8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement http://slidepdf.com/reader/full/new-century-investor-lawsuit-125-million-dollars-cash-proposed-settlement 1/616 Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 1 of 3 Page ID #:10808 1 BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP 2 BLAIR A. NICHOLAS (Bar No. 178428) 2ZET blblaw.co argm 3 LIZH LIN (Bar No. 174663) ([email protected]) 4 NIKI L. MENDOZA (Bar No. 214646) W [email protected]5 AMGALDSTON (Bar No. 211114) ([email protected]) 6TAKEO A. KELLAR (Bar No. 234470) (takeok@blbglaw. com ) 7 12481 High Bluff Drive, Suite 300 San Diego, CA 92130 8 Tel: (858 793-0070 Fax: (8583 793-0323 9 and- SALVATO @ RE J. GRAZI )ANO 10 LAUREN A. MeMILLEN 11 ^[email protected]) 285 Avenue of the Americas 12 New York, NY 10019 Tel: (212) 554-1400 13 Fax: (212) 554-1444 14 Lead Counsel for Lead Plaintiff New York State Teachers’ Retirement System 15 16 NITED STATES DISTRICT COURT 17 ENTRAL DISTRICT OF CALIFORNIA 18 IN RE NEW CENTURY ase No. 2:07-cv-00931-DDP (FMOx) 19 Lead Case) 20 OTICE OF UNOPPOSED 1 OTION AND UNOPPOSED MOTION FOR PRELIMINARY 2 PPROVAL OF SETTLEMENTS 3 ate: August 30, 2010 24 ime: 10:00 a.m. Courtroom: 3 25 udge: Hon. Dean D. Pregerson 26 27 28 NOTICE OF MOTION Case No. 2:07-cv-00931-DDP (FMOx)
616
Embed
New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 5 of 32 Page ID#:10815
1n re L DK Solar Sec . Litig.,255 F.R.D. 519 (N.D. C al. 2009)7, 18, 20
2In re Me o Fin. Corp. Sec. Litig.,13 F.3d 454 (9th Cir. 2000)0, 22
4M endoza v. United States,6 23 F.2d 1338 (9th Cir. 1980)25
Of ficers for Justice v. Civ il S erv. Com m ’n,88 F.2d 6 15 (9th Cir. 1982)07n re Om nivision Techs.,559 F. Supp. 2d 1036 (N.D. Cal. 2007 )0, 22
8In re Oracle S ec. L itig.,994 W L 502054 (N.D. Cal. June 18, 1994)210 In re Portal S oftw are, Inc. S ec. L itig.,
2007 W L 417 1201 (N.D. Cal. Nov. 26, 2007)
411R odriguez v . W . Publ’g Corp.,26 3 F.3d 948 (9th Cir. 2009)413 S chaefer v. Ov erland E xpress Fam ily of Funds,
16 9 F.R.D. 124 (S.D. Cal. 1996 )814Schwartz v. Harp,508 F.R.D. 279 (C .D. Cal. 1985)616 S iem er v. A ssocs. First Capital Corp.,
2000 U.S. Dist. LEX IS - 21244 (D . Ariz. Dec. 13, 2000)617 S ilber v. M abon,88 F.3d 1449 (9th Cir. 1994)519 In re T HQ Inc. S ec. Litig
2002U.S. Dist. LEXIS,7753 (C.D. Cal. Mar. 22, 2002)720
T orrisi v. T ucson Elec. Pow er Co.,1F.3d 137 0 (9th Cir. 1993)022V an Bronkhorst v. S afeco Cor .,
529 F.2d 943 (9th Cir. 1976 )23In re V eriSign Inc. Sec. L itig.,4005 U.S. Dist. LE XIS 104 38 (N.D. Cal. Jan. 13, 2005)625 In re V eritas So ftw are Corp. Sec. L itig.,
496 F.3d 962 (9th Cir. 2007)226In re W ireless Facilities, Inc. Sec . L itig.,753 F.R.D. 6 30 (S.D. Cal. 2008)7, 22
28 In re W orldCom , Inc. Sec. L itig.,388 F. Supp. 2d 319 (S.D.N.Y. 2005)0-iv-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 7 of 32 Page ID#:10817
1 . PRELIMINARY STATEMENTead Plaintiff, the New York State Teachers’ Retirement System
3 (“NYSTRS”), and plaintiffs Carl Larson and Charles Hooton (collectively,
4 “Plaintiffs”), respectfully submit this Memorandum of Points and Authorities in
5 support of their unopposed motion for the entry of an order (i) granting preliminary
6 approval to the proposed Settlements set forth in the Settlement Stipulations filed
7 concurrently herewith 1 ; (ii) certifying the proposed Class for settlement purposes;
8 (iii) approving the form and manner of giving notice of the proposed Settlements to
9 the Class; and (iv) setting a hearing date for final approval of the Settlements (the
10 “Final Settlement Hearing”). The parties have agreed upon a form of [Proposed]
11 Order Preliminarily Approving Settlements And Providing For Notice
12 (“Preliminary Approval Order”) and exhibits thereto, which is submitted herewith.
13s set forth in the Settlement Stipulations, the Settlements provide for the
14 collective payment of approximately $125 million in cash (the “Settlement
15 Amount”) plus any and all interest earned thereon (the “Settlement Fund”) for the
16 benefit of the Class, in exchange for dismissal of claims against all Defendants. 2
1781The three Settlement Stipulations are as follows: (a) Stipulation Of Global
19 Settlement With New Century Officers And Directors (“Global Settlement
Stipulation,” attached as Exhibit 2 hereto), which provides a sum to the Class of
20 $65,077,088 to settle the claims against the New Century director and officer
21 Defendants; (b) Stipulation Of Settlement Between Plaintiffs And KPMG (attached
as Exhibit 3 hereto), which provides a sum of $44,750,000 to settle the claims
22 against auditor Defendant KPMG; and (c) Stipulation Of Settlement Between
23 Plaintiffs And The Underwriter Defendants (attached as Exhibit 4 hereto), which
provides a sum of $15,000,000 to settle the claims against the Underwriter24 Defendants. The three Settlement Stipulations provide for a total recovery for the
25 Class of approximately $125,000,000 in cash before deduction of Court-approved
26 fees, expenses, and costs.
2 The Defendants include the following: (i) “Individual Defendants” who are
27 former officers and directors of New Century, including Robert K. Cole, Brad A.
28 Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael
M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A.
-1 -RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 8 of 32 Page ID#:10818he proposed Settlements were reached only after extensive litigation and
2 negotiations – including more than eleven in-person mediation sessions and
3 numerous negotiations over the course of more than one year – overseen by an
4 experienced mediator, the Honorable Daniel Weinstein (Ret.) (the “Mediator”),
5 and with the active participation of the Court-appointed Lead Plaintiff NYSTRS,
6 whose General Counsel or Associate General Counsel personally attended each of
7 the mediation sessions. The proposed Settlements represent an outstanding result
8 for Plaintiffs and the Class, particularly in light New Century’s bankruptcy and the
9 risks to the Class if the action continued, including the risks of establishing
10 Defendants’ liability and the Class’s full amount of damages trial and the risks that
11 there would be significantly less funds available to satisfy any judgment or post-
12 trial settlement.
13y this Motion, Lead Plaintiff respectfully requests that the Court
14 preliminarily approve the Settlements, based on Lead Plaintiff’s evaluation of the
15 facts and applicable law, and its recognition of the substantial risks and expense of
16 continued litigation. At the Final Settlement Hearing, the Court will have before it
17 more extensive motion papers submitted in support of the proposed Settlements,
18 and will then make an ultimate determination of whether the Settlements are fair,
19 reasonable, and adequate under all of the circumstances surrounding the action. At
20 this juncture, Lead Plaintiff requests only that the Court grant preliminary approval
21 of the Settlements so that Notice of the Settlements may be sent to the Class and
22 the Final Settlement Hearing may be scheduled.
23
245 Zona, Marilyn A. Alexander, David Einhorn, and William J. Popejoy; (ii)
26 “Underwriter Defendants,” including Bear, Stearns & Co. Inc., Deutsche Bank
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 9 of 32 Page ID#:10819
1 I. OVERVIEW OF THE LITIGATION. The Consolidated ComplaintsAnd D efendants’ Motions To Dismiss
3
4
eginning on February 8, 2007, numerous related class action complaints5 were filed in the Central District of California alleging that the Defendants violated
6 the federal securities laws by misrepresenting and failing to disclose adverse facts
7oncerning New Century’s business condition and financial results.n8 June 26, 2007, the Court entered an Order consolidating all the related actions, and
9 appointed NYSTRS as Lead Plaintiff and Bernstein Litowitz Berger & Grossmann
10 LLP as Lead Counsel. On September 14, 2007, after extensive research and
11nvestigation, Plaintiffs filed a consolidated class action complaint.n12 November 2 and 20, 2007, Defendants filed five separate motions to dismiss.
13 Plaintiffs opposed the motions. Thereafter, on January 31, 2008, the Court
14 dismissed the consolidated complaint with leave to amend.
15n March 24, 2008, Plaintiffs filed an amended complaint, and two days
16 later the Bankruptcy Examiner published his Final Report concerning his
17 investigation of the facts leading to New Century’s bankruptcy. In the interests of
18 judicial economy, the parties agreed to a schedule for filing Plaintiffs’ Second
19 Amended Complaint. On April 30, 2008, Plaintiffs filed the Second Amended
20 Complaint, asserting claims under Sections 10(b) and 20(a) of the Securities
21 Exchange Act of 1934 (“Exchange Act”) and Sections 11 and 15 of the Securities
22 Act of 1933 (“Securities Act”).
23n June 2, 2008, Defendants filed six separate motions to dismiss the
24 Second Amended Complaint. Among other things, the Defendants argued that
25 Plaintiffs did not adequately plead the strong inference of scienter required for the
26 Exchange Act claims and that Plaintiffs failed to adequately plead there was loss
27 causation. Plaintiffs opposed these motions on July 7, 2008, and Defendants filed
28 their reply memoranda on July 28, 2008. On September 22, 2008, the Court heard
-3 -RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 12 of 32 Page ID#:10822
1 October 1, 2009. A fourth in-person mediation session took place on October 26,
2 2009, followed by conference calls and meetings with the Mediator on December
3 29, 2009, and January 13, 2010. A fifth in-person mediation session took place
4 over two days on January 18 and 19, 2010, followed by conference calls on5 January 19, 2010, January 20, 2010, and February 11, 2010. The parties continued
6 to participate in conference calls with the Mediator thereafter and held final in-
7 person mediation sessions on April 28 and 29, 2010. Although the parties did not
8 fully resolve these matters by April 29, 2010, all parties were close to reaching
9 agreements in principle to settle all of the claims. At that time, Lead Counsel
10 drafted the comprehensive settlement documents. Over May, June, and July 2010,
11 the parties extensively negotiated the specific terms of the settlement documents,
12 including the three Settlement Stipulations, the proposed Preliminary Approval
13 Order, the Class Notice, the Proof of Claim form, the Summary Notice, and the
14 three proposed Judgments.
15 III. THE SETTLEMENTS
16. Summary Of The Settlements
17he parties entered into the Settlement Stipulations to completely resolve the
18 above-captioned action against Defendants. Defendants collectively agreed to pay
19 approximately $125 million in cash to the Class. If the Settlements are approved
20 by the Court, this action will be dismissed with prejudice and Defendants and their
21 related parties will receive the release of claims in the Settlement Stipulations.
22s part of the Settlements, the parties agreed to the certification of a Class
23 defined as:
24ll persons and entities who purchased or otherwise acquired New
25entury common stock, New Century Series A Preferred Stock, New
26entury Series B Preferred Stock, and/or New Century call options
27nd/or who sold New Century put options, during the time period
28rom May 5, 2005, through and including March 13, 2007, either in
-6 -RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 13 of 32 Page ID#:10823he Offerings, pursuant to a registration statement, or in the market,
2nd who, upon disclosure of certain facts alleged in the Complaint,
3ere injured thereby. 3
4
he approximately $125 million of settlement proceeds, after payment of5 taxes, costs (including costs of providing notice and claims administration),
6 expenses and attorneys’ fees, will be distributed to Class Members pursuant to a
7 Plan of Allocation to fairly allocate the net proceeds of the Settlements to members
8 of the Class who submit acceptable Proof of Claim forms. The proposed Plan of
9 Allocation is set forth in paragraphs 32 through 85 of the proposed Notice to the
10 Class, attached as Exhibit A-1 to the proposed Preliminary Approval Order.
11he Settlements are documented in three separate Settlement Stipulations
12 entered into by Plaintiffs, on behalf of themselves and the Class, subject to Court
13 approval. 4 First, Plaintiffs have entered into a Settlement Stipulation with
14 Defendant KPMG providing for payment to the Class of $44,750,000. Second,
15 Plaintiffs have entered into a Settlement Stipulation with the Underwriter
16 Defendants for payment to the Class of $15,000,000. Third, Plaintiffs have entered
17 into a Global Settlement Stipulation with the New Century officer and director
18 Defendants providing for payment to the Class of $65,077,088 in cash (as well as
190 3 Excluded from the Class are (a) Defendants; (b) members of the immediate
21 families of the Individual Defendants; (c) the subsidiaries and affiliates of
Defendants; (d) any person or entity who was a partner, executive officer, director22 or controlling person of New Century (including any of its subsidiaries or
23 affiliates) or of any Defendant; (e) any entity in which any Defendant has a
controlling interest; and (f) the legal representatives, heirs, successors and assigns24 of any such excluded party. Also excluded from the Class are any persons who
25 exclude themselves by filing a request for exclusion in accordance with the
requirements set forth in the Notice.26 4 Pursuant to the Settlement Stipulations and as explained in the Notice, the three
27 settlement agreements are closely related and, if one of the three settlements should
28 not become final for any reason, it could affect the finality and enforceability of the
other settlements.
-7 -RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 15 of 32 Page ID#:10825
1 whether Plaintiffs would ultimately prevail on the merits, including specifically
2 with regard to proving loss causation. Additionally, there was a very substantial
3 risk that, even if Plaintiffs were to prevail on the merits, the Class might not
4 recover as much as the total Settlement Amount on a judgment. Indeed, because5 New Century had filed for bankruptcy, the available funds to satisfy any judgment
6 against the New Century officer and director Defendants were diminishing over
7 time. The Settlements represent a substantial all-cash fund for the Class and will
8 eliminate the significant risk that continued litigation might result in a smaller
9 recovery or possibly no recovery at all. As set forth below, the Settlements include
10 payment of the vast amount of the Director and Officer insurance available to
11 satisfy a judgment in this action along with personal contributions from certain of
12 the New Century officer Defendants.
13or these reasons, Lead Plaintiff and Lead Counsel submit that the
14 Settlements are fair, adequate and reasonable, and warrant preliminary approval.
15 IV. THE PROPOSED SETTLEMENTSW ARRANT PRELIMINARY APPROVAL
16A. Factors To Be Considered By The Court In The
17reliminary Approval Of C lass Action Settlements
18ederal Rule of Civil Procedure 23(e) requires judicial approval for any
19 compromise of claims brought on a class basis. Whether to approve a proposed
20 settlement is within the sound discretion of the district court, which should be
21 exercised in the context of public policy strongly favoring the pretrial settlement of
22 class action lawsuits. See Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir.
23 1992). “[T]here is an overriding public interest in settling and quieting litigation,”
24 and this is “particularly true in class action suits.” V an B ronkhorst v. Safeco Corp.,
25 529 F.2d 943, 950 (9th Cir. 1976).
26ecognizing that a settlement represents an exercise of judgment by the
27 negotiating parties, the Ninth Circuit has held that “the court’s intrusion upon what
28 is otherwise a private consensual agreement negotiated between the parties to a
-9 -RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 18 of 32 Page ID#:10828
1 supporting the settlement is entitled to considerable weight. See, e.g., In re
2First Capital Holdings Corp. Fin. Prods. Sec. Litig., 1992 U.S. Dist. LEXIS
3 14337, at *8 (C.D. Cal. June 10, 1992); Kirkorian v. Borelli, 6 95 F. Supp. 446 , 451
4 (N.D. Cal. 1988). Thus, “the trial judge, absent fraud, collusion, or the like, should5 be hesitant to substitute its own judgment for that of counsel.” In re Heritage
6B ond Litig., 2005 WL 1594403, at *9 (C.D. Cal. June 10, 2005).
7he Settlements are the result of extensive arm’s-length negotiations by
8 experienced counsel which occurred for over one year and through numerous
9 mediation sessions and correspondences facilitated by the Mediator. Based upon
10 Lead Counsel’s familiarity with the factual and legal issues of this action, the
11 investigation performed, the discovery work completed, and the work in preparing
12 for and participating in the mediations, Lead Counsel was ultimately able to
13 negotiate an excellent result for the Class. This result takes into account the
14 defenses of Defendants, and the risks that the action might not survive a motion for
15 summary judgment, that Lead Plaintiff would not prevail at trial or upon appeal, or
16 that there would be less funds available to the Class after a successful result at trial
17 or on appeal than those being agreed to at this time.
18.he Substantial Benefits Obtained For The C lass,Especially In Light Of Serious Risks Of L esser Or
9o Recovery, Support Approval Of T he Settlements
0nder the terms of the Settlements, Defendants agreed to create a fund
21 consisting of approximately $125 million in cash for the Class. This is a
22 significant recovery, particularly in light of the risks of continued litigation. If the
23 action had continued, Lead Plaintiff faced substantial risks, including establishing
24 Defendants’ liability and the full amount of the Class’s damages at summary
25 judgment or trial. In addition, litigating this complex securities class action to
26 completion would result in significant expense and delay.
27he recoveries obtained by L ead C ounsel through global settlements are also
28 particularly extraordinary in light of the multiple parties involved in the
-12-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 19 of 32 Page ID#:10829
1 negotiations. For example, as set forth in detail in the Stipulations, Lead Plaintiff
2 was able to obtain substantial sums from the New Century Insurance Carriers that
3 will be allocated to settle the claims asserted by the Class, the Trustee, and the
4 Kodiak plaintiffs. Of those sums, $65,077,088 in cash will be paid to the Class.6
5 In addition, the Settlements provide for payment of additional funds by KPMG
6 ($44,750,000 in cash) and the Underwriter Defendants ($15,000,000 in cash)
7 solely for the benefit of the Class.
8s will be explained in further detail in advance of the Final Settlement
9 Hearing, including through a declaration of Lead Plaintiff’s damages consultant,
10 the total estimated damages calculated by Lead Plaintiff’s damages consultant
11 were in excess of the amounts recovered. In evaluating the Settlements, however,
12 Lead Plaintiff took into account the fact that the Class could have a far less
13 recovery if, for example, KPMG succeeded on its motion for summary judgment
14 because KPMG’s motion threatened to eliminate all claims against KPMG and to
15 greatly reduce damages recoverable against the Underwriter Defendants.
16 Moreover, continued litigation as to the New Century Individual Defendants would
17 have further depleted the available insurance which was the primary source of
18 available recovery as to those Defendants who would have faced continued
19 litigation not only with the Class, but also with the SEC, the Trustee and Kodiak.
20n sum, these recoveries, totaling nearly $125,000,000 and obtained in the
21 face of a lesser recovery or no recovery at all, support approval of the Settlements.
223 6 The break-down of the payments by the Insurance Carriers and the New Centuryofficers, individually, is set forth in paragraphs nine through eleven of the Global
24 Settlement Stipulation. Lead Plaintiff was able to obtain the vast amount of
25 Director and Officer insurance available to satisfy any judgment, millions of which
had already been expended in defense costs. Paragraph eleven also demonstrates
26 that over 70% of the cash settlement funds contributed by the director and officer
27 Defendants (including the insurance contributions), or $65,077,088, is being
28 allocated to the resolution of the Class claims as opposed to those being allocated
to settle the actions brought by the T rustee and Kod iak.
-13-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 21 of 32 Page ID#:10831
1 under the general scheme of Rule 23, provided that the class is eventually
2 determined to meet the certification requirements under Rule 23. Id .ederal Rule of Civil Procedure 23(a) sets forth four prerequisites to class
4 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of5 representation. In addition, the class must meet one of the three requirements in
6 Rule 23(b).
7ourts have generally found securities claims to be particularly well-suited
8 for class action status because they allow for the policies behind the securities laws
9 to be enforced in circumstances where there are numerous investors with small
10 individual claims that otherwise would effectively be barred from litigation. See
11 Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir. 1975). This action is no exception
12 and, as explained below, the parties agree that, for purposes of the Settlements, the
13 Class should be certified as satisfying each of the requirements set forth in Rule 23.
14.umerosity
5ule 23(a)(1) requires that the class be so numerous that joinder of all class
16 members is impracticable. For purposes of Rule 23(a)(1), “[i]mpracticable does
17 not mean impossible, only that it would be difficult or inconvenient to join all
18 members of the class.” In re Juniper Networks Sec. Litig., 264 F.R.D. 584, 588
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 24 of 32 Page ID#:10834
1Litig., 2003 U.S. Dist. LEXIS 14492, at *13 (S.D. Cal. July 10, 2003) (typicality
2 satisfied where plaintiff acquired securities inflated by the defendant’s false and
3 misleading statements). Additionally, Plaintiffs are not subject to any unique
4 defenses that could make them atypical members of the Class. Therefore,5 Plaintiffs respectfully submits that this Court should find that Plaintiffs’ claims are
6 typical of the Class.
7.dequacyule 23(a)(4) requires that class representatives “fairly and adequately
9 protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). In the Ninth Circuit,
10 the adequacy requirement is met where, as here, the plaintiffs: (1) “do not have
11 conflicts of interest with the proposed class”; and (2) “are represented by qualified
12 and competent counsel.” Dukes v . W al-Mart, Inc., 509 F.3d 1168, 1185 (9th Cir.
13 2007) (citing Hanlon, 150 F.3d at 1020); see also LDK, 255 F.R.D. at 532. Here,
14 the requirements for adequacy are satisfied.
