UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK MASTER FILE NO, In re REFCO, INC. SECURITIES 0 Civ . 8626 (GEL) LITIGATION STIPULATI ANll AGREEMENT OF SETLLEMENT This stipulation and agreement of settlement is made and entered into by and between Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC on behalf of themselves and the class of persons defined below (tile "Class") and Defendant BAWAG P .S .K, Bank Mr Arbeit and Wirtschafl atn d dsterreichische Postsparkasse Aktiengesellschaft ("E3AWAG") . W HEREAS : A . All capitalized words or terms not otherwise defined herein shall have th e meaning for those words or terms as set forth in the section below entitled "Definitions" at T1 hereof . B . Commencing in October 2005, multiple securities class action complaints were filed against Refco, certain of Refco's former officers and directors, Refeo's auditors, Refco's underwriters, and others . C, By Order dated February 8, 2006, the Court consolidated the class actions and appointed RH Capital Associates LLC and Pacific Investment Managemen t 12464113 .6
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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
MASTER FILE NO,
In re REFCO, INC. SECURITIES 0 Civ. 8626 (GEL)
LITIGATION
STIPULATI ANll AGREEMENT OF SETLLEMENT
This stipulation and agreement of settlement is made and entered into by and
between Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management
Company LLC on behalf of themselves and the class of persons defined below (tile
"Class") and Defendant BAWAG P .S.K, Bank Mr Arbeit and Wirtschafl atn d
or related companies and any of their respective present or former officers, directors an d
employees .
pp. "Sale Price" means the Transaction Value as defined in a separate
Stipulation and Order of Settlement reached between BAWAG and the Creditors
Committee and approved by the Approval Order.
qq. "Safe Transaction" means the Sale Transaction as defined in a
separate Stipulation and Order of Settlement reached between BAWAG and the Creditor s
Committee and approved by the Approval Order ,
rr. "Settled Claims" means any and all claims, rights, demands,
obligations, controversies, debts, damages, losses, causes of action or liabilities of any
kind or nature whatsoever in law or in equity, including both known and Unknown
Claims, held by any Class Member at any point from the beginning of time to the date of
the execution of this Stipulation, including but not limited to those which (i) wer e
to
asserted in the Action by Class Members against any of the Settling Defendants ; or (ii)
could have been asserted in any forum by any of the Class Members against any of the
Settling Defendants, that arise out of or relate to the allegations of the Complaint and the
acquisition or disposition of Refco Group Ltd ., LLC/Refco Finance Inc . 9% Senior
Subordinated Notes due 2012 and/or common stock of Refco during the Class Period .
ss . "Settling Defendants" means BAWAG, its direct and indirect
subsidiaries, parents, affiliates, predecessors, and successors, set forth in the attache d
Schedule A, and their respective agents and attorneys, set forth in the attached Schedul e
B, and all post, present, and future othcers, directors and employees, except for the
individuals set forth in the attached Schedule C or any individuals who at any tim e
worked as an officer, director or employee of Refco, in their capacity as officer, directo r
or employee of Refco, excluding any individual who served as an officer, director, or
employee of BAWAG Overseas, Inc. or D>" Capital, Inc . prior to the merger with or sale
of these entities to Refco and who was not otherwise employed by Refco .
tt. "Settling Defendants' Claims" means any and all claims, rights ,
demands, obligations, controversies, debts, damages, losses, causes of action and
liabilities of any kind or nature whatsoever in law or in equity, including both known and
Unknown Claims, held at any point from the beginning of time to the date of the
execution of this Stipulation, which claims have been or could have been asserted by the
Settling Defendants against any of the Released Plaintiff Parties and which arise out of or
relate in any way to the institution or maintenance of the Action .
uu. "Settlement Amount" means the Non-Contingent Payment o f
$108,000,000 and the Contingent Payment of up to $32,000,000, as described more fully
in 1118- 10 below .
vv, "Settlement Fund" m zeans (i) the Non-Contingent Payment of
S108,000,000 in cash to be paid by or on behalf of BAWAG ; (ii) any amounts paid
pursuant to the Contingent Payment; and (iii) any interest earned on any monies held in
the Escrow Account.
ww, "Settlement Hearing" means the hearing to be held by the Court to
determine whether the proposed BAWAG Settlement is fair, reasonable and adequate and
should be approved .
xx. "Stipulation" means this Stipulation and Agreement of Settlement .
yy. "Taxes" means all taxes on the income of the Settlement Fund an d
expenses and costs incurred in connection with the taxation of the Settlement Fun d
( including, without limitation, expenses of tax attorneys and accountants).
xz. "Termination Notice" shall have the meaning set fort]; in 1137
below.
aaa, "USAD" means the United States Attorney for the Southern
District of New York.
bbb. "Unkirown Claims" means any and all Settled Claims which Lea d
Plaintiffs in the Action or any Class Member does not know to exist in his, her or its
favor at the time of the release of the Settling Defendants, and any Settling Defendants'
Claims which the Settling Defendants do not know to exist in its favor at the time of the
release of the Released Plaintiff Parties, which if known by them might have affecte d
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their decisions with respect to the Settlement. With respect to any and all Settled Claims
and Settling Defendants' Claims, the parties stipulate and agree that upon the Effective
Date, Lead Plaintiffs and the Settling Defendants shall expressly, and each Class Member
shall be deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law of any state or territory of
the United States, any law applicable in Austria or principle of common law, which is
similar, comparable, or equivalent to Cal . Civ . Code § 1542, which provides :
A general release does not extend to claims which thecreditor does not know or suspect to exist in his or herfavor at the time of executing the release, which if knownby him or her must have materially affected his or hersettlement with the debtor .
Lead Plaintiffs and BAWAG acknowledge, and other Class Members by operation of la w
shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in th e
definition of Settled Claims and Settling Defendants' Claims was separately bargaine d
for and was a key element of this Settlement.
RE, LEI AS S
2. The obligations incurred pursuant to this Stipulation are in till and fina l
disposition of the Action with respect to the Settling Defendants and any and all Settle d
Claims.
3, As of the Effective Date, Lead plaintiff's and each Class Member on behal f
of themselves, and each of their respective predecessors, successors, parents, subsidiaries,
affiliates, heirs, executors, trustees, and administrators, by operation of the Judgment,
will release and forever discharge each and every Settled Claim, as against each and
every one of the Settling Defendants and shall forever be barred and enjoined from
13
commencing, instituting or maintaimting any of the Settled Claims against any of the
Settling Defendants .
4 . As of the Effective Date, the Settling Defendants, on behalf of themselves
and each and every of the Settling Defendants, by operation of the Judgment, will release
and forever discharge each and every Settling Defendants' Claim, and shall forever be
barred and enjoined from commencing, instituting or maintaining any of the Settling
Defendants' Claims against any of the Released Plaintiff Parties .
5 . Notwithstanding any release or other language that may be contained i n
the Stipulation and Order of Settlement that may be entered by the Bankruptcy Court or
in any other document (incWding, but not limited to, any order issued by the Bankruptcy
Court for the Southern District of New York in connection with the separate settlement
reached between BAWAG and the Creditors Committee) which purports to release or
otherwise extinguish or limit any claims that Lead Plaintiffs and/or members of the Class
have asserted or could assert against BAWAG (collectively, the "Bankruptcy Releases"),
the Parties agree that as tong as the Settlement between Lead Plaintiffs and BAWAG is
approved by the Court, the Bankruptcy Releases shall be fully effective on their terms,
provided, however, the Bankruptcy Releases shall not release the claims of Lead
Plaintiffs and/or members of the Class in this Action, which claims will be released only
through this Settlement between Lead Plaintiffs and BAWAG . Further, notwithstanding
any language that may be contained in the Bankruptcy Releases ar other documents
referenced above, if this Settlement or any future settlement between the Parties is
approved by the Court, nothing shall preclude members of the Class from receiving
distributions from such Settlement or future settlement in this Action -and receivin g
14
distributions from settlements reached between BAWAG and others in the Bankruptcy
Court, to the extent that those Class members have allowed claims as creditors or interest
holders in the Refoo Banlauptcy Proceeding, The Parties further agree that, in the event
that this Settlement is not approved by the Court, and the Parties subsequently enter into a
future settlement, any Future settlement will include the terns of this paragraph .
CLASS CERTIFICATION
6. Solely for purposes of this Settlement, BAWAG stipulates to (i)
certification of the Action as a class action, pursuant to Rules 23(a) and 23(b)(3) of the
Federal Rules of Civil Procedure ; (ii) the appointment of Lead Plaintiffs as j
representatives of the Class ; and (iii) the appointment of Co-Lead Counsel as Class
Counsel pursuant to Rule 23(g) of the Federal Rules of Civil Procedure . Lead Plaintiffs
will move for, and BAWAG shall not oppose, entry of the Notice and Preliminary
Approval Order, which will certify the Action to proceed as a class action solely for
purposes of the Settlement .
THE S TTLEI'IIENT CONSIDERATION
7 , in full settlement of the claims asserted in the Action against the Settling
Defendant and in consideration of the releases specified in 113-5, above, BAWAG shal l
provide Lead Plaintiffs with the monetary and non-monetary consideration described
below ,
Monetar r Consideration
8. BAWAG shall pay or cause to be paid to the members of the Class the
sum of $1 O8,000,000 'in cash (the "Non- Contingent Payment"), and in the event BAWA G
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is sold for a Sale Price exceeding €1 .8 billion ( euros) within two years after the Approval
Order is entered , BAWAG will pay to the members of the Class an additional cash sum
calculated as follows : 5% of the Sale Price of BAWAG above €1 . 8 billion ( euros), up to
a maxiinum additional payment to the Class not to exceed $32,000,000 (dollars) (the
"Contingent Payment ") . For currency conversion purposes , all amounts paid shall be
converted into U . S. dollars on the date such Contingent Payment is made .
9. The Settlement Amount shall be paid in accordance with the followin g
schedule :
a . BAWAG shall pay $25,000,000 of the Non-Contingent Payment
into the Escrow Account within thirty days after the Approval Order becomes a final
order that has not been stayed, vacated, reversed, or materially modified or amended, an d
as to which : (i) the time to seek review, reargument, or rehearing has expired, and as to
which no appeal or motion or petition for certiorari, review, or rehearing is pending, or
(ii) if a stay, appear review, reargtunent, rehearing, or certiorari has been sought, the
order or judgment has been affirmed, or the request for stay, review, reargument,
rehearing, or certiorari has been denied and the time to seek further stay, appeal, review,
reargument, rehearing, or certiorari has expired, as a result of which such order or
judgment has become final and non-appealable in accordance with applicable law ;
provided, however, that the possibility that a motion under Rule 6 0 of the Federal Rules
of Civil Procedure, or Rule 9024 of the Federal Rules of Bankruptcy Procedure, may be
but has not then been filed with respect to such order, shall not cause such order not to be
a final order.
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b. Within thirty days of the earlier of (a) the closing of the Sale
Transaction of BAWAG or (b) one year after the date the Approval Order is entered,
BAWAG shall pay $75, 000,000 of the Non-Contingent Payment into the Escro w
Account ;
c . Should 13AWAG be sold for a Sale Price exceeding €1 .8 billion
(euros) within two years after the Approval Order is entered, BAWAG shall, within thirty
days after the closing of the Sale Transaction of BAWAG, pay the Contingent Payment
into the Escrow Account;
d . Within ten days after entry of the Notice and Preliminary Approval
Order by the Court, BAWAG shall pay $8,000,000 of the Non-Contingent Payment into
the Escrow Account .
10 . Lead Plaintiffs agree that, in connection with each of the payments due
from BAWAG in accordance with 119(a)-(c) above, before demanding payment from
BAWAG they will use their reasonable best efforts both to (a) apply to the USAO, on
behalf ofthe Class, to receive that payment from the BAWAG Global Resolution Fund,
and (b) pursue receipt of such payment, and further, that they will credit the receipt of
any monies received from the BAWAG Global Resolution Fund to reduce, dollar for
dollar, the payment obligations of BAWAG pursuant to 19(a)-(c) in that order i_e.,
19(a) first, then 119(b), then ¶9(c)) . BAWAG agrees that it remains unconditionally
obligated to pay directly to the Class whatever amount is necessary to ensure that each of
the payments set forth in ¶ 9(a)-(c) above is fully paid should the USAO, for any reason
whatsoever, fail to pay, in whole or in part, the amounts required to be paid pursuant to
Jill 9(a)-(c) . BAWAG's obligation to pay the amounts set forth in ¶ 9(a)-(c) shall be
17
suspended while the USAO processes the aforementioned request (s), provided owever,
that if the USAO fails to make full payment within 180 days of a scheduled payment
date, interest shall accrue on such amounts that remain unpaid at the then-applicable 3-
nmonth LIBOR rate without compounding. If the USAO fails to make full payment of any
amount of the Non-Contingent Payment within 365 days of the scheduled payment date
in 119(b) or fu ll payment of the Contingent Payment within 365 days of the scheduled
payment date in 119(c), BAWAG shall, on or before the 366th day after the respective
scheduled payment dates , make such payments to the Escrow Account as are necessary
such that the Class receives fall payment of the scheduled payment, plus interest as set
forth herein . Nonetheless , if the USAO makes a payment to the Class out of the
BAWAG Global Resolution Fund after BAWAG has made a direct payment to the Class
pursuant 1 9(a), (b) or (c) above, the Class will transfer an amount equivalent to the
payment received from the USAO pursuant to that same subparagraph ( i .e .. ¶ 9(a), (b) or
(c)) to BAWAG within twenty days of receipt of such payment from the USAO. In no
event shall the funds received through the BAWAG Global Resolution Fund reduce the
payment obligation of BAWAG set forth in 11 9(d) above , even if that payment results in
total payments to the Class exceeding $108 million.
Non-Monetary Consid Lat3on
11 . Subject to Austrian bank secrecy laws and pursuant to the Confidentialit y
Agreement, BAWAG shall provide Co-Lead Counsel with access to such documents and
financial information that Lead Plaintiffs believe are reasonably necessary to confirm the
information provided during the course of settlement negotiations . Subject to the
provisions of the Austrian bank secrecy laws and pursuant to the Confidentialit y
18
Agreement, I3AWAG agrees, that it shall, upon reasonable request, be under a continuing
obligation to provide Lead Plaintiffs with copies of all Refco-related documents provided
in the future to the USAO and/or the Creditors Committee .
12. BAWAG shall in good faith and subject to Austrian bank secrecy laws
provide reasonable cooperation to assist Lead Plaintiffs in their prosecution of claim s
against other defendants and/or prospective defendants in the Action . BAWAG's
cooperation shall include making reasonably available to Lead Plaintiff for interviews
and depositions (without the need for subpoenas) in Austria then-current BAWAG
employees familiar with the aforementioned documents and the matters alleged in the
Amended Complaint, proy;ded, however, that Lead Plaintiffs agree that the timing of
such interviews and/or depositions will be subject to coordination with the USAO and
Securities and Exchange Commission .
USE AND ADMI ISTR.ATION OF SETTLEMEN'T' TUN A
13. The Settlement Fund may be used : (i) to pay any Taxes ; (ii) to pay Notice
and Administration Expenses ; (iii) to pay any attorneys' fees and expenses awarded by
the Court ; (iv) to pay any other fees and expenses approved by the Court; and (v) to pay
claims of Authorized Claimants determined valid for payment ; provided, however, that
Co-Lead Counsel agree that funds used to pay any attorney's fee award shall not be
drawn from funds that are paid to the Settlement Fund through the BAWAG Global
Resolution Fund .
14. The Not Settlement Fund shall remain in the Escrow Account until the
Effective Date, whereafter the Net Settlement Fund shall be distributed to Authorized
Claimants as provided in ¶% 22-25 hereof . All funds held by the Escrow Agent shall be
19
deemed to be in the custody of the Court , and shall remain subject to the jurisdiction of
the Court until such time as the funds shall be distributed or returned pursuant to this
Stipulation and/or fu rther order of the Court. The Escrow Agent shall invest any funds in
the Escrow Account in United States Treasury Bills or, if approved by each of the Co-
Lead Counsel and Lead Plaintiffs, in money market funds with one or more of the fifty
(50) largest banking institutions in the United States , and shall collect and reinvest all
interest accrued thereon . The Lead P laintiffs have structured the Escrow Account so that
will qualify as a "qualified settlement fund ," as that term is defined in Treas . Reg.
§ 1 .4 68B - 1, which has been promulgated under Section 468E of the Internal Revenue
Code of 1986, as amended) and the parties hereto accordingly agree to treat the
Settlement Fund as a Qualified Settlement Fund within the meaning of Treasury
Regulation 41 .458E-1 , and that Bernstein Litowitz and Grant & isenhofer, as
administrators of the Settlement Fund within the meaning of Treasury Regulation
§1,468B-2(k)(3), shall be responsible for timely filing tax returns and any relevant tax
filings and documentation relating thereto for the Settlement Fund and timely paying
from the Settlement Fund any Taxes owed with respect to the Settlement Fund .
BAWAGs Counsel as transferor agrees to provide promptly to Bernstein Litowitz the
required statement described in Treasury Regulation §1 .468B-3(e) ; provided, tha since
the Settling Defendants are not US persons and are not US taxpayers, the Settling
Defendants do not file US federal income tax returns and thus, the Settling Defendants
cannot file the required statement with their US tax return, as this regulation appears to
require .
20
15, All Taxes shall be paid out of the Settlement Fund, and shall be timel y
paid by the Escrow Agent without prior Order of the Court . Any Tax returns prepared
for the Settlement Fund (as well as the election set forth therein ) shall be consistent with
the previous paragraph , and in all events shall reflect that all Taxes ( inc )uding any
interest or penalties) on the income earned by the Settlement Fund shall be paid out of the
Settlement Fund as provided herein. The Settlement Fund shall indemnify and hold the
Settling Defendants harmless for Taxes and related expenses (including without
limitation, taxes paya ble by reason of any such indemni fication), if any, payable by the
Settling Defendants by reason of the income earned on the Settlement Fund . The Settling
Defendants shall notify the Escrow Agent promptly if they receive any notice of any
claim for Taxes relating to the Settlement Fund .
€ 6 . Co-Lead Counsel may pay from the Settlement Amount all reasonable
costs and expenses associated with the administration of the Settlement, including,
without limitation, the actual costs of identifying and notifying Class Members and
printing and mailing the Notice and Proof of Claim, publication of the Publication
Notice, reimbursement to nominee owners for forwarding the Notice and Proof of Claim
to their beneficial owners, the administrative expenses incurred and fees charged by the
Claims Administrator in connection with mailing notices and processing the submitted
claims, and any other Notice and Administration Expenses . In the event that the
Settlement is terminated, as provided for herein, Notice and Administration Expenses
paid or accrued in connection with this paragraph shall not be returned to the persons
who paid the Settlement Amount up to a maximum amount of $300,000 .00 .
21
1 7. Co4Lead Counsel will apply to the Court for a Class Distribution Order ,
on notice to BAWAG's Counsel, approving the Claims Administrator's administrative
determinations concerning the acceptance and rejection of the claims submitted herein
and approving any fees and expenses not previously applied for, including the fees and
expenses of the Claims Administrator, and, if the Effective Date has occurred, directin g
the payment of the Net Settlement Fund to Authorized Claimants ,
1 8. This is not a claims-made settlement . As of the Effective Date, with the
exception of the Class 's obligation to return payments to BAWAG if payments are later
obtained from the BAWAG Global Resolution Fund (as set forth in paragraph 10 above) ,
and the terms of paragraph 40 below, neither the Settling Defendants nor any person
paying the Settlement Amount or any portion of the Settlement Amount on behalf of th e
Settling Defendants shall have any right to the return of the Settlement Fund or any
portion thereof irrespective of the number of Proofs of Claim filed, the collective amount
of losses of Authorized Claimants, the percentage of recovery of losses, or the amounts to
be paid to Authorized Claimants from the Net Settlement Fund . to the event that the
Settlement is terminated or fails to become effective for any reason prior to the Effective
Date, the Class shall return to BAWAG the $8 million Non-Contingent Payment paid in
accordance with paragraph 9(d) above, subject to the provisions of paragraph 40 .
19, The Claims Administrator will administer the Settlement under Co-Lea d
Counsel's supervision and subject to the jurisdiction of the Court. The Settling
Defendants will have no responsibility for the administration of the Settlement, and shall
have no liability to the Class in connection with such administration . Co-Lead Counsel
will cause the Claims Administrator to mail the Notice (and, at a later date, the Proof o f
22
Claim) to those members of the Class whose addresses may be identified through
reasonable effort . Co-Lead Counsel will publish the Publication Notice of the proposed
Settlement in the national edition of The Wall Slreei Journal within ten ( 1 9) days of the
mailing of the Notice, or in such other form or manner as may be ordered by the Court .
A 1(TORNEYS' FEES AND EXPENSE S
20, At any time prior to distribution to the Class , upon reasonable notice to
Class Members, Co-Lead Counsel, on behalf of all plaintiffs ' counsel in the Action, may
apply to the Court for an award from the Settlement Fund of attorneys' fees not to excee d
70/4 of the Non-Contingent Payment ; provided, however, that funds used to pay any '
attorneys' fee award shall not be drawn from funds that BAWAG may pay to th e
Settlement Fund through the BAWAG Global Resolution Fund . BAWAG will take no
position on any request for attorney's fees by Co-Lead Counsel other than to
affirmatively acknowledge that the efforts of Lead Plaintiffs and Co-Lead Counsel,
including the filing of the Amended Complaint and the presentation of certain facts and
arguments during the settlement discussions, contributed materially to BAWAG's
agreement to fund the BAWAG Global Resolution Fund and to pay the Settlement
Amount to the Class . Any attorneys' fees as are awarded by the Court shall be paid from
the Settlement Fund to Co-Lead Counsel within five (5) business days of the entry of the
Order awarding such attorneys' fees, notwithstanding the existence of any timely filed
objections thereto, or potential for appeal therefrom, or collateral attack on the Settlement
or any part thereof, subject to The obligation of Co-Lead Counsel and each such plaintiffs'
counsel to refund to the Settlement Fund, within ten (10) days, the amount received by
each plus accrued interest at the rate paid on the Escrow Account by the financia l
23
institution holding it, if and when, as a result of any appeal and/or further proceeding on
remand, or successful collateral attack, the fee or cost award is reduced or reversed, if the
award order does not become final, if the Settlement itself is voided by any party as
provided herein, or if the Settlement is later reversed or modified by any court . Co-Lead
Counsel shall allocate the attorneys' fees among plaintiffs' counsel in a Manner in which
they in good faith believe reflects the contributions of such counsel to the prosecution and
settlement of the Action with the Settling Defendants . Co-Lead Counsel will indemnify
and hold the Settling Defendants harmless for any claims by any Class member regarding
attorneys' fees .
21 . Lead Plaintiffs and Co-Lead Counsel may not cancel or terminate the
Stipulation or the Settlement in accordance with' 37 or otherwise based on this Court's
or any appellate court's ruling solely with respect to any application for attorneys' fees
and expenses or other fee and expense award in the Action . The Settling Defendants
have no responsibility or liability for the allocation of attorneys' fees .
)D ISTRIBUTION TO AUTHORIZED CLAIMANTS
22. The Claims Administrator shall determine each Authorized Clai mant's pto
rata share of the Net Settlement Fund based upon each Authorized Claimant's
Recognized Loss as set forth in $ 23 below .
23. Tice distribution of the Net Settlement Fund to Class Members shall b e
subject to the Plan of Allocation, which Lead plaintiffs shall propose in their discretion,
at a later point and subject to further notice to Class Members . The Settling Defendants
will take no position with respect to such Plan of Allocation ; such Plan of Allocation is a
matter separate and apart from the proposed Settlement between Lead Plaintiffs and th e
24
Settling Defendants, and any decision by the Court concerning the Plan of Allocation
shall not affect the validity or finality of the proposed Settlement .
24. The Plain of Allocation is not a necessary term of this Stipulation and it i s
not a condition of this Stipulation that any particular plan of allocation be approved by
the Court . Lead Plaintiffs and Co-Lead Counsel may not cancel or terminate th e
Stipulation or the Settlement in accordance with I{ 37 or otherwise based on this Court's
or any appellate court's ruling solely with respect to the Plan of Allocation or any plan of
allocation in the Action. The Settling Defendants have no responsibility or liability fo r
allocation of the Net Settlement Fund .
25. Each Authorized Claimant shall be allocated a pro rata share of the Net
Settlement Fund based on the Plan of Allocation . The Settling Defendants will have no
involvement or responsibility in reviewing or challenging claims .
ADMINISTRATION OF THE SETTLEMEN T
26. Any member of the Class who fails to timely submit a valid Proof o f
Claim will not be entitled to receive any of the proceeds from the Net Settlement Fund
but will otherwise be bound by all of the terms of this Stipulation and the Settlement,
including the terms of the Judgment to be entered in the Action and the releases provided
for herein, and will be barred from bringing any action against the Settling Defendants
conce rn ing the Settled Claims ,
27. Co-Lead Counsel shall be responsible for supervising the administration
of the Settlement and disbursement of the Net Settlement Fund. The Settling Defendants
shall have no liability, obligation or responsibility for the administration of th e
25
Settlement, the allocation of the Settlement proceeds or the reviewing or challenging o f
claims of members of the Class .
28, For purposes of determining the extent, if any, to which a Class Member
shall be entitled to be treated as an "Authorized Claimant," the following conditions shal l
apply ;
a . each Class Member shall be required to submit a Proof of Claim
signed under penalty of perjury, and supported by such documents as are designated
therein, including proof of the claimant's loss, or such other documents or proof as Lead
Counsel, in its discretion, may deem acceptable and subject to the approval of the Court ;
b . All Proofs of Claim must be submitted by the date specified
thereon unless such period is extended by Order of the Court . Any Class Member who
fails to submit a Proof of Claim by such date shall be forever barred from receiving any
payment pursuant to this Stipulation (unless, by Order of the Court, a later submitted
Proof of Claim by such Class Member is approved), but shall in all other respects be
bound by all of the terms of this Stipulation and the Settlement, including the terms of the
Judgment to be entered in the Action and the releases provided for herein, and will be
barred from bringing any action against the Settling Defendants concerning the Settled
Claims. A Proof of Claim shall be deemed to have been submitted when posted, i f
received with a postmark indicated on the envelope and if mailed first-class postage
prepaid and addressed in accordance with the instructions thereon, provided that it i s
'. received before the motion for the Class Distribution Order is filed . In all other cases, the
Proof of Claim shall be deemed to have been submitted when actually received by th e
Claims Administrator ;
26
c . Each Proof of Claim shall be submitted to and reviewed by the
Claims Administrator, who shall determine in accordance with this Stipulation and under
the supervision of Co-Lead Counsel, the extent, if any, to which each claim shall be
allowed, subject to review by the Court pursuant to subparagraph (e) below ;
d. Proofs of Claim that do not meet the submission requirements may
be rejected. Prior to rejection of a Proof of Claim, the Claims Administrator shall
communicate with the claimant in order to afford the claimant the opportunity to remedy
curable deficiencies in the Proof of Claim submitted . The Claims Administrator, under
supervision of Co-Lead Counsel, shall notify, in a timely fashion and in writing, all
claimants whose Proofs of Claim they propose to reject in whole or in part, setting forth
the reasons therefore, and shall indicate in such notice that the claimant whose claim is to
be rejected in whole or in part has the right to a review by the Court if such claimant so
desires and if such claimant complies with the requirements of subparagraph (e) below ;
e . If any claimant who is notified by the Claims Administrator that
the Claims Administrator intends to reject his, her or its claim in whole or in part desires
to contest such rejection, such claimant must, within twenty (20) days after the date of
mailing of the notice required in subparagraph (d) above, serve upon the Claims
Administrator a notice and statement of reasons indicating the claimant's grounds for
contesting the rejection along with any supporting documentation, and specifically
requesting a review thereof by the Court. If the dispute concerning the claim cannot be
otherwise resolved, Co-Lead Counsel shall thereafter present the request for review to the
Court; and
27
E The administrative determin ations of the Claims Administrator
accepting and rejecting claims shall be presented to the Court, on notice to BAWAG's
Counsel, for approval by the Court in the Class Distribution Order .
79. Each claimant shall be deemed to have submitted to the jurisdiction of the
Court with respect to the claimant's claim, and the claim will be subject to investigation
and discovery under the Federal Rules of Civil Procedure, provided that such
investigation and discovery shall be limited to that claimant's status as a Class Member
and the validity and amount of the claimant's claim . In connection with the processing of
the Proofs of Claim, no discovery shall be allowed on the merits of the Action or of the
Settlement .
30. Payment pursuant to this Stipulation shall be deemed final and conclusive
against all Class Members . All Class Members whose claims are not approved by the
Court shall be barred from participating in distributions from the Net Settlement Fund,
but otherwise shall be bound by all of the terms of this Stipulation and the Settlement,
including the teens of the Judgment to be entered in the Action and the releases provided
for herein, and will be barred from bringing any action against the Settling Defendant s
concerning the Settled Claims.
31 . All proceedings with respect to the administration, processing and
determination of claims described in this Stipulation and the determination of al l
controversies relating thereto, including disputed questions of law and fact with respect to
the validity of claims, shall be subject to the jurisdiction of the Court .
32. The Net Settlement Fund shall be distributed to Authorized Claimants by
the Claims Administrator only after the Effective Date and after all claims have bee n
28
processed and all claimants whose claims have been rejected or disallowed, in whole or
in part, have been notified and provided the opportunity to communicate with the Claims
Administrator concerning such rejection or disallowance ; provided, however, that a
distribution may occur pending any appellate court's ruling solely with respect to the
scope of the bar order provision of the Judgment, as set forth in 135 herein .
AVB Affiliate s"Ingebe" Industrie - u. Gewerbe -Beteiligungsgesellschaft m.b.H.Austinvest AnstaltAI-ALTERNATIVE INVESTMENTS LTD .Alinea PrivatstiftungAlinea Holding GmbHALPHARENT s .r.o .Athena Wien Beteiligungen AGAUST-INGEBE Beteiligungsverwaltung GmbH .AUSTFINANZVERWALTUNG S .A.AUSTOST ANSTALTAUSTOST HANDELS UND TREUHAND LIMITE DAUSTOST HANDELS- UND TREUHANDGESELLSCHAFT M .B .H .B.I .S. BAWAG Internet Services GmbHB.L.H. BAWAG Leasing Holding GmbHBAWAG Allianz Mitarbeitervorsorgekasse AGBAWAG Bank CZ as .BAWAG banka d .d .BAWAG Beteiligungsmanagement GmbHBAWAG CAPITAL FINANCE (JERSEY) II LIMITEDBAWAG CAPITAL FINANCE (JERSEY) III LIMITEDBAWAG CAPITAL FINANCE (JERSEY) LIMITEDBAWAG FINANCE HOLDING LIMITE DBAWAG Finance Malta Ltd .BAWAG Finanzanalyse GmbHBAWAG INTERNATIONAL FINANCE LIMITEDBAWAG Invest Consult Gmb HBAWAG Leasing & Fleet KitBAWAG Leasing & fleet s .r .o .BAWAG Leasing & Fleet Sp . z o.o .BAWAG Leasing Rt .BAWAG Malta Bank Limite dBAWAG P.S.K. Datendienst Gesellsehaft m .b.H .BAWAG P.S .K. Fuhrparkleasing GmbHBAWAG P.S.K. IMMOBILIEN AGBAWAG P.S .K. IMMOBILIENLEASING GmbHBAWAG P.S .K. Kommerzleasing GmbHBAWAG P.S .K. LEASING Gmb HBAWAG P.S.K. LEASING GmbH & Co . Hochholzerhof Errichtungs- and Vermietungs-KG.BAWAG P.S.K. LEASING GmbH & Co . MOBILIENLEASING KG .BAWAG P.S.K. MOBILIENLEASING GmbHBAWAG P.S.K. Vermietungs- and Leasing GmbHBAWAG Wohnbaubank AktiengesellschaftBAWAG Wohnbauholding GmbH
BETARENT s .r .o .bezahlen.at Internet-Service GmbHBodensee LimitedBPI Holding Gmb HBPI Holding GmbH & Co KEG,BPI Holding GmbH & Co. Betriebsanlagenverwaltungs KG.BPI Holding GmbH & Co. Immobilien and Anlagen KG .BSH BAWAG Strategic Holding GmbHCe1esteTrust reg.C. & P. Leasing-Gesellsehaft m .b.H .Cafe Bawag Betriebsgesellschaft m .b.H .CARNI lndustrie-Immobiliengesellschaft m .b.H.Cromer Capital Management Ltd .CROMER FINANCE LTD .Cromer International Limite dE-C-B Beteiligungsgesellschaft m .b .H.easybank AGEinlagensicherung der Banken and Bankiers Gesellsehaft m .b.H .EURO RAIL INVEST LIMITEDFC Leasing GmbHFCH alpha Finanzierungsvermittlung GmbHFCH beta Finanzierungsvermittlung GmbHFFE Finanzierungsvermittlungsgesellschaft m.b.H. in Liqu .FinHaus s .r.o .Gara Feuerwehrzentralen Leasing Gesellschaft m .b.H .Gara Holding GmbHGara RPK Grundstucksverwaltungsgesellschaft m .b.H .Genossenschaftsktiche der bei der Osterreichischen Postsparkasse tatigen Bediensteten,registrierte Genossenschaft mit beschrankter Haftung in Liqu.Hafner See-Liegenschaftsverwaltungsgesellschaft m .b.H .HBV Holding and Beteiligungsverwaltung GmbHHFE alpha Handels-GmbH1DG Immobilien Development Gesellschaft m.b.H .IDG Immobilien Development Gesellschaft m.b.H, & Co KGIngebe beta Immobilienholding GmbHIngebe COR Finanzierungsberatung GmbH in Liqu .ingebe lmmobilienhandels- and Vermittlungs-GmbH .Ingebe Medien Holding Gmb HISTRO - RECOVERY, s .r.o .ISTRO ASSET MANAGEMENT, spray . spol., a.s .Istrobanka a .s.ISTROFINANCE, s .r.o .ISTROLEASING, s .r .o .ISTRORENT, s .r .o .Kinomax spolka z . ograniczona odpowiedzialnosciaKLB Baulandentwicklung GmbH
TADEMA Leasing and Beteiligung Gesellschaft m .b.H .UHW Finanzierungsdienstleistungen beta Gmb Hi.mi venture Beteiligungs AGOKK Holding Gesellschaft m.b.H .Osterreichische V erkehrskreditbank AGBond Classic Ltd.CAP Holding AGCDC City Investments Ltd .Conservative Properties Ltd.First Investors Assets Ltd .Moore Classic Ltd. Var Portfolio Ltd.
OGB entitie sOsterreichischer GewerkschaftsbundOGB Vermogensverwaltungsgesellschal"t m .b.H .OGB Beteiligungsgesellschaft m.b.HAnteilsverwaltung BAWAG P .S .K. AGOsterreichische Gewerkschaftliche Solidariti t Privatstiftung
Current Supervisory Boardfamily name first nameMuhm WernerSellitsch Siegfrie dStein DworaHochleitner AlbertKothbauer MaxKovarik GeorgSchenz Richard
Zraunig GabrielaFraif3l MonikaGostel ManuelaJakubovits BrigitteLeeb RudolfProll BeatrixStreibel-Zarfl Ingrid
Schedule B
Schedule B includes the following, their predecessors, successors, and all employees, partners,members, shareholders, agents, and representatives thereo f
Schedule B also includes the following, their predecessors, successors, affiliates, parents, andsubsidiaries, and all employees, partners, members, shareholders, agents, and representativesthereof:
Fellner Wratzfeld & Partner Rechtsanwalte Gmb HDr. Harry Neubauer and Dr . Christa Springer, RechtsanwalteMcDermott Will & EmeryDechert LLPJaksch, Schoeller & RielSchoenherr RechtsanwAlte GmbHAllen & Overy LLP
Schedule C
Helmut ElsnerJohann ZwettlerHubert KreuchJosef SchwarzeckerChristian ButtnerPeter Nakowitz
EXHIBIT A
IN THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK--------------------------------------------------------------
In re REFCO, INC. SECURITIES LITIGATION
-------------------- ------------------------------------ ___-- x
05 Civ . 8626 (GEL )
ORDER PRELIMINARILY APPROVINGPROPOSED SETTLEMENT WITH DEFENDANT BAWAG
WHEREAS, by Order dated February 8, 2006, Pacific Investment Management
Company LLC and RH Capital Associates LLC were appointed by this Court to serve as Lea d
Plaintiffs on behalf of the Class in In re Rfco, Inc. Securities Litigation, No, 05 Civ. 8626-
(GEL) (S .D.N.Y.) (the "Action");
WHEREAS, the parties have made an application, pursuant to Rule 23 of the Federal
Rules of Civil Procedure, for an order preliminarily approving the partial settlement
("Settlement") of the Action in accordance with the Stipulation and Agreement of Settlement
dated February 13, 2007 between Lead Plaintiffs and defendant BAWAG P .S.K. Bank fiir Arbeit
and Wirtschaft and 0sterreichische Postsparkasse Aktiengesellschaft ("BAWAG") (the
"Stipulation"), which sets forth the terms and conditions for a proposed Settlement and for the
release of certain claims and the dismissal of the Action against BAWAG with prejudice upon
the terms and conditions set forth therein ;
WHEREAS, the Court has not certified the Action as a class action, but is being asked to
preliminarily certify a Settlement Class, for purposes of this Settlement only, consisting of all
persons and entities that purchased or otherwise acquired Refco Group Ltd ., LLC/ Refco Finance
Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos . 75866HAA5 and/or 75866I-IACI)
and/or common stock of Refco (CUSIP No, 758660109) during the period August 5, 2004
through and including October 17, 2005 (the "Class Period") and who were damaged thereby ;
WHEREAS, Lead Plaintiffs' proposed definition of the Settlement Class excludes (i)
Refco ; (ii) the Defendants ; (iii) any person or entity who was a partner, executive officer,
director, controlling person, subsidiary, or affiliate of Refco or any Defendant during the Class
Period; (iv) me€nbers of the Defendants' immediate families ; (v) entities in which Refco or any
Defendant has a controlling interest ; and (vi) the legal representatives, heirs, predecessors,
successors or assigns of any of the foregoing excluded persons or entities . Also excluded from
the Class is any person or entity who or which properly excludes himself, herself or itself by
filing a valid and timely request for exclusion in accordance with the requirements set forth in
the Notice .
WHEREAS, the Court having (1) read and considered the First Amended Consolidated
Class Action Complaint, filed in this Action on May 5, 2006; (2) read and considered Lead
Plaintiffs' Notice of Motion for (I) Preliminary Approval of Partial Settlement With Defendant
BAWAG, (11) Preliminary Certification of Class for Purposes of Settlement (Ill) Preliminary
Approval of Form and Manner of Notice, and (IV) Scheduling of a Final Approval Hearing,
together with the accompanying Memorandum of Law ; (3) read and considered the Stipulation
between counsel for BAWAG and counsel for Lead Plaintiffs ; and (4) heard and considered
arguments by counsel for Lead Plaintiffs and BAWAG in favor of preliminary approval of the
Settlement and preliminary certification of the Settlement Class for purposes of the Settlement ;
WHEREAS, the Court finds, upon a preliminary evaluation, that the proposed Settlement
falls within the range of possible approval criteria, as it provides a beneficial result for the
Settlement Class and appears to be the product of good faith, informed and non-collusive
negotiations between experienced and able counsel for the settling parties ;
WHEREAS, the Court also finds, upon a preliminary evaluation, that the Settlement
Class should be apprised of the Settlement, allowed to file objections thereto and to appear at the
Settlement Hearing, or alternatively, be afforded a reasonable opportunity to opt out of the
Action;
WHEREAS, the Court finds, upon a preliminary evaluation, that the Notice and the
Publication Notice attached hereto as Exhibits I and 2, respectively, and the methodology
described in Paragraph 6 of this Order for the publication and dissemination of such Notice and
Publication Notice : (i) are the best practicable notice ; (ii) are reasonably calculated, tinder the
circumstances, to apprise Class Members of the pendency of the Action and of their right to
object or exclude themselves from the proposed Settlement and to object to Co-Lead Counsel's
application for attorneys' fees; (iii) are reasonable and constitute due, adequate and sufficient
notice to all persons and entities entitled to receive notice ; and (iv) meet all applicable
requirements of the Federal Rules' of Civil Procedures, the United States Constitution (including,
the Due Process Clause), the Private Securities Litigation Reform Act of 1995 (15 U .S .C. 78u-4,
et seq .), the Rules of the Court and any other applicable law ; and
WHEREAS, unless otherwise stated herein, all defined terms contained herein shall have
the same meanings set forth in the Stipulation .
NOW THEREFORE, IT IS HEREBY ORDERED :
1 . Class Findings - For purposes of the Settlement of this Action as against BAWAG (and
only for such purposes, and without an adjudication of the merits), the Court preliminarily finds that the
requirements of the Federal Rules of Civil Procedure, the United States Constitution, the Rules of the
Court and any other applicable law have been met as to the Settlement Class described in the paragraph s
above in that :
a. The identities of the Settlement Class members are likely to beascertainable from records kept by Refco and/or its agents, and from otherobjective criteria, and the Settlement Class members are so numerous thattheir joinder before the Court would be impracticable.
b. Lead Plaintiffs have alleged numerous questions of fact and law commonto the Settlement Class.
c . Based on allegations in the Action that BAWAG engaged in misconductuniformly affecting members of the proposed Settlement Class, the Courtpreliminarily finds that the claims of the Lead Plaintiffs in the Action aretypical of the claims of the proposed Settlement Class,
id. The Court finds that Lead Plaintiffs will fairly and adequately protect th e
interest of the proposed Class in that (i) the interests of Lead Plaintiffs andthe nature of their alleged claims are consistent with those of the membersof the Settlement Class, (ii) there appear to be no conflicts between oramong the Lead Plaintiffs and the Settlement Class, (ii) Lead Plaintiffshave been and appear to be capable of continuing to be active participantsin both the prosecution and the settlement of the Action, and ((v) LeadPlaintiffs and the Settlement Class members are represented by qualified,reputable counsel who are experienced in preparing and prosecuting large,complex securities fraud class actions ,
The Court preliminarily finds that, for settlement purposes in the Action asagainst BAWAG, questions of law or fact common to members of theSettlement Class predominate over any questions affecting only individualmembers of the Settlement Class and that a class-action resolution in themanner proposed by the Stipulation would be superior to other availablemethods for a fair and efficient adjudication of the Action . In makingthese preliminary findings, the Court has considered, among other factors,(i) the interest of the Settlement Class members in individually controllingthe prosecution or defense of separate actions, (ii) the impracticability orinefficiency of prosecuting or defending separate actions, (iii) the extentand nature of any litigation concerning these claims already commenced,and (iv) the desirability of concentrating the litigation of the claims in aparticular forum .
