Академический Документы
Профессиональный Документы
Культура Документы
#:10808
NOTICE OF MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
27 BLAIR A. NICHOLAS
ELIZABETH LIN
28 NIKI L. MENDOZA
1 NOTICE OF MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
1 BENJAMIN GALDSTON
TAKEO A. KELLAR
2 12481 High Bluff Drive, Suite 300
San Diego, CA 92130
3 Tel: (858) 793-0070
Fax: (858) 793-0323
4 -and-
SALVATORE J. GRAZIANO
5 LAUREN A. MCMILLEN
1285 Avenue of the Americas
6 New York, NY 10019
Tel: (212) 554-1400
7 Fax: (212) 554-1444
8 Lead Counsel for Lead Plaint ff
The New York State Teachers Retirement
9 System and the Class
10 MARVIN L. FRANK
Murray, Frank & Sailer LLP
11 275 Madison Avenue
12 New York, NY 10016
Tel: (212) 682-1818
13 Fax: (212) 682-1892
14
Counsel for Plaintiff Carl Larson
15
JEFFREY ZWERLING
16 Zwerling, Schachter & Zwerling, LLP
17 41 Madison Avenue
New York, NY 10010
18 Tel: (212) 223-3900
19 Fax: (212) 371-5969
2 NOTICE OF MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 1 of 32 Page ID
#:10811
27
28
1 TABLE OF CONTENTS
2 Page
3 TABLE OF AUTHORITIES iii
4 I. PRELIMINARY STATEMENT 1
5 II. OVERVIEW OF THE LITIGATION 3
6 A. The Consolidated Complaints And
Defendants’ Motions To Dismiss 3
7
B. Discovery 4
8
C. KPMG’s Motion For Summary Judgment 4
9
D. The Extensive Negotiations Leading To The
10 Settlements 5
11 III. THE SETTLEMENTS 6
12 A. Summary Of The Settlements 6
13 B. Reasons For The Settlements 8
14 IV. THE PROPOSED SETTLEMENTS WARRANT
PRELIMINARY APPROVAL 9
15
A. Factors To Be Considered By The Court In
16 The Preliminary Approval Of Class Action
Settlements 9
17
1. The Settlements Were Vigorousl
18 Negotiated And Are Supported Wy
Experienced Counsel 11
19
2. The Substantial Benefits Obtained For
20 The Class, Especially In Light Of
Serious Risks Of Lesser Or No
21 Recovery, Support Approval Of The
Settlements 12
22
3. The Stage Of The Proceedings And
23 Discovery Completed Support
Approval Of The Settlements 14
24
B. The Class Should Be Certified For
25 Settlement Purposes 14
26 1. Numerosity 15
27 2. Commonality 16
28 3. Typicality 17
1 4. Adequacy 18
2 5. Common Questions Of Law
Predominate And A Class Action Is
3 The Superior Method Of Adjudication 18
4 C. The Proposed Plan Of Allocation Is Fair
And Reasonable 19
5
D. The Notice To The Class Is Adequate 22
6
V. CONCLUSION 24
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1 TABLE OF AUTHORITIES
2 C ASES PAGE ( S)
3 In re Applied Micro Circuits Corp. Sec. Litig.,
2003 U.S. Dist. LEXIS 14492 (S.D. Cal. July 10, 2003) 18
4
Blackie v. Barrack,
5 524 F.2d 891 (9th Cir. 1975) 15
6 Class Plaintiffs v. Seattle,
955 F.2d 1268 (9th Cir. 1992) 9,10,20
7
Conn. Ret. Plans and Trust Funds v. Amgen, Inc.,
8 2009 U.S. Dist. LEXIS 71653 (C.D. Cal. Aug. 12, 2009) 16
9 In re Consol. Pinnacle W. Sec. Litig.,
51 F.3d 194 (9th Cir. 1995) 11
1 0
In re Cooper Cos., Inc. Sec. Litig.,
11 254 F.R.D. 628 (C.D. Cal. 2009) 19
12 Crossen v. CV Therapeutics,
2005 WL 1910928 (N.D. Cal. Aug. 10, 2005) 17
13
Dukes v. Wal-Mart, Inc. ,
14 509 F.3d 1168 (9th C ir. 2007) 18
15 In re Emulex Corp. Sec. Litig. ,
210 F.R.D. 717 (C.D. Cal. 2002) 20
16
In re First Capital Holdings
Corp. Fin. Prods. Sec. Litig .,
17 1992 U.S.-Dist. LEXIS 14337 (C.D. Cal. June 10, 1992) 12
18 Fulford v. Lo itech, Inc.,
2010 U.S.-Dist. LEXIS 29042 (N.D. Cal. Mar. 5, 2010) 11
19
Glass v. UBS Fin. Servs. Inc.,
20 331 Fed. Appx. 452 (9th Cir. 2009) (unpubl.) 20,22
21 Harris v. Palm Springs Alpine Estates, Inc.,
329 F.2d 909 (9th Cir. 1964) 15
22
In re Heritage Bond Litig.,
23 2005 WL 1594403 (C.D. Cal. June 10, 2005) 12
24 In re Immune Response Sec. Liti
497 F. Supp. 2d 1166 (S.D. Caf. 2007) 24
25
In re Juniper Networks Sec. Litig.,
26 264 F.R.D. 584 (N.D. Cal. 2009) 15, 16, 17
27 Kirkorian v. Borelli
695 F. Supp. 449 (N.D. Cal. 1988) 12
2 8
1 I. PRELIMINARY STATEMENT
2 Lead 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.
13 As 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
17
18 1 The 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 Underwriter
24 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.
-1- PRELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
1 The 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.
13 By 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
24
25 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.
-2- PRELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
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 D. The Extensive Negotiations Leading To The Settlements
4 The 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-DDP-
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.
21 The 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
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 on
5 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 A. Summary Of The Settlements
17 The 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.
22 As part of the Settlements, the parties agreed to the certification of a Class
23 defined as:
24 All persons and entities who purchased or otherwise acquired New
25 Century common stock, New Century Series A Preferred Stock, New
26 Century Series B Preferred Stock, and/or New Century call options
27 and/or who sold New Century put options, during the time period
28 from May 5, 2005, through and including March 13, 2007, either in
1 other payments to resolve the other claims brought against these Defendants by the
2 SEC, the Trustee, and Kodiak). 5
3 B. Reasons For The Settlements
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, 688
5 F.2d 615, 625 (9th Cir. 1982).
6 In 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 Plaintiffs, 955 F.2d at 1276.
14 At 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. See
21 Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993).
22 The 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
1 the Settlements represent a reasonable resolution and eliminate the risk that the
2 Class might recover less or nothing at all.
3 As 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 and
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.
18 As summarized below, and as will be detailed further in a subsequent motion
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 1. The Settlements Were Vigorously Negotiated
And Are Supported By Experienced Coun
sel
23
24 There 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
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.
8 As 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.
20 In 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.
22
23 6 The break-down of the payments by the Insurance Carriers and the New Century
officers, 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 Trustee and Kodiak.
-13- PRELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 20 of 32 Page ID
#:10830
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.
3 Federal Rule of Civil Procedure 23(a) sets forth four prerequisites to class
4 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of
5 representation. In addition, the class must meet one of the three requirements in
6 Rule 23(b).
7 Courts 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 1. Numerosity
15 Rule 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
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 Here, millions of shares of New Century securities were traded during the
5 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 2. Commonality
1 contention of all Class Members is that they purchased and/or acquired New
2 Century securities at artificially inflated prices, and suffered damages as a result of
3 the alleged securities violations, the commonality requirement of Rule 23(a)(2) is
4 satisfied. See In re Wireless Facilities, Inc. Sec. Litig., 253 F.R.D. 630, 635 (S.D.
5 Cal. 2008) (finding “core issue” in a securities litigation to be plaintiffs’
6 “acquisition of [defendant] common stock at artificially inflated prices”).
7 3. Typicality
1 Litig., 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 4. Adequacy
8 Rule 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. Wal-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.
15 Here, 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 5. Common Questions Of Law Predominate And A
Class Action Is The Superior Method Of Adjudication
26
27 Finally, 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
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 between
5 individual class members “[w]hen ‘a common nucleus of misrepresentations,
6 material omissions and market manipulations [exists].’” In re Cooper Cos., Inc.
7 Sec. 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.
9 The 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 § 1778 (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 C. The Proposed Plan Of Allocation Is Fair And Reasonable
27 A plan 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
1 Plaintiffs, 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 allocation
5 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 Omnivision, 559 F. Supp. 2d at 1045; see also Glass v. UBS Fin.
8 Servs., 331 Fed. Appx. 452, 454 (9th Cir. 2009) (unpubl.); In re Mego Fin. Corp.
9 Sec. Litig., 213 F.3d 454, 461 (9th Cir. 2000).
10 Here, 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.
18 Plaintiffs 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.
27 As 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;
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.
5 The 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 WL
28 502054, at *1 (N.D. Cal. June 18, 1994) (finding it is “reasonable to allocate more
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
7 As 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
16
17 The Notice explains that Lead Counsel has not received any payment for its
8
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, approximately
24 $0.32 per share of Preferred Stock, approximately $0.02 per Call Option, and
25 approximately $0.04 per Put Option.
As explained in the Notice, the Individual Defendants, Insurance Carriers,
9
1 BENJAMIN GALDSTON
TAKEO A. KELLAR
2 12481 High Bluff Drive, Suite 300
San Diego, CA 92130
3 Tel: (858) 793-0070
Fax: (858) 793-0323
4
-and-
5
SALVATORE J. GRAZIANO
6 LAUREN A. MCMILLEN
1285 Avenue of the Americas
7 New York, NY 10019
Tel: (212) 554-1400
8 Fax: (212) 554-1444
9 Lead Counsel for Lead Plaint ff
The New York State Teachers Retirement
10 System and the Class
11
MARVIN L. FRANK
12 Murray, Frank & Sailer LLP
13 275 Madison Avenue
New York, NY 10016
14 Tel: (212) 682-1818
15 Fax: (212) 682-1892
EXHIBIT TITLE
1 Proposed Schedule I
2 Stipulation Of Global Settlement With New Century Officers And Directors y
(with exhibits thereto) p
3 Stipulation Of Settlement Between Plaintiffs And KPMG !,
(with exhibits thereto)
4 Stipulation Of Settlement Between Plaintiffs And The Underwriter Defendants
(with exhibits thereto)
{
Case 2:07-cv-00931-DDP-FMO Document 484-2 Filed 07/30/10 Page 1 of 2 Page ID
#:10843
Y
i
r
a
i
EXHIBIT 1
TO UNOPPOSED MOTION FOR PRELIMINARY e
APPROVAL OF SETTLEMENTS
1- PROPOSED SCHEDULE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-2 Filed 07/30/10 Page 2 of 2 Page ID
#:10844
PROPOSED SCHEDULE
If the Court grants preliminary approval of the proposed Settlements, the
parties respectfully submit the following schedule for the Court's consideration:
Event Time for Compliance Deadline if
preliminary
approval granted
Aug. 30, 2010
Deadline for mailing the 5 business days after the September 7, 2010
Notice to Class Members entry of the Preliminary
("Notice Date") Approval Order
(Preliminary Approval
Order, ¶6a)
Deadline for publishing 5 business days after the September 14, 2010
Summary Notice Notice Date (Preliminary
Approval Order, ¶6b)
Filing of briefs in support of 28 days before the Final October 12, 2010
final approval of the Approval Hearing
Settlements, Plan of (Preliminary Approval
Allocation, and Lead Order, ¶11)
Counsel's fee and expense
request !
Receipt Deadline for Requests 21 calendar days before October 18, 2010
for Exclusions and Objections the Final Approval
Hearing (Preliminary
Approval Order, T¶ 12,
19)
Filing of reply memoranda in 7 calendar days before November 1, 2010
response to any objections to the Final Approval
the Settlements Hearing
Final Approval Hearing 100 days following filing November 8, 2010
of Stipulations 10:00 a.m.
(Preliminary Approval
Order, ¶ 10)
Deadline for submitting Proofs 120 calendar days January 5, 2011
of Claim following the Notice
Date (Preliminary
Approval Order, ¶16)
EXHIBIT 2
TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
-1-
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 2 of 56 Page ID
#:10846
8
STIPULATION OF GLOBAL SETTLEMENT
9 WITH NEW CENTURY OFFICERS AND DIRECTORS
10
11
12
13
14
l
15
16
17
18
19
20
21
22
23
24
25
26
27
i
28
13 any other litigation activity and to an extension of the time for the Trustee
23 admission or concession on the part of any Settling Individual with respect to any
24 claim or of any fault or liability or wrongdoing or damage whatsoever, or any
25 infirmity in the defenses that the Settling Individuals have or could have asserted.
26 The Officer And Director Litigations are being settled voluntarily after receiving
27 sufficient advice of counsel, and the Parties believe that the tenns of the Settlement
28 are fair, adequate and reasonable. This Stipulation shall not be construed or
5 the underlying events and transactions alleged in the Officer And Director
6 Litigations. Such counsel has each analyzed the evidence it has adduced through
7 discovery or otherwise and has researched the applicable law with respect to the
8 claims asserted and the potential defenses thereto;
9 U. Based upon their investigation and/or discovery as set forth above,
10 Plaintiffs 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
15 benefits that the Plaintiffs will receive from the Settlement, (2) the attendant risks
18 V. The recitals and prefatory phrases and paragraphs set forth above are
1 9 incorporated in full and made part of this Stipulation.
20 NOW THEREFORE, without any admission or concession on the part of
21 Plaintiffs of any lack of merit of the Officer And Director Litigations whatsoever,
27 Parties from the Settlement, that all Settled Claims as against the Released Officers
28 And Directors and all Settling Individuals' Claims as against the Class Plaintiffs
1 and all other Class Members, the Trust, the Trustee, Alan M. Jacobs individually,
2 the Debtors, the Debtors' Estates, the Plan Advisory Committee, and Kodiak shall
3 be compromised, settled, released and dismissed with prejudice, upon and subject
10 Court.
11 b) "Authorized Claimant" means a Class Member who submits a
12 timely and valid Proof of Claim Form and all required documentation to the
13 Claims Administrator, in accordance with the requirements established by the Plan
25 Exhibit A, that a Claimant or Class Member must complete should that Claimant or
26 Class Member seek to share in a distribution of the Class Net Settlement Fund.
27
28
2 to the Claims Administrator seeking to share in the proceeds of the Class Net
3 Settlement Fund.
4 h) "Claims Administrator" means the firm of Analytics
5 Incorporated.
6 1) "Class" means all persons and entities who purchased or
7 otherwise acquired New Century common stock, New Century Series A Preferred
8 Stock, New Century Series B Preferred Stock, and/or New Century call options
9 and/or who sold New Century put options, during the time period from May 5,
1.0 2005, through and including March 13, 2007, either in the Offerings, pursuant to a
11 registration statement, or in the market, and who, upon disclosure of certain facts
12 alleged 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
14 Defendants; (c) the subsidiaries and affiliates of Class Defendants; (d) any person
15 or 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;
18 and (f) the legal representatives, heirs, successors and assigns of any such excluded
19 party. Also excluded from the Class are any persons who exclude themselves by
20 filing a request for exclusion in accordance with the requirements set forth in the
21 Notice.
22 j) "Class Defendants" means the Underwriter Defendants, KPMG
23 and the Class Individual Defendants.
24 k) "Class Distribution Order" means an order entered by the
25 Consolidated Class Action Court authorizing and directing that the Class Net
26 Settlement Fund be distributed, in whole or in part, to Authorized Claimants.
27 1) "Class Escrow Account" means an account maintained to hold
28 the Class Settlement Fund, which shall be controlled exclusively by Lead Counsel,
1 shall be deemed to be in the custody of the Consolidated Class Action Court, and
P
2 shall remain subject to the jurisdiction of the Consolidated Class Action Court until
3 such time as the funds are distributed or returned pursuant to the terms of this
14 Consolidated Class Action; (iii) any attorneys' fees awarded by the Consolidated
15 Class Action Court; and (iv) any Litigation Expenses awarded by the Consolidated
19 in paragraph 11 c below.
20 q) "Class Period" means the period from May 5, 2005, through
21 and including March 13, 2007.
3 paid into the Class Escrow Account as set forth in paragraphs 11 and 12 below.
4 u) "Consolidated Class Action" means Avi Gold a Brad A.
5 Morrice, et al., a/k/a, In re New Century, Case No. 2:07-cv-00931-DDP-FMO
6 (C.D. Cal.), and cases consolidated therein.
7 v) "Consolidated Class Action Court" means the United States
8 District Court for the Central District of California hearing the Consolidated Class
9 Action.
10 w) "DCP Distributions" means the deferred compensation amounts
11 referenced under the DCP Settlement Agreement as Target Distributions and which
12 pursuant to that agreement have been held by the Trustee pending the resolution
19 this Stipulation.
2 0 dd) "Effective Date" means the date on which all the following
21 shall have occurred: (a) payment of the monies into the Global Escrow Account
22 has been made pursuant to paragraph 9a below; (b) the Consolidated Class Action
23 Court has entered the Officer And Director Judgment, substantially in the form
24 annexed hereto as Exhibit B, which has become Final; (c) the Consolidated Class
25 Action Court has entered the KPMG Judgment and the Underwriter Judgment,
26 which have become Final; (d) a judgment has been entered by the court in the
1 and without costs to any party have been executed in the Trustee Litigation and the
2 Kodiak Litigation and delivered to counsel designated by the Kodiak Litigation
4 53.
5 ee) "Escrow Agent" means the financial institution selected by
6 Lead Counsel, with the consent of the Trustee, which consent shall not be
i
7 unreasonably withheld, to serve as escrow agent.
8 fo "Escrow 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)
m
11 between (i) Lead Counsel and (ii) the Escrow Agent setting forth the terms under
12 which the Escrow Agent shall maintain the Class Escrow Account.
16 appeal 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 appellate review by further appeal or writ of certiorari.
19 ii) "Global Escrow Account" means an account maintained to hold
20 the Global Officer And Director Settlement Amount, which shall be controlled
21 exclusively by Lead Counsel and the Trustee and deemed to be in the custody of
22 the Consolidated Class Action Court and shall remain subject to the jurisdiction of
23 the Consolidated Class Action Court until such time as the funds are distributed or
24 returned pursuant to the terms of this Stipulation and/or further order of the
5 concert with any of them with respect to their respective Policies. Insurance
6 Carriers and Policies do not include Philadelphia Indemnity Insurance Company
22 KPMG and the other Released Auditor Parties of any and all claims and causes of
23 action of every nature and description, whether known or Unknown Claims against
24 any of the Settling Individuals, whether arising under federal, state, common or
25 foreign law, that arise out of or relate in any way to the institution, prosecution, or
26 settlement of the claims which were asserted in the Officer And Director
27 Litigations, or that arise out of or relate in any way to New Century (including any
28 of its subsidiaries and affiliates), the Trust, the Trustee, the Debtors, or the Debtors'
4 defense and subsequent settlement of the Schroeder v. New Century Holdings, Inc.
5 (Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity
6 Arbitration, including, but not limited to (a) claims for benefits under any
7 insurance programs or policies to which the Settling Individuals are entitled, (b)
18 Consolidated Class Action Court for reimbursement from the Class Settlement
19 Fund.
20 vv) "New Century" means New Century Financial Corporation.
21 ww) "Notice" means the Notice of Pendency of Class Action and
22 Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees
25 xx) "Notice and Administration Costs" means the costs, fees and
26 expenses that are incurred by the Claims Administrator and Lead Counsel in
27 connection with (i) providing notice to the Class; and (ii) administering the claims
13 of the applicable insurance policy, New Century, its successor-in-interest, the New
15 Lange, and Michael M. Sachs, the full amount of defense costs that each have
23 Debtors and the Official Committee of Unsecured Creditors dated as of April 23,
1 Action Court preliminarily approving the Global Officer And Director Settlement
2 and directing notice to be provided to the Class.
3 hhh) "Released Auditor Parties" means KPMG and its affiliates, r
4 heirs, predecessors, successors, assigns, partners, employees and agents.
5 iii) "Released Officers And Directors" means: (i) the Settling
6 Individuals; and (ii) all directors, officers, employees, and other natural persons
7 affiliated with New Century (including any of its subsidiaries and affiliates)
8 included in the definition of "Assured" or "Insured" as defined in the Policies and
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..
18 k d^,) "Second Amended Class Complaint" or "Complaint" means the
19 second amended consolidated class action complaint filed by the Class Plaintiffs in
E
1 ppp) "Settled Class Claims" means any and all claims and causes of
2 action of every nature and description, whether known or Unknown Claims,
3 whether arising under federal, state, common or foreign law, that Class Plaintiffs or
4 any other member of the Class (a) asserted in the Consolidated Class Action, or (b)
5 could have asserted in any forum that arise out of or are based upon the allegations,
6 transactions, facts, matters or occurrences, representations or omissions involved,
7 set forth, or referred to in. the Consolidated Class Action, and that arise out of or
8 relate to the purchase of New Century common stock, New Century Series A
9 Preferred Stock, New Century Series B Preferred Stock, and/or New Century call
10 options and/or the sale of New Century put options during the Class Period.
11 Settled Class Claims does not include claims relating to the enforcement of the
12 Settlement.
13 qqq) "Settled Kodiak Claims" means any and all claims and causes
14 of action of every nature and description, whether known or Unknown Claims,
15 whether arising under federal, state, common or foreign law, that Kodiak (a)
16 asserted in the Kodiak Litigation, or b) could have asserted in any forum that arise
17 out of or are based upon the allegations, transactions, facts, matters or occurrences,
18 representations or omissions involved, set forth, or referred to in the Kodiak
19 Litigation, or that arise out of or relate in any way to New Century (including any
20 of its subsidiaries and affiliates), the Debtors or the Debtors' Estates. Settled
21 Kodiak Claims does not include claims relating to the enforcement of the
22 Settlement.
23 rrr) "Settled Trustee Claims" means any and all claims and causes
24 of action of every nature and description, whether known or Unknown Claims,
25 whether arising under federal, state, common or foreign law, that the Trustee (a)
26 asserted in the Trustee Litigation; (b) could have asserted in any forum that arise
27 out of or are based upon the allegations, transactions, facts, matters or occurrences,
1 Litigation or that arise out of or relate in any way to New Century (including any
2 of its subsidiaries and affiliates), the Trust, the Trustee, the Debtors, or the Debtors'
3 Estates, except that the Settled Trustee Claims expressly excludes claims or causes
4 of action (i) asserted in, arising from, in connection with, or in any way related to
5 the Philadelphia Indemnity Arbitration; (ii) asserted by or that may in the future be
6 asserted 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
8 any actual or alleged Wrongful Act, as that term is defined in the Policies,
9 including the Adversary Proceeding Alan M. Jacobs, as Liquidating Trustee of the
10 New Century Liquidating Trust a Daniel R Sussman, et al. (In re New Century TRS
11 Holdings, Inc. (Adv. Proc. No. 09-50883 (KJC)); or (iii) asserted by the Trust and
12 Trustee 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
1.4 Insurance Carriers arising from, in connection with or in any way related to the
15 Policies. Settled Trustee Claims does not include claims relating to the
16 enforcement of the Settlement.
17 sss) "Settlement" or "Global Officer And Director Settlement"
18 means the settlement embodied in this Stipulation of Global Settlement with New
19 Century Officers and Directors ("Global Officer And Director Stipulation").
20 ttt) "Settlement Hearing" or "Final Approval Hearing" means the
21 hearing set by the Consolidated Class Action Court under Rule 23(e)(1)(c) of the
22 Federal Rules of Civil Procedure to consider final approval of the Settlement.
23 uuu) "Settling Individuals" means Class Individual Defendants,
24 Trustee Litigation Defendants, Kodiak Litigation Defendants, and David Kenneally
25 and any and all of their respective heirs, executors, administrators, predecessors,
26 successors and assigns, employees, agents and retained professionals (other than
27 KPMG and the Underwriter Defendants).
28
1 vvv) "Settling Individuals' Claims" means any and all claims and
2 causes of action of every nature and description, whether known or Unknown
3 Claims, whether arising under federal, state, common or foreign law, that arise out
4 of or relate in any way to the institution, prosecution, or settlement of the claims
5 which 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
e
7 of its subsidiaries and affiliates), the Tnist, the Trustee, the Debtors, or the Debtors'
8 Estates, 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
10 against Debtors' Estates and (ii) any and all claims arising out of or in connection
11 with the defense and subsequent settlement of the Schroeder a New Century
27 zzz) "Taxes" means: (1) all federal, state and/or local taxes of any
28 kind on any income earned by the funds contained in the Global Escrow Account
1 and/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
3 taxes owed on the interest earned on the funds in the Global Escrow Account
4 and/or Class Escrow Account (including, without limitation, reasonable expenses
14 Cole, et al. (In re New Century TRS Holdings, Inc) (Adv. Proc. No. 09-50882
15 (KJC)) commenced on April 1, 2009, against the Trustee Litigation Defendants by
24 ffff) "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,
27 Morgan Stanley & Co., Inc., and Jefferies & Company, Inc.
28
4 every claim against any of the Settling Individuals, whether arising under federal,
5 state, common or foreign law, arising out of or based upon the allegations,
13 in his, her or its favor, which if known by him, her or it might have affected his, I
14 her or its decision(s) with respect to the Settlement. With respect to any and all
15 Settled Claims and Settling Individuals' Claims, the Parties stipulate and agree that
16 upon the Effective Date, the Class Plaintiffs and each Class Member, the Trustee,
17 Kodiak, and the Settling Individuals shall expressly waive and each shall be
18 deemed 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
20 provisions, rights and benefits conferred by any law of any state or territory of the
21 United States, or principle of common law, that is similar, comparable, or
1 Class Plaintiffs, the Trustee, Kodiak, and the Settling Individuals acknowledge, and
2 each Class Member by operation of law shall be deemed to have acknowledged,
3 that the inclusion of "Unknown Claims" in the definitions of Settled Class Claims,
4 Settled Trustee Claims, Settled Kodiak Claims, and Settling Individuals' Claims
5 was separately bargained for and was a key element of the Settlement.
9 pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure on
10 behalf of the Class; (b) appointment of Class Plaintiffs as representatives of the
11 Class; and (c) appointment of Lead Counsel as counsel for the Class pursuant to
12 Rule 23(g) of the Federal Rules of Civil Procedure. Following execution of this
13 Stipulation, Class Plaintiffs, with the consent of the Class Defendants, shall apply
14 to the Consolidated Class Action Court for entry of the Preliminary Approval
15 Order, which will certify the Consolidated Class Action to proceed as a class
16 action. The Class Defendants shall have the right to withdraw their consent to
17 class certification and the appointment of representatives and counsel for the Class
18 in the event that the Officer And Director Judgment does not become Final.
19 RELEASE OF CLAIMS
20 3. The Parties understand and agree that the obligations incurred
21 pursuant to this Stipulation shall be in full and final disposition of the Officer And
22 Director Litigations; and, upon the Effective Date, shall fully and finally release
23 any and all Settled Claims as against all Released Officers and Directors and the
24 Insurance Carriers and shall also release as against the Class Plaintiffs and all other
25 Class Members, the Trust, the Trustee, Alan M. Jacobs individually, the Debtors,
26 the Debtors' Estates, the Plan Advisory Committee, and Kodiak, any and all
27 Settling Individuals' Claims, and shall also fully and finally release other claims as
1 4. Upon the Effective Date, Class Plaintiffs and members of the Class,
2 the Trustee, and Kodiak hereby release, waive, discharge and dismiss each and
3 every of the Settled Class Claims, Settled Trustee Claims, and Settled Kodiak
4 Claims, respectively, as against each and every Released Officer And Director and
5 the Insurance Carriers, and shall be deemed by this agreement and/or operation of }
6 law to forever be enjoined from prosecuting any or all of the Settled Class Claims,
7 Settled Trustee Claims and Settled Kodiak Claims, respectively, against each and
8 every Released Officer And Director and the Insurance Carriers.
11 operation of law to forever be enjoined from prosecuting each and every of the
12 Settling Individuals' Claims against Class Plaintiffs and all other Class Members,
13 the Trust, the Trustee, Alan M. Jacobs individually, the Debtors, the Debtors'
14 Estates, the Plan Advisory Committee, and Kodiak, and their respective heirs,
15 predecessors, successors, assigns, employees, agents and retained professionals.
16 6. Upon the Effective Date, the .Settling Individuals hereby release,
17 waive, discharge and dismiss, and shall be deemed by this agreement and/or
18 operation of law to forever be enjoined from prosecuting each and every Settling
1 9 Individuals' Claim against KPMG and the other Released Auditor Parties, provided
20 and conditioned upon the Settling Individuals receiving substantively reciprocal
21 releases from KPMG and the Released Auditor Parties, and conditioned on KPMG
22 being required pursuant to the KPMG Judgment to promptly offer to other former
23 New Century officers or directors with whom KPMG has entered into a tolling
28 operation of law to forever be enjoined from prosecuting any claim against any and
1 all of the Underwriter Defendants and the other Released Underwriter Parties
2 whether arising under federal, state, common or foreign law, arising out of or based
3 upon the allegations, transactions, facts, matters or occurrences, representations or
4 omissions involved, set forth, or referred to in the Consolidated Class Action,
5 provided and conditioned upon the Settling Individuals receiving substantively
6 reciprocal releases from the Underwriter Defendants and the other Released
7 Underwriter Parties.
8 8. Upon the Effective Date, Kodiak hereby releases, waives, discharges
9 and dismisses, and shall be deemed by this agreement and/or operation of law to
1.0 forever be enjoined from prosecuting each and every of the Settled Kodiak Claims
11 as against KPMG and the other Released Auditor Parties, provided and conditioned
12 upon Kodiak receiving substantively reciprocal releases from KPMG.
25 balance, if any, of the DCP Distribution for each Distribution Defendant (after
28 the DCP Settlement Contribution and the balance, if any, of the DCP Distribution.
1 The Trustee shall issue or cause to be issued a form W-2 or 1099, as appropriate,
2 with respect to such distribution (including the DCP Settlement Contribution)
6 Distribution Defendant agrees that the distributions (including the DCP Settlement
7 Contributions) 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
9 the DCP Distributions shall be borne by the Distribution Defendants; the Trustee
I
10 and the Trust shall have no liability for any taxes associated with these
11 distributions.
15 be released and the Global Officer And Director Settlement Amount shall be
16 allocated and distributed as follows:
11 among the Plaintiffs based on funds distributed from the Global Escrow Account to
12 such Plaintiffs pursuant to paragraph 11 a-c. Escrow fees, Taxes and tax
13 preparation fees and costs incurred under the Escrow Agreement for the Global
14 Escrow Account shall be allocated pro rata among the Plaintiffs in the same
15 manner as interest.
16 13. If any portion of the Global Officer And Director Settlement Amount
17 is not paid in the timeframe as designated above in paragraph 9a, Plaintiffs shall,
18 upon their unanimous agreement, have the option to: (i) terminate the Global
23 Party or Insurance Carrier may seek the assistance of the Hon. Daniel Weinstein
24 for 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 14. The costs of all Taxes and tax preparation and escrow fees and related
27 fees in connection with the Global Officer And Director Settlement Amount while
28 it is in the Global Escrow Account may be paid directly out of the Global Escrow
1 Account without further order of the Court in accordance with the Escrow M
r
2 Agreement for the Global Escrow Account.
f
6 attorneys' fees awarded by the Consolidated Class Action Court; and (iv) any
7 Litigation Expenses awarded by the Consolidated Class Action Court. The balance
8 remaining in the Class Settlement Fund, after payment of items (I)-(iv), shall be
9 distributed to Authorized Claimants as provided below.
10 16. 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
13 interest accrued thereon, except that any residual cash balances of less than
15 investments secured by the full faith and credit of the United States.
16 17. The Class Plaintiffs and the Class Defendants agree that the Class
17 Settlement 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 responsible for filing or causing to be filed all informational
21 and other tax returns as may be necessary or appropriate (including, without
23 Class Settlement Fund. Such returns shall be consistent with this paragraph and in
24 all events shall reflect that all Taxes on the income earned on the Class Settlement
25 Fund shall be paid out of the Class Settlement Fund as provided by paragraph 18
26 below. Lead Counsel shall also be solely responsible for causing payment to be
27 made from the Class Settlement Fund of any Taxes owed with respect to the Class
28 Settlement Fund. Upon written request, the Class Individual Defendants will
1 provide promptly to Lead Counsel any statements or information required for tax r
2 purposes, including the statement described in Treasury Regulation § 1.468B-3(e).
3 Lead Counsel, as administrator of the Class Settlement Fund within the meaning of
4 Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as are
19 and hold all Settling Individuals and Insurance Carriers harmless for any Taxes and
i
20 related expenses of any kind whatsoever (including without limitation, taxes 1
21 payable by reason of any such indemnification), if any, payable by the Settling
22 Individuals or the Insurance Carriers by reason of any income earned on the Class
23 Settlement Fund. The Settling Individuals and the Insurance Carriers shall notify
24 the Escrow Agent promptly if they receive any notice of any claim for Taxes
25 relating to the Class Settlement Fund and, for the avoidance of doubt, in such case
26 the Settling Individuals and the Insurance Carriers will have no recourse against
27 the Trust, Trustee, Alan M. Jacobs individually, the Debtors, the Debtors' Estates,
28 the Plan Advisory Committee, or Kodiak.
1 19. This is not a claims-made settlement. Once the Effective Date occurs,
2 neither the Settling Individuals, the Insurance Carriers, nor any other Settling
3 Individuals nor any other person or entity that contributed to the Global Officer
4 And Director Settlement Amount on their behalf, will have the right or ability to
5 get back any of the Global Officer And Director Settlement Amount or any interest
6 accrued thereon, irrespective of the number of Claims filed, the collective amount
8 amounts to be paid to Authorized Claimants from the Class Net Settlement Fund.
9 20. The Claims Administrator shall discharge its duties under Lead
10 Counsel's supervision and subject to the jurisdiction of the Consolidated Class
11 Action Court. Except as otherwise provided herein, no other Party shall have
12 responsibility whatsoever for the administration of the Global Officer And Director
13 Settlement, and no other Party shall have liability whatsoever to any person,
14 including, but not limited to, the Class Members, in connection with any such I
15 administration. 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
17 each such person as set forth in the records of New Century or its transfer agent(s),
18 or who otherwise may be identified through further reasonable effort. Lead
19 Counsel will cause to be published the Summary Notice pursuant to the terms of
20 the Preliminary Approval Order or whatever other form or manner might be
21 ordered by the Consolidated Class Action Court. For the purpose of identifying
22 and providing notice to the Class, promptly upon execution of this Stipulation, the
23 Trustee shall provide to the Claims Administrator (at no cost to the Global Escrow
24 Account, Lead Counsel or the Claims Administrator) any New Century shareholder
25 lists in his possession as appropriate for providing notice to the Class, in electronic
26 fonn (if available). The Trustee shall make no representation as to the accuracy or
28
1 21. Lead Counsel may pay from the Global Escrow Account or the Class
0
2 Escrow Account, without further approval from the other Parties or further order of
3 the Consolidated Class Action Court, the Notice and Administration Costs actually
4 incurred. Such amounts will be deducted as expenses from the Class Officer And
5 Director Settlement Amount. Such costs and expenses shall include, without
6 limitation, the actual costs of publication, printing and mailing the Notice,
8 owners of New Century securities, the administrative expenses incurred and fees
9 charged 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
11 event that the Global Officer And Director Settlement is terminated pursuant to the
12 terms 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
i
14 other persons and entities who or which contributed to the Global Escrow Account
15 on their behalf, less all Notice and Administration Costs paid or incurred, including
16 any related fees, as set forth in paragraph 41 below.
17 CLASS ATTORNEYS' FEES AND LITIGATION EXPENSES
18 22. Lead Counsel will apply to the Consolidated Class Action Court for a
19 collective award of attorneys' fees to Class Plaintiffs' Counsel related to settlement
20 of the Consolidated Class Action. Lead Counsel also will apply to the
25 are not the subject of any agreement between the Parties other than what is set
26 forth in this Stipulation. Lead Counsel will not calculate attorneys' fees based
27 upon, or seek attorneys' fees or expenses with respect to, any disgorgement or
28 penalties obtained by the Securities and Exchange Commission in the SEC Action.
1 23. Any attorneys' fees and Litigation Expenses that are awarded by the
2 Consolidated Class Action Court shall be paid from the Global Escrow Account to
3 Lead Counsel, with the Consolidated Class Action Court's approval, immediately
4 upon award, notwithstanding the existence of any timely filed objections thereto,
5 or potential for appeal therefrom, or collateral attack on the Settlement or any part
6 thereof, subject to Lead Counsel's obligation to pay back any such amount if, as a
9 become Final, or if the Effective Date does not occur or the Settlement is
10 terminated for any reason. Such amounts will be deducted from the Class Officer
11 And Director Settlement Amount. Lead Counsel shall make the appropriate refund
12 or repayment in full no later than ten (10) business days after receiving from the
18 24. Lead Counsel shall have the sole authority to allocate the
19 Consolidated Class Action Court-awarded attorneys' fees among Class Plaintiffs'
20 Counsel in a manner which it, in good faith, believes reflects the contributions of
21 such counsel to the prosecution and settlement of the Consolidated Class Action.
22 The Settling Individuals shall have no responsibility for any such allocation and
24 25. The attorneys' fees and Litigation Expenses discussed herein are
25 exclusive of any attorneys' fees or litigation expenses related to the settlement of
26 the Trustee Litigation or Kodiak Litigation. Each side and each party in the
27 Trustee Litigation and the Kodialc Litigation shall bear his, her or its own
9 Consolidated Class Action, or the allocation of the Class Net Settlement Fund. The
10 Parties and their respective counsel shall cooperate in the administration of the
12 27. The allocation of the Class Net Settlement Fund among Authorized
13 Claimants shall be subject to a Plan of Allocation to be proposed by Lead Counsel
14 and approved by the Consolidated Class Action Court. Class Individual
15 Defendants shall take no position with respect to such proposed Plan of Allocation;
16 such Plan of Allocation is a matter separate and apart from the proposed Settlement
17 herein, and any decision by the Consolidated Class Action Court concerning the
18 Plan of Allocation shall not affect the validity or finality of the proposed
19 Settlement.
2 0 28. The Claims Administrator shall receive Claims and determine first,
21 whether the Claim is a valid Claim, in whole or part, and second, each Authorized
22 Claimant's pro rata share of the Class Net Settlement Fund as set forth in the Plan
25 29. The Plan of Allocation proposed in the Notice is not a necessary term
26 of this Stipulation and it is not a condition of this Stipulation that any particular
1 30. Any Class Member who does not submit a valid Claim Form will not
2 be entitled to receive any distribution from the Class Net Settlement Fund but will
3 otherwise be bound by all of the terms of this Stipulation and Settlement, including
4 the terms of the Officer And Director Judgment to be entered in the Consolidated
5 Class 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.
8 31. Lead Counsel shall be responsible for supervising the administration
9 of the settlement of the claims in the Consolidated Class Action and disbursement
10 of the Class Net Settlement Fund. No other Party shall have any liability,
12 disbursement of the Class Net Settlement Fund. No other Party shall be permitted
13 to review, contest or object to any Claim Form or any decision of the Claims
15 Form or Claim for payment by a Class Member. Lead Counsel 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 32. For purposes of determining the extent, if any, to which a Class
19 Member shall be entitled to be treated as an Authorized Claimant, the following
20 conditions shall apply:
25 Lead Counsel, in their discretion, may deem acceptable, by the date set by the
26 Consolidated Class Action Court;
1 in accordance with this Stipulation the extent, if any, to which each Claim shall be
9 shall notify, in a timely fashion and in writing, all Claimants whose Claim the
10 Claims Administrator proposes to reject in whole or in part, setting forth the
11 reasons therefor, and shall indicate in such notice that the Claimant whose Claim is
12 to be rejected has the right to a review by the Consolidated Class Action Court if
13 the Claimant so desires and complies with the requirements of subparagraph (e)
14 below;
22 Counsel shall thereafter present the request for review to the Consolidated Class
26 Court, on notice to the Class Individual Defendants' counsel, for approval by the
12 the acceptance and rejection of the Claims submitted; (ii) approving payment of
13 any additional unpaid or anticipated administration fees and expenses associated
14 with 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 Authorized Claimants from the Class Escrow Account; and (iv) other relief
17 as appropriate.
18 35. Payment pursuant to the Class Distribution Order shall be final and
19 conclusive 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
24 Class Action and the releases provided for therein, and will be permanently barred
25 and enjoined from bringing any action against any and all Released Officers And
26 Directors concerning any and all of the Settled Claims.
27 36. All proceedings with respect to the administration, processing and
28 determination of Claims and the determination of all controversies relating thereto,
1 including disputed questions of law and fact with respect to the validity of Claims,
2 shall be subject to the jurisdiction of the Consolidated Class Action Court.
3 TERMS OF THE JUDGMENT
4 37. If the Settlement contemplated by this Stipulation is approved by the
5 Consolidated Class Action Court, the Parties shall request that the Consolidated
6 Class Action Court enter the Officer And Director Judgment, substantially in the
7 form annexed hereto as Exhibit B, pursuant to Rule 54(b) of the Federal Rules of
8 Civil Procedure.
9 WAIVER OR TERMINATION
10 38. 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
12 any 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
14 declining to enter the Officer And Director Judgment in any material respect; or (d)
15 the date upon which the Officer And Director Judgment is modified or reversed in
16 any material respect by the Court of Appeals or the Supreme Court, the Parties and
17 the Insurance Carriers each shall have the right to terminate the Settlement and this
18 Stipulation by providing written notice to all other Parties of an election to do so.
19 However, any decision with respect to an application for attomeys' fees or
24 themselves from the Class in accordance with the requirements for requesting
26 Agreement Between Class Plaintiff And The Class Individual Defendants, the
27 Class Individual Defendants and the Insurance Carriers shall have the option, as set
1 In the event that the option to terminate the Settlement is exercised and not
2 withdrawn as set forth in paragraph 40 below, the entire Settlement set forth herein
3 is terminated, including the settlement of the Consolidated Class Action, the
4 Trustee Litigation and the Kodiak Litigation.
5 40. Lead Counsel and the Class Individual Defendants' counsel shall
6 request jointly that the deadline for submitting exclusions from the Class be at least
7 twenty-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
9 other person designated to receive exclusion requests) shall be provided to Lead
10 Counsel, Class Individual Defendants' counsel, and counsel for the Insurance
11 Carriers no later than fifteen (15) days prior to the Final Approval Hearing. If the
12 threshold stated in the Supplemental Agreement is reached, the Class Individual
13 Defendants and the Insurance Carriers shall have until 5:00 p.m. PDT of the
14 seventh day before the Final Approval Hearing to inform Lead Counsel, in writing,
15 that 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
17 such shares and, if a sufficient number of them withdraw in writing their requests
18 for exclusion such that the total number of shares purchased. during the Class
19 Period represented by the remaining "opt outs" represents less than the threshold,
20 the notice of termination shall be deemed withdrawn.
21 41. Except as otherwise provided herein, in the event that the Effective
22 Date does not occur or the Settlement is terminated, the Parties shall be deemed to
23 have reverted to their respective status in the Officer And Director Litigations
24 immediately prior to May 5, 2010, and, except as otherwise expressly provided, the
25 Parties shall proceed in all respects as if this Stipulation and any related orders had
26 not been entered. If the Effective Date does not occur or the Settlement is
27 terminated, the settlement consideration paid under paragraphs 9a2 and 9a3 shall
1 previously paid, less any amounts paid or incurred for Notice and Administration
2 Costs actually incurred and paid or payable and/or Taxes paid or owing, shall
3 revert to the Insurance Carriers in proportion to the cash amounts each contributed
4 to the Global Escrow Account under paragraph 9al, within fourteen (14) business
5 days after written notification of such event by Lead Counsel or any of the Settling
6 Individuals to the Escrow Agent, pursuant to the terms of the Escrow Agreement.
7 NO ADMISSION OF WRONGDOING
8 42. This Stipulation, whether or not consummated, and any proceedings
9 taken pursuant to it:
10 a. shall not be offered or received against any of the Released
I
11 Officers And Directors as evidence of, or construed as, or deemed to be evidence
12 of any 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 Officers And Directors in the Officer And Director Litigations or in any litigation,
16 or of any liability, negligence, fault, or other wrongdoing of any kind of any of the
28 other reason as against any of the Released Officers And Directors, in any other
13 without merit or that damages recoverable under the Officer And Director
14 Litigations would not have exceeded the Officer And Director Settlement Amount;
15 and
19 MISCELLANEOUS PROVISIONS
20 43. Pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28
21 U.S.C. § 1715(b), not later than ten (10) days after the Global Officer And Director
23 shall cause to be served upon the appropriate State official of each State and the
24 Attorney General of the United States a CAFA Notice. The Parties will request
25 that, pursuant to 28 U.S.C. § 1715(d), the Final Approval Hearing be scheduled for
26 no earlier than ninety (90) days following the deadline for Settling Individuals to
27 serve the CAFA Notice as stated in this paragraph. Any failure by Settling
28 Individuals to comply with the CAFA Notice requirements will not provide
1 grounds for delay of the Final Approval Hearing or entry of the Officer And
2 Director Judgment.
3 44. All of the exhibits attached hereto are hereby incorporated by
4 reference as though fully set forth herein.
5 45. The Settling Individuals and Insurance Carriers each warrant that, as
6 to the payments made by or on behalf of him, her or it, at the time of such 1
7 payment, he, she or it was not insolvent, nor did nor will the payment required to
8 be made by or on behalf of him, her or it render him, her or it insolvent, within the
9 meaning 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 Insurance Carriers and not by their counsel,
16 similar transaction pursuant to the Bankruptcy Code, and any portion thereof is
17 required to be returned, and such amount is not promptly deposited to the Global
18 Escrow Account by others, then, at the election of Plaintiffs, Plaintiffs may move
19 the Consolidated Class Action Court to vacate the Officer And Director Judgment
20 in whole or in part; the Parties shall be restored to their respective positions in the
21 Officer And Director Litigations immediately prior to May 5, 2010; and any cash
22 amounts in the Global Escrow Account shall be returned as provided in paragraph
23 41 above.
24 47. The Parties intend this Settlement to be a final and complete
25 resolution of all disputes asserted or which could be asserted by the Plaintiffs, any
i
26 other Class Members and their attorneys against all Released Officers And
27 Directors with respect to all Settled Claims. Accordingly, the Parties agree not to
28 assert that the Consolidated Class Action, Trustee Litigation, or Kodiak Litigation
1 was brought or defended in bad faith or without a good faith basis. The Parties
2 hereto shall assert no claims of any violation of Rule 11 of the Federal Rules of
3 Civil Procedure relating to the prosecution, defense, or settlement of the Officer
4 And Director Litigations. The Parties agree that the amount paid and the other
9 48. While retaining their rights to deny that the claims asserted in the
10 Officer 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
13 prosecuted in good faith. Similarly, while retaining their rights to deny that the
14 defenses in the Officer And Director Litigations were meritorious, the Class
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
18 any 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
21 defense alleged.
22 49. This Stipulation may not be modified or amended, nor may any of its
23 provisions be waived except by a writing signed by all signatories hereto or their
24 successors-in-interest.
25 50. The headings herein are used for the purpose of convenience only and
26 are not meant to have legal effect.
1 Court, and the Consolidated Class Action Court shall retain jurisdiction for the
2 purpose of entering orders providing for awards of attorneys' fees and Litigation
3 Expenses to Lead Counsel and enforcing the terms of this Stipulation as it concerns
4 the Consolidated Action. After the Effective Date, the Bankruptcy Court shall have
5 and retain jurisdiction in the Trustee Litigation for purposes of enforcing 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
8 Kodiak Litigation for purposes of enforcing the terms of this Stipulation as
13 or scheduled in the Bankruptcy Court against the Debtors' Estates; and (b) Arch
15 claim no. 2329 filed in the Bankruptcy Court against the Debtors' Estates. Upon
16 the Effective Date, proof of claim no. 2385 filed by Fredric J. Forster in the
i
17 Bankruptcy Court against the Debtors' Estate shall be allowed as a priority claim in
18 the amount of $5,000.00.
19 53. Upon the Effective Date, the notices of dismissal in the Trustee
20 Litigation and Kodiak Litigation held by counsel designated by the Kodiak
21 Litigation Defendants and the Trustee Litigation Defendants shall be filed in the
22 Trustee Litigation and Kodiak Litigation, respectively. If the Effective Date does
23 not occur or the Settlement is terminated, the notices of dismissal shall not be filed
24 and shall be returned to counsel for Trustee and Kodiak, respectively.
25 54. The waiver by one Party of any breach of this Stipulation by any other
26 Party shall not be deemed a waiver of any other prior or subsequent breach of this
27 Stipulation.
28
1 55. This Stipulation and its exhibits constitute the entire agreement among
2 the Parties hereto concerning the matters set forth herein, and no representations,
3 warranties, or inducements have been made by any Party hereto concerning this
4 Stipulation and its exhibits other than those contained and memorialized in such
5 documents.
6 56. This Stipulation may be executed in one or more original and/or faxed
7 counterparts. All executed counterparts and each of them shall be deemed to be
8 one and the same instrument provided that counsel for the signatories of this
9 Stipulation shall exchange among themselves copies of original signed
10 counterparts.
11 57. This Stipulation shall be binding upon, and inure to the benefit of, the
12 successors and assigns of the Parties hereto.
15 internal laws of the State of California without regard to conflicts of laws, except
16 to the extent that federal law requires that federal law govern.
17 59. This Stipulation shall not be construed more strictly against one Party
18 than another merely by virtue of the fact that it, or any part of it, may have been
19 prepared by counsel for one of the Parties, it being recognized that it is the result of
20 arm's-length negotiations between the Parties and all Parties have contributed
21 substantially and materially to the preparation of this Stipulation.
22 60. All counsel and any other person executing this Stipulation and any of
23 the exhibits hereto, or any related Settlement documents, warrant and represent that
24 they have the full authority to do so and that they have the authority to take
27 61. The Parties and their counsel agree to cooperate fully with one
28 another in seeking Court approval of the Preliminary Approval Order, the
i
G
1 Stipulation 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
r
3 approval by the Consolidated Class Action Court of the Settlement and to
4 effectuate its terms.
5 62. 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
7 given upon receipt of hand delivery or facsimile transmission with confirmation of
8 receipt.
t
9 DATED AS OF: July 23, 2010 BERNSTEIN LITOWITZ IF, ERGER
10
& GROS MANN ids
11
12
AL ATORE . GRAZIANO
13
14
BI^AIR A, NICHOLAS f
ELIZABETH LIN
15 NIKI L. MENDOZA
BENJAMIN GALDSTON
16
TAI,' EO A. KELLAR
12481 High Bluff Drive, Suite 300
17
San Diego, CA 92130
Tel: 858 793-0070
18 Fax: (858) 793-0323
-and-
19
SALVATORE J. GRAZIANO
LAUREN A. MCMILLEN
20 1285 Avenue of the Americas
New York, NY 10019
21 Tel: (212) 554-1400
Fax: (212) 554-1444
22
27
28
t ZWERLING, SCHACHTER
& ZWERLING LLP
2 JE:I FREY C. ZWERLING
41 Madison Avenue
3 New York, NY 10010
T'el:212) 223-3900
4 Fax: (212
) 371 - 5969
5 Lead C'otinsel for Lead Plaintiff The New I
9.
u
11 JOHN V. SPIEGEL ,^
KATHLEEN M. MCDOW L
KEVIN S. ALLR.ED
2 355 South Grand Avenue, 35 th Floor
13
Los A. eles, CA 90071-1560
Tel: 213 683-9100
14 Fax: (213) 687-3702
15 Attorneys for Defendants Brad A. Moa"rice,
Patti Af Dodge, Kevin M. Clo d, Patrick
16 Flana an, Stergios Theologi es, and Joseph
F, Eclol oth, Jr.
17
20 i
21 JACK P. DICANIO
22 300 S. Grand Avenue, Suite 3400
Los An eles, CA 90071-3144
23 Tel: (2 3) 687-5000
Fax: (213) 687-5600
24
Attorneysfor Defendant Estate of Edward
25 Gotschall
26
27
28
T...___
-45- DJO STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FN40x)
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 48 of 56 Page ID
#:10892
1 ZWERLING, SCHACHTER
& ZWERLING LLP
2 JEFFREY C. ZWERLING
41 Madison Avenue
3 New York, NY 10010
Tel: 212 223-3900
4 Fax: (212) 371-5969 C
5 Lead Counsel for Lead Plaintiff The New
York State Teachers Retirement System and
6 the Class, and Plaintiffs Carl Larson and
Charles Hooten
7
8 MUNGER, TOLLES & OLSON LLP
9 I
10 .
11 JOHN W. SPIEGEL
KATHLEEN M. MCDOWELL
12 KEVIN S. ALLRED ch
355 South Grand Avenue, 35 Floor
13 Los An eles, CA 90071- 1560
Tel: 213 683-9100
14 Fax: (213) 687-3702
15 4ttorneys for Defendants Brad A. Morrice,
Patti M Dodge, Kevin M. Clod, Patrick
16 s, and Joseph
Flanaggan, Stergios Theologide
F. Eckroth, Jr.
17
28
NIA
1 LATH: & WATKINS LLP
2
3 A
4 NNY A. ABASCAL
ETHAN J. BROWN
5 355 South Grand Avenue, Suite 100
Los Angeles, CA 90071-1560
6 Tel: (213) 485-1234
7 Fax: (213) 891-8763
20
MERYL L. YOUNG
21
WAYNE W. SMITH
22 3161 Michelson Drive
23 Irvine, CA 92612
Tel: (949) 451-4038
24 Fax: (949) 451-4220
25
Attorneys for Defendants Marilyn A,
26 Alexander, Harald A. Black, David Einhorn,
Fredric. J. Forster, Donald E. Lange,
27 Michael M. Sachs, Terrence P. Sandvik, And
Richard A. Zona
28
3
MANNY A. ABASCAL......^v,__ . 1
4 ETHAN J. BROWN
5 355 South Grand Avenue, Suite 100 j
E Los Angeles, CA 90071-1560
6 {a Tel: (213) 485-1234
7
Fax: (213) 891-8763
i
J'01 1 CROUCHE Y
13 51.5 South Flower Street, 40'h Floor
14 Los Angeles, California 90071-2258
Tel: (213) 622-4750
15 ;
Fax: (213) 622-2690
16
Attorneys for David Kenneally
17
25
Attorneys for cferidants Marilyn .A.
26 Alexander, J-Darold A. Black, David Einhorn,
Fredric J, Forster, .Donald L. Lange,
27 Michael M. Sachs, Terrence P. Sandvik, And
Richard A. Zona
28
12
JOHN CROUCHLEY
13
515 South Flower Street, 40 th Floor
14 Los Angeles, California 90071-2258
Tel: (213) 622-4750
15
Fax: (213) 622-2690
16
Attorneys for David Kenneally
17
MERYLJYO
21
WAYN . S111 4
22 3161 Michelson Drive
Irvine, CA 92612
23
Tel: (949) 451-4038
24 Fax: (949) 451-4220
4
RONALD RUS
2211 Michelson Drive Seventh Floor
Irvine CA 926 12.104
Tel: (49) 752-7100
6 Fax: (949) 252-1514
7 alttor neys fbr Defendant William J; PcpejoJ
8,
9 MORR.ISON : FOERSTER I:..I.,I'
10
DAN MA.RMALE.FSKY
12 SAMANTHA. P. GOODMAN
13 555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024 E
14
Tel: 213-892-5200
1.5 Fax: 213-892-5454
,16 AttorneysfbrJqffreyD. Goldberg
17
.18
I-IAHN HE,SSEN ELP
1
I
20 i
21 JOHN P, McCAHEY
MARK S. INTDELIC,`ATO
22
MARIA A. AR ^SOTT
23 488 Madison Avenue
New York, NY 10022
24 Tel: (2121) 478-7420
Fax: (2 t 478-7400
2
attorneys for° the .Nevi Century Liquidating
26 Trust and Reorganized New Century
27 Warehouse Corporation, by and through
..Tan M, Jacobs, Liquidaling Trustee and
2.8 Ilan administrator
-47- DIO STIPULATION OF SETTLEMFNT
Case Igo, 2V-cv.. 00931-DDP (FMOx)
i
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 53 of 56 Page ID
#:10897
2} qp
3 X
11
i ,I
W , IM A L F, I{ 'KY
SAMAN I I =I, '. GO )OMAN
13 ' 555 West 1" I fth Strect, Suite 3 500
Los Angeles, CA 90013-1024
l l
Te1: 213-892-5200
15 Fax: 213-892-5454
1.6
1tt rr ^s c ^°.1 ;fPey D, Goldberg
1?
i
I bk 1-I i 1-11 , S 1 ^:N I..1. P
^. _...
21 J01-IN 1 1 . McCA.1 fE '
22 MARK S, INUELIC IyC
MARIA A, ARNO'1 T
23 488 Madison Avenue
New gook NY 10022
241 Tel: (21.2)4 -78-7420
Fax: (212) 478-7100
2
<Ittor°are^}-^,s-^`'rrr• the t"^'ew C.c,na.ra t- .I icit.rccicr^ira„
2
Irtisl ct.rrdRe°org aniz, ec1Neiv (;'emur),
27 War•cr/rera;a-se C'otporrat on., kp and dirougla
^1lcarz M* Jacobs,
bs, I^ic, uidating ..'note and
2
Plan pfd adnislrnto r
16
Attorneys for Jeffrey D. Goldberg
17 k
r
18
HAHN & HESSEN LLP
19
20
Jn
21 JO P. McCAHEY
MARK S. INDELICATO
22
MARIA A. ARNOTT
23 488 Madison Avenue
New York, NY 10022
24 Tel: (212_) 478-7420
Fax: (212) 478-7400
25
Attorneys for the New Century Liquidating
26 Trust and Reorganized New Century
27 Warehouse Corporation, by and through
Alan M. Jacobs, Liquidating Trustee and
28 Plan Administrator
-47- D/O STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 55 of 56 Page ID
#:10899
1
WINSTON & STRAWN LLP II
P
2
4 STEVEN D. ATLEE
333 S. Grand Avenue
5 Los Any CA 90071-1543
Tel: (21 6Y5-1827
6 Fax: (21J) 615-1750
7 Attorneys for Kodiak Warehouse LLC,
Kodiak Warehouse JPM Capital LLC,
8
Kodiak CDOI Ltd., Kodiak CDO
9 Management LLC, and Kodiak Funding LP
10
TUCKER ELLIS & WEST LLP 1
11
12
Agreed to as to paragraph 52 only,
13
14 ALEC H. BOYD
135 Main Street Suite 700
15 San Francisco, GSA 94105
Tel: (415) 617--2232
16 Fax: (415) 617-2409
17 Attorneys for Arch Insurance Company
F
18
19
20
21
22
23
24
25
26
27
28
2
3
4 STEVEN D. ATLEE
333 S. Grand Avenue
5 Las Angeles CA 90071-1543
Tel: 213)) 6^5-1827
6 Fax: (213) 615-1750
7 Attorneys for Kodiak Warehouse LLC,
Kodiak Warehouse JPM Capital LLC,
8 Kodiak CDOI Ltd., Kodiak CDO
9 Management LLC, and Kodiak Funding LP
10
TUCKER ELLIS & WEST LLP
11
Agreedto as to 1 graph 52 only,
12
13
ALEC H. BOYD
14 135 Main Street S ite 700
15 San Francisco ^A 94105
Tel: (415) 60-2232
16 Fax: (415) 617-2409
18
19
20
21
22
23
24
25
26
27
28
EXHIBIT A
TO GLOBAL OFFICER AND DIRECTOR STIPULATION j-
I
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 2 of 117 Page ID
#:10902
i
1 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
blairn blMllaw.c
3 LIZA E LINar No. 174663)
(elizabethlblb law.com)
4 NIKI L. M NDOZA (Bar No. 214646)
nikim Mplaw.coV
5 ENJA GALDON (Bar No. 211114)
benMlblbqaw.com)
6 AIA.^, L (Bar No. 234470)
eok blbgaw.com)
7 M81 &1g1.h- Bluff Drive, Suite 300
San Dlego, CA 92130
8 Tel: 858 793-0070
Fax: ^858^ 793-0323
9 -and-
SALVATO RE J. GRAZI ANO
10 Ls )
AUREN Tb M 1 MILLEN
11^1aurentngb1bgjaw.com)
285 Avenue of the Americas
12 New York, NY 10019
Tel: (212) 554-1400
13 Fax: (212) 554-1444
14 Lead Counsel for Lead Plaintiff New
York State Teachers' Retirement System
15
16
27
28
[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 3 of 117 Page ID
#:10903
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 NOW, THEREFORE, IT IS HEREBY ORDERED:
6 1. This 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.
E
1 4. The 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
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 E
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 5. Pursuant to Rule 23 of 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 6. The 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 a. Within 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 b. A 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
[PROPOSED] ORDER PRELIM. APPROVING
-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 6 of 117 Page ID
#:10906
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 7. The 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 8. For 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 9. Nominees 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
[PROPOSED] ORDER PRELIM. APPROVING
-4- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 7 of 117 Page ID
#:10907
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
r
4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles & f
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 3
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 13. 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.
23 14. 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.
27 15. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
[PROPOSED] ORDER PRELIM. APPROVING
-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 9 of 117 Page ID
#:10909
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
4 16. 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).
10 17. 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.
15 18. As set forth in the Stipulations, Defendants and their related parties
16 shall have no responsibility whatsoever for the administration of the Settlements or
i
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
22 19. 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),
[PROPOSED] ORDER PRELIM. APPROVING
-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 10 of 117 Page ID
#:10910
f
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 f
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 I
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
Q
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.
14 20. 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
i
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.
[PROPOSED] ORDER PRELIM. APPROVING
-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 11 of 117 Page ID
#:10911
1 21. 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.
4 22. 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.
9 23. 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
i
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.
16 24. 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
[PROPOSED] ORDER PRELIM. APPROVING
-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 12 of 117 Page ID
#:10912
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.
3 25. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6 a. shall not be offered or received against any of the Released
7 Parties4 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 b. shall 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 C. shall 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 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).
[PROPOSED] ORDER PRELIM. APPROVING
-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 13 of 117 Page ID
#:10913
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 d. shall 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 e. shall 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 f. shall 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 26. 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
[PROPOSED] ORDER PRELIM. APPROVING
-11- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 14 of 117 Page ID
#:10914 a
16
21 NOTICE OF PENDENCY OF
CLASS ACTION AND PROPOSED
22 SETTLEMENTS, SETTLEMENT
FAIRNESS HEARING AND
23 MOTION FOR ATTORNEYS'
FEES AND REIMBURSEMENT
24 OF LITIGATION EXPENSES
25
Judge: Hon. Dean D. Pregerson
26
27
I
28
I
NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
' I
8 ( "Series B Preferred Stock"), and/or Call Options and/or sold Put Options of Y
19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
20
21 ' "Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
22
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.
23 ("Underwriter Defendants").
2 "Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
24
Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
25
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26 Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
Underwriter Defendants, the Individual Defendants, and KPMG.
27
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange
28 Commission in a civil enforcement action entitled SEC v. Mor rice et al., Case No.
2 Stipulations.4
3 This Notice explains important rights you may have, including your possible
4 receipt of cash from the Settlements. Your legal rights will be affected
5 whether or not you act. Please read this Notice carefully!
6
1 May 5, 2005, through and including March 13, 2007, either in the Offerings,
i
2 pursuant 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
4 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
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
16 administration 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
18 Allocation") that will be approved by the Court and will determine how the Net
1 9 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.
1 recoverable If Plaintiffs were to prevail. Defendants deny all liability and that any
2 shares or Options of New Century Securities were damaged as Plaintiffs have
3 alleged. 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
8 resulted from the disclosure of any information that Plaintiffs allege was k
9 wrongfully withheld.
10 4. Statement 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
12 an amount not to exceed 12% of the Total Settlement Amount with interest from
13 the 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
15 incurred 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
18 Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
20 approximately $0.11 per share of Common Stock, approximately $0.32 per share
21 of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
25 Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
14
15 OBJECT TO THE Write to the Court and explain why you
SETTLEMENTS BY do not like the Settlements, the proposed
16
17 SUBMITTING WRITTEN Plan of Allocation, or the request for
OBJECTIONS SO THAT THEY attorneys' fees and reimbursement of
18
19 ARE RECEIVED NO LATER expenses. You cannot object to the
THAN [INSERT]. Settlements unless you are a Class
20
Member and do not exclude yourself.
21
27 [INSERT].
I
28
23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24 1
8
26
6. This 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 i
-6- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 23 of 117 Page ID
#:10923
r
1 New Century Securities during the Class Period. The Court has directed us to send
2 you 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
5 generally 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 payments pursuant to the Settlements after any objections and appeals are resolved.
8 7. In 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
13 approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
15 Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs 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
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
20 of the class members, except for any persons who choose to exclude themselves
21 from the class. (For more information on excluding yourself from the Class, please
22 read "What If I Do Not Want To Be A Part Of The Settlements? How Do 1
27 District Judge. The people who are suing are called plaintiffs, and those who are
28 being sued are called defendants. In this case, the plaintiff is referred to as the
1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 Defendants, the Underwriter Defendants and KPMG New Century was not named
3 as a defendant because New Century has filed a petition for voluntary bankruptcy
4 and the Bankruptcy Code does not permit an action to proceed against a debtor
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
10 do 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,
12 and adequacy of the proposed Settlements, the fairness and reasonableness of the
13 proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
17 Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
18 California 90012 to determine:
9 payments to Authorized Claimants will be made after any appeals are resolved, and
10 after the completion of all claims processing. Please be patient.
4
11
WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?
12
16 13. 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 Chapter 11 of Title 11 of the United States Code.
19 14. By Order dated June 26, 2007, the Court appointed the New York
20 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action I
21 and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
1 17. By Order dated January 31, 2008, the Court granted the motions to
2 dismiss with leave to amend the complaint.
3 18. 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.
6 19. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims
i
8 against Defendants pursuant to the Securities Act and the Exchange Act.
21 were able to reach agreements in principle to settle this Consolidated Action on the
22 terms 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 "Kodiak Litigation") and the
27 adversary proceeding entitled The New Century Liquidating Trust and Reorganized
28 New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating
-10- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
12 their claims against Defendants through trial and appeals, as well as the difficulties
13 in 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
16 summary judgment, and have considered issues that would have been decided by a
21 the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22 uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23 Lead Plaintiff also considered the available funds to satisfy any verdict at trial
27 recovery 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.
-12- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 29 of 117 Page ID
#:10929
1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
Ii
3 described 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
6 30. 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
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10 be construed as an admission of Defendants' wrongdoing.
11
WHAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
12
13 31. If there were no Settlements and Lead Plaintiff failed to establish any
14 essential legal or factual element of its claims, neither Lead Plaintiff nor the other
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
18 Settlements, or nothing at all.
19
HOW MUCH WILL MY PAYMENT BE?
20
21 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22 32. Pursuant to the respective Stipulations, the Individual Defendants
23 have agreed to pay or cause to be paid collectively $65,077,088.00; the
27 33. After approval of the Settlements by the Court, and upon satisfaction
28 of the other conditions to the Settlements, and upon issuance of a Class
14 accordance with the Stipulations, the Plan of Allocation, or further orders of the
15 Court. 'Plaintiffs, Defendants, their respective counsel, and all other Released
25 and industry factors or Company-specific factors not related to the alleged wrongful
1 38. The proposed Plan of Allocation provides for distribution of the Net r
2 Settlement Fund to Authorized Claimants as follows:
3 I. SUMMARY OF PLAN OF ALLOCATION
13 during the Class Period in any such New Century Security; and (iii) each
15 Preferred 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
18 see 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
20 Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
22 Stock and Preferred Stock made during the 90-day look back period of March 13,
25 5 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26
under this title in which the plaintiff seeks to establish damages by reference to the
market 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,
28 by 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
-16- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 33 of 117 Page ID
#:10933
25
correcting the misstatement or omission that is the basis for the action is
26 disseminated." 15 U.S.C. §78u-4(e)(1). $0.87 was the average closing price of New
27
Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007.
28
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2 to 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
4 who submit valid Claim Forms, regardless of the type of New Century Security
15 estimate of the amount that will be paid to Authorized Claimants pursuant to the
F_
16 Settlement. The Recognized Loss Claim formula is the basis upon which the
22 considered in developing the Plan of Allocation, include, among others: (i) the time
23 period in which a New Century Security was purchased; (ii) whether a Security
24 was purchased or acquired on the open market, or as a result of some other type of
27 2007), 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
2 false 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
5 were varied amounts of artificial inflation in prices of New Century Securities
6 during the Class Period, and based on the assumption that Plaintiffs could
12 their respective class of Securities. The Plan of Allocation is not a formal damage
a
13 analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14 that the prices of New Century Securities were artificially inflated during the Class
15 Period (May 5, 2005 — March 13, 2007) due to Defendants allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
19 Securities.
20 46. The Plan of Allocation covers the following New Century Securities:
21 (1) Common Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22 (iv) Call and Put Options on Common Stock.
25 Security purchased or otherwise acquired during the first part of the Class Period,
26 from May 5, 2005 through February 7, 2007, must be held until or beyond
27 February 8, 2007, the first trading day after the first corrective disclosure.
28 Similarly, a New Century Security purchased or otherwise acquired on or after
1 February 8, 2007, and before or on March 2, 2007, must be held until March 5, I,
2 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
4 be 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
6 different parts of the Class Period described above and below (see the artificial
7 inflation Tables annexed hereto) for both the New Century Common 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
10 these transactions will be calculated as zero because it has been determined that the
11 artificial inflation between each disclosure and arising from the circumstances
12 underlying the allegations of Plaintiffs' Complaint was constant.
r
13 II. ADDITIONAL CONSIDERATIONS IN
CALCULATION OF RECOGNIZED LOSS
14 CLAIMS FOR NEW CENTURY SECURITIES
15 48. 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 f
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
12 in the Underwriter Allotment and/or Individual-Auditor Allotment for their class of
15 Recognized Loss Claims of all Authorized Claimants for the included class of
16 securities. Each Authorized Claimant will receive a pro rata share of the
22 of the amount that will be paid pursuant to this Settlement. Instead, this
23 computation is only a method to weigh Class Members' claims against one another.
24 52. To the extent a Claimant had a gain from his, her or its transactions
25 during the Class Period with respect to New Century Securities specified above,
26 the value of their Recognized Loss Claim will be zero. Such claimants will, in any
27 event, be bound by the Settlements. You may wish to consider this when deciding
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
8 Security 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
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
12 Claimant's market gain or loss on his, her, or its overall transactions in that
13 individual New Century Security during the Class Period. E
i
14 54. An Authorized Claimant's gains and losses on a particular New
15 Century Security purchased during the Class Period will be netted against each
16 other 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
Is Options 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,
20 gains and losses will not be netted or aggregated across different eligible New
21 Century Securities. For example, an Authorized Claimant's Recognized Loss
22 Claim (as calculated under this Plan) on New Century Common Stock/Options will
23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
25 55. 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 for exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28 bound by the Settlements and the judgments of the Court.
4 for entry of a proposed Class Distribution Order which will, among other things,
f
5 approve of the distribution to Authorized Claimants of the Net Settlement Fund.
a
6 57. The Individual Defendants, the Underwriter Defendants, and KPMG j
'I
7 and their respective counsel, and all other Released Parties shall have no
8 responsibility for, or liability whatsoever, relating to distributions from the
18 prices for New Century Common Stock during three different portions of the 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 changes that were attributable to market forces unrelated to the alleged fraud.
23 59. 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 C. Recognized Loss Calculations
27 60. Recognized Loss Claims will be calculated for the purposes of the
28 Settlement as follows:
i
-23- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 40 of 117 Page ID
#:10940
1 (a) the difference between the price paid and the price received (out-of-
2 pocket investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and
3 commissions) and the average closing price as set forth in Table 3
4 annexed hereto if sold between March 13, 2007, and June 10, 2007; and K
(c) the difference between the price per share paid and $0.87 per share if the 1
5 shares were sold after June 10, 2007, or were held until the current date.
6 2. Calculation of Recognized Loss
for New Century Series A Preferred Stock
7 Purchases
8 66. Calculation of Recognized Loss Claims for New Century Series A
F
12 (a) For each share sold on or before February 7, 2007, no Recognized Claims
for damages shall be allowed;
13
(b) For each share sold on or between February 8, 2007, and through March
14 13, 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,
15
annexed hereto, less the inflation per share at the time of sale as set forth
16 in Table 4; and
17
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
20 for damages shall be allowed;
21
(b) 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 of
22 purchase for the applicable date of purchase as set forth in Table 4,
23
annexed hereto, less the inflation per share at the time of sale as set forth
in Table 4; and
24
27 (a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages shall be allowed;
28
1 (b) For each share sold on or after March 13, 2007, the allowed damages
2 shall be the inflation per share at the time of purchase for the applicable
date of purchase as set forth in Table 4, annexed hereto.
3
4
70. The Recognized Loss Claims for damages for such Series A Preferred
5 Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA) to the smallest of the following:'
k,
(a) the difference between the price paid and the price received (out-of-pocket G
13
71. Calculation of Recognized Loss Claims for New Century Series B
15
Preferred Stock shares shall be as follows:
16
72. For shares purchased on or between May 5, 2005, through February 7,
17 2007, the following claims for damages shall be allowed:
18 (a) For each share sold on or before February 7, 2007, no Recognized
Claims for damages shall be allowed;
19 (b) 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
20
the time of purchase for the applicable date of purchase as set forth in i
21 Table 5, annexed hereto, less the inflation per share at the time of sale
22
as set forth in Table 5; and
1 annexed hereto, less the inflation per share at the time of sale as set
2 forth in Table 5; and
3 74. For shares purchased between March 5, 2007, through March 12,
4 2007, the following claims for damages shall be allowed:
5 (a) For each share sold on or before March 12, 2007, no Recognized
6 Claims for damages shall be allowed;
(b) For each share sold on or after March 13, 2007, the allowed damages
7 shall be the inflation per share at the time of purchase for the applicable
8 date of purchase as set forth in Table 5, annexed hereto.
9 75. The Recognized Loss Claims for damages for such Series B Preferred i
10 Shares purchased during the Class Period shall be further limited (as provided for
12 (a) the difference between the price paid and the price received (out-of-pocket
13 investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and commissions)
14 and the average closing price as set forth in Table 7 annexed hereto if sold
15 between March 13, 2007, and June 10, 2007; and
(c) the difference between the price per share paid and $7.95 per share if the
16 shares were sold after June 10, 2007, or were held until the current date.
17 4. Calculation of Recognized Loss for
New Century Call and Put Options
18
76. The Plan of Allocation covers the following New Century Call and
19
Put Options: New Century Call Options on Common Stock initially purchased or
20
otherwise acquired during the Class Period, on May 5, 2005, up to and including
21
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
22
Common Stock written or purchased (covered) during the Class Period May 5,
23
2005, through and including March 13, 2007 ("New Century Put Options").
24
77. Artificial inflation and Recognized Losses as to New Century Call
25
Options and artificial deflation and Recognized Losses as to New Century Put
26
Options were computed in a manner similar to that used with respect to New
27
Century Common Stock as described above. To determine artificial inflation for
28
Call Options, Lead Plaintiff's damages consultant considered securities' price
-27- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 44 of 117 Page ID
#:10944
I
1 changes that occurred in reaction to certain public announcements regarding New
2 Century and then made adjustments
J for changes
g that were attributable to market
3 forces unrelated to the alleged fraud in prices of such Call Options and Put
4 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
7 in 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
10 compared to New Century Common Stock and New Century Preferred Shares.
11 78. With respect to purchases and sales (covers) of New Century Call
12 Options during the period May 5, 2005, through and including March 13, 2007, the
13 Artificial 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
I
15 Common 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 adjustment for dividends and the annualized standard deviation estimated from 46-
18 day, historical daily volatility estimates) using the closing share price of New
19 Century Common Stock on the transaction date, compared with the Black-Scholes
20 call pricing formula value for the Call Option using the uninflated closing share
21 price of New Century Common Stock on that same date as determined by: (1) the
22 reported closing share price minus the Common Stock price inflation per share set
23 forth in the annexed Table 2 for Call Options initially purchased between May 5,
24 2005, and March 13, 2007, and (2) the reported closing share price minus the
25 Common Stock price inflation per share set forth in the annexed Table 2 for Call
26 Options initially sold between May 5, 2005, and March 13, 2007. Once again,
1 the previous 45-day stock returns, which are then annualized using a 252-trading
2 day approach.
3
4 (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
5 closed out) prior to February 7, 2007, the Recognized Loss Claim shall
6 be zero.
7 (b) For Call Options which were purchased or acquired between May 5,
8
2005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
9 13, 2007; or (3) were sold (position closed out) on or between February
10 8, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
11
12 (1) the difference between Artificial Inflation per Call Option on the
date of purchase and Artificial Inflation per Call Option on the date
13 of expiration, exercise, or sale, as appropriate; or {
14 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
15
1 (1) the difference between Artificial Inflation per Call Option on the
2 date of purchase and Artificial Inflation per Call Option on the date
of expiration, exercise, or sale, as appropriate; or
3 (2) the difference between the purchase price per Option and the sale
4 price per Option ($0.00 if the Call Option expired worthless).
5 (d) For Call Options which were purchased or acquired between March 5,
6 2007, and March 12, 2007, and (1) expired on or after March 13, 2007;
(2) were exercised on or after March 13, 2007; or 3) were sold (position
7 closed out) on or after March 13, 2007, the Recognized Loss Claim
8 shall be that number of Options multiplied by the lesser of.
9 (1) the Artificial Inflation per Call Option on the date of purchase, or
10 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
11
12 79. 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
r
14 per Option on a given day shall be the dollar change in the value of Put Options on
15 that 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 dividends and the
20 transaction date, compared with the Black-Scholes put pricing formula value for
21 the Put Option using the uninflated share closing share price of New Century
22 Common Stock on that same date as determined by: (1) the reported closing share
23 price 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 I
25 13, 2007, and (2) the reported closing share price minus the Common Stock price
26 inflation per share set forth in the annexed Table 2 for Put Options initially sold 9
27 between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28 dividends is implemented. Annualized volatility estimates are obtained using the
11
(1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
12 per Put Option on the date of expiration, exercise, or purchase
13
($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
14 Put Option and the purchase price of the Put Option ($0.00 if the
15
Put Option expired worthless).
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) were
26 exercised on or between March 5, 2007 and March 13, 2007; or 3) were
27 purchased (position closed out) on or between March 5, 2007, and March
13, 2007, the Recognized Loss Claim shall be that number of Options
28 multiplied by the lesser of-
-31-
-31- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 48 of 117 Page ID
#:10948
E
1 F
2 (1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3 per Put Option on the date of expiration, exercise, or purchase
4 ($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
5 Put Option and the purchase price of the Put Option ($0.00 if the
6 Put Option expired worthless).
7 (d) For Put Options which were sold between March 5, 2007, and March 12,
8 2007, 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 or
9 after March 13, 2007, the Recognized Loss Claim shall be that number of
10 Options multiplied by the lesser of:
11 (1) the Artificial Inflation per Put Option on the date of sale,
12 multiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per
13 Put Option and the purchase price of the Put Option ($0.00 if the
14 Put Option expired worthless).
s
15
Another example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of E
16 $10. The 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 Put
18 options after March 13, 2007, when Put inflation was zero. The Recognized
19 Loss 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 option
20 and sale price of the Put option was greater than $0.68 per Put option.
21 III. OTHER PROVISIONS OF THE PLAN
22 80. 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
25 will be made.
26 81. The determination of the price paid and the price received for a
27 particular security shall be exclusive of all commissions, taxes, fees and charges.
28
1 82. 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 of any
3 Class 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 any n
5 claims administrator or other agent designated by Plaintiffs or their counsel, or
6 against Defendants or their counsel, based on distributions made substantially in
7 accordance with the Stipulations and the Settlements contained therein, the Plan of
8 Allocation, or further orders of the Court.
9 83. 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
P
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.
i
17 84. The Court has reserved jurisdiction to allow, disallow, or adjust on
1 8 equitable grounds the Claim of any Class Member.
19 85. 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
i
21 approve this plan as proposed or it may modify the Plan of Allocation without
22 further notice to the Class.
23 '
WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
24
25 86. 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 other Class Members will provide releases as described below.
-33- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 50 of 117 Page ID
#:10950
1 87. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2 members of the Class will be deemed by operation of law to have released, waived,
3 discharged and dismissed each and every Settled Class Claim as against each and p
4 every 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
6 enjoined from prosecuting any or all of the Settled Class Claims against each and
7 every Released Officer And Director and the Insurance Carriers. "Settled Class
I
8 Claim" 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
k
10 federal, 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 forum that arise out of or are based upon the allegations, transactions, facts,
15 Century 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
17 Century Put Options during the Class Period. Settled Class Claims does not
21 Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22 administrators, predecessors, successors, assigns, employees, agents and retained
23 professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
25 included 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
28
-34- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 51 of 117 Page ID
#:10951
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
8 nature and description, whether known or Unknown, 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
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
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
1 9 "Released Auditor Parties" does not include any Defendants other than KPMG
20 89. 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
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
-35- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 52 of 117 Page ID
#:10952
1 federal, state, common or foreign law, that Plaintiffs or any other member of the
2 Class (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
4 occurrences, 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
6 Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7 Stock and/or New Century
Y all Options
p and/or the sale of New Century
rY Put
8 Options during the Class Period. "Settled Claims" does not include claims relating
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.
15 90. "Released Parties" means the Released Officers And Directors, the
16 Released Auditor Parties, and the Released Underwriter Parties.
17 91. "Unknown Claims" means any and all claims that Lead Plaintiff or
18 any 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
i
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:
8 the Released Auditor Parties, the Released Underwriter Parties, and the Released
9
Officers And Directors will release certain claims against Lead Plaintiff and the
10 Class. In addition, certain Defendants and other persons and entities will also
f
11
release claims against each other and other persons and entities as set forth in the
12 Stipulations.
s
13 WHAT PAYMENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14 HOW WILL THE LAWYERS BE PAID?
15
16 94. 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
21 Amount, plus interest from the date of funding at the same rate as earned by the
22 Settlement 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
26 Expenses 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
11 period from May 5, 2005, through and including March 13, 2007, either in the
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
15 Class, then you are a Class Member. You will be bound by the proposed
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
k
22 website is www.neweenturysettlement.com . You may also request a Claim Form I
23 by 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
25 exclude themselves from the Class, and those who do not submit timely and valid
26 Claim Forms with adequate supporting documentation, will not be entitled 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.
-38- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 55 of 117 Page ID
#:10955
1 96. As a Class Member, you are represented by Lead Plaintiff and Lead
2 Counsel, unless you enter an appearance through counsel of your own choice at
3 your 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
5 must 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.
8 97. 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 If 1 Do Not Want To Be A Part Of The Class And The Settlements? How Do I
12 98. If you wish to object to the Settlements or any of the terms of the
13 Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
16 instructions in the section entitled, "When and Where Will the Court Decide
17 Whether to Approve the Settlements?," below.
23 favorable 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
1 Each request for exclusion must (i) state the name and address of the person or
2 entity requesting exclusion; (ii) state that such person or entity requests exclusion
3 from 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
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 I
i
7 Period. Requests for exclusion will not be valid if they do not include the
r
k
8 information set forth above and are not received within the time stated above,
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.
21
WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE
22
THE SETTLEMENTS?
23
DO I HAVE TO COME TO THE HEARING?
24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?
25
26 103. 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 i
28 reimbursement of Litigation Expenses, you do not need to attend the Settlement
-40- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 57 of 117 Page ID
#:10957
1 Hearing. You can object to or participate in the Settlements without attending the
2 Settlement Hearing.
3 104. The Settlement Hearing will be held on [INSERT] before the 14'
4 Honorable Dean D. Pregerson, at the United States District Court for the Central
i
5 District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
6 California 90012. The Court reserves the right to approve the Settlements, the Plan
7 of Allocation or the request for attorneys' fees and reimbursement of Litigation
8 Expenses 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.
6
11 105. Any Class Member who does not submit a valid exclusion that is
12 received 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
16 all other papers (including proof of all transactions in New Century Securities
17 during 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
17
106. The filing must demonstrate your membership in the Class, including
18
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 not
20
object to the Settlements or any aspect of them, if you are not a Class Member or if
21
you excluded yourself from the Class.
22
107. You may file a written objection without having to appear at the
23
24 Settlement Hearing. You may not appear at the Settlement Hearing to present your
objection, however, unless you first filed and served a written objection in
25
accordance with the procedures described above, unless the Court orders
26
otherwise.
27 I
108. If you wish to be heard orally at the hearing in opposition to the
28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for
-42- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 59 of 117 Page ID
#:10959
6 the identity of any witnesses they may call to testify and exhibits they intend to t
7 introduce into evidence at the hearing.
8 109. 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
10 an 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
15 you should confirm the date and time with Lead Counsel.
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 Settlements, the proposed Plan of Allocation, or Lead Counsel's request for an
20 award of attorneys' fees and reimbursement of Litigation Expenses. Class
21 Members do not need to appear
Pp g at the hearing or take anyother action to
22 indicate their approval.
23
WHAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?
24
27 organization 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
-43- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 60 of 117 Page ID
#:10960
ii)
1 fourteen (14) days after you receive this Notice, or ((^)
i pp rovide the names and k,
2 addresses of such persons no later than fourteen (14) days after you receive this k
3 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
8 future 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.
13 Copies of this Notice may also be obtained from the settlement website
28
I
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 61 of 117 Page ID
#:10961
11
Dated: By Order of the Clerk of Court
United States District Court
12 for the Central District of California
13
14
15
16
17
18
p
19 G,
20
21
22
23
i
24
25
26
27
28
2 Table 1 t
11 Preferred Stock
New Century 6435EV207 8/15/2006 $ 25.00 9.750% X X
12 Series B I
13
New Century 6435EV108 Common Stock - - - X
14
New Century Various Call Option - - - X
15
17
18
19
20
21
22
23
24
25
26
27
28
1
2 Table 2
3
4 Inflation per Share for Common Stock Shares Purchased between
May 5, 2005, and March 13, 2007
5
6 Period Begin Date End date Inflation
1 5-May-05 7-Feb-07 $ 25.21
7 2 8-Feb-07 4-Mar-07 $ 11.09
3 5-Mar-07 12-Mar-07 $ 0.69
8 4 13-Mar-07 to the present $ 0.00
9
10
11
12
13
14
15
16
17
18
19 E
20
21
I
22
23
24
25
26
i
27
28
1
2
3 Table 3
4
Common Stock PSLRA 90-Day Look-Back Loss Limitation Calculations
5 Average Average
Closing closing Closing closing
6 Date Price ($) price ($) Date Price ($) price ($)
7
13Mar2007 0.84 0.84 27Apr2007 0.86 1.19
8 14Mar2007 0.67 0.76 30Apr2007 0.89 1.18
15Mar2007 1.35 0.95 01May2007 0.85 1.17
t
9 16Mar2007 2.34 1.30 02May2007 0.83 1.16 1
19Mar2007 2.17 1.47 03May2007 0.80 1.15
10 20Mar2007 1.69 1.51 04May2007 0.72 1.14
i
21Mar2007 1.67 1.53 07May2007 0.59 1.12
11
22Mar2007 1.56 1.54 08May2007 0.58 1.11
23Mar2007 2.00 1.59 09May2007 0.53 1.10
12
26Mar2007 1.56 1.59 10May2007 0.43 1.08
13 27Mar2007 1.41 1.57 11May2007 0.43 1.06
28Mar2007 1.11 1.53 14May2007 0.41 1.05
14 29Mar2007 1.03 1.49 15May2007 0.37 1.03
30Mar2007 1.06 1.46 16May2007 0.36 1.02
15 02Apr2007 0.91 1.43 17May2007 0.36 1.01
03Apr2007 1.01 1.40 18May2007 0.39 0.99
16
04Apr2007 1.00 1.38 21May2007 0.44 0.98
17 05Apr2007 1.26 1.37 22May2007 0.43 0.97
09Apr2007 1.14 1.36 23May2007 0.47 0.96
18 10Apr2007 1.09 1.34 24May2007 0.45 0.95
11Apr2007 0.98 1.33 25May2007 0.47 0.94
19 12Apr2007 0.89 1.31 29May2007 0.46 0.93
13Apr2007 0.86 1.29 30May2007 0.45 0.92
20
16Apr2007 0.98 1.27 31May2007 0.44 0.92
21 17Apr2007 1.00 1.26 01Jun2007 0.44 0.91
18Apr2007 0.99 1.25 04JLm2007 0.43 0.90
22 19Apr2007 0.93 1.24 05Jun2007 0.43 0.89
20Apr2007 0.96 1.23 06Jun2007 0.45 0.88
23 23Apr2007 0.96 1.22 07Jun2007 0.44 0.88
24Apr2007 0.92 1.21 Mun2007 0.44 0.87
24 25Apr2007 0.96 1.20 Mun2007 0.44 0.87
26Apr2007 0.94 1.20 10Jun2007 0.44 0.87
25
26
27
28
1 ^ti
2 Table 4
3
4 Inflation per Share for Series A Preferred Shares Purchased between
5 May 5, 2005, and March 1.3, 2007 i
11
12
13
Table 5
14
21
22
23
24
25
26
27
28
28
1
2 Table 7
3 Preferred Stock, Series S, PSLRA 90-Day Look-Sack Loss
Limitation Calculations
4 kl
Average Average
5 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
6
13-Mar-2007 6.32 6.32 27-Apr-2007 8.06 7.35
7 14-Mar-2007 6.35 634 30-Apr-2007 8.40 7.38
15-Mar-2007 9.89 7.52 01-May-2007 8.70 7.42
8
16-Mar-2007 10.00 8.14 02-May-2007 8.70 7.45 h,
9 19-Mar-2007 9.35 8.38 03-May-2007 8.65 7.48
20-Mar-2007 8.60 8.42 04-May-2007 8.61 7,51
10 21-Mar-2007 9.00 8.50 07-May-2007 9.45 7.56 i
11 22-Mar-2007 9.10 8.58 08-May-2007 8.88 7.60
23-Mar-2007 9.50 8.68 09-May-2007 8.70 7.62
12 26-Mar-2007 8.90 8.70 10-May-2007 8.53 7.64
27-Mar-2007 6.65 8.51 11-May-2007 8.05 7.65
13
28-Mar-2007 5.80 8.29 14-May-2007 8.45 7.67
14 29-Mar-2007 6.25 8.13 15-May-2007 8.78 7.70
30-Mar-2007 6.40 8.01 16-May-2007 9.00 7.72
15 02-Apr-2007 7.00 7.94 17-May-2007 9.20 7.76
16 03-Apr-2007 7.25 7.90 18-May-2007 8.88 7.78 I
04-Apr-2007 8.00 7.90 21-May-2007 9.50 7.81 E
17 05-Apr-2007 8.45 7.93 22-May-2007 8.75 7.83
09-Apr-2007 7.50 7.91 23-May-2007 9.25 7.86
18
10-Apr-2007 7.03 7.87 24-May-2007 9.25 7.89
19 11-Apr-2007 7.05 7.83 25-May-2007 9.10 7.91
12-Apr-2007 6.90 7.79 29-May-2007 9.30 7.94
20 13-Apr-2007 6.80 7.74 30-May-2007 9.00 7.96
21 16-Apr-2007 6.76 7.70 31-May-2007 9.65 7.99
17-Apr-2007 6.15 7.64 01-Jun-2007 8.85 8.00
22 18-Apr-2007 6.00 7.58 04-Jun-2007 8.60 8.01
19-Apr-2007 6.00 7.52 05-Jun-2007 7.60 8.00
23
20-Apr-2007 6.05 7.47 06-Jun-2007 7.50 8.00
24 23-Apr-2007 5.90 7.41 07-Jun-2007 6.90 7.98
24-Apr-2007 6.00 7.37 08-Jun-2007 6.25 7.95
25 25-Apr-2007 6.20 7.33 09-Jun-2007 6.25 7.95
26 26-Apr-2007 7.25 7.33 10-Jun-2007 6.25 7.95
27
28
1 Table S
2 Table 8 has been abbreviated for example purposes. For a complete table, visit
Ii
3 http://www.newcenturysettlement.com/Forms/Table 8.pdf.