15ere, as described above, Plaintiffs have claims that are typical of and
16 coextensive with those of the Class. Plaintiffs, like all Class Members, purchased
17 or otherwise acquired New Century securities at artificially inflated prices during
18 the Class Period as a result of the Defendants’ alleged materially false and
19 misleading statements and/or omissions, and were allegedly damaged thereby.
20 Further, Plaintiffs have retained counsel highly experienced in securities class
21 action litigation and which have successfully prosecuted many securities and other
22 complex class actions throughout the United States. Thus, Plaintiffs are adequate
23 representatives of the Class, and their counsel are qualified, experienced and
24 capable of prosecuting this action, in satisfaction of Rule 23(a)(4).
25. Common Questions Of Law Predominate And AClass Action Is The Superior Method O f Adjudication
26
27inally, in addition to the four requirements of Rule 23(a), a class must also
28 satisfy one of the three subparts of Rule 23(b). Here, a class action is superior to
-18-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 26 of 32 Page ID#:10836
1Plaintiffs, 955 F.2d at 1284-85. “An allocation formula need only have a
2 reasonable, rational basis, particularly if recommended by experienced and
3 competent class counsel.” In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319,
4 344 (S.D.N.Y. 2005) (citation omitted). The goal of an equitable plan of allocation5 is fairness to the class as a whole, taking into consideration the strengths of claims
6 based upon available facts and evidence, as well as the size of the fund to be
7 distributed. See Om nivision, 559 F. Supp. 2d at 1045; see also Glass v. UBS Fin.
8Servs., 331 Fed. Appx. 452, 454 (9th Cir. 2009) (unpubl.); In re Mego Fin. Corp.
9 ec. Litig., 213 F.3d 454, 46 1 (9th Cir. 2000).
10ere, Lead Plaintiff seeks only preliminary approval of the Plan of
11 Allocation so that Notice of the Plan can be sent to Class Members. At the Final
12 Settlement Hearing, the Court will have before it a more complete record,
13 including additional briefing from Lead Plaintiff, a declaration in support of the
14 Plan by Lead Plaintiff’s damages consultant, and any comments from Class
15 Members, before making a final determination on the Plan of Allocation. As set
16 forth below, the proposed Plan of Allocation plainly meets the standards for
17 preliminary approval.
18laintiffs and Lead Counsel have developed the proposed Plan of Allocation
19 set forth in paragraphs 32 through 85 of the Notice, attached as Exhibit A-1 to the
20 proposed Preliminary Approval Order. The Plan of Allocation provides that Class
21 Members who file timely and valid Proof of Claim forms will receive a pro rata
22 share of the settlement funds based on their recognized losses. The Plan of
23 Allocation was developed in consultation with Lead Plaintiff’s damages expert,
24 Professor H. Nejat Seyhun, Ph.D. It calculates each claimant’s “Recognized Loss
25 Claim,” using a formula that reflects the likely provable damages that could have
26 been obtained had this litigation proceeded to trial.
27s set forth in the Notice, the Plan of Allocation is based upon the following
28 premises: (1) the market price of New Century securities was artificially inflated;
-20-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 28 of 32 Page ID#:10838
1 of the settlement to class members with stronger claims on the merits”);
2Omnivision, 559 F. Supp. 2d at 1045; Mego Fin., 213 F.3d at 46 1.
3n sum, the Plan of Allocation has a rational basis, is fully supported by
4 Lead Counsel and Plaintiffs and should be preliminarily approved so that Notice of5 the Plan can be disseminated to Class Members.
6. The Notice To The Class Is Adequateotice of a proposed settlement must be given to class members in the most
8 practicable manner under the circumstances, describing “the terms of the
9 settlement in sufficient detail to alert those with adverse viewpoints to investigate
10 and to come forward and be heard.” Mendoza v. United States, 623 F.2d 1338,
11 1352 (9th Cir. 1980); see also Fed. R. Civ. P. 23(c)(2)(B). In addition, “every
12 settlement notice must include a statement explaining a plaintiff’s recovery.”
13 Wireless Facilities, 253 F.R.D. at 636 (citing In re Veritas Software Corp. Sec.
14 Litig., 496 F.3d 96 2, 96 9 (9th Cir. 2007) ).
15ere, the Notice more than satisfies these standards. Among other things,
16 the Notice informs Class Members of: (1) the amount of the Settlements,
17 determined in the aggregate and on an average per-share basis 7 ; (2) the reasons
18 why the parties propose the Settlements; (3) a statement as to the issues on which
1907For example, the Notice explains that assuming that all Class Members
21 participate in the Settlements, Lead Plaintiff’s damages consultant estimates that
the average distribution per damaged share will be approximately $0.69 per share
22 of New Century common stock, approximately $2.08 per share of New Century
23 Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
per Put Option, before deduction of Court-approved fees, expenses and costs. This24 number is calculated by, for each type of security, dividing the relevant gross
25 settlement amount by the number of estimated damages shares or options. This
assumes that 100% of the damaged shares submit valid claim forms. Studies
26 indicate that, in reality however, a substantial percentage of class members may
27 elect to not file claims. To the extent that Class Members do not file claims, the
28 recovery per share for valid claims filed will increase. The actual amount of
recovery per security will depend on how m any valid claims are submitted.
-22-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 29 of 32 Page ID#:10839
1 the parties disagree with respect to the amount of damages which would have been
2 recoverable at trial; (4) a statement describing Lead Counsel’s intended fee and
3 expense application and support therefor 8 ; and (5) Lead Counsel’s contact
4 information. See 15 U.S.C.A. §78u-4(a)(7)(A)-(F). The Notice also describes the
5 rights of Class Members, including their rights to exclude themselves from the
6 Class or object to the Settlements. 9
7s detailed in the proposed Preliminary Approval Order and in the Proposed
8 Schedule attached hereto as Exhibit 1, Lead Counsel and the Claims Administrator
9 propose to mail copies of the Class Notice (substantially in the form of Exhibit A-1
10 to the proposed Preliminary Approval Order) and the Proof of Claim form
11 (substantially in the form of Exhibit A-2 to the proposed Preliminary Approval
12 Order) by first class mail to all persons and entities who can be identified from the
13 shareholder lists of New Century, as are in the Trustee’s possession. The Claims
14 Administrator will also mail copies of the Notice to the largest banks and
15 brokerage houses requesting that the Notice be sent to all persons and entities for
167 8The Notice explains that Lead Counsel has not received any payment for its
18 services in pursuing claims against Defendants on behalf of the Class, nor has Lead
19 Counsel been reimbursed for its out-of-pocket expenses. Before the Final
Settlement Hearing, Lead Counsel intends to apply to the Court for an award of
20 attorneys’ fees from the Settlement Fund in an amount not to exceed 12% of the
21 Settlement Amount, and Litigation Expenses not to exceed $4.5 million, plus
interest from the date of funding at the same rate as earned by the Settlement Fund .22 If the Court approves Lead Counsel’s fee and Litigation Expense application, Lead
23 Plaintiff’s damages consultant estimates that the average cost per damaged share
will not exceed approximately $0.11 per share of common stock, approximately24 $0.32 per share of Preferred Stock, approximately $0.02 per Call Option, and
25 approximately $0.04 per Put Option.
9As explained in the Notice, the Individual Defendants, Insurance Carriers,
26 Underwriter Defendants or KPMG may terminate the Settlements if requests for
27 exclusion are received from potential Class Members representing over a certain
28 amount of shares as stated in Supplemental Agreements. Upon request, the
Supplemental Agreements w ill be submitted under seal for the Court’s review.
-23-RELIMINARY APPROVAL MOTION
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 30 of 32 Page ID#:10840
1 whom they acted as nominee purchaser of New Century securities. In addition,
2 Lead Counsel intends to publish a Summary Notice (substantially in the form of
3 Exhibit A-3 to the proposed Preliminary Approval Order) in the national edition of
4
The W all Street Journal and over the PR N ewsw ire and provide a link to the Notice5 and the Proof of Claim form, as well as other case documents, on the website
6 created by the Claims Administrator specifically for these Settlements.
7he proposed notice program fulfills the requirements of due process and
8 satisfies Rule 23(e) because it alerts and informs those members of the Class who
9 can be identified through reasonable efforts of the information set forth above.
10 See, e.g., In re Portal Software, Inc. Sec. Litig., 2007 WL 4171201, at *1 (N.D.
11 Cal. Nov. 26, 2007) (approving similar notice regimen); In re Immune Response
12 Sec. Litig., 497 F. Supp. 2d 1166, 1170 (S.D. Cal. 2007); see also Rodriguez v. W .
13 Publ’g Corp., 563 F.3d 948, 962 (9th Cir. 2009) (“Notice is satisfactory if it
14 ‘generally describes the terms of the settlement in sufficient detail to alert those
15 with adverse viewpoints to investigate and to come forward and be heard’”)
Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 32 of 32 Page ID#:10842
TABLE OF C ONTENTS TO EXHIBITS TO
PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENTS
EXHIBITITLE
1roposed Schedule2tipulation Of Global Settlement With New Century Officers And Directors(with exhibits thereto)3tipulation Of Settlement Betwee n Plaintiffs And KPM G(with exhibits thereto)
4tipulation Of Settlement B etween Plaintiffs And T he Underwriter Defendants(whexhbshereo
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 4 of 56 Page ID#:10848
1.n April 2, 2007, New Century and the other Debtors filed for
2bankruptcy in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code;
3.y Order dated June 26, 2007, the Consolidated Class Action Court
4appointed the Lead Class Plaintiff for the Consolidated Class Action and approved5he selection of Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel for
6he Class;
7
.
n September 14, 2007, Class Plaintiffs filed their complaint in the
8Consolidated Class Action asserting claims against Class Defendants under the
9Excha nge Act and the Sec urities Act on behalf of the Class;10.eginning on November 2, 2007, Class Defendants filed motions to
11dismiss the complaint in the Consolidated Class Action, which Class Plaintiffs
12 opposed on Decem ber 14, 2007;
1 3
.
y Order dated January 31, 2008, the Consolidated Class Action
14Co urt granted the motions to dismiss with leave to ame nd the complaint;
1 5.n March 24, 2008, Class Plaintiffs filed their Amended Class
16Com plaint, alleging claims against C lass D efendants pursuant to the Securities Act
17 and the Exchange Act;
1 8
.
ursuant to stipulation, on April 30, 2008, Class Plaintiffs filed their
19Second Amended Class Complaint, alleging claims against the Class Defendants
20 pursuant to the Securities Act and the Ex change A ct;
21.eginning on June 2, 2008, Class Defendants filed motions to dismiss
22 the Second Amended Class Complaint, which Class Plaintiffs opposed on July 7,
23 2008;
24
.
n July 2008, the Bankruptcy Court approved a plan of liquidation of
25 the Debtors' assets, which was later modified with the Bankruptcy Court's
26 approv al. Pursuant to the plan of liquidation, the Trust was crea ted and the Trustee
27was appointed to liquidate the Debtors' assets, including the claims asserted in the
28Trustee Litigation;
-2 -/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 10 of 56 Page ID#:10854
1
)
Class Settlement Fund" means the Class Officer And Director
2ettlement Am ount, and any and a ll interest earned thereon, wh ich interest shall be
3 paid into the Class Escrow Account as set forth in paragraphs 11 and 12 below.
4)Consolidated Class Action" means A vi Gold a Brad A .
5Morrice, et al., a/k/a, In re New Century, Case No. 2:07-cv-00931-DDP-FMO
6 (C.D. Ca l.), and case s consolidated therein.
7
)
Consolidated Class Action Court" means the United States
8District Court for the Central District of California hearing the Consolidated Class
9Action.
1 0) "DCP Distributions" means the deferred compensation amounts
11 referenced under the DC P Settlement Agreem ent as Target Distributions and which12 pursuant to that agreement have been held by the Trustee pending the resolution
13 and conclusion of the Trustee Litigation.
14)DCP Settlement Agreement" means the settlement agreement
15entered into as o f July 2009 by and am ong the Trustee, on the one hand, and the Ad
16Hoc Committee of Beneficiaries of the New Century Financial Corporation
17Deferred Compensation Plan and SERP, on the other hand.
1 8
)
DCP Settlement Contributions" means those payments set
19 forth below in paragraphs 9b and 11.
20)Debtors" means New Century Financial Corporation (f/k/a
21New Century REIT, Inc.), a Maryland corporation; New Century TRS Holdings,
22nc. (f/k/a New Century Financial Corporation), a Delaware corporation; New
23 Century Mortgage Corporation (f/k/a JBE Mortgage) (d/b/a NCMC Mortgage
24Corporate, New Century Corporation, and New Century Mortgage V entures, LLC),
25a California corporation; NC Capital Corporation, a California corporation;
26Home123 Corporation (f/k/a The Anyloan Corporation, 1800anyloan.com , and
27Anyloan.com), a California corporation; New Century Credit Corporation (f/k/a
28Worth Funding Incorporated), a California corporation; NC Asset Holding, L.P.
-8 -/O STIPULATION O F SETTLEMENTCase No. 2;07-cv-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 12 of 56 Page ID#:10856
1 nd without costs to any pa rty have bee n exec uted in the Trustee Litigation and the
2Kodiak Litigation and delivered to counsel designated by the Kodiak Litigation
3De fendants and the Trustee Litigation D efendants to be held pursuant to paragraph
43 .
5
e) "Escrow Agent" means the financial institution selected by
6Lead Counsel, with the consent of the Trustee, which consent shall not be
7 unreasonably withheld, to serve as escrow agent.
8oEscrow Agreement(s)" means the agreement(s) (1) among (1)
9 Lead Counsel and the Trustee and (ii) the Escrow Agent setting forth the terms
10 under which the Escrow Agent shall maintain the Global Escrow Account, and (2)11 between (i) Lead Counsel and (ii) the Escrow Agent setting forth the terms under
12which the Escrow Age nt shall maintain the Class Escrow Acc ount.
13
g) "Exchange Act" means the Securities Exchange Act of 1934.
14h) "Final" means: (i) that the time for appeal or appellate review
15of the order or judgm ent has ex pired; or (ii) if there ha s been an app eal, (a) that the
16appeal has been decided without causing a material change in the order or
17 judgment; or (b) that the order or judgment has been upheld on appeal and is no
18 longer subject to app ellate review by further appeal o r writ of certiorari.
1 9
i)
G lobal Escrow Ac count" means an account maintained to hold
20he Global Officer And Director Settlement Amount, which shall be controlled
21exclusively by Lead Counsel and the Trustee and deemed to be in the custody of
22he Consolidated Class Action Court and shall remain subject to the jurisdiction of
23 he Consolidated Class Action Court until such time as the funds are distributed or
24eturned pursuant to the terms of this Stipulation and/or further order of the
25Consolidated C lass Action Court.
26
j)
Global Officer And Director Settlement" or "Settlement"
27means the settlement em bodied in this Stipulation O f G lobal Settlement W ith N ew
2 8 entury Officers And Directors ("G lobal Officer And Director Stipulation").
-10-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 19 of 56 Page ID#:10863
1Litigation or that arise out of or relate in any way to New Century (including any
2 f its subsidiaries and a ffiliates), the Trust, the Trustee, the D ebtors, or the D ebtors'
3Estates, except that the Settled Trustee C laims expressly excludes claims or c auses
4of action (i) asserted in, arising from, in connection with, or in any way related to
5he P hiladelphia Indemnity Arbitration; (ii) asserted by or that ma y in the future be
6asserted by the Trustee and Trust against the Released Officers And Directors
7(other than the Settling Individuals) that do not arise from and are not based upon
8any actual or alleged Wrongful Act, as that term is defined in the Policies,
9ncluding the A dversary Proceeding Alan M. Jacobs, as Liquidating Trustee of the
10N ew Cen tury L iquidating Trust a Daniel R S ussm an, e t al . (In re N ew Cen tury T RS
11Holdings, Inc. (Adv. Proc. No. 09-50883 (KJC)); or (iii) asserted by the Trust and12Trustee against Carl A. Vernon, Gregory J. Schroeder, and Daniel P. Sussman; or
13(c) ever had, now has, claims to have or may in the future have against the
1.4Insurance Carriers arising from, in connection with or in any way related to the
15Policies.ettled Trustee Claims does not include claims relating to the
16enforcement of the Settlement.
1 7ss) "Settlement" or "Global Officer And Director Settlement"
18means the settlement embodied in this Stipulation of Global Settlement with New
19Ce ntury Officers and Directors ("G lobal Officer And D irector Stipulation").
20tt) "Settlement Hearing" or "Final Approval Hearing" means the
21hearing set by the Consolidated Class Action Court under Rule 23(e)(1)(c) of the
22Fede ral Rules of Civil Proce dure to consider final approval of the Settleme nt.
23uu) "Settling Individuals" means Class Individual Defendants,
24Trustee Litigation Defenda nts, Kodiak Litigation Defenda nts, and David Ke nneally
25and any and all of their respective heirs, executors, administrators, predecessors,
26uccessors and assigns, employees, agents and retained professionals (other than
27KPM G and the Underwriter Defendants).
28
-17-/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FMO x)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 25 of 56 Page ID#:10869
1ll of the Underwriter Defendants and the other Released Underwriter Parties
2hether arising under federal, state, com mo n or foreign law, arising out of or based
3 upon the allegations, transactions, facts, matters or occurrences, representations or
4omissions involved, set forth, or referred to in the Consolidated Class Action,
5provided and conditioned upon the Settling Individuals receiving substantively
6eciprocal releases from the Underwriter Defendants and the other Released
7 Underwriter Parties.
8.pon the Effective Date, Kodiak hereby releases, waives, discharges
9 and dismisses, and shall be deemed by this agreement and/or operation of law to
1.0forever be enjoined from prosecuting each and every of the Settled Kodiak Claims
11 as against KPMG and the other Released Auditor Parties, provided and conditioned12 upon Kodiak receiving substantively reciprocal releases from KPMG.
1 3
HE SETTLEMENT CONSIDERATION
14.he Global Officer And Director Settlement Amount shall be paid as
15ollows:
16. Within fourteen (14) calendar days after entry of the Preliminary
1 7pprova l Order, the Settling Individuals shall pay and/or caus e to be paid
is
nto the Global Escrow Account a total of $91,102,331.51 in cash as
1 9
ollows:
20
) The Settling Individuals shall cause the Insurance Carriers to
21ay the amount of $90,960,516 in cash. This amount includes a
22250,000 credit to Morrice, a $450,000 credit to Dodge, and a
23150,000 credit to Kenneally in partial satisfaction of amounts
24
wed pursuant to any prospective SEC judgments in SEC v.
25orrice, et al., Case No. 09-1426-DDP (the "SEC Action").
26hese credits, however, shall not be applied towards penalties
27wed pursuant to the referenced SE C judgme nts;
28
-23-/O STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 28 of 56 Page ID#:10872
ccount and designated as consideration for the settlement of the Class
2laintiffs' claims against the Class Individual Defendants in the
3onsolidated Class Action.
4. Included in the amounts set forth in this paragraph is a total of
5
1,523,845 paid by or on behalf of Morrice ($791,345), Dodge
6
$550,000), and Kenneally ($182,500) in satisfaction of amounts owed
7
ursuant to any prospective SEC judgments in the SEC Action and which
8ill be distributed pursuant to this Stipulation of Settlement.
92. Interest that accrues on the funds held in the Global Escrow Account
10prior to their distribution to the Plaintiffs hereunder shall be allocated pro rata
11amo ng the Plaintiffs based on funds distributed from the G lobal Escrow Ac count to12such Plaintiffs pursuant to paragraph 11 a-c. Escrow fees, Taxes and tax
13preparation fees and costs incurred under the Escrow Agreement for the Global
14Escrow Account shall be allocated pro rataamong the Plaintiffs in the same
15manne r as interest.
1 63. If any portion of the Global Officer And Director Settlement Amount
17s not paid in the timeframe as designated above in paragraph 9a, Plaintiffs shall,
18upon their unanimous agreement, have the option to: (i) terminate the Global
19 Officer And Director Settlement; or (ii) seek to enforce this Stipulation of
20Settleme nt, including seeking interest on unpaid portions of the G lobal Officer And
21Director Settlement Amount, as against those Parties or Insurance Carriers who
22have not complied with their payment obligations as set out in paragraph 9a. Any
23Party or Insurance Carrier may seek the assistance of the Hon. Daniel Weinstein
24or resolution of any disputes relating to this paragraph, but seeking or not seeking
25 such assistance does not preclude all otherwise available legal remedies.
26
4. The costs of all Taxes and tax preparation and escrow fees and related
27 ees in connection with the Global Officer And Director Settlement Amount while
28t is in the Global Escrow Account may be paid directly out of the Global Escrow
-26-/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 31 of 56 Page ID#:10875
1
9. This is not a claims-made settlement. Once the Effective Date occurs,
2neither the Settling Individuals, the Insurance Carriers, nor any other Settling
3ndividuals nor any other person or entity that contributed to the Global Officer
4And Director Settlement Amount on their behalf, will have the right or ability to
5et back any o f the G lobal Officer And D irector Settlement Am ount or any interest
6ccrued thereon, irrespective of the number of Claims filed, the collective amount
7f losses of Authorized Claimants, the percentage of recovery of losses, or the
8 amounts to be paid to Authorized Claimants from the Class Net Settlement Fund.
90. The Claims Administrator shall discharge its duties under Lead
10 Counsel's supervision and subject to the jurisdiction of the Consolidated Class
11Action Court. Except as otherwise provided herein, no other Party shall have12esponsibility whatsoever for the administration of the Global Officer And Director
13Settlement, and no other Party shall have liability whatsoever to any person,
14ncluding, but not limited to, the Class Members, in connection with any such15administration. Lead Counsel shall cause the Claims Administrator to mail the
16 Notice and Proof of Claim Form to those members of the Class at the address of
17each suc h person as set forth in the records of N ew Century or its transfer agent(s),
18or who otherwise may be identified through further reasonable effort. Lead
19Counsel will cause to be published the Summary Notice pursuant to the terms of
20he Preliminary Approval Order or whatever other form or manner might be
21ordered by the Consolidated Class Action Court. For the purpose of identifying
22and providing notice to the Class, promptly upon execution of this Stipulation, the
23Trustee shall provide to the Claims Administrator (at no cost to the Global Escrow
24Account, Lead Counsel or the Claims Administrator) any New Century shareholder
25ists in his posses sion as app ropriate for providing notice to the Class, in electronic
26onn (if available). The Trustee shall make no representation as to the accuracy or
27com pleteness of such shareh older lists.
28
-29-/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FMO x)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 32 of 56 Page ID#:10876
11. Lead Counsel may pay from the Global Escrow Account or the Class
2Escrow Account, without further approval from the other Parties or further order of
3he C onsolidated C lass Action Co urt, the N otice a nd A dministration C osts actually
4ncurred. Such amounts will be deducted as expenses from the Class Officer And
5Director Settlement Amount. Such costs and expenses shall include, without
6imitation, the actual costs of publication, printing and mailing the Notice,
7eimbursements to nominee owners for forwarding the Notice to their benefi
8wners of New Century securities, the administrative expenses incurred and fees
9harged by the Claims Administrator in connection with providing Notice and
10 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
11event that the G lobal Officer A nd D irector Settlement is terminated pursuant to the12erms of this Stipulation, all amounts contributed to the Global Escrow Account
13 shall be returned or repaid to the Settling Individuals, Insurance Carriers and all
14 ther persons and entities who or which contributed to the G lobal Escrow Account
15 n their behalf, less all No tice and Ad ministration C osts paid or incurred, including
16 any related fees, as set forth in paragraph 41 below.
1 7LASS ATTORNEYS' FEES AND LITIGATION EXPENSES
18
2. Lead Counsel will apply to the Consolidated Class Action Court for a
19ollective award of attorneys ' fees to C lass Plaintiffs' Counse l related to settlement
20of the Consolidated Class Action. Lead Counsel also will apply to the
21Conso lidated C lass Action Co urt for reimbursement of Litigation E xpenses, which
22may include reimbursement of the expenses of Class Plaintiffs in accordance with
2315 U.S.C. § 78u-4(a)(4). No other Party shall ta pe any position with respect to
24Lead Counsel's applications or awards discussed in this paragraph. Such matters
25are not the subject of any agreement between the Parties other than what is set
26orth in this Stipulation. Lead Counsel will not calculate attorneys' fees based
27upon, or seek attorneys' fees or expenses with respect to, any disgorgement or
28penalties obtained by the Securities and Exchange C omm ission in the SEC A ction.
-30-/O STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 33 of 56 Page ID#:10877
1
3. Any attorneys' fees and Litigation Expenses that are awarded by the
2Conso lidated Class Ac tion C ourt shall be paid from the G lobal Escrow Account to
3Lead Counsel, with the Consolidated Class Action Court's approval, immediately
4upon award, notwithstanding the existence of any timely filed objections thereto,
5r potential for appeal therefrom, or collateral attack on the Settlement or any part
6hereof, subject to Lead Counsel's obligation to pay back any such amount if, as a
7esult of any appeal, further proceeding or successful collateral attack, the
8ttorneys' fee or Litigation Expense award is amended, modified or does not
9become Final, or if the Effective Date does not occur or the Settlement is
10erminated for any reason. Such amounts will be deducted from the Class Officer
11And D irector Settlement A mount. Lead Co unsel shall make the appropriate refund12or repayment in full no later than ten (10) business days after receiving from the
13Settling Individuals' counsel or from a court of appropriate jurisdiction notice of
14 the termination of the Settlement or notice of any reduction of the award of
15attorneys' fees and/or Litigation. Expenses. An award of attorneys' fees and/or
16 Litigation Expenses is not a necessary term of this Stipulation and is not a
17 ondition of this Stipulation.
18
4. Lead Counsel shall have the sole authority to allocate the
19 Consolidated Class Action Court-awarded attorneys' fees among Class Plaintiffs'
20Counsel in a manner which it, in good faith, believes reflects the contributions of
21such counsel to the prosecution and settlement of the Consolidated Class Action.
22The Settling Individuals shall have no responsibility for any such allocation and
23 hall not be liable for any c laims relating to suc h allocation.
24
5. The attorneys' fees and Litigation Expenses discussed herein are
25exclusive of any attorneys' fees or litigation expenses related to the settlement of
26he Trustee Litigation or Kodiak Litigation. Each side and each party in the
27Trustee Litigation and the Kodialc Litigation shall bear his, her or its own
28 attorneys' fees and costs.
-31-/O STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
LLC, Roth Capital Partners, Morg an Stanley & Co ., Inc., and Jeffries & C o., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation),
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
[PROPOSED] ORDER PRELIM. APPROVING4- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-D DP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 8 of 117 Page ID#:10908
2 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &5 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
6 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th
7 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
8 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
9 objections, papers and briefs with the Clerk of the United States District Court for
10 the Central District of California on or before twenty-one (21) days before the
11 Settlement Hearing. Any Class Member who does not make his, her or its
12 objection in the manner provided for herein shall be deemed to have waived such
13 objection and shall forever be foreclosed from making any objection to the fairness
14 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
15 Allocation or to the application by Lead Counsel for an award of attorneys' fees
16 and payment of Litigation Expenses unless otherwise ordered by the Court. The
17 manner in which a notice of objection should be prepared, filed and delivered shall
18 be stated in the Notice.
19
3. If approved, all Class Members will be bound by the proposed
20 Settlements provided for in the Stipulations, and by any judgment or determination
21 of the Court affecting Class Members, regardless of whether or not a Class
22 Member submits a Claim Fonn.
234. Any member of the Class may enter an appearance in the
24 Consolidated Action, at their own expense, individually or through counsel of their
25 own choice. If they do not enter an appearance, they will be represented by Lead
26 Counsel.
275. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
[PROPOSED] ORDER PRELIM. APPROVING-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-D DP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 10 of 117 Page ID#:10910
1 and number(s) of shares of all purchases, acquisitions, and sales of New Century
2 Securities during the Class Period. Requests for exclusion will not be valid if they3 do not include the information set forth above and are not received within the time
4 stated above, unless the Court otherwise determines. Copies of all timely requests
5 for exclusion from the Class received by the Claims Administrator (or other person
6 designated to receive exclusion requests) shall be provided to Lead Counsel and
7 Individual Defendants' Counsel, counsel for the Insurance Carriers (as defined in
8 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for9 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
10 Hearing. All persons who submit valid and timely requests for exclusion in the
11 manner set forth in this paragraph shall have no rights under the Stipulations, shall
12 not share in the distribution of the Net Settlement Fund, and shall not be bound by
13 the Stipulations or any final judgment.
140. As set forth in the Stipulations, Defendants and their related parties
15 shall have no responsibility or liability whatsoever with respect to the Plan of
16 Allocation or Lead Counsel's application for an award of attorneys' fees and
17 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel's
18 application for an award of attorneys' fees and payment of Litigation Expenses will
19 be considered separately from the fairness, reasonableness and adequacy of the
20 Settlements. At or after the Settlement Hearing, the Court will determine whether
21 Lead Counsel's proposed Plan of Allocation should be approved, and the amount
22 of attorneys' fees and Litigation Expenses to be awarded to Lead Counsel. Any
23 appeal from any orders relating to the Plan of Allocation or Lead Counsel's
24 application for an award of attorneys' fees and Litigation Expenses, or reversal or
25 modification thereof, shall not operate to terminate or cancel the Settlements, or
26 affect or delay the finality of the judgment to be entered pursuant to Rule 54(b) of
27 the Federal Rules of Civil Procedure approving the Settlements and the settlement
28 of the Consolidated Action set forth therein.
[PROPOSED] ORDER PRELIM. APPROVING-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DD P (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 12 of 117 Page ID#:10912
1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6
.
hall not be offered or received against any of the Released
7 Parties 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by Plaintiffs 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
1 4.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20
.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (1) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as defined in th e Und erwriter Stipulation).27 5 "Plaintiffs" in th is parag raph 25 includes C lass Plaintiffs, the Trus tee, and Kod iak28 (as defined in the Global Officer And Director Stipulation).
[PROPOSED] ORDER PRELIM. APPROVING-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.
23"Underwriter Defendants ").
24
Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
25Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27Underwriter Defendants, the Individual Defendants , and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Mor rice et al., Case No.
- 1 -OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-0093 t
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 18 of 117 Page ID#:10918
1 $124,827,088.00.
he terms of the Settlements are set forth in the
2Stipulations.4
3This Notice explains important rights you may have, including your possible
4 eceipt of cash from the Settlements. Your legal rights will be affected
5whether or not you act. Please read this Notice carefully!
6
7
.
escription of the Consolidated Action and the Class: Lead
8Plaintiff alleges that Defendants made false and misleading statements and/or
9mitted material information to investors during the Class Period. Defendants
10 deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12 egarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15 of Class Members against the Defendants and the other applicable Released Parties
16 (as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
18tock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20 Options and/or who sold New Century Put Options, during the time period from
212 09-1426-DDP, commenced on December 7, 2009, in the United States District
23 Court for the Central District of California (the "SEC Action").
4ll capitalized terms that are not defined herein shall have the meaning24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25 Global Settlement With New Century Officers And Directors (the "Global Officer
26 And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation Of Settlement B etween Plaintiffs And Th e Underw riter Defendants (the27 "Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
28 "KPMG Settlement").
-2-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 20 of 117 Page ID#:10920
1 recoverable If Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5wh ether th e price of New Century sh ares was inflated as th e result of any allegedly
6alse or mis leading public s tatements or om iss ions by D efendants ; and (ii i) w h ether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was9 wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11 will apply to the Court for an award of attorneys' fees from the Settlement Fund in
12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated16Action, in an amount not to exceed $4.5 million, plus interest from the date of
17 unding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26eg arding the Settlements s h ould be directed to M r. Graziano at Bernstein Litowitz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 866 ) 6 48-2524, blbg@ blbg law.com .
-4-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 27 of 117 Page ID#:109271Trustee and Plan Administrator. Robert K.e et al. In re New CenturybeoR S
2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5 authorized this Notice to be sent to potential Class Members, and scheduled the
6 Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW D O I KNOW IF I AM AFFECTED B Y THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements
11 unless you timely request to be excluded. The Class consists of all persons and
12 entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or14iew Century Call Options and/or who sold New Century Put Options, during the
15t ime period from May 5, 2005, throug h and including M arch 1 3, 2007, eith er in th e
16 Offerings, pursuant to a registration statement, or in the market, and who, upon17 disclosure of certain facts alleged in the Complaint, were injured thereby.18Excluded from the Class are (a) Defendants; (b) members of the immediate
19 families of the Individual Defendants; (c) the subsidiaries and affiliates of
20 Defendants; (d) any person or entity who was a partner, executive officer, director
21 or controlling person of New Century (including any of its subsidiaries or
22 affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23 controlling interest; and (f) the legal representatives, heirs, successors and assigns
24 of any such excluded party. The Class also does not include those persons and
25 entities who timely request exclusion from the Class pursuant to this Notice (see
26 "What If I Do Not Want To Participate In The Class And The Settlements? How
27 Do I Exclude Myself?," below).
28
- 1 1 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 31 of 117 Page ID#:10931
1
5. Each person wishing to participate in the distribution must timely
2ubmit a valid Claim Form establishing membership in the Class, and including all
3equired documentation, postmarked no later thanto the
4 ddress set . forth in the Claim Form th at accompanies th is Notice. Unless the C ourt5therwise orders , any Class Member wh o fails to submit a Claim Form pos tmarked no
6 later than
h all be forever barred from receiving paym ents purs uant to
7he Settlements set forth in the Stipulations but will in all other respects remain a
8 Class Member and be subject to the provisions of the Stipulations, including the
9erms of any Judgm ent entered and releases g iven.
106. Payment pursuant to the Plan of Allocation approved by the Court
11hall be conclusive against all Authorized Claimants. No person shall have any
12 claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13designated by Lead Counsel arising from distributions made substantially in
14accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. 'Plaintiffs, Defendants, their respective counsel, and all other Released
16 Parties shall have no responsibility or liability whatsoever for the investment or17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18 Allocation, the determination, administration, calculation, or payment of any claim
19or nonperformance of the Claims Administrator, the payment or withholding of
20 Taxes owed by the Settlement Fund, or any losses incurred in connection
21 therewith, except as otherwise provided in the Stipulations.
227.he objective of the Plan of Allocation is to equitably distribute the
23proceeds of the Settlements to th ose Class Mem bers wh o suffered economic loss es
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25 nd industry factors or C ompany- specific factors not related to the alleged wrong ful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27 nalysis undertaken to that end, including a review of publicly available information
28 eg arding New C entury and analysis reg arding the s tock price movements.
- 15 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 32 of 117 Page ID#:10932
8. The proposed Plan of Allocation provides for distribution of the Net
2Settlement Fund to Auth orized Claimants as follows:
3I.UMMARY OF PLAN OF ALLOCATION9. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6 separate Claim Form signed under penalty of perjury and supported by such
7ocuments as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (1) each
9laimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B Preferred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16 market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
24
55 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this t i tle in wh ich th e plaintiff seeks to es tablish damag es by reference to th e
market price of a security, the award of damages to the plaintiff shall not exceed27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
- 1 6 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 34 of 117 Page ID#:10934
1Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2 o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3 whereas the Individual-Auditor Allotment will be distributed to all Class Members
4who submit valid Claim Forms, regardless of the type of New Century Security
5purchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claima
10 pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11eparately es tablish ed for each class of securities sh own in Table 1 annexed h ereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17Underwriter Allotment and the Individual-Auditor Allotment will be
18 proportionately allocated to the Authorized Claimants.
19
4. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21accordance with the provisions of this Plan of Allocation. Factors generally
22 onsidered in developing the Plan of Allocation, include, among others : ( i ) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25 ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26 iii) whether the Security was held until the end of the Class Period (March 13,
2 7 007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
- 18-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 35 of 117 Page ID#:10935ecurities at different times during the Class Period attributable to Defendants'
2alse and misleading statements as alleged in this case, and as calculated by Lead
3 Plaintiff's damages consultant. (Based on the opinions of this consultant, Lead
4 Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7dequately alleg e and prove liability for th at entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9lass Member who submits an acceptable Proof of Claim can claim under the10Settlements for the purpose of making pro rata allocations of the cash from the
11Underwriter Allotment and the Individual-Auditor Allotment to Class Members for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14h at th e prices of New C entury Securities were artificially inflated during th e Class
15Period (May 5, 2005 — March 13, 2007) due to Defendants allegedly material
16misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
19Securities.
206. The Plan of Allocation covers the following New Century Securities:
21 1 ) C omm on Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22 iv) Call and Put Options on C omm on Stock.
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26 rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
- 19-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 37 of 117 Page ID#:10937
1calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be
2eemed an assignment of any claim relating to the purchase of such New Century
3Securities unless specifically provided in the instrument of gift or assignment.
4Similarly, the covering purchase of a short sale shall not be deemed a purchase or
5ale of New Century Securities for the calculation of an Authorized Claimant's
6Recognized Loss Claim,
7
0. Each Authorized Claimant shall be allocated a pro rata portion or
8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss
10Claims of all Authorized Claimants for their respective class of Securities. Each
11 Authorized Claimant shall be paid an amount determined by multiplying the total
12n th e Underw riter Allotment and/or Individual-Auditor Allotment for th eir class of
13Securities by a fraction, the numerator of which shall be the Claimant's
14Recognized Loss Claim and the denominator of which shall be the Total
15Recognized Loss Claims of all Authorized Claimants for the included class of
16securities. Each Authorized Claimant will receive a pro rata share of the
17Underw riter Allotment and/or Individual-Auditor Allotment based on h is, he r or its
18Recognized Loss Claim.
1 9
1. The amount of a Class Member's Recognized Loss as computed
20above is not intended to be an estimate of a Class Member's damages, nor of what
21a Class Member might have been able to recover at trial, and it is not an estimate
22of the amount that will be paid pursuant to this Settlement. Instead, this
23computation is only a meth od to weigh Class M embers ' c laims ag ainst one anoth er.
24
2. To the extent a Claimant had a gain from his, her or its transactions
25during the Class Period with respect to New Century Securities specified above,
26he value of their Recognized Loss Claim will be zero. Such claimants will, in any
27event, be bound by the Settlements. You may wish to consider this when deciding
28wh ethe r to opt-out of th e Settlements.
-21-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 40 of 117 Page ID#:10940
.
alculation of Recog nized Loss for New
Century Common Stock Purchas es2
61. Calculation of Recognized Loss Claims for New Century Common3
Stock sh ares sh all be as follows:4
5
2. For shares purchased on or between May 5, 2005, through February 7,
62007, th e following claims for damag es s h all be allowed:
(a) For each share sold on or before February 7, 2007, no Recognized
Claims for damages sh all be allowed;gb) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
10ereto, less the inflation per share at the time of sale as set forth in Table 2;
and1 1
12
3. For shares purchased on or between February 8, 2007, through March
2 2007 the following claims for damages3
s s h all be allowed:
14a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages sh all be allowed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,
1 6he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,17
ess the inflation per sh are at th e time of sale as s et forth in Table 2; and18
9
4. For shares purchased on or between March 5, 2007, through March
201 2, 2007, the following claims for damag es sh all be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or damages sh all be allowed;
22b) For each share sold on or after March 13, 2007, the allowed damages
shall be the inflation per share at the time of purchase for the applicable23
ate of purchas e as s et forth in Table 2, annexed hereto.
24
25
5. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Comm on Stock claims , th e Recog nized Loss Claims for damages for such
27 shares purchased during the Class Period shall be further limited (as provided for
28under th e PSLRA) to the s malles t of the following :
-24-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 41 of 117 Page ID#:10941
1a) the difference between the price paid and the price received (out-of-
2ocket investment loss) if sold on or before June 10, 2007;(b) the difference between the price paid (excluding all fees and
3ommissions) and the average closing price as set forth in Table 3
4nnexed h ereto if sold between March 1 3, 2007, and June 1 0, 2007; and(c) the difference between the price per share paid and $0.87 per share if the5
h ares we re sold after June 10, 2007, or were h eld until the current date.
6
.
alculation of Recog nized Loss
for New C entury Series A Preferred Stock7
urchases
86. Calculation of Recognized Loss Claims for New Century Series A
9referred Stock sh ares sh all be as follows:
1 07. For shares purchased on or between May 5, 2005, through February 7,
112007, th e following claims for damag es s h all be allowed:12
a) For each sh are sold on or before February 7, 2007, no Recog nized Claims
13
or damages sh all be allowed;
(b) For each share sold on or between February 8, 2007, and through March143, 2007, the allowed damages shall be the inflation per share at the time
of purchase for the applicable date of purchase as set forth in Table 4,15nnexed hereto, less the inflation per share at the time of sale as set forth1 6n Table 4; and
1 7
68. For shares purchased on or between February 8, 2007, through March
18 2, 2007, the following claims for damages shall be allowed:
19
a) For each share sold on or before March 2, 2007, no Recognized Claims
20or damages sh all be allowed;
21b) For each share sold on or between March 5, 2007, and March 13, 2007,
the allowed damages shall be the inflation per share at the time of22urchase for the applicable date of purchase as set forth in Table 4,
23nnexed hereto, less the inflation per share at the time of sale as set forthin Table 4; and
24
25
9. For shares purchased on or between March 5, 2007, through March
262, 2007, the following claims for damag es s h all be allowed:
27a) For each share sold on or before March 12, 2007, no Recognized Claims
for damages sh all be allowed;28
-25-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 42 of 117 Page ID#:10942
1b) For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicable
date of purch ase as set forth in Table 4, annexed h ereto.3
470. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA to the smallest of the follown
investment loss ) if sold on or before June 1 0, 2007;
8b) the difference between the price paid (excluding all fees and commissions)
9nd the average closing price as set forth in Table 6 annexed hereto if sold
between March 1 3, 2007 and June 1 0, 2007; and10c) the difference between the price per share paid and $8.02 per share if the
1 1
h ares w ere sold after June 10, 2007, or were h eld until th e current date.
12
.
alculation of Recog nized Loss
for New C entury Series B Preferred StockPurchases
13
131. Calculation of Recognized Loss Claims for New Century Series B
15Preferred Stock sh ares s h all be as follows:
1672. For shares purchased on or between May 5, 2005, through February 7,
17 2007, th e following claims for damag es s h all be allowed:
1 8
a) For each share sold on or before February 7, 2007, no Recognized
Claims for damages sh all be allowed;19b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in21able 5, annexed hereto, less the inflation per share at the time of sale
22s s et forth in Table 5; and
233. For shares purchased between February 8, 2007, through March 2,
242007, th e following claims for damag es s h all be allowed:
25a) For each share sold on or before March 2, 2007, no Recognized Claims
26or damages sh all be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
28urchase for the applicable date of purchase as set forth in Table 5,
-26 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 43 of 117 Page ID#:10943
1nnexed hereto, less the inflation per share at the time of sale as set
2orth in Table 5; and
34. For shares purchased between March 5, 2007, through March 12,
4 007, th e following claims for damag es s h all be allowed:
5a) For each share sold on or before March 12, 2007, no Recognized
6
laims for damag es sh all be allowed;
(b) For each share sold on or after March 13, 2007, the allowed damages
7
h all be the inflation per sh are at th e time of purch ase for th e applicable
8ate of purchas e as s et forth in Table 5, annexed h ereto.
95. The Recognized Loss Claims for damages for such Series B Preferred10Shares purchased during the Class Period shall be further limited (as provided for
11under the PSLRA) to the s malles t of the following:12a) the difference between the price paid and the price received (out-of-pocket
1 3
nvestm ent loss) if sold on or before June 10 , 2007;
(b) the difference between the price paid (excluding all fees and commissions)14nd the average closing price as set forth in Table 7 annexed hereto if sold
1 5etween March 1 3, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the
1 6h ares w ere sold after June 10, 2007, or were h eld until the current date.
1 7.alculation of Recog nized Loss for
New Century Call and Put Options18
76. The Plan of Allocation covers the following New Century Call and19
20Put Options: New Century Call Options on Common Stock initially purchased or
21otherwise acquired during the Class Period, on May 5, 2005, up to and including
22
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
23
Common Stock written or purchased (covered) during the Class Period May 5,
242005, throug h and including M arch 1 3, 2007 ("New C entury Put Options") .
257. Artificial inflation and Recognized Losses as to New Century Call
26
Options and artificial deflation and Recognized Losses as to New Century Put
27Options were computed in a manner similar to that used with respect to New
Century Common Stock as described above. To determine artificial inflation for28
Call Options, Lead Plaintiff's damages consultant considered securities' price-27-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 45 of 117 Page ID#:10945
1the previous 45-day stock returns, which are then annualized using a 252-trading
2 ay approach.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6
e zero.
7
b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) we re sold (pos ition closed out) o n or between February
1 0, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options m ultiplied by the less er of:
11
1 2
1) the difference between Artificial Inflation per Call Option on the
date of purch ase and A rtificial Inflation per Call Option on th e date13f expiration, exercis e, or sale, as app ropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the C all Option expired worth less ) .15
1 6n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,17007 maturity and exercise price of $20. The Call Option inflation on this
1 8
ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor19hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($1 0.40 - $1 .60, or $8.80) t imes num ber of Options (1 00) , for a total of$880.00; assuming that the difference between the purchase price and the
23ale price was g reater th an $8.80.
24
(c) For Call Options which were purchased or acquired between February25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
26
2) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions multiplied by th e less er of:
-29-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 47 of 117 Page ID#:10947
1daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, wh ich are then annualized using 252 trading d ay approach .
3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6(b) For Put Options which were sold between May 5, 2005, and February 7,
7
007, and (1 ) expired on or after February 8, 2007; (2) we re exercised on
8r between February 8, 2007, and March 13, 2007; or 3) were purchased(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
10ultiplied by th e less er of:
(1) the difference, multiplied by minus one, between Artificial1 1
nflation per Put Option on the date of sale and Artificial Inflation
12
er Put Option on the date of expiration, exercise, or purchase
13
$0.00 if th e Put Option expired worth less ) , as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per
1 4
ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired worth less ) .
1 6n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of $20. The Put inflation on this date is -$14.2218rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9
ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
21, 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22) =225.15) times number of Put Options, 100 for a total of $515.00; assuming
23h at th e difference between th e Put purch ase price and the Put sale price wasg reater than $5.15.
24
25
c) For Put Options which were initially sold between February 8, 2007, and
March 2, 2007, and (1) expired on or after March 5, 2007; (2) were26
xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of -
-31 -31 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 48 of 117 Page ID#:10948
121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if th e Put Option expired w orthless ) , as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
5
ut Option and the purchase price of the Put Option ($0.00 if the
6
ut Option expired worth less ) .
7
d) For Put Options wh ich were sold between March 5, 2007, and March 1 2,
8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 1 3, 2007, the Recog nized Los s C laim s h all be that number of
1 0ptions multiplied by th e less er of:
1 1
1) the Artificial Inflation per Put Option on the date of sale,
12
ultiplied by minus one; or
(2) the difference, multiplied by minus one, between the sale price per13
ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired worth less ) .
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 61 0.he put inflation for this option on March 6, 2007, was1 7$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18
ptions after March 13, 2007, when Put inflation was zero. The Recognized
19
oss Claim for this investor will be $68 (negative of the Put inflation on the
sale date), assuming that the difference in purchase price of the Put option20nd s ale price of th e Put option was g reater than $0.6 8 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25 will be made.
26
1. The determination of the price paid and the price received for a
27particular security sh all be exclusive of all commiss ions, taxes, fees and ch arg es.
28
-32-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 49 of 117 Page ID#:1094912. The Court has reserved jurisdiction to modify, amend, or alter the Plan
2 f Allocation w ithout furth er notice, or to allow, disallow or adjust th e claim of any
3 Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 unds. No person shall have any claim against the Plaintiffs or their counsel or any5claims administrator or other agent designated by Plaintiffs or their counsel, or
6against Defendants or their counsel, based on distributions made substantially in
7 accordance with the Stipulations and the Settlements contained therein, the Plan of
8Allocation, or further orders of the Court.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11 Fund or the Underwriter Allotment or Individual-Auditor Allotment, for the Plan of
12 Allocation, for the determination, administration and calculation of, or payment
13 pursuant to, Proofs of Claim, for the payment or withholding of Taxes owed by the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 for acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
1 74.he Court has reserved jurisdiction to allow, disallow, or adjust on
1 8 equitable grounds the Claim of any Class Member.
1 9
5. The Plan of Allocation set forth herein is the plan that is being proposed
20 by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21 approve this plan as proposed or it may modify the Plan of Allocation without
22 further notice to the Class.
23WHA T RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMEN TS?
2456. If the Settlements are approved, the Court will enter judgments (the
26 "Judgments"). The Judgments will dismiss with prejudice the claims against the
27 Defendants and other related persons and entities and will provide that Lead
28 Plaintiff and all othe r Class Mem bers will provide releases as des cribed below.
-33-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 50 of 117 Page ID#:10950
1
7. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2members of the C lass w ill be deemed by operation of law to have released, waived,
3 discharged and dismissed each and every Settled Class Claim as against each and4every Released Officer And Director and the Insurance Carriers (as defined in the
5Global Officer And Director Stipulation), and shall be deemed to forever be
6njoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8 Claim" in this paragraph means any and all claims and causes of action of every
9nature and description, whether known or Unknown Claims, whether arising under
10 ederal, state, common or foreign law, that Plaintiffs or any other member of the
11 Class (a) asserted in the Consolidated Action, or (b) could have asserted in any
12 orum that arise out of or are based upon the allegations, transactions, facts,
13 matters or occurrences, representations or omissions involved, set forth, or referred
14o in th e Cons olidated Action, and th at arise out of or relate to th e purch ase of N ew
15Century Common Stock, New Century Series A Preferred Stock, New Century
16Series B Preferred Stock, and/or New Ce ntury Call Options and /or th e sale of New
17Century Put Options during the Class Period. Settled Class Claims does not
1 8 nclude claims relating to the enforcement of the Settlement. "Released Officers
19 And Directors" in this paragraph means (i) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24 affiliated with New Century (including any of its subsidiaries and affiliates)
25ncluded in the definition of "Assured" or "Insured" as defined in the Policies
26defined in the Global Officer And Director Stipulation) and any and all of their
27 espective heirs, executors, administrators, predecessors, successors and assigns,
28
-34-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 54 of 117 Page ID#:10954
1Lead Plaintiff and/ora d/o named plaintiffs Carl Larson and Charles Hooten for
2 eimbursement of their reasonable costs and expenses (including lost wages)
3 directly related to their representation of the Class. The Court will determine the
4 mount of th e awards.
5
OW D O I PARTICIPATE IN THE SETTLEMENTS?
6
HAT DO I NEED TO DO?
7
85. If you purchased or otherwise acquired New Century Common Sto
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10and/or New C entury Call Options and/or sold New Century Put Options , during th e
11period from May 5, 2005, through and including March 13, 2007, either in the
12Offerings, pursuant to a registration statement, or in the market, and were injured
13 upon disclosure of certain facts alleged in the Complaint, and you are not excluded
14 by the definition of the Class and you do not elect to exclude yourself from the
15Class, then you are a Class Member. You will be bound by the proposed
16Settleme nts if approved by th e Court, and by any judg men t or determination of th e
17Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19 Settlements. A Claim Form is included with this Notice, or you may go to the
20website maintained by the Claims Administrator for the Settlements to download a
21copy of the Claim Form or request that a Claim Form be mailed to you. The
22website is www .neweenturysettlement.com . You may also request a Claim Form23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24downloaded from Lead Counsel's website at www.blbglaw.com . Those who
25exclude themselves from the Class, and those who do not submit timely and valid
26Claim Forms w ith adequate suppo rting docum entation, will not be entitled to sh are
27 in the Settlements. Please retain all records of your ownership of, or transactions
28 in, New Century Securities, as th ey may be neede d to document your Claim.
-38-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 58 of 117 Page ID#:10958
Iepresentative C ounsel for Directors and2fficers
3UNGER, TOLLES & OLSON LLP
4athleen M. McDowell355 South G rand Avenue, 35th Floor
5
os Angeles, CA 90071-1560
6Counsel for Underwriter Defendants
7
8AUL, HASTINGS, JANOFSKY &WALKER LLP
9illiam F. Sullivan
10oh n S. Durrant515 South Flower Street, 25 Floorloor
I 1
os Ang eles, CA 90071
12Counsel for KPM G
13
14IDLEY AUSTIN LLPMichael L. Rug en
1555 California Street, Suite 2000
1 6an Francisco, CA 941 04
17
18
06. The filing must demonstrate your membership in the Class, including
19 the number of shares of New Century Securities purchased or otherwise acquired
or sold during the Class Period and the price(s) paid and received. You may not20
object to the Se ttlemen ts or any aspect of the m, if you are not a Class M embe r or if21
you excluded yourself from th e Class .22
107. You may file a written objection without having to appear at the2324 Settlement Hearing. You may not appear at the Settlement Hearing to present your
objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise.27108. If you wish to be heard orally at the hearing in opposition to the28
approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for-42-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 60 of 117 Page ID#:10960
1 fourteen (14) days after you receive this Notice, or (ii)irovide the names and)p2ddresses of such persons no later than fourteen (14) days after you receive this3 Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4 Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5 choose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7 must retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9 Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11 reasonable expenses actually incurred, by providing the Claims Administrator with
12 proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14 www.neweenturysettlement.com or Lead Counsel's website, www.blbglaw.com, o r
15 by calling toll-free 1-866-308-7615.
16CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17
QUESTIONS?181 9
12. This Notice contains only a summary of the terms of the proposed
20 Settlements. More detailed information about the matters involved in the
21 Consolidated Action is available at www.newcenturysettlement.com , including,
22 among other documents, copies of the Stipulations, Claim Form, the Complaint,
23 the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24 and the Answers of Defendants. Copies of the Court-filed documents are also
25 available for review during regular business hours at the address listed above. All
26 inquiries concerning this Notice or the Claim Form should be directed to:
27
28
-44-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 74 of 117 Page ID#:10974
1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3 Pendency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4nd Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11 contains the definitions of many of the defined terms (which are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13 Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18
ADDRESSED TO:
19
n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims Administrator
P.O. Box 200421hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27Preferred Stock"), and/or New Century call options and/or who sold New Century
28put options, during the time period from May 5, 2005, through March 13, 2007,
1
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
6 predecessors, successors and assigns, and any and all of their current and former
7officers, directors, employees, agents and attorneys, for good and sufficient
8 consideration, the receipt and adequacy of which are hereby aclalowledged,
9 hether or not a Proof of Claim is exec uted and delivered by , or on behalf of, such
10Class Member, will be deemed by operation of law to have released, waived,
11discharged and dismissed each and every Settled Claim, and shall forever be
12enjoined from prosecuting any or all Settled Claims, against any Released
13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 ther mem ber of the Class (a) asserted in the Com plaint, or (b) could have asserted
17n any forum that arise out of or are based upon the allegations, transactions, facts,18 matters or occurrences, representations or omissions involved, set forth, or referred
19o in the Complaint, and that arise out of or relate to the purchase of New Century
20Common Stock, New Century Series A Preferred Stock, New Century Series B
21Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22Put Options during the Class Period. "Settled Claims" does not include claims
23 elating to the enforcement of the Settlements. "Released Underwriter Party"
24means the Underwriter Defendants and any and all of their respective parent
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 101 of 117 Page ID#:11001
1
NITED STATES DISTRICT COUR T
2ENTRA L DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDPFMOx
4(Lead Case)
5
SUMMARY NOTICE
78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
109.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK11 ("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12 CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13 PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 9 2005, THROUGH MARCH 13, 20079
16 INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil18 Procedure and an Order of the United States District Court for the Central District
of California (1) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).
he total cash amount of the Settlements equals
$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 at
on
2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 102 of 117 Page ID#:11002
1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonable, and adequ ate; (3) wh ether the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 xpenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 106 of 117 Page ID#:11006
1his matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
3 Approval Order" or "Notice Order"), on the application of Lead Plaintiff New
4 York State Teachers' Retirement System ("Lead Class Plaintiff') and Plaintiffs5 Carl Larson and Charles Hooten (collectively "Class Plaintiffs") for approval of
6 the settlement between the Class Plaintiffs, on behalf of the Class, and the Class
7 Individual Defendants set forth in the Stipulation Of Global Settlement W ith New
g Century Officers And D irectors (the "Global Officer And Director Stipulation" or
9 "Global Officer And Director Settlement"). Full and adequate notice having been
10 given to the Class as required in the Court's Order, and the Court having
11 considered a ll papers filed and proceeding s held herein and otherwise being fully12 informed in the prem ises and good cause appearing therefor,
1 3
OW, THEREFORE, IT IS HEREBY OR DERED THAT:
14.
his Judgment incorporates by referenc e the definitions in the Global
15 Officer And Director Stipulation, and all capitalized terms used, but not defined
16 herein, shall have the same meanings as in the Global Officer And Director
17 Stipulation.
1 8
.
his Court has jurisdiction over the subject matter of the Conso lidated
19 Class Action and over all parties to the Consolidated Class Action, including all
20 members of the Class.
21.he Court hereby a ffirms its certification in the Preliminary A pproval
22 Order pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
23 Procedure, of a Class defined as follows:
24
ll persons and entities who purchased or otherwise acquired New
Century common stock, New Century Series A Preferred Stock, New25
entury Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, durinD the time period
26
rom May 5, 2005, through and including March :3, 2007, either in
the Offerings, pursuant to a registration statement, or in the marke t,
27
nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Class
28efendants;(vcndants;
members of the immediate families of thhe ClassIndividual Dec) the subsidiaries and affiliates of Class
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 109 of 117 Page ID#:11009
1 assigns, employees, agents and retained professionals (other than KPMG or the
2 U nderwriter Defendan ts) shall be released, waived, discharged and dismissed, and
3 the Settling Individuals shall be deemed to forever be enjoined from prosecuting
4 each and every of the Settling Individuals' Claims against Class Plaintiffs and all5 other Class Members, the Trust, the Trustee, Alan M. Jacobs individually, the
6 Debtors, the Debtors' Estates, the Plan Advisory Committee, and Kodiak, and
7 their respective heirs, predecessors, successors, assigns, employees, agents and
8 retained professionals.
92. Upon the Effective Date, the Settling Individuals shall be deemed to
10 have released, waived, discharged and dismissed each and every Settling
11 Individuals' Claims against KPMG and the other Released Auditor Parties, and
12 shall forever be enjoined from prosecuting each and every Settling Individuals'
13 Claim against KPM G and the other R eleased Auditor Parties.
143. Upon the Effective Date, the Settling Individuals shall be deemed to
15 have released, waived, discharged and dismissed each and every claim, and shall
16 forever be enjoined from prosecuting any claim, against any and all of the
17 Underwriter Defendants and the other Released Underwriter Parties whether
18 arising under federal, state, common or foreign law, arising out of or based upon
19 the allegations, transactions, facts, matters or occurrences, representations or
20 omissions involved, set forth, or referred to in the Consolidated Class Action,
214. Upon the Effective Date, Kodiak shall be deemed to have released,
22 w aived, discharged and dismissed, and shall forever be enjoined from p rosecuting
23 each and every of the Settled Kodiak Claims as against KPMG and the other
24 Released Auditor Parties.25
5. Upon the Effective Date, this Final Judgment And Order Of
26 Dismissal With Prejudice constitutes the final discharge of all obligations to the
27 Plaintiffs of the Settling Individuals arising out of the Officer And Director
28 Litigations. All future claims for contribution arising out of the Officer And
4
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 110 of 117 Page ID#:11010
1 Director Litigations by any pe rson or entity against the Settling Individuals or by
2 any Settling Individual against any other person or entity, other than a person
3 w hose liability for the Claims asserted in the D irector And O fficer Litigations has
4 been extinguished by the Settlement of those Claims by that Settling Individual,5 are barred pursuant to 15 U.S.C. § 78 u-4(f)(7)(A).
6
6. The distribution of the Notice and the publication of the Summary
7 Notice as provided for in the Preliminary Approval Order constituted the best
8 notice practicable under the circumstances, including individual notice to all
9 members of the Class who could be identified through reasonable effort. Said
10 notice provided the best notice practicable under the circumstances of those
11 proceedings and of the matters set forth therein, including the proposed Global
12 Officer And Director Settlement set forth in the Global Officer And Director
13 Stipulation, to all persons entitled to such notice, and said notice fully satisfied the
14 requirements of Federal Rule of Civil Procedure 23, the Private Securities
15 Litigation Reform Act of 19 95 , due process, and any other applicable law
167. The Court hereby finds and concludes that the formula for the
17 calculation of the claims which is set forth in the Plan of Allocation proposed by
18 L ead C lass Plaintiff provides a fair and equitable basis upon which to allocate the
19 proceeds of the Settlements' among the Class Members with due consideration
20 hav ing been given to administrative convenience and necessity.
218. The Court hereby finds and concludes that the Plan of Allocation
22 prop osed by Lead Class Plaintiff is, in all respects, fair and equitable to the Class.
234 ' "Settlements" herein includes the settlements as set forth in the Global Officer
25 And Director Stipulation, the Stipulation of Settlement Between Plaintiffs and
KP MG LLP ("K PM G Stipulation" or "KPM G Settlement"), and the Stipulation of26 Settlement Between Plaintiffs and the Underwriter Defendants ("Underwriter
Settlement" or "Underwriter Stipulation") (collectively "Settlements" or
27 "Stipulations"). The Plan of Allocation sets forth a plan for allocating to Class
28 M embers the funds allocated to the Class from all three of the Settlements.
5
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 111 of 117 Page ID#:11011ccordingly, the Court hereby approves the Plan of Allocation proposed by Lead2 Class Plaintiff.
39. Any order entered regarding any attorneys' fees and any expense
4 application shall in no way disturb or affect this Final Judgment And Order Of5ismissal With Prejudice and shall be considered separate from this Final
6 Judg ment And O rder Of Dismissal W ith Prejudice.
7
0. The Global Officer And Director Stipulation and Global Officer And
8 Director Settlement set forth therein, whether or not consummated, and any
9 proceedings taken pursuant to it:
10.hall not be offered or received against any of the R eleased Officers
11 And Directors as evidence of, or construed as, or deemed to be evidence of any
12 presumption, concession, or admission by any of the Released Officers And
13 Directors with respect to the truth of any fact alleged by Plaintiffs or the validity of
14 any claim that was or could have been asserted against any of the Released
15 O fficers And D irectors in the Officer And D irector Litigations or in any litigation,
16 or of any liability, negligence, fault, or other wrong doing of any k ind of any of the
17 Released Officers And Directors;
18
.
hall not be offered or received against any of the R eleased Officers
19 And D irectors as evidence of a presumption, concession or admission of any fault,
20 misrepresentation or omission with respect to any statement or written document
21 approved or made by any of the Released Officers And Directors, or against the
22 Plaintiffs or any Class Members as evidence of any infirmity in the claims of
23 Plaintiffs or the other Class Mem bers;
24
.hall not be offered or received against any of the R eleased Officers
25 A nd Directors, or against the Plaintiffs or any other C lass Members, as evidence of
26 a presumption, concession or admission with respect to any liability, negligence,
27 fault or wrongdoing of any k ind, or in any w ay referred to for any other reason as
28 ag ainst any of the R eleased Officers An d Directors, in any other civil, criminal or
6
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 112 of 117 Page ID#:11012
1 administrative action or proceeding, other than such proceedings as may be
2 necessary to effectuate the provisions of this Stipulation; provided, however, that if
3 this Stipulation is approved by the Consolidated Class Action Court, the Settling
4 Individuals, any other Released Officer And Director, or any Class Member may5 refer to it to effectuate the protection from liability granted them hereunder;
6
.
hall not be construed against any of the Released Officers And
7 Directors, Plaintiffs or any other Class Members as an admission, concession, or
8 presumption that the consideration to be given hereunder represents the amount
9 which could be or would have been recovered after trial;
10.hall not be construed against Plaintiffs or any other Class Mem bers
11 as an admission, concession, or presumption that any of their claims are without
12 merit or that damages recoverable under the Officer And Director Litigations
13 would not have exceeded the Officer And Director Settlement Am ount; and
14.hall not be construed as or received in evidence as an admission,
15 concession or presumption that class certification is appropriate in this
16 Consolidated Class A ction, except for purposes of this Settlement.
171. The G lobal Officer And D irector Stipulation m ay be filed in an action18 to enforce or interpret the terms of the Global Officer And Director Stipulation, the
19 Global Officer And Director Settlement contained therein, and any other
20 documents executed in connection with the performance of the agreements
21 embodied therein. The Stipulation and/or this Final Judgment And Order Of
22 D ismissal With Prejudice may be filed in any action in order to support a defense
23 or counterclaim based on the principles of res judicata, collateral estoppel, full
24 faith and credit, release, good faith settlement, judgment bar, or reduction or any25 other theory of claim preclusion or issue preclusion or similar defense or
26 counterclaim.
27
2. Without affecting the finality of this Final Judgment And Order Of
28 Dismissal With Prejudice in any way, this Court hereby retains continuing
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 113 of 117 Page ID#:11013
1 jurisdiction over: (a) implementation of this Global Officer And Director
2 Settlement an d any a ward or distribution of the settlement fund, including interest
3 earned thereon; (b) the allowance, disallowance or adjustment of any Class
4 Member's claim on equitable grounds and any award or distribution of the5 settlement fund; (c) disposition of the settlement fund; (d) hearing and determining
6 a pplications for attorneys' fees and Litigation Exp enses in the Consolidated Class
7 Action; (e) enforcing and administering this Judgment; (f) all parties hereto for the
8 purpose of construing, enforcing and administering the Global Officer And
9 D irector Stipulation; and (g) other m atters related or ancillary to the foregoing.
103. The Court finds that during the course of the Consolidated Class
11 Action, the Parties and their respective counsel at all times complied with the
12 requirements of Federal R ule of Civil Procedure 11.
1 3
4. In the event that the Global Officer And D irector Settlement does not
14 becom e effective in accordance with the terms of the Global Officer And D irector
15 Stipulation or the Effective D ate does not occur, or in the event that the settlement
16 fund, or any portion thereof, is returned to any person or entity contributing to the
17 settlement fund, then this Final Judgment A nd Order Of D ismissal With Prejudice
18 shall be rendered null and void to the extent provided by and in accordance with
19 the Global Officer And Director Stipulation and shall be vacated and, in such
20 event, all orders entered and releases delivered in connection herewith shall be
21 and void to the extent provided by and in accordance with the Global Officer And
22 Director Stipulation.
235. Without further Order of the Court, the Parties may agree to
24 reasonable extensions of time to carry out any of the provisions of the Global
25 Officer And Director Stipulation.
26 1\
27 \\
28 11
8
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
3company; NCoral, L.P., a Delaware limited partnership; and New Century4Warehouse Corporation, a C alifornia corporation.
5)Debtors' Estates" means the bankruptcy estates of the Debtors
6 created as a result of the Debtors' petitions under Chapter 11 of Title 11 of the
7United States Bankruptcy Code.
8)Effective Date" means the date on which all the following
9hall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)
10payment of the KPMG Settlement Amount has been made pursuant to ¶9 below;
11 c) ninety (90) days have elapsed since the deadline for KPMG to serve the CAFA12Notices; (d) KPMG and the other Released Auditor Parties have been released
13 rom any and all claims and causes of action of every nature and description,
14whether known or Unlmown Claims, by the Settling Individuals whether arising
15under federal, state, common or foreign law, that arise out of or relate in any way
16 to the institution, prosecution, or settlement of the claims which were asserted in
17he Consolidated Action, the Trustee Litigation or the Kodiak Litigation, or that
18arise out of or relate in any way to New Century (including any of its subsidiaries
19and affiliates), the Trust, the Trustee, the Debtors, or the Debtors' Estates, except
20 or (1) a n allowed priority claim in the am ount of $5,000 p ursuant to proof of claim
21no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against Debtors'
22Estates and (ii) any and all claims arising out of or in connection with the defense
23and subsequent settlement of the Schroeder a New Century Holdings, Inc.
24Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity
25Arbitration, including, but not limited to (I) claims for b enefits under any insurance
26programs or policies to which the Settling Individuals are entitled, (II) claims for
2 7 dvancement, indemnification, contribution, reimbursement or other payments
28whether based on law, the Debtors' certificate or articles of incorporation, bylaws,
-7 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 I -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 14 of 37 Page ID#:11031
1 "Released Parties' Claims" does not include claims relating to the enforcement of
2he KPM G Settlement.
3s) "Released Underwriter Parties" means the Underwriter
4 Defendants and any and all of their respective parent companies, subsidiaries,
5ffiliates, heirs, executors, administrators, predecessors, successors and assigns,
6 and any and all of their current and former officers, directors, employees, agents
7nd attorneys. "Released Underwriter Parties" does not include any Defendants
8ther than the Underw riter Defendants.
9t)Settled Claims" means any and all claims and causes of action
10of every nature and description, whether known or Unknown, whether arising
11under federal, state, common or foreign law, that Plaintiffs or any other member of12he Class (a) asserted against the Released Auditor Parties in the Complaint, or (b)
13 ould have a sserted against the Released Aud itor Parties in any forum that arise out
14of or are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Complaint,
16 and that arise out of or relate to the purchase of New Century common stock, New
17 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
18New Century call options and/or the sale of New Century put options during the
19 Class Period. "Settled Claims" does not include claims relating to the enforcement
20of the KPM G Settlement.
21u) "Settlement Fund" means the KPMG Settlement Amount, and
22ny and all interest earned thereon.
23v) "Settlement Hearing" means the hearing set by the Court under
24Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of
25he KPM G Settlement.
26w) "Settling Individuals" means the Individual Defendants and the
27Other Former Officers and their respective heirs, executors, administrators,
28
-12-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 19 of 37 Page ID#:11036
1Released Underwriter Parties, arising under federal, state, common or foreign law,
2rising out of or based upon the allegations, transactions, facts, matters or
3ccurrences, representations or omissions involved, set forth, or referred to in the
4Consolidated Action, provided and conditioned upon KPMG receiving
5ubstantively reciprocal releases from the Underw riter D efendants.
6.ursuant to the KPMG Judgment, upon the Effective Date, KPMG
7nd the Released Auditor Parties shall be deemed by operation of law to have
8 eleased, waived, discharged and dismissed, and shall be forever enjoined from
9rosecuting, each and every claim and cause of action of every nature and
10 description, whether known or Unknown Claims, whether arising under federal,
11state, common or foreign law, that KPMG (a) asserted in the Kodiak Litigation, or12(b) could have asserted in any forum that arise out of or are based upon the
13 allegations, transactions, facts, matters or occurrences, representations or
14omissions involved, set forth, or referred to in the Kodiak Litigation, or that arise
15out of or relate in any way to New Century (including any of its subsidiaries and
16affiliates), the Debtors or the Debtors' Estates, against Kodiak, provided and
17 conditioned upon K PM G receiving a substantially reciprocal release from K odiak
18HE SETTLEMENT CONSIDERATION
19.ithin twenty-one (21) business days after entry of the Preliminary
20Approval Order, KPMG shall pay or cause to be paid into the Escrow Account a
21 otal of $44,750,000.00 in cash (the "KPMG Settlement Amount"). No later than
22ten (10) business days a fter entry of the Preliminary Approval O rder, Lead Co unsel
23 hall provide to K PM G the following information:
24)he street address of the Escrow Agent;
25)he AB A routing number of the EscrowAgent; and
26c)he Fed eral tax identification numb er for the
27scrow Account.
28
-17-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 20 of 37 Page ID#:11037
10. If any portion of the KPMG Settlement Amount is not paid into the
2Escrow Account in the timeframe as designated above in ¶9, Plaintiffs have the
3option to: (1) terminate the KPMG Settlement; or (ii) require that KPMG pay or
4cause to be paid interest at the rate of 5% per annum from the time the payments
5 are due until deposited, which interest shall be paid at the time the funds are
6 ubsequently paid into the Escrow A ccount.
7l . Within ten (10) calendar days after filing of the Motion for
8reliminary Approval, KPMG shall properly serve the CAFA Notices. The Parties
9will request that, pursuant to 28 U.S.C. § 1715(d), the Final Approval Hearing be
10 scheduled for no earlier than ninety (90) days following the deadline for KPMG to
11serve the CAFA Notices as stated in this paragraph. Any failure by KPMG to12comply with the CAFA Notices requirements will not provide grounds for delay of
13 he Final Approval Hearing or entry of the KPM G Judgm ent.
14SE OF SETTLEMENT FUNDS
52. The Settlement Fund shall be used to pay: (1) any Taxes; (ii) any
16Notice and Administration Costs; (iii) any attorneys' fees awarded by the Court;
17and (iv) any Litigation Expenses awarded by the Court. The balance remaining in
18he Settlement Fund, after payment of items (i)-(iv), shall be distributed to
19Authorized Claimants as provided below.
203. The Net Settlement Fund shall be distributed to Authorized Claimants
21as provided herein. Except as provided herein or pursuant to orders of the Court,
22he Net Settlement Fund shall remain in the Escrow Account prior to the Effective
23Date. All funds held by the Escrow Agent shall be deemed to be in the custody of
24he Co urt and shall remain subject to the jurisdiction of the C ourt until such time as
25he funds shall be distributed or returned pursuant to the terms of this Stipulation
26and/or further order of the Court. The Escrow Agent shall invest any funds in the
27Escrow Account in United States Treasury Bills (or a mutual fund invested solely
28 in such instruments) and shall collect and reinvest all interest accrued thereon,
-1 8 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 21 of 37 Page ID#:110381xcept that any residual cash balances of less than $100,000 may be invested in2oney market mutual funds comprised exclusively of investments secured by the
3ull faith and credit of the United States.
44. The Parties hereto agree that the Settlement Fund is intended to be a
5 ualified Settlement Fund w ithin the meaning of Treasury Regulation § 1.46 8 13-1
6 and that Lead Counsel, as administrator of the Settlement Fund within the meaning
7f Treasury Regulation § 1.468B-2(k)(3), shall be solely responsible for filing or
8 causing to be filed all informational and other tax returns as may be necessary or
9ppropriate (including, without limitation, the returns described in Treasury
10Regulation § 1.468B-2(k)) for the Settlement Fund. Such returns shall be
11consistent with this paragraph and in all events shall reflect that all Taxes on the12income earned on the Settlement Fund shall be paid out of the Settlement Fund as
13provided by Paragraph 37 below. Lead Counsel shall also be solely responsible for
14causing payment to be made from the Settlement Fund of any Taxes owed with
15 respect to the Settlement Fund. Upon written request, KPMG will provide
16 promptly to Lead Counsel any statements or information required for tax purposes,
17 ncluding the statement described in Treasury Regulation § 1.468B-3(e). Lead
18Counsel, as administrator of the Settlement Fund within the meaning of Treasury
19 Regulation § 1.468B-2(k)(3), shall timely make such elections as are necessary or
20advisable to carry out this paragraph, including, as necessary, making a "relation
21back election," as described in Treasury Regulation § 1.468B-10), to cause the
22Q ualified Settlement Fund to com e into existence at the earliest allowable date, and
23shall take or cause to be taken all actions as may be necessary or appropriate in
24onnection therewith.
255. All Taxes shall be paid out of the Settlement Fund, and shall be timely
26paid by the Escrow Agent pursuant to the disbursement instructions to be set forth
27n the Escrow Agreement, and without prior Order of the Court. Any tax returns
28prepared for the Settlement Fund (as well as the election set forth therein) shall be
-19-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 22 of 37 Page ID#:11039
1 onsistent with the previous paragraph and in all events shall reflect that all Taxes
2including any interest or penalties) on the income earned by the Settlement Fund
3hall be paid out of the Settlement Fund as provided herein. None of the Released
4Auditor Parties shall have any liability or responsibility for any Taxes or related
5xpenses of any kind whatsoever. The Settlement Fund shall indemnify and hold
6 all Released Auditor Parties harmless for any Taxes and related expenses of any
7ind whatsoev er (including without limitation, taxes pay able by reason of any such
8ndem nification), if any, payable by KPM G by reason of any incom e earned on the
9ettlement Fund. KPMG shall notify the Escrow Agent promptly if it receives any10notice of any claim for Taxes relating to the Settlement Fund.
1 16. This is not a claims-made settlement. Once the Effective Date occurs,
12neither KPMG, its insurance carriers, nor any other Released Auditor Parties nor
13any other person or entity that contributed to the Settlement Fund on their behalf,
14will have the right or ability to get back any of the KPMG Settlement Amount or
15any interest accrued thereon, irrespective of the number of Claims filed, the
16 collective amount of losses of Authorized Claimants, the percentage of recovery of
17 losses, or the amounts to be paid to Authorized Claimants from the Net Settlement
18 Fund.
197. The Claims Administrator shall discharge its duties under Lead
20Counsel's supervision and subject to the jurisdiction of the Court. Except as21otherwise provided herein, the Released Auditor Parties shall have no22esponsibility whatsoever for the administration of the KPMG Settlement, and
23shall have no liability whatsoever to any person, including, but not limited to, the
24Class Members, in connection with any such administration. Lead Counsel shall
25cause the Claims Administrator to mail the Notice and Proof of Claim Form to
26 hose members of the Class at the address of each such person as set forth in the
27 ecords of N ew Century or its transfer agent(s), or who o therwise may be identified
28hrough further reasonable effort. Lead Counsel will cause to be published the
-20-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 23 of 37 Page ID#:11040
1Summary Notice pursuant to the terms of the Preliminary Approval Order or
2whatever other form or manner m ight be ordered by the Court.
38. Lead Counsel may pay from the Escrow Account, without further
4pproval from KP M G or other Defend ants or further order of the Court, the Notice
5nd A dm inistration Costs actually incurred. Such costs and ex penses shall include,
6 without limitation, the actual costs of publication, printing and mailing the Notice,
7 eimbursements to nominee owners for forwarding the Notice to their beneficial
8wners of New Century securities, the administrative expenses incurred and fees
9harged by the Claims Administrator in connection with providing Notice and
10processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
11
event that the KPMG Settlement is terminated pursuant to the terms of this12Stipulation, all Notice and Administration Costs paid or incurred, including any
13 related fees, shall not be returned or repaid to KPMG or any other person or entity
14who or which con tributed to the S ettlement F und on their behalf.
1 5TTORNEYS' FEES AND LITIGATION EXPENSES
69. Lead Counsel will apply to the Court for a collective award of
17attorneys' fees to Plaintiffs' Counsel. Lead Counsel also will apply to the Court for
1s eimbursement of Litigation Expenses, which may include reimbursement of the
19 xpenses of Plaintiffs in accordance with 15 U.S.C. § 78u-4(a)(4). Neither KPMG,
20nor any other Released Auditor Party, shall take any position with respect to Lead
21Counsel's applications or awards discussed in this paragraph. Such matters are not
22he subject of any agreement between KPMG and Plaintiffs other than what is set
23 orth in this Stipulation.
240. Any attorneys' fees and Litigation Expenses that are awarded by the
25Court shall be paid to Lead Counsel, with the Court's approval, immediately upon
26award, notwithstanding the existence of any timely filed objections thereto, or
27potential for appeal therefrom, or collateral attack on the K PM G Se ttlemen t or any
28part thereof, subject to Lead Counsel's obligation to pay back any such amount if,
-21-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 24 of 37 Page ID#:11041
1as a result of any appeal, further proceeding or successful collateral attack, the
2attorneys' fee or Litigation Expense award is amended, modified or does not
3ecome Final. Lead Counsel shall make the appropriate refund or repayment in
4ull, with interest at the same rate as earned by the Settlement Fund, no later than
5en (10) business days after receiving from KPMG's counsel or from a court of
6ppropriate jurisdiction notice of the termination of the KPMG Settlement or
7 notice of any reduction of the award of attorneys' fees and/or Litigation Expenses.
8 An award of attorneys' fees and/or Litigation Expenses is not a necessary term of
9his Stipulation and is not a condition of this Stipulation. Lead Counsel, as a
10 condition of receiving such fees and expenses, on behalf of itself and each partner
11and/or shareholder of it, agrees that the law firm and its partners and/or12shareholders are subject to the jurisdiction of the Court for the purpose of
13enforcing the provisions of this paragraph. Without limitation, each such law firm
14and its partners and/or shareholders agree that the Court may, upon application of
15KPMG on notice to Lead Counsel, summarily issue orders, including but not
16 imited to judgment and attachment orders, and may make appropriate findings of,
17 or sanctions for, contempt against them or any of them should such law firm fail to
18 imely repay fees and expe nses pursuant to this paragraph.
191. Lead Counsel shall have the sole authority to allocate the Court-
20awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
21 aith, believes reflects the contributions of such counsel to the prosecution and
22ettlement of the C onsolidated A ction.
232. Neither KPMG nor any of the Released Auditor Parties shall have any
24esponsibility for, or interest in, or liability whatsoever with respect to any person
25who may assert some claim to any fee and expense award that the Court may
26make.
27
28
-22-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DD P (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 27 of 37 Page ID#:11044
1 ubmitted. The Claims Administrator, under supervision of Lead Counsel, shall
2notify, in a timely fashion and in writing, all Claimants whose Claim the Claims3 Administrator proposes to reject in whole or in part, setting forth the reasons
4therefor, and shall indicate in such notice that the Claimant whose Claim is to be
5ejected has the right to a review by the Court if the Claimant so desires and
6 omplies with the requirements of subparagraph (e) below;
7.f any Claimant whose Claim has been rejected in whole or in
8part desires to contest such rejection, the Claimant must, within twenty (20) days
9 after the date of mailing of the notice required in subparagraph (c) above, serve
10upon the Claims Administrator a notice and statement of reasons indicating the
11Claimant's grounds for contesting the rejection along with any supporting12documentation, and requesting a review thereof by the Court. If a dispute
13 concerning a Claim cannot be otherwise resolved, Lead Counsel shall thereafter
14present the request for review to the Cou rt; and
15.he administrative detenninations of the Claims Administrator
16accepting and rejecting Claims shall be presented to the Court, on notice to
17KP MG 's counsel, for approval by the Cou rt in the Class Distribution Ord er,
189. Each Claimant shall be deemed to have submitted to the jurisdiction
19 of the Court with respect to the Claimant's Claim, and the Claim will be subject to
20nvestigation and discovery under the Federal Rules of Civil Procedure, provided
21 hat such investigation and discovery shall be limited to that Claimant's status as a
22Class Member and the validity and amount of the Claimant's Claim. No discovery
23 shall be allowed on the merits of this Consolidated Action or this KPMG
24Settlement in con nection with the processing of Claim Forms.
250. Lead Counsel will apply to the Court, on notice to all Parties, for a
26Class Distribution Order: (i) approving the Claims Administrator's administrative
27determinations concerning the acceptance and rejection of the Claims submitted;
28 ii) approving payment of any additional unpaid or anticipated administration fees
-25-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-009 3 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 28 of 37 Page ID#:11045
1nd expen ses associated with the administration of the KPM G Settlement from the
2Escrow Account; (iii) if the Effective Date has occurred, directing payment of the3Net Settlement Fund to Authorized Claimants from the Escrow Account; and (iv)
4 ther relief as appropriate.
51. Payment pursuant to the Class Distribution Order shall be final and
6conclusive against all Class Members. All Class Members whose Claims are not
7pproved by the Court shall be barred from participating in distributions from the
8Net Settlement Fund, but otherwise shall be bound by all of the terms of this
9 Stipulation and the KPMG Settlement, including the terms of the Judgment to be
10entered in this Consolidated Action and the releases provided for therein, and will
11 be permanently barred and enjoined from bringing any action against any and all
12Released A uditor Parties concerning any and all of the Settled Claims.
132. All proceedings with respect to the administration, processing and
14determination of C laims and the determination of all controversies relating thereto,15 including disputed questions of law and fact with respect to the validity of Claims,
16 shall be subject to the jurisdiction of the Court.
17ERMS OF THE JUDGMENT
183. If the KPMG Settlement contemplated by this Stipulation is approved
19by the Court, Lead Counsel and KPMG's counsel shall request that the Court enter
20a KPMG Judgment, substantially in the form annexed hereto as Exhibit B,
21pursuant to Rule 54(b) of the Federal Rules of C ivil Procedure.
22AIVER OR TERMINATION
234.ithin thirty (30) days of. (a) the Court's declining to enter, without
24eave to resubmit, an order granting preliminary approval of the KPM G Settlement
25n any material respect; (b) the Court's refusal to approve this Stipulation or any
26material part of it; (c) the Court's declining to enter the KPMG Judgment in any
27material respect; or (d) the date upon which the KPMG Judgment is modified or
28 eversed in any material respect by the Court of Appeals or the Supreme Court,
-26-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DD P (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 30 of 37 Page ID#:11047
17. Except as otherwise provided herein, in the event that the KPMG
2Settlement is terminated, the Parties shall be deemed to have reverted to their
3espective status in this Consolidated Action immediately prior to May 5, 2010,
4 and, except as otherwise expressly provided, the Parties shall proceed in all
5espects as if this Stipulation and any related orders had not been entered. Within
6ive (5) business days of receipt from KPMG of a notice of termination, Lead
7Counsel shall direct the Escrow Agent, in writing, to return to KPMG the KPMG
8ettleme nt Am ount, including accrued interest and earnings, less any amou nts paid
9or incurred for Notice and Administration Costs actually incurred and paid or
10payable and/or Taxes paid or owing. Within ten (10) business days of receipt of
11such notice, the Escrow Agent shall refund that full amount to KPMG At the12 request of KPMG, the Escrow Agent or its designee shall apply for any tax refund
13owed on account of the KPMG Settlement Amount and shall pay the proceeds,
14after deducting any fees or expenses incurred in connection with such
15pplication(s) for refund, to KPM G
16O ADMISSION OF WRONGDOING
178. This Stipulation, whether or not consummated, and any proceedings
18aken pursuant to it:
19.hall not be offered or received against any of the Released
20Auditor Parties as evidence of, or construed as, or deemed to be evidence of any
21presump tion, concession, or adm ission by any o f the Released A uditor Parties with
22respect to the truth of any fact alleged by P laintiffs or the va lidity of any c laim that
23was or could ha ve been asse rted against any of the Released A uditor Parties in this
24Consolidated Action or in any litigation, or of any liability, negligence, fault, or
25other wrongdoing of any kind o f any of the Released A uditor Parties;
26.hall not be offered or received against any of the Released
27Aud itor Parties as evidence of a presum ption, concession or admission of any fault,
28misrepresentation or omission with respect to any statement or written document
-28-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 31 of 37 Page ID#:11048
1approved or made by any of the Released Auditor Parties, or against the Plaintiffs
2 or any C lass Mem bers as evidenc e of any infirmity in the claims of P laintiffs or the
3 other Class Members;
4.hall not be offered or received against any of the Released
5Auditor Parties, or against the Plaintiffs or any other Class Members, as evidence
6f a presum ption, concession or ad mission with respect to an y liability, negligence,
7ault or wrongdoing of any kind, or in any way referred to for any other reason as
8against any of the Released Auditor Parties, in any other civil, criminal or
9 administrative action or proceeding, other than such proceedings as may be
10 necessary to e ffectuate the provisions of this Stipulation; provided, how ever, that if
11this Stipulation is approved by the Court, KPMG, any other Released Auditor12Party, or any Class Member may refer to it to effectuate the protection from
13 iability granted them hereunder;
14.hall not be construed against any of the Released Auditor
15Parties, Plaintiffs or any other Class Members as an admission, concession, or
16 presumption that the consideration to be given hereunder represents the amount
17 which could be o r would have b een recovered after trial;
1 8.hall not be construed against Plaintiffs or any other Class
19Members as an admission, concession, or presumption that any of their claims are
20without merit or that damages recoverable under the Complaint would not have
21 xceeded the KPM G Settlement Amount; and
22.hall not be construed as or received in evidence as an
23admission, concession or presumption that class certification is appropriate in this
24Consolidated Action, except for purposes of this KP MG Settlement.
259. KPMG and/or any of the other Released Auditor Parties may file this
26Stipulation of Settlement and/or the Judgment in this action, in order to support a
27defense or coun terclaim base d on principles of res judicata, collateral estoppel, full
28 aith and credit, release, good faith settlement, judgment bar, or reduction or any
-29-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 33 of 37 Page ID#:11050
1 espect to all Settled Claims. Accordingly, the Parties agree not to assert in any
2orum that this Consolidated Action was brought or defended in bad faith or3without a reasonable basis. The Parties hereto shall assert no claims of any
4iolation of Rule 11 of the Federal Rules of Civil Procedure relating to the
5prosecution, defense, or settlement of this Consolidated Action. The Parties agree
6 that the amount paid and the other terms of this Settlement were negotiated at
7 arm's-length in good faith by the Parties, including a mediation conducted by a
8professional mediator, the Hon. Daniel Weinstein of JAMS (the "Mediator"), and
9 reflect a settlement that was reached voluntarily after consultation with
10experienced legal counsel.
1 14. While retaining their rights to deny that the claims asserted in the
12Consolidated Action were m eritorious, KPMG in any statement made to any m edia
13 representative (whether or not for attribution) will not deny that the Consolidated
14Action was commenced and prosecuted in good faith and is being settled
15voluntarily after consultation with competent legal counsel. In all events, the
16 Parties shall refrain from any accusations of wrongful or actionable conduct by any
17 Party concerning the prosecution and resolution of the Consolidated Action, and
18shall not otherwise suggest that the Settlement constitutes an admission of any
19 claim or defense alleged.
205. Except as specifically provided above, this Stipulation may not be
21modified or amended, nor may any of its provisions be waived except by a writing
22igned by all signatories hereto or their successors-in-interest.
236. In the event of any dispute between the Parties regarding the
24mplementation of this Stipulation of Settlement or any related d ocumen t, except as
25otherwise provided herein, the Parties agree to submit such disputes first to the
26Mediator for prompt mediation and, if no agreement can be promptly reached, the
27Parties may p ursue all legal remedies under this Stipulation of Settlement in a court
28 with appropriate jurisdiction.
-31-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 3 of 114 Page ID#:11057HEREAS, Lead Plaintiff New York State Teachers' Retirement System2 ("Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 "Plaintiffs") and the Individual Defendants,] the Underwriter Defendants, 2 and
5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with
6 Defendants, the "Parties"), have reached agreements to settle the above-captioned
7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court
8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order
9 preliminarily approving the Settlements in accordance with the Stipulations of
10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms
11 and conditions for the proposed Settlements regarding the Consolidated Action,
12
13"Individual Defendants" or "Class Individual Defendants" means Robert K.
14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.
15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.
Sandvik, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.
16 Popejoy.
172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
LLC , Roth Capital Partners, Morgan Stanley & Co ., Inc., and Jef fries & C o., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer
25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
The Global Officer And Director Stipulation, the Underwriter Stipulation and the
27 KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
[PROPOSED] ORDER PRELIM. APPROVING-1- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DDP (FMO x)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 5 of 114 Page ID#:11059.he Court finds that the prerequisites for a class action under Rules
23(a) and (b)(3) of the Fed eral Rules of Civil Procedure have been satisfie d in that:3 (a) the number of Class Members is so numerous that joinder of all members
4 thereof is impracticable; (b) there are questions of law and fact common to the
5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement
6 System ("NYSTRS") and Plaintiffs Carl Larson and Charles Hooten are typical of
7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and
8 adequately represented the interests of the Class; (e) the questions of law and fact
9 common to the members of the Class predominate over any questions affecting
10 only individual members of the Class; and (f) a class action is superior to other
11 available methods for the fair and efficient adjudication of the controversy.12.ursuant to Rule 23 of the Fe deral Rules of Civil Procedure, Plaintiffs
13 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15.he Court appoints the firm of Analytics Incorporated ("Claims
16 Administrator") to supervise and administer the notice procedure as well as the
17 processing of claims as more fully set forth below:
18.ithin five (5) business days after entry of this Order, the
19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
20 Release (the "Claim Form"), annexed hereto respectively as Exhibits 1 and 2, to be
21 mailed by first-class mail, postage prepaid, to all members of the Class at the
22 address of each such Class Member as set forth in the records of New Century or
23 its transfer agent, or who are identified by further reasonable efforts (the "Notice
24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the
25 Court proof of mailing of the Notice and Claim Form; and
26.summary notice ("Summary Notice"), annexed hereto as
27 Exhibit 3, shall be published once each in the national edition of The Wall Street
28 Journal and over the PR Newswire within five (5) business days of the mailing of
[PROPOSED] ORDER PRELIM. APPROVING-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-00931-DD P (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 11 of 114 Page ID#:110651. Only Class Members and Lead Counsel shall have any right to any
2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
42. All funds held by the escrow agent selected by Lead Counsel to
5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
[PROPOSED] ORDER PRELIM. APPROVING-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-ev-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 12 of 114 Page ID#:11066
1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6.hall not be offered or received against any of the Released
7 Parties 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by Plaintiffs 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
14.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (i) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as de fined in the Underwriter Stipulation).27 5 "Plaintiffs" in this paragraph 25 includes C lass Plaintiffs, the T rustee, and Kod iak28 (as defined in the Global Officer And Director Stipulation).
[PROPOSED] ORDER PRELIM. APPROVING-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 17 of 114 Page ID#:110711A Federal Court authorized t his Notice. This is not a sol icitat ion from a lawy er.
2NOTICE OF PE NDEN CY O F CL ASS ACT ION: Please be advised that your rights
3may be affected by a class action lawsuit pending in this Court (the
4Consolidated Action") if, during the period from May 5, 2005, through and
5ncluding March 13, 2007, you purchased or acquired Common Stock,
69.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8"Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9New Century Financia l Corporat ion ("New C entury" or the "Com pany").
1 0
11NO TICE O F SET TLE ME NTS : Please a lso be advised that the Court -appointed12Lead Plaintiff, New York State Teachers' Retirement System ("Lead
13Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively
14"Plaintiffs"), on behalf of the Class (as defined below), have reached three
15 proposed settlements ("Settlements") of the Consolidated Action as follows: a
16sett lement with the Underw riter Defend ants' in the am ount of $15,000,000.00;
17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual DefendantS 2 in which the Class will
19receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underwriter Defendants" means Bea r, Stearns & C o. Inc., Deutsche B ank
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.23 "Underwriter D efendants").
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of
25Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27Underwriter Defendants, the Individual Defendants, and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
-1-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 18 of 114 Page ID#:11072
1 124 9 827 9 088.00.he terms of the Settlements are set forth in the
2Stipulations.4
3This Notice explains important rights you may have, including your possible
4receipt of cash from the Settlements. Your legal rights will be affected
5hethe r or not you act . Please read this N otice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8 Plaintiff alleges that Defendants made false and misleading statements and/or
9omitted material information to investors during the Class Period. Defendants
10 deny all allegations, and deny that investors were damaged as a result of any such
11alleged statements or omissions. This Notice relates to three proposed Settlements12regarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed14Settlements, if approved by the Court, will resolve all claims and potential claims
15of Class Membe rs against the De fendants and the oth er applicable Re leased Parties
16 (as identified below), and will provide relief to all persons and entities who
17purchased or otherwise acquired New Century Common Stock, Series A Preferred
18 Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20Options and/or who sold New Century Put Options, during the time period from
21209-1426-DDP, commenced on December 7, 2009, in the United States District
23Court for the Central District of California (the "SEC A ction").4
ll capitalized terms that are not defined herein shall have the meaning24ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation Of Settlement Be tween Plaintiffs And The Underwriter Defendants (the27"Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement").
-2-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 19 of 114 Page ID#:11073
1May 5, 2005, through and including March 13, 2007, either in the Offerings,
2 pursuant to a registration statement, or in the market, and who, upon disclosure of
3ertain facts alleged in the Complaint, were injured thereby (the "Class"). (The4 New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,
5 and/or New Century Call Options and New Century Put Options (as described
6 bove) are referred to collectively as "New C entury Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8s described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9 settle all claims related to the purchase of New Century Common Stock, Preferred
10 Stock and/or New Century Call Options and/or sales of New Century Put Options
11 during the Class Period that were or could have been asserted against Defendants
12 and other Released Parties in the Consolidated Action in exchange for total
13 settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash
14 to be deposited into an interest-bearing escrow account (the "Settlement Fund").
15The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17 Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19 Settlement Fund shall be allocated to the members of the Class. The proposed Plan
20 of Allocation is included in this Notice. Assuming that all Class Members
21 participate in the Settlements, Lead Plaintiff's damages consultant estimates that
22 the average distribution per damaged share will be approximately $0.69 per share
23 of New Century Common Stock, approximately $2.08 per share of New Century
24 Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
25 per Put Option, before deduction of Court-approved fees, expenses and costs
26 described herein.
27.tatement of AveraL e Amount of Damages Per Share: The parties
28 do not agree on the average amount of damages per share that would be
-3-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 20 of 114 Page ID#:11074
1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4 challenged in this Consolidated Action were materially false and misleading; (ii)
5 whether the price of New Century shares was inflated as the result of any allegedly
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 resulted from the disclosure of any information that Plaintiffs allege was
9wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reim bursement of L itigation Expenses paid or
15incurred in connection with the prosecution and resolution of the Consolidated
16Action, in an amount not to exceed $4.5 million, plus interest from the date of
17funding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead P laintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26 egarding the Settlements should be directed to M r. Graziano at Bernstein Litowitz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 27 of 114 Page ID#:11081
1Trustee and Plan Administrator v Robert K. Cole et al. (In re New Century TRS
2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5 authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW D O I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14 New Century Call Options and/or who sold New Century Put Options, during the
15t ime pe riod from M ay 5, 2005, through and including March 13, 2007, eithe r in the
16Offerings, pursuant to a registration statement, or in the market, and who, upon
17 disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director
21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded parry. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27Do I Exclude M yself?," below).
28
-11-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 30 of 114 Page ID#:11084
IDistribution Order, the Net Settlement Fund will be distributed to Authorizedlaimants in accordance with th e Plan of Allocation.4. The Settlement Fund will be distributed as follows:
4i)o pay all federal, state, and local Taxes on any income earned
5y the Se ttleme nt Fund and to pay the reasonable costs incurred
6n connection with determining the amount of, and paying,
7axes owed by the Settlement Fund (including reasonable
8xpense s of tax attorneys and accountants);
9ii )o pay costs and expenses in connection with providing Notice
1 0o Class Members and administering the Settlements on behalf
I If Class Members;1 2iii)o pay attorneys' fees, with interest on such amount, to the
1 3xtent allowed by the Court pursuant to Lead Counsel's1 4pplication;
1 5iv )o pay Litigation Expenses incurred in commencing and
1 6rosecuting the Consolidated Action, with interest on such
1 7oney, to the extent allowed by the Court pursuant to Lead
18ounsel's application; and
19vo compensate Authorized Claimants with the balance of the
20et Settlement Fund in accordance with the Plan of Allocation,2 1ubject to an Order of the Court approving the Settlements and
22he P lan of Allocation (or such othe r allocation plan as the Cou rt
2 3ay approve), and subject to such Order becoming Final
24meaning that the tim e for appeal or appellate review of the Order
2 5ranting final approval has expired, or, if the O rder is appealed,
26hat the appeal is either decided without causing a material
27hange in the Order or is upheld on appeal and is no longer
28ubject to appellate revie w).
-14-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 31 of 114 Page ID#:11085
15. Each person wishing to participate in the distribution must timely
2 ubmit a valid Claim Form establishing m embe rship in the Class, and including all
3 required documentation, postmarked no later thanto the
4 address set forth in the Claim Form that accompanies this Notice. Unless the Court
5otherwise orders, any Class Membe r who fails to submit a Claim Form postmarked no
6ater thanhall be forever barred from receiv ing payme nts pursuant to
7 the Settlements set forth in the Stipulations but will in all other respects remain a8Class Member and be subject to the provisions of the Stipulations, including the
9 terms of any Judgment entered and releases given.
106. Payment pursuant to the Plan of Allocation approved by the Court
11shall be conclusive against all Authorized Claimants. No person shall have any
12claim against Plaintiffs, Lead Counsel, the Claims Administrator or other agent
13 designated by Lead Counsel arising from distributions made substantially in
14 accordance with the Stipulations, the Plan of Allocation, or further orders of the
15Court. Plaintiffs, Defendants, their respective counsel, and all other Released
16Parties shall have no responsibility or liability whatsoever for the investment or
17 distribution of the Settlement Fund, the Net Settlement Fund, the Plan of
18Allocation, the determination, administration, calculation, or payment of any claim
19 or nonperformance of the Claims Administrator, the payment or withholding of
20Taxes owed by the Settlement Fund, or any losses incurred in connection
21herewith, except as othe rwise provided in the Stipulations.
227.he objective of the Plan of Allocation is to equitably distribute the
23proceeds of the Settleme nts to those Class Mem bers who suffered econom ic losses
24as a result of the alleged wrongful conduct, as opposed to losses caused by market
25and indu stry factors or Company-spe cific factors not related to the alleged wrongful
26conduct. The Plan of Allocation reflects Lead Plaintiff's damages consultant's
27analysis undertaken to that e nd, including a review o f publicly available information
2 8 egarding New Century and analysis regarding the stock price m ovements.
-15-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 32 of 114 Page ID#:11086
18. The proposed Plan of Allocation provides for distribution of the Net
2ettleme nt Fund to Authorized Claim ants as follows:
3I.UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6eparate Claim Form signed under penalty of perjury and supported by such
7ocuments as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (i) each
9laimant's opening securities position in New Century Common Stock, Series A
10Preferred S tock, Series B Prefe rred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 transaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14laimant's ending securities position in New Century Common Stock, Series A15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16market on March 13, 2007, the last day of the Class Period, and, for Common
17Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this title in which th e plaintiff seeks to establish dam ages by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
-16-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 33 of 114 Page ID#:11087
10. All Proof of Claim forms must be postmarked or received by [DATE],
2 ddressed as follows:3n re Ne w C entury Securities Litigation Settlement4/o Analytics, Inc. Claims Adm inistrator
P.O. Box 20045hanhassen, MN 55317-2004
6
41. Unless otherwise ordered by the Court, any Class Member who fails7
to submit a properly completed and signed Proof of Claim within such period as8
may be ordered by the Court shall be forever barred from receiving any payments9
pursuant to the Stipulation, but will in all other respects be subject to the provisions10
of the Stipulation and the final judgments entered by the C ourt.
11 42. The Net Settlement Fund shall be distributed to members of the Class12
who submit acceptable Proofs of Claim. For purposes of the Plan of Allocation, the13
Net Settlement Fund is divided into two components: the "Underwriter Allotment"1 4
(composed of the settlement fund from the settlement with the Underwriter15
Defendants net of Court-approved fees and expenses), and the "Individual-Auditor16
Allotment" (composed of the settlement funds from the settlement with the17
Individual Defendants and KPMG, net of Court-approved fees and expenses).18
Only Class Members who purchased Series A Preferred Stock and/or Series B19
Preferred Stock during the Class Period and were dam aged thereby m ay be eligible20to receive distributions from the Underwriter Allotment based on those purchases.21
All Class Members (including but not limited to those who purchased Series A22
Preferred Stock and/or Series B Preferred Stock during the Class Period and were23
damaged thereby) may be eligible to receive distributions from the Individual-24
25
correcting the misstatement or omission that is the basis for the action is26disseminated ." 15 U.S.C. §78 u-4(e)(1). $0.87 was the average closing price of N ew
27Century Common Stock during the 90-day period beginning on March 13, 2007,
and ending on June 10, 2007 .28
-17-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 34 of 114 Page ID#:11088
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3whe reas the Individual-Auditor A llotment w ill be d istributed to all Class Mem bers
4who submit valid Claim Forms, regardless of the type of New Century Security
5urchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7 Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claimant's
10 pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11 eparately established for each class of securities shown in Table 1 annexe d he reto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16 Settlement. The Recognized Loss Claim formula is the basis upon which the
17 Underwriter Allotment and the Individual-Auditor Allotment will be
18proportionately allocated to the Auth orized Claimants.
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21accordance with the provisions of this Plan of Allocation. Factors generally
22considere d in deve loping the Plan of Allocation, include, among othe rs: (1) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26(iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
-18-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 35 of 114 Page ID#:11089
1 Securities at different times during the Class Period attributable to Defendants'
2alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9 Class Member who submits an acceptable Proof of Claim can claim under the
10Settlements for the purpose of making pro rata allocations of the cash from the
11 Underwriter Allotment and the Individual-Auditor Allotment to Class Members for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14 hat the prices of Ne w C entury Securities were artif icially inflated during the Class
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17 corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
1 9 Securities.
206. The Plan of Allocation covers the following New Century Securities:
211) Common Stock; (ii) Series A Preferred Stock; (ii i) Series B Preferred Stock; and
22 iv) Call and Put Options on Com mon Stock.
237. A New Century Security must be held through a corrective disclosure
24in order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26from May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
-19-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 39 of 114 Page ID#:11093
16. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and
3fter all claims have been processed. At that time, Lead Plaintiff will file a motion
4 or entry of a proposed Class Distribution Order which will, among other things,
5pprove of the distribution to Authorized Claimants of the Net Settlement Fund.
67. The Individual Defendants, the Underwriter Defendants, and KPMG
7and their respective counsel, and all other Released Parties shall have no
8responsibility for, or liability whatsoever, relating to distributions from the
9Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12Adm inistrator, the payme nt or withholding of Taxes owed by a Settlement Fund , or
13 any losses incurred in connection therewith.
1 4.omputation Method ology Re lating toRecognized Losses for Comm on Stock
1 5urchases
168. For purposes of developing the Plan of Allocation, the damages17consultant calculated the amount of artificial inflation in the daily closing market
18 prices for New Century Cominon Stock during three different portions of the Class
19Period. See the annexed Table 2. In computing artificial inflation, the damages
20consultant considered price changes of New Century Common Stock in regard to
21certain public announcements regarding New Century and adjusted those price
22changes that we re attributable to marke t forces unrelated to the alleged fraud.
239. As explained above, Common Stock purchases are not eligible for
24distributions from the Underwriter Allotment, but may be eligible for distributions
25 rom the Individual-Auditor A llotment.
26.ecognized Loss Calculations
270. Recognized Loss Claims will be calculated for the purposes of the
28 Settlement as follows:
-23-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 41 of 114 Page ID#:11095a) the difference between the price paid and the price received (out-of-
2pocket inve stmen t loss) if sold on or before June 10, 2007 ;
(b) the difference between the price paid (excluding all fees and
3ommissions) and the average closing price as set forth in Table 3
4nnexed h ereto if sold betwe en M arch 13, 2007 , and June 10, 2007 ; and(c) the diffe rence betwee n the price per share paid and $0.87 pe r share if the
5hares were sold after June 10, 2007 , or we re held until the current date.
6.alculation of Recognize d Lossfor New Century Series A Preferred Stock
7urchases
86. Calculation of Recognized Loss Claims for New Century Series A
9 Preferred Stock shares shall be as follows:
107. For shares purchased on or between May 5, 2005, through February 7,
112007 , the following claims for dam ages shall be allowed:12a) For each share sold on or before Fe bruary 7 , 2007, no R ecognized Claims
1 3or damage s shall be allowed;(b) For each share sold on or between February 8, 2007, and through March
1 43, 2007, the allowed damages shall be the inflation per share at the time
1 5f purchase for the applicable date of purchase as set forth in Table 4,
annexed hereto, less the inflation per share at the time of sale as set forth16n Table 4; and
17
68. For shares purchased on or between February 8, 2007, through March18
2, 2007, the fo llowing claims for dam ages shall be allowed:1 9a) For each share sold on or before March 2, 2007, no Recognized Claims
20or damage s shall be allowed;
21b) For each share sold on or between March 5, 2007, and March 13, 2007,
the allowed damages shall be the inflation per share at the time of22urchase for the applicable date of purchase as set forth in Table 4,
23nnexed hereto, less the inflation per share at the time of sale as set forthin Table 4; and
24
259. For shares purchased on or between March 5, 2007, through March
2612, 2007, the f ollowing claims for damage s shall be allowed:
27a) For each share sold on or before March 12, 2007, no Recognized Claimsfor damage s shall be allowed;
28
-25-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 43 of 114 Page ID#:11097
1nnexed hereto, less the inflation per share at the time of sale as set
2orth in Table 5; and
34. For shares purchased between March 5, 2007, through March 12,
42007 , the following claims for dam ages shall be allowed:
5a) For each share sold on or before March 12, 2007, no Recognized
6laims for damages shall be allowed ;(b) For each share sold on or after March 13, 2007, the allowed damages
7hall be the inflation per share at the tim e of purchase for the applicable
8ate of purchase as set forth in Table 5, annexed h ereto.
95. The Recognized Loss Claims for damages for such Series B Preferred
10Shares purchased during the Class Period shall be further limited (as provided for
11 under the PSLRA) to the smallest of the following:12a) the difference between the price paid and the price received (out-of-pocket
13nvestm ent loss) if sold on or before June 10, 2007;(b) the difference between the price paid (excluding all fees and commissions)
14nd the average closing price as set forth in Table 7 annexed hereto if sold
15etwee n March 13, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the
16hares were sold after June 10, 2007, or were he ld until the current date.
17.alculation of Recognize d Loss for
New Century Call and Put O ptions1 8
96. The Plan of Allocation covers the following New Century Call and
20
Put Options: New Century Call Options on Common Stock initially purchased or
21
otherwise acquired during the Class Period, on May 5, 2005, up to and including
22
March 13, 2007 ("New Century Call Options"), and New Century Put Options on
23
Common Stock written or purchased (covered) during the Class Period May 5,
24
2005, through and including M arch 13, 2007 ("New C entury Put Options").
257. Artificial inflation and Recognized Losses as to New Century Call
Options and artificial deflation and Recognized Losses as to New Century Put26
27
Options were computed in a manner similar to that used with respect to New
Century Common Stockas described above. To determine artificial inflation for28Call Options, Lead Plaintiff's damages consultant considered securities' price
-27-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 44 of 114 Page ID#:11098
1hanges that occurred in reaction to certain public announcements regarding New
2Century and then made adjustments for changes that were attributable to market
3orces unrelated to the alleged fraud in prices of such Call Options and Put4 Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5 from which the Recognized Losses for New Century Call Options and Put Options
6 may be calculated. In addition, the total dollar amount payable to Class Members
7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9imitation reflects the speculative and derivative nature of these securities as
10compared to New Ce ntury Comm on Stock and New Ce ntury Preferred Shares.
118. With respect to purchases and sales (covers) of New Century Call
12Options during the pe riod May 5, 2005, through and including March 13, 2007, the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15 Common Stock share price. The dollar change in the value of Call Options will be
16calculated using the Black-Scholes option pricing formula (using Black's
17 adjustment for dividends and the annualized standard deviation estimated from 46-
18day, historical daily volatility estimates) using the closing share price of New
19Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22reported closing share price minus the Common Stock price inflation per share set
23forth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
2 7 lack's adjustment for dividends is implemented. Annualized volatility estimates
2 8 are obtained using the daily standard deviations using the returns for that day plus
-28-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 45 of 114 Page ID#:11099
1 the previous 45-day stock returns, which are then annualized using a 252-trading
2ay approach.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall
6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) were sold (position closed out) on or betwee n February
1 0, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of O ptions multiplied by the lesser of:
1 1
1 21) the difference between Artificial Inflation per Call Option on the
date of purchase and A rtificial Inflation per Call Option on the date1 3f expiration, ex ercise, or sale, as appropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).1 5
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
1 8ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor1 9hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) times num ber of O ptions (100), for a total of$880.00; assuming that the difference between the purchase price and the
23ale price was greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions multiplied by the lesser of-
-29-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 46 of 114 Page ID#:11100
11) the difference between Artificial Inflation per Call Option on the2ate of purchase and Artificial Inflation per C all Option on the d ateof expi ration, exercise, or sale, as appropriate; or
32) the difference between the purchase price per Option and the sale
4rice per Option ($0.00 if the Call Option expired w orthless).
5d) For Call Options which were purchased or acquired between March 5,
6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) were exe rcised on or after March 13, 2007 ; or 3) were sold (position
7losed out) on or after March 13, 2007, the Recognized Loss Claim
8hall be that numbe r of Options multiplied by the lesser of:
91) the Artificial Inflation per Call Option on the date of purchase, or
102) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).
11
129. With respect to purchases (covers) and sales of Put Options during the
13 period May 5, 2005, through and including March 13, 2007, the Artificial Inflation
14 per Option on a given day shall be the dollar change in the value of Put Options on
15hat day as a result of the inflation in New Century's Common Stock share price.
16 The dollar change in the value of Put Options will be calculated using the Black-
17 Scholes put option pricing formula (using Black's adjustment for di vidends and the
18annualized standard deviation estimated from 46-day historical daily volatility
19 estimates) using the closing share price of New Century Common Stock on the
20ransaction date, compared with the Black-Scholes put pricing formula value for
21he Put Option using the uninflated share closing share price of New Century
22Common Stock on that same date as determined by: (1) the reported closing share
23price minus the Common Stock price inflation per share set forth in the annexed
24 Table 2 for Put Options subsequently purchased between May 5, 2005, and March
2513, 2007, and (2) the reported closing share price minus the Common Stock price
26inflation per share set forth in the annexed Table 2 for Put Options initially sold
27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for
28dividends is implemented. Annualized volatility estimates are obtained using the
-30-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 47 of 114 Page ID#:11101
1daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, which are then annualized using 252 trading day approach.3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6(b) For Put Options which were sold between May 5, 2005, and February 7,
7007 , and (1) expired on or after February 8, 2007; (2) were e xercised on
8r between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
1 0ultiplied by the lesser of:
1 11) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
12er Put Option on the date of expiration, exercise, or purchase
1 3$0.00 if the Put O ption expired worthless), as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
14ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired worthless).
1 6n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of S20. The Put inflation on this date is -$14.221 8rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
211 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22) =225.15) times number of Put Options, 100 for a total of $515.00; assuming
23hat the difference be tween the Put purchase price and the Put sale price wasgreater than $5.15.
24
25c) For Put Options which were initially sold between February 8, 2007, andMarch 2, 2007, and (1) expired on or after March 5, 2007; (2) were
26xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the. Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of-
-31-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 48 of 114 Page ID#:11102
121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put O ption expired w orthless), as appropriate; or
(2) the difference, multiplied by minus one, between the sale price per5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired w orthless).
7d) For Put Options which we re sold betwe en M arch 5, 2007 , and March 12,8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 13, 2007, the Recognized Loss Claim shall be that number of
1 0ptions multiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,
12ultiplied by minus one; or(2) the difference, multiplied by minus one, between the sale price per
13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired w orthless).
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 610.he put inflation for this option on March 6, 2007, was
17$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put1 8ptions after March 13, 2007, when Put inflation was zero. The Recognized
1 9oss Claim for this investor will be $68 (negative of the Put inflation on thesale date), assuming that the difference in purchase price of the Put option
20nd sale price of the Put option was greater than $0.68 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25will be made.
261. The determination of the price paid and the price received for a
27particular security shall be exclusive of all commissions, taxes, fees and charges.
28
-32-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 49 of 114 Page ID#:111032. The Court has reserved jurisdiction to modify, amend, or alter the Plan
2of Allocation wi thout furth er notice , or to allow, disallow or adjust the claim o f any
3 Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 unds. No person shall have any claim against the Plaintiffs or their counsel or any
5claims administrator or other agent designated by Plaintiffs or their counsel, or
6against Defendants or their counsel, based on distributions made substantially in
7accordance with the Stipulations and the Settlements contained therein, the Plan of
8 Allocation, or further orders of the Court.
93. The Defendants and their counsel shall have no involvement in, or
10responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Unde rwriter Allotment or Individual-Auditor A llotment, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13ursuant to, Proofs of Claim, for the payment or withh olding of Taxes owed by the14Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 for acts or omissions of the Escrow Agent or any losses incurred in connection
1 6herewith.1 74. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 e quitable grounds the C laim of any Class Me mber.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 urther notice to the C lass.
23WHA T RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
2456. If the Settlements are approved, the Court will enter judgments (the
26"Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28Plaintiff and all other Class Mem bers will provide releases as describe d below.
-33-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 53 of 114 Page ID#:111071xecuting the release, which if known by him or her must have
2aterially affected his or her sett lement with the debtor.
32. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6 nd was a key e lement of the Settlements.
73. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10Class. In addition, certain Defendants and other persons and entities will also
release claims against each other and other persons and entities as set forth in the1 112
Stipulations.
13HAT PAYM ENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14OW WILL THE LAWYERS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel
18been reimbursed for its out-of-pocket expenses. Before final approval of the
19 Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'
20fees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23eek attorneys' fees or expenses with respect to, any disgorgements or penalties
24obtained by the Securities and Exchange Commission in the SEC Action. At the
25ame time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed $4.5 million, plus interest from the date of funding at the
27ame rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28request for reimbursement of Litigation Expenses will be a request for an award to
-37-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 55 of 114 Page ID#:11109
16. As a Class Member, you are represented by Lead Plaintiff and Lead
2Counsel, unless you enter an appearance through counsel of your own choice at
3your own expense. You are not required to retain your own counsel, but if you
4choose to do so, such counsel must file a notice of appearance on your behalf and
5must serve copies of his or her notice of appearance on the attorneys listed in the
6section entitled, "When and Where Will the Court Decide Whether to Approve the
7ettleme nts?," below.
87. If you do not wish to remain a Class Member, you may exclude
9ourself from the Class by following the instructions in the section entitled, "What
10 If I Do Not Want To Be A Part Of The Class And The Settlements? How Do I11Exclude Myself?," below.
128. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15exclude yourself from the Class, you m ay present your objections by following the
16instructions in the section entitled, "When and Where Will the Court Decide
17Wh ether to A pprove the Settlements?," below.
1 8HAT IF I DO NOT W ANT TO BE A PART OF THE SETTLEMENTS?1 . 9OW DO I EXCLUDE MYSELF?201 99. Each Class Member will be bound by all determinations and
22judgments in this lawsuit, including those concerning the Settlements, whether23favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Settlement, c/o A nalytics, Inc., Claims A dministrator, P.O. Box 2004, Chanhassen,
27MN 55317-2004. The exclusion request must be received no later than
28 [INSERT]. You will not be able to exclude yourself from the Class after that date.
-39-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 56 of 114 Page ID#:11110
1 Each request for exclusion must (i) state the name and address of the person or
2ntity requesting exclusion; (ii) state that such person or entity requests exclusion
3rom the Class in In re New Century, 2:07-CV-0093 I -DDP; (iii) be signed by the
4erson or entity requesting exclusion; (iv) provide a telephone number for that
5person or entity; and (v) provide the date(s), price(s), and numbers) of shares of
6ll purchases, acquisitions, and sales of New Century Securities during the Class
7Period. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1000. If you do not want to be part of the Class, you must follow these
11instructions for exclusion even if you have pending, or later file, another lawsuit,12arbitration, or other procee ding relating to any Settled C laims.
1301. If a person or entity requests to be excluded from the Class, that
14person or entity will not receive any bene fit provided for in the Se ttleme nts.1502. The Individual Defendants, Insurance Carriers, Underwriter
16Defendants or KPMG may terminate the Settlements if requests for exclusion are
17received from potential Class Members representing over a certain amount of
18shares as stated in Supplemental Agreements. The three settlement agreements are
19 closely related and, if one of the three Settlements should not become final for any
20eason, it could affect the finality and enforceabi lity of the other Settleme nts.
21HEN AND W HERE WILL THE COURT DECIDE WHETHER TO APPROV E22
THE SETTLEMENTS?23
DO I HAVE TO COME TO THE HEA RING?24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27proposed Plan of Allocation, and/or the application for attorneys' fees and
28reimbursement of Litigation Expenses, you do not need to attend the Settlement
-40-OTICE OF PENDENCY OF CLASS ACT ION
Case No, 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 58 of 114 Page ID#:11112
1epresentative Counsel for Directors and2fficers3UNGER, TOLLES & OLSON LLP
4athleen M. McDowell355 South Grand Ave nue, 35th Floor
5os Angeles, CA 90071-1560
6 Counsel for Underwriter Defendants7
8AUL, HASTINGS, JANOFSKY &WALKER LLP
9illiam F. Sullivan
toohn S. Durrant515 South Flower Stree t, 25 t h Floor
1 1os Angeles, CA 9007 11 2
Counsel for KPMG13
14IDLEY AUSTIN LLPMichael L. Rugen
1555 California Street, Suite 200016an Francisco, CA 94104
17
106. The filing must demonstrate your membership in the Class, including18
the number of shares of New Century Securities purchased or otherwise acquired1 9
or sold during the Class Period and the price(s) paid and received. You may not20
object to the Settlements or any aspect of them, if you are not a Class Me mber or if21
you excluded yo urself from the C lass.22
107. You may file a written objection without having to appear at the23
Settlement H earing. You may not appear at the Settlement H earing to present your24objection, however, unless you first filed and served a written objection in25
accordance with the procedures described above, unless the Court orders26
otherwise.27
108. If you wish to be heard orally at the hearing in opposition to the28
approval of the Settlements, the P lan of Allocation, or Lead Counsel's request for-42-OTICE OF PENDENCY OF CLASS ACT ION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 59 of 114 Page ID#:11113
1 an award of youttorneys' fees and reimbursement of Litigation Expenses, and if2ave filed and served a timely written objection as described above, you also must
3otify the above counsel on or before [INSERT4oncerning your intention to appear. Persons who intend to object and desire to
5resent evidence at the Settlement Hearing must include in their written objections
6he identity of any witnesses they may call to testify and exhibits they intend to
7 introduce into evidence at the hearing.
809. You are not required to hire an attorney to represent you in making9ritten objections or in appearing at the Settlement Hearing. If you decide to hire
10an attorney, which will be at your own expense, however, he or she must file a
11 notice of appearance with the Court and serve it on Lead Counsel so that the notice
12s received on or before [INSERT].
1310. The Settlement Hearing may be adjourned by the Court without
14further written notice to the Class. If you intend to attend the Settlement Hearing,
15you should confirm the date and tim e with L ead Counsel.
16Unless the Court orders otherwise, any Class Member who does not object in
17 the manner described above will be deemed to have waived any objection and
18 shall be forever foreclosed from making any objection to the proposed
19Sett lements, the proposed P lan of Allocation, or Lead C ounsel's request for an
20award of attorneys' fees and reimbursement of Litigation Expenses. Class
21Members do not need to appear at the hearing or take any other action to
22ndicate their approval.
23HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?24
2511. If you purchased or otherwise acquired or sold New Century
26Securities during the Class Period for the beneficial interest of a person or
27organization other than yourself, you must either (i) send a copy of this Notice to
28the beneficial owner of such New Century Securities, postmarked no later than
-43-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 60 of 114 Page ID#:111141 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2ddresses of such persons no later than fourteen (14) days after you receive this
3Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.4 Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5choose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7must retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11easonable expenses actually incurred, by providing the Claims Ad ministrator with12proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14 www.newcenturysettlement.com or Lead Counsel's website, www.blbglaw.com, or
15by calling toll-free 1-866-308-7615.
16 CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17UESTIONS?
18912. This Notice contains only a summary of the terms of the proposed
20Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.neweenturysettlement.com, including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
-44-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 74 of 114 Page ID#:11128
1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3endency of Class Action and P roposed Settlements, Settlement Fairness Hearing,
4 and Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10 Court approves the Settlements and the Plan of Allocation. The Notice also
11contains the definitions of many of the defined terms (w hich are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18 ADDRESSED TO:
1 9n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims AdministratorP.O. Box 2004
21hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27 Preferred Stock"), and/or New Century call options and/or who sold New Century
28 put options, during the time period from May 5, 2005, through March 13, 2007,
1
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 75 of 114 Page ID#:11129
1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in
2he Complaint, were injured thereby (the "Class"). (The New Century common
3 stock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4 ptions and New Century put options are referred to collectively as "New Century
5ecurities.")6.Class Member" means any person who is included in the definition
7 of the Class and who did not timely submit a proper request for exclusion in
8accordance with the requirements set forth in the Notice. Excluded from the Class
9 are certain persons or entities excluded by definition pursuant to the Court's
10preliminary approval of the Settlements.' Also excluded from the Class are any
11 persons or entities who exclude themselves by filing a request for exclusion in12accordance w ith the requirements set forth in the Notice.
1 3.Authorized Claimant" means a Class Member who submits a timely
14and valid Proof of Claim form to the Claims A dministrator, in accordance w ith the
15 requirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
17. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18 SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19 EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21SETTLEMENTS IF YOU A RE NOT A CLASS MEM BER. THUS, IF YOU FILE
223'
The following persons are excluded from the Class:pa) the Underwriter
24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive26officer, director or controlling person of New Century (including any of its
27ubsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,28uccessors and assigns of any such excluded party.
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 80 of 114 Page ID#:11134
1 transactions made b that enti ty, no matter how man separate accounts that entity^ 2 as (e.g., a corporation with multiple brokerage accounts should include all
3 transactions made in New Century Securities during the Class Period on one Proof
4 of Claim, no matter how many accounts the transactions were made in). If you
5 require additional room to list your transactions, please be sure to include your full
6 name and the last four digits of your social security number or Tax ID number on
7 each additional sheet. Check here if additional transactions are included on
8 additional schedules.PART II:EW CENTURY COMMON STOCK
1 0. BeRinnins! Holdings: State the number of shares of New Century
1 1ommon Stock the Claimant owned as of the close of the market
1 2n May 4, 2005. If none, write "zero" or "0." If other than zero,
1 3e sure to attach the required documentation.
14
1 5. Purchases:
1 6i) List all purchases of New Century Common Stock made during the
17 period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
1 8 acquired your New Century Common Stock during this period other than by an
19 open-market purchase, please provide a complete description of the terms of the
20 acquisition on a separate page.) Be sure to attach the required documentation.
2 1rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
23245627 excluding com missions, transfer taxes or other fees.28
7
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 85 of 114 Page ID#:11139
1you acquired your New Century Series B Preferred Stock during this period in an2ffering or otherwise or other than by an open-market purchase, please provide a
3om plete description of the terms of the acquisition on a separate pag e.) Be sure to4ttach the required docum entation.
5rade Date(s) (List6hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*7901 *excluding commissions, transfer taxes or other fees.
12
1 3ii) State the total number of shares of New Century Series B Preferred
14 Stock the Claimant purchased during the period between March 14, 2007, through
1.5and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
16
purchases, which are not in the Class Period, are not included in the calculation of
17 Recognized Loss. This information is needed by the Claims Administrator for
18 purposes of the ove rall evaluation of the C laim.)
19. Sales: List all sales of New Century Series B Preferred Stock
20ade during the period from May 5, 2005, through and including
21une 10, 2007. Be sure to attach the required documentation.
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 94 of 114 Page ID#:11148
1 executors, administrators, predecessors, successors and assigns, employees, agents
2nd retained professionals (other than KP MG or the Underwriter Defendants).
3PMG Release
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7ufficient consideration, the receipt and adequacy of which are hereby
8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
10eleased, waived, discharged and dismissed each and every Settled Claim, and
11hall forever be enjoined from prosecuting any or all Settled Claims, against any
12Released Auditor Party. "Settled Claim" in this paragraph means any and all
13claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)16could have asserted in any forum that arise out of or are based upon the allegations,17 ransactions, facts, matters or occurrences, representations or omissions involved,
18 set forth, or referred to in the Complaint, and that arise out of or relate to the
19purchase of New Century Common Stock, New Century Series A Preferred Stock,
20New Century Series B Preferred Stock, and/or New Century Call Options and/or
21he sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPMG .
26
27
28
2 1
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 101 of 114 Page ID#:11155
1NITED STATES DISTRICT COURT2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-0093 1 -DDP (FM Ox)4Lead Case)
5SUMMARY NOTICE78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125%SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
I"SERIES A PREFERRED STOCK"); NEW CENTURY 9.75%SERIES B
12CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 1 2005, THROUGH MARCH 13, 2007,
16INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil
18 Procedure and an Order of the United States District Court for the Central District
of California (1) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).he total cash amount of the Settlements equals$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
1
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 102 of 114 Page ID#:11156
12 whether the proposed Settlements should be approved b the Court as fair, pp2 easonable, and adequ ate; (3) whether the Plan of A llocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation4
Expenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
g Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 wu'w.newcentu.rysettlement.com. If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action,
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 107 of 114 Page ID#:11161f any such excluded -arty. Also excluded from the Class are any
persons who exclude t Iemselves b filing a request for exclusion in2corance with the requirements set foth in the Notice, as listed on
Exhibit 1 annexed hereto.3
4
5.he Court also affirms its findings in the Preliminary Approval Order
6 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal
Rules of Civil Procedure have been satisfied in that: (a) the number of Class
7 Members is so numerous that joinder of all members thereof is impracticable; (b)89 there are questions of law and fact common to the Class; (c) the claims of New
10 York State Teachers' Retirement System ("NYSTRS") and Plaintiffs Carl Larson
and Charles Ho oten are typical of the claims of the C lass they seek to represent; (d)1 112 Plaintiffs have fairly and adequately represented the interests of the Class; (e) the
questions of law and fact common to the members of the Class predominate over1314 any questions affecting only individual members of the Class; and (f) a class action
15 is superior to other available methods for the fair and efficient adjudication of the
16 controversy.
17.ursuant to Rule 23 of the Federal Rules of Civil Procedure, the
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
Counsel Bernstein Litowitz Berger & Grossm ann LLP as Class Counsel.19
20.ursuant to Federal Rule of Civil Procedure 23, this Court hereby
21 approves the KPMG Settlement set forth in the KPMG Stipulation and finds that
the KPM G Settlem ent is, in all respects, fair, reasonable, and adequ ate to the Lead2223 Plaintiff, the Class and each of the Class Members. The Court further finds that
24 the KPMG Settlement set forth in the KPMG Stipulation is the result of arm's-
length negotiations between experienced counsel representing the interests of the2526 Parties. Accordingly, the KPMG Settlement embodied in the KPMG Stipulation
27 is hereby finally approved in all respects. The Parties are hereby directed to
perform its terms.28
2PMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 108 of 114 Page ID#:11162.ursuant to and in compliance with Rule 23 of the Federal Rules of
2 Civil Procedure, the Court hereby finds that due and adequate notice of these
3 proceedings was directed to all persons and entities who are Class Members,
4 advising them of the KPMG Settlement, the Plan of Allocation, and Lead
5 Counsel's intent to apply for attorneys' fees and reimbursement of Litigation
6 Expenses associated with the Consolidated Action, and of their right to object
7 thereto, and a fall and fair opportunity was accorded to all persons and entities
8 who are Class Members to be heard with respect to the foregoing matters. Thus, it
9 is hereby determined that all Class Members who did not timely and properly elect
10 to exclude themselves by written communication postmarked or otherwise
11 delivered on or before the date set forth in the Notice and the Preliminary
12 Approval Order, are bound by this Judgment.
13.he Consolidated Action and all claims contained therein are
14 dismissed with prejudice as to KPMG. The parties are to bear their own costs,
15 except as otherwise provided in the KPMG Stipulation.
16.pon the Effective Date, Plaintiffs and members of the Class shall be
17 deemed by operation of law to have released, waived, discharged and dismissed18 each and every Settled Claim, and shall forever be enjoined from prosecuting any
19 or all Settled Claims, against any Released Auditor Party.
200. Upon the Effective Date, KPMG and each of the other Released
21 Auditor Parties, on behalf of themselves, their heirs, executors, administrators,
22 predecessors, successors and assigns, shall be deemed by operation of law to have
23 released, waived, discharged and dismissed each and every one of the Released
24 Parties' Claims, and shall forever be enjoined from prosecuting any or all of the
25 Released Parties' Claims, against Plaintiffs and their employees, agents and
26 attorneys, and all other Class Members.
271. Upon the Effective Date, and conditioned on KPMG and the other
28 Released Auditor Parties receiving substantively reciprocal releases from the
3PMG JUDGMENT
Case No. 2:07-ov-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 109 of 114 Page ID#:11163
1 Settling Individuals, KPMG and the other Released Auditor Parties shall be
2 deemed to have released, waived, discharged and dismissed, and shall forever be
3 enjoined from prosecuting, all Claims Against Directors And Officers against the4 Settling Individuals. In the event that KPMG receives the reciprocal release from
5 the Settling Individuals contemplated in this paragraph, KPMG shall be required to
6 promptly offer to other former New Century officers or directors with whom
7 KPMG has entered into a tolling agreement related to New Century substantially
8 similar substantively reciprocal releases.
92. Upon the Effective Date, and conditioned on KPMG and the other
10 Released Auditor Parties receiving substantively reciprocal releases from the
11 Underwriter Defendants and the other Released Underwriter Parties, KPMG and
12 the other Released Auditor Parties shall be deemed by operation of law to have
13 released, waived, discharged and dismissed each and every claim, and shall
14 forever be enjoined from prosecuting any claim, against the Underwriter
15 Defendants and the other Released Underwriter Parties, arising under federal,
16 state, common or foreign law, arising out of or based upon the allegations,17 transactions, facts, matters or occurrences, representations or omissions involved,18 set forth, or referred to in the Consolidated Action.
193. Upon the Effective Date, and conditioned on KPMG and the other
20 Released Auditor Parties receiving reciprocal releases from Kodiak, KPMG and21 the Released Auditor Parties shall be deemed by operation of law to have released,
22 waived, discharged and dismissed, and shall be forever enjoined from prosecuting,
23 each and every claim and cause of action of every nature and description, whether
24 known or Unknown Claims, whether arising under federal, state, common or
25 foreign law, that KPMG (a) asserted in the Kodiak Litigation, or (b) could have
26 asserted in any forum that arise out of or are based upon the allegations,
27 transactions, facts, matters or occurrences, representations or omissions involved,
28 set forth, or referred to in the Kodiak Litigation, or that arise out of or relate in any
4PMG JUDGMENT
Case No. 2:07-cv-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 111 of 114 Page ID#:11165
1 proceeds of the Settlements' among the Class Members with due consideration
2 having been given to administrative convenience and necessity.
37. The Court hereby finds and concludes that the Plan of Allocation
4 proposed by Lead Plaintiff is, in all respects, fair and equitable to the Class.
5 Accordingly, the Court hereby approves the Plan of Allocation proposed by Lead
6 Plaintiff.
78. Any order entered regarding any attorneys' fees and for expense
8 application shall in no way disturb or affect this Final Judgment and Order of
9 Dismissal With Prejudice and shall be considered separate from this Final
10 Judgment and Order of Dismissal With Prejudice.
119. The KPMG Stipulation and KPMG Settlement set forth therein,
12 whether or not consummated, and any proceedings taken pursuant to it:
13.hall not be offered or received against any of the Released Auditor
14 Parties as evidence of, or construed as, or deemed to be evidence of any
15 presumption, concession, or admission by any of the Released Auditor Parties with
16 respect to the truth of any fact alleged by Plaintiffs or the validity of any claim that
17 was or could have been asserted against any of the Released Auditor Parties in this
18 Consolidated Action or in any litigation, or of any liability, negligence, fault, or
19 other wrongdoing of any kind of any of the Released Auditor Parties;
20.hall not be offered or received against any of the Released Auditor21 Parties as evidence of a presumption, concession or admission of any fault,
2223 i "Settlements" herein includes the settlements as set forth in the KPMG
24 Stipulation, the Stipulation of Settlement Between Plaintiffs and the Underwriter
25 Defendants ("Underwriter Settlement" or "Underwriter Stipulation"), and the
Stipulation of Global Settlement with New Century Officers and Directors
26 ("Global Officer And Director Settlement" or "Global Officer And Director
27 Stipulation") (collectively "Settlements" or "Stipulations").he Plan ofAllocation sets forth a plan for allocating to Class Members the funds allocated to
28 the Class from all three of the Settlements.
6PMG JUDGMENTCase No. 2:07-cv-00931-DDP (FM Ox)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 3 of 33 Page ID#:11171his Stipulation of Settlement (the "Stipulation") is submitted pursuant to
2Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the
3Cou rt, this Stipulation is entered into between and am ong L ead Plaintiff New Y ork
4State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson
5nd Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned
6 consolidated class action (the "Consolidated Action"), on behalf of themselves and
7he Class (as hereinafter defined), and defendants Bear, Stearns & Co. Inc., now
8 known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray
9& Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,
10Morgan Stanley & Co., Inc., and Jefferies & Company, Inc. (the "Underwriter
11Defendants") (collectively, with Plaintiffs, the "Parties"), by and through their
12 respective counsel. The Underwriter Settlement is intended to settle all Settled
13Claims (as defined below) against the Underwriter Defendants and all other
14Released Underwriter Parties (as defined below).
15HEREAS:
1 6.ll terms with initial capitalization not otherwise defined herein shall
17 have the m eanings ascribed to them in ¶l herein.
1 8.eginning on or about February 8, 2007, securities class action
19complaints were filed in the United States District Court for the Central District of
20California against certain of the Defendants; and the actions were consolidated by
21Order dated June 26, 2007;
22.y Order dated June 26, 2007, the Court appointed the New York
23State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
24and approved its selection of B ernstein Litowitz B erger & G rossmann LLP as Lead
25Counsel for the C lass;
26.n September 14, 2007, Plaintiffs filed their Consolidated Class
27Action C omp laint ("Consolidated Com plaint") asserting claims against Defendants
28under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
-1-W STIPULATION OF SETTLEMENT
Case No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 5 of 33 Page ID#:11173. On January 13, 2010, Defendant KPMG filed a motion for summary
2udgm ent, which Plaintiffs opposed on M arch 15 , 2010;
3.he Parties have participated in mediation sessions and additional
4iscussions before the H onorable Dan iel Weinstein, and subsequen tly were able to
5each agreements in principle to settle this Consolidated Action on the terms set
6 orth herein;
7.he Underwriter Defendants deny any wrongdoing whatsoever and
8his Stipulation shall in no event be construed or deemed to be evidence of or an
9dmission or concession on the part of any Underwriter Defendant with respect to10any claim or of any fault or liability or wrongdoing or damage whatsoever, or any
11 infirmity in the defenses that the Underwriter Defendants have asserted. The12Parties recognize, however, that the litigation has been filed by Plaintiffs and
13defended by the Underwriter Defendants in good faith and in compliance with
14Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled
15after receiving advice of counsel, and that the terms of the settlement are fair,
16adequate and reasonable. This Stipulation shall not be construed or deemed to be a
17 concession by any plaintiff of any infirmity in the claims asserted in the action;
1 8.ead Counsel represents that it has conducted an extensive
19 investigation and thorough discovery relating to the claims and the underlying
20events and transactions alleged in the Complaint. Lead Counsel represents that it
21has analyzed the evidence adduced through discovery and has researched the
22applicable law with respect to the claims of P laintiffs and the other m embers o f the
23Class (as defined herein) and the potential defenses thereto;
24.ased upon their investigation and discovery as set forth above,
25Plaintiffs and Lead Counsel have concluded that the terms and conditions of this
26Stipulation are fair, reasonable and adequate to Plaintiffs and the o ther mem bers of
27 the Class, and in their best interests, and have agreed to settle the claims raised in
28he action p ursuant to the terms and provisions of this Stipulation, after considering
-3-W STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 6 of 33 Page ID#:11174
1(1) the benefits that the Class will receive from the Und erwriter Settlement, (2) the
2 attendant risks of litigation, and (3) the desirability of permitting the Underwriter
3 Settlement to be consummated as provided by the terms of this Stipulation;
4OW THEREFORE, without any admission or concession on the part of
5Plaintiffs of any lack of merit of the action whatsoever, and without any admission
6or concession of any liability or wrongdoing or lack of merit in the defenses
7whatsoever by the Released Underwriter Parties (as defined herein), it is hereby
8TIPULAT ED AND AG REED , by and am ong the Parties, through their respective
9 attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal
10Rules of Civil Procedure, in consideration of the benefits flowing to the Parties
11 hereto from the Underwriter Settlement, that all Settled Claims (as defined below)12as against the Released Underwriter Parties (as defined below) and all Released
13 Parties' Claims (as defined below) shall be compromised, settled, released and
14dismissed with prejudice, upon and subject to the following terms and conditions:
15EFINITIONS
16.s used in this Stipulation, the following terms have the following
1 7 eanings:
18)Authorized Claimant" means a Class Member who submits a
19 timely and valid Proof of Claim Form and all required documentation to the
20Claims A dm inistrator, in accordance w ith the requirements established by the Plan
21of Allocation approved by the Court, that is approved for payment from the Net
22Settlement Fund.
23)Claim" means a completed and signed Proof of Claim Form
24submitted to the Claims Administrator in accordance with the instructions on the
25Proof of Claim Form .
26)Claim Form" or "Claim Form and Release" or "Proof of Claim
27Form" means the form, substantially in the form attached hereto as Exhibit 2 to
28
-4-W STIPULATION OF SETTLEMENTCase No, 2:07-cv-009 3 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 7 of 33 Page ID#:11175
1xhibit A, that a Claimant or Class Mem ber must com plete should that C laimant or2Class Member seek to share in a distribution of the Net Settlement Fund.
3)Claimant" means a person or entity that submits a Claim Form
4o the Claims Administrator seeking to share in the proceeds of the Net Settlement
5Fund.
6)Claims Administrator" means the firm of Analytics
7ncorporated.
8)Claims Against Directors And Officers" means the claims as
9 defined in paragraph 6.
10)Class" means all persons and entities who purchased or
11 otherwise acquired New Century common stock, New Century Series A Preferred12Stock, New Century Series B Preferred Stock, and/or New Century call options
13and/or who sold New Century put options, during the time period from May 5,
142005, through and including March 13, 2007, either in the Offerings (as defined
15 herein), pursuant to a registration statement, or in the market, and who, upon
16 disclosure of certain facts alleged in the Complaint, were injured thereby.
17Excluded from the Class are (a) Defendants; (b) members of the immediate
18 amilies of Individual Defend ants; (c) the subsidiaries and affiliates of Defend ants;
19 (d) any person or entity who was a partner, executive officer, director or controlling
20person of New Century (including any of its subsidiaries or affiliates) or of any
21Defendan t; (e) any entity in which any D efendant has a co ntrolling interest; and (f)
22he legal representatives, heirs, successors and assigns of any such excluded party.
23Also excluded from the Class are any persons who exclude themselves by filing a
24equest for exclusion in accordance with the requireme nts set forth in the Notice.
25)Class Distribution Order" m eans an order entered by the C ourt
26authorizing and directing that the Net Settlement Fund be distributed, in whole or
27n part, to Authorized Claimants.
28
-5 -W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 14 of 33 Page ID#:11182
1y him or her must have materially affected his or her
2ettlement with the debtor.
3Plaintiffs and the Released Underwriter Parties acknowledge, and Class Members
4by operation of law shall be deemed to have acknowledged, that the inclusion of
5Unknown Claims" in the definition of Settled Claims and Released Parties'
6Claims was separately bargained for and was a key element of the Underwriter
7ettlement.
8LASS CERTIFICATION
9.he Parties stipulate and agree to: (a) certification of the Consolidated
10Action as a class action for the purposes of settlement pursuant to Rules 23(a) and
11 23(b)(3) of the Federal Rules of Civil Procedure on behalf of the Class; (b)12appointment of Plaintiffs as the Class Representatives; and (c) appointment of
13Lead Counsel as Class Counsel pursuant to Rule 23(g) of the Federal Rules of
14Civil Procedure. Following execution of this Stipulation, Plaintiffs, with the
15consent of the Underwriter Defendants, shall apply to the Court for entry of the
16Preliminary A pproval Order, w hich will certify the Consolidated Action to proceed
17 as a class action. The Parties shall have the right to withdraw from the agreement
18o stipulate and agree to class certification and the appointment of Class
19 Representatives and Class Counsel in the event that the Underwriter Settlement
20does not becom e Final.
21ELEASE OF CLAIMS
22.he obligations incurred pursuant to this Stipulation shall be in full
23and final disposition of the Consolidated Action against the Underwriter
24Defend ants; and shall fully and finally release any an d all Settled Claims as against
25all Released Underwriter Parties and shall also release as against the Plaintiffs and
26all other Class Members any and all Released Parties' Claims, and shall also fully
27and finally release other claims as set forth below.
28
-12-W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
4uccessors and assigns, and any and all of their current and former officers,
5directors, employees, agents and attorneys shall be deemed by operation of law to
6 ave released, waived, discharged and dismissed each and every S ettled C laim, and
7hall forever be enjoined from prosecuting any or all Settled Claims, against any
8Released Underw riter Party.
9.ursuant to the Underwriter Judgment, upon the Effective Date, the
10Underwriter Defendants and each of the other Released Underwriter Parties, on
11 behalf of themselves, their parent companies, subsidiaries, affiliates, heirs,12executors, administrators, predecessors, successors and assigns, and any and all of
13heir current and former officers, directors, employees, agents and attorneys shall
14 be deemed by operation of law to have released, waived, discharged and dismissed
15 each and every one of the Released Parties' Claims, and shall forever be enjoined
16 from prosecuting any or all of the Released Parties' Claims, against Plaintiffs and
17heir employees, agents and attorneys, and all other Class Members.
18.ursuant to the Underwriter Judgment, upon the Effective Date, the
19 Underwriter Defendants and the Released Underwriter Parties shall be deemed by
20operation of law to have released, waived, discharged and dismissed each and
21every claim, and shall forever be enjoined from prosecuting any claim, against any
22of the Settling Individuals, whether arising under fed eral, state, commo n or foreign
23 aw, arising out of or based upon the allegations, transactions, facts, matters or
24occurrences, representations or omissions involved, set forth, or referred to in the
2 5 onsolidated Action ("Claims Against D irectors And Officers"), conditioned upon
26he Underwriter Defendants and the other Released Underwriter Parties receiving
27 ubstantively reciprocal releases from the Settling Individua ls.
28
-13-W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 19 of 33 Page ID#:11187
1he percentage of recovery of losses, or the amounts to be paid to Authorized
2Claimants from the Net Settlement Fund .
35. The Claims Administrator shall discharge its duties under Lead
4Counsel's supervision and subject to the jurisdiction of the Court. Except as
5otherwise provided herein, the Released Underwriter Parties shall have no
6 esponsibility whatsoever for the adm inistration o f the U nderwriter Settlement, and
7 shall have no liability whatsoever to any person, including, but not limited to, the
8 Class Members, in connection with any such administration. Lead Counsel shall
9 cause the Claims Administrator to mail the Notice and Proof of Claim Form to
10those members of the Class at the address of each such person as set forth in the
11 records of New Century or its transfer agent(s), or who otherwise may be identified12through further reasonable effort. Lead Counsel will cause to be published the
13Summary Notice pursuant to the terms of the Preliminary Approval Order or
14whatever other form or manner might be ordered by the Court. For the purpose of
15identifying and providing notice to the Class, promptly upon execution of this
16Stipulation, Plaintiffs shall seek shareho lder lists from the T rustee for New Cen tury
17 or others. In addition, the Underwriter Defendants shall make best efforts to cause
18to be provided to the Claims Ad ministrator (at no cost to the Settlement Fu nd, Lead
19 Counsel or the Claims Administrator) New Century's shareholder lists to the extent
20 hat such documents have been located after a reasonably diligent search of the
21docum ents already gathered or prod uced to Plaintiffs. The Underw riter Defendants
22represent, and Plaintiffs and their counsel recognize, that any such lists will only
23nclude the names of purchasers of securities in the initial Offerings and that the
24current owners o f the securities may differ significantly from the names on the list.
25The U nderwriter Defendants offer no assurance that they will be able to locate any
26shareholder lists in the documents gathered or produced to Plaintiffs, nor can they
27provide any assurance that any shareholder lists that they d o locate have any useful
2 8 contact information, such as current addresses.
-17-W STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 21 of 33 Page ID#:11189
1 attorneys' fee or Litigation Expense award is amended, modified or does not
2 ecome Final. Lead C ounsel shall make the app ropriate refund or repaym ent in full
3no later than ten (10) business days after receiving from Underwriter Defendants'
4counsel or from a court of appropriate jurisdiction notice of the termination of the
5Underwriter Settlement or notice of any reduction of the award of attorneys' fees
6nd/or Litigation Expenses. An award of attorneys' fees and/or Litigation
7Expenses is not a necessary term of this Stipulation and is not a condition of this
8 Stipulation.
99, Lead Counsel shall have the sole authority to allocate the Court-
10awarded attorneys' fees amongst Plaintiffs' Counsel in a manner which it, in good
11 faith, believes reflects the contributions of such counsel to the prosecution and12settlement of the Consolidated Action. Underwriter Defendants shall have no
13 responsibility for any such allocation and shall not be liable for any claims relating
14o such allocation.
15LAIMS ADMINISTRATOR
1 60. The Claims Administrator shall administer the process of receiving,
17 reviewing and approving or denying Claims under Lead Counsel's supervision and
18subject to the jurisdiction of the Court. Other than Underwriter Defendants'
19obligation to use best efforts to attempt to locate and provide New Century's
20shareholder lists, as provided herein, none of the Underwriter Defendants shall
21have any responsibility for, involvement in or liability for providing notice to the
22Class, the administration of the Underwriter Settlement, the allocation of the
23Settlement proceeds, or the reviewing or challenging of Claims of members of the
24Class. Underwriter Defendants and their respective counsel shall cooperate in the
25administration of the Underwriter Settlement to the extent reasonably necessary to
26effectuate its terms. The allocation of the Net Settlement Fund among Authorized
27Claimants shall be subject to a Plan of Allocation to be proposed by Lead Counsel
28and approved by the Court. Underwriter Defendants shall take no position with
-19-W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 22 of 33 Page ID#:111901 espect to such proposed Plan of Allocation; such Plan of Allocation is a matter
2eparate and apart from the proposed Settlement between the Underwriter
3Defendants and Plaintiffs, and any decision by the Court concerning the Plan of
4Allocation shall not affect the validity or finality of the proposed Settlement.
51. The Claims Administrator shall receive Claims and determine first,
6whether the Claim is a valid Claim, in whole or part, and second, each Authorized
7Claimant's pro rata share of the Net Settlement Fund as set forth in the Plan of
8Allocation set forth in the Notice attached hereto as Exhibit 1 to Exhibit A, or in
9 such other plan of allocation as the Court approves.
1 02. The Plan of Allocation proposed in the Notice is not a necessary term
11 of this Stipulation and it is not a condition of this Stipulation that any particular12 plan of allocation be approved by the C ourt.
133. Any Class Member who does not submit a valid Claim Form will not
14be entitled to receive any distribution from the Net Settlement Fund but will
15otherwise be bound by all of the terms of this Stipulation and Underwriter
16Settlement, including the terms of the Judgment to be entered in the Consolidated
17Action and the releases provided for herein, and will be permanently barred and
18enjoined from bringing any action, claim, or other proceeding of any kind against
19 any Released Underwriter Party concerning any Settled Claim.
204. Lead Counsel shall be responsible for supervising the administration
21of the Settlement and disbursement of the Net Settlement Fund. Neither
22Underw riter Defendants, nor any other R eleased Underwriter Party, shall have any
23 iability, obligation or responsibility whatsoever for the administration of the
24Underwriter Settlement or disbursement of the Net Settlement Fund. Neither
25Underwriter Defendants nor any other Released Underwriter Party shall be
26permitted to review, contest or object to any Claim Form or any decision of the
27Claims Administrator or Lead Counsel with respect to accepting or rejecting any
28Claim Form or Claim for payment by a Class Member. Lead Counsel shall have
-20-W STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 24 of 33 Page ID#:11192
1 after the date of mailing of the notice required in subparagraph (c) above, serve
2upon the Claims Administrator a notice and statement of reasons indicating the
3 Claimant's grounds for contesting the rejection along with any supporting
4documentation, and requesting a review thereof by the Court. If a dispute
5concerning a Claim cannot be otherwise resolved, Lead Counsel shall thereafter
6resent the request for review to the Cou rt; and
7.he administrative determinations of the Claims Administrator
8accepting and rejecting Claims shall be presented to the Court, on notice to
9nderwriter Defendants' counsel, for approval by the Court in the Class10Distribution O rder.
1 1
6. Each Claimant shall be deemed to have submitted to the jurisdiction12of the Court with respect to the Claimant's Claim, and the Claim will be subject to
13 investigation and discovery under the Federal Rules of Civil Procedure, provided
14that such investigation and discovery shall be limited to that Claimant's status as a
15Class Member and the validity and amount of the Claimant's Claim. No discovery
16shall be allowed on the merits of this Consolidated Action or this Underwriter
17 Settlement in connection with the processing of Claim Forms.
187. Lead Counsel will apply to the Court, on notice to all Parties, for a
19Class Distribution Order: (i) approving the Claims Administrator's administrative
20determinations concerning the acceptance and rejection of the Claims submitted;
21(ii) approving payment of any additional unpaