration
9f the settlement of the claims in the Consolidated Class Action and disbursement
10of the Class Net Settlement Fund. No other Party shall have any liability,
11obligation or responsibility whatsoever for the administration of the Settlement or
12disbursement of the Class Net Settlement Fund. No other Party shall be permitted
13 o review, contest or object to any Claim Form or any decision of the Claims
14Administrator or Lead Counsel with respect to accepting or rejecting any Claim
15Form o r Claim for payment by a Class M ember. Lead C ounsel shall have the right,
16 but not the obligation, to waive what they deem to be formal or technical defects in
17 any Claim Forms submitted in the interests of achieving substantial justice.
18
2. For purposes of determining the extent, if any, to which a Class
19Member shall be entitled to be treated as an Authorized Claimant, the following
20 onditions shall apply:
2 1.ach Class Member shall be required to submit a Claim Form
22and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,
23supported by such documents as are designated therein, including proof of the
24Claimant's loss, or such other documents or proof as the Claims Administrator or
25Lead Counsel, in their discretion, may deem acceptable, by the date set by the
26Consolidated Class Action Court;
27.ach Claim Form shall be submitted to and reviewed by the
28Claims Administrator, under the supervision of Lead Counsel, who shall determine
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1n accordance with this Stipulation the extent, if any, to which each Claim shall be
2 allowed, subject to review by the Consolidated Class Action Court pursuant to
3 subparagraph (d) below;
4.laim F orms that do not mee t the submission requirements may
5be rejected. Prior to rejecting a Claim in whole or in part, the Claims
6 Administrator shall communicate with the Claimant in writing, to give the
7Claimant the chance to remedy any curable deficiencies in the Claim Form
8ubmitted. The Claims Administrator, under the supervision of Lead Counsel,
9hall notify, in a timely fashion and in writing, all Claimants whose Claim the
10Claims Administrator proposes to reject in whole or in part, setting forth the
11 reason s therefor, and shall indicate in such notice that the C laimant who se C laim is
12 to be rejected has the right to a review by the Consolidated Class Action Court if
13he Claimant so desires and complies with the requirements of subparagraph (e)
14 below;
15.f any Claimant whose Claim has been rejected in whole or in
16 part desires to contest such rejection, the Claimant must, within twenty (20) days
17after the date of mailing of the notice required in subparagraph (c) above, serve
18upon the Claims Administrator a notice and statement of reasons indicating the
19Claimant's grounds for contesting the rejection along with any supporting
20documentation, and requesting a review thereof by the Consolidated Class Action
21Court. If a dispute concerning a Claim cannot be otherwise resolved, Lead
22Counsel shall thereafter present the request for review to the Consolidated Class
23Action Court; and
24
.
he administrative determinations of the Claims Administrator
25accepting and rejecting C laims shall be presented to the C onsolidated C lass Action
26Court, on notice to the Class Individual Defendants' counsel, for approval by the
27Co nsolidated Class Action Co urt in the Class D istribution O rder.
28
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1
3. Each Claimant shall be deemed to have submitted to the jurisdiction
2 of the Consolidated Class Action Court with respect to the Claimant's Claim, and
3 he Claim will be subject to investigation and discovery under the Federal Rules of
4 Civil Procedure, provided that such investigation and discovery shall be limited to
5hat Claimant's status as a Class Member and the validity and amount of the
6Claimant's Claim. No discovery shall be allowed on the merits of this
7Consolidated Class Action or this Settlement in connection with the processing of
8 Claim Forins.
94. Lead Counsel will apply to the Consolidated Class Action Court, on
10 notice to the Class Individual Defendants, for a Class Distribution Order: (i)
11approving the Claims Administrator's administrative determinations concerning
12 the acceptance and rejection of the Claims submitted; (ii) approving payment of
13any additional unpaid or anticipated administration fees and expenses associated
14with the administration of the Settlement from the Class Escrow Account; (iii) if
15 the Effective Date has occurred, directing payment of the Class Net Settlement
16 Fund to A uthorized C laimants from the C lass Escrow A ccount; and (iv) other relief
17 as appropriate.
1 8
5. Payment pursuant to the Class Distribution Order shall be final and
19conclusive against all Class Members. All Class Members whose Claims are not
20 approved by the Consolidated Class Action Court shall be barred from
21 participating in distributions from the Class Net Settlement Fund, but otherwise
22 shall be bound by all of the terms of this Stipulation and the Settlement, including
23 the terms of the Officer And Director Judgment to be entered in this Consolidated
24Class Action and the releases provided for therein, and will be permanently barred
25and enjoined from bringing any action against any and all Released Officers And
26 Directors conc erning any and all of the Settled C laims.
276. All proceedings with respect to the administration, processing and
28determ ination of Claims and the determ ination of all controve rsies relating thereto,
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1ncluding disputed questions of law and fact with respect to the validity of Claims,
2hall be subject to the jurisdiction of the C onsolidated Class A ction Court.
3ERMS OF THE JUDGMENT
47. If the Settlement contemplated by this Stipulation is approved by the
5Consolidated Class Action Court, the Parties shall request that the Consolidated
6Class Action Court enter the Officer And Director Judgment, substantially in the
7orm annexed hereto as Exhibit B, pursuant to Rule 54(b) of the Federal Rules of
8 Civil Procedure.
9AIVER OR TERMINATION
108. Within thirty (30) days of. (a) the Consolidated Class Action Court's
11 declining to enter, without leave to resubmit, the Preliminary Approval Order in
12any material respect; (b) the Consolidated Class Action Court's refusal to approve
13 this Stipulation or any material part of it; (c) the Consolidated Class Action Court's
14declining to enter the Officer And D irector Judgment in any material respect; or (d)
15he date upon which the Officer And Director Judgment is modified or reversed in
16any m aterial respect by the C ourt of Appeals or the Supreme Court, the Parties and
17 the Insurance Carriers each shall have the right to terminate the Settlement and this
18Stipulation by providing written notice to all other Parties of an election to do so.
19However, any decision with respect to an application for attomeys' fees or
20Litigation Expenses, or with respect to any plan of allocation, shall not be
21considered m aterial to the Se ttleme nt and shall not be ground s for termination.
229. In addition, if Class Members who purchased or acquired more than a
23certain number of shares during the Class Period properly elect to exclude
24hemselves from the Class in accordance with the requirements for requesting
25exclusion provided in the Notice, as specified in a separate Supplemental
26Agreement Between Class Plaintiff And The Class Individual Defendants, the
27Class Individual De fendants and the Insurance Ca rriers shall have the option, as se t
28out in the Supplemental Agreement, to terminate this Settlement and Stipulation.
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1n the event that the option to terminate the Settlement is exercised and not
2withdrawn as se t forth in paragraph 40 be low, the entire Settleme nt set forth herein
3 s terminated, including the settlement of the Consolidated Class Action, the
4Trustee Litigation and the Ko diak Litigation.
5
0. Lead Counsel and the Class Individual Defendants' counsel shall
6 request jointly that the deadline for submitting exclusions from the Class be at least
7wenty-one (21) days prior to the Final Approval Hearing. Copies of all timely
8 requests for exclusion from the Class received by the Claims Administrator (or
9other person designated to receive exclusion requests) shall be provided to Lead
10 Counsel, Class Individual Defendants' counsel, and counsel for the Insurance
11Carriers no later than fifteen (15) days prior to the Final Approval Hearing. If the
12hreshold stated in the Supplemental Agreement is reached, the Class Individual
13Defendants and the Insurance Carriers shall have until 5:00 p.m. PDT of the
14eventh day before the Final Approval Hearing to inform Lead Counse l, in writing,
15hat they elect to exercise their option to terminate the Settlement and this
16 Stipulation. Lead Counsel shall have the right to communicate with the holders of
17such shares and, if a sufficient number of them withdraw in writing their requests
18or exclusion such that the total number of shares purchased. during the Class
19Period represented by the remaining "opt outs" represents less than the threshold,
2 0 he notice of termination shall be deem ed withdrawn.
211. Except as otherwise provided herein, in the event that the Effective
22Date does not occur or the Settlement is terminated, the Parties shall be deemed to
23have reverted to their respective status in the Officer And Director Litigations
24mm ediately prior to M ay 5 , 2010, and, except as otherwise expressly provided, the
25Pa rties sha ll proce ed in all respec ts as if this Stipulation and an y related orders had
26not been entered. If the Effective Date does not occur or the Settlement is
27erminated, the settlement consideration paid under paragraphs 9a2 and 9a3 shall
2 8 e returned in full, and the remaining portion of the Settlement consideration
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1 previously paid, less any amounts paid or incurred for Notice and Administration
2Costs actually incurred and paid or payable and/or Taxes paid or owing, shall
3evert to the Insurance Carriers in proportion to the cash amounts each contributed
4o the Global Escrow Account under paragraph 9al, within fourteen (14) business
5ays after written notification of such event by Le ad C ounse l or any of the Settling
6 Individuals to the Escrow Agent, pursuant to the terms of the Escrow Agreement.
7
O ADMISSION OF WRONGDOING
82. This Stipulation, whether or not consummated, and any proceedings
9aken pursuant to it:
10.hall not be offered or received against any of the Released
11 Officers And Directors as evidence of, or construed as, or deemed to be evidence
12of any presum ption, concession, or admission by any o f the Released O fficers And
13D irectors with respect to the truth of any fact alleged by P laintiffs or the validity of
14any claim that was or could have been asserted against any of the Released
15 Officers And Directors in the Officer And Director Litigations or in any litigation,
16or of any liability, negligence, fault, or other wrongdoing of any kind of any of the
17 Released Officers And Directors;
18
.
hall not be offered or received against any of the Released
19Officers And Directors as evidence of a presumption, concession or admission of
20any fault, misrepresentation or omission with respect to any statement or written
21 document approved or made by any of the Released Officers And Directors, or
22against the Plaintiffs or any Class Members as evidence of any infirmity in the
23claims of Plaintiffs or the other Class M emb ers;
24
.
hall not be offered or received against any of the Released
25Officers And Directors, or against the Plaintiffs or any other Class Members, as
26evidence of a presumption, concession or admission with respect to any liability,
27negligence, fault or wrongdoing of any kind, or in any way referred to for any
28other reason as against any of the Released Officers And Directors, in any other
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1 ivil, criminal or administrative action or proceeding, other than such proceedings
2as may be necessary to effectuate the provisions of this Stipulation; provided,
3 however, that if this Stipulation is approved by the Consolidated Class Action
4Court, the Settling Individuals, any other Released Officer And Director, or any
5 Class Member may refer to it to effectuate the protection from liability granted
6hem hereunder;
7
.
hall not be construed against any of the Released O fficers And
8Directors, Plaintiffs or any other Class Members as an admission, concession, or
9presumption that the consideration to be given hereunder represents the amount
10which could be or wo uld have been reco vered after trial;
1 1
.
hall not be construed against Plaintiffs or any other Class
12Members as an admission, concession, or presumption that any of their claims are
13without merit or that damages recoverable under the Officer And Director
14Litigations w ould not have e xceeded the Officer And D irector Settlement A mount;
15nd
1 6hall not be construed as or received in evidence as an
17 admission, concession or presumption that class certification is appropriate in this
18Co nsolidated Class Ac tion, exce pt for purposes of this Settlement.
1 9
ISCELLANEOUS PROVISIONS
203. Pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28
21U.S.C. § 171 5 (b), not later than ten (10) days after the G lobal Officer And Director
22Settlement is filed in the Consolidated Class Action Court, Settling Individuals
23shall cause to be served upon the appropriate State official of each State and the
24Attorney General of the United States a CAFA Notice. The Parties will request
25hat, pursuant to 28 U.S.C. § 171 5 (d), the Final Approval Hearing be scheduled for
26no earlier than ninety (90) days following the deadline for Settling Individuals to
27serve the CAFA Notice as stated in this paragraph. Any failure by Settling
28ndividuals to comply with the CAFA Notice requirements will not provide
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1grounds for delay of the Final Approval Hearing or entry of the Officer And
2Director Judgment.
34. All of the exhibits attached hereto are hereby incorporated by
4eference a s though fully set forth herein.
5
5. The Settling Individuals and Insurance Carriers each warrant that, as
6o the payments made by or on behalf of him, her or it, at the time of such
7ayment, he, she or it was not insolvent, nor did nor will the payment required to
8be made by or on behalf of him, her or it render him, her or it insolvent, within the
9meaning of and/or for the purposes of the Bankruptcy Code, including §§ 101 and
10 547 thereof. This representation is made by the Settling Individuals and the
11 nsurance C arriers and not by their counsel,12
6. In the event of the entry of a final order of a court of competent
13 jurisdiction determining the transfer of money to the Global Escrow Account or
14 any portion thereof by or on behalf of any of the Settling Individuals or the
15nsurance Carriers to be a preference, voidable transfer, fraudulent transfer or
16similar transaction pursuant to the Bankruptcy Code, and any portion thereof is
17required to be returned, and such amount is not promptly deposited to the Global
18Escrow Account by others, then, at the election of Plaintiffs, Plaintiffs may move
19he Consolidated Class Action Court to vacate the Officer And Director Judgment
20n whole or in part; the Parties shall be restored to their respective positions in the
21Officer And Director Litigations immediately prior to May 5, 2010; and any cash
22amounts in the Global Escrow Account shall be returned as provided in paragraph
2341 above.
24
7. The Parties intend this Settlement to be a final and complete
25esolution of all disputes asserted or which could be asserted by the Plaintiffs, any
26other Class Members and their attorneys against all Released Officers And
27Directors with respect to all Settled Claims. Accordingly, the Parties agree not to
28assert that the Consolidated Class Action, Trustee Litigation, or Kodiak Litigation
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1was brought or defended in bad faith or without a good faith basis. The Parties
2hereto shall assert no claims of any violation of Rule 11 of the Federal Rules of
3Civil Procedure relating to the prosecution, defense, or settlement of the Officer
4And Director Litigations. The Parties agree that the amount paid and the other
5erms of this Settlement were negotiated at arm's-length in good faith by the
6Parties, including a mediation conducted by a professional mediator, and reflect a
7 settlement that was reached voluntarily after consultation with experienced legal
8ounsel.
98. While retaining their rights to deny that the claims asserted in the
10Officer And Director Litigations were meritorious, the Settling Individuals in any
11 statement made to any media representative (whether or not for attribution) will
12 not deny that the Officer And Director Litigations were commenced and
13prosecuted in good faith. Similarly, while retaining their rights to deny that the
14defenses in the Officer And Director Litigations were meritorious, the Class
15Plaintiffs, Trustee, and Kodiak in any statement to any media representative
16 (whether or not for attribution) will not deny that the Officer And Director
17 Litigations were defended in good faith. In all events, the Parties shall refrain from
18any accusations of wrongful or actionable conduct by any Party concerning the
19 prosecution and resolution of the Officer And Director Litigations, and shall not
20 otherwise suggest that the Settlement constitutes an admission of any claim or
21defense alleged.
229. This Stipulation may not be modified or amended, nor may any of its
23provisions be waived except by a writing signed by all signatories hereto or their
24uccessors-in-interest.
25
0. The headings herein are used for the purpose of convenience only and
26are not meant to have legal effect.
271. The administration and consummation of this Settlement as embodied
28n this Stipulation shall be under the authority of the Consolidated Class Action
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1Court, and the Consolidated Class Action Court shall retain jurisdiction for the
2urpose of entering orders providing for awards of attorneys' fees and Litigation
3xpense s to Lead C ounsel and en forcing the terms o f this Stipulation as it concerns
4he C onsolidated Ac tion. After the Effective D ate, the Bankruptcy C ourt shall have
5nd retain jurisdiction in the Trustee Litigation for purpos es of enforc ing the terms
6 of this Stipulation as between the Trustee and Trustee Litigation Defendants, and
7 the court hearing the Kodiak Litigation shall have and retain jurisdiction in the
8Kodiak Litigation for purposes of enforcing the terms of this Stipulation as
9 between Kodiak and Kodiak Litigation Defendants.
102. Upon the Effective Date and to the extent not already withdrawn: (a)
11 the Settling Individuals will be deemed to have withdrawn with prejudice the
12claims identified in the schedule annexed hereto as Exhibit C that have been filed
13or scheduled in the Bankruptcy Court against the Debtors' Estates; and (b) Arch
14nsurance Company will be deemed to have withdrawn with prejudice proof of
15claim no. 2329 filed in the Bankruptcy Court against the Debtors' Estates. Upon
16he Effective Date, proof of claim no. 2385 filed by Fredric J. Forster in the
17 Bankruptcy Court against the Debtors' Estate shall be allowed as a priority claim in
18he amount of $5,000.00.
1 9
3. Upon the Effective Date, the notices of dismissal in the Trustee
20Litigation and Kodiak Litigation held by counsel designated by the Kodiak
21Litigation Defendants and the Trustee Litigation Defendants shall be filed in the
22Trustee Litigation and Kodiak Litigation, respectively. If the Effective Date does
23not occur or the Settlement is terminated, the notices of dismissal shall not be filed
24and shall be returned to counsel for Trustee and K odiak, respectively.
25
4. The waiver by one Party of any breach of this Stipulation by any other
26Party shall not be deemed a waiver of any other prior or subsequent breach of this
27Stipulation.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 46 of 56 Page ID#:10890
1Stipulation and this Settlement, and to use best efforts to promptly agree upon and
2 execute all such other documentation as may be reasonably required to obtain final
3 approval by the Consolidated Class Action Court of the Settlement and to
4ffectuate its terms.
5
2. If any Party is required to give notice to any other Party under this
6 Stipulation, such notice shall be in writing and shall be deemed to have been duly
7given upon receipt of hand delivery or facsimile transmission with confirmation of
8 receipt.
9 DATED AS OF: July 23, 2010ERNSTEIN LITOWITZ IF, ERGER
10GROS MANN ids
11
12
AL ATORE . GRAZIANO13
BI^AIR A, NICHO LAS
14LIZABETH LIN
1 5IKI L. MEN DO ZABENJAMIN GALDSTON
16AI,' EO A. KELL AR124 8 1 High Bluff Drive, Suite 300
17an Diego, CA 921 30Tel: 858 793-0070
1 8ax: (858) 793-032 3-and-
19
ALVATORE J . G RAZIANO
LAUREN A. MCM ILLEN20
285 Avenue of the Americas
New York, NY 100192 1
el: (212) 554-1400
Fax: (212) 554-1444
22
3URRAY, FRANK & SAILER LLPMARV IN L. FRANK275 Madison Avenue, Suite 8 01
24ew York, NY 10016
2 5
el: 212 682-1818Fax; 212 682-1892
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 47 of 56 Page ID#:10891
tWERLING, SCHACHTER& ZWERLING LLPFREY C. ZWERLINGE:I
41 Madison Avenue3ew York, NY 10010
T'el:212) 223-3900
4
ax: (212 371 - 5969
5ead C'otinsel for Lead Plaintiff The NewFork State Teachers ' Retirement S i )stem and
6he Class, and Plaintif s Carl Larson andChar les Hooten
7
8 MUS-G, ER, TOLLE;S & OLSLLP
9
9 .
1 1
OHN V. SPIEGEL
^
ATHLEEN M. MCDOW LKEVIN S. ALLR.ED
2
55 South Grand Avenue, 35 t h Floor
13os A . eles, C A 90071-1560Te l: 213 683 -9100
1 4ax: (213) 687-3702
1 5ttorneys f or Defendants Brad A . Moa"rice,Patti A f Dodge, K evin M. Clo d, Patrick
16lana an, Stergios Theologi es, and JosephF, Eclo l oth, Jr.
17
1 . 8
I<.ADDEN, ARPS, SLATE, MEAGHER
1
FL,OM LLP
202 1ACK P. DICANIO
2200 S. Grand Avenue, Suite 3400Los A n e les, CA 90071-3144
2 3el: (2 3) 687-5000Fax: (213) 687-5600
24
Attorneysfor Defendant Estate of Edward
2 5otschall
26
27
28
T...___45 -JO STIPULATION OF SETTLEMENTCase No. 2 :07-cv-00931-DDP (FN40x)
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 48 of 56 Page ID#:10892
1WERLING , SCHACHTER& ZWERLING LLP
2EFFREY C. ZWERLING41 M adison Avenueew York, NY 1 0010Tel: 212 223-3900
4ax : (212) 371-5 9695ead Coun sel for Le ad Plaintiff The N ew
Y ork State Teachers Retirement S ystem and6he Class, and Plaintiffs Carl Larson and
Charles Hooten7
8UNG ER, TOLLES & OLSON LLP
91 01 1OHN W . SPIEG EL
KATHLEEN M. MCDOW ELL12
EVIN S. ALLRED
h
355 South Grand Avenue, 35 Floor13
os An eles, CA 90071-
Tel:
5 6 0
213 683-910014ax: (213) 687-37 02
15ttorney s for Defendants Brad A . M orrice,Patti M Dodg e, K evin M . Clod, Patrick
1 6lanaggan, S tergios Theo logide, and JosephF. Eckroth, Jr.
17
1 8
KADD EN, ARPS, SLATE, MEAG HER
1 9
FLOM LLP
20
2 1
sAnfeles,
P. DICANIO2 2rand Avenue, Suite 3400
CA 90071 -3144
23el: (2 3) 687-5000Fax: ((213) 687-5600
24A ttorney s or Defendant Estate of Edw ard
2 5otschallf2 6
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 49 of 56 Page ID#:10893
1ATH: & WATKINS LLP
2
34NY A. ABASCAL
ETHAN J. BROWN5
5 5 South G rand Avenue, Suite 100
Los Angeles, CA 90071-156 06
el: (213) 485-1 234
7
ax: (213) 891-8 763
8t torney s for Defend ant Ro bert K . Cole
91 0ROWELL & MORING LLP
1 1
1 2
JOHN CROUCHLEY1 3
15 South Flower Street, 40 ` h Floor
1 4os Angeles, California 90071 -225 8
1 5el: (213) 622-475 0Fax: (213) 622 -2690
16A ttorney s for David Kenn eally
17
18
IBSON D UNN & CRUTCHER LLP
19
20
21ERYL L. YOUNGWAYNE W . SMITH
2216 1 M ichelson Drive
2 3rvine, CA 9261 2Tel: (949) 451-4038
4ax: (949) 451-4220
25t torney s for Defendants M arily n A ,2 6lexander, Harald A . B lack , David E inhorn,
Fredric. J. Forster, Don ald E . Lang e,27ichael M . Sachs , Terrence P. Sandvik , A nd
Richard A . Zona2 8
-46-/O STIPULATION OF SETTLEMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 50 of 56 Page ID
#:10894
1 LATHAM & WATKINS LLP
2
3ANNY A. ABASCAL......^v,__ .
4
THAN J. BROWN
5
55 South Grand Avenue, Suite 100
Los Angeles, CA 90071-1560
6 {ael: (213) 485-1234
7Fax: (213) 891-8763
i
8ttorneys for Defendant Robert K. Cole
9
1 0ROWELL & MORING LLP1 1
^
J ' 01 CROUCHE Y1 3
1.5 South Flower Street, 40' h Floor
1 4os Angeles, California 90071-2258
15 ;el: (213) 622-4750Fax: (213) 622-2690
16
A ttorney s for David K enneally17
1 8
IBSON DUNK & CRUTCHER LLP
19
j
20
M21 '
RYL L, YOUNG
WAYNE W. SMITH22161 Michelson Drive
23rvine, CA 9261 2Tel: (949) 451-4038
2 4 {ax: (949) 451-4220ij
25ttorneys for cferidants Marily n .A .
26lexander, J-Darold A . Black, David Einhorn,Fredric J, Forster, .Donald L. Lange,
27ichael M. Sachs, Terrence P. Sandvik, A ndRichard A. Zona
28
46-/O STIPULATION OF SETTLEMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 51 of 56 Page ID#:10895
1ATHAM & WATKINS LLP
2
3
4
ANN Y A. ABASCAL
ETHAN J. BROWN5
55 South G rand Avenue, Suite 100
Los Angeles, CA 90071-15 606
el: (213) 485-1234
7
ax: (213) 891-876 3
8ttorneys far Defendant Robert K. Cole
9
1 0ROWELL & MORING LLP
11
12
JOHN CROUCHLEY13
15 South Flower Street, 40 t h Floor
1 4os Angeles, California 90071 -225 8
Tel: (213) 622-475015ax: (213) 622-2690
16
A ttorney s for David K enneally17
1 8
GIBS ON D ," & CR C R LLP
19
^....
2 1ERYLJYO
WAYN . S 411
2 2161 Michelson Drive
23rvine, CA 92612Tel: (949) 451-4038
2 4ax: (949) 451-4220
2 5t torney s for Defendants M arily n A .26lexander, Harold A . B lack , David Einhorn,
Fred ric J. Forster, Do nald E. L ange,
27ichael M . Sachs, Terrence P. S andv ik, A ndRichard A . Zona
28
46-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 52 of 56 Page ID#:10896
RUS MILI SAND & SMITH
4ONALD RUS
2211 Michelson Drive Seventh FloorIrvine CA 926 12.104Tel: (49) 752-7100
6ax: (949) 252-1514
7lttor ney s fbr Def end ant W illiam J; PcpejoJ
8ORR .ISON : FO ERSTER I:..I.,I'
1 0
DAN MA.RMALE.FSKY1 2
AMANTHA. P . G OODM AN
1 3
55 West Fifth Street, Suite 3500
1 4os Angeles, CA 90013-1024
Tel: 213-892-5200
1 . 5ax: 213-892-5454
, 1 6ttorneysf brJqff reyD. Goldberg1 7
. 1 8
-IAHN HE,SSEN ELP
1
20
21OHN P, McCAHEY
MARK S. INTDE LIC,`ATO22ARIA A. AR ^SOTT
2388 M adison Av enueNew York, N Y 10022
2 4e l : ( 2 1 2 1 ) 478-7420
Fax: (2 t 478-7400
2attorney s fo r° the .Nev i Cen tury Liquidating
26rus t and R eorganized N ew Cen tury
27arehouse Corporation, by and through
..Tan M, Jacobs, Liquidaling Trustee and2. 8lan adm inistrator
-47-IO STIPULATION OF SETTLEMFNTCase Igo, 2V-cv .. 00931-DDP (FMOx)
i
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 53 of 56 Page ID#:10897
K.C_ 15 .4IIH11 A.ND d: S .1 !11`l l i
2}3
221 1
Michelson Drive, Seventh Floor5
rvine, CA 92612-1043
'1 ej: (949) 752-7100
6
av (949) 252-1514
41torne -l'brDr-. rad arti k'illimn ). I'ojxjoy
t1 `'1. ^ f11 C) 1:; R f I- R LLP
1 t l
11
i WI
I M A L F , I { 'K Y
SAMAN I I = I, '. GO )OMAN13 '
5 5 West 1 " I fth Strect, Suite 3 500
Los Angeles, CA 90013-1024l le1: 213-892-52001 5ax: 213-892-5454
1 .6
1tt rr s c °.1 ;fPey D, Goldberg
1?
iI b k 1 - I i
- 1 1 , S 1 ^ : N I . . 1 . P
101-IN 1 1 . McCA.1 fE '^
. . .
2 2ARK S, INUELIC IyC
MARIA A, ARNO'1 T2 38 8 M a d is o n A v e n u e
New gook NY 10022241el: (21.2)4 -78-7420
2Fax: (212) 478-7100
<Ittor°are^} -^ ,s-^`'rrr• the t"^'ew C.c,na.ra t- .I icit.rccicr^ira„2rtisl ct.rrdRe°org aniz ec1Neiv (;'emur),
27ar•c r/rera;a-se C 'otporrat on., k p and dirougla
^ 1 l c a rz M* Jacobs,s, I ^ ic uidating ..'note and2lan pfd adnislrnto r
_a{7-!C) S I-IPULATION OF s[ I l i l"IME 1'
C asi^, No. 2!07,(-v- ,t( 9,', 4-DIX, (}a;MOX)
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 54 of 56 Page ID#:10898
1US MILIBAND & SMITH
2
3
4ONALD RUS2211 Michelson Drive Seventh Floor5
rvine CA 9261 2-104'3
Tel: (^49) 752-71006
ax: (949) 252-1 51 4
7ttorney s fo r Defendant W illiam J Popejoy
8
9ORRISON & FOERSTER LLP
10
11
DAN MARMALEFSKY1 2
A MA NTHA P . G OODM A N
1 3
5 5 W est Fifth Street, Suite 35 00
Los Angeles, CA 90013-102414el: 213-892-5200
15ax: 213-892-54541 6ttorney s for Jeffrey D. Go ldberg1718 HAHN & HESSEN LLP
19
20n1O P. McCAHEY
22ARK S. INDEL ICATOM ARIA A. ARNO TT
2 388 Madison AvenueNew York, NY 10022
24el: (212_ ) 478-7420Fax: (212) 478-7400
25
A ttorneys f or the N ew Century Liquidat ing2 6rus t and R eorganized N ew Century
2 7arehouse Co rporation, by and th rough
A lan M . Jacobs , L iquidating Trustee and28lan A dm inistrator
-47-/O STIPULATION OF SETTLEMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 55 of 56 Page ID#:10899
1 WINSTON & STRAWN LLP23
TEVEN D . ATLEE333 S. G rand Avenue5
os AnyCA 90071-1543
Tel: (21 6Y5 -18276
ax: (21J) 615-1750
7t torney s for K odiak W arehouse LL C,
K odiak W arehouse JPM Capital LLC ,8odiak CDOI L td ., K odiak CDO9anagemen t LLC , and K odiak Funding LP
0UCKER ELLIS & WEST LLP11
12Agreed to as to paragraph 52 only,
13
ALEC H. BOYD1 435 Ma in Street Suite 7001 5an Francisco, G A 94105
Tel: (415 ) 617 --22321 6ax: (415) 617-2409
1 7ttorneys for Arch Insurance Company
18
19
20
21
22
23
24
25
26
27
28
-48-/O STIPULATION OF SETTLEMENT J
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Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 56 of 56 Page ID#:10900
1INSTON & STRAWN LLP
23
4
TEVEN D . ATLEE
333 S. G rand Avenue5
as Angeles CA 90071-1543
Tel: 213)) 6^5-18276
ax: (213) 615-1750
7t torney s for K odiak W arehouse LLC ,
K odiak W arehouse JPM Capital LLC ,8odiak CDOI Ltd., Kodiak CDO
9anagement LLC, and Kodiak Funding LP
10UCKER ELLIS & WEST LLP
11
12greed o as to 1 graph 52 only,
13
ALEC H. BOYD1 435 Main Street S ite 700
1 5an Francisco ^A 94105Tel: (415) 60-2232
1 6ax: (415) 617-2409
1 7t torneys for A rch Insurance C om pany
18
19
20
21
22
23
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 1 of 117 Page ID#:10901
EXH IBIT A
TO GLOBA L OFFICER AND DIRECTOR STIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 2 of 117 Page ID#:10902
1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)blairn blMaw.c
3 LIZA E LINar No. 174663)(elizabethlblb law.com)
4 NIKI L. M NDOZA (Bar No. 214646)
nikim Mplaw.coV5 ENJA
ALDON (Bar No. 211114)
benMlblbqaw.com)6 AA, L
Bar No. 234470)
M81eok
&1 g.h -blbgaw.com)
luff Drive, Suite 300
San Dlego, CA 921308 Tel: 858 793-0070
Fa x: ^85 8^ 793-0323and-SALVATO
T
RE J. GRAZI ANO10 Ls
AUREN b 1M MILLEN
1 1 ^1aurentngb1bgjaw.com)285 Avenue of th e Americas12 New York, NY 10019
Tel: (212) 554-140013 F ax : (212) 55 4-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teach ers ' Retirement System
15
16
7NITED STATES DISTRICT COURT
18
ENTRAL D ISTRICT O F CALIFORNIA
19
IN RE NEW CENTURY
ase No. 2:07-cv-00931- DDP (FMOx)
20
Lead Case)
21
[PROPOSED] ORDER22RELIMINARILY APPROVING
SETTLEMENTS AND23ROVIDING FOR NOTICE
24
XHIBIT A
25
udge: Hon. Dean D. Pregerson
26728[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PRO VIDING FOR NOTICECase No. 2:07-ev-00931-D DP (FMOx)
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HEREAS, Lead Plaintiff New York State Teachers' Retirement System
2 ("Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 "Plaintiffs") and the Individual Defendants,' the Underwriter Defendants, 2 and
5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with
6 Defendants, the "Parties"), have reached agreements to settle the above-captioned
7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court
8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order
9 preliminarily approving the Settlements in accordance with the Stipulations of
10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms
11 and conditions for the proposed Settlements regarding the Consolidated Action,
12
13"Individual Defendants" or "Class Individual Defendants" means Robert K.
14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.
15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.
Sandvilc, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.16 Popejoy.
172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Capital Partners, Morg an Stanley & Co ., Inc., and Jeffries & C o., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation),
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
[PROPOSED] ORDER PRELIM. APPROVING4- SETTLEMENTS AND PROVIDING FOR NOTICE
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 4 of 117 Page ID#:10904
1 and for dismissal of the Consolidated Action with prejudice as against all of the
2 Defendants and their related parties, upon the terms and conditions set forth
3 therein; and the Court having read and considered the Stipulations and the exhibits
4 annexed thereto;
5
OW, THEREFORE, IT IS HEREBY ORDERE D:
6
.
his order (the "Notice Order" or "Preliminary Approval Order")
7 hereby incorporates by reference the definitions in the Stipulations unless
8 otherwise indicated, and all terms with initial capitalization not otherwise defined
9 herein shall have the same meanings as set forth in the Stipulations. Any
10 inconsistencies between the Stipulations and the Notice of Pendency of Class
11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for
12 Attorneys' Fees and Reimbursement of Litigation Expenses ("Notice") will be
13 controlled by the language of the Stipulations.
4.h e Court he reby preliminarily approves th e Settleme nts as being fair,
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
16 CLASS CERTIFICATION
7.h e Court h ereby certifies , pursuant to Rules 23(a) and 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19
ll persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred stock, New20
entury Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, during the time period21rom May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,22nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants; b23embers of the immediate families of the Individual Defendants,, c^
the subsidiaries and affiliates of Defendants; (d) any person or entity24
ho was a partner, executive officer, director or controllinperson of
New Cen
including any of its subsidiaries or affiliates or of any
25
efendant; e) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns26
f any such excluded p arty. Also excluded from the Class are any
persons who exclude t-Iemselves by filing a request for exclusion In27ccordance with the requirements s et forth In the N otice.
28
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.
he Court finds that the prerequisites for a class action under Rules
2 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been s atisfied in that:
3 (a) the number of Class Members is so numerous that joinder of all members
4 thereof is impracticable; (b) there are questions of law and fact common to the
5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement
6 System ("NYSTRS") and Plaintiffs Carl Larson and Charles Hooten are typical of
7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and
8 adequately represented the interests of the Class; (e) the questions of law and fact
9 common to the members of the Class predominate over any questions affecting
10 only individual members of the Class; and (f) a class action is superior to other
11 available methods for the fair and efficient adjudication of the controversy.
12
.
ursuant to Rule 23 o f the Federal Rules of Civil Procedure, Plaintiffs
13 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15.he Court appoints the firm of Analytics Incorporated ("Claims
16 Administrator") to supervise and administer the notice procedure as well as the
17 processing of claims as more fully set forth below:
18
.
ithin five (5) business days after entry of this Order, the
19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
20 Release (the "Claim Form"), annexed hereto respectively as Exhibits 1 and 2, to be
21 mailed by first-class mail, postage prepaid, to all members of the Class at the
22 address of each such Class Member as set forth in the records of New Century or
23 its transfer agent, or who are identified by further reasonable efforts (the "Notice
24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the
25 Court proof of mailing of the Notice and Claim Form; and
26
.
summary notice ("Summary Notice"), annexed hereto as
27 Exhibit 3, shall be published once each in the national edition of The Wall Street
28 Journal and over the PR Newswire within five (5) business days of the mailing of
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1 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
2 Court proof of publication of the Summary Notice.
3.he Court approves the form of Notice and Summary Notice
4 (together, the "Notices") and Claim Form, and finds that the procedures established
5 for publication, mailing and distribution of such Notices substantially in the
6 manner and form set forth in paragraph 6 of this Order meet the requirements of
7 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation
8 Reform Act of 1995, and due process, and constitute the best notice practicable
9 under the circumstances.
10.or the purpose of identifying and providing notice to the Class, the
11 Trustee and the Underwriter Defendants shall provide to the Claims Administrator
12 the information as agreed to in the Global Officer And Director Stipulation and the
13 Underwriter Stipulation, respectively.
14.ominees who purchased or otherwise acquired New Century stock
15 for beneficial owners who are Class Members are directed to: (a) request within
16 fourteen (14) days of receipt of the Notice additional copies of the Notice and the
17 Claim Form from the Claims Administrator for such beneficial owners; or (b) send
18 a list of the names and addresses of such beneficial owners to the Claims
19 Administrator within fourteen (14) days after receipt of the Notice. If a nominee
20 elects to send the Notice to beneficial owners, such nominee is directed to mail the
21 Notice within fourteen (14) days of receipt of the copies of the Notice from the
22 Claims Administrator, and upon such mailing, the nominee shall send a statement
23 to the Claims Administrator confirming that the mailing was made as directed, and
24 the nominee shall retain the list of names and addresses for use in connection with
25 any possible future notice to the Class. Upon full compliance with this Preliminary
26 Approval Order, including the timely mailing of Notice to beneficial owners, such
27 nominees may seek reimbursement of their reasonable expenses actually incurred
28 in complying with this Preliminary Approval Order by providing the Claims
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1 Administrator with proper documentation supporting the expenses for which
2 reimbursement is sought and reflecting compliance with these instructions,
3 including timely mailing of the Notice, if the nominee elected or elects to do so.
4 Such properly documented expenses incurred by nominees in compliance with the
5 terms of this Preliminary Approval Order shall be paid from the Settlement Fund.
6 HEARING: RIGHT TO BE HEARD
7
0. There shall be a hearing on [November 8, 2010, or November 15,
8 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the "Settlement
9 Hearing") at which time the Court shall address the fairness, reasonableness and
10 adequacy of the Settlements, the fairness and reasonableness of the Plan of
11 Allocation, and Lead Counsel's application for attorneys' fees and payment of
12 Litigation Expenses. The Settlement Hearing shall be held before this Court at the
13 United States District Court for the Central District of California, 312 North Spring
14 Street, Courtroom 3, 2nd Floor, Los Angeles, California 90012.
151. Papers in support of the Settlements, the Plan of Allocation, and Lead
16 Counsel's application for attorneys' fees and payment of Litigation Expenses shall
17 be filed on or before twenty-eight (28) days prior to the Settlement Hearing.
18
2. Any member of the Class may appear at the Settlement Hearing and
19 show cause why the proposed Settlements embodied in the Stipulations should or
20 should not be approved as fair, reasonable and adequate, and/or to present
21 opposition to the Plan of Allocation or to the application of Lead Counsel for
22 attorneys' fees and payment of Litigation Expenses. However, no Class Member
23 shall be heard or entitled to contest the approval of the terms and conditions of the
24 Settlements, or the terms of the Plan of Allocation or the application by Lead
25 Counsel for an award of attorneys' fees and payment of Litigation Expenses unless
26 that Class Member (1) has served written objections, including the basis therefor, as
27 well as copies of any papers (including proof of all purchases or acquisitions of
28 New Century stock or options during the Class Period) and/or briefs in support of
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2 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &5 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
6 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th
7 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
8 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
9 objections, papers and briefs with the Clerk of the United States District Court for
10 the Central District of California on or before twenty-one (21) days before the
11 Settlement Hearing. Any Class Member who does not make his, her or its
12 objection in the manner provided for herein shall be deemed to have waived such
13 objection and shall forever be foreclosed from making any objection to the fairness
14 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
15 Allocation or to the application by Lead Counsel for an award of attorneys' fees
16 and payment of Litigation Expenses unless otherwise ordered by the Court. The
17 manner in which a notice of objection should be prepared, filed and delivered shall
18 be stated in the Notice.
19
3. If approved, all Class Members will be bound by the proposed
20 Settlements provided for in the Stipulations, and by any judgment or determination
21 of the Court affecting Class Members, regardless of whether or not a Class
22 Member submits a Claim Fonn.
234. Any member of the Class may enter an appearance in the
24 Consolidated Action, at their own expense, individually or through counsel of their
25 own choice. If they do not enter an appearance, they will be represented by Lead
26 Counsel.
275. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
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1 Class Members and to approve the Stipulations and/or Plan of Allocation with
2 modification and without further notice to Class Members.
3 CLAIMS PROCESS
46. In order to be entitled to participate in the Settlements, a Class
5 Member must complete and submit a Claim Form in accordance with the
6 instructions contained therein and/or in the Notice. To be valid and accepted,
7 Claim Forms submitted in connection with the Settlements must be postmarked no
8 later than 120 days after the Notice date (unless by Order of the Court, late-filed
9 Claim Forms are accepted).
107. Any Class Member who does not timely submit a valid Claim Form
11 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
12 the Court, but nonetheless shall be barred and enjoined from asserting any of the
13 settled claims and shall be bound by any judgment or determination of the Court
14 affecting the Class Members.
158. As set forth in the Stipulations, Defendants and their related parties
16 shall have no responsibility whatsoever for the administration of the Settlements or
17 the disbursement of the Net Settlement Fund and shall not be permitted to review,
18 contest or object to any Claim Form or any decision of the Claims Administrator or
19 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
20 payment by a Class Member.
21 REQUEST FOR EXCLUSION FROM THE CLASS
229. Any requests for exclusion must be submitted such that they are
23 received no later than twenty-one (21) days before the date of the Settlement
24 Hearing. To be valid, each request for exclusion must (1) state the name and
25 address of the person or entity requesting exclusion; (ii) state that such person or
26 entity requests exclusion from the Class in In re New Century, 07-CV-00931-DDP
27 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
28 telephone number for that person or entity; and (v) provide the date(s), price(s),
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1 and number(s) of shares of all purchases, acquisitions, and sales of New Century
2 Securities during the Class Period. Requests for exclusion will not be valid if they3 do not include the information set forth above and are not received within the time
4 stated above, unless the Court otherwise determines. Copies of all timely requests
5 for exclusion from the Class received by the Claims Administrator (or other person
6 designated to receive exclusion requests) shall be provided to Lead Counsel and
7 Individual Defendants' Counsel, counsel for the Insurance Carriers (as defined in
8 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for9 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
10 Hearing. All persons who submit valid and timely requests for exclusion in the
11 manner set forth in this paragraph shall have no rights under the Stipulations, shall
12 not share in the distribution of the Net Settlement Fund, and shall not be bound by
13 the Stipulations or any final judgment.
140. As set forth in the Stipulations, Defendants and their related parties
15 shall have no responsibility or liability whatsoever with respect to the Plan of
16 Allocation or Lead Counsel's application for an award of attorneys' fees and
17 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel's
18 application for an award of attorneys' fees and payment of Litigation Expenses will
19 be considered separately from the fairness, reasonableness and adequacy of the
20 Settlements. At or after the Settlement Hearing, the Court will determine whether
21 Lead Counsel's proposed Plan of Allocation should be approved, and the amount
22 of attorneys' fees and Litigation Expenses to be awarded to Lead Counsel. Any
23 appeal from any orders relating to the Plan of Allocation or Lead Counsel's
24 application for an award of attorneys' fees and Litigation Expenses, or reversal or
25 modification thereof, shall not operate to terminate or cancel the Settlements, or
26 affect or delay the finality of the judgment to be entered pursuant to Rule 54(b) of
27 the Federal Rules of Civil Procedure approving the Settlements and the settlement
28 of the Consolidated Action set forth therein.
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1. Only Class Members and Lead Counsel shall have any right to any
2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
42. All funds held by the escrow agent selected by Lead Counsel to
5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
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1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6
.
hall not be offered or received against any of the Released
7 Parties 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by Plaintiffs 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
1 4.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20
.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (1) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as defined in th e Und erwriter Stipulation).27 5 "Plaintiffs" in th is parag raph 25 includes C lass Plaintiffs, the Trus tee, and Kod iak28 (as defined in the Global Officer And Director Stipulation).
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1 fault or wrongdoing of any kind, or in any way referred to for any other reason as
2 against any of the Released Parties, in any other civil, criminal or administrative
3 action or proceeding, other than such proceedings as may be necessary to
4 effectuate the provisions of the Stipulations; provided, however, that if the
5 Stipulations are approved by the Court, Defendants, any other Released Party, or
6 any Class Member may refer to the Settlements and Stipulations to effectuate the
7 protection from liability granted them hereunder;
8.hall not be construed against any of the Released Parties,
9 Plaintiffs or any other Class Members as an admission, concession, or presumption
10 that the consideration to be given hereunder represents the amount which could be
11 or would have been recovered after trial;
12
.
hall not be construed against Plaintiffs or any other Class
13 Members as an admission, concession, or presumption that any of their claims are
14 without merit or that damages recoverable under the Consolidated Action, the
15 Trustee Litigation and the Kodiak Litigation would not have exceeded the amount
16 of the Settlements; and
17.hall not be construed as or received in evidence as an
18 admission, concession or presumption that class certification is appropriate in this
19 Consolidated Action, except for purposes of the Settlements.
20
6. Except as otherwise provided in the Stipulations, there shall be no
21 distribution of any of the net settlement fund for any of the Settlements to any
22 Class Member until a plan of allocation is finally approved and the Court issues a
23 Class Distribution Order.
24 \\
25 1\
26 \\
27
28
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1
he Court retains jurisdiction of this Consolidated Action to consider all
2 further applications arising out of or connected with the proposed Settlements, and
3 as otherwise warranted.
4T IS SO ORDERE D.
5 DATED:
HE HONORA BLE DEAN D. PREGERSON
7
NITED STATES DISTRICT COURT JUDGE
8
9
10
1 1
12
13
14
15
16
17
18
19
20
21
22
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25
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EXH IBIT A-1 TO EX HIBIT A
TO GLOBA L OFFICER AND DIRECTOR STIPULATION
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
UIZAWETairblbglaw.com)LIN (Bar No. 174663)
(elizabethlblbglaw.com)4 NIKI L. M NDOZA (Bar No. 214646)UNJAUkim5ALDON (Bar No. 211114)((ben blbglaw.com
6 TAI- A. KELLA (Bar No. 234470)(takeoklighlbglaw.com )
7
481 luff Drive, Suite 300
San Dieg o, CA 921 308 Tel: (858) 793-0070
Fax: (858) 793-03239and-
SALVATORE J. GRAZIANO10 ([email protected]
LAUREN A. MCM ILLE
1 1 ^[email protected])285 Avenue of th e Americas12 New York, NY 10019
Tel:
12 554-1400
13Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers ' Retirement System
15
16
7NITED STATES DISTRICT COURT
1 8
ENTRAL DISTRICT O F CALIFORNIA
19 IN RE NEW CENTURY
ase No. 2:07-cv-0093 1 - DDP (FMOx)
(Lead Case)20
1OTICE OF PENDENCY OFCLASS ACTION AND PROPOSED
22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING AND
2 3OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT
24
F LITIGATION EXPENSES
25
26
udge: Hon. Dean D. Pregerson
27
28
NOTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
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1 A Feder al Court authoriz ed t his Notice. T his is not a solicitation from a law yer .
2NOTICE OF PENDENCY OF CLASS ACTION: Please be advised that your rights
3may be affected by a class action lawsuit pending in this Court (the
4"Consolidated Action") if, during the period from May 5, 2005, through and
5ncluding March 13, 2007, you purchased or acquired Common Stock,
69.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of9New Century F inancial Corporation ("New Century" or the "Company").
1 0
11 NOTICE OF SETTLEMENTS: Please also be advised that the Court - appointed
12Lead Plaintiff, New York State Teachers' Retirement System ("Lead
13 Plaintiff") and Plaintiffs Carl Larson and Charles Hooten (collectively
14 "Plaintiffs"), on behalf of the Class (as defined below), have reached three
15proposed settlements ("Settlements") of the Consolidated Action as follows: a
16 ettlem ent with the U nderwriter Defendants' in the amou nt of $15,000,000.00;
17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual Defendants 2 in which the Class will
19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
22Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.
23"Underwriter Defendants ").
24
Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
25Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27Underwriter Defendants, the Individual Defendants , and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Mor rice et al., Case No.
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1 $124,827,088.00.
he terms of the Settlements are set forth in the
2Stipulations.4
3This Notice explains important rights you may have, including your possible
4 eceipt of cash from the Settlements. Your legal rights will be affected
5whether or not you act. Please read this Notice carefully!
6
7
.
escription of the Consolidated Action and the Class: Lead
8Plaintiff alleges that Defendants made false and misleading statements and/or
9mitted material information to investors during the Class Period. Defendants
10 deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12 egarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15 of Class Members against the Defendants and the other applicable Released Parties
16 (as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
18tock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20 Options and/or who sold New Century Put Options, during the time period from
212 09-1426-DDP, commenced on December 7, 2009, in the United States District
23 Court for the Central District of California (the "SEC Action").
4ll capitalized terms that are not defined herein shall have the meaning24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25 Global Settlement With New Century Officers And Directors (the "Global Officer
26 And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation Of Settlement B etween Plaintiffs And Th e Underw riter Defendants (the27 "Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
28 "KPMG Settlement").
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1May 5, 2005, through and including March 13, 2007, either in the Offerings,
2pursuant to a registration statement, or in the market, and who, upon disclosure of
3 certain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,
5nd/or New Century Call Options and New Century Put Options (as described
6bove) are referred to collectively as "New Century Securities.")
7
.
tatement of the Class's Recovery: Subject to Court approval, and
8 as described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9 settle all claims related to the purchase of New Century Common Stock, Preferred
10 Stock and/or New Century Call Options and/or sales of New Century Put Options
11during the Class Period that were or could have been asserted against Defendants
12and other Released Parties in the Consolidated Action in exchange for total
13settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash
14 to be deposited into an interest-bearing escrow account (the "Settlement Fund").
15The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18 Allocation") that will be approved by the Court and will determine how the Net
19 ettlement Fund sh all be allocated to th e mem bers of the Class . Th e proposed Plan
20 of Allocation is included in this Notice. Assuming that all Class Members
21participate in the Settlements, Lead Plaintiff's damages consultant estimates that
22he average distribution per damaged share will be approximately $0.69 per share
23of New Century Common Stock, approximately $2.08 per share of New Century
24Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
25per Put Option, before deduction of Court-approved fees, expenses and costs
26des cribed h erein.
27.tatement of AveraLe Amount of Damages Per Share: The parties
28do not agree on the average amount of damages per share that would be
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1 recoverable If Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5wh ether th e price of New Century sh ares was inflated as th e result of any allegedly
6alse or mis leading public s tatements or om iss ions by D efendants ; and (ii i) w h ether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was9 wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11 will apply to the Court for an award of attorneys' fees from the Settlement Fund in
12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated16Action, in an amount not to exceed $4.5 million, plus interest from the date of
17 unding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26eg arding the Settlements s h ould be directed to M r. Graziano at Bernstein Litowitz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 866 ) 6 48-2524, blbg@ blbg law.com .
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1
2OUR LEGA L RIGHTS AND OPTIONS IN THE SETTLEMENTS:
3SUBMIT A CLAIM FORM NOhis is the only way to get a payment. If
4LATER TH AN [INSERT]ou wish to obtain a payment as a Class
5
ember, you will need to file a Claim
6Form (which is included with this Notice)
7postmarlced no later than [INSERT].
8EXCLUDE YOURSELF FROMet no payment. This is the only option
9THE CLASS BY SUBMITTING A that allows you to ever be part of any
1 0WRITTEN REQUEST FORther lawsuit against any of th e defendants
1 1 EXCLUSION SO THAT IT ISr other released parties concerning the12
RECEIVEDNO LATER THAN
laims that were, or could have been,
13[INSERT].
ss er ted in th is case .
1 4
15 OBJECT TO THErite to the Court and explain why you
16SETTLEMENTS BYo not like the Settlements, the proposed
17 SUBMITTING WRITTENlan of Allocation, or the request for
18OBJECTIONS SO THAT THEY
ttorneys' fees and reimbursement of
19 ARE RECEIVEDNO LATER
xpenses. You cannot object to the
20THAN [INSERT].
ettlements unless you are a Class
21ember and do not exclude yourself.
22GO TO THE HEARING ONsk to s peak in Court about th e fairness of
23[INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of
24FILE A NOTICE OF INTENTION Allocation, or the request for attorneys'
25TO APPEAR SO TH AT IT ISees and reimbursement of expenses.
26RECEIVEDNO LATER THAN
27INSERT].
28
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1 DO NOTHING
et no payment. Remain a Class
2ember. Give up your rights.
3
4HAT THIS NOTICE CONTAINS
5
6Wh y Did I Get Th is Notice?
ag e
7Wh at Is Th is Case A bout? What Has Happened So Far?
ag e
8How D o I Know If I Am Affected By Th e Settlements?ag e
9Wh at Are The L ead Plaintiff 's Reas ons For Th e Settlements?ag e
10
Wh at Migh t Happen If There Were No Settlements?ag e
1 1
How M uch W ill My Payment Be?
ag e
12
13
Wh at Rig h ts Am I Giving Up By Ag reeing To Th e Sett lements?
ag e
14
Wh at Payment Are The Attorneys For The Class Seeking?
1.5How W ill The Lawyers B e Paid?ag e
16 How Do I Participate In The Settlements? What Do I Need To Do?ag e
17Wh at If I Do Not Want To Be A Part Of The Settlements?
1 8 How Do I Exclude Myself?
ag e
19 When And Where Will The Court Decide Whether To Approve
20 The Settlements? Do I Have To Come To The Hearing?
21 May I Speak At The Hearing If I Don't Like The Settlements?ag e
22 What If I Bought Shares On Someone Else's Behalf?ag e23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24WHY DID I GET THIS NOTICE?
25
26
6 .
his Notice is being sent to you pursuant to an Order of the United
27
States District Court for the Central District of California (the "Court") because
28
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1 New Century Securities during the Class Period. The Court has directed us to send
2ou this Notice because, as a potential Class Member, you have a right to know
3bout your options before the Court rules on the proposed Settlements in this case.
4Additionally, you have the right to understand how a class action lawsuit may
5enerally affect your legal rights. If the Court approves the Settlements, a claims
6 administrator selected by Lead Plaintiff and approved by the Court, will make
7 ayments pursuant to the Settlements after any objections and appeals are resolved.
8.n a class action lawsuit, the Court selects one or more people, known
9 as class representatives, to sue on behalf of all people with similar claims,
10commonly known as the class or the class members. In this Consolidated Action,
11he Court has appointed New York State Teachers' Retirement System to serve as
12"Lead Plaintiff' under a federal law governing lawsuits such as this one, and
13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
14Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated
15Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
17action is a type of lawsuit in which the claims of a number of individuals are
18 resolved together, thus providing the class members with both consistency and
19 efficiency. Once the class is certified, the Court must resolve all issues on behalf
20of the class members, except for any persons who choose to exclude themselves
21 rom th e class . (For more information on excluding yourself from th e Class , please
22 ead "What If I Do Not Want To Be A Part Of The Settlements? How Do 1
23Exclude M yself?" located below.)
24
.
he Court in charge of this case is the United States District Court for
25 h e Central District of California, and th e case is kn own as In re New Century. Th e
26Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27District Judge. The people who are suing are called plaintiffs, and those who are
28being sued are called defendants. In this case, the plaintiff is referred to as the
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1Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2Defendants, the Underwriter Defendants and KPMG New Century was not named
3as a defendant because New Century has filed a petition for voluntary bankruptcy
4nd the Bankruptcy Code does not permit an action to proceed against a debtor
5wh o h as filed such a petition.
6
.
his Notice explains the lawsuit, the Settlements, your legal rights,
7what benefits are available, who is eligible for them, and how to get them. The
8purpose of this Notice is to inform you of this case, that it is a class action, how
9 you might be affected, and how to exclude yourself from the Class if you wish to
10do so. It also is being sent to inform you of the terms of the proposed Settlements,
11and of a hearing to be held by the Court to consider the fairness, reasonableness,
12and adequacy of the proposed Settlements, the fairness and reasonableness of the
13proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
14 ees and reimbursement of Litig ation Expenses ( the "Settlement Hearing") .
150. The Settlement Hearing will be held on [INSERT] at [INSERT],
16 before th e Honorable Dean D . Pregerson, at the United States Dis tr ict Court for th e
17Central District of California, 31 2 North S pring Street, Courtroom 3, Los A ng eles,
18California 9001 2 to determine:
1 9
.
h eth er this Co ns olidated Action sh ould be finally certified, for
20ettlement purposes only, as a class action under Rules 23(a)
21nd (b) of the Federal Rules of Civil Procedure on behalf of the
22lass ;
23.hether the proposed Settlements are fair, reasonable, and
24
dequate and sh ould be approved by the C ourt;
25
.
hether the claims against defendants and the other released
26
arties should be dismissed with prejudice as set forth in the
27tipulations;28
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1.hether the proposed Plan of Allocation is fair and reasonable
2nd s h ould be approved by the C ourt; and
3.hether Lead Counsel's request for an award of attorneys' fees
4nd reimbursement of Litigation Expenses should be approved
5
y the C ourt.
6
1. This Notice does not express any opinion by the Court concerning the
7merits of any claim in the Consolidated Action, and the Court still has to decide
8whether to approve the Settlements. If the Court approves the Settlements,
9payments to Auth orized Claimants will be mad e after any appeals are resolved, and
10 fter th e completion of all claims proces sing . Please be patient.
1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?
12
3
2. Beginning on or about February 8, 2007, securities class action
14complaints were filed in the United States District Court for the Central District of
15California and the actions were consolidated by Order dated June 26, 20
1 63. On April 2, 2007, New Century and other Debtors filed for
17 bankruptcy in the United States Bankruptcy Court for the District of Delaware
18 `Bankruptcy Court") under Ch apter 1 1 o f Title 1 1 of th e United States Code.
19
4. By Order dated June 26, 2007, the Court appointed the New York
20State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
21 nd approved its s election of Bernstein Litowitz Berger & Gross mann LLP as Lead
22Counsel for the Class .
235. On September 14, 2007, Plaintiffs filed their Consolidated Class
24Action C omplaint ("Consolidated C omplaint") ass erting claims ag ainst Defendants
25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26Act of 1933 ("Securities Act") on beh alf of the Clas s.
276. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Cons olidated Complaint, wh ich Plaintiffs opposed on December 1 4, 2007.
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1
7. By Order dated January 31, 2008, the Court granted the motions to
2 ismiss with leave to amend th e complaint.
38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
4 Action Complaint ("Amended Complaint"), alleging claims against Defendants
5 ursuant to the Securities A ct and th e Exch ang e Act.
6
9. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7Am ended C onsolidated C lass Action C omplaint ( the "Complaint") , a lleging claims
8g ainst Defendants pursuant to th e Securities Act and the Exchang e Act.
90. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10Com plaint, wh ich Plaintiffs oppos ed on July 7, 2008.
11
1. Following a hearing, by Order dated December 3, 2008, the Court
12 ubstantially denied Defendants ' motions to dismiss .
13
2. Beginning on January 26, 2009, Defendants answered the Complaint.
143. The Parties began discovery in or about April 2009, including filing
15multiple motions to compel and motions for protective order, and serving
16discovery requests and res ponses , and producing voluminous documents .
174. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgm ent, wh ich Plaintiffs opposed on March 1 5, 201 0.
1 9
5. The Parties have participated in mediation sessions and additional
20discussions before the Honorable Daniel Weinstein, following which the Parties
21were able to reach agreem ents in principle to settle th is Cons olidated Action on the
22erms set forth herein. In connection with the settlement of the Consolidated
23Action, Defendants and other persons also reached agreements to settle the action
24 entitled Kodiak Warehouse LLC, et al. a Brad A. Morrice, et al. (Case No. 08-
251265-DDP-FMO) commenced on November 7, 2008, in the United States District
26Court for the Central District of California (the "Kodiak Litigation") and the
27adversary proceeding entitled The N ew Century L iquidating T rust and R eorganized
28 New Century W arehouse Corp. by and through Alan M. Jacobs, Liquidating
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2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5 authorized this Notice to be sent to potential Class Members, and scheduled the
6 Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW D O I KNOW IF I AM AFFECTED B Y THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements
11 unless you timely request to be excluded. The Class consists of all persons and
12 entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or14iew Century Call Options and/or who sold New Century Put Options, during the
15t ime period from May 5, 2005, throug h and including M arch 1 3, 2007, eith er in th e
16 Offerings, pursuant to a registration statement, or in the market, and who, upon17 disclosure of certain facts alleged in the Complaint, were injured thereby.18Excluded from the Class are (a) Defendants; (b) members of the immediate
19 families of the Individual Defendants; (c) the subsidiaries and affiliates of
20 Defendants; (d) any person or entity who was a partner, executive officer, director
21 or controlling person of New Century (including any of its subsidiaries or
22 affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23 controlling interest; and (f) the legal representatives, heirs, successors and assigns
24 of any such excluded party. The Class also does not include those persons and
25 entities who timely request exclusion from the Class pursuant to this Notice (see
26 "What If I Do Not Want To Participate In The Class And The Settlements? How
27 Do I Exclude Myself?," below).
28
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1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO
3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO
4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST
5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER
6THAN [INSERT].
7
WHAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?8
98. Lead Plaintiff and Lead Counsel believe that the claims asserted
10against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11however, the expense and length of continued proceedings necessary to pursue
12their claims ag ainst Defendants th rough tr ial and appeals , as well as th e difficulties
13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel
14 have taken into account the possibility that the claims asserted in the Complaint
15 might have been dismissed at a later stage, such as in response to motions for
16summary judgment, and have considered issues that would have been decided by a
17 jury in the event of a trial of the Consolidated Action, including whether
18 Defendants acted with an intent to mislead investors, whether the alleged
19 misrepresentations or omissions were material to investors, whether all of the Class
20Members' losses were caused by the alleged misrepresentations or omissions, and
21the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24given the expense and length of continued proceedings necessary to reach a
25succes sful reso lution at trial and on appeal.
26
9. In light of the amount of the Settlements and the immediacy of
27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed
28 Settleme nts are fair, reason able and adequate, and in the bes t interests o f the C lass .
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1Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
2benefit now, namely $124,827,088.00 in cash (less the various deductions
3escribed in this Notice), as compared to the risk that the claims in the Complaint
4would produce a s imilar, smaller, or no recovery after summ ary judgm ent, trial and
5ppeals, poss ibly years in th e future.
6
0. Defendants have denied the claims asserted against them in the
7 Complaint and deny having engaged in any wrongdoing or violation of law of any
8ind wh atsoever. Defendants h ave agreed to th e Settlements s olely to eliminate th e
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10 be construed as an admission of Defendants' wrongdoing.
1 1
HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
12
1 3
1. If there were no Settlements and Lead Plaintiff failed to establish any
14essential legal or factual element of its claims, neither Lead Plaintiff nor the other
15members of the Class would recover anything from Defendants. Also, if
16 Defendants were successful in proving any of their defenses, the members of the
17 Class likely would recover substantially less than the amount provided in the
18Settlements , or nothing at all.
1 9
OW MUCH W ILL MY PAYMENT BE?
20
1 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22. Pursuant to the respective Stipulations, the Individual Defendants
23have agreed to pay or cause to be paid collectively $65,077,088.00; the
24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
25 KPMG has agreed to pay $44,750,000.00. Collectively, Defendants have agreed to
26pay a total amount of $1 24,827,088.00 in cash .
273. After approval of the Settlements by the Court, and upon satisfaction
28of the other conditions to the Settlements, and upon issuance of a Class
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1Distribution Order, the Net Settlement Fund will be distributed to Authorized
2Claimants in accordance with the Plan of Allocation.
34. The Settlement Fund will be distributed as follows:4 (i)o pay all federal, state, and local Taxes on any income earned
5
y th e Settlement Fund and to pay the reasonable costs incurred
6
n connection with determining the amount of, and paying,
7
axes owed by the Settlement Fund (including reasonable
8xpenses of tax attorneys and accountants) ;
9ii)o pay costs and expenses in connection with providing Notice
10o Class Members and administering the Settlements on behalf1 1
f Class M embers;
1 2
iii)
o pay attorneys' fees, with interest on such amount, to the
1 3
xtent allowed by the Court pursuant to Lead Couns
14pplication;
1 5iv)o pay Litigation Expenses incurred in commencing and
16rosecuting the Consolidated Action, with interest on such
1 7oney, to the extent allowed by the Court pursuant to Lead
1 8
ounsel's application; and
19
v)
o compensate Authorized Claimants with the balance of the
20
et Settlement Fund in accordance with the Plan of Allocation,
21ubject to an Order of the Court approving the Settlements andP22h e Plan of Allocation (or such oth er allocation plan as th e Court
23ay approve), and subject to such Order becoming Final
24
meaning tha t the time for appeal or appellate review of th e Order
25
ranting final approval has expired, or, if the Order is appealed,
26
hat the appeal is either decided without causing a material
27hange in the Order or is upheld on appeal and is no longer
28ubject to appellate review) .
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1
5. Each person wishing to participate in the distribution must timely
2ubmit a valid Claim Form establishing membership in the Class, and including all
3equired documentation, postmarked no later thanto the
4 ddress set . forth in the Claim Form th at accompanies th is Notice. Unless the C ourt5therwise orders , any Class Member wh o fails to submit a Claim Form pos tmarked no
6 later than
h all be forever barred from receiving paym ents purs uant to
7he Settlements set forth in the Stipulations but will in all other respects remain a
8 Class Member and be subject to the provisions of the Stipulations, including the
9erms of any Judgm ent entered and releases g iven.
106. Payment pursuant to the Plan of Allocation approved by the Court
11hall be conclusive against all Authorized Claimants. No person shall have any
12 claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13designated by Lead Counsel arising from distributions made substantially in
14accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. 'Plaintiffs, Defendants, their respective counsel, and all other Released
16 Parties shall have no responsibility or liability whatsoever for the investment or17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18 Allocation, the determination, administration, calculation, or payment of any claim
19or nonperformance of the Claims Administrator, the payment or withholding of
20 Taxes owed by the Settlement Fund, or any losses incurred in connection
21 therewith, except as otherwise provided in the Stipulations.
227.he objective of the Plan of Allocation is to equitably distribute the
23proceeds of the Settlements to th ose Class Mem bers wh o suffered economic loss es
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25 nd industry factors or C ompany- specific factors not related to the alleged wrong ful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27 nalysis undertaken to that end, including a review of publicly available information
28 eg arding New C entury and analysis reg arding the s tock price movements.
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8. The proposed Plan of Allocation provides for distribution of the Net
2Settlement Fund to Auth orized Claimants as follows:
3I.UMMARY OF PLAN OF ALLOCATION9. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6 separate Claim Form signed under penalty of perjury and supported by such
7ocuments as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (1) each
9laimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B Preferred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16 market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
24
55 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this t i tle in wh ich th e plaintiff seeks to es tablish damag es by reference to th e
market price of a security, the award of damages to the plaintiff shall not exceed27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
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1
0. All Proof of Claim forms must be postmarked or received by [DATE],
2 ddressed as follows:
3n re N ew C entury Securities Litig ation Settlement4/o Analytics, Inc. Claims A dm inistrator
P.O. Box 20045
hanhassen, MN 55317-2004
641. Unless otherwise ordered by the Court, any Class Member who fails
7
to submit a properly completed and signed Proof of Claim within such period as8
may be ordered by the Court shall be forever barred from receiving any payments9
pursuant to th e Stipulation, but will in all oth er respe cts be s ubject to th e provisions10
of the Stipulation and the final judg ments entered by the C ourt.11
42. The Net Settlement Fund shall be distributed to members of the Class1 2
wh o subm it acceptable Proofs of C laim. For purposes of the Plan of Allocation, the1 3
Net Settlement Fund is divided into two components: the "Underwriter Allotment"14
(composed of the settlement fund from the settlement with the Underwriter15
Defendants net of Court-approved fees and expenses), and the "Individual-Auditor16
Allotment" (composed of the settlement funds from the settlement with the17
Individual Defendants and KPMG, net of Court-approved fees and expenses).1 8
Only Class Members who purchased Series A Preferred Stock and/or Series B19
Preferred Stock during th e Class Period and w ere damag ed th ereby may be elig ible20
to receive distributions from the Underwriter Allotment based on those purchases.21
All Class Members (including but not limited to those who purchased Series A22
Preferred Stock and/or Series B Preferred Stock during the Class Period and were23
damaged thereby) may be eligible to receive distributions from the Individual-24
25correcting the misstatement or omission that is the basis for the action is
26dissem inated." 15 U.S.C. §78u-4(e)(1) . $0.87 was the averag e closing price of New
27Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 1 0, 2007.28
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1Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2 o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3 whereas the Individual-Auditor Allotment will be distributed to all Class Members
4who submit valid Claim Forms, regardless of the type of New Century Security
5purchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claima
10 pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11eparately es tablish ed for each class of securities sh own in Table 1 annexed h ereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17Underwriter Allotment and the Individual-Auditor Allotment will be
18 proportionately allocated to the Authorized Claimants.
19
4. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21accordance with the provisions of this Plan of Allocation. Factors generally
22 onsidered in developing the Plan of Allocation, include, among others : ( i ) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25 ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26 iii) whether the Security was held until the end of the Class Period (March 13,
2 7 007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
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2alse and misleading statements as alleged in this case, and as calculated by Lead
3 Plaintiff's damages consultant. (Based on the opinions of this consultant, Lead
4 Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7dequately alleg e and prove liability for th at entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9lass Member who submits an acceptable Proof of Claim can claim under the10Settlements for the purpose of making pro rata allocations of the cash from the
11Underwriter Allotment and the Individual-Auditor Allotment to Class Members for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14h at th e prices of New C entury Securities were artificially inflated during th e Class
15Period (May 5, 2005 — March 13, 2007) due to Defendants allegedly material
16misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
19Securities.
206. The Plan of Allocation covers the following New Century Securities:
21 1 ) C omm on Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22 iv) Call and Put Options on C omm on Stock.
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26 rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
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1February 8, 2007, and before or on March 2, 2007, must be held until March 5,
2007, the next trading day after the second corrective disclosure. Finally, a New
3entury Security purchased or otherwise acquired on or after March 5, 2007, must
4 be held until March 13, 2007, the last day of the Class Period. If you did not hold
5New Century Security referred to above which was purchased during the three
6ifferent parts of the Class Period described above and below (see the artificial
7nflation Tables annexed hereto) for both th e New Century Common Stock and the
8New Century Preferred Stock th rough at leas t one of the three corrective disclosure
9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for
10 h ese transactions will be calculated as zero because it h as been determined that the
11artificial inflation between each disclosure and arising from the circumstances
12underlying th e alleg ations of Plaintiffs ' Complaint was co ns tant.
13I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS
14LAIMS FOR NEW CENTURY SECURITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16 New Century Securities that is within the Class Period, listed in the Proof of Claim1 7 orm, and for wh ich adequate documentation is provided.
18
.
uidelines Applicable to th e
Calculations orAll Claims19
20
49. In the event a Class Member has more than one purchase or sale of the
21New Century Securities, all purchases and sales of each type of security shall be
22matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23matched first against any New Century Securities held at the beginning of the
24Class Period, and th en ag ainst purch ases in chronological order, beginning w ith the
25earliest purchase made during the Class Period. Purchases and sales of New
26Century Securities shall be deemed to have occurred on the "contract" or "trade"
27date as opposed to the "settlement" or "payment" date. Th e receipt or g rant by g ift ,
28devise or operation of law of New Century Securities during the Class Period shall
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1calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be
2eemed an assignment of any claim relating to the purchase of such New Century
3Securities unless specifically provided in the instrument of gift or assignment.
4Similarly, the covering purchase of a short sale shall not be deemed a purchase or
5ale of New Century Securities for the calculation of an Authorized Claimant's
6Recognized Loss Claim,
7
0. Each Authorized Claimant shall be allocated a pro rata portion or
8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss
10Claims of all Authorized Claimants for their respective class of Securities. Each
11 Authorized Claimant shall be paid an amount determined by multiplying the total
12n th e Underw riter Allotment and/or Individual-Auditor Allotment for th eir class of
13Securities by a fraction, the numerator of which shall be the Claimant's
14Recognized Loss Claim and the denominator of which shall be the Total
15Recognized Loss Claims of all Authorized Claimants for the included class of
16securities. Each Authorized Claimant will receive a pro rata share of the
17Underw riter Allotment and/or Individual-Auditor Allotment based on h is, he r or its
18Recognized Loss Claim.
1 9
1. The amount of a Class Member's Recognized Loss as computed
20above is not intended to be an estimate of a Class Member's damages, nor of what
21a Class Member might have been able to recover at trial, and it is not an estimate
22of the amount that will be paid pursuant to this Settlement. Instead, this
23computation is only a meth od to weigh Class M embers ' c laims ag ainst one anoth er.
24
2. To the extent a Claimant had a gain from his, her or its transactions
25during the Class Period with respect to New Century Securities specified above,
26he value of their Recognized Loss Claim will be zero. Such claimants will, in any
27event, be bound by the Settlements. You may wish to consider this when deciding
28wh ethe r to opt-out of th e Settlements.
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1
3. For purposes of determining whether a Claimant had an overall
2market gain with respect to his, her, or its Class Period purchases of an individual
3New C entury Security or suffered an overall market loss , th e Claims Ad ministrator
4hall determine the difference between (i) the Total Purchase Amount paid for all
5purchases of that individual New Century Security purchased or acquired during
6he Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7he sum of the Sales Proceeds received for all of that individual New Century
8ecurity during th e Class Period and the Ho lding Value ascribed to that security for
9ll Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11per share for Series B Preferred Stock. This difference will be deemed a
12Claimant's market gain or loss on his, her, or its overall transactions in that
13 individual New Century Security during the Class Period.
44. An Authorized Claimant's gains and losses on a particular New
15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17particular security. In the case of New Century Common Stock and Put and Call
I s ptions on that stock, gains and losses on both the stock and the Options will be
19combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22Claim (as calculated under this P lan) on New Century Comm on Stock/Options will
23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 ny iss ue of New C entury Preferred Stock.
255Class Members who do not submit acceptable Proofs of Claim will
26not share in the settlement proceeds. Class Members who do not submit a request
27 or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bound by th e Settlements and the judg ments of the Court.
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1
6. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and
3fter all claims have been processed. At that time, Lead Plaintiff will file a motion
4or entry of a proposed Class Distribution Order which will, among other things,
5pprove of the distribution to Auth orized Claimants of th e Net Settlement Fund.
6
7. The Individual Defendants, the Underwriter Defendants, and KPMG
7nd their respective counsel, and all other Released Parties shall have no
8esponsibility for, or liability whatsoever, relating to distributions from the
9 Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12Adm inis trator, th e payment or withh olding of Taxes ow ed by a Settlement Fund, or
13ny losses incurred in connection th erewith.
14.omputation Meth odology Relating toRecog nized Loss es for Com mon Stock
15urchases
168. For purposes of developing the Plan of Allocation, the damages
17consultant calculated the amount of artificial inflation in the daily closing market
18 prices for New Century Common Stock during three different portions of th e Class
19 Period. See the annexed Table 2. In computing artificial inflation, the damages
20 consultant considered price changes of New Century Common Stock in regard to
21 certain public announcements regarding New Century and adjusted those price
22 h ang es th at were attributable to market forces unrelated to th e alleg ed fraud.
239. As explained above, Common Stock purchases are not eligible for
24distributions from the Underwriter Allotment, but may be eligible for distributions
25 rom th e Individual-A uditor Allotment.
26
.
ecognized Los s Calculations
270. Recognized Loss Claims will be calculated for the purposes of the
28Settlement as follows :
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.
alculation of Recog nized Loss for New
Century Common Stock Purchas es2
61. Calculation of Recognized Loss Claims for New Century Common3
Stock sh ares sh all be as follows:4
5
2. For shares purchased on or between May 5, 2005, through February 7,
62007, th e following claims for damag es s h all be allowed:
(a) For each share sold on or before February 7, 2007, no Recognized
Claims for damages sh all be allowed;gb) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
10ereto, less the inflation per share at the time of sale as set forth in Table 2;
and1 1
12
3. For shares purchased on or between February 8, 2007, through March
2 2007 the following claims for damages3
s s h all be allowed:
14a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages sh all be allowed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,
1 6he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,17
ess the inflation per sh are at th e time of sale as s et forth in Table 2; and18
9
4. For shares purchased on or between March 5, 2007, through March
201 2, 2007, the following claims for damag es sh all be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or damages sh all be allowed;
22b) For each share sold on or after March 13, 2007, the allowed damages
shall be the inflation per share at the time of purchase for the applicable23
ate of purchas e as s et forth in Table 2, annexed hereto.
24
25
5. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Comm on Stock claims , th e Recog nized Loss Claims for damages for such
27 shares purchased during the Class Period shall be further limited (as provided for
28under th e PSLRA) to the s malles t of the following :
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1a) the difference between the price paid and the price received (out-of-
2ocket investment loss) if sold on or before June 10, 2007;(b) the difference between the price paid (excluding all fees and
3ommissions) and the average closing price as set forth in Table 3
4nnexed h ereto if sold between March 1 3, 2007, and June 1 0, 2007; and(c) the difference between the price per share paid and $0.87 per share if the5
h ares we re sold after June 10, 2007, or were h eld until the current date.
6
.
alculation of Recog nized Loss
for New C entury Series A Preferred Stock7
urchases
86. Calculation of Recognized Loss Claims for New Century Series A
9referred Stock sh ares sh all be as follows:
1 07. For shares purchased on or between May 5, 2005, through February 7,
112007, th e following claims for damag es s h all be allowed:12
a) For each sh are sold on or before February 7, 2007, no Recog nized Claims
13
or damages sh all be allowed;
(b) For each share sold on or between February 8, 2007, and through March143, 2007, the allowed damages shall be the inflation per share at the time
of purchase for the applicable date of purchase as set forth in Table 4,15nnexed hereto, less the inflation per share at the time of sale as set forth1 6n Table 4; and
1 7
68. For shares purchased on or between February 8, 2007, through March
18 2, 2007, the following claims for damages shall be allowed:
19
a) For each share sold on or before March 2, 2007, no Recognized Claims
20or damages sh all be allowed;
21b) For each share sold on or between March 5, 2007, and March 13, 2007,
the allowed damages shall be the inflation per share at the time of22urchase for the applicable date of purchase as set forth in Table 4,
23nnexed hereto, less the inflation per share at the time of sale as set forthin Table 4; and
24
25
9. For shares purchased on or between March 5, 2007, through March
262, 2007, the following claims for damag es s h all be allowed:
27a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages sh all be allowed;28
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1b) For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicable
date of purch ase as set forth in Table 4, annexed h ereto.3
470. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA to the smallest of the follown
investment loss ) if sold on or before June 1 0, 2007;
8b) the difference between the price paid (excluding all fees and commissions)
9nd the average closing price as set forth in Table 6 annexed hereto if sold
between March 1 3, 2007 and June 1 0, 2007; and10c) the difference between the price per share paid and $8.02 per share if the
1 1
h ares w ere sold after June 10, 2007, or were h eld until th e current date.
12
.
alculation of Recog nized Loss
for New C entury Series B Preferred StockPurchases
13
131. Calculation of Recognized Loss Claims for New Century Series B
15Preferred Stock sh ares s h all be as follows:
1672. For shares purchased on or between May 5, 2005, through February 7,
17 2007, th e following claims for damag es s h all be allowed:
1 8
a) For each share sold on or before February 7, 2007, no Recognized
Claims for damages sh all be allowed;19b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in21able 5, annexed hereto, less the inflation per share at the time of sale
22s s et forth in Table 5; and
233. For shares purchased between February 8, 2007, through March 2,
242007, th e following claims for damag es s h all be allowed:
25a) For each share sold on or before March 2, 2007, no Recognized Claims
26or damages sh all be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
28urchase for the applicable date of purchase as set forth in Table 5,
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1nnexed hereto, less the inflation per share at the time of sale as set
2orth in Table 5; and
34. For shares purchased between March 5, 2007, through March 12,
4 007, th e following claims for damag es s h all be allowed:
5a) For each share sold on or before March 12, 2007, no Recognized
6
laims for damag es sh all be allowed;
(b) For each share sold on or after March 13, 2007, the allowed damages
7
h all be the inflation per sh are at th e time of purch ase for th e applicable
8ate of purchas e as s et forth in Table 5, annexed h ereto.
95. The Recognized Loss Claims for damages for such Series B Preferred10Shares purchased during the Class Period shall be further limited (as provided for
11under the PSLRA) to the s malles t of the following:12a) the difference between the price paid and the price received (out-of-pocket
1 3
nvestm ent loss) if sold on or before June 10 , 2007;
(b) the difference between the price paid (excluding all fees and commissions)14nd the average closing price as set forth in Table 7 annexed hereto if sold
1 5etween March 1 3, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the
1 6h ares w ere sold after June 10, 2007, or were h eld until the current date.
1 7.alculation of Recog nized Loss for
New Century Call and Put Options18
76. The Plan of Allocation covers the following New Century Call and19
20Put Options: New Century Call Options on Common Stock initially purchased or
21otherwise acquired during the Class Period, on May 5, 2005, up to and including
22
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
23
Common Stock written or purchased (covered) during the Class Period May 5,
242005, throug h and including M arch 1 3, 2007 ("New C entury Put Options") .
257. Artificial inflation and Recognized Losses as to New Century Call
26
Options and artificial deflation and Recognized Losses as to New Century Put
27Options were computed in a manner similar to that used with respect to New
Century Common Stock as described above. To determine artificial inflation for28
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1changes that occurred in reaction to certain public announcements regarding New
2Centurynd then made adjustments for changes that were attributable to market
3orces unrelated to the alleged fraud in prices of such Call Options and Put
4Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5 rom wh ich the R ecognized Loss es for New Century Call Options and Put Options
6may be calculated. In addition, the total dollar amount payable to Class Members
7n connection with the acquisition of Call Options and the sale of Put Options
8uring the Class Period is l imited to 1 0% of the Individual-Auditor Allotment. Th is
9imitation reflects the speculative and derivative nature of these securities as
10 compared to New Century Common Stock and New Century Preferred Shares.
1 1
8. With respect to purchases and sales (covers) of New Century Call
12Options during th e period M ay 5, 2005, th rough and including M arch 1 3, 2007, the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14 value of Call Options on that day as a result of the inflation in New Century's
15Common Stock share price. The dollar change in the value of Call Options will be
16 calculated using the Black-Scholes option pricing formula (using Black's
17adjustment for dividends and the annualized standard deviation estimated from 46-
18day, historical daily volatility estimates) using the closing share price of New
19Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22 eported closing share price minus the Common Stock price inflation per share set
23orth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
27Black's adjustment for dividends is implemented. Annualized volatility estimates
28are obtained using the daily standard deviations using the returns for that day plus
-28-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
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1the previous 45-day stock returns, which are then annualized using a 252-trading
2 ay approach.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6
e zero.
7
b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) we re sold (pos ition closed out) o n or between February
1 0, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options m ultiplied by the less er of:
11
1 2
1) the difference between Artificial Inflation per Call Option on the
date of purch ase and A rtificial Inflation per Call Option on th e date13f expiration, exercis e, or sale, as app ropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the C all Option expired worth less ) .15
1 6n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,17007 maturity and exercise price of $20. The Call Option inflation on this
1 8
ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor19hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($1 0.40 - $1 .60, or $8.80) t imes num ber of Options (1 00) , for a total of$880.00; assuming that the difference between the purchase price and the
23ale price was g reater th an $8.80.
24
(c) For Call Options which were purchased or acquired between February25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
26
2) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions multiplied by th e less er of:
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1
1) the difference between Artificial Inflation per Call Option on the
2ate of purch ase and A rtificial Inflation per Call Option on th e dateof expiration, exercise, or sale, as appropriate; or
32) the difference between the purchase price per Option and the sale
4rice per Option ($0.00 if the C all Option expired worth less ) .
5d) For Call Options which were purchased or acquired between March 5,
6
007, and March 12, 2007, and (1) expired on or after March 13, 2007;
(2) were exercised on or after March 1 3, 2007; or 3) w ere sold (position7
losed out) on or after March 13, 2007, the Recognized Loss Claim
8sh all be that num ber of Options multiplied by th e less er of.
91) the Artificial Inflation per Call Option on the date of purchase, or1 02) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the C all Option expired worth less ) .
1 1
12
9. With respect to purchases (covers) and sales of Put Options during the
13period M ay 5, 2005, through and including March 13, 2007, the Artificial Inflation
14per Option on a given day shall be the dollar change in the value of Put Options on
15hat day as a result of the inflation in New Century's Common Stock share price.
16The dollar change in the value of Put Options will be calculated using the Black-
17Sch oles put option pricing formula (using Black's adjustment for dividends and the
18annualized standard deviation estimated from 46-day historical daily volatility
19 estimates) using the closing share price of New Century Common Stock on the
20 ransaction date, compared with the Black-Scholes put pricing formula value for
21 he Put Option using the uninflated share closing share price of New Century
22Common Stock on that same date as determined by: (1) the reported closing share
23price minus the Common Stock price inflation per share set forth in the annexed
24Table 2 for Put Options subsequently purchased between May 5, 2005, and March
2513, 2007, and (2) the reported closing share price minus the Common Stock price
26nflation per share set forth in the annexed Table 2 for Put Options initially sold
27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28 dividends is implemented. Annualized volatility estimates are obtained using the
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1daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, wh ich are then annualized using 252 trading d ay approach .
3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6(b) For Put Options which were sold between May 5, 2005, and February 7,
7
007, and (1 ) expired on or after February 8, 2007; (2) we re exercised on
8r between February 8, 2007, and March 13, 2007; or 3) were purchased(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
10ultiplied by th e less er of:
(1) the difference, multiplied by minus one, between Artificial1 1
nflation per Put Option on the date of sale and Artificial Inflation
12
er Put Option on the date of expiration, exercise, or purchase
13
$0.00 if th e Put Option expired worth less ) , as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
1 4
ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired worth less ) .
1 6n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of $20. The Put inflation on this date is -$14.2218rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9
ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
21, 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22) =225.15) times number of Put Options, 100 for a total of $515.00; assuming
23h at th e difference between th e Put purch ase price and the Put sale price wasg reater than $5.15.
24
25
c) For Put Options which were initially sold between February 8, 2007, and
March 2, 2007, and (1) expired on or after March 5, 2007; (2) were26
xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of -
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121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if th e Put Option expired w orthless ) , as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
5
ut Option and the purchase price of the Put Option ($0.00 if the
6
ut Option expired worth less ) .
7
d) For Put Options wh ich were sold between March 5, 2007, and March 1 2,
8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 1 3, 2007, the Recog nized Los s C laim s h all be that number of
1 0ptions multiplied by th e less er of:
1 1
1) the Artificial Inflation per Put Option on the date of sale,
12
ultiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per13
ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired worth less ) .
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 61 0.he put inflation for this option on March 6, 2007, was1 7$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18
ptions after March 13, 2007, when Put inflation was zero. The Recognized
19
oss Claim for this investor will be $68 (negative of the Put inflation on the
sale date), assuming that the difference in purchase price of the Put option20nd s ale price of th e Put option was g reater than $0.6 8 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25 will be made.
26
1. The determination of the price paid and the price received for a
27particular security sh all be exclusive of all commiss ions, taxes, fees and ch arg es.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 49 of 117 Page ID#:1094912. The Court has reserved jurisdiction to modify, amend, or alter the Plan
2 f Allocation w ithout furth er notice, or to allow, disallow or adjust th e claim of any
3 Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 unds. No person shall have any claim against the Plaintiffs or their counsel or any5claims administrator or other agent designated by Plaintiffs or their counsel, or
6against Defendants or their counsel, based on distributions made substantially in
7 accordance with the Stipulations and the Settlements contained therein, the Plan of
8Allocation, or further orders of the Court.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11 Fund or the Underwriter Allotment or Individual-Auditor Allotment, for the Plan of
12 Allocation, for the determination, administration and calculation of, or payment
13 pursuant to, Proofs of Claim, for the payment or withholding of Taxes owed by the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 for acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
1 74.he Court has reserved jurisdiction to allow, disallow, or adjust on
1 8 equitable grounds the Claim of any Class Member.
1 9
5. The Plan of Allocation set forth herein is the plan that is being proposed
20 by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21 approve this plan as proposed or it may modify the Plan of Allocation without
22 further notice to the Class.
23WHA T RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMEN TS?
2456. If the Settlements are approved, the Court will enter judgments (the
26 "Judgments"). The Judgments will dismiss with prejudice the claims against the
27 Defendants and other related persons and entities and will provide that Lead
28 Plaintiff and all othe r Class Mem bers will provide releases as des cribed below.
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1
7. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2members of the C lass w ill be deemed by operation of law to have released, waived,
3 discharged and dismissed each and every Settled Class Claim as against each and4every Released Officer And Director and the Insurance Carriers (as defined in the
5Global Officer And Director Stipulation), and shall be deemed to forever be
6njoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8 Claim" in this paragraph means any and all claims and causes of action of every
9nature and description, whether known or Unknown Claims, whether arising under
10 ederal, state, common or foreign law, that Plaintiffs or any other member of the
11 Class (a) asserted in the Consolidated Action, or (b) could have asserted in any
12 orum that arise out of or are based upon the allegations, transactions, facts,
13 matters or occurrences, representations or omissions involved, set forth, or referred
14o in th e Cons olidated Action, and th at arise out of or relate to th e purch ase of N ew
15Century Common Stock, New Century Series A Preferred Stock, New Century
16Series B Preferred Stock, and/or New Ce ntury Call Options and /or th e sale of New
17Century Put Options during the Class Period. Settled Class Claims does not
1 8 nclude claims relating to the enforcement of the Settlement. "Released Officers
19 And Directors" in this paragraph means (i) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
25ncluded in the definition of "Assured" or "Insured" as defined in the Policies
26defined in the Global Officer And Director Stipulation) and any and all of their
27 espective heirs, executors, administrators, predecessors, successors and assigns,
28
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1employees, agents and retained professionals (other than KPMG or the
2Underwriter Defendants) .
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4 lass w ill be deemed by operation of law to h ave released, waived, disch arged and
5ismissed each and every Settled Claim, and shall forever be enjoined from
6 prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8 ature and des cription, wh ether know n or Unknown, wh ether aris ing under federal,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10 asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11 or are based upon the allegations, transactions, facts, matters or occurrences,
12 epresentations or omissions involved set forth or referred to in the Complaint,
13nd th at arise out of or relate to the purch ase of N ew C entury Com mon Stock, New
14Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
15New Century Call Options and/or the sale of New Century Put Options during the
16 Class Period. "Settled Claims" does not include claims relating to the enforcement
17of the Settlements. "Released Auditor Party" means KPMG and any and all of its
18partners, principals, officers, directors, employees, agents, attorneys and affiliates.
1 9 "Released Auditor Parties" does not include any Defendants other than KPMG
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22heirs, executors, administrators, predecessors, successors and assigns, and any and
23all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25dismissed each and every Settled Claim, and shall forever be enjoined from
26prosecuting any or all Settled Claims, against any Released Underwriter Party.
27"Settled Claim" in this paragraph means any and all claims and causes of action of
28 every nature and description, whether lu-iown or Unknown, whether arising under
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1 ederal, state, common or foreign law, that Plaintiffs or any other member of the
2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that
3 arise out of or are based upon the allegations, transactions, facts, matters or
4occurrences, representations or omissions involved, set forth, or referred to in the
5 Complaint, and that arise out of or relate to the purchase of New Century Common
6Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7Stock and/or New Century all Options and/or the sale of New Century Put
Y
8Options during the Class Period. "Settled Claims" does not include claims relating
9o the enforcement of the Settlements. "Released Underwriter Party" means the
10Underwriter Defendants and any and all of their respective parent companies,
11subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors
12and assigns, and any and all of their current and former officers, directors,
13 employees, agents and attorneys. "Released Underwriter Parties" does not include
14 any Defendants other than the Underwriter Defendants.
1 50. "Released Parties" means the Released Officers And Directors, the
16Released A uditor Parties, and th e Released Underwriter Parties.
171. "Unknown Claims" means any and all claims that Lead Plaintiff or
18any Class Member does not know or suspect to exist in his, her or its favor at the
19 ime of the release of the Released Parties, which if known by him, her or it might
20have affected his, her or its decision(s) with respect to the Settlements. With
21 espect to any and all settled claims, the Lead Plaintiff shall expressly waive, and
22each Class Member shall be deemed to have waived, and by operation of the
23Judgment shall have expressly waived, any and all provisions, rights and benefits
24conferred by any law of any state or territory of the United States, or principle of
25common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,
26wh ich provides:
27general release does not extend to claims which the creditor
28oes not know or suspect to exist in his or her favor at the time of
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1xecuting the release, which if known by him or her must have
2aterially affected his or her settlement with the debtor.
32. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6 nd was a key element of th e Settlements .
93. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10 Class. In addition, certain Defendants and other persons and entities will also
11elease claims against each other and other persons and entities as set forth in the
12 Stipulations.
13WHA T PAYMENT ARE THE ATTORNEY S FOR THE CLASS SEEKING?
14OW W ILL THE LAWYE RS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel
18been reimbursed for its out-of-pocket expenses. Before final approval of the
19Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'
20 fees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the
22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23seek attorneys' fees or expenses with respect to, any disgorgements or penalties
24obtained by the Securities and Exchange Commission in the SEC Action. At the
25same time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed $4.5 million, plus interest from the date of funding at the
27 same rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28 request for reimbursement of Litigation Expenses will be a request for an award to
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1Lead Plaintiff and/ora d/o named plaintiffs Carl Larson and Charles Hooten for
2 eimbursement of their reasonable costs and expenses (including lost wages)
3 directly related to their representation of the Class. The Court will determine the
4 mount of th e awards.
5
OW D O I PARTICIPATE IN THE SETTLEMENTS?
6
HAT DO I NEED TO DO?
7
85. If you purchased or otherwise acquired New Century Common Sto
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10and/or New C entury Call Options and/or sold New Century Put Options , during th e
11period from May 5, 2005, through and including March 13, 2007, either in the
12Offerings, pursuant to a registration statement, or in the market, and were injured
13 upon disclosure of certain facts alleged in the Complaint, and you are not excluded
14 by the definition of the Class and you do not elect to exclude yourself from the
15Class, then you are a Class Member. You will be bound by the proposed
16Settleme nts if approved by th e Court, and by any judg men t or determination of th e
17Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19 Settlements. A Claim Form is included with this Notice, or you may go to the
20website maintained by the Claims Administrator for the Settlements to download a
21copy of the Claim Form or request that a Claim Form be mailed to you. The
22website is www .neweenturysettlement.com . You may also request a Claim Form23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24downloaded from Lead Counsel's website at www.blbglaw.com . Those who
25exclude themselves from the Class, and those who do not submit timely and valid
26Claim Forms w ith adequate suppo rting docum entation, will not be entitled to sh are
27 in the Settlements. Please retain all records of your ownership of, or transactions
28 in, New Century Securities, as th ey may be neede d to document your Claim.
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16. As a Class Member, you are represented by Lead Plaintiff and Lead
2Counsel, unless you enter an appearance through counsel of your own choice at
3your own expense. You are not required to retain your own counsel, but if you
4 choose to do so, such counsel must file a notice of appearance on your behalf and
5must serve copies of his or her notice of appearance on the attorneys listed in the
6 section entitled, "When and Where Will the Court Decide Whether to Approve the
7ettlements ?," below.
87. If you do not wish to remain a Class Member, you may exclude
9ourself from the Class by following the instructions in the section entitled, "What
10 f 1 Do Not Want To Be A Part Of The Class And The Settlements? How Do I
11Exclude Mys elf?," below.1 28. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14 attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15exclude yourself from the Class, you may present your objections by following the
16 instructions in the section entitled, "When and Where Will the Court Decide
17Wh eth er to Approve the Settlements?," below.
1 8
HAT IF I DO NOT W ANT TO BE A PART OF THE SETTLEMEN TS?
1 9
OW D O I EXCLUDE MYSELF?
2019. Each Class Member will be bound by all determinations and
22 judgments in this lawsuit, including those concerning the Settlements, whether
23favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Settlement, c/o Analytics, Inc., Claims A dm inistrator, P.O. Box 2004, Ch anh ass en,
27MN 55317-2004. The exclusion request must be received no later than
28[INSERT]. You will not be able to exclude yourself from the Class after that date.
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1Each request for exclusion must (i) state the name and address of the person or
2ntity requesting exclusion; (ii) state that such person or entity requests exclusion
3rom the Class in In re New Century, 2:07-CV-0093 I -DDP; (iii) be signed by the
4 person or entity requesting exclusion; (iv) provide a telephone number for that
5person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6all purchases, acquisitions, and sales of New Century Securities during the Class
7Period. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1000. If you do not want to be part of the Class, you must follow these
11 instructions for exclusion even if you have pending, or later file, another lawsuit,
12 rbitration, or other proceeding relating to any Settled Claims .
13
01. If a person or entity requests to be excluded from the Class, that
14 person or entity will not receive any benefit provided for in th e Settlements.
1502. The Individual Defendants, Insurance Carriers, Underwriter
16Defendants or KPMG may terminate the Settlements if requests for exclusion are
1 7 eceived from potential Class Members representing over a certain amount of
18shares as stated in Supplemental Agreements. The three settlement agreements are
19 closely related and, if one of the three Settlements should not become final for any
20 eason, it could affect the finality and enforceability of th e oth er Settlements.
21HEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE22
THE SETTLEMENTS?23
24
O I HAVE TO COME TO THE HEARING?
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
26
03. If you do not wish to object in person to the proposed Settlements,
27 proposed Plan of Allocation, and/or the application for attorneys' fees and
28 reimbursement of Litigation Expenses, you do not need to attend the Settlement
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1 Hearing. You can object to or participate in the Settlements without attending the
2ettlement Hearing.
3104. The Settlement Hearing will be held on [INSERT] before the
4Honorable Dean D. Pregerson, at the United States District Court for the Central
5District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
6California 9001 2. The Court reserves the r ig h t to approve the Settlements , the Plan
7f Allocation or the request for attorneys' fees and reimbursement of Litigation
8Expenses at or after the Settlement Hearing without further notice to the members
9f the Class. The Settlements will become effective only if all three Settlements
10 re approved by the C ourt.
1 1
05. Any Class Member who does not submit a valid exclusion that is
12received no later than [INSERT] may object to the Settlements, the Plan of
13Allocation, or Lead Counsel's request for an award of attorneys' fees and
14 reimbursement of Litigation Expenses. Objections or oppositions must be in
15writing. You must file any written objection or opposition, together with copies of
16all other papers (including proof of all transactions in New Century Securities
17during the Class Period) and briefs, with the Clerk's Office at the United States
18District Court for the Central District of California at the address set forth below
19onor before[INSERT]. You must also serve the papers
20on Lead Counsel for the Class at the address set forth below so that the papers are
21received on or before [NSERT].
22
23 Clerk's Officeead Coun sel for the Class
24 UNITED STATESERNSTEIN LITOWITZ BERGER
25DISTRICT COURT
GROSSMANN LLP
FOR THE CENTRAL
alvatore J. Graziano, Es q.
26DISTRICT OF CALIFORNIA
285 Avenue of th e Americas
27Clerk of th e Courtew York , NY 1 001931 2 N. Spring Street
28Los Ang eles , California 9001 2
-41 -OTICE OF PENDENCY OF CLASS ACTION
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Iepresentative C ounsel for Directors and2fficers
3UNGER, TOLLES & OLSON LLP
4athleen M. McDowell355 South G rand Avenue, 35th Floor
5
os Angeles, CA 90071-1560
6Counsel for Underwriter Defendants
7
8AUL, HASTINGS, JANOFSKY &WALKER LLP
9illiam F. Sullivan
10oh n S. Durrant515 South Flower Street, 25 Floorloor
I 1
os Ang eles, CA 90071
12Counsel for KPM G
13
14IDLEY AUSTIN LLPMichael L. Rug en
1555 California Street, Suite 2000
1 6an Francisco, CA 941 04
17
18
06. The filing must demonstrate your membership in the Class, including
19 the number of shares of New Century Securities purchased or otherwise acquired
or sold during the Class Period and the price(s) paid and received. You may not20
object to the Se ttlemen ts or any aspect of the m, if you are not a Class M embe r or if21
you excluded yourself from th e Class .22
107. You may file a written objection without having to appear at the2324 Settlement Hearing. You may not appear at the Settlement Hearing to present your
objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise.27108. If you wish to be heard orally at the hearing in opposition to the28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for-42-OTICE OF PENDENCY OF CLASS ACTION
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1 an award of attorneys' fees and reimbursement of Litigation Expenses, and if you
2ave filed and served a timely written objection as described above, you also must
3otify the above counsel on or before [INSERT4 concerning your intention to appear. Persons who intend to object and desire to
5resen t evidence at th e Settlemen t Hearing m ust include in th eir written objections
6 the identity of any witnesses they may call to testify and exhibits they intend to
7ntroduce into evidence at the h earing.
809. You are not required to hire an attorney to represent you in making
9written objections or in appearing at the Settlement Hearing. If you decide to hire
10an attorney, which will be at your own expense, however, he or she must file a
11notice of appearance with the Court and serve it on Lead C ounsel so that th e notice12s received on or before [INSERT].
13
10. The Settlement Hearing may be adjourned by the Court without
14urther written notice to the Class. If you intend to attend the Settlement Hearing,
15you sh ould confirm the date and time with Lead Couns el.
16 Unless the Court orders otherwise, any Class Member who does not object in
17 the manner described above will be deemed to have waived any objection and
18 shall be forever foreclosed from making any objection to the proposed
19 Settlemen ts, the proposed Plan of A llocation, or Lead Counsel's request for an
20award of attorneys' fees and reimbursement of Litigation Expenses. Class
21Members do not need to appear at the hearing or take an other action topg22indicate their approval.
23HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?24
25
11. If you purchased or otherwise acquired or sold New Century
26Securities during the Class Period for the beneficial interest of a person or
27organization other than yourself, you must either (1) send a copy of this Notice to
28 the beneficial owner of such New Century Securities, postmarked no later than
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1 fourteen (14) days after you receive this Notice, or (ii)irovide the names and)p2ddresses of such persons no later than fourteen (14) days after you receive this3 Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4 Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5 choose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7 must retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9 Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11 reasonable expenses actually incurred, by providing the Claims Administrator with
12 proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14 www.neweenturysettlement.com or Lead Counsel's website, www.blbglaw.com, o r
15 by calling toll-free 1-866-308-7615.
16CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17
QUESTIONS?181 9
12. This Notice contains only a summary of the terms of the proposed
20 Settlements. More detailed information about the matters involved in the
21 Consolidated Action is available at www.newcenturysettlement.com , including,
22 among other documents, copies of the Stipulations, Claim Form, the Complaint,
23 the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24 and the Answers of Defendants. Copies of the Court-filed documents are also
25 available for review during regular business hours at the address listed above. All
26 inquiries concerning this Notice or the Claim Form should be directed to:
27
28
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1 In re New Century Securities Litigation
alvatore J. Graziano, Es q.
2ettlementERNSTEIN LITOWITZ BERGERc/o Analytics, Inc.GROSSMANN LLP
3laims Administrator285 Avenue of th e Americas4.O. Box 200 4ew York , NY 1 0019
Chanhassen, MN 55317-2004866 ) 648 -25245
laims Adm [email protected]
6ead Counsel
DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE7
CLERK OF COURT8
REGARDING TH IS NOTICE.9
10
11
Dated:y Order of the Clerk of CourtUnited States D istrict Court
12
or th e Ce ntral District of California
1 3
14
1 5
16
17
18
19
20
21
22
23
24
25
26
27
28
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1Table 13
4
5
6
ssuer /
iquidation
hare in
hare in
7
nderlying
USIPypessue DatePreference
at enderwriter Individual
AllotmentAuditor
8llotment
Preferred Stock
9New Century 64352D200/15/200525.00.125%Series A
10
11referred StockNew Century 6435EV207
/15/2006
25.00
.750%
12
eries B
13
New Century 6435EV108 Common Stock14
15New Centuryariousall Option
16 New Centuryariousut Option178
19
20
21
22
23
24
25
26
27
28
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12able 2
3nflation per Share for Common Stock Shares Purch ased betwee nMay 5, 2005, and March 1 3, 2007
5
6eriodegin Datend datenflation
1
-May-05
-Feb-07
5.21
7
-Feb-07
-Mar-07
1.09
3-Mar-072-Mar-07.6 983-Mar-07o the present.00
9
10
1 1
12
13
14
15
1 6
17
18
19
20
21
22
23
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 64 of 117 Page ID#:10964
12
3able3Comm on Stock PSLR A 90-Day Look-Back L oss Limitation Calculations
5
verageverage
Closinglosinglosinglosing6
aterice ($ )
rice ($)
aterice ($ )
rice ($)
7
3Mar2007.84.847Apr2007.86.1 9
84Mar2007.6 7.760Apr2007.89.1 8
15Mar2007.35.951May2007.85.1 76Mar2007.34.302May2007.83.1 619Mar2007.1 7.473May2007.80.1 5
100Mar2007.6 9.514May2007.72.1 4
21Mar2007.6 7.537May2007.59.1 21 1
2Mar2007
.56
.54
8May2007
.58
.1 1
12
3Mar2007
.00
.59
9May2007
.53
.1 0
26Mar2007
.56
.59
0May2007
.43
.08
1 3
7Mar2007
.41
.57
1May2007
.43
.06
28Mar2007.1 1.534May2007.41.05
149Mar2007.03.495May2007.37.03
30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01
163Apr2007.01.408May2007.39.99
04Apr2007.00.381May2007.44.98
175Apr2007.26.372May2007.43.97
09Apr2007
.1 4
.36
3May2007
.47
.9 6
18
0Apr2007
.09
.34
4May2007
.45
.95
11Apr2007
.98
.33
5May2007
.47
.94
19
2Apr2007
.89
.31
9May2007
.46
.93
203Apr2007.86.290May2007.45.92
16Apr2007.98.271May2007.44.92
217Apr2007.00.261Jun2007.44.91
18Apr2007.99.254JLm2007.43.9 0
229Apr2007.93.245Jun2007.43.89
20Apr2007.96.236Jun2007.45.88
233Apr2007.96.227Jun2007.44.88
24Apr2007.92.21un2007.44.8724
5Apr2007
.96
.20
un2007
.44
.87
256Apr2007
.94
.20
0Jun2007
.44
.87
26
27
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12able 4
3nflation per Share for Series A Preferred Shares Purchased betw een
5
ay 5, 2005, and March 1.3, 2007
6
eriod
egin Date
nd date
nflation
1
-May-05
-Feb-07
5.10
7-Feb-07-Mar-070.48
8-Mar-072-Mar-07.48
43-Mar-07o the present009
10
11
12
13
Table 5145nflation per Share for Series B Preferred Shares Purchased betw een
16ay 5, 2005, and M arch 13, 2007
7eriodegin Datend datenflation
18
-May-05
-Feb-07
5.41
2
-Feb-07
-Mar-07
1.18
19
-Mar-07
2-Mar-07
.03
4
3-Mar-07
o the present
00
20
21
22
23
24
25
26
27
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1
23abe64referred Stock, Series A, PSLRA 90-Day Look-Back Loss
Limitation Calculations5Average
verage
6
losing
losing
losing
losing
Date
rice ($) price ($)
ate
rice ($) price ( $ )
7
-Mr-2007.45.457-Apr-2007.27.45
84-Mar-2007.20.330-Apr-2007.45.48
95-Mar-2007.9 5.531-May-2007.00.52
16-Mar-20070.00.152-May-2007.80.56
109-Mar-2007.25.373-May-2007.80.59
20-Mar-2007.5 0.394-May-2007.75.6 2
1 1
1-Mar-2007
.75
.44
7-May-2007
.25
.6 6
12
2-Mar-2007
.85
.49
8-May-2007
.00
.70
23-Mar-2007
.77
.6 4
9-May-2007
.70
.72
13
6-Mar-2007
.9 2
.6 6
0-May-2007
.23
.73
147-Mar-2007.40.461-May-2007.73.73
28-Mar-2007.10.264-May-2007.50.75
159-Mar-2007.20.105-May-2007.00.7830-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.83173-Apr-2007.55.9 18-May-2007.83.85
04-Apr-2007
.10
.9 2
1-May-2007
.50
.88
18
5-Apr-2007
.25
.9 4
2-May-2007
.50
.9 2
19
9-Apr-2007
.6 5
.9 2
3-May-2007
.10
.9 4
10-Apr-2007
.50
.9 0
4-May-2007
.25
.9 7
201-Apr-2007.6 0.895-May-2007.10.9 9
12-Apr-2007.45.879-May-2007.25.01213-Apr-2007.00.830-May-2007.20.03
226-Apr-2007.05.801-May-2007.14.05
17-Apr-2007.70.751-Jun-2007.75.06
2 38-Apr-2007.30.704-Jun-2007.25.07
24
9-Apr-2007
.10
.6 4
5-Jun-2007
.10
.0720-Apr-2007
.15
.59
6-Jun-2007
.45
.06
25
3-Apr-2007
.6 0
.52
7-Jun-2007
.00
.04
24-Apr-2007
.00
.47
8-Jun-2007
.87
.02
26
5-Apr-2007
.25
.43
9-Jun-2007
.87
.02
2716-Apr-2007.37.430-Jun-2007.87.0228
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1able7referred Stock, Series S, PSLRA 90-Day Look-Sack L oss
Limitation CalculationsAverageverage
5
losing
losing
losing
losing
Date
rice ($) price ($)
aterice ($) price ($)
613-Mar-2007
.32
.32
7-Apr-2007
.06
.35
74-Mar-2007
.35340-Apr-2007
.40.38
5-Mar-2007.89.521-May-2007.70.42
16-Mar-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.6 5.48
20-Mar-2007.6 0.424-May-2007.6 1,5101-Mar-2007.00.507-May-2007.45.56
1
2-Mar-2007
.10
.588-May-2007
.88
.6 023-Mar-2007
.50
.6 8
9-May-2007
.70
.6 2
2
6-Mar-2007
.9 0
.70
0-May-2007
.53
.6 4
3
7-Mar-2007
.6 5
.51
1-May-2007
.05
.6 5
28-Mar-2007
.80.29
4-May-2007
.45.6 7
49-Mar-2007.25.135-May-2007.78.70
30-Mar-2007.40.016-May-2007.00.7252-Apr-2007.00.9 47-May-2007.20.76
63-Apr-2007.25.9 08-May-2007.88.7804-Apr-2007.00.9 01-May-2007.50.8175-Apr-2007.45.9 32-May-2007.75.83
8
9-Apr-2007
.50
.91
3-May-2007
.25
.86
10-Apr-2007
.03
.87
4-May-2007
.25
.89
9
1-Apr-2007
.05
.83
5-May-2007
.10
.9 1
12-Apr-2007
.9 0
.79
9-May-2007
.30
.9 4
03-Apr-2007.80.740-May-2007.00.9 6
16-Apr-2007.76.701-May-2007.6 5.9 9
17-Apr-2007.15.6 41-Jun-2007.85.00
28-Apr-2007.00.584-Jun-2007.6 0.01
39-Apr-2007.00.525-Jun-2007.6 0.00
20-Apr-2007.05.476-Jun-2007.50.00
4
3-Apr-2007
.9 0
.41
7-Jun-2007
.9 0
.9 8
24-Apr-2007
.00
.37
8-Jun-2007
.25
.9 5
5
5-Apr-2007
.20
.33
9-Jun-2007
.25
.9 5
66-Apr-2007
.25
.33
0-Jun-2007
.25
.95
27
28
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1 Table S
2able 8 has been abbreviated for example purposes. For a complete table, visit
3ttp://www.newcenturysettlement.com/Forms/Table 8.pdf.
4f you do not have access to the Internet, please contact the Claims Administrator
5t 1-866-308-7615 to have a co mailed toopyyouY
6Maxin7axinax Miniskiskaxinax
Maturityxer.loseloseolaolareereeallallutin Put
8atericericericeilityilityateatenflat.nflat.nflat.nflation
97-Mar-072.505.163.21.98.88.05.050.690.510.00$0.18
21-Apr-072.505.163.21.98.88.05.050.640.49$0.05$0.20
109-May-
072.505.163.21.98.88.05.050.620.51$0.07$0.19
118-Aug-072.50
5.16
3.21.98.88
.05
.05
0.62
0.54$0.08
$0.15
129-Jan-08
2.50
5.16
3.21.98.88
.05
.05
0.63
0.59$0.06
$0.11
17-Jan-09
2.50
5.16
3.21.98.88
.05
.05
0.66
0.64$0.04
$0.05
137-Feb-075.0019.7517.21.93.88.05.0511.0911.080.00$0.01
17-Mar-075.0019.753.21.98.88.05.0511.080.03$0.01$1.40
141-Apr-075.0015.853.21.98.95.05.059.410.22$0.20$2.29
159-May-
075.0019.753.21.98.88.05.0510.860.30$0.19$2.30
168-Aug-075.0019.753.21.98.88.05.0510.460.42$0.16$3.00
19-Jan-085.0019.753.21.98.88.05.059.870.51$0.11$4.20
177-Jan-09
5.00
19.75
3.21
.98
.88
.05.058.940.61$0.06$3.44
187-Feb-077.5019.7517.21.93.88
.05
.0511.09
9.59
0.00
$1.50
17-Mar-077.5019.75
3.21.98.88
.05
.0510.75
0.00$0.34
$3.87
19
1-Apr-077.5015.85
3.21.98.95
.05
.05
7.070.10$0.36
$4.69
209-May-
077.5019.753.21.98.88.05.059.970.18$0.31$4.56
218-Aug-077.50 $19.753.21.98.88.05.059.380.33$0.23$4.90
19-Jan-087.5019.753.21.98.88.05.058.750.46$0.16$5.63
227-Jan-097.5019.753.21.98.88.05.057.950.59$0.08$4.50
2310.0
17-Feb-0719.7517.21.93.88.05.059.007.10$1.14$3.99
24
10.0
17-Mar-07
19.75
3.21.98.88
.05
.05
9.10
0.00$0.64
$6.33
25
10.0
21-Apr-07
18.77
3.21.98.93
.05
.05
7.98
0.05$0.48
$6.82
269-May-10.0
0719.753.21.98.88.05.058.540.11$0.41$6.51
2710.0
18-Aug-0719.753.21.98.88.05.058.110.27$0.29$6.40
2810.0
19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70
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110.0
17-Jan-0919.753.21.98.88.05.057.140.57$0.09$5.31
212.5
17-Feb-07$19.7517.21.93.88.05.056.504.60$3.63$6.49
312.5
17-Mar-07$19.753.21.98.88.05.056.800.00$0.68$8.50
412.5
21-Apr-07
$18.77
3.21.98.93
.05
.05
6.05
0.02$0.55
$8.45
5
9-May-
12.5
07
19.75
3.21.98.88
.05
.05
6.95
0.08$0.48
$8.00
612.5
18-Aug-0719.753.21.98.88.05.056.870.15$0.34$7.54
712.5
89-Jan-0819.753.21.98.88.05.056.720.39$0.23$7.51
$12.5
97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95$15.0
107-Feb-07$19.7517.21.93.88.05.054.002.16$6.12$8.93
$15.0117-Mar-07$19.753.21.98.88.05.054.700.00$0.69$9.97
$15.0
121-Apr-07
$18.77
3.21.98.93
.05
.05
4.35
0.01$0.60
$9.54
19-May-
15.0
13719.753.21.98.88.05.055.400.05$0.53$9.05
$15.0
148-Aug-07$19.753.21.98.88.05.055.760.10$0.38$8.40
$15.0
159-Jan-0819.753.21.98.88.05.055.890.20$0.25$8.14
$15.0
167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47
$17.5
177-Feb-0719.7517.21.93.88.05.051.700.48$8.61$10.61
$17.5
18
7-Mar-07
19.75
3.21.98.88
.05
.05
2.95
0.00$0.69$10.69
$17.5
191-Apr-07
18.77
3.21.98.93
.05
.05
3.02
0.01$0.63$10.21
19-May-17.5
20719.753.21.98.88.05.053.900.04$0.56$9.76
2117.5
18-Aug-0719.753.21.98.88.05.054.500.10$0.41$9.03
2217.5
19-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63
2317.5
17-Jan-0919.753.21.98.88.05.055.400.40$0.13$6.90
2420.017-Feb-07
$42.1017.21.93.21
.05
.0519.93
0.04$5.28$17.39
2520.0
17-Mar-07
$30.84
3.21.98.23
.05
.0510.64
0.00$0.69$15.54
2620.0
21-Apr-07$18.773.21.98.93.05.051.750.00$0.65$10.60
279-May-20.0
07$30.603.21.98.24.05.059.320.03$0.59$16.74
2 820.0
18-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25
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1 9 - J a n - 0 851.223.21. 9 8. 2 1. 0 5.0419.940 . 1 5$0.30$18.65
22 0 . 0
17-Jan-0942.103.21.98.21.05.059.250.25$0.14$16.72
322.5
17-Feb-07$42.1017.21.93.21.05.0517.530.00$7.68$19.88
42 2 . 5
17-Mar-07
30.84
3 . 2 1
. 9 8
. 2 3
. 0 5
. 0 5
8.16
0.00
$0.69
$18.0352 2 . 5
21-Apr-0718.773.21. 9 8
. 9 3. 0 5. 0 50.900.00$0.66
$10.82
69-May-2 2 . 5
0 739.693.21. 9 8.21. 0 5. 0 514.130.02$0.61$21.23$ 2 2 . 588 - A u g - 0 7$34.443 . 2 1. 9 8. 2 1. 0 5. 0 57.530.10$0.47$21.41$25.097-Feb-0742.1017.21.93.21.05.0515.100.0010.11$22.30
$25.0
107-Mar-0730.843.21.98.23.05.055.700.00$0.69$20.49
$ 2 5 . 0
111-Apr-0718.773.21.98.93.05.050.400.00$0.67$10.94
19-May-25.0
12742.10
3.21.98.21
.05
.0513.69
0.02$0.63$23.07
$25.0
138-Aug-07
34.443.21.98.21.05.055.440.10$0.49$23.05
$25.0
149-Jan-0851.223.21.98.21.05.0416.720.15$0.33$21.93
$30.0157-Feb-0747.8217.21.93.21.05.0514.260.0010.95$25.03
$30.0
167-Mar-07$30.843.21. 9 8. 2 3. 0 5. 0 51.640.00$0.69$24.29
$30.0171-Apr-07$18.773.21.98.93.05.050.250.00$0.68$11.05
19-May-30.0187$42.10
3.21.98.21
.05
.05
9.35
0.01$0.65$24.86
$30.0198-Aug-07
$34.44
3.21.98.21
.05
.05
2.38
0.09$0.52$24.73
$30.0209-Jan-0853.003.21.98.19.05.0313.640.15$0.36$23.81
213 0 . 0
17-Jan-0947.823.21.98.21.05.058.450.03$0.17$21.29
2235.017-Feb-0747.8217.21.93.21.05.0510.360.0011.09$25.21
2335.017-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 50.120.00$0.69$25.18
249-May -35.00 742.103.21. 9 8
.21. 0 5. 0 55.830.01$0.66
$25.19
2535.0
1 8 - A u g - 0 734.443.21. 9 8
.21. 0 5. 0 50.880.04$0.55$25.13
2635.0
1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 54.610.03$0.38$24.72
2740.01 7 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 57.360.0011.09$25.21
2840.0
17-Mar-07$30.843.21.98.23.05.050.050.00$0.69$25.21
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19-May-40.00 742.103.21. 9 8. 2 1. 0 5. 0 53.430.00$0.67$25.21
24 0 . 0
1 8 - A u g - 0 734.443.21. 9 8. 2 1. 0 5. 0 50.500.00$0.57$25.20
34 0 . 0
19-Jan-0853.003.21.98.19.05.038.650.00$0.40$25.06
440.0
1 7 - J a n - 0 9
47.82
3.21
. 9 8
. 2 1
. 0 5
. 0 5
5.52
0.00
$0.19
$23.29545.01 7 - F e b - 0 747.82
17.21
. 9 3
. 2 1. 0 5. 0 55.110.00
11.09$25.21
645.017-Mar-0730.843,21.9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21
79-May -45.0
8742.103.21. 9 8. 2 1. 0 5.051.900.00$0.68$25.21
$45.0
98 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5.050.300.00$0.58$25.21
$45.0
109-Jan-08$42.103.21.98.21.05.052.100.00$0.42$25.17
$50.01 17 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5.053.470.0011.09$25.21
19-May-50.0
12742.10
3.21.98.21
.05
.05
0.98
0.00$0.68$25.21
$50.0
138 - A u g - 0 734.443.21. 9 8. 2 1. 0 5. 0 50.250.00$0.60$25.21
$50.0
149 - J a n - 0 853.003.21. 9 8. 1 9. 0 5. 0 35.320.00$0.43$25.20$50.0
157 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18
$55.01 67 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21
19-May-55.017742.103.21. 9 8. 2 1. 0 5. 0 50.400.00$0.68$25.21
$55.0189 - J a n - 0 851.223.21. 9 8
. 2 1. 0 5.054.150.00$0.45$25.21
$60.01 97 - F e b - 0 747.8217.21
. 9 3
. 2 1. 0 5.051.350.001 1 . 0 9$25.21
$60.0209 - J a n - 0 8$53.003.21. 9 8. 1 9. 0 5.033.240.00$0.46$25,21
2160.0
1 7 - J a n - 0 947.823.21. 9 8. 2 1. 0 5.052.500.00$0.23$24.71
2270.0
1 9 - J a n - 0 853.003.21. 9 8. 1 9.05. 0 31.900.00$0.48$25.21
2370.0
17-Jan-0947.823.21.98.21.05.051.730.00$0.24$24.96
24
25
26
27
28
-55-OTICE OF PENDENCY OF CLASS A CTION
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 72 of 117 Page ID#:10972
EXHIBIT A-2 TO EXH IBIT A
TO GLO BAL OFFICER AND DIRECTOR STIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 73 of 117 Page ID#:10973
1BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
MZAWETirblbglaw.com )LIN (Bar No. 174663)
(elizabethl(a^ blb law.com )4NIKI L. MENDO ZA (Bar No. 214646 )
mkim Mplaw.coV5 ENJAALDON (Bar No. 211114)bblbglaw.com
6
. KELLA (Bar No. 234470)
takeokffigh
blbglaw. com )7
481
luff Drive, Suite 300
San Diego, CA 9 21308 Tel: (858) 793-0070
Fax: (858) 793-0323and-SALVATOR E J. GRA ZIANO
10sgraziano(a^blbglaw.com )LAUR EN A. MC;MILLEN
11 [email protected] )285 A venue of the Americas12 New York, NY 10019
Tel: (212) 554-140013Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers' R etirement System
15
16
7NITED STATES DISTRICT COUR T
1.8
ENTRA L DISTR ICT OF CALIFORN IA
19 N RE NEW CENTURY
ase No. 2:07-cv-00931-DD P (FM Ox)
(Lead Case)20
1ROOF OF CLAIM AND
22ELEASE
23
4
udge: Hon. Dean D. Pregerson
25
6
ROOF OF CLAIM AND RELEASE
27
28EADLINE FOR SUBMISSION2010.
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Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 74 of 117 Page ID#:10974
1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3 Pendency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4nd Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11 contains the definitions of many of the defined terms (which are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13 Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18
ADDRESSED TO:
19
n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims Administrator
P.O. Box 200421hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27Preferred Stock"), and/or New Century call options and/or who sold New Century
28put options, during the time period from May 5, 2005, through March 13, 2007,
1
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1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2he Complaint, were injured thereby (the "Class"). (The New Century common
3tock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4ptions and New Century put options are referred to collectively as "New Century
5ecurities.")
6
.
Class Member" means any person who is included in the definition
7 of the Class and who did not timely submit a proper request for exclusion in
8accordance with the requirements set forth in the Notice. Excluded from the Class
9are certain persons or entities excluded by definition pursuant to the Court's
10 preliminary approval of the Settlements.' Also excluded from the Class are any
11persons or entities who exclude themselves by filing a request for exclusion in
12 ccordance w ith the requirements set forth in the Notice.
13
.
Authorized Claimant" means a Class Member who submits a timely
14 and valid Proof of Claim form to the Claims Administrator, in accordance with the
15 requirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
1 7. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18 SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21 SETTLEMENTS IF YOU ARE NOT A CLASS MEMBER. THUS, IF YOU FILE
22
23 he following persons are excluded from the Class: (a) the Underwriter24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive
26officer, director or controlling person of New Century (including any of its
27 subsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,28 uccessors and assigns of any such excluded party.
2
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1 A VALID REQUEST FOR EXCLU SION IN A TIMELY M ANNER , ANY PROO F
2OF CLAIM THAT YOU SUBMIT, OR THA T MAY BE SUBMITTED ON YOUR
3EHALF, WILL NOT BE ACCEPTED.
4.o recover as a Class Member, you must complete and sign this Proof
5f Claim and mail it to the Claims Administrator postmarked on or before
6
010. If you fail to file a timely, properly addressed, and
7ompleted Proof of Claim, your claim may be rejected, and you may be precluded
8rom receiving any distribution from the Settlements.
9.ubmission of this Proof of Claim does not ensure that you will share
10 in the proceeds of the Settlements. Distributions to Class Members from the
11Settlements are governed by the Plan of Allocation approved by the Court. The
12proposed Plan of Allocation, which is subject to the Court's approval, is included
13n the Notice.
14.f you have questions concerning the Proof of Claim, or need
15 dditional copies of the Proof of Claim or the Notice, you may contact the Claims
16Adm inistrator, at In re New Century Se curities Litigation Settlement, c/o Analytics,
17 nc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by
18oll-free phone at (866) 308-7615, or you may download the documents from Lead
1 9 Counsel's website, www.blbglaw.com, or the website maintained by the Claims
20Adm inistrator for this Settlemen t, www .newcenturysettlement.com .
210. If you are a Class Member and you do not, or someone acting on your
22behalf does not, submit a timely request for exclusion from the Class, and if the
23Court approves the Settlements, you will be bound by the terms of any orders and
24udgments that the Court enters. You will be bound by such orders and judgments
25whether or not you subm it a Proof of Claim.
26
1. You are required to . submit genuine and sufficient documentation for
27all your purchases and sales of New Century Securities from May 5, 2005,
28 hrough and including March 13, 2007, as well as genuine and sufficient
3
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1 ocumentation for all sales of New Century Common Stock and Preferred Stock
2 etween March 14, 2007, through and including June 10, 2007. You are also
3equired to submit genuine and sufficient documentation reflecting your positions
4n New Century Cominon Stock and Preferred Stock as of the close of the market
5n March 13, 2007, and as of the close of the market on June 10, 2007.
6Documentation may be photocopies of stockbrokers' confirmation slips or
7 stockbrokers' monthly statements (reflecting your opening and closing balances for
8he m onths specified on the actual claim form, and in which transactions during the
9 Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR
10POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT
11 CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE
12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF
13YOUR CLAIM. DO NOT SEND ORIGINAL STOCK CER TIFICATES.
142. All joint purchasers must each sign this Proof of Claim.
153. Agents, executors, administrators, guardians, and trustees must
16complete and sign the Proof of Claim on behalf of persons represented by them,
17 and they must:
18
a)
xpressly state the capacity in which they are acting;
1 9
b) identify the name, account number, Social Security Number (or
20axpayer identification number), address and telephone number
21f the beneficial owner of (or other person or entity on whose
22ehalf they are acting with respect to) the New Century
23ecurities; and
24
c)
urnish herewith evidence of their authority to bind to the Proof
25
f Claim the person or entity on whose behalf they are acting.
26
Authority to complete and sign a Proof of Claim cannot be
27stablished by stockbrokers demonstrating only that they have
28
4
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1
iscretionary authority to trade stock in another person's
2ccounts.)34. By submitting a signed Proof of Claim, you will be swearing that you:
4a) own(ed) the New Century Securities you have listed in the
5
roof of Claim; or
6
b) are expressly authorized to act on behalf of the owner thereof.
75. By submitting a signed Proof of Claim, you will be swearing to the
8 truth of the statements contained therein and the genuineness of the documents
9 attached thereto, subject to penalties of perjury under the laws of the United States
10of America. The making of false statements, or the submission of forged or
11 raudulent documentation, will result in the rejection of your claim and may
12 ubject you to civil liability or crim inal prosecution.
13 NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large
14 numbers of transactions may request, or may be requested, to submit information
15 regarding their transactions in electronic files. All Claimants MUST submit a
16 manually signed paper Proof of Claim form listing all their transactions, whether or
17not they also submit electronic copies. If you wish to file your claim
18 lectronically, you must contact the Claims Administrator at 1-866-308-7615, or
19 visit its settlement website www.newcenturysettlement.com to obtain the required
20ile layout. No electronic files will be considered to have been properly submitted
21unless the Claims Administrator issues to the Claimant a written paper
22 clilowledgment of receipt and acceptance of electronically submitted data.
23
24
25
26
27
28
5
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1In re New Century
2PART I: CLAIMANT IDENTIFICATION
3 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name
5 treet Address
7
itytateip Code
9Daytime)10 Area Codeelephone Num ber
11Evening)12 Area Code
elephone Num ber
1 3
14 Social Security Number or
axpayer Identification Number
15
16 Record Owner's Name (if different from beneficial owner listed above)
17
Check appropriate box (check only one box):18
19ElIndividual/Sole Proprietor
3Joint Owners
1Pension Plan
20qorporation
artnership
rust
21qR Ather22
23 (describe:24NOTE: Separate Proofs of Claim should be submitted for each separate legal
25 ntity (e.g., a claim from Joint Owners should not include separate transactions of
26 just one of the Joint Owners; an Individual should not combine his or her IRA
27 ransactions with transactions made solely in the Individual's name). Conversely,
28 single Proof of Claim submitted on behalf of one legal entity should include all
6
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1 transactions made by that entity, no matter how many separate accounts that entity
2as (e.g., a corporation with multiple brokerage accounts should include all
3ransactions made in New Century Securities during the Class Period on one Proof
4 of Claim, no matter how many accounts the transactions were made in). If you
5 equire additional room to list your transactions, please be sure to include yo ur full
6name and the last four digits of your social security number or Tax ID number on
7ach additional sheet. Check here if additional transactions are included on
8dditional schedules. ART II:EW CENTURY COMMON STOCK
10. BeL inninL Holdings: State the number of shares of New Century
1 1
ommon Stock the Claimant owned as of the close of the market
12
n May 4, 2005. If none, write "zero" or "0." If other than zero,
13
e sure to attach the required documen tation.
14
15. Purchases:
1 61) List all purchases of New Century Common Stock made during the
17period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
18acquired your New Century Common Stock during this period other than by an
19 open-market purchase, please provide a complete description of the terms of the
20cquisition on a separate page.) Be sure to attach the required docum entation.
21rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
234
5
6
7*excluding com missions, transfer taxes or other fees.28
7
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1ii) State the total number of shares of New Century Common Stock the
2Claimant purchased during the period between March 14, 2007, through and
3 including June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,
4 hich are not in the Class Period, are not included in the calculation of Recog nized
5Loss. This information is needed by the Claims Administrator for purposes of the
6 verall evaluation of the Claim.)
7
. Sales: List all sales of New C entury Comm on Stock m ade during
8he period from May 5, 2005, through and including
9une 10, 200 7. Be sure to attach the required documentation.
1.0rade Date(s) (List
11
hronologically)umber ofalesotal
Month/Day/Year
hares Sold
rice Per Share
ales Price*
12
3
456*excluding com missions, transfer taxes or other fees17
1 8
. Unsold Holdinl4s: State the total number of shares of New
1 9
entury Common Stock the Claimant owned at the close of the
20market on March 13 2007. If none write "zero" or "0." If other
21than zero, be sure to attach the required documentation.
22
23. EndinL Position For 90-Day Look Back: State the total number
24
f shares of New Century Common Stock the Claimant owned at
25
he close of the market on June 10, 2007. If none, write "zero" or
26
0."
f other than zero, be sure to attach the required
27ocumentation.
28
8
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1F YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
2IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
34NAME ON THE COPY AND CHECK THIS BOX q5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
6NOT BE REVIEWED
7
8PART III: NEW CENTURY 9.125% SERIES A CUMULATIVE
REDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED
9 TOCK")
1 0
A. Beminnins! Holdings: State the number of shares of New C entury
11Series A Preferred Stock the Claimant owned as of the close of
1 2the market on May 4, 2005. If none, write "zero" or "0." If other
13than zero, be sure to attach the required documentation.
1 4
1 5B. Purchases:
1 6(i) List all purchases of New Century Series A Preferred Stock made during
1 7
the period from May 5, 2005, through and including March 13, 2007. (NOTE: If18
you acquired your New Century Series A Preferred Stock during this period in an19
Offering or otherwise or other than by an open-market purchase, please provide a20
com plete description of the terms of the acquisition on a separate pag e.) Be sure to21attach the required documen tation.222 3
24
2 5
2 6
2 7
2 8
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1rade Date(s) (List2hronologically)umber ofurchaseotal
Month/Day/Yearhares Purchased Price Per Share Purchase Price*345
6
excluding com missions, transfer taxes or other fees.8
9ii) State the total number of shares of New Century Series A Preferred
10 Stock the Claimant purchased during the period between March 14, 2007, through
11and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12purchases, which are not in the Class Period, are not included in the calculation of
13Recognized Loss Amount.
his information is needed by the Claims
14Administrator for purposes of the overall evaluation of the Claim.)
156o Sales: List all sales of New Century Series A Preferred Stock
1 7ade during the period from May 5, 2005, through and including
1 8
une 10, 200 7. Be sure to attach the required documentation.
1 9rade Date(s) (ListChronologically)
umber of
ales
otal
20onth/Day/Year
hares Sold
rice Per Share
ales Price*
2 1$$2
23
24
25 *excluding com missions, transfer taxes or other fees
26
27
28
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1
. Unsold Holdinits: State the total number of shares of New
2entury Series A Preferred Stock the Claimant owned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6. Ending Position For 90-Day L ook Back: State the total number
7
f shares of New Century Series A Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
1 1
12IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
13IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
14 NAME ON THE COPY AND CHECK THIS BOX q15
16 IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17 NOT BE REVIEWED
18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE
19 REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED
STOCK")2021. Bel4innint! Holdings: State the number of shares of New Century
22eries B Preferred Stock the Claimant owned as of the close of
23he market on May 4, 2005. If none, write "zero" or "0." If other
24
han zero, be sure to attach the required documentation.
25
26. Purchases:
271) List all purchases of New Century Series B Preferred Stock made during
28he period from May 5, 2005, through and including March 13, 2007. (NOTE: If
1 1
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1 ou acquired your New Century Series B Preferred Stock during this period in an
2Offering or otherwise or other than by an open-market purchase, please provide a
3 om plete description of the terms of the acquisition on a separate pag e.) Be sure to
4ttach the required docum entation.
5rade Date(s) (List
6Chronologically)
umber of
urchase
otal
Month/Day/Year
hares Purchased Price Per Share Purchase Price*
7
81 01 *excluding commissions, transfer taxes or other fees.
1 2
3
ii) State the total number of shares of New Century Series B Preferred
14Stock the Claimant purchased during the period between March 14, 2007, through
15and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
16purchases, which are not in the Class Period, are not included in the calculation of
17Recognized Loss. This information is needed by the Claims Administrator for
18 purposes of the ov erall evaluation of the C laim.)
1 9
. Sales: List all sales of New Century Series B Preferred Stock
20
ade during the period from May 5, 2005, through and including
2 1une 10, 200 7. Be sure to attach the required documentation.
22rade Date(s) (ListChronologically)umber ofalesotal
23onth/Day/Yearhares Soldrice Per Shareales Price*
24
$
5
26
$
728 excluding com missions, transfer taxes or other fees
12
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1 D. Unsold Holdinjjs: State the total number of shares of New
2entury Series B Preferred Stock the C laimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6. EndinL Position For 90-Day Look Back: State the total number
7
f shares of New Century Series B Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." if other than zero, be sure to attach the required10ocumentation.11
12
13 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
14 IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
15NAME ON THE COPY AND CHECK THIS BOX q16 IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17NOT BE REVIEWED
18
1 9
20
21
22
23
24
25
26
27
28
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1 PART V: NEW CENTURY CALL OPTIONS
2. BeL inning Holdinus: List all Call Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5
umber of Call
trike Price for
6
ption Contracts
xpiration Month
all Option
osition: Short
Open
nd Year
ontract
r Long
7
10
1 1
. Purchases: List all Call Option contracts on New Century
12
ommon Stock that you purchased or acquired during the period
13
rom May 5, 2005, through and including March 13, 2007. Be
14ure to attach the required documentation.
15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call
1 6hronologically)ontractshareonth andption
1 7onth/Day/Yearurchasedearontract
18
$
9
20$$21
22. Sales: List all Call Option contracts on New Century Common
23tock that you sold during the period from May 5, 2005, through
24
nd including March 13, 2007. Be sure to attach the required
25
ocumentation.
26
27
28
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1
ales Date(s)
remium
2Listumber ofrice Perxpirationtrike Price forChronologically)ptionhareonth andall Option3Month/Day/Year Contracts Soldearontract
4$$$7
8D. Exercised Calls: List all Call Option contracts on New Century
9mon Stock that you exercised during the period from May 5,10
005, through and including March 13, 2007. Be sure to attach
11 the required documentation.12
Strike13
rice for
14xpiration
all
umber of Call Result:
Month andptionption Contracts Rec'd Shares15ate Exercisedea rontract Exercisedr Cash?
16
17
19
0
. Expired Calls: List all Call Option contracts on New Century
21ommon Stock that expired worthless during the period from
22ay 5, 2005, through and including March 13, 2007. Be sure to
23ttach the required documentation.
24
25
26
27
28
1 5
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1ate Contracts
trike Price
2Expired (Listumber ofer Call
Chronologically)xpired Option Expiration Monthption3onth/Day/Yearontractsnd Yearontract46
7
8F. Unsold/Unexpired Calls: List Call Option contracts on New
9Century Common Stock that were open as of the close of the
1 0arket on March 13, 2007.
1 1
1 2Strike Price
1 3umber of Call
er Call
1 4ption Contracts
osition: Short or Expiration Month
ption
Openongnd Yearontract1 56
7
1 s
1 9
20
2 1
2 2
2 3
24
2 5
2 6
2 7
2 8
1 6
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1PART VI: NEW CENTURY PUT OPTIONS
2. Be2innin2 Holdings: List all Put Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5
umber of Put
trike Price for
6
ption Contracts
xpiration Month
ut Option
osition: Short
Open
nd Year
ontract
r Long
7
8910
1 1
. Sales: List all Put Option contracts on New Century Common
12
tock that you sold (wrote) during the period from May 5, 2005,
13
hrough and including March 13, 2007. Be sure to attach the
1 4
equired documentation.
15ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for
16Chronologically)ptionhareonth andut Option
17Month/Day/Year Contracts Soldearontract
1 8
19
20$$122
23
24
25
26
27
2 8
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1
. Purchases: List all Put Option contracts on New Century
2ommon Stock that you purchased or acquired during the period
3rom May 5, 2005, through and including March 13, 2007. Be
4ure to attach the required documentation.
5urchase Date(s) Number of Put Premium
6
List
ption
rice Per
xpiration
trike Price per
Chronologically)
ontracts
hare
onth and
ut Option
7 onth/Day/Year
urchased
ear
ontract
8$011
12D. Exercised Puts: List all Put Option contracts on New Century
13Common Stock that you exercised during the period from May 5,
14005, through and including March 13, 2007. Be sure to attach15
the required documentation.1 6trikeumber of Putesult:17xpirationrice for Option Contracts Delivered
1 8
onth and Put Option Exercised
hares or
Date Exercised
ear
ontract
aid?
19
20
21
22
23
24
. Expired Puts: List all Put Option contracts on New Century
25
ommon Stock that expired worthless during the period from
26
ay 5, 2005, through and including March 13, 2007. Be sure to
27ttach the required documentation.
28
1 8
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1ate Contracts2xpired (Listumber oftrike Price for
Chronologically)xpired Putxpiration M onthut Option3onth/Day/Yearontractsnd Yearontract
46
7
8F. Unexpired Puts: List Put Option contracts on New Century9ommon Stock open as of the close of the market on March 13,
102007.
1 1
umber of
trike Price for
1 2
nexpired Put
osition: Short or Expiration Month
ut Option
1 3
ptions Contracts
ong
nd Year
ontract
141 5
16YOU MUST READ THE FOLLOWING RELEASE AND SIGN ON PAGE
17ELEASE OF CLAIMS
18 Definitions
1 9
efined terms not already defined herein have the meanings given them in
20 the respective Stipulations of Settlement (described in the Notice) (the
21 "Stipulations").
22
23
24The Releases
25
fficer and Director Release
26
(we) understand and acknowledge that, without further action by anyone,
27 on and after entry of the Global Officer And Director Judgment and occurrence of
28 the Effective Date of the Global Officer And Director Settlement, each Class
19
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1Member, on behalf of themselves, for good and sufficient consideration, the receipt
2and adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4y operation of law to have released, waived, discharged and dismissed each and
5very Settled Class Claim as ag ainst each and every R eleased Officer And D irector
6nd the Insurance Carriers (as defined in the Global Officer And Director
7 Stipulation), and shall be deemed to forever be enjoined from prosecuting any or
8 all of the Settled Class Claims against each and every Released Officer And
9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10ny and all claims and causes of action of every nature and description, whether
11known or Unknown Claims, whether arising under federal, state, common or
12 oreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15 epresentations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17 Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18 Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20elating to the enforcement of the Settlement. "Released Officers And Directors"
21 n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25 nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
2 0
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1xecutors, administrators, predecessors, successors and assigns, employees, agents
2nd retained professionals (other than KPM G or the Underw riter Defendants).
3PMG R elease
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of
6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7ufficient consideration, the receipt and adequacy of which are hereby
8cknow ledged, whether or not a Proof of Claim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
10released, waived, discharged and dismissed each and every Settled Claim, and
11 shall forever be enjoined from prosecuting any or all Settled Claims, against any
12Released Auditor Party. "Settled Claim" in this paragraph means any and all
13claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
16 ould have asserted in any forum that arise out of or are based upon the allegations,
17 ransactions, facts, matters or occurrences, representations or omissions involved,
18 et forth, or referred to in the Complaint, and that arise out of or relate to the
19 purchase of New Century Common Stock, New Century Series A Preferred Stock,
20 New Century Series B Preferred Stock, and/or New Century Call Options and/or
21 he sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPM G.
26
27
28
21
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1nderwriter Release
2(we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,
5heir parent companies, subsidiaries, affiliates, heirs, executors, administrators,
6 predecessors, successors and assigns, and any and all of their current and former
7officers, directors, employees, agents and attorneys, for good and sufficient
8 consideration, the receipt and adequacy of which are hereby aclalowledged,
9 hether or not a Proof of Claim is exec uted and delivered by , or on behalf of, such
10Class Member, will be deemed by operation of law to have released, waived,
11discharged and dismissed each and every Settled Claim, and shall forever be
12enjoined from prosecuting any or all Settled Claims, against any Released
13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 ther mem ber of the Class (a) asserted in the Com plaint, or (b) could have asserted
17n any forum that arise out of or are based upon the allegations, transactions, facts,18 matters or occurrences, representations or omissions involved, set forth, or referred
19o in the Complaint, and that arise out of or relate to the purchase of New Century
20Common Stock, New Century Series A Preferred Stock, New Century Series B
21Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22Put Options during the Class Period. "Settled Claims" does not include claims
23 elating to the enforcement of the Settlements. "Released Underwriter Party"
24means the Underwriter Defendants and any and all of their respective parent
25companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,
26 uccessors and assigns, and any and all of their current and former officers,
27directors, employees, agents and attorneys. "Released Underwriter Parties" does
28 ot include any Defendants other than the Underwriter Defendants.
22
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1
2IGNATURE AND CERTIFICATIONS
3y signing and submitting this Proof of Claim, the Claimant or the person
4who represents the Claimant certifies, as follows:
5
. that the Claima nt is a Class M em ber, as defined in the Notice;
6
. that I (we) have read and understand the contents of the Notice and the
7
roof of Claim;
8. that I (we) are not acting for any of the Defendants, nor am I (are we)
9uch a Defendan t or otherwise excluded from the Class;
10. that I (we) have not filed a request for exclusion from the Class and that I
1 1
we) do not k now of any request for exclusion from the Class filed on m y
12
our) behalf with respect to my (our) transactions in New Century
13
ecurities;
14. that I (we) own(ed) the New Century Securities identified in the Proof of
15laim, or that, in signing and subm itting this Proof of Claim, 1 (w e) have
16he authority to act on behalf of the owner(s) thereof,
17. that Claimant may be entitled to receive a distribution from the Net
18
ettlement Fund;
19
. that Claimant desires to participate in the Settlements described in the
20otice and agrees to the terms and con ditions thereof;
21. that I (we) submit to the jurisdiction of the United States District Court
22or the Central District of California for purposes of investigation and
23iscovery under the Federal Rules of Civil Procedure with respect to this
24
roof of Claim;
25
. that 1 (we) agree to furnish such additional information with respect to
26
his Proof of Claim as the parties, the Claims Administrator or the Court
27ay require;
28
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10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2ourt's summary disposition of the determination of the validity or
3mount of the claim ma de by this Proof of Claim; and
41. that I (we) certify that I am (we are) not subject to backup withholding
5
nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6
ode.
7
OTE: If you have been notified by the Internal Revenue Service that you are
8ubject to backup withholding, please strike the language that you are not
9ubject to backup withholding in the certification above. The Internal Revenue
10ervice does not require your consent to any provision other than the
1 1
ertification required to avoid back up w ithholding.
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1declare, under penalty of perjury under the laws of the United States of
2America, that the statements made and answers given in this Proof of Claim are
3rue and correct and that the documents submitted herewith are true and genuine.
4
5
Signature of Claimant
7Print Name of C laimantate Signed
9
10Signature of Joint Claimant, if any
1 1
12Print Nam e of Joint Claimant, if any
ate Signed
13
14 If Claim ant is other than an individual , or is not the p erson comp let ing this
15form , the follow ing also m ust he provid ed:
16
17Signature of Person Completing Form
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19 Print Name of Person Completing Form
ate Signed
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21Capacity of P erson Signing (Ex ecutor, President, Trustee, etc.)
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1EMINDER C HECKLIST
2lease sign the Proof of Claim on page _.
3f this Claim is being made on beh alf of Joint Claim ants, then both must sign.
4lease rememb er to attach supporting documents.
5
f you mov e, please send your new a ddress to:
6n re New Century Securities Litigation Settlement
7/o Analytics, Inc., Claims A dm inistrator
P.O. Box 2004
8hanhassen, MN 55317-2004
9-866-308-7615
1 0
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.1 1
1 2
eep a copy of your Proof of Claim and all documentation submitted for your
13 ecords.4he Claims Administrator will acknowledge receipt of your Proof of
15laim by mail within 60 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 60 days, please call
1 7he Claims Adm inistrator toll free at (866) 308-76 1 5.
18
19ACCUR ATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20F TIME.
2 1HANK YOU FOR YOUR PATIENCE
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EXHIBIT A-3 TO EXH IBIT A
TO GLO BAL OFFICER AND DIRECTOR STIPULATION
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1
NITED STATES DISTRICT COUR T
2ENTRA L DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDPFMOx
4(Lead Case)
5
SUMMARY NOTICE
78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
109.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK11 ("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12 CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13 PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 9 2005, THROUGH MARCH 13, 20079
16 INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil18 Procedure and an Order of the United States District Court for the Central District
of California (1) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).
he total cash amount of the Settlements equals
$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 at
on
2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
i
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1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonable, and adequ ate; (3) wh ether the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 xpenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
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1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE
2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and
3 Claim Form, may be made to Lead Counsel:
4
BERNSTEIN LITOWITZ BERGE R5 GROSSMANN LLP
alvatore J. Graziano
1285 A venue of the Americas
7
ew York, New York 10019
8elephone: (866) 648-2524
9
10 Dated:2010y Order of the Clerk of the CourtUnited States District Court
1 1
or the Cen tral District of California
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EXHIBIT B
TO GLO BAL OFFICER AND DIRECTOR STIPULATION
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1
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45
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8
9NITED STATES DISTR ICT COURT
10ENTRAL DISTRICT OF CALIFORNIA
11 IN RE NEW CENTURY
ase No. 2:07-cv-00931-DDP (FM Ox)
12
Lead Case)
13
41 5PROPOSED] OFFICER AND DIRECTOR FINAL JUDGMENT AND
16RDER O F DISMISSAL WITH PR EJUDICE
17
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1his matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
3 Approval Order" or "Notice Order"), on the application of Lead Plaintiff New
4 York State Teachers' Retirement System ("Lead Class Plaintiff') and Plaintiffs5 Carl Larson and Charles Hooten (collectively "Class Plaintiffs") for approval of
6 the settlement between the Class Plaintiffs, on behalf of the Class, and the Class
7 Individual Defendants set forth in the Stipulation Of Global Settlement W ith New
g Century Officers And D irectors (the "Global Officer And Director Stipulation" or
9 "Global Officer And Director Settlement"). Full and adequate notice having been
10 given to the Class as required in the Court's Order, and the Court having
11 considered a ll papers filed and proceeding s held herein and otherwise being fully12 informed in the prem ises and good cause appearing therefor,
1 3
OW, THEREFORE, IT IS HEREBY OR DERED THAT:
14.
his Judgment incorporates by referenc e the definitions in the Global
15 Officer And Director Stipulation, and all capitalized terms used, but not defined
16 herein, shall have the same meanings as in the Global Officer And Director
17 Stipulation.
1 8
.
his Court has jurisdiction over the subject matter of the Conso lidated
19 Class Action and over all parties to the Consolidated Class Action, including all
20 members of the Class.
21.he Court hereby a ffirms its certification in the Preliminary A pproval
22 Order pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
23 Procedure, of a Class defined as follows:
24
ll persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred Stock, New25
entury Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, durinD the time period
26
rom May 5, 2005, through and including March :3, 2007, either in
the Offerings, pursuant to a registration statement, or in the marke t,
27
nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Class
28efendants;(vcndants;
members of the immediate families of thhe ClassIndividual Dec) the subsidiaries and affiliates of Class
i
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efendants; (d) any person or entity who was a partner, executiveofficer, director or controllingerson of New Century (includin any
2f its subsidiaries or affiliates or of any Class Defendant; (e anentity in which any Class Defendant has a controlling interest; and ( I
3he legal representatives, heirs successors and assigns of any suchexcluded party. Also excluded from the Class are any persons who
4xclude themselves by filing a request for exclusion in accordancewith the requirements set forth in the Notice, as listed on Exhibit 1
5
nnexed hereto.
6
7
.
he Court also affirms its findings in the Preliminary Approval Order
8 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal
9 Rules of Civil Procedure have been satisfied in that: (a) the number of Class
10 Members is so numerous that joinder of all members thereof is impracticable; (b)
11 there are questions of law and fact common to the Class; (c) the claims of Lead
12 Class Plaintiff and Class Plaintiffs Carl Larson and Charles Hooten are typical of
13 the claims of the Class they seek to represent; (d) Class Plaintiffs have fairly and
14 adequately represented the interests of the Class; (e) the questions of law and fact
15 common to the members of the Class predominate over any questions affecting
16 only individual members of the Class; and (f) a class action is superior to other
17 available methods for the fair and efficient adjudication of the controversy.
18
.
ursuant to Rule 23 of the Federal Rules of Civil Procedure, the
19 Court affirms its certification of Class Plaintiffs as the Class representatives and
20 Lead Counsel Bernstein Litowitz Berger & Grossmann LLP as the Class counsel.
21.ursuant to Federal Rule of Civil Procedure 23, this Court hereby
22 approves the Global Officer And Director Settlement set forth in the Global
23 Officer And Director Stipulation and finds that the Global Officer And Director
24 Settlement is, in all respects, fair, reasonable, adequate and entered into in good
25 faith within the meaning of California Code of Civil Procedure § 877. The Court
26 further finds that the Global Officer And Director Settlement set forth in the
27 Global Officer And Director Stipulation is the result of arm's-length negotiations
28 between experienced counsel representing the interests of the Parties.
2
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1 Acco rdingly, the Global Officer And Director Settlement embo died in the Global
2 Officer And Director Stipulation is hereby finally approved in all respects. The
3 Parties are hereby directed to perform its terms.
4
.
ursuant to and in compliance with R ule 23 of the Federal R ules of5 Civil Procedure, the Court hereby finds that due and adequate notice of these
6 proceedings was directed to all persons and entities who are Class Members,
7 advising them of the Global Officer And Director Settlement, the Plan of
8 Allocation, and Lead Counsel's intent to apply for attorneys' fees and
9 reimbursement of Litigation Expenses associated with the Consolidated Class
10 Action, and of their right to object thereto, and a full and fair opportunity was
11 accorded to all persons and entities who are Class Members to be heard with
12 respect to the foregoing matters. Thus, it is hereby determined that all Class
13 M embers w ho did not timely and properly elect to exclude themselves by written
14 com munication postmarked or otherwise delivered on or before the date set forth
15 in the Notice and the Preliminary Approval Order, are bound by this Judgment.
16.he Con solidated Class Action and all claims contained therein are17 dismissed w ith prejudice as to the Class Individual Defendants.
1 8
.
he Parties are to bear their own costs, except as otherwise provided
19 in the Global Officer And D irector Stipulation.
20
0. Upon the Effective Date, the Settled Claims shall be discharged as
21 against each and every R eleased Officer And Director and the Insurance Carriers,
22 and P laintiffs shall be deemed to forev er be enjoined from prosec uting any or all
23 of the Settled Claims against each and every Released Officer And Director and
24 the Insurance Carriers.25
1. Upon the Effective Date, the Settling Individuals' Claims as against
26 Class Plaintiffs and all other Class Members, the Trust, the Trustee, Alan M.
27 Jacobs individually, the Debtors, the Debtors' Estates, the Plan Advisory
28 Committee, and Kodiak, and their respective heirs, predecessors, successors,
3
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1 assigns, employees, agents and retained professionals (other than KPMG or the
2 U nderwriter Defendan ts) shall be released, waived, discharged and dismissed, and
3 the Settling Individuals shall be deemed to forever be enjoined from prosecuting
4 each and every of the Settling Individuals' Claims against Class Plaintiffs and all5 other Class Members, the Trust, the Trustee, Alan M. Jacobs individually, the
6 Debtors, the Debtors' Estates, the Plan Advisory Committee, and Kodiak, and
7 their respective heirs, predecessors, successors, assigns, employees, agents and
8 retained professionals.
92. Upon the Effective Date, the Settling Individuals shall be deemed to
10 have released, waived, discharged and dismissed each and every Settling
11 Individuals' Claims against KPMG and the other Released Auditor Parties, and
12 shall forever be enjoined from prosecuting each and every Settling Individuals'
13 Claim against KPM G and the other R eleased Auditor Parties.
143. Upon the Effective Date, the Settling Individuals shall be deemed to
15 have released, waived, discharged and dismissed each and every claim, and shall
16 forever be enjoined from prosecuting any claim, against any and all of the
17 Underwriter Defendants and the other Released Underwriter Parties whether
18 arising under federal, state, common or foreign law, arising out of or based upon
19 the allegations, transactions, facts, matters or occurrences, representations or
20 omissions involved, set forth, or referred to in the Consolidated Class Action,
214. Upon the Effective Date, Kodiak shall be deemed to have released,
22 w aived, discharged and dismissed, and shall forever be enjoined from p rosecuting
23 each and every of the Settled Kodiak Claims as against KPMG and the other
24 Released Auditor Parties.25
5. Upon the Effective Date, this Final Judgment And Order Of
26 Dismissal With Prejudice constitutes the final discharge of all obligations to the
27 Plaintiffs of the Settling Individuals arising out of the Officer And Director
28 Litigations. All future claims for contribution arising out of the Officer And
4
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1 Director Litigations by any pe rson or entity against the Settling Individuals or by
2 any Settling Individual against any other person or entity, other than a person
3 w hose liability for the Claims asserted in the D irector And O fficer Litigations has
4 been extinguished by the Settlement of those Claims by that Settling Individual,5 are barred pursuant to 15 U.S.C. § 78 u-4(f)(7)(A).
6
6. The distribution of the Notice and the publication of the Summary
7 Notice as provided for in the Preliminary Approval Order constituted the best
8 notice practicable under the circumstances, including individual notice to all
9 members of the Class who could be identified through reasonable effort. Said
10 notice provided the best notice practicable under the circumstances of those
11 proceedings and of the matters set forth therein, including the proposed Global
12 Officer And Director Settlement set forth in the Global Officer And Director
13 Stipulation, to all persons entitled to such notice, and said notice fully satisfied the
14 requirements of Federal Rule of Civil Procedure 23, the Private Securities
15 Litigation Reform Act of 19 95 , due process, and any other applicable law
167. The Court hereby finds and concludes that the formula for the
17 calculation of the claims which is set forth in the Plan of Allocation proposed by
18 L ead C lass Plaintiff provides a fair and equitable basis upon which to allocate the
19 proceeds of the Settlements' among the Class Members with due consideration
20 hav ing been given to administrative convenience and necessity.
218. The Court hereby finds and concludes that the Plan of Allocation
22 prop osed by Lead Class Plaintiff is, in all respects, fair and equitable to the Class.
234 ' "Settlements" herein includes the settlements as set forth in the Global Officer
25 And Director Stipulation, the Stipulation of Settlement Between Plaintiffs and
KP MG LLP ("K PM G Stipulation" or "KPM G Settlement"), and the Stipulation of26 Settlement Between Plaintiffs and the Underwriter Defendants ("Underwriter
Settlement" or "Underwriter Stipulation") (collectively "Settlements" or
27 "Stipulations"). The Plan of Allocation sets forth a plan for allocating to Class
28 M embers the funds allocated to the Class from all three of the Settlements.
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39. Any order entered regarding any attorneys' fees and any expense
4 application shall in no way disturb or affect this Final Judgment And Order Of5ismissal With Prejudice and shall be considered separate from this Final
6 Judg ment And O rder Of Dismissal W ith Prejudice.
7
0. The Global Officer And Director Stipulation and Global Officer And
8 Director Settlement set forth therein, whether or not consummated, and any
9 proceedings taken pursuant to it:
10.hall not be offered or received against any of the R eleased Officers
11 And Directors as evidence of, or construed as, or deemed to be evidence of any
12 presumption, concession, or admission by any of the Released Officers And
13 Directors with respect to the truth of any fact alleged by Plaintiffs or the validity of
14 any claim that was or could have been asserted against any of the Released
15 O fficers And D irectors in the Officer And D irector Litigations or in any litigation,
16 or of any liability, negligence, fault, or other wrong doing of any k ind of any of the
17 Released Officers And Directors;
18
.
hall not be offered or received against any of the R eleased Officers
19 And D irectors as evidence of a presumption, concession or admission of any fault,
20 misrepresentation or omission with respect to any statement or written document
21 approved or made by any of the Released Officers And Directors, or against the
22 Plaintiffs or any Class Members as evidence of any infirmity in the claims of
23 Plaintiffs or the other Class Mem bers;
24
.hall not be offered or received against any of the R eleased Officers
25 A nd Directors, or against the Plaintiffs or any other C lass Members, as evidence of
26 a presumption, concession or admission with respect to any liability, negligence,
27 fault or wrongdoing of any k ind, or in any w ay referred to for any other reason as
28 ag ainst any of the R eleased Officers An d Directors, in any other civil, criminal or
6
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1 administrative action or proceeding, other than such proceedings as may be
2 necessary to effectuate the provisions of this Stipulation; provided, however, that if
3 this Stipulation is approved by the Consolidated Class Action Court, the Settling
4 Individuals, any other Released Officer And Director, or any Class Member may5 refer to it to effectuate the protection from liability granted them hereunder;
6
.
hall not be construed against any of the Released Officers And
7 Directors, Plaintiffs or any other Class Members as an admission, concession, or
8 presumption that the consideration to be given hereunder represents the amount
9 which could be or would have been recovered after trial;
10.hall not be construed against Plaintiffs or any other Class Mem bers
11 as an admission, concession, or presumption that any of their claims are without
12 merit or that damages recoverable under the Officer And Director Litigations
13 would not have exceeded the Officer And Director Settlement Am ount; and
14.hall not be construed as or received in evidence as an admission,
15 concession or presumption that class certification is appropriate in this
16 Consolidated Class A ction, except for purposes of this Settlement.
171. The G lobal Officer And D irector Stipulation m ay be filed in an action18 to enforce or interpret the terms of the Global Officer And Director Stipulation, the
19 Global Officer And Director Settlement contained therein, and any other
20 documents executed in connection with the performance of the agreements
21 embodied therein. The Stipulation and/or this Final Judgment And Order Of
22 D ismissal With Prejudice may be filed in any action in order to support a defense
23 or counterclaim based on the principles of res judicata, collateral estoppel, full
24 faith and credit, release, good faith settlement, judgment bar, or reduction or any25 other theory of claim preclusion or issue preclusion or similar defense or
26 counterclaim.
27
2. Without affecting the finality of this Final Judgment And Order Of
28 Dismissal With Prejudice in any way, this Court hereby retains continuing
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1 jurisdiction over: (a) implementation of this Global Officer And Director
2 Settlement an d any a ward or distribution of the settlement fund, including interest
3 earned thereon; (b) the allowance, disallowance or adjustment of any Class
4 Member's claim on equitable grounds and any award or distribution of the5 settlement fund; (c) disposition of the settlement fund; (d) hearing and determining
6 a pplications for attorneys' fees and Litigation Exp enses in the Consolidated Class
7 Action; (e) enforcing and administering this Judgment; (f) all parties hereto for the
8 purpose of construing, enforcing and administering the Global Officer And
9 D irector Stipulation; and (g) other m atters related or ancillary to the foregoing.
103. The Court finds that during the course of the Consolidated Class
11 Action, the Parties and their respective counsel at all times complied with the
12 requirements of Federal R ule of Civil Procedure 11.
1 3
4. In the event that the Global Officer And D irector Settlement does not
14 becom e effective in accordance with the terms of the Global Officer And D irector
15 Stipulation or the Effective D ate does not occur, or in the event that the settlement
16 fund, or any portion thereof, is returned to any person or entity contributing to the
17 settlement fund, then this Final Judgment A nd Order Of D ismissal With Prejudice
18 shall be rendered null and void to the extent provided by and in accordance with
19 the Global Officer And Director Stipulation and shall be vacated and, in such
20 event, all orders entered and releases delivered in connection herewith shall be
21 and void to the extent provided by and in accordance with the Global Officer And
22 Director Stipulation.
235. Without further Order of the Court, the Parties may agree to
24 reasonable extensions of time to carry out any of the provisions of the Global
25 Officer And Director Stipulation.
26 1\
27 \\
28 11
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26. There is no just reason for delay in the entry of this Judgment and
3 imm ediate entry by the Clerk of the Court is expressly directed.
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T IS SO ORDERED,
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6 DATED:
HE HONORABLE DEAN D. PREGERSON8NITED STATES DISTRICT COUR T JUDGE
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EXHIBIT C
TO GLO BAL OFFICER AND DIRECTOR STIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 1 of 37 Page ID#:11018
EXHIBIT 3TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
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Case No. 2:07-cv-00931-DDP (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 2 of 37 Page ID#:11019
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UNITED STATES DISTRICT COURT8
CENTRA L DISTRICT OF CALIFORN IA9
IN RE NEW CENTURYase No. 2:07-cv-0093 1 -DDP (FMOx)1 0Lead Case)
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15TIPULATION OF SETTLEM ENTBETWEEN PLAINTIFFS AND KPMG LLP
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KPMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 3 of 37 Page ID#:11020
1his Stipulation of Settlement (the "Stipulation") is submitted pursuant to
2Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the
3ourt, this Stipulation is entered into between and amo ng Lea d Plaintiff New York
4State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson
5and Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned
6onsolidated class action (the "Co nsolidated Action"), on behalf of themselves and
7he Class (as hereinafter defined), and defendant KPMG LLP ("KPMG")
8(collectively, with Plaintiffs, the "Parties"), by and through their respective
9 counsel. The KPMG Settlement is intended to settle all Settled Claims (as defined
10below) against KPM G and all other Released A uditor Parties (as defined below).
1 1HEREAS:12.ll terms with initial capitalization not otherwise defined herein shall
13have the meanings ascribed to them in ¶1 herein.
1 4.eginning on or about February 8, 2007, securities class action
15complaints were filed in the United States District Court for the Central District of
16California against certain of the Defendants; and the actions were consolidated by
17 Order dated June 26, 2007;
18.y Order dated June 26, 2007, the Court appointed the New York
19 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
20 nd approved its selection of B ernstein Litowitz B erger & Grossma nn LLP as L ead
21Counsel for the Class;
22.n September 14, 2007, Plaintiffs filed their Consolidated Class
23Action Com plaint ("Conso lidated C omp laint") asserting claims against Defendan ts
24under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
25Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased
26or otherwise acquired New Century Financial Corporation ("New Century" or the
27 "Company") common stock; New Century 9.125% Series A Cumulative
28Redeemable Preferred Stock ("Series A Preferred Stock"); New Century 9.75%
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1 Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock");
2nd/or New Century call options and/or who sold New Century put options during
3 the time period from May 5, 2005, through and including, March 13, 2007, either
4n the Offerings, pursuant to a registration statement, or in the market, and who,
5 upon disclosure of certain facts, were injured thereby;
6.eginning on November 2, 2007, Defendants filed motions to dismiss
7he Consolidated Com plaint, which Plaintiffs opposed on D ecember 1 4, 2007;
8.y Order dated January 31, 2008, the Court granted the motions to
9ismiss with leave to am end the co mplaint;
10.n M arch 24, 2008 , Plaintiffs filed their Am ended C onsolidated Class
11Action Complaint ("Amended Complaint"), alleging claims against Defendants
12pursuant to the Securities Act and the E xchange Act;
1 3.n April 30, 2008, Plaintiffs filed their Second Amended
14Consolidated Class Action Complaint (the "Complaint"), alleging claims against
15 Defendants pursuant to the Securities Act and the Exchange Act;
16.eginning on June 2, 2008, Defendants filed motions to dismiss the
17Com plaint, which Plaintiffs opposed o n July 7, 2008 ;
is.ollowing a hearing, by Order dated December 3, 2008, the Court
19 ubstantially d enied D efendants' motions to d ismiss;
20.eginning on January 26 , 2009, Defendants answered the C omplaint;
21.he Parties began discovery in or about April 2009, including filing
22multiple motions to compel and motions for protective order, and serving
23discovery requests, responses and v oluminous docume nts;
24. On January 13, 2010, KPMG filed a motion for summary judgment,
25which Plaintiffs opposed on M arch 15, 201 0;
26.he Parties have participated in mediation sessions and additional
27discussions before the Honorable Da niel W einstein, and subsequen tly were able to
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1 each agreements in principle to settle this Consolidated Action on the terms set
2orth herein;
3.PMG denies any wrongdoing whatsoever and this Stipulation shall
4n no event be construed or deemed to be evidence of or an admission or
5oncession on the part of KPMG with respect to any claim or of any fault or
6 iability or wrongdoing o r dam age w hatsoever, or any infirmity in the defense s that
7KPMG has asserted. The Parties recognize, however, that the litigation has been
8iled by Plaintiffs and defended by KPMG in good faith and in compliance with
9Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled
10after receiving advice of counsel, and that the terms of the settlement are fair,
11 adequate and reasonable. This Stipulation shall not be construed or deemed to be a
12oncession by any plaintiff of any infirmity in the claims asserted in the action;
13.ead Counsel represents that it has conducted an extensive
14nvestigation and thorough discovery relating to the claims and the underlying
15events and transactions alleged in the Complaint. Lead Counsel represents that it
16has analyzed the evidence adduced through discovery and has researched the
17 pplicable law w ith respect to the claims of P laintiffs and the o ther mem bers of the
18Class (as defined herein) and the potential defenses thereto;
1 9.ased upon their investigation and discovery as set forth above,
20Plaintiffs and Lead Counsel have concluded that the terms and conditions of this
21Stipulation are fair, reasonable and ad equate to Plaintiffs and the o ther mem bers of
22he Class, and in their best interests, and have agreed to settle the claims raised in
23 he ac tion pursuant to the terms and p rovisions of this Stipulation, after considering
241) the benefits that the Class will receive from the KPMG Settlement, (2) the
25attendant risks of litigation, and (3) the desirability of permitting the KPMG
26Settlement to be consumm ated as provided by the terms of this Stipulation;
27OW THEREFORE, without any admission or concession on the part of
28Plaintiffs of any lack of me rit of the action wha tsoever, and w ithout any adm ission
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1 or concession of any liability or wrongdoing or lack of merit in the defenses
2whatsoever by the Released Auditor Parties (as defined herein), it is hereby
3STIPULA TED AN D A GREE D, by and among the Parties, through their respective
4attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal
5Rules of Civil Procedure, in consideration of the benefits flowing to the Parties
6hereto from the KPMG Settlement, that all Settled Claims (as defined below) as
7 against the Released Auditor Parties (as defined below) and all Released Parties'
8Claims (as defined below) shall be compromised, settled, released and dismissed
9with prejudice, upon and subject to the following terms and conditions:
1 0EFINITIONS
11.s used in this Stipulation, the following terms have the following12meanings:
13)Authorized Claimant" means a Class Member who submits a
1.4timely and valid Proof of Claim Form and all required documentation to the
15Claims Ad ministrator, in accordan ce with the requirements established by the Plan
16of Allocation approved by the Court, that is approved for payment from the Net
17 Settlement Fund.
18)CAFA Notices" means proper notices of settlement, sent by
19 KPMG to the appropriate Federal official and the appropriate State official of each
20state in which a class me mbe r resides, pursuant to the Class Action Fairness Act of
212005 ("CAFA"), 28 U .S.C. § 171 5(b).
22)Claim" means a completed and signed Proof of Claim Form
23submitted to the Claims Administrator in accordance with the instructions on the
24Proof of Claim Form .
25)Claim Form" or "Claim Form and Release" or "Proof of Claim
26Form" means the form, substantially in the form attached hereto as Exhibit 2 to
27Exhibit A, that a Claimant or C lass Memb er must com plete should that Claimant or
28Class Mem ber seek to share in a distribution of the Net Settlement Fund.
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1)Claimant" means a person or entity that submits a Claim Form
2 to the Claims Administrator seeking to share in the proceeds of the Net Settlement
3Fund.
4)Claims Administrator" means the firm of Analytics
5ncorporated.
6)Claims Aga inst Directors And O fficers" mean s those claims as
7efined in paragraph 6 .
8)Class" means all persons and entities who purchased or
9 otherwise acquired New Century common stock, New Century Series A Preferred
10 Stock, New Century Series B Preferred Stock, and/or New Century call options
11and/or who sold New Century put options, during the time period from May 5,
122005, through and including March 13, 2007, either in the Offerings (as defined
13herein), pursuant to a registration statement, or in the market, and who, upon
14disclosure of certain facts alleged in the Complaint, were injured thereby.
15 Excluded from the Class are (a) Defendants; (b) members of the immediate
16families of Individual Defen dants; (c) the subsidiaries and affiliates of De fendants;
17 d) any person or entity who was a partner, executive officer, director or controlling
18person of New Century (including any of its subsidiaries or affiliates) or of any
1 9 ther Defendant; (e) any entity in which any Defendant has a controlling interest;
20and (f) the legal representatives, heirs, successors and a ssigns of any such e xcluded
21party. Also excluded from the Class are any persons who exclude themselves by
22filing a request for exclusion in accordance with the requirements set forth in the
23Notice.
24)Class Distribution Orde r" means an order entered by the Co urt
25authorizing and directing that the Net Settlement Fund be distributed, in whole or
26 n part, to Authorized C laimants.
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1)Class Member" means a person or entity that is a member of
2he Class and does not exclude himself, herself or itself by filing a request for
3xclusion in ac cordance w ith the requirements set forth in the No tice.
4)Class Period" means the period from May 5, 2005, through
5nd including March 1 3, 2007.
6)Complaint" means the Second Amended Consolidated Class
7Action Complaint filed by Plaintiffs in the Consolidated Action, on or about April
80, 2008 .
9)Court" means the United States District Court for the Central
1.0 District of California.
1 1)Defendants" means the Underwriter Defendants, KPMG, and
1 2he Individual Defendants.1 3)Debtors" means New Century Financial Corporation (f/k/a
14New Century REIT, Inc.), a Maryland corporation; New Century TRS Holdings,
15nc. (f/k/a New Century Financial Corporation), a Delaware corporation; New
16Century Mortgage Corporation (f/k/a JBE Mortgage) (d/b/a NCMC Mortgage
17Corporate, New Cen tury Corporation, and New C entury Mortgage Ventures, LLC),
18a California corporation; NC Capital Corporation, a California corporation;
19 Home1.23 Corporation (f/k/a The Anyloan Corporation, 1800anyloan.com, and
20Anyloan.com ), a California corporation; New Century Credit Corporation (f/k/a
21Worth Funding Incorporated), a California corporation; NC Asset Holding, L.P.
22f/k/a NC Residual II Corporation), a Delaware limited partnership; NC Residual
23 II Corporation, a Delaware corporation; NC Residual IV Corporation, a Delaware
24corporation; New Century R.E.O. Corp., a California corporation; New Century
25R.E.O. II Corp., a California corporation; New Century R.E.O. III Corp., a
26California corporation; New Century Mortgage Ventures, LLC (d/b/a Summit
27Resort Lending, Total Mortgage Resource, Select Mortgage Group, Monticello
28Mortgage Services, Ad Astra Mortgage, Midwest Home Mortgage, TRATS
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1Financial Services, Elite Financial Services, and Buyers Advantage Mortgage), a
2Delaware limited liability company; NC Deltex, LLC, a Delaware limited liability
3company; NCoral, L.P., a Delaware limited partnership; and New Century4Warehouse Corporation, a C alifornia corporation.
5)Debtors' Estates" means the bankruptcy estates of the Debtors
6 created as a result of the Debtors' petitions under Chapter 11 of Title 11 of the
7United States Bankruptcy Code.
8)Effective Date" means the date on which all the following
9hall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)
10payment of the KPMG Settlement Amount has been made pursuant to ¶9 below;
11 c) ninety (90) days have elapsed since the deadline for KPMG to serve the CAFA12Notices; (d) KPMG and the other Released Auditor Parties have been released
13 rom any and all claims and causes of action of every nature and description,
14whether known or Unlmown Claims, by the Settling Individuals whether arising
15under federal, state, common or foreign law, that arise out of or relate in any way
16 to the institution, prosecution, or settlement of the claims which were asserted in
17he Consolidated Action, the Trustee Litigation or the Kodiak Litigation, or that
18arise out of or relate in any way to New Century (including any of its subsidiaries
19and affiliates), the Trust, the Trustee, the Debtors, or the Debtors' Estates, except
20 or (1) a n allowed priority claim in the am ount of $5,000 p ursuant to proof of claim
21no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against Debtors'
22Estates and (ii) any and all claims arising out of or in connection with the defense
23and subsequent settlement of the Schroeder a New Century Holdings, Inc.
24Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity
25Arbitration, including, but not limited to (I) claims for b enefits under any insurance
26programs or policies to which the Settling Individuals are entitled, (II) claims for
2 7 dvancement, indemnification, contribution, reimbursement or other payments
28whether based on law, the Debtors' certificate or articles of incorporation, bylaws,
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1or other contract or agreement; (e) KPMG and the other Released Auditor Parties
2have been released from each and every claim by the Underwriter Defendants
3rising under federal, state, common or foreign law, arising out of or based upon
4he allegations, transactions, facts, matters or occurrences, representations or
5omissions involved, set forth, or referred to in the Consolidated Action; (f) the
6 Court has approved the KPMG Settlement, following notice to the Class and a
7earing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure; and
8 (g) the Court has entered the KPMG Judgment, substantially in the form annexed
9 hereto as Exhibit B, which has become Final. KPMG shall have the right to waive
10 ome or all of the conditions in subsections (d) and (e) of this subparagraph, but in
11such event, KPMG shall be required to promptly offer to the Settling Individuals
12and to the Underwriter Defendants substantively reciprocal releases substantively
13similar to the reciprocal releases identified below in paragraphs 6 and 7. In the
14 event that KPMG receives the releases from the Settling Individuals stated in
15subsection (d), KPMG shall be required to promptly offer to other former New
16 Century officers or directors with whom KPMG has entered into a tolling
17agreement related to New Century substantially similar substantively reciprocal
18releases.
19)Escrow Account" means an account maintained to hold the
20 Settlement Fund, which shall be controlled exclusively by Lead Counsel and
21deemed to be in the custody of the Court and shall remain subject to the
22 jurisdiction of the Court until such time as the funds are distributed or returned
23pursuant to the terms of this Stipulation and/or further order of the Court.
24)Escrow Agent" means The Huntington National Bank to serve
25 s escrow agent.
26)Escrow Agreement" means the agreement among Lead
27Counsel and the Escrow Agent setting forth the terms under which the Escrow
28Agent shall maintain the Escrow A ccount.
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1)Final" when referring to an order or judgment means: (i) that
2he time for appeal or appellate review of the order or judgment has expired; or
3ii) if there has been an appeal, (a) that the appeal has been decided without
4ausing a material change in the order or judgment; or (b) that the order or
5udgment has been upheld on appeal and is no longer subject to appellate review
6y further appe al or writ of certiorari.
7)Individual Defendants" means Robert K. Cole, Brad A.
8Morrice, the Estate of Edward F. Gotschall, Patti M. Dodge, Fredric J. Forster,
9 Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,
10Richard A. Zona, M arilyn A. A lexander, David Einhorn, and W illiam J. Pop ejoy.
1 1) "Kodiak" means Kodiak Warehouse LLC, Kodiak Warehouse
12JPM Capital LLC, Kodiak CDO1 Ltd., Kodiak CDO Management LLC, and
13Kodiak Funding LP.
14) "KPMG" means KPMG LLP.
15)KPMG Judgment" means the final judgment, substantially in
16he form attached hereto as Exhibit B, to be entered pursuant to Rule 54(b) of the
17Federal Rules of Civil Procedure approving the KPM G Settlement.
18)KPMG Settlement" means the proposed settlement as set forth
19 in this Stipulation.
20a) "KPMG Settlement Amount" means the sum of $44,750,000.0021 n cash which KPMG shall pay or cause to be paid into the Escrow Account as set
22orth in ¶9 below.
23b) "Kodiak Litigation" means the action K odiak W arehouse LL C,
24et al. a Brad A. Morrice, et al. (Case No. 08-1265-DDP-FMO) commenced on
25Novem ber 7, 2008 , against Robert K. Cole, B rad A. M orrice, the Estate of Edw ard
26 F, Gotschall, Patti M. Dodge, and Jeffrey D. Goldberg by Kodiak in the United
27States District Court for the Central District of California.
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1c) "Lead Counsel" means the law firm of Bernstein Litowitz
2B erger & Grossmann LLP.
3d) "Lead Plaintiff' means the New York State Teachers'
4Retirement System.
5e) "Litigation Expenses" means the costs and expenses incurred
6by Plaintiffs' Counsel in connection with commencing and prosecuting the
7Consolidated Action, for which Lead Counsel intends to apply to the Court for
8 eimbursement from the Settlement Fund .
9f)Net Settlement Fund" means the Settlement Fund (as defined
10below) less: (i) any Taxes; (ii) any Notice and Administration Costs; (iii) any
11attorneys' fees awarded by the Court; and (iv) any Litigation Expenses awarded by12he Court.
13g) "Notice" means the Notice of Pendency of Class Action and
14 Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees
15and Reimbursement of Litigation Expenses, substantially in the form attached
16hereto as Exhibit 1 to Exhibit A, which is to be sent to m embers of the C lass.
1 7h) "Notice and Administration Costs" means the costs, fees and
18expenses that are incurred by the Claims Administrator and Lead Counsel in
19connection w ith (i) providing notice to the Class; and (ii) adm inistering the Claims
20process.
21i)Offerings" means the public offerings pursuant to which New
22Century Series A and B Preferred Stock were offered to the public in June 2005
23 nd August 2006 .
24j)Other Former O fficers" means D avid Kenneally, Kevin C loyd,
25Patrick Flanagan, Stergios Theologides, and Joseph F. Eckroth, Jr.
26k) "Parties" means KPMG and Plaintiffs, on behalf of themselves
27 nd the Class Mem bers.
28
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11 )Philadelphia Indemnity Arbitration" means the claims filed
2 with the American Arbitration Association by the Trustee against Philadelphia
3 Indemnity Insurance Company to pay and indemnify, in accordance with the terms
4 f the applicable insurance p olicy, New C entury, its successor-in-interest, the New
5Century Liquidating Trust, and Harold A. Black, Fredric J. Forster, Donald E.
6Lange, and Michael M. Sachs, the full amount of defense costs that each have
7ncurred in the defense and subsequent settlement of S chroeder v . N ew Century
8Holdings, Inc. (Adversary Proceeding No. 07-51598 (KJC)), and to pay and
9 eimburse their other insurable losses as agreed to in said insurance policy.
10m) "Plaintiffs" means Lead Plaintiff, Carl Larson and Charles
11 Hooten.12n) "Plaintiffs' Counsel" means Lead Counsel and all other counsel
13who, at the direction and under the supervision of Lead Counsel, represent Class
14Mem bers in the Consolidated Action.
15o) "Plan of Allocation" means the proposed plan of allocation of
16 he N et Settlement Fun d set forth in the N otice.
1 7p) "Preliminary Approval Order" or "Notice Order" means the
18proposed order, substantially in the form attached hereto as Exhibit A, to be entered
19 by the Court preliminarily approving the KPMG Settlement and directing notice be
20provided to the C lass.
21q) "Released Auditor Parties" means KPMG and any and all of its
22partners, principals, officers, directors, employees, agents, attorneys and affiliates.
23"Released Auditor Parties" does not include any Defendants other than KPMG
24r)Released P arties' Claims" means any and a ll claims and causes
25of action of every nature and description, whether known or unknown, whether
26arising under federal, state, common or foreign law, that arise out of or relate in
27any way to the institution, prosecution, or settlement of the claims against KPMG
28
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1 "Released Parties' Claims" does not include claims relating to the enforcement of
2he KPM G Settlement.
3s) "Released Underwriter Parties" means the Underwriter
4 Defendants and any and all of their respective parent companies, subsidiaries,
5ffiliates, heirs, executors, administrators, predecessors, successors and assigns,
6 and any and all of their current and former officers, directors, employees, agents
7nd attorneys. "Released Underwriter Parties" does not include any Defendants
8ther than the Underw riter Defendants.
9t)Settled Claims" means any and all claims and causes of action
10of every nature and description, whether known or Unknown, whether arising
11under federal, state, common or foreign law, that Plaintiffs or any other member of12he Class (a) asserted against the Released Auditor Parties in the Complaint, or (b)
13 ould have a sserted against the Released Aud itor Parties in any forum that arise out
14of or are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Complaint,
16 and that arise out of or relate to the purchase of New Century common stock, New
17 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
18New Century call options and/or the sale of New Century put options during the
19 Class Period. "Settled Claims" does not include claims relating to the enforcement
20of the KPM G Settlement.
21u) "Settlement Fund" means the KPMG Settlement Amount, and
22ny and all interest earned thereon.
23v) "Settlement Hearing" means the hearing set by the Court under
24Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of
25he KPM G Settlement.
26w) "Settling Individuals" means the Individual Defendants and the
27Other Former Officers and their respective heirs, executors, administrators,
28
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1 predecessors, successors and assigns, employees, agents and retained professionals
2other than the Underw riter Defendants).
3x) "Summary Notice" means the publication notice, substantially
4n the form a ttached hereto as E xhibit 3 to Exhibit A, to be pu blished as set forth in
5he Preliminary Approval Order.
6y) "Taxes" means: (i) all federal, state and/or local taxes of any
7ind on any income earned by the Settlement Fund; and (ii) the reasonable
8xpenses and costs incurred by Lead Counsel in connection with determining the
9mount of, and paying, any taxes owed by the Settlement Fund (including, without10 imitation, reasonable expenses of tax attorneys and accountants).
1 1z) "Trust" means the New Century Liquidating Trust and12Reorganized New Century W arehouse Corporation.
13aa) "Trustee" means Alan M. Jacobs, as Liquidating Trustee of the
14New Century Liquidating Trust and Plan Administrator of the Reorganized New
15Century Warehouse C orporation.
16bb) "Trustee Litigation" means the adversary proceeding The New
17Century Liquidating Trust and Reorganized New Century Warehouse Corp. by and
18hrough Alan M. Jacobs, Liquidating Trustee and Plan Administrator (In re New
19Century TRS Holdings, Inc.) (Adv. Proc. No. 09-58 8 2 (KJC)) commenced on April
20 11 2009, against Robert C. Cole, Brad A. Morrice, Susan K. Gotschall, as Executor
21of the Estate of Edward F. Gotschall, Marilyn A. Alexander, Harold A. Black,
22Frederic J. Forster, Donald E. Lange, William J. Popejoy, Michael M. Sachs,
23Richard A. Zona, David Einhorn, Patrick Flanagan, Kevin M. Cloyd, Patti M.
24Dodge, Joseph F. Eckroth, Jr., Stergios Theologides, and EG Enterprises, in the
25United States D istrict Court for the D istrict of Delaware.
26cc) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now
27known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
28
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1 & Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
2Morgan S tanley & Co., Inc., and Jefferies & Com pany, Inc.
3dd) "Unknown Claims" means any and all Settled Claims that
4 Plaintiffs or any Class Member does not know or suspect to exist in his, her or its
5avor at the time of the release of the Released Auditor Parties, and any Released
6 Parties' Claims that any Released Auditor Party does not know or suspect to exist
7n his, her or its favor, which if known by him, her or it might have affected his,
8 her or its decision(s) with respect to the KPMG Settlement. With respect to any
9 nd all Settled Claims and Released Parties' Claims, the Parties stipulate and agree
10 that upon the Effective Date, the Plaintiffs and the Released Auditor Parties shall
11expressly waive, and each Class Member shall be deemed to have waived, and by
12operation of the KPMG Judgment shall have expressly waived, any and all
13provisions, rights and benefits conferred by any law of any state or territory of the
14 United States, or principle of common law, that is similar, comparable, or
15 quivalent to Cal. Civ. Code § 154 2, which provides:
1 6general release does not extend to claims which the
17reditor does not know or suspect to exist in his or her
1 8avor at the time of exec uting the release, which if known
19y him or her must have materially affected his or her
20ettlement w ith the debtor.
21Plaintiffs and the Released Auditor Parties acknowledge, and Class Members by
22operation of law shall be deemed to have acknowledged, that the inclusion of
23"Unknown Claims" in the definition of Settled Claims and Released Parties'
24Claims was separately bargained for and was a key element of the KPMG
25Settlement.
26LASS CERTIFICATION
27.he Pa rties stipulate and agree to: (a) certification of the C onsolidated
28Action as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules
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1 f Civil Procedure on be half of the Class; (b) appointme nt of Plaintiffs as the Class
2Representatives; and (c) appointment of Lead Counsel as Class Counsel pursuant
3 o Rule 23(g) of the Federal Rules of Civil Procedure. Following execution of this
4 Stipulation, Plaintiffs, with the consent of KPMG, shall apply to the Court for entry
5f the Preliminary Approval Order, which will certify the Consolidated Action to
6 proceed as a class action. The Parties shall have the right to withdraw from the
7agreem ent to stipulate and ag ree to class certification and the appointme nt of Class
8Represen tatives and Class Co unsel in the event that the KP M G Settlement does not
9 become Final.
1 0ELEASE OF CLAIMS
1 1.he obligations incurred pursuant to this Stipulation shall be in full
12and final disposition of the C onsolidated A ction against KPM G; an d shall frilly and
13 inally release any and all Settled Claims as against all Released Auditor Parties
14nd shall also release as against the Plaintiffs and all other Class Me mbe rs any and
15all Released Parties' Claims, and shall also fully and finally release other claims as
16 et forth below.
1 7.ursuant to the KPMG Judgment, upon the Effective Date, Plaintiffs
18and members of the Class shall be deemed by operation of law to have released,
19 waived, discharged and dismissed each and every Settled Claim, and shall forever
20be enjoined from prosecuting any or all Settled Claims, against any Released
21Auditor Party.
22.ursuant to the KPMG Judgment, upon the Effective Date, KPMG
23 nd each of the other Released A uditor Parties, on behalf of themselves, their heirs,
24xecutors, administrators, predecessors, successors and assigns, shall be deem ed b y
25operation of law to have released, waived, discharged and dismissed each and
26every one of the Released Parties' Claims, and shall forever be enjoined from
27prosecuting any or all of the Released Parties' Claims, against Plaintiffs and their
28 mployees, agents and attorneys, and all other Class Members.
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1.ursuant to the KPMG Judgment, upon the Effective Date, KPMG
2and the other Released Auditor Parties hereby release, waive, discharge and
3ismiss, and shall be deemed by this agreement and/or operation of law to forever
4be enjoined from prosecuting any and all claims and causes of action of every
5ature and description, whether known or Unknown Claims against any of the
6Settling Individuals, whether arising under federal, state, common or foreign law,
7 that arise out of or relate in any way to the institution, prosecution, or settlement of
8the claims which were asserted in the Consolidated Action, the Trustee Litigation
9or the Kodiak Litigation, or that arise out of or relate in any way to New Century
10 (including any of its subsidiaries and affiliates), the Trust, the Trustee, the Debtors,
11or the Debtors' Estates, except for (i) an allowed priority claim in the amount of
12$5,000 pursuant to proof of claim no. 2385 filed by Fredric J. Forster in the
13B ankruptcy C ourt against Debtors' Estates and (ii) any and a ll claims arising out of
14or in connection with the defense and subsequent settlement of the S chroeder v.
15N ew Century H oldings, Inc. (Adversary Proceeding No. 07-51598(KJC)) and the
16Philadelphia Indemnity Arbitration, including, but not limited to (a) claims for
17 benefits under any insurance programs or policies to which the Settling Individuals
1 8 re entitled, (b) claims for advancement, indemnification, contribution,
19 reimbursement or other payments whether based on law, the Debtors' certificate or
20articles of incorporation, bylaws, or other contract or agreement ("Claims Against
21Directors And Officers"), provided and conditioned upon KPMG and the other
22Released Auditor Parties receiving substantively reciprocal releases from the
23Settling Individuals.his release does not include claims relating to the
24nforcement of the S ettlement.
25.ursuant to the KPMG Judgment, upon the Effective Date, KPMG
26 and the Released Auditor Parties shall be deemed by operation of law to have
2 7 eleased, waived, discharged and dismissed, and shall be forever enjoined from
28prosecuting, each and every claim against the Underwriter Defendants and the
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1Released Underwriter Parties, arising under federal, state, common or foreign law,
2rising out of or based upon the allegations, transactions, facts, matters or
3ccurrences, representations or omissions involved, set forth, or referred to in the
4Consolidated Action, provided and conditioned upon KPMG receiving
5ubstantively reciprocal releases from the Underw riter D efendants.
6.ursuant to the KPMG Judgment, upon the Effective Date, KPMG
7nd the Released Auditor Parties shall be deemed by operation of law to have
8 eleased, waived, discharged and dismissed, and shall be forever enjoined from
9rosecuting, each and every claim and cause of action of every nature and
10 description, whether known or Unknown Claims, whether arising under federal,
11state, common or foreign law, that KPMG (a) asserted in the Kodiak Litigation, or12(b) could have asserted in any forum that arise out of or are based upon the
13 allegations, transactions, facts, matters or occurrences, representations or
14omissions involved, set forth, or referred to in the Kodiak Litigation, or that arise
15out of or relate in any way to New Century (including any of its subsidiaries and
16affiliates), the Debtors or the Debtors' Estates, against Kodiak, provided and
17 conditioned upon K PM G receiving a substantially reciprocal release from K odiak
18HE SETTLEMENT CONSIDERATION
19.ithin twenty-one (21) business days after entry of the Preliminary
20Approval Order, KPMG shall pay or cause to be paid into the Escrow Account a
21 otal of $44,750,000.00 in cash (the "KPMG Settlement Amount"). No later than
22ten (10) business days a fter entry of the Preliminary Approval O rder, Lead Co unsel
23 hall provide to K PM G the following information:
24)he street address of the Escrow Agent;
25)he AB A routing number of the EscrowAgent; and
26c)he Fed eral tax identification numb er for the
27scrow Account.
28
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10. If any portion of the KPMG Settlement Amount is not paid into the
2Escrow Account in the timeframe as designated above in ¶9, Plaintiffs have the
3option to: (1) terminate the KPMG Settlement; or (ii) require that KPMG pay or
4cause to be paid interest at the rate of 5% per annum from the time the payments
5 are due until deposited, which interest shall be paid at the time the funds are
6 ubsequently paid into the Escrow A ccount.
7l . Within ten (10) calendar days after filing of the Motion for
8reliminary Approval, KPMG shall properly serve the CAFA Notices. The Parties
9will request that, pursuant to 28 U.S.C. § 1715(d), the Final Approval Hearing be
10 scheduled for no earlier than ninety (90) days following the deadline for KPMG to
11serve the CAFA Notices as stated in this paragraph. Any failure by KPMG to12comply with the CAFA Notices requirements will not provide grounds for delay of
13 he Final Approval Hearing or entry of the KPM G Judgm ent.
14SE OF SETTLEMENT FUNDS
52. The Settlement Fund shall be used to pay: (1) any Taxes; (ii) any
16Notice and Administration Costs; (iii) any attorneys' fees awarded by the Court;
17and (iv) any Litigation Expenses awarded by the Court. The balance remaining in
18he Settlement Fund, after payment of items (i)-(iv), shall be distributed to
19Authorized Claimants as provided below.
203. The Net Settlement Fund shall be distributed to Authorized Claimants
21as provided herein. Except as provided herein or pursuant to orders of the Court,
22he Net Settlement Fund shall remain in the Escrow Account prior to the Effective
23Date. All funds held by the Escrow Agent shall be deemed to be in the custody of
24he Co urt and shall remain subject to the jurisdiction of the C ourt until such time as
25he funds shall be distributed or returned pursuant to the terms of this Stipulation
26and/or further order of the Court. The Escrow Agent shall invest any funds in the
27Escrow Account in United States Treasury Bills (or a mutual fund invested solely
28 in such instruments) and shall collect and reinvest all interest accrued thereon,
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3ull faith and credit of the United States.
44. The Parties hereto agree that the Settlement Fund is intended to be a
5 ualified Settlement Fund w ithin the meaning of Treasury Regulation § 1.46 8 13-1
6 and that Lead Counsel, as administrator of the Settlement Fund within the meaning
7f Treasury Regulation § 1.468B-2(k)(3), shall be solely responsible for filing or
8 causing to be filed all informational and other tax returns as may be necessary or
9ppropriate (including, without limitation, the returns described in Treasury
10Regulation § 1.468B-2(k)) for the Settlement Fund. Such returns shall be
11consistent with this paragraph and in all events shall reflect that all Taxes on the12income earned on the Settlement Fund shall be paid out of the Settlement Fund as
13provided by Paragraph 37 below. Lead Counsel shall also be solely responsible for
14causing payment to be made from the Settlement Fund of any Taxes owed with
15 respect to the Settlement Fund. Upon written request, KPMG will provide
16 promptly to Lead Counsel any statements or information required for tax purposes,
17 ncluding the statement described in Treasury Regulation § 1.468B-3(e). Lead
18Counsel, as administrator of the Settlement Fund within the meaning of Treasury
19 Regulation § 1.468B-2(k)(3), shall timely make such elections as are necessary or
20advisable to carry out this paragraph, including, as necessary, making a "relation
21back election," as described in Treasury Regulation § 1.468B-10), to cause the
22Q ualified Settlement Fund to com e into existence at the earliest allowable date, and
23shall take or cause to be taken all actions as may be necessary or appropriate in
24onnection therewith.
255. All Taxes shall be paid out of the Settlement Fund, and shall be timely
26paid by the Escrow Agent pursuant to the disbursement instructions to be set forth
27n the Escrow Agreement, and without prior Order of the Court. Any tax returns
28prepared for the Settlement Fund (as well as the election set forth therein) shall be
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1 onsistent with the previous paragraph and in all events shall reflect that all Taxes
2including any interest or penalties) on the income earned by the Settlement Fund
3hall be paid out of the Settlement Fund as provided herein. None of the Released
4Auditor Parties shall have any liability or responsibility for any Taxes or related
5xpenses of any kind whatsoever. The Settlement Fund shall indemnify and hold
6 all Released Auditor Parties harmless for any Taxes and related expenses of any
7ind whatsoev er (including without limitation, taxes pay able by reason of any such
8ndem nification), if any, payable by KPM G by reason of any incom e earned on the
9ettlement Fund. KPMG shall notify the Escrow Agent promptly if it receives any10notice of any claim for Taxes relating to the Settlement Fund.
1 16. This is not a claims-made settlement. Once the Effective Date occurs,
12neither KPMG, its insurance carriers, nor any other Released Auditor Parties nor
13any other person or entity that contributed to the Settlement Fund on their behalf,
14will have the right or ability to get back any of the KPMG Settlement Amount or
15any interest accrued thereon, irrespective of the number of Claims filed, the
16 collective amount of losses of Authorized Claimants, the percentage of recovery of
17 losses, or the amounts to be paid to Authorized Claimants from the Net Settlement
18 Fund.
197. The Claims Administrator shall discharge its duties under Lead
20Counsel's supervision and subject to the jurisdiction of the Court. Except as21otherwise provided herein, the Released Auditor Parties shall have no22esponsibility whatsoever for the administration of the KPMG Settlement, and
23shall have no liability whatsoever to any person, including, but not limited to, the
24Class Members, in connection with any such administration. Lead Counsel shall
25cause the Claims Administrator to mail the Notice and Proof of Claim Form to
26 hose members of the Class at the address of each such person as set forth in the
27 ecords of N ew Century or its transfer agent(s), or who o therwise may be identified
28hrough further reasonable effort. Lead Counsel will cause to be published the
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1Summary Notice pursuant to the terms of the Preliminary Approval Order or
2whatever other form or manner m ight be ordered by the Court.
38. Lead Counsel may pay from the Escrow Account, without further
4pproval from KP M G or other Defend ants or further order of the Court, the Notice
5nd A dm inistration Costs actually incurred. Such costs and ex penses shall include,
6 without limitation, the actual costs of publication, printing and mailing the Notice,
7 eimbursements to nominee owners for forwarding the Notice to their beneficial
8wners of New Century securities, the administrative expenses incurred and fees
9harged by the Claims Administrator in connection with providing Notice and
10processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
11
event that the KPMG Settlement is terminated pursuant to the terms of this12Stipulation, all Notice and Administration Costs paid or incurred, including any
13 related fees, shall not be returned or repaid to KPMG or any other person or entity
14who or which con tributed to the S ettlement F und on their behalf.
1 5TTORNEYS' FEES AND LITIGATION EXPENSES
69. Lead Counsel will apply to the Court for a collective award of
17attorneys' fees to Plaintiffs' Counsel. Lead Counsel also will apply to the Court for
1s eimbursement of Litigation Expenses, which may include reimbursement of the
19 xpenses of Plaintiffs in accordance with 15 U.S.C. § 78u-4(a)(4). Neither KPMG,
20nor any other Released Auditor Party, shall take any position with respect to Lead
21Counsel's applications or awards discussed in this paragraph. Such matters are not
22he subject of any agreement between KPMG and Plaintiffs other than what is set
23 orth in this Stipulation.
240. Any attorneys' fees and Litigation Expenses that are awarded by the
25Court shall be paid to Lead Counsel, with the Court's approval, immediately upon
26award, notwithstanding the existence of any timely filed objections thereto, or
27potential for appeal therefrom, or collateral attack on the K PM G Se ttlemen t or any
28part thereof, subject to Lead Counsel's obligation to pay back any such amount if,
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1as a result of any appeal, further proceeding or successful collateral attack, the
2attorneys' fee or Litigation Expense award is amended, modified or does not
3ecome Final. Lead Counsel shall make the appropriate refund or repayment in
4ull, with interest at the same rate as earned by the Settlement Fund, no later than
5en (10) business days after receiving from KPMG's counsel or from a court of
6ppropriate jurisdiction notice of the termination of the KPMG Settlement or
7 notice of any reduction of the award of attorneys' fees and/or Litigation Expenses.
8 An award of attorneys' fees and/or Litigation Expenses is not a necessary term of
9his Stipulation and is not a condition of this Stipulation. Lead Counsel, as a
10 condition of receiving such fees and expenses, on behalf of itself and each partner
11and/or shareholder of it, agrees that the law firm and its partners and/or12shareholders are subject to the jurisdiction of the Court for the purpose of
13enforcing the provisions of this paragraph. Without limitation, each such law firm
14and its partners and/or shareholders agree that the Court may, upon application of
15KPMG on notice to Lead Counsel, summarily issue orders, including but not
16 imited to judgment and attachment orders, and may make appropriate findings of,
17 or sanctions for, contempt against them or any of them should such law firm fail to
18 imely repay fees and expe nses pursuant to this paragraph.
191. Lead Counsel shall have the sole authority to allocate the Court-
20awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
21 aith, believes reflects the contributions of such counsel to the prosecution and
22ettlement of the C onsolidated A ction.
232. Neither KPMG nor any of the Released Auditor Parties shall have any
24esponsibility for, or interest in, or liability whatsoever with respect to any person
25who may assert some claim to any fee and expense award that the Court may
26make.
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 25 of 37 Page ID#:11042LAIMS ADMINISTRATOR
23. The Claims Administrator shall administer the process of receiving,
3 eviewing and approving or denying Claims under Lead Counsel's supervision and
4ubject to the jurisdiction of the Court. KPMG shall not have any responsibility
5or, involvement in or liability for providing notice to the Class, the administration
6of the KPMG Settlement, the allocation of the Settlement proceeds, or the
7 eviewing or challenging of Claims of members of the Class. The allocation of
8he Net Settlement Fund among Authorized Claimants shall be subject to a Plan of
9Allocation to be proposed by Lead Counsel and approved by the Court. KPMG
10shall take no position with respect to such proposed Plan of Allocation; such Plan
11of Allocation is a matter separate and apart from the proposed Settlement between
12 KPMG and Plaintiffs, and any decision by the Court concerning the Plan of
13Allocation shall not affect the validity or finality of the proposed Settlement.
144. The Claims Administrator shall receive Claims and determine first,
15 whether the Claim is a valid Claim, in whole or part, and second, each Authorized
16 Claimant's pro rata share of the Net Settlement Fund as set forth in the Plan of
17Allocation set forth in the Notice attached hereto as Exhibit 1 to Exhibit A, or in
18such other plan of allocation as the Court approves.
195. The Plan of Allocation proposed in the Notice is not a necessary tern
20of this Stipulation and it is not a condition of this Stipulation that any particular
21plan of allocation be approved by the Court.
226. Any Class Member who does not submit a valid Claim Form will not
23be entitled to receive any distribution from the Net Settlement Fund but will
24otherwise be bound by all of the terns of this Stipulation and KPMG Settlement,
25ncluding the terms of the Judgment to be entered in the Consolidated Action and
26 he releases provided for herein, and will be perm anently barred and en joined from
27bringing any action, claim, or other proceeding of any kind against any Released
28Auditor Party concerning any S ettled C laim.
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17. Lead Counsel shall be responsible for supervising the administration
2 of the Settlement and disbursement of the Net Settlement Fund. Neither KPMG,
3 nor any other Released Auditor Party, shall have any liability, obligation or
4 responsibility whatsoever for the administration of the KPMG Settlement or
5 disbursement of the Net Settlement Fund. Neither KPMC^ nor any other Released
6Aud itor Party, shall be permitted to review, contest or object to any C laim Form o r
7ny decision of the Claims Administrator or Lead Counsel with respect to
8ccepting or rejecting any Claim Form or Claim for payment by a Class Member.
9 Lead Counsel shall have the right, but not the obligation, to waive what they deem
10 to be formal or technical defects in any Claim Forms submitted in the interests of
11
chieving substantial justice.1 28. For purposes of determining the extent, if any, to which a Class
13Member shall be entitled to be treated as an Authorized Claimant, the following
14 conditions shall apply:
1 5aach Class Member shall be required to submit a Claim Form
16 and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,
17 releasing all Released Claims against the Released Auditor Parties and supported
1 8 y such documents as are designated therein, including proof of the Claimant's
19 loss, or such other documents or proof as the Claims Administrator or Lead
2 0 ounsel, in their discretion, may de em acceptable, by the date set by the Court;
2 1.ach Claim Form shall be submitted to and reviewed by the
22 Claims Administrator, under the supervision of Lead Counsel, who shall determine
23 in accordance with this Stipulation the extent, if any, to which each Claim shall be
24 allowed, subject to review by the Court pursuant to subparagraph (d) below;
2 5.laim Forms that do not meet the submission requirements may
26be rejected. Prior to rejecting a Claim in whole or in part, the Claims
27 Administrator shall communicate with the Claimant in writing, to give the
28 Claimant the chance to remedy any curable deficiencies in the Claim Form
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1 ubmitted. The Claims Administrator, under supervision of Lead Counsel, shall
2notify, in a timely fashion and in writing, all Claimants whose Claim the Claims3 Administrator proposes to reject in whole or in part, setting forth the reasons
4therefor, and shall indicate in such notice that the Claimant whose Claim is to be
5ejected has the right to a review by the Court if the Claimant so desires and
6 omplies with the requirements of subparagraph (e) below;
7.f any Claimant whose Claim has been rejected in whole or in
8part desires to contest such rejection, the Claimant must, within twenty (20) days
9 after the date of mailing of the notice required in subparagraph (c) above, serve
10upon the Claims Administrator a notice and statement of reasons indicating the
11Claimant's grounds for contesting the rejection along with any supporting12documentation, and requesting a review thereof by the Court. If a dispute
13 concerning a Claim cannot be otherwise resolved, Lead Counsel shall thereafter
14present the request for review to the Cou rt; and
15.he administrative detenninations of the Claims Administrator
16accepting and rejecting Claims shall be presented to the Court, on notice to
17KP MG 's counsel, for approval by the Cou rt in the Class Distribution Ord er,
189. Each Claimant shall be deemed to have submitted to the jurisdiction
19 of the Court with respect to the Claimant's Claim, and the Claim will be subject to
20nvestigation and discovery under the Federal Rules of Civil Procedure, provided
21 hat such investigation and discovery shall be limited to that Claimant's status as a
22Class Member and the validity and amount of the Claimant's Claim. No discovery
23 shall be allowed on the merits of this Consolidated Action or this KPMG
24Settlement in con nection with the processing of Claim Forms.
250. Lead Counsel will apply to the Court, on notice to all Parties, for a
26Class Distribution Order: (i) approving the Claims Administrator's administrative
27determinations concerning the acceptance and rejection of the Claims submitted;
28 ii) approving payment of any additional unpaid or anticipated administration fees
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1nd expen ses associated with the administration of the KPM G Settlement from the
2Escrow Account; (iii) if the Effective Date has occurred, directing payment of the3Net Settlement Fund to Authorized Claimants from the Escrow Account; and (iv)
4 ther relief as appropriate.
51. Payment pursuant to the Class Distribution Order shall be final and
6conclusive against all Class Members. All Class Members whose Claims are not
7pproved by the Court shall be barred from participating in distributions from the
8Net Settlement Fund, but otherwise shall be bound by all of the terms of this
9 Stipulation and the KPMG Settlement, including the terms of the Judgment to be
10entered in this Consolidated Action and the releases provided for therein, and will
11 be permanently barred and enjoined from bringing any action against any and all
12Released A uditor Parties concerning any and all of the Settled Claims.
132. All proceedings with respect to the administration, processing and
14determination of C laims and the determination of all controversies relating thereto,15 including disputed questions of law and fact with respect to the validity of Claims,
16 shall be subject to the jurisdiction of the Court.
17ERMS OF THE JUDGMENT
183. If the KPMG Settlement contemplated by this Stipulation is approved
19by the Court, Lead Counsel and KPMG's counsel shall request that the Court enter
20a KPMG Judgment, substantially in the form annexed hereto as Exhibit B,
21pursuant to Rule 54(b) of the Federal Rules of C ivil Procedure.
22AIVER OR TERMINATION
234.ithin thirty (30) days of. (a) the Court's declining to enter, without
24eave to resubmit, an order granting preliminary approval of the KPM G Settlement
25n any material respect; (b) the Court's refusal to approve this Stipulation or any
26material part of it; (c) the Court's declining to enter the KPMG Judgment in any
27material respect; or (d) the date upon which the KPMG Judgment is modified or
28 eversed in any material respect by the Court of Appeals or the Supreme Court,
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1 ach of the Parties shall have the right to terminate the KPMG Settlement and this
2Stipulation by providing written notice to the other Party of an election to do so.
3However, any decision with respect to an application for attorneys' fees or
4Litigation Expenses, or with respect to any plan of allocation, shall not be
5onsidered material to the KPMG Settlement and shall not be grounds for
6 ermination.
75. In addition, if Class Members who purchased or acquired more than a
8ertain number of shares of New Century common stock during the Class Period
9 properly elect to exclude themselves from the Class in accordance with the
10equirements for requesting exclusion provided in the Notice, as specified in a11separate supplemental agreement among the Parties (the "Supplemental
12Agreement"), KPMG shall have the option to terminate this KPMG Settlement and
13Stipulation.
146, Lead Counsel and KPMG's counsel shall request jointly that the
15deadline for submitting exclusions from the Class be at least twenty-one (21) days
16prior to the Final Approval Hearing. Copies of all timely requests for exclusion
1 7 rom the C lass received by the Claims Ad ministrator (or other person designated to
18 eceive exclusion requests) shall be provided to Lead Counsel and KPMG's
19 counsel no later than fifteen (15) days prior to the Final Approval Hearing. If the
20hreshold stated in the Suppleme ntal Agreemen t is reached, KPM G shall have until
215:00 p.m. PDT of the seventh day before the Final Approval Hearing to inform
22Lead Counsel, in writing, that it elects to exercise its option to terminate the
23KPMG Settlement and this Stipulation. Lead Counsel shall have the right to
24communicate with the holders of such shares and, if a sufficient number of them
25withdraw in writing their requests for exclusion such that the total number of
26shares purchased during the Class Period represented by the remaining "opt outs"
27 epresents less than the threshold, the notice of termination shall be deemed
28withdrawn.
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17. Except as otherwise provided herein, in the event that the KPMG
2Settlement is terminated, the Parties shall be deemed to have reverted to their
3espective status in this Consolidated Action immediately prior to May 5, 2010,
4 and, except as otherwise expressly provided, the Parties shall proceed in all
5espects as if this Stipulation and any related orders had not been entered. Within
6ive (5) business days of receipt from KPMG of a notice of termination, Lead
7Counsel shall direct the Escrow Agent, in writing, to return to KPMG the KPMG
8ettleme nt Am ount, including accrued interest and earnings, less any amou nts paid
9or incurred for Notice and Administration Costs actually incurred and paid or
10payable and/or Taxes paid or owing. Within ten (10) business days of receipt of
11such notice, the Escrow Agent shall refund that full amount to KPMG At the12 request of KPMG, the Escrow Agent or its designee shall apply for any tax refund
13owed on account of the KPMG Settlement Amount and shall pay the proceeds,
14after deducting any fees or expenses incurred in connection with such
15pplication(s) for refund, to KPM G
16O ADMISSION OF WRONGDOING
178. This Stipulation, whether or not consummated, and any proceedings
18aken pursuant to it:
19.hall not be offered or received against any of the Released
20Auditor Parties as evidence of, or construed as, or deemed to be evidence of any
21presump tion, concession, or adm ission by any o f the Released A uditor Parties with
22respect to the truth of any fact alleged by P laintiffs or the va lidity of any c laim that
23was or could ha ve been asse rted against any of the Released A uditor Parties in this
24Consolidated Action or in any litigation, or of any liability, negligence, fault, or
25other wrongdoing of any kind o f any of the Released A uditor Parties;
26.hall not be offered or received against any of the Released
27Aud itor Parties as evidence of a presum ption, concession or admission of any fault,
28misrepresentation or omission with respect to any statement or written document
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1approved or made by any of the Released Auditor Parties, or against the Plaintiffs
2 or any C lass Mem bers as evidenc e of any infirmity in the claims of P laintiffs or the
3 other Class Members;
4.hall not be offered or received against any of the Released
5Auditor Parties, or against the Plaintiffs or any other Class Members, as evidence
6f a presum ption, concession or ad mission with respect to an y liability, negligence,
7ault or wrongdoing of any kind, or in any way referred to for any other reason as
8against any of the Released Auditor Parties, in any other civil, criminal or
9 administrative action or proceeding, other than such proceedings as may be
10 necessary to e ffectuate the provisions of this Stipulation; provided, how ever, that if
11this Stipulation is approved by the Court, KPMG, any other Released Auditor12Party, or any Class Member may refer to it to effectuate the protection from
13 iability granted them hereunder;
14.hall not be construed against any of the Released Auditor
15Parties, Plaintiffs or any other Class Members as an admission, concession, or
16 presumption that the consideration to be given hereunder represents the amount
17 which could be o r would have b een recovered after trial;
1 8.hall not be construed against Plaintiffs or any other Class
19Members as an admission, concession, or presumption that any of their claims are
20without merit or that damages recoverable under the Complaint would not have
21 xceeded the KPM G Settlement Amount; and
22.hall not be construed as or received in evidence as an
23admission, concession or presumption that class certification is appropriate in this
24Consolidated Action, except for purposes of this KP MG Settlement.
259. KPMG and/or any of the other Released Auditor Parties may file this
26Stipulation of Settlement and/or the Judgment in this action, in order to support a
27defense or coun terclaim base d on principles of res judicata, collateral estoppel, full
28 aith and credit, release, good faith settlement, judgment bar, or reduction or any
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1other theory of claim preclusion or issue preclusion or similar defense or
2ounterclaim.
3ISCELLANEOUS PROVISIONS
40. All of the exhibits attached hereto are hereby incorporated by
5eference as though fully set forth herein.
61. KPMG warrants that, as to the payments made by or on behalf of it, at
7 he time of such payment, it was not insolvent, nor did nor will the payment
8 required to be made by or on behalf of it render it insolvent, within the meaning of
9and/or for the purposes of the United States Bankruptcy Code, including §§ 101
10 nd 547 thereof. This representation is made by K PM G and n ot by its counsel.
1 12. If a case is commenced in respect of KPMG (or any insurance carrier
12contributing to the KPMG Settlement Amount) under Title 11 of the United States
13 Code (Bankruptcy), or a trustee, receiver, conservator, or other fiduciary is
14appointed under any similar law, and in the event of the entry of a final order of a
15 ourt of comp etent jurisdiction determining the transfer of money to the S ettleme nt
16 Fund or any portion thereof by or on behalf of KPMG to be a preference, voidable
17 ransfer, fraudulent transfer or similar transaction and any portion thereof is
18 equired to be returned, and such amount is not promptly deposited to the
1 9 ettlement Fund by others, then, at the election of Lead Counsel, the Parties shall
20ointly move the Court to vacate and set aside the releases given and the Judgment
21entered in favor of KPMG and the other Released Auditor Parties pursuant to this
22Stipulation, which releases and Judgment shall be null and void; the Parties shall
23be restored to their respective positions in the litigation immediately prior to May
245, 2010; and any cash amounts in the Settlement Fund shall be returned as
25provided in Paragraph 37 above.
263. The Parties intend this KPMG Settlement to be a final and complete
27 esolution of all disputes asserted or which could be asserted by the Plaintiffs, any
28other Class Members and their attorneys against all Released Auditor Parties with
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1 espect to all Settled Claims. Accordingly, the Parties agree not to assert in any
2orum that this Consolidated Action was brought or defended in bad faith or3without a reasonable basis. The Parties hereto shall assert no claims of any
4iolation of Rule 11 of the Federal Rules of Civil Procedure relating to the
5prosecution, defense, or settlement of this Consolidated Action. The Parties agree
6 that the amount paid and the other terms of this Settlement were negotiated at
7 arm's-length in good faith by the Parties, including a mediation conducted by a
8professional mediator, the Hon. Daniel Weinstein of JAMS (the "Mediator"), and
9 reflect a settlement that was reached voluntarily after consultation with
10experienced legal counsel.
1 14. While retaining their rights to deny that the claims asserted in the
12Consolidated Action were m eritorious, KPMG in any statement made to any m edia
13 representative (whether or not for attribution) will not deny that the Consolidated
14Action was commenced and prosecuted in good faith and is being settled
15voluntarily after consultation with competent legal counsel. In all events, the
16 Parties shall refrain from any accusations of wrongful or actionable conduct by any
17 Party concerning the prosecution and resolution of the Consolidated Action, and
18shall not otherwise suggest that the Settlement constitutes an admission of any
19 claim or defense alleged.
205. Except as specifically provided above, this Stipulation may not be
21modified or amended, nor may any of its provisions be waived except by a writing
22igned by all signatories hereto or their successors-in-interest.
236. In the event of any dispute between the Parties regarding the
24mplementation of this Stipulation of Settlement or any related d ocumen t, except as
25otherwise provided herein, the Parties agree to submit such disputes first to the
26Mediator for prompt mediation and, if no agreement can be promptly reached, the
27Parties may p ursue all legal remedies under this Stipulation of Settlement in a court
28 with appropriate jurisdiction.
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17. The headings herein are used for the purpose of convenience only and
2re not meant to have legal effect.
38. The administration and consummation of this KPMG Settlement as
4mbodied in this Stipulation shall be under the authority of the Court, and the
5Court shall retain jurisdiction for the purpose of entering orders providing for
6wards of attorneys' fees and Litigation Expenses to Lead Counsel and enforcing
7he terms of this Stipulation.
89. The waiver by one Party of any breach of this Stipulation by any other
9 Party shall not be deemed a waiver of any other prior or subsequent breach of this
10Stipulation.
1 10. This Stipulation and its exhibits constitute the entire agreement among
12he Parties hereto concerning this KPMG Settlement, and no representations,
13warranties, or inducements have been made by any Party hereto concerning this
14 Stipulation and its exhibits other than those contained and memorialized in such
15documents.
161. This Stipulation may be executed in one or more original and/or faxed
17counterparts. All executed counterparts and each of them shall be deemed to be
18one and the same instrument provided that counsel for the signatories of this
19 Stipulation shall exchange among themselves copies of original signed
20 ounterparts.
212. This Stipulation shall be binding upon, and inure to the benefit of, the
22uccessors and a ssigns of the Parties hereto.
233. The construction, interpretation, operation, effect and validity of this
24Stipulation, and all documents necessary to effectuate it, shall be governed by the
25nternal laws of the State of California without regard to conflicts of laws, except
26 o the extent that federal law requires that federal law govern.
274. This Stipulation shall not be construed more strictly against one Party
28han another merely by virtue of the fact that it, or any part of it, may have been
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1 prepared by counsel for one of the Parties, it being recognized that it is the result of
2rm's-length negotiations between the Parties and all Parties have contributed
3 substantially and materially to the preparation of this Stipulation.
45. All counsel and any other person executing this Stipulation and any of
5he exhibits hereto, or any related KPMG Settlement documents, warrant and
6 represent that they have the full authority to do so and that they have the authority
7 toake appropriate action required or permitted to be taken pursuant to the
8 Stipulation to effectuate its terms.
96. Counsel for the Parties agree to cooperate fully with one another in
10seeking C ourt approval of the Preliminary App roval Order, the Stipulation and this
11 KPMG Settlement, and to use best efforts to promptly agree upon and execute all
12such other documentation as may be reasonably required to obtain final approval
13by the C ourt of the Settlement.
147. All of the exhibits to this Stipulation of Settlement are material and
15 integral parts hereof and are fully incorporated herein by this reference.
1 68. This Stipulation of Settlement shall be binding upon and inure to the
1 7 enefit of the successors and assigns of the Parties.
189, The Parties and their respective counsel also agree to keep the
19 nformation disclosed to them in connection with mediation and settlement
20negotiations confidential unless required to publicly disclose such information by
21applicable law, in which case written notice as to the content of any public
22communication shall be provided to the other Party at least three (3) business days
23 prior to disclosure. In the event either of the Parties or their counsel wishes to
24make a voluntary public disclosure regarding the Settlement, its terms, conditions,
25or obligations (other than the fact that this case was resolved by Settlement), such
26Party or counse l shall provide at least three (3) business days' adva nce notice to the
27other Party as to the content of any such public communication. Notwithstanding
28 the foregoing, nothing herein shall preclude Plaintiffs' Counsel or Plaintiffs from
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1publicly filing papers, and making statements, in Court in connection with
2 reliminary and final approval of the KPMG Settlement,
30. If any Party is required to give notice to any other Party under this
4 Stipulation, such notice shall be in writing and shall be deemed to havebeen duly
5 given upon receipt of hand delivery or facsimile transmission with confirmation of
6 receipt. Notice required to be provided to any Party shall be provided to that
7 Party's counsel at the address listed below.
8 DATED AS OF: July 23, 2010ERNSTEIN LITOWITZ BERGER
9GROSSMANN LLP
1 011
V • ORE J. GRAZIANO12
13LAIR A. NICHOL ASELIZAB ETH LIN
14IKI L. MENDOZABENJAMIN GALDSTONTAKEO A. KELLAR
15248 1 H igh Bluff Drive, Suite 300
16an Dieggo CA 92130Tel: 85 793-0070
1 7ax: (8583 793-0323-and-
1 8ALVATORE J . GRAZIANO
LAUREN A. MCMILLEN1 928 5 Avenue of the Americas
New York, NY 1001 920el:(212,) 554-1400
Fax: (212) 554-1444
21URRAY, FRANK & SAILER LLP
22ARVIN L. FRANK275 Madison Avenue, Suite 801
23ew York, NY 1 0016Tel:212 682-1818
24ax: (212 682-1892
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1ead Counsel for Lead Plaintiff The NewY ork S tate Teachers' R etirem ent Sy stem and
2he Class, and Plaintiffs Carl Larson andCharles Hooten
3
4SIDLEY ULP
5
6"Amid
7IC , ELF. RUGEN555alifornia St. Suite 2000
8 San Francisco, CX 94104-1 715Tel; 415-772-1292
9
1 0ttorneys for Defendant KPMG LLP
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TO KPMG STIPULATION
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)
3 2
lairblbglaw.com)LIZAETH LIN (Bar No. 174663)
(elizabethl^blbglaw.com )4 NIKI L. MEEN DOZA (Bar No. 214646)
nikima blbglaw.com)5 ENJAl^IIN GALDSTON (Bar No. 211114)benkblbglaw.com)
6 A O A. KELLAR (Bar No. 234470)(takeokffighlb law.com)
7481 luff Drive, Suite 300San Diego, CA 92130
8 Tel: (858) 793-0070Fax: (858) 793-0323
9and-SALVATO
( c^RE J. GRAZI )
LNO10
sAUREN . MC1MILLEN
1 1 [email protected])285 Avenue of the Ame ricas12 New York, NY 10019
Tel: 212 554-140013 Fax: 212 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers' Retirement System
15
16
7NITED STATES DISTRICT COUR T
18ENTRA L DISTRICT OF CALIFORNIA
19
IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)20Lead Case)
21
[PROPOSED] ORDER22RELIMINARILY APPROVING
SETTLEMENTS AND23ROVIDING FOR NOTICE
24XHIBIT A
25udge: Hon. Dean D. Pregerson
26728[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PROVIDING FOR NOTICECase No. 2:07-cv-0093 1 -DDP (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 3 of 114 Page ID#:11057HEREAS, Lead Plaintiff New York State Teachers' Retirement System2 ("Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 "Plaintiffs") and the Individual Defendants,] the Underwriter Defendants, 2 and
5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with
6 Defendants, the "Parties"), have reached agreements to settle the above-captioned
7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court
8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order
9 preliminarily approving the Settlements in accordance with the Stipulations of
10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms
11 and conditions for the proposed Settlements regarding the Consolidated Action,
12
13"Individual Defendants" or "Class Individual Defendants" means Robert K.
14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.
15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.
Sandvik, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.
16 Popejoy.
172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC , Roth Capital Partners, Morgan Stanley & Co ., Inc., and Jef fries & C o., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer
25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
The Global Officer And Director Stipulation, the Underwriter Stipulation and the
27 KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
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1 and for dismissal of the Consolidated Action with prejudice as against all of the
2 Defendants and their related parties, upon the terms and conditions set forth
3 therein; and the Court having read and considered the Stipulations and the exhibits
4nnexed thereto;5OW, THEREFORE, IT IS HEREBY O RDERED:
6.his order (the "Notice Order" or "Preliminary Approval Order")
7 hereby incorporates by reference the definitions in the Stipulations unless
8 otherwise indicated, and all terms with initial capitalization not otherwise defined
9 herein shall have the same meanings as set forth in the Stipulations. Any
10 inconsistencies between the Stipulations and the Notice of Pendency of Class
11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for
12 Attorneys' Fees and Reimbursement of Litigation Expenses ("Notice") will be
13 controlled by the language of the Stipulations.
14.he C ourt hereby preliminarily approves the Se ttleme nts as being fair,
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
16 CLASS CERTIFICATION
17.he Court hereby certif ies, pursuant to Rules 23(a) and 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New
20entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
21rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
22nd who, upon disclosure of certain facts alleged in the Complaint,were injured thereby. Excluded from the Class are (a) Defendants;b
23embers of the immediate families of the Individual Defendants; ^c)the subsidiaries and affiliates of Defendants; (d) any person or entity
24ho was a partner, executive officer, director or controllingperson ofNew Centu (including any of its subsidiaries or affiliate or of any
25efendant; 7e) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives heirs, successors and assigns
26f any such excluded party. Also excluded from the Class are anypersons who exclude themselves by filing a request for exclusion in
27ccordance with the requirements set forth in the N otice.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 5 of 114 Page ID#:11059.he Court finds that the prerequisites for a class action under Rules
23(a) and (b)(3) of the Fed eral Rules of Civil Procedure have been satisfie d in that:3 (a) the number of Class Members is so numerous that joinder of all members
4 thereof is impracticable; (b) there are questions of law and fact common to the
5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement
6 System ("NYSTRS") and Plaintiffs Carl Larson and Charles Hooten are typical of
7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and
8 adequately represented the interests of the Class; (e) the questions of law and fact
9 common to the members of the Class predominate over any questions affecting
10 only individual members of the Class; and (f) a class action is superior to other
11 available methods for the fair and efficient adjudication of the controversy.12.ursuant to Rule 23 of the Fe deral Rules of Civil Procedure, Plaintiffs
13 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15.he Court appoints the firm of Analytics Incorporated ("Claims
16 Administrator") to supervise and administer the notice procedure as well as the
17 processing of claims as more fully set forth below:
18.ithin five (5) business days after entry of this Order, the
19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
20 Release (the "Claim Form"), annexed hereto respectively as Exhibits 1 and 2, to be
21 mailed by first-class mail, postage prepaid, to all members of the Class at the
22 address of each such Class Member as set forth in the records of New Century or
23 its transfer agent, or who are identified by further reasonable efforts (the "Notice
24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the
25 Court proof of mailing of the Notice and Claim Form; and
26.summary notice ("Summary Notice"), annexed hereto as
27 Exhibit 3, shall be published once each in the national edition of The Wall Street
28 Journal and over the PR Newswire within five (5) business days of the mailing of
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1 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
2 Court proof of publication of the Summary Notice.
3.he Court approves the form of Notice and Summary Notice
4 (together, the "Notices") and Claim Form, and finds that the procedures established
5 for publication, mailing and distribution of such Notices substantially in the
6 manner and form set forth in paragraph 6 of this Order meet the requirements of
7 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation
8 Reform Act of 1995, and due process, and constitute the best notice practicable
9 Linder the circumstances.
10.or the purpose of identifying and providing notice to the Class, the
11 Trustee and the Underwriter Defendants shall provide to the Claims Administrator
12 the information as agreed to in the Global Officer And Director Stipulation and the
13 Underwriter Stipulation, respectively.
14.ominees who purchased or otherwise acquired New Century stock
15 for beneficial owners who are Class Members are directed to: (a) request within
16 fourteen (14) days of receipt of the Notice additional copies of the Notice and the
17 Claim Form from the Claims Administrator for such beneficial owners; or (b) send
18 a list of the names and addresses of such beneficial owners to the Claims
19 Administrator within fourteen (14) days after receipt of the Notice. If a nominee
20 elects to send the Notice to beneficial owners, such nominee is directed to mail the
21 Notice within fourteen (14) days of receipt of the copies of the Notice from the
22 Claims Administrator, and upon such mailing, the nominee shall send a statement
23 to the Claims Administrator confirming that the mailing was made as directed, and
24 the nominee shall retain the list of names and addresses for use in connection with
25 any possible future notice to the Class. Upon full compliance with this Preliminary
26 Approval Order, including the timely mailing of Notice to beneficial owners, such
27 nominees may seek reimbursement of their reasonable expenses actually incurred
28 in complying with this Preliminary Approval Order by providing the Claims
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1 Administrator with proper documentation supporting the expenses for which
2 reimbursement is sought and reflecting compliance with these instructions,
3 including timely mailing of the Notice, if the nominee elected or elects to do so.
4 Such properly documented expenses incurred by nominees in compliance with the
5 terms of this Preliminary Approval Order shall be paid from the Settlement Fund.
6 HEARING: RIGHT TO BE HEARD
70. There shall be a hearing on [November 8, 2010, or November 15,
8 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the "Settlement
9 Hearing") at which time the Court shall address the fairness, reasonableness and
10 adequacy of the Settlements, the fairness and reasonableness of the Plan of
11 Allocation, and Lead Counsel's application for attorneys' fees and payment of
12 Litigation Expenses. The Settlement Hearing shall be held before this Court at the
13 United States District Court for the Central District of California, 312 North Spring
14 Street, Courtroom 3, 2nd Floor, Los Angeles, California 90012.
151. Papers in support of the Settlements, the Plan of Allocation, and Lead
16 Counsel's application for attorneys' fees and payment of Litigation Expenses shall
17 be filed on or before twenty-eight (28) days prior to the Settlement Hearing.
182. Any member of the Class may appear at the Settlement Hearing and
19 show cause why the proposed Settlements embodied in the Stipulations should or
20 should not be approved as fair, reasonable and adequate, and/or to present
21 opposition to the Plan of Allocation or to the application of Lead Counsel for
22 attorneys' fees and payment of Litigation Expenses. However, no Class Member
23 shall be heard or entitled to contest the approval of the terms and conditions of the
24 Settlements, or the terms of the Plan of Allocation or the application by Lead
25 Counsel for an award of attorneys' fees and payment of Litigation Expenses unless
26 that Class Member (i) has served written objections, including the basis therefor, as
27 well as copies of any papers (including proof of all purchases or acquisitions of
28 New Century stock or options during the Class Period) and/or briefs in support of
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1 his, her or its position upon the following counsel such that it is received on or
2 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &
5 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
6 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th
7 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
8 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
9 objections, papers and briefs with the Clerk of the United States District Court for
10 the Central District of California on or before twenty-one (21) days before the
11 Settlement Hearing. Any Class Member who does not make his, her or its
12 objection in the manner provided for herein shall be deemed to have waived such
13 objection and shall forever be foreclosed from making any objection to the fairness
14 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
15 Allocation or to the application by Lead Counsel for an award of attorneys' fees
16 and payment of Litigation Expenses unless otherwise ordered by the Court. The
17 manner in which a notice of objection should be prepared, filed and delivered shall
18 be stated in the Notice.
193. If approved, all Class Members will be bound by the proposed
20 Settlements provided for in the Stipulations, and by any judgment or determination
21 of the Court affecting Class Members, regardless of whether or not a Class
22 Member submits a Claim Form.
234. Any member of the Class may enter an appearance in the
24 Consolidated Action, at their own expense, individually or through counsel of their
25 own choice. If they do not enter an appearance, they will be represented by Lead
26 Counsel.
275. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
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1 Class Members and to approve the Stipulations and/or Plan of Allocation with
2 modification and without further notice to Class Members.
3 CLAIMS PROCESS
46.n order to be entitled to participate in the Settlements, a Class
5 Member must complete and submit a Claim Form in accordance with the
6 instructions contained therein and/or in the Notice. To be valid and accepted,
7 Claim Forms submitted in connection with the Settlements must be postmarked no
8 later than 120 days after the Notice date (unless by Order of the Court, late-filed
9 Claim Forms are accepted).
107. Any Class Member who does not timely submit a valid Claim Form
11 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
12 the Court, but nonetheless shall be barred and enjoined from asserting any of the
13 settled claims and shall be bound by any judgment or determination of the Court
14 affecting the Class Members.
1 58. As set forth in the Stipulations, Defendants and their related parties
16 shall have no responsibility whatsoever for the administration of the Settlements or
17 the disbursement of the Net Settlement Fund and shall not be permitted to review,
18 contest or object to any Claim Form or any decision of the Claims Administrator or
19 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
20 payment by a Class Member.
21 REQUEST FOR EXCLUSION FROM THE CLASS
229. Any requests for exclusion must be submitted such that they are
23 received no later than twenty-one (21) days before the date of the Settlement
24 Hearing. To be valid, each request for exclusion must (1) state the name and
25 address of the person or entity requesting exclusion; (ii) state that such person or
26 entity requests exclusion from the Class in In re New Century, 07-CV-0093 I -DDP
27 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
28 telephone number for that person or entity; and (v) provide the date(s), price(s),
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 11 of 114 Page ID#:110651. Only Class Members and Lead Counsel shall have any right to any
2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
42. All funds held by the escrow agent selected by Lead Counsel to
5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
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1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6.hall not be offered or received against any of the Released
7 Parties 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by Plaintiffs 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
14.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (i) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as de fined in the Underwriter Stipulation).27 5 "Plaintiffs" in this paragraph 25 includes C lass Plaintiffs, the T rustee, and Kod iak28 (as defined in the Global Officer And Director Stipulation).
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1 fault or wrongdoing of any kind, or in any way referred to for any other reason as
2 against any of the Released Parties, in any other civil, criminal or administrative
3 action or proceeding, other than such proceedings as may be necessary to
4 effectuate the provisions of the Stipulations; provided, however, that if the
5 Stipulations are approved by the Court, Defendants, any other Released Party, or
6 any Class Member may refer to the Settlements and Stipulations to effectuate the
7 protection from liability granted them hereunder;
8.hall not be construed against any of the Released Parties,
9 Plaintiffs or any other Class Members as an admission, concession, or presumption
10 that the consideration to be given hereunder represents the amount which could be
I I or would have been recovered after trial;
12.hall not be construed against Plaintiffs or any other Class
13 Members as an admission, concession, or presumption that any of their claims are
14 without merit or that damages recoverable under the Consolidated Action, the
15 Trustee Litigation and the Kodiak Litigation would not have exceeded the amount
16 of the Settlements; and
17.hall not be construed as or received in evidence as an
18 admission, concession or presumption that class certification is appropriate in this
19 Consolidated Action, except for purposes of the Settlements.
206. Except as otherwise provided in the Stipulations, there shall be no
21 distribution of any of the net settlement fund for any of the Settlements to any
22 Class Member until a plan of allocation is finally approved and the Court issues a
23 Class Distribution Order.
24 1\
25 \\
26 \\
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1he Court retains jurisdiction of this Consolidated Action to consider all
2 further applications arising out of or connected with the proposed Settlements, and
3 as otherwise warranted.
4T IS SO ORDERED .
5 DATED:HE HONORA BLE DEAN D. PREGERSON7NITED STATES DISTRICT CO URT JUDGE
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EXHIBIT A-1 TO EXHIBIT A
TO KPMG STIPULATION
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
N1ZAWETairblbglaw.com)
3LIN (Bar No. 174663)elizabethlblbglaw.com
4 NIKI L. M NDOZA (Bar No. 214646)
UNJAM1kimlbglaw.com)5GALDS TON (Bar No. 211114)benblbglaw.com6I. < -Bar No. 234470)
(takeokfflg.,hblb law.com )481 luff Drive, Suite 300
San Diego, CA 921308 Tel:(858) 793-0070
Fax: (858) 793-03239and-
SALVATO RE J. GRAZIANO10 (sgraziano(a^blbglaw.com )
LAUREN A. MCMILLEN
1 1 [email protected])285 Avenue of the Ame ricas12 New York, NY 10019
Tel: 212 554-140013 Fax: 212 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers' Retirement System
15
1 6
7NITED STATES DISTRICT COUR T
1 8ENTRA L DISTRICT OF CALIFORNIA
19 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)(Lead Case)
20
1OTICE OF PENDENCY OFCLASS ACTION AND PROPOSED
22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND2 3OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT
24F LITIGATION EXPENSES
25
26udge: Hon. Dean D. Pregerson
27
28
NOTICE OF PENDENCY OF CLASS ACTION
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2NOTICE OF PE NDEN CY O F CL ASS ACT ION: Please be advised that your rights
3may be affected by a class action lawsuit pending in this Court (the
4Consolidated Action") if, during the period from May 5, 2005, through and
5ncluding March 13, 2007, you purchased or acquired Common Stock,
69.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8"Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9New Century Financia l Corporat ion ("New C entury" or the "Com pany").
1 0
11NO TICE O F SET TLE ME NTS : Please a lso be advised that the Court -appointed12Lead Plaintiff, New York State Teachers' Retirement System ("Lead
13Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively
14"Plaintiffs"), on behalf of the Class (as defined below), have reached three
15 proposed settlements ("Settlements") of the Consolidated Action as follows: a
16sett lement with the Underw riter Defend ants' in the am ount of $15,000,000.00;
17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual DefendantS 2 in which the Class will
19receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underwriter Defendants" means Bea r, Stearns & C o. Inc., Deutsche B ank
22Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.23 "Underwriter D efendants").
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
25Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27Underwriter Defendants, the Individual Defendants, and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
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1 124 9 827 9 088.00.he terms of the Settlements are set forth in the
2Stipulations.4
3This Notice explains important rights you may have, including your possible
4receipt of cash from the Settlements. Your legal rights will be affected
5hethe r or not you act . Please read this N otice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8 Plaintiff alleges that Defendants made false and misleading statements and/or
9omitted material information to investors during the Class Period. Defendants
10 deny all allegations, and deny that investors were damaged as a result of any such
11alleged statements or omissions. This Notice relates to three proposed Settlements12regarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed14Settlements, if approved by the Court, will resolve all claims and potential claims
15of Class Membe rs against the De fendants and the oth er applicable Re leased Parties
16 (as identified below), and will provide relief to all persons and entities who
17purchased or otherwise acquired New Century Common Stock, Series A Preferred
18 Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20Options and/or who sold New Century Put Options, during the time period from
21209-1426-DDP, commenced on December 7, 2009, in the United States District
23Court for the Central District of California (the "SEC A ction").4
ll capitalized terms that are not defined herein shall have the meaning24ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation Of Settlement Be tween Plaintiffs And The Underwriter Defendants (the27"Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement").
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1May 5, 2005, through and including March 13, 2007, either in the Offerings,
2 pursuant to a registration statement, or in the market, and who, upon disclosure of
3ertain facts alleged in the Complaint, were injured thereby (the "Class"). (The4 New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,
5 and/or New Century Call Options and New Century Put Options (as described
6 bove) are referred to collectively as "New C entury Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8s described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9 settle all claims related to the purchase of New Century Common Stock, Preferred
10 Stock and/or New Century Call Options and/or sales of New Century Put Options
11 during the Class Period that were or could have been asserted against Defendants
12 and other Released Parties in the Consolidated Action in exchange for total
13 settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash
14 to be deposited into an interest-bearing escrow account (the "Settlement Fund").
15The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17 Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19 Settlement Fund shall be allocated to the members of the Class. The proposed Plan
20 of Allocation is included in this Notice. Assuming that all Class Members
21 participate in the Settlements, Lead Plaintiff's damages consultant estimates that
22 the average distribution per damaged share will be approximately $0.69 per share
23 of New Century Common Stock, approximately $2.08 per share of New Century
24 Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
25 per Put Option, before deduction of Court-approved fees, expenses and costs
26 described herein.
27.tatement of AveraL e Amount of Damages Per Share: The parties
28 do not agree on the average amount of damages per share that would be
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1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4 challenged in this Consolidated Action were materially false and misleading; (ii)
5 whether the price of New Century shares was inflated as the result of any allegedly
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 resulted from the disclosure of any information that Plaintiffs allege was
9wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reim bursement of L itigation Expenses paid or
15incurred in connection with the prosecution and resolution of the Consolidated
16Action, in an amount not to exceed $4.5 million, plus interest from the date of
17funding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead P laintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26 egarding the Settlements should be directed to M r. Graziano at Bernstein Litowitz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 866) 648-2524, [email protected] .
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1
2O U R L E G A L R I G HT S A N D O P T I O N S I N T H E S E T T L E M E N T S :
3S U B M I T A C L A I M F O R M N Ohis is the only way to get a payment. If
4LATER THAN [INSERT]ou wish to obtain a payment as a Class
5ember, you will need to file a Claim
6orm (which is included with this Notice)
7postmarked no later than [INSERT].
8
E X C L U D E Y O U R S E L F F R O Met no payment. This is the only option9
THE CLASS BY SUBMITTING A that allows you to ever be part of any1 0
WRITTEN REQUEST FORther lawsuit against any of the defendants
1 1 EXCLUSION SO THAT IT ISr other released parties concerning the12
RECEIVEDNO LATER THANlaims that were, or could have been,13
[INSERT].sserted in this case.14
15O B J E C T T O T H Erite to the Court and explain why you
16 SETTLEMENTS BYo not like the Settlements, the proposed
17SUBMITTING WRITTENlan of Allocation, or the request for
18OBJECTIONS SO THAT THEYttorneys' fees and reimbursement of
19A RE RECEIVED NO LATERxpenses. You cannot object to the
20THAN [INSERT].ettlements unless you are a Class
21ember and do not e xclude yourself.
22GO TO THE HEARING ONsk to speak in C ourt about the fairness of
23[INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of
24FILE A NOTICE OF INTENTION Allocation, or the request for attorneys'
25T O A P P E A R S O T H A T I T I Sees and reimbursement of expenses.
26RECEIVEDNO LATER THAN
27 [INSERT].
28
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1 DO NOTHINGet no payment. Remain a Class
2 Member. Give up your rights.
34HAT THIS NOTICE CONTAINS
5
6Why Did I Get This Notice?age
7Wh at Is This Case About? What Has Happe ned So Far?age
8How D o I Know If I Am A ffected By The Settlements?age
9Wh at Are The Le ad Plaintiff 's Reasons For The Settlements?age10
Wh at Might Happen If There W ere No Settlements?age
11
How M uch Will My Payment Be?age12
13
What Rights Am I Giving Up By A greeing To The Sett lements?age
14Wh at Payment Are The A ttorneys For The Class Seeking?
15 How Will The Lawyers Be Paid?age
16How D o I Participate In The Settlements? Wh at Do I Nee d To Do?age
17 What If I Do Not Want To Be A Part Of The Settlements?
1 8 How Do I Exclude Myself?ag e
19Whe n And W here Will The Court Decide Whe ther To Approve
20 The Settlements? Do I Have To Come To The Hearing?
21 May I Speak At The Hearing If I Don't Like The Settlements?age
22 What If I Bought Shares On Someone Else's Behalf?age
23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24
WH Y DID I GET THIS NOTICE?25
26
6.his Notice is being sent to you pursuant to an Order of the United
27
States District Court for the Central District of California (the "Court") because
28
you or someone in your family may have purchased or otherwise acquired or sold
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1 New Century Securities during the Class Period. The Court has directed us to send
2you this Notice because, as a potential Class Member, you have a right to know
3bout your options before the Court rules on the proposed Settlements in this case.
4Additionally, you have the right to understand how a class action lawsuit may
5generally affect your legal rights. If the Court approves the Settlements, a claims
6dministrator selected by Lead Plaintiff and approved by the Court, will make
7payme nts pursuant to the Settlem ents after any objections and appeals are resolved.
8.n a class action lawsuit, the Court selects one or more people, known
9 as class representatives, to sue on behalf of all people with similar claims,
10 commonly known as the class or the class members. In this Consolidated Action,
11he Court has appointed New York State Teachers' Retirement System to serve as
12"Lead Plaintiff' under a federal law governing lawsuits such as this one, and
13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
14Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated
15Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
17action is a type of lawsuit in which the claims of a number of individuals are
18 resolved together, thus providing the class members with both consistency and
19efficiency. Once the class is certified, the Court must resolve all issues on behalf
20of the class members, except for any persons who choose to exclude themselves
21 rom the class. (For more information on excluding yourself from the Class, please
22ead "What If I Do Not Want To Be A Part Of The Settlements? How Do I23Exclude M yself?" located below.)
24.he Court in charge of this case is the United States District Court for
25he Central District of California, and the case is known as In re New Century. The
26Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27District Judge. The people who are suing are called plaintiffs, and those who are
28being sued are called defendants. In this case, the plaintiff is referred to as the
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1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2Defendants, the Underwriter Defendants and KPMG New Century was not named
3as a defendant because New Century has filed a petition for voluntary bankruptcy
4nd the Bankruptcy Code does not permit an action to proceed against a debtor
5wohasfiledsuchapeitio
6.his Notice explains the lawsuit, the Settlements, your legal rights,
7what benefits are available, who is eligible for them, and how to get them. The
8purpose of this Notice is to inform you of this case, that it is a class action, how
9you might be affected, and how to exclude yourself from the Class if you wish to
10 do so. It also is being sent to inform you of the terms of the proposed Settlements,
11and of a hearing to be held by the Court to consider the fairness, reasonableness,
12and adequacy of the proposed Settlements, the fairness and reasonableness of the
13proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
14 ees and reimbursement of Litigation Expenses (the "Settlement Hearing").
150. The Settlement Hearing will be held on [INSERT] at [INSERT],
16 before the H onorable De an D. Pregerson, at the Unite d States District Court for the
17Central District of California, 312 North Spring S treet, Courtroom 3, Los A ngeles,
18California 90012 to determine:
1 9.hethe r this Consolidated A ction should be finally certif ied, for
20ettlement purposes only, as a class action under Rules 23(a)
21nd (b) of the Federal Rules of Civil Procedure on behalf of the
22lass;
23.hether the proposed Settlements are fair, reasonable, and
24dequate and should be approved by th e Court;
25.hether the claims against defendants and the other released
26arties should be dismissed with prejudice as set forth in the
27tipulations;
28
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1.hether the proposed Plan of Allocation is fair and reasonable
2nd should be approved by the Court; and
3.hether Lead Counsel's request for an award of attorneys' fees
4nd reimbursement of Litigation Expenses should be approved
5y the Court.
61. This Notice does not express any opinion by the Court concerning the
7 merits of any claim in the Consolidated Action, and the Court still has to decide
8 whether to approve the Settlements. If the Court approves the Settlements,
9payments to A uthorized Claimants will be made after any appeals are resolved, and
10after the completion of all claims processing. Please be patient.
1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Begiluling on or about February 8, 2007, securities class action
14 complaints were filed in the United States District Court for the Central District of
15 California and the actions were consolidated by Order dated June 26, 2007.
163. On April 2, 2007, New Century and other Debtors filed for
17bankruptcy in the United States Bankruptcy Court for the District of Delaware
18"Bankruptcy Court") under Chapter 11 of Title 11 of the United States Code .
194. By Order dated June 26, 2007, the Court appointed the New York
20 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
21and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
22Counsel for the Class.
235. On September 14, 2007, Plaintiffs filed their Consolidated Class
24Action C omplaint ("Consolidated Com plaint") asserting claims against Defend ants
25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26Act of 1933 ("Securitie s Act") on behalf of the C lass.
276. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Consolidated Com plaint, which Plaintiffs opposed on De cembe r 14, 2007 .
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17. By Order dated January 31, 2008, the Court granted the motions to
2ismiss with leave to amend the complaint.
38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
4 Action Complaint ("Amended Complaint"), alleging claims against Defendants
5ursuant to the Se curities Act and the Exchange A ct,
69. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7Am ended Consolidated Class Action Com plaint (the "C omplaint"), alleging claims
8gainst Defendants pursuant to the Securities Act and the Exchange Act.
90. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10Complaint, which Plaintiffs opposed on July 7 , 2008.
1 11. Following a hearing, by Order dated December 3, 2008, the Court
12 ubstantially denied Defendants' motions to dismiss.
1 32. Beginning on January 26, 2009, Defendants answered the Complaint.
1 43. The Parties began discovery in or about April 2009, including filing
15multiple motions to compel and motions for protective order, and serving
16 discovery requests and responses, and producing voluminous documents.
174. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgment, which Plaintiffs opposed on M arch 15, 2010.
1 95. The Parties have participated in mediation sessions and additional
20discussions before the Honorable Daniel Weinstein, following which the Parties
21were able to reach agreeme nts in principle to settle this Consolidated Action on the
22erms set forth herein. In connection with the settlement of the Consolidated
23Action, Defendants and other persons also reached agreements to settle the action
24entitled Kodiak W arehouse LLC, et al. a Brad A. Morrice, et al. (Case No. 08-
251265-DDP-FMO) commenced on November 7, 2008, in the United States District
26Court for the Central District of California (the "Kodiak Litigation") and the
27adversary proceed ing entitled The New Century Liquidating Trust and Reorganized
28 New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating
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1Trustee and Plan Administrator v Robert K. Cole et al. (In re New Century TRS
2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5 authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW D O I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14 New Century Call Options and/or who sold New Century Put Options, during the
15t ime pe riod from M ay 5, 2005, through and including March 13, 2007, eithe r in the
16Offerings, pursuant to a registration statement, or in the market, and who, upon
17 disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director
21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded parry. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27Do I Exclude M yself?," below).
28
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1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT
2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO
3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO
4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST
5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER
6THAN [INSERT].
7HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?898. Lead Plaintiff and Lead Counsel believe that the claims asserted
10 against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11however, the expense and length of continued proceedings necessary to pursue
12their claims against Defe ndants through trial and appeals, as we ll as the difficulties
13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel
14have taken into account the possibility that the claims asserted in the Complaint
15 might have been dismissed at a later stage, such as in response to motions for
16 summary judgment, and have considered issues that would have been decided by a
17 jury in the event of a trial of the Consolidated Action, including whether
18Defendants acted with an intent to mislead investors, whether the alleged
19misrepresentations or omissions we re material to investors, whethe r all of the Class
20Members' losses were caused by the alleged misrepresentations or omissions, and
21the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24given the expense and length of continued proceedings necessary to reach a
25successful resolution at trial and on appeal.
269. In light of the amount of the Settlements and the immediacy of
27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed
28 Settlements are fair, reasonable and adequate, and in the best interests of the Class.
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1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
2benefit now, namely $124,827,088.00 in cash (less the various deductions
3 described in this Notice), as compared to the risk that the claims in the Complaint
4would produce a similar, smaller, or no recovery after summary judgment, trial and
5ppeals, possibly years in the future.
60. Defendants have denied the claims asserted against them in the
7 Complaint and deny having engaged in any wrongdoing or violation of law of any
8ind wh atsoever. Defe ndants have agreed to the Se ttleme nts solely to eliminate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10be construed as an admission of Defendants' wrongdoing.
1 1HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
1231. If there were no Settlements and Lead Plaintiff failed to establish any
14essential legal or factual element of its claims, neither Lead Plaintiff nor the other
15 members of the Class would recover anything from Defendants. Also, if
16Defendants were successful in proving any of their defenses, the members of the
17Class likely would recover substantially less than the amount provided in the
18Settlem ents, or nothing at all.
1 9OW M UCH WILL MY PAYMENT BE?201 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22. Pursuant to the respective Stipulations, the Individual Defendants
23 have agreed to pay or cause to be paid collectively $65,077,088.00; the
24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
25KPM G h as agreed to pay $44,750,000.00. Collectively, Defendants have agreed to
26pay a total amount of $124,827 ,088.00 in cash.
273. After approval of the Settlements by the Court, and upon satisfaction
28of the other conditions to the Settlements, and upon issuance of a Class
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IDistribution Order, the Net Settlement Fund will be distributed to Authorizedlaimants in accordance with th e Plan of Allocation.4. The Settlement Fund will be distributed as follows:
4i)o pay all federal, state, and local Taxes on any income earned
5y the Se ttleme nt Fund and to pay the reasonable costs incurred
6n connection with determining the amount of, and paying,
7axes owed by the Settlement Fund (including reasonable
8xpense s of tax attorneys and accountants);
9ii )o pay costs and expenses in connection with providing Notice
1 0o Class Members and administering the Settlements on behalf
I If Class Members;1 2iii)o pay attorneys' fees, with interest on such amount, to the
1 3xtent allowed by the Court pursuant to Lead Counsel's1 4pplication;
1 5iv )o pay Litigation Expenses incurred in commencing and
1 6rosecuting the Consolidated Action, with interest on such
1 7oney, to the extent allowed by the Court pursuant to Lead
18ounsel's application; and
19vo compensate Authorized Claimants with the balance of the
20et Settlement Fund in accordance with the Plan of Allocation,2 1ubject to an Order of the Court approving the Settlements and
22he P lan of Allocation (or such othe r allocation plan as the Cou rt
2 3ay approve), and subject to such Order becoming Final
24meaning that the tim e for appeal or appellate review of the Order
2 5ranting final approval has expired, or, if the O rder is appealed,
26hat the appeal is either decided without causing a material
27hange in the Order or is upheld on appeal and is no longer
28ubject to appellate revie w).
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15. Each person wishing to participate in the distribution must timely
2 ubmit a valid Claim Form establishing m embe rship in the Class, and including all
3 required documentation, postmarked no later thanto the
4 address set forth in the Claim Form that accompanies this Notice. Unless the Court
5otherwise orders, any Class Membe r who fails to submit a Claim Form postmarked no
6ater thanhall be forever barred from receiv ing payme nts pursuant to
7 the Settlements set forth in the Stipulations but will in all other respects remain a8Class Member and be subject to the provisions of the Stipulations, including the
9 terms of any Judgment entered and releases given.
106. Payment pursuant to the Plan of Allocation approved by the Court
11shall be conclusive against all Authorized Claimants. No person shall have any
12claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13 designated by Lead Counsel arising from distributions made substantially in
14 accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. Plaintiffs, Defendants, their respective counsel, and all other Released
16Parties shall have no responsibility or liability whatsoever for the investment or
17 distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18Allocation, the determination, administration, calculation, or payment of any claim
19 or nonperformance of the Claims Administrator, the payment or withholding of
20Taxes owed by the Settlement Fund, or any losses incurred in connection
21herewith, except as othe rwise provided in the Stipulations.
227.he objective of the Plan of Allocation is to equitably distribute the
23proceeds of the Settleme nts to those Class Mem bers who suffered econom ic losses
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25and indu stry factors or Company-spe cific factors not related to the alleged wrongful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27analysis undertaken to that e nd, including a review o f publicly available information
2 8 egarding New Century and analysis regarding the stock price m ovements.
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18. The proposed Plan of Allocation provides for distribution of the Net
2ettleme nt Fund to Authorized Claim ants as follows:
3I.UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6eparate Claim Form signed under penalty of perjury and supported by such
7ocuments as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (i) each
9laimant's opening securities position in New Century Common Stock, Series A
10Preferred S tock, Series B Prefe rred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 transaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14laimant's ending securities position in New Century Common Stock, Series A15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16market on March 13, 2007, the last day of the Class Period, and, for Common
17Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this title in which th e plaintiff seeks to establish dam ages by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
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10. All Proof of Claim forms must be postmarked or received by [DATE],
2 ddressed as follows:3n re Ne w C entury Securities Litigation Settlement4/o Analytics, Inc. Claims Adm inistrator
P.O. Box 20045hanhassen, MN 55317-2004
6
41. Unless otherwise ordered by the Court, any Class Member who fails7
to submit a properly completed and signed Proof of Claim within such period as8
may be ordered by the Court shall be forever barred from receiving any payments9
pursuant to the Stipulation, but will in all other respects be subject to the provisions10
of the Stipulation and the final judgments entered by the C ourt.
11 42. The Net Settlement Fund shall be distributed to members of the Class12
who submit acceptable Proofs of Claim. For purposes of the Plan of Allocation, the13
Net Settlement Fund is divided into two components: the "Underwriter Allotment"1 4
(composed of the settlement fund from the settlement with the Underwriter15
Defendants net of Court-approved fees and expenses), and the "Individual-Auditor16
Allotment" (composed of the settlement funds from the settlement with the17
Individual Defendants and KPMG, net of Court-approved fees and expenses).18
Only Class Members who purchased Series A Preferred Stock and/or Series B19
Preferred Stock during the Class Period and were dam aged thereby m ay be eligible20to receive distributions from the Underwriter Allotment based on those purchases.21
All Class Members (including but not limited to those who purchased Series A22
Preferred Stock and/or Series B Preferred Stock during the Class Period and were23
damaged thereby) may be eligible to receive distributions from the Individual-24
25
correcting the misstatement or omission that is the basis for the action is26disseminated ." 15 U.S.C. §78 u-4(e)(1). $0.87 was the average closing price of N ew
27Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007 .28
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1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3whe reas the Individual-Auditor A llotment w ill be d istributed to all Class Mem bers
4who submit valid Claim Forms, regardless of the type of New Century Security
5urchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7 Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claimant's
10 pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11 eparately established for each class of securities shown in Table 1 annexe d he reto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16 Settlement. The Recognized Loss Claim formula is the basis upon which the
17 Underwriter Allotment and the Individual-Auditor Allotment will be
18proportionately allocated to the Auth orized Claimants.
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21accordance with the provisions of this Plan of Allocation. Factors generally
22considere d in deve loping the Plan of Allocation, include, among othe rs: (1) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26(iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
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1 Securities at different times during the Class Period attributable to Defendants'
2alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9 Class Member who submits an acceptable Proof of Claim can claim under the
10Settlements for the purpose of making pro rata allocations of the cash from the
11 Underwriter Allotment and the Individual-Auditor Allotment to Class Members for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14 hat the prices of Ne w C entury Securities were artif icially inflated during the Class
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17 corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
1 9 Securities.
206. The Plan of Allocation covers the following New Century Securities:
211) Common Stock; (ii) Series A Preferred Stock; (ii i) Series B Preferred Stock; and
22 iv) Call and Put Options on Com mon Stock.
237. A New Century Security must be held through a corrective disclosure
24in order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26from May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
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1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
2007, the next trading day after the second corrective disclosure. Finally, a New
3 Century Security purchased or otherwise acquired on or after March 5, 2007, must
4e held until March 13, 2007 5 the last day of the Class Period. If you did not hold
5a New Century Security referred to above which was purchased during the three
6 different parts of the Class Period described above and below (see the artificial
7nflation Tables annexed hereto) for both the New Century Com mon Stock and the
8 New Century Preferred Stock through at least one of the three corrective disclosure
9 dates indicated, the Recognized Loss per share is $0. The Recognized Loss for
10hese transactions will be calculated as zero because it has bee n dete rmined that the
11artificial inflation between each disclosure and arising from the circumstances
12underlying the allegations of Plaintiffs' Complaint w as constant.
13 II. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGN IZED LOSS
14LAIMS FOR NEW CENTURY SECURITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16New Century Securities that is within the Class Period, listed in the Proof of Claim
17 orm, and for which adequate docume ntation is provided.
18.uidelines Applicable to theCalculations o} All Claims
1 9
209. In the event a Class Member has more than one purchase or sale of the
21
New Century Securities, all purchases and sales of each type of security shall be
22
matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23
matched first against any New Century Securities held at the beginning of the
24
Class Period, and then against purchases in chronological order, beginning w ith the
25
earliest purchase made during the Class Period. Purchases and sales of New
26
Century Securities shall be deemed to have occurred on the "contract" or "trade"
27
date as opposed to the "settleme nt" or "payment" date. Th e receipt or grant by gift,
28
devise or operation of law of New Century Securities during the C lass Period shall
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1alculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be
2deemed an assignment of any claim relating to the purchase of such New Century
3Securities unless specifically provided in the instalment of gift or assignment.
4Similarly, the covering purchase of a short sale shall not be deemed a purchase or
5 sale of New Century Securities for the calculation of an Authorized Claimant's
6Recognized Loss Claim.
70. Each Authorized Claimant shall be allocated a pro rata portion or
8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on
9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss
10 Claims of all Authorized Claimants for their respective class of Securities. Each
11 Authorized Claimant shall be paid an amount determined by multiplying the total
12n the Unde rwriter Allotment and/or Individual-Auditor Allotment for their class of
13Securities by a fraction, the numerator of which shall be the Claimant's
14Recognized Loss Claim and the denominator of which shall be the Total
15Recognized Loss Claims of all Authorized Claimants for the included class of
16 securities. Each Authorized Claimant will receive a pro rata share of the
17 Underwriter Allotment and/or Individual-Auditor Allotment based on his, her or its
18Recognized Loss Claim.
1 91. The amount of a Class Member's Recognized Loss as computed
20above is not intended to be an estimate of a Class Member's damages, nor of what
21a Class Member might have been able to recover at trial, and it is not an estimate
22of the amount that will be paid pursuant to this Settlement. Instead, this
23computation is only a method to weigh Class Members' claims against one another.
242. To the extent a Claimant had a gain from his, her or its transactions
25during the Class Period with respect to New Century Securities specified above,
26he value of their Recognized Loss Claim will be zero. Such claimants will, in any
27event, be bound by the Settlements. You may wish to consider this when deciding
28whethe r to opt-out of the Settlements.
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13. For purposes of determining whether a Claimant had an overall
2market gain with respect to his, her, or its Class Period purchases of an individual
3 New Century Security or suffered an overall market loss, the Claims Administrator
4shall determine the difference between (i) the Total Purchase Amount paid for all
5urchases of that individual New Century Security purchased or acquired during
6 the Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7he sum of the Sales Proceeds received for all of that individual New Century
8ecurity during the Class Period and the Holding Value ascribed to that security for
9 all Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11per share for Series B Preferred Stock. This difference will be deemed a
12Claimant's market gain or loss on his, her, or its overall transactions in that
13 individual New Century Security during the Class Period.
144. An Authorized Claimant's gains and losses on a particular New
15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17 particular security. In the case of New Century Common Stock and Put and Call
18Options on that stock, gains and losses on both the stock and the Options will be
19combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22Claim (as calculated unde r this Plan) on Ne w Ce ntury Common Stock/Options will
23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24any issue of New C entury Preferred Stock.
255. Class Members who do not submit acceptable Proofs of Claim will
26 not share in the settlement proceeds. Class Members who do not submit a request
27 or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bound by the Settlements and the judgme nts of the Court.
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16. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and
3fter all claims have been processed. At that time, Lead Plaintiff will file a motion
4 or entry of a proposed Class Distribution Order which will, among other things,
5pprove of the distribution to Authorized Claimants of the Net Settlement Fund.
67. The Individual Defendants, the Underwriter Defendants, and KPMG
7and their respective counsel, and all other Released Parties shall have no
8responsibility for, or liability whatsoever, relating to distributions from the
9Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12Adm inistrator, the payme nt or withholding of Taxes owed by a Settlement Fund , or
13 any losses incurred in connection therewith.
1 4.omputation Method ology Re lating toRecognized Losses for Comm on Stock
1 5urchases
168. For purposes of developing the Plan of Allocation, the damages17consultant calculated the amount of artificial inflation in the daily closing market
18 prices for New Century Cominon Stock during three different portions of the Class
19Period. See the annexed Table 2. In computing artificial inflation, the damages
20consultant considered price changes of New Century Common Stock in regard to
21certain public announcements regarding New Century and adjusted those price
22changes that we re attributable to marke t forces unrelated to the alleged fraud.
239. As explained above, Common Stock purchases are not eligible for
24distributions from the Underwriter Allotment, but may be eligible for distributions
25 rom the Individual-Auditor A llotment.
26.ecognized Loss Calculations
270. Recognized Loss Claims will be calculated for the purposes of the
28 Settlement as follows:
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1.alculation of Recognize d Loss for NewCentury Common Stock Purchases
2
61. Calculation of Recognized Loss Claims for New Century Common3
Stock sh ares shall be as follows:4
62. For shares purchased on or between May 5, 2005, through February 7,5
2007 , the following claims for dam ages shall be allowed:6
(a) For each share sold on or before February 7, 2007, no Recognized
7laims for damages shall be allowe d;gb) For each share sold on or between February 8, 2007, and through March
13 1 2007, the allowed damages shall be the inflation per share at the time of
9urchase for the applicable date of purchase as set forth in Table 2, annexed
10ereto, less the inflation per share at the time of sale as set forth in Table 2;
and
1 1
123. For shares purchased on or between February 8, 2007, through March
132, 2007, the fo llowing claims for dam ages shall be allowed:
14a) For each share sold on or before March 2, 2007, no Recognized Claims
for damage s shall be allowed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,
1 6he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,17
ess the inflation per share at the time of sale as set forth in Table 2; and18
94. For shares purchased on or between March 5, 2007, through March
20 12, 2007, the following claims for damages shall be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or damage s shall be allowed;
22b) For each share sold on or after March 13, 2007, the allowed damages
shall be the inflation per share at the time of purchase for the applicable23
ate of purchase as set forth in Table 2, annexe d here to.
24
255. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Com mon Stock claims, the Recognized Loss Claims for damages for such
27shares purchased during the Class Period shall be further limited (as provided for
28under the PSL RA) to the smallest of the following:
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2pocket inve stmen t loss) if sold on or before June 10, 2007 ;
(b) the difference between the price paid (excluding all fees and
3ommissions) and the average closing price as set forth in Table 3
4nnexed h ereto if sold betwe en M arch 13, 2007 , and June 10, 2007 ; and(c) the diffe rence betwee n the price per share paid and $0.87 pe r share if the
5hares were sold after June 10, 2007 , or we re held until the current date.
6.alculation of Recognize d Lossfor New Century Series A Preferred Stock
7urchases
86. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
107. For shares purchased on or between May 5, 2005, through February 7,
112007 , the following claims for dam ages shall be allowed:12a) For each share sold on or before Fe bruary 7 , 2007, no R ecognized Claims
1 3or damage s shall be allowed;(b) For each share sold on or between February 8, 2007, and through March
1 43, 2007, the allowed damages shall be the inflation per share at the time
1 5f purchase for the applicable date of purchase as set forth in Table 4,
annexed hereto, less the inflation per share at the time of sale as set forth16n Table 4; and
17
68. For shares purchased on or between February 8, 2007, through March18
2, 2007, the fo llowing claims for dam ages shall be allowed:1 9a) For each share sold on or before March 2, 2007, no Recognized Claims
20or damage s shall be allowed;
21b) For each share sold on or between March 5, 2007, and March 13, 2007,
the allowed damages shall be the inflation per share at the time of22urchase for the applicable date of purchase as set forth in Table 4,
23nnexed hereto, less the inflation per share at the time of sale as set forthin Table 4; and
24
259. For shares purchased on or between March 5, 2007, through March
2612, 2007, the f ollowing claims for damage s shall be allowed:
27a) For each share sold on or before March 12, 2007, no Recognized Claimsfor damage s shall be allowed;
28
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1b) For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicable
date of purchase as set forth in Table 4, annexe d here to.30. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6under the PSLRA) to the smallest of the following:
7 investm ent loss) if sold on or before June 10, 2007;8b) the difference between the price paid (excluding all fees and commissions)
9nd the average closing price as set forth in Table 6 annexed hereto if sold
betwe en March 13, 2007 and June 10, 2007; and10c) the difference between the price per share paid and $8.02 per share if the
1 1hares were sold after June 10, 2007, or were h eld until the current date.
12.alculation of Recognize d Lossfor New C entury Series B Preferred Stock
1 3urchases
141. Calculation of Recognized Loss Claims for New Century Series B
15Preferred Stock shares shall be as follows:
162. For shares purchased on or between May 5, 2005, through February 7,17 2007 , the following claims for dam ages shall be allowed:
18a) For each share sold on or before February 7, 2007, no Recognized
Claims for damage s shall be allowed;1 9b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in
21able 5, annexed hereto, less the inflation per share at the time of sale
22s set forth in Table 5; and
233. For shares purchased between February 8, 2007, through March 2,
242007 , the following claims for damages shall be allowed:
2 5a) For each share sold on or before March 2, 2007, no Recognized Claims
26or damage s shall be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
2 8urchase for the applicable date of purchase as set forth in Table 5,
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1nnexed hereto, less the inflation per share at the time of sale as set
2orth in Table 5; and
34. For shares purchased between March 5, 2007, through March 12,
42007 , the following claims for dam ages shall be allowed:
5a) For each share sold on or before March 12, 2007, no Recognized
6laims for damages shall be allowed ;(b) For each share sold on or after March 13, 2007, the allowed damages
7hall be the inflation per share at the tim e of purchase for the applicable
8ate of purchase as set forth in Table 5, annexed h ereto.
95. The Recognized Loss Claims for damages for such Series B Preferred
10Shares purchased during the Class Period shall be further limited (as provided for
11 under the PSLRA) to the smallest of the following:12a) the difference between the price paid and the price received (out-of-pocket
13nvestm ent loss) if sold on or before June 10, 2007;(b) the difference between the price paid (excluding all fees and commissions)
14nd the average closing price as set forth in Table 7 annexed hereto if sold
15etwee n March 13, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the
16hares were sold after June 10, 2007, or were he ld until the current date.
17.alculation of Recognize d Loss for
New Century Call and Put O ptions1 8
96. The Plan of Allocation covers the following New Century Call and
20
Put Options: New Century Call Options on Common Stock initially purchased or
21
otherwise acquired during the Class Period, on May 5, 2005, up to and including
22
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
23
Common Stock written or purchased (covered) during the Class Period May 5,
24
2005, through and including M arch 13, 2007 ("New C entury Put Options").
257. Artificial inflation and Recognized Losses as to New Century Call
Options and artificial deflation and Recognized Losses as to New Century Put26
27
Options were computed in a manner similar to that used with respect to New
Century Common Stockas described above. To determine artificial inflation for28Call Options, Lead Plaintiff's damages consultant considered securities' price
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1hanges that occurred in reaction to certain public announcements regarding New
2Century and then made adjustments for changes that were attributable to market
3orces unrelated to the alleged fraud in prices of such Call Options and Put4 Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5 from which the Recognized Losses for New Century Call Options and Put Options
6 may be calculated. In addition, the total dollar amount payable to Class Members
7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9imitation reflects the speculative and derivative nature of these securities as
10compared to New Ce ntury Comm on Stock and New Ce ntury Preferred Shares.
118. With respect to purchases and sales (covers) of New Century Call
12Options during the pe riod May 5, 2005, through and including March 13, 2007, the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15 Common Stock share price. The dollar change in the value of Call Options will be
16calculated using the Black-Scholes option pricing formula (using Black's
17 adjustment for dividends and the annualized standard deviation estimated from 46-
18day, historical daily volatility estimates) using the closing share price of New
19Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22reported closing share price minus the Common Stock price inflation per share set
23forth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
2 7 lack's adjustment for dividends is implemented. Annualized volatility estimates
2 8 are obtained using the daily standard deviations using the returns for that day plus
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1 the previous 45-day stock returns, which are then annualized using a 252-trading
2ay approach.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall
6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) were sold (position closed out) on or betwee n February
1 0, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of O ptions multiplied by the lesser of:
1 1
1 21) the difference between Artificial Inflation per Call Option on the
date of purchase and A rtificial Inflation per Call Option on the date1 3f expiration, ex ercise, or sale, as appropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).1 5
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
1 8ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor1 9hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) times num ber of O ptions (100), for a total of$880.00; assuming that the difference between the purchase price and the
23ale price was greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions multiplied by the lesser of-
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11) the difference between Artificial Inflation per Call Option on the2ate of purchase and Artificial Inflation per C all Option on the d ateof expi ration, exercise, or sale, as appropriate; or
32) the difference between the purchase price per Option and the sale
4rice per Option ($0.00 if the Call Option expired w orthless).
5d) For Call Options which were purchased or acquired between March 5,
6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) were exe rcised on or after March 13, 2007 ; or 3) were sold (position
7losed out) on or after March 13, 2007, the Recognized Loss Claim
8hall be that numbe r of Options multiplied by the lesser of:
91) the Artificial Inflation per Call Option on the date of purchase, or
102) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).
11
129. With respect to purchases (covers) and sales of Put Options during the
13 period May 5, 2005, through and including March 13, 2007, the Artificial Inflation
14 per Option on a given day shall be the dollar change in the value of Put Options on
15hat day as a result of the inflation in New Century's Common Stock share price.
16 The dollar change in the value of Put Options will be calculated using the Black-
17 Scholes put option pricing formula (using Black's adjustment for di vidends and the
18annualized standard deviation estimated from 46-day historical daily volatility
19 estimates) using the closing share price of New Century Common Stock on the
20ransaction date, compared with the Black-Scholes put pricing formula value for
21he Put Option using the uninflated share closing share price of New Century
22Common Stock on that same date as determined by: (1) the reported closing share
23price minus the Common Stock price inflation per share set forth in the annexed
24 Table 2 for Put Options subsequently purchased between May 5, 2005, and March
2513, 2007, and (2) the reported closing share price minus the Common Stock price
26inflation per share set forth in the annexed Table 2 for Put Options initially sold
27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28dividends is implemented. Annualized volatility estimates are obtained using the
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1daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, which are then annualized using 252 trading day approach.3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6(b) For Put Options which were sold between May 5, 2005, and February 7,
7007 , and (1) expired on or after February 8, 2007; (2) were e xercised on
8r between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
1 0ultiplied by the lesser of:
1 11) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
12er Put Option on the date of expiration, exercise, or purchase
1 3$0.00 if the Put O ption expired worthless), as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
14ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired worthless).
1 6n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of S20. The Put inflation on this date is -$14.221 8rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
211 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22) =225.15) times number of Put Options, 100 for a total of $515.00; assuming
23hat the difference be tween the Put purchase price and the Put sale price wasgreater than $5.15.
24
25c) For Put Options which were initially sold between February 8, 2007, andMarch 2, 2007, and (1) expired on or after March 5, 2007; (2) were
26xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the. Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of-
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121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put O ption expired w orthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired w orthless).
7d) For Put Options which we re sold betwe en M arch 5, 2007 , and March 12,8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 13, 2007, the Recognized Loss Claim shall be that number of
1 0ptions multiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,
12ultiplied by minus one; or(2) the difference, multiplied by minus one, between the sale price per
13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired w orthless).
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 610.he put inflation for this option on March 6, 2007, was
17$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put1 8ptions after March 13, 2007, when Put inflation was zero. The Recognized
1 9oss Claim for this investor will be $68 (negative of the Put inflation on thesale date), assuming that the difference in purchase price of the Put option
20nd sale price of the Put option was greater than $0.68 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25will be made.
261. The determination of the price paid and the price received for a
27particular security shall be exclusive of all commissions, taxes, fees and charges.
28
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2of Allocation wi thout furth er notice , or to allow, disallow or adjust the claim o f any
3 Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 unds. No person shall have any claim against the Plaintiffs or their counsel or any
5claims administrator or other agent designated by Plaintiffs or their counsel, or
6against Defendants or their counsel, based on distributions made substantially in
7accordance with the Stipulations and the Settlements contained therein, the Plan of
8 Allocation, or further orders of the Court.
93. The Defendants and their counsel shall have no involvement in, or
10responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Unde rwriter Allotment or Individual-Auditor A llotment, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13ursuant to, Proofs of Claim, for the payment or withh olding of Taxes owed by the14Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 for acts or omissions of the Escrow Agent or any losses incurred in connection
1 6herewith.1 74. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 e quitable grounds the C laim of any Class Me mber.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 urther notice to the C lass.
23WHA T RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
2456. If the Settlements are approved, the Court will enter judgments (the
26"Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28Plaintiff and all other Class Mem bers will provide releases as describe d below.
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17. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2members of the Class will be deemed by operation of law to have released, waiv
3ischarged and dismissed each and every Settled Class Claim as against each and
4every Released Officer And Director and the Insurance Carriers (as defined in the
5Global Officer And Director Stipulation), and shall be deemed to forever be
6 enjoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8Claim" in this paragraph means any and all claims and causes of action of every
9 nature and description, whether known or Unknown Claims, whether arising under
10federal, state, common or foreign law, that Plaintiffs or any other member of the
11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any
12forum that arise out of or are based upon the allegations, transactions, facts,
13matters or occurrences, representations or om issions involved, set forth, or referred
14 to in the C onsolidated Action, and that arise out of or relate to the purchase of N ew
15Century Common Stock, New Century Series A Preferred Stock, New Century
16 Series B Preferred Stock, and/or New Century Call Options and/or the sale of New
17Century Put Options during the Class Period. Settled Class Claims does not
18include claims relating to the enforcement of the Settlement. "Released Officers
19 And Directors" in this paragraph means (1) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24affiliated with New Century (including any of its subsidiaries and affiliates)
25included in the definition of "Assured" or "Insured" as defined in the Policies
26(defined in the Global Officer And Director Stipulation) and any and all of their
27respective heirs, executors, administrators, predecessors, successors and assigns,
28
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1mployees, agents and retained professionals (other than KPMG or the
2Underwriter D efendants).
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4 lass will be de eme d by operation of law to have released, waived, discharged and
5 dismissed each and every Settled Claim, and shall forever be enjoined from
6 prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8ature and description, whe ther known or Unknow n, whether arising under federal,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11or are based upon the allegations, transactions, facts, matters or occurrences,
12 representations or omissions involved, set forth, or referred to in the Complaint,
13and that arise out of or relate to the purchase of Ne w Ce ntury Common Stock, Ne w
14Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
15 New Century Call Options and/or the sale of New Century Put Options during the
16 Class Period. "Settled Claims" does not include claims relating to the enforcement
17 of the Settlements. "Released Auditor Party" means KPMG and any and all of its
18 partners, principals, officers, directors, employees, agents, attorneys and affiliates.
19 "Released Auditor Parties" does not include any Defendants other than KPMG.
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22heirs, executors, administrators, predecessors, successors and assigns, and any and
23all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25dismissed each and every Settled Claim, and shall forever be enjoined from
26prosecuting any or all Settled Claims, against any Released Underwriter Party.
27"Settled Claim" in this paragraph means any and all claims and causes of action of
28every nature and description, whether known or Unknown, whether arising under
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1ederal, state, common or foreign law, that Plaintiffs or any other member of the
2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that
3rise out of or are based upon the allegations, transactions, facts, matters or
4 occurrences, representations or omissions involved, set forth, or referred to in the
5Com plaint, and that arise out of or relate to the purchase of N ew C entury Comm on
6 Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7Stock, and/or New Century Call Options and/or the sale of New Century Put
8Options during the Class Period. "Settled Claims" does not include claims relating
9 to the enforcement of the Settlements. "Released Underwriter Party" means the
10Underwriter Defendants and any and all of their respective parent companies,
11subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors
12and assigns, and any and all of their current and former officers, directors,
13employees, agents and attorneys. "Released Underwriter Parties" does not include
14any Defendants other than the Underwriter Defendants.
150. "Released Parties" means the Released Officers And Directors, the
16 Released Auditor Parties, and the Released Underwriter Parties.
171. "Unknown Claims" means any and all claims that Lead Plaintiff or
18any Class Member does not know or suspect to exist in his, her or its favor at the
19 time of the release of the Released Parties, which if known by him, her or it might
20have affected his, her or its decision(s) with respect to the Settlements. With
21respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and
22each Class Member shall be deemed to have waived, and by operation of the
23 Judgment shall have expressly waived, any and all provisions, rights and benefits
24conferred by any law of any state or territory of the United States, or principle of
25common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,
26which provides:
27general release does not extend to claims which the creditor
28oes not know or suspect to exist in his or her favor at the time of
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2aterially affected his or her sett lement with the debtor.
32. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6 nd was a key e lement of the Settlements.
73. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10Class. In addition, certain Defendants and other persons and entities will also
release claims against each other and other persons and entities as set forth in the1 112
Stipulations.
13HAT PAYM ENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14OW WILL THE LAWYERS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel
18been reimbursed for its out-of-pocket expenses. Before final approval of the
19 Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'
20fees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23eek attorneys' fees or expenses with respect to, any disgorgements or penalties
24obtained by the Securities and Exchange Commission in the SEC Action. At the
25ame time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed $4.5 million, plus interest from the date of funding at the
27ame rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28request for reimbursement of Litigation Expenses will be a request for an award to
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1 Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
2 reimbursement of their reasonable costs and expenses (including lost wages)
3 directly related to their representation of the Class. The Court will determine the
4 amount of the awards.
5OW DO I PARTICIPATE IN THE SETTLEMENTS?
6HAT DO I NEED TO DO?785. If you purchased or otherwise acquired New Century Common Stock,
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10and/or New Century Call Options and/or sold New Century Put Options, during the
11 period from May 5, 2005, through and including March 13, 2007, either in the
12Offerings, pursuant to a registration statement, or in the market, and were injured
13 upon disclosure of certain facts alleged in the Complaint, and you are not excluded
14 by the definition of the Class and you do not elect to exclude yourself from the
15Class, then you are a Class Member. You will be bound by the proposed
16Settlements if approved by the Court, and by any judgme nt or determination of the
17Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19Settlements. A Claim Form is included with this Notice, or you may go to the
20website maintained by the Claims Administrator for the Settlements to download a
21copy of the Claim Form or request that a Claim Form be mailed to you. The
22website is www.newee ntuT-ysettlement.com . You may also request a Claim Form
23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24 downloaded from Lead Counsel's website at www.blbglaw.com. Those who
25exclude themselves from the Class, and those who do not submit timely and valid
26Claim Forms wi th adequate supporting documentation, will not be e ntitled to share
27 in the Settlements. Please retain all records of your ownership of, or transactions
28n, New Ce ntury Securities, as they may be ne eded to document your Claim.
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16. As a Class Member, you are represented by Lead Plaintiff and Lead
2Counsel, unless you enter an appearance through counsel of your own choice at
3your own expense. You are not required to retain your own counsel, but if you
4choose to do so, such counsel must file a notice of appearance on your behalf and
5must serve copies of his or her notice of appearance on the attorneys listed in the
6section entitled, "When and Where Will the Court Decide Whether to Approve the
7ettleme nts?," below.
87. If you do not wish to remain a Class Member, you may exclude
9ourself from the Class by following the instructions in the section entitled, "What
10 If I Do Not Want To Be A Part Of The Class And The Settlements? How Do I11Exclude Myself?," below.
128. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15exclude yourself from the Class, you m ay present your objections by following the
16instructions in the section entitled, "When and Where Will the Court Decide
17Wh ether to A pprove the Settlements?," below.
1 8HAT IF I DO NOT W ANT TO BE A PART OF THE SETTLEMENTS?1 . 9OW DO I EXCLUDE MYSELF?201 99. Each Class Member will be bound by all determinations and
22judgments in this lawsuit, including those concerning the Settlements, whether23favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Settlement, c/o A nalytics, Inc., Claims A dministrator, P.O. Box 2004, Chanhassen,
27MN 55317-2004. The exclusion request must be received no later than
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
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1 Each request for exclusion must (i) state the name and address of the person or
2ntity requesting exclusion; (ii) state that such person or entity requests exclusion
3rom the Class in In re New Century, 2:07-CV-0093 I -DDP; (iii) be signed by the
4erson or entity requesting exclusion; (iv) provide a telephone number for that
5person or entity; and (v) provide the date(s), price(s), and numbers) of shares of
6ll purchases, acquisitions, and sales of New Century Securities during the Class
7Period. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1000. If you do not want to be part of the Class, you must follow these
11instructions for exclusion even if you have pending, or later file, another lawsuit,12arbitration, or other procee ding relating to any Settled C laims.
1301. If a person or entity requests to be excluded from the Class, that
14person or entity will not receive any bene fit provided for in the Se ttleme nts.1502. The Individual Defendants, Insurance Carriers, Underwriter
16Defendants or KPMG may terminate the Settlements if requests for exclusion are
17received from potential Class Members representing over a certain amount of
18shares as stated in Supplemental Agreements. The three settlement agreements are
19 closely related and, if one of the three Settlements should not become final for any
20eason, it could affect the finality and enforceabi lity of the other Settleme nts.
21HEN AND W HERE WILL THE COURT DECIDE WHETHER TO APPROV E22
THE SETTLEMENTS?23
DO I HAVE TO COME TO THE HEA RING?24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27proposed Plan of Allocation, and/or the application for attorneys' fees and
28reimbursement of Litigation Expenses, you do not need to attend the Settlement
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1earing. You can object to or participate in the Settlements without attending the
2 ettlement Hearing.304. The Settlement Hearing will be held on [INSERT] before the
4Honorable Dean D. Pregerson, at the United States District Court for the Central
5District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
6 California 90012. The Court reserves the right to approve the Settlements, the Plan
7f Allocation or the request for attorneys' fees and reimbursement of Litigation
8Expenses at or after the Settlement Hearing without further notice to the members
9 of the Class. The Settlements will become effective only if all three Settlements
10 are approved by the Court.
1 105. Any Class Member who does not submit a valid exclusion that is
12received no later than [INSERT] may object to the Settlements, the Plan of
13Allocation, or Lead Counsel's request for an award of attorneys' fees and
14 reimbursement of Litigation Expenses. Objections or oppositions must be in
15writing. You must file any written objection or opposition, together with copies of
16all other papers (including proof of all transactions in New Century Securities
17during the Class Period) and briefs, with the Clerk's Office at the United States
18District Court for the Central District of California at the address set forth below
19on or before [NSERT]. You must also serve the papers
20on Lead Counsel for the Class at the address set forth below so that the papers are
21received on or before [NSERT].
22
23Clerk's Officeead C ounsel for the Class
24UNITED STATESERNSTEIN LITOWITZ BERGER
25DISTRICT COURTGROSSMANN LLPFOR THE CENTRALalvatore J. G raziano, Esq.
26DISTRICT OF CALIFORNIA285 Avenue of the Ame ricas27Clerk of the Courtew Y ork, NY 10019
312 N. Spring Street28Los Ange les, California 90012
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1epresentative Counsel for Directors and2fficers3UNGER, TOLLES & OLSON LLP
4athleen M. McDowell355 South Grand Ave nue, 35th Floor
5os Angeles, CA 90071-1560
6 Counsel for Underwriter Defendants7
8AUL, HASTINGS, JANOFSKY &WALKER LLP
9illiam F. Sullivan
toohn S. Durrant515 South Flower Stree t, 25 t h Floor
1 1os Angeles, CA 9007 11 2
Counsel for KPMG13
14IDLEY AUSTIN LLPMichael L. Rugen
1555 California Street, Suite 200016an Francisco, CA 94104
17
106. The filing must demonstrate your membership in the Class, including18
the number of shares of New Century Securities purchased or otherwise acquired1 9
or sold during the Class Period and the price(s) paid and received. You may not20
object to the Settlements or any aspect of them, if you are not a Class Me mber or if21
you excluded yo urself from the C lass.22
107. You may file a written objection without having to appear at the23
Settlement H earing. You may not appear at the Settlement H earing to present your24objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise.27
108. If you wish to be heard orally at the hearing in opposition to the28
approval of the Settlements, the P lan of Allocation, or Lead Counsel's request for-42-OTICE OF PENDENCY OF CLASS ACT ION
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1 an award of youttorneys' fees and reimbursement of Litigation Expenses, and if2ave filed and served a timely written objection as described above, you also must
3otify the above counsel on or before [INSERT4oncerning your intention to appear. Persons who intend to object and desire to
5resent evidence at the Settlement Hearing must include in their written objections
6he identity of any witnesses they may call to testify and exhibits they intend to
7 introduce into evidence at the hearing.
809. You are not required to hire an attorney to represent you in making9ritten objections or in appearing at the Settlement Hearing. If you decide to hire
10an attorney, which will be at your own expense, however, he or she must file a
11 notice of appearance with the Court and serve it on Lead Counsel so that the notice
12s received on or before [INSERT].
1310. The Settlement Hearing may be adjourned by the Court without
14further written notice to the Class. If you intend to attend the Settlement Hearing,
15you should confirm the date and tim e with L ead Counsel.
16Unless the Court orders otherwise, any Class Member who does not object in
17 the manner described above will be deemed to have waived any objection and
18 shall be forever foreclosed from making any objection to the proposed
19Sett lements, the proposed P lan of Allocation, or Lead C ounsel's request for an
20award of attorneys' fees and reimbursement of Litigation Expenses. Class
21Members do not need to appear at the hearing or take any other action to
22ndicate their approval.
23HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?24
2511. If you purchased or otherwise acquired or sold New Century
26Securities during the Class Period for the beneficial interest of a person or
27organization other than yourself, you must either (i) send a copy of this Notice to
28the beneficial owner of such New Century Securities, postmarked no later than
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 60 of 114 Page ID#:111141 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2ddresses of such persons no later than fourteen (14) days after you receive this
3Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.4 Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5choose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7must retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11easonable expenses actually incurred, by providing the Claims Ad ministrator with12proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14 www.newcenturysettlement.com or Lead Counsel's website, www.blbglaw.com, or
15by calling toll-free 1-866-308-7615.
16 CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17UESTIONS?
18912. This Notice contains only a summary of the terms of the proposed
20Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.neweenturysettlement.com, including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
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1n re N ew C entury Securities Litigationalvatore J. Graziano, Esq.2ettlementERNSTEIN LITOWITZ BERGER
c/o A nalytics, Inc.GROSSMANN LLP3laims Administrator285 Avenue of the Ame ricas4.O. Box 2004ew York, NY 10019
Chanhassen, MN 55317-2004866) 648-25245la ims [email protected] Counsel
D O N O T C A L L O R W R IT E T H E C O U R T O R T H E O F F I C E O F T H E7
C L E R K O F C O U R T8
R E G A R D I N G T H I S N O T I C E .9
1 0
11
Dated:y Order of the C lerk of CourtUnited S tates District Court
1 2or the Ce ntral District of California
1 3
1 4
1 5
1 6
1 7
1 8
1 9
20
2 1
2 2
2 3
24
2 5
2 6
2 7
2 8
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12able 1
3
4
5
6ssuer /iquidationhare inhare in
Underlyingreferencenderwriter Individual7USIPyp essue Dateate
AllotmentAuditor
Allotment8
Preferred Stock
9New Century 64352D200/15/200525.00.125%Series A
10
11referred StockNew Century 6435EV207/15/200625.00,750%12eries B
13ew Century 6435EV108 Corrunon Stock14
15New Centuryariousall Option
16 New Centuryariousut Option178
19
2021
22
23
24
25
26
27
28
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1
2able 2
3nflation per Share for Common Stock Sh ares Purchased betwee nMay 5, 2005, and March 13, 2007
5
6eriodegin Datend datenflation1-May-05-Feb-075.21
7-Feb-07-Mar-071.09
3-Mar-072-Mar-07.69
83-Mar-07o the present00910
1112
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 64 of 114 Page ID#:11118
123abe34
Com mon Stock PSL RA 90-Day Look-Back L oss Limitat ion Calculat ions
5verageverageClosinglosinglosinglosing
6aterice (S)rice ($)aterice ($)rice ($ )
713Mar2007.8 4.847Apr2007.8 6.19
84Mar2007.67.7 60Apr2007.8 9.18
15Mar2007.35.951May2007.8 5.17
96Mar2007.34.302May2007.83.16
19Mar2007.17.473May2007.8 0.15100Mar2007.69.514May2007.7 2.14
111Mar2007.67.537May2007.59.12
22Mar2007.56,548May2007.58.11
123Mar2007.00.599May2007.53.10
26Mar2007.56.59OMay2007.43.08
137Mar2007.41.57lMay2007.43.06
28Mar2007.11.534May2007.41.05
149Mar2007.03.495May2007.37.03
30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01
163Apr2007.01.408May2007.39.99
04Apr2007.00.381May2007.44.98
175Apr2007.26.372May2007.43.97
09Apr2007.14.363May2007.47.9618OApr2007.09.344May2007.45.95
1lApr2007.98.335May2007.47.94192Apr2007.8 9.319May2007.46.93
203Apr2007.8 6.290May2007.45.92
16Apr2007.98.271May2007.44.92
217Apr2007.00.261Jun2007.44.91
1SApr2007.99.254Jun2007.43.90
229Apr2007.93.245Jun2007,43.8 9
20Apr2007.96.236Jun2007.45.8 8
233Apr2007.96.227Jun2007.44.8 8
24Apr2007.92.21
8Jun2007
.44
.8 7245Apr2007.96.209JLm2007.44.8 7
256Apr2007.94.200JLm2007.44.87
26
27
28
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1
2able 4
3nflation per Share for Series A Preferred Shares Purchased betw een
5ay 5, 2005, and March 13, 2007
6eriodegin Datend datenflation
1-May-05-Feb-075.10
7-Feb-07-Mar-070.48
8-Mar-072-Mar-07.48
43-Mar-07o the present009
10
1 1
12
13Table 5
145nflation per Share for Series B Preferred Shares Purchased betw een
16ay 5, 2005, and M arch 13, 2007
17eriodegin Datend datenflation
18-May-05-Feb-075.41
2-Feb-07-Mar-071.18
19-Mar-072-Mar-07.03
43-Mar-07o the present0020
21
22
23
24
25
26
27
28
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1
2
3abe64referred Stock, Series A, PSLRA 90-Day Look-Back Loss
Limitation Calculations5Averageverage
6losinglosinglosinglosingDaterice ($)rice ($)aterice ($ )rice ($)13-Mar-2007.4 5.4 57-Apr-2007.27.4 5
84-Mar-2007.20.330-Apr-2007.4 5.4 8
95-Mar-2007.9 5.5 31-May-2007.00.5 2
16-Mar-20070.00.152-May-2007.80.5 6
109-Mar-2007.25.373-May-2007.80.5 9
20-Mar-2007.5 0.394-May-2007.75.6 2
1 11.-Mar-2007.75.4 47-May-2007.25.6 6
122-Mar-2007.85.4 98-May-2007.00.70
23-Mar-2007.77.6 49-May-2007.70.7 2136-Mar-2007.9 2.6 60-May-2007.23.73
147-Mar-2007.4 0.4 61-May-2007.73.73
28-Mar-2007.10.264-May-2007.5 0.75
159-Mar-2007.20.105-May-2007.00.7 8
30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.83
173-Apr-2007.5 5.918-May-2007.83.85
04-Apr-2007.10.9 21-May-2007.5 0.88185-Apr-2007.25.9 42-May-2007.5 0.9 2
199-Apr-2007.6 5.9 23-May-2007.1 0.9 4
10-Apr-2007.5 0.9 04-May-2007.25.9 7
201-Apr-2007.6 0.895-May-2007.10.9 9
12-Apr-2007.4 5.879-May-2007.25.01213-Apr-2007.00.830-May-2007.20.03
226-Apr-2007.05.801-May-2007.1 4.05
17-Apr-2007.70.751-Jun-2007.75.0 6238-Apr-2007.30.704-Jun-2007.25.07
249-Apr-2007.10.6 45-Jun-2007.10.0720-Apr-2007.15.5 96-Jun-2007.4 5.06
253-Apr-2007.6 0.5 27-Jun-2007.00.0 4
24-Apr-2007.0 0.4 78-Jun-2007.87.0 2265-Apr-2007.25.4 39-Jun-2007.87.0 2
276-Apr-2007.37.4 30-Jun-2007.87.0228
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1
2able7referred Stock, Series B, PSLRA 90-Day Loo k-Back Loss
Limitation Calculationsverageverage
5losinglosinglosinglosingDaterice ($) price ($)aterice ($) price ($ )
613-Mar-2007.32.327-Apr-2007.06.35
74-Mar-2007.35.340-Apr-2007.40.385-Mar-2007.89.521-May-2007.70.42
-Mr-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48
-Mr-2007.60.424-May-2007.6 1.5 101-Mar-2007.00.507-May-2007.45.56
12-Mar-2007
.10
.58
8-May-2007
.88
.60-Mr-2007.50.689-May-2007.70.6226-Mar-2007.90.700-May-2007.53.64
37-Mar-2007.65.5 11-May-2007.05.65
-Mr-2007.80.294-May-2007.45.67149-Mar-2007.25.135-May-2007.78.70
-Mr-2007.40.016-May-2007.00.7252-Apr-2007.00.947-May-2007.20.76
63-Apr-2007.25.908-May-2007.88.78Apr-2007.00.901-May-2007.50.8175-Apr-2007.45.932-May-2007.75.83
89-Apr-2007.50.9 13-May-2007.25.86
-Apr-2007.03.874-May-2007.25.89
91-Apr-2007.05.835-May-2007.10.9 1
Apr-2007.90.799-May-2007.30.9403-Apr-2007.80.740-May-2007.00.96
216-Apr-2007.76.701-May-2007.65.99
Apr-2007.15.641-Jun-2007.85.00
228-Apr-2007.00.584-Jun-2007.60.01
239-Apr-2007.00.525-Jun-2007.60.00
-Apr-2007.05.476-Jun-2007.50.00
43-Apr-2007.90.4 17-Jun-2007.90.98
Apr-2007.00.378-Jun-2007.25.9555-Apr-2007.20.339-Jun-2007.25.95
266-Apr-2007.25.330-Jun-2007.25.9527
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1able 8
2Table 8 has been abbreviated for example purposes. For a complete table, visit
3ttp://www.newcenturysettlement.com/Fonns/Table 8.pdf.
4f you do not have access to the Internet, please contact the Claims Administrator
5t 1-866 -308-7615 to have a copy m ailed to you.
6
M axin7a xinax Minis kis kaxinaxMatur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Pu t
8a ter icer icer i c eil ityi l itya t ea tenf lat.nf lat.nf lat.nflat ion
97-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510.00$0.18
21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0.05$0.20
109-May-
0 72.505.163.21. 9 8. 8 8. 0 5. 0 50.620.51$0.07$0.19
118 - A u g - 0 72.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.54$0.08$0.151 9 - J a n - 0 82.505.163.21. 9 8. 8 8. 0 5. 0 50.630.59$0.06$0.11
127 - J a n - 0 92.505.163.21. 9 8. 8 8. 0 5. 0 50.660.64$0.04$0.05
137 - F e b - 0 75.0019.7517.21. 9 3. 8 8. 0 5. 0 511.0911.080.00$0.01
17-Mar-075.0019.753.21. 9 8. 8 8. 0 5. 0 511.080.03$0.01$1.40141-Apr-075.0015.853.21. 9 8. 9 5. 0 5. 0 59.410.22$0.20$2.29
159-May-075.0019.753.21.98.88.05.0510.860.30$0.19$2.30
168-Aug-075.0019.753.21.98.88.05.0510.460.42$0.16$3.00
19-Jan-085.0019.753.21.98.88.05.059.870.51$0.11$4.20
177 - J a n - 0 95.0019.753.21. 9 8. 8 8. 0 5. 0 58.940.61$0.06$3 .44
187 - F e b - 0 77.5019.7517.21. 9 3. 8 8. 0 5. 0 511.099.590.00$1.50
17-Mar-077.5019.753.21. 9 8. 8 8. 0 5. 0 510.750.00$0.34$3.87191-Apr-077.5015.853.21. 9 8. 9 5. 0 5. 0 57.070.10$0.36$4 .69
209-May-
0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.970.18$0.31$4 .56
218 - A u g - 0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90
1 9 - J a n - 0 87.5019.753.21. 9 8. 8 8. 0 5. 0 58.750.46$0.16$5 .63
227 - J a n - 0 97.5019.753.21. 9 8. 8 8. 0 5. 0 57.950.59$0.08$4 .50
2310.01 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 59.007.10$1.14$3.99
$10.0247-Mar-0719.753.21. 9 8. 8 8. 0 5. 0 59.100.00$0.64$6 .332510.021-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 57.980.05$0.48$6.82
269-May-10.0
0 719.753.21. 9 8. 8 8. 0 5. 0 58.540.11$0.41$6 .51
2710.0
1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5. 0 58.110.27$0.29$6 .40
2810.0
19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70
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110.0
1 7 - J a n - 0 919.753.21. 9 8. 8 8. 0 5.057.140.57$0.09$5 .31
212.5
1 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 56 .504.60$3 .63$6 .4931 2 . 5
17-Mar-0719.753 . 2 1, 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.5041 2 . 5
21-Apr-07
18.77
3.21
. 9 8
. 9 3
. 0 5
. 0 5
6 . 0 5
0.02
$0.55
$8.4559-May-1 2 . 50719.753.21.98
.88.05.056.950.08$0.48$8.00
612.5
1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5. 0 56.870.15$0.34$7 .54712.5
89 - J a n - 0 819.753.21. 9 8, 8 8. 0 5. 0 56.720.39$0.23$7.51
$12.5
97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95$15.0
107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54.002.16$6.12$8.93
$15.0
117-Mar-0719.753.21.98.88.05.054.700.00$0.69$9.97
$15.0
121-Apr-07$18.773.21.98
.93.05.054.350.01$0.60$9.54
19-May-15.0
137$19.753.21.98.88.05.055.400.05$0.53$9.05
$15.0
148-Aug-0719.753.21.98.88.05.055.760.10$0.38$8.40
$15.0
159-Jan-08 19.753.21.98.88.05.055.890.20$0.25$8.14
$15.0
167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47
$17.5177-Feb-0719.7517.21.93.88.05.051.700.48$8.61$10.61
$17.5187-Mar-0719.753.21.98
.88.05.052.950.00$0.69
$10.69
$ 1 7 . 5
191-Apr-0718.773.21.98.93.05.053.020.01$0.63$10.21
19-May-17.520719.753.21.98.88.05.053.900.04$0.56$9.76
2117.5
18-Aug-0719.753.21.98.88.05.054.500.10$0.41$9.03
221 7 . 519-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63
2317.5
17-Jan-09$19.753.21.98.88.05.055.400.40$0.13$6.90
2420.017-Feb-07$42.10
17.21
.93
.21.05.05
19.930.04$5.28
$17.39
2520.0
17-Mar-0730.843.21.98.23.05.0510.640.00$0.69$15.54262 0 . 021-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60
279-May-20.0
0 730.603 . 2 1. 9 8. 2 4. 0 5. 0 59.320.03$0.59$16.74
282 0 . 018-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 70 of 1 14 Page ID#:1112412 0 . 01 9 - J a n - 0 851.223 . 2 1. 9 8. 2 1. 0 5.0419.940 . 1 5$0.30$18.65
220.01 7 - J a n - 0 942.103 . 2 1. 9 8. 2 1. 0 5. 0 59.250.25$0.14$16.72
32 2 . 51 7 - F e b - 0 7$42.10 $17.21. 9 3. 2 1. 0 5. 05 $ 1 7 . 5 30.00$7 .68$19.88
42 2 . 517-Mar-07
$30.84
3.21
. 9 8. 2 3
. 0 5
. 0 58.16
0.00
$0.69$18.0352 2 . 521-Apr-0718.773 . 2 1. 9 8. 9 3. 0 5. 0 50.900.00$0.66$10.82
69-May-2 2 , 57739 .6 93 .21.98.2 1.0 5.0 514 .130.02$ 0 .6 1$21.23
$ 2 2 . 5
88 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 57.530.10$0.47$21.41
$25.097 - F e b - 0 7$42.1017.21. 9 3. 2 1. 0 5. 0 515.100.0010.11$22.30
$25.0
1 07-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 55 .700.00$0.69$20.49
$25.0
1 11 -Ap r -0 718,773 .21.98.9 3.05.0 50.400.00$ 0 .6 7$10.94
19-May-25.012742.103 . 2 1. 9 8. 2 1. 0 5. 0 513.690 . 0 2$0,63$23.07
$25.0
1 38-Aug-073 4 . 4 43 .21.98.2 1.0 5.0 55 . 4 40.10$ 0 .4 9$23.05
$25.0
1 49-Jan -0851 .223 .21.98.2 1.0 5.04 $16.720.15$ 0 . 33$21.93
3001 57-Feb-07$47.8217.21.9 3.2 1.0 5.0 514 .260.0010.95$25.03
$30.0
167 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 51.640.00$ 0 .6 9$24.29
$30.01 71 -Ap r -0 718.773 .21.9 8.9 3.0 5.0 50.250.00$ 0 .6 8$11.05
19-May-30.018742.103.21. 9 8. 2 1. 0 5. 0 59.350.01$0.65$24.86
$30.01 98-Aug-07$34.443 .21.9 8.2 1.0 5.0 52 .3 80.09$ 0 . 5 2$24.73
$30.0209-Jan -08$53.003 .21.9 8.1 9.0 5.0 31 3 . 6 40.15$ 0 . 3 6$23.81
2130.0
17-Jan -094 7 .8 23 .21.9 8.2 1.0 5.0 58 .4 50.03$0 .17$21.29
2235 .01 7 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5. 0 510.360.0011.09$25.21
2335 .0
17-Mar-0730.843 . 2 1. 9 8. 2 3. 0 5. 0 50.120.00$0.69$25,18
249-May-35 .00742.103 .21.98.2 1.0 5.0 55 .8 30.01$ 0 .6 6$25.19
2535 .0
1 8 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 50.880.04$0.55$25.13
2635 .0
1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 54 .610.03$0.38$24.72
2740.01 7 - F e b - 0 7$47.8217.21. 9 3. 2 1. 0 5. 0 57.360.0011.09$25.21
2840.01 7 - M a r - 0 730 .843 .21.98.2 3.0 5.0 50.050.00$ 0 .6 9$25.21
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19-May-40.00 742.103 . 2 1. 9 8. 2 1. 0 5. 0 53.430.00$0.67$25.21240.018-Aug-073 4 . 4 43 .21.98.2 1.0 5.0 50.500.00$ 0 . 5 7$25.20
34 0 . 01 9 - J a n - 0 853.003 . 2 1. 9 8. 1 9. 0 5. 0 38.650.00$0.40$25.06
440.0
1 7 - J a n - 0 9
47.82
3 . 2 1
. 9 8
. 2 1
. 0 5
. 0 5
5 .52
0.00
$0.19
$23.29545 .01 7 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5.055.110.0011.09$25.21
645 .0
1 7 -Mar - 0 730.843 . 2 1. 9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21
79-May-45 .0
8742 .103 .21.9 8.2 1.0 5.0 51.900.00$ 0 .6 8$25.21
$45 .0
98 - A u g - 0 7$34.443.21. 9 8.21. 0 5. 0 50.300.00$0.58$25.21
$45 .0
109-Jan -08$42.103 .21.9 8.2 1.0 5.0 52.100.00$ 0 .4 2$25.17
500117 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 53 .470.0011.09$25.21
19-May-50.0
12742.103.21. 9 8.21. 0 5. 0 50.980.00$0.68$25.21
$50.0
138-A u g -0 73 4 . 4 43 .21.9 8.2 1.0 5.0 50,250.00$ 0 .6 0$25.21
$50.0
149 - J a n - 0 853.003 . 2 1. 9 8. 1 9. 0 5. 0 35 .320.00$0.43$25.20
$50.0
157 - J a n - 0 947.823 . 2 1. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18
$55 .0167 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21
19-May-55 .017742.103 . 2 1. 9 8. 2 1.05. 0 50.400.00$0.68$25.21
$55 .0189-Jan -0851 .223 .21.98.2 1.0 5.0 54 .150.00$ 0 . 4 5$25.21
600197 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 51.350.0011.09$25.21$60.0209 - J a n - 0 853.003.21. 9 8.19. 0 5. 0 33.240.00$0.46$25.21
2160.01 7 - J a n - 0 947.823 . 2 1. 9 8.21. 0 5. 0 52.500.00$0.23$24.71
2270.01 9 - J a n - 0 853.003 . 2 1. 9 8.19. 0 5.031.900.00$0.48$25.21
2370.017-Jan-094 7 .8 23 .21.9 8.2 1.0 5.0 51.730.00$0 .24$24.96
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 72 of 114 Page ID#:11126
EXHIBIT A-2 TO EXHIBIT A
TO KPMG STIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 73 of 114 Page ID#:11127
1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)blairn blbglaw.com)
3 LIZA ETH LIN (Bar No. 174663)elizabethl blbglaw.com4NIKI L. M NDOZA (Bar No. 214646)
UNJAMPGALDSkimlaw.com5ON (Bar No. 211114)((bent^((,, blbglaw.com)
6 TAa% A. KELLAR (Bar No. 234470)
M81eok
&,g hblbgaw.com)
7luff Drive, Suite 300San Diego, CA 92130
8 Tel: (858) 793-0070Fax: (858) 793-0323
9and-SALVATO
I
RE J. GRAZI ANO
10 LAUREN bMCM )LLEN
1 1 ^[email protected] )285 A venue of the Americas12 New York, NY 10019
Tel: 212 554-140013 Fax: ^212^ 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers' Retirement System
15
16
1 7NITED STATES DISTRICT COURT
1 8ENTRAL DISTRICT OF CALIFORNIA
19 N RE NEW CENTURYase No. 2:07-cv-00931-DDP (FM Ox)(Lead Case)
20
1ROOF OF CLAIM AND
22ELEASE23
4udge: Hon. Dean D. Pregerson
25
6ROOF OF CLAIM AND RELEASE
27
28EADLINE FOR SUBMISSION2010.
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1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3endency of Class Action and P roposed Settlements, Settlement Fairness Hearing,
4 and Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10 Court approves the Settlements and the Plan of Allocation. The Notice also
11contains the definitions of many of the defined terms (w hich are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18 ADDRESSED TO:
1 9n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims AdministratorP.O. Box 2004
21hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27 Preferred Stock"), and/or New Century call options and/or who sold New Century
28 put options, during the time period from May 5, 2005, through March 13, 2007,
1
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1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2he Complaint, were injured thereby (the "Class"). (The New Century common
3 stock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4 ptions and New Century put options are referred to collectively as "New Century
5ecurities.")6.Class Member" means any person who is included in the definition
7 of the Class and who did not timely submit a proper request for exclusion in
8accordance with the requirements set forth in the Notice. Excluded from the Class
9 are certain persons or entities excluded by definition pursuant to the Court's
10preliminary approval of the Settlements.' Also excluded from the Class are any
11 persons or entities who exclude themselves by filing a request for exclusion in12accordance w ith the requirements set forth in the Notice.
1 3.Authorized Claimant" means a Class Member who submits a timely
14and valid Proof of Claim form to the Claims A dministrator, in accordance w ith the
15 requirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
17. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18 SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19 EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21SETTLEMENTS IF YOU A RE NOT A CLASS MEM BER. THUS, IF YOU FILE
223'
The following persons are excluded from the Class:pa) the Underwriter
24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive26officer, director or controlling person of New Century (including any of its
27ubsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,28uccessors and assigns of any such excluded party.
2
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1A VALID REQUEST FOR EXCLUSION IN A TIMELY M ANNER, ANY PROOF
2OF CLAIM THAT YOU SUBMIT, OR THAT MA Y BE SUBMITTED ON YOUR
3 BEHALF, WILL NOT BE ACCEPTED.
4.o recover as a Class Member, you must complete and sign this Proof
5f Claim and mail it to the Claims Administrator postmarked on or before
6 2010. If you fail to file a timely, properly addressed, and
7completed Proof of Claim, your claim may be rejected, and you may be precluded
8rom receiving any d istribution from the Settlements.
9.ubmission of this Proof of Claim does not ensure that you will share
10 in the proceeds of the Settlements. Distributions to Class Members from the
11Settlements are governed by the Plan of Allocation approved by the Court. The
12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
14.f you have questions concerning the Proof of Claim, or need
15dditional copies of the Proof of Claim or the Notice, you may contact the Claims
16Adm inistrator, at In re New Century Secu rities Litigation Settlemen t, c/o Analytics,
17 nc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by
18 toll-free phone at (866) 308-7615, or you may download the documents from Lead
19 Counsel's website, www.blbglaw.com , or the website maintained by the Claims
20Adm inistrator for this Settleme nt, www.newcenturysettlement.com . .
210. If you are a Class Member and you do not, or someone acting on your
22 behalf does not, submit a timely request for exclusion from the Class, and if the
23 Court approves the Settlements, you will be bound by the terms of any orders and
24 judgments that the Court enters. You will be bound by such orders and judgments
25whether or not you subm it a Proof of Claim.
261. You are required to submit genuine and sufficient documentation for
27all your purchases and sales of New Century Securities from May 5, 2005,
28hrough and including March 13, 2007, as well as genuine and sufficient
3
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1ocumentation for all sales of New Century Common Stock and Preferred Stock
2 between March 14, 2007, through and including June 10, 2007. You are also
3equired to submit genuine and sufficient documentation reflecting your positions
4n New Century Common Stock and Preferred Stock as of the close of the market
5n March 13, 2007, and as of the close of the market on June 10, 2007.
6 Documentation may be photocopies of stockbrokers' confirmation slips or
7stockbrokers' monthly statements (reflecting your opening and closing balances for
8the mon ths specified on the actual claim form , and in which transactions during the
9Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR
10 POSSESSION, PLEASE OBTAIN COPIES ' OR EQUIVALENT
11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE
12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF
13YOUR CLA IM. DO NOT SEND ORIGINAL STOCK CERTIFICATES.
142. All joint purchasers must each sign this Proof of Claim.
153. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
17 nd they must:
18a)xpressly state the capacity in which they are ac ting;
1 9b) identify the name, account number, Social Security Number (or
20axpayer identification number), address and telephone number
21f the beneficial owner of (or other person or entity on whose
22ehalf they are acting with respect to) the New Century
23ecurities; and
24c)urnish herewith evidence of their authority to bind to the Proof
25f Claim the person or entity on whose behalf they are acting.
26Authority to complete and sign a Proof of Claim cannot be
27stablished by stockbrokers demonstrating only that they have
28
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1iscretionary authority to trade stock in another person's
2ccounts.)
34. By submitting a signed Proof of Claim, you will be swearing that you:
4a) owned) the New Century Securities you have listed in the
5roof of Claim; or
6b) are expressly authorized to act on behalf of the owner thereof.
75. By submitting a signed Proof of Claim, you will be swearing to the
8ruth of the statements contained therein and the genuineness of the documents
9 attached thereto, subject to penalties of perjury under the laws of the United States
10of America. The making of false statements, or the submission of forged or
11raudulent documentation, will result in the rejection of your claim and may
12 ubject you to civil liability or criminal prosecution.
13NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large
14numbers of transactions may request, or may be requested, to submit information
15 regarding their transactions in electronic files. All Claimants MUST submit a
16ma nually signed paper Proof of C laim form listing all their transactions, wh ether or
17 not they also submit electronic copies.f you wish to file your claim
Is lectronically, you must contact the Claims Administrator at 1-866-308-7615, or
19 visit its settlement website www.newcenturysettlement.com to obtain the required
20ile layout. No electronic files will be considered to have been properly submitted
21unless the Claims Administrator issues to the Claimant a written paper
22 cknowledgm ent of receipt and acceptance of electronically submitted data.
23
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 79 of 114 Page ID#:111331n re New Century
2ART I: CLAIMANT IDENTIFICATION
3 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name
5
6treet Address
7 itytateip Code
9Daytime)10 Area Codeelephone Num ber
11Evening)12
Area Codeelephone Num ber
13
14Social Security Number oraxpayer Identification Num ber
15
16ecord Ow ner's Nam e (if different from beneficial owner listed above)
17
Check approp riate box (check only one box):18
19ElIndividual/Sole ProprietorlJoint Owners1Pension Plan
20qorporationartnershiprust21qRAther22
23(describe:
24NOTE: Separate Proofs of Claim should be submitted for each separate legal
25entity (e.g., a claim from Joint Owners should not include separate transactions of
26 just one of the Joint Owners; an Individual should not combine his or her IRA
27 ransactions with transactions made solely in the Individual's name). Conversely,
28a single Proof of Claim submitted on behalf of one legal entity should include all
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1 transactions made b that enti ty, no matter how man separate accounts that entity^ 2 as (e.g., a corporation with multiple brokerage accounts should include all
3 transactions made in New Century Securities during the Class Period on one Proof
4 of Claim, no matter how many accounts the transactions were made in). If you
5 require additional room to list your transactions, please be sure to include your full
6 name and the last four digits of your social security number or Tax ID number on
7 each additional sheet. Check here if additional transactions are included on
8 additional schedules.PART II:EW CENTURY COMMON STOCK
1 0. BeRinnins! Holdings: State the number of shares of New Century
1 1ommon Stock the Claimant owned as of the close of the market
1 2n May 4, 2005. If none, write "zero" or "0." If other than zero,
1 3e sure to attach the required documentation.
14
1 5. Purchases:
1 6i) List all purchases of New Century Common Stock made during the
17 period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
1 8 acquired your New Century Common Stock during this period other than by an
19 open-market purchase, please provide a complete description of the terms of the
20 acquisition on a separate page.) Be sure to attach the required documentation.
2 1rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
23245627 excluding com missions, transfer taxes or other fees.28
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1 (ii) tate the total number of shares of New CenturyY Common Stock the
2Claimant purchased during the period between March 14, 2007, through and
3ncluding June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,
4which are no t in the Class Period, are not included in the calculation of Recog nized
5Loss. This information is needed by the Claims Administrator for purposes of the
6 overall evaluation of the Claim.)
7. Sales: List all sales of New C entury Comm on Stock made during
8he period from May 5, 2005, through and including
9une 10, 2007. Be sure to attach the required documentation.
10rade Date(s) (List
1 1hronologically)umber ofalesotal
Month/Day/Yearhares Soldrice Per Shareales Price*123456 *excluding commissions, transfer taxes or other fees
17
1 8. Unsold Holdings: State the total number of shares of New
1 9entury Common Stock the Claimant owned at the close of the
20arket on March 13, 2007. If none, write "zero" or "0." If other
21han zero, be sure to attach the required documentation.
22
23E. Ending Position For 90-Day Look Back: State the total number
24f shares of New Century Common Stock the Claimant owned at
25he close of the market on June 10, 2007. If none, write "zero" or
260."f other than zero, be sure to attach the required
27ocumentation.
28
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1 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR3
4NAME ON THE COPY AND CHECK THIS BOX q
5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
6NOT BE REVIEWED
7
8 PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED9 TOCK")
10
A. Beginning Holdings: State the number of shares of New Century
11Series A Preferred Stock the Claimant owned as of the close of
12the market on May 4, 2005. If none, write "zero" or "0." If other13
than zero, be sure to attach the required documentation.14
15
B. Purchases:16 (1) List all purchases of New Century Series A P referred Stock m ade during17
the period from May 5, 2005, through and including March 13, 2007. (NOTE: If18
you acquired your New Century Series A Preferred Stock during this period in an19
Offering or otherwise or other than by an open-market purchase, please provide a20
com plete description of the terms of the acquisition on a separate pag e.) Be sure to21
attach the required documen tation.22
23
24
25
26
27
28
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1rade Date(s) (List2hronologically)umber ofurchaseotal
Month/Day/Yearhares Purchased Price Per Share Purchase Price*
3 excluding com missions, transfer taxes or other fees.8
9ii) State the total number of shares of New Century Series A Preferred
10 Stock the Claimant purchased during the period between March 14, 2007, through
11
and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12purchases, which are not in the Class Period, are not included in the calculation of
13Recognized Loss Amount.his information is needed by the Claims
14Administrator for purposes of the overall evaluation of the Claim.)
156. Sales: List all sales of New Century Series A Preferred Stock
1 7ade during the period from May 5, 2005, through and including
1 8une 10, 2007. Be sure to attach the required documentation.
1 9rade Date(s) (ListChronologically)umber ofalesotal
20onth/Day/Yearhares Soldrice Per Shareales Price*
2 12$$3$4
25 *excluding com missions, transfer taxes or other fees
26
27
28
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1 D. Unsold Holdings: State the total number of shares of New
2entury Series A Preferred Stock the Claimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6. Ending Position For 90-Day Look Back: State the total number
7f shares of New Century Series A Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write9zero" or "0." If other than zero, be sure to attach the required
10ocumentation,
1 1
12IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
13 IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
14 NAME ON THE COPY AND CHECK THIS BOX
15
16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17NOT BE REVIEWED
18 PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE
19REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED
STOCK")
20
21. Beizinnim Holdings: State the number of shares of New Century
22eries B Preferred Stock the Claimant owned as of the close of
23he market on May 4, 2005. If none, write "zero" or "0." If other
24han zero, be sure to attach the required documentation.
25
26. Purchases:
271) List all purchases of New Century Series B Preferred Stock made during
28he period from May 5, 2005, through and including March 13, 2007. (NOTE: If
1 1
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1you acquired your New Century Series B Preferred Stock during this period in an2ffering or otherwise or other than by an open-market purchase, please provide a
3om plete description of the terms of the acquisition on a separate pag e.) Be sure to4ttach the required docum entation.
5rade Date(s) (List6hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*7901 *excluding commissions, transfer taxes or other fees.
12
1 3ii) State the total number of shares of New Century Series B Preferred
14 Stock the Claimant purchased during the period between March 14, 2007, through
1.5and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
16
purchases, which are not in the Class Period, are not included in the calculation of
17 Recognized Loss. This information is needed by the Claims Administrator for
18 purposes of the ove rall evaluation of the C laim.)
19. Sales: List all sales of New Century Series B Preferred Stock
20ade during the period from May 5, 2005, through and including
21une 10, 2007. Be sure to attach the required documentation.
22rade Date(s) (ListChronologically)umber ofalesotal
23onth/Day/Yearhares Soldrice Per Shareales Price*
24$5
26
2728excluding com missions, transfer taxes or other fees
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1. Unsold Holdings: State the total number of shares of New
2entury Series B Preferred Stock the Claimant owned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6. Ending Position For 90-Day Look Back: State the total number
7f shares of New Century Series B Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
11
12
13IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
14IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
15NAME ON THE COPY AND CHECK THIS BOX
16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17 NOT BE REVIEWED
18
19
20
21
22
23
24
25
26
27
28
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1PART V: NEW CENTURY CALL OPTIONS
2. Beginning Holdings: List all Call Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5umber of Calltrike Price for6ption Contractsxpiration Monthall Optionosition: Short
Opennd Yearontractr Long7810
1. Purchases: List all Call Option contracts on New Century
12ommon Stock that you purchased or acquired during the period
13rom May 5, 2005, through and including March 13, 2007. Be
14ure to attach the required documen tation.
15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call16hronologically)ontractshareonth andption
17onth/Day/Yearurchasedearontract
$
1920$$1
22. Sales: List all Call Option contracts on New Century Common
2 3tock that you sold during the period from May 5, 2005, through
24nd including March 13, 2007. Be sure to attach the required
25ocumentation.
26
27
28
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1ales Date(s)remium2Listumber ofrice Perxpirationtrike Price for
Chronologically)ptionhareonth andall Option3Month/Day/Year Contracts Soldearontract
4$$$$8D. Exercised Calls: List all Call Option contracts on New Century
9Common Stock that you exercised during the period from May 5,
1 0005, through and including March 13, 2007. Be sure to attach
1 1 the required documentation.1 2
Strike1 3rice for
1 4xpirationallumber of Call Result:
Month andptionption Contracts Rec'd Shares1 5ate Exercisedearontract Exercisedr Cash?
1 6
1 7
1 8
1 9
20. Expired Calls: List all Call Option contracts on New Century
2 1ommon Stock that expired worthless during the period from
22ay 5, 2005, through and including March 13, 2007. Be sure to
23ttach the required documentation.
24
25
26
27
28
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1ate Contractstrike Price2xpired (Listumber ofer Call
Chronologically)xpired Option Expiration Monthption3onth/Day/Yearontractsnd Yearontract
457
8F. Unsold/Unexpired Calls: List Call Option contracts on New
9entury Common Stock that were open as of the close of the
1 0arket on March 13, 2007.
1 1
12trike Price13umber of Caller Call
14ption Contractsosition: Short or Expiration MonthptionOpenongnd Yearontract
1567
18
19
2021
22
23
24
25
26
27
28
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1PART VI: NEW CENTURY PUT OPTIONS
2. Beginning Iloldims: List all Put Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5umber of Puttrike Price for6ption Contractsxpiration Monthut Optionosition: Short
Opennd Yearontractr Long7891 0
1 1. Sales: List all Put Option contracts on New Century Common
1 2tock that you sold (wrote) during the period from May 5, 2005,
13hrough and including March 13, 2007. Be sure to attach the
1 4equired documentation.
1 5ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for
16 Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract
1 81 9$$0$$21
22
23
24
25
26
27
28
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1. Purchases: List all Put Option contracts on New Century
2ommon Stock that you purchased or acquired during the period
3rom May 5, 2005, through and including March 13, 2007. Be4ure to attach the required docum entation.
5urchase Date(s) Number of Put Premium
6(Listptionrice Perxpirationtrike Price per
Chronologically)ontractshareonth andut Option7Month/Day/Yearurchasedearontract
8$0
1 1
12D. Exercised Puts: List all Put Option contracts on New Century
1 3ommon Stock that you exercised during the period from May 5,14005, through and including March 13, 2007. Be sure to attach
15he required documentation.1 6trikeumber of Putesult:17xpirationrice for Option Contracts Delivered
1 8onth and Put Option Exercisedhares orDate Exercisedearontractaid?
19
20
21
22
23
24. Expired Puts: List all Put Option contracts on New Century
2 5ommon Stock that expired worthless during the period from
26ay 5, 2005, through and including March 13, 2007. Be sure to
27ttach the required documentation.
28
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1ate Contracts2xpired (Listumber oftrike Price for
Chronologically)xpired Putxpiration Monthut Option3onth/Day/Yearontractsnd Yearontract
46
$8 F. Unexpired Puts: List Put Option contracts on New Century
9ommon Stock open as of the close of the market on March 13,10
007.
1 1umber oftrike Price for12nexpired Putosition: Short or Expiration Monthut Option
13ptions Contractsongnd Yearontract
1415
16YOU MUST READ THE FOLLOW ING RELEASE AND SIGN ON PAGE
1 7ELEASE OF CLAIMS
18 Definitions
1 9efined terms not already defined herein have the meanings given them in
20the respective Stipulations of Settlement (described in the Notice) (the
21"Stipulations").
22
23
24The Releases
25fficer and Director Release
26(we) understand and acknowledge that, without further action by anyone,
27on and after entry of the Global Officer And Director Judgment and occurrence of
28 the Effective Date of the Global Officer And Director Settlement, each Class
1 9
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1Member, on behalf of themselves, for good and sufficient consideration, the receipt
2nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4 y operation of law to have released, waived, discharged and dismissed each and
5very Settled Class Claim as against each and every R eleased Officer And Director
6nd the Insurance Carriers (as defined in the Global Officer And Director
7 Stipulation), and shall be deemed to forever be enjoined from prosecuting any or
8all of the Settled Class Claims against each and every Released Officer And
9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10any and all claims and causes of action of every nature and description, whether
11known or Unknown Claims, whether arising under federal, state, common or
12foreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15 representations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20elating to the enforcement of the Settlement. "Released Officers And Directors"
21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
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1 executors, administrators, predecessors, successors and assigns, employees, agents
2nd retained professionals (other than KP MG or the Underwriter Defendants).
3PMG Release
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7ufficient consideration, the receipt and adequacy of which are hereby
8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
10eleased, waived, discharged and dismissed each and every Settled Claim, and
11hall forever be enjoined from prosecuting any or all Settled Claims, against any
12Released Auditor Party. "Settled Claim" in this paragraph means any and all
13claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)16could have asserted in any forum that arise out of or are based upon the allegations,17 ransactions, facts, matters or occurrences, representations or omissions involved,
18 set forth, or referred to in the Complaint, and that arise out of or relate to the
19purchase of New Century Common Stock, New Century Series A Preferred Stock,
20New Century Series B Preferred Stock, and/or New Century Call Options and/or
21he sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPMG .
26
27
28
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1nderwriter Release
2(we) understand and acknowledge that, without further action by anyone,
3n and after entry of the Underwriter Judgment and occurrence of the Effective
4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,
5heir parent companies, subsidiaries, affiliates, heirs, executors, administrators,
6predecessors, successors and assigns, and any and all of their current and former
7fficers, directors, employees, agents and attorneys, for good and sufficient
8 consideration, the receipt and adequacy of which are hereby acknowledged,
9whe ther or not a Proof of Claim is executed and de livered by, or on behalf of, such
to Class Member, will be deemed by operation of law to have released, waived,
11discharged and dismissed each and every Settled Claim, and shall forever be
12enjoined from prosecuting any or all Settled Claims, against any Released
13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted
17n any forum that arise out of or are based upon the allegations, transactions, facts,
18 matters or occurrences, representations or omissions involved, set forth, or referred
19o in the Complaint, and that arise out of or relate to the purchase of New Century
20Common Stock, New Century Series A Preferred Stock, New Century Series B
21Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22Put Options during the Class Period. "Settled Claims" does not include claims
23elating to the enforcement of the Settlements. "Released Underwriter Party"
24means the Underwriter Defendants and any and all of their respective parent
25companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,
26uccessors and assigns, and any and all of their current and former officers,
27directors, employees, agents and attorneys. "Released Underwriter Parties" does
28ot include any Defendants other than the Underwriter Defendants.
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1
2IGNATURE AND CERTIFICATIONS
3y signing and submitting this Proof of Claim, the Claimant or the person
4 ho represents the Claimant certifies, as follows:
5. that the Claimant is a Class Mem ber, as defined in the Notice;
6. that I (we) have read and understand the contents of the Notice and the
7roof of Claim;
8. that I (we) are not acting for any of the Defendants, nor am 1 (are we)
9uch a Defendan t or otherwise excluded from the Class;
1 0. that I (we) have not filed a request for exclusion from the Class and that 1
1 1we) do not know of any request for exclusion from the Class filed on my12our) behalf with respect to my (our) transactions in New Century
13ecurities;
14. that I (we) own(ed) the New Century Securities identified in the Proof of
15laim, or that, in signing and submitting this Proof of Claim, I (we) have
16he authority to act on behalf of the owner(s) thereof;
17. that Claimant may be entitled to receive a distribution from the Net
18ettlement F und;
19. that Claimant desires to participate in the Settlements described in the
20otice and agrees to the terms and con ditions thereof;
21. that I (we) submit to the jurisdiction of the United States District Court
22or the Central District of California for purposes of investigation and
23iscovery under the Federal Rules of Civil Procedure with respect to this
24roof of Claim;
25. that I (we) agree to furnish such additional information with respect to
26his Proof of Claim as the parties, the Claims Administrator or the Court
27ay require;
28
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10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2ourt's summary disposition of the determination of the validity or
3moun t of the claim m ade by this Proof of Claim; and
41.that I (we) certify that I am (we are) not subject to backup withholding5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6ode.
7OTE: If you have been notified by the Internal Revenue Service that you are
8ubject to backup withholding, please strike the language that you are not
9ubject to backup withholding in the certification above. The Internal Revenue
10ervice does not require your consent to any provision other than the
1 1ertification required to avo id backup w ithholding.12
13
14
15
16
17
18
19
20
21
2223
24
25
26
27
28
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1declare, under penalty of perjury under the laws of the United States of
2America, that the statements made and answers given in this Proof of Claim are
3rue and correct and that the documents submitted herewith are true and genuine.
45ignature of Claimant67Print Name of Claimantate Signed
9
10 Signature of Joint Claimant, if any
1 1
12Print Nam e of Joint Claimant, if anyate Signed
1 3
14If Claim ant is other than an individual, or is not the p erson comp let ing this
15form , the fol low ing also m ust be p rovided :
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17Signature of Person Completing Form
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19 Print Name of Person Completing Formate Signed
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21Capacity of Pe rson Signing (Executor, President, Trustee, etc.)
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1EMINDER C HECKLIST
2lease sign the Proof of Claim on page
3f this Claim is being m ade on behalf of Joint Claimants, then both must sign.
4lease rememb er to attach supporting documents.
5f you mov e, please send your new add ress to:
6n re New Century Securities Litigation Settlement7/o Analytics, Inc., Claims Ad ministrator
P.O. Box 20048hanhassen, MN 55317-2004
9-866 -308-7615
1 0
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.
1 1
1 2eep a copy of your Proof of Claim and all documentation submitted for your
13ecords.
4he Claims Administrator will acknowledge receipt of your Proof of
1 5 Claim by mail within 60 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 60 days, please call
1 7he Claims Adm inistrator toll free at (866 ) 308-7615.
1 8
1 9ACCURATE CL AIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20F TIME.
21HANK YOU FOR YOUR PATIENCE
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EXHIBIT A-3 TO EXHIBIT A
TO KPMG STIPULATION
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1NITED STATES DISTRICT COURT2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-0093 1 -DDP (FM Ox)4Lead Case)
5SUMMARY NOTICE78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125%SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
I"SERIES A PREFERRED STOCK"); NEW CENTURY 9.75%SERIES B
12CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 1 2005, THROUGH MARCH 13, 2007,
16INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil
18 Procedure and an Order of the United States District Court for the Central District
of California (1) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).he total cash amount of the Settlements equals$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
1
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12 whether the proposed Settlements should be approved b the Court as fair, pp2 easonable, and adequ ate; (3) whether the Plan of A llocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation4
Expenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
g Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 wu'w.newcentu.rysettlement.com. If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action,
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
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1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and
3 Claim Form, may be made to Lead Counsel:
4
BERNSTEIN LITOWITZ BERGE R5 GROSSMANN LLPalvatore J. Graziano
1285 A venue of the Americas7ew York, New Y ork 100198elephone: (866) 648-2524
9
10 Dated:2010y Order of the Clerk of the CourtUnited States District Court
1 . 1or the Cen tral District of California12
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EXHIBIT B
TO KPMG STIPULATION
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8NITED STATES DISTRICT COURT
10ENTRAL DISTRICT OF CALIFORNIA
11 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)
12Lead Case)
1345PROPOSED] KPMG FINAL JUDGMENT AND
16RDER OF DISMISSAL WITH PREJUDICE
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2728KPMG JUDGMENT
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1his matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
3 Approval Order" or "Notice Order"), on the application of Lead Plaintiff New
4 York State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl
5 Larson and Charles Hooten (collectively "Plaintiffs") for approval of the
6 settlement between Plaintiffs and KPMG LLP ("KPMG") set forth in the
7 Stipulation Of Settlement Between Plaintiffs and KPMG LLP (the "KPMG
g Stipulation" or "KPMG Settlement"). Full and adequate notice having been given
9 to the Class as required in the Court's Order, and the Court having considered all
10 papers filed and proceedings held herein and otherwise being fully informed in the
11 premises and good cause appearing therefor,
12 NOW , THEREFORE, IT IS HEREBY ORD ERED THA T:13.his Judgment incorporates by reference the definitions in the KPMG
14 Stipulation, and all capitalized terms used, but not defined herein, shall have the
15 same meanings as in the KPMG Stipulation.
16 2.his Court has jurisdiction over the subject m atter of the Consolidated
17
Action and over all Parties to the Consolidated Action, including all members of
18 the Class.
19.he Court hereby affirms its certification in the Preliminary Approval
20 Order pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
21 Procedure, of a Class defined as follows:
22ll persons and entities who purchased or otherwiseacquired NewCentury common stock, New Century Series A Preferred Stock, New
23entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
24rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
25nd who, upon disclosure of certain facts alleged in the Complaint,were injured thereby. Excluded from the Class are (a) Defendants;b
26embers of the immediate families of the Individual Defendants; k c )the subsidiaries and affiliates of Defendants; (d) any person or entity
27ho was a partner, executive officer, director or controllin person ofNew Centu (including any of its subsidiaries or affiliates or of any
28efendant; e) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives, heirs, successors and assigns
1PMG JUDGMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 107 of 114 Page ID#:11161f any such excluded -arty. Also excluded from the Class are any
persons who exclude t Iemselves b filing a request for exclusion in2corance with the requirements set foth in the Notice, as listed on
Exhibit 1 annexed hereto.3
4
5.he Court also affirms its findings in the Preliminary Approval Order
6 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal
Rules of Civil Procedure have been satisfied in that: (a) the number of Class
7 Members is so numerous that joinder of all members thereof is impracticable; (b)89 there are questions of law and fact common to the Class; (c) the claims of New
10 York State Teachers' Retirement System ("NYSTRS") and Plaintiffs Carl Larson
and Charles Ho oten are typical of the claims of the C lass they seek to represent; (d)1 112 Plaintiffs have fairly and adequately represented the interests of the Class; (e) the
questions of law and fact common to the members of the Class predominate over1314 any questions affecting only individual members of the Class; and (f) a class action
15 is superior to other available methods for the fair and efficient adjudication of the
16 controversy.
17.ursuant to Rule 23 of the Federal Rules of Civil Procedure, the
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
Counsel Bernstein Litowitz Berger & Grossm ann LLP as Class Counsel.19
20.ursuant to Federal Rule of Civil Procedure 23, this Court hereby
21 approves the KPMG Settlement set forth in the KPMG Stipulation and finds that
the KPM G Settlem ent is, in all respects, fair, reasonable, and adequ ate to the Lead2223 Plaintiff, the Class and each of the Class Members. The Court further finds that
24 the KPMG Settlement set forth in the KPMG Stipulation is the result of arm's-
length negotiations between experienced counsel representing the interests of the2526 Parties. Accordingly, the KPMG Settlement embodied in the KPMG Stipulation
27 is hereby finally approved in all respects. The Parties are hereby directed to
perform its terms.28
2PMG JUDGMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 108 of 114 Page ID#:11162.ursuant to and in compliance with Rule 23 of the Federal Rules of
2 Civil Procedure, the Court hereby finds that due and adequate notice of these
3 proceedings was directed to all persons and entities who are Class Members,
4 advising them of the KPMG Settlement, the Plan of Allocation, and Lead
5 Counsel's intent to apply for attorneys' fees and reimbursement of Litigation
6 Expenses associated with the Consolidated Action, and of their right to object
7 thereto, and a fall and fair opportunity was accorded to all persons and entities
8 who are Class Members to be heard with respect to the foregoing matters. Thus, it
9 is hereby determined that all Class Members who did not timely and properly elect
10 to exclude themselves by written communication postmarked or otherwise
11 delivered on or before the date set forth in the Notice and the Preliminary
12 Approval Order, are bound by this Judgment.
13.he Consolidated Action and all claims contained therein are
14 dismissed with prejudice as to KPMG. The parties are to bear their own costs,
15 except as otherwise provided in the KPMG Stipulation.
16.pon the Effective Date, Plaintiffs and members of the Class shall be
17 deemed by operation of law to have released, waived, discharged and dismissed18 each and every Settled Claim, and shall forever be enjoined from prosecuting any
19 or all Settled Claims, against any Released Auditor Party.
200. Upon the Effective Date, KPMG and each of the other Released
21 Auditor Parties, on behalf of themselves, their heirs, executors, administrators,
22 predecessors, successors and assigns, shall be deemed by operation of law to have
23 released, waived, discharged and dismissed each and every one of the Released
24 Parties' Claims, and shall forever be enjoined from prosecuting any or all of the
25 Released Parties' Claims, against Plaintiffs and their employees, agents and
26 attorneys, and all other Class Members.
271. Upon the Effective Date, and conditioned on KPMG and the other
28 Released Auditor Parties receiving substantively reciprocal releases from the
3PMG JUDGMENT
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1 Settling Individuals, KPMG and the other Released Auditor Parties shall be
2 deemed to have released, waived, discharged and dismissed, and shall forever be
3 enjoined from prosecuting, all Claims Against Directors And Officers against the4 Settling Individuals. In the event that KPMG receives the reciprocal release from
5 the Settling Individuals contemplated in this paragraph, KPMG shall be required to
6 promptly offer to other former New Century officers or directors with whom
7 KPMG has entered into a tolling agreement related to New Century substantially
8 similar substantively reciprocal releases.
92. Upon the Effective Date, and conditioned on KPMG and the other
10 Released Auditor Parties receiving substantively reciprocal releases from the
11 Underwriter Defendants and the other Released Underwriter Parties, KPMG and
12 the other Released Auditor Parties shall be deemed by operation of law to have
13 released, waived, discharged and dismissed each and every claim, and shall
14 forever be enjoined from prosecuting any claim, against the Underwriter
15 Defendants and the other Released Underwriter Parties, arising under federal,
16 state, common or foreign law, arising out of or based upon the allegations,17 transactions, facts, matters or occurrences, representations or omissions involved,18 set forth, or referred to in the Consolidated Action.
193. Upon the Effective Date, and conditioned on KPMG and the other
20 Released Auditor Parties receiving reciprocal releases from Kodiak, KPMG and21 the Released Auditor Parties shall be deemed by operation of law to have released,
22 waived, discharged and dismissed, and shall be forever enjoined from prosecuting,
23 each and every claim and cause of action of every nature and description, whether
24 known or Unknown Claims, whether arising under federal, state, common or
25 foreign law, that KPMG (a) asserted in the Kodiak Litigation, or (b) could have
26 asserted in any forum that arise out of or are based upon the allegations,
27 transactions, facts, matters or occurrences, representations or omissions involved,
28 set forth, or referred to in the Kodiak Litigation, or that arise out of or relate in any
4PMG JUDGMENT
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1 way to New Century (including any of its subsidiaries and affiliates), the Debtors
2 or the Debtors' Estates, against Kodiak, provided and conditioned upon KPMG
3 receiving a substantially reciprocal release from Kodiak.
44. Upon the Effective Date, this Final Judgment And Order Of
5 Dismissal With Prejudice constitutes the final discharge of all obligations to the
6 Plaintiffs of KPMG arising out of the Consolidated Action. All future claims for
7 contribution arising out of the Consolidated Action by any person or entity against
8 KPMG or by KPMG against any other person or entity, other than a person whose
9 liability has been extinguished by this Settlement, are barred pursuant to 15 U.S.C.
10 § 78u-4(f)(7)(A).
115. The distribution of the Notice of Pendency of Class Action and
12 Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees
13 and Reimbursement of Expenses ("Notice") and the publication of the Summary
14 Notice as provided for in the Preliminary Approval Order constituted the best
15 notice practicable under the circumstances, including individual notice to all
16 members of the Class who could be identified through reasonable effort. Said
17 notice provided the best notice practicable under the circumstances of those
18 proceedings and of the matters set forth therein, including the proposed KPMG
19 Settlement set forth in the KPMG Stipulation, to all persons entitled to such notice,
20 and said notice fully satisfied the requirements of Federal Rule of Civil Procedure
21 23, the Private Securities Litigation Reform Act of 1995, due process, and any
22 other applicable law.
236. The Court hereby finds and concludes that the formula for the
24 calculation of the claims which is set forth in the Plan of Allocation proposed by
25 Lead Plaintiff provides a fair and equitable basis upon which to allocate the
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5PMG JUDGMENTCase No. 2:07-cv-00931-DDP (FM Ox)
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1 proceeds of the Settlements' among the Class Members with due consideration
2 having been given to administrative convenience and necessity.
37. The Court hereby finds and concludes that the Plan of Allocation
4 proposed by Lead Plaintiff is, in all respects, fair and equitable to the Class.
5 Accordingly, the Court hereby approves the Plan of Allocation proposed by Lead
6 Plaintiff.
78. Any order entered regarding any attorneys' fees and for expense
8 application shall in no way disturb or affect this Final Judgment and Order of
9 Dismissal With Prejudice and shall be considered separate from this Final
10 Judgment and Order of Dismissal With Prejudice.
119. The KPMG Stipulation and KPMG Settlement set forth therein,
12 whether or not consummated, and any proceedings taken pursuant to it:
13.hall not be offered or received against any of the Released Auditor
14 Parties as evidence of, or construed as, or deemed to be evidence of any
15 presumption, concession, or admission by any of the Released Auditor Parties with
16 respect to the truth of any fact alleged by Plaintiffs or the validity of any claim that
17 was or could have been asserted against any of the Released Auditor Parties in this
18 Consolidated Action or in any litigation, or of any liability, negligence, fault, or
19 other wrongdoing of any kind of any of the Released Auditor Parties;
20.hall not be offered or received against any of the Released Auditor21 Parties as evidence of a presumption, concession or admission of any fault,
2223 i "Settlements" herein includes the settlements as set forth in the KPMG
24 Stipulation, the Stipulation of Settlement Between Plaintiffs and the Underwriter
25 Defendants ("Underwriter Settlement" or "Underwriter Stipulation"), and the
Stipulation of Global Settlement with New Century Officers and Directors
26 ("Global Officer And Director Settlement" or "Global Officer And Director
27 Stipulation") (collectively "Settlements" or "Stipulations").he Plan ofAllocation sets forth a plan for allocating to Class Members the funds allocated to
28 the Class from all three of the Settlements.
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1 misrepresentation or omission with respect to any statement or written document
2 approved or made by any of the Released Auditor Parties, or against the Plaintiffs
3r any Class M em bers as evidence of any infirmity in the claims of Plaintiffs or the4 other Class Members;
5.hall not be offered or received against any of the Released Auditor
6 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
7 presumption, concession or admission with respect to any liability, negligence,
8 fault or wrongdoing of any kind, or in any way referred to for any other reason as
9 against any of the Released Auditor Parties, in any other civil, criminal or
10 administrative action or proceeding, other than such proceedings as may be
11 necessary to effectuate the provisions of this Stipulation; provided, however, that if
12 this Stipulation is approved by the Court, KPMG, any other Released Auditor
13 Party, or any Class Member may refer to it to effectuate the protection from
14 liability granted them hereunder;
15.hall not be construed against any of the Released Auditor Parties,
16 Plaintiffs or any other Class Members as an admission, concession, or presumption
17 that the consideration to be given hereunder represents the amount which could be
18 or would have been recovered after trial;
19.hall not be construed against Plaintiffs or any other Class Members
20 as an admission, concession, or presumption that any of their claims are without
21 merit or that damages recoverable under the Complaint would not have exceeded
22 the KPMG Settlement Amount; and
23.hall not be construed as or received in evidence as an admission,
24 concession or presumption that class certification is appropriate in this
25 Consolidated Action, except for purposes of this KPMG Settlement.
260. The KPMG Stipulation may be filed in an action to enforce or
27 interpret the terms of the KPMG Stipulation, the KPMG Settlement contained
28 therein, and any other documents executed in connection with the performance of
7PMG JUDGMENTCase No. 2:07-ev-00931-DDP (FM Ox)
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1 the agreements embodied therein. The Released Auditor Parties, and/or any Class
2 Member, may file the Stipulation and/or this Final Judgment And Order Of
3 Dismissal With Prejudice in any action that may be brought against them in order
4 to support a defense or counterclaim based on the principles of res judicata,
5 collateral estoppel, full faith and credit, release, good faith settlement, judgment
6 bar, or reduction or any other theory of claim preclusion or issue preclusion or
7 similar defense or counterclaim.
81. Without affecting the finality of this Final Judgment And Order Of
9 Dismissal With Prejudice in any way, this Court hereby retains continuing
10 jurisdiction over: (a) implementation of this KPMG Settlement and any award or
11 distribution of the settlement fund. including interest earned thereon; (b) the
12 allowance, disallowance or adjustment of any Class Member's claim on equitable
13 grounds and any award or distribution of the settlement fund; (c) disposition of the
14 settlement fund; (d) hearing and determining applications for attorneys' fees and
15 Litigation Expenses in the Consolidated Action; (e) enforcing and administering
16 this Judgment; (f) all parties hereto for the purpose of construing, enforcing and
17 administering the KPMG Stipulation; and (g) other matters related or ancillary to
18 the foregoing.
192. The Court finds that during the course of the Consolidated Action, the
20 Parties and their respective counsel at all times complied with the requirements of
21 Federal Rule of Civil Procedure 11.
223. In the event that the KPMG Settlement does not become effective in
23 accordance with the terms of the KPMG Stipulation or the Effective Date does not
24 occur, or in the event that the settlement fund, or any portion thereof, is returned to
25 KPMG, then this Final Judgment And Order Of Dismissal With Prejudice shall be
26 rendered null and void to the extent provided by and in accordance with the
27 KPMG Stipulation and shall be vacated and, in such event, all orders entered and
28 releases delivered in connection herewith shall be null and void to the extent
8PMG JUDGMENT
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1 provided by and in accordance with the KPMG Stipulation.
24. Without further Order of the Court, the Parties may agree to
3 reasonable extensions of time to carry out any of the provisions of the KPMG
4 Stipulation.
55. There is no just reason for delay in the entry of this Judgment and
6 immediate entry by the Clerk of the Court is expressly directed.
7
ST IS SO ORDERED,
9
10ATED:1HE HONORABLE DEAN D . PREGERSON
12NITED STATES DISTRICT COURT JUDGE
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EXHIBIT 4
TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
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UNITED STATES DISTRICT COURT8
CENTRAL DISTRICT OF CALIFORNIA9
IN RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)1 0Lead Case)
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1 5TIPULATION OF SETTLEMENT BETW EENPLAINTIFFS AND THE UNDER WRITER DEFENDANTS
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UW STIPULATION OF SETTLEMENT
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Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 3 of 33 Page ID#:11171his Stipulation of Settlement (the "Stipulation") is submitted pursuant to
2Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the
3Cou rt, this Stipulation is entered into between and am ong L ead Plaintiff New Y ork
4State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson
5nd Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned
6 consolidated class action (the "Consolidated Action"), on behalf of themselves and
7he Class (as hereinafter defined), and defendants Bear, Stearns & Co. Inc., now
8 known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
9& Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
10Morgan Stanley & Co., Inc., and Jefferies & Company, Inc. (the "Underwriter
11Defendants") (collectively, with Plaintiffs, the "Parties"), by and through their
12 respective counsel. The Underwriter Settlement is intended to settle all Settled
13Claims (as defined below) against the Underwriter Defendants and all other
14Released Underwriter Parties (as defined below).
15HEREAS:
1 6.ll terms with initial capitalization not otherwise defined herein shall
17 have the m eanings ascribed to them in ¶l herein.
1 8.eginning on or about February 8, 2007, securities class action
19complaints were filed in the United States District Court for the Central District of
20California against certain of the Defendants; and the actions were consolidated by
21Order dated June 26, 2007;
22.y Order dated June 26, 2007, the Court appointed the New York
23State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
24and approved its selection of B ernstein Litowitz B erger & G rossmann LLP as Lead
25Counsel for the C lass;
26.n September 14, 2007, Plaintiffs filed their Consolidated Class
27Action C omp laint ("Consolidated Com plaint") asserting claims against Defendants
28under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
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1Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased
2or otherwise acquired New Century Financial Corporation ("New Century" or the
3"Company") common stock; New Century 9.125% Series A Cumulative
4Redeemable Preferred Stock ("Series A Preferred Stock"); New Century 9.75%
5Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock");
6 and/or New Century call options and/or who sold New Century put options during
7he time period from May 5 , 2005 , through and including March 13, 2007, either in
8 the Offerings, pursuant to a registration statement, or in the market, and who, upon
9 isclosure of certain facts, were injured thereby;
10.eginning on November 2, 2007, Defendants filed motions to dismiss
11 he Con solidated Com plaint, which Plaintiffs opposed on December 14 , 2007;12.y Order dated January 31, 2008, the Court granted the motions to
13dismiss with leave to amend the complaint;
14.n M arch 24, 2008, Plaintiffs filed their Amended Con solidated C lass
15Action Complaint ("Amended Complaint"), alleging claims against Defendants
16pursuant to the Securities Act and the E xchange Act;
17.ursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
18Am ended Consolidated Class Action Com plaint (the "Com plaint"), alleging claims
19 against Defendants pursuant to the Securities Act and the Exchange Act;
20.eginning on June 2, 2008, Defendants filed motions to dismiss the
21Com plaint, which Plaintiffs opposed on July 7, 2008;
22.ollowing a hearing, by Order dated December 3, 2008, the Court
23 ubstantially denied Defendants' motions to dismiss;
24.eginning on January 26, 2009, Defendan ts answered the Com plaint;
25.he Parties began discovery in or about April 2009, including filing
26multiple motions to compel and motions for protective order, and serving
27discovery requests, responses and voluminous d ocuments;
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Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 5 of 33 Page ID#:11173. On January 13, 2010, Defendant KPMG filed a motion for summary
2udgm ent, which Plaintiffs opposed on M arch 15 , 2010;
3.he Parties have participated in mediation sessions and additional
4iscussions before the H onorable Dan iel Weinstein, and subsequen tly were able to
5each agreements in principle to settle this Consolidated Action on the terms set
6 orth herein;
7.he Underwriter Defendants deny any wrongdoing whatsoever and
8his Stipulation shall in no event be construed or deemed to be evidence of or an
9dmission or concession on the part of any Underwriter Defendant with respect to10any claim or of any fault or liability or wrongdoing or damage whatsoever, or any
11 infirmity in the defenses that the Underwriter Defendants have asserted. The12Parties recognize, however, that the litigation has been filed by Plaintiffs and
13defended by the Underwriter Defendants in good faith and in compliance with
14Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled
15after receiving advice of counsel, and that the terms of the settlement are fair,
16adequate and reasonable. This Stipulation shall not be construed or deemed to be a
17 concession by any plaintiff of any infirmity in the claims asserted in the action;
1 8.ead Counsel represents that it has conducted an extensive
19 investigation and thorough discovery relating to the claims and the underlying
20events and transactions alleged in the Complaint. Lead Counsel represents that it
21has analyzed the evidence adduced through discovery and has researched the
22applicable law with respect to the claims of P laintiffs and the other m embers o f the
23Class (as defined herein) and the potential defenses thereto;
24.ased upon their investigation and discovery as set forth above,
25Plaintiffs and Lead Counsel have concluded that the terms and conditions of this
26Stipulation are fair, reasonable and adequate to Plaintiffs and the o ther mem bers of
27 the Class, and in their best interests, and have agreed to settle the claims raised in
28he action p ursuant to the terms and provisions of this Stipulation, after considering
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1(1) the benefits that the Class will receive from the Und erwriter Settlement, (2) the
2 attendant risks of litigation, and (3) the desirability of permitting the Underwriter
3 Settlement to be consummated as provided by the terms of this Stipulation;
4OW THEREFORE, without any admission or concession on the part of
5Plaintiffs of any lack of merit of the action whatsoever, and without any admission
6or concession of any liability or wrongdoing or lack of merit in the defenses
7whatsoever by the Released Underwriter Parties (as defined herein), it is hereby
8TIPULAT ED AND AG REED , by and am ong the Parties, through their respective
9 attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal
10Rules of Civil Procedure, in consideration of the benefits flowing to the Parties
11 hereto from the Underwriter Settlement, that all Settled Claims (as defined below)12as against the Released Underwriter Parties (as defined below) and all Released
13 Parties' Claims (as defined below) shall be compromised, settled, released and
14dismissed with prejudice, upon and subject to the following terms and conditions:
15EFINITIONS
16.s used in this Stipulation, the following terms have the following
1 7 eanings:
18)Authorized Claimant" means a Class Member who submits a
19 timely and valid Proof of Claim Form and all required documentation to the
20Claims A dm inistrator, in accordance w ith the requirements established by the Plan
21of Allocation approved by the Court, that is approved for payment from the Net
22Settlement Fund.
23)Claim" means a completed and signed Proof of Claim Form
24submitted to the Claims Administrator in accordance with the instructions on the
25Proof of Claim Form .
26)Claim Form" or "Claim Form and Release" or "Proof of Claim
27Form" means the form, substantially in the form attached hereto as Exhibit 2 to
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1xhibit A, that a Claimant or Class Mem ber must com plete should that C laimant or2Class Member seek to share in a distribution of the Net Settlement Fund.
3)Claimant" means a person or entity that submits a Claim Form
4o the Claims Administrator seeking to share in the proceeds of the Net Settlement
5Fund.
6)Claims Administrator" means the firm of Analytics
7ncorporated.
8)Claims Against Directors And Officers" means the claims as
9 defined in paragraph 6.
10)Class" means all persons and entities who purchased or
11 otherwise acquired New Century common stock, New Century Series A Preferred12Stock, New Century Series B Preferred Stock, and/or New Century call options
13and/or who sold New Century put options, during the time period from May 5,
142005, through and including March 13, 2007, either in the Offerings (as defined
15 herein), pursuant to a registration statement, or in the market, and who, upon
16 disclosure of certain facts alleged in the Complaint, were injured thereby.
17Excluded from the Class are (a) Defendants; (b) members of the immediate
18 amilies of Individual Defend ants; (c) the subsidiaries and affiliates of Defend ants;
19 (d) any person or entity who was a partner, executive officer, director or controlling
20person of New Century (including any of its subsidiaries or affiliates) or of any
21Defendan t; (e) any entity in which any D efendant has a co ntrolling interest; and (f)
22he legal representatives, heirs, successors and assigns of any such excluded party.
23Also excluded from the Class are any persons who exclude themselves by filing a
24equest for exclusion in accordance with the requireme nts set forth in the Notice.
25)Class Distribution Order" m eans an order entered by the C ourt
26authorizing and directing that the Net Settlement Fund be distributed, in whole or
27n part, to Authorized Claimants.
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1)Class Member" means a person or entity that is a member of
2he Class and does not exclude himself, herself or itself by filing a request for
3xclusion in accordanc e with the requiremen ts set forth in the Notice.
4)Class Period" means the period from May 5, 2005, through
5nd including March 13, 2007.
6)Complaint" means the Second Amended Consolidated Class
7Action Complaint filed by Plaintiffs in the Consolidated Action, on or about April
80, 2008.
9)Court" means the United States District Court for the Central
10District of California.
1 1) "Defendants" means the Underwriter Defendants, KPMG, and
12 the Individual Defendants.
13)Effective Date" means the date on which all the following
14shall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)
15payment of the Underwriter Settlement Amount has been made pursuant to 1 1 8
16below; (c) notice has been provided to the Class, and the Underwriters have not
17exercised any right to terminate this Underwriter Stipulation and Settlement
18pursuant to the Supplemental Agreement described in ¶32 below; (d) the Court has
19approved the Underwriter Settlement, following a hearing, as prescribed by
20Rule 23 of the Federal Rules of Civil Procedure; (e) the Court has entered the
21Underwriter Judgment, substantially in the form annexed hereto as Exhibit B,
22which has become Final; and (f) the Court has entered the Officer And Director
23 udgment and KPMG Judgment, which have become Final.
24)Escrow Account" means an account maintained to hold the
25Settlement Fund, which shall be controlled exclusively by Lead Counsel and
26deemed to be in the custody of the Court and shall remain subject to the
2 7 urisdiction of the Court until such time as the funds are distributed or returned
28pursuant to the teens of this Stipulation and /or further order of the C ourt.
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1)Escrow Agent" means the financial institution selected by
2Lead C ounsel to serve as escrow agent.
3)Escrow Agreement" means the agreement among Lead
4Counsel and the Escrow Agent setting forth the terms under which the Escrow
5Agent shall maintain the E scrow Account.
6)Final" when referring to an order or judgment means: (i) that
7he time for appeal or appellate review of the order or judgment has expired; or
8 (ii) if there has been an appeal, (a) that the appeal has been decided without
9causing a material change in the order or judgment; or (b) that the order or
10 judgment has been upheld on appeal and is no longer subject to appellate review
11 by further appeal or writ of certiorari.
12)Individual Defendants" means Robert K. Cole, Brad A.
13Morrice, the Estate of Edward F. Gotschall, Patti M. Dodge, Fredric J. Forster,
14Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,
15Richard A. Zona, M arilyn A. A lexander, David Einhorn, and William J. Popej oy.
1 6)K PMG" means KPMG LLP.
17)KPMG Judgment" means a judgment entered by the Court
18 which, among other things, includes a release by KPMG and the other Released
19Auditor Parties of each and every claim against the Underwriter Defendants and
20 he other Released Underwriter Parties, arising under federal, state, common or
21 oreign law, arising out of or based upon the allegations, transactions, facts, matters
22or occurrences, representations or omissions involved, set forth, or referred to in
23 he Consolidated Action.
24)Lead Counsel" means the law firm of Bernstein Litowitz
25B erger & Grossmann LLP.
26) "Lead Plaintiff' means the New York State Teachers'
27Retirement System.
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1)Litigation Expenses" means the costs and expenses incurred
2by Plaintiffs' Counsel in connection with commencing and prosecuting the
3Consolidated Action, for which Lead Counsel intends to apply to the Court for
4eimbursement from the Settlement Fund .
5)Net Settlement Fund" means the Settlement Fund less: (i) any
6Taxes; (ii) any Notice and Administration Costs; (iii) any attorneys' fees awarded
7 by the Court; and (iv) any Litigation Expenses awarded by the Court.
8)Notice" means the Notice of Pendency of Class Action and
9 Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees
10and Reimbursement of Litigation Expenses, substantially in the form attached
11
hereto as Exhibit 1 to Exh ibit A, which is to be sent to members of the Class.12a) "Notice and Administration Costs" means the costs, fees and
13 expenses that are incurred by the Claims Administrator and Lead Counsel in
14connection with (1) p roviding notice to the C lass; and (ii) administering the Claims
15process.
16b) "Offerings" means the public offerings pursuant to which New
17 Century Series A and B Preferred Stock were offered to the public in June 2005
18 and A ugust 2006, respectively.
1 9c) "Officer And Director Judgment" means a judgment entered by
20 he Court which, among other things, includes a release by the Individual
21Defendants of each and every claim against the Underwriter Defendants and the
22Released Underwriter Parties whether arising under federal, state, common or
23 oreign law, arising out of or based upon the allegations, transactions, facts, matters
24or occurrences, representations or omissions involved, set forth, or referred to in
25he Consolidated Action.
26d) "Parties" means the Underwriter Defendants and Plaintiffs, on
27behalf of themselves and the C lass M embers.
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2Hooten.
3f)Plaintiffs' Counsel" means Lead Counsel and all other counsel
4who, at the direction and under the supervision of Lead Counsel, represent Class
5Mem bers in the Consolidated Action.
6g) "Plan of Allocation" means the proposed plan of allocation of
7 the Net Settlement Fund set forth in the Notice.8h) "Preliminary Approval Order" or "Notice Order" means the
9 order, substantially in the form attached hereto as Exhibit A, to be entered by the
10Court preliminarily approving the Underwriter Settlement and directing notice beI 1 provided to the Class.
12i)Released Auditor Parties" means KPMG and any and all of its
13partners, principals, officers, directors, employees, agents, attorneys and affiliates.
14Released Auditor Parties" does not include any Defendants other than K PM G.
15j)Released Parties' Claims" m eans any and all claims and causes
16of action of every nature and description, whether known or Unknown, whether
17arising under federal, state, common or foreign law, that arise out of or relate in
I8any way to the institution, prosecution, or settlement of the claims against the
19 Underwriter Defendants. "Released Parties' Claims" does not include claims
20 elating to the enforcement of the Underwriter Settlement.
21k) "Released Underwriter Parties" means the Underwriter
22Defendants and any and all of their respective parent companies, subsidiaries,
23affiliates, heirs, executors, administrators, predecessors, successors and assigns,
24and any and all of their current and former officers, directors, employees, agents
25and attorneys. "Released Underwriter Parties" does not include any Defendants
26other than the Underwriter Defendants.
271 )Settled Claims" means any and all claims and causes of action
2 8 f every nature and description, whether known or Unknown, whether arising
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1 under federal, state, comm on or foreign law, that Plaintiffs or any other m ember of
2he Class (a) asserted in the Complaint, or (b) could have asserted in any forum
3hat arise out of or are based upon the allegations, transactions, facts, matters or
4occurrences, representations or omissions involved, set forth, or referred to in the
5Complaint, and that arise out of or relate to the purchase of New Century common
6tock, New Century Series A Preferred Stock, New Century Series B Preferred
7tock, and/or New Century call options and/or the sale of New Century pu t options
8uring the Class Period. Additionally, "Settled Claims" does not include claims
9 relating to the enforcement of the Underwriter Settlement.
10m) "Settlement Fund" means the Underwriter Settlement Amount,
11
and any and all interest earned thereon.12n) "Settlement Hearing" means the hearing set by the Court under
13Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of
14he Underwriter Settlement.
15o) "Settling Individuals" means the Individual Defendants, Jeffrey
16D. Goldberg, Patrick Flanagan, Kevin M. Cloyd, Joseph F. Eckroth, Jr., and
17Stergios Theologides.
1 8p) "Summary Notice" means the publication notice, substantially
19 in the form attached hereto as Exhibit 3 to Exhibit A, to be published as set forth in
20 he Preliminary Approval Order.
21q) "Taxes" means: (1) all federal, state and/or local taxes of any
22kind on any income earned by the Settlement Fund; and (ii) the reasonable
23expenses and costs incurred by Lead Counsel in connection with determining the
24amou nt of, and paying, any taxes owed b y the Settlement Fun d (including, without
25 imitation, reasonable expenses of tax attorneys and accountants).
26r) "Underwriter Judgment" means the final judgment,
27ubstantially in the form attached hereto as Exhibit B, to be entered pursuant to
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1Rule 54(b) of the Federal Rules of Civil Procedure approving the Underwriter
2Settlement.
3s) "Underwriter Settlement" means the proposed settlement as set
4orth in this Stipulation.
5t)Underwriter Settlement Amount" means the sum of
6$1500,000.00 in cash which the Underwriter Defendants shall pay or cause to be
7paid into the Escrow A ccount as set forth in ¶8 below.
8u) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now
9 known as J.P. Morgan. Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
10 & Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
11 Morgan Stanley & Co., Inc., and Jefferies & Com pany, Inc.1 2v) "Unknown Claims" means any and all Settled Claims that
13Plaintiffs or any Class Member does not know or suspect to exist in his, her or its
14avor at the time of the release of the Released Underwriter Parties, and any
15Released Parties' Claims that any Released Underwriter Party does not know or
16 suspect to exist in his, her or its favor, which if known by him, her or it might have
1 7 ffected his, her or its decision(s) with respect to the U nderwriter Settlement. W ith
18respect to any and all Settled Claims and Released Parties' Claims, the Parties
19 stipulate and agree that upon the Effective Date, the Plaintiffs and the Released
20Underwriter Parties shall expressly waive, and each Class Member shall be
21deemed to have waived, and by operation of the Underwriter Judgment shall have
22expressly waived, any and all provisions, rights and benefits conferred by any law
23of any state or territory of the United States, or principle of common law, that is
24imilar, comparable, or equivalent to Cal. Civ. Cod e § 15 42, which provides:
25general release does not extend to claims which the
26reditor does not know or suspect to exist in his or her
27avor at the time of execu ting the release, which if known
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1y him or her must have materially affected his or her
2ettlement with the debtor.
3Plaintiffs and the Released Underwriter Parties acknowledge, and Class Members
4by operation of law shall be deemed to have acknowledged, that the inclusion of
5Unknown Claims" in the definition of Settled Claims and Released Parties'
6Claims was separately bargained for and was a key element of the Underwriter
7ettlement.
8LASS CERTIFICATION
9.he Parties stipulate and agree to: (a) certification of the Consolidated
10Action as a class action for the purposes of settlement pursuant to Rules 23(a) and
11 23(b)(3) of the Federal Rules of Civil Procedure on behalf of the Class; (b)12appointment of Plaintiffs as the Class Representatives; and (c) appointment of
13Lead Counsel as Class Counsel pursuant to Rule 23(g) of the Federal Rules of
14Civil Procedure. Following execution of this Stipulation, Plaintiffs, with the
15consent of the Underwriter Defendants, shall apply to the Court for entry of the
16Preliminary A pproval Order, w hich will certify the Consolidated Action to proceed
17 as a class action. The Parties shall have the right to withdraw from the agreement
18o stipulate and agree to class certification and the appointment of Class
19 Representatives and Class Counsel in the event that the Underwriter Settlement
20does not becom e Final.
21ELEASE OF CLAIMS
22.he obligations incurred pursuant to this Stipulation shall be in full
23and final disposition of the Consolidated Action against the Underwriter
24Defend ants; and shall fully and finally release any an d all Settled Claims as against
25all Released Underwriter Parties and shall also release as against the Plaintiffs and
26all other Class Members any and all Released Parties' Claims, and shall also fully
27and finally release other claims as set forth below.
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1.ursuant to the Underwriter Judgment, upon the Effective Date,
2Plaintiffs and members of the Class, on behalf of themselves, their parent
3companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,
4uccessors and assigns, and any and all of their current and former officers,
5directors, employees, agents and attorneys shall be deemed by operation of law to
6 ave released, waived, discharged and dismissed each and every S ettled C laim, and
7hall forever be enjoined from prosecuting any or all Settled Claims, against any
8Released Underw riter Party.
9.ursuant to the Underwriter Judgment, upon the Effective Date, the
10Underwriter Defendants and each of the other Released Underwriter Parties, on
11 behalf of themselves, their parent companies, subsidiaries, affiliates, heirs,12executors, administrators, predecessors, successors and assigns, and any and all of
13heir current and former officers, directors, employees, agents and attorneys shall
14 be deemed by operation of law to have released, waived, discharged and dismissed
15 each and every one of the Released Parties' Claims, and shall forever be enjoined
16 from prosecuting any or all of the Released Parties' Claims, against Plaintiffs and
17heir employees, agents and attorneys, and all other Class Members.
18.ursuant to the Underwriter Judgment, upon the Effective Date, the
19 Underwriter Defendants and the Released Underwriter Parties shall be deemed by
20operation of law to have released, waived, discharged and dismissed each and
21every claim, and shall forever be enjoined from prosecuting any claim, against any
22of the Settling Individuals, whether arising under fed eral, state, commo n or foreign
23 aw, arising out of or based upon the allegations, transactions, facts, matters or
24occurrences, representations or omissions involved, set forth, or referred to in the
2 5 onsolidated Action ("Claims Against D irectors And Officers"), conditioned upon
26he Underwriter Defendants and the other Released Underwriter Parties receiving
27 ubstantively reciprocal releases from the Settling Individua ls.
28
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1.ursuant to the Underwriter Judgment, upon the Effective Date, the
2 Underwriter Defendants and the Released Underwriter Parties shall be deemed by
3 operation of law to have released, waived, discharged and dismissed each and
4 every claim, and shall forever be enjoined from prosecuting any claim, against
5 KPMG and the other Released Auditor Parties arising under federal, state, common
6 or foreign law, arising out of or based upon the allegations, transactions, facts,
7 matters or occurrences, representations or omissions involved, set forth, or referred
8o in the Consolidated Action, conditioned upon the Underwriter Defendants and10 KPMG and the other Released Auditor Parties.
1 1HE SETTLEMENT CONSIDERATION1 2.ithin ten (10) calendar days after entry of the Preliminary Approval
13Order, Plaintiffs shall provide cou nsel for the Und erwriter Defendants w ith a duly-
14 authorized W-9 and effective wire instructions. Within twenty (20) calendar days
15 after entry of the Preliminary Approval Order, or within ten (10) calendar days of
16 eceipt of Plaintiffs' duly-authorized W-9 and effective wire instructions as set
17 forth in this paragraph, whichever is later, the Underwriter Defendants shall pay or
1 8 cause to be paid into the Escrow Account a total of $15,000,000.00 in cash (the
19 "Underwriter Settlement Amount").
20.f any portion of the Underwriter Settlement Amount is not paid into
21 the Escrow Account in the timeframe as designated above in ^8, Plaintiffs have the
22 option to: (i) terminate the Underwriter Settlement; or (ii) require that the
23Underwriter Defendants pay or cause to be paid interest at the rate of 5% per
24 annum from the time the payments are due until deposited, which interest shall be
25 paid at the time the funds are subsequently paid into the Escrow Account.
2 6SE OF SETTLEMENT FUNDS
270. The Settlement Fund shall be used to pay: (i) any Taxes; (ii) any
28Notice and Administration Costs; (iii) any attorneys' fees awarded by the Court;
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1and (iv) any Litigation Expenses awarded by the Court. The balance remaining in
2he Settlement Fund, after payment of items (I)-(iv), shall be distributed to
3Authorized Claimants as provided below.
41. The Net Settlement Fund shall be distributed to Authorized Claimants
5 as provided herein. Except as provided herein or pursuant to orders of the Court,
6 the Net Settlement Fund shall remain in the Escrow Account prior to the Effective
7Date. All funds held by the Escrow Agent shall be deemed to be in the custody of
8he Court and shall remain subject to the jurisdiction of the Court until such time as
9he funds shall be distributed or returned pursuant to the terms of this Stipulation
10 and/or further order of the Court. The Escrow Agent shall invest any funds in the
11Escrow Account in United States Treasury Bills (or a mutual fund invested solely
12n such instruments) and shall collect and reinvest all interest accrued thereon,
13except that any residual cash balances of less than $100,000 may be invested in
14money market mutual funds comprised exclusively of investments secured by the
15 full faith and cred it of the United States.
162. The Parties hereto agree that the Settlement Fund is intended to be a
17Qualified Settlement Fund within the meaning of Treasury Regulation § 1.468B-1
18and that Lead Coun sel, as administrator of the Settlement F und w ithin the meaning
19of Treasury Regulation § 1.468B-2(k)(3), shall be solely responsible for filing or
20causing to be filed all informational and other tax returns as may be necessary or
21appropriate (including, without limitation, the returns described in Treasury
22Regulation § 1.468B-2(k)) for the Settlement Fund. Such returns shall be
23consistent with this paragraph and in all events shall reflect that all Taxes on the
24ncome earned on the Settlement Fund shall be paid out of the Settlement Fund as
25provided by Paragraph 13 below. Lead Counsel shall also be solely responsible for
26causing payment to be made from the Settlement Fund of any Taxes owed with
27 espect to the Settlement Fund. Upon written request, the Underwriter Defendants
28will provide promptly to Lead Counsel any statements or infonnation required for
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1 ax purposes, including the statement described in Treasury Regulation § 1.468B-
2 (e). ead C ounsel, as administrator of the Settlement Fund within the meaning of
3Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as are
4necessary or advisable to carry out this paragraph, including, as necessary, making
5a "relation back election," as described in Treasury Regulation § 1.468B-10), to
6cause the Qualified Settlement Fund to come into existence at the earliest
7 allowable date, and shall take or cause to be taken all actions as may be necessary
8r appropriate in connection therewith.
93. All Taxes shall be paid out of the Settlement Fund, and shall be timely
10paid by the Escrow Agent pursuant to the disbursement instructions to be set forth
11in the Escrow Agreement, and without prior Order of the Court. Any tax returns
12prepared for the Settlement Fund (as well as the election set forth therein) shall be
13consistent with the previous paragraph and in all events shall reflect that all Taxes
14(including any interest or penalties) on the income earned by the Settlement Fund
15shall be paid out of the Settlement Fund as provided herein. The Settlement Fund
16shall indemnify and hold all Released Underwriter Parties harmless for any Taxes
1 7 nd related expenses of any kind whatsoever (including without limitation, taxes
18payable by reason of any such indemnification), if any, payable by Underwriter
19 Defendants by reason of any income earned on the Settlement Fund. The
20Underwriter Defendants shall notify the Escrow Agent promptly if they receive any
21notice of any claim for Taxes relating to the Settlement Fund.
224. This is not a claims-made settlement. Once the Effective Date occurs,
23neither the Underwriter Defendants, their insurance carriers, nor any other
24Released Underwriter Parties nor any other person or entity that contributed to the
25Settlement Fund on their behalf, will have the right or ability to get back any of the
26Und erwriter Settlement Am ount or any interest accrued thereon, irrespective of the
27number of Claims filed, the collective amount of losses of Authorized Claimants,
28
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1he percentage of recovery of losses, or the amounts to be paid to Authorized
2Claimants from the Net Settlement Fund .
35. The Claims Administrator shall discharge its duties under Lead
4Counsel's supervision and subject to the jurisdiction of the Court. Except as
5otherwise provided herein, the Released Underwriter Parties shall have no
6 esponsibility whatsoever for the adm inistration o f the U nderwriter Settlement, and
7 shall have no liability whatsoever to any person, including, but not limited to, the
8 Class Members, in connection with any such administration. Lead Counsel shall
9 cause the Claims Administrator to mail the Notice and Proof of Claim Form to
10those members of the Class at the address of each such person as set forth in the
11 records of New Century or its transfer agent(s), or who otherwise may be identified12through further reasonable effort. Lead Counsel will cause to be published the
13Summary Notice pursuant to the terms of the Preliminary Approval Order or
14whatever other form or manner might be ordered by the Court. For the purpose of
15identifying and providing notice to the Class, promptly upon execution of this
16Stipulation, Plaintiffs shall seek shareho lder lists from the T rustee for New Cen tury
17 or others. In addition, the Underwriter Defendants shall make best efforts to cause
18to be provided to the Claims Ad ministrator (at no cost to the Settlement Fu nd, Lead
19 Counsel or the Claims Administrator) New Century's shareholder lists to the extent
20 hat such documents have been located after a reasonably diligent search of the
21docum ents already gathered or prod uced to Plaintiffs. The Underw riter Defendants
22represent, and Plaintiffs and their counsel recognize, that any such lists will only
23nclude the names of purchasers of securities in the initial Offerings and that the
24current owners o f the securities may differ significantly from the names on the list.
25The U nderwriter Defendants offer no assurance that they will be able to locate any
26shareholder lists in the documents gathered or produced to Plaintiffs, nor can they
27provide any assurance that any shareholder lists that they d o locate have any useful
2 8 contact information, such as current addresses.
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16. Lead Counsel may pay from the Escrow Account, without further
2approval from the Underwriter Defendants or other Defendants or further order of
3 he Court, the Notice and Administration Costs actually incurred. Such costs and
4expenses shall include, without limitation, the actual costs of publication, printing
5nd mailing the Notice, reimbursements to nominee owners for forwarding the
6Notice to their beneficial owners of New Century securities, the administrative
7expenses incurred and fees charged by the Claims Administrator in connection
8with providing Notice and processing the submitted claims, and the fees, if any, of
9he Escrow Agent. In the event that the Underwriter Settlement is terminated
10 pursuant to the terms of this Stipulation, all Notice and Administration Costs paid
11or incurred, including any related fees, shall not be returned or repaid to
12 Underwriter Defendants or any other person or entity who or which contributed to
13 he Settlement Fund on their behalf.
14TTORNEYS' FEES AND LITIGATION EXPENSES
1 57. Lead Counsel will apply to the Court for a collective award of
16attorneys' fees to Plaintiffs' Counsel. Lead Counsel also will apply to the Court for
17 reimbursement of Litigation Expenses, which may include reimbursement of the
18expenses of Plaintiffs in accordance with 15 U.S.C. § 78u-4(a)(4). Neither
19 Underwriter Defendants, nor any other Released Underwriter Party, shall take any
20position with respect to Lead Counsel's applications or awards discussed in this
21paragraph. Such m atters are not the subject of any agreement between U nderwriter
22Defend ants and P laintiffs other than what is set forth in this Stipulation.
238. Any attorneys' fees and Litigation Expenses that are awarded by the
24Court shall be paid to Lead Counsel, with the Court's approval, immediately upon
25award, notwithstanding the existence of any timely filed objections thereto, or
26potential for appeal therefrom, or collateral attack on the Underwriter Settlemen t or
27any part thereof, subject to Lead C ounsel's obligation to pay back any such am ount
28f, as a result of any appeal, further proceeding or successful collateral attack, the
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1 attorneys' fee or Litigation Expense award is amended, modified or does not
2 ecome Final. Lead C ounsel shall make the app ropriate refund or repaym ent in full
3no later than ten (10) business days after receiving from Underwriter Defendants'
4counsel or from a court of appropriate jurisdiction notice of the termination of the
5Underwriter Settlement or notice of any reduction of the award of attorneys' fees
6nd/or Litigation Expenses. An award of attorneys' fees and/or Litigation
7Expenses is not a necessary term of this Stipulation and is not a condition of this
8 Stipulation.
99, Lead Counsel shall have the sole authority to allocate the Court-
10awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
11 faith, believes reflects the contributions of such counsel to the prosecution and12settlement of the Consolidated Action. Underwriter Defendants shall have no
13 responsibility for any such allocation and shall not be liable for any claims relating
14o such allocation.
15LAIMS ADMINISTRATOR
1 60. The Claims Administrator shall administer the process of receiving,
17 reviewing and approving or denying Claims under Lead Counsel's supervision and
18subject to the jurisdiction of the Court. Other than Underwriter Defendants'
19obligation to use best efforts to attempt to locate and provide New Century's
20shareholder lists, as provided herein, none of the Underwriter Defendants shall
21have any responsibility for, involvement in or liability for providing notice to the
22Class, the administration of the Underwriter Settlement, the allocation of the
23Settlement proceeds, or the reviewing or challenging of Claims of members of the
24Class. Underwriter Defendants and their respective counsel shall cooperate in the
25administration of the Underwriter Settlement to the extent reasonably necessary to
26effectuate its terms. The allocation of the Net Settlement Fund among Authorized
27Claimants shall be subject to a Plan of Allocation to be proposed by Lead Counsel
28and approved by the Court. Underwriter Defendants shall take no position with
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2eparate and apart from the proposed Settlement between the Underwriter
3Defendants and Plaintiffs, and any decision by the Court concerning the Plan of
4Allocation shall not affect the validity or finality of the proposed Settlement.
51. The Claims Administrator shall receive Claims and determine first,
6whether the Claim is a valid Claim, in whole or part, and second, each Authorized
7Claimant's pro rata share of the Net Settlement Fund as set forth in the Plan of
8Allocation set forth in the Notice attached hereto as Exhibit 1 to Exhibit A, or in
9 such other plan of allocation as the Court approves.
1 02. The Plan of Allocation proposed in the Notice is not a necessary term
11 of this Stipulation and it is not a condition of this Stipulation that any particular12 plan of allocation be approved by the C ourt.
133. Any Class Member who does not submit a valid Claim Form will not
14be entitled to receive any distribution from the Net Settlement Fund but will
15otherwise be bound by all of the terms of this Stipulation and Underwriter
16Settlement, including the terms of the Judgment to be entered in the Consolidated
17Action and the releases provided for herein, and will be permanently barred and
18enjoined from bringing any action, claim, or other proceeding of any kind against
19 any Released Underwriter Party concerning any Settled Claim.
204. Lead Counsel shall be responsible for supervising the administration
21of the Settlement and disbursement of the Net Settlement Fund. Neither
22Underw riter Defendants, nor any other R eleased Underwriter Party, shall have any
23 iability, obligation or responsibility whatsoever for the administration of the
24Underwriter Settlement or disbursement of the Net Settlement Fund. Neither
25Underwriter Defendants nor any other Released Underwriter Party shall be
26permitted to review, contest or object to any Claim Form or any decision of the
27Claims Administrator or Lead Counsel with respect to accepting or rejecting any
28Claim Form or Claim for payment by a Class Member. Lead Counsel shall have
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1he right, but not the obligation, to waive w hat they deem to be formal or technical
2defects in any Claim Forms submitted in the interests of achieving substantial
3 ustice.
45. For purposes of determining the extent, if any, to which a Class
5Member shall be entitled to be treated as an Authorized Claimant, the following
6onditions shall apply:
7.ach Class Member shall be required to submit a Claim Form
8 and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,
9upported by such documents as are designated therein, including proof of the
10Claimant's loss, or such other documents or proof as the Claims Administrator or
11
Lead Counsel, in their discretion, may deem acceptable, by the date set by the12Court;
13.ach Claim Form shall be submitted to and reviewed by the
14Claims Ad ministrator, under the supervision of Lead Coun sel, who shall determine
15n accordance with this Stipulation the extent, if any, to which each Claim shall be
16 allowed, subject to review by the Court pursuant to subparagraph (d) below;
17.laim F orms that do no t meet the submission requirements may
18be rejected. Prior to rejecting a Claim in whole or in part, the Claims
19Administrator shall communicate with the Claimant in writing, to give the
20Claimant the chance to remedy any curable deficiencies in the Claim Form
21submitted. The Claims Administrator, under the supervision of Lead Counsel,
22shall notify, in a timely fashion and in writing, all Claimants whose Claim the
23Claims Administrator proposes to reject in whole or in part, setting forth the
24easons therefor, and shall indicate in such notice that the Claimant w hose C laim is
25o be rejected has the right to a review by the Court if the Claimant so desires and
26complies with the requirements of subparagraph (e) below;
27.f any Claimant whose Claim has been rejected in whole or in
28part desires to contest such rejection, the Claimant must, within twenty (20) days
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1 after the date of mailing of the notice required in subparagraph (c) above, serve
2upon the Claims Administrator a notice and statement of reasons indicating the
3 Claimant's grounds for contesting the rejection along with any supporting
4documentation, and requesting a review thereof by the Court. If a dispute
5concerning a Claim cannot be otherwise resolved, Lead Counsel shall thereafter
6resent the request for review to the Cou rt; and
7.he administrative determinations of the Claims Administrator
8accepting and rejecting Claims shall be presented to the Court, on notice to
9nderwriter Defendants' counsel, for approval by the Court in the Class10Distribution O rder.
1 1
6. Each Claimant shall be deemed to have submitted to the jurisdiction12of the Court with respect to the Claimant's Claim, and the Claim will be subject to
13 investigation and discovery under the Federal Rules of Civil Procedure, provided
14that such investigation and discovery shall be limited to that Claimant's status as a
15Class Member and the validity and amount of the Claimant's Claim. No discovery
16shall be allowed on the merits of this Consolidated Action or this Underwriter
17 Settlement in connection with the processing of Claim Forms.
187. Lead Counsel will apply to the Court, on notice to all Parties, for a
19Class Distribution Order: (i) approving the Claims Administrator's administrative
20determinations concerning the acceptance and rejection of the Claims submitted;
21(ii) approving payment of any additional unpaid or anticipated administration fees
22and expenses associated with the administration of the Underwriter Settlement
23from the Escrow Account; (iii) if the Effective Date has occurred, directing
24payment of the Net Settlement Fund to Authorized Claimants from the Escrow
25Account; and (iv) other relief as appropriate.
268. Payment pursuant to the Class Distribution Order shall be final and
27conclusive against all Class Members. All Class Members whose Claims are not
28approved by the Court shall be barred from participating in distributions from the
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1Net Settlement Fund, but otherwise shall be bound by all of the terms of this
2Stipulation and the U nderwriter Settlement, including the terms of the Jud gmen t to
3be entered in this Consolidated Action and the releases provided for therein, and
4will be permanently barred and enjoined from bringing any action against any and
5ll Released Underwriter Parties concerning any and all of the Settled Claims.
69. All proceedings with respect to the administration, processing and
7etermination o f C laims and the determination of all controversies relating thereto,
8including disputed questions of law and fact with respect to the validity of Claims,
9hall be subject to the jurisdiction of the Court.
1 0ERMS OF THE JUDGMENT
11
0. If the Underwriter Settlement contemplated by this Stipulation is12approved by the Court, Lead Counsel and Underwriter Defendants' counsel shall
13 request that the Court enter an Underwriter Judgment, substantially in the form
14annexed hereto as Exhibit B, pursuant to Rule 54(b) of the Federal Rules of Civil
15Procedure.
1 6AIVER OR TERM INATION
171. Within thirty (30) days of: (a) the Court's declining to enter, without
18leave to resubmit, the Preliminary Approval Order in any material respect; (b) the
19Court's refusal to approve this Stipulation or any material part of it; (c) the Court's
20declining to enter the U nderwriter Judgm ent in any m aterial respect; or (d) the date
21upon which the Underwriter Judgment is modified or reversed in any material
22respect by the Court of Appeals or the Supreme Court, the Parties each shall have
23he right to terminate the Underwriter Settlement and this Stipulation by providing
24 written notice to all other Parties of an election to do so. However, any decision
25 with respect to an application for attorneys' fees or Litigation Expenses, or with
26respect to any plan of allocation, shall not be considered material to the
27Underwriter Settlement and shall not be grounds for termination.
28
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12. In addition, if Class Members who purchased or acquired more than a
2certain number of shares of New Century Series A Preferred Stock and Series B
3Preferred Stock during the Class Period properly elect to exclude themselves from
4he Class in accordance w ith the requirements for requesting exclusion provided in
5he Notice, as specified in a separate supplemental agreement among the Parties
6 (the "Supplemental Agreement"), Underwriter Defendants shall have the option,
7which option must be exercised unanimously amongst them, to terminate this
8Underwriter Settlement and Stipulation.
93. Lead Counsel and Underwriter Defendants' counsel shall request10 jointly that the deadline for submitting exclusions from the Class be at least
11
wenty-one (21) days prior to the Final Approval Hearing. Copies of all timely12 requests for exclusion from the Class received by the Claims Administrator (or
13other person designated to receive exclusion requests) shall be provided to Lead
14Coun sel and Underw riter Defendants' coLU lsel no later than fifteen (15) d ays prior
15o the Final Approval Hearing. If the threshold stated in the Supplemental
16Agreement is reached, Underwriter Defendants shall have until 5:00 p.m. PDT of
17he seventh day before the Final Approval Hearing to inform Lead Counsel, in
18writing, that they unanimously elect to exercise their option to terminate the
19Underwriter Settlement and this Stipulation. Lead Counsel shall have the right to
20communicate with the holders of such shares and, if a sufficient number of them
21withdraw in writing their requests for exclusion such that the total number of
22 shares purchased during the Class Period represented by the remaining "opt outs"
23 epresents less than the threshold, the notice of termination shall be deemed
24withdrawn.
254. Except as otherwise provided herein, in the event that the Underwriter
26Settlement is terminated, the Parties shall be deemed to have reverted to their
27 espective status in this Consolidated Action immediately prior to May 5, 2010,
28and, except as otherwise expressly provided, the Parties shall proceed in all
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1 respects as if this Stipulation and any related orders had not been entered, and any
2ortion of the U nderwriter Settlement consideration previously paid (including an y
3 and all interest, income, or other investment return actually accrued), less any
4mounts paid or incurred for Notice and Administration Costs actually incurred
5nd paid or payable and/or Taxes paid or owing, shall revert to the person(s)
6 making the deposits, within fourteen (14) business days after written notification of
7uch event by Lead Counsel to the Escrow Agent, pursuant to the terms of the
8scrow Agreement.
9O ADMISSION OF WRONGDOING
105. This Stipulation, whether or not consummated, and any proceedings
11taken pursuant to it:12.hall not be offered or received against any of the Released
13Underwriter Parties as evidence of, or construed as, or deemed to be evidence of
14any presumption, concession, or admission by any of the Released Underwriter
15Parties with respect to the truth of any fact alleged by Plaintiffs or the validity of
16 any claim that was or could have been asserted against any of the Released
17Underwriter Parties in this Consolidated Action or in any litigation, or of any
18 iability, negligence, fault, or other wrongdoing of any kind of any of the Released
19 Underwriter Parties;
20.hall not be offered or received against any of the Released
21Underwriter Parties as evidence of a presumption, concession or admission of any
22ault, misrepresentation or omission with respect to any statement or written
23docum ent approved or mad e by any of the Released Underw riter Parties, or against
24he Plaintiffs or any Class Members as evidence of any infirmity in the claims of
25Plaintiffs or the other Class Members;
2 6.hall not be offered or received against any of the Released
27Underwriter Parties, or against the Plaintiffs or any other Class Members, as
28evidence of a presumption, concession or admission with respect to any liability,
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1negligence, fault or wrongdoing of any kind, or in any way referred to for any
2other reason as against any of the Released Underwriter Parties, in any other civil,
3riminal or administrative action or proceeding, other than such proceedings as
4 may be necessary to effectuate the provisions of this Stipulation; provided,
5owever, that if this Stipulation is approved by the Cou rt, Underwriter Defendants,
6ny other Released Underwriter Party, or any Class Member may refer to it to
7 effectuate the protection from liability granted them hereunder;
8.hall not be construed against any of the Released Underwriter
9 Parties, Plaintiffs or any other Class Members as an admission, concession, or
10presumption that the consideration to be given hereunder represents the amount
11which could b e or w ould have b een recovered after trial;12.hall not be construed against Plaintiffs or any other Class
13Members as an admission, concession, or presumption that any of their claims are
14without merit or that damages recoverable under the Complaint would not have
15exceeded the Un derwriter Settlement Am ount; and
16.hall not be construed as or received in evidence as an
17 admission, concession or presumption that class certification is appropriate in this
1 8 onsolidated Action, except for purposes of this Underwriter Settlement.
1 9AFA NOTICE
206. Pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28
21U.S.C. § 1715(b), not later than ten (10) days after the proposed Underwriter
22Settlement is filed in the Court, Underwriter Defendants shall cause to be served
23upon the appropriate State official of each State and the Attorney General of the
24United States a CA FA Notice The P arties will request that, pursuant to 28 U.S.C. §
251.715(d), the Final Approval Hearing be scheduled for no earlier than ninety (90)
26days following the deadline for Underwriter Defendants to serve the CA FA N otice
27as stated in this paragraph. Any failure by Underwriter Defendants to comply with28
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1the CAFA Notice requirements will not provide grounds for delay of the Final
2Approval Hearing or entry of the Un derwriter Judgment.
3ISCELLANEOUS PROVISIONS
47. All of the exhibits attached hereto are hereby incorporated by
5 eference as though fully set forth herein.
68. Underwriter Defendants each warrant that, as to the payments made
7by or on behalf of it, at the time of such payment, it was not insolvent, nor did nor
8will the payment required to be made by or on behalf of it render it insolvent,
9 within the meaning of and/or for the purposes of the United States Bankruptcy
10 Code, including §§ 101 and 547 thereof. This representation is made by
11 Underwriter Defendants and no t by their counsel.129. If a case is commenced in respect of any Underwriter Defendant (or
13any insurance carrier contributing to the Underwriter Settlement Amount) under
14 Title 11 of the United States Code (Bankruptcy), or a trustee, receiver, conservator,
15or other fiduciary is appointed under any similar law, and in the event of the entry
16of a final order of a court of competent jurisdiction determining the transfer of
17money to the Settlement Fund or any portion thereof by or on behalf of any of the
18Und erwriter Defendants to be a preference, voidable transfer, fraudulent transfer or
19 similar transaction and any portion thereof is required to be returned, and such
20 amount is not promptly deposited to the Settlement Fund by others, then, at the
21election of Lead Coun sel, the Parties shall jointly m ove the C ourt to vacate and set
22aside the releases given and the Judgment entered in favor of Underwriter
23Defendan ts and the other Released U nderwriter Parties pursuant to this Stipulation,
24which releases and Judg ment shall be null and vo id; the Parties shall be restored to
25heir respective positions in the litigation immediately prior to May 5, 2010; and
26any cash amounts in the Settlement Fund shall be returned as provided in
27Paragraph 34 above.
28
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10. The Parties intend this Underwriter Settlement to be a final and
2complete resolution of all disputes asserted or which could be asserted by the
3Plaintiffs, any other Class Members and their attorneys against all Released
4Underwriter Parties with respect to all Settled Claims. Accordingly, the Parties
5gree not to assert in any forum that this Consolidated Action was brought or
6efended in bad faith or without a reasonable basis. The Parties hereto shall assert
7no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure
8relating to the prosecution, defense, or settlement of this Consolidated Action. The
9 Parties agree that the amount paid and the other terms of this Settlement were
10negotiated at arm's-length in good faith by the Parties, including a mediation
11conducted by a professional mediator, the Hon. Daniel Weinstein of JAMS (the
12"Mediator"), and reflect a settlement that was reached voluntarily after
13consultation with experienced legal counsel.
141. While retaining their rights to deny that the claims asserted in the
15Consolidated Action were meritorious, Underwriter Defendants in any statement
16mad e to any m edia representative (whether or not for attribution) will not deny that
17he Consolidated Action was com menced and prosecuted in good faith and is being
1 8 ettled voluntarily after consultation with competent legal counsel. In all events,
19 the Parties shall refrain from any accusations of wrongful or actionable conduct by
20any Party concerning the prosecution and resolution of the Consolidated Action,
21and shall not otherwise suggest that the Settlement constitutes an admission of any
22claim or defense alleged.
232. This Stipulation may not be modified or amended, nor may any of its
24provisions be waived except by a writing signed by all signatories hereto or their
25 uccessors-in-interest.
263. The headings herein are used for the purpose of convenience only and
2 7 re not meant to have legal effect.
28
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14. The administration and consummation of this Underwriter Settlement
2as embodied in this Stipulation shall be under the authority of the Court, and the
3Court shall retain jurisdiction for the purpose of entering orders providing for
4awards of attorneys' fees and Litigation Expenses to Lead Counsel and enforcing
5he terms of this Stipulation.
65. The waiver by one Party of any breach of this Stipulation by any other
7Party shall not be deemed a waiver of any other prior or subsequent breach of this
8Stipulation.
96. This Stipulation and its exhibits constitute the entire agreement among
10the Parties hereto concerning this Underwriter Settlement, and no representations,
11
warranties, or inducements have been made by any Party hereto concerning this12Stipulation and its exhibits other than those contained and memorialized in such
13documents.
147. This Stipulation may be executed in one or more original and/or faxed
15counterparts. All executed counterparts and each of them shall be deemed to be
16one and the same instrument provided that counsel for the signatories of this
17Stipulation shall exchange among themselves copies of original signed
18 ounterparts.
1 98. This Stipulation shall be binding upon, and inure to the benefit of, the
20 uccessors and assigns of the Pa rties hereto.
219.he construction, interpretation, operation, effect and validity of this
22Stipulation, and all documents necessary to effectuate it, shall be governed by the
23nternal laws of the State of California without regard to conflicts of laws, except
24to the extent that federal law requires that federal law go vern.
250. This Stipulation shall not be construed more strictly against one Party
26han another merely by virtue of the fact that it, or any part of it, may have been
27prepared by counsel for one of the P arties, it being recognized that it is the result of
28
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1rm's-length negotiations between the Parties and all Parties have contributed
2 substantially and materially to the preparation of this Stipulation.31. All counsel and any other person executing this Stipulation and any of
4 the exhibits hereto, or any related Underwriter Settlement documents, warrant and
5 represent that they have the full authority to do so and that they have the authority
6o take appropriate action required or permitted to be taken pursuant to the
7 Stipulation to effectuate its terms.
82. Counsel for the Parties agree to cooperate fully with one another in
9seeking Court approval of the Preliminary Approval Order, the Stipulation and this
10 Underwriter Settlement, and to use best efforts to promptly agree upon and. execute
11 all such other documentation as may be reasonably required to obtain final12approval by the Court of the Settlement.
133. If any Party is required to give notice to any other Party under this
14 Stipulation, such notice shall be in writing and shall be deemed to have been duly
15 given upon receipt of hand delivery or facsimile transmission with confirmation of16 receipt.17DATED AS OF: July 23, 2010ERNSTE 13OW '^^ ERGER
18. GRQL1 9/ r
20SALV , TORE J " RAZIANO
2 1LAIR A. N CIIOLASELIZABETH LIN
22IKI L, MENDOZABENJAMIN GALDSTON
23AKEO A. KELLAR12481 Nigh Bluff Drive, Suite 300
24an Diego, CA 92130Tel:(858) 793-0070
25ax: (858) 793-0323-and-
26ALVATORE J. GRAZIANOLAUREN A. MCMILLEN
27285 Avenue of the AmericasNew York, NY 10019
2 8el: (212) 554-1400Fax: (212) 554-1444
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1
MURRAY, FRANK & SAILER. LLP2ARVIN L. FRANK
275 Madison Avenue Suite 8013ew York, NY 1001
Tel;212 682-18184a x : (21282-1892
5WERLING, SCHACHTER& ZWERLING LLP
6EFFREY C. ZWERLING41 Madison Avenue
7ew York, NY 10010Tel:212 223-3900
8ax: (212) 371-5969ead Counsel for Lead Plaintiff The NewY ork S tate .Te achers' R etirem ent Sy stem and
10he Class, and . Plaintif fs Carl Larson andCharles .Hooten
11
1 2AUL, HASTINGS, JANOFSK Y1 3WALK ER LLP
14
15A
16ILLIAM S1 IV A
JOHNS. D ' v, T1 715 South Flower Street, 25^ b Floor
Los An eles, CA 900711 8e l:3 683-6000
F ax : (213) 627-070519
A ttorneys for Def endants Bear Stearns &20o. Inc., now kn ow n as J.P. M organ2 1ecurities Inc., Deutsche Barak Securities
Inc., Jefferies & Com pany Inc., JM P22ecurities LL C, .Morgan ,S tanley ch i Co. Inc.,
2 3iper Jaffray & Co., Roth Capital Partners
24L C, Sti fel Nicolaus & C o. Inc.
25
26
27
28
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EXHIBIT A
TO UNDERWRITER STIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 2 of 113 Page ID#:112031 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)
NIZAVETairnblbglaw.com)
3LIN (Bar No. 174663)(elizabetNINDOZAlbgglaw. com )
4 NIKI L.Bar No . 214646)
UNJAMIkimlbglaw.com)5GALDSTON (Bar No. 211114)(ben %blbglaw.com)
6 A. KELLAR (Bar No. 234470)
M81eok c rb l bg l aw . com )gh B luff Drive, Suite 300
San Diego , CA 921308 Tel:(858) 793-0070
Fax: (858) 793-0323and-SALVATORE J. GRAZIANO
10 sgrazianoa b lbMLLEN
. com )LAUREN 1 . M
11 ([email protected])1285 Avenue of the Am erica s12 New York, NY 10019
Tel: 212 554-140013 Fax: ^212^ 554-1444
14 Lead Counse l or Lea d Plaintiff NewYo rk State Teache rs ' Retirem ent System
15
16
7NITED STATES DISTRICT CO URT
18ENTRAL D ISTRICT OF C ALIFORNIA
19
IN RE NEW CENTURYase No . 2:07-cv-00931-DD P (FMOx)20Lead Case )
21
[PROPOSED] ORDER22RELIMINARILY APPROVING
SETTLEMENTS AND23ROVIDING FOR NOTICE
24XHIBIT A
25udge: Hon. Dean D. Pregerson
26728[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PROVIDING FOR NOTICECase No . 2:07-cv-0093 1 -DDP (FMOx)
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1HEREAS, Lead Plaintiff New York State Teachers' Retirement System
2 ("Lead Plaintiff"), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 "Plaintiffs") and the Individual Defendants,' the Underwriter Defendants, 2 and
5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with
6 Defendants, the "Parties"), have reached agreements to settle the above-captioned
7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court
8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order
9 preliminarily approving the Settlements in accordance with the Stipulations of
10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms
11 and conditions for the proposed Settlements regarding the Consolidated Action,
12
13"Individual Defendants" or "Class Individual Defendants" means Robert K.
14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.
Sandvik, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.
16 Popej oy.
172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Ca pital Partners, Morg an Stanley & C o., Inc. , and Jeffries & Co., Inc.193 The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
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1 and for dismissal of the Consolidated Action with prejudice as against all of the
2 Defendants and their related parties, upon the terms and conditions set forth
3 therein; and the Court having read and considered the Stipulations and the exhibits
4 annexed thereto;
5OW, THEREFORE, IT IS HEREBY ORDERED :
6.his order (the "Notice Order" or "Preliminary Approval Order")
7 hereby incorporates by reference the definitions in the Stipulations unless
8 otherwise indicated, and all terms with initial capitalization not otherwise defined
9 herein shall have the same meanings as set forth in the Stipulations. Any
0nconsistencies between the Stipulations and the Notice of Pendency of Class11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for
12 Attorneys' Fees and Reimbursement of Litigation Expenses ("Notice") will be
13 controlled by the language of the Stipulations.
14.he Court hereby preliminarily approves the Settlements as being
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
16CLASS CERTIFICATION
7.he Co urt hereb y cert ifies , pursuant to Rules 23(a) a nd 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New
20entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
21rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
22nd who, upon disclosure of certain facts alleged in the Complaint,were injured thereby. Excluded from the Class are (a) Defendants;b
23embers of the immediate families of the Individual Defendants; ^c)the subsidiaries and affiliates of Defendants; (d) any person or entity
24ho was a partner, executive officer, director or controlling erson ofNew Centur (including any of its subsidiaries or affiliates or of any
25efendant; (ye) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives heirs, successors and assigns
26f any such excluded party. Also excluded from the Class are anypersons who exclude themselves by filing a request for exclusion in
27cco rdance w ith the requirem ents set forth In the No tice.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 5 of 113 Page ID#:11206.he Court finds that the prerequisites for a class action under Rules
2 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in that:
3 (a) the number of Class Members is so numerous that joinder of all members
4 thereof is impracticable; (b) there are questions of law and fact common to the
5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement
6ystem NYSTRS and Plaintiffs Carl Larson and Charles Hooten areypical of
7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and
8 adequately represented the interests of the Class; (e) the questions of law and fact
9 common to the members of the Class predominate over any questions affecting
10 only individual members of the Class; and (f) a class action is superior to other
11 available methods for the fair and efficient adjudication of the controversy.12.ursuant to Rule 23 of the Fe deral Rules o f Civil Proc edure, Plaintiffs
1.3 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15.he Court appoints the firm of Analytics Incorporated ("Claims
16 Administrator") to supervise and administer the notice procedure as well as the
17 processing of claims as more fully set forth below:8.ithin five (5) business days after entry of this Order, the
19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
20 Release (the "Claim Fonn"), annexed hereto respectively as Exhibits 1 and 2, to be
21 mailed by first-class mail, postage prepaid, to all members of the Class at the
22 address of each such Class Member as set forth in the records of New Century or
23 its transfer agent, or who are identified by further reasonable efforts (the "Notice
24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the
25 Court proof of mailing of the Notice and Claim Form; and
26.summary notice ("Summary Notice"), annexed hereto as
27 Exhibit 3, shall be published once each in the national edition of The Wall Street
28 Journal and over the PR Newswire within five (5) business days of the mailing of
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1 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
2ourt proof of publ icat ion of the Sum m ary Notice.3.he Court approves the form of Notice and Summary Notice
4 (together, the "Notices") and Claim Form, and finds that the procedures established
5 for publication, mailing and distribution of such Notices substantially in the
6 manner and form set forth in paragraph 6 of this Order meet the requirements of
7 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation
8 Reform Act of 1995, and due process, and constitute the best notice practicable
9 under the circumstances.
10.or the purpose of identifying and providing notice to the Class, the
11 Trustee and the Underwriter Defendants shall provide to the Claims Administrator
12 the information as agreed to in the Global Officer And Director Stipulation and the
13 Underwriter Stipulation, respectively.
14.ominees who purchased or otherwise acquired New Century stock
15 for beneficial owners who are Class Members are directed to: (a) request within
16 fourteen (14) days of receipt of the Notice additional copies of the Notice and the
17 Claim Form from the Claims Administrator for such beneficial owners; or (b) send
18 a list of the names and addresses of such beneficial owners to the Claims
19 Administrator within fourteen (14) days after receipt of the Notice. If a nominee
20 elects to send the Notice to beneficial owners, such nominee is directed to mail the
21 Notice within fourteen (14) days of receipt of the copies of the Notice from the
22 Claims Administrator, and upon such mailing, the nominee shall send a statement
23 to the Claims Administrator confirming that the mailing was made as directed, and
24 the nominee shall retain the list of names and addresses for use in connection with
25 any possible future notice to the Class. Upon full compliance with this Preliminary
26 Approval Order, including the timely mailing of Notice to beneficial owners, such
27 nominees may seek reimbursement of their reasonable expenses actually incurred
28 in complying with this Preliminary Approval Order by providing the Claims
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1 Administrator with proper documentation supporting the expenses for which
2 reimbursement is sought and reflecting compliance with these instructions,
3 including timely hailing of the Notice, if the nominee elected or elects to do so.
4 Such properly documented expenses incurred by nominees in compliance with the
5 terms of this Preliminary Approval Order shall be paid from the Settlement Fund.
6 HEARING: RIGHT TO BE HEARD
70. There shall be a hearing on [November 8, 2010, or November 15,
8 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the "Settlement
9 Hearing") at which time the Court shall address the fairness, reasonableness and
10 adequacy of the Settlements, the fairness and reasonableness of the Plan of
11 Allocation, and Lead Counsel's application for attorneys' fees and payment of
12 Litigation Expenses. The Settlement Hearing shall be held before this Court at the
13 United States District Court for the Central District of California, 312 North Spring
14 Street, Courtroom 3, 2nd Floor, Los Angeles, California 90012.
151. Papers in support of the Settlements, the Plan of Allocation, and Lead
16 Counsel's application for attorneys' fees and payment of Litigation Expenses shall
17 be filed on or before twenty-eight (28) days prior to the Settlement Hearing.
182. Any member of the Class may appear at the Settlement Hearing and
19 show cause why the proposed Settlements embodied in the Stipulations should or
20 should not be approved as fair, reasonable and adequate, and/or to present
21 opposition to the Plan of Allocation or to the application of Lead Counsel for
22 attorneys' fees and payment of Litigation Expenses. However, no Class Member
23 shall be heard or entitled to contest the approval of the terms and conditions of the
24 Settlements, or the terms of the Plan of Allocation or the application by Lead
25 Counsel for an award of attorneys' fees and payment of Litigation Expenses unless
26 that Class Member (1) has served written objections, including the basis therefor, as
27 well as copies of any papers (including proof of all purchases or acquisitions of
28 New Century stock or options during the Class Period) and/or briefs in support of
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1 his, her or its position upon the following counsel such that it is received on or
2 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &
5 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
6 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th
7 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
8 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
9 objections, papers and briefs with the Clerk of the United States District Court for
10 the Central District of California on or before twenty-one (21) days before the
11 Settlement Hearing. Any Class Member who does not make his, her or its
12 objection in the manner provided for herein shall be deemed to have waived such
13 objection and shall forever be foreclosed from making any objection to the fairness
14 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
15 Allocation or to the application by Lead Counsel for an award of attorneys' fees
16 and payment of Litigation Expenses unless otherwise ordered by the Court. The
17 manner in which a notice of objection should be prepared, filed and delivered shall
18 be stated in the Notice.
193. If approved, all Class Members will be bound by the proposed
20 Settlements provided for in the Stipulations, and by any judgment or determination
21 of the Court affecting Class Members, regardless of whether or not a Class
22 Member submits a Claim Form.
234. Any member of the Class may enter an appearance in the
24 Consolidated Action, at their own expense, individually or through counsel of their
25 own choice. If they do not enter an appearance, they will be represented by Lead
26 Counsel.
275. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
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1 Class Members and to approve the Stipulations and/or Plan of Allocation with
2 modification and without further notice to Class Members.
3 CLAIMS PROCESS
46.n order to be entitled to participate in the Settlements, a Class
5 Member must complete and submit a Claim Form in accordance with the
6 instructions contained therein and/or in the Notice. To be valid and accepted,
7 Claim Forms submitted in connection with the Settlements must be postmarked no
8 later than 120 days after the Notice date (unless by Order of the Court, late-filed
9 Claim Forms are accepted).
107. Any Class Member who does not timely submit a valid Claim Form
11 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
12 the Court, but nonetheless shall be barred and enjoined from asserting any of the
13 settled claims and shall be bound by any judgment or determination of the Court
14 affecting the Class Members.
158. As set forth in the Stipulations, Defendants and their related parties
16hal l have no responsibi l i ty w hatsoeve r for the adm inistrat ion of the Settlem ents or17 the disbursement of the Net Settlement Fund and shall not be permitted to review,
18 contest or object to any Claim Form or any decision of the Claims Administrator or
19 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
20 payment by a Class Member.
21 REQUEST FOR EXCLUSION FROM THE CLASS
229. Any requests for exclusion must be submitted such that they are
23 received no later than twenty-one (21) days before the date of the Settlement
24 Hearing. To be valid, each request for exclusion must (i) state the name and
25 address of the person or entity requesting exclusion; (ii) state that such person or
26 entity requests exclusion from the Class in In re New Century, 07-CV-0093 I -DDP
27 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
28 telephone number for that person or entity; and (v) provide the date(s), price(s),
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1 and number(s) of shares of all purchases, acquisitions, and sales of New Century
2 Securities during the Class Period. Requests for exclusion will not be valid if they
3 do not include the information set forth above and are not received within the time
4 stated above, unless the Court otherwise determines. Copies of all timely requests
5 for exclusion from the Class received by the Claims Administrator (or other person
6 designated to receive exclusion requests) shall be provided to Lead Counsel and
7 Individual Defendants' Counsel, counsel for the Insurance Carriers (as defined in
8 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for
9 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
10 Hearing. All persons who submit valid and timely requests for exclusion in the
11 manner set forth in this paragraph shall have no rights under the Stipulations, shall
12 not share in the distribution of the Net Settlement Fund, and shall not be bound by
13 the Stipulations or any final judgment.
140. As set forth in the Stipulations, Defendants and their related parties
15 shall have no responsibility or liability whatsoever with respect to the Plan of
16 Allocation or Lead Counsel's application for an award of attorneys' fees and
17 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel's
18 application for an award of attorneys' fees and payment of Litigation Expenses will
19 be considered separately from the fairness, reasonableness and adequacy of the20 Settlements. At or after the Settlement Hearing, the Court will determine whether
21 Lead Counsel's proposed Plan of Allocation should be approved, and the amount
22 of attorneys' fees and Litigation Expenses to be awarded to Lead Counsel. Any
23 appeal from any orders relating to the Plan of Allocation or Lead Counsel's
24 application for an award of attorneys' fees and Litigation Expenses, or reversal or
25 modification thereof, shall not operate to terminate or cancel the Settlements, or
26 affect or delay the finality of the judgment to be entered pursuant to Rule 54(b) of
27 the Federal Rules of Civil Procedure approving the Settlements and the settlement
28 of the Consolidated Action set forth therein.
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2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
42. All funds held by the escrow agent selected by Lead Counsel to
5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
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1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6.hall not be offered or received against any of the Released
7 PartieS 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by PlaintiffS 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
14.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (1) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as defined in the Und erw riter Stipulation) .27 5 "Pla intiffs" in this para gra ph 25 include s Class Plaintiffs, the Trustee, and K od iak28 (as defined in the Global Officer And Director Stipulation).
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1 fault or wrongdoing of any kind, or in any way referred to for any other reason as
2 against any of the Released Parties, in any other civil, criminal or administrative
3 action or proceeding, other than such proceedings as may be necessary to
4 effectuate the provisions of the Stipulations; provided, however, that if the
5 Stipulations are approved by the Court, Defendants, any other Released Party, or
6 any Class Member may refer to the Settlements and Stipulations to effectuate the
7 protection from liability granted them hereunder;
8.hall not be construed against any of the Released Parties,
9 Plaintiffs or any other Class Members as an admission, concession, or presumption
10 that the consideration to be given hereunder represents the amount which could be
11 or would have been recovered after trial;
12.hall not be construed against Plaintiffs or any other Class
13 Members as an admission, concession, or presumption that any of their claims are
14 without merit or that damages recoverable under the Consolidated Action, the
15 Trustee Litigation and the Kodiak Litigation would not have exceeded the amount
16 of the Settlements; and
17.hall not be construed as or received in evidence as an
18 admission, concession or presumption that class certification is appropriate in this
19 Consolidated Action, except for purposes of the Settlements.
206. Except as otherwise provided in the Stipulations, there shall be no
21 distribution of any of the net settlement fund for any of the Settlements to any
22 Class Member until a plan of allocation is finally approved and the Court issues a
23 Class Distribution Order.
24 1\
25 \\
26 1\
27
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1he Court retains jurisdiction of this Consolidated Action to consider all2 further applications arising out of or connected with the proposed Settlements, and
3 as otherwise warranted.
4T IS SO ORDERED .
5 DATED:6HE HONORAB LE DEAN D. PREGERSON7NITED STATES DISTRICT COU RT JUDGE
8
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
UIZairn(a^blbglaw.com
3BETH LIN ^ar No. 174663(elizabetNINDOZAlbglaw.com)
4 NIKI L.Bar No . 214646)
UJAMlaw.coVm5N GALDSTON (Bar No. 211114)(ben: # blbglaw.com)
6 TA 4 * A. KELLAR (Bar No. 234470)takeok&1g
1 , hb l bg l a w . c om )
7481 luff Drive, Suite 30 0San Diego , CA 92130
8 Tel: 858 793-0070Fax: ^858^ 793-0323
9and-SALVATO
i
RE J. GRAZI ANO1 0AUREN MCM )LLEN
1 1 ^[email protected])285 Avenue of the Am ericas12 New York, NY 10019
Tel: : 212 554-140013 Fax: ^212^ 554-1444
14 LeadCounsel for Lead Plaintiff NewYo rk State Teache rs ' Retirem ent System
15
16
7NITED STATES DISTRICT CO URT
1 8ENTRAL D ISTRICT OF C ALIFORNIA
19 IN RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)(Lead Case )
20
1OTICE OF PENDENCY OFCLASS ACTION AND PROPOSED
22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND
23OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT
24F LITIGATION EXPENSES
25
6udge: Hon. Dean D. Pregerson
27
28
NOTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931
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1A Federal Court authorized t his Notice. This is not a sol icitat ion from a lawy er.
2NOTICE OF PENDENCY OF CLASS ACTION: Please be advised that your rights
3may be affected by a class action lawsuit pending in this Court (the
4Consolidated Action") if, during the period from May 5, 2005, through and
5 including March 13, 2007, you purchased or acquired Common Stock,
69.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7referred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9ew Century Financial Corporation ( "New Century" or the "Company").
1 0
11NOTICE OF SETTLEMENTS: Please also be advised that the Court - appointed12Lead Plaintiff, New York State Teachers' Retirement System ("Lead
13 Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively
14"Plaintiffs"), on behalf of the Class (as defined below), have reached three
15 proposed settlements ("Settlements") of the Consolidated Action as follows: a
16ettlem ent with the U nderwriter Defendants' in the amoun t of $15,000,000.00;
17 a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual Defendants 2 in which the Class will
19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underw riter Defendants" means Bear, Stearns & C o. Inc., Deutsche Bank
22Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Capital Partners, Morgan. Stanley & Co., Inc., and Jeffries & Co., Inc.23"Underw riter Defendants") .
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of25 Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27 Underw riter Defendants, the Individual Defenda nts, and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
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1$124 9 827 9 088.00.he terms of the Settlements are set forth in the
2tipulations.4
3This Notice explains important rights you may have, including your possible
4eceipt of cash from the Settlements. Your legal rights will be affected
5whether or not you act. Please read this Notice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8Plaintiff alleges that Defendants made false and misleading statements and/or
9 omitted material information to investors during the Class Period. Defendants
10deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12 regarding claims against the Individual Defendants, the Underwriter Defendants,
13 and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15of Class Mem be rs ag ainst the Defenda nts and the other appl ica ble Relea sed Part ies
16as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
1s Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20 Options and/or who sold New Century Put Options, during the time period from
212 09-1426-DDP, commenced on December 7, 2009, in the United States District
23 Court for the Central District of California (the "SEC Action").
4ll capitalized terms that are not defined herein shall have the meaning24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement');
Stipulat ion Of Sett lem ent Betw een Plaintiffs And The Underw riter Defenda nts ( the27"Underwriter Stipulation" or "Underwriter Settlement'); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement').
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1 May 5, 2005, through and including March 13, 2007, either in the Offerings,
2ursuant to a registration statement, or in the market, and who, upon disclosure of
3ertain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,
5nd/or New Century Call Options and New Century Put Options (as described
6 above) are referred to collectively as "New Century Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8as described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9 settle all claims related to the purchase of New Century Common Stock, Preferred
10Stock and/or New Century Call Options and/or sales of New Century Put Options
11during the Class Period that were or could have been asserted against Defendants
12and other Released Parties in the Consolidated Action in exchange for total
1 3ettlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash14o be deposited into an interest-bearing escrow account (the "Settlement Fund").
15 The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19Set tl em ent Fund sha l l be a l loca ted to the m em bers of the Class. The proposed Plan
20of Allocation is included in this Notice. Assuming that all Class Members
21participate in the Settlements, Lead Plaintiff's damages consultant estimates that
22he average distribution per damaged share will be approximately $0.69 per share
23of New Century Common Stock, approximately $2.08 per share of New Century
24referred Stock, approximately $0.11 per Call Option, and approximately $0.2525per Put Option, before deduction of Court-approved fees, expenses and costs
26described he rein.
27.tatement of Average Amount of Damages Per Share: The parties
28do not agree on the average amount of damages per share that would be
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2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (1) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5w hether the price o f New Century shares w as infla ted as the resul t of any a l leg edly
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was
9w rongful ly w ithheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead C ounsel
11 will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14 Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated
16 Action, in an amount not to exceed $4.5 million, plus interest from the date of
17unding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26ega rding the Settlem ents should b e directed to Mr. Graziano at Be rnstein Litow itz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 (866) 648-2524, b lbg@b lbg law .com .
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1
2OUR LEG AL RIGHTS AND OPTIONS IN THE SETTLEME NTS:
3SUBMIT A CLAIM FORM NOhis is the only way to get a payment. If
4LATER THAN [INSERT]ou wish to obtain a payment as a Class5ember, you will need to file a Claim6
Form (which is included with this Notice)
7postmarked no later than [INSERT].
8EXCLUDE YOURSELF FROMet no payment. This is the only option
9THE CLASS BY SUBMITTING A that allows you to ever be part of any
10WRITTEN REQUEST FORther law suit aga inst any of the de fendants
1 1 EXCLUSION SO THAT IT ISr other released parties concerning the12
RECEIVED NO LATER THANlaims that were, or could have been,13
[INSERT].sserted in this ca se.145OBJECT TO THErite to the Court and explain why you
16SETTLEMENTS BYo not like the Settlements, the proposed
17SUBMITTING WRITTENlan of Allocation, or the request for
18OBJECTIONS SO THAT THEYttorneys' fees and reimbursement of
19 ARE RECEIVED NO LATERxpenses. You cannot object to the
20 THAN [INSERT].ettlements unless you are a Class
21em ber and do not exc lude yourse lf .
22GO TO THE HEARING ONsk to speak in Court ab out the fairness of
23 INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of
24FILE A NOTICE OF INTENTION Allocation, or the request for attorneys'
25TO APPEAR SO TH AT IT ISees and reimbursement of expenses.
26RECEIVED NO LATER THAN
27 INSERT].
28
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1DO NOTHINGet no payment. Remain a Class
2ember. Give up your rights.
3
4HAT THIS NOTICE CONTAINS5
6Why D id I Get This Notice?ag e
7What Is This Case Ab out? What Has Ha ppened So Far?ag e
8 How Do I Know If I Am Affected By The Settlements?age
9Wha t Are The Lea d Plaintiff 's Reaso ns For The Sett lem ents?age10
Wha t Might Happen If There Were No Settlem ents?age
ll
How Much Wil l My Payment Be?ag e1 213 What Rights Am I Giving Up By Agreeing To The Settlements?ag e
14Wha t Paym ent Are The Attorneys For The Class Seeking?
15 How Will The Lawyers Be Paid?ag e
16 How Do I Participate In The Settlements? What Do I Need To Do?ag e
17What If I Do Not W ant To Be A Part Of The Sett lem ents?
18 How Do I Exclude Myself?ag e
19 When And Where Will The Court Decide Whether To Approve
20The Settlements? Do I Have To Come To The Hearing?
21Ma y I Speak A t The Hearing If I Do n' t Like The Sett lem ents?age
22Wha t If I Bo ught Shares On Som eo ne Else 's Behalf?ag e
23Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24WHY DID I GET THIS NOTICE?
2 5
26.his Notice is being sent to you pursuant to an Order of the United
27 States District Court for the Central District of California (the "Court") because
28 you or someone in your family may have purchased or otherwise acquired or sold
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1New Century Securities during the Class Period. The Court has directed us to send
2you this Notice because, as a potential Class Member, you have a right to know
3bout your options before the Court rules on the proposed Settlements in this case.
4Additionally, you have the right to understand how a class action lawsuit may
5enerally affect your legal rights. If the Court approves the Settlements, a claims
6dministrator selected by Lead Plaintiff and approved by the Court, will make
7 payments pursuant to the Settlements after any objections and appeals are resolved.
8.n a class action lawsuit, the Court selects one or more people, known
9 as class representatives, to sue on behalf of all people with similar claims,
10 commonly known as the class or the class members. In this Consolidated Action,
11 the Court has appointed New York State Teachers' Retirement System to serve as
12 "Lead Plaintiff' under a federal law governing lawsuits such as this one, and
13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
14Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated
15 Action. Lead Plaintiff New York State Teachers' Retirement System and named
16plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
17 action is a type of lawsuit in which the claims of a number of individuals are
Is esolved together, thus providing the class members with both consistency and
19 efficiency. Once the class is certified, the Court must resolve all issues on behalf
20 of the class members, except for any persons who choose to exclude themselves
21 rom the c lass . (For m ore inform ation on excluding yourself from the Class, please
22read "What If I Do Not Want To Be A Part Of The Settlements? How Do I
23Exclude Myself?" loc ated below . )
24.he Court in charge of this case is the United States District Court for
25he Ce ntra l Distric t of Cal ifornia , and the case is know n as In re New Century. The
26Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27District Judge. The people who are suing are called plaintiffs, and those who are
28being sued are called defendants. In this case, the plaintiff is referred to as the
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1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 efendants, the Underw riter Defendants and KPMG. New Century w as not nam ed
3s a defendant because New Century has filed a petition for voluntary bankruptcy
4nd the Bankruptcy Code does not permit an action to proceed against a debtor
5 who has filed such a petition.
6.his Notice explains the lawsuit, the Settlements, your legal rights,
7what benefits are available, who is eligible for them, and how to get them. The
8 purpose of this Notice is to inform you of this case, that it is a class action, how
9you might be affected, and how to exclude yourself from the Class if you wish to
10do so. It also is being sent to inform you of the terms of the proposed Settlements,
11 and of a hearing to be held by the Court to consider the fairness, reasonableness,
12and adequacy of the proposed Settlements, the fairness and reasonableness of the
13 proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
14 ees and reim bursem ent of Lit iga t ion Expenses (the "Settlem ent Hearing") .
1 50. The Settlement Hearing will be held on [INSERT] at [INSERT],
16befo re the Hono rable D ean D . Pregerson, a t the United States Distric t Court for the
17 entra l Distr ic t o f Cal ifornia , 312 No rth Spring Street , Co urtroo m 3, Los Ang eles,
1 8 California 90012 to determine:
19.hether this Co nsol idated Ac tion should b e f inal ly cert if ied, for
20ettlement purposes only, as a class action under Rules 23(a)
21nd (b) of the Federal Rules of Civil Procedure on behalf of the
22lass;
23.hether the proposed Settlements are fair, reasonable, and
24dequate and should be approved b y the Co urt;
25.hether the claims against defendants and the other released
26arties should be dismissed with prejudice as set forth in the
27tipulations;
28
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1.hether the proposed Plan of Allocation is fair and reasonable
2nd should be a pproved b y the Co urt; and
3.hether Lead Counsel's request for an award of attorneys' fees
4nd reimbursement of Litigation Expenses should be approved
5y the Court.61. This Notice does not express any opinion by the Court concerning the
7merits of any claim in the Consolidated Action, and the Court still has to decide
8whether to approve the Settlements. If the Court approves the Settlements,
9 payments to Authorized Claimants will be made after any appeals are resolved, and
10 f ter the com plet ion o f a l l c la im s proc essing. Please be pa tient .
11 WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Beginning on or about February 8, 2007, securities class action
14complaints were filed in the United States District Court for the Central District of
15California a nd the act ions w ere co nsol idated b y Order dated June 26, 2007.
163. On April 2, 2007, New Century and other Debtors filed for
17bankruptcy in the United States Bankruptcy Court for the District of Delaware
18 `Bankruptcy Co urt" ) under Chapter 11 of Tit le 11 o f the United States Co de.
1 94. By Order dated June 26, 2007, the Court appointed the New York
20 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
21 nd approved i ts select ion of Bernstein Litow itz Berger & Gro ssma nn LLP as Lead
22Counsel for the Cla ss.
235. On September 14, 2007, Plaintiffs filed their Consolidated Class
24Action Com pla int ( "Consol ida ted Co m pla int" ) asser ting c l a ims aga ins t Defendants
25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26Act of 1933 ("Securi ties Act") on beha lf of the Class.
276. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Consol idated Com plaint , w hich Plaintiffs opposed o n Dec em ber 14, 2007.
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17. By Order dated January 31, 2008, the Court granted the motions to
2ism iss with leave to am end the com plaint .
38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
4Action Complaint ("Amended Complaint"), alleging claims against Defendants
5 ursuant to the Securi ties Act and the Exc hange Act .
69. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 m ended Co nsol ida ted Class Act ion C om pla int (the "Com pla int" ) , a l l eg ing c l a ims8 against Defendants pursuant to the Securities Act and the Exchange Act.
90. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10 Co m plaint, w hich Plaintiffs oppo sed on July 7, 2008.
1 11. Following a hearing, by Order dated December 3, 2008, the Court1 2ubstantia l ly denied D efendants ' mo tions to dism iss .132. Beginning on January 26, 2009, Defendants answered the Complaint.
143. The Parties began discovery in or about April 2009, including filing
15 multiple motions to compel and motions for protective order, and serving
16discovery requests and responses, and produc ing volum inous docum ents .
174. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgm ent, w hich Plaintiffs opposed on M arch 15, 2010.
1 95. The Parties have participated in mediation sessions and additional
20discussions before the Honorable Daniel Weinstein, following which the Parties
21w ere ab le to reach ag reem ents in principle to set t le this Consol idated Ac tion o n the
22erms set forth herein. In connection with the settlement of the Consolidated
23Action, Defendants and other persons also reached agreements to settle the action
24entitled Kodiak Warehouse LLC, et al. v Brad A. Morrice, et al. (Case No. 08-
251265-DDP-FMO) commenced on November 7, 2008, in the United States District
26Court for the Central District of California (the "Kodiak Litigation") and the
27 dversary procee ding enti tled The N ew Century L iquidating T rust and R eorganized
28New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating
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1Trustee and Plan Administrator v. Robert K. Cole et al. (In re New Century TRS
2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlem ent Hearing to c onsider whe ther to g rant final approval to the Settlem ents .
7
$OW DO I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?
9107. If you are a member of the Class, you are subject to the Settlements
11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14New Century Call Options and/or who sold New Century Put Options, during the
15t im e period from Ma y 5, 2005, through a nd including Ma rch 13, 2007, ei ther in the
1 6 Offerings, pursuant to a registration statement, or in the market, and who, upon17disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director
21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded party. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27Do I Exclude Myself?," belo w ) .
28
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1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT
2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO
3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO
4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MU
5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER
6THAN [INSERT].
7HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEM ENTS?8
98. Lead Plaintiff and Lead Counsel believe that the claims asserted
10against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11however, the expense and length of continued proceedings necessary to pursue
12their c la im s ag ainst Defendants through tr ia l and a ppeals , as w el l as the diff icul t ies
13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel
14 have taken into account the possibility that the claims asserted in the Complaint
15 might have been dismissed at a later stage, such as in response to motions for
16summary judgment, and have considered issues that would have been decided by a
17 jury in the event of a trial of the Consolidated Action, including whether
18Defendants acted with an intent to mislead investors, whether the alleged
19m isrepresentat ions or o m issions w ere m ateria l to investors , w hether a l l of the Class
20Members' losses were caused by the alleged misrepresentations or omissions, and
21the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24given the expense and length of continued proceedings necessary to reach a
25 successful resolution at trial and on appeal.
269. In light of the amount of the Settlements and the immediacy of
27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed
28Sett lem ents are fa ir , reasona ble a nd ade quate, and in the best interests of the Class .
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1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
2benefit now, namely $124,827,088.00 in cash (less the various deductions
3described in this Notice), as compared to the risk that the claims in the Complaint
4 would produce a similar, smaller, or no recovery after summary judgment, trial and
5ppeals, possibly yea rs in the future.
60. Defendants have denied the claims asserted against them in the
7Complaint and deny having engaged in any wrongdoing or violation of law of any
8kind w hatsoeve r . De fendants have agree d to the Sett lem ents solely to el im inate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10e construed as an admission of Defendants' wrongdoing.
1 1HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
1231. If there were no Settlements and Lead Plaintiff failed to establish any
14essential legal or factual element of its claims, neither Lead Plaintiff nor the other
15members of the Class would recover anything from Defendants. Also, if
16Defendants were successful in proving any of their defenses, the members of the
17Class likely would recover substantially less than the amount provided in the
18Settlem ents, or nothing a t a l l .
19HOW MUCH WILL MY PAYMENT BE?
201 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
222. Pursuant to the respective Stipulations, the Individual Defendants
23have agreed to pay or cause to be paid collectively $65,077,088.00; the
24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
25KPM G has ag reed to pay $44,750,000.00. Col lect ively, Defendants have a greed to
26pay a tota l am ount of $124,827,088.00 in ca sh.
273. After approval of the Settlements by the Court, and upon satisfaction
28of the other conditions to the Settlements, and upon issuance of a Class
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1Distribution Order, the Net Settlement Fund will be distributed to Authorized
2 laim ants in acc ordance w ith the Plan of Allocat ion.
34. The Settlement Fund will be distributed as follows:
4i)o pay all federal, state, and local Taxes on any income earned
5y the Settlem ent Fund and to pay the reasona ble c osts incurred
6n connection with determining the amount of, and paying,
7axes owed by the Settlement Fund (including reasonable
8xpenses of tax at torneys and ac co untants) ;
9ii)o pay costs and expenses in connection with providing Notice
10o Class Members and administering the Settlements on behalf
1 1f Class Mem bers;12iii)o pay attorneys' fees, with interest on such amount, to the
13xtent allowed by the Court pursuant to Lead Counsel's
14pplication;
15iv )o pay Litigation Expenses incurred in commencing and
1 6rosecuting the Consolidated Action, with interest on such
17oney, to the extent allowed by the Court pursuant to Lead
18ounsel's application; and
19v)o compensate Authorized Claimants with the balance of the
20et Settlement Fund in accordance with the Plan of Allocation,
21ubject to an Order of the Court approving the Settlements and
22he Plan o f Al locat ion (or such other a l loca t ion plan a s the Court
23ay approve), and subject to such Order becoming Final
24m eaning that the tim e for appeal or appellate review of the Order
25ranting f inal a pproval has expired, or , i f the O rder is appealed,
26hat the appeal is either decided without causing a material27hange in the Order or is upheld on appeal and is no longer
28ubject to appellate review) .
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15.ach person wishing to participate in the distribution must timely
2ubm it a va l id Cla im Form es tab l i shing m em bership in the C lass, and inc luding a l l
3equired documentation, postmarked no later thanto the
4ddress set forth in the Claim Form that acco m panies this No tice. Unless the Court
5therw ise orders, any Class Mem ber w ho fai ls to subm it a Claim Form postmarked no
6ater thanhal l be forever ba rred from receiving paym ents pursuant to
7he Settlements set forth in the Stipulations but will in all other respects remain a
8 Class Member and be subject to the provisions of the Stipulations, including the
9 terms of any Judgment entered and releases given.
1 06. Payment pursuant to the Plan of Allocation approved by the Court
11 shall be conclusive against all Authorized Claimants. No person shall have any
12claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13designated by Lead Counsel arising from distributions made substantially in
14accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. Plaintiffs, Defendants, their respective counsel, and all other Released
16Parties shall have no responsibility or liability whatsoever for the investment or
17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18 Allocation, the determination, administration, calculation, or payment of any claim
19 or nonperformance of the Claims Administrator, the payment or withholding of
20Taxes owed by the Settlement Fund, or any losses incurred in connection
21 herew ith, exc ept as otherw ise provided in the Stipulations.
2237.he objective of the Plan of Allocation is to equitably distribute the
23 proceeds of the Settlements to those Class Members who suffered economic losses
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25 nd industry factors or Com pany-specif ic fac tors not rela ted to the a l lege d w rongful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27 nalysis undertaken to that end, including a review of publ ic ly avai lable inform ation
28 egarding New Century and a nalysis regarding the stock price m ovem ents.
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2et tlem ent Fund to Authorized Claim ants as fo l low s:
3I.UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6eparate Claim Form signed under penalty of perjury and supported by such
7 documents as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (1) each
9laimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B Preferred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
1 8 ee if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this t it le in which the plaintiff seeks to e stabl ish dam ag es by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
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10. All Proof of Claim forms must be postmarked or received by [DATE],
2 ddressed as fo l low s:
3n re New Century Securi ties Lit iga t ion Sett lem ent4/o A nalytics , Inc . Claim s Adm inistrator
P.O. Box 20045hanhassen, MN 55317-2004
6
41. Unless otherwise ordered by the Court, any Class Member who fails
to submit a properly completed and signed Proof of Claim within such period as8
may be ordered by the Court shall be forever barred from receiving any payments9
pursuant to the Stipulat ion, b ut w ill in a l l other respects b e sub ject to the provisions1 0
of the Stipulat ion and the f inal judgm ents entered by the Court .
1142. The Net Settlement Fund shall be distributed to members of the Class12
w ho subm it acce ptab le Proofs of Cla im. For purposes of the P lan of A l loca t ion, the13
Net Settlement Fund is divided into two components: the "Underwriter Allotment"1 4
(composed of the • settlement fund from the settlement with the Underwriter15
Defendants net of Court-approved fees and expenses), and the "Individual-Auditor1 6
Allotment" (composed of the settlement funds from the settlement with the17
Individual Defendants and KPMG, net of Court-approved fees and expenses).18
Only Class Members who purchased Series A Preferred Stock and/or Series B19
Preferred Stock dur ing the Class Period and w ere dam age d thereby m ay be e l ig ib le20
to receive distributions from the Underwriter Allotment based on those purchases.21
All Class Members (including but not limited to those who purchased Series A22
Preferred Stock and/or Series B Preferred Stock during the Class Period and were23
damaged thereby) may be eligible to receive distributions from the Individual-
24
25correcting the misstatement or omission that is the basis for the action is
26dissem inated," 15 U.S.C. §78u-4(e)(1) . $0.87 w as the averag e c lo sing price of New
27Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending o n June 10, 2007.28
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1 Auditor Al lotm ent . Put ano ther wa y, the Underw riter Al lotm ent w ill be distr ibuted
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;3 hereas the Individual-Auditor Al lotm ent w ill be distributed to a l l Class Mem be rs
4who submit valid Claim Forms, regardless of the type of New Century Security
5urchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7 Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of8 other Securities.93. The Claims Administrator shall determine each Authorized Claimant's
10pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
I 1separately establ ished for ea ch c la ss of securi t ies show n in Table 1 annexe d hereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13 Recognized Loss Claim formula is not intended to be an estimate of the amount
14 hat a Class Member might have been able to recover after a trial; nor is it an
15 estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17 Underwriter Allotment and the Individual-Auditor Allotment will be
18proport ionately a l loc ated to the Authorized Claim ants .
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21ccordance with the provisions of this Plan of Allocation. Factors generally
22onsidered in developing the Plan o f Al locat ion, include, am ong others: ( i) the t ime
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28 so, when it was sold; and (iv) the artificial inflation in the price of New Century
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1Securities at different times during the Class Period attributable to Defendants'
2 alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead
4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6during the Class Period, and based on the assumption that Plaintiffs could
7 dequa tely al lege a nd prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9Class Member who submits an acceptable Proof of Claim can claim under the
10 Settlements for the purpose of making pro rata allocations of the cash from the
11Underw riter Al lotm ent and the Individual-Auditor Al lotm ent to Class Mem bers for
12 their respective class of Securities. The Plan of Allocation is not a formal damage
13nalysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations14 hat the prices of Ne w Century Securi t ies w ere art ific ia l ly infla ted during the Cla ss
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
19Securities.
206. The Plan of Allocation covers the following New Century Securities:
21 i ) Com m on Stoc k; ( ii ) Series A Preferred Stock; ( i ii ) Series B Preferred Stock; and
22 iv) Ca l l and Put Options on Co m m on Stock .
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
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1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
22007, the next trading day after the second corrective disclosure. Finally, a New
3Century Security purchased or otherwise acquired on or after March 5, 2007, must
4 be held until March 13, 2007, the last day of the Class Period. If you did not hold
5a New Century Security referred to above which was purchased during the three
6 different parts of the Class Period described above and below (see the artificial
7nf la t ion Tab les annexed hereto ) for both the New Century Com m on Stock and the
8New Century Preferred Stock throug h at least one of the three correc t ive disc losure
9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for
10 hese transact ions wil l be ca lc ulated as zero bec ause i t has bee n determ ined that the
11 artificial inflation between each disclosure and arising from the circumstances12underlying the a l legat ions of Plaintiffs' Com plaint w as co nstant .
13 I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS
1 4LAIMS FOR NEW CENTURY SEC URITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16 New Century Securities that is within the Class Period, listed in the Proof of Claim
17 orm , and for w hich adequate docum entat ion is provided.
18.uidelines Applica ble to theCalculat ions of Al l Claim s
1 949. In the event a Class Member has more than one purchase or sale of the
20
21
New Century Securities, all purchases and sales of each type of security shall be
22
matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23
matched first against any New Century Securities held at the beginning of the
24
Class Period, and then ag ainst purchases in chrono log ica l order, beg inning w ith the
25
earliest purchase made during the Class Period. Purchases and sales of New
26
Century Securities shall be deemed to have occurred on the "contract" or "trade"
27
date as oppo sed to the "set tlem ent" or "paym ent" date. The receipt or grant by g ift ,
devise or operat ion of law of New Century Securi ties during the Class Period shal l28
not be deemed a purchase or sale of these New Century Securities for the-20-OTICE OF PENDENCY OF CLASS ACTION
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1 calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be
2eemed an assignment of any claim relating to the purchase of such New Century
3ecurities unless specifically provided in the instrument of gift or assignment.
4 Similarly, the covering purchase of a short sale shall not be deemed a purchase or
5sale of New Century Securities for the calculation of an Authorized Claimant's6Recog nized Loss Cla im .
70. Each Authorized Claimant shall be allocated a pro rata portion or
8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on
9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss
10Claims of all Authorized Claimants for their respective class of Securities. Each
11Authorized Claimant shall be paid an amount determined by multiplying the total
12n the Underw riter Al lotm ent and/or Individual-Auditor Al lotm ent for their c lass of
13Securities by a fraction, the numerator of which shall be the Claimant's
14Recognized Loss Claim and the denominator of which shall be the Total
15Recognized Loss Claims of all Authorized Claimants for the included class of
16securities. Each Authorized Claimant will receive a pro rata share of the
17Underw riter Al lotm ent and/or Individual-Auditor Al lotm ent based on his , her or i ts
18Recog nized Loss Cla im .
1 91. The amount of a Class Member's Recognized Loss as computed
20 above is not intended to be an estimate of a Class Member's damages, nor of what
21a Class Member might have been able to recover at trial, and it is not an estimate
22of the amount that will be paid pursuant to this Settlement. Instead, this
23 om puta t ion is only a m ethod to w eigh Class Mem bers ' c l a ims ag a inst one another .
242. To the extent a Claimant had a gain from his, her or its transactions
25during the Class Period with respect to New Century Securities specified above,
26he value of their Recognized Loss Claim will be zero. Such claimants will, in any
27event, be bound by the Settlements. You may wish to consider this when deciding
28w hether to o pt-out of the Sett lem ents .
-21-OTICE OF PENDENCY OF CLASS ACTION
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13. For purposes of determining whether a Claimant had an overall
2arket gain with respect to his, her, or its Class Period purchases of an individual3New Century Security or suffered an overal l m arket loss, the Claim s Adm inistrator
4 hall determine the difference between (1) the Total Purchase Amount paid for all
5urchases of that individual New Century Security purchased or acquired during
6he Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7 the sum of the Sales Proceeds received for all of that individual New Century
8ecuri ty during the Class Period and the Holding V alue a scribed to that securi ty for
9ll Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11per share for Series B Preferred Stock. This difference will be deemed a12Claimant's market gain or loss on his, her, or its overall transactions in that
13ndividual New Century Security during the Class Period .
144. An Authorized Claimant's gains and losses on a particular New15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17 particular security. In the case of New Century Common Stock and Put and Call
18Options on that stock, gains and losses on both the stock and the Options will be
19 combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22Cla im (as ca l cu la ted under this P lan) on N ew Century Com m on Stock/Opt ions w i ll
23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 ny issue of New Century Preferred Stoc k.
255. Class Members who do not submit acceptable Proofs of Claim will
26not share in the settlement proceeds. Class Members who do not submit a request
27 or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bo und by the Settlem ents and the judgm ents of the Co urt.
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16. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and
3after all claims have been processed. At that time, Lead Plaintiff will file a motion
4or entry of a proposed Class Distribution Order which will, among other things,
5pprove of the distribution to Authorized Claim ants of the N et Sett lem ent Fund.
67. The Individual Defendants, the Underwriter Defendants, and KPMG
7nd their respective counsel, and all other Released Parties shall have no
8responsibility for, or liability whatsoever, relating to distributions from the
9 Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12Adm inist ra tor , the paym ent or w i thholding o f Taxes ow ed b y a Set t lem ent Fund, or
13 ny losses incurred in connec tion therewith.
14.om puta t ion M ethodology Rela t ing toRecog nized Losses for Com m on Stock
15urchases
168. For purposes of developing the Plan of Allocation, the damages
17consultant calculated the amount of artificial inflation in the daily closing market
18prices for New Century Com m on Stoc k during three different port ions of the Class
19 Period. See the annexed Table 2. In computing artificial inflation, the damages
20consultant considered price changes of New Century Common Stock in regard to
21certain public announcements regarding New Century and adjusted those price
22 hange s that w ere at tributable to m arket forces unrelated to the a l leged fraud.
239. As explained above, Common Stock purchases are not eligible for
24distributions from the Underwriter Allotment, but may be eligible for distributions
2 5 rom the Individual-Auditor Al lotm ent .
26.eco gnized Loss Calculat ions
270. Recognized Loss Claims will be calculated for the purposes of the
28Settlem ent as fo l low s:
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1.alculat ion o f Recog nized Lo ss for NewCentury Com m on Stock Purchases
2
31. Calculation of Recognized Loss Claims for New Century Common
Stock shares shal l be a s fo l low s:4
52. For shares purchased on or between May 5, 2005, through February 7,
2007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:6
(a) For each share sold on or before February 7, 2007, no Recognized
7l a im s for dam ages sha ll be a l lowe d;8b) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
1 0ereto, less the inflation per share at the time of sale as set forth in Table 2;
and
1 1
123. For shares purchased on or between February 8, 2007, through March
132, 2007, the fol low ing c la ims for dam ag es shal l be a l low ed:
14a) For each share sold on or before March 2, 2007, no Recognized Claims
for dama ges sha l l be a l low ed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,
1 6he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,
1 7
ess the infla t ion pe r share a t the t im e o f sa le as set forth in Table 2; a nd18
194. For shares purchased on or between March 5, 2007, through March
2012, 2007, the fol low ing c la ims for dam ag es shal l be a l low ed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or dam ages sha l l be a l low ed;22b) For each share sold on or after March 13, 2007, the allowed damages
23hall be the inflation per share at the time of purchase for the applicable
date o f purchase a s set forth in Tab le 2, annexed hereto.
24
255. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Com m on Stock c l a im s , the Recognized Loss Cla ims for dam ages for such
27 shares purchased during the Class Period shall be further limited (as provided for
28under the PSLRA) to the sm al lest of the fol low ing:
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1b)For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicable
date o f purchase as set forth in Tab le 4, annexed hereto.3
40. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA) to the smallest of the following:
7a) the difference between the price paid and the price received (out-of-pocketinvestm ent loss) i f sold o n or b efore June 10, 2007;8b) the difference between the price paid (excluding all fees and commissions)9nd the average closing price as set forth in Table 6 annexed hereto if sold
be tw een M arch 13, 2007 and June 10, 2007; and1 0c) the difference between the price per share paid and $8.02 per share if the
1 1hares w ere sold a f ter June 10, 2007, or w ere held unti l the c urrent date.
1 2.alculat ion of Recog nized Lossfor New Century Series B Preferred StockPurchases
13
1 41. Calculation of Recognized Loss Claims for New Century Series B
15 Preferred Stock shares shall be as follows:
162. For shares purchased on or between May 5, 2005, through February 7,
17 2007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:
1 8a) For each share sold on or before February 7, 2007, no RecognizedCla im s for dam ages sha ll be a l lowed;
1 9b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in2 1able 5, annexed hereto, less the inflation per share at the time of sale
22s set forth in Table 5; and
2 33. For shares purchased between February 8, 2007, through March 2,
242007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:
2 5a) For each share sold on or before March 2, 2007, no Recognized Claims
26or dam ages sha l l be a l low ed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
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1nnexed hereto less the inflationion p er share at the time of sale as set
2orth in Tab le 5; and
34. For shares purchased between March 5, 2007, through March 12,
4 007, the fo l lowing c l a im s for dama ges sha l l be a l low ed:
5a) For each share sold on or before March 12, 2007, no Recognized
6Cla im s for dam ages sha ll be a l lowe d;
(b) For each share sold on or after March 13, 2007, the allowed damages
7hal l be the infla t ion per share a t the tim e o f purcha se for the appl icable
8ate o f purchase as set forth in Tab le 5, annexed hereto.
95. The Recognized Loss Claims for damages for such Series B Preferred
10Shares purchased during the Class Period shall be further limited (as provided for
11under the PSLRA) to the sm al lest of the fol low ing:12a) the difference between the price paid and the price received (out-of-pocket
13nvestm ent loss) i f sold o n or b efore June 10, 2007;(b) the difference between the price paid (excluding all fees and commissions)
14nd the average closing price as set forth in Table 7 annexed hereto if sold
15etw een M arch 13, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the
16hares w ere sold a f ter June 10, 2007, or w ere held unti l the current date.
1 7.alculat ion of Recog nized Loss for
New Century Ca l l and Put Options1 .8
196. The Plan of Allocation covers the following New Century Call and
20
Put Options: New Century Call Options on Common Stock initially purchased or
21
otherwise acquired during the Class Period, on May 5, 2005, up to and including
22
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
23
Common Stock written or purchased (covered) during the Class Period May 5,
2005, through a nd including M arch 13, 2007 ("Ne w Century Put Options") .24
2577. Artificial inflation and Recognized Losses as to New Century Call
Options and artificial deflation and Recognized Losses as to New Century Put26
27Options were computed in a manner similar to that used with respect to New
Century Common Stock as described above. To determine artificial inflation for28
Call Options, Lead Plaintiff's damages consultant considered securities' price-27-OTICE OF PENDENCY OF CLASS ACTION
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1changes that occurred in reaction to certain public announcements regarding New
2Century and then made adjustments for changes that were attributable to market
3 orces unrelated to the alleged fraud in prices of such Call Options and Put
4Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5 rom w hich the Reco gnized Lo sses for New Century Ca l l Opt ions and Put Opt ions
6may be calculated. In addition, the total dollar amount payable to Class Members
7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9 limitation reflects the speculative and derivative nature of these securities as
10 om pared to New Century Com m on Stock and New Century Preferred Shares.
1 18. With respect to purchases and sales (covers) of New Century Call12Options during the period Ma y 5, 2005, through and including M arch 13, 2007, the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15Common Stock share price. The dollar change in the value of Call Options will be
16 calculated using the Black-Scholes option pricing formula (using Black's
17 djustm ent for dividends and the annua l ized standard deviat ion est im ated from 46-
18day, historical daily volatility estimates) using the closing share price of New
19 Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22 eported closing share price minus the Common Stock price inflation per share set
23orth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
27Black's adjustment for dividends is implemented. Annualized volatility estimates
28are obtained using the daily standard deviations using the returns for that day plus
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i the previous 45-day stock returns, which are then annualized using a 252-trading
2 ay approac h.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) w ere so ld (pos i tion c losed out ) o n or b etwe en February
108, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
num ber o f Options m ultipl ied b y the lesser of :
11
121) the difference between Artificial Inflation per Call Option on the
date o f purchase a nd Artific ia l Infla t ion per Cal l Option o n the da te13f expiration, exe rcise, or sale, as appro priate; o r
142) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Ca l l Option expired w orthless) .15
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
isate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor
1 9hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the2 1ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) t im es num ber o f Options (100) , for a tota l of$880.00; assuming that the difference between the purchase price and the
23ale price w as greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions m ultiplied by the lesser of-
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11) the difference between Artificial Inflation per Call Option on the
2ate o f purchase and A rtificial Inflation per Call Option on the da teof expiration, exercise, or sale, as appropriate; or
32) the difference between the purchase price per Option and the sale
4rice per Option ($0.00 if the Call Option expired w orthless) .
5d) For Call Options which were purchased or acquired between March 5,
6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) w ere exercised on or af ter March 13, 2007; or 3) w ere sold (posit ion
7losed out) on or after March 13, 2007, the Recognized Loss Claim
8hal l be that num ber o f Options m ultipl ied b y the lesser of-
91) the Artificial Inflation per Call Option on the date of purchase, or
1 02) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Ca l l Option expired w orthless) .
1 1
129. With respect to purchases (covers) and sales of Put Options during the
13period May 5, 2005, through and including March 13, 2007, the Artificial Inflation
14 per Option on a given day shall be the dollar change in the value of Put Options on
15hat day as a result of the inflation in New Century's Common Stock share price.
16 The dollar change in the value of Put Options will be calculated using the Black-
17 Scho les put option pricing form ula (using B lack 's adjustm ent for dividends and the
18 annualized standard deviation estimated from 46-day historical daily volatility
19estimates) using the closing share price of New Century Common Stock on the
20ransaction date, compared with the Black-Scholes put pricing formula value for
21he Put Option using the uninflated share closing share price of New Century
22Common Stock on that same date as determined by: (1) the reported closing share
23price minus the Common Stock price inflation per share set forth in the annexed
24Table 2 for Put Options subsequently purchased between May 5, 2005, and March
2513, 2007, and (2) the reported closing share price minus the Common Stock price
26nflation per share set forth in the annexed Table 2 for Put Options initially sold
27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28dividends is implemented. Annualized volatility estimates are obtained using the-30-OTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931
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1
21) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put Option e xpired w orthless), as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired worthless) .
7d) For Put Options which w ere so ld betw een Ma rch 5, 2007, and Ma rch 12,
S007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9f ter Ma rch 13, 2007, the Reco gnized Loss Claim shal l be that numb er of
10ptions m ultiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,12 m ul tipl ied b y m inus one; or
(2) the difference, multiplied by minus one, between the sale price per13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired worthless) .
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1610.he put inflation for this option on March 6, 2007, was
1 7$0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18ptions after March 13, 2007, when Put inflation was zero. The Recognized1 9oss Claim for this investor will be $68 (negative of the Put inflation on the
sale date), assuming that the difference in purchase price of the Put option20nd sale price of the Put option w as grea ter than $0.68 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25w il l b e made .
261. The determination of the price paid and the price received for a
27part icular securi ty shal l be exclusive o f a l l co m m issions, taxes, fees and charge s .
28
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 49 of 113 Page ID#:112502. The Court has reserved jurisdiction to modify, amend, or alter the Plan2 of Allocation without further notice, or to allow, disallow or adjust the claim of any
3Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 funds. No person shall have any claim against the Plaintiffs or their counsel or any5claims administrator or other agent designated by Plaintiffs or their counsel, or
6 against Defendants or their counsel, based on distributions made substantially in
7ccordance with the Stipulations and the Settlements contained therein, the Plan of
8Alloc ation, or further orders of the Co urt.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Underw riter Al lotm ent or Individual-Auditor Al lotm ent, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13 pursuant to , Proofs of Cla im, for the paym ent or w i thholding o f Taxes ow ed b y the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 or acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
174. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 quitable grounds the Claim of any Class Memb er.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 urther notice to the Cla ss.
23WHA T RIGHTS AM I GIVING UP BY AGREEING T4 THE SETTLEMENTS?
24256. If the Settlements are approved, the Court will enter judgments (the
26"Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28 Plaintiff and a l l other Class Mem bers w ill provide releases as described belo w .
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17. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2m em bers of the Class w i ll be deem ed by opera t ion of l aw to have re leased, wa ived,
3discharged and dismissed each and every Settled Class Claim as against each and
4every Released Officer And Director and the Insurance Carriers (as defined in the
5Global Officer And Director Stipulation), and shall be deemed to forever be
6njoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8Claim" in this paragraph means any and all claims and causes of action of every
9ature and description, whether known or Unknown Claims, whether arising under
10 ederal, state, common or foreign law, that Plaintiffs or any other member of the
11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any12forum that arise out of or are based upon the allegations, transactions, facts,
13m atters or oc currences, representat ions o r om issions involved, set forth, or referred
14 to in the Co nsol idated Action, and that arise out of or rela te to the purchase o f New
15Century Common Stock, New Century Series A Preferred Stock, New Century
16Series B Preferred Stock, and/or Ne w Century Cal l Options and/o r the sa le o f New
1 7 entury Put Options during the Class Period. Settled Class Claims does not
18nclude claims relating to the enforcement of the Settlement. "Released Officers
19And Directors" in this paragraph means (i) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24affiliated with New Century (including any of its subsidiaries and affiliates)
25ncluded in the definition of "Assured" or "Insured" as defined in the Policies
26defined in the Global Officer And Director Stipulation) and any and all of their
27 espective heirs, executors, administrators, predecessors, successors and assigns,
28
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1employees, agents and retained professionals (other than KPMG or the
2 nderwri ter D efendants) .
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4l a ss w i ll be dee m ed by o pera tion of l aw to have re leased, w a ived, d ischarged a nd
5ismissed each and every Settled Claim, and shall forever be enjoined from
6prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8nature and description, w hether know n or Unknow n, w hether aris ing under federa l ,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11or are based upon the allegations, transactions, facts, matters or occurrences,12 representations or omissions involved, set forth, or referred to in the Complaint,
13 nd tha t a rise o ut of or re la te to the purchase of Ne w Century Com m on Stock , New
14 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
15 New Century Call Options and/or the sale of New Century Put Options during the
16Class Period. "Settled Claims" does not include claims relating to the enforcement
17 of the Settlements. "Released Auditor Party" means KPMG and any and all of its
18partners, principals, officers, directors, employees, agents, attorneys and affiliates.
19 "Released Auditor Parties" does not include any Defendants other than KPM
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22heirs, executors, administrators, predecessors, successors and assigns, and any and
23all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25dismissed each and every Settled Claim, and shall forever be enjoined from
26prosecuting any or all Settled Claims, against any Released Underwriter Party.
2 7 Settled Claim" in this paragraph means any and all claims and causes of action of
2 8 very nature and description, whether known or Unknown, whether arising under
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1 ederal, state, common or foreign law, that Plaintiffs or any other member of the
2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that
3arise out of or are based upon the allegations, transactions, facts, matters or
4occurrences, representations or omissions involved, set forth, or referred to in the
5Com pla int , and tha t a r ise out of or re l a te to the purchase of New Century Com m on
6Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7 Stock, and/or New Century Call Options and/or the sale of New Century Put
8Options during the Class Period. "Settled Claims" does not include claims relating
9o the enforcement of the Settlements. "Released Underwriter Party" means the
10Underwriter Defendants and any and all of their respective parent companies,
11subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors
12and assigns, and any and all of their current and former officers, directors,
13employees, agents and attorneys. "Released Underwriter Parties" does not include
14any D efendants other than the Underw riter Defendants .150. "Released Parties" means the Released Officers And Directors the
16 Released Auditor Parties, and the Released Underwriter Parties.
1 71. "Unknown Claims" means any and all claims that Lead Plaintiff or
18any Class Member does not know or suspect to exist in his, her or its favor at the
19time of the release of the Released Parties, which if known by him, her or it might
20have affected his, her or its decision(s) with respect to the Settlements. With
21respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and
22each Class Member shall be deemed to have waived, and by operation of the
23udgment shall have expressly waived, any and all provisions, rights and benefits
24conferred by any law of any state or territory of the United States, or principle of
25ommon law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,
26w hich provides:
27general release does not extend to claims which the creditor
28oes not know or suspect to exist in his or her favor at the time of
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1xecuting the release, which if known by him or her must have
2aterially affected his or her settlement with the debtor.
32. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6nd w as a key elem ent of the Settlem ents .
73. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10Class. In addition, certain Defendants and other persons and entities will also
11 release claims against each other and other persons and entities as set forth in the
12Stipulations.
13WHA T PAYMENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14OW W ILL THE LAWY ERS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel
18 been reimbursed for its out-of-pocket expenses. Before final approval of the
19 Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'
20 fees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the
22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23seek attorneys' fees or expenses with respect to, any disgorgements or penalties
24obtained by the Securities and Exchange Commission in the SEC Action. At the
25same time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed $4.5 million, plus interest from the date of funding at the
27same rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28 request for reimbursement of Litigation Expenses will be a request for an award to
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1Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
2 reimbursement of their reasonable costs and expenses (including lost wages)
3 directly related to their representation of the Class. The Court will determine the
4 amount of the awards.
5HOW DO I PARTICIPATE IN THE SETTLEMENTS?
6HAT DO I NEED TO DO?75. If you purchased or otherwise acquired New Century Common Stock,
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10 and/or New Century Call Options and/or sold New Century Put Options, during the
11 period from May 5, 2005, through and including March 13, 2007, either in the
12 Offerings, pursuant to a registration statement, or in the market, and were injured
13 upon disc losure of certa in facts a l leged in the Co m plaint, and you a re not excluded
14by the definition of the Class and you do not elect to exclude yourself from the
15 Class, then you are a Class Member. You will be bound by the proposed
16Sett lem ents if approved by the Co urt, and b y any judgm ent or determ ination o f the
17Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19 Settlements. A Claim Form is included with this Notice, or you may go to the
20 website maintained by the Claims Administrator for the Settlements to download a
21 copy of the Claim Form or request that a Claim Form be mailed to you. The
22 website is www.newcentarysettlement.com. You may also request a Claim Form
23 by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24downloaded from Lead Counsel's website at www.blbglaw.com. Those who
25 exclude themselves from the Class, and those who do not submit timely and valid
26 Cla im Form s w i th adequa te suppor ting docum enta tion, wi l l not be e nt it led to share
27 in the Settlements. Please retain all records of your ownership of, or transactions
28 in, New Century Securities, as they may be needed to document your Claim.
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16. As a Class Member, you are represented by Lead Plaintiff and Lead
2Counsel, unless you enter an appearance through counsel of your own choice at
3our own expense. You are not required to retain your own counsel, but if you
4 choose to do so, such counsel must file a notice of appearance on your behalf and
5must serve copies of his or her notice of appearance on the attorneys listed in the
6 section entitled, "When and Where Will the Court Decide Whether to Approve the
7 Settlements?," below.
87. If you do not wish to remain a Class Member, you may exclude
9 yourself from the Class by following the instructions in the section entitled, "What
10f I Do Not Want To Be A Part Of The Class And The Settlements? How Do I
11Exclude Myself? ," below .128. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14 attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15 xclude yourself from the Class, you m ay present your ob ject ions by fol low ing the
16 instructions in the section entitled, "When and Where Will the Court Decide
1 7 hether to A pprove the Set tlem ents?," b elow .
18HAT IF I DO NO T WANT TO BE A PART OF THE SETTLEMENTS?19OW D O I EXCLUDE MYSELF?2019. Each Class Member will be bound by all determinations and
22judgments in this lawsuit, including those concerning the Settlements, whether
23favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24 its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Sett lem ent, c /o Analytics , Inc . , Claim s Adm inistrator , P.O. Box 2004, Chanhassen,
27MN 55317-2004. The exclusion request must be received no later than
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
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1Each request for exclusion must (i) state the name and address of the person or
2ntity requesting exclusion; (ii) state that such person or entity requests exclusion
3rom the Class in In re N ew Century, 2:07-CV -0093 I -DDP; (iii) be signed by the
4 person or entity requesting exclusion; (iv) provide a telephone number for that
5person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6 allurchases, acquisitions, and sales of New Century Securities during the ClassY7eriod. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1000. If you do not want to be part of the Class, you must follow these
11 instructions for exclusion even if you have pending, or later file, another lawsuit,12 rbi tra t ion, or o ther proc eeding rela t ing to a ny Sett led C laims.
1301. If a person or entity requests to be excluded from the Class, that
14 person or e ntity w ill not rece ive any b enefi t provided for in the Sett lem ents .
1502. The Individual Defendants, Insurance Carriers, Underwriter
16 Defendants or KPMG may terminate the Settlements if requests for exclusion are
17 received from potential Class Members representing over a certain amount of
18shares as stated in Supplemental Agreements. The three settlement agreements are19 closely related and, if one of the three Settlements should not become final for any
20 reaso n, it co uld affect the finality and enfo rcea bility of the other Settlem ents.
21THER TO APPROVE22
THE SETTLEMENTS?23
24O I HAVE TO COME TO THE HEARING?
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27proposed Plan of Allocation, and/or the application for attorneys' fees and
28 reimbursement of Litigation Expenses, you do not need to attend the Settlement
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1Hearing. You can object to or participate in the Settlements without attending the
2Settlement Hearing.
304. The Settlement Hearing will be held on [INSERT] before the
4Honorable Dean D. Pregerson, at the United States District Court for the Central
5District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
6 California 90012. The Court reserves the right to approve the Settlements, the Plan
7f Allocation or the request for attorneys' fees and reimbursement of Litigation
8xpenses at or after the Settlement Hearing without further notice to the members
9 of the Class. The Settlements will become effective only if all three Settlements
10 are a pproved b y the Court .
1 105. Any Class Member who does not submit a valid exclusion that is12eceived no later than [INSERT] may object to the Settlements, the Plan of
13 Allocation, or Lead Counsel's request for an award of attorneys' fees and
14 reimbursement of Litigation Expenses. Objections or oppositions must be in
15writing. You must file any written objection or opposition, together with copies of
16 all other papers (including proof of all transactions in New Century Securities
17during the Class Period) and briefs, with the Clerk's Office at the United States
18 District Court for the Central District of California at the address set forth below
19on or before [NSERT]. You must also serve the papers
20on Lead Counsel for the Class at the address set forth below so that the papers are
21receivedonor before[INSERT].
22
23Clerk's Officeead Cou nsel for the Class
24UNITED STATESERNSTEIN LITOWITZ BERGER
25DISTRICT C OURTGROSSMANN LLPFOR THE CENTRALalva tore J. Graziano , Esq.
26DISTRICT OF CALIFORNIA285 Avenue of the Am ericas
27Clerk of the Courtew York , NY 10019312 N. Spring Street
28Los A ngeles, Cal ifornia 90012
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1epresentative Co unsel for Directors and2fficers
3UNGER, TOLLES & OLSON LLP
4a thl een M. McDow el l355 South Grand Avenue , 35th Floo r
5os Angeles, CA 90071-1560
6Co unsel for Underw riter Defenda nts
7AUL, HASTINGS, JANO FSKY &WALKER LLP
9i ll iam F. Sul l ivan
toohn S. Durrant515 South Flow er Street , 25 t h Floor
1 Ios Ang eles, CA 9007112
Counsel for KPMG13
4IDLEY AUSTIN LLPMichael L. Rugen
1555 Ca lifornia Stree t, Suite 2000
1 6an Francisco, CA 9410417
106. The filing must demonstrate your membership in the Class, including18
19 the number of shares of New Century Securities purchased or otherwise acquired
or sold during the Class Period and the price(s) paid and received. You may not20
ob jec t to the Set tl em ents or any aspec t of them , if you a re no t a Class Mem ber o r if21
you excluded yourself from the Class .22
107. You may file a written objection without having to appear at the23
Set tl em ent Hear ing . You m ay not a ppear a t the Set tl em ent Hear ing to present your24
objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise .27
108. If you wish to be heard orally at the hearing in opposition to the2s
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1n award of attorneys' fees and reimbursement of Litigation Expenses, and if you
2have filed and served a timely written objection as described above, you also must
3otify the above counsel on or before [INSERT4oncerning your intention to appear. Persons who intend to object and desire to
5present evidence at the Settlement Hearing must include in their written objections
6he identity of any witnesses they may call to testify and exhibits they intend to
7ntroduc e into evidence at the hearing.
809. You are not required to hire an attorney to represent you in making
9 written objections or in appearing at the Settlement Hearing. If you decide to hire
10an attorney, which will be at your own expense, however, he or she must file a
11notice of appea rance w ith the Court and serve it on Lead Co unsel so that the notice12s received on o r before [INSERT].
1 310. The Settlement Hearing may be adjourned by the Court without
14 urther written notice to the Class. If you intend to attend the Settlement Hearing,
15you should confirm the date and t im e w ith Lead Co unsel .
16Unless the Court orders otherwise, any Class Member who does not object in
1 7 the manner described above will be deemed to have waived any objection and
18shall be forever foreclosed from making any objection to the proposed
19 Settlements, the proposed Plan of Allocation, or Lead Counsel's request for an
20award of attorneys' fees and reimbursement of Litigation Expenses. Class
21Members do not need to appear at the hearing or take any other action to
22indicate their approval.
234HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?
2511. If you purchased or otherwise acquired or sold New Century
26Securities during the Class Period for the beneficial interest of a person or
27organization other than yourself, you must either (1) send a copy of this Notice to
28 the beneficial owner of such New Century Securities, postmarked no later than
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2addresses of such persons no later than fourteen (14) days after you receive this
3 Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5hoose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7 must retain the list of names and addresses for use in connection with any possible
8 uture notice to the Class. If you choose the second option, the Claims9 Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11 reasonable expenses actually incurred, by providing the Claims Administrator with
12 proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14w w w .new centuryse tt lem ent. com o r Lead Counse l 's w ebs it e , ww w .b lbg l aw . com ., or
15by calling toll-free 1-866-308-7615.
16 CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
1 7
QUESTIONS?18912. This Notice contains only a summary of the terms of the proposed
20 Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.newcenturysettlement.com , including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
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1n re New Century Securities Litigationalva tore J. Graziano , Esq.2et t lementERNSTEIN LITOWITZ BERGER
c/o Ana lytics, Inc.GROSSMANN LLP3la ims Administrator285 Avenue of the Am ericas4.O. Box 2004ew York , NY 10019
Chanhassen, MN 55317-2004866) 648-25245laim s Ad m [email protected] Counsel
DO NOT CALL OR W RITE THE COURT OR THE OFFICE OF THE7
CLERK OF COURT8
REGARDING TH IS NOTICE.9
1 0
11 Dated:y Order of the Clerk of Co urtUnited States District Court
12or the Ce ntral District of California
13
14
15
16
17
18
1920
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12able 1
3
4
5
6 Issuer /iquidationhare inhare in
7nderlyingUSIPyp essue DatePreferencea tenderwriter Individual
AllotmentAuditor
Al lo tmen t8
Preferred Stock
9 New Century 64352D200/15/200525.00.125%Series A
10
11referred Stock
New Century 6435EV207/15/200625.00.750%12eries B
13New Century 6435EV108 Common Stock14
15 New Centuryariousall Option16New Centuryariousut Option178
19
20
21
22
23
24
25
26
27
28
-46-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 63 of 113 Page ID#:11264
1
2able 2
3nf la t ion per Share for Com m on Stock Shares Purchased betw eenMa y 5, 2005, and Ma rch 13, 2007
5
6eriodegin Datend datenflation1-May-05-Feb-075.21
7-Feb-07-Mar-071.09
3-Mar-072-Mar-07.6 983-Mar-07o the present.0 09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-47-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 64 of 113 Page ID#:11265
12
3abe34
Common Stock PSLRA 90-Day Look-Back Loss L imitation Calculations
5verageverageClosinglosinglosinglosing
6at erice ( $ )rice ( $ )aterice ( $ )rice ($ )
713Mar2007.8 4.8 47Apr2007.86.1 9
84Mar2007.6 7.760Apr2007.89.18
15Mar2007.35.951May2007.85.1 7
96Mar2007.3 4.302May2007.83.16
19Mar2007.17.473May2007.8 0.15100Mar2007.69.514May2007.72.14
111Mar2007.67.537May2007.5 9.1 2
22Mar2007.56.548May2007.58'll123Mar2007.0 0.599May2007.53.10
26Mar2007.56.59OMay2007.43.08
137Mar2007.41.5 7lMay2007.4 3.0 6
28Mar2007.11.534May2007.41.05
149Mar2007.03.495May2007.37.03
30Mar2007.06.4 66May2007.3 6.0 2152Apr2007.9 1.437May2007.3 6.01
163Apr2007.01.40SMay2007.3 9.9 9
04Apr2007.0 0.381May2007.4 4.98
175Apr2007.26.3 72May2007.43.97
09Apr2007.14.363May2007.47.9 618OApr2007,09.344May2007.45.95
1lApr2007.98.335May2007.47.9 4192Apr2007.89.319May2007.4 6.93
203Apr2007.86.290May2007.45.9 2
16Apr2007.98.271May2007.44.9 2
217Apr2007.00.261Jun2007.44.91
18Apr2007.9 9.254Jun2007.43.9 0
229Apr2007.93.245Jun2007.4 3.8 9
20Apr2007.9 6.236Jun2007.4 5.88
233Apr2O07.9 6.227JLm2007.4 4.8 8
24Apr2007.92.218Jun2007.4 4.8 7245Apr2007.9 6.209Jun2007.4 4.8 7
256Apr2007.9 4.200Jun2007.4 4.87
26
27
28
-48-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 65 of 113 Page ID#:11266
1
2able 4
3nflation per Share for Series A Preferred Shares Purchased betw een
5
ay 5, 2005, and March 13, 2007
6eriodegin Datend datenflation
1
-May-05
-Feb-07
5.10
7-Feb-07-Mar-070.488-Mar-072-Mar-07.48
43-Mar-07o the present009
10
11
12
13Table 5
14
15nflation per Share for Series B Preferred Shares Purchased betw een
16ay 5, 2005, and March 13, 2007
17eriodegin Datend datenflation
18
-May-05
-Feb-07
5.41
2
-Feb-07
-Mar-07
1.18
19
-Mar-07
2-Mar-07
.03
4
3-Mar-07
o the present
00
20
21
22
23
24
25
26
27
2849OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 66 of 113 Page ID#:11267
1
2
3abe64referredo k Series A P LRA -Da Look-Backt c S07oss
Limitation Calculations5Average
verage
6
losing
losing
losing
losing
Date
rice ($) price ($)
ate
rice ($) price ($ )
713-Mar-2007.4 5.4 57-Apr-2007.27.4 5
84-Mar-2007.20.330-Apr-2007.45.4 8
95-Mar-2007.95.531-May-2007.00.52
16-Mar-20070.00.152-May-2007.8 0.56
109-Mar-2007.25.373-May-2007.8 0.59
20-Mar-2007.50.394-May-2007.75.6 2
1 1
1-Mar-2007
.75
.4 4
7-May-2007
.25
.6 6
12
2-Mar-2007
.85
.4 9
8-May-2007
.00
.70
23-Mar-2007
.77
.6 4
9-May-2007
.70
.72
13
6-Mar-2007
.92
.6 6
0-May-2007
.23
.73
147-Mar-2007.4 0.4 61-May-2007.73.73
28-Mar-2007.10.264-May-2007.50.75
159-Mar-2007.20.105-May-2007.00.78
30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.937-May-2007.95.83
173-Apr-2007.55.918-May-2007.83.85
04-Apr-2007
.1 0
.92
1-May-2007
.50
.8 8
18
5-Apr-2007
.25
.94
2-May-2007
.50
.9 2
19
9-Apr-2007
.6 5
.92
3-May-2007
.10
.9 4
10-Apr-2007
.5 0
.90
4-May-2007
.25
.9 7
201-Apr-2007.6 0.8 95-May-2007.10.9 9
12-Apr-2007.4 5.8 79-May-2007.25.01213-Apr-2007.0 0.830-May-2007.20.03
226-Apr-2007.05.8 01-May-2007.14.05
17-Apr-2007.70.751-Jun-2007.75.06238-Apr-2007.30.704-Jun-2007.25.07
24
9-Apr-2007
.10
.6 4
5-Jun-2007
.10
.0720-Apr-2007
.15
.5 9
6-Jun-2007
.4 5
.06
25
3-Apr-2007
.6 0
.52
7-Jun-2007
.00
.04
24-Apr-2007
.00
.4 7
8-Jun-2007
.8 7
.02
26
5-Apr-2007
.25
.4 3
9-Jun-2007
.8 7
.02
276-Apr-2007.37.4 30-Jun-2007.8 7.02
28
-50-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 67 of 113 Page ID#:11268
1
2able7referred Stock, Series B, PS LRA 90-Day Look-Back Loss
Limitation Calculations4
Averageverage
5
losing
losing
losing
losing
Date
rice ($) price ($)
ate
rice ($) price ( $ )
6
13-Mar-2007
.32
.32
7-Apr-2007
.06
.35
74-Mar-2007
.35.340-Apr-2007
.40.38
5-Mar-2007.89.521-May-2007.70.42
-Mr-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48
-Mr-2007.60.424-May-2007.6 1.5101-Mar-2007.00.507-May-2007.45.56
1
2-Mar-2007.10.588-May-2007.88.60
-Mr-2007
.50
.68
9-May-2007
.70
.62
2
6-Mar-2007
.90
.70
0-May-2007
.53
.64
3
7-Mar-2007
.65
.51
1-May-2007
.05
.65
-Mr-2007
.80.294-May-2007
.45.67
49-Mar-2007.25.135-May-2007.78.70
-Mr-2007.40.016-May-2007.00.7252-Apr-2007.00.947-May-2007.20.76
63-Apr-2007.25.908-May-2007.88.78
Apr-2007.00.901-May-2007.50.8 1
75-Apr-2007.45.932-May-2007.75.83
8
9-Apr-2007
.50
.91
3-May-2007
.25
.86
-Apr-2007
.03
.87
4-May-2007
.25
.89
9
1-Apr-2007
.05
.83
5-May-2007
.10
.9 1
Apr-2007
.90.799-May-2007
.30.94
03-Apr-2007.80.740-May-2007.00.96
216-Apr-2007.76.701-May-2007.65.99
Apr-2007.15.641-Jun-2007.85.00
28-Apr-2007.00.584-Jun-2007.60.01
239-Apr-2007.00.525-Jun-2007.60.00
-Apr-2007.05.476-Jun-2007.50.00
4
3-Apr-2007
.90
.4 1
7-Jun-2007
.90
.98
Apr-2007
.00
.37
8-Jun-2007
.25
.95
25
5-Apr-2007
.20
.33
9-Jun-2007
.25
.95
66-Apr-2007
.25
.33
0-Jun-2007
.25
.95
27
28
-51-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 68 of 113 Page ID#:11269
1able 8
2 Table 8 has been abbreviated for example purposes. For a complete table, visit
3ttp://www.newcenturysettlement.com/Forms/Table 8.pdf.
4 If you do not have access to the Internet, please contact the Claims Administrator
5t 1-866 -308-7615 to have a copy m ailed to you.
6in
7axinax Minis kis ka xinaxMatur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Pu t
8a tericericer i c eil ityil itya tea tenf lat.nf lat.nf lat.nflat ion
97-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510.00$0.18
21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0 .05$0.20
109-May-
0 72.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.51$0 .07$0.19
1 18 - A u g - 0 7
2 . 5 05.163 . 2 1
. 9 8
. 8 8. 0 5. 0 50.620.54
$0 .08$0.15
1 9 - J a n - 0 82.505.163 . 2 1
. 9 8
. 8 8. 0 5. 0 50.630.59
$0 .06$0.11
127 - J a n - 0 92.505.163.21
. 9 8
. 8 8. 0 5. 0 50.660.64
$0 .04$0.05
137-Feb-075.0019.7517.21.93.88.05.0511.0911.080.00$0.01
17-Mar-075.0019.753.21.98.88.05.0511.080.03$0.01$1.40141-Apr-075.0015.853.21.98.95.05.059.410.22$0.20$2.29
159-May-
0 75 .0019.753.21. 9 8.88. 0 5.0 510.860.30$0.19$2.30
168 - A u g - 0 75 .0019.753.21. 9 8. 8 8. 0 5. 0 5 $ 1 0 . 4 60.42$0.16$3 .00
1 9 - J a n - 0 85 .0019.753.21. 9 8. 8 8. 0 5. 0 59.870.51$0.11$4.2017
7 - J a n - 0 95 .0019.753.21. 9 8. 8 8. 0 5. 0 58.940.61$0 .06$3 .44
187-Feb-077.5019.7517.21.93.88
.05
.0511.09
9.59
0.00
$1.50
17-Mar-077.5019.75
3.21.98.88
.05
.0510.75
0.00$0.34
$3.87
191-Apr-077.5015.85
3.21.98.95
.05
.05
7.07
0.10$0.36
$4.69
209-May-
0 77.5019.753.21. 9 8. 8 8. 0 5.0 59.970.18$0.31$4 .56
218 - A u g - 0 77.5019.753.21, 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90
19-Jan-087.5019.753.21.98.88.05.058.750.46$0.16$5.63
227-Jan-097.5019.753.21.98.88.05.057.950.59$0.08$4.50
$ 1 0 . 0237-Feb-0719.7517.21.93.88.05.059.007,10$1.14$3.99
2410.017-Mar-07
19.75
3.21.98.88
.05
.05
9.10
0.00$0.64
$6.33
2510.0
21-Apr-0718.773.21
. 9 8. 9 3. 0 5.0 57.980 . 0 5
$0 .48$6.82
26
9-May-10.0
0 719.753.21. 9 8. 8 8. 0 5.0 58.540.11$0 .41$6.51
2710.0
1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5.0 58.110.27$0.29$6.402810.0
19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70-52-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 69 of 113 Page ID#:11270
110.01 7 - J a n - 0 919.753 . 2 1. 9 8. 8 8. 0 5. 0 57.140.57$0 .09$5 .31
21 2 . 5
1 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 56.504.60$3.63$6.4931 2 . 5
17-Mar-0719.753 . 2 1. 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.50
41 2 . 5
21-Apr-07
18.77
3.21
. 9 8
. 9 3
. 0 5
. 0 5
6.05
0.02
$0.55
$8.4559-May-12.5
0 719.753.21
. 9 8. 8 8. 0 5. 0 56.950.08
$0 .48$8.00
61 2 . 5
1 8 - A u g - 0 7$19.753.21. 9 8. 8 8. 0 5. 0 56.870 . 1 5$0 .34$7.54
$ 1 2 . 5
1 9 - J a n - 0 819.753.21. 9 8. 8 8. 0 5. 0 56.720.39$0.23$7.51g
12.597 - J a n - 0 919.753.21. 9 8. 8 8. 0 5. 0 56.460.55$0.10$5 .95
$15.0
107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54 .002.16$6.12$8.93
$15.0
1 17-Mar-07$19.753.21. 9 8.88. 0 5. 0 54.700.00$0.69$9.97
$15.0
121-Apr-0718.773.21
. 9 8. 9 3. 0 5. 0 54.350.01
$0.60$9.54
19-May-15.0
13719.753.21. 9 8. 8 8. 0 5. 0 55.400 . 0 5
$0 .53$9.05
$15.0
148-Aug-0719.753.21.98.88.05.055.760.10$0.38$8.40
$15.0
159-Jan-0819.753.21.98.88.05.055.890.20$0.25$8.14
$15.0
167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47
$ 1 7 . 5177 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 51.700.48$8.61$10.61
$ 1 7 . 5187-Mar-0719.753.21
. 9 8. 8 8. 0 5. 0 52.950.00
$0.69
$10.69
$17.5191-Apr-07
18.77
3.21.98.93
.05
.05
3.02
0.01$0.63$10.21
19-May-17.5207$19.753.21.98.88.05.053.900.04$0.56$9.76
211 7 . 5
1 8 - A u g - 0 7$19.753.21. 9 8.88.0 5. 0 54 .500.10$0 .41$9.03
221 7 . 5
19-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63
231 7 . 5
17-Jan-0919.753.21.98.88.05.055.400.40$0.13$6.90
24
20.0
17-Feb-07
42.1017.21.93.21
.05
.0519.93
0.04$5.28$17.39
25
20.0
17-Mar-0730.843,21
. 9 8. 2 3. 0 5. 0 510.640.00
$0.69$15.54
2620.0
21-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60
279-May-20.00 730.603.21. 9 8.24. 0 5. 0 59.320.03$0 .59$16.74
2820.0
18-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25
-53-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 70 of 1 13 Page ID#:11271
120.0
1 9 - J a n - 0 851.223 . 2 1. 9 8. 2 1. 0 5.0 419.940.15$0 .30$18.65
22 0 . 0
17-Jan-0942 .103 .21.9 8.2 1.0 5.0 59.250 .25$ 0 . 1 4$16.72
322.5
17-Feb-07$42.1017.21.9 3.2 1.0 5.0 517.530 . 0 0$7 .68$19.88
422.5
1 7 - M a r - 0 7
$30.84
3 .21
.9 8
.2 3
.0 5
.0 5
8.16
0 . 0 0
$ 0 .6 9
$18.0352 2 . 5
21-Apr-0718.773 . 2 1
. 9 8. 9 3. 0 5. 0 50.900.00
$0.66$10.82
69-May-2 2 . 5
0 73 9 .6 93 .21.9 8.2 1.0 5.0 514.130 . 0 2$ 0 .6 1$21.23
$22.5
88 - A u g - 0 73 4 . 4 43 .21.9 8.2 1.0 5.0 57.530 .10$ 0 . 4 7$21.41
$25.097-Feb-0742 .1017.21.9 3.2 1.0 5.0 515.100 . 0 010.11$22.30
$25.0
107 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 55 .7 00 . 0 0$ 0 .6 9$20.49
$25.0
111 - A p r - 0 7$18.773 .21.9 8.9 3.0 5.0 50 . 4 00 . 0 0$ 0 .6 7$10.94
19-May-25.0
12742.103 .21
.9 8.2 1.0 5.0 513.690 . 0 2
$ 0 .6 3$23.07
$25.0
138 - A u g - 0 7$34.443 .21.9 8.2 1.0 5.0 55 . 4 40 .10$ 0 . 4 9$23.05
$25.0
149 - J an - 0 8$51.223 .21.9 8.2 1.0 5.04 $16.720 .15$ 0 . 3 3$21.93
$30 .0157-Feb-07$47.8217.21.9 3.2 1.0 5.0 514.260 . 0 010 .95$25.03
$30.0
167 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 51.640 . 0 0$ 0 .6 9$24.29
$30.0171 - A p r - 0 718.773 .21.9 8.9 3.0 5.0 50 .250 . 0 0$ 0 .6 8$11.05
19-May-30.018742.103 .21
.9 8.2 1.0 5.0 59 . 3 50 . 0 1
$ 0 .6 5$24.86
$ 3 0 . 0198 - A u g - 0 73 4 . 4 43 .21.9 8.2 1.0 5.0 52.380 . 0 9$ 0 . 5 2$24.73
$30.0209 - J an - 0 85 3 . 0 03 .21.9 8.1 9.0 5.0 313.640 .15$ 0 . 3 6$23.81
2130.0
17-Jan-0947.823 .21.9 8.2 1.0 5.0 58.450 . 0 3$ 0 .1 7$21.29
2235 .017-Feb-0747.8217.21.9 3.2 1.0 5.0 51 0 . 3 60 . 0 011.09$25.21
2335 .0
1 7 - M a r - 0 73 0 .8 43 .21.9 8.2 3.0 5.0 50 .120 . 0 0$ 0 .6 9$25.18
249-May-35 .00 742.103.21
. 9 8. 2 1. 0 5. 0 55.830.01
$0.66$25.19
2535 .0
1 8 - A u g - 0 7$34.443.21
. 9 8. 2 1. 0 5.0 50.880 .04
$0 .55$25.13
2635 .0
1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5.0 54.610.03$0 .38$24.72
2740.01 7 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 57.360.0011.09$25.21
2840.0
1 7 - M a r - 0 73 0 .8 43 .21.9 8.2 3.0 5.0 50 . 0 50 . 0 0$ 0 .6 9$25.21
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 72 of 113 Page ID#:11273
EXH IBIT A-2 TO EXH IBIT A
TO UNDERWR ITER S TIPULATION
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 73 of 113 Page ID#:11274
1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
UIZADETairnblbglaw.com)3LIN (Bar No. 174663)
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Tel: 212 554-140013 Fax: ^212^ 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers' Retirement System
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7NITED STATES DISTRICT COURT
1 8
ENTRAL DISTRICT OF CALIFORNIA
19 IN RE NEW CENTURY
ase No. 2:07-cv-00931-DDP ( FM Ox)
(Lead Case)20
1ROOF OF CLAIM AND
22ELEASE
23
4
udge: Hon. Dean D. Pregerson
25
6
ROOF OF CLAIM AND RELEASE
27
DEADLINE FOR SUBMISSION2010.28
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 74 of 113 Page ID#:11275
1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3 Pendency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4nd Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8 Consolidated Action, how the Class Members are affected by the Settlements, and
9he manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11ontains the definitions of m any of the defined term s ( which are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14you have read and that you understand the Notice.
1 5. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18
ADDRESSED TO:
19
n re N ew Century Securities Litigation Settlement
20c/o Analytics, Inc. Claims Administrator
P.O. Box 200421hanhassen, MN 55317-2004
22-866-308 -7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27Preferred Stock"), and/or New Century call options and/or who sold New Century
28 put options, during the time period from May 5, 2005, through March 13, 2007,
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1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2he Complaint, were injured thereby (the "Class"). (The New Century common
3tock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4ptions and New Century put options are referred to collectively as "New Century
5ecurities.")
6
.
Class Member" means any person who is included in the definition
7f the Class and who did not timely submit a proper request for exclusion in
8accordance with the requirements set forth in the Notice. Excluded from the Class
9 re certain persons or entities excluded by definition pursuant to the Court's
10 preliminary approval of the Settlements.' Also excluded from the Class are any
11persons or entities who exclude themselves by filing a request for exclusion in
12 ccordance w ith the requirements set forth in the Notice.
13
.
Authorized Claimant" means a Class Member who submits a timely
14nd valid Proof of Claim form to the Claims A dministrator, in accordance w ith the
15 requirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
17. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19 EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21SETTLEMENTS_IF YOU ARE NOT A CLASS MEM BER. THUS, IF YOU FILE
223
The following persons are excluded from the Class: (a) the Underwriter
24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive
26officer, director or controlling person of New Century (including any of its
27subsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,
28uccessors and assigns of any such excluded party.
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1A VALID REQUEST FOR EXCLUSION IN A TIMELY MA NNER, ANY PROOF
2OF CLAIM THAT YOU SUBMIT, OR THAT MAY BE SUBMITTED ON YOUR3BEHALF, WILL NOT BE ACCEPTED.
4.o recover as a Class Member, you must complete and sign this Proof
5f Claim and mail it to the Claims Administrator postmarked on or before
6
010. If you fail to file a timely, properly addressed, and
7ompleted Proof of Claim, your claim may be rejected, and you may be precluded
8from receiving any d istribution from the Settlements.
9.ubmission of this Proof of Claim does not ensure that you will share
10 in the proceeds of the Settlements. Distributions to Class Members from the
11 Settlements are governed by the Plan of Allocation approved by the Court. The12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
14.f you have questions concerning the Proof of Claim, or need
15dditional copies of the Proof of Claim or the Notice, you may contact the Claims
16 Administrator, at In re New Century Securities Litigation Settlement, c/o Analytics,
17 nc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by
18 toll-free phone at (866) 308-7615, or you may download the documents from Lead
1 9 ounsel's website, www.blbglaw.com, or the website maintained by the Claims
20Administrator for this Settlement, www.neweenturysettlement.com .
210. If you are a Class Member and you do not, or someone acting on your
22behalf does not, submit a timely request for exclusion from the Class, and if the
23Court approves the Settlements, you will be bound by the terms of any orders and
24udgments that the Court enters. You will be bound by such orders and judgments
25whether or not you subm it a Proof of Claim.
26
1. You are required to submit genuine and sufficient documentation for
27all your purchases and sales of New Century Securities from May 5, 2005,
28hrough and including March 13, 2007, as well as genuine and sufficient
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1 documentation for all sales of New Century Common Stock and Preferred Stock
2etween March 14, 2007, through and including June 10, 2007. You are also
3equired to submit genuine and sufficient documentation reflecting your positions
4n New Century Common Stock and Preferred Stock as of the close of the market5n March 13, 2007, and as of the close of the market on June 10, 2007.
6Documentation may be photocopies of stockbrokers' confirmation slips or
7 stockbrokers' monthly statements (reflecting your opening and closing balances for
8he m onths specified on the actual claim form, and in which transactions during the
9Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR
10POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT
11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER, FAILURE12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF
13YOUR CLA IM. DO NOT SEND ORIGINAL STOCK CERTIFICATES.
142. All joint purchasers must each sign this Proof of Claim.
153. Agents, executors, administrators, guardians, and trustees must
16complete and sign the Proof of Claim on behalf of persons represented by them,
17 nd they must:
18
a)
xpressly state the capacity in which they are a cting;
19
b) identify the name, account number, Social Security Number (or
20axpayer identification number), address and telephone number
21f the beneficial owner of (or other person or entity on whose
22ehalf they are acting with respect to) the New Century
23ecurities; and
24
c) furnish herewith evidence of their authority to bind to the Proof
25
f Claim the person or entity on whose behalf they are acting.
26
Authority to complete and sign a Proof of Claim cannot be
27stablished by stockbrokers demonstrating only that they have
28
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1
iscretionary authority to trade stock in another person's
2ccounts.)
34. By submitting a signed Proof of Claim, you will be swearing that you:
4a) own(ed) the New Century Securities you have listed in the
5
roof of Claim; or
6
b) are expressly authorized to act on behalf of the owner thereof.
7
5. By submitting a signed Proof of Claim, you will be swearing to the
8ruth of the statements contained therein and the genuineness of the documents
9 ttached thereto, subject to penalties of perjury under the laws o f the United States
10of America. The making of false statements, or the submission of forged or
11 fraudulent documentation, will result in the rejection of your claim and may12 ubject you to civil liability or criminal prosecution.
13NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large
14 numbers of transactions may request, or may be requested, to submit information
15 regarding their transactions in electronic files. All Claimants MUST submit a
16ma nually signed paper Proo f of Claim form listing all their transactions, whether or
17 not they also submit electronic copies. If you wish to file your claim
18electronically, you must contact the Claims Administrator at 1-866-308-7615, or
19visit its settlement website www.newcenturysettlement.com to obtain the required
20ile layout. No electronic files will be considered to have been properly submitted
21unless the Claims Administrator issues to the Claimant a written paper
22 cknowledgm ent of receipt and acceptance of electronically submitted data.
23
24
25
26
27
28
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1In re New Century
2PART I: CLAIMANT IDENTIFICATION
3Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name
5treet Address
7itytateip Code
9Daytime)10 Area Codeelephone Num ber
11(Evening)12
Area Code
elephone Num ber
13
14 Social Security Number or
axpayer Identification Num ber
15
16ecord Ow ner's Name ( if different from beneficial owner listed above)1 7
Check appropriate box ( check only one box):18
q
ndividual/Sole Proprietor
oint Owners
ension Plan
19
20qorporation
artnership
rust
21qRAther22
23
(describe:24NOTE: Separate Proofs of Claim should be submitted for each separate legal
25entity (e.g., a claim from Joint Owners should not include separate transactions of
26 ust one of the Joint Owners; an Individual should not combine his or her IRA
27ransactions with transactions made solely in the Individual's name). Conversely,
28a single Proof of Claim submitted on behalf of one legal entity should include all
6
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1transactions made by that entity, no matter how many separate accounts that entity
2as (e.g., a corporation with multiple brokerage accounts should include all
3 transactions made in New Century Securities during the Class Period on one Proof
4f Claim, no matter how many accounts the transactions were made in). If you
5equire additional room to list your transactions, please be sure to include you r full
6name and the last four digits of your social security number or Tax ID number on
7ach additional sheet. Check here if additional transactions are included on
8dditional schedules.PART ILNEW CENTURY COMMON STOCK
10. Be2innint! Holdings: State the number of shares of New Century
1 I
ommon Stock the Claimant owned as of the close of the market12
n May 4, 2005. If none, write "zero" or "0." If other than zero,
1 3
e sure to attach the required documentation.
14
15. Purchases:
16i) List all purchases of New Century Common Stock made during the
17period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
18cquired your New Century Common Stock during this period other than by an
19 open-market purchase, please provide a complete description of the terms of the
20cquisition on a separate page.) B e sure to attach the required documentation.
21rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
234
5
6
7 excluding com missions, transfer taxes or other fees.28
7
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1
ii) State the total number of shares of New Century Common Stock the
2Claimant purchased during the period between March 14, 2007, through and
3ncluding June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,
4 hich are not in the Class Period, are not included in the calculation of Re cogniz ed
5Loss. This information is needed by the Claims Administrator for purposes of the
6verall evaluation of the Claim.)
7
. Sales: List all sales of New Century Common Stock made during
8he period from May 5, 2005, through and including
9une 10, 2007. Be sure to attach the required documentati
10rade Date(s) (L ist
1 1
hronologically)umber ofalesotal
Month/Day/Year
hares Sold
rice Per Share
ales Price*
12
13
456 *excluding commissions, transfer taxes or other fees
17
1 8
. Unsold Holdings: State the total number of shares of New
1 9
entury Common Stock the Claimant owned at the close of the
20arket on March 13, 2007. If none, write "zero" or "0." If other
21han zero, be sure to attach the required documentation.
22
23. Ending Position For 90-Day Look Back: State the total number
24
f shares of New Century Common Stock the Claimant owned at
25
he close of the market on June 10, 2007. If none, write "zero" or
26
0."
f other than zero, be sure to attach the required
27ocumentation.
28
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1 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
2IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
3
4NAME ON THE COPY AND CHECK THIS BOX q
5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
6
NOT BE REVIEWED7
8PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED
9 TOCK")
1 0
A. Beainnin$! Holdings: S tate the number of shares of New Century
11 Series A Preferred Stock the Claimant owned as of the close of1 2
the market on May 4, 2005. If none, write "zero" or "0." If other13
than zero, be sure to attach the required documentation.1 4
15
B. Purchases:1 6
(i) List all purchases of New Century Series A Preferred Stock made during1 7
the period from May 5, 2005, through and including March 13, 2007. (NOTE: If18
19
you acquired your New Century Series A Preferred Stock during this period in an
Offering or otherwise or other than by an open-market purchase, please provide a20
com plete description of the terms of the acquisition on a separate pag e.) B e sure to21
attach the required docum entation.22
23
24
25
26
27
28
9
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1rade Date(s) (List
2ronologically)umber ofurchaseotal
Month/Day/Yearhares Purchased Price Per Share Purchase Price*
3excluding com missions, transfer taxes or other fees.8
9ii) State the total number of shares of New Century Series A Preferred10 Stock the Claimant purchased during the period between March 14, 2007, through
11and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12purchases, which are not in the Class Period, are not included in the calculation of
13Recognized Loss Amount.
his information is needed by the Claims
14Administrator for purposes of the overall evaluation of the Claim.)
1 56. Sales: List all sales of New Century Series A Preferred Stock
1 7ade during the period from May 5, 2005, through and including
1 8
une 10, 2007. Be sure to attach the required documentation.
1 9
rade Date(s) (L istChronologically)
umber of
ales
otal
20onth/Day/Year
hares Sold
rice Per Share
ales Price*
2 12
23
24
25 *excluding com missions, transfer taxes or other fees
26
27
28
1 0
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1. Unsold Holdings: State the total number of shares of New
2entury Series A Preferred Stock the Claimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6
. Ending Position For 90-Day Look Back: State the total number
7
f shares of New Century Series A Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
1 1
12IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
13IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
14NAME ON THE COPY AND CHECK THIS BOX
15
1 6F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY7OT BE REVIEWED18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE19 REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED
STOCKI)20
21. Beginning Holdings: State the number of shares of New Century
22eries B Preferred Stock the Claimant owned as of the close of
23he market on May 4, 2005. If none, write "zero" or "0." If other
24
han zero, be sure to attach the required documentation.
25
26
. Purchases:
271) List all purchases of New Century Series B Preferred Stock made during
28he period from May 5, 2005, through and including March 13, 2007. (NOTE: Ifi i
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1ou acquired your New Century Series B Preferred Stock during this period in an
2Offering or otherwise or other than by an open-market purchase, please provide a
3 complete description of the terms of the acquisition on a separate page.) Be sure to
4 ttach the required docum entation.
5
rade Date(s) (List
6
hronologically)
umber of
urchase
otal
nth/Day/Year
hares Purchased Price Per Share Purchase Price*
7
.01 *excluding com missions, transfer taxes or other fees.
12
1 3(ii) State the total number of shares of New Century Series B Preferred
14Stock the Claimant purchased during the period between March 14, 2007, through
15and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
16purchases, which are not in the Class Period, are not included in the calculation of
17Recognized Loss. This information is needed by the Claims Administrator for
18 purposes of the overall evaluation of the C laim.)
1 9
. Sales: List all sales of New Century Series B Preferred Stock
20
ade during the period from May 5, 2005, through and including
21une 10, 2007. B e sure to attach the required docum entation.
22rade Date(s) (ListChronologically)umber ofalesotal
23onth/Day/Yearhares Soldrice Per Shareales Price*
24
$
5
$
6
27
28excluding com missions, transfer taxes or other fees
12
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1. Unsold Holdings: State the total number of shares of New
2 Century Series B Preferred Stock the Claimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6
. Ending Position For 90-Day Look Back: State the total number
7
f shares of New Century Series B Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
1 1
12
13IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
14IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
15 NAME ON THE COPY AND CHECK THIS BOX q16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17 NOT BE REVIEWED
18
19
20
21
22
23
24
25
26
27
28
1 3
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1PART V: NEW CENTURY CALL OPTIONS
2. Beginning Holdings: List all Call Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5
umber of Call
trike Price for
6
ption Contracts
xpiration Month
all Option
osition: Short
Open
nd Year
ontract
r Long
7
10
1. Purchases: List all Call Option contracts on New Century
12
ommon Stock that you purchased or acquired during the period
13
rom May 5, 2005, through and including March 13, 2007. Be
14ure to attach the required documen tation.
15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call
1 6hronologically)ontractshareonth andption
17onth/Day/Yearurchasedearontract
18
19
$
0
$$122. Sales: List all Call Option contracts on New Century Common
23tock that you sold during the period from May 5, 2005, through
24
nd including March 13, 2007. Be sure to attach the required
25
ocumentation.
26
27
28
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1ate Contracts
trike Price
2xpired (Listumber ofer CallChronologically)xpired Option Expiration Monthption
3onth/Day/Yearontractsnd Yearontract
4. Unsold/Unexpired Calls; List Call Option contracts on New9entury Common Stock that were open as of the close of the1 0arket on March 13, 2007.
1 1
1 2trike Price1 3umber of Call
er Call
1 4ption Contracts
osition: Short or Expiration Month
ption
Openongnd Yearontract1 56
7
1 8
1 9
20
2 1
2 22 3
24
2 5
26
27
2 8
1 6
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1PART VI: NEW CENTURY PUT OPTIONS
2. Beiinnin2 Holdings: List all Put Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5umber of Put
trike Price for
6ption Contracts
xpiration Month
ut Option
osition: Short
Open
nd Year
ontract
r Long
7
10
llSales: List all Put Option contracts on New Century Common
12
tock that you sold (wrote) during the period from May 5, 2005,
1 3
hrough and including March 13, 2007. Be sure to attach the
1 4equired documentation.
1 5ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for
16Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract
$
19
20
$$122
2 3
24
25
26
27
281 7
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1
. Purchases: List all Put Option contracts on New Century
2ommon Stock that you purchased or acquired during the period
3rom May 5, 2005, through and including March 13, 2007. Be
4ure to attach the required documentation.
5urchase Date(s) Number of Put Premium
6
List
ption
rice Per
xpiration
trike Price per
Chronologically)
ontracts
hare
onth and
ut Option
7Month/Day/Year
urchased
ear
ontract
s$10
1 1
12D. Exercised Puts: List all Put Option contracts on New Century
13
ommon Stock that you exercised during the period from May 5,
14005, through and including March 13, 2007. Be sure to attach
15the required documentation.
1 6trikeumber of Putesult:1 7xpirationrice for Option Contracts Delivered
is
onth and Put Option Exercised
hares or
Date Exercised
ear
ontract
aid?
19
20
21
22
23
24
. Expired Puts: List all Put Option contracts on New Century
25
ommon Stock that expired worthless during the period from
26
ay 5, 2005, through and including March 13, 2007. Be sure to
27ttach the required documentation.
28
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1ate Contracts2xpired (Listumber oftrike Price for
Chronologically)xpired Putxpiration Monthut Option3onth/Day/Yearontractsnd Yearontract
4$8F. Unexpired Puts: List Put Option contracts on New Century
9ommon Stock open as of the close of the market on March 13,1 0
007.
1 1
umber of
trike Price for
1 2nexpired Put
osition: Short or Expiration Month
ut Option
1 3
ptions Contracts
ong
nd Year
ontract
1 4
1 5
16YOU MUST RE AD THE FOLLOWING RELEAS E AND SIGN ON PAGE
17ELEASE OF CLAIMS
18 Definitions
1 9
efined terms not already defined herein have the meanings given them in
20 the respective Stipulations of Settlement (described in the Notice) (the
21 "Stipulations").
22
23
24The Releases
25fficer and Director Release
26(we) understand and acknowledge that, without further action by anyone,
27 on and after entry of the Global Officer And Director Judgment and occurrence of
28 the Effective Date of the Global Officer And Director Settlement, each Class
1 9
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1Me mber, on be half of themselves, for good a nd sufficient consideration, the receipt
2 nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4y operation of law to have released, waived, discharged and dismissed each and
5
6nd the Insurance Carriers (as defined in the Global Officer And Director
7 Stipulation), and shall be deemed to forever be enjoined from prosecuting any or
8ll of the Settled Class Claims against each and every Released Officer And
9 irector and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10any and all claims and causes of action of every nature and description, whether
11known or Unknown Claims, whether arising under federal, state, common or12foreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20relating to the enforcement of the Settlement. "Released Officers And Directors"
21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
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1xecutors, administrators, predecessors, successors and assigns, employees, agents
2nd retained professionals (other than KPM G or the Underwriter Defendants) .
3PMG Release
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of
6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7ufficient consideration, the receipt and adequacy of which are hereby
8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
to released, waived, discharged and dismissed each and every Settled Claim, and
11hall forever be enjoined from prosecuting any or all Settled Claims, against any12 Released Auditor Party. "Settled Claim" in this paragraph means any and all
13 claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
16ould have asserted in any forum that arise out of or are based upon the a llegations,
17 ransactions, facts, matters or occurrences, representations or omissions involved,
18et forth, or referred to in the Complaint, and that arise out of or relate to the
19 purchase of New Century Common Stock, New Century Series A Preferred Stock,
20New Century Series B Preferred Stock, and/or New Century Call Options and/or
21he sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPMG .
26
27
28
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1
nderwriter Release
2(we) understand and acknowledge that, without further action by anyone,
3n and after entry of the Underwriter Judgment and occurrence of the Effective
4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,
5heir parent companies, subsidiaries, affiliates, heirs, executors, administrators,
6predecessors, successors and assigns, and any and all of their current and former
7fficers, directors, employees, agents and attorneys, for good and sufficient
8onsideration, the receipt and adequacy of which are hereby acknowledged,
9whe ther or not a Proof of Claim is executed and de livered by, or on behalf of, such
10 Class Member, will be deemed by operation of law to have released, waived,
I1discharged and dismissed each and every Settled Claim, and shall forever be12enjoined from prosecuting any or all Settled Claims, against any Released
13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted17n any forum that arise out of or are based upon the allegations, transactions, facts,
18ma tters or occurrences, representations or omissions involved, set forth, or referred
19 to in the Complaint, and that arise out of or relate to the purchase of New Century
20Common Stock, New Century Series A Preferred Stock, New Century Series B
21Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22Put Options during the Class Period. "Settled Claims" does not include claims
23elating to the enforcement of the Settlements. "Released Underwriter Party"
24means the Underwriter Defendants and any and all of their respective parent
25companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,
26uccessors and assigns, and any and all of their current and former officers,
27directors, employees, agents and attorneys. "Released Underwriter Parties" does
2 8 ot include any Defendants other than the Underwriter Defendants.
22
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1
2IGNATURE AND CERTIFICATIONS
3y signing and submitting this Proof of Claim, the Claimant or the person
4 who represents the Claimant certifies, as follows:
5
. that the Claimant is a Class Mem ber, as defined in the Notice;
6
. that I (we) have read and understand the contents of the Notice and the
7
roof of Claim;
8. that I (we) are not acting for any of the Defendants, nor am I (are we)
9uch a Defendan t or otherwise excluded from the Class;
10. that I (we) have not filed a request for exclusion from the Class and that I
1 1
we) do not know of any request for exclusion from the Class filed on my12
our) behalf with respect to my (our) transactions in New Century
1 3
ecurities;
1 4
. that I (we) own(ed) the New Century Securities identified in the Proof of
15laim, or that, in signing and submitting this Proof of Claim, I (we) have
16he authority to act on behalf of the owner(s) thereof;
17. that Claimant may be entitled to receive a distribution from the Net
1s
ettlement Fund;
1 9
. that Claimant desires to participate in the Settlements described in the
20 Notice and agrees to the term s and conditions thereof;
21. that I (we) submit to the jurisdiction of the United States District Court
22or the Central District of California for purposes of investigation and
23iscovery under the Federal Rules of Civil Procedure with respect to this
24
roof of Claim;
25
. that I (we) agree to furnish such additional information with respect to
26
his Proof of Claim as the parties, the Claims Administrator or the Court
27ay require;
28
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1
0.that I (we) waive trial by jury, to the extent it exists, and agree to the
2ourt's summary disposition of the determination of the validity or
3mou nt of the claim m ade by this Proof of Claim; and
41.that I (we) certify that I am (we are) not subject to backup withholding
5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6
ode.
7
OTE: If you have been notified by the Internal Revenue Service that you are
8ubject to backup withholding, please strike the language that you are not
9ubject to backup withholding in the certification above. The Internal Revenue
1 0ervice does not require your consent to any provision other than the
11
ertification required to avoid b ackup w ithholding.12
13
14
15
16
1718
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1declare, under penalty of perjury under the laws of the United States of
2America, that the statements made and answers given in this Proof of Claim are
3rue and correct and that the documents submitted herewith are true and genuine.
4
5
ignature of Claimant
7
rint Name of Claimantate Signed
9
10Signature of Joint Claimant, if any
1 1
12Print Nam e of Joint Claimant, if any
ate Signed
13
14 If Claim ant is other t han an indiv idual, or is not the person com pleting this
15form , the follow ing also m ust be p rovided :
16
17 Signature of Person Completing Form
18
19 Print Name of Person Completing Form
ate Signed
20
21Capacity of Person Signing ( Executor, President, Trustee, etc.)
22
23
24
25
26
27
28
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1EMINDER CHECKLIST
2lease sign the Proof of Claim on pag e
3f this Claim is being m ade on behalf of Joint Claimants, then both must sign.
4lease remembe r to attach supporting documents.
5
f you move , please send your new address to:n re New Century S ecurities Litigation Settlement
7/o Analytics, Inc., Claims Adm inistrator
P.O. Box 20048hanhassen, MN 5 5 3 1 7 - 2 0 0 4
9-866-308-7615
1 0
1 1O NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.
12eep a copy of your Proof of Claim and all documentation submitted for your
13ecords.4he Claims Administrator will acknowledge receipt of your Proof of
15laim by mail within 6 0 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 6 0 days, please call
17he C laims Adm inistrator toll free at (866) 308-7615 .
1 8
1 9ACCURATE CLAIMS PROCE S SING TAKES A SIGNIFICANT AMOUNT
20F TIME.
21HANK YOU FOR YOUR PATIENCE
22
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EXHIBIT A-3 TO EXH IBIT A
TO UNDERWR ITER S TIPULATION
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1
NITED STATES DISTRICT COURT
2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDP ( FM Ox)
4Lead Case)
5
SUMMARY NOTICE
78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
1 1
("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13 PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 9 2005, THROUGH MARCH 13, 2007,
16 INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil
18 Procedure and an Order of the United States District Court for the Central District
of California (i) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class"),
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).
he total cash amount of the Settlements equals
$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 at
on
2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
1
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1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 xpenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
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1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE
2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and3 Claim Form, may be made to Lead Counsel:
4
BERNSTEIN LITOWITZ BERGER5
GROSSMANN LLP
6alvatore J. Graziano
1285 Avenue of the Am ericas7
ew York, New York 10019
8elephone: (866) 648-2524
9
10 Dated:2010y Order of the Clerk of the CourtUnited States District Court
1 1
or the Central D istrict of California
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EXHIBIT B
TO UNDERWRITER STIPULATION
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12
3
4
5
6
7
8NITED STATES DISTRICT COURTCENTRA L DISTRICT OF CALIFORNIA
9
10N RE NEW CENTURYase No. 2:07-ev- 00931-DDP (FMOx)(Lead Case)
1 1
12
13
141PR OPOS ED] UNDERWR ITER DEFENDANTS FINAL JUDGMENT AND
ORDER OF DIS MISS AL WITH PREJUDICE
15
1617
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Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 106 of 113 Page ID#:113071his matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
3 Approval Order" or "Notice Order"), on the application of Lead Plaintiff New
4 York State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl
5 Larson and Charles Hooten (collectively "Plaintiffs") for approval of the
6 settlement between Plaintiffs and the Underwriter Defendants set forth in the
7 Stipulation Of Settlement Between Plaintiffs And The Underwriter Defendants
g (the "Underwriter Stipulation" or "Underwriter Settlement"). Full and adequate
9 notice having been given to the Class as required in the Court's Order, and the
10 Court having considered all papers filed and proceedings held herein and otherwise
11 being fully informed in the premises and good cause appearing therefor,
12
OW , THEREFOR E, IT IS HEREBY ORDERE D THAT:
13
.
his Judgment incorporates by reference the definitions in the
14 Underwriter Stipulation, and all capitalized terms used, but not defined herein,
15 shall have the same meanings as in the Underwriter Stipulation.
16.his Court has jurisdiction over the subject ma tter of the Consolidated
17 Action and over all Parties to the Consolidated Action, including all members of
18 the Class.
19
.
he Court hereby affirms its certification in the Preliminary Approval
20 Order pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
21 Procedure, of a Class defined as follows:
22ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New
23entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
24
rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
25
nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;b
26
embers of the immediate families of the Individual Defendants; ^c)
the subsidiaries and affiliates of Defendants; (d) any person or entity
27ho was a partner, executive officer, director or controlling erson of
New Centur (including any of its subsidiaries or affiliates or of any
28efendant; (ye) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives, heirs, successors and assigns
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f any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filling a request for exclusion in2ccordance with the requirements set forth in the Notice, as listed on
Exhibit 1 annexed hereto.3
4
5
.
he Court also affirms its findings in the Preliminary Approval Order6 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal
Rules of Civil Procedure have been satisfied in that: (a) the number of Class7
Members is so numerous that joinder of all members thereof is impracticable; (b)8
there are questions of law and fact common to the Class; (c) the claims of New9
York State Teachers' Retirement System ("NYSTRS") and Plaintiffs Carl Larson10
and Charles Ho oten are typical of the claims of the C lass they seek to represent; (d)
1 112 Plaintiffs have fairly and adequately represented the interests of the Class; (e) the
13 questions of law and fact common to the members of the Class predominate over
14 any questions affecting only individual members of the Class; and (f) a class action
15 is superior to other available methods for the fair and efficient adjudication of the
16 controversy.
17.ursuant to Rule 23 of the Federal Rules of Civil Procedure, the
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
19 Counsel Bernstein Litowitz Berger & Grossmann LLP as Class Counsel.
6.
ursuant to Federal Rule of Civil Procedure 23, this Court hereby
2021 approves the Underwriter Settlement set forth in the Underwriter Stipulation and
22 finds that the Underwriter Settlement is, in all respects, fair, reasonable, and
23 adequate to the Lead Plaintiff, the Class and each of the Class Members. The
Court further finds that the Underwriter Settlement set forth in the Underwriter2425 Stipulation is the result of arm's-length negotiations between experienced counsel
26 representing the interests of the Parties. Accordingly, the Underwriter Settlement
27 embodied in the Underwriter Stipulation is hereby finally approved in all respects.
28 The Parties are hereby directed to perform its terms.
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1 Proposed Settlement. Settlement Fairness Hearing and Motion for Attorneys' Fees
2 and Reimbursement of Expenses ("Notice") and the publication of the Summary
3 Notice as provided for in the Preliminary Approval Order constituted the best
4 notice practicable under the circumstances, including individual notice to all
5 members of the Class who could be identified through reasonable effort. Said
6 notice provided the best notice practicable under the circumstances of those
7 proceedings and of the matters set forth therein, including the proposed
8 Underwriter Settlement set forth in the Underwriter Stipulation, to all persons
9 entitled to such notice, and said notice fully satisfied the requirements of Federal
10 Rule of Civil Procedure 23, the Private Securities Litigation Reform Act of 1995,
11 due process, and any other applicable law.
12
5. The Court hereby finds and concludes that the formula for the
13 calculation of the claims which is set forth in the Plan of Allocation proposed by
14 Lead Plaintiff provides a fair and equitable basis upon which to allocate the
15 proceeds of the Settlements' among the Class Members with due consideration
16 having been given to administrative convenience and necessity.
176. The Court hereby finds and concludes that the Plan of Allocation
18 proposed by Lead Plaintiff is, in all respects, fair and equitable to the Class.
19 Accordingly, the Court hereby approves the Plan of Allocation proposed by Lead
20 Plaintiff.
217. Any order entered regarding any attorneys' fees and for expense
223Settlements" herein includes the settlements as set forth in the Underwriter
24 Stipulation, the Stipulation of Settlement Between Plaintiffs and KPMG LLP25 ("KPMG Settlement" or "KPMG Stipulation"), and the Stipulation of Global
Settlement w ith New Century Officer and Directors ("G lobal Officer And Director26 Settlement" or "Global Officer And Director Stipulation") (collectively
27 "Settlements" or "Stipulations"). The Plan of Allocation sets forth a plan for
allocating to Class Members the funds allocated to the Class from all three of the
28 Settlements.
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1 application shall in no way disturb or affect this Final Judgment And Order Of
2 Dismissal With Prejudice and shall be considered separate from this Final
3Judgment And Order O Dsmssal Wth Prejudi
48. The Underwriter Stipulation and Underwriter Settlement set forth5 therein, whether or not consummated, and any proceedings taken pursuant to it:
6
.
hall not be offered or received against any of the Released
7 Underwriter Parties as evidence of, or construed as, or deemed to be evidence of
8 any presumption, concession, or admission by any of the Released Underwriter
9 Parties with respect to the truth of any fact alleged by Plaintiffs or the validity of
10 any claim that was or could have been asserted against any of the Released
11 Underwriter Parties in this Consolidated Action or in any litigation, or of any
12 liability, negligence, fault, or other wrongdoing of any kind of any of the Released
13 Underwriter Parties;
14
.
hall not be offered or received against any of the Released
15 Underwriter Parties as evidence of a presumption, concession or admission of any
16 fault, misrepresentation or omission with respect to any statement or written
17 document approved or made by any of the Released Underwriter Parties, or against
18 the Plaintiffs or any Class Members as evidence of any infirmity in the claims of
19 Plaintiffs or the other Class Members;
20
.hall not be offered or received against any of the Released
21 Underwriter Parties, or against the Plaintiffs or any other Class Members, as
22 evidence of a presumption, concession or admission with respect to any liability,
23 negligence, fault or wrongdoing of any kind, or in any way referred to for any
24 other reason as against any of the Released Underwriter Parties, in any other civil,
25 criminal or administrative action or proceeding, other than such proceedings as
26 may be necessary to effectuate the provisions of this Stipulation; provided,
27 however, that if this Stipulation is approved by the Court, Underwriter Defendants,
28
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1 any other Released Underwriter Party, or any Class Member may refer to it to
2ffectuate the protection from liability granted them hereunder;3.hall not be construed against any of the Released Underwriter
4 Parties, Plaintiffs or any other Class Members as an admission, concession, or
5 presumption that the consideration to be given hereunder represents the amount
6 which could be or would have been recovered after trial;
7
.
hall not be construed against Plaintiffs or any other Class
8 Members as an admission, concession, or presumption that any of their claims are
9 without merit or that damages recoverable under the Complaint would not have
10 exceeded the Underwriter Settlement Amount; and
1 1
.
hall not be construed as or received in evidence as an
12 admission, concession or presumption that class certification is appropriate in this
13 Consolidated Action, except for purposes of this Underwriter Settlement.
14
9.he Underwriter Stipulation may be filed in an action to enforce or
15 interpret the terms of the Underwriter Stipulation, the Underwriter Settlement
16 contained therein, and any other documents executed in connection with the
17 performance of the agreements embodied therein. The Released Underwriter
18 Parties and/or any Class Member may file the Stipulation and/or this Final
19 Judgment And Order Of Dismissal With Prejudice in any action that may be
20 brought against them in order to support a defense or counterclaim based on the
21 principles of res judicata, collateral estoppel, full faith and credit, release, good
22 faith settlement, judgment bar, or reduction or any other theory of claim preclusion
23 or issue preclusion or similar defense or counterclaim.
24
0. Without affecting the finality of this Final Judgment And Order Of
25 Dismissal With Prejudice in any way, this Court hereby retains continuing
26 jurisdiction over: (a) implementation of this Underwriter Settlement and any award
27 or distribution of the Settlement Fund. including interest earned thereon; (b) the
28 allowance, disallowance or adjustment of any Class Member's claim on equitable
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1 grounds and any award or distribution of the Settlement Fund; (c) disposition of
2 the Settlement Fund; (d) hearing and determining applications for attorneys' fees
3 and Litigation Expenses in the Consolidated Action; (e) enforcing and
4 administering this Judgment; (f) all parties hereto for the purpose of construing,
5 enforcing and administering the Underwriter Stipulation; and (g) other matters
6 related or ancillary to the foregoing.
7
1. The Court finds that during the course of the Consolidated Action, the
8 Parties and their respective counsel at all times complied with the requirements of
9 Federal Rule of Civil Procedure 11.
102. In the event that the Underwriter Settlement does not become
11 effective in accordance with the terms of the Underwriter Stipulation or the
12 Effective Date does not occur, or in the event that the Settlement Fund, or any
13 portion thereof, is returned to the Underwriter Defendants, then this Final
14 Judgment And Order Of Dismissal With Prejudice shall be rendered null and void
15 to the extent provided by and in accordance with the Underwriter Stipulation and
16 shall be vacated and, in such event, all orders entered and releases delivered in
17 connection herewith shall be null and void to the extent provided by and in
18 accordance with the Underwriter Stipulation.
19
3. Without further Order of the Court, the parties may agree to
20 reasonable extensions of time to carry out any of the provisions of the Underwriter
21 Stipulation.
224. There is no just reason for delay in the entry of this Judgment and
23 immediate entry by the Cleric of the Court is expressly directed.
24
T IS SO ORDERED,
25
26 DATED:
7HE HONORABLE DEA N D. PREGERSON28NITED STATES DISTRICT COURT JUDGE
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
2ZETblblaw.coargm
3 LIZH LIN (Bar No. 174663)([email protected] )
4 NIKI L. MENDOZA (Bar No. 214646)
5AMGALDSTON (Bar No. 211114)([email protected] )
6TAKEO A. KELLAR (Bar No. 234470)(takeok@blbglaw. com )
7 12481 High Bluff Drive, Suite 300San Diego, CA 92130
8 Tel: (858 793-0070Fax: (8583 793-0323
9and-SALVATO
@RE J. GRAZI )ANO
10 LAUREN A. MeMILLEN1 1 ^[email protected])285 Avenue of the Am ericas
12 New York, NY 10019Tel: (212) 554-1400
13 Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff NewYork State Teachers’ Retirement System
15
16
17NITED STATES DISTRICT COURT
18ENTRA L DISTRICT OF CALIFORNIA
19IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)
20Lead Case)
21[PROPOSED] ORDER
2RELIMINARILY APPROVINGSETTLEMENTS AND
3ROV IDING FOR NOTICE
24
25Judge: Hon. Dean D. Pregerson
26728
[PROPOSED] ORDE R PRELIM. APPROVINGSETTLE MENTS AND PROVIDING FOR NOTICE
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 2 of 103 Page ID#:11316HEREAS, Lead Plaintiff New York State Teachers’ Retirement System
2 (`Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 `Plaintiffs') and the Individual Defendants, 1
the Underwriter Defendants,2
and5 KP MG LLP (`KPMG ') (collectively `Defendants') (collectively, with Defendants, the
6 `Parties'), have reached agreements to settle the above-captioned litigation (the
7 `Consolidated Action'), and Plaintiffs have applied to the Court pursuant to Rule
8 23(e) of the Federal Rules of Civil Procedure for an order preliminarily approving
9 the Settlements in accordance with the Stipulations of Settlement, 3 which, together
10 with the exhibits annexed thereto, set forth the terms and conditions for the
11 proposed Settlements regarding the Consolidated Action, and for dismissal of the
12 Consolidated Action with prejudice as against all of the Defendants and their
134 1 Individual Defendants' or `Class Individual Defendants' means Robert K. Cole,
15 Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster,
Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,
16 Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J. Popejoy.
17 2 `Underwriter Defendants' means Bear, Stearns & Co. Inc., Deutsche Bank18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC , Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
21 Defendants (the`Underwriter Stipulatiori'or the`Underwriter Settlement'); the terms
of the proposed settlement with KPMG is set forth in the Stipulation Of Settlement22 Between Plaintiffs And KPMG LLP (the `KPMG Stipulation' or `KPMG
23 Settlement'); and the proposed settlement with the Individual Defendants is set
forth in the Stipulation Of Global Settlement With New Century Officers And24 Directors (the `Global Officer And Director Settlement' or `Global Officer And
25 Director Stipulation'). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the `Stipulations,' `Stipulations of28 Settlement,' or the `Settlements.'
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1 related parties, upon the terms and conditions set forth therein; and the Court
2 having read and considered the Stipulations and the exhibits annexed thereto;
3OW, THEREFORE, IT IS HEREBY ORDERE D:
4.
his order (the `Notice Order” or `Preliminary Approval Order”) hereby5 incorporates by reference the definitions in the Stipulations unless otherwise
6 indicated, and all terms with initial capitalization not otherwise defined herein shall
7 have the same meanings as set forth in the Stipulations. Any inconsistencies
8 between the Stipulations and the Notice of Pendency of Class Action and Proposed
9 Settlements, Settlement Fairness Hearing, and Motion for Attorneys’ Fees and
10 Reimbursement of Litigation Expenses (`Notice”) will be controlled by the language
11 of the Stipulations.
12.he Court hereby preliminarily approves the Settlements as being fair,
13 reasonable and adequate to the Class, pending a final hearing on the Settlements.
14 CLASS CER TIFICATION
5.he Court hereby certifies, pursuant to Rules 23(a) and 23(b) (3) of the
16 Federal Rules of Civil Procedure, a Class defined as follows:
17ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New18entury Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, duringt he time period19rom May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,20nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;21embers of the immediate families of the Individual Defendants; ^C3
the subsidiaries and affiliates of Defendants; (d) any person or entity22ho was a partner, executive officer, director or controlling erson of
New Century (including any of its subsidiaries or affiliates or of any23efendant; (e) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns24f any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filing a request for exclusion in25ccordance with the requirements set forth in the-Notice.
26.he Court finds that the prerequisites for a class action under Rules
27 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in that:
28 (a) the number of Class Members is so numerous that joinder of all members
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1 thereof is impracticable; (b) there are questions of law and fact common to the
2 Class; (c) the claims of Lead Plaintiff New York State Teachers’ Retirement System
3 (`NYSTRS”) and Plaintiffs Carl Larson and Charles Hooten are typical of the claims
4 of the Class they seek to represent; (d) Plaintiffs have fairly and adequately5 represented the interests of the Class; (e) the questions of law and fact common to
6 the members of the Class predominate over any questions affecting only individual
7 members of the Class; and (f) a class action is superior to other available methods
8 for the fair and efficient adjudication of the controversy.
9.ursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs
10 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
11 & Grossmann LLP is certified as Class Counsel.
12.he Court appoints the firm of Analytics Incorporated (`Claims
13 Administrator”) to supervise and administer the notice procedure as well as the
14 processing of claims as more fully set forth below:
15.ithin five (5) business days after entry of this Order, the
16 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
17 Release (the `Claim Form”), annexed hereto respectively as Exhibits 1 and 2, to be
18 mailed by first-class mail, postage prepaid, to all members of the Class at the
19 address of each such Class Member as set forth in the records of New Century or
20 its transfer agent, or who are identified by further reasonable efforts (the `Notice
21 Date”). Lead Counsel shall, at or before the Settlement Hearing, file with the Court
22 proof of mailing of the Notice and Claim Form; and
23.summary notice (`Summary Notice”), annexed hereto as
24 Exhibit 3, shall be published once each in the national edition of The Wall Street
25Journal and over the PR Newswire within five (5) business days of the mailing of
26 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
27 Court proof of publication of the Summary Notice.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 5 of 103 Page ID#:11319.he Court approves the form of Notice and Summary Notice
2 (together, the “Notices”) and Claim Form, and finds that the procedures established
3 for publication, mailing and distribution of such Notices substantially in the
4 manner and form set forth in paragraph 6 of this Order meet the requirements of5 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation
6 Reform Act of 1995, and due process, and constitute the best notice practicable
7 under the circumstances.
8.or the purpose of identifying and providing notice to the Class, the
9 Trustee and the Underwriter Defendants shall provide to the Claims Administrator
10 the information as agreed to in the Global Officer And Director Stipulation and the
11 Underwriter Stipulation, respectively.
12.ominees who purchased or otherwise acquired New Century stock
13 for beneficial owners who are Class Members are directed to: (a) request within
14 fourteen (14) days of receipt of the Notice additional copies of the Notice and the
15 Claim Form from the Claims Administrator for such beneficial owners; or (b) send
16 a list of the names and addresses of such beneficial owners to the Claims
17 Administrator within fourteen (14) days after receipt of the Notice. If a nominee
18 elects to send the Notice to beneficial owners, such nominee is directed to mail the
19 Notice within fourteen (14) days of receipt of the copies of the Notice from the
20 Claims Administrator, and upon such mailing, the nominee shall send a statement
21 to the Claims Administrator confirming that the mailing was made as directed, and
22 the nominee shall retain the list of names and addresses for use in connection with
23 any possible future notice to the Class. Upon full compliance with this Preliminary
24 Approval Order, including the timely mailing of Notice to beneficial owners, such
25 nominees may seek reimbursement of their reasonable expenses actually incurred
26 in complying with this Preliminary Approval Order by providing the Claims
27 Administrator with proper documentation supporting the expenses for which
28 reimbursement is sought and reflecting compliance with these instructions,
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1 including timely mailing of the Notice, if the nominee elected or elects to do so.
2 Such properly documented expenses incurred by nominees in compliance with the
3 terms of this Preliminary Approval Order shall be paid from the Settlement Fund.
4HEARING: RIGHT TO BE HEARD0. There shall be a hearing on [November 8, 2010, or November 15,
6 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the “Settlement
7 Hearing”) at which time the Court shall address the fairness, reasonableness and
8 adequacy of the Settlements, the fairness and reasonableness of the Plan of
9 Allocation, and Lead Counsel’s application for attorneys’ fees and payment of
10 Litigation Expenses. The Settlement Hearing shall be held before this Court at the
11 United States District Court for the Central District of California, 312 North Spring
12 Street, Courtroom 3, 2nd Floor, Los Angeles, California 90012.
131. Papers in support of the Settlements, the Plan of Allocation, and Lead
14 Counsel’s application for attorneys’ fees and payment of Litigation Expenses shall
15 be filed on or before twenty-eight (28) days prior to the Settlement Hearing.
162. Any member of the Class may appear at the Settlement Hearing and
17 show cause why the proposed Settlements embodied in the Stipulations should or
18 should not be approved as fair, reasonable and adequate, and/or to present
19 opposition to the Plan of Allocation or to the application of Lead Counsel for
20 attorneys’ fees and payment of Litigation Expenses. However, no Class Member
21 shall be heard or entitled to contest the approval of the terms and conditions of the
22 Settlements, or the terms of the Plan of Allocation or the application by Lead
23 Counsel for an award of attorneys’ fees and payment of Litigation Expenses unless
24 that Class Member (i) has served written objections, including the basis therefor, as
25 well as copies of any papers (including proof of all purchases or acquisitions of
26 New Century stock or options during the Class Period) and/or briefs in support of
27 his, her or its position upon the following counsel such that it is received on or
28 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
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1 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
2 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &
3 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
4 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th5 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
6 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
7 objections, papers and briefs with the Clerk of the United States District Court for
8 the Central District of California on or before twenty-one (21) days before the
9 Settlement Hearing. Any Class Member who does not make his, her or its
10 objection in the manner provided for herein shall be deemed to have waived such
11 objection and shall forever be foreclosed from making any objection to the fairness
12 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
13 Allocation or to the application by Lead Counsel for an award of attorneys’ fees and
14 payment of Litigation Expenses unless otherwise ordered by the Court. The
15 manner in which a notice of objection should be prepared, filed and delivered shall
16 be stated in the Notice.
173. If approved, all Class Members will be bound by the proposed
18 Settlements provided for in the Stipulations, and by any judgment or determination
19 of the Court affecting Class Members, regardless of whether or not a Class
20 Member submits a Claim Form.
214. Any member of the Class may enter an appearance in the
22 Consolidated Action, at their own expense, individually or through counsel of their
23 own choice. If they do not enter an appearance, they will be represented by Lead
24 Counsel.
255. The Court reserves the right to adjourn or continue the Settlement
26 Hearing, or any adjournment or continuance thereof, without any further notice to
27 Class Members and to approve the Stipulations and/or Plan of Allocation with
28 modification and without further notice to Class Members.
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1CLAIMS PROCESS6. In order to be entitled to participate in the Settlements, a Class
3 Member must complete and submit a Claim Form in accordance with the
4 instructions contained therein and/or in the Notice. To be valid and accepted,5 Claim Forms submitted in connection with the Settlements must be postmarked no
6 later than 120 days after the Notice date (unless by Order of the Court, late-filed
7 Claim Forms are accepted).
87. Any Class Member who does not timely submit a valid Claim Form
9 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
10 the Court, but nonetheless shall be barred and enjoined from asserting any of the
11 settled claims and shall be bound by any judgment or determination of the Court
12 affecting the Class Members.
138. As set forth in the Stipulations, Defendants and their related parties
14 shall have no responsibility whatsoever for the administration of the Settlements or
15 the disbursement of the Net Settlement Fund and shall not be permitted to review,
16 contest or object to any Claim Form or any decision of the Claims Administrator or
17 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
18 payment by a Class Member.
19 REQUEST FOR EXCLUSION FROM THE CLASS
09. Any requests for exclusion must be submitted such that they are
21 received no later than twenty-one (21) days before the date of the Settlement
22 Hearing. To be valid, each request for exclusion must (i) state the name and
23 address of the person or entity requesting exclusion; (ii) state that such person or
24 entity requests exclusion from the Class in In re New Century, 07-CV -0093 1 -DDP
25 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
26 telephone number for that person or entity; and (v) provide the date(s), price(s),
27 and number(s) of shares of all purchases, acquisitions, and sales of New Century
28 Securities during the Class Period. Requests for exclusion will not be valid if they
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1 do not include the information set forth above and are not received within the time
2 stated above, unless the Court otherwise determines. Copies of all timely requests
3 for exclusion from the Class received by the Claims Administrator (or other person
4 designated to receive exclusion requests) shall be provided to Lead Counsel and5 Individual Defendants’ Counsel, counsel for the Insurance Carriers (as defined in
6 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for
7 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
8 Hearing. All persons who submit valid and timely requests for exclusion in the
9 manner set forth in this paragraph shall have no rights under the Stipulations, shall
10 not share in the distribution of the Net Settlement Fund, and shall not be bound by
11 the Stipulations or any final judgment.
120. As set forth in the Stipulations, Defendants and their related parties
13 shall have no responsibility or liability whatsoever with respect to the Plan of
14 Allocation or Lead Counsel’s application for an award of attorneys’ fees and
15 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel’s
16 application for an award of attorneys’ fees and payment of Litigation Expenses will
17 be considered separately from the fairness, reasonableness and adequacy of the
18 Settlements. At or after the Settlement Hearing, the Court will determine whether
19 Lead Counsel’s proposed Plan of Allocation should be approved, and the amount of
20 attorneys’ fees and Litigation Expenses to be awarded to Lead Counsel. Any appeal
21 from any orders relating to the Plan of Allocation or Lead Counsel’s application for
22 an award of attorneys’ fees and Litigation Expenses, or reversal or modification
23 thereof, shall not operate to terminate or cancel the Settlements, or affect or delay
24 the finality of the judgment to be entered pursuant to Rule 54(b) of the Federal
25 Rules of Civil Procedure approving the Settlements and the settlement of the
26 Consolidated Action set forth therein.
27
28
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2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
4
2. All funds held by the escrow agent selected by Lead Counsel to5 maintain the escrow account(s) for the Settlements (“Escrow Agent”) shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action (“Notice and Administration Costs”) actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
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1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and5 Settlements:
6.hall not be offered or received against any of the Released
7 Parties 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by Plaintiffs 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
14.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
244Herein `Released Parties' includes: (i) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as defined in the Underwriter Stipulation).27
5 `Plaintiffs' in this paragraph 25 includes Class Plaintiffs, the Trustee, and Kodiak
28 (as defined in the Global Officer And Director Stipulation).
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1 fault or wrongdoing of any kind, or in any way referred to for any other reason as
2 against any of the Released Parties, in any other civil, criminal or administrative
3 action or proceeding, other than such proceedings as may be necessary to
4 effectuate the provisions of the Stipulations; provided, however, that if the5 Stipulations are approved by the Court, Defendants, any other Released Party, or
6 any Class Member may refer to the Settlements and Stipulations to effectuate the
7 protection from liability granted them hereunder;
8.hall not be construed against any of the Released Parties,
9 Plaintiffs or any other Class Members as an admission, concession, or presumption
10 that the consideration to be given hereunder represents the amount which could be
11 or would have been recovered after trial;
12.hall not be construed against Plaintiffs or any other Class
13 Members as an admission, concession, or presumption that any of their claims are
14 without merit or that damages recoverable under the Consolidated Action, the
15 Trustee Litigation and the Kodiak Litigation would not have exceeded the amount
16 of the Settlements; and
17.hall not be construed as or received in evidence as an
18 admission, concession or presumption that class certification is appropriate in this
19 Consolidated Action, except for purposes of the Settlements.
206. Except as otherwise provided in the Stipulations, there shall be no
21 distribution of any of the net settlement fund for any of the Settlements to any
22 Class Member until a plan of allocation is finally approved and the Court issues a
23 Class Distribution Order.
24 \\
25 \\
26 \\
27
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1he Court retains jurisdiction of this Consolidated Action to consider all
2 further applications arising out of or connected with the proposed Settlements, and
3 as otherwise warranted.
4
T IS SO ORDERED.5 DATED:HE HONORABLE DEAN D. PREGERSON7NITED STATES DISTRICT COURT JUDGE
8
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TABLE OF CONTE NTS TO EXHIBITS TO
ORDER PRELIMINARILY APPROVING SETTLEMENTS
AND PROVIDING FOR NOTICE
EXHIBITITLEA-1otice Of Pendency O f Class Action And Proposed Settlements, Settlement Fairness
Hearing, And Mo tion For Attorneys' Fees And Reimb ursement Of Litigation Ex pensesA-2roof Of Claim And Release
A-3ummyNce
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1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
NIZAIETairnblbgglawcom)
3LIN (Bar No. 174663)(elizabethl blbglaw.com)4 NIKI L. MENDOZA (Bar No. 214646)
UNJAkim PGALMONlaw.c5Bar No. 211114)ben blbglaw.com
6 AI. KELLA (Bar No. 234470)(takeokff
ighblbglaw. com )
7 12481luff Drive, Suite 300San Diego, CA 9213 08 Tel: 858 793-0070Fax: 858 793-0323
9and-SALVATORE J . GRAZIANO
to sgrazianoblb law.comLAUREN M MILLE
11 ([email protected])11285 Avenue of the Americas12New York, NY 10019
Tel: 212 554-140013Fax: 212 554-1444
14Lead C ounsel for Lead Plaintiff NewYork State Teachers' Retirement System
1 5
1 6
1 7NITED STATE S DISTRICT COURT
1 8ENTRAL DISTRICT OF CALIFORNIA
19 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FM Ox)(Lead Case)
20
21OTICE OF PENDENCY OFCLASS ACTION AND PRO POSED
22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND
23OTION FOR ATTORNEYS'FEES AND REIMBUR SEMENT
24F LITIGATION EXPENSES
2 5
26udge: Hon. Dean D. Pregerson
27
28
NOTICE OF PENDENCY OF CLASS ACTION
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1 A Feder al Court authorized this Notice. This is not a solicitation from a law ver .2NOTICE OF PENDENCY OF CLASS ACTION: Please be ad vised that yo ur rights
3may be affected by a class action lawsuit pending in this Court (the
4Consolidated Action") if, during the period from May 5, 2005, through and
5ncluding March 13, 2007, you purchased or acquired Common Stock,
6.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9ew Centu ry Financial Corporation ("New Century" or the "Com pany").
1 0
11 NOTICE OF SETTLEMENTS: Please also be advised that the Court -appointed12Lead Plaintiff, New York State Teachers' Retirement System ( "Lead
13 Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively
14 "Plaintiffs"), on behalf of the Class (as defined below), have reached three
15proposed settlements ("Settlements") of the Consolidated Action as follows: a
16 settlement with the Underwriter Defendants' in the amount of $15,000,000.00;17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual Defendants 2 in which the Class will
19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underwriter Defendants" means Bea r, Stearns & Co . Inc., Deutsche Bank
22Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.23"Underwriter Defendants").
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of25 Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popej oy. "Defendants" means the
27 Underwriter Defendants, the Individual Defendants, and KPMG.
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange
28 Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
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1 124 9 82 7 9 088.00.he terms of the Settlements are set forth in the
2Stipulations.4
3 This Notice explains important rights you may have, including your possible
4receipt of cash from the Settlements. Your legal rights will be affected
5 whether or not you act. Please read this Notice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8 Plaintiff alleges that Defendants made false and misleading statements and/or
9omitted material information to investors during the Class Period. Defendants
10deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12egarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15 of Class Members against the Defendants and the other applicable Released Parties
16 as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
18 Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20Options and/or who sold New Century Put Options, during the time period from
21209-1426-DDP, commenced on December 7, 2009, in the United States District
23Court for the C entral District of California (the "SE C Action").4
ll capitalized terms that are not defined herein shall have the meaning24ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation O f Settlement Between Plaintiffs An d T he U nderwriter D efendants (the27"Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement").
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1May 5, 2005, through and including March 13, 2007, either in the Offerings,
2ursuant to a registration statement, or in the market, and who, upon disclosure of
3certain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,5nd/or New Century Call Options and New Century Put Options (as described
6 above) are referred to collectively as "New Century Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8s described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9ettle all claims related to the purchase of New Century Common Stock, Preferred
10 Stock and/or New Century Call Options and/or sales of New Century Put Options
11during the Class Period that were or could have been asserted against Defendants
12 and other Released Parties in the Consolidated Action in exchange for total
13 settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash
14o be deposited into an interest-bearing escrow account (the "Settlement Fund").
15The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19Settlement Fund shall be allocated to the mem bers of the Class. The propo sed Plan
20of Allocation is included in this Notice. Assuming that all Class Members
21participate in the Settlements, Lead Plaintiff's damages consultant estimates that22 the average distribution per damaged share will be approximately $0.69 per share
23 of New Century Common Stock, approximately $2.08 per share of New Century
24Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
25per Put Option, before deduction of Court-approved fees, expenses and costs
26described herein.
27.tatement of Average Amount of Damages Per Share: The parties
28do not agree on the average amount of damages per share that would be
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1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5 whether the price of New Century shares was inflated as the result of any allegedly
6alse or misleading public statements or omissions by D efendants; and (iii) whether
7 the decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was
9 wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated
16 Action, in an amount not to exceed $4.5 million, plus interest from the date of
17 funding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26 egarding the Settlements should be directed to Mr. G raziano at Bernstein Litowitz
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 866 ) 64 8-2524, [email protected] .
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1
2OUR LEGAL RIGHTS AND OPTIONS IN THE SETTLEMENTS:
3SUBMIT A CLAIM FORM NOhis is the only way to eta payment. If4ygpy
LATER TH AN [INSERT]ou wish to obtain a payment as a Class
5ember, you will need to file a Claim
6orm (which is included with this Notice)
7postmarked no later than [INSERT].
sEXCLUDE YOURSELF FROMet no payment. This is the only option
9THE CLASS BY SUBMITTING A that allows you to ever be part of any
10
WRITTEN REQUEST FORther lawsuit against any of the defendants
11 EXCLUSION SO THAT IT ISr other released parties concerning the12
RECEIVED NO LATER THANlaims that were, or could have been,13
[INSERT].sserted in this case.14
15 OBJECT TO THErite to the Court and explain why y
16SETTLEMENTS BYo not like the Settlements, the proposed
17 SUBMITTING WRITTENlan of Allocation, or the request for
18OBJECTIONS SO THAT THEYttorneys' fees and reimbursement of
19 ARE RECEIVEDNO LATERxpenses. You cannot object to the
20 THAN [INSERT].ettlements unless you are a Class
21Member and do not exclude yourself.
22GO TO THE HEARING ONsk to speak in C ourt about the fairness of
23 INSERT] AT [INSERT ], ANDhe Settlements, the proposed Plan of
24 FILE A NOTICE OF INTENTIONAllocation, or the request for attorneys'
25TO APPEAR SO TH AT IT ISees and reimbursement of expenses.
26RECEIVED NO LATER THAN
27 [INSERT].
28
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1DO NOTHINGet no payment. Remain a Class
2ember. Give up your rights.
3
4HAT THIS NOTICE CONTAINS
5 Why Did I Get This Notice?age
7What Is This Case About? What Has Happened So Far?age
8 How Do I Know If 1 Am Affected By The Settlements?age
9W hat Are Th e Lead Plaintiff's Reasons For The S ettlements?age10
W hat Might Happen If There W ere No Settlements?age
11How M uch Will My Paym ent Be?age
1 2
13W hat Rights Am I Giving Up By Agreeing To The Settlements?age
14W hat Payment Are The Attorneys For The Class Seeking?
15How W ill The Lawyers Be Paid?age
16How Do I Participate In The Settlements? What Do I Need To Do?age
17 W hat If I Do Not Want To B e A Part Of The Settlements?
18 How Do I Exclude Myself?age
19 When And Where Will The Court Decide Whether To Approve
20 The Settlements? Do I Have To Come To The Hearing?
21May I Speak A t The H earing If I Don't Like The Settlements?age
22What If I Bought Shares On Som eone E lse's Behalf?age
23Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24HY DID I GET THIS NOTICE?25
266.his Notice is being sent to you pursuant to an Order of the United
27States District Court for the Central District of California (the "Court") because
28you or someone in your family may have purchased or otherwise acquired or sold
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1 New Century Securities during the Class Period. The Court has directed us to send
2ou this Notice because, as a potential Class Member, you have a right to know
3 about your options before the Court rules on the proposed Settlements in this case.
4 Additionally, you have the right to understand how a class action lawsuit may
5enerally affect your legal rights. If the Court approves the Settlements, a claims
6dministrator selected by Lead Plaintiff and approved by the Court, will make7payments pursuant to the Settlements after any objections and appeals are resolved.
8.n a class action lawsuit, the Court selects one or more people, known
9s class representatives, to sue on behalf of all people with similar claims,
10 commonly known as the class or the class members. In this Consolidated Action,
11he Court has appointed New York State Teachers' Retirement System to serve as
12"Lead Plaintiff' under a federal law governing lawsuits such as this one, and
13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
14 Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated
15Action. Lead Plaintiff New York State Teachers' Retirement System and named
16plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
17action is a type of lawsuit in which the claims of a number of individuals are
18 resolved together, thus providing the class members with both consistency and
19efficiency. Once the class is certified, the Court must resolve all issues on behalf
20of the class members, except for any persons who choose to exclude themselves
21rom the class. (For m ore information on excluding y ourself from the Class, please
22ead "What If 1 Do Not Want To Be A Part Of The Settlements? How Do I23Ex clude Myself?" located below.)
24.he Court in charge of this case is the United States District Court for
25he Cen tral District of California, and the case is know n as In re New Century. The
26Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27District Judge. The people who are suing are called plaintiffs, and those who are
2 8being sued are called defendants. In this case, the plaintiff is referred to as the
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1Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 efendants, the Underwriter Defendants and KPM G. New Century was not nam ed
3s a defendant because New Century has filed a petition for voluntary banl iptcy
4nd the Bankruptcy Code does not permit an action to proceed against a debtor
5 ho has filed such a petition.
6.his Notice explains the lawsuit, the Settlements, your legal rights,
7what benefits are available, who is eligible for them, and how to get them. The
8 purpose of this Notice is to inform you of this case, that it is a class action, how
9 you might be affected, and how to exclude yourself from the Class if you wish to
10do so. It also is being sent to inform you of the terms of the proposed Settlements,
11and of a hearing to be held by the Court to consider the fairness, reasonableness,
12and adequacy of the proposed Settlements, the fairness and reasonableness of the
13proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
14ees and reimbursemen t of Litigation Expen ses (the "Settlement Hearing").
1 50. The Settlement Hearing will be held on [INSERT] at [INSERT],
16before the Hon orable Dean D . Pregerson, at the United States District Court for the
17Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
18 California 90012 to determine:
1 9.hether this Consolidated A ction should be finally certified, for
20ettlement purposes only, as a class action under Rules 23(a)
21nd (b) of the Federal Rules of Civil Procedure on behalf of the
22lass;
23.hether the proposed Settlements are fair, reasonable, and
24dequate and should be approved by the Court;
25.hether the claims against defendants and the other released
26arties should be dismissed with prejudice as set forth in the
27tipulations;
28
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#:11339
1.hether the proposed Plan of Allocation is fair and reasonable
2nd should be approved by the Cou rt; and
3.hether Lead Counsel's request for an award of attorneys' fees
4nd reimbursement of Litigation Expenses should be approved
5
y the Court.
61. This Notice does not express any opinion by the Court concerning the7 merits of any claim in the Consolidated Action, and the Court still has to decide
8 whether to approve the Settlements. If the Court approves the Settlements,
9 payments to Authorized Claimants will be made after any appeals are resolved, and
10 fter the com pletion of all claims processing. Please be patient.
1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Beginning on or about February 8, 2007, securities class action
14 complaints were filed in the United States District Court for the Central District of
15California and the actions were consolidated by Order dated June 26 , 2007 .
163. On April 2, 2007, New Century and other Debtors filed for
17 bankruptcy in the United States Bankruptcy Court for the District of Delaware
1 8 ("Bankruptcy Court") under Chapter 11 of Title 11 of the United States Code.1 94. By Order dated June 26, 2007, the Court appointed the New York
20 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
21 nd approved its selection of Bernstein Litowitz Berger & Grossm ann LL P as Lead
22Counsel for the Class.
235. On September 14, 2007, Plaintiffs filed their Consolidated Class
24Action Com plaint ("Consolidated Com plaint") asserting claims against Defendan ts25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26Act of 1933 ("Securities Act") on behalf of the Class.
276. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Consolidated Com plaint, which Plaintiffs opposed on D ecember 14, 2007 .
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17. By Order dated January 31, 2008, the Court granted the motions to
2 dismiss with leave to amend the complaint.
38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
4 Action Complaint ("Amended Complaint"), alleging claims against Defendants
5 pursuant to the Securities Act and the Exchange Act.69. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims
8gainst Defendants pursuant to the Securities Act and the Ex change Act,
90. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10 Complaint, which Plaintiffs opposed on July 7, 2008.
1 11. Following a hearing, by Order dated December 3, 2008, the Court
12 substantially denied Defendants' motions to dismiss.
1 32. Beginning on January 26, 2009, Defendants answered the Complaint.
1 43. The Parties began discovery in or about April 2009, including filing
1.5 multiple motions to compel and motions for protective order, and serving
16 discovery requests and responses, and producing voluminous documents.
1 74. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgm ent, which Plaintiffs opposed on March 15, 2010 .
1 95. The Parties have participated in mediation sessions and additional
20 discussions before the Honorable Daniel Weinstein, following which the Parties
21 were able to reach agreements in principle to settle this Consolidated Action on the
22 terns set forth herein. In connection with the settlement of the Consolidated
23 Action, Defendants and other persons also reached agreements to settle the action
24 entitled Kodiak Warehouse LLC et al. a Brad A. Morrice, et al. (Case No. 08-
25 1265-DDP-FMO) commenced on November 7, 2008, in the United States District
26 Court for the Central District of California (the "Kodialc Litigation") and the
27 adversary proceeding entitled The N ew Century L iquidating T rust and R eorganized
2 8 New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating
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1Trustee and Plan Administrator a Robert K. Cole et al. (In re New Century TRS
2Holdings,v. Proc. No. 09-50882 Km n, Inc .))((C)) commenceded o April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW DO-I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements
11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14New Century Call Options and/or who sold New Century Put Options, during the
15 time period from May 5, 2005, through and including March 13, 2007, either in the
16Offerings, pursuant to a registration statement, or in the market, and who, upon
17disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded party. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27 Do I Exclude My self?," below).
28
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1 RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT
2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO
3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO
4 BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST
5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER
6THAN [INSERT].HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?8
98. Lead Plaintiff and Lead Counsel believe that the claims asserted
10against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11however, the expense and length of continued proceedings necessary to pursue
12their claims against Defendan ts through trial and appeals, as w ell as the difficulties
13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel
14 have taken into account the possibility that the claims asserted in the Complaint15might have been dismissed at a later stage, such as in response to motions for
16summary judgment, and have considered issues that would have been decided by a
17 jury in the event of a trial of the Consolidated Action, including whether
18Defendants acted with an intent to mislead investors, whether the alleged
19misrepresentations o r om issions w ere material to investors, whether all of the Class
20Members' losses were caused by the alleged misrepresentations or omissions, and
21the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24given the expense and length of continued proceedings necessary to reach a
25successful resolution at trial and on appeal.
269. In light of the amount of the Settlements and the immediacy of
27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed
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1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
2 benefit now, namely $124,827,088.00 in cash (less the various deductions
3 described in this Notice), as compared to the risk that the claims in the Complaint
4ould produ ce a similar, smaller, or no recovery after sum mary judgm ent, trial and
5ppeals, possibly years in the future.
60. Defendants have denied the claims asserted against them in the
7Complaint and deny having engaged in any wrongdoing or violation of law of any
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9urden and expense of continued litigation. Accordingly, the Settlements may not
10be construed as an admission of Defend ants' wrongd oing.
11HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?123 31. If there were no Settlements and Lead Plaintiff failed to establish any14essential legal or factual element of its claims, neither Lead Plaintiff nor the other
15members of the Class would recover anything from Defendants. Also, if
16Defendants were successful in proving any of their defenses, the members of the
17Class likely would recover substantially less than the amount provided in the
18Settlements, or nothing at all.
19HOW MUCH WILL MY PAYMENT BE?
201 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22. Pursuant to the respective Stipulations, the Individual Defendants
23have agreed to pay or cause to be paid collectively $65,077,088.00; the
24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
25KPMG has agreed to pay $44,750,000.00. Collectively, Defendants have agreed to
26pay a total amount of $124,827 ,088.00 in cash.
273. After approval of the Settlements by the Court, and upon satisfaction
28of the other conditions to the Settlements, and upon issuance of a Class
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1 Distribution Order, the Net Settlement Fund will be distributed to Authorized
2 laimants in accordance with the Plan of Allocation.
34. The Settlement Fund will be distributed as follows:
41 )o pay all federal, state, and local Taxes on any income earned
5
y the Settlement Fund and to pay the reasonable costs incurred
6n connection with determining the amount of, and paying,
7axes owed by the Settlement Fund (including reasonable
8xpenses of tax attorneys and accountants);ii)o pay costs and expenses in connection with providing Notice
1 0o Class Members and administering the Settlements on behalf
1 1f Class Members;12iii)o pay attorneys' fees, with interest on such amount, to the
13xtent allowed by the Court pursuant 'to Lead Counsel's
1 4pplication;
15iv)o pay Litigation Expenses incurred in commencing and
1 6rosecuting the Consolidated Action, with interest on such
17oney, to the extent allowed by the Court pursuant to Lead
18ounsel's application; and
1 9v)o compensate Authorized Claimants with the balance of the
20et Settlement Fund in accordance with the Plan of Allocation,
21ubject to an Order of the Court approving the Settlements and
22he Plan of A llocation (or such other allocation plan as the Court
23ay approve), and subject to such Order becoming Final
24meaning that the time for appeal or appellate review of the Order
25ranting final approval has expired, or, if the Order is appealed,
26hat the appeal is either decided without causing a material
27hange in the Order or is upheld on appeal and is no longer
2 8ubject to appellate review).
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15.ach person wishing to participate in the distribution must timely
2ubmit a valid Claim Form establishing membership in the Class, and including all
3 equired documentation, postmarked no later thanto the
4ddress set forth in the Claim F orm that accom panies this Notice. Unless the Court
5therwise orders, any Class Member w ho fails to submit a Claim Form postm arked no
6 ater thanhall be forever barred from receiving payments pursuant to
7 the Settlements set forth in the Stipulations but will in all other respects remain a
8 Class Member and be subject to the provisions of the Stipulations, including the
9 terms of any Judgment entered and releases given.
1 06. Payment pursuant to the Plan of Allocation approved by the Court
11shall be conclusive against all Authorized Claimants. No person shall have any
12claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13designated by Lead Counsel arising from distributions made substantially in
14accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. Plaintiffs, Defendants, their respective counsel, and all other Released
16Parties shall have no responsibility or liability whatsoever for the investment or
17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18 Allocation, the determination, administration, calculation, or payment of any claim
19 or nonperformance of the Claims Administrator, the payment or withholding of
20Taxes owed by the Settlement Fund, or any losses incurred in connection
21herewith, except as otherwise provided in the Stipulations.
227.he objective of the Plan of Allocation is to equitably distribute the
23proceeds of the Settlements to those Class Mem bers who suffered econom ic losses
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25 nd industry factors or Company-specific factors not related to the alleged wrongful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27 nalysis unde rtaken to that end, including a review o f publicly available information
2 8 regarding New Century and analysis regarding the stock price mo vements.
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2ettlement Fund to Authorized Claimants as follows:
3I,UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6 separate Claim Form signed under penalty of perjury and supported by such
7 documents as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (i) each
9 claimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B P referred Stock, or Put/Call Options as of the close of the
11 market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16 market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19 calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this title in w hich the plaintiff seeks to establish d amages by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27 the difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
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10. All Proof of Claim forms must be postmarked or received by [DATE],
2ddressed as follows:
3n re New C enturyecurities Litigation Settlemen t
4/o An alytics, Inc. Claims Ad ministratorP.O. Box 2004
5hanhassen, MN 55317-2004
6
41. Unless otherwise ordered by the Court, any Class Member who fails7
to submit a properly completed and signed Proof of Claim within such period as
may be ordered by the Court shall be forever barred from receiving any payments9
pursuant to the Stipulation, but will in all other respects be subject to the provisions10
of the Stipulation and the final judgments entered by the Court.
11 42. The Net Settlement Fund shall be distributed to members of the Class12
who su bmit acceptable Proofs of Claim. For purposes of the Plan of A llocation, the1 3
Net Settlement Fund is divided into two components: the "Underwriter Allotment"1 4
(composed of the settlement fund from the settlement with the Underwriter1 5
Defendants net of Court-approved fees and expenses), and the "Individual-Auditor16
Allotment" (composed of the settlement funds from the settlement with the17
Individual Defendants and KPMG, net of Court-approved fees and expenses).18
Only Class Members who purchased Series A Preferred Stock and/or Series B1 . 9
Preferred Stock during the Class Period and were dam aged thereby m ay be eligible20
to receive distributions from the Underwriter Allotment based on those purchases.21
All Class Members (including but not limited to those who purchased Series A22
Preferred Stock and/or Series B Preferred Stock during the Class Period and were23
damaged thereby) may be eligible to receive distributions from the Individual-24
25correcting the misstatement or omission that is the basis for the action is
26disseminated." 15 U.S.C. §78u-4(e)(1). $0.87 was the average closing price of New
27Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007.
28
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1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3whereas the Individual-Auditor Allotment will be distributed to all Class Members—4ho submit valid Claim Forms, regardless of the type of New Century Security
5purchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7tock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claimant's
10pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11eparately established for each class of securities show n in T able 1 annexed hereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17Underwriter Allotment and the Individual-Auditor Allotment will be
18proportionately allocated to the Authorized Claimants.
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20 be calculated by the Claims Administrator in consultation with Lead Counsel in
21 accordance with the provisions of this Plan of Allocation. Factors generally
22onsidered in developing the P lan of Allocation, include, among others: (i) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25 ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26 iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
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1 Securities at different times during the Class Period attributable to Defendants'
2alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead
4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9Class Member who submits an acceptable Proof of Claim can claim under the
10Settlements for the purpose of making pro rata allocations of the cash from the
11Und erwriter Allotment and the Individual-Auditor Allotment to Class Memb ers for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14hat the prices of N ew C entury Securities were artificially inflated d uring the C lass
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
1 7 orrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18 March 13, 2007, removed artificial inflation from the prices of New Century
1 9 Securities.
206. The Plan of Allocation covers the following New Century Securities:
211) Com mon Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22iv) Call and Put Options on Com mon Stock.
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26 rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
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1February 8, 2007, and before or on March 2, 2007, must be held until March 5,
22007, the next trading day after the second corrective disclosure. Finally, a New
3 Century Security purchased or otherwise acquired on or after March 5, 2007, must
4be held until March 13, 2007, the last day of the Class Period. If you did not hold
5 a New Century Security referred to above which was purchased during the three
6ifferent parts of the Class Period described above and below (see the artificial
7nflation Tables annexed hereto) for both the New Century Common Stock and the
8New Century P referred Stock through at least one of the three corrective disclosure
9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for10hese transactions w ill be calculated as zero because it has been d etermined that the
11 artificial inflation between each disclosure and arising from the circumstances
12underlying the allegations of P laintiffs' Com plaint was con stant.
13 I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS
1 .4LAIMS FOR NEW CENTURY SECURITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16 New Century Securities that is within the Class Period, listed in the Proof of Claim
17orm, and for w hich adequate documentation is provided.
18.uidelines App licable to theCalculations of All Claims
1 9
209. In the event a Class Member has more than one purchase or sale of the
21New Century Securities, all purchases and sales of each type of security shall be
22matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23matched first against any New Century Securities held at the beginning of the
24Class Period, and then against purchases in chronological order, beginning w ith the
25earliest purchase made during the Class Period. Purchases and sales of New
26Century Securities shall be deemed to have occurred on the "contract" or "trade"
date as opposed to the "settlement" or "pay ment" date. T he receipt or grant by gift,27devise or operation of law of New Century Securities during the Class Period shall28
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1calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be
2eemed an assignment of any claim relating to the purchase of such New Century
3ecurities unless specifically provided in the instrument of gift or assignment.
4 Similarly, the covering purchase of a short sale shall not be deemed a purchase or
5 sale of New Century Securities for the calculation of an Authorized Claimant's
6Recognized Loss Claim.
70. Each Authorized Claimant shall be allocated a pro rata portion or
8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on
9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss
10Claims of all Authorized Claimants for their respective class of Securities. Each
11Authorized Claimant shall be paid an amount determined by multiplying the total
12n the U nderwriter Allotment and/or Ind ividual-Aud itor Allotment for their class of
13 Securities by a fraction, the numerator of which shall be the Claimant's
14 Recognized Loss Claim and the denominator of which shall be the Total
15 Recognized Loss Claims of all Authorized Claimants for the included class of
16securities. Each Authorized Claimant will receive a pro rata share of the
17Underw riter Allotment and/or In dividual-Auditor Allotment based on his, her or its
18Recognized Loss Claim.
1 91. The amount of a Class Member's Recognized Loss as computed
20above is not intended to be an estimate of a Class Member's damages, nor of what
21a Class Member might have been able to recover at trial, and it is not an estimate
22of the amount that will be paid pursuant to this Settlement. Instead, this
23 omp utation is only a method to weigh C lass Memb ers' claims against one another.
242. To the extent a Claimant had a gain from his, her or its transactions
25during the Class Period with respect to New Century Securities specified above,
26 he value of their Recognized Loss Claim will be zero. Such claimants will, in any
27event, be bound by the Settlements. You may wish to consider this when deciding
28whether to opt-out of the Settlements.
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 38 of 103 Page ID#:113523. For purposes of determining whether a Claimant had an overall
2market gain with respect to his, her, or its Class Period purchases of an individual
3 New Century Security or suffered an overall market loss, the Claims Administrator
4hall determine the difference between (i) the Total Purchase Amount paid for all
5urchases of that individual New Century Security purchased or acquired during
6 the Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7 the sum of the Sales Proceeds received for all of that individual New Century
8ecurity d uring the Class Period and the Holding V alue ascribed to that security for
9 all Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10 share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11 per share for Series B Preferred Stock. This difference will be deemed a
12Claimant's market gain or loss on his, her, or its overall transactions in that
13 ndividual New C entury Security during the C lass Period.
144. An Authorized Claimant's gains and losses on a particular New
15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17 particular security. In the case of New Century Common Stock and Put and Call
18Options on that stock, gains and losses on both the stock and the Options will be
19 combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22laim (as calculated under this Plan) on N ew Cen tury Com mon S tock/Options will23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24ny issue of New Century Preferred Stock.
255. Class Members who do not submit acceptable Proofs of Claim will
26not share in the settlement proceeds. Class Members who do not submit a request
27or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bound by the Settlements and the judgm ents of the Court.
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16. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and3 after all claims have been processed. At that time, Lead Plaintiff will file a motion
4 for entry of a proposed Class Distribution Order which will, among other things,
5 approve of the distribution to Authorized Claimants of the Net Settlement Fund.
67. The Individual Defendants, the Underwriter Defendants, and KPMG
7and their respective counsel, and all other Released Parties shall have no
8esponsibility for, or liability whatsoever, relating to distributions from the
9 Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10 or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12 Administrator, the payment or withholding of Taxes owed by a Settlement Fund, or
13 any losses incurred in connection therewith.
14.omp utation Method ology Relating toRecognized Losses for Com mon S tock
15urchases
168. For purposes of developing the Plan of Allocation, the damages
17 consultant calculated the amount of artificial inflation in the daily closing market
18 prices for New C entury Com mon Stock during three different portions of the Class
19Period. See the annexed Table 2. In computing artificial inflation, the damages
20 consultant considered price changes of New Century Common Stock in regard to
21 certain public announcements regarding New Century and adjusted those price
22 changes that were attributable to market forces unrelated to the alleged fraud.
2 39. As explained above, Common Stock purchases are not eligible for
24 distributions from the Underwriter Allotment, but may be eligible for distributions
25 from the Individual-Auditor Allotment.
26.ecognized Loss C alculations
270. Recognized Loss Claims will be calculated for the purposes of the
2 8 ettlement as follows:
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1
.alculation of Recognized Lo ss for NewCentury Common Stock Purchases
2
61. Calculation of Recognized Loss Claims for New Century Common3
Stock shares shall be as follows:4
62. For shares purchased on or between May 5, 2005, through February 7,5
2007 ) the following claims for d amages shall be allowed :6
(a) For each share sold on or before February 7, 2007, no Recognized
Claims for dam ages shall be allowed;gb) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
10ereto, less the inflation per share at the time of sale as set forth in Table 2;
and
1 1
123. For shares purchased on or between February 8, 2007, through March
13 2, 2007, the following claims for damages shall be allowed:
1 4a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages shall be allowed;15b) For each share sold on or between March 5, 2007, and March 13, 2007,
16he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,17
ess the inflation per share at the time o f sale as set forth in T able 2; and18
194. For shares purchased on or between March 5, 2007, through March
2012, 2007 , the following claims for dam ages shall be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or dam ages shall be allowed;
22b) For each share sold on or after March 13, 2007, the allowed damages
shall be the inflation per share at the time of purchase for the applicable23
ate of purchase as set forth in Table 2, annexed hereto.
24
255. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Common Stock claims, the Recognized Loss Claims for damages for such
27shares purchased during the Class Period shall be further limited (as provided for
28under the PSL RA) to the smallest of the following:
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1a) the difference between the price paid and the price received (out-of-
2ocket investment loss) if sold on or before June 10, 2007 ;(b) the difference between the price paid (excluding all fees and
3ommissions) and the average closing price as set forth in Table 3
4nnexed hereto if sold between March 13, 2007 , and June 10, 2007 ; and(c) the difference between the price per share paid and $0.87 per share if the
5hares were sold after June 10, 2007 , or were held until the current date.
6.alculation o f Recognized Lossfor New C entury Series A Preferred Stock
7
urchases
86. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
1 07. For shares purchased on or between May 5, 2005, through February 7,
11 2007, the following claims for damages shall be allowed:
12a) Fo r each share sold on or before February 7 , 2007, no R ecognized Claims
13or dam ages shall be allowed;(b) For each share sold on or between February 8, 2007, and through March
143, 2007, the allowed damages shall be the inflation per share at the time
15f purchase for the applicable date of purchase as set forth in Table 4,
annexed hereto, less the inflation per share at the time of sale as set forth16n Table 4; and
17
68. For shares purchased on or between February 8, 2007, through March1 8
2, 2007 , the following claims for dam ages shall be allowed:1 9a) For each share sold on or before March 2, 2007, no Recognized Claims
20or damages shall be allowed;
21b) For each share sold on or between March 5, 2007, and March 13, 2007,
the allowed damages shall be the inflation per share at the time of22urchase for the applicable date of purchase as set forth in Table 4,
23nnexed hereto, less the inflation per share at the time of sale as set forthin Table 4; and
24
259. For shares purchased on or between March 5, 2007, through March
2612, 2007 , the following claims for dam ages shall be allowed:
27a) For each share sold on or before March 12, 2007, no Recognized Claimsfor damages shall be allowed;
28
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1b) For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicabledate of purchase as set forth in Table 4, annexed here3
40. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 nder the PSL RA) to the smallest of the following:7a) the difference between the price paid and the price received (out-of-pocket
investment loss) if sold on or before June 10, 2007 ;8b) the difference between the price paid (excluding all fees and commissions)
9nd the average closing price as set forth in Table 6 annexed hereto if soldbetween March 13, 2007 and June 10, 2007; and10c) the difference between the price per share paid and $8.02 per share if the
1 1hares were sold after June 10, 2007 , or were held until the current date.
12.alculation of Recognized Lossfor New C entury Series B P referred Stock
1 3urchases
1471. Calculation of Recognized Loss Claims for New Century Series B
15Preferred Stock shares shall be as follows:
1672. For shares purchased on or between May 5, 2005, through February 7,
17 2007, the following claims for damages shall be allowed:
isa) For each share sold on or before February 7, 2007, no Recognized
Claims for dam ages shall be allowed;1 9b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in
2 1able 5, annexed hereto, less the inflation per share at the time of sale
22s set forth in Table 5; and
233. For shares purchased between February 8, 2007, through March 2,
242007 , the following claims for dam ages shall be allowed:
25a) For each share sold on or before March 2, 2007, no Recognized Claims
26or damages shall be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
28urchase for the applicable date of purchase as set forth in Table 5,
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1 changes that occurred in reaction to certain public announcements regarding New
2 entury and then made adjustments for changes that were attributable to market
3orces unrelated to the alleged fraud in prices of such Call Options and Put
4Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5rom which the Recognized Losses for New Century Call Options and Put Options
6may be calculated. In addition, the total dollar amount payable to Class Members7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9 limitation reflects the speculative and derivative nature of these securities as
10 compared to New Century Common Stock and New Century Preferred Shares.
it8. With respect to purchases and sales (covers) of New Century Call
12Options during the period May 5, 2005 , through and including March 13, 2007 , the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15Common Stock share price. The dollar change in the value of Call Options will be
16 calculated using the Black-Scholes option pricing formula (using Black's
17 djustment for dividends and the annualized standard deviation estimated from 46 -
18 day, historical daily volatility estimates) using the closing share price of New
19Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22eported closing share price minus the Common Stock price inflation per share set
23 orth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
27Black's adjustment for dividends is implemented. Annualized volatility estimates
28are obtained using the daily standard deviations using the returns for that day plus
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1he previous 45-day stock returns, which are then annualized using a 252-trading
2ay approach.
34
(a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007 ; or (3) were sold (position closed out) o n or between February
10, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
1 1
121) the difference between Artificial Inflation per Call Option on the
date of purchase an d A rtificial Inflation per Call Option on the date13f expiration, exercise, or sale, as appropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).1 5
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
1 8ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor19
hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) times number of Op tions (100), for a total. of$880.00; assuming that the difference between the purchase price and the
23ale price was greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
2 8ptions multiplied by the lesser of:
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11) the difference between Artificial Inflation per Call Option on the
2ate of purchase and A rtificial Inflation p er Call Option o n the d ateof expiration, exercise, or sale, as appropriate; or
32) the difference between the purchase price per Option and the sale
4rice per Option ($0.00 if the Call Option expired w orthless).
5d) For Call Options which were purchased or acquired between March 5,
6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) w ere exercised on or after March 13, 2007 ; or 3) w ere sold (position
7losed out) on or after March 13, 2007, the Recognized Loss Claim
8hall be that number of O ptions multiplied by the lesser of-
91) the Artificial Inflation per Call Option on the date of purchase, or
1 02) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).
1 1
129. With respect to purchases (covers) and sales of Put Options during the
13 period May 5, 2005, through and including March 13, 2007, the Artificial Inflation
14 per Option on a given day shall be the dollar change in the value of Put Options on
15hat day as a result of the inflation in New Century's Common Stock share price.
16 The dollar change in the value of Put Options will be calculated using the Black-
17 Scholes put option pricing formula (using B lack's adjustment for dividends an d the
18annualized standard deviation estimated from 46-day historical daily volatility
19estimates) using the closing share price of New Century Common Stock on the
20ransaction date, compared with the Black-Scholes put pricing formula value for
21he Put Option using the uninflated share closing share price of New Century
22Common Stock on that same date as determined by: (1) the reported closing share
23price minus the Common Stock price inflation per share set forth in the annexed
24Table 2 for Put Options subsequently purchased between May 5, 2005, and March
2513, 2007, and (2) the reported closing share price minus the Common Stock price
26nflation per share set forth in the annexed Table 2 for Put Options initially sold
27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28dividends is implemented. Annualized volatility estimates are obtained using the
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1 daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, which are then annualized u sing 252 trading day approach.
3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6 7007, and (1) expired on or after February 8, 2007; (2) were exercised on
8or between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
1 0ultiplied by the lesser o£
11
1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
12er Put Option on the date of expiration, exercise, or purchase
1 3$0.00 if the Put O ption expired worthless), as app ropriate; or(2) the difference, multiplied by minus one, between the sale price per
14ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired w orthless).
16n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of $20. The Put inflation on this date is -$14.2218rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
21, 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22)225.15) times number of Put Options, 100 for a total of $515.00; assuming
2 3hat the difference between the P ut purchase price and the Put sale price wasgreater than $5.15.
24
25c) For Put Options which were initially sold between February 8, 2007, andMarch 2, 2007, and (1) expired on or after March 5, 2007; (2) were
26xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of-
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121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put O ption expired worthless), as app ropriate; or(2) the difference, multiplied by minus one, between the sale price per
5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired w orthless).
7d) For Put Options which were sold between March 5, 2007, and March 12,
8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 13, 2007, the Recognized Loss Claim shall be that number of
10ptions mu ltiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,12ultiplied by m inus one; or
(2) the difference, multiplied by minus one, between the sale price per13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired wo rthless).
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 610.he put inflation for this option on March 6, 2007, was
1 7$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18
ptions after March 13, 2007, when Put inflation was zero. The Recognized
1 9oss Claim for this investor will be $68 (negative of the Put inflation on thesale date), assuming that the difference in purchase price of the Put option
20nd sale price of the Put option was greater than $0.6 8 per Put option.
21IIl.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25will be made.
261. The determination of the price paid and the price received for a
27particular security shall be exclusive of all comm issions, taxes, fees and charges.
28
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12. The Court has reserved jurisdiction to modify, amend, or alter the Plan
2 of Allocation without further notice, or to allow, disallow or adjust the claim o f any
3Class Member on equitable grounds, to ensure a fair and equitable distribution of
4unds. No person shall have any claim against the Plaintiffs or their counsel or any
5laims administrator or other agent designated by Plaintiffs or their counsel, or
6 against Defendants or their counsel, based on distributions made substantially in
7 ccordance with the Stipulations and the Settlements contained therein, the Plan of
8Allocation, or further orders of the Cou rt.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Underw riter Allotment or Individual-Auditor Allotment, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13pursuant to, Proofs of Claim, for the payment or w ithholding of Tax es owed b y the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 or acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
174. The Court has reserved jurisdiction to allow, disallow, or adjust on
18quitable grounds the Claim of any C lass Member.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 further notice to the Class.
23WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
2456. If the Settlements are approved, the Court will enter judgments (the
26 "Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28Plaintiff and all other Class Members will provide releases as described below.
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17. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2 embers of the C lass will be deem ed by operation of law to have released, waived,
3ischarged and dismissed each and every Settled Class Claim as against each and
4very Released Officer And Director and the Insurance Carriers (as defined in the
5 Global Officer And Director Stipulation), and shall be deemed to forever be
6njoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8 Claim" in this paragraph means any and all claims and causes of action of every
9nature and description, whether known or Unknown Claims, whether arising under
10 federal, state, common or foreign law, that Plaintiffs or any other member of the
11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any
12orum that arise out of or are based upon the allegations, transactions, facts,
13matters or o ccurrences, representations o r om issions involved, set forth, or referred
14o in the C onsolidated Action, and that arise out of or relate to the purchase of N ew
15Century Common Stock, New Century Series A Preferred Stock, New Century
16Series B Preferred Stock, and/or New C entury Call Options and/or the sale of New
17Century Put Options during the Class Period. Settled Class Claims does not
18include claims relating to the enforcement of the Settlement. "Released Officers
19And Directors" in this paragraph means (i) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24affiliated with New Century (including any of its subsidiaries and affiliates)
25ncluded in the definition of "Assured" or "Insured" as defined in the Policies
26 defined in the Global Officer And Director Stipulation) and any and all of their
27espective heirs, executors, administrators, predecessors, successors and assigns,
28
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1employees, agents and retained professionals (other than KPMG or the
2 Underwriter Defendants).
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4 Class will be deemed by operation of law to have released, waived, discharged and
5 dismissed each and every Settled Claim, and shall forever be enjoined from
6prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8nature and description, whether know n or Unk nown , whether arising under federal,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10 asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11 or are based upon the allegations, transactions, facts, matters or occurrences,
12 representations or omissions involved, set forth, or referred to in the Complaint,
13 and that arise out of or relate to the purchase of New Century Common Stock, New
14entury Series A Preferred Stock, New Century Series B Preferred Stock, and/or15 New Century Call Options and/or the sale of New Century Put Options during the
16 Class Period. "Settled Claims" does not include claims relating to the enforcement
7f the Settlements. "Released Auditor Party" means KPMG and any and all of its18 partners, principals, officers, directors, employees, agents, attorneys and affiliates.
19 "Released Auditor Parties" does not include any Defendants other than KPMG.
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21 Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22 heirs, executors, administrators, predecessors, successors and assigns, and any and
23 all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25 dismissed each and every Settled Claim, and shall forever be enjoined from
26 prosecuting any or all Settled Claims, against any Released Underwriter Party.
27 "Settled Claim" in this paragraph means any and all claims and causes of action of
28 every nature and description, whether known or Unknown, whether arising under
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1ederal, state, common or foreign law, that Plaintiffs or any other member of the
2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that
3 arise out of or are based upon the allegations, transactions, facts, matters or
4occurrences, representations or omissions involved, set forth, or referred to in the
5Com plaint, and that arise out of or relate to the purchase of New Cen tury Com mon
6 Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7 Stock, and/or New Century Call Options and/or the sale of New Century Put
8Options during the Class Period. "Settled Claims" does not include claims relating9 to the enforcement of the Settlements. "Released Underwriter Party" means the
10 Underwriter Defendants and any and all of their respective parent companies,11 subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors
12 and assigns, and any and all of their current and former officers, directors,
13 employees, agents and attorneys. "Released Underwriter Parties" does not include
14 any Defendants other than the Underwriter Defendants.
1 50. "Released Parties" means the Released Officers And Directors, the
16Released Auditor Parties, and the Released Underwriter Parties.
1 71. "Unknown Claims" means any and all claims that Lead Plaintiff or
18ny Class Member does not know or suspect to exist in his, her or its favor at the
19ime of the release of the Released Parties, which if known by him, her or it might
20 have affected his, her or its decision(s) with respect to the Settlements. With
21 respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and
22 each Class Member shall be deemed to have waived, and by operation of the
23 Judgment shall have expressly waived, any and all provisions, rights and benefits
24 conferred by any law of any state or territory of the United States, or principle of
25 common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,
26 which provides:
27general release does not extend to claims which the creditor
28oes not know or suspect to exist in his or her favor at the time of
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1xecuting the release, which if known by him or her must have
2aterially affected h is or her sett lement w ith the de btor.2. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6 nd w as a key element of the Settlements.
73. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10Class. In addition, certain Defendants and other persons and entities will also
1 1
ms against each other and other persons and entities as set forth in the12
Stipulations.
13 WHAT PAYMENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14OW WILL THE LAW YERS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel18been reimbursed for its out-of-pocket expenses. Before final approval of the
19Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'20 ees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the
22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23 seek attorneys' fees or expenses with respect to, any disgorgements or penalties
24 obtained by the Securities and Exchange Commission in the SEC Action. At the
25 same time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed S4.5 million, plus interest from the date of funding at the
27same rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28request for reimbursement of Litigation Expenses will be a request for an award to
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1Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
2eimbursement of their reasonable costs and expenses (including lost wages)
3irectly related to their representation of the Class. The Court will determine the
4mount of the awards.
5OW DO I PARTICIPATE IN THE SETTLE MENTS?6HAT DO I NEED TO DO?7
5. If you purchased or otherwise acquired New Century Common Stock,
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10 and/or New C entury Call Options and/or sold New C entury Put Options, during the
11 period from May 5, 2005, through and including March 13, 2007, either in the12fferings, pursuant to a registration statement, or in the market, and were injured
13upon disclosure of certain facts alleged in the Complaint, and you are not excluded
14 by the definition of the Class and you do not elect to exclude yourself from the
15Class, then you are a Class Member. You will be bound by the proposed
16 Settlements if approved by the Court, and by any judgment or determination of the
17 Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19 Settlements. A Claim Form is included with this Notice, or you may go to the
20 website maintained by the Claims Administrator for the Settlements to download a
21 copy of the Claim Form or request that a Claim Form be mailed to you. The
22 website is ww w.neween turysettlement.com . You may also request a Claim Form
23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24downloaded from Lead Counsel's website at www.blbglaw.com. Those who
25 exclude themselves from the Class, and those who do not submit timely and valid
26 Claim Form s with adequate suppo rting docu mentation, will not be entitled to share
27 in the Settlements. Please retain all records of your ownership of, or transactions
28in, New Century Securities, as they may be needed to document yo ur Claim.
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16. As a Class Member, you are represented by Lead Plaintiff and Lead
2 ounsel, unless you enter an appearance through counsel of your own choice at
3our own expense. You are not required to retain your own counsel, but if you
4hoose to do so, such counsel must file a notice of appearance on your behalf and5must serve copies of his or her notice of appearance on the attorneys listed in the
6ection entitled, "When and Where Will the Court Decide Whether to Approve the
7ettlements?," below.
87. If you do not wish to remain a Class Member, you may exclude
9 yourself from the Class by following the instructions in the section entitled, What
10 f I Do Not Want To Be A Part Of The Class And The Settlements? How Do I
11Ex clude Myself?," below.128. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15 xclude yourself from the Class, you m ay present your ob jections by following the
16 nstructions in the section entitled, "When and Where Will the Court Decide
17Wh ether to Approve the Settlements?," below.
isHAT IF I DO NOT WANT TO BE A PART OF THE SETTLEME NTS?19OW DO I EXCLUDE MYSELF?2019. Each Class Member will be bound by all determinations and
22judgments in this lawsuit, including those concerning the Settlements, whether
23 favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Settlement, c/o An alytics, Inc., Claims A dm inistrator, P.O. Box 2004, C hanhassen,
27MN 55317-2004. The exclusion request must be received no later than
28[INSERT]. You will not be able to exclude yourself from the Class after that date.
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1 Each request for exclusion must (i) state the name and address of the person or
2entity requesting exclusion; (ii) state that such person or entity requests exclusion
3 from the Class in In re New Century, 2:07-CV-00931-DDP; (iii) be signed by the
4 person or entity requesting exclusion; (iv) provide a telephone number for that
5 person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6 all purchases, acquisitions, and sales of New Century Securities during the Class
7 Period. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1 000. If you do not want to be part of the Class, you must follow these
11 instructions for exclusion even if you have pending, or later file, another lawsuit,
12 arbitration, or other proceeding relating to any Settled Claims.
1 301. If aerson or entity requests to be excluded from the Class thatY14person or entity w ill not receive any be nefit provided for in the Settlements.
1 502. The Individual Defendants, Insurance Carriers, Underwriter
16 Defendants or KPMG may terminate the Settlements if requests for exclusion are
17 received from potential Class Members representing over a certain amount of
1 8 shares as stated in Supplemental Agreements. The three settlement agreements are
19 closely related and, if one of the three Settlements should not become final for any
20 reason, it could affect the finality and enforceability of the other Settlements.
21HEN AND WHERE WILL THE COURT DECIDE WHETHE R TO APPROVE
22
THE SETTLEMENTS?23
DO I HAVE TO COME T O THE HEARING?24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27 proposed Plan of Allocation, and/or the application for attorneys' fees and
28reimbursement of Litigation Expenses, you do not need to attend the Settlement
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 58 of 103 Page ID
#:11372
1epresentative Counsel for Directors and2fficers
3UNGER, TOLLES & OLSON LLP4athleen M. M cDowell
355 South Grand A venue, 35th Floor5os Angeles, CA 90071-1560
6
Counsel for Underwriter Defendants7
8AUL, HASTINGS, JANOFSKY &WALKER LLP
9illiam F . Sullivan
10John S. Durrant515 South Flower Street, 25 Floorloor
11
os Angeles, CA 9007 1
12
Counsel for KPMG13
14 SIDLEY AUSTIN LLPMichael L. Rugen
1 555 California Street, Suite 2000
1 6an Francisco, CA 94 104
1 7
106. The filing must demonstrate your membership in the Class, including18
the number of shares of New Century Securities purchased or otherwise acquired1 9
20
or sold during the Class Period and the price(s) paid and received. You may not
object to the Settlements or any aspect of them, if you are not a Class M ember or if21
you excluded y ourself from the C lass.22
107. You may file a written objection without having to appear at the23
Settlement H earing. You m ay not appear at the Settlement Hearing to present your24
objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise.27
108. If you wish to be heard orally at the hearing in opposition to the28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for
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1ourteen (14) days after you receive this Notice, or (ii) provide the names and
2ddresses of such persons no later than fourteen (14) days after you receive this
3otice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5hoose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you7ust retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9Administrator will send a copy of the Notice to the beneficial owner. Upon full
10compliance with these directions, such nominees may seek reimbursement of their
11easonable expenses actually incurred, by providing the C laims Adm inistrator with12 proper documentation supporting the expenses for which reimbursement is sought.
13 Copies of this Notice may also be obtained from the settlement website
14www.newcenturysettlement.com or Lead Counsel's website, www.blbglaw.com, or
15 by calling toll-free 1-86 6 -308-7 6 15.
16CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17
QUESTIONS?18912. This Notice contains only a summary of the terms of the proposed
20Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.newcenturysettlement.com, including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
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1n re New Century Securities Litigationalvatore J. Graziano, Esq.2ettlementERNSTEIN LITOWITZ BE RGER
c/o Analytics, Inc.GROSSMANN LLP3laims Adm inistrator285 Avenue of the Am ericas
4.O. Box 2004ew York, NY 10019Chanhassen, MN 55317-2004866 ) 6 48-2524
5la ims Adm [email protected] Counsel
DO NOT CALL OR W RITE THE COURT OR THE O FFICE OF THE7
CLERK OF COURT8
REGARD ING THIS NOTICE.9
10
1 1Dated:y Ord er of the Clerk of Cou rt
United States D istrict Court12or the Central District of California
13
14
1 5
16
17
18
19
20
21
22
23
24
25
26
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12able 1
34
5
6ssuer /iquidationhare inhare in7nderlyingUSIPyp essue DatePreferenceatenderwriter Individual
AllotmentAuditor
Allotment8
Preferred Stock
9New Century 64352D200/15/200525.00.125%Series A
10
11
referred Stock
New Century 6435EV207/15/200625.00.750%12
eries B
13ew Century 6435EV108 Common Stock14
15 New Centuryariousall Option16New Centuryariousut Option178
19
20
21
22
23
24
25
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1
2able 2
34nflation per Share for Comm on Stock Shares Purchased between
May 5, 2005, and M arch 13, 20075
6eriodegin Datend datenflation1-May-05-Feb-075.21
7-Feb-07-Mar-071.09
3-Mar-072-Mar-07.6 9
83-Mar-07o the present.00
9
10
1 1
12
13
14
15
16
17
18
1 9
20
21
22
23
24
25
26
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 64 of 103 Page ID#:11378
1
2
3abe34
Comm on Stock PSLRA 90-Day Look-Back Loss Limitat ion Calculat ions
5verageverageClosinglosinglosinglosing
6aterice ($)rice ($)aterice ($ )rice ($)
713Mar2007.84.847Apr2007.86.19
84Mar2007.6 7.7 60Apr2007.89.18
15Mar2007.35.951May2007.85.17
96Mar2007.34.302May2007.83.16
19Mar2007.17.4731May2007.80.15
100Mar2007.6 9.514May2007.7 2.14
111Mar2007.6 7,537May2007.59.12
22Mar2007.56.548May2007.58.11
123Mar2007.00.599May2007.53.10
26Mar2007,56.59OMay2007.43.081 .37Mar2007.41.571May2007.43.0628Mar2007.11.534May2007.41.05
1 49Mar2007.03.495May2007.37.03
30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01
163Apr2007.01.40SMay2007.39.99
04Apr2007.00.381May2007.44.98
1 75Apr2007.26.372May2007.43.97
09Apr2007.14.363May2007.47.96180Apr2007.09.344May2007.45.95
11Apr2007.98.335May2007.47.94
192Apr2007.89.319May2007.46.93
13Apr2007.86.290May2007.45.92206Apr2007.98.271May2007.44.92
217Apr2007.00.261 Jun2007.44.91
18Apr2007.99.254Jun2007.43.90
229Apr2007.93.245Jun2007.43.89
20Apr2007.96.236Jun2007.45.88
233Apr2007.96.227Jun2007.44.88
24Apr2007.92.218Jun2007.44.87245Apr2007.96.209Jun2007.44.87
256Apr2007.94.200Jun2007.44.87
26
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1
2able 4
3nflation per Share for Series A Preferred Shares Purchased betw een
May 5, 2005, and March 13, 20075
6eriodegin Datend datenflation
1-May-05-Feb-075.10
7-Feb-07-Mar-070.48
8-Mar-072-Mar-07.4 8
43-Mar-07o the present009
10
1 1
12
13Table 5
145nflation per Share for Series B Preferred Shares Purchased betw een
16ay 5, 2005, and March 13, 2007
17 Periodegin Datend datenflation
18-May-05-Feb-075.41
2-Feb-07-Mar-071.18
19-Mar-072-Mar-07.03
43-Mar-07o the present0020
21
22
23
24
25
26
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 66 of 103 Page ID#:11380
123abe64referred Stock, Series A, PSLRA 90-Day Look-Back Lo ss
Limitation Calculations5 Averageverage6losinglosinglosinglosing
Daterice ($) price ($)aterice ($) price ( $ )
713-Mar-2007.4 5.4 57-Apr-2007.27.45
84-Mar-2007.20.330-Apr-2007.4 5.4 8
95-Mar-2007.9 5.531-May-2007.00.52
16-Mar-20070.00.152-May-2007.8 0.5 6
109-Mar-2007.25.373-May-2007.8 0.59
20-Mar-2007.50.394-May-2007.75.6 2
1 11-Mar-2007.75.4 47-May-2007.25.6 6
122-Mar-2007.85.4 98-May-2007.0 0.70
23-Mar-2007.7 7.6 49-May-2007.7 0.7 2136-Mar-2007.9 2.6 60-May-2007.23.73
147-Mar-2007.4 0.4 61-May-2007.73.73
28-Mar-2007.1 0.2 64-May-2007.5 0.75
159-Mar-2007.2 0.1 05-May-2007.00.78
30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.8 3
173-Apr-2007.55.9 18-May-2007.83.8 5
04-Apr-2007.10.9 21-May-2007.50.8 8185-Apr-2007.25.9 42-May-2007.50.9 2
199-Apr-2007.6 5.9 23-May-2007.10.9 4
10-Apr-2007.50.9 04-May-2007.25.9 7
201-Apr-2007.6 0.8 95-May-2007.1 0.9 9
12-Apr-2007.4 5.8 79-May-2007.25.01213-Apr-2007.00.830-May-2007.2 0.03
226-Apr-2007.05.8 01-May-2007.14.05
17-Apr-2007.70.751-Jun-2007.75.06238-Apr-2007.30.704-Jun-2007.25.07
249-Apr-2007
.10
.6 4
5-Jun-2007
.1 0
.0720-Apr-2007.15.596-Jun-2007.4 5.0 6
253-Apr-2007.6 0.5 27-Jun-2007.00.0 4
24-Apr-2007.00.4 78-Jun-2007.8 7.0 2265-Apr-2007.25.4 39-Jun-2007.8 7.0 2
276-Apr-2007.37.4 30-Jun-2007.8 7.0228
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1able7Preferred Stock Series B PSLRA 90-Da Look-Back LossLimitation Calculations
4Averageverage
5losinglosinglosinglosingDaterice ($) price ($)aterice ($) price ($)13-Mar-2007.32.327-Apr-2007.06.35
74-Mar-2007.35.340-Apr-2007.40.38
85 -Mar-2007.89.521-May-2007.70.42
16-Mar-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48
20-Mar-2007.60.424-May-2007.6 1.5101-Mar-2007.00.507-May-2007.45.56
12-Mar-2007.10.588-May-2007.88.60
23-Mar-2007.50.689-May-2007.70.62
26-Mar-2007.90.700-May-2007.53.64
27-Mar-2007.65.511-May-2007.05.6513
28-Mar-2007.80.294-May-2007.45.67
49-Mar-2007.25.135-May-2007.78.70
30-Mar-2007.40.016-May-2007.00.72152-Apr-2007.00.947-May-2007.20.76
63-Apr-2007.25.908-May-2007.88.78
04-Apr-2007.00.901-May-2007.50.8 1
75-Apr-2007.45.932-May-2007.75.83
89-Apr-2007.50.9 13-May-2007.25.86
10-Apr-2007.03.874-May-2007.25.89
91-Apr-2007.05.835-May-2007.10.9 1
12-Apr-2007.90.799-May-2007.30.9403-Apr-2007.80.740-May-2007.00.96
16-Apr-2007.76.701-May-2007.65.99
17-Apr-2007.15.641-Jun-2007.85.00
28-Apr-2007.00.584-Jun-2007.60.01
39-Apr-2007.00.525 -Jun-2007.60.00
20-Apr-2007.05.476-Jun-2007.50.00
43-Apr-2007.90.4 17-Jun-2007.90.98
24-Apr-2007.00.378-Jun-2007.25.9555-Apr-2007.20.339-Jun-2007.25.95
66-Apr-2007.25.330-Jun-2007.25.9527
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 68 of 103 Page ID#:11382
1able 8
2Table 8 has been abbreviated for example purposes. For a complete table, visit
3ttp://www.newcenturysettlement.com/Forms/Table 8.pd£
4f you do not have access to the Internet, please contact the Claims Administrator
5t 1-866 -308-7615 to have a copy mailed to you.
6
in7axinax Minis kis ka xinax
Matur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Put8a ter icer icer i c eil ityil itya t ea t enf lat.nf lat.nflat.nflat ion
17-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510 . 0 0$0.18
21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0.05$0.20
109-May-
0 72.505.163.21. 9 8. 8 8. 0 5. 0 50.620.51$0.07$0.19
118 - A u g - 0 7
2.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.54
$0.08$0.15
129 - J a n - 0 82.505.163.21
. 9 8
. 8 8. 0 5. 0 50.630.59
$0.06$0.11
1 7 - J a n - 0 92.505.163.21
. 9 8
. 8 8. 0 5. 0 50.660.64
$0.04$0.05
137 - F e b - 0 7
5 .00 $ 19.7517.21. 9 3. 8 8. 0 5.05 $11.09 $11.080.00$0.01
17-Mar-075.0019.753.21. 9 8. 8 8. 0 5.0511.080.03$0.01$1.40141-Apr-075.0015.853.21. 9 8. 9 5. 0 5. 0 59.410.22$0.20$2.29
159-May-
0 75.0019.753.21. 9 8.88. 0 5. 0 510.860.30$0.19$2.30
168 - A u g - 0 75.0019.753.21. 9 8. 8 8. 0 5. 0 510.460 , 4 2$0.16$3.00
1 9 - J a n - 0 85.001 9 . 7 53.21. 9 8. 8 8. 0 5. 0 59.870 . 5 1$0.11$4.2017
7 - J a n - 0 95.0019,753.21. 9 8. 8 8. 0 5. 0 58.940 . 6 1$0.06$3.44
187 - F e b - 0 7
7.5019.7517.21. 9 3. 8 8. 0 5. 0 511.099.590.00$1.50
17-Mar-077.5019.753.21
. 9 8. 8 8. 0 5. 0 510.750.00
$0.34$3.87
191-Apr-07
7.5015.853.21
. 9 8. 9 5. 0 5. 0 57.070.10
$0.36$4 .69
2019-May-
0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.970.18$0.31$4 .56
218 - A u g - 0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90
1 9 - J a n - 0 87.5019.753.21. 9 8. 8 8. 0 5. 0 58.750.46$0.16$5.63227 - J a n - 0 97.5019.753 . 2 1. 9 8. 8 8. 0 5. 0 57.950.59$0.08$4 .50
$10.0237 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 59.007.10$1.14$3.99
2410.017-Mar-07$19.753.21.98.88.05.059.100.00$0.64$6.33
2510.021-Apr-07$18.773.21
. 9 8. 9 3.05. 0 57.980 . 0 5$0.48$6.82
269-May-10.0
0 719.753.21. 9 8. 8 8.05. 0 58.540.11$0.41$6 .512710.0
1 8 - A u g - 0 719.753 . 2 1. 9 8. 8 8. 0 5. 0 58.110.27$0.29$6 .402810.0
19-Jan-0819.753.21.9 8.88.05.057.680.42$0.20$6.70
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1 0 . 01 7 - J a n - 0 919.753.21. 9 8. 8 8. 0 5. 0 57.140.57$0.09$5.31
21 2 . 51 7 - F e b - 0 719.751 7 . 2 1. 9 3. 8 8. 0 5. 0 56 .504.60$3.63$6 .4931 2 . 517-Mar-0719.753 . 2 1. 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.50
41 2 . 521-Apr-07
18.77
3.21
. 9 8
. 9 3
. 0 5
. 0 5
6.05
0.02
$0.55
$ 8 . 4 559-May-12.5
0 719.753.21
. 9 8. 8 8. 0 5. 0 56.950.08
$0.48$8.00
61 2 . 51 8 - A u g - 0 7$19.753.21. 9 8. 8 8. 0 5. 0 56.870.15$0.34$7.5471 2 . 589-Jan-0819.753.21.98.88.05.056.720.39$0.23$7.51
$ 1 2 . 5
97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95
$15.0
107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54.002.16$6.12$8.93
$15.0
117-Mar-0719.753.21. 9 8. 8 8. 0 5. 0 54.700.00$0.69$ 9 . 9 7
$15.0
121-Apr-0718.773.21
. 9 8. 9 3. 0 5. 0 54.350.01
$0.60$9.54
19-May-15.0
137$19.753.21. 9 8.88. 0 5. 0 55 .400.05
$0.53$9.05
$15.0
148 - A u g - 0 7$19.753.21. 9 8.88. 0 5. 0 55.760.10$0.38$8.40
$15.0
159 - J a n - 0 819.753.21. 9 8.88. 0 5. 0 55.890.20$0.25$8.14
$15.0
167 - J a n - 0 9$19.753.21. 9 8.88. 0 5. 0 55.890.45$0.12$6 .47
$17.5177 - F e b - 0 7$19.7517.21. 9 3.88. 0 5. 0 51.700.48$8.61$10.61
$17.5187-Mar-07$19.753.21.98.88.05.052.950.00$0.69$10.69
$17.5191-Apr-0718.773.21.98.93.05.053.020.01$0.63$10.21
19-May-17.5207$19.753.21. 9 8. 8 8. 0 5. 0 53.900.04$0.56$9.76
2117.51 8 - A u g - 0 7 19.753.21.98.88.05.054 .500.10$0.41$9.03
2217.5
1 9 - J a n - 0 819.753.21. 9 8.88. 0 5. 0 55.170.20$0.28$ 8 . 6 3
2317.51 7 - J a n - 0 919.753.21. 9 8.88. 0 5. 0 55 .400.40$0.13$6.90
2420.01 7 - F e b - 0 742.1017.21. 9 3.21. 0 5. 0 519.930.04
$5.28$17.39
2520.0
17-Mar-07$30.843.21
. 9 8. 2 3. 0 5. 0 510.640.00
$0.69$15.54
262 0 . 021-Apr-07$18.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60
279-May-20.0
0 7$30.603.21. 9 8.24. 0 5.059.320.03$0.59$16.74
2820.0
18-Aug-07$30.603.21.98.24.05.057.790.05$0.44$18.25
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 70 of 103 Page ID#:1138420.0
19-Jan-0851.223.21.9 8.21.0 5.0 419.940.15$0.30$18.65
220.0
17-Jan-0942 .103.21.98.21.0 5.0 59.250.25$0.14$16 .72
322.5
17-Feb-0742 .1017.21.93.2 1.0 5.0 517.530.00$7 . 6 8$19.88
422.5
1 7 -Ma r -0 730.843.21
.98.2 3.0 5.0 58.160.00
$0 . 6 9$18.03
522.5
2 1 -Ap r -0 718.773.21
.98.93.05.0 50.900.00
$ 0 . 6 6$10.82
69 - M a y -22.5
7739.693.21.98.21.05.0 514.130.02$0 . 6 1$21.23
$22.5
88-A u g -07$34.443.21.98.2 1.0 5.0 57.530.10$0 . 47$21.41
$ 25 . 097-Feb-07$42.10 $17.21.9 3.2 1.0 5.05 $15.100.0010.11$22.30
$ 2 5 . 0
107 - M a r - 0 7$30.843.21.98.2 3.0 5.0 55 .7 00.00$0 . 6 9$20.49
$ 2 5 . 0
111 -Ap r -0 718.773.21.98.9 3.0 5.0 50 .400.00$0 . 6 7$10.94
1 9 - M a y -25 .0
12742 .103.21
.98.2 1.05.0 513.690.02
$ 0 . 6 3
$23.07
$ 2 5 . 0
138-Aug-073 4 . 4 43.21.98.21.05.0 55 . 4 40.10$ 0 . 4 9$23.05
$ 25 . 0
149-Jan-0851.223.21.9 8.2 1.05.0 416.720.15$0.33$21.93
$30.0157-Feb-0747 .8217.21.9 3.2 1.0 5.0 514.260.0010.95$25.03
$30.0
167 - M a r - 0 730.843.21.9 8.2 3.0 5.0 51 .6 40.00$ 0 . 6 9$24.29
$30.0
171 -Ap r -0 718.773.21.9 8.9 3.0 5.0 50.250.00$ 0 . 6 8$11.05
1 9 - M a y -30.0
18742 .103.21
.9 8.2 1.0 5.0 59.350.01
$ 0 . 6 5
$24.86
$30.0198-Aug-073 4 . 4 43.21.9 8.2 1.0 5.0 52.380.09$ 0 . 5 2$247$ 30.0209-Jan-08$53.003.21.9 8.1 9.0 5.03 $13.640.15$0.36$23.81
2130.0
17-Jan-0947 .823.21.9 8.2 1.0 5.0 58 .450.03$0.17$21.29
2235.017-Feb-0747 .8217.21.9 3.2 1.0 5.0 510.360.0011.09$25.21
2335.0
1 7 -Ma r -0 730.843.21.9 8.2 3.0 5.0 50.120.00$ 0 . 6 9$25.18
249 - M a y -35.00742 .103.21
.98.2 1.0 5.0 55 .8 30.01
$ 0 . 6 6
$25.19
2535.0
18-Aug-073 4 . 4 43.21.98.2 1.0 5.0 50.880.04$ 0 . 5 5$25 .13
263 5 .0
19-Jan-0842 .103.21.98.2 1.0 5.0 54 . 6 10.03$0.38$24.72
2740 .017-Feb-0747 .8217.21.9 3.2 1.0 5.0 57.360.0011.09$2 5 .2 1
2840 .0
1 7 -Ma r -0 730.843.21.98.2 3.0 5.0 50.050.00$ 0 . 6 9$25.21
-54-OTICE OF PENDENCY OF CLASS ACTION
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 71 of 103 Page ID#:11385
19-May-40.0
0 742.103.21. 9 8.21. 0 5.053.430.00$0.67$25.21
240.01 8 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 50.500.00$0.57$25.20
340.0
1 9 - J a n - 0 853.003.21. 9 8.19. 0 5. 0 38.650.00$0.40$25.06
440.0
1 7 - J a n - 0 947.823.21
. 9 8.21. 0 5. 0 55.520.00
$0.19$23.29
545.01 7 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 55.110.0011.09$25.21
645.0
17-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21
19-May-45.0
0 742.103.21. 9 8. 2 1. 0 5. 0 51.900.00$0.68$25.21845098-Aug-073 4 . 443.21.9 8.2 1.0 5.0 50.300.00$0 ,58$25.21
$45.0
1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 52.100.00$0.42$25.1710500
117 - F e b - 0 7
47.82
17.21
. 9 3
.21
. 0 5
.05
3.47
0.00
11.09
$25.2119-May-50.0
127$42.103.21
. 9 8.21. 0 5.050.980.00
$0.68$25.21
$50.0
138 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5.050.250.00$0.60$25.21
$50.0
149-Jan-0853 .003.21.9 8.1 9.0 5.0 35 .3 20.00$0 . 43$25.20
$50.0
157 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18
$55.0167 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21
19-May-55.017742.103.21. 9 8. 2 1. 0 5. 0 50.400.00$0.68$25.21
$55.0189 - J a n - 0 851.223.21
. 9 8. 2 1. 0 5.054.150.00
$0.45
$25.21
$60.0197 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5.051.350.0011.09$25.21
$60.0209 - J a n - 0 853.003.21. 9 8. 1 9. 0 5. 0 33.240.00$0.46$25.21
2160.0
1 7 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 52.500.00$0.23$24.71
2270.0
1 9 - J a n - 0 853.003.21. 9 8. 1 9. 0 5.031.900.00$0.48$25.21
2370.017-Jan-0947 .823.21.98.2 1.0 5.0 51.730.00$0 .24$24.96
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 72 of 103 Page ID#:11386
EXHIBIT A-2TO ORDER PRELIMINARILY APPROVING
SETTLEMENTS AND PROVIDNG FOR NOTICE
-1-
Case No. 2:07-cv-00931-DD P (FMOx)
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 73 of 103 Page ID#:113871 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)
NIZAVETairnblbglaw.com)LIN (Bar No. 174663)
(elizabethl , blbglaw.com)4 IKI L. MENDOZA (Bar No. 2146 46 )
(mkim blbglaw.com)
5 ENJA IN GALDSTON (Bar No. 211114)
ftblbglaw.com )A. KELLAR (Bar No. 234470)
M81eok (a^blbgaw.com )
7igh Bluff Drive, Suite 300San Diego, CA 9 2130
8 Tel: (858) 793-0070Fax: (858) 793-0323and-SALVATORE J. GRAZIANO
10grazianoblbggl^aw.comLAURENT MC MILLE
11 laurenm@blbglaw. com)285 Avenue of the A mericas12 New York NY 10019
Tel: (21^) 554-140013 Fax: (212) 554-1444
14LeadCounsel for Lead Plaintiff NewYork State Teachers' Retirement System
15
16
7NITED STATES DISTRICT COURT
1 8ENTRAL DISTRICT OF CALIFORNIA
19 N RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)(Lead Case)
20
1ROOF OF CLAIM AND
22ELEASE23
4udge: Hon. Dean D. Pregerson
2 5
6ROOF OF CLAIM AND RELEASE
27
28EADLINE FOR SUBMISSION2010.
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 74 of 103 Page ID#:113881ENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3endency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4 and Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5 "Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6 and the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11ontains the definitions of ma ny of the defined terms (w hich are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16 YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTM ARKED ON O R BEFORE
1 8 ADDRESSED TO:
1 9n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims AdministratorP.O. Box 200421hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27 Preferred Stock"), and/or New Century call options and/or who sold New Century
28put options, during the time period from May 5, 2005, through March 13, 2007,
i
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1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in2he Complaint, were injured thereby (the "Class"). (The New Century common
3tock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4ptions and New Century put options are referred to collectively as "New Century
5ecurities.")
6.Class Member" means any person who is included in the definition
7f the Class and who did not timely submit a proper request for exclusion in
8ccordance with the requirements set forth in the Notice. Excluded from the Class
9 are certain persons or entities excluded by definition pursuant to the Court's
10preliminary approval of the Settlements.' Also excluded from the Class are any
11 persons or entities who exclude themselves by filing a request for exclusion in
12 ccordance w ith the requirements set forth in the Notice.
13.Authorized Claimant" means a Class Member who submits a timely
14 nd valid Proof of Claim form to the Claims A dministrator, in accordance w ith the
15equirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
17. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19 EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21SETTLEMENTS IF YOU A RE NOT A CLASS MEM BER. THUS, IF YOU FILE
223 1The following persons are excluded from the Class: (a) the Underwriter
24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive
26officer, director or controlling person of New Century (including any of its
27ubsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,28uccessors and assigns of any such excluded party.
2
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 76 of 103 Page ID#:11390
1A VALID REQUEST FOR EX CLUSION IN A TIMELY M ANNER, ANY PROOF
2F CLAIM THAT YOU SUBMIT, OR THAT MAY BE SUBMITTED ON YOUR3EHALF, WILL NOT BE ACCEPTED.
4.o recover as a Class Member, you must complete and sign this Proof
5f Claim and mail it to the Claims Administrator postmarked on or before
6 2010. If you fail to file a timely, properly addressed, and
7 completed Proof of Claim, your claim may be rejected, and you may be precluded
8rom receiving any distribution from the Settlements.
9.ubmission of this Proof of Claim does not ensure that you will share
10in the proceeds of the Settlements. Distributions to Class Members from the
11
Settlements are governed by the Plan of Allocation approved by the Court. The
12proposed Plan of Allocation, which is subject to the Court's approval, is included
13n the Notice.
14.f you have questions concerning the Proof of Claim, or need
15 additional copies of the Proof of Claim or the Notice, you may contact the Claims
16 Adm inistrator, at In re New Century Se curities Litigation Settlement, c/o A nalytics,
17 Inc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by
18oll-free phone at (866 ) 308-7615, or you may download the documents from Lead
19 Counsel's website, www.blbglaw.com., or the website maintained by the Claims
20Adm inistrator for this Settlemen t, www.neweenturysettlement.com .
210. If you are a Class Member and you do not, or someone acting on your
22behalf does not, submit a timely request for exclusion from the Class, and if the
23Court approves the Settlements, you will be bound by the terms of any orders and
24 judgments that the Court enters. You will be bound by such orders and judgments
25whether or not you subm it a Proof of Claim.
261. You are required to submit genuine and sufficient documentation for
2 7 all your purchases and sales of New Century Securities from May 5, 2005,
28hrough and including March 13, 2007, as well as genuine and sufficient
3
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1documentation for all sales of New Century Common Stock and Preferred Stock
2 etween March 14, 2007, through and including June 10, 2007. You are also
3 equired to submit genuine and sufficient documentation reflecting your positions4 in New Century Common Stock and Preferred Stock as of the close of the market
5on March 13, 2007, and as of the close of the market on June 10, 2007.
6Documentation may be photocopies of stockbrokers' confirmation slips or
7stockbrokers' monthly statements (reflecting your opening and closing balances for
8he mo nths specified on the actual claim form, and in which transactions during the
9Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR
10POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT
11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF
13YOUR CLA IM. DO NOT SEND ORIGINAL STOCK CERTIFICATES.
1 42. All joint purchasers must each sign this Proof of Claim.
153. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
17 nd they must:
1 8a)xpressly state the capacity in which they are acting;
1 9b) identify the name, account number, Social Security Number (or
20axpayer identification number), address and telephone number
21f the beneficial owner of (or other person or entity on whose
22ehalf they are acting with respect to) the New Century
23ecurities; and
24c)urnish herewith evidence of their authority to bind to the Proof
25f Claim the person or entity on whose behalf they are acting.
26Authority to complete and sign a Proof of Claim cannot be
27stablished by stockbrokers demonstrating only that they have
28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 78 of 103 Page ID#:11392
1iscretionary authority to trade stock in another person's
2ccounts.)
34. By submitting a signed Proof of Claim, you will be swearing that you:
4a) own(ed) the New Century Securities you have listed in the
5roof of Claim; or
6b) are expressly authorized to act on behalf of the owner thereof.
75. By submitting a signed Proof of Claim, you will be swearing to the
8truth of the statements contained therein and the genuineness of the documents
9 attached thereto, subject to penalties of perjury under the laws of the United States
10of America. The making of false statements, or the submission of forged or
11fraudulent documentation, will result in the rejection of your claim and may12 ubject you to civil liability or criminal prosecution.
13 NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large
14 numbers of transactions may request, or may be requested, to submit information
15 regarding their transactions in electronic files. All Claimants MUST submit a
16man ually signed paper Proof of Claim form listing all their transactions, whether or
17 not they also submit electronic copies. If you wish to file your claim
18electronically, you must contact the Claims Administrator at 1-866-308-7615, or
19visit its settlement website www.newcenturysettlement.com to obtain the required
20ile layout. No electronic files will be considered to have been properly submitted
21unless the Claims Administrator issues to the Claimant a written paper
22 cknow ledgment of receipt and acceptance o f electronically submitted data.
23
24
25
26
27
28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 79 of 103 Page ID#:113931n re New Century
2PART I: CLAIMANT IDENTIFICATION
3 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name
5 treet Address
7 itytateip Code
9Daytime)
10Area Codeelephone Num ber
1 1Evening)12 Area Codeelephone Num ber
13
14Social Security Number oraxpayer Identification Num ber
15
16Record O wner's Nam e (if different from beneficial owner listed above)
17
Check app ropriate box (check only one box):18
19qndividual/Sole Proprietoroint Ownersension Plan
20qorporationartnershiprust
21qIR Ather22
23(describe:
24NOTE: Separate Proofs of Claim should be submitted for each separate legal
25entity (e.g., a claim from Joint Owners should not include separate transactions of
26ust one of the Joint Owners; an Individual should not combine his or her IRA
27 ransactions with transactions made solely in the Individual's name). Conversely,
28 single Proof of Claim submitted on behalf of one legal entity should include all
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1 transactions made by that entity, no matter how many separate accounts that entity
2has (e.g., a corporation with multiple brokerage accounts should include all
3ransactions made in New Century Securities during the Class Period on one Proof4 of Claim, no matter how many accounts the transactions were made in). If you5 equire additional room to list your transactions, please be sure to include your frill
6 ame and the last four digits of your social security number or Tax ID number on
7 ach additional sheet. Check here if additional transactions are included on
8 additional schedules.PART II:EW CENTURY COMMON STOCK
10. Be2inninL HoldinLs: State the number of shares of New Century
1 1ommon Stock the Claimant owned as of the close of the market
12n May 4, 2005. If none, write "zero" or "0." If other than zero,
1 3e sure to attach the required documen tation.
14
15. Purchases:
1 61) List all purchases of New Century Common Stock made during the
17 period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
1 8 cquired your New Century Common Stock during this period other than by an
19open-market purchase, please provide a complete description of the terms of the
20cquisition on a separate page.) Be sure to attach the required documentation.
21rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
2345627
*excluding com missions, transfer taxes or other fees.28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 81 of 103 Page ID#:11395
1ii) State the total number of shares of New Century Common Stock the
2Claimant purchased during the period between March 14, 2007, through and
3ncluding June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,
4 hich are not in the Class Pe riod, are not included in the calculation of Recognize d
5Loss. This information is needed by the Claims Administrator for purposes of the
6 verall evaluation of the C laim.)
7. Sales: List all sales of New Century Common Stock made during
8he period from May 5, 2005, through and including
9une 10, 2007. Be sure to attach the required docum entation.
10rade D ate(s) (List
11hronologically)umber ofalesotalMonth/Day/Yearhares Soldrice Per Shareales Price*
123456*excluding com missions, transfer taxes or other fees
17
1 8. Unsold Holdings: State the total number of shares of New
1 9entury Common Stock the Claimant owned at the close of the
20arket on March 13, 2007. If none, write "zero" or "0." If other
2 1han zero, be sure to attach the required documentation.
22
23. Ending Position For 90-Day Look Back; State the total number
24f shares of New Century Common Stock the Claimant owned at
25he close of the market on June 10, 2007. If none, write "zero" or
260."f other than zero, be sure to attach the required
27ocumentation.
28
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 82 of 103 Page ID#:11396
1 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
2
IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR3
4NAME ON THE COPY AND CHECK THIS BOX q
5 IF YOU DONOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
6NOT BE REVIEWED
7
8 PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED
9STOCK")
1 0
A. Be$!innini! HoldinLs: State the number o f shares of New Century
11 Series A Preferred Stock the Claimant owned as of the close of12
the market on May 4, 2005. If none, write "zero" or "0." If other13
than zero, be sure to attach the required documentation.1 4
1 5B. Purchases:
1 6(i) List all purchases of New Century Series A Preferred Stock made during
17
the period from May 5, 2005, through and including March 13, 2007. (NOTE: If1 8
you acquired your New Century Series A Preferred Stock during this period in an1 9
Offering or otherwise or other than by an open-market purchase, please provide a20
com plete description of the term s of the acquisition on a separate page.) B e sure to2 1
attach the required documentation.22
23
24
2 5
26
27
28
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1rade Date(s) (List2hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
3 excluding comm issions, transfer taxes or other fees.8ii) State the total number of shares of New Century Series A Preferred
10Stock the Claimant purchased during the period between March 14, 2007, through
11and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12purchases, which are not in the Class Period, are not included in the calculation of
13Recognized Loss Amount.his information is needed by the Claims
14Administrator for purposes of the overall evaluation of the Claim.)
156. Sales: List all sales of New Century Series A Preferred Stock
1 7ade during the period from May 5, 2005, through and including
18une 10, 2007. B e sure to attach the required docum entation.
1 9rade Date(s) (ListChronologically)umber ofalesotal
20onth/Day/Yearhares Soldrice Per Shareales Price*
212$$$3
24
25 excluding comm issions, transfer taxes or other fees
26
27
28
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1. Unsold Holdings: State the total number of shares of New
2entury Series A Preferred Stock the C laimant ow ned at the close
3 of the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6. EndinL Position Fo r 90-Day Look Back: State the total number
7f shares of New Century Series A Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
11
12IF YOU NEED ADDITIONAL SPACE TOLIST YOUR TRANSACTIONS
13N THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR14NAME ON THE CO PY AND CHECK THIS BOX
1 5
16 IF YOU DONOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17NOT BE REVIEWED
18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE
19REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED
STOCK')20
21. Beginning Holdinus: State the number of shares of New Century
22eries B Preferred Stock the Claimant owned as of the close of
23he market on May 4, 2005. If none, write "zero" or "0." If other
24han zero, be sure to attach the required documentation.
25
26. Purchases:
271) List all purchases of New Century Series B Preferred Stock made during
28he period from May 5, 2005, through and including March 13, 2007. (NOTE: If
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1you acquired your New Century Series B Preferred Stock during this period in an
2Offering or otherwise or other than by an open-market purchase, please provide a
3 complete description of the terms of the acquisition on a separate page.) Be sure to
4ttach the required docum entation.
5rade Date(s) (List
6)callhronoloumber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*1 0
1 *excluding commissions, transfer taxes or other fees.
12
13ii) State the total number of shares of New Century Series B Preferred
14Stock the Claimant purchased during the period between March 14, 2007, through
15and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
16purchases, which are not in the Class Period, are not included in the calculation of
17 Recognized Loss. This information is needed by the Claims Administrator for
18purposes of the overall evaluation of the Claim.)
1 9. Sales: List all sales of New Century Series B Preferred Stock
20made during the period from May 5, 2005, through and including21une 10, 2007. B e sure to attach the required documentation.
22rade D ate(s) (ListChronologically)umber ofalesotal
23onth/Day/Yearhares Soldrice Per Shareales Price*
24$$5
26$728excluding comm issions, transfer taxes or other fees
12
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1. Unsold Holdings: State the total number of shares of New
2entury Series B Preferred Stock the Claimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If4ther than zero, be sure to attach the required documentation.
5
6. EndinL Position For 90-Day Lo ok Back: State the total numbe r
7f shares of New Century Series B Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
1 1
12
13IF YOU NEED ADDITIONAL SPACE TOLIST YOUR TRANSACTIONS
14IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
15NAME ON THE COPY AND CHECK THIS BOX q16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY
17 NOT BE REVIEWED
18
1920
21
22
23
24
25
26
27
28
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1ART V: NEW CENTURY CALL OPTIONS
2. Beginning Holdings: List all Call Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:
5umber of Calltrike Price for6ption Contractsxpiration Monthall Optionosition: Short
Opennd Yearontractr Long710'
1 1. Purchases: List all Call Option contracts on New Century
12ommon Stock that you purchased or acquired during the period
13rom May 5, 2005, through and including March 13, 2007. Be
14ure to attach the required documentation.
1 5urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call
16hronologically)ontractshareonth andption
17onth/Day/Yearurchasedearontract
181920$$1
22. Sales: List all Call Option contracts on New Century Common
23tock that you sold during the period from May 5, 2005, through
24nd including March 13, 2007. Be sure to attach the required
25ocumentation.
26
27
28
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1ales Date(s)remium2Listumber ofrice Perxpirationtrike Price for
Chronologically)ptionhareonth andall Option3 Month/Day/Year Contracts Soldearontract
4$$$$7
sExercised Calls: List all Call Option contracts on New Century9ommon Stock that you exercised during the period from May 5,10through and including March 13, 2007. Be sure to attach
1 1 the required documentation.12
Strike13rice for
14xpirationallumber of Callesult:Month andptionption Contracts Rec' d Shares
15ate Exercisedea rontract Exercisedr Cash?
16
17
18
1 9
20. Expired Calls: List all Call Option contracts on New Century
2 1ommon Stock that expired worthless during the period from
22ay 5, 2005, through and including March 13, 2007. Be sure to
23ttach the required documentation.
24
25
26
27
28
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2xpired (Listumber ofer CallChronologically)xpired Option Expiration Monthption
3onth/Day/Yearontractsnd Yearontract4
5678. Unsold/Unexpired Calls: List Call Option contracts on New
9entury Common Stock that were open as of the close of the1 0arket on March 13, 2007.
11
12
Strike Price1 3umber of Caller Call
1 4ption Contractsosition: Short or Expiration MonthptionOpenongnd Yearontract
.1 567
18
19
20
2 1
22
2 3
24
25
26
27
28
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1PART VI: NEW CENTURY PUT OPTIONS
2. BeRinnint! Holdings: List all Put Option contracts on New
3entury Common Stock open as of the close of the market on
4ay 4, 2005:5umber of Puttrike Price for6ption Contractsxpiration Monthut Optionosition: Short
Opennd Yearontractr Long71 0
1. Sales: List all Put Option contracts on New Century Common
1 2tock that you sold (wrote) during the period from May 5, 2005,
1 3hrough and including March 13, 2007. Be sure to attach the
1 4required documentation.
1 5ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for
16Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract
1 8$$9$20$$2 1
2 2
2 3
24
2 5
26
27
2 8
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1. Purchases: List all Put Option contracts on New Century
2ommon Stock that you purchased or acquired during the period
3rom May 5, 2005, through and including March 13, 2007. Be
4ure to attach the required documen tation.
5urchase Date(s) Number of Put Premium
6Listptionrice Perxpirationtrike Price perChronologically)ontractshareonth andut Option
7 Month/Day/Yearurchasedearontract
8$0$1
1 2D. Exercised Puts: List all Put Option contracts on New Century
13ommon Stock that you exercised during the period from May 5,14005, through and including March 13, 2007. Be sure to attach
15the required documentation.
1 6Strikeumber of Putesult:
1 7xpirationrice for Option Contracts Delivered
1 8onth and Put Option Exercisedhares orDate Exercisedearontractaid?
19
20
21
22
23
24. Expired Puts: List all Put Option contracts on New Century
25ommon Stock that expired worthless during the period from
26ay 5, 2005, through and including March 13, 2007. Be sure to
27ttach the required documentation.
28
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1ate Contracts2xpired (Listumber oftrike Price for
Chronologically)xpired Putxpiration M onthut Option3onth/Day/Yearontractsnd Yearontract468
F. Unexpired Puts: List Put Option contracts on New Century9
Common Stock open as of the close of the market on March 13,1 0007.
1 1umber oftrike Price for1 2nexpired Putosition: Short or Expiration Monthut Option
13ptions Contractsongnd Yearontract
1415
16 YOU MUST READ THE FOLLOWINGRELEASE AND SIGN ON PAGE ®.
17ELEASE OF CLAIMS
18Definitions
19efined terms not already defined herein have the meanings given them in
20the respective Stipulations of Settlement (described in the Notice) (the
21"Stipulations").
22
23
24The Releases
25fficer and Director Release
26(we) understand and acknowledge that, without further action by anyone,
27on and after entry of the Global Officer And Director Judgment and occurrence of
28the Effective Date of the Global Officer And Director Settlement, each Class
1 9
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1Me mb er, on behalf of themselves, for good and sufficient consideration, the receipt
2nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4y operation of law to have released, waived, discharged and dismissed each and
5very Settled Class Claim as against each and every Released Officer And Director
6 and the Insurance Carriers (as defined in the Global Officer And Director
7tipulation), and shall be deemed to forever be enjoined from prosecuting any or
8all of the Settled Class Claims against each and every Released Officer And
9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10any and all claims and causes of action of every nature and description, whether
11 known or Unknown Claims, whether arising under federal, state, common or12 oreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13 Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20elating to the enforcement of the Settlement. "Released Officers And Directors"
21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25 nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
2 0
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1xecutors, adm inistrators, predece ssors, successors and assigns, employees, agents
2nd retained professionals (other than KP MG or the Underwriter Defendants).
3PMG Release
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of
6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7 sufficient consideration, the receipt and adequacy of which are hereby
8acknow ledged, whether or not a Proof of C laim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
10released, waived, discharged and dismissed each and every Settled Claim, and
11shall forever be enjoined from prosecuting any or all Settled Claims, against any
12Released Auditor Party. "Settled Claim" in this paragraph means any and all
13claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
16 ould have asserted in any forum that arise out of or are based up on the allegations,
17 transactions, facts, matters or occurrences, representations or omissions involved,
18et forth, or referred to in the Complaint, and that arise out of or relate to the
19 purchase of New Century Common Stock, New Century Series A Preferred Stock,
20New Century Series B Preferred Stock, and/or New Century Call Options and/or
21the sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPMG .
26
27
28
21
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1nderwriter Release
2(we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,5 their parent companies, subsidiaries, affiliates, heirs, executors, administrators,6predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
8onsideration, the receipt and adequacy of which are hereby acknowledged,
9wh ether or not a Proof of Claim is executed and de livered by, or on behalf of, such
10Class Member, will be deemed by operation of law to have released, waived,
11 discharged and dismissed each and every Settled Claim, and shall forever be
12 enjoined from prosecuting any or all Settled Claims, against any Released
13 Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted
17 in any forum that arise out of or are based upon the allegations, transactions, facts,
18 matters or occurrences, representations or omissions involved, set forth, or referred
19o in the Complaint, and that arise out of or relate to the purchase of New Centuryp2 0 ommon Stock, New Century Series A Preferred Stock, New Century Series B21 Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22 Put Options during the Class Period. "Settled Claims" does not include claims
23 relating to the enforcement of the Settlements. "Released Underwriter Party"
24 means the Underwriter Defendants and any and all of their respective parent
25 companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,
26 successors and assigns, and any and all of their current and former officers,
27 directors, employees, agents and attorneys. "Released Underwriter Parties" does
2 8 ot include any Defendants other than the Underwriter Defendants.22
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1
2IGNATURE AND CERTIFICATIONS
3y signing and submitting this Proof of Claim, the Claimant or the person4 ho represents the Claimant certifies, as follows:
5. that the Claimant is a Class Mem ber, as defined in the Notice;
6. that I (we) have read and understand the contents of the Notice and the7roof of Claim;
8. that I (we) are not acting for any of the Defendants, nor am I (are we)uch a Defendan t or otherwise excluded from the Class;
10. that I (we) have not filed a request for exclusion from the Class and that I
1 1we) do not k now of any request for exclusion from the Class filed on my12our) behalf with respect to my (our) transactions in New Century
13ecurities;
14. that I (we) own(ed) the New Century Securities identified in the Proof of
5laim, or that, in signing and submitting this Proof of Claim, I (we) have
16he authority to act on behalf of the owner(s) thereof,1 7. that Claimant may be entitled to receive a distribution from the Net
18ettlement F und;
1 9. that Claimant desires to participate in the Settlements described in the
20 Notice and agrees to the terms a nd conditions thereof;
21. that I (we) submit to the jurisdiction of the United States District Court
22or the Central District of California for purposes of investigation and
23iscovery under the Federal Rules of Civil Procedure with respect to this
24roof of Claim;
25. that I (we) agree to furnish such additional information with respect to
26his Proof of Claim as the parties, the Claims Administrator or the Court
27ay require;
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10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2ourt's summary disposition of the determination of the validity or
3mount of the claim m ade by this Proof of Claim; and
4 1l.that I (we) certify that I am (we are) not subject to backup withholding
5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6ode.
7OTE: If you have been notified by the Internal Revenue Service that you are
8ubject to backup withholding, please strike the language that you are not
9ubject to backup withholding in the certification above. The Internal Revenue
1 0ervice does not require your consent to any provision other than the
1 1ertification required to avoid bac kup w ithholding.12
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1declare, under penalty of perjury under the laws of the United States of
2America, that the statements made and answers given in this Proof of Claim are
3rue and correct and that the docum ents submitted herewith are true and genuine.
4
5 Signature of Claimant
78
Print Name of Claimantate Signed
9
10 Signature of Joint Claimant, if any
1 1
12 Print Nam e of Joint Claimant, if anyate Signed
1 3
14 f C laimant is other than an individual , or is not the person com plet ing this
15form , the fol lowing also must b e pr ovided:
1 6
17 Signature of Person Completing Form
1 8
19 Print Name of Person Com pleting Formate Signed
20
21 Capacity of Person Signing (Executor, President, Trustee, etc.)
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 99 of 103 Page ID#:11413
1EMINDER CHECKLIST
2lease sign the Proof of Claim on page
3f this Claim is being made on behalf of Joint Claiman ts, then both m ust sign.
4lease remembe r to attach supporting docum ents.
5f you move, please send your new address to:
6n re New Century Securities Litigation Settlement
7/o Analytics, Inc., Claims Administrator
P.O. Box 20048hanhassen, MN 55317-2004
91-866-308-7615
10
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.11
2eep a copy of your Proof of Claim and all documentation submitted for your
13 records.
4he Claims Administrator will acknowledge receipt of your Proof of
1 5laim by mail within 60 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 60 days, please call
1 7he Claims Administrator toll free at (866) 308-7615.
18
19
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20F TIME.
2 1HANK YOU FOR YOUR PATIENCE
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EXHIBIT A-3TO ORDER PRELIMINARILY APPROVING
SETTLEMENTS AND PROVIDNG FOR NOTICE
-1 -
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 101 of 103 Page ID#:11415
1NITED STATES DISTRICT COURT2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)4Lead Case)
56 SUMM ARY NOTICE7
8 TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
11 ("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12 CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE15 TIME PERIOD FROM MAY 5 9 005, THROUGH MARCH 13, 2007,
16 INCLUSIVE:
17YOU ARE HERE BY N OTIFIED pursuant to Rule 23 of the Federal Rules of Civil18 Procedure and an Order of the United States District Court for the Central District
of California (i) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).he total cash amount of the Settlements equals$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
2 8 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
i
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Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 102 of 103 Page ID#:114161 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonab le, and adequate; (3) whethe r the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 Expenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are e ntitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
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1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE
2 REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and3 Claim Form, may be made to Lead Counsel:
4
BERNSTEIN LITOWITZ BERGER5GROSSMANN LLP
6alvatore J. Graziano1285 Avenue of the Americas
7ew York, New Y ork 100198elephone: (866) 648-2524
9
10 Dated:2010y Order of the Clerk of the C ourtUnited States District Court
1 1or the Cen tral District of California12
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Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 1 of 7 Page ID#:11418
1BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP
2BLAIR A. NICHOLAS (Bar No. 178428)
32laiblbglaw.com
LIZZETH P. LIN (Bar No. 174663)([email protected] )4NIKI L. MENDO ZA (Bar No. 214646)
([email protected] )5 BENJAMIN GALDSTON (Bar No. 211114)
([email protected] )6 TAKEO A. KELLAR (Bar No. 234470)
([email protected] )7 12481 H igh Bluff Drive, Suite 300
San Diego, CA 921308Tel: (858 793-0070
Fax: (8583 793-03239and-
SALVATO RE J. GRAZIANO10 (sgrazianoblb law.com
LAUREN A. M^MILLE1 1 ^[email protected])
285 Avenue of the Americas12New York, NY 10019
Tel: (212) 554-140013Fax: (212) 554-1444
14Lead C ounsel for Lead Plaintiff the NewYork State Teachers’ Retirement System
15and the C lass
16
UNITED STATES DISTRICT COURT
17
18ENTRAL D ISTRICT OF CALIFORNIA
19IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)
20Lead Case)
21ECLARATION OF SERVICE
22
23udge Dean D . Pregerson
24526
27
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DECLARATION OF SERVICE
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Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 2 of 7 Page ID#:11419ECLARATION OF SERVICE
2, the undersigned, declare:
3.hat I am and was, at all times herein mentioned, a citizen of the United
4tates and a resident of the Coun ty of San D iego, over the age of 18 years, and not a party
5 to the within action; that my business address is 12481 High Bluff Drive, Suite 300, San
6 iego, California 92130 .
7.hat on July 30, 2010, I caused to be served the following documents:
8otice Of Unopposed M otion and Unopposed M otion For Preliminary
9pproval Of Settlements;
*laintiffs' Memorandum Of Points And Authorities In Support Of1 0nopposed Motion For Preliminary Approval Of Settlements (and
1 1xhibits thereto);*Proposed] Order Preliminarily Approving Settlements And Providing
12or Notice (and exhibits thereto);
13tipulation To Shorten Time In Which Plaintiffs' Unopposed Motion
14or Preliminary Approval Of Settlements Will Be Heard;
*Proposed] Order Shortening Time in Which Plaintiffs' Unopposed1 5otion For P reliminary Approval Of Settlements W ill Be Heard; and
16eclaration of Service
17
18 Those attorneys who are registered with the Electronic Case Filing ("ECF")
19 System may access this filing through the Court's system, and notice of this filing
20
will be sent to the parties by operation of the Court's ECF System. Attorneys not
21
registered with the Court's ECF system will be duly and properly served in
accordance with the Federal Rules of Civil Procedure and the Court's Local Rules22
23
(see attached Service List).
3.
declare that I am employed in the office of a member of the bar of24this Court at whose direction the service was made.
25
26Executed on July 30, 2010, at San Diego, California.
27Kayj-f A. M artin
28
-1-ECLARATION OF SERVICE
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Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 3 of 7 Page ID#:11420
1ERVICE LISTOUNSEL FOR PLAINTIFF CARL LARSON3
4arvin L. Frank, Esq.
MURRAY , FRANK & SAILER LLP575 M adison Avenue
New York, NY 10016
6el: (212) 682-1818
Fax: (212) 682-1892
8ia ECF
9OUNSEL FOR PLAINTIFF CHARLES H OOTEN
0effery C. Zw erling, Esq.
1 1tephen Brodsky, Esq.ZWERLING, SCHACHTER
12ZWERLING, LLP
41 Mad ison Avenue, 32 n d Floor13ew York, NY 10010
Tel: (212) 223-390014ax: (212) 371-5969
16ia ECF
17COUNSEL FOR DEFENDANTS PATTI M. DODGE, BRAD A. MORRICE, KEVIN
18M. CLOYD, PATRICK FLANAGAN, STERGIOS THEOLOGIDES AND JOSEPH
F. ECKROTH, JR.
19John W . Spiegel, Esq.
20athleen M. McDowell, Esq.
21evin S. Allred, Esq.
MUNGER TOLLES & O LSON, LLP
2255 South Grand Avenue, Suite 3500
Los Angeles, CA 90071-15 60
23el: (213) 683-9100
Fax: (213) [email protected]
26ia ECF
27
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-2 -ECLARATION OF SERVICE
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Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 4 of 7 Page ID#:114211OUNSEL FOR DEFENDANT SUSAN GOTSCHALL, AS REPRESENTATIVE OF
2HE ESTATE OF EDWARD F. GOTSCHALLack P. Dicanio, Esq.
Harriet S. Posner, Esq.4
ila Jones, Esq.5KADD EN, ARPS, SLATE, MEAGHER & FLOM LLP
300 S. Grand Avenue, Suite 3400
6os Angeles, CA 90071-3144
Tel: (213) 687-5000
7ax: (213) 687-5600
Via ECF
10
COUNSEL FOR DEFENDANT ROBERT K . COLE1 1
12anny A. Ab ascal, Esq.
Ethan J. Brown, Esq.
13 LATHAM & WATKINS LLP
355 South Grand Avenue, Suite 100
14os Angeles, CA 90071-15 60
Tel: (213) 485 -123415ax: (213) 891-8763
17ia ECF
18COUNSEL FOR DEFENDANTS MARILYN A. ALEXANDER, HAROLD A.
9LACK, DAVID EINHORN, FREDRIC J. FORSTER, DONALD E. LANGE,
MICHAEL M. SACHS, TERRENCE P. SANDVIK, AND RICHARD A. ZONA
20Matthew E. Lilly, Esq.
21eryl L. Young, Esq.
Wayn e W. Smith, Esq.
22 GIB SON DUNN & CRUTCHER LLP
23161 Michelson Drive
Irvine, CA 9261224el: (949) 451-4038
Fax: (949) 451-4220
[email protected]@gibsondunn.com
27ia ECF
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Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 5 of 7 Page ID#:114221OUNSEL FOR DEFE NDANT WILLIAM J. POPEJOY
2Ronald Rus, Esq.
3oel S. Miliband, Esq.
Leo J. Presiado, Esq.
4aurel R. Zaeske, Esq.
5US MILIBAND & SMITH
2211 Michelson Drive, Seventh Floor
6rvine, CA 92612-1043
Tel: (949) 75 2-7100
7ax: (949) 252-15 14
[email protected]@rusmiliband.com
10ia ECF
1OUNSEL FOR DE FENDANTS BE AR, STEARNS & CO., INC., now known as J.P.
2ORGAN SECURITIES, INC., DEUTSCHE BANK SECURITIES, INC.,
JEFFERIES & COMPANY, INC., JMP SECURITIES LLC, MORGAN STANLEY &
3O., INC., PIPER JAFFRAY & CO., ROTH CAPITAL PARTNER S, LLC, AND
STIFEL, NICOLAUS & C OMPA NY, INC.14
W illiam F. Sullivan, Esq.15ohn S. Durrant, Esq.
16leanor K. Mercado, Esq.
PAUL, HASTINGS, JANOFSKY & W ALKER LLP
1715 So uth Flower Street, 25t h
FloorLos Angeles, CA 9007118el: (213) 683-6000
Fax: (213) [email protected]
21ia ECF
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