I
4 If you do not have access to the Internet, please contact the Claims Administrator
18 17-Feb-07 $7.50 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $9.59 $0.00 -$1.50
17-Mar-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.75 $0.00 -$0.34 -$3.87
19 21-Apr-07 $7.50 $15.85 $3.21 1.98 0.95 0.05 0.05 $7.07 $0.10 -$0.36 -$4.69
19-May-
20 07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.97 $0.18 -$0.31 -$4.56
18-Aug-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.38 $0.33 -$0.23 -$4.90
21
19-Jan-08 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.75 $0.46 -$0.16 -$5.63
22 17-Jan-09 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.95 $0.59 -$0.08 -$4.50
$10.0
23 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $9.00 $7.10 -$1.14 -$3.99
$10.0
24 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.10 $0.00 -$0.64 -$6.33
$10.0
25 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $7.98 $0.05 -$0.48 -$6.82
19-May- $10.0
26
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.54 $0.11 -$0.41 -$6.51
$10.0
27
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.11 $0.27 -$0.29 -$6.40
28 $10.0
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.68 $0.42 -$0.20 -$6.70
1 $10.0
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.14 $0.57 -$0.09 -$5.31
2 $12.5
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $6.50 $4.60 -$3.63 -$6.49
3 $12.5
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.80 $0.00 -$0.68 -$8.50
4 $12.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $6.05 $0.02 -$0.55 -$8.45
5 19-May- $12.5
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.95 $0.08 -$0.48 -$8.00
6 $12.5
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.87 $0.15 -$0.34 -$7.54
7 $12.5
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.72 $0.39 -$0.23 -$7.51
8
$12.5
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.46 $0.55 -$0.10 -$5.95 C,
9
$15.0
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $4.00 $2.16 -$6.12 -$8.93
10
$15.0 j
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.70 $0.00 -$0.69 -$9.97
11
$15.0
12 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $4.35 $0.01 -$0.60 -$9.54
19-May- $15.0
13 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.05 -$0.53 -$9.05
$15.0
14 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.76 $0.10 -$0.38 -$8.40
$15.0
15 19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.20 -$0.25 -$8.14
$15.0
16 17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.45 -$0.12 -$6.47
$17.5
17 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $1.70 $0.48 -$8.61 -$10.61
$17.5
18 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $2.95 $0.00 -$0.69 -$10.69
$17.5
19 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $3.02 $0.01 -$0.63 -$10.21
19-May- $17.5
20 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $3.90 $0.04 -$0.56 -$9.76
$17.5
21 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.50 $0.10 -$0.41 -$9.03
$17.5
22
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.17 $0.20 -$0.28 -$8.63
$17.5
23
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.40 -$0.13 -$6.90
$20.0
24
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $19.93 $0.04 -$5.28 -$17.39
25 $20.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $10.64 $0.00 -$0.69 -$15.54
26 $20.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $1.75 $0.00 -$0.65 -$10.60
27 19-May- $20.0
07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $9.32 $0.03 -$0.59 -$16.74
28 $20.0
18-Aug-07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $7.79 $0.05 -$0.44 -$18.25
-53- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 $20.0
19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $19.94 $0.15 -$0.30 -$18.65
2 $ 20.0
17-Jan-09 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.25 $0.25 -$0.14 -$16.72
3 $22.5
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $17.53 $0.00 -$7.68 -$19.88
4 $22.5
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $8.16 $0.00 -$0.69 -$18.03
5 $22.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.90 $0.00 -$0.66 -$10.82
6 19-May- $22.5
07 0 $39.69 $3.21 1.98 0.21 0.05 0.05 $14.13 $0.02 -$0.61 -$21.23 j
$22.5 CI
8 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $7.53 $0.10 -$0.47 -$21.41 p
$25.0 -
9 17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $15.10 $0.00 $10.11 -$22.30
$25.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $5.70 $0.00 -$0.69 -$20.49
10
$25.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.40 $0.00 -$0.67 -$10.94
11
19-May- $25.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $13.69 $0.02 -$0.63 -$23.07
$25.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $5.44 $0.10 -$0.49 -$23.05
$25.0
14 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $16.72 $0.15 -$0.33 -$21.93
$30.0 -
15 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $14.26 $0.00 $10.95 -$25.03
$30.0
16 17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $1.64 $0.00 -$0.69 -$24.29
$30.0
17 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.25 $0.00 -$0.68 -$11.05
19-May- $30.0
18 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.35 $0.01 -$0.65 -$24.86
$30.0
19 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $2.38 $0.09 -$0.52 -$24.73
$30.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $13.64 $0.15 -$0.36 -$23.81
$30.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 $8.45 $0.03
0.05 -$0.17 -$21.29
$35.0 -
22
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $10.36 $0.00 $11.09 -$25.21
$35.0
23
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.12 $0.00 -$0.69 -$25.18
24
19-May- $35.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $5.83 $0.01 -$0.66 -$25.19
25 $35.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.88 $0.04 -$0.55 -$25.13
26 $35.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $4.61 $0.03 -$0.38 -$24.72
27 $40.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $7.36 $0.00 $11.09 -$25.21
28 $40.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.05 $0.00 -$0.69 -$25.21
S
-54- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 19-May- $40.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $3.43 $0.00 -$0.67 -$25.21
2 $40.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.50 $0.00 -$0.57 -$25.20
3 $40.0
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $8.65 $0.00 -$0.40 -$25.06
4 $40.0
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $5.52 $0.00 -$0.19 -$23.29
5 $45.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $5.11 $0.00 $11.09 -$25.21
6 $45.0
17-Mar-07 0 $30.84 $3,21 1.98 0.23 0.05 0.05 $0.02 $0.00 -$0.69 -$25.21
7 19-May- $45.0 I
E
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $1.90 $0.00 -$0.68 -$25.21
8
$45.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.30 $0.00 -$0.58 -$25.21
9 $45.0
10 19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $2.10 $0.00 -$0.42 -$25.17
$50.0 -
11 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $3.47 $0.00 $11.09 -$25.21
19-May- $50.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.98 $0.00 -$0.68 -$25.21
$50.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.25 $0.00 -$0.60 -$25.21
$50.0
14 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $5.32 $0.00 -$0.43 -$25.20 !
$50.0
15 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $3.68 $0.00 -$0.21 -$24.18
$55.0 -
16 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $2.31 $0.00 $11.09 -$25.21
19-May- $55.0
17 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.40 $0.00 -$0.68 -$25.21
$55.0
18 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.05 $4.15 $0.00 -$0.45 -$25.21
$60.0 -
19 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $1.35 $0.00 $11.09 -$25.21
$60.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $3.24 $0.00 -$0.46 -$25,21
$60.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $2.50 $0.00 -$0.23 -$24.71
$70.0
22
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $1.90 $0.00 -$0.48 -$25.21
$70.0
23
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $1.73 $0.00 -$0.24 -$24.96
24
25
26
27
28
16
23
1 GENERAL INSTRUCTIONS
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
7 Allocation describe the proposed settlements ("Settlements") that will resolve this
8 Consolidated 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
11 contains the definitions of many of the defined terms (which are indicated by initial
12 capital 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.
18 , ADDRESSED TO:
19 In re New Century Securities Litigation Settlement
20 c/o Analytics, Inc. Claims Administrator
P.O. Box 2004 t
21 Chanhassen, MN 55317-2004
22 1-866-308-7615
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
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 75 of 117 Page ID
#:10975
1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2 the 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 options and New Century put options are referred to collectively as "New Century
5 Securities.")
10 preliminary 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
16 Settlement Fund.
23 ' The following persons are excluded from the Class: (a) the Underwriter
24 Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
of the immediate families of the Individual Defendants; (c) the subsidiaries and
25
affiliates of Defendants; (d) any person or entity who was a partner, executive
26 officer, 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 successors and assigns of any such excluded party.
2
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 76 of 117 Page ID
#:10976
4 7. To recover as a Class Member, you must complete and sign this Proof
5 of Claim and mail it to the Claims Administrator postmarked on or before p
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
9 8. Submission 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. The
13 in the Notice.
14 9. If 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
21 10. 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
28 through and including March 13, 2007, as well as genuine and sufficient
3
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 77 of 117 Page ID
#:10977
1 documentation for all sales of New Century Common Stock and Preferred Stock
f
2 between March 14, 2007, through and including June 10, 2007. You are also
3 required to submit genuine and sufficient documentation reflecting your positions
4 in New Century Cominon Stock and Preferred Stock as of the close of the market
i
5 on March 13, 2007, and as of the close of the market on June 10, 2007.
14 12. All joint purchasers must each sign this Proof of Claim.
15 13. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
4
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 78 of 117 Page ID
#:10978 u
f
1 discretionary authority to trade stock in another person's
2 accounts.) i
3 14. By submitting a signed Proof of Claim, you will be swearing that you:
4 (a) own(ed) the New Century Securities you have listed in the
5 Proof of Claim; or
6 (b) are expressly authorized to act on behalf of the owner thereof.
7 15. 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
10 of America. The making of false statements, or the submission of forged or
11 fraudulent documentation, will result in the rejection of your claim and may
12 subject you to civil liability or criminal prosecution.
23
24
25
26
27
28
5
i
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 79 of 117 Page ID
#:10979
1 In re New Century
5
6 Street Address
7
8 City State Zip Code
9 (Daytime)
10 Area Code Telephone Number
11 (Evening)
12 Area Code Telephone Number
13
14 Social Security Number or Taxpayer Identification Number
15
16 Record Owner's Name (if different from beneficial owner listed above)
17
Check appropriate box (check only one box):
18
ElIndividual/Sole Proprietor 13Joint Owners 11Pension Plan
19
24 NOTE: Separate Proofs of Claim should be submitted for each separate legal
25 entity (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 transactions with transactions made solely in the Individual's name). Conversely,
28 a single Proof of Claim submitted on behalf of one legal entity should include all
6
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 80 of 117 Page ID
#:10980
1 transactions made by that entity, no matter how many separate accounts that entity
2 has (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
8 additional schedules.
15 B. Purchases:
16 (1) 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
18 acquired your New Century Common Stock during this period other than by an
26 / / $ $
27
*excluding commissions, transfer taxes or other fees.
28
7
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 81 of 117 Page ID
#:10981
1 (ii) State the total number of shares of New Century Common Stock the
2 Claimant 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 which are not in the Class Period, are not included in the calculation of Recognized
5 Loss. This information is needed by the Claims Administrator for purposes of the
14 / / $ $
15 / / $ $
16
*excluding commissions, transfer taxes or other fees
17
18 D. Unsold Holdinl4s: State the total number of shares of New
19 Century Common Stock the Claimant owned at the close of the
20
market on March 13 2007. If none write "zero" or "0." If other
i
21
than zero, be sure to attach the required documentation.
22
23
E. EndinLy Position For 90-Day Look Back: State the total number
24
of shares of New Century Common Stock the Claimant owned at
25
the close of the market on June 10, 2007. If none, write "zero" or
26
"0." If other than zero, be sure to attach the required
documentation.
27
28
8
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 82 of 117 Page ID
#:10982
23
24
25
26
27
28
9
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 83 of 117 Page ID
#:10983
6 / / $ $
11
and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12
purchases, which are not in the Class Period, are not included in the calculation of
13
Recognized Loss Amount. This information is needed by the Claims
14
Administrator for purposes of the overall evaluation of the Claim.)
15
16
Co Sales: List all sales of New Century Series A Preferred Stock
17 made during the period from May 5, 2005, through and including
22
23
24
27
28
10
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 84 of 117 Page ID
#:10984
6 E. Ending Position For 90-Day Look Back: State the total number
7 of shares of New Century Series A Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation.
11
11
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 85 of 117 Page ID
#:10985
1 you acquired your New Century Series B Preferred Stock during this period in an
2 Offering 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 attach the required documentation.
5 Trade Date(s) (List
Chronologically) Number of Purchase Total k
6
Month/Day/Year Shares Purchased Price Per Share Purchase Price*
7 / / $ $ 6
8 / / $ $
9 / / $ $
10 I I $ $
11 *excluding commissions, transfer taxes or other fees.
12
13 (ii) 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
15
and 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 overall evaluation of the Claim.)
19 C. Sales: List all sales of New Century Series B Preferred Stock
20 made during the period from May 5, 2005, through and including
25
26 / / $ $
27
12
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 86 of 117 Page ID
#:10986 y
1 D. Unsold Holdinjjs: State the total number of shares of New
2 Century Series B Preferred Stock the Claimant owned at the close
3 of the market on March 13, 2007. If none, write "zero" or "0." If
4 other than zero, be sure to attach the required documentation.
5
6
6 E. EndinLy Position For 90-Day Look Back: State the total number
7 of shares of New Century Series B Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." if other than zero, be sure to attach the required 1
10 documentation. x
11
12
19
20
21
22
23
24
25
26
27
28
13
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 87 of 117 Page ID
#:10987
9
10
11
B. Purchases: List all Call Option contracts on New Century
12
Common Stock that you purchased or acquired during the period
13
from May 5, 2005, through and including March 13, 2007. Be
sure to attach the required documentation.
14
Purchase Date(s) Number of Premium Strike Price
15
(List Option Price Per Expiration for Call
16 Chronologically) Contracts Share Month and Option
Month/Day/Year Purchased Year Contract
17
18 / /
$ $
19 / / $ $
20 / / $ $
21
27
28
14
i
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 88 of 117 Page ID
#:10988
7
8
D. Exercised Calls: List all Call Option contracts on New Century
9
Common Stock that you exercised during the period from May 5, k
10
2005, through and including March 13, 2007. Be sure to attach
11
the required documentation.
12
Strike
13 Price for I
Expiration Call Number of Call Result:
14
Month and Option Option Contracts Rec'd Shares
15 Date Exercised Year Contract Exercised Or Cash?
16
17
19
20
E. Expired Calls: List all Call Option contracts on New Century
21
Common Stock that expired worthless during the period from
22
May 5, 2005, through and including March 13, 2007. Be sure to
23
attach the required documentation.
24
25
26
27
28
15
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 89 of 117 Page ID
#:10989
i
1 Date Contracts Strike Price
2 Expired (List Number of per Call
Chronologically) Expired Option Expiration Month Option
3 Month/Day/Year Contracts and Year Contract 9
4 / / $
$
5
6
7
8
F. Unsold/Unexpired Calls: List Call Option contracts on New
9
Century Common Stock that were open as of the close of the
10
market on March 13, 2007.
11
12
Strike Price
13 Number of Call per Call
Option Contracts Position: Short or Expiration Month Option
14
Open Long and Year Contract
15 $
16 $
17
1s
19
20
21
22
23
24
25
26
27
28
16
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 90 of 117 Page ID
#:10990
9
10
11
B. Sales: List all Put Option contracts on New Century Common
12
Stock that you sold (wrote) during the period from May 5, 2005,
13
through and including March 13, 2007. Be sure to attach the
required documentation.
14
Sales Date(s) Premium
15
(Writing) (List Number of Put Price Per Expiration Strike Price for
16 Chronologically) Option Share Month and Put Option
Month/Day/Year Contracts Sold Year Contract
17
18 / / $ $
19 / / $ $
20 / / $ $
21
22
23
24
25
26
27
28
17
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 91 of 117 Page ID
#:10991
0
10
11
12
D. Exercised Puts: List all Put Option contracts on New Century
13
Common Stock that you exercised during the period from May 5,
14
2005, through and including March 13, 2007. Be sure to attach
15
the required documentation. !
16
Strike Number of Put Result:
17 Expiration Price for Option Contracts Delivered
18 Month and Put Option Exercised Shares or
Date Exercised Year Contract Paid?
19
20
21
22
23
E. Expired Puts: List all Put Option contracts on New Century
24
Common Stock that expired worthless during the period from
25
May 5, 2005, through and including March 13, 2007. Be sure to
26
attach the required documentation.
27
28
18
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 92 of 117 Page ID
#:10992
1 Date Contracts
2 Expired (List Number of Strike Price for
Chronologically) Expired Put Expiration Month Put Option
3 Month/Day/Year Contracts and Year Contract
4 / / $
6
7
8
F. Unexpired Puts: List Put Option contracts on New Century I
9 Common Stock open as of the close of the market on March 13,
10 '
2007.
11
Number of Strike Price for
12 Unexpired Put Position: Short or Expiration Month Put Option
13
Options Contracts Long and Year Contract
14 $
15
16 YOU MUST READ THE FOLLOWING RELEASE AND SIGN ON PAGE
17 RELEASE OF CLAIMS
18 Definitions
19 Defined 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
24 The Releases
25 Officer and Director Release
26 1 (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
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 93 of 117 Page ID
#:10993
1 Member, on behalf of themselves, for good and sufficient consideration, the receipt
2 and adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3 is executed and delivered by, or on behalf of, such Class Member, will be deemed
4 by operation of law to have released, waived, discharged and dismissed each and
5 every 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
12 foreign 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
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
20 relating to the enforcement of the Settlement. "Released Officers And Directors"
21 in this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
25 and (ii) all directors, officers, employees, and other natural persons affiliated with
26 New Century (including any of its subsidiaries and affiliates) included in the
28 Global Officer And Director Stipulation) and any and all of their respective heirs,
20
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 94 of 117 Page ID
#:10994
k
6 the KPMG Settlement, each Class Member, on behalf of themselves, for good and
9 behalf of, such Class Member, will be deemed by operation of law to have r
10 released, waived, discharged and dismissed each and every Settled Claim, and
11 shall forever be enjoined from prosecuting any or all Settled Claims, against any
12 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
14 Unknown, whether arising under federal, state, common or foreign law, that
15 Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
16 could have asserted in any forum that arise out of or are based upon the allegations,
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 the sale of New Century Put Options during the Class Period. "Settled Claims"
22 does not include claims relating to the enforcement of the Settlements. "Released
23 Auditor Party" means KPMG and any and all of its partners, principals, officers,
27
28
21
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 95 of 117 Page ID
#:10995
1 Underwriter Release
2 I (we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
4 Date of the Underwriter Settlement, each Class Member, on behalf of themselves,
6 predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
8 consideration, the receipt and adequacy of which are hereby aclalowledged,
v
9 whether or not a Proof of Claim is executed and delivered by, or on behalf of, such
10 Class 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
15 whether 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, i
18 matters 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
20 Common Stock, New Century Series A Preferred Stock, New Century Series B
21 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
26 successors and assigns, and any and all of their current and former officers,
22
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 96 of 117 Page ID
#:10996
6 2. that I (we) have read and understand the contents of the Notice and the
h
7 Proof of Claim;
8 3. that I (we) are not acting for any of the Defendants, nor am I (are we)
9 such a Defendant or otherwise excluded from the Class;
10 4. that I (we) have not filed a request for exclusion from the Class and that I
11 (we) do not know of any request for exclusion from the Class filed on my
12 (our) behalf with respect to my (our) transactions in New Century
13 Securities;
14 5. that I (we) own(ed) the New Century Securities identified in the Proof of
15 Claim, or that, in signing and submitting this Proof of Claim, 1 (we) have
16 the authority to act on behalf of the owner(s) thereof,
17 6. that Claimant may be entitled to receive a distribution from the Net
18 Settlement Fund;
19 7. that Claimant desires to participate in the Settlements described in the
20 Notice and agrees to the terms and conditions thereof;
1
21 8. that I (we) submit to the jurisdiction of the United States District Court
22 for the Central District of California for purposes of investigation and
23 discovery under the Federal Rules of Civil Procedure with respect to this
24 Proof of Claim;
25 9. that 1 (we) agree to furnish such additional information with respect to
i
26 this Proof of Claim as the parties, the Claims Administrator or the Court
27 may require;
28
23
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 97 of 117 Page ID
#:10997
i
E
1 10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2 Court's summary disposition of the determination of the validity or
I
3 amount of the claim made by this Proof of Claim; and
4 11. that I (we) certify that I am (we are) not subject to backup withholding
5 under the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6 Code.
7 NOTE: If you have been notified by the Internal Revenue Service that you are
8 subject to backup withholding, please strike the language that you are not
9 subject to backup withholding in the certification above. The Internal Revenue
10 Service does not require your consent to any provision other than the
11 certification required to avoid backup withholding.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
24
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 98 of 117 Page ID j
#:10998
i
1 I declare, under penalty of perjury under the laws of the United States of
2 America, that the statements made and answers given in this Proof of Claim are
3 true and correct and that the documents submitted herewith are true and genuine.
4
5
6 Signature of Claimant
F
7
8 Print Name of Claimant Date Signed
9
10 Signature of Joint Claimant, if any
11
16
18
19 Print Name of Person Completing Form Date Signed
20
22
23
24
25
26
27
28
25
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 99 of 117 Page ID
#:10999
1 REMINDER CHECKLIST
2 Please sign the Proof of Claim on page _.
3 If this Claim is being made on behalf of Joint Claimants, then both must sign.
4 Please remember to attach supporting documents.
I
5 If you move, please send your new address to: I
6 In re New Century Securities Litigation Settlement
7 c/o Analytics, Inc., Claims Administrator
P.O. Box 2004
8 Chanhassen, MN 55317-2004
9 1-866-308-7615
10
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.
11
12 Keep a copy of your Proof of Claim and all documentation submitted for your
13 records.
14 The Claims Administrator will acknowledge receipt of your Proof of
15 Claim by mail within 60 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do
16 not receive an acknowledgment postcard within 60 days, please call
17 the Claims Administrator toll free at (866) 308-7615.
18
19
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20 OF TIME.
21 THANK YOU FOR YOUR PATIENCE
22
23
24
25
26
27
28
26
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 100 of 117 Page ID
#:11000 r,
i
I
i
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 101 of 117 Page ID
#:11001
P,
1 UNITED STATES DISTRICT COURT
2 CENTRAL DISTRICT OF CALIFORNIA
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 in
23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00). The 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
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 102 of 117 Page ID
#:11002
1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 reasonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable and
adequate 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.
y
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO ^I
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
i
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of m
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 New
12 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 y
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 than , establishing 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 by , in 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 i
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
27 , in the manner and form set forth in the Notice.
28
2
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 103 of 117 Page ID
#:11003
27
28
3
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 104 of 117 Page ID
#:11004
EXHIBIT B
TO GLOBAL OFFICER AND DIRECTOR STIPULATION
r
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 105 of 1 17 Page ID
#:11005
1
1
2
3
4
5
6
7
8
9 UNITED STATES DISTRICT COURT
10 CENTRAL DISTRICT OF CALIFORNIA
13
14
15 [PROPOSED] OFFICER AND DIRECTOR FINAL JUDGMENT AND
ORDER OF DISMISSAL WITH PREJUDICE
16
17
18
19
20
21
22
23
24
25
26
27
28
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 106 of 117 Page ID
#:11006
i
1 This matter came before the Court for hearing pursuant to the Order
i
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 Plaintiffs
5 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 With New
g Century Officers And Directors (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 all papers filed and proceedings held herein and otherwise being fully
12 informed in the premises and good cause appearing therefor,
18 2. This Court has jurisdiction over the subject matter of the Consolidated
19 Class Action and over all parties to the Consolidated Class Action, including all
20 members of the Class.
2
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 108 of 117 Page ID
#:11008
1 Accordingly, the Global Officer And Director Settlement embodied 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 7. Pursuant to and in compliance with Rule 23 of the Federal Rules of
5 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, f
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 Members who did not timely and properly elect to exclude themselves by written
14 communication 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 S. The Consolidated Class Action and all claims contained therein are [
17 dismissed with prejudice as to the Class Individual Defendants.
18 9. The Parties are to bear their own costs, except as otherwise provided
19 in the Global Officer And Director Stipulation.
20 10. Upon the Effective Date, the Settled Claims shall be discharged as
21 against each and every Released Officer And Director and the Insurance Carriers,
22 and Plaintiffs shall be deemed to forever be enjoined from prosecuting any or all
23 of the Settled Claims against each and every Released Officer And Director and
24 the Insurance Carriers.
25 11. 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
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 109 of 117 Page ID
#:11009
1 assigns, employees, agents and retained professionals (other than KPMG or the
2 Underwriter Defendants) shall be released, waived, discharged and dismissed, and
4
4
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 110 of 117 Page ID
#:11010
I'
1 Director Litigations by any person or entity against the Settling Individuals or by
2 any Settling Individual against any other person or entity, other than a person
3 whose liability for the Claims asserted in the Director And Officer Litigations has
4 been extinguished by the Settlement of those Claims by that Settling Individual,
5 are barred pursuant to 15 U.S.C. § 78u-4(f)(7)(A).
6 16. The distribution of the Notice and the publication of the Summary i
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 1995, due process, and any other applicable law
16 17. 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 Lead Class Plaintiff provides a fair and equitable basis upon which to allocate the
19 proceeds of the Settlements' among the Class Members with due consideration
i
20 having been given to administrative convenience and necessity.
21 18. The Court hereby finds and concludes that the Plan of Allocation
22 proposed by Lead Class Plaintiff is, in all respects, fair and equitable to the Class.
23
24 ' "Settlements" herein includes the settlements as set forth in the Global Officer
25 And Director Stipulation, the Stipulation of Settlement Between Plaintiffs and
KPMG LLP ("KPMG Stipulation" or "KPMG Settlement"), and the Stipulation of
26 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 Members the funds allocated to the Class from all three of the Settlements.
5
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 111 of 117 Page ID
#:11011
b
i
1 Accordingly, the Court hereby approves the Plan of Allocation proposed by Lead !;
C
2 Class Plaintiff.
3 19. Any order entered regarding any attorneys' fees and any expense
4 application shall in no way disturb or affect this Final Judgment And Order Of
a
5 Dismissal With Prejudice and shall be considered separate from this Final j
6 Judgment And Order Of Dismissal With Prejudice.
7 20. 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 a. shall not be offered or received against any of the Released 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 Officers And Directors in the Officer And Director Litigations or in any litigation,
16 or of any liability, negligence, fault, or other wrongdoing of any kind of any of the
17 Released Officers And Directors;
18 b. shall not be offered or received against any of the Released Officers
19 And Directors 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 Members;
24 C. shall not be offered or received against any of the Released Officers
25 And Directors, or against the Plaintiffs or any other Class Members, as evidence of
26 a presumption, concession or admission with respect to any liability, negligence,
27 fault or wrongdoing of any kind, or in any way referred to for any other reason as
28 against any of the Released Officers And Directors, in any other civil, criminal or
i
I^
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 112 of 117 Page ID
#:11012
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 114 of 117 Page ID
#:11014
1
2 26. There is no just reason for delay in the entry of this Judgment and
3 immediate entry by the Clerk of the Court is expressly directed.
4 IT IS SO ORDERED,
5
6 DATED:
16
i
17
18
19
20 0
21
22
23
24
25
26
27
28
9
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 115 of 117 Page ID
#:11015 i
`r
6
EXHIBIT C
TO GLOBAL OFFICER AND DIRECTOR STIPULATION
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 116 of 117 Page ID
#:11016
i l
i
C5
E
E
0 1 00
Lw
x E
wCL
u
(3) L) i z a) I
z
Z
2 .2
1
1
cc Zcm '0 Z c: o c
.21 , = .2 m m I
CD co CD d' CD n LL E^ r- Ln 0)!U- 10 , U- c (u I-L tE LL
CO It ^'^r LO Co CO U- co N ool jm^ U- r-- r- N LL
r,- r- t" CO CO CO M q-
F4 Go 10
C'^ N I N co co 0 Iq C14 i 'on ^ 5 —1— :1 i-' 2- J- N
(D 0 o 'o 0 0
4 -- 4--f-) U)
(D
co
70
cc
C)
2
X -r
< (D
E
(D 2 0,
al x co
(L) 0)
a)
Z . 7 E - Z L^ 5, 0, >1 >l: -?,! (,!
D I m 11
L t: b it: LIE , 610*0 0 101 01 cu
co _0
0 0 0,0101 I -0 w LIL, LOU LL, 1 5 5 1 0 0 ,
— ^F, 0 0 0
I:E :E U^ co
2 E;. — LL:LL;LL ti';
-^ J -^ ^ w ^ :2 :E ! 1!9
'2 0 = ;.(-- =
CL IQ < -0
0^ 0-: 0 0
rL
'0 > LIJ (D Cc
a) 1 a) a) >
I(D lip
2 2 E2 f E2 - a -c! 0 0 0 0 (D Q); (1) (1)
im i m I im i m 0 r
- 0
0
^f, 12
a)
IL 0- LL 0-
fl
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 117 of 117 Page ID
#:11017
I I
I .Q .c
,c s c s c c I
0 0 0 ^^ o
O O Q c
C C c
CT 'a ^ 6 a N U' 'p C ^-0^ O' 'CS
i. CAS CAS CAS .^ C CgS
° g ;n 9 L` ° fl y ^ I- ro g N ^
E a^ cs
0,
a) ow
ro^
N
V) C® a)
m m v
a,
U)
m N
r
N
a' m 4)
o U ^ or U
M C N
v, ma
i
y o roU
ro to
URmN
C Z C Z = Z U Z
Eat^^ _EN (D 7 Eoo>
ro E .L-. a) _N E a) (0 E„'C,-, N LL !-' E L-. a)
U w c p 6q)
U y c a c p U Ry y c ID
a) ° mE co mE U) J? E U cmE can
E
E
o
N m c'ia Uzi
c ro m _cro 02 U-0rnX at c^i o
w S ro(D _c o
o 06ow oy ;owe ^oc'
a4
U
d) I m o 0)iu
•O U C
m o rn
.n U C
o m
v c
5
US maoUrn
c
C C _ L 1
_g
i^ I C C O a) C O O N ”' c c ro a) C c 0 Q)
""' 4) 0 al O ' C a) a)
(L) O + , a) O O .'C.. L
X( O U' U O U UU
O I O C C Q. O C c O-
i ro G C Q-
ro ro Y 7 o 3 vCca
O C Q
3 E croroY
om
y oEmo
00 o q) E o
cro co o m c ro ^
o oEmac ro Y
ow 0) oro-M UmL°, 691c )ro^a co
of
} I m^ c ^n >a c m `n co m n ° E 70 a `n
++
3. `o ro _ v ° -c
o m _root^ acm w rte. m roo^
s rod°
-a D C O U C O
aai
N
CO O O'
o
'^ o o Z o '^ o o Z o' o o z a ooz
c U U) c 0 c `TNC al
c OoNc^.'-- o c ci O o m c ti O
4_
ca
^ [,^ 'f6 j '.^ N C N O to ro4 E E E 2 a) O a) Q.
(D E a) E c:
E E E ^a E E E E.2 cE (D 2
-- ._H i- I j U QuroiQ U.S auroiQ U RLll )
Q U ac QviQ
13 ro
w
.O ! ^ ^ ^I
Z G c
at •
O ^
f
E ro.
V t!') 1 O I ti L m O CD Ll. C^ N m O CD O t0
LO CI 00
W;O i0 cc 0
iMM NIM MM MM C ^'^-mod • !
0 C) O. co m m M
N C14 N N
I.
• CO I a)
7 U
U I 0mU
i !: (n U
I i
I
E ! ^ j
w ^ I
O
O 'N a) N NON. 0. N
m o o,o o o: o o a)L'
U,
Z O Q7 O O O ! O O.
N O Q) OI
O QO,
-I Q NI m'
O a) N: all a)IQ) j
Q) . O)^ cB
Q (.^ L ' .C.0 iL LI L .0 LZ..:d'. c LL
— ', I — F-- ^
F- F- !1 I — IF I m ! Oq ^ i
CU o;,L.,o;o of o; o; E E ' a p, m
O)i cm
ro a,a^'^I^I^II m. ^I- a ro
[x;^iu),cn;cn;u^lcn,cn! cnl^^': ^i S LL
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 1 of 37 Page ID
#:11018
I
1
1
EXHIBIT 3
TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
-1-
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 2 of 37 Page ID
#:11019
7
UNITED STATES DISTRICT COURT
8
CENTRAL DISTRICT OF CALIFORNIA i
9
IN RE NEW CENTURY Case No. 2:07-cv-0093 1 -DDP (FMOx)
10 (Lead Case)
11
12
13
14
15 STIPULATION OF SETTLEMENT
BETWEEN PLAINTIFFS AND KPMG LLP
16
17
18
19
20
21
22
23
24
25
26
27
28
4 State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson
5 and Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned
6 consolidated class action (the "Consolidated Action"), on behalf of themselves and
7 the 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
10 below) against KPMG and all other Released Auditor Parties (as defined below).
11 WHEREAS:
12 A. All terms with initial capitalization not otherwise defined herein shall
13 have the meanings ascribed to them in ¶1 herein.
24 under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
25 Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased
3 the time period from May 5, 2005, through and including, March 13, 2007, either
4 in the Offerings, pursuant to a registration statement, or in the market, and who,
8 F. By Order dated January 31, 2008, the Court granted the motions to
9 dismiss with leave to amend the complaint;
10 G. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
11 Action Complaint ("Amended Complaint"), alleging claims against Defendants
28
1 reach agreements in principle to settle this Consolidated Action on the terms set
2 forth herein;
3 O. KPMG denies any wrongdoing whatsoever and this Stipulation shall
4 in no event be construed or deemed to be evidence of or an admission or
5 concession on the part of KPMG with respect to any claim or of any fault or
9 Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled
10 after receiving advice of counsel, and that the terms of the settlement are fair,
15 events and transactions alleged in the Complaint. Lead Counsel represents that it
16 has analyzed the evidence adduced through discovery and has researched the
17 applicable law with respect to the claims of Plaintiffs and the other members of the
22 the Class, and in their best interests, and have agreed to settle the claims raised in
23 the action pursuant to the terms and provisions of this Stipulation, after considering
24 (1) the benefits that the Class will receive from the KPMG Settlement, (2) the
25 attendant risks of litigation, and (3) the desirability of permitting the KPMG
3 Fund.
4 f) "Claims Administrator" means the firm of Analytics
5 Incorporated.
12 2005, through and including March 13, 2007, either in the Offerings (as defined
15 Excluded from the Class are (a) Defendants; (b) members of the immediate
16 families of Individual Defendants; (c) the subsidiaries and affiliates of Defendants;
17 (d) any person or entity who was a partner, executive officer, director or controlling
18 person of New Century (including any of its subsidiaries or affiliates) or of any
19 other Defendant; (e) any entity in which any Defendant has a controlling interest;
20 and (f) the legal representatives, heirs, successors and assigns of any such excluded
21 party. Also excluded from the Class are any persons who exclude themselves by
22 filing a request for exclusion in accordance with the requirements set forth in the
23 Notice.
24 i) "Class Distribution Order" means an order entered by the Court
25 authorizing and directing that the Net Settlement Fund be distributed, in whole or
27
28
9 m) "Court" means the United States District Court for the Central
1.0 District of California.
11 n) "Defendants" means the Underwriter Defendants, KPMG, and
12 the Individual Defendants. y
13 o) "Debtors" means New Century Financial Corporation (f/k/a
14 New Century REIT, Inc.), a Maryland corporation; New Century TRS Holdings,
17 Corporate, New Century Corporation, and New Century Mortgage Ventures, LLC),
12 Notices; (d) KPMG and the other Released Auditor Parties have been released
13 from any and all claims and causes of action of every nature and description,
15 under federal, state, common or foreign law, that arise out of or relate in any way
18 arise out of or relate in any way to New Century (including any of its subsidiaries
19 and affiliates), the Trust, the Trustee, the Debtors, or the Debtors' Estates, except
20 for (1) an allowed priority claim in the amount of $5,000 pursuant to proof of claim
21 no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against Debtors'
22 Estates and (ii) any and all claims arising out of or in connection with the defense
25 Arbitration, including, but not limited to (I) claims for benefits under any insurance
26 programs or policies to which the Settling Individuals are entitled, (II) claims for
1 or other contract or agreement; (e) KPMG and the other Released Auditor Parties
2 have been released from each and every claim by the Underwriter Defendants
3 arising under federal, state, common or foreign law, arising out of or based upon
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 some or all of the conditions in subsections (d) and (e) of this subparagraph, but in
11 such event, KPMG shall be required to promptly offer to the Settling Individuals
14 event that KPMG receives the releases from the Settling Individuals stated in
15 subsection (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
17 agreement related to New Century substantially similar substantively reciprocal
18 releases.
19 r) "Escrow Account" means an account maintained to hold the
20 Settlement Fund, which shall be controlled exclusively by Lead Counsel and
21 deemed 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
23 pursuant to the terms of this Stipulation and/or further order of the Court.
24 s) "Escrow Agent" means The Huntington National Bank to serve
25 as escrow agent.
26 t) "Escrow Agreement" means the agreement among Lead
27 Counsel and the Escrow Agent setting forth the terms under which the Escrow
4 causing a material change in the order or judgment; or (b) that the order or
5 judgment has been upheld on appeal and is no longer subject to appellate review
22 forth in ¶9 below.
25 November 7, 2008, against Robert K. Cole, Brad A. Morrice, the Estate of Edward
28
9 ff) "Net Settlement Fund" means the Settlement Fund (as defined
10 below) less: (i) any Taxes; (ii) any Notice and Administration Costs; (iii) any
11 attorneys' fees awarded by the Court; and (iv) any Litigation Expenses awarded by
12 the Court.
1 7 hh) "Notice and Administration Costs" means the costs, fees and
18 expenses that are incurred by the Claims Administrator and Lead Counsel in
19 connection with (i) providing notice to the Class; and (ii) administering the Claims
20 process.
21 ii) "Offerings" means the public offerings pursuant to which New
22 Century Series A and B Preferred Stock were offered to the public in June 2005
6 Lange, and Michael M. Sachs, the full amount of defense costs that each have
7 incurred in the defense and subsequent settlement of Schroeder v. New Century
8 Holdings, Inc. (Adversary Proceeding No. 07-51598 (KJC)), and to pay and
9 reimburse their other insurable losses as agreed to in said insurance policy.
10 mm) "Plaintiffs" means Lead Plaintiff, Carl Larson and Charles
11 Hooten.
12 nn) "Plaintiffs' Counsel" means Lead Counsel and all other counsel
13 who, at the direction and under the supervision of Lead Counsel, represent Class
14 Members in the Consolidated Action.
19 by the Court preliminarily approving the KPMG Settlement and directing notice be
20 provided to the Class.
21 qq) "Released Auditor Parties" means KPMG and any and all of its
22 partners, principals, officers, directors, employees, agents, attorneys and affiliates.
23 "Released Auditor Parties" does not include any Defendants other than KPMG
24 rr) "Released Parties' Claims" means any and all claims and causes
25 of action of every nature and description, whether known or unknown, whether
26 arising under federal, state, common or foreign law, that arise out of or relate in
27 any way to the institution, prosecution, or settlement of the claims against KPMG
28
1 "Released Parties' Claims" does not include claims relating to the enforcement of
2 the KPMG Settlement.
6 and any and all of their current and former officers, directors, employees, agents
7 and attorneys. "Released Underwriter Parties" does not include any Defendants
9 tt) "Settled Claims" means any and all claims and causes of action
10 of every nature and description, whether known or Unknown, whether arising
11 under federal, state, common or foreign law, that Plaintiffs or any other member of
12 the Class (a) asserted against the Released Auditor Parties in the Complaint, or (b)
13 could have asserted against the Released Auditor Parties in any forum that arise out
14 of or are based upon the allegations, transactions, facts, matters or occurrences,
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
18 New 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
20 of the KPMG Settlement.
23 vv) "Settlement Hearing" means the hearing set by the Court under
24 Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of
25 the KPMG Settlement.
6 yy) "Taxes" means: (i) all federal, state and/or local taxes of any
7 kind on any income earned by the Settlement Fund; and (ii) the reasonable
8 expenses and costs incurred by Lead Counsel in connection with determining the
9 amount of, and paying, any taxes owed by the Settlement Fund (including, without a
10 limitation, reasonable expenses of tax attorneys and accountants).
19 Century TRS Holdings, Inc.) (Adv. Proc. No. 09-5882 (KJC)) commenced on April
26 ccc) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now
27 known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
28
1 & Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
2 Morgan Stanley & Co., Inc., and Jefferies & Company, Inc.
3 ddd) "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
5 favor 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
7 in 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 and 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
11 expressly waive, and each Class Member shall be deemed to have waived, and by
12 operation of the KPMG Judgment shall have expressly waived, any and all
13 provisions, 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 equivalent to Cal. Civ. Code § 1542, which provides:
25 Settlement.
26 CLASS CERTIFICATION
27 2. The Parties stipulate and agree to: (a) certification of the Consolidated
28 Action as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules
1 of Civil Procedure on behalf of the Class; (b) appointment of Plaintiffs as the Class
I
2 Representatives; and (c) appointment of Lead Counsel as Class Counsel pursuant
3 to 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
I
5 of 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
7 agreement to stipulate and agree to class certification and the appointment of Class
8 Representatives and Class Counsel in the event that the KPMG Settlement does not
9 become Final.
10 RELEASE OF CLAIMS
11 3. The obligations incurred pursuant to this Stipulation shall be in full
12 and final disposition of the Consolidated Action against KPMG; and shall frilly and
13 finally release any and all Settled Claims as against all Released Auditor Parties
14 and shall also release as against the Plaintiffs and all other Class Members any and
15 all Released Parties' Claims, and shall also fully and finally release other claims as
19 waived, discharged and dismissed each and every Settled Claim, and shall forever
20 be enjoined from prosecuting any or all Settled Claims, against any Released
21 Auditor Party.
22 5. Pursuant to the KPMG Judgment, upon the Effective Date, KPMG
23 and each of the other Released Auditor Parties, on behalf of themselves, their heirs,
24 executors, administrators, predecessors, successors and assigns, shall be deemed by
25 operation of law to have released, waived, discharged and dismissed each and
26 every one of the Released Parties' Claims, and shall forever be enjoined from
27 prosecuting any or all of the Released Parties' Claims, against Plaintiffs and their
4 be enjoined from prosecuting any and all claims and causes of action of every
5 nature and description, whether known or Unknown Claims against any of the
6 Settling 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
8 the claims which were asserted in the Consolidated Action, the Trustee Litigation
9 or 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,
11 or 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
13 Bankruptcy Court against Debtors' Estates and (ii) any and all claims arising out of
14 or in connection with the defense and subsequent settlement of the Schroeder v.
15 New Century Holdings, Inc. (Adversary Proceeding No. 07-51598(KJC)) and the
16 Philadelphia Indemnity Arbitration, including, but not limited to (a) claims for
17 benefits under any insurance programs or policies to which the Settling Individuals
18 are entitled, (b) claims for advancement, indemnification, contribution,
19 reimbursement or other payments whether based on law, the Debtors' certificate or
20 articles of incorporation, bylaws, or other contract or agreement ("Claims Against
21 Directors And Officers"), provided and conditioned upon KPMG and the other
22 Released Auditor Parties receiving substantively reciprocal releases from the
23 Settling Individuals. This release does not include claims relating to the
24 enforcement of the Settlement.
1 Released Underwriter Parties, arising under federal, state, common or foreign law,
2 arising out of or based upon the allegations, transactions, facts, matters or
9 prosecuting, each and every claim and cause of action of every nature and
12 (b) could have asserted in any forum that arise out of or are based upon the
15 out of or relate in any way to New Century (including any of its subsidiaries and
16 affiliates), the Debtors or the Debtors' Estates, against Kodiak, provided and
22 ten (10) business days after entry of the Preliminary Approval Order, Lead Counsel
1 10. If any portion of the KPMG Settlement Amount is not paid into the
2 Escrow Account in the timeframe as designated above in ¶9, Plaintiffs have the
3 option to: (1) terminate the KPMG Settlement; or (ii) require that KPMG pay or
4 cause 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 subsequently paid into the Escrow Account.
7 1 l . Within ten (10) calendar days after filing of the Motion for
8 Preliminary Approval, KPMG shall properly serve the CAFA Notices. The Parties
9 will 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
11 serve the CAFA Notices as stated in this paragraph. Any failure by KPMG to
12 comply with the CAFA Notices requirements will not provide grounds for delay of
17 and (iv) any Litigation Expenses awarded by the Court. The balance remaining in
22 the Net Settlement Fund shall remain in the Escrow Account prior to the Effective
23 Date. All funds held by the Escrow Agent shall be deemed to be in the custody of
24 the Court and shall remain subject to the jurisdiction of the Court until such time as
25 the funds shall be distributed or returned pursuant to the terms of this Stipulation
26 and/or further order of the Court. The Escrow Agent shall invest any funds in the
27 Escrow 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,
1 except that any residual cash balances of less than $100,000 may be invested in
E
4 14. The Parties hereto agree that the Settlement Fund is intended to be a
5 Qualified Settlement Fund within the meaning of Treasury Regulation § 1.46813-1
6 and that Lead Counsel, as administrator of the Settlement Fund within the meaning
7 of 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
9 appropriate (including, without limitation, the returns described in Treasury
10 Regulation § 1.468B-2(k)) for the Settlement Fund. Such returns shall be
11 consistent with this paragraph and in all events shall reflect that all Taxes on the
12 income earned on the Settlement Fund shall be paid out of the Settlement Fund as
13 provided by Paragraph 37 below. Lead Counsel shall also be solely responsible for
14 causing 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
E
16 promptly to Lead Counsel any statements or information required for tax purposes,
17 including the statement described in Treasury Regulation § 1.468B-3(e). Lead
24 connection therewith.
25 15. All Taxes shall be paid out of the Settlement Fund, and shall be timely
26 paid by the Escrow Agent pursuant to the disbursement instructions to be set forth
27 in the Escrow Agreement, and without prior Order of the Court. Any tax returns
28 prepared for the Settlement Fund (as well as the election set forth therein) shall be
3 shall be paid out of the Settlement Fund as provided herein. None of the Released
4 Auditor Parties shall have any liability or responsibility for any Taxes or related
5 expenses 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
7 kind whatsoever (including without limitation, taxes payable by reason of any such
8 indemnification), if any, payable by KPMG by reason of any income earned on the
9 Settlement Fund. KPMG shall notify the Escrow Agent promptly if it receives any E
a
10 notice of any claim for Taxes relating to the Settlement Fund.
11 16. This is not a claims-made settlement. Once the Effective Date occurs,
12 neither KPMG, its insurance carriers, nor any other Released Auditor Parties nor
13 any other person or entity that contributed to the Settlement Fund on their behalf,
14 will have the right or ability to get back any of the KPMG Settlement Amount or
15 any interest accrued thereon, irrespective of the number of Claims filed, the
23 shall have no liability whatsoever to any person, including, but not limited to, the
24 Class Members, in connection with any such administration. Lead Counsel shall
25 cause the Claims Administrator to mail the Notice and Proof of Claim Form to
26 those members of the Class at the address of each such person as set forth in the
27 records of New Century or its transfer agent(s), or who otherwise may be identified
28 through further reasonable effort. Lead Counsel will cause to be published the
3 18. Lead Counsel may pay from the Escrow Account, without further
4 approval from KPMG or other Defendants or further order of the Court, the Notice
5 and Administration Costs actually incurred. Such costs and expenses shall include,
6 without limitation, the actual costs of publication, printing and mailing the Notice,
7 reimbursements to nominee owners for forwarding the Notice to their beneficial
8 owners of New Century securities, the administrative expenses incurred and fees
12 Stipulation, 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
20 nor any other Released Auditor Party, shall take any position with respect to Lead
21 Counsel's applications or awards discussed in this paragraph. Such matters are not
22 the subject of any agreement between KPMG and Plaintiffs other than what is set
24 20. Any attorneys' fees and Litigation Expenses that are awarded by the
25 Court shall be paid to Lead Counsel, with the Court's approval, immediately upon
27 potential for appeal therefrom, or collateral attack on the KPMG Settlement or any
28 part thereof, subject to Lead Counsel's obligation to pay back any such amount if,
4 full, with interest at the same rate as earned by the Settlement Fund, no later than
5 ten (10) business days after receiving from KPMG's counsel or from a court of
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
9 this 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
s
11 and/or shareholder of it, agrees that the law firm and its partners and/or
12 shareholders are subject to the jurisdiction of the Court for the purpose of
13 enforcing the provisions of this paragraph. Without limitation, each such law firm
14 and its partners and/or shareholders agree that the Court may, upon application of
15 KPMG on notice to Lead Counsel, summarily issue orders, including but not
16 limited 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 timely repay fees and expenses pursuant to this paragraph.
19 21. Lead Counsel shall have the sole authority to allocate the Court-
20 awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
21 faith, believes reflects the contributions of such counsel to the prosecution and
23 22. Neither KPMG nor any of the Released Auditor Parties shall have any
24 responsibility for, or interest in, or liability whatsoever with respect to any person
25 who may assert some claim to any fee and expense award that the Court may
26 make.
27
28
1 CLAIMS ADMINISTRATOR
2 23. The Claims Administrator shall administer the process of receiving,
3 reviewing and approving or denying Claims under Lead Counsel's supervision and
4 subject to the jurisdiction of the Court. KPMG shall not have any responsibility
5 for, involvement in or liability for providing notice to the Class, the administration d
22 26. Any Class Member who does not submit a valid Claim Form will not
23 be entitled to receive any distribution from the Net Settlement Fund but will
24 otherwise be bound by all of the terns of this Stipulation and KPMG Settlement,
25 including the terms of the Judgment to be entered in the Consolidated Action and
26 the releases provided for herein, and will be permanently barred and enjoined from
27 bringing any action, claim, or other proceeding of any kind against any Released
8 accepting 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 achieving substantial justice.
5 rejected has the right to a review by the Court if the Claimant so desires and
9 after the date of mailing of the notice required in subparagraph (c) above, serve
10 upon the Claims Administrator a notice and statement of reasons indicating the
11 Claimant's grounds for contesting the rejection along with any supporting
17 KPMG's counsel, for approval by the Court in the Class Distribution Order,
21 that such investigation and discovery shall be limited to that Claimant's status as a
22 Class Member and the validity and amount of the Claimant's Claim. No discovery
25 30. Lead Counsel will apply to the Court, on notice to all Parties, for a
26 Class Distribution Order: (i) approving the Claims Administrator's administrative
1 and expenses associated with the administration of the KPMG Settlement from the
2 Escrow Account; (iii) if the Effective Date has occurred, directing payment of the p
3 Net Settlement Fund to Authorized Claimants from the Escrow Account; and (iv)
4 other relief as appropriate.
5 31. Payment
Y pursuant to the Class Distribution Order shall be final and
6 conclusive against all Class Members. All Class Members whose Claims are not
7 approved by the Court shall be barred from participating in distributions from the
8 Net 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
10 entered 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
12 Released Auditor Parties concerning any and all of the Settled Claims.
22 WAIVER OR TERMINATION
23 34. Within thirty (30) days of. (a) the Court's declining to enter, without
24 leave to resubmit, an order granting preliminary approval of the KPMG Settlement
25 in any material respect; (b) the Court's refusal to approve this Stipulation or any
26 material part of it; (c) the Court's declining to enter the KPMG Judgment in any
27 material respect; or (d) the date upon which the KPMG Judgment is modified or
28 reversed in any material respect by the Court of Appeals or the Supreme Court,
1 each of the Parties shall have the right to terminate the KPMG Settlement and this
2 Stipulation by providing written notice to the other Party of an election to do so.
3 However, any decision with respect to an application for attorneys' fees or
5 considered material to the KPMG Settlement and shall not be grounds for
6 termination.
7 35. In addition, if Class Members who purchased or acquired more than a
8 certain 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
10 requirements for requesting exclusion provided in the Notice, as specified in a
f
13 Stipulation.
14 36, Lead Counsel and KPMG's counsel shall request jointly that the
i
15 deadline for submitting exclusions from the Class be at least twenty-one (21) days
16 prior to the Final Approval Hearing. Copies of all timely requests for exclusion
17 from the Class received by the Claims Administrator (or other person designated to
18 receive 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
20 threshold stated in the Supplemental Agreement is reached, KPMG shall have until
21 5:00 p.m. PDT of the seventh day before the Final Approval Hearing to inform
22 Lead Counsel, in writing, that it elects to exercise its option to terminate the
23 KPMG Settlement and this Stipulation. Lead Counsel shall have the right to
24 communicate with the holders of such shares and, if a sufficient number of them
25 withdraw in writing their requests for exclusion such that the total number of
26 shares purchased during the Class Period represented by the remaining "opt outs"
27 represents less than the threshold, the notice of termination shall be deemed
28 withdrawn.
1 37. Except as otherwise provided herein, in the event that the KPMG
E
4 and, except as otherwise expressly provided, the Parties shall proceed in all
5 respects as if this Stipulation and any related orders had not been entered. Within
6 five (5) business days of receipt from KPMG of a notice of termination, Lead
7 Counsel shall direct the Escrow Agent, in writing, to return to KPMG the KPMG
8 Settlement Amount, including accrued interest and earnings, less any amounts paid
9 or incurred for Notice and Administration Costs actually incurred and paid or
10 payable and/or Taxes paid or owing. Within ten (10) business days of receipt of
11 such notice, the Escrow Agent shall refund that full amount to KPMG At the
12 request of KPMG, the Escrow Agent or its designee shall apply for any tax refund
13 owed on account of the KPMG Settlement Amount and shall pay the proceeds,
14 after deducting any fees or expenses incurred in connection with such i
i
15 application(s) for refund, to KPMG
16 NO ADMISSION OF WRONGDOING
17 38. This Stipulation, whether or not consummated, and any proceedings
18 taken pursuant to it:
22 respect to the truth of any fact alleged by Plaintiffs or the validity of any claim that
23 was or could have been asserted against any of the Released Auditor Parties in this
1 approved or made by any of the Released Auditor Parties, or against the Plaintiffs
2 or any Class Members as evidence of any infirmity in the claims of Plaintiffs or the
3 other Class Members;
4 C. shall not be offered or received against any of the Released
5 Auditor Parties, or against the Plaintiffs or any other Class Members, as evidence
6 of a presumption, concession or admission with respect to any liability, negligence,
7 fault or wrongdoing of any kind, or in any way referred to for any other reason as
8 against any of the Released Auditor Parties, in any other civil, criminal or
12 Party, or any Class Member may refer to it to effectuate the protection from
25 39. KPMG and/or any of the other Released Auditor Parties may file this
26 Stipulation of Settlement and/or the Judgment in this action, in order to support a
19 Settlement Fund by others, then, at the election of Lead Counsel, the Parties shall
20 jointly move the Court to vacate and set aside the releases given and the Judgment
21 entered in favor of KPMG and the other Released Auditor Parties pursuant to this
22 Stipulation, which releases and Judgment shall be null and void; the Parties shall
26 43. The Parties intend this KPMG Settlement to be a final and complete
27 resolution of all disputes asserted or which could be asserted by the Plaintiffs, any
28 other Class Members and their attorneys against all Released Auditor Parties with
1 respect to all Settled Claims. Accordingly, the Parties agree not to assert in any
2 forum that this Consolidated Action was brought or defended in bad faith or i
3 without a reasonable basis. The Parties hereto shall assert no claims of any
4 violation of Rule 11 of the Federal Rules of Civil Procedure relating to the
11 44. While retaining their rights to deny that the claims asserted .in the
12 Consolidated Action were meritorious, KPMG in any statement made to any media
13 representative (whether or not for attribution) will not deny that the Consolidated
14 Action was commenced and prosecuted in good faith and is being settled
15 voluntarily 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
18 shall not otherwise suggest that the Settlement constitutes an admission of any
19 claim or defense alleged.
20 45. Except as specifically provided above, this Stipulation may not be
21 modified or amended, nor may any of its provisions be waived except by a writing
23 46. In the event of any dispute between the Parties regarding the
24 implementation of this Stipulation of Settlement or any related document, except as
25 otherwise provided herein, the Parties agree to submit such disputes first to the
26 Mediator for prompt mediation and, if no agreement can be promptly reached, the
27 Parties may pursue all legal remedies under this Stipulation of Settlement in a court
1 47. The headings herein are used for the purpose of convenience only and
2 are not meant to have legal effect.
5 Court shall retain jurisdiction for the purpose of entering orders providing for
6 awards of attorneys' fees and Litigation Expenses to Lead Counsel and enforcing
11 50. This Stipulation and its exhibits constitute the entire agreement among
12 the Parties hereto concerning this KPMG Settlement, and no representations,
13 warranties, or inducements have been made by any Party hereto concerning this
14 Stipulation and its exhibits other than those contained and memorialized in such
15 documents.
16 51. This Stipulation may be executed in one or more original and/or faxed
17 counterparts. All executed counterparts and each of them shall be deemed to be
18 one and the same instrument provided that counsel for the signatories of this
21 52. This Stipulation shall be binding upon, and inure to the benefit of, the
22 successors and assigns of the Parties hereto.
25 internal laws of the State of California without regard to conflicts of laws, except
26 to the extent that federal law requires that federal law govern.
27 54. This Stipulation shall not be construed more strictly against one Party
28 than another merely by virtue of the fact that it, or any part of it, may have been
1 prepared by counsel for one of the Parties, it being recognized that it is the result of
i
2 arm's-length negotiations between the Parties and all Parties have contributed
3 substantially and materially to the preparation of this Stipulation.
4 55. All counsel and any other person executing this Stipulation and any of
5 the 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 to take appropriate action required or permitted to be taken pursuant to the
14 57. All of the exhibits to this Stipulation of Settlement are material and
15 integral parts hereof and are fully incorporated herein by this reference.
16 58. This Stipulation of Settlement shall be binding upon and inure to the
17 benefit of the successors and assigns of the Parties.
18 59, The Parties and their respective counsel also agree to keep the
19 information disclosed to them in connection with mediation and settlement
22 communication 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
24 make a voluntary public disclosure regarding the Settlement, its terms, conditions,
25 or obligations (other than the fact that this case was resolved by Settlement), such
26 Party or counsel shall provide at least three (3) business days' advance notice to the
28 the foregoing, nothing herein shall preclude Plaintiffs' Counsel or Plaintiffs from
10 q
11
V • ORE J. GRAZIANO
12
13
BLAIR A. NICHOLAS
ELIZABETH LIN
14
NIKI L. MENDOZA
BENJAMIN GALDSTON
15
TAKEO A. KELLAR
12481 High Bluff Drive, Suite 300
16
San Dieggo CA 92130
Tel: 85 793-0070
17 Fax: (8583 793-0323
-and-
18 SALVATORE J. GRAZIANO
LAUREN A. MCMILLEN
19 1285 Avenue of the Americas
New York, NY 10019
20 Tel:(212,) 554 -1400
Fax: (212) 554-1444
21
MURRAY, FRANK & SAILER LLP
22
MARVIN L. FRANK
275 Madison Avenue, Suite 801
23
New York, NY 10016
Tel:212 682-1818
24
Fax: (212
) 682-1892
25
26
I
27
28
6
"Amid
7 MIC , ELF . RUGEN
555 alifornia St. Suite 2000
8 San Francisco, CX 94104-1715
Tel; 415-772-1292
9
Attorneys for Defendant KPMG LLP
10
11
12
13
14
15
h
16
17
18
19
20
21
22
23
24
25
26
27
28
EXHIBIT A
TO KPMG STIPULATION
I
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 2 of 114 Page ID
#:11056
16
27
28
[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 3 of 114 Page ID
#:11057
1 WHEREAS, Lead Plaintiff New York State Teachers' Retirement System n'
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 1
"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.
17 2 "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 Jeffries & Co., Inc.
19 3 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 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."
[PROPOSED] ORDER PRELIM. APPROVING
-1- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 4 of 114 Page ID
#:11058
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; r
5 NOW, THEREFORE, IT IS HEREBY ORDERED:
6 1. This 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 2. The Court hereby preliminarily approves the Settlements as being fair,
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
f
16 CLASS CERTIFICATION
17 3. The Court hereby certifies, pursuant to Rules 23(a) and 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19 all persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred Stock, New
20 Century Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, during the time period
21 from May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,
22 and who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;b
23 members of the immediate families of the Individual Defendants; ^c)
the subsidiaries and affiliates of Defendants; (d) any person or entity
24 who was a partner, executive officer, director or controllingperson of
New Centu (including any of its subsidiaries or affiliate or of any
25 Defendant; 7 (e) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns
26 of any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filing a request for exclusion in
27 accordance with the requirements set forth in the Notice.
28
[PROPOSED] ORDER PRELIM. APPROVING
-2- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 5 of 114 Page ID
#:11059
1 4. The 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: b
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 5. Pursuant to Rule 23 of 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 6. The 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 a. Within 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 b. A 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
[PROPOSED] ORDER PRELIM. APPROVING
-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 6 of 114 Page ID
#:11060
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 7. The 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 8. For 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 9. Nominees 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
[PROPOSED] ORDER PRELIM. APPROVING
-4- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 7 of 114 Page ID
#:11061
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.
19 13. 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.
23 14. 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.
27 15. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
[PROPOSED] ORDER PRELIM. APPROVING
-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 9 of 114 Page ID
#:11063
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
4 16. 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).
10 17. 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.
15 18. 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
22 19. 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),
[PROPOSED] ORDER PRELIM. APPROVING
-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No, 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 10 of 114 Page ID
#:11064
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
i
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.
14 20. 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' app cation for an award of attorneys' fees and
Counsel's application
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
tl
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.
[PROPOSED] ORDER PRELIM. APPROVING
-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 I -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 11 of 114 Page ID
#:11065
1 21. 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.
4 22. 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.
9 23. 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.
16 24. 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
4
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
[PROPOSED] ORDER PRELIM. APPROVING
-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 12 of 114 Page ID
#:11066
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.
3 25. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6 a. shall not be offered or received against any of the Released
7 Parties4 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 b. shall 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 C. shall 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 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).
[PROPOSED] ORDER PRELIM. APPROVING
-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 13 of 114 Page ID
#:11067
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
N
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 d. shall 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 e. shall 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 f. shall 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 26. 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 \\
27
28
[PROPOSED] ORDER PRELIM. APPROVING
-11- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 14 of 114 Page ID
#:11068
it
TO KPMG STIPULATION
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 16 of 114 Page ID
#:11070
16
27
28
14 "Plaintiffs"), on behalf of the Class (as defined below), have reached three
18 and 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
20
21 ' " Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
22
Securities 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 2 "Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
25
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26 Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
Underwriter Defendants, the Individual Defendants, and KPMG.
27
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.
-1- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
2 Stipulations.4
3 This Notice explains important rights you may have, including your possible
4 receipt of cash from the Settlements. Your legal rights will be affected
5 whether or not you act. Please read this Notice carefully!
6
14 Settlements, 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
20 Options and/or who sold New Century Put Options, during the time period from
21
23
Court for the Central District of California (the "SEC Action").
4
All capitalized terms that are not defined herein shall have the meaning
24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25 Global Settlement With New Century Officers And Directors (the "Global Officer
And Director Stipulation" or "Global Officer And Director Settlement");
26
Stipulation Of Settlement Between Plaintiffs And The Underwriter Defendants (the
27 "Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
28
"KPMG Settlement").
-2- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 19 of 114 Page ID
#:11073
r
1 May 5, 2005, through and including March 13, 2007, either in the Offerings,
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"). I
15 The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2 shares or Options of New Century Securities were damaged as Plaintiffs have
3 alleged. 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
7 the 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
9 wrongfully withheld.
10 4. Statement 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
12 an amount not to exceed 12% of the Total Settlement Amount with interest from
13 the 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
i
15 incurred 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
18 Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
20 approximately $0.11 per share of Common Stock, approximately $0.32 per share
21 of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22 per Put Option.
25 Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26 regarding the Settlements should be directed to Mr. Graziano at Bernstein Litowitz
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
27 [INSERT].
28
16
How Do I Participate In The Settlements? What Do I Need To Do? Page
17 What If I Do Not Want To Be A Part Of The Settlements?
1 8 How Do I Exclude Myself? Page
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? Page
22 What If I Bought Shares On Someone Else's Behalf? Page
23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24
WHY DID I GET THIS NOTICE?
25
26
6. This 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
-6- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 23 of 114 Page ID
#:11077
1 New Century Securities during the Class Period. The Court has directed us to send
2 you 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
5 generally 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 payments pursuant to the Settlements after any objections and appeals are resolved.
8 7. In 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
13 approved 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
15 Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
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
20 of the class members, except for any persons who choose to exclude themselves
21 from the class. (For more information on excluding yourself from the Class, please
24 8. The Court in charge of this case is the United States District Court for
25 the Central District of California, and the case is known as In re New Century. The
26 Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27 District Judge. The people who are suing are called plaintiffs, and those who are
28 being sued are called defendants. In this case, the plaintiff is referred to as the
1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 Defendants, the Underwriter Defendants and KPMG New Century was not named
3 as a defendant because New Century has filed a petition for voluntary bankruptcy
4 and the Bankruptcy Code does not permit an action to proceed against a debtor
i
5 who has filed such a petition.
6 9. This Notice explains the lawsuit, the Settlements, your legal rights,
7 what 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
10 do 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,
12 and adequacy of the proposed Settlements, the fairness and reasonableness of the
13 proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
17 Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
18 California 90012 to determine:
11
WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?
12
P
13 12. 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.
16 13. 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.
19 14. 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 and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
25 under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26 Act of 1933 ("Securities Act") on behalf of the Class.
27 16. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Consolidated Complaint, which Plaintiffs opposed on December 14, 2007.
1 17. By Order dated January 31, 2008, the Court granted the motions to
k
2 dismiss with leave to amend the complaint.
3 18. 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,
6 19. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims
8 against Defendants pursuant to the Securities Act and the Exchange Act.
21 were able to reach agreements in principle to settle this Consolidated Action on the
22 terms 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 "Kodiak Litigation") and the
27 adversary proceeding entitled The New Century Liquidating Trust and Reorganized
1 Trustee and Plan Administrator v Robert K. Cole et al. (In re New Century TRS
2 Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
4 26. 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
12 entities who purchased or otherwise acquired New Century Common Stock, New
i
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
15 time period from May 5, 2005, through and including March 13, 2007, either in the
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 parry. 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
9 28. Lead Plaintiff and Lead Counsel believe that the claims asserted
10 against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11 however, the expense and length of continued proceedings necessary to pursue
12 their claims against Defendants through trial and appeals, as well as the difficulties
13 in 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
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
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
20 Members' losses were caused by the alleged misrepresentations or omissions, and
21 the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22 uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23 Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24 given the expense and length of continued proceedings necessary to reach a
28 Settlements are fair, reasonable and adequate, and in the best interests of the Class.
-12- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
i
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 29 of 114 Page ID
#:11083
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
4 would produce a similar, smaller, or no recovery after summary judgment, trial and
5 appeals, possibly years in the future.
6 30. 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
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10 be construed as an admission of Defendants' wrongdoing.
11
WHAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
12
13 31. If there were no Settlements and Lead Plaintiff failed to establish any
14 essential legal or factual element of its claims, neither Lead Plaintiff nor the other
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
18 Settlements, or nothing at all.
19
HOW MUCH WILL MY PAYMENT BE?
20
21 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22 32. Pursuant to the respective Stipulations, the Individual Defendants
23 have agreed to pay or cause to be paid collectively $65,077,088.00; the
24 Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
12 claim 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
15 Court. Plaintiffs, Defendants, their respective counsel, and all other Released
17 distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18 Allocation, the determination, administration, calculation, or payment of any claim
25 and industry factors or Company-specific factors not related to the alleged wrongful
28 regarding New Century and analysis regarding the stock price movements.
-15- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 32 of 114 Page ID
#:11086
1 38. The proposed Plan of Allocation provides for distribution of the Net
2 Settlement Fund to Authorized Claimants as follows:
w
3 I. SUMMARY OF PLAN OF ALLOCATION
6 separate Claim Form signed under penalty of perjury and supported by such
11 market on May 4, 2005, the day before the first day of the Class Period; (ii) each
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
18 see 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
20 Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
22 Stock and Preferred Stock made during the 90-day look back period of March 13,
25
correcting the misstatement or omission that is the basis for the action is
26 disseminated." 15 U.S.C. §78u-4(e)(1). $0.87 was the average closing price of New
27
Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007.
28
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
i
2 to 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
4 who submit valid Claim Forms, regardless of the type of New Century Security
11 separately established for each class of securities shown in Table 1 annexed hereto,
12 based upon each Authorized Claimant's "Recognized Loss Claim." The
15 estimate 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
18 proportionately allocated to the Authorized Claimants.
23 period in which a New Century Security was purchased; (ii) whether a Security
24 was purchased or acquired on the open market, or as a result of some other type of
26 (iii) whether the Security was held until the end of the Class Period (March 13,
27 2007), 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
6 during the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
8 45. 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
10 Settlements for the purpose of making pro rata allocations of the cash from the
6
14 that the prices of New Century Securities were artificially inflated during the Class
15 Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
1 9 Securities.
20 46. The Plan of Allocation covers the following New Century Securities:
21 (1) Common Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22 (iv) Call and Put Options on Common Stock.
25 Security purchased or otherwise acquired during the first part of the Class Period,
26 from May 5, 2005 through February 7, 2007, must be held until or beyond
27 February 8, 2007, the first trading day after the first corrective disclosure.
1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
2 2007, the next trading day after the second corrective disclosure. Finally, a New
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
10 these transactions will be calculated as zero because it has been determined that the
11 artificial inflation between each disclosure and arising from the circumstances
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
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
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
1
21 a Class Member might have been able to recover at trial, and it is not an estimate
22 of the amount that will be paid pursuant to this Settlement. Instead, this
23 computation is only a method to weigh Class Members' claims against one another.
24 52. To the extent a Claimant had a gain from his, her or its transactions
25 during the Class Period with respect to New Century Securities specified above,
26 the value of their Recognized Loss Claim will be zero. Such claimants will, in any
27 event, be bound by the Settlements. You may wish to consider this when deciding
28 whether to opt-out of the Settlements.
3 New Century Security or suffered an overall market loss, the Claims Administrator
4 shall determine the difference between (i) the Total Purchase Amount paid for all
5 purchases 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
8 Security 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
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
12 Claimant's market gain or loss on his, her, or its overall transactions in that
17 particular security. In the case of New Century Common Stock and Put and Call
18 Options 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,
20 gains and losses will not be netted or aggregated across different eligible New
21 Century Securities. For example, an Authorized Claimant's Recognized Loss
22 Claim (as calculated under this Plan) on New Century Common Stock/Options will
23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 any issue of New Century Preferred Stock.
25 55. 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 for exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28 bound by the Settlements and the judgments of the Court.
4 for entry of a proposed Class Distribution Order which will, among other things,
i
5 approve of the distribution to Authorized Claimants of the Net Settlement Fund.
'I
6 57. The Individual Defendants, the Underwriter Defendants, and KPMG
7 and their respective counsel, and all other Released Parties shall have no
8 responsibility for, or liability whatsoever, relating to distributions from the
22 changes that were attributable to market forces unrelated to the alleged fraud.
23 59. As explained above, Common Stock purchases are not eligible for
24 distributions from the Underwriter Allotment, but may be eligible for distributions
14 (a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages shall be allowed;
15
(b) For each share sold on or between March 5, 2007, and March 13, 2007,
16 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 2, annexed hereto,
17
less the inflation per share at the time of sale as set forth in Table 2; and
18
64. For shares purchased on or between March 5, 2007, through March
19
20 12, 2007, the following claims for damages shall be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims
21
for damages shall be allowed;
22 (b) 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 applicable
23
date of purchase as set forth in Table 2, annexed hereto.
24
65. In addition to the annexed Table 2 relating to Section 10(b) New
25
Century Common Stock claims, the Recognized Loss Claims for damages for such
26
shares purchased during the Class Period shall be further limited (as provided for
27
28 under the PSLRA) to the smallest of the following:
1 (a) the difference between the price paid and the price received (out-of-
2 pocket investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and
3 commissions) and the average closing price as set forth in Table 3
4 annexed 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
5 shares were sold after June 10, 2007, or were held until the current date.
6 2. Calculation of Recognized Loss
for New Century Series A Preferred Stock
7 Purchases
8 66. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
10 67. For shares purchased on or between May 5, 2005, through February 7,
11 2007, the following claims for damages shall be allowed:
12 (a) For each share sold on or before February 7, 2007, no Recognized Claims
for damages shall be allowed;
13
(b) For each share sold on or between February 8, 2007, and through March
14 13, 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,
15
annexed hereto, less the inflation per share at the time of sale as set forth
16 in Table 4; and
17
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
20 for damages shall be allowed;
21
(b) 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 of
22 purchase for the applicable date of purchase as set forth in Table 4,
23
annexed hereto, less the inflation per share at the time of sale as set forth
in Table 4; and
24
25 69. For shares purchased on or between March 5, 2007, through March
27
(a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages shall be allowed;
28
4 70. The Recognized Loss Claims for damages for such Series A Preferred
5 Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA) to the smallest of the following:
(a) the difference
7
between the price paid and the price received (out-of-pocket N
15
Preferred Stock shares shall be as follows:
16
72. For shares purchased on or between May 5, 2005, through February 7, e
17 2007, the following claims for damages shall be allowed:
(a) For each share sold on or before February 7, 2007, no Recognized
18
Claims for damages shall be allowed;
19 (b) For each share sold on or between February 8, 2007, and through
20 March 13, 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
21 Table 5, annexed hereto, less the inflation per share at the time of sale
22
as set forth in Table 5; and
25 (a) For each share sold on or before March 2, 2007, no Recognized Claims
26
for damages shall be allowed;
(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27 the allowed damages shall be the inflation per share at the time of
28 purchase for the applicable date of purchase as set forth in Table 5,
1 annexed hereto, less the inflation per share at the time of sale as set
2 forth in Table 5; and
3 74. For shares purchased between March 5, 2007, through March 12,
4 2007, the following claims for damages shall be allowed:
5 (a) For each share sold on or before March 12, 2007, no Recognized
6 Claims for damages shall be allowed;
(b) For each share sold on or after March 13, 2007, the allowed damages
7 shall be the inflation per share at the time of purchase for the applicable
8 date of purchase as set forth in Table 5, annexed hereto.
9 75. The Recognized Loss Claims for damages for such Series B Preferred
10 Shares purchased during the Class Period shall be further limited (as provided for
12 (a) the difference between the price paid and the price received (out-of-pocket
13 investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and commissions)
14 and the average closing price as set forth in Table 7 annexed hereto if sold
15 between March 13, 2007, and June 10, 2007; and
(c) the difference between the price per share paid and $7.95 per share if the
16 shares were sold after June 10, 2007, or were held until the current date.
17 4. Calculation of Recognized Loss for
New Century Call and Put Options
18
76. The Plan of Allocation covers the following New Century Call and
19
Put Options: New Century Call Options on Common Stock initially purchased or
20
otherwise acquired during the Class Period, on May 5, 2005, up to and including
21
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
22
Common Stock written or purchased (covered) during the Class Period May 5,
23
2005, through and including March 13, 2007 ("New Century Put Options").
24
77. Artificial inflation and Recognized Losses as to New Century Call
25
Options and artificial deflation and Recognized Losses as to New Century Put
26
Options were computed in a manner similar to that used with respect to New
27
Century Common Stockas described above. To determine artificial inflation for
28 i
Call Options, Lead Plaintiff's damages consultant considered securities' price
-27- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 44 of 114 Page ID
#:11098
2 Century and then made adjustments for changes that were attributable to market
3 forces unrelated to the alleged fraud in prices of such Call Options and Put i
E.
4 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
1
7 in 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.
11 78. With respect to purchases and sales (covers) of New Century Call
12 Options during the period May 5, 2005, through and including March 13, 2007, the
13 Artificial 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
15 Common 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 adjustment for dividends and the annualized standard deviation estimated from 46-
18 day, historical daily volatility estimates) using the closing share price of New
19 Century Common Stock on the transaction date, compared with the Black-Scholes
20 call pricing formula value for the Call Option using the uninflated closing share
21 price of New Century Common Stock on that same date as determined by: (1) the
22 reported closing share price minus the Common Stock price inflation per share set
23 forth in the annexed Table 2 for Call Options initially purchased between May 5,
24 2005, and March 13, 2007, and (2) the reported closing share price minus the
25 Common Stock price inflation per share set forth in the annexed Table 2 for Call
26 Options initially sold between May 5, 2005, and March 13, 2007. Once again,
1 the previous 45-day stock returns, which are then annualized using a 252-trading
2 day approach.
3 j
4 (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
5 closed out) prior to February 7, 2007, the Recognized Loss Claim shall
6 be zero.
7 (b) For Call Options which were purchased or acquired between May 5,
8
2005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
9 13, 2007; or (3) were sold (position closed out) on or between February
10 8, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
11
12 (1) the difference between Artificial Inflation per Call Option on the
date of purchase and Artificial Inflation per Call Option on the date
13 of expiration, exercise, or sale, as appropriate; or
14 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
15
16 An 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,
17 2007 maturity and exercise price of $20. The Call Option inflation on this
18 date 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
19 then sells these Call Options on February 9, 2007, when the Call Option
20 inflation 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, the
21 Recognized Loss Claim is the difference in call price inflation on these two
22 dates ($10.40 - $1.60, or $8.80) times number of Options (100), for a total of
$880.00; assuming that the difference between the purchase price and the
23 sale price was greater than $8.80.
24
(c) For Call Options which were purchased or acquired between February
25 8, 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, and
27 March 13, 2007, the Recognized Loss Claim shall be that number of
28 Options multiplied by the lesser of-
1 (1) the difference between Artificial Inflation per Call Option on the 1
2 date of purchase and Artificial Inflation per Call Option on the date
of expiration, exercise, or sale, as appropriate; or
3 (2) the difference between the purchase price per Option and the sale
4 price per Option ($0.00 if the Call Option expired worthless).
5 (d) For Call Options which were purchased or acquired between March 5,
6 2007, and March 12, 2007, and (1) expired on or after March 13, 2007;
(2) were exercised on or after March 13, 2007; or 3) were sold (position
7 closed out) on or after March 13, 2007, the Recognized Loss Claim
8 shall be that number of Options multiplied by the lesser of:
9 (1) the Artificial Inflation per Call Option on the date of purchase, or
10 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
11
12 79. 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
15 that day as a result of the inflation in New Century's Common Stock share price.
i
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 dividends and the e
18 annualized standard deviation estimated from 46-day historical daily volatility
19 estimates) using the closing share price of New Century Common Stock on the
20 transaction date, compared with the Black-Scholes put pricing formula value for
21 the Put Option using the uninflated share closing share price of New Century
22 Common Stock on that same date as determined by: (1) the reported closing share
23 price 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
25 13, 2007, and (2) the reported closing share price minus the Common Stock price
26 inflation per share set forth in the annexed Table 2 for Put Options initially sold
27 between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28 dividends is implemented. Annualized volatility estimates are obtained using the
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) were
26 exercised on or between March 5, 2007 and March 13, 2007; or 3) were
27 purchased (position closed out) on or between March 5, 2007, and March
13, 2007, the. Recognized Loss Claim shall be that number of Options
28 multiplied by the lesser of-
-31- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 48 of 114 Page ID
#:11102
1
2 (1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3 per Put Option on the date of expiration, exercise, or purchase
4 ($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
5 Put Option and the purchase price of the Put Option ($0.00 if the
6 Put Option expired worthless).
7 (d) For Put Options which were sold between March 5, 2007, and March 12,
8 2007, 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 or
9 after March 13, 2007, the Recognized Loss Claim shall be that number of
10 Options multiplied by the lesser of:
11 (1) the Artificial Inflation per Put Option on the date of sale,
12 multiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per
13 Put Option and the purchase price of the Put Option ($0.00 if the
14 Put Option expired worthless).
15
Another example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of
16 $10. The 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 Put
18 options after March 13, 2007, when Put inflation was zero. The Recognized
19 Loss 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 option
20 and sale price of the Put option was greater than $0.68 per Put option.
21 III. OTHER PROVISIONS OF THE PLAN
22 80. 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
24 Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25 will be made.
26 81. The determination of the price paid and the price received for a
27 particular security shall be exclusive of all commissions, taxes, fees and charges.
28
1 82. 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 of any
3 Class 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 any
5 claims administrator or other agent designated by Plaintiffs or their counsel, or
13 pursuant to, Proofs of Claim, for the payment or withholding of Taxes owed by the I
15 for acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith. f
17 84. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 equitable grounds the Claim of any Class Member.
19 85. 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
23
WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
24
25 86. 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 other Class Members will provide releases as described below.
-33- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 50 of 114 Page ID
#:11104
1 87. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2 members of the Class will be deemed by operation of law to have released, waived,!
3 discharged and dismissed each and every Settled Class Claim as against each and
4 every 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
6 enjoined from prosecuting any or all of the Settled Class Claims against each and
7 every Released Officer And Director and the Insurance Carriers. "Settled Class
fl
8 Claim" 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
10 federal, 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 forum that arise out of or are based upon the allegations, transactions, facts,
14 to in the Consolidated Action, and that arise out of or relate to the purchase of New
15 Century 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
17 Century Put Options during the Class Period. Settled Class Claims does not
18 include claims relating to the enforcement of the Settlement. "Released Officers
19 And Directors" in this paragraph means (1) the Individual Defendants, David
20 Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21 Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
23 professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
2 Underwriter Defendants).
13 and that arise out of or relate to the purchase of New Century Common 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
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.
20 89. 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
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
1 federal, state, common or foreign law, that Plaintiffs or any other member of the
2 Class (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
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
15 90. "Released Parties" means the Released Officers And Directors, the
16 Released Auditor Parties, and the Released Underwriter Parties.
17 91. "Unknown Claims" means any and all claims that Lead Plaintiff or
18 any 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
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:
7 93. As specified in the Stipulations, the Judgments will also provide that
8 the Released Auditor Parties, the Released Underwriter Parties, and the Released
9 Officers And Directors will release certain claims against Lead Plaintiff and the
10 Class. 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
E
12
Stipulations.
16 94. 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
21 Amount, plus interest from the date of funding at the same rate as earned by the f
22 Settlement 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
26 Expenses 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
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.
11 period from May 5, 2005, through and including March 13, 2007, either in the
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
15 Class, then you are a Class Member. You will be bound by the proposed
17 Court affecting the Class. If you are a Class Member, you must submit a Claim
18 Form 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
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.
1 96. As a Class Member, you are represented by Lead Plaintiff and Lead
2 Counsel, unless you enter an appearance through counsel of your own choice at
3 your 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
5 must 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.
8 97. 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 If I Do Not Want To Be A Part Of The Class And The Settlements? How Do I r
11 Exclude Myself?," below.
12 98. If you wish to object to the Settlements or any of the terms of the
13 Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
15 exclude 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
18 WHAT IF I DO NOT WANT TO BE A PART OF THE SETTLEMENTS?
1.9
HOW DO I EXCLUDE MYSELF? E
20
21 99. Each Class Member will be bound by all determinations and
22 judgments in this lawsuit, including those concerning the Settlements, whether i
23 favorable 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
26 Settlement, c/o Analytics, Inc., Claims Administrator, P.O. Box 2004, Chanhassen,
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
-39- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 56 of 114 Page ID
#:11110
1 Each request for exclusion must (i) state the name and address of the person or
2 entity requesting exclusion; (ii) state that such person or entity requests exclusion
3 from 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
5 person or entity; and (v) provide the date(s), price(s), and numbers) of shares of
6 all purchases, acquisitions, and sales of New Century Securities during the Class i
7 Period. Requests for exclusion will not be valid if they do not include the
8 information set forth above and are not received within the time stated above,
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.
21
WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE
22
THE SETTLEMENTS?
23
DO I HAVE TO COME TO THE HEARING?
24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?
25
26 103. 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
-40- NOTICE OF PENDENCY OF CLASS ACTION
Case No, 07-00931
1 Hearing. You can object to or participate in the Settlements without attending the
1
2 Settlement Hearing.
E
6 California 90012. The Court reserves the right to approve the Settlements, the Plan
7 of Allocation or the request for attorneys' fees and reimbursement of Litigation
8 Expenses 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.
11 105. Any Class Member who does not submit a valid exclusion that is
12 received 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
15 writing. 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
17 during 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
19 on or before [ INSERT]. You must also serve the papers
20 on Lead Counsel for the Class at the address set forth below so that the papers are
21 received on or before [ INSERT].
22
23
Clerk's Office Lead Counsel for the Class
17
106. The filing must demonstrate your membership in the Class, including
18
the number of shares of New Century Securities purchased or otherwise acquired
19
or sold during the Class Period and the price(s) paid and received. You may not
20
object to the Settlements or any aspect of them, if you are not a Class Member or if
21
you excluded yourself from the Class.
22
107. You may file a written objection without having to appear at the
23
Settlement Hearing. You may not appear at the Settlement Hearing to present your
24 I
objection, however, unless you first filed and served a written objection in
25
accordance with the procedures described above, unless the Court orders
26
otherwise.
27 ^
108. If you wish to be heard orally at the hearing in opposition to the
28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for
-42- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 59 of 114 Page ID
#:11113
1 an award of attorneys'
Y fees and reimbursement of Litigation
g Expenses,
p and if you
Y
2 have filed and served a timely written objection as described above, you also must
6 the identity of any witnesses they may call to testify and exhibits they intend to
15 you should confirm the date and time with Lead Counsel.
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 Settlements, the proposed Plan of Allocation, or Lead Counsel's request for an
20 award of attorneys' fees and reimbursement of Litigation Expenses. Class
21 Members do not need to appear at the hearing or take any other action to
23
WHAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?
24
i
25 111. If you purchased or otherwise acquired or sold New Century
26 Securities during the Class Period for the beneficial interest of a person or
27 organization other than yourself, you must either (i) send a copy of this Notice to
28 the beneficial owner of such New Century Securities, postmarked no later than
#:11114
1 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2 addresses of such persons no later than fourteen (14) days after you receive this
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 future 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
13 Copies of this Notice may also be obtained from the settlement website
19 112. This Notice contains only a summary of the terms of the proposed
20 Settlements. More detailed information about the matters involved in the
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
1
2 Table 1
3
11 Preferred Stock
New Century 6435EV207 8/15/2006 $ 25.00 9,750% X X
12 Series B
13
New Century 6435EV108 Corrunon Stock - - - X
14
New Century Various Call Option - - - X
15
18
19
20 PI
21
22
23
24
25
26
27
28
2 Table 2
3
9 i
10
11 '
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1 'F
2 F'
3 Table 3
4
Common Stock PSLRA 90-Day Look-Back Loss Limitation Calculations
5 Average Average
Closing closing Closing closing
6 Date Price (S) price ($) Date Price ($) price ($)
7
13Mar2007 0.84 0.84 27Apr2007 0.86 1.19
8 14Mar2007 0.67 0.76 30Apr2007 0.89 1.18
15Mar2007 1.35 0.95 O1May2007 0.85 1.17
9 16Mar2007 2.34 1.30 02May2007 0.83 1.16
19Mar2007 2.17 1.47 03May2007 0.80 1.15
10 20Mar2007 1.69 1.51 04May2007 0.72 1.14
21Mar2007 1.67 1.53 07May2007 0.59 1.12
11
22Mar2007 1.56 1,54 08May2007 0.58 1.11
12 23Mar2007 2.00 1.59 09May2007 0.53 1.10
26Mar2007 1.56 1.59 1OMay2007 0.43 1.08
13 27Mar2007 1.41 1.57 1lMay2007 0.43 1.06
28Mar2007 1.11 1.53 14May2007 0.41 1.05
14 29Mar2007 1.03 1.49 15May2007 0.37 1.03
30Mar2007 1.06 1.46 16May2007 0.36 1.02
15 02Apr2007 0.91 1.43 17May2007 0.36 1.01
03Apr2007 1.01 1.40 18May2007 0.39 0.99
16
04Apr2007 1.00 1.38 21May2007 0.44 0.98
17 05Apr2007 1.26 1.37 22May2007 0.43 0.97
09Apr2007 1.14 1.36 23May2007 0.47 0.96
18 1OApr2007 1.09 1.34 24May2007 0.45 0.95
1lApr2007 0.98 1.33 25May2007 0.47 0.94
19 12Apr2007 0.89 1.31 29May2007 0.46 0.93
13Apr2007 0.86 1.29 30May2007 0.45 0.92
20
16Apr2007 0.98 1.27 31May2007 0.44 0.92
21 17Apr2007 1.00 1.26 O1Jun2007 0.44 0.91
1SApr2007 0.99 1.25 04Jun2007 0.43 0.90
22 19Apr2007 0.93 1.24 05Jun2007 0,43 0.89
20Apr2007 0.96 1.23 06Jun2007 0.45 0.88
23 23Apr2007 0.96 1.22 07Jun2007 0.44 0.88
24Apr2007 0.92 1.21 08Jun2007 0.44 0.87
24 25Apr2007 0.96 1.20 09JLm2007 0.44 0.87
26Apr2007 0.94 1.20 10JLm2007 0.44 0.87
25
26
27
28
2 Table 4
3
10
11
12
13
Table 5
14
21
22
23
24
25
26
27
28
3 Table 6
4 Preferred Stock, Series A, PSLRA 90-Day Look-Back Loss
Limitation Calculations
5
Average Average
6 Closing closing Closing closing I
Date Price ($) price ($) Date Price ($) price ($)
7 t
13-Mar-2007 6.45 6.45 27-Apr-2007 8.27 7.45
8 14-Mar-2007 6.20 6.33 30-Apr-2007 8.45 7.48
15-Mar-2007 9.95 7.53 01-May-2007 9.00 7.52
9
16-Mar-2007 10.00 8.15 02-May-2007 8.80 7.56
10 19-Mar-2007 9.25 8.37 03-May-2007 8.80 7.59
20-Mar-2007 8.50 8.39 04-May-2007 8.75 7.62
11 21.-Mar-2007 8.75 8.44 07-May-2007 9.25 7.66
12 22-Mar-2007 8.85 8.49 08-May-2007 9.00 7.70
23-Mar-2007 9.77 8.64 09-May-2007 8.70 7.72
13 26-Mar-2007 8.92 8.66 10-May-2007 8.23 7.73
27-Mar-2007 6.40 8.46 11-May-2007 7.73 7.73
14
28-Mar-2007 6.10 8.26 14-May-2007 8.50 7.75
15 29-Mar-2007 6.20 8.10 15-May-2007 9.00 7.78
30-Mar-2007 6.75 8.01 16-May-2007 9.00 7.81
16 02-Apr-2007 6.90 7.93 17-May-2007 8.95 7.83
17 03-Apr-2007 7.55 7.91 18-May-2007 8.83 7.85
04-Apr-2007 8.10 7.92 21-May-2007 9.50 7.88
18 05-Apr-2007 8.25 7.94 22-May-2007 9.50 7.92
09-Apr-2007 7.65 7.92 23-May-2007 9.10 7.94
19
10-Apr-2007 7.50 7.90 24-May-2007 9.25 7.97
20 11-Apr-2007 7.60 7.89 25-May-2007 9.10 7.99
12-Apr-2007 7.45 7.87 29-May-2007 9.25 8.01
21 13-Apr-2007 7.00 7.83 30-May-2007 9.20 8.03
22 16-Apr-2007 7.05 7.80 31-May-2007 9.14 8.05
17-Apr-2007 6.70 7.75 01-Jun-2007 8.75 8.06
23 18-Apr-2007 6.30 7.70 04-Jun-2007 8.25 8.07
19-Apr-2007 6.10 7.64 05-Jun-2007 8.10 8.07
24
20-Apr-2007 6.15 7.59 06-Jun-2007 7.45 8.06
25 23-Apr-2007 5.60 7.52 07-Jun-2007 7.00 8.04
24-Apr-2007 6.00 7.47 08-Jun-2007 6.87 8.02
26 25-Apr-2007 6.25 7.43 09-Jun-2007 6.87 8.02
27 26-Apr-2007 7.37 7.43 10-Jun-2007 6.87 8.02
28
2 Table 7
3 Preferred Stock, Series B, PSLRA 90-Day Look-Back Loss
Limitation Calculations
4
Average Average
5 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
6
13-Mar-2007 6.32 6.32 27-Apr-2007 8.06 7.35
7 14-Mar-2007 6.35 6.34 30-Apr-2007 8.40 7.38
15-Mar-2007 9.89 7.52 01-May-2007 8.70 7.42
8
16-Mar-2007 10.00 8.14 02-May-2007 8.70 7.45
9 19-Mar-2007 9.35 8.38 03-May-2007 8.65 7.48
20-Mar-2007 8.60 8.42 04-May-2007 8.61 7.51
10 21-Mar-2007 9.00 8.50 07-May-2007 9.45 7.56
11 22-Mar-2007 9.10 8.58 08-May-2007 8.88 7.60
23-Mar-2007 9.50 8.68 09-May-2007 8.70 7.62 {
12 26-Mar-2007 8.90 8.70 10-May-2007 8.53 7.64
27-Mar-2007 6.65 8.51 11-May-2007 8.05 7.65
13
28-Mar-2007 5.80 8.29 14-May-2007 8.45 7.67 f
14 29-Mar-2007 6.25 8.13 15-May-2007 8.78 7.70
30-Mar-2007 6.40 8.01 16-May-2007 9.00 7.72
15 02-Apr-2007 7.00 7.94 17-May-2007 9.20 7.76
03-Apr-2007 18-May-2007 I
16 7.25 7.90 8.88 7.78
04-Apr-2007 8.00 7.90 21-May-2007 9.50 7.81 $
17 05-Apr-2007 8.45 7.93 22-May-2007 8.75 7.83
09-Apr-2007 7.50 7.91 23-May-2007 9.25 7.86
18
10-Apr-2007 7.03 7.87 24-May-2007 9.25 7.89
19 11-Apr-2007 7.05 7.83 25-May-2007 9.10 7.91
12-Apr-2007 6.90 7.79 29-May-2007 9.30 7.94
20 13-Apr-2007 6.80 7.74 30-May-2007 9.00 7.96
21 16-Apr-2007 6.76 7.70 31-May-2007 9.65 7.99
17-Apr-2007 6.15 7.64 01-Jun-2007 8.85 8.00
22 18-Apr-2007 6.00 7.58 04-Jun-2007 8.60 8.01
23 19-Apr-2007 6.00 7.52 05-Jun-2007 7.60 8.00
20-Apr-2007 6.05 7.47 06-Jun-2007 7.50 8.00
24 23-Apr-2007 5.90 7.41 07-Jun-2007 6.90 7.98
24-Apr-2007 6.00 7.37 08-Jun-2007 6.25 7.95
25 25-Apr-2007 6.20 7.33 09-Jun-2007 6.25 7.95
26 26-Apr-2007 7.25 7.33 10-Jun-2007 6.25 7.95
27
28
1 Table 8
2 Table 8 has been abbreviated for example purposes. For a complete table, visit
3 http://www.newcenturysettlement.com/Fonns/Table 8.pdf.
4 If you do not have access to the Internet, please contact the Claims Administrator
5 at 1-866-308-7615 to have a copy mailed to you.
6
Max Min
7 Max Min Max Min Risk Risk Max Min Max
Maturity Exer. Close Close Vola Vola Free Free Call Call Put Min Put
8 date price price Price tility tility Rate Rate Inflat. Inflat. Inflat. Inflation 9
17-Mar-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.69 $0.51 $0.00 -$0.18
9
21-Apr-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.64 $0.49 -$0.05 -$0.20
10 19-May-
07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.51 -$0.07 -$0.19
11 18-Aug-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.54 -$0.08 -$0.15
19-Jan-08 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.63 $0.59 -$0.06 -$0.11
12
17-Jan-09 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.66 $0.64 -$0.04 -$0.05
13 17-Feb-07 $5.00 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $11.08 $0.00 -$0.01
17-Mar-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $11.08 $0.03 -$0.01 -$1.40
14
21-Apr-07 $5.00 $15.85 $3.21 1.98 0.95 0.05 0.05 $9.41 $0.22 -$0.20 -$2.29
19-May- I
15
07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.86 $0.30 -$0.19 -$2.30 S
16 18-Aug-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.46 $0.42 -$0.16 -$3.00
19-Jan-08 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.87 $0.51 -$0.11 -$4.20
17 17-Jan-09 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.94 $0.61 -$0.06 -$3.44
18 17-Feb-07 $7.50 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $9.59 $0.00 -$1.50
17-Mar-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.75 $0.00 -$0.34 -$3.87 V
19 21-Apr-07 $7.50 $15.85 $3.21 1.98 0.95 0.05 0.05 $7.07 $0.10 -$0.36 -$4.69
19-May-
20 07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.97 $0.18 -$0.31 -$4.56
21 18-Aug-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.38 $0.33 -$0.23 -$4.90
19-Jan-08 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.75 $0.46 -$0.16 -$5.63
22 17-Jan-09 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.95 $0.59 -$0.08 -$4.50
$10.0
23 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $9.00 $7.10 -$1.14 -$3.99
$10.0
24
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.10 $0.00 -$0.64 -$6.33 i
$10.0
25
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $7.98 $0.05 -$0.48 -$6.82
19-May- $10.0
26
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.54 $0.11 -$0.41 -$6.51
27
$10.0
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.11 $0.27 -$0.29 -$6.40
28 $10.0
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.68 $0.42 -$0.20 -$6.70
1 $10.0
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.14 $0.57 -$0.09 -$5.31
2 $12.5
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $6.50 $4.60 -$3.63 -$6.49
3 $12.5
17-Mar-07 0 $19.75 $3.21 1,98 0.88 0.05 0.05 $6.80 $0.00 -$0.68 -$8.50
4 $12.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $6.05 $0.02 -$0.55 -$8.45
5 19-May- $12.5
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.95 $0.08 -$0.48 -$8.00
6 $12.5
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.87 $0.15 -$0.34 -$7.54
7 $12.5
19-Jan-08 0 $19.75 $3.21 1.98 0,88 0.05 0.05 $6.72 $0.39 -$0.23 -$7.51
8
$12.5
9 17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.46 $0.55 -$0.10 -$5.95 j
$15.0
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $4.00 $2.16 -$6.12 -$8.93
10
$15.0
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.70 $0.00 -$0.69 -$9.97
11
$15.0
12 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $4.35 $0.01 -$0.60 -$9.54
19-May- $15.0
13 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.05 -$0.53 -$9.05
$15.0
14 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.76 $0.10 -$0.38 -$8.40
$15.0
15 19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.20 -$0.25 -$8.14
$15.0
16 17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.45 -$0.12 -$6.47
$17.5
17 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $1.70 $0.48 -$8.61 -$10.61
$17.5
18 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $2.95 $0.00 -$0.69 -$10.69
$17.5
19 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $3.02 $0.01 -$0.63 -$10.21
19-May- $17.5
20 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $3.90 $0.04 -$0.56 -$9.76
$17.5
21 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 $4.50 $0.10
0.05 -$0.41 -$9.03
$17.5
22
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.17 $0.20 -$0.28 -$8.63
$17.5
23
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.40 -$0.13 -$6.90
24
$20.0
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $19.93 $0.04 -$5.28 -$17.39
25
$20.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $10.64 $0.00 -$0.69 -$15.54
3
26 $ 20.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $1.75 $0.00 -$0.65 -$10.60
27 19-May- $20.0
07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $9.32 $0.03 -$0.59 -$16.74
28 $ 20.0
18-Aug-07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $7.79 $0.05 -$0.44 -$18.25
-53- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 $20.0
19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $19.94 $0.15 -$0.30 -$18.65
2 $20.0
17-Jan-09 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.25 $0.25 -$0.14 -$16.72
3 $22.5
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $17.53 $0.00 -$7.68 -$19.88
4 $22.5
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $8.16 $0.00 -$0.69 -$18.03
5 $22.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.90 $0.00 -$0.66 -$10.82
6 19-May- $22,5
07 0 $39.69 $3.21 1.98 0.21 0.05 0.05 $14.13 $0.02 -$0.61 -$21.23
7 $22.5
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $7.53 $0.10 -$0.47 -$21.41
8 $25.0 -
9 17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $15.10 $0.00 $10.11 -$22.30
$25.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $5.70 $0.00 -$0.69 -$20.49
10
$25.0
21-Apr-07 0 $18,77 $3.21 1.98 0.93 0.05 0.05 $0.40 $0.00 -$0.67 -$10.94
11
19-May- $25.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $13.69 $0.02 -$0,63 -$23.07
$25.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $5.44 $0.10 -$0.49 -$23.05
$25.0
14 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $16.72 $0.15 -$0.33 -$21.93
$30.0 -
15 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $14.26 $0.00 $10.95 -$25.03
$30.0
16 17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $1.64 $0.00 -$0.69 -$24.29
$30.0
17 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.25 $0.00 -$0.68 -$11.05
19-May- $30.0
18 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.35 $0.01 -$0.65 -$24.86
$30.0
19 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $2.38 $0.09 -$0.52 -$24.73
$30.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $13.64 $0.15 -$0.36 -$23.81
$30.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $8.45 $0.03 -$0.17 -$21.29
$35.0 -
22
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $10.36 $0.00 $11.09 -$25.21
$35.0
23
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.12 $0.00 -$0.69 -$25,18
24
19-May- $35.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $5.83 $0.01 -$0.66 -$25.19
25 $35.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.88 $0.04 -$0.55 -$25.13
26 $35.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $4.61 $0.03 -$0.38 -$24.72
27 $40.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $7.36 $0.00 $11.09 -$25.21
28 $40.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.05 $0.00 -$0.69 -$25.21
-54- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 19-May- $40.0
t
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $3.43 $0.00 -$0.67 -$25.21
2 $40.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.50 $0.00 -$0.57 -$25.20
3 $40.0
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $8.65 $0.00 -$0.40 -$25.06 j
4 $40.0
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $5.52 $0.00 -$0.19 -$23.29
5 $45.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $5.11 $0.00 $11.09 -$25.21
6 $45.0
17- Mar -07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.02 $0.00 -$0.69 -$25.21
7 19-May- $45.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $1.90 $0.00 -$0.68 -$25.21
8
$45.0
9 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.30 $0.00 -$0.58 -$25.21
$45.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $2.10 $0.00 -$0.42 -$25.17
10
$50.0 -
11
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $3.47 $0.00 $11.09 -$25.21
19-May- $50.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.98 $0.00 -$0.68 -$25.21
$50.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0,25 $0.00 -$0.60 -$25.21
$50.0
14 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $5.32 $0.00 -$0.43 -$25.20
$50.0
15 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $3.68 $0.00 -$0.21 -$24.18
$55.0 -
16 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $2.31 $0.00 $11.09 -$25.21
19-May- $55.0
17 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.40 $0.00 -$0.68 -$25.21
$55.0
18 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.05 $4.15 $0.00 -$0.45 -$25.21
$60.0 -
19 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $1.35 $0.00 $11.09 -$25.21 t
$60.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $3.24 $0.00 -$0.46 -$25.21
$60.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $2.50 $0.00 -$0.23 -$24.71
$70.0
22
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $1.90 $0.00 -$0.48 -$25.21
$70.0
23
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $1.73 $0.00 -$0.24 -$24.96
24
25
26
27
28
TO KPMG STIPULATION
1
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 73 of 114 Page ID
#:11127
16
23
1 GENERAL INSTRUCTIONS
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
7 Allocation describe the proposed settlements ("Settlements") that will resolve this
I
8 Consolidated 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
11 contains the definitions of many of the defined terms (which are indicated by initial
12 capital 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
18 , ADDRESSED TO:
19 In re New Century Securities Litigation Settlement
20
c/o Analytics, Inc. Claims Administrator
P.O. Box 2004
21 Chanhassen, MN 55317-2004
22 1-866-308-7615
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
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 75 of 114 Page ID
#:11129
1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2 the 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 f
4 options and New Century put options are referred to collectively as "New Century
5 Securities.") j
15 requirements established by the Court, that is approved for payment from the Net
r
16 Settlement Fund.
22
23 '
The following persons are excluded from the Class: (a) the Underwriter
g p
24 Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25
of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive
26 officer, 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 successors and assigns of any such excluded party.
2
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 76 of 114 Page ID
#:11130
9 8. Submission 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. The
12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
14 9. If 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
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
20 Administrator for this Settlement, www.newcenturysettlement.com..
21 10. 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
25 whether or not you submit a Proof of Claim.
26 11. You are required to submit genuine and sufficient documentation for
27 all your purchases and sales of New Century Securities from May 5, 2005,
28 through and including March 13, 2007, as well as genuine and sufficient
3
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 77 of 114 Page ID
#:11131
1 documentation 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
3 required to submit genuine and sufficient documentation reflecting your positions
4 in New Century Common Stock and Preferred Stock as of the close of the market
5 on March 13, 2007, and as of the close of the market on June 10, 2007.
8 the months specified on the actual claim form, and in which transactions during the
14 12. All joint purchasers must each sign this Proof of Claim.
15 13. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
17 and they must:
4
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 78 of 114 Page ID
#:11132
11 fraudulent documentation, will result in the rejection of your claim and may
16 manually 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
Is electronically, you must contact the Claims Administrator at 1-866-308-7615, or
19 visit its settlement website www.newcenturysettlement.com to obtain the required
20 file layout. No electronic files will be considered to have been properly submitted
21 unless the Claims Administrator issues to the Claimant a written paper
23
24
25
26
27
28
5
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 79 of 114 Page ID
#:11133
h
f
1 In re New Century
2 PART I: CLAIMANT IDENTIFICATION
3
4 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name j
6 Street Address
7
8 City State Zip Code
9 (Daytime)
10 Area Code Telephone Number
11 (Evening)
12
Area Code Telephone Number
13
14
Social Security Number or Taxpayer Identification Number
15
16
Record Owner's Name (if different from beneficial owner listed above)
17
Check appropriate box (check only one box):
18
ElIndividual/Sole Proprietor ElJoint Owners 11Pension Plan
19 ,
20 q Corporation q Partnership q Trust i
21
q IRA q Other
22
(describe: ) f
23
24 NOTE: Separate Proofs of Claim should be submitted for each separate legal
25 entity (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 transactions with transactions made solely in the Individual's name). Conversely,
28 a single Proof of Claim submitted on behalf of one legal entity should include all
6
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 80 of 114 Page ID
#:11134
15 B. Purchases:
16 (i) 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
2 0 acquisition on a separate page.) Be sure to attach the required documentation.
21 Trade Date(s) (List
22 Chronologically) Number of Purchase Total
Month/Day/Year Shares Purchased Price Per Share Purchase Price*
23 / / $ $
24 / / $ $
25 / / $ $
26 $ $
7
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 81 of 114 Page ID
#:11135
15 / / $ $
21
than zero, be sure to attach the required documentation.
22
23
E. Ending Position For 90-Day Look Back: State the total number
24
of shares of New Century Common Stock the Claimant owned at
25
the close of the market on June 10, 2007. If none, write "zero" or
26
"0." If other than zero, be sure to attach the required
27
documentation.
28
8
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 82 of 114 Page ID
#:11136
15
B. Purchases: -
16
(1) List all purchases of New Century Series A Preferred Stock made during j
17
the period from May 5, 2005, through and including March 13, 2007. (NOTE: If
18
you acquired your New Century Series A Preferred Stock during this period in an
19
Offering or otherwise or other than by an open-market purchase, please provide a
20
complete description of the terms of the acquisition on a separate page.) Be sure to
21
attach the required documentation.
22
23
24
25
26
27
28
9
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 83 of 114 Page ID
#:11137
11
and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12
purchases, which are not in the Class Period, are not included in the calculation of
13
Recognized Loss Amount. This information is needed by the Claims
14
Administrator for purposes of the overall evaluation of the Claim.)
f
15
23
$ $
24
27
28
10
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 84 of 114 Page ID
#:11138
6 E. Ending Position For 90-Day Look Back: State the total number
7 of shares of New Century Series A Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write s
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation,
11
17 NOT BE REVIEWED
26 B. Purchases:
27 (1) List all purchases of New Century Series B Preferred Stock made during
28 the period from May 5, 2005, through and including March 13, 2007. (NOTE: If
11
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 85 of 114 Page ID
#:11139
1 you acquired your New Century Series B Preferred Stock during this period in an
i
2 Offering or otherwise or other than by an open-market purchase, please provide a
3
3 complete description of the terms of the acquisition on a separate page.) Be sure to j
13 (ii) 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
1.5
and 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 overall evaluation of the Claim.)
19
C. Sales: List all sales of New Century Series B Preferred Stock
20
made during the period from May 5, 2005, through and including
21
June 10, 2007. Be sure to attach the required documentation.
Trade Date(s) (List
22
Chronologically) Number of Sales Total
23 Month/Day/Year Shares Sold Price Per Share Sales Price*
24 / / $ $
25
26
27 i
12
I'
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 86 of 114 Page ID
#:11140
6 E. Ending Position For 90-Day Look Back: State the total number
7 of shares of New Century Series B Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation.
11
12
19
20
21
22
23
24
25
26
27
28
13
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 87 of 114 Page ID
#:11141
14
sure to attach the required documentation.
Purchase Date(s) Number of Premium Strike Price
15
(List Option Price Per Expiration for Call -_
16 Chronologically) Contracts Share Month and Option
Month/Day/Year Purchased Year Contract
17
$
19 / / $ $ L
20 / / $ $
21
22 C. Sales: List all Call Option contracts on New Century Common
23 Stock that you sold during the period from May 5, 2005, through
24 and including March 13, 2007. Be sure to attach the required
25 documentation.
26
27
28
14
I
7
8
D. Exercised Calls: List all Call Option contracts on New Century
9
Common Stock that you exercised during the period from May 5,
10
2005, through and including March 13, 2007. Be sure to attach
11
the required documentation.
12
Strike
13 Price for
14
Expiration Call Number of Call Result:
Month and Option Option Contracts Rec'd Shares
15 Date Exercised Year Contract Exercised Or Cash?
16
17
18
19
20
E. Expired Calls: List all Call Option contracts on New Century
21
Common Stock that expired worthless during the period from
22
May 5, 2005, through and including March 13, 2007. Be sure to
23
attach the required documentation.
24
25
26
27
28
15
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 89 of 114 Page ID
#:11143
8
F. Unsold/Unexpired Calls: List Call Option contracts on New
9 Century Common Stock that were open as of the close of the
10 market on March 13, 2007.
11
12
Strike Price
13 Number of Call per Call
14
Option Contracts Position: Short or Expiration Month Option
Open Long and Year Contract
15 $
16 $
17
18
19
20 +
21
22
23
24
25
26
27
28
16
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 90 of 114 Page ID
#:11144
9
10
B. Sales: List all Put Option contracts on New Century Common
11
12 Stock that you sold (wrote) during the period from May 5, 2005,
13
through and including March 13, 2007. Be sure to attach the
14 required documentation.
Sales Date(s) Premium
15
(Writing) (List Number of Put Price Per Expiration Strike Price for
16 Chronologically) Option Share Month and Put Option
17 Month/Day/Year Contracts Sold Year Contract
18 / / $ $
19 / / $ $
20 / / $ $
21
22
23
24
25
26
27
28
17
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 91 of 114 Page ID
#:11145
4
1 C. Purchases: List all Put Option contracts on New Century
2 Common Stock that you purchased or acquired during the period
i
3 from May 5, 2005, through and including March 13, 2007. Be I
I
4 sure to attach the required documentation.
5 Purchase Date(s) Number of Put Premium
6
(List Option Price Per Expiration Strike Price per
Chronologically) Contracts Share Month and Put Option
7 Month/Day/Year Purchased Year Contract
8 $ $
9 $ $
10
11
12
D. Exercised Puts: List all Put Option contracts on New Century
13
Common Stock that you exercised during the period from May 5,
14
2005, through and including March 13, 2007. Be sure to attach
15
the required documentation. e-
16
Strike Number of Put Result:
17 Expiration Price for Option Contracts Delivered
Month and Put Option Exercised Shares or
18
Date Exercised Year Contract Paid?
19
20
21
22 i
23
E. Expired Puts: List all Put Option contracts on New Century
24
Common Stock that expired worthless during the period from
25
May 5, 2005, through and including March 13, 2007. Be sure to
26
attach the required documentation.
27
28
18
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 92 of 114 Page ID
#:11146
1 Date Contracts
2 Expired (List Number of Strike Price for
Chronologically) Expired Put Expiration Month Put Option
3 Month/Day/Year Contracts and Year Contract
4 / / $
$
5
6
$
7 i
8
F. Unexpired Puts: List Put Option contracts on New Century
9 Common Stock open as of the close of the market on March 13,
10
2007.
11
Number of Strike Price for
12 Unexpired Put Position: Short or Expiration Month Put Option
13
Options Contracts Long and Year Contract
14 $
15
16
YOU MUST READ THE FOLLOWING RELEASE AND SIGN ON PAGE
f
17 RELEASE OF CLAIMS
18 Definitions
19 Defined 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
24
The Releases
25 Officer and Director Release
26 I (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
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 93 of 114 Page ID
#:11147
E
1 Member, on behalf of themselves, for good and sufficient consideration, the receipt
2 and adequacy of which are hereby acknowledged, whether or not a Proof of Claim
r
3 is executed and delivered by, or on behalf of, such Class Member, will be deemed
4 by operation of law to have released, waived, discharged and dismissed each and
5 every 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
9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10 any and all claims and causes of action of every nature and description, whether
11 known or Unknown Claims, whether arising under federal, state, common or
12 foreign 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
14 are based upon the allegations, transactions, facts, matters or occurrences,
i
15 representations or omissions involved, set forth, or referred to in the Consolidated
E-
16 Action, 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
20 relating to the enforcement of the Settlement. "Released Officers And Directors"
21 in this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23 D. Goldberg, and any of their respective heirs, executors, administrators,
25 and (ii) all directors, officers, employees, and other natural persons affiliated with
26 New Century (including any of its subsidiaries and affiliates) included in the
28 Global Officer And Director Stipulation) and any and all of their respective heirs,
20
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 94 of 114 Page ID
#:11148
3 KPMG Release
e
4 I (we) understand and acknowledge that, without further action by anyone,
5 on and after entry of the KPMG Judgment and occurrence of the Effective Date of j
6 the KPMG Settlement, each Class Member, on behalf of themselves, for good and
9 behalf of, such Class Member, will be deemed by operation of law to have
10 released, waived, discharged and dismissed each and every Settled Claim, and
11 shall forever be enjoined from prosecuting any or all Settled Claims, against any
12 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
14 Unknown, whether arising under federal, state, common or foreign law, that
15 Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b) E
16 could have asserted in any forum that arise out of or are based upon the allegations, f
2 0 New Century Series B Preferred Stock, and/or New Century Call Options and/or
21 the sale of New Century Put Options during the Class Period. "Settled Claims"
22 does not include claims relating to the enforcement of the Settlements. "Released
23 Auditor Party" means KPMG and any and all of its partners, principals, officers,
26
27
28
21
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 95 of 114 Page ID
#:11149
1 Underwriter Release
2 I (we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
6 predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
13 Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
15 whether 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,
20 Common Stock, New Century Series A Preferred Stock, New Century Series B
21 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
24 means the Underwriter Defendants and any and all of their respective parent
22
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 96 of 114 Page ID
#:11150
23
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 97 of 114 Page ID
#:11151
f
1 10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2 Court's summary disposition of the determination of the validity or
I
3 amount of the claim made by this Proof of Claim; and
4 11.that I (we) certify that I am (we are) not subject to backup withholding N
5 under the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6 Code.
7 NOTE: If you have been notified by the Internal Revenue Service that you are
8 subject to backup withholding, please strike the language that you are not
9 subject to backup withholding in the certification above. The Internal Revenue
10 Service does not require your consent to any provision other than the
11 certification required to avoid backup withholding.
12
13
14
15
1
16
17
18
19
20
21
22 I
23
24
25
26
27
28
24
i
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 98 of 114 Page ID
#:11152
d
1 I declare, under penalty of perjury under the laws of the United States of k
2 America, that the statements made and answers given in this Proof of Claim are
3 true and correct and that the documents submitted herewith are true and genuine.
E
4 p
5
Signature of Claimant j
6 i
7
$ Print Name of Claimant Date Signed
16
18
19 Print Name of Person Completing Form Date Signed
20
21 Capacity of Person Signing (Executor, President, Trustee, etc.)
22 I
23
24
25
26
27
28
25
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 99 of 114 Page ID
#:11153
i
1 REMINDER CHECKLIST
2 Please sign the Proof of Claim on page
3 If this Claim is being made on behalf of Joint Claimants, then both must sign.
4 Please remember to attach supporting documents.
5 If you move, please send your new address to:
6 In re New Century Securities Litigation Settlement
7 c/o Analytics, Inc., Claims Administrator
P.O. Box 2004
8 Chanhassen, MN 55317-2004
1-866-308-7615
9
10
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.
11
12 Keep a copy of your Proof of Claim and all documentation submitted for your
13 records.
18
19
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20 OF TIME.
21 THANK YOU FOR YOUR PATIENCE
22
23
24
25
26
27
28
26
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 100 of 114 Page ID
#:11154
Id
I
I
E
zF
TO KPMG STIPULATION
i
E
I
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 101 of 114 Page ID
#:11155
5
6
SUMMARY NOTICE
7
8 TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
9
10 9.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
"SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
I (
CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
12
PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
13
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 1 2005, THROUGH MARCH 13, 2007,
INCLUSIVE:
16
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 in
23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00). The 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
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 102 of 114 Page ID
#:11156
O
12 whether the proposed
P p Settlements should be approved
pp bY the Court as fair,,
2 reasonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable and I
adequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation 1
Expenses should be approved.
4
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
GI
2
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 103 of 114 Page ID
#:11157
3
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 104 of 114 Page ID
#:11158
i
I^
EXHIBIT B
TO KPMG STIPULATION
i
f
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 105 of 114 Page ID
#:11159
1 ^.
6
7
8 1
14
18
19
20
21
22
23
24
25
26
27 f
28
KPMG JUDGMENT
Case No. 2:07-ev-00931-DDP (FMOx)
E
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 106 of 114 Page ID
#:11160
1 This matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
i
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,
17 Action and over all Parties to the Consolidated Action, including all members of
18 the Class.
19 3. The 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:
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 107 of 114 Page ID
#:11161
1 of any such excluded -arty. Also excluded from the Class are any
persons who exclude t Iemselves b filing a request for exclusion in
2 ccor with the requirements set
dance rthfoin the Notice, as listed on
Exhibit 1 annexed hereto.
3
4
4. The Court also affirms its findings in the Preliminary Approval Order
5
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)
8
9 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 Hooten are typical of the claims of the Class they seek to represent; (d) PI
11
12 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 over
13
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.
5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
17
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
Counsel Bernstein Litowitz Berger & Grossmann LLP as Class Counsel.
19
6. Pursuant to Federal Rule of Civil Procedure 23, this Court hereby
20
21 approves the KPMG Settlement set forth in the KPMG Stipulation and finds that
the KPMG Settlement is, in all respects, fair, reasonable, and adequate to the Lead
22
23 Plaintiff, the Class and each of the Class Members. The Court further finds that
the KPMG Settlement set forth in the KPMG Stipulation is the result of arm's-
24
length negotiations between experienced counsel representing the interests of the
25
26 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
2 KPMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 108 of 114 Page ID
#:11162
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
i
11 delivered on or before the date set forth in the Notice and the Preliminary
12 Approval Order, are bound by this Judgment.
13 8. The 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 9. Upon the Effective Date, Plaintiffs and members of the Class shall be
17 deemed by operation of law to have released, waived, discharged and dismissed
18 each and every Settled Claim, and shall forever be enjoined from prosecuting any
19 or all Settled Claims, against any Released Auditor Party.
20 10. 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
i
25 Released Parties' Claims, against Plaintiffs and their employees, agents and
26 attorneys, and all other Class Members.
27 11. Upon the Effective Date, and conditioned on KPMG and the other
28 Released Auditor Parties receiving substantively reciprocal releases from the
3 KPMG JUDGMENT
Case No. 2:07-ov-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 109 of 114 Page ID
#:11163
1 Settling Individuals, KPMG and the other Released Auditor Parties shall be
'n
2 deemed to have released, waived, discharged and dismissed, and shall forever be
i
3 enjoined from prosecuting, all Claims Against Directors And Officers against the d
4 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
i
8 similar substantively reciprocal releases.
9 12. 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.
19 13. Upon the Effective Date, and conditioned on KPMG and the other
20 Released Auditor Parties receiving reciprocal releases from Kodiak, KPMG and
i
21 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
4 KPMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FMOx)
9
!I
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 110 of 114 Page ID
#:11164
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.
4 14. 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).
11 15. 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 e
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.
23 16. 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
26
27
28
5 KPMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FMOx)
k
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 111 of 114 Page ID ^!
#:11165
1 proceeds of the Settlements' among the Class Members with due consideration
r
2 having been given to administrative convenience and necessity.
3 17. 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.
7 18. 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 ,14
6 KPMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 112 of 114 Page ID
#:11166
7 KPMG JUDGMENT !
Case No. 2:07-ev-00931-DDP (FMOx)
f.
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 113 of 114 Page ID
#:11167
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.
8 21. 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.
19 22. 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.
22 23. 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
8 KPMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FMOx)
a
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 114 of 114 Page ID
#:11168
9 KPMG JUDGMENT
Case No. 2:07-ev-00931-DDP (FMOx)
EXHIBIT 4
TO UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENTS
-1- €
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 2 of 33 Page ID
#:11170
1
2
7
UNITED STATES DISTRICT COURT
8
CENTRAL DISTRICT OF CALIFORNIA
9
IN RE NEW CENTURY Case No. 2:07-cv-00931-DDP (FMOx)
10 (Lead Case)
11
12
13
14
17
18
19
20
21
22
23
24
25
26
27
28
UW STIPULATION OF SETTLEMENT
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 3 of 33 Page ID
#:11171
4 State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson
5 and Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned
13 Claims (as defined below) against the Underwriter Defendants and all other
15 WHEREAS:
16 A. All terms with initial capitalization not otherwise defined herein shall
17 have the meanings ascribed to them in ¶l herein.
18 B. Beginning on or about February 8, 2007, securities class action
19 complaints were filed in the United States District Court for the Central District of
20 California against certain of the Defendants; and the actions were consolidated by
24 and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
28 under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
1 Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased
2 or otherwise acquired New Century Financial Corporation ("New Century" or the
3 "Company") common stock; New Century 9.125% Series A Cumulative
4 Redeemable Preferred Stock ("Series A Preferred Stock"); New Century 9.75%
5 Series 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
7 the 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 disclosure of certain facts, were injured thereby;
10 E. Beginning on November 2, 2007, Defendants filed motions to dismiss
11 the Consolidated Complaint, which Plaintiffs opposed on December 14, 2007;
12 F. By Order dated January 31, 2008, the Court granted the motions to
13 dismiss with leave to amend the complaint;
14 G. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
15 Action Complaint ("Amended Complaint"), alleging claims against Defendants
19 against Defendants pursuant to the Securities Act and the Exchange Act;
20 I. Beginning on June 2, 2008, Defendants filed motions to dismiss the
21 Complaint, which Plaintiffs opposed on July 7, 2008;
22 J. Following a hearing, by Order dated December 3, 2008, the Court
23 substantially denied Defendants' motions to dismiss;
6 forth herein;
7 O. The Underwriter Defendants deny any wrongdoing whatsoever and
8 this Stipulation shall in no event be construed or deemed to be evidence of or an
14 Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled
15 after receiving advice of counsel, and that the terms of the settlement are fair,
16 adequate 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 P. Lead Counsel represents that it has conducted an extensive
19 investigation and thorough discovery relating to the claims and the underlying
20 events and transactions alleged in the Complaint. Lead Counsel represents that it
21 has analyzed the evidence adduced through discovery and has researched the
22 applicable law with respect to the claims of Plaintiffs and the other members of the
27 the Class, and in their best interests, and have agreed to settle the claims raised in
28 the action pursuant to the terms and provisions of this Stipulation, after considering
1 (1) the benefits that the Class will receive from the Underwriter 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;
4 NOW THEREFORE, without any admission or concession on the part of
5 Plaintiffs of any lack of merit of the action whatsoever, and without any admission
8 STIPULATED AND AGREED, by and among the Parties, through their respective
9 attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal
10 Rules 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)
12 as against the Released Underwriter Parties (as defined below) and all Released
13 Parties' Claims (as defined below) shall be compromised, settled, released and
14 dismissed with prejudice, upon and subject to the following terms and conditions:
15 DEFINITIONS
16 1. As used in this Stipulation, the following terms have the following
17 meanings:
18 a) "Authorized Claimant" means a Class Member who submits a
19 timely and valid Proof of Claim Form and all required documentation to the
20 Claims Administrator, in accordance with the requirements established by the Plan
21 of Allocation approved by the Court, that is approved for payment from the Net
22 Settlement Fund.
1 Exhibit A, that a Claimant or Class Member must complete should that Claimant or
i
2 Class Member seek to share in a distribution of the Net Settlement Fund.
13 and/or who sold New Century put options, during the time period from May 5,
14 2005, through and including March 13, 2007, either in the Offerings (as defined
19 (d) any person or entity who was a partner, executive officer, director or controlling
20 person of New Century (including any of its subsidiaries or affiliates) or of any
I
21 Defendant; (e) any entity in which any Defendant has a controlling interest; and (f)
22 the legal representatives, heirs, successors and assigns of any such excluded party.
23 Also excluded from the Class are any persons who exclude themselves by filing a
24 request for exclusion in accordance with the requirements set forth in the Notice.
28
9 1) "Court" means the United States District Court for the Central
10 District of California.
i
11 m) "Defendants" means the Underwriter Defendants, KPMG, and
12 the Individual Defendants.
13 n) "Effective Date" means the date on which all the following
14 shall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)
15 payment of the Underwriter Settlement Amount has been made pursuant to 118
16 below; (c) notice has been provided to the Class, and the Underwriters have not
18 pursuant to the Supplemental Agreement described in ¶32 below; (d) the Court has
19 approved the Underwriter Settlement, following a hearing, as prescribed by
20 Rule 23 of the Federal Rules of Civil Procedure; (e) the Court has entered the
22 which has become Final; and (f) the Court has entered the Officer And Director
23 Judgment and KPMG Judgment, which have become Final.
26 deemed to be in the custody of the Court and shall remain subject to the
27 jurisdiction of the Court until such time as the funds are distributed or returned
28 pursuant to the teens of this Stipulation and/or further order of the Court.
8 (ii) if there has been an appeal, (a) that the appeal has been decided without
9 causing 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
20 the other Released Underwriter Parties, arising under federal, state, common or
21 foreign law, arising out of or based upon the allegations, transactions, facts, matters
12 aa) "Notice and Administration Costs" means the costs, fees and
13 expenses that are incurred by the Claims Administrator and Lead Counsel in
14 connection with (1) providing notice to the Class; and (ii) administering the Claims
15 process.
21 Defendants of each and every claim against the Underwriter Defendants and the
22 Released Underwriter Parties whether arising under federal, state, common or
23 foreign law, arising out of or based upon the allegations, transactions, facts, matters
28
15 jj) "Released Parties' Claims" means any and all claims and causes
16 of action of every nature and description, whether known or Unknown, whether
17 arising under federal, state, common or foreign law, that arise out of or relate in
I8 any way to the institution, prosecution, or settlement of the claims against the
25 and attorneys. "Released Underwriter Parties" does not include any Defendants
26 other than the Underwriter Defendants.
27 11) "Settled Claims" means any and all claims and causes of action
28 of every nature and description, whether known or Unknown, whether arising
I
-9- UW STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 12 of 33 Page ID
#:11180
1 under federal, state, common or foreign law, that Plaintiffs or any other member of
i
2 the Class (a) asserted in the Complaint, or (b) could have asserted in any forum
3 that arise out of or are based upon the allegations, transactions, facts, matters or
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 options
8 during the Class Period. Additionally, "Settled Claims" does not include claims
12 nn) "Settlement Hearing" means the hearing set by the Court under
13 Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of
14 the Underwriter Settlement.
17 Stergios Theologides.
23 expenses and costs incurred by Lead Counsel in connection with determining the
24 amount of, and paying, any taxes owed by the Settlement Fund (including, without
1 Rule 54(b) of the Federal Rules of Civil Procedure approving the Underwriter
2 Settlement.
1
1
8 uu) "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 & Company, Inc.
12 vv) "Unknown Claims" means any and all Settled Claims that
13 Plaintiffs or any Class Member does not know or suspect to exist in his, her or its
14 favor at the time of the release of the Released Underwriter Parties, and any
15 Released 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
17 affected his, her or its decision(s) with respect to the Underwriter Settlement. With
18 respect 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
20 Underwriter Parties shall expressly waive, and each Class Member shall be
21 deemed to have waived, and by operation of the Underwriter Judgment shall have
22 expressly waived, any and all provisions, rights and benefits conferred by any law
23 of any state or territory of the United States, or principle of common law, that is
6 Claims was separately bargained for and was a key element of the Underwriter
7 Settlement.
8 CLASS CERTIFICATION
9 2. The Parties stipulate and agree to: (a) certification of the Consolidated
10 Action 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)
12 appointment of Plaintiffs as the Class Representatives; and (c) appointment of
13 Lead Counsel as Class Counsel pursuant to Rule 23(g) of the Federal Rules of
14 Civil Procedure. Following execution of this Stipulation, Plaintiffs, with the
15 consent of the Underwriter Defendants, shall apply to the Court for entry of the
16 Preliminary Approval Order, which will certify the Consolidated Action to proceed
17 as a class action. The Parties shall have the right to withdraw from the agreement
18 to stipulate and agree to class certification and the appointment of Class
19 Representatives and Class Counsel in the event that the Underwriter Settlement
20 does not become Final.
21 RELEASE OF CLAIMS
22 3. The obligations incurred pursuant to this Stipulation shall be in full
23 and final disposition of the Consolidated Action against the Underwriter
24 Defendants; and shall fully and finally release any and all Settled Claims as against
25 all Released Underwriter Parties and shall also release as against the Plaintiffs and
26 all other Class Members any and all Released Parties' Claims, and shall also fully
13 their current and former officers, directors, employees, agents and attorneys shall
i
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
17 their employees, agents and attorneys, and all other Class Members.
21 every claim, and shall forever be enjoined from prosecuting any claim, against any
22 of the Settling Individuals, whether arising under federal, state, common or foreign
23 law, arising out of or based upon the allegations, transactions, facts, matters or
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 receipt 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 9. If 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
23 Underwriter 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.
26 USE OF SETTLEMENT FUNDS
27 10. The Settlement Fund shall be used to pay: (i) any Taxes; (ii) any
28 Notice and Administration Costs; (iii) any attorneys' fees awarded by the Court;
1 and (iv) any Litigation Expenses awarded by the Court. The balance remaining in
2 the Settlement Fund, after payment of items (I)-(iv), shall be distributed to
9 the 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
11 Escrow Account in United States Treasury Bills (or a mutual fund invested solely
12 in such instruments) and shall collect and reinvest all interest accrued thereon,
13 except that any residual cash balances of less than $100,000 may be invested in
18 and that Lead Counsel, as administrator of the Settlement Fund within the meaning
23 consistent with this paragraph and in all events shall reflect that all Taxes on the
24 income earned on the Settlement Fund shall be paid out of the Settlement Fund as
25 provided by Paragraph 13 below. Lead Counsel shall also be solely responsible for
26 causing payment to be made from the Settlement Fund of any Taxes owed with
27 respect to the Settlement Fund. Upon written request, the Underwriter Defendants
28 will provide promptly to Lead Counsel any statements or infonnation required for
9 13. All Taxes shall be paid out of the Settlement Fund, and shall be timely
10 paid by the Escrow Agent pursuant to the disbursement instructions to be set forth
11 in the Escrow Agreement, and without prior Order of the Court. Any tax returns
12 prepared for the Settlement Fund (as well as the election set forth therein) shall be
13 consistent 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
15 shall be paid out of the Settlement Fund as provided herein. The Settlement Fund
16 shall indemnify and hold all Released Underwriter Parties harmless for any Taxes
17 and related expenses of any kind whatsoever (including without limitation, taxes
18 payable by reason of any such indemnification), if any, payable by Underwriter
22 14. This is not a claims-made settlement. Once the Effective Date occurs,
23 neither the Underwriter Defendants, their insurance carriers, nor any other
24 Released Underwriter Parties nor any other person or entity that contributed to the
25 Settlement Fund on their behalf, will have the right or ability to get back any of the
28
16 Stipulation, Plaintiffs shall seek shareholder lists from the Trustee for New Century
17 or others. In addition, the Underwriter Defendants shall make best efforts to cause
18 to be provided to the Claims Administrator (at no cost to the Settlement Fund, Lead
19 Counsel or the Claims Administrator) New Century's shareholder lists to the extent
20 that such documents have been located after a reasonably diligent search of the
21 documents already gathered or produced to Plaintiffs. The Underwriter Defendants
22 represent, and Plaintiffs and their counsel recognize, that any such lists will only
23 include the names of purchasers of securities in the initial Offerings and that the
24 current owners of the securities may differ significantly from the names on the list.
25 The Underwriter Defendants offer no assurance that they will be able to locate any
26 shareholder lists in the documents gathered or produced to Plaintiffs, nor can they
27 provide any assurance that any shareholder lists that they do locate have any useful
1 16. Lead Counsel may pay from the Escrow Account, without further
P
9 the 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
11 or 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
i
13 the Settlement Fund on their behalf.
19 Underwriter Defendants, nor any other Released Underwriter Party, shall take any
20 position with respect to Lead Counsel's applications or awards discussed in this
21 paragraph. Such matters are not the subject of any agreement between Underwriter
22 Defendants and Plaintiffs other than what is set forth in this Stipulation.
23 18. Any attorneys' fees and Litigation Expenses that are awarded by the
24 Court shall be paid to Lead Counsel, with the Court's approval, immediately upon
27 any part thereof, subject to Lead Counsel's obligation to pay back any such amount
28 if, as a result of any appeal, further proceeding or successful collateral attack, the
7 Expenses is not a necessary term of this Stipulation and is not a condition of this
8 Stipulation.
9 19, Lead Counsel shall have the sole authority to allocate the Court-
10 awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
11 faith, believes reflects the contributions of such counsel to the prosecution and
12 settlement of the Consolidated Action. Underwriter Defendants shall have no
13 responsibility for any such allocation and shall not be liable for any claims relating
14 to such allocation.
15 CLAIMS ADMINISTRATOR
16 20. The Claims Administrator shall administer the process of receiving,
17 reviewing and approving or denying Claims under Lead Counsel's supervision and
18 subject to the jurisdiction of the Court. Other than Underwriter Defendants'
19 obligation to use best efforts to attempt to locate and provide New Century's
21 have any responsibility for, involvement in or liability for providing notice to the
22 Class, the administration of the Underwriter Settlement, the allocation of the
26 effectuate its terms. The allocation of the Net Settlement Fund among Authorized
2 separate and apart from the proposed Settlement between the Underwriter
3 Defendants and Plaintiffs, and any decision by the Court concerning the Plan of
4 Allocation shall not affect the validity or finality of the proposed Settlement.
5 21. The Claims Administrator shall receive Claims and determine first,
9
6 whether the Claim is a valid Claim, in whole or part, and second, each Authorized
7 Claimant's pro rata share of the Net Settlement Fund as set forth in the Plan of
13 23. Any Class Member who does not submit a valid Claim Form will not
14 be entitled to receive any distribution from the Net Settlement Fund but will
17 Action and the releases provided for herein, and will be permanently barred and
18 enjoined from bringing any action, claim, or other proceeding of any kind against
19 any Released Underwriter Party concerning any Settled Claim.
20 24. Lead Counsel shall be responsible for supervising the administration
21 of the Settlement and disbursement of the Net Settlement Fund. Neither
22 Underwriter Defendants, nor any other Released Underwriter Party, shall have any
23 liability, obligation or responsibility whatsoever for the administration of the
26 permitted to review, contest or object to any Claim Form or any decision of the
28 Claim Form or Claim for payment by a Class Member. Lead Counsel shall have
1 the right, but not the obligation, to waive what they deem to be formal or technical
11 Lead Counsel, in their discretion, may deem acceptable, by the date set by the
12 Court;
15 in accordance with this Stipulation the extent, if any, to which each Claim shall be
22 shall notify, in a timely fashion and in writing, all Claimants whose Claim the
24 reasons therefor, and shall indicate in such notice that the Claimant whose Claim is
25 to be rejected has the right to a review by the Court if the Claimant so desires and
1 after the date of mailing of the notice required in subparagraph (c) above, serve
2 upon the Claims Administrator a notice and statement of reasons indicating the
3 Claimant's grounds for contesting the rejection along with any supporting
4 documentation, and requesting a review thereof by the Court. If a dispute
13 investigation and discovery under the Federal Rules of Civil Procedure, provided
14 that such investigation and discovery shall be limited to that Claimant's status as a
15 Class Member and the validity and amount of the Claimant's Claim. No discovery
16 shall be allowed on the merits of this Consolidated Action or this Underwriter
23 from the Escrow Account; (iii) if the Effective Date has occurred, directing
24 payment of the Net Settlement Fund to Authorized Claimants from the Escrow
26 28. Payment pursuant to the Class Distribution Order shall be final and
27 conclusive against all Class Members. All Class Members whose Claims are not
28 approved by the Court shall be barred from participating in distributions from the
1 Net Settlement Fund, but otherwise shall be bound by all of the terms of this
2 Stipulation and the Underwriter Settlement, including the terms of the Judgment to
3 be entered in this Consolidated Action and the releases provided for therein, and
4 will be permanently barred and enjoined from bringing any action against any and
5 all Released Underwriter Parties concerning any and all of the Settled Claims.
15 Procedure.
16 WAIVER OR TERMINATION
17 31. Within thirty (30) days of: (a) the Court's declining to enter, without
18 leave to resubmit, the Preliminary Approval Order in any material respect; (b) the
19 Court's refusal to approve this Stipulation or any material part of it; (c) the Court's 4
20 declining to enter the Underwriter Judgment in any material respect; or (d) the date
23 the 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
26 respect to any plan of allocation, shall not be considered material to the
27 Underwriter Settlement and shall not be grounds for termination.
28
12 requests for exclusion from the Class received by the Claims Administrator (or
13 other person designated to receive exclusion requests) shall be provided to Lead
14 Counsel and Underwriter Defendants' coLUlsel no later than fifteen (15) days prior
16 Agreement is reached, Underwriter Defendants shall have until 5:00 p.m. PDT of
17 the seventh day before the Final Approval Hearing to inform Lead Counsel, in
18 writing, that they unanimously elect to exercise their option to terminate the
19 Underwriter Settlement and this Stipulation. Lead Counsel shall have the right to
20 communicate with the holders of such shares and, if a sufficient number of them
21 withdraw 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 represents less than the threshold, the notice of termination shall be deemed
24 withdrawn.
25 34. Except as otherwise provided herein, in the event that the Underwriter
26 Settlement is terminated, the Parties shall be deemed to have reverted to their
28 and, except as otherwise expressly provided, the Parties shall proceed in all
1 respects as if this Stipulation and any related orders had not been entered, and any
2 portion of the Underwriter Settlement consideration previously paid (including any
3 and all interest, income, or other investment return actually accrued), less any
4 amounts paid or incurred for Notice and Administration Costs actually incurred
5 and 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
7 such event by Lead Counsel to the Escrow Agent, pursuant to the terms of the
8 Escrow Agreement.
9 NO ADMISSION OF WRONGDOING
10 35. This Stipulation, whether or not consummated, and any proceedings
11 taken pursuant to it:
12 a. shall not be offered or received against any of the Released
13 Underwriter Parties as evidence of, or construed as, or deemed to be evidence of
i
14 any presumption, concession, or admission by any of the Released Underwriter
15 Parties 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
17 Underwriter Parties in this Consolidated Action or in any litigation, or of any
18 liability, negligence, fault, or other wrongdoing of any kind of any of the Released
19 Underwriter Parties;
20 b. shall not be offered or received against any of the Released
21 Underwriter Parties as evidence of a presumption, concession or admission of any
22 fault, misrepresentation or omission with respect to any statement or written
1 negligence, fault or wrongdoing of any kind, or in any way referred to for any
2 other reason as against any of the Released Underwriter Parties, in any other civil,
3 criminal or administrative action or proceeding, other than such proceedings as
6 any other Released Underwriter Party, or any Class Member may refer to it to
14 without merit or that damages recoverable under the Complaint would not have
23 upon the appropriate State official of each State and the Attorney General of the
24 United States a CAFA Notice The Parties will request that, pursuant to 28 U.S.C. §
25 1.715(d), the Final Approval Hearing be scheduled for no earlier than ninety (90)
26 days following the deadline for Underwriter Defendants to serve the CAFA Notice
1 the CAFA Notice requirements will not provide grounds for delay of the Final
2 Approval Hearing or entry of the Underwriter Judgment.
3 MISCELLANEOUS PROVISIONS
4 37. All of the exhibits attached hereto are hereby incorporated by
5 reference as though fully set forth herein.
6 38. Underwriter Defendants each warrant that, as to the payments made
7 by or on behalf of it, at the time of such payment, it was not insolvent, nor did nor
8 will 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 not by their counsel.
17 money to the Settlement Fund or any portion thereof by or on behalf of any of the
18 Underwriter 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
21 election of Lead Counsel, the Parties shall jointly move the Court to vacate and set
22 aside the releases given and the Judgment entered in favor of Underwriter
23 Defendants and the other Released Underwriter Parties pursuant to this Stipulation,
24 which releases and Judgment shall be null and void; the Parties shall be restored to
25 their respective positions in the litigation immediately prior to May 5, 2010; and
27 Paragraph 34 above.
28
4 Underwriter Parties with respect to all Settled Claims. Accordingly, the Parties
5 agree not to assert in any forum that this Consolidated Action was brought or
6 defended in bad faith or without a reasonable basis. The Parties hereto shall assert
7 no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure
8 relating 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
10 negotiated at arm's-length in good faith by the Parties, including a mediation
14 41. While retaining their rights to deny that the claims asserted in the
I
15 Consolidated Action were meritorious, Underwriter Defendants in any statement
16 made to any media representative (whether or not for attribution) will not deny that
17 the Consolidated Action was commenced and prosecuted in good faith and is being
18 settled voluntarily after consultation with competent legal counsel. In all events,
19 the Parties shall refrain from any accusations of wrongful or actionable conduct by
20 any Party concerning the prosecution and resolution of the Consolidated Action,
21 and shall not otherwise suggest that the Settlement constitutes an admission of any
23 42. This Stipulation may not be modified or amended, nor may any of its
24 provisions be waived except by a writing signed by all signatories hereto or their
25 successors-in-interest.
26 43. The headings herein are used for the purpose of convenience only and
27 are not meant to have legal effect.
28
8 Stipulation.
9 46. This Stipulation and its exhibits constitute the entire agreement among
10 the Parties hereto concerning this Underwriter Settlement, and no representations,
11 warranties, or inducements have been made by any Party hereto concerning this
12 Stipulation and its exhibits other than those contained and memorialized in such
13 documents.
14 47. This Stipulation may be executed in one or more original and/or faxed
15 counterparts. All executed counterparts and each of them shall be deemed to be
16 one and the same instrument provided that counsel for the signatories of this
19 48. This Stipulation shall be binding upon, and inure to the benefit of, the
20 successors and assigns of the Parties hereto.
23 internal laws of the State of California without regard to conflicts of laws, except
24 to the extent that federal law requires that federal law govern.
25 50. This Stipulation shall not be construed more strictly against one Party
26 than another merely by virtue of the fact that it, or any part of it, may have been
27 prepared by counsel for one of the Parties, it being recognized that it is the result of
28
1 arm's-length negotiations between the Parties and all Parties have contributed
I
2 substantially and materially to the preparation of this Stipulation.
1
3 51. 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
^y
6 to take appropriate action required or permitted to be taken pursuant to the
7 Stipulation to effectuate its terms.
8 52. Counsel for the Parties agree to cooperate fully with one another in
9 seeking 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 final
12 approval by the Court of the Settlement.
13 53. 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 of a
16 receipt.
/^
17 DATED AS OF: July 23, 2010 BERNSTE 13 OW '^^ ERGER
AL.
18 &. GRQ
19 ,/ r
20
SALV , TORE J " RAZIANO
21 BLAIR A. N CIIOLAS
ELIZABETH LIN
22 NIKI L, MENDOZA
BENJAMIN GALDSTON
23 TAKEO A. KELLAR
12481 Nigh Bluff Drive, Suite 300
24 San Diego, CA 92130
Tel:(858) 793-0070
25 Fax: (858) 793-0323
-and-
26 SALVATORE J. GRAZIANO
LAUREN A. MCMILLEN
27 1285 Avenue of the Americas
New York, NY 10019
28 Tel: (212) 554-1400
Fax: (212) 554-1444
-30- Uw STIPULATION OF SETTLEMENT
Case No. 2;07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 33 of 33 Page ID
#:11201
1
MURRAY, FRANK & SAILER. LLP
2 MARVIN L. FRANK
275 Madison Avenue Suite 801
3 New York, NY 1001
Tel;212 682-1818
4 )
Fax: (212 682-1892
5 ZWERLING, SCHACHTER
& ZWERLING LLP
6 JEFFREY C. ZWERLING
41 Madison Avenue
7 New York, NY 10010
Tel:212 223-3900
8 Fax: (212) 371-5969
9 Lead Counsel for Lead Plaintiff The New
York State .Teachers' Retirement System and
10 the Class, and . Plaintiffs Carl Larson and
Charles .Hooten
11
15 ,A
WILLIAM S1 IV A
16
JOHNS. D ' v, T
17 515 South Flower Street, 25^b Floor
Los An eles, CA 90071
18 Tel: 13 683-6000
Fax: (213) 627-0705
19
Attorneys for Defendants Bear Stearns &
20 Co. Inc., now known as J.P. Morgan -
21 Securities Inc., Deutsche Barak Securities
Inc., Jefferies & Company Inc., JMP
22 Securities LLC, .Morgan ,Stanley chi Co. Inc.,
23 Piper Jaffray & Co., Roth Capital Partners
LLC, Stifel Nicolaus & Co. Inc.
24
25
26
27
28
I
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 1 of 113 Page ID
#:11202
r
^I
i
y
EXHIBIT A
TO UNDERWRITER STIPULATION
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 2 of 113 Page ID
#:11203 p.
F
1 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP I
2 BLAIR A. NICHOLAS (Bar No. 178428)
airnblbglaw.com)
3 NIZAVET H LIN (Bar No. 174663)
(elizabetNINDOZA
blbgglaw. com)
4 NIKI L. (Bar No. 214646)
kimlbglaw.com)
5 UNJAMI N GALDSTON (Bar No. 211114)
(ben %blbglaw.com)
6 A A. KELLAR (Bar No. 234470)
eok crblbglaw.com)
7 M81 1gh Bluff Drive, Suite 300
San Diego, CA 92130
8 Tel:(858) 793-0070
Fax: (858) 793-0323
9 -and-
SALVATORE J. GRAZIANO
10 sgrazianoa blb .com)
LAUREN 1. M MLLEN
11 (laurenm@blbglaw.com)
1285 Avenue of the Americas
12 New York, NY 10019
Tel: 212 554-1400
13 Fax: ^212^ 554-1444
14 Lead Coun sel for Lead Plaintiff New
York State Teachers' Retirement System
15
16
27
28
[PROPOSED] ORDER PRELIM. APPROVING
SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 3 of 113 Page ID
#:11204
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 NOW, THEREFORE, IT IS HEREBY ORDERED:
6 1. This 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
a
10 inconsistencies between the Stipulations and the Notice of Pendency of Class N
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 2. The Court hereby preliminarily approves the Settlements as being fair,,
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
16 CLASS CERTIFICATION
17 3. The Court hereby certifies, pursuant to Rules 23(a) and 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19 all persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred Stock, New
20 Century Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, during the time period
21 from May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,
22 and who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;b
23 members of the immediate families of the Individual Defendants; ^c)
the subsidiaries and affiliates of Defendants; (d) any person or entity
24 who was a partner, executive officer, director or controlling erson of
New Centur (including any of its subsidiaries or affiliates or of any
25 Defendant; (ye) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns
26 of any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filing a request for exclusion in
27 accordance with the requirements set forth In the Notice.
28
[PROPOSED] ORDER PRELIM. APPROVING
-2- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 5 of 113 Page ID
#:11206
1 4. The 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
6 System
Y "
( 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
i
11 available methods for the fair and efficient adjudication of the controversy.
12 5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs
1.3 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15 6. The Court appoints the firm of Analytics Incorporated ("Claims
t
18 a. Within 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 b. A 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
[PROPOSED] ORDER PRELIM. APPROVING
-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 6 of 113 Page ID
#:11207
1 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
2 Court proof of publication of the Summary Notice. y
3 7. The 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 8. For 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 9. Nominees 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
[PROPOSED] ORDER PRELIM. APPROVING
-4- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2;07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 7 of 113 Page ID
#:11208
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 E
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 13. 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.
23 14. 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.
27 15. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
[PROPOSED] ORDER PRELIM. APPROVING
-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 9 of 113 Page ID
#:11210
5
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
4 16. 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).
10 17. 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.
15 18. As set forth in the Stipulations, Defendants and their related parties
16 shall have no responsibility whatsoever for the administration of the Settlements or i
i
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
22 19. 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),
[PROPOSED] ORDER PRELIM. APPROVING
-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 10 of 113 Page ID
#:11211
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.
14 20. 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 I
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.
[PROPOSED] ORDER PRELIM. APPROVING
-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 1 1 of 113 Page ID
#:11212
1 21. 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.
r
4 22. 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.
9 23. 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.
16 24. As set forth in the Stipulations, Lead Counsel may pay from the
k
t
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.
3 25. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6 a. shall not be offered or received against any of the Released
7 PartieS4 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 b. shall 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 C. shall 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 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).
[PROPOSED] ORDER PRELIM. APPROVING
-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 13 of 113 Page ID
#:11214
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 d. shall 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 e. shall 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 f. shall 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 26. 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
28
[PROPOSED] ORDER PRELIM. APPROVING
-11- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 14 of 113 Page ID
#:11215
f
i
C'
i
IF
k
G
16
21 NOTICE OF PENDENCY OF
CLASS ACTION AND PROPOSED
22 SETTLEMENTS, SETTLEMENT
FAIRNESS HEARING, AND
23 MOTION FOR ATTORNEYS'
FEES AND REIMBURSEMENT
24 OF LITIGATION EXPENSES
25
27
28
NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 17 of 113 Page ID
#:11218
1 A Federal Court authorized this Notice. This is not a solicitation from a lawyer.
4 receipt of cash from the Settlements. Your legal rights will be affected
8 Plaintiff alleges that Defendants made false and misleading statements and/or
9 omitted 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 regarding claims against the Individual Defendants, the Underwriter Defendants,
13 and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14 Settlements, 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
1 May 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
3 certain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4 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
12 and other Released Parties in the Consolidated Action in exchange for total
19 Settlement Fund shall be allocated to the members of the Class. The proposed Plan
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 i
25 per Put Option, before deduction of Court-approved fees, expenses and costs
26 described herein.
1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2 shares or Options of New Century Securities were damaged as Plaintiffs have
3 alleged. The parties disagree on, among other things: (1) 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
i
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7 the 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
9 wrongfully withheld.
10 4. Statement 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
12 an amount not to exceed 12% of the Total Settlement Amount with interest from
13 the 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
15 incurred 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
18 Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
I
20 approximately $0.11 per share of Common Stock, approximately $0.32 per share
21 of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22 per Put Option.
25 Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
a
26 regarding the Settlements should be directed to Mr. Graziano at Bernstein Litowitz
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28
i
-5- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
5
6 Why Did I Get This Notice? Page
7 What Is This Case About? What Has Happened So Far? Page
8 How Do I Know If I Am Affected By The Settlements? Page
9 What Are The Lead Plaintiff's Reasons For The Settlements? Page
10
What Might Happen If There Were No Settlements? Page
ll How Much Will My Payment Be? Page
'
12
13 What Rights Am I Giving Up By Agreeing To The Settlements? Page
What Payment Are The Attorneys For The Class Seeking?
14
15 How Will The Lawyers Be Paid? Page
16 How Do I Participate In The Settlements? What Do I Need To Do? Page
17 What If I Do Not Want To Be A Part Of The Settlements?
18 How Do I Exclude Myself? Page
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? Page
22 What If I Bought Shares On Someone Else's Behalf? Page
23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24
WHY DID I GET THIS NOTICE?
25
26
6. This 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
-6- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 23 of 113 Page ID
#:11224
1 New Century Securities during the Class Period. The Court has directed us to send
2 you 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
5 generally 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 payments pursuant to the Settlements after any objections and appeals are resolved.
8 7. In 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
13 approved 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
15 Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs 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 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
20 of the class members, except for any persons who choose to exclude themselves
21 from the class. (For more information on excluding yourself from the Class, please
22 read "What If I Do Not Want To Be A Part Of The Settlements? How Do I
23 Exclude Myself?" located below.)
24 8. The Court in charge of this case is the United States District Court for
25 the Central District of California, and the case is known as In re New Century. The
26 Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27 District Judge. The people who are suing are called plaintiffs, and those who are
28 being sued are called defendants. In this case, the plaintiff is referred to as the
-7- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 24 of 113 Page ID
#:11225
1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 Defendants, the Underwriter Defendants and KPMG. New Century was not named
3 as a defendant because New Century has filed a petition for voluntary bankruptcy
4 and the Bankruptcy Code does not permit an action to proceed against a debtor
5 who has filed such a petition.
6 9. This Notice explains the lawsuit, the Settlements, your legal rights,
7 what 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
10 do so. It also is being sent to inform you of the terms of the proposed Settlements,
13 proposed Plan of Allocation, and the application by Lead Counsel for attorneys'
14 fees and reimbursement of Litigation Expenses (the "Settlement Hearing").
1 7 Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
1 8 California 90012 to determine:
19 1. whether this Consolidated Action should be finally certified, for
20 settlement purposes only, as a class action under Rules 23(a)
21 and (b) of the Federal Rules of Civil Procedure on behalf of the
22 Class;
23 2. whether the proposed Settlements are fair, reasonable, and
24 adequate and should be approved by the Court;
25 3. whether the claims against defendants and the other released
26 parties should be dismissed with prejudice as set forth in the
27 Stipulations;
28
16 13. 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 Chapter 11 of Title 11 of the United States Code.
19 14. 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 and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
22 Counsel for the Class.
25 under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
3 18. 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.
6 19. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
H
7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims
8 against Defendants pursuant to the Securities Act and the Exchange Act.
9 20. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10 Complaint, which Plaintiffs opposed on July 7, 2008.
11 21. Following a hearing, by Order dated December 3, 2008, the Court h,
12 substantially denied Defendants' motions to dismiss. G
13 22. Beginning on January 26, 2009, Defendants answered the Complaint.
14 23. The Parties began discovery in or about April 2009, including filing
15 multiple motions to compel and motions for protective order, and serving A
17 24. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgment, which Plaintiffs opposed on March 15, 2010.
22 terms 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. v Brad A. Morrice, et al. (Case No. 08-
27 adversary proceeding entitled The New Century Liquidating Trust and Reorganized
1 Trustee and Plan Administrator v. Robert K. Cole et al. (In re New Century TRS
2 Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
4 26. 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
10 27. 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/or
14 New 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 6
9 28. Lead Plaintiff and Lead Counsel believe that the claims asserted
10 against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
12 their claims against Defendants through trial and appeals, as well as the difficulties
13 in 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
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
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
20 Members' losses were caused by the alleged misrepresentations or omissions, and
21 the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22 uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23 Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24 given the expense and length of continued proceedings necessary to reach a
28 Settlements are fair, reasonable and adequate, and in the best interests of the Class.
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
i,
3 described 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
5 appeals, possibly years in the future.
6 30. 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
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
1 0 be construed as an admission of Defendants' wrongdoing.
11
WHAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
12
13 31. If there were no Settlements and Lead Plaintiff failed to establish any
14 essential legal or factual element of its claims, neither Lead Plaintiff nor the other
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
18 Settlements, or nothing at all.
19
HOW MUCH WILL MY PAYMENT BE?
20
21 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22 32. Pursuant to the respective Stipulations, the Individual Defendants
23 have agreed to pay or cause to be paid collectively $65,077,088.00; the
24 Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
i
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 30 of 113 Page ID
#:11231
15 Court. Plaintiffs, Defendants, their respective counsel, and all other Released
17 distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
25 and industry factors or Company-specific factors not related to the alleged wrongful
26 conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
28 regarding New Century and analysis regarding the stock price movements.
1 38. The proposed Plan of Allocation provides for distribution of the Net
2 Settlement Fund to Authorized Claimants as follows: .aI
3 I. SUMMARY OF PLAN OF ALLOCATION
13 during the Class Period in any such New Century Security; and (iii) each
15 Preferred 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
18 see 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 t
20 Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
25 5 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26
under this title in which the plaintiff seeks to establish damages by reference to the
market 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,
28
by 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
-16- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
27 Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007.
28
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2 to only purchasers of Series A Preferred Stock and Series B Preferred Stock; kl
4 Counsel assumed, for purposes of determining the Recognized Loss, that there
5 were varied amounts of artificial inflation in prices of New Century Securities
6 during the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
8 45. 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
10 Settlements for the purpose of making pro rata allocations of the cash from the
11 Underwriter Allotment and the Individual-Auditor Allotment to Class Members for
12 their respective class of Securities. The Plan of Allocation is not a formal damage
13
ii
analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14 that the prices of New Century Securities were artificially inflated during the Class
15 Period (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
18 March 13, 2007, removed artificial inflation from the prices of New Century
19 Securities.
20 46. The Plan of Allocation covers the following New Century Securities:
21 (i) Common Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
25 Security purchased or otherwise acquired during the first part of the Class Period,
26 from May 5, 2005 through February 7, 2007, must be held until or beyond
27 February 8, 2007, the first trading day after the first corrective disclosure.
1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
2 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 i
4 be 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
6 different parts of the Class Period described above and below (see the artificial
7 inflation Tables annexed hereto) for both the New Century Common 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
10 these transactions will be calculated as zero because it has been determined that the
11 artificial inflation between each disclosure and arising from the circumstances
12 underlying the allegations of Plaintiffs' Complaint was constant.
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 l
6 Recognized Loss Claim.
7 50. Each Authorized Claimant shall be allocated a pro rata portion or
d
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
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
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
18 Recognized Loss Claim.
22 of the amount that will be paid pursuant to this Settlement. Instead, this
23 computation is only a method to weigh Class Members' claims against one another.
24 52. To the extent a Claimant had a gain from his, her or its transactions
25 during the Class Period with respect to New Century Securities specified above,
26 the value of their Recognized Loss Claim will be zero. Such claimants will, in any
27 event, be bound by the Settlements. You may wish to consider this when deciding
i
28 whether to opt-out of the Settlements.
3 New Century Security or suffered an overall market loss, the Claims Administrator
4 shall determine the difference between (1) the Total Purchase Amount paid for all
5 purchases 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
8 Security 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
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
12 Claimant's market gain or loss on his, her, or its overall transactions in that
15 Century Security purchased during the Class Period will be netted against each
16 other 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
18 Options 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,
r.
20 gains and losses will not be netted or aggregated across different eligible New
21 Century Securities. For example, an Authorized Claimant's Recognized Loss
22 Claim (as calculated under this Plan) on New Century Common Stock/Options will
a
23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 any issue of New Century Preferred Stock.
25 55. 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 for exclusion and do not submit an acceptable Proof of Claim will nevertheless be
14 (a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages shall be allowed;
15
(b) For each share sold on or between March 5, 2007, and March 13, 2007,
16 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 2, annexed hereto,
17 less the inflation per share at the time of sale as set forth in Table 2; and
18
64. For shares purchased on or between March 5, 2007, through March
19
12, 2007, the following claims for damages shall be allowed:
20
(a) For each share sold on or before March 12, 2007, no Recognized Claims
21
for damages shall be allowed;
22 (b) 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 applicable
23
date of purchase as set forth in Table 2, annexed hereto.
24
65. In addition to the annexed Table 2 relating to Section 10(b) New
25
Century Common Stock claims, the Recognized Loss Claims for damages for such
26
27 shares purchased during the Class Period shall be further limited (as provided for
under the PSLRA) to the smallest of the following:
28
1 (a) the difference between the price paid and the price received (out-of-
2 pocket investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and
3 commissions) and the average closing price as set forth in Table 3
4 annexed 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
5 shares were sold after June 10, 2007, or were held until the current date.
6 2. Calculation of Recognized Loss
for New Century Series A Preferred Stock
7 Purchases
8 66. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
10 67. For shares purchased on or between May 5, 2005, through February 7,
11 2007, the following claims for damages shall be allowed:
12 (a) For each share sold on or before February 7, 2007, no Recognized Claims
for damages shall be allowed;
13
(b) For each share sold on or between February 8, 2007, and through March
14 13, 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,
15
annexed hereto, less the inflation per share at the time of sale as set forth
16 in Table 4; and
17
68. For shares purchased on or between February 8, 2007, through March
18
2 1 2007, the following claims for damages shall be allowed:
19
(a) For each share sold on or before March 2, 2007, no Recognized Claims
20 for damages shall be allowed;
21
(b) 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 of
22 purchase for the applicable date of purchase as set forth in Table 4,
23
annexed hereto, less the inflation per share at the time of sale as set forth
in Table 4; and
24
27
(a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages shall be allowed;
28
1 (b)For each share sold on or after March 13, 2007, the allowed damages
2 shall be the inflation per share at the time of purchase for the applicable
date of purchase as set forth in Table 4, annexed hereto.
3
4 70. The Recognized Loss Claims for damages for such Series A Preferred
5 Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA) to the smallest of the following:
7 (a) the difference between the price paid and the price received (out-of-pocket r^
investment loss) if sold on or before June 10, 2007;
8 (b) the difference between the price paid (excluding all fees and commissions) q^
9 and the average closing price as set forth in Table 6 annexed hereto if sold
between March 13, 2007 and June 10, 2007; and
10 (c) the difference between the price per share paid and $8.02 per share if the
11 shares were sold after June 10, 2007, or were held until the current date.
3. Calculation of Recognized Loss
12 for New Century Series B Preferred Stock
Purchases
13
25 (a) For each share sold on or before March 2, 2007, no Recognized Claims
26 for damages shall be allowed;
(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27 the allowed damages shall be the inflation per share at the time of
28
purchase for the applicable date of purchase as set forth in Table 5, E
3 74. For shares purchased between March 5, 2007, through March 12,
4 2007, the following claims for damages shall be allowed:
5 (a) For each share sold on or before March 12, 2007, no Recognized
6 Claims for damages shall be allowed;
(b) For each share sold on or after March 13, 2007, the allowed damages
7 shall be the inflation per share at the time of purchase for the applicable
8 date of purchase as set forth in Table 5, annexed hereto.
k
9 75. The Recognized Loss Claims for damages for such Series B Preferred AN
10 Shares purchased during the Class Period shall be further limited (as provided for
11 under the PSLRA) to the smallest of the following:
12 (a) the difference between the price paid and the price received (out-of-pocket
13 investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and commissions)
14 and the average closing price as set forth in Table 7 annexed hereto if sold
15 between March 13, 2007, and June 10, 2007; and
(c) the difference between the price per share paid and $7.95 per share if the
16 shares were sold after June 10, 2007, or were held until the current date.
17 4. Calculation of Recognized Loss for
New Century Call and Put Options
1.8
76. The Plan of Allocation covers the following New Century Call and
19
Put Options: New Century Call Options on Common Stock initially purchased or
20
otherwise acquired during the Class Period, on May 5, 2005, up to and including
21
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
22
Common Stock written or purchased (covered) during the Class Period May 5,
23
2005, through and including March 13, 2007 ("New Century Put Options").
24
77. Artificial inflation and Recognized Losses as to New Century Call
25 '
Options and artificial deflation and Recognized Losses as to New Century Put
26
Options were computed in a manner similar to that used with respect to New
27
Century Common Stock as described above. To determine artificial inflation for
28
Call Options, Lead Plaintiff's damages consultant considered securities' price
-27- NOTICE OF PENDENCY OF CLASS ACTION i
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 44 of 113 Page ID
#:11245
E
1 changes that occurred in reaction to certain public announcements regarding New
2 Century and then made adjustments for changes that were attributable to market
3 forces unrelated to the alleged fraud in prices of such Call Options and Put
4 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
d
c
7 in 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.
11 78. With respect to purchases and sales (covers) of New Century Call
12 Options during the period May 5, 2005, through and including March 13, 2007, the
13 Artificial 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
15 Common Stock share price. The dollar change in the value of Call Options will be
19 Century Common Stock on the transaction date, compared with the Black-Scholes
Gr
20 call pricing formula value for the Call Option using the uninflated closing share
21 price of New Century Common Stock on that same date as determined by: (1) the
22 reported closing share price minus the Common Stock price inflation per share set
23 forth in the annexed Table 2 for Call Options initially purchased between May 5,
24 2005, and March 13, 2007, and (2) the reported closing share price minus the
25 Common Stock price inflation per share set forth in the annexed Table 2 for Call
26 Options initially sold between May 5, 2005, and March 13, 2007. Once again,
28 are obtained using the daily standard deviations using the returns for that day plus
i the previous 45-day stock returns, which are then annualized using a 252-trading
2 day approach.
3
4 (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
5 closed out) prior to February 7, 2007, the Recognized Loss Claim shall
6 be zero.
7 (b) For Call Options which were purchased or acquired between May 5,
8
2005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
9 13, 2007; or (3) were sold (position closed out) on or between February
10
8, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
11
12 (1) the difference between Artificial Inflation per Call Option on the
date of purchase and Artificial Inflation per Call Option on the date
13 of expiration, exercise, or sale, as appropriate; or
14 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
15
16
An 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,
17 2007 maturity and exercise price of $20. The Call Option inflation on this
is date 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
19 then sells these Call Options on February 9, 2007, when the Call Option
20 inflation 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, the
21 Recognized Loss Claim is the difference in call price inflation on these two
22 dates ($10.40 - $1.60, or $8.80) times number of Options (100), for a total of
$880.00; assuming that the difference between the purchase price and the
23 sale price was greater than $8.80.
24
(c) For Call Options which were purchased or acquired between February
25 8, 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, and
27 March 13, 2007, the Recognized Loss Claim shall be that number of
28 Options multiplied by the lesser of-
1 (1) the difference between Artificial Inflation per Call Option on the
2 date of purchase and Artificial Inflation per Call Option on the date
of expiration, exercise, or sale, as appropriate; or
3 (2) the difference between the purchase price per Option and the sale
4 price per Option ($0.00 if the Call Option expired worthless).
5 (d) For Call Options which were purchased or acquired between March 5,
6 2007, and March 12, 2007, and (1) expired on or after March 13, 2007;
(2) were exercised on or after March 13, 2007; or 3) were sold (position
7 closed out) on or after March 13, 2007, the Recognized Loss Claim
8 shall be that number of Options multiplied by the lesser of-
9 (1) the Artificial Inflation per Call Option on the date of purchase, or
10 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
11
12 79. 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
I
15 that 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 dividends and the
21 the Put Option using the uninflated share closing share price of New Century
22 Common Stock on that same date as determined by: (1) the reported closing share
23 price 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
25 13, 2007, and (2) the reported closing share price minus the Common Stock price
26 inflation per share set forth in the annexed Table 2 for Put Options initially sold
27 between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28 dividends is implemented. Annualized volatility estimates are obtained using the f
-30- NOTICE OF PENDENCY OF CLASS ACTION i
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 47 of 113 Page ID
#:11248
1 daily standard deviations using the returns for that day plus the previous 45-day
2 stock returns, which are then annualized using 252 trading day approach.
3 (a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4
were exercised prior to February 7, 2007; or 3) were purchased (position
closed out) prior to February 7, 2007, the Recognized Loss Claim shall
5 be zero.
6
(b) For Put Options which were sold between May 5, 2005, and February 7,
7 2007, and (1) expired on or after February 8, 2007; (2) were exercised on
8 or between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
r
9 2007, the Recognized Loss Claim shall be that number of Options
10 multiplied by the lesser of:
(1) the difference, multiplied by minus one, between Artificial
11
Inflation per Put Option on the date of sale and Artificial Inflation
12 per Put Option on the date of expiration, exercise, or purchase
($0.00 if the Put Option expired worthless), as appropriate; or
13
(2) the difference, multiplied by minus one, between the sale price per
14 Put Option and the purchase price of the Put Option ($0.00 if the
15
Put Option expired worthless).
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) were
26 exercised on or between March 5, 2007 and March 13, 2007; or 3) were
27 purchased (position closed out) on or between March 5, 2007, and March
13, 2007, the Recognized Loss Claim shall be that number of Options
28 multiplied by the lesser of:
-31- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 48 of 113 Page ID
#:11249
1
2 (1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3 per Put Option on the date of expiration, exercise, or purchase
4 ($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
5 Put Option and the purchase price of the Put Option ($0.00 if the
6 Put Option expired worthless).
7 (d) For Put Options which were sold between March 5, 2007, and March 12,
S 2007, 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 or
9 after March 13, 2007, the Recognized Loss Claim shall be that number of
10 Options multiplied by the lesser of:
11 (1) the Artificial Inflation per Put Option on the date of sale,
12 multiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per
13 Put Option and the purchase price of the Put Option ($0.00 if the
14 Put Option expired worthless).
15
Another example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of
16 $10. The 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 Put
18 options after March 13, 2007, when Put inflation was zero. The Recognized
19 Loss 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 option
20 and sale price of the Put option was greater than $0.68 per Put option.
21 III. OTHER PROVISIONS OF THE PLAN
22 80. 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
25 will be made.
26 81. The determination of the price paid and the price received for a
27 particular security shall be exclusive of all commissions, taxes, fees and charges.
28
1 82. The Court has reserved jurisdiction to modify, amend, or alter the Plan j
2 of Allocation without further notice, or to allow, disallow or adjust the claim of any
3 Class 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 any h
9 83. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
f
11 Fund or the Underwriter Allotment or Individual-Auditor Allotment, for the Plan of
13 pursuant to, Proofs of Claim, for the payment or withholding of Taxes owed by the
16 therewith.
17 84. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 equitable grounds the Claim of any Class Member.
19 85. 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.
i
23
WHAT RIGHTS AM I GIVING UP BY AGREEING T4 THE SETTLEMENTS?
24
G
25 86. 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 other Class Members will provide releases as described below.
-33- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
9
i
1 87. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2 members of the Class will be deemed by operation of law to have released, waived,
3 discharged and dismissed each and every Settled Class Claim as against each and
4 every 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
6 enjoined from prosecuting any or all of the Settled Class Claims against each and
7 every 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
9 nature 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
11 Class (a) asserted in the Consolidated Action, or (b) could have asserted in any j
12 forum that arise out of or are based upon the allegations, transactions, facts,
13 matters or occurrences, representations or omissions involved, set forth, or referred
14 to in the Consolidated Action, and that arise out of or relate to the purchase of New
15 Century 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
17 Century Put Options during the Class Period. Settled Class Claims does not
18 include claims relating to the enforcement of the Settlement. "Released Officers
19 And Directors" in this paragraph means (i) the Individual Defendants, David
21 Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
23 professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
28
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 nature and description, whether known or Unknown, 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
13 and that arise out of or relate to the purchase of New Century Common Stock, New
4
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
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'
20 89. 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
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
k
-35- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 52 of 113 Page ID
#:11253
1 federal, state, common or foreign law, that Plaintiffs or any other member of the
2 Class (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
4 occurrences, 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
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
8 Options during the Class Period. "Settled Claims" does not include claims relating
9 to the enforcement of the Settlements. "Released Underwriter Party" means the
E
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
k
14 any Defendants other than the Underwriter Defendants.
15 90. "Released Parties" means the Released Officers And Directors the
16 Released Auditor Parties, and the Released Underwriter Parties.
17 91. "Unknown Claims" means any and all claims that Lead Plaintiff or
18 any 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
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:
27 A general release does not extend to claims which the creditor
28 does not know or suspect to exist in his or her favor at the time of
10 Class. 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
12 Stipulations.
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
21 Amount, plus interest from the date of funding at the same rate as earned by the
22 Settlement 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
26 Expenses 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
1 Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
I.
15 Class, 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
18 Form and supporting documentation to establish your entitlement to share in the
i
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
24 downloaded 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 Forms with adequate supporting documentation, will not be entitled 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.
-38- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
f
G
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 55 of 113 Page ID
#:11256
1 96. As a Class Member, you are represented by Lead Plaintiff and Lead
k
2 Counsel, unless you enter an appearance through counsel of your own choice at
3 your 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
5 must 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.
8 97. 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 If I Do Not Want To Be A Part Of The Class And The Settlements? How Do I
f
12 98. If you wish to object to the Settlements or any of the terms of the
13 Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
16 instructions in the section entitled, "When and Where Will the Court Decide
17 Whether to Approve the Settlements?," below.
18
WHAT IF I DO NOT WANT TO BE A PART OF THE SETTLEMENTS?
E
19
IOW DO I EXCLUDE MYSELF?
20
21 99. Each Class Member will be bound by all determinations and
22 judgments in this lawsuit, including those concerning the Settlements, whether
23 favorable 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
25 Exclusion from the Class, addressed to In re New Century Securities Litigation
26 Settlement, c/o Analytics, Inc., Claims Administrator, P.O. Box 2004, Chanhassen,
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
-39- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 56 of 113 Page ID
#:11257
1 Each request for exclusion must (i) state the name and address of the person or
2 entity requesting exclusion; (ii) state that such person or entity requests exclusion
3 from 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
5 person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6 allurchases,
p acquisitions,
q and sales of New CenturyrY Securities duringg the Class
7 Period. Requests for exclusion will not be valid if they do not include the
8 information set forth above and are not received within the time stated above,
14 person or entity will not receive any benefit provided for in the Settlements.
l
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 57 of 113 Page ID
#:11258
1 Hearing. You can object to or participate in the Settlements without attending the
2 Settlement Hearing.
3 104. The Settlement Hearing will be held on [INSERT] before the
4 Honorable Dean D. Pregerson, at the United States District Court for the Central
9 of the Class. The Settlements will become effective only if all three Settlements
10 are approved by the Court.
11 105. Any Class Member who does not submit a valid exclusion that is
12 received 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
15 writing. 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
17 during 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
19 on or before [ INSERT]. You must also serve the papers
20 on Lead Counsel for the Class at the address set forth below so that the papers are
21 received on or before [ INSERT].
22
23
Clerk's Office Lead Counsel for the Class
i
24 UNITED STATES BERNSTEIN LITOWITZ BERGER
25
DISTRICT COURT & GROSSMANN LLP
FOR THE CENTRAL Salvatore J. Graziano, Esq.
26 DISTRICT OF CALIFORNIA 1285 Avenue of the Americas
27 Clerk of the Court New York, NY 10019
312 N. Spring Street
28 Los Angeles, California 90012
-41- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 58 of 113 Page ID
#:11259
2 have filed and served a timely written objection as described above, you also must
3 notify the above counsel on or before [INSERT ] I
4 concerning your intention to appear. Persons who intend to object and desire to
5 present evidence at the Settlement Hearing must include in their written objections
6 the identity of any witnesses they may call to testify and exhibits they intend to
7 introduce into evidence at the hearing.
8 109. 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
F
10 an 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
15 you should confirm the date and time with Lead Counsel.
16 Unless 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
18 shall be forever foreclosed from making any objection to the proposed
21 Members do not need to appear at the hearing or take any other action to
22 indicate their approval.
23
WHAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?
24
28 the beneficial owner of such New Century Securities, postmarked no later than
-43- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 60 of 113 Page ID
#:11261 j
1 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2 addresses 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.
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
8 future notice to the Class. If you choose the second option, the Claims r
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
19 112. 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
i
-44- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1
8
REGARDING THIS NOTICE.
9
10
11 Dated: By Order of the Clerk of Court
United States District Court
12 for the Central District of California
13
14
15
16
17
18
19 t
20
21
i
22
23
24
25
26
27
28
1
2 Table 1
3
4
5
6 Issuer / Liquidation Share in Share in
Underlying Preference Underwriter Individual
7 CUSIP Type Issue Date Rate
-Auditor
Allotment
Allotment
8
Preferred Stock
9 New Century 64352D200 6/15/2005 $ 25.00 9.125% X X
Series A
10
11 Preferred Stock
New Century 6435EV207 8/15/2006 $ 25.00 9.750% X X
12 Series B
13
New Century 6435EV108 Common Stock - - - X
14
15 New Century Various Call Option - - - X
17
18
19
20
21
22
23
24
25
26
27
28
I
-46- NOTICE OF PENDENCY OF CLASS ACTION i
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 63 of 113 Page ID
#:11264
1
2 Table 2
3
4 Inflation per Share for Common Stock Shares Purchased between I!
May 5, 2005, and March 13, 2007
5
6 Period Begin Date End date Inflation
1 5-May-05 7-Feb-07 $ 25.21
7 2 8-Feb-07 4-Mar-07 $ 11.09
3 5-Mar-07 12-Mar-07 $ 0.69 i
8 4 13-Mar-07 to the present $ 0.00 I
9
10
11
12
13
14
15
16
17
18
i
19
20
21
22
23
24
25
26
27
28
3 Table 3
4
Common Stock PSLRA 90-Day Look-Back Loss Limitation Calculations
5 Average Average
Closing closing Closing closing
6 Date Price ($) price ($) Date Price ($) price ($)
7
13Mar2007 0.84 0.84 27Apr2007 0.86 1.19
8 14Mar2007 0.67 0.76 30Apr2007 0.89 1.18
15Mar2007 1.35 0.95 O1May2007 0.85 1.17
9 16Mar2007 2.34 1.30 02May2007 0.83 1.16
19Mar2007 2.17 1.47 03May2007 0.80 1.15
10 20Mar2007 1.69 1.51 04May2007 0.72 1.14
21Mar2007 1.67 1.53 07May2007 0.59 1.12
11
22Mar2007 1.56 1.54 08May2007 0.58 I'll
23Mar2007 2.00 1.59 09May2007 0.53 1.10
12
26Mar2007 1.56 1.59 IOMay2007 0.43 1.08
13 27Mar2007 1.41 1.57 1lMay2007 0.43 1.06
28Mar2007 1.11 1.53 14May2007 0.41 1.05
14 29Mar2007 1.03 1.49 15May2007 0.37 1.03
30Mar2007 1.06 1.46 16May2007 0.36 1.02
15 02Apr2007 0.91 1.43 17May2007 0.36 1.01
03Apr2007 1.01 1.40 1SMay2007 0.39 0.99
16
04Apr2007 1.00 1.38 21May2007 0.44 0.98
17 05Apr2007 1.26 1.37 22May2007 0.43 0.97
09Apr2007 1.14 1.36 23May2007 0.47 0.96
18 1OApr2007 1,09 1.34 24May2007 0.45 0.95
1lApr2007 0.98 1.33 25May2007 0.47 0.94
19 12Apr2007 0.89 1.31 29May2007 0.46 0.93
13Apr2007 0.86 1.29 30May2007 0.45 0.92
20
16Apr2007 0.98 1.27 31May2007 0.44 0.92
17Apr2007 1.00 1.26 O1Jun2007 0.44 0.91
21
18Apr2007 0.99 1.25 04Jun2007 0.43 0.90
22 19Apr2007 0.93 1.24 05Jun2007 0.43 0.89
20Apr2007 0.96 1.23 06Jun2007 0.45 0.88
23 23Apr2O07 0.96 1.22 07JLm2007 0.44 0.88
24Apr2007 0.92 1.21 08Jun2007 0.44 0.87
24 25Apr2007 0.96 1.20 09Jun2007 0.44 0.87
26Apr2007 0.94 1.20 10Jun2007 0.44 0.87
25
26
27
28
1
2 Table 4
3
10
11
12
13
Table 5
14
21
22
23
24
25
26
27
28
1
2 i
3 Table 6
4 Preferredo
St kc Series
9 S A7 PS LRA 90
-Da Look-Back
,7 Loss
Limitation Calculations
5
Average Average
6 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
7
13-Mar-2007 6.45 6.45 27-Apr-2007 8.27 7.45
8 14-Mar-2007 6.20 6.33 30-Apr-2007 8.45 7.48
9 15-Mar-2007 9.95 7.53 01-May-2007 9.00 7.52
16-Mar-2007 10.00 8.15 02-May-2007 8.80 7.56
10 19-Mar-2007 9.25 8.37 03-May-2007 8.80 7.59
20-Mar-2007 8.50 8.39 04-May-2007 8.75 7.62
11 21-Mar-2007 8.75 8.44 07-May-2007 9.25 7.66
12 22-Mar-2007 8.85 8.49 08-May-2007 9.00 7.70
23-Mar-2007 9.77 8.64 09-May-2007 8.70 7.72
13 26-Mar-2007 8.92 8.66 10-May-2007 8.23 7.73
27-Mar-2007 6.40 8.46 11-May-2007 7.73 7.73
14
28-Mar-2007 6.10 8.26 14-May-2007 8.50 7.75
15 29-Mar-2007 6.20 8.10 15-May-2007 9.00 7.78
30-Mar-2007 6.75 8.01 16-May-2007 9.00 7.81
16 02-Apr-2007 6.90 7.93 17-May-2007 8.95 7.83
17 03-Apr-2007 7.55 7.91 18-May-2007 8.83 7.85
04-Apr-2007 8.10 7.92 21-May-2007 9.50 7.88
18 05-Apr-2007 8.25 7.94 22-May-2007 9.50 7.92
09-Apr-2007 7.65 7.92 23-May-2007 9.10 7.94
19
10-Apr-2007 7.50 7.90 24-May-2007 9.25 7.97
20 11-Apr-2007 7.60 7.89 25-May-2007 9.10 7.99
12-Apr-2007 7.45 7.87 29-May-2007 9.25 8.01
21 13-Apr-2007 7.00 7.83 30-May-2007 9.20 8.03
22 16-Apr-2007 7.05 7.80 31-May-2007 9.14 8.05
17-Apr-2007 6.70 7.75 01-Jun-2007 8.75 8.06
23 18-Apr-2007 6.30 7.70 04-Jun-2007 8.25 8.07
19-Apr-2007 6.10 7.64 05-Jun-2007 8.10 8.07
24
20-Apr-2007 6.15 7.59 06-Jun-2007 7.45 8.06
25 23-Apr-2007 5.60 7.52 07-Jun-2007 7.00 8.04
24-Apr-2007 6.00 7.47 08-Jun-2007 6.87 8.02
26 25-Apr-2007 6.25 7.43 09-Jun-2007 6.87 8.02
27 26-Apr-2007 7.37 7.43 10-Jun-2007 6.87 8.02
28
2 Table 7
3 Preferred Stock, Series B, PSLRA 90-Day Look-Back Loss
Limitation Calculations
4
Average Average
5 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
6
13-Mar-2007 6.32 6.32 27-Apr-2007 8.06 7.35
7 14-Mar-2007 6.35 6.34 30-Apr-2007 8.40 7.38
15-Mar-2007 9.89 7.52 01-May-2007 8.70 7.42
8
16-Mar-2007 10.00 8.14 02-May-2007 8.70 7.45
9 19-Mar-2007 9.35 8.38 03-May-2007 8.65 7.48
20-Mar-2007 8.60 8.42 04-May-2007 8.61 7.51
10 21-Mar-2007 9.00 07-May-2007
8.50 9.45 7.56
11 22-Mar-2007 9.10 8.58 08-May-2007 8.88 7.60
23-Mar-2007 9.50 8.68 09-May-2007 8.70 7.62
12 26-Mar-2007 8.90 8.70 10-May-2007 8.53 7.64
27-Mar-2007 6.65 8.51 11-May-2007 8.05 7.65
13
28-Mar-2007 5.80 8.29 14-May-2007 8.45 7.67
14 29-Mar-2007 6.25 8.13 15-May-2007 8.78 7.70
30-Mar-2007 6.40 8.01 16-May-2007 9.00 7.72
15 02-Apr-2007 7.00 7.94 17-May-2007 9.20 7.76
16 03-Apr-2007 7.25 7.90 18-May-2007 8.88 7.78
04-Apr-2007 8.00 7.90 21-May-2007 9.50 7.81
17 05-Apr-2007 8.45 7.93 22-May-2007 8.75 7.83
09-Apr-2007 7.50 7.91 23-May-2007 9.25 7.86
18
10-Apr-2007 7.03 7.87 24-May-2007 9.25 7.89
19 11-Apr-2007 7.05 7.83 25-May-2007 9.10 7.91
12-Apr-2007 6.90 7.79 29-May-2007 9.30 7.94
20 13-Apr-2007 6.80 7.74 30-May-2007 9.00 7.96
21 16-Apr-2007 6.76 7.70 31-May-2007 9.65 7.99
17-Apr-2007 6.15 7.64 01-Jun-2007 8.85 8.00
22 18-Apr-2007 6.00 7.58 04-Jun-2007 8.60 8.01
19-Apr-2007 6.00 7.52 05-Jun-2007 7.60 8.00
23
20-Apr-2007 6.05 7.47 06-Jun-2007 7.50 8.00
24 23-Apr-2007 5.90 7.41 07-Jun-2007 6.90 7.98
24-Apr-2007 6.00 7.37 08-Jun-2007 6.25 7.95
25 25-Apr-2007 6.20 7.33 09-Jun-2007 6.25 7.95
26 26-Apr-2007 7.25 7.33 10-Jun-2007 6.25 7.95
27
28
1 Table 8
2 Table 8 has been abbreviated for example purposes. For a complete table, visit
3 http://www.newcenturysettlement.com/Forms/Table 8.pdf.
4 If you do not have access to the Internet, please contact the Claims Administrator
5 at 1-866-308-7615 to have a copy mailed to you.
6 6
Max Min
7 Max Min Max Min Risk Risk Max Min Max
Maturity Exer. Close Close Vola Vola Free Free Call Call Put Min Put
8 date price price Price tility tility Rate Rate Inflat. Inflat. Inflat. Inflation
17-Mar-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.69 $0.51 $0.00 -$0.18
9
21-Apr-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.64 $0.49 -$0.05 -$0.20
10 19-May-
07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.51 -$0.07 -$0.19
11 18-Aug-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.54 -$0.08 -$0.15
19-Jan-08 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.63 $0.59 -$0.06 -$0.11
12
17-Jan-09 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.66 $0.64 -$0.04 -$0.05
13 17-Feb-07 $5.00 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $11.08 $0.00 -$0.01
17-Mar-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $11.08 $0.03 -$0.01 -$1.40
14
21-Apr-07 $5.00 $15.85 $3.21 1.98 0.95 0.05 0.05 $9.41 $0.22 -$0.20 -$2.29
19-May-
15
07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.86 $0.30 -$0.19 -$2.30
16 18-Aug-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.46 $0.42 -$0.16 -$3.00
19-Jan-08 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.87 $0.51 -$0.11 -$4.20
17
17-Jan-09 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.94 $0.61 -$0.06 -$3.44
18 17-Feb-07 $7.50 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $9.59 $0.00 -$1.50
17-Mar-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.75 $0.00 -$0.34 -$3.87 Q
19 21-Apr-07 $7.50 $15.85 $3.21 1.98 0.95 0.05 0.05 $7.07 $0.10 -$0.36 -$4.69
19-May-
20 07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.97 $0.18 -$0.31 -$4.56
21 18-Aug-07 $7.50 $19.75 $3.21 1,98 0.88 0.05 0.05 $9.38 $0.33 -$0.23 -$4.90
19-Jan-08 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.75 $0.46 -$0.16 -$5.63
22 17-Jan-09 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.95 $0.59 -$0.08 -$4.50
$10.0
23 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $9.00 $7,10 -$1.14 -$3.99
$10.0
24
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.10 $0.00 -$0.64 -$6.33
$10.0
25
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $7.98 $0.05 -$0.48 -$6.82
19-May- $10.0
26 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.54 $0.11 -$0.41 -$6.51
27 $10.0
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.11 $0.27 -$0.29 -$6.40 I
28 $10.0
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.68 $0.42 -$0.20 -$6.70 G
9
-52- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 $10.0
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.14 $0.57 -$0.09 -$5.31
2 $12.5
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $6.50 $4.60 -$3.63 -$6.49
3 $12.5 N
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.80 $0.00 -$0.68 -$8.50
4 $12.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $6.05 $0.02 -$0.55 -$8.45
5 19-May- $12.5
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.95 $0.08 -$0.48 -$8.00
6 $12.5
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.87 $0.15 -$0.34 -$7.54
$12.5
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.72 $0.39 -$0.23 -$7.51
g
$12.5 ^,
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.46 $0.55 -$0.10 -$5.95
9
$15.0
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $4.00 $2.16 -$6.12 -$8.93
10
$15.0
11 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.70 $0.00 -$0.69 -$9.97
$15.0
12 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $4.35 $0.01 -$0.60 -$9.54
19-May- $15.0
13 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.05 -$0.53 -$9.05
$15.0
14 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.76 $0.10 -$0.38 -$8.40
$15.0
15 19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.20 -$0.25 -$8.14
$15.0
16 17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.45 -$0.12 -$6.47
$17.5
17 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $1.70 $0.48 -$8.61 -$10.61
$17.5
18 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $2.95 $0.00 -$0.69 -$10.69
$17.5
19 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $3.02 $0.01 -$0.63 -$10.21
19-May- $17.5
20 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $3.90 $0.04 -$0.56 -$9.76
$17.5
21 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.50 $0.10 -$0.41 -$9.03
$17.5
22 19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.17 $0.20 -$0.28 -$8.63
$17.5
23
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.40 -$0.13 -$6.90
$ 20.0
24
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $19.93 $0.04 -$5.28 -$17.39
$20.0
25
17-Mar-07 0 $30.84 $3,21 1.98 0.23 0.05 0.05 $10.64 $0.00 -$0.69 -$15.54
26 $20.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $1.75 $0.00 -$0.65 -$10.60
27 19-May- $20.0
07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $9.32 $0.03 -$0.59 -$16.74
28 $20.0
18-Aug-07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $7.79 $0.05 -$0.44 -$18.25
-53- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 $20.0
19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $19.94 $0.15 -$0.30 -$18.65
2 $ 20.0
17-Jan-09 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.25 $0.25 -$0.14 -$16.72
3 $22.5
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $17.53 $0.00 -$7.68 -$19.88
4 $22.5
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $8.16 $0.00 -$0.69 -$18.03
5 $22.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.90 $0.00 -$0.66 -$10.82
6 19-May- $22.5
07 0 $39.69 $3.21 1.98 0.21 0.05 0.05 $14.13 $0.02 -$0.61 - $21.23
$22.5
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $7.53 $0.10 -$0.47 -$21.41
8
$25.0 -
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $15.10 $0.00 $10.11 -$22.30
9
$25.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $5.70 $0.00 -$0.69 -$20.49
10
$25.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.40 $0.00 -$0.67 -$10.94
11
19-May- $25.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $13.69 $0.02 -$0.63 -$23.07
$25.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $5.44 $0.10 -$0.49 -$23.05
$25.0
14 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $16.72 $0.15 -$0.33 -$21.93
$30.0 -
15 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $14.26 $0.00 $10.95 -$25.03
$30.0
16 17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $1.64 $0.00 -$0.69 -$24.29
$30.0
17 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.25 $0.00 -$0.68 -$11.05
19-May- $30.0
18 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.35 $0.01 -$0.65 -$24.86
$ 30.0
19 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $2.38 $0.09 -$0.52 -$24.73
$30.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $13.64 $0.15 -$0.36 -$23.81
$30.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $8.45 $0.03 -$0.17 -$21.29
$35.0
22
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $10.36 $0.00 $11.09 -$25.21
$35.0
23
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.12 $0.00 -$0.69 -$25.18
24
19-May- $35.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $5.83 $0.01 -$0.66 -$25.19
25
$35.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.88 $0.04 -$0.55 -$25.13
26 $35.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $4.61 $0.03 -$0.38 -$24.72
27 $40.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $7.36 $0.00 $11.09 -$25.21
28 $40.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.05 $0.00 -$0.69 -$25.21
-54- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
19-May-
v $40.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $3.43 $0.00 -$0.67 -$25.21
2 $40.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.50 $0.00 -$0.57 -$25.20
3 $40.0
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $8.65 $0.00 -$0.40 -$25.06
4 $40.0
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $5.52 $0.00 -$0.19 -$23.29
5 $45.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $5.11 $0.00 $11.09 -$25.21
6 $45.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.02 $0.00 -$0.69 -$25.21
7 19-May- $45.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $1.90 $0.00 -$0.68 -$25.21
8
$45.0
9 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.30 $0.00 -$0.58 -$25.21
$45.0
10 19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $2.10 $0.00 -$0.42 -$25.17
$50.0 -
11 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $3.47 $0.00 $11.09 -$25.21
19-May- $50.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.98 $0.00 -$0.68 -$25.21
$50.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.25 $0.00 -$0.60 -$25.21
$50.0
14 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $5.32 $0.00 -$0.43 -$25.20
$50.0
15 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $3.68 $0.00 -$0.21 -$24.18
$55.0 -
16 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $2.31 $0.00 $11.09 -$25.21
19-May- $55.0
17 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.40 $0.00 -$0.68 -$25.21
$55.0
18 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.05 $4.15 $0.00 -$0.45 -$25.21 1
$60.0 -
19 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $1.35 $0.00 $11.09 -$25.21 F
$60.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $3.24 $0.00 -$0.46 -$25.21
$60.0
21
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $2.50 $0.00 -$0.23 -$24.71
$70.0
22
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $1.90 $0.00 -$0.48 -$25.21
$70.0
23
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $1.73 $0.00 -$0.24 -$24.96
24
25
26
27
28
I
I
I
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 73 of 113 Page ID
#:11274
16
1 GENERAL INSTRUCTIONS
2 1. It is important that you completely read and understand the Notice of
3 Pendency 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"),
i
6 and the Plan of Allocation included in the Notice. The Notice and the Plan of
7 Allocation describe the proposed settlements ("Settlements") that will resolve this
8 Consolidated 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
11 contains the definitions of many of the defined terms (which are indicated by initial
12 capital 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
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,
i
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 75 of 113 Page ID
#:11276
1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2 the 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 options and New Century put options are referred to collectively as "New Century
5 Securities.") ti
d
15 requirements established by the Court, that is approved for payment from the Net
16 Settlement Fund.
23 i
The following persons are excluded from the Class: (a) the Underwriter
24 Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
of the immediate families of the Individual Defendants; (c) the subsidiaries and
25
affiliates of Defendants; (d) any person or entity who was a partner, executive
26 officer, director or controlling person of New Century (including any of its
subsidiaries or affiliates) or of any Defendant; (e) any entity in which any
27
Defendant has a controlling interest; and (f) the legal representatives, heirs,
28 successors and assigns of any such excluded party.
2
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 76 of 113 Page ID
#:11277
9 8. Submission 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. The
12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
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
20 Administrator for this Settlement, www.neweenturysettlement.com .
21 10. 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
28 through and including March 13, 2007, as well as genuine and sufficient
3
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 77 of 113 Page ID
#:11278
1 documentation 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
4 in New Century Common Stock and Preferred Stock as of the close of the market 4
5 on March 13, 2007, and as of the close of the market on June 10, 2007.
14 12. All joint purchasers must each sign this Proof of Claim.
15 13. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
I
I
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 78 of 113 Page ID
#:11279
9 attached thereto, subject to penalties of perjury under the laws of the United States
10 of America. The making of false statements, or the submission of forged or
i
11 fraudulent documentation, will result in the rejection of your claim and may
12 subject you to civil liability or criminal prosecution.
a
17 not they also submit electronic copies. If you wish to file your claim
18 electronically, you must contact the Claims Administrator at 1-866-308-7615, or
19 visit its settlement website www.newcenturysettlement.com to obtain the required
20 file layout. No electronic files will be considered to have been properly submitted
23
24
25 I
26
27
s
28
5
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 79 of 113 Page ID
#:11280
1 In re New Century
6 Street Address
9 (Daytime)
10 Area Code Telephone Number
i
11 (Evening)
12
Area Code Telephone Number
13
15
16'
Record Owner's Name (if different from beneficial owner listed above) E
17
Check appropriate box (check only one box):
18
q Individual/Sole Proprietor q Joint Owners q Pension Plan
19
24 NOTE: Separate Proofs of Claim should be submitted for each separate legal
25 entity (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 transactions with transactions made solely in the Individual's name). Conversely,
28 a single Proof of Claim submitted on behalf of one legal entity should include all
6
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 80 of 113 Page ID
#:11281
1 transactions made by that entity, no matter how many separate accounts that entity
2 has (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
k
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
15 B. Purchases:
4
16 (i) 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
18 acquired your New Century Common Stock during this period other than by an
24 / / $ $
25 / / $ $
26 / / $ $
7
it
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 81 of 113 Page ID
#:11282
1 (ii) State the total number of shares of New Century Common Stock the f
2 Claimant 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 which are not in the Class Period, are not included in the calculation of Recognized
5 Loss. This information is needed by the Claims Administrator for purposes of the
7 C. Sales: List all sales of New Century Common Stock made during
8 the period from May 5, 2005, through and including
9 June 10, 2007. Be sure to attach the required documentation.!
10 Trade Date(s) (List
11
Chronologically) Number of Sales Total
Month/Day/Year Shares Sold Price Per Share Sales Price*
12 / / $ $
13
f
14 / / $ $
15 / / $ $
20
market on March 13, 2007. If none, write "zero" or "0." If other
than zero, be sure to attach the required documentation.
21
22
E. Ending Position For 90-Day Look Back: State the total number
23
24
of shares of New Century Common Stock the Claimant owned at
the close of the market on June 10, 2007. If none, write "zero" or
25
"0." If other than zero, be sure to attach the required
26
documentation.
27
28
s
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 82 of 113 Page ID
#:11283
23
24
25
26
27
28
9
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 83 of 113 Page ID
#:11284
6 / / $ $
7
9
(ii) State the total number of shares of New Century Series A Preferred i
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
12 purchases, which are not in the Class Period, are not included in the calculation of
13
Recognized Loss Amount. This information is needed by the Claims
14
Administrator for purposes of the overall evaluation of the Claim.)
15
16 C. Sales: List all sales of New Century Series A Preferred Stock
17 made during the period from May 5, 2005, through and including
18 June 10, 2007. Be sure to attach the required documentation.
Trade Date(s) (List
19
Chronologically) Number of Sales Total
20 Month/Day/Year Shares Sold Price Per Share Sales Price*
21 / / $ $
22
23
24
26
27
28
10
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 84 of 113 Page ID
#:11285
6 E. Ending Position For 90-Day Look Back: State the total number
7 of shares of New Century Series A Preferred Stock the Claimant I
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation.
11
12 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
15
17 NOT BE REVIEWED I
28 the period from May 5, 2005, through and including March 13, 2007. (NOTE: If i
ii
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 85 of 113 Page ID
#:11286
G
1 you acquired your New Century Series B Preferred Stock during this period in an
f
1.0 / / $ $
11
*excluding commissions, transfer taxes or other fees.
12
13 (ii) 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
15
and 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 overall evaluation of the Claim.)
22
Trade Date(s) (List
Chronologically) Number of Sales Total
23 Month/Day/Year Shares Sold Price Per Share Sales Price*
24 / / $ $
$ $
25
26
27
12
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 86 of 113 Page ID
#:11287
6 E. Ending Position For 90-Day Look Back: State the total number
7 of shares of New Century Series B Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation. i
11
12
19
20
i
21
22
23
24
25
26
27
28
13
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 87 of 113 Page ID
#:11288
10
12
Common Stock that you purchased or acquired during the period
13
from May 5, 2005, through and including March 13, 2007. Be
14
sure to attach the required documentation.
Purchase Date(s) Number of Premium Strike Price
15
(List Option Price Per Expiration for Call
16 Chronologically) Contracts Share Month and Option
Month/Day/Year Purchased Year Contract
17
18 / / $ $
19 / / $ $
20 / / $ $
21
27
28
14
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 88 of 113 Page ID
#:11289 J
7
8
D. Exercised Calls: List all Call Option contracts on New Century
9 Common Stock that you exercised during the period from May 5,
10
2005, through and including March 13, 2007. Be sure to attach f
11
the required documentation.
12
Strike
13 Price for
Expiration Call Number of Call Result:
14
Month and Option Option Contracts Rec'd Shares
15 Date Exercised Year Contract Exercised Or Cash?
16
17
18
19
20
E. Expired Calls: List all Call Option contracts on New Century
21
Common Stock that expired worthless during the period from
22
May 5, 2005, through and including March 13, 2007. Be sure to
23
attach the required documentation.
24
25
26
27
28
15
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 89 of 113 Page ID
#:11290
9
Century Common Stock that were open as of the close of the
10
market on March 13, 2007.
11
12
Strike Price
13 Number of Call per Call
Option Contracts Position: Short or Expiration Month Option
14
Open Long and Year Contract
15 $
16 $
17
18
19
20
21
22 S
23
24
25
26
27
28
16
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 90 of 113 Page ID
#:11291
10
i
ll
B. Sales: List all Put Option contracts on New Century Common
Stock that you sold (wrote) during the period from May 5, 2005,
12
through and including March 13, 2007. Be sure to attach the
13
required documentation.
14
Sales Date(s) Premium
15
(Writing) (List Number of Put Price Per Expiration Strike Price for
16 Chronologically) Option Share Month and Put Option
17 Month/Day/Year Contracts Sold Year Contract
$
19 / / $ $
20 / / $ $
21
22
23
24
25
26
27
28 I
17
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 91 of 113 Page ID
#:11292
10
11
12
D. Exercised Puts: List all Put Option contracts on New Century
13
Common Stock that you exercised during the period from May 5,
14
2005, through and including March 13, 2007. Be sure to attach
15
the required documentation.
16
Strike Number of Put Result:
17 Expiration Price for Option Contracts Delivered
is Month and Put Option Exercised Shares or
Date Exercised Year Contract Paid?
19
20
21
22
23
E. Expired Puts: List all Put Option contracts on New Century
24
Common Stock that expired worthless during the period from
25
May 5, 2005, through and including March 13, 2007. Be sure to
26
attach the required documentation.
27
28
18
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 92 of 113 Page ID
#:11293
1 Date Contracts
2 Expired (List Number of Strike Price for i
Chronologically) Expired Put Expiration Month Put Option
3 Month/Day/Year Contracts and Year Contract
4 / / $
$
5
6
$
7
8
F. Unexpired Puts: List Put Option contracts on New Century
9 Common Stock open as of the close of the market on March 13,
10
2007.
11
Number of Strike Price for
12 Unexpired Put Position: Short or Expiration Month Put Option
Options Contracts Long and Year Contract
13
14 $
15
16
YOU MUST READ THE FOLLOWING RELEASE AND SIGN ON PAGE
17
RELEASE OF CLAIMS
18 Definitions
19 Defined 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
24
The Releases
25 Officer and Director Release
26 I (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
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 93 of 113 Page ID
#:11294
1 Member, on behalf of themselves, for good and sufficient consideration, the receipt I
2 and adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3 is executed and delivered by, or on behalf of, such Class Member, will be deemed
4 by operation of law to have released, waived, discharged and dismissed each and
E
5
every Settled Class Claim as against each and every Released Officer And Director j
6 and 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
10 any and all claims and causes of action of every nature and description, whether
12 foreign 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
14 are based upon the allegations, transactions, facts, matters or occurrences,
16 Action, 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
20 relating to the enforcement of the Settlement. "Released Officers And Directors"
21 in this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
25 and (ii) all directors, officers, employees, and other natural persons affiliated with
26 New Century (including any of its subsidiaries and affiliates) included in the
28 Global Officer And Director Stipulation) and any and all of their respective heirs,
20
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 94 of 113 Page ID
#:11295
3 KPMG Release
4 I (we) understand and acknowledge that, without further action by anyone,
5 on and after entry of the KPMG Judgment and occurrence of the Effective Date of
6 the KPMG Settlement, each Class Member, on behalf of themselves, for good and ;I!
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
11 shall forever be enjoined from prosecuting any or all Settled Claims, against any
12 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
14 Unknown, whether arising under federal, state, common or foreign law, that
15 Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
f
16 could have asserted in any forum that arise out of or are based upon the allegations,
i
17 transactions, 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
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 the sale of New Century Put Options during the Class Period. "Settled Claims"
22 does not include claims relating to the enforcement of the Settlements. "Released
23 Auditor Party" means KPMG and any and all of its partners, principals, officers,
26
27
28
21
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 95 of 113 Page ID
#:11296
1 Underwriter Release
2 I (we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
4 Date of the Underwriter Settlement, each Class Member, on behalf of themselves,
5 their parent companies, subsidiaries, affiliates, heirs, executors, administrators,
6 predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
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
15 whether arising under federal, state, common or foreign law, that Plaintiffs or any
t
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
19 to in the Complaint, and that arise out of or relate to the purchase of New Century
20 Common Stock, New Century Series A Preferred Stock, New Century Series B
21 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
24 means the Underwriter Defendants and any and all of their respective parent
26 successors and assigns, and any and all of their current and former officers,
22
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 96 of 113 Page ID
#:11297
23
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 97 of 113 Page ID
#:11298
1 10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2 Court's summary disposition of the determination of the validity or
3 amount of the claim made by this Proof of Claim; and
4 11.that I (we) certify that I am (we are) not subject to backup withholding
5 under the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6 Code.
7 NOTE: If you have been notified by the Internal Revenue Service that you are j
i
8 subject to backup withholding, please strike the language that you are not
9 subject to backup withholding in the certification above. The Internal Revenue
10 Service does not require your consent to any provision other than the
11 certification required to avoid backup withholding.
12
13
14
15
4
16
17 i
18
19
20
21
22
23
24
25
26
27
28
24
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 98 of 113 Page ID
#:11299
1 I declare, under penalty of perjury under the laws of the United States of
2 America, that the statements made and answers given in this Proof of Claim are
3 true and correct and that the documents submitted herewith are true and genuine.
4
5
6 Signature of Claimant
7
8 Print Name of Claimant Date Signed
9 r
10 Signature of Joint Claimant, if any
t
11
22
23
24
25
26
27
28
25
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 99 of 113 Page ID
#:11300
1 REMINDER CHECKLIST
2 Please sign the Proof of Claim on page
3 If this Claim is being made on behalf of Joint Claimants, then both must sign.
4 Please remember to attach supporting documents.
5 If you move, please send your new address to:
6 In re New Century Securities Litigation Settlement
7 c/o Analytics, Inc., Claims Administrator
P.O. Box 2004
8 Chanhassen, MN 55317-2004
9 1-866-308-7615
10
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.
11
12 Keep a copy of your Proof of Claim and all documentation submitted for your
13 records.
i
14 The Claims Administrator will acknowledge receipt of your Proof of
15
Claim by mail within 60 days. Your Proof of Claim is not deemed
fully filed until you receive an acknowledgement postcard. If you do
16 not receive an acknowledgment postcard within 60 days, please call
17
the Claims Administrator toll free at (866) 308-7615.
18
19
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20 OF TIME.
21 THANK YOU FOR YOUR PATIENCE
22
23
24
25
26
27
28
26
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 100 of 113 Page ID
#:11301
i
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 101 of 113 Page ID
#:11302
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 f
1
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 102 of 113 Page ID
#:11303
1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 reasonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable and
adequate 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.
2
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 103 of 113 Page ID
#:11304
2 REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and EI
3 Claim Form, may be made to Lead Counsel:
4
BERNSTEIN LITOWITZ BERGER
5 & GROSSMANN LLP j.
6 Salvatore J. Graziano
1285 Avenue of the Americas
7 New York, New York 10019
8 Telephone: (866) 648-2524
9
10 Dated: , 2010 By Order of the Clerk of the Court
United States District Court
11 for the Central District of California
12 i
13
14
15
16
17
18
19 E
20
21
22
23
24
25
26
27
i
f
28
I
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 104 of 113 Page ID
#:11305
I
a
^I
EXHIBIT B
TO UNDERWRITER STIPULATION
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 105 of 113 Page ID
#:11306
3
4
5
6
7 l
8 UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
9
10 IN RE NEW CENTURY Case No. 2:07-ev- 00931-DDP (FMOx)
(Lead Case)
11
12
13
1PROPOSED] UNDERWRITER DEFENDANTS FINAL JUDGMENT AND
14
ORDER OF DISMISSAL WITH PREJUDICE
15
16 E
17
18
19
20
21
22
23
24
25
26
27
28
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 106 of 113 Page ID
#:11307 i
1 This matter came before the Court for hearing pursuant to the Order fl
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,
16 2. This Court has jurisdiction over the subject matter of the Consolidated
17 Action and over all Parties to the Consolidated Action, including all members of
18 the Class.
19 3. The 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:
1 of any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filling a request for exclusion in
2 accordance with the requirements set forth in the Notice, as listed on
Exhibit 1 annexed hereto.
3
4
4. The Court also affirms its findings in the Preliminary Approval Order
5
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)
8
there are questions of law and fact common to the Class; (c) the claims of New
9
York State Teachers' Retirement System ("NYSTRS") and Plaintiffs Carl Larson
10
and Charles Hooten are typical of the claims of the Class they seek to represent; (d)
11
12 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.
5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
17
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
19 Counsel Bernstein Litowitz Berger & Grossmann LLP as Class Counsel.
6. Pursuant to Federal Rule of Civil Procedure 23, this Court hereby
20
21 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 Underwriter
24
25 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.
2
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 108 of 113 Page ID
#:11309
3
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 109 of 113 Page ID
#:11310
1 Released Parties' Claims, and shall forever be enjoined from prosecuting any or all
2 of the Released Parties' Claims, against Plaintiffs and their employees, agents and
u
3 attorneys, and all other Class Members.
4 11. Upon the Effective Date, and conditioned on the Underwriter Defendants and
5 the other Released Underwriter Parties receiving substantively reciprocal releases from the u
6 Settling Individuals, the Underwriter Defendants and the other Released Underwriter
7 Parties shall be deemed by operation of law to have released, waived, discharged
8 and dismissed, and shall forever be enjoined from prosecuting, all Claims Against
9 Officers And Directors against any of the Settling Individuals.
10 12. Pursuant to the Underwriter Judgment, upon the Effective Date, and
11 conditioned on the Underwriter Defendants and the other Released Underwriter
12 Parties receiving substantively reciprocal releases from KPMG and the Released
13 Auditor Parties, the Underwriter Defendants and the other Released Underwriter
14 Parties shall be deemed by operation of law to have released, waived, discharged 3
15 and dismissed each and every claim, and shall forever be enjoined from
16 prosecuting any claim, against KPMG and the Released Auditor Parties arising
17 under federal, state, common or foreign law, arising out of or based upon the
18 allegations, transactions, facts, matters or occurrences, representations or
19 omissions involved, set forth, or referred to in the Consolidated Action.
20 13. Upon the Effective Date, this Final Judgment And Order Of
21 Dismissal With Prejudice constitutes the final discharge of all obligations to the f
4
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 110 of 113 Page ID
#:11311
1 Proposed Settlement. Settlement Fairness Hearing and Motion for Attorneys' Fees I
20 Plaintiff.
21 17. Any order entered regarding any attorneys' fees and for expense
22
23 "Settlements" herein includes the settlements as set forth in the Underwriter
24 Stipulation, the Stipulation of Settlement Between Plaintiffs and KPMG LLP
25 ("KPMG Settlement" or "KPMG Stipulation"), and the Stipulation of Global
Settlement with New Century Officer and Directors ("Global Officer And Director
26 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.
5
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 111 of 113 Page ID
#:11312
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
3 Judgment And Order Of Dismissal With Prejudice.'
4 18. The Underwriter Stipulation and Underwriter Settlement set forth
I
5 therein, whether or not consummated, and any proceedings taken pursuant to it:
6 a. shall 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
I
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 b. shall 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 C. shall 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
6
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 112 of 113 Page ID
#:11313
1 any other Released Underwriter Party, or any Class Member may refer to it to
2 effectuate the protection from liability granted them hereunder; f
3 d. shall 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 e. shall 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
11 f. shall 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 19. The 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
I
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
7
23 or issue preclusion or similar defense or counterclaim.
24 20. 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
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 113 of 113 Page ID
#:11314
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 21. 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.
10 22. 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 23. 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.
22 24. 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 IT IS SO ORDERED,
25
26 DATED:
27 THE HONORABLE DEAN D. PREGERSON
28 UNITED STATES DISTRICT COURT JUDGE
8
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 1 of 103 Page ID
#:11315
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;
3 NOW, THEREFORE, IT IS HEREBY ORDERED:
4 1. This order (the `Notice Order” or `Preliminary Approval Order”) hereby
5 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 2. The 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 CERTIFICATION
15 3. The 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:
17 all persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred Stock, New
18 Century Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, duringt he time period
19 from May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,
20 and who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;
21 members of the immediate families of the Individual Defendants; ^C3
the subsidiaries and affiliates of Defendants; (d) any person or entity
22 who was a partner, executive officer, director or controlling erson of
New Century (including any of its subsidiaries or affiliates or of any
23 Defendant; (e) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns
24 of any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filing a request for exclusion in
25 accordance with the requirements set forth in the-Notice.
26 4. The 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
[PROPOSED] ORDER PRELIM. APPROVING
-2- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 4 of 103 Page ID
#:11318
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 adequately
5 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 5. Pursuant 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 6. The 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 a. Within 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 b. A summary notice (`Summary Notice”), annexed hereto as
24 Exhibit 3, shall be published once each in the national edition of The Wall Street
25 Journal 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
[PROPOSED] ORDER PRELIM. APPROVING
-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 5 of 103 Page ID
#:11319
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.
4 HEARING: RIGHT TO BE HEARD
5 10. 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.
13 11. 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.
16 12. 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.
[PROPOSED] ORDER PRELIM. APPROVING
-5- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 7 of 103 Page ID
#:11321
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, 25th
5 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.
17 13. 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.
21 14. 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.
25 15. 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.
[PROPOSED] ORDER PRELIM. APPROVING
-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 8 of 103 Page ID
#:11322
1 CLAIMS PROCESS
2 16. 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).
8 17. 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.
13 18. 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
20 19. 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
[PROPOSED] ORDER PRELIM. APPROVING
-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 9 of 103 Page ID
#:11323
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 and
5 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.
12 20. 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
[PROPOSED] ORDER PRELIM. APPROVING
-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 10 of 103 Page ID
#:11324
1 21. 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.
4 22. 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.
9 23. 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.
16 24. 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
[PROPOSED] ORDER PRELIM. APPROVING
-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 11 of 103 Page ID
#:11325
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.
3 25. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6 a. shall not be offered or received against any of the Released
7 Parties4 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 b. shall 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 c. shall 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 4Herein `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).
[PROPOSED] ORDER PRELIM. APPROVING
-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 12 of 103 Page ID
#:11326
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 d. shall 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 e. shall 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 f. shall 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 26. 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
28
[PROPOSED] ORDER PRELIM. APPROVING
-11- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 13 of 103 Page ID
#:11327
EXHIBIT TITLE
A-1 Notice Of Pendency Of Class Action And Proposed Settlements, Settlement Fairness
Hearing, And Motion For Attorneys' Fees And Reimbursement Of Litigation Expenses
A-2 Proof Of Claim And Release
A-3 Summary Notice
is
V
I
i
f
s
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 15 of 103 Page ID
#:11329
!F!
EXHIBIT A-1
TO ORDER PRELIMINARILY APPROVING
SETTLEMENTS AND PROVIDNG FOR NOTICE
-1-
Case No. 2:07-cv-00931-DDP (FMOx)
27
28
NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
C
1 A Federal Court authorized this Notice. This is not a solicitation from a lawver. a
2 NOTICE OF PENDENCY OF CLASS ACTION: Please be advised that your rights
e
3 may 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
5 including March 13, 2007, you purchased or acquired Common Stock,
6 9.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7 Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8 ( " Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9 New Century Financial Corporation ("New Century" or the "Company").
10
11 NOTICE OF SETTLEMENTS: Please also be advised that the Court-appointed
12 Lead 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
16 settlement with the Underwriter Defendants' in the amount of $15,000,000.00; l
17 a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18 and 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
20
21 ' " Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
22
Securities 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 2 "Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
25 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.
26 Alexander, 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.
-1- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
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
21
22 09-1426-DDP, commenced on December 7, 2009, in the United States District
23
Court for the Central District of California (the "SEC Action").
4
All capitalized terms that are not defined herein shall have the meaning
24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25 Global Settlement With New Century Officers And Directors (the "Global Officer
And Director Stipulation" or "Global Officer And Director Settlement");
26
Stipulation Of Settlement Between Plaintiffs And The Underwriter Defendants (the
27 "Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
28
"KPMG Settlement").
-2- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 19 of 103 Page ID
#:11333 P
1 May 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
3 certain facts alleged in the Complaint, were injured thereby (the "Class"). (The i
4 New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock, I
5 and/or New Century Call Options and New Century Put Options (as described
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").
15 The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16 administration 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
18 Allocation") 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
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.
1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2 shares or Options of New Century Securities were damaged as Plaintiffs have
3 alleged. 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
d
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7 the 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
9 wrongfully withheld.
10 4. Statement 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
12 an amount not to exceed 12% of the Total Settlement Amount with interest from
13 the 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
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
18 Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
20 approximately $0.11 per share of Common Stock, approximately $0.32 per share
I
21 of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 (866) 648-2524, blbg@blbglaw.com .
16
How Do I Participate In The Settlements? What Do I Need To Do? Page
17 What If I Do Not Want To Be A Part Of The Settlements?
18 How Do I Exclude Myself? Page
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? Page
22 What If I Bought Shares On Someone Else's Behalf? Page
23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page
24
WHY DID I GET THIS NOTICE?
25
26
6. This 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
-6- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 23 of 103 Page ID
#:11337
1 New Century Securities during the Class Period. The Court has directed us to send
2 you 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
5 generally 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 j
7 payments pursuant to the Settlements after any objections and appeals are resolved.
8 7. In 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
13 approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
r
14 Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated r
15 Action. Lead Plaintiff New York State Teachers' Retirement System and named
16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
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
20 of the class members, except for any persons who choose to exclude themselves
21 from the class. (For more information on excluding yourself from the Class, please
27 District Judge. The people who are suing are called plaintiffs, and those who are
2 8 being sued are called defendants. In this case, the plaintiff is referred to as the
-7- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 24 of 103 Page ID
#:11338
1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual
2 Defendants, the Underwriter Defendants and KPMG. New Century was not named
3 as a defendant because New Century has filed a petition for voluntary banl iptcy
4 and the Bankruptcy Code does not permit an action to proceed against a debtor
6 9. This Notice explains the lawsuit, the Settlements, your legal rights,
7 what 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
10 do so. It also is being sent to inform you of the terms of the proposed Settlements,
12 and 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 fees and reimbursement of Litigation Expenses (the "Settlement Hearing").
17 Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
11
WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?
12
16 13. 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. B
19 14. 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 and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead
22 Counsel for the Class.
25 under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26 Act of 1933 ("Securities Act") on behalf of the Class.
1 17. By Order dated January 31, 2008, the Court granted the motions to
2 dismiss with leave to amend the complaint.
3 18. 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. ^a
6 19. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims
8 against Defendants pursuant to the Securities Act and the Exchange Act,
1 Trustee and Plan Administrator a Robert K. Cole et al. (In re New Century TRS
2 Holdings,
g , Inc.))
dv. Proc. No.
(( 09-50882 K JC)) commenced
mm n ced onApril 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
4 26. On [INSERT], the Court preliminarily approved the Settlements, E
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
8
HOW DO-I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?
9
10 27. 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/or
14 New 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
16 Offerings, pursuant to a registration statement, or in the market, and who, upon
18 Excluded from the Class are (a) Defendants; (b) members of the immediate
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
9 28. Lead Plaintiff and Lead Counsel believe that the claims asserted
10 against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11 however, the expense and length of continued proceedings necessary to pursue
12 their claims against Defendants through trial and appeals, as well as the difficulties
13 in 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 F
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
22 uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23 Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24 given the expense and length of continued proceedings necessary to reach a
6 30. 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
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9 burden and expense of continued litigation. Accordingly, the Settlements may not
10 be construed as an admission of Defendants' wrongdoing.
11
WHAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?
12
13 31. If there were no Settlements and Lead Plaintiff failed to establish any I
P
14 essential legal or factual element of its claims, neither Lead Plaintiff nor the other
17 Class likely would recover substantially less than the amount provided in the
18 Settlements, or nothing at all.
19
HOW MUCH WILL MY PAYMENT BE?
20
27 33. After approval of the Settlements by the Court, and upon satisfaction
28 of the other conditions to the Settlements, and upon issuance of a Class
15 Court. Plaintiffs, Defendants, their respective counsel, and all other Released
16 Parties shall have no responsibility or liability whatsoever for the investment or
17 distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
25 and industry factors or Company-specific factors not related to the alleged wrongful
26 conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
28 regarding New Century and analysis regarding the stock price movements.
-15- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 32 of 103 Page ID
#:11346
1 38. The proposed Plan of Allocation provides for distribution of the Net
2 Settlement Fund to Authorized Claimants as follows:
d
3 I, SUMMARY OF PLAN OF ALLOCATION
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
8 Authorized Claimant. Each Proof of Claim must separately set forth: (i) each
11 market 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
13 during the Class Period in any such New Century Security; and (iii) each
15 Preferred 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
18 see 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
20 Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
22 Stock and Preferred Stock made during the 90-day look back period of March 13,
25 5 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26
under this title in which the plaintiff seeks to establish damages by reference to the
market 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,
28 by 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
-16- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
27
Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007.
28
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2 to 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 NI
4 who submit valid Claim Forms, regardless of the type of New Century Security
5 purchased or sold. This is because claims against the Underwriter Defendants
11 separately established for each class of securities shown in Table 1 annexed hereto,
12 based upon each Authorized Claimant's "Recognized Loss Claim." The
14 that 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
16 Settlement. The Recognized Loss Claim formula is the basis upon which the
17 Underwriter Allotment and the Individual-Auditor Allotment will be
23 period in which a New Century Security was purchased; (ii) whether a Security
24 was purchased or acquired on the open market, or as a result of some other type of
27 2007), 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
-18- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 35 of 103 Page ID
#:11349
4 Counsel assumed, for purposes of determining the Recognized Loss, that there
6 during the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
8 45. 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
10 Settlements for the purpose of making pro rata allocations of the cash from the
12 their respective class of Securities. The Plan of Allocation is not a formal damage
14 that the prices of New Century Securities were artificially inflated during the Class
15 Period (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
18 March 13, 2007, removed artificial inflation from the prices of New Century
1 9 Securities.
20 46. The Plan of Allocation covers the following New Century Securities:
21 (1) Common Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
25 Security purchased or otherwise acquired during the first part of the Class Period,
26 from May 5, 2005 through February 7, 2007, must be held until or beyond
27 February 8, 2007, the first trading day after the first corrective disclosure.
28 Similarly, a New Century Security purchased or otherwise acquired on or after
1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
2 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
4 be 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
6 different parts of the Class Period described above and below (see the artificial
7 inflation Tables annexed hereto) for both the New Century Common Stock and the
8 New Century Preferred Stock through at least one of the three corrective disclosure
k
9 dates indicated, the Recognized Loss per share is $0. The Recognized Loss for
10 these transactions will be calculated as zero because it has been determined that the
11 artificial inflation between each disclosure and arising from the circumstances
12 underlying the allegations of Plaintiffs' Complaint was constant.
13 II. ADDITIONAL CONSIDERATIONS IN
CALCULATION OF RECOGNIZED LOSS
1.4 CLAIMS FOR NEW CENTURY SECURITIES
15 48. 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
2 deemed an assignment of any claim relating to the purchase of such New Century
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
6 Recognized Loss Claim.
7 50. Each Authorized Claimant shall be allocated a pro rata portion or
8 share 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
21 a Class Member might have been able to recover at trial, and it is not an estimate
22 of the amount that will be paid pursuant to this Settlement. Instead, this
23 computation is only a method to weigh Class Members' claims against one another.
24 52. To the extent a Claimant had a gain from his, her or its transactions
25 during the Class Period with respect to New Century Securities specified above,
26 the value of their Recognized Loss Claim will be zero. Such claimants will, in any
27 event, be bound by the Settlements. You may wish to consider this when deciding
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
8 Security 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
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
12 Claimant's market gain or loss on his, her, or its overall transactions in that
13 individual New Century Security during the Class Period.
17 particular security. In the case of New Century Common Stock and Put and Call
18 Options 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,
20 gains and losses will not be netted or aggregated across different eligible New
21 Century Securities. For example, an Authorized Claimant's Recognized Loss
22 Claim (as calculated under this Plan) on New Century Common Stock/Options will {
23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 any issue of New Century Preferred Stock.
25 55. 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 for exclusion and do not submit an acceptable Proof of Claim will nevertheless be
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 changes that were attributable to market forces unrelated to the alleged fraud.
23 59. 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 C. Recognized Loss Calculations
27 60. Recognized Loss Claims will be calculated for the purposes of the
28 Settlement as follows:
-23- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 40 of 103 Page ID
#:11354
1 (a) the difference between the price paid and the price received (out-of-
2 pocket investment loss) if sold on or before June 10, 2007; I
(b) the difference between the price paid (excluding all fees and
3 commissions) and the average closing price as set forth in Table 3
4 annexed 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
5 shares were sold after June 10, 2007, or were held until the current date.
6 2. Calculation of Recognized Loss
for New Century Series A Preferred Stock
7 Purchases
8 66. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
10 67. For shares purchased on or between May 5, 2005, through February 7,
11 2007, the following claims for damages shall be allowed:
12 (a) For each share sold on or before February 7, 2007, no Recognized Claims
for damages shall be allowed;
13
(b) For each share sold on or between February 8, 2007, and through March
14 13, 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,
15
annexed hereto, less the inflation per share at the time of sale as set forth
16 in Table 4; and
17
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
20 for damages shall be allowed;
21
(b) 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 of
22 purchase for the applicable date of purchase as set forth in Table 4,
23
annexed hereto, less the inflation per share at the time of sale as set forth
in Table 4; and
24
26
12, 2007, the following claims for damages shall be allowed:
27
(a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages shall be allowed;
28
1 (b) For each share sold on or after March 13, 2007, the allowed damages
2 shall be the inflation per share at the time of purchase for the applicable t
15
Preferred Stock shares shall be as follows:
72. For shares purchased on or between May 5, 2005, through February 7,
16
17 2007, the following claims for damages shall be allowed:
(a) For each share sold on or before February 7, 2007, no Recognized
is
Claims for damages shall be allowed;
19 (b) 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
20
the time of purchase for the applicable date of purchase as set forth in
21 Table 5, annexed hereto, less the inflation per share at the time of sale
as set forth in Table 5; and
22
25 (a) For each share sold on or before March 2, 2007, no Recognized Claims
26
for damages shall be allowed;
(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27 the allowed damages shall be the inflation per share at the time of
28 purchase for the applicable date of purchase as set forth in Table 5,
1 annexed hereto, less the inflation per share at the time of sale as set
2 forth in Table 5; and
i
3 74. For shares purchased between March 5, 2007, through March 12,
4 2007, the following claims for damages shall be allowed:
5 (a) For each share sold on or before March 12, 2007, no Recognized Q
9 75. The Recognized Loss Claims for damages for such Series B Preferred
10 Shares purchased during the Class Period shall be further limited (as provided for
11 under the PSLRA) to the smallest of the following:
12 (a) the difference between the price paid and the price received (out-of-pocket
13
investment loss) if sold on or before June 10, 2007;
(b) the difference between the price paid (excluding all fees and commissions)
14 and the average closing price as set forth in Table 7 annexed hereto if sold
15 between March 13, 2007, and June 10, 2007; and
(c) the difference between the price per share paid and $7.95 per share if the
16 shares were sold after June 10, 2007, or were held until the current date.
17 4. Calculation of Recognized Loss for
New Century Call and Put Options
18
76. The Plan of Allocation covers the following New Century Call and
19
Put Options: New Century Call Options on Common Stock initially purchased or
20
otherwise acquired during the Class Period, on May 5, 2005, up to and including
21
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
22
Common Stock written or purchased (covered) during the Class Period May 5,
23
2005, through and including March 13, 2007 ("New Century Put Options").
24
77. Artificial inflation and Recognized Losses as to New Century Call
25
Options and artificial deflation and Recognized Losses as to New Century Put
26
Options were computed in a manner similar to that used with respect to New
27
Century Common Stock as described above. To determine artificial inflation for
28
Call Options, Lead Plaintiff's damages consultant considered securities' price
-27- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 44 of 103 Page ID
#:11358
3 forces unrelated to the alleged fraud in prices of such Call Options and Put
4 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
u
6 may be calculated. In addition, the total dollar amount payable to Class Members h
7 in 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
t
9 limitation reflects the speculative and derivative nature of these securities as
10 compared to New Century Common Stock and New Century Preferred Shares.
it 78. With respect to purchases and sales (covers) of New Century Call
12 Options during the period May 5, 2005, through and including March 13, 2007, the
13 Artificial 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
15 Common Stock share price. The dollar change in the value of Call Options will be
22 reported closing share price minus the Common Stock price inflation per share set
23 forth in the annexed Table 2 for Call Options initially purchased between May 5,
24 2005, and March 13, 2007, and (2) the reported closing share price minus the
25 Common Stock price inflation per share set forth in the annexed Table 2 for Call
26 Options initially sold between May 5, 2005, and March 13, 2007. Once again,
28 are obtained using the daily standard deviations using the returns for that day plus
1 the previous 45-day stock returns, which are then annualized using a 252-trading
2 day approach.
3 C
4
(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
5 closed out) prior to February 7, 2007, the Recognized Loss Claim shall
6 be zero.
7 (b) For Call Options which were purchased or acquired between May 5,
8 2005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
9 13, 2007; or (3) were sold (position closed out) on or between February
10
8, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
11
12 (1) the difference between Artificial Inflation per Call Option on the
date of purchase and Artificial Inflation per Call Option on the date
13 of expiration, exercise, or sale, as appropriate; or
14 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
15
16
An 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,
17 2007 maturity and exercise price of $20. The Call Option inflation on this
18 date 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
19 then sells these Call Options on February 9, 2007, when the Call Option r
20 inflation 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, the
21 Recognized Loss Claim is the difference in call price inflation on these two
22 dates ($10.40 - $1.60, or $8.80) times number of Options (100), for a total. of
$880.00; assuming that the difference between the purchase price and the
23 sale price was greater than $8.80.
24
(c) For Call Options which were purchased or acquired between February
25 8, 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, and
27 March 13, 2007, the Recognized Loss Claim shall be that number of
28 Options multiplied by the lesser of:
1 (1) the difference between Artificial Inflation per Call Option on the
2 date of purchase and Artificial Inflation per Call Option on the date
of expiration, exercise, or sale, as appropriate; or
3 (2) the difference between the purchase price per Option and the sale
4 price per Option ($0.00 if the Call Option expired worthless).
5 (d) For Call Options which were purchased or acquired between March 5,
6 2007, and March 12, 2007, and (1) expired on or after March 13, 2007;
(2) were exercised on or after March 13, 2007; or 3) were sold (position
7 closed out) on or after March 13, 2007, the Recognized Loss Claim
8 shall be that number of Options multiplied by the lesser of-
9 (1) the Artificial Inflation per Call Option on the date of purchase, or
10 (2) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired worthless).
11
12 79. 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
15 that 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 dividends and the
18 annualized standard deviation estimated from 46-day historical daily volatility
19 estimates) using the closing share price of New Century Common Stock on the
20 transaction date, compared with the Black-Scholes put pricing formula value for
'y
21 the Put Option using the uninflated share closing share price of New Century
22 Common Stock on that same date as determined by: (1) the reported closing share
23 price 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
25 13, 2007, and (2) the reported closing share price minus the Common Stock price
26 inflation per share set forth in the annexed Table 2 for Put Options initially sold
27 between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
1 daily standard deviations using the returns for that day plus the previous 45-day
2 stock returns, which are then annualized using 252 trading day approach.
3 (a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4 were exercised prior to February 7, 2007; or 3) were purchased (position
closed out) prior to February 7, 2007, the Recognized Loss Claim shall
5 be zero.
6
(b) For Put Options which were sold between May 5, 2005, and February 7, d
7 2007, and (1) expired on or after February 8, 2007; (2) were exercised on
8 or between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
9 2007, the Recognized Loss Claim shall be that number of Options
10 multiplied by the lesser o£
(1) the difference, multiplied by minus one, between Artificial
11
Inflation per Put Option on the date of sale and Artificial Inflation
12 per Put Option on the date of expiration, exercise, or purchase
13 ($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
14 Put Option and the purchase price of the Put Option ($0.00 if the
15
Put Option expired worthless).
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) were
26 exercised on or between March 5, 2007 and March 13, 2007; or 3) were
27 purchased (position closed out) on or between March 5, 2007, and March
13, 2007, the Recognized Loss Claim shall be that number of Options
28 multiplied by the lesser of-
-31- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 48 of 103 Page ID
#:11362
1
2 (1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3 per Put Option on the date of expiration, exercise, or purchase
4 ($0.00 if the Put Option expired worthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
5 Put Option and the purchase price of the Put Option ($0.00 if the
6 Put Option expired worthless).
7 (d) For Put Options which were sold between March 5, 2007, and March 12,
8 2007, 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 or
9 after March 13, 2007, the Recognized Loss Claim shall be that number of
10 Options multiplied by the lesser of:
11 (1) the Artificial Inflation per Put Option on the date of sale,
12 multiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per
13 Put Option and the purchase price of the Put Option ($0.00 if the
14 Put Option expired worthless).
15
Another example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of
16 $10. The 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 Put
18 options after March 13, 2007, when Put inflation was zero. The Recognized
19 Loss 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 option
20 and sale price of the Put option was greater than $0.68 per Put option.
21 IIl. OTHER PROVISIONS OF THE PLAN
22 80. 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
24 Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25 will be made.
26 81. The determination of the price paid and the price received for a
27 particular security shall be exclusive of all commissions, taxes, fees and charges.
28
1 82. 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 of any
3 Class 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 any
5 claims administrator or other agent designated by Plaintiffs or their counsel, or
9 83. 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
13 pursuant to, Proofs of Claim, for the payment or withholding of Taxes owed by the
16 therewith.
17 84. The Court has reserved jurisdiction to allow, disallow, or adjust on
1 8 equitable grounds the Claim of any Class Member.
i
19 85. 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
28 Plaintiff and all other Class Members will provide releases as described below.
-33- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 50 of 103 Page ID
#:11364
1 87. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2 members of the Class will be deemed by operation of law to have released, waived,
3 discharged and dismissed each and every Settled Class Claim as against each and
4 every 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
6 enjoined from prosecuting any or all of the Settled Class Claims against each and
7 every 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
9 nature and description, whether known or Unknown Claims, whether arising under
r
10 federal, 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 forum that arise out of or are based upon the allegations, transactions, facts,
14 to in the Consolidated Action, and that arise out of or relate to the purchase of New
15 Century 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
17 Century Put Options during the Class Period. Settled Class Claims does not
21 Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
23 professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
2 Underwriter Defendants).
3 88. 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
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 nature and description, whether known or Unknown, 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
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 a
16 Class Period. "Settled Claims" does not include claims relating to the enforcement
I
17 of the Settlements. "Released Auditor Party" means KPMG and any and all of its l
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
-35- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 federal, state, common or foreign law, that Plaintiffs or any other member of the
2 Class (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
4 occurrences, representations or omissions involved, set forth, or referred to in the
i
5 Complaint, and that arise out of or relate to the purchase of New Century Common
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
8 Options during the Class Period. "Settled Claims" does not include claims relating t^
9 to the enforcement of the Settlements. "Released Underwriter Party" means the
10 Underwriter Defendants and any and all of their respective parent companies, i
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.
15 90. "Released Parties" means the Released Officers And Directors, the
16 Released Auditor Parties, and the Released Underwriter Parties.
1 7 91. "Unknown Claims" means any and all claims that Lead Plaintiff or
1 8 any 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
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
I
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:
27 A general release does not extend to claims which the creditor
28 does not know or suspect to exist in his or her favor at the time of
7 93. As specified in the Stipulations, the Judgments will also provide that
8 the Released Auditor Parties, the Released Underwriter Parties, and the Released
9 Officers And Directors will release certain claims against Lead Plaintiff and the
10 Class. In addition, certain Defendants and other persons and entities will also
release11claims against each other and other persons and entities as set forth in the f
12 Stipulations.
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' I
20 fees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21 Amount, plus interest from the date of funding at the same rate as earned by the
22 Settlement 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
26 Expenses not to exceed S4.5 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
1 Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
11 period from May 5, 2005, through and including March 13, 2007, either in the j
12y
Offerings, 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
15 Class, 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
21 copy of the Claim Form or request that a Claim Form be mailed to you. The
22 website is www.neweenturysettlement.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
24 downloaded 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 Forms with adequate supporting documentation, will not be entitled 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.
-38- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 55 of 103 Page ID
#:11369
1 96. As a Class Member, you are represented by Lead Plaintiff and Lead
2 Counsel, unless you enter an appearance through counsel of your own choice at
3 your 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 p
5 must 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.
8 97. 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 If I Do Not Want To Be A Part Of The Class And The Settlements? How Do I
11 Exclude Myself?," below.
12 98. If you wish to object to the Settlements or any of the terms of the
13 Settlements, 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 exclude 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
is
WHAT IF I DO NOT WANT TO BE A PART OF THE SETTLEMENTS?
19
HOW DO I EXCLUDE MYSELF?
20
21 99. Each Class Member will be bound by all determinations and
22 judgments in this lawsuit, including those concerning the Settlements, whether
23 favorable 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
26 Settlement, c/o Analytics, Inc., Claims Administrator, P.O. Box 2004, Chanhassen,
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
-39- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 Each request for exclusion must (i) state the name and address of the person or
2 entity 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
8 information set forth above and are not received within the time stated above,
1 Hearing. You can object to or participate in the Settlements without attending the
2 Settlement Hearing.
3 104. The Settlement Hearing will be held on [INSERT] before the
4 Honorable Dean D. Pregerson, at the United States District Court for the Central
5 District of California, 312 North Spring Street, Courtroom 3, Los Angeles,
I
6 California 90012. The Court reserves the right to approve the Settlements, the Plan
7 of Allocation or the request for attorneys' fees and reimbursement of Litigation
8 Expenses 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.
i
11 105. Any Class Member who does not submit a valid exclusion that is
0
12 received 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
c
14 reimbursement of Litigation Expenses. Objections or oppositions must be in
15 writing. 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
17 during 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
#:11372
i
1 Representative Counsel for Directors and
2 Officers
17
106. The filing must demonstrate your membership in the Class, including
18
the number of shares of New Century Securities purchased or otherwise acquired
19
or sold during the Class Period and the price(s) paid and received. You may not
20
object to the Settlements or any aspect of them, if you are not a Class Member or if
21
you excluded yourself from the Class.
22
107. You may file a written objection without having to appear at the
23
Settlement Hearing. You may not appear at the Settlement Hearing to present your
24
objection, however, unless you first filed and served a written objection in
25
accordance with the procedures described above, unless the Court orders
26
otherwise.
27
108. If you wish to be heard orally at the hearing in opposition to the
28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for
-42- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 59 of 103 Page ID
#:11373
15 you should confirm the date and time with Lead Counsel. 3
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
23
WHAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?
24
27 organization other than yourself, you must either (i) send a copy of this Notice to
28 the beneficial owner of such New Century Securities, postmarked no later than
1 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2 addresses of such persons no later than fourteen (14) days after you receive this
E
6 Claims Administrator confirming that the mailing was made as directed, and you N
7 must retain the list of names and addresses for use in connection with any possible
8 future notice to the Class. If you choose the second option, the Claims
i
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
13 Copies of this Notice may also be obtained from the settlement website
14 www.newcenturysettlement.com or Lead Counsel's website, www.blbglaw.com , or
16
CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17
QUESTIONS?
18
19 112. 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
14
15
16
17
18
19
20 w
21
22
23
24
25
26
27
28
i
-45- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 62 of 103 Page ID
#:11376
1
2 Table 1
3 d
4
5
11 Preferred Stock
New Century 6435EV207 8/15/2006 $ 25.00 9.750% X X
12 Series B
13
New Century 6435EV108 Common Stock - - - X
14
15 New Century Various Call Option - - - X
17
18
19
f
20
21
22
23
24
25
26
27
28
2 Table 2
3 n
4 Inflation per Share for Common Stock Shares Purchased between
May 5, 2005, and March 13, 2007
5
Period Begin Date End date Inflation j
6 25.21
1 5-May-05 7-Feb-07 $
7 2 8-Feb-07 4-Mar-07 $ 11.09
3 5-Mar-07 12-Mar-07 $ 0.69
8 4 13-Mar-07 to the present $ 0.00
9
10
11
12
13
14
15
16
17
18
19 i
20
21
22
23
24
25
26
27
28
1
2
3 Table 3
I
4
Common Stock PSLRA 90-Day Look-Back Loss Limitation Calculations
5 Average Average
Closing closing Closing closing
6 Date Price ($) price ($) Date Price ($) price ($)
7
13Mar2007 0.84 0.84 27Apr2007 0.86 1.19
8 14Mar2007 0.67 0.76 30Apr2007 0.89 1.18
15Mar2007 1.35 0.95 01May2007 0.85 1.17
9 16Mar2007 2.34 1.30 02May2007 0.83 1.16
19Mar2007 2.17 1.47 031May2007 0.80 1.15
10 20Mar2007 1.69 1.51 04May2007 0.72 1.14
21Mar2007 1.67 1,53 07May2007 0.59 1.12
11
22Mar2007 1.56 1.54 08May2007 0.58 1.11
12 23Mar2007 2.00 1.59 09May2007 0.53 1.10
26Mar2007 1,56 1.59 1OMay2007 0.43 1.08 6
1.3 27Mar2007 1.41 1.57 11May2007 0.43 1.06 P
28Mar2007 1.11 1.53 14May2007 0.41 1.05
14 29Mar2007 1.03 1.49 15May2007 0.37 1.03
30Mar2007 1.06 1.46 16May2007 0.36 1.02
15 02Apr2007 0.91 1.43 17May2007 0.36 1.01
03Apr2007 1.01 1.40 1 SMay2007 0.39 0.99
16
04Apr2007 1.00 1.38 21May2007 0.44 0.98
17 05Apr2007 1.26 1.37 22May2007 0.43 0.97
09Apr2007 1.14 1.36 23May2007 0.47 0.96
18 10Apr2007 1.09 1.34 24May2007 0.45 0.95
11Apr2007 0.98 1.33 25May2007 0.47 0.94
19 12Apr2007 0.89 1.31 29May2007 0.46 0.93 f
26
27
28
1
2 Table 4
3
11
12
13
Table 5 k
14
21
22
23
24
25
26
27
28
1 ,
3 Table 6
4 Preferred Stock, Series A, PSLRA 90-Day Look-Back Loss
Limitation Calculations f
5
Average Average
6 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
7
13-Mar-2007 6.45 6.45 27-Apr-2007 8.27 7.45
8 14-Mar-2007 6.20 6.33 30-Apr-2007 8.45 7.48
15-Mar-2007 9.95 7.53 01-May-2007 9.00 7.52
9
16-Mar-2007 10.00 8.15 02-May-2007 8.80 7.56
10 19-Mar-2007 9.25 8.37 03-May-2007 8.80 7.59
20-Mar-2007 8.50 8.39 04-May-2007 8.75 7.62
11 21-Mar-2007 8.75 8.44 07-May-2007 9.25 7.66
12 22-Mar-2007 8.85 8.49 08-May-2007 9.00 7.70
23-Mar-2007 9.77 8.64 09-May-2007 8.70 7.72
13 26-Mar-2007 8.92 8.66 10-May-2007 8.23 7.73
27-Mar-2007 6.40 8.46 11-May-2007 7.73 7.73
14
28-Mar-2007 6.10 8.26 14-May-2007 8.50 7.75
15 29-Mar-2007 6.20 8.10 15-May-2007 9.00 7.78
30-Mar-2007 6.75 8.01 16-May-2007 9.00 7.81
16 02-Apr-2007 6.90 7.93 17-May-2007 8.95 7.83
17 03-Apr-2007 7.55 7.91 18-May-2007 8.83 7.85
04-Apr-2007 8.10 7.92 21-May-2007 9.50 7.88
18 05-Apr-2007 8.25 7.94 22-May-2007 9.50 7.92
09-Apr-2007 7.65 7.92 23-May-2007 9.10 7.94
19
10-Apr-2007 7.50 7.90 24-May-2007 9.25 7.97
20 11-Apr-2007 7.60 7.89 25-May-2007 9.10 7.99
12-Apr-2007 7.45 7.87 29-May-2007 9.25 8.01 4
21 13-Apr-2007 7.00 7.83 30-May-2007 9.20 8.03
22 16-Apr-2007 7.05 7.80 31-May-2007 9.14 8.05
17-Apr-2007 6.70 7.75 01-Jun-2007 8.75 8.06
23 18-Apr-2007 6.30 7.70 04-Jun-2007 8.25 8.07
19-Apr-2007 6.10 7.64 05-Jun-2007 8.10 8.07
24
20-Apr-2007 6.15 7.59 06-Jun-2007 7.45 8.06
25 23-Apr-2007 5.60 7.52 07-Jun-2007 7.00 8.04
24-Apr-2007 6.00 7.47 08-Jun-2007 6.87 8.02
26 25-Apr-2007 6.25 7.43 09-Jun-2007 6.87 8.02
27 26-Apr-2007 7.37 7.43 10-Jun-2007 6.87 8.02
28
1 r
2 Table 7
3 Preferred Stock> Series B PSLRA 90-DaYLook-Back Loss
Limitation Calculations
4
Average Average
5 Closing closing Closing closing
Date Price ($) price ($) Date Price ($) price ($)
6 i
13-Mar-2007 6.32 6.32 27-Apr-2007 8.06 7.35
7 14-Mar-2007 6.35 6.34 30-Apr-2007 8.40 7.38
8 15 -Mar-2007 9.89 7.52 01-May-2007 8.70 7.42
16-Mar-2007 10.00 8.14 02-May-2007 8.70 7.45
9 19-Mar-2007 9.35 8.38 03-May-2007 8.65 7.48
20-Mar-2007 8.60 8.42 04-May-2007 8.61 7.51
10 21-Mar-2007 9.00 8.50 07-May-2007 9.45 7.56
1.1 22-Mar-2007 9.10 8.58 08-May-2007 8.88 7.60
23-Mar-2007 9.50 8.68 09-May-2007 8.70 7.62
12 26-Mar-2007 8.90 8.70 10-May-2007 8.53 7.64
27-Mar-2007 6.65 8.51 11-May-2007 8.05 7.65
13
28-Mar-2007 5.80 8.29 14-May-2007 8.45 7.67
14 29-Mar-2007 6.25 8.13 15- May-2007 8.78 7.70
30-Mar-2007 6.40 8.01 16-May-2007 9.00 7.72
15 02-Apr-2007 17-May-2007
7.00 7.94 9.20 7.76
16 03-Apr-2007 7.25 7.90 18-May-2007 8.88 7.78
04-Apr-2007 8.00 7.90 21-May-2007 9.50 7.81
17 05-Apr-2007 8.45 7.93 22-May-2007 8.75 7.83
09-Apr-2007 7.50 7.91 23-May-2007 9.25 7.86
18
10-Apr-2007 7.03 7.87 24-May-2007 9.25 7.89
19 11-Apr-2007 7.05 7.83 25-May-2007 9.10 7.91
12-Apr-2007 6.90 7.79 29-May-2007 9.30 7.94
20 13-Apr-2007 6.80 7.74 30-May-2007 9.00 7.96
21 16-Apr-2007 6.76 7.70 31-May-2007 9.65 7.99
17-Apr-2007 6.15 7.64 01-Jun-2007 8.85 8.00
22 18-Apr-2007 6.00 7.58 04-Jun-2007 8.60 8.01
19-Apr-2007 6.00 7.52 05 -Jun-2007 7.60 8.00
23
20-Apr-2007 6.05 7.47 06-Jun-2007 7.50 8.00
24 23-Apr-2007 5.90 7.41 07-Jun-2007 6.90 7.98
24-Apr-2007 6.00 7.37 08-Jun-2007 6.25 7.95
25 25-Apr-2007 6.20 7.33 09-Jun-2007 6.25 7.95
26 26-Apr-2007 7.25 7.33 10-Jun-2007 6.25 7.95
27
28
1 Table 8
2 Table 8 has been abbreviated for example purposes. For a complete table, visit
3 http://www.newcenturysettlement.com/Forms/Table 8.pd£
4 If you do not have access to the Internet, please contact the Claims Administrator
5 at 1-866-308-7615 to have a copy mailed to you.
6
Max Min
7 Max Min Max Min Risk Risk Max Min Max
Maturity Exer. Close Close Vola Vola Free Free Call Call Put Min Put
8 date price price Price tility tility Rate Rate Inflat. Inflat. Inflat. Inflation
17-Mar-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.69 $0.51 $0.00 -$0.18
21-Apr-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.64 $0.49 -$0.05 -$0.20
10 19-May-
07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.51 -$0.07 -$0.19
11 18-Aug-07 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.62 $0.54 -$0.08 -$0.15
19-Jan-08 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.63 $0.59 -$0.06 -$0.11
12
17-Jan-09 $2.50 $5.16 $3.21 1.98 1.88 0.05 0.05 $0.66 $0.64 -$0.04 -$0.05
13 17-Feb-07 $5.00 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $11.08 $0.00 -$0.01
17-Mar-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $11.08 $0.03 -$0.01 -$1.40
14
21-Apr-07 $5.00 $15.85 $3.21 1.98 0.95 0.05 0.05 $9.41 $0.22 -$0.20 -$2.29
19-May-
15
07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.86 $0.30 -$0.19 -$2.30
16 18-Aug-07 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.46 $0,42 -$0.16 -$3.00
19-Jan-08 $5.00 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.87 $0.51 -$0.11 -$4.20
17
17-Jan-09 $5.00 $19,75 $3.21 1.98 0.88 0.05 0.05 $8.94 $0.61 -$0.06 -$3.44
18 17-Feb-07 $7.50 $19.75 $17.21 0.93 0.88 0.05 0.05 $11.09 $9.59 $0.00 -$1.50
17-Mar-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $10.75 $0.00 -$0.34 -$3.87
19 21-Apr-07 $7.50 $15.85 $3.21 1.98 0.95 0.05 0.05 $7.07 $0.10 -$0.36 -$4.69
19-May-
20
07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.97 $0.18 -$0.31 -$4.56
21 18-Aug-07 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.38 $0.33 -$0.23 -$4.90
19-Jan-08 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.75 $0.46 -$0.16 -$5.63
22 17-Jan-09 $7.50 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.95 $0.59 -$0.08 -$4.50
$10.0
23 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $9.00 $7.10 -$1.14 -$3.99
$10.0
24
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $9.10 $0.00 -$0.64 -$6.33
$10.0
25
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $7.98 $0.05 -$0.48 -$6.82
19-May- $10.0
26
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.54 $0.11 -$0.41 -$6.51
27 $10.0
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $8.11 $0.27 -$0.29 -$6.40 i
28 $10.0
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.68 $0.42 -$0.20 -$6.70
-52- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 69 of 103 Page ID
#:11383
1 $ 10.0 I'
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $7.14 $0.57 -$0.09 -$5.31
2 $12.5
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $6.50 $4.60 -$3.63 -$6.49 p
3 $12.5
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.80 $0.00 -$0.68 -$8.50
4 $12.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $6.05 $0.02 -$0.55 -$8.45
5 19-May- $12.5
07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.95 $0.08 -$0.48 -$8.00
6 $12.5
18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.87 $0.15 -$0.34 -$7.54
7 $12.5
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.72 $0.39 -$0.23 -$7.51
8
$12.5 I
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $6.46 $0.55 -$0.10 -$5.95
9
$15.0
17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $4.00 $2.16 -$6.12 -$8.93
10
$15.0
11
17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.70 $0.00 -$0.69 -$9.97
$15.0
12 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $4.35 $0.01 -$0.60 -$9.54
19-May- $15.0
13 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.05 -$0.53 -$9.05
$15.0
14 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.76 $0.10 -$0.38 -$8.40
$15.0
15 19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.20 -$0.25 -$8.14
$15.0
16 17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.89 $0.45 -$0.12 -$6.47
$17.5
17 17-Feb-07 0 $19.75 $17.21 0.93 0.88 0.05 0.05 $1.70 $0.48 -$8.61 -$10.61
$17.5
18 17-Mar-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $2.95 $0.00 -$0.69 -$10.69
$17.5
19 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $3.02 $0.01 -$0.63 -$10.21
19-May- $17.5
20 07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $3.90 $0.04 -$0.56 -$9.76
$17.5
21 18-Aug-07 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $4.50 $0.10 -$0.41 -$9.03
$17.5
22
19-Jan-08 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.17 $0.20 -$0.28 -$8.63
23 $17.5
17-Jan-09 0 $19.75 $3.21 1.98 0.88 0.05 0.05 $5.40 $0.40 -$0.13 -$6.90
24
$20.0
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $19.93 $0.04 -$5.28 -$17.39
25
$20.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $10.64 $0.00 -$0.69 -$15.54
26 $ 20.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $1.75 $0.00 -$0.65 -$10.60
27 19-May- $20.0
07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $9.32 $0.03 -$0.59 -$16.74
28 $20.0
18-Aug-07 0 $30.60 $3.21 1.98 0.24 0.05 0.05 $7.79 $0.05 -$0.44 -$18.25
-53- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 $20.0
19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $19.94 $0.15 -$0.30 -$18.65
2 $20.0
17-Jan-09 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.25 $0.25 -$0.14 -$16.72
3 $22.5
17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $17.53 $0.00 -$7.68 -$19.88
4 $22.5
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $8.16 $0.00 -$0.69 -$18.03
5 $22.5
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.90 $0.00 -$0.66 -$10.82
6 19-May- $22.5
7 07 0 $39.69 $3.21 1.98 0.21 0.05 0.05 $14.13 $0.02 -$0.61 -$21.23
$22.5
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $7.53 $0.10 -$0.47 -$21.41
8
$25.0 -
9 17-Feb-07 0 $42.10 $17.21 0.93 0.21 0.05 0.05 $15.10 $0.00 $10.11 -$22.30
$25.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $5.70 $0.00 -$0.69 -$20.49
10
$25.0
21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.40 $0.00 -$0.67 -$10.94
11
19-May- $25.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $13.69 $0.02 -$0.63 -$23.07
$25.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $5.44 $0.10 -$0.49 -$23.05
$25.0
14 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.04 $16.72 $0.15 -$0.33 -$21.93
$30.0 -
15 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $14.26 $0.00 $10.95 -$25.03
$30.0
16 17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $1.64 $0.00 -$0.69 -$24.29
$30.0
17 21-Apr-07 0 $18.77 $3.21 1.98 0.93 0.05 0.05 $0.25 $0.00 -$0.68 -$11.05
19-May- $30.0
18 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $9.35 $0.01 -$0.65 -$24.86
$30.0
19 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $2.38 $0.09 -$0.52 -$24.73'
$ 30.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $13.64 $0.15 -$0.36 -$23.81
$30.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $8.45 $0.03 -$0.17 -$21.29
$35.0 -
22
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $10.36 $0.00 $11.09 -$25.21
$35.0
23
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.12 $0.00 -$0.69 -$25.18
19-May- $35.0
24
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $5.83 $0.01 -$0.66 -$25.19
$35.0
25
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.88 $0.04 -$0.55 -$25.13
26 $35.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $4.61 $0.03 -$0.38 -$24.72
27 $40.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $7.36 $0.00 $11.09 -$25.21
28 $40.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.05 $0.00 -$0.69 -$25.21
-54- NOTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
1 19-May-
$40.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $3.43 $0.00 -$0.67 -$25.21
2 $40.0
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.50 $0.00 -$0.57 -$25.20
3 $40.0
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $8.65 $0.00 -$0.40 -$25.06
4 $40.0
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $5.52 $0.00 -$0.19 -$23.29
5 $45.0 -
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $5.11 $0.00 $11.09 -$25.21
6 $45.0
17-Mar-07 0 $30.84 $3.21 1.98 0.23 0.05 0.05 $0.02 $0.00 -$0.69 -$25.21
19-May- $45.0
07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $1.90 $0.00 -$0.68 -$25.21
8
$ 45.0 j
18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.30 $0.00 -$0,58 -$25.21
9
$45.0
19-Jan-08 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $2.10 $0.00 -$0.42 -$25.17
10
$50.0 -
11
17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $3.47 $0.00 $11.09 -$25.21
19-May- $50.0
12 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.98 $0.00 -$0.68 -$25.21
$50.0
13 18-Aug-07 0 $34.44 $3.21 1.98 0.21 0.05 0.05 $0.25 $0.00 -$0.60 -$25.21
$50.0
14 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $5.32 $0.00 -$0.43 -$25.20
$50.0
15 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $3.68 $0.00 -$0.21 -$24.18
$55.0 -
16 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $2.31 $0.00 $11.09 -$25.21
19-May- $55.0
17 07 0 $42.10 $3.21 1.98 0.21 0.05 0.05 $0.40 $0.00 -$0.68 -$25.21
$55.0
18 19-Jan-08 0 $51.22 $3.21 1.98 0.21 0.05 0.05 $4.15 $0.00 -$0.45 -$25.21
$60.0 -
19 17-Feb-07 0 $47.82 $17.21 0.93 0.21 0.05 0.05 $1.35 $0.00 $11.09 -$25.21
$60.0
20 19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $3.24 $0.00 -$0.46 -$25.21
$60.0
21 17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $2.50 $0.00 -$0.23 -$24.71
$70.0
22
19-Jan-08 0 $53.00 $3.21 1.98 0.19 0.05 0.03 $1.90 $0.00 -$0.48 -$25.21
$70.0
23
17-Jan-09 0 $47.82 $3.21 1.98 0.21 0.05 0.05 $1.73 $0.00 -$0.24 -$24.96
24
25
26
27
28
I
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 72 of 103 Page ID
#:11386
EXHIBIT A-2
TO ORDER PRELIMINARILY APPROVING
SETTLEMENTS AND PROVIDNG FOR NOTICE
-1-
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 73 of 103 Page ID
#:11387 i
i
1 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
2 BLAIR A. NICHOLAS (Bar No. 178428)
airnblbglaw.com)
3 NIZAVET H LIN (Bar No. 174663)
(elizabethl , blbglaw.com)
4 NIKI L. MENDOZA (Bar No. 214646)
(mkim blbglaw.com )
5 ENJA IN GALDSTON (Bar No. 211114)
blbglaw.com)
6 ft ^ A. KELLAR (Bar No. 234470)
eok (a^blbgaw.com)
7 M81 Nigh Bluff Drive, Suite 300
San Diego, CA 92130
8 Tel: (858) 793-0070
Fax: (858) 793-0323
9 -and-
SALVATORE J. GRAZIANO
10 sgrazianoblbggl^aw.com
LAURENT MC MILLE
11 laurenm@blbglaw. com)
285 Avenue of the Americas
12 New York NY 10019
Tel: (21^) 554-1400
13 Fax: (212) 554-1444
14 LeadCounsel for Lead Plaintiff New
York State Teachers' Retirement System
15
16
23
1 GENERAL INSTRUCTIONS
F
E
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
7 Allocation describe the proposed settlements ("Settlements") that will resolve this
8 Consolidated 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
11 contains the definitions of many of the defined terms (which are indicated by initial
12 capital 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
18 , ADDRESSED TO:
19 In re New Century Securities Litigation Settlement
20
c/o Analytics, Inc. Claims Administrator a
P.O. Box 2004 E
21 Chanhassen, MN 55317-2004
22 1-866-308-7615
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,
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 75 of 103 Page ID
#:11389
1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in u
2 the 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 options and New Century put options are referred to collectively as "New Century
5 Securities.")
16 Settlement Fund.
22
23 1 The following persons are excluded from the Class: (a) the Underwriter
24 Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
of the immediate families of the Individual Defendants; (c) the subsidiaries and
25
affiliates of Defendants; (d) any person or entity who was a partner, executive
26 officer, director or controlling person of New Century (including any of its
subsidiaries or affiliates) or of any Defendant; (e) any entity in which any
27
Defendant has a controlling interest; and (f) the legal representatives, heirs,
28 successors and assigns of any such excluded party.
I
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 76 of 103 Page ID
#:11390
4 7. To recover as a Class Member, you must complete and sign this Proof
5 of Claim and mail it to the Claims Administrator postmarked on or before
9 8. Submission 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. The
i
12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
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
3
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 77 of 103 Page ID
#:11391
1 documentation 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
3 required to submit genuine and sufficient documentation reflecting your positions a
4 in New Century Common Stock and Preferred Stock as of the close of the market
5 on 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
7 stockbrokers' monthly statements (reflecting your opening and closing balances for
8 the months specified on the actual claim form, and in which transactions during the
4
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 78 of 103 Page ID
#:11392
9 attached thereto, subject to penalties of perjury under the laws of the United States
10 of America. The making of false statements, or the submission of forged or
11 fraudulent documentation, will result in the rejection of your claim and may
17 not they also submit electronic copies. If you wish to file your claim
20 file layout. No electronic files will be considered to have been properly submitted
21 unless the Claims Administrator issues to the Claimant a written paper
23
24
25
26
27
28
5
I
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 79 of 103 Page ID
#:11393 k`
F
1 In re New Century
3
4 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name
5
6 Street Address
7
8 City State Zip Code
9 (Daytime)
10 Area Code Telephone Number
11 (Evening)
12 Area Code Telephone Number
13
15
E
16
Record Owner's Name (if different from beneficial owner listed above)
17
Check appropriate box (check only one box):
18
q Individual/Sole Proprietor q Joint Owners q Pension Plan
19
f
20 q Corporation q Partnership q Trust
21 q
IRA q Other
22
(describe: )
23
24 NOTE: Separate Proofs of Claim should be submitted for each separate legal
25 entity (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
6
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 80 of 103 Page ID
#:11394
i
1 transactions made by that entity, no matter how many separate accounts that entity
2 has (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 p
4 of Claim, no matter how many accounts the transactions were made in). If you C
5 require additional room to list your transactions, please be sure to include your frill
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.
9 PART II: NEW CENTURY COMMON STOCK
10 A. Be2inninLy HoldinLys: State the number of shares of New Century
11 Common Stock the Claimant owned as of the close of the market
12 on May 4, 2005. If none, write "zero" or "0." If other than zero,
13 be sure to attach the required documentation.
14
15 B. Purchases:
16 (1) 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
18 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
26 / / $ $
i
27
*excluding commissions, transfer taxes or other fees.
28
7
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 81 of 103 Page ID
#:11395
p
1 (ii) State the total number of shares of New Century Common Stock the
2 Claimant purchased during the period between March 14, 2007, through and p
3 including June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,
4 which are not in the Class Period, are not included in the calculation of Recognized
5 Loss. This information is needed by the Claims Administrator for purposes of the
15 / / $ $
16
*excluding commissions, transfer taxes or other fees
17
18 D. Unsold Holdings: State the total number of shares of New
19 Century Common Stock the Claimant owned at the close of the
20 market on March 13, 2007. If none, write "zero" or "0." If other
22
E. Ending Position For 90-Day Look Back; State the total number
23
24
of shares of New Century Common Stock the Claimant owned at
25
the close of the market on June 10, 2007. If none, write "zero" or
26
"0." If other than zero, be sure to attach the required
documentation.
27
28
8
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 82 of 103 Page ID
#:11396
23
24
25
26
27
28
9
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 83 of 103 Page ID
#:11397
a
1 Trade Date(s) (List f
z
4 / / $ $
5 / / $ $
6 / / $ $
9 (ii) 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
12
purchases, which are not in the Class Period, are not included in the calculation of
13
Recognized Loss Amount. This information is needed by the Claims
14
Administrator for purposes of the overall evaluation of the Claim.)
15
16 C. Sales: List all sales of New Century Series A Preferred Stock
17 made during the period from May 5, 2005, through and including
18
June 10, 2007. Be sure to attach the required documentation.
19 Trade Date(s) (List
Chronologically) Number of Sales Total
20 Month/Day/Year Shares Sold Price Per Share Sales Price*
21 / / $ $
$ $
22
S $
23
24
27
28
10
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 84 of 103 Page ID
#:11398
E
f
1 D. Unsold Holdings: State the total number of shares of New i
2 Century Series A Preferred Stock the Claimant owned at the close q
3 of the market on March 13, 2007. If none, write "zero" or "0." If
4 other than zero, be sure to attach the required documentation.
5
6 E. EndinLy Position For 90-Day Look Back: State the total number
7 of shares of New Century Series A Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation.
11
h
12 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
26 B. Purchases:
27 (1) List all purchases of New Century Series B Preferred Stock made during
28 the period from May 5, 2005, through and including March 13, 2007. (NOTE: If
I
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 85 of 103 Page ID
#:11399
a
1 you acquired your New Century Series B Preferred Stock during this period in an
2 Offering 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 attach the required documentation.
5 Trade Date(s) (List
6 Chronolo g icall y) Number of Purchase Total
Month/Day/Year Shares Purchased Price Per Share Purchase Price* k
a
7 / / $ $
s l I $ $
9 / / $ $ i
$
10 / / $
13
(ii) 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
15
and 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
20 made during the period from May 5, 2005, through and including {
21
June 10, 2007. Be sure to attach the required documentation.
Trade Date(s) (List
22
Chronologically) Number of Sales Total
23 Month/Day/Year Shares Sold Price Per Share Sales Price*
24 $ $
25
26
I l $ $
27
12
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 86 of 103 Page ID
#:11400
6 E. EndinLy Position For 90-Day Look Back: State the total number
7 of shares of New Century Series B Preferred Stock the Claimant
8 owned at the close of the market on June 10, 2007. If none, write
9 "zero" or "0." If other than zero, be sure to attach the required
10 documentation.
11
12
17 NOT BE REVIEWED
18
19 a
20
21
22
23
24
25
26
27
28
13
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 87 of 103 Page ID j
#:11401
EI
1 PART V: NEW CENTURY CALL OPTIONS
2 A. Beginning Holdings: List all Call Option contracts on New
3 Century Common Stock open as of the close of the market on
4 May 4, 2005:
5 Number of Call Strike Price for
6 Option Contracts Expiration Month Call Option Position: Short
Open and Year Contract or Long
7 $
8 $
10'
11
B. Purchases: List all Call Option contracts on New Century
12
Common Stock that you purchased or acquired during the period
13
from May 5, 2005, through and including March 13, 2007. Be
1
14
sure to attach the required documentation.
Purchase Date(s) Number of Premium Strike Price
15
(List Option Price Per Expiration for Call
16 Chronologically) Contracts Share Month and Option
Month/Day/Year Purchased Year Contract
17
18 / / $ $
19 / / $ $
20 / / $ $
21
27
28
14
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 88 of 103 Page ID
#:11402
i
1 Sales Date(s) Premium
2 (List Number of Price Per Expiration Strike Price for
Chronologically) Option Share Month and Call Option
3 Month/Day/Year Contracts Sold Year Contract
4 / / $ $
5 / / $ $
7
s ',
D. Exercised Calls: List all Call Option contracts on New Century o
9 Common Stock that you exercised during the period from May 5,
10 E
2005, through and including March 13, 2007. Be sure to attach I
11
the required documentation.
12
Strike
13 Price for
Expiration Call Number of Call Result: j
14
Month and Option Option Contracts Rec' d Shares
15 Date Exercised Year Contract Exercised Or Cash?
16
17
18
19
R
20
E. Expired Calls: List all Call Option contracts on New Century
21
Common Stock that expired worthless during the period from
22
May 5, 2005, through and including March 13, 2007. Be sure to
23
attach the required documentation.
24
25
26
27
28
15
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 89 of 103 Page ID
#:11403
^I
$
5
12
Strike Price
13 Number of Call per Call
Option Contracts Position: Short or Expiration Month Option
14
Open Long and Year Contract
.15 $
16 $
17
18
19
20
21
22
23
24
25
26
27
28
16
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 90 of 103 Page ID
#:11404
18 / / $ $
19 / / $ $ f
20 / / $ $ i
21
22
23
24
25
26
27
28
17
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 91 of 103 Page ID
#:11405
10 $ $
11
12
D. Exercised Puts: List all Put Option contracts on New Century
13
Common Stock that you exercised during the period from May 5,
14
2005, through and including March 13, 2007. Be sure to attach
15
the required documentation.
16
Strike Number of Put Result:
17 Expiration Price for Option Contracts Delivered
18
Month and Put Option Exercised Shares or
Date Exercised Year Contract Paid?
19
20
21
22
23
E. Expired Puts: List all Put Option contracts on New Century I
24
Common Stock that expired worthless during the period from
25
May 5, 2005, through and including March 13, 2007. Be sure to
26
attach the required documentation.
27
28
18
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 92 of 103 Page ID
#:11406
1 Date Contracts
2 Expired (List Number of Strike Price for
Chronologically) Expired Put Expiration Month Put Option
3 Month/Day/Year Contracts and Year Contract
4 $
6 / / $
7
8
F. Unexpired Puts: List Put Option contracts on New Century
9
Common Stock open as of the close of the market on March 13,
10
2007.
11
Number of Strike Price for
12 Unexpired Put Position: Short or Expiration Month Put Option
Options Contracts Long and Year Contract
13
14 $
15
21 "Stipulations").
22
23
24
The Releases
25 Officer and Director Release
26 I (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
i
28 the Effective Date of the Global Officer And Director Settlement, each Class i
19
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 93 of 103 Page ID
#:11407
1 Member, on behalf of themselves, for good and sufficient consideration, the receipt
2 and adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3 is executed and delivered by, or on behalf of, such Class Member, will be deemed
4 by operation of law to have released, waived, discharged and dismissed each and
5 every 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
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 l
10 any and all claims and causes of action of every nature and description, whether
a
11 known or Unknown Claims, whether arising under federal, state, common or
12 foreign 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
14 are based upon the allegations, transactions, facts, matters or occurrences,
16 Action, 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
20 relating to the enforcement of the Settlement. "Released Officers And Directors"
21 in this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
26 New Century (including any of its subsidiaries and affiliates) included in the
28 Global Officer And Director Stipulation) and any and all of their respective heirs,
20
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 94 of 103 Page ID
#:11408
6 the KPMG Settlement, each Class Member, on behalf of themselves, for good and
27
28
21
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 95 of 103 Page ID
#:11409
1 Underwriter Release
2 I (we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
E
4 Date of the Underwriter Settlement, each Class Member, on behalf of themselves, r
5 their parent companies, subsidiaries, affiliates, heirs, executors, administrators, I
6 predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
8 consideration, the receipt and adequacy of which are hereby acknowledged,
9 whether or not a Proof of Claim is executed and delivered by, or on behalf of, such
10 Class 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
14 causes of action of every nature and description, whether known or Unknown,
15 whether 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
19 to in the Complaint,
p ^ and that arise out of or relate to the p
p urchase of New Centu ry
20 Common Stock, New Century Series A Preferred Stock, New Century Series B N'
21 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
i
28 not include any Defendants other than the Underwriter Defendants.
22
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 96 of 103 Page ID
#:11410
1
F
23
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 97 of 103 Page ID
#:11411 P
1 10.that I (we) waive trial by jury, to the extent it exists, and agree to the
2 Court's summary disposition of the determination of the validity or
3 amount of the claim made by this Proof of Claim; and
4 1l.that I (we) certify that I am (we are) not subject to backup withholding
5 under the provisions of Section 3406(a)(1)(c) of the Internal Revenue
6 Code.
7 NOTE: If you have been notified by the Internal Revenue Service that you are
8 subject to backup withholding, please strike the language that you are not
R
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
I
24
P
P
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 98 of 103 Page ID
#:11412
!i
1 I declare, under penalty of perjury under the laws of the United States of
2 America, that the statements made and answers given in this Proof of Claim are
I
3 true and correct and that the documents submitted herewith are true and genuine.
4
5
6 Signature of Claimant
d
G
7
8
Print Name of Claimant Date Signed
16
18
23
J
24
25
26
27
28
25
f
1 REMINDER CHECKLIST
2 Please sign the Proof of Claim on page
3 If this Claim is being made on behalf of Joint Claimants, then both must sign.
4 Please remember to attach supporting documents.
5 If you move, please send your new address to:
h
6 In re New Century Securities Litigation Settlement i
7 c/o Analytics, Inc., Claims Administrator
P.O. Box 2004
8 Chanhassen, MN 55317-2004
1-866-308-7615
9
^u
10
DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.
11
12 Keep a copy of your Proof of Claim and all documentation submitted for your
13 records.
18
19
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT
20 OF TIME.
21 THANK YOU FOR YOUR PATIENCE
22
23
24
25
26
27
28
26
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 100 of 103 Page ID
#:11414
EXHIBIT A-3
TO ORDER PRELIMINARILY APPROVING
SETTLEMENTS AND PROVIDNG FOR NOTICE
-1-
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 101 of 103 Page ID
#:11415
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 in
23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00). The 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
2 8 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 102 of 103 Page ID
#:11416 I
1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 reasonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable and
adequate 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.
2
i
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 103 of 103 Page ID
#:11417
3
Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 1 of 7 Page ID
#:11418
23
Judge Dean D. Pregerson
24
25
26
27
28
DECLARATION OF SERVICE
Case No. 2:07-cv-00931-DDP (FMOx)
Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 2 of 7 Page ID
#:11419 -
1 DECLARATION OF SERVICE
2 I, the undersigned, declare:
3 1. That I am and was, at all times herein mentioned, a citizen of the United
4 States and a resident of the County of San Diego, 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 Diego, California 92130.
1 SERVICE LIST
2
COUNSEL FOR PLAINTIFF CARL LARSON
3
Marvin L. Frank, Esq.
4
MURRAY, FRANK & SAILER LLP
5 275 Madison Avenue
New York, NY 10016
6 Tel: (212) 682-1818
Fax: (212) 682-1892
7 mfrank@murrayfrank.com
8 Via ECF
27
28
28
23
24
25
26
27
28
28
25
26
27
28