2. Preliminary Class Certi fication for Settlement Put -noses With BAWAG - Based on
the findings set out in paragraph k above, the Court preliminarily certifies the following Settlement
Class for settlement purposes only under Fed . R. Civ . P. 23(a) and (b)(3) in the Action: all persons and
entities that purchased or otherwise acquired Refco Group Ltd., LLCI Refco Finance Inc . 9% Senior
Subordinated Notes due 2012 (CUSIP Nos . 75866HAA5 and/or 75866HAC1) and/or common stock of
Refco (CUS1P No . 758666109) during the Class Period and were damaged thereby . The Settlement
Class excludes (i) Refco; (ii) the Defendants ; (iii) any person or entity who was a partner, executive
officer, director, controlling person, subsidiary, or affiliate of Refco or any Defendant during the Class
Period; (iv) members of the Defendants` immediate families ; (v) entities in which Refco or any
Defendant has a controlling interest ; and (vi) the legal representatives, heirs, predecessors, successors or
assigns of any of the foregoing excluded persons or entities . Also excluded from the Class is any person
or entity who or which properly excludes himself, herself or itself by filing a valid and timely request for
exclusion in accordance with the requirements set forth in the Notice .
3 . Preliminary Approval of Settlement - The Court hereby preliminarily approves
the Settlement, as embodied in the Stipulation, as being fair, reasonable and adequate as to the
Settlement Class members, subject to further consideration at the Settlement Hearing described
below,
4 . Settlement Hearin -- A hearing (the "Settlement Hearing") shall be held o n
2007 at before the Honorable Gerard E. Lynch in the Unite d
States District Court for the Southern District of New York, United States Courthouse, 500 Pearl
Street, New York, NY, 10007 . The purpose of the Settlement Hearing will be to determine
whether the proposed Settlement on the terms and conditions provided for in the Stipulation is
fair, reasonable and adequate to the Class and should be approved by the Court ; whether the
Judgment as provided in the Stipulation should be entered herein ; and whether Co-Lead
Counsel's application for attorneys' fees should be granted .
5 . Approval of Form and Content of Notice - The Court approves, as to form an d
content, the Notice and the Publication Notice, attached hereto as Exhibits I and 2, respectively,
and finds that the mailing and distribution of the Notice and the publication of the Publication
Notice in the manner and form set forth in Paragraph 6 of this Order meet the requirements of
Rule 23 of the Federal Rules of Civil Procedure, the Securities Exchange Act of 1934, as
amended by Section 2113(a)(7) of the Private Securities Litigation Reform Act of 1995, 15
U .S .C. § 78ti-4(a)(7), and due process, and is the best notice practicable under the circumstances
and shall constitute due and sufficient notice to all persons and entities entitled thereto .
6 . Retention of Claims Administrator and Manner of Notice - Lead Counsel ar e
hereby authorized to retain The Garden City Group, Inc . ("Claims Administrator") to supervis e
and administer the notice procedure as well as the processing of claims as more fully set forth
below :
(a) Not later than 2007 (the "Notice Date"), Lead Counse l
shall cause a copy of the Notice substantially in the form attached to the Stipulation as Exhibit I
to be mailed by first-class mail to all Class Members who can be identified with reasonable
effort ;
(b) Not later than 2007, Lead Counsel shall cause th e
Publication Notice, substantially in form attached to the Stipulation as Exhibit 2, to be publishe d
on one occasion in the national edition of The Wall Street Journal ; an d
(e) Not later than 2007, Lead Counsel shall serve o n
BAWAG's Counsel and file with the Court proof, by affidavit or declaration, of such mailing
and publication .
7 . Nominee Procedures - Nominees who purchased or acquired Refco Group Ltd .,
LLC/Refco Finance inc . 9% Senior Subordinated Notes Due 2012 or Refco, Inc . common stock
for the benefit of another person or entity during the Class Period shall be requested to send the
Notice to all such beneficial owners within ten (10) days after receipt thereof, or send a list of the
names and addresses of such beneficial owners to the Claims Administrator within ten (10) days
of receipt thereof in which event the Claims Administrator shall promptly mail the Notice to
such beneficial owners.
8 . Exclusion From the Class - All Settlement Class members who do not timel y
and validly request exclusion from the Settlement Class shall be bound by all proceedings, A
determinations, orders and judgments in the Action relating to the Settlement, including, but no t
limited to, the releases provided for therein, whether favorable or unfavorable to the Settlement
Class . Settlement Class members who wish to exclude themselves from the Settlement Class
shall request exclusion within the time and in the manner set forth in the Notice, including
mailing or delivering a written request for exclusion such that it is postmarked no later than
, 2007, to : In re Refco, Inc. Securities Litigation, c/o The Garden City Group,
Inc ., Claims Administrator, P.O. Box 9087, Merrick, NY 11566, as provided in the Notice .
9 . Appearance and Oblections at Fairness Hearing - Any Settlement Clas s
member may enter an appearance in the Action, at their own expense, individually or through
counsel of their own choice, in which case such counsel must file with the Clerk of Court and
deliver to Co-Lead Counsel and BAWAG's Counsel a notice of appearance such that it is
received by , 2007, or as the Court may otherwise direct . Any Settlement
Class member who does not enter an appearance will be represented by Co-Lead Counsel . Any
Settlement Class member may appear and show cause, if he, she or it has any such cause, why
the proposed Settlement of the Action should or should not be approved as fair, reasonable and
adequate, or why a Judgment should or should not be entered thereon ; or why Co-Lead
Counsel's application for attorneys' fees should not be granted ; provided, however, that no
Settlement Class member or any other person or entity shall be heard or entitled to contest th e
approval of the terms and conditions of the proposed Settlement, or, if approved, the Final
Judgment to be entered thereon approving the same or the award of attorneys' fees to Co-Lea d
Counsel, unless that person or entity has filed written objections and copies of any such papers
and briefs with the Clerk of the Court for the United States District Court for the Souther n
District of New York, on or before 2007, and unless copies of such
written objection papers and briefs are received by each of the following :
Attorney for BAWAG :
Andrew Levander, EsquireDECHERT LLP30 Rockefeller PlazaNew York, NY 10112-220 0
Co-Lead Counsel :
Megan D. McIntyre, EsquireGRANT & EISENHOFER, P.A .Chase Manhattan Centre1201 N. Market Street, Suite 2100Wilmington, DE 1980 1
John P. Coffey, EsquireBERNSTEIN LITOWITZ BERG ER & GROSSMANN, LLP1285 Avenue of the AmericasNew York, NY 1001 9
The Claims Administrator :
In re Refco Inc . Securities Litigationc/o The Garden City Group, Inc,Claims Administrator
P.O. Box 9087Merrick, NY 1156 6
The objections and/or briefs filed by the objecting Settlement Class member must contain a
statement of his, her or its objection, as well as the specific reasons, if any, for each objection,
including the legal support the Settlement Class member wishes to bring to the Court's attention
and any evidence the Settlement Class member wishes to introduce in support of his, her or its
objection . Any Settlement Class member who does not make his, her or its objection in the
manner provided herein shall be deemed to have waived such objection and shall be forever
barred and foreclosed from making any objection to the fairness, reasonableness or adequacy of
the proposed Settlement, or to the approval of Co-Lead Counsel's fee application .
10 . Fees and Expenses - All reasonable costs incurred in identifying and notifying
Settlement Class members, as well as in administering the Settlement, shall be paid as set forth in
the Stipulation . At or after the Settlement Hearing, the Court shall determine whether any
application for attorneys' fees shall be approved . Neither BAWAG nor BAWAG's Counsel
shall have any responsibility for any application for attorneys' fees submitted by Co-Lead
Counsel, and such matters will be considered separately from the fairness, reasonableness and
adequacy of the Settlement .
11 . Continuance of Hear ing -- The Court reserves the right to adjourn the date of th e
Settlement Hearing without further notice to Settlement Class members and retains jurisdiction
to consider all further applications arising out of or connected with the proposed Settlement . The
Court may approve the Settlement, with such modifications as may be agreed to by the parties to
the Stipulation, if appropriate, without further notice to the Settlement Class ,
12 . Termination of Settlement -- This Order shall become null and void, and be
without prejudice to the rights of Lead Plaintiffs, the Settlement Class members, and BAWAG,
all of whom shall be restored to their respective positions existing immediately before this Court
entered this Order, if: (i) the proposed Settlement is not finally approved by the Court, or does
not become final, pursuant to the terms of the Stipulation ; or (ii) the proposed Settlement is
terminated or does not become effective for any other reason . In such events, the Stipulation
shall become null and void and of no further force and effect .
13 . Use of Order - This Order shall not be construed or used as an admission ,
concession or declaration by or against BAWAG of any fault, wrongdoing, breach, or liability .
Nor shall the Order be construed or used as an admission, concession or declaration by or against
Lead Plaintiffs, or the Settlement Class members, that their claims lack merit, that their damagesM
are in any way limited , or that the relief requested in the Action is inappropriate, improper, or 4,
unavailable , or as a waiver by any pa rty of any defenses or claims he, she, or it may have ,
IT IS SO ORDERED .
Dated: -- . , 2007 BY THE COURT
Hon. Gerard E . Lynch
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
EXHIBIT 1
UNITED STATES DISTRICT COURTSOUTRERN DISTRICT OF NEW YORK
x05 Civ . 8626 (GEL )
In re REFCO, INC. SECURITIES LITIGATION
------------ -_- .._ ..___ ------------ ------ x
NOTICE OF (I) PENDENCY AND PROPOSED PARTIALSETTLEMENT OF CLASS ACTION WITH BAWAG, AND
l it HEARING ON PROPOSED PARTIAL SETTLEMEN T
If you purchased or otherwise acquired Refco Group Ltd ., LLC/ Refco Finance Inc. 9%Senior Subor dinated Notes due 2012 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) and/o r
Refco, Inc . common stock (CUSIP No . 758666109) between August 5, 2004 and October17, 2005, inclusive , you might be a member of the class in this action entitling you to relief
in connection with a partial settlement of the action . Alli
A federal court authorized this Notice . This is not a solicitation f ront a lawer.
The Court has preliminarily approved a partial settlement of a securities class actionbrought by investors who claim that the prices of Refco, Inc . common stock and RefcoGroup Ltd ., LLC/ Refco Finance Inc, bonds were artificially inflated as a result of falsestate€nents, non-disclosures, and fraudulent conduct in violation of the federal securitieslaws .
The partial settlement is between Lead Plaintiffs Pacific Investment ManagementCompany LLC and RH Capital Associates LLC, on behalf of themselves and theproposed Settlement Class (defined below), and defendant BAWAG P .S.K. Bank FurArbeit and Wirtschaft and Osterreichische Postsparkasse Aktiengesellschaft("BAWAG"). It is only a partial settlement because it does not resolve the plaintiffs'claims against forty-three (43) other defendants .
BAWAG will pay a minimum of $108 million in cash to settle the lawsuit, with thepossibility of an additional payment of up to 532 million if certain conditions are met .After payment of costs and expenses, the settlement proceeds will be distributed toinvestors who are members of the Settlement Class . No determination has been made yetof the amount to be distributed .
The two sides disagree on the amount of money that could have been recovered if theplaintiffs won at trial .
Although the fee agreement between Lead Plaintiffs and the plaintiffs' attorneys wouldhave entitled the attorneys to request a fee of up to 18% of the Class's recovery, theplaintiffs' attorneys have agreed to request a fee from this settlement of 7% of the Non-Contingent Payment (defined below), due to the timing and circumstances of thissettlement .
The settlement was reached because it provides significant benefits to investors andavoids the costs and risks of continuing the lawsuit against BAWAG .
• If you are a member of the Settlement Class and the partial settlement is approved, yourlegal rights will be affected whether you act or not, Read this notice carefully to see whatyour options are in connection with the partial settlement.
rc .
This is the only way to get a settlement payment . If you wish toRemain a Member of the remain a member of the Settlement Class, you do not need toSettlement Class take any action in response to this notice at this time . At a
(no action required) future date, you will be provided with a proof of claim for mwhich you must submit to establish your entitlement to apayment,
Exclude Yourself If you exclude yourself, you will not get a settlement payment.(by , 2007)
Object If you do not exclude yourself, but you wish to object to any(by , 2007) part of the settlement, you may write to the Court about your
objections .
Attend the HearingIf you have submitted a written objection to the settlement t othe Court, you may (but do not have to) attend the hearing about
(on 2007) the settlement and speak to the Court about your objections .
• These rights and options -- and the deadlines to exercise them -- are explained in this
Notice .
• The Court in charge of this case still has to decide whether to approve the settlement .Payments will be made only if the Court approves the settlement and that approval isupheld in any appeals . Please be patient .
-"44N" r
BASIC iNFORMATION . . . . . . .. . . . .. . .. . . . . . . . . . . . . . . . . .. . .. . . . . . . .. . .. . .. . . .. . . . . . . . . . . .. . . .. . .. . .. . .. . . . . . . . . . . .. . .. . .. . .. Page 4i . Why did I get this Notice ?2. What is a class action ?3 . What is this lawsuit about?
2
4. What should I do if my address changes, or if this notice was sentto the wrong address ?
WHO IS IN THE SETTLEMENT CLASS . ... . . . . . . ... .. . . . .. . .. . . . . . . . . . . . .. . . .. . . . .. . ... .. . . . . . .. . . . . . . . .. . .. . Page 65, How do I know whether I am a member of the Partial Settlement?6. Are there exceptions to being included?7. 1 am still not sure whether I am included.
2€ . Do 1 have a lawyer in the case ?22 . How will the lawyers be paid?
OBJECTING TO THE SETTLEMENT OR THE ATTORNEYS' FEES . .. . .. . . .. . . . . . . . . Page 1223. I-low do I tell the Court if I don't like the Partial Settlement ?
24. What's the difference between objecting and requesting exclusion?
25 . When and where will the Court decide whether to approve thePartial Settlement?
26. Do I have to come to the hearing?27. May I speak at the hearing?
You or someone in your family may have purchased or acquired Refco Inc . commonstock (CUSIP No, 75866G 1 09 ) and/or Refco Group Ltd., LLC/ Refco Finance Inc, 9% SeniorSubordinated Notes due 201 2 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) between August5, 2004 and October 17 , 2005 . The Court caused this Notice to be sent to you because, if youpurchased or acquired those securities during that period, you have a right to know about theproposed Partial Settlement of a class action lawsuit , and about all of your options, before theCourt decides whether to approve the Partial Settlement .
This Notice describes the lawsuit, the Partial Settlement, your legal rights , what benefitsare available , who is eligible for them, and how to get them.
The Court in charge of this case is the United States District Court for the SouthernDistrict of New York. The case is known as In re Refi;.'o Inc. Securities Litigation, Case Number05 Civ . 8626 (GEL) .
In a class action, one or more plaintiffs called Lead Plaintiffs or class representatives sueon behalf of people who have similar claims . All of the individuals and entities on whose behalfthe class representatives are suing are known as class members . One court resolves the issues inthe case for all class members, except for those who choose to exclude themselves from the classif exclusion is permitted by applicable rules of procedure .
in1 k~, q&u"y~- t 8
rl r ~ 4~ f ~ £ } ~a i t r I '~ :k,; . .,v a.~c, .. G -,w tl 11
This lawsuit (the "Action") is a class action alleging violations of the federal securitieslaws by persons affiliated with Refco, inc . and its predecessors and affiliates (including, but not
limited to, Refco Group Ltd., LLC, Refco Finance Holdings LLC, and Refco Finance Inc .) .
Refco, inc . and its predecessors and affiliates are referred to collectively as the "Company" or"Refco" in this Notice . The Court has appointed Pacific Investment Management Company LLCand RI-I Capital Associates LLC ("Lead Plaintiffs") to serve as Lead Plaintiffs in the Action, andhas appointed the law firms of Grant & Eisenhofer P .A. and Bernstein Litowitz Berger &Grossmann LLP to serve as Co-Lead Counsel on behalf of the class . The Action is broughtagainst forty-four (44) individuals and entities, including certain current and former executive
officers of Refco, the members of Refco' s audit committee, Refco's outside auditing firm (GrantThornton LLP), fifteen Wall Street investment banks, the private equity firm of Thomas H . LeePartners, L .P . and its affiliates, and BAWAG (collectively, the "Defendants") .
The First Amended Consolidated Class Action Complaint (the "Complaint"), which wasfiled in the Action on May 5, 2006, alleges that the Defendants violated the federal securitieslaws in numerous ways, including : engaging in negligent and fraudulent activities that concealedRefco's true financial condition from investors ; and using accounting practices that violatedgenerally accepted accounting principles and caused Refco's published financial statements forthe years ended February 29, 2002, February 28, 2003, February 28, 2004, February 28, 2005,and the quarter ended May 31, 2005, to be materially false and misleading .
As alleged in the Complaint, a little more than two months after completing an initialpublic offering ("IPO"), Refco admitted that its financial statements "should no longer be reliedupon" because the Company had concealed hundreds of millions of dollars of uncollectiblereceivables owed to the Company by an entity owned by its Chief Executive Officer, PhillipBennett ("Bennett"). The Complaint further alleges that while this admission only partiallyrevealed the true extent of the problems at the Company, it set into motion a chain of events andsubsequent disclosures that led to Refco's abrupt collapse into bankruptcy .
The Complaint alleges that the Defendants either actively participated in the Company'smanipulative accounting practices and misstatements during the Class Period, or knew or shouldhave known about them in the exercise of due diligence . The Complaint alleges that BAWAGparticipated in the scheme to defraud investors by, among other things, engaging in numeroussham loan transactions with Refco that had no purpose other than to allow Refco to temporarilyreplace related party receivables with third party loans on its books just before the end of itsfinancial accounting periods, thereby concealing from investors the existence of significantrelated party receivables .
The Complaint asserts two different sets of claims. The first is a series of strict liabilityand negligence-based claims pursuant to the Securities Act of 1933 ("Securities Act"), which areasserted against the Defendants who are statutorily responsible for the untrue statements in theprospectuses and registration statements pursuant to which Refco issued securities to the public .The second set of claims consists of fraud-based claims under the Securities Exchange Act of1934 ("Exchange Act") against those Defendants who directly participated in the fraudulentscheme and those who knew about or were reckless with respect to discovering the fraud . TheComplaint alleges seven (7) separate claims against BAWAG, including claims pursuant toSection 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act .
To the extent Defendants have responded to the Complaint, they have denied the claimsagainst them and specifically denied any wrongdoing or liability to any Class member .
The Court has made no determination on the merits of the claims against BAWAG oragainst any other Defendants .
if this Notice was sent to you at the wrong address, or if your address changes in thefuture, please send prompt written notification of your correct address to the Claims
Administrator at the following address :
In re Refco Inc . Securities Litigationc/o The Garden City Group, inc .
Claims Administrato r
P .O . Box 9087Merrick, NY 11566
a-; CLASSENTVy)f p IS IN THE SETTLEM==
'^y 1 .. ,
The Court has preliminarily certified for purposes of the Partial Settlement a SettlementClass that consists of, subject to certain exceptions identified below, the following individuals
and entities :
/III persons and entities that purchased or otherwise acquiredRefco Group Ltd,, LLC/Refco Finance Inc. 9% Senior
Subordinated Notes due 2012 (CUSIP Nos . 75866HAA5 rind/or-
75866H4CI) and/or common stock of Refco (CUSIP No .
758666109) during the Class Period, and who were damaged
Even if you fall within the Settlement Class definition, you are not a member of the
Settlement Class if you are a Defendant in the Action; if you were a partner, executive officer,
director, controlling person, subsidiary, or affiliate of Refco or any Defendant between August 5,
2004 and October 17, 2005; if you are an immediate family member of any Defendant
; if you are
an entity in which Refco or any Defendant has a controlling interest; or if you are a legal
representative, heir, predecessor, successor or assign of any of these excluded persons or entities.
If you are still not sure whether you are included, you can ask for help, which will beprovided to you at no cost, You can call the Claims Administrator toll free at (888) 212-5574, orwrite to the Claims Administrator at the address stated in the answer to Question #4 above
.
SUMMARY OF SETTLEMEN T
Lead Plaintiffs reached an agreement-in-principle with BAWAG regarding the Pa rt ialSettlement on May 31, 2006 . On February _, 2007, Lead Plaintiffs and BAWAG signed aStipulation and Agreement of Settlement (the "Stipulation") to formalize their agreement .
The Partial Settlement was reached after arms-length negotiation between Co-LeadCounsel and counsel for BAWAG, and only after Co-Lead Counsel had (i) obtained access to,and reviewed, certain documents pertinent to the Class's claims and BAWAG's defenses to thoseclaims, including documents that BAWAG has provided to the United States Attorneys Office("USAO"), (ii) investigated and analyzed all available evidence, and (iii) researched theapplicable law with respect to the Class's claims against BAWAG and the potential defensesthereto.
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In the Partial Settlement, BAWAG agrees to pay S 108 million (the "Non-ContingentPayment") to the Settlement Class . In addition , in the event that BAWAG is sold for a priceexceeding €1 .8 billion (euros ) within two years after the United States Bankruptcy Court entersan order approving BAWAG's separate settlement with Refco's Official Committee ofUnsecured Creditors ("Creditors' Committee"), then BAWAG will pay the Settlement Class anadditional surn of 5%, of the amount by which the sale price of BAWAG exceeds e l,8 billion(euros), up to a maximum additional payment of $32 million (dollars) (the "ContingentPayment") . The Non-Contingent Payment and the Contingent Payment are collectively referredto as the "Settlement Amount . "
After the parties retched agreement on the terms of the Partial Settlement, BAWAGentered into an agreement of sale which, if consummated, may trigger BAWAG's obligation topay the maximum Contingent Payment of $32 million (dollars) . Closing of the sale is presently
expected to occur in the first half of 2007 .
The Settlement Amount will be paid in . installments, with $8 million to be paid within tendays after preliminary approval of the Partial Settlement, another $25 million to be paid withinthirty days after the order approving BAWAG's settlement with the Creditors' Committeebecomes final, and $75 million to be paid within thirty days of the earlier of (a) the closing of thesale of BAWAG, or (b) one year after entry of the order approving BAWAG's settlement withthe Creditors' Committee . The Contingent Payment, if any, will be paid within thirty days afterthe closing of the sale of BAWAG . With the exception of the initial $& million payment, LeadPlaintiffs have agreed to accept payment of the Settlement Amount from funds to be paid byBAWAG into a restitution fend managed by the USAO, subject to BAWAG's agreement to payany amounts that the USAO fails to pay, and to pay interest on any amounts not paid within 180days of the scheduled payment date .
Under the terms of the Partial Settlement, BAWAG also agrees to reasonably cooperatewith Lead Plaintiffs in providing copies of documents and in making employees available for
interviews and depositions, so as to reasonably assist Lead Plaintiffs in their prosecution ofclaims against other Defendants and/or prospective defendants in this Action .
if the Partial Settlement is approved by the Court, all members of the Settlement Classwill be deemed to have released all claims against BAWAG, its direct and indirect subsidiaries,parents, affiliates, predecessors, and successors, and their respective agents, attorneys, and past,present, and future officers, directors and employees, as agreed by the parties, (collectively, the"Releasees") that arise out of or relate to the allegations in the Complaint and the acquisition or
disposition of Refco Group Ltd ., LLC/ Refco Finance Inc.'s 9% Senior Subordinated Notes due2062 and/or Refco common stock between August 5, 2004 and October 17, 2005 . This meansthat, upon Court approval, all Settlement Class members will be permanently barred fromasserting any of the claims described above against BAWAG or any other Releasees . Inaddition, if the Court approves the Partial Settlement, BAWAG will be precluded from suing theLead Plaintiffs, members of the Settlement Class, or Co-Lead Counsel in connection with the
Action .
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Lead Plaintiffs agreed to the Partial Settlement because of the substantial moneta rybenefit it will provide to the Class, compared to the risk that recovery might not be achieved aftera contested period of litigation which could extend years into the future . As with any litigatedcase, the plaintiffs would face an uncertain outcome if the case went to trial . Even if theplaintiffs were successful at trial, BAWAG might be bankrupt, sold, or unable to pay anyjudgment at that time . Alternatively, BAWAG might well appeal the verdict, result in furtheruncertainty and delay .
BAWAG agreed to the Partial Settlement to settle and terminate all existing or potentialclaims against it, to eliminate the risk of a substantial judgment against it, and to avoid theburden and expense of further litigation, without acknowledging any fault or liability .
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Lead Plaintiffs and BAWAG do not agree on the average amount of damages per sharethat would have been recoverable from BAWAG if Lead Plaintiffs were to have prevailed oneach claim asserted. The issues on which the parties disagree include : (1) whether BAWAGengaged in conduct that would give rise to liability under the federal securities laws ; (2) whetherBAWAG acted with scienter with respect to the conduct alleged to constitute a violation ofSection 10(b) of the Exchange Act; (3) whether BAWAG has valid defenses to any of the claimsagainst it ; and (4) the amount, if any, by which the prices of Refco's securities were artificiallyinflated as a result of BAWAG's alleged violations of the federal securities laws .
TIE SETTLEMENT BENEFITS - WHAT YOU GET
The Partial Settlement will create a cash settlement fund in the aggregate principalamount of between $108 million and $140 million, depending upon whether and to what extentBAWAG's obligation to pay the maximum Contingent Payment is triggered
. After deduction of
the costs of notice and administration, certain taxes and tax-related expenses, and any attorneys'fees that are approved by the Court, the balance of the settlement fund, plus accrued interest, will
be available for distribution to members of the Settlement Class. Co-Lead Counsel will reques
t er recoveryCo-Lea attonleys' fees of7% of the Non-Contingent
t tolbendistrib~t d to Ahe SettielnnentlClass will be betwee~Counsel estimate that the ne
t
$98 million and $130 million ;y N ^
The amounts to be distributed to individual Settlement Class membe~le number ootherfvariety of factors, including : the amount, if any, of the Coy i ge nt Payment ;
number of bonds a sharesSettlement Class members who submit valid proof of clai m
of stock you purchased ; the prices and dates of those purchases ; and the prices and dates of anythe s between
sales of your bonds or stock . The manner of dividing the settlement proceed
purchasers of bonds and purchasers of stock, and between the variou
s has not yet been determined. Depending upon which securities you purchased and the timing o f
your transactions, you may be entitled to recover for all, none, or only some of the claims
asserted in the Complaint.
The amount to be distributed to Settlement Class members on a per share basis willdepend on future Court proceedings and factual and legal analysis, and it is therefore not possible
to estimate the amount of any such distribution at the present time. After further notice to the
Settlement Class and an opportunity to be heard, Lead Plaintiffs will seek Court approval of aplan of allocation that will govern calculation of Settlement Class members' individual
distributions,
HOW TO SET A PAYl1'IEN T
If you are amember of the Settlement Class, you will have to submit a proof of claim
form and supporting documentation in order to establish your entitlement to share in the Partial
Settlement. Those who act to exclude themselves from the Settlement Class, and those who fail
to submit timely and valid proof of claim forms with adequate supporting documentation, will
not be entitled to share in the Partial Settlement ,
Proof of claim forms have not yet been prepared,and you need not submit a proof of
claim or any other documentation of your claim at this time . You will be provided with a
proof of claim form, and instructions on how to complete and submitit, in a future notice to be
disseminated in a similar mariner as this notice . To ensure that you receive copies of futurenotices, you may write to the Claims Administrator at the following address to request that yoube added to the mailing list for notices in In re Refco, Inc. Securities Litigation :
In re Refco Inc. Securities Litigationc/o The Garden City Group, Inc .Claims AdministratorA.O. Box 9087Merrick, NY 1156 6
Please retain all records of your ownership of, or transactions in, Refco's stock andbonds, as they may be needed to document your claim .
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Because BAWAG's payments under the Partial Settlement will be made in installment sover a period of time, the Lead Plaintiffs do not anticipate being able to distribute the settlement Aproceeds to members of the Settlement Class for at least a year from now, and possibly longer .Distribution may also be delayed in the interest of the Settlement Class in order to minimize the Znumber and cost of distributions during the course of the Action, and to allow for the BAWA Gsettlement proceeds to be distributed in combination with future settlements or recoveries fromother Defendants .
Any settlement payments are also contingent upon the Court approving the PartialSettlement and on such approval becoming final and no longer subject to any appeals . Even ifthe Court approves the Partial Settlement, there still might be appeals, which can take more thana year to resolve.
The money paid by BAWAG in the Partial Settlement will be kept in an interest-bearingaccount until it is ready for distribution , and the accrued interest will be added to the principalthat will be distributed to the Settlement Class .
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If you remain a member of the Settlement Class and do not exclude yourself , you will bebound by all orders, judgments and releases entered by the Court re garding the PartialSettlement. If the Partial Settlement is approved , you will not be able to sue, continue to sue, orbe pa rt of any other lawsuit involving any claims released in the Pa rtial Settlement ; provided,however , that the Pa rtial Settlement does not affect your ability to recover as a creditor inRefco's bankruptcy proceedings, including your ability to receive a share of the monies paid toRefco's bankruptcy estate by BAWAG. You will be bound by the releases whether or not yousubmit a proof of claim and/or receive a payment under the Partial Settlement.
10
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SGUil' 13 14tja .EOM 9 b`MVU ans o; ilj`oti i UL* do aATt` nod `j jasinot~ 2pn oxa ElaX 3SajGin ON
a~n i aGj~ ui saasuaja aatjlo 1 0 OVMV '3ans of alqu aq Itj0rtu not, j nsmi sj€jI tij stia c etj
IetjI 2uE€EjXu8 Xq punoq Ajjdal aq 3ou jjiM noX Put : `IuatuajUUaS j>✓ +~.ind QT of a33fgo ioutit~a
no1~ `~€iatti2j1~a j~t3 ~'d aGj~ Zito[ }u uXi d XuL" 1*9 Iou jjiM note `papnjoxa;)q of ~jst noX1 1
`sguipaaaoid 4oxdn uUq s,oOJa1 tj1 M uopoauuoo ui OW2sa Aojdnnjutq s,ooja ~l 01 OVM S Xq
pd spunj utoJJ onj2-d jo aaploq 2sa .ta1ut ao .io2ipa.€a s st ianoaaz jjils ma nor 2uatua 12aS j .id
a€j2 tuo.',J 1uatuX d iUawoIllas a an,saoaa pue ssej3 juaiuatIIOS 0142 ut uiuu€aa no,( ji '
so k
xnox ~ an ~xa~ ~~ ~i . 1 s xs woS . A-1198
case immediately . You must exclude yourself from this Settlement Class to continue your ow n
Tice Court has appointed the law firms of Bernstein Litowitz Berger & Urossran ""- the
r and Grant & Eisenllofer P.A . as Co -Lea d ad if Counsel 1 aveoa t an
y represent Lead Plaintiffs and questions about the praposediPart a 1
Settlement Class members in the Action . Y
Settlement, you may contact Co-Lead Counsel as follows: Megan D . McIntyre, Esq ., Grant al
Eisenhofer P .A., Chase Manhattan Centre, 1201 N . Market St ., Wilmington, Delaware 19801,
-7000; or John P. Coffey, Esq., Bernstein Litowitz Berger & Grossmann, LLP, 1285
(302) 622 ?S5 -1400.Avenue of the Americas, New York, New York 10019, (212 )
if you want to be represented by your own lawyer, you may hire one at your ow
n L-eao You will be not charged directly for the fees or expenses
for the Co i t of fees{and
appointed by the Court. instead,, those lawyers may apply to the Cour
t expenses out of the proceeds of any recoveries achieved in the Action.
When this case began, Lead Plaintiffs fees of udto 1 &°/a of any recove1ry Co-Lead Counselachieved by thewhich permits Co-Lead Counsel to apply for up
Class plus out of pocket expenses . Given have the timin g~ to apply for fee from this settlement of ~'%a
7%BAWAG, however, Co-Lead Counsel h gr the facts ,
Partial Settlement
. eClawyers for investigating o Lead Counsel re ail the right t oof the he case The
litigating g the case, and negotiatin grequest the full 18% fee plus expenses from any future recoveries from other defendants
.
I
1 2
No. Only Settlement Class members who do not exclude themselves will be eitgIoIe to
recover money in the Partial Settlement .
THE LAWY ERS RE 'RESi~ai`IT NG 'C1 U
if you are a Settlement Class member and you do not exclude yourself, you can object tod Counsel' sPartial Settlement or any part of it, including Co-Lea's application for attorneys'
fees, and give reasons why you think the Court should not approve it. To object, you must send
a letter or other filing saying that you object to the proposed Pa rtial Settlement and/or the
attorneys' fee application in In re Refco, Inc. Securities Litigation, Case No . 05 Civ. 8626(GEL) . Be sure to include your name, address , telephone number, signature, and the reasons foryour objection . Your written objection must be sent to the following counsel and must bereceived by them no later than , 2007 :
Counsel for BAWAG:
Andrew Levander, EsquireDECHERT LL. P30 Rockefeller Plaz aNew York, NY 10112-2200
Co-Lead Counsel :
Megan D . McIntyre, EsquireGRANT & EISENHOFER P .A.Chase Manhattan Centre1201 N . Market StreetWilmington, DE 1980 1
and
John P. Coffey, EsquireBERNSTEIN L1TOWITZ BERGER & GROSSMANN, LLP1285 Avenue of the America sNew York, NY 1001 9
You must also file your objection with the clerk of the United States District Court forthe Southern District of New York, so it is received no later than 2007 .
The address is :
Clerk of the U .S . District Court for the Southern District of New York,Daniel Patrick Moynihan United States Courthous e
500 Pearl StreetNew York, NY 10007-131 2
Once an objection to the proposed Partial Settlement is made, it cannot be withdrawnwithout the Court's approval . Any member of the Settlement Class who does not object in themanner provided above will be deemed to have waived all objections to the Partial Settlementand to Co-Lead Counsel's application for attorneys' fees .
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av. g+ «.
Objecting is simply telling the Court that you do not like something about the PartialSettlement. You can object only if you are a Settlement Class member.
13
Excluding yourself is telling the court that you do not want to be part of the Settlement
Class. If you exclude yourself, you have no basis to object, because the case no longer affect
s all or ers
you. If you do not exclude yourself, you Partial the egard esstof whetherdtheand judgments entered by the Court regarding
Court accepts or denies your objection .
The Court has scheduled a hearing on the proposed Partial Settlement for
, 2007 at _ , before the Honorable Gerard E . Lynch in the U .S. Distric t
Court for the Southern District of New York, United States courthouse, 500 Pea Settlem e Street, fN ew
York, NY, 10007. At this hearing, the Court will consider whethe
r reasonable, and adequate, and will consider Co-Lead Counsel's application for attorneys' fees,
if there are objections, the Court will consider them. At or after the hearing, the court will
decide whether to approve the Partial Settlement .
Please note that the date of the Court hearing is subject to change without further notice.
plan to attend the hearing, you should check with the Court to be sure no change to theif youdate and time of the hearing has been made .
thare e
No. Co-Lead Counsel will answer any questions the Court might have roBut you
welcome to come at your own expense . If you send an objection, you theCourt to talk about it . As mailed
the Court considers whether itot the Partial
deadline, it wil l ill b be before e the the CourtSettlement, You may also pay your own lawyer to attend the hearing, but attendance is not
necessary .
If you are a Settlement Class member who has not asked to be excluded from the
Settlement Class, you may ask the Court for permission to speak at the hearing. To do so, you
must send a letter or other paper called a "Notice of Intention to Appear at Fairnes s telephon e Hearinumbe r g in In
re Refco, Inc. Securities Litigation ." Be sure to include your name, address, h e Clerk the Cour
t and your signature, Your Notice of Intention ~~er Apar must b
e to Question #?3e s od rteceivad by the Court the and sent the counsel listed above 200 .x . You cannot speak at the hearing if you have
and counsel no later than ,asked to be excluded from the Settlement Class .
14
IF YOU DO NOTHING
wn v uv~ ~.,r x'
sf
If you do nothing in response to this Notice, you will remain a member of the SettlementClass and will be bound by the Partial Settlement, You will not be able to start, continue, or bepart of any other lawsuit or arbitration against BAWAG or other Releasees based on the claimsin the Action . To receive a payment from the Partial Settlement, you will have to submit a proofof claim and supporting documentation at a future date, in accordance with instructions to beprovided in a future notice .
GETTING MORE INFORMATION
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This Notice contains only a summary of the proposed Partial Settlement . The completePartial Settlement is set out in a Stipulation and Agreement of Settlement dated September 7,2006. You may request a copy of the Stipulation in writing to Refco Inc. Securit ies Litigation,c/o The Garden City Group , Inc., Clai ms Administrator , P .O. Box 9087 , Merrick, NY 11566 .There may be a charge for copying and mailing the Stipulation , Copies of the Stipulation may beobtained for free at refcosecuritieslitigatior€ .coni.
hr w xyl <f, ~s as3 F s s 4
You can also call the Claims Administrator toll free at (888) 212-5574, write to theClaims Administrator at the above address, or visit the website at refcosecuritiesliriaatioil, Coll) ,where you will find a copy of the Stipulation, the Complaint, and certain other documentsrelating to the Action and the Partial Settlement, Anyone interested in more detail regarding theAction is invited to visit the Office of the Clerk of the United States District Court for theSouthern District of New York at the United States Courthouse, 500 Pearl Street, New York,NY, 10007, during regular business hours, to inspect the Stipulation, the pleadings, and the otherpapers maintained there in Case No . 05 Civ . 8626 (GEL) .
Dated: , ?007 BY ORDER OF THE COURT
Hon. Gerard E. LynchUNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YOR K
15
EXHIBIT 2
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
In re REFCO, INC. SECURITIES LITIGATION
x05 Civ . 8626 (GEL )
-------_-_--__M_ --------- ____ ------------------ _________ x
SUMMARY NOTICE OF PENDENCY ANDPROPOSED PARTIAL SETTLEMENT OF CLASS ACTION
WITH BA'WAG P.S.K. AND HEARING ON PROPOSED SETTLEMEN T
TO : ALL PERSONS OR ENTITIES WHO PURCHASED OR ACQUIRED REFCOGROUP LTD ., LLC/ REFCO FINANCE INC . 9% SENIOR SUBORDINATEDNOTES DUE 2012 (CUSIP NOS. 75866HAA5 AND/OR 75866HAC1) AND/ORREFCO INC. COMMON STOCK (CUSIP NO. 75866G109) BETWEEN AUGUST5, 2004 AND OCTOBER 17, 2005, INCLUSIVE (THE "CLASS PERIOD"), ANDWHO WERE DAMAGED THEREBY (THE "CLASS")
YOU ARE HEREBY NOTIFIED that the Lead Plaintiffs in the above-captioned class z .
action (the "Action") have proposed a Partial Settlement with defendant 13AWAG P .S .K . Bank
fur Arbeit and Wirtschaft and Oster eichische Postsparkasse Aktiengesellschaft ("BAWAG" )
whereby BAWAG will pay a settlement amount to the Class of at least ONE HUNDRED AND
EIGHT MILLION DOLLARS (S 108,000,000) and the Class Members will dismiss and release
their claims against BAWAG arising out of or related to the subject matter of the Action or any
transactions in the above-referenced securities of Refco Inc . and its predecessors during the Class
Period . In addition, if BAWAG is sold for a price exceeding €i .8 billion (euros) within two
years after entry of an order approving BAWAG's separate settlement with Refco's Official
Committee of Unsecured Creditors, then BAWAG shall pay the Class an additional sum of 5%
of the amount by which the sale price of BAWAG exceeds €1 .8 billion (euros), up to a
maximum additional payment of $32,000,000 (dollars) .
This proposed Partial Settlement is the first proposed settlement in this €nulti-defendant
Action . The litigation is continuing against numerous other named defendants .
A hearing will be held on 2007 at-,_ , before the Honorabl e
Gerard E . Lynch in the U .S. District Court for the Southern District of New York, United States
Courthouse, 500 Pearl Street, New York, NY, 10007, to determine (1) whether the Partial
Settlement should be approved as fair, just and reasonable ; (2) whether the Action should be
dismissed with prejudice against BAWAG and all claims against BAWAG released ; and (3)
whether the plaintiffs' attorneys' application for attorneys' fees should be granted .
IF YOU ARE A MEMBER OF THE CL ASS DESCRIBED ABOVE , YOUR RIGHT S
WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT
FUNDS. If you have not yet received the full printed Notice of (i) Pendency and Proposed
Partial Settlement of Class Action With BAWAG, and (ii) Hearin, on Proposed Partial
Settlement, you may obtain one by contacting the Claims Administrator at :
In re Refco Inc . Securities Litigationc/o The Garden City Group, Inc .Claims Administrato rF.O. Box 9087Merrick, NY 1156 6
To participate in the Partial Settlement, you will be required to submit a Proof of Claim ,
using a form to be disseminated to members of the Class at a future date . To ensure that you
receive a Proof of Claim form and any future notices in this Action, please contact the Claims
Administrator at the address above to request that you be added to their mailing list for the Refco
Securities Litigation.
Inquiries, other than requests for copies of the Notice or for inclusion on the mailing lis t
for future notices, may be directed to Plaintiffs' Co-Lead Counsel :
John P . Coffey, EsquireBERNSTEIN LITOWITZ BERGER & GROSSMANN, LLP1285 Avenue of the America sNew York, NY 10019
2
Megan D . McIntyre, EsquireGRANT & EISENHOFER P.A .Chase Manhattan Centr e1201 N . Market StreetWilmington, DE 1980 1
Dated : W._ , 2007 BY ORDER OF THE COURT
EXHIBIT B
IN THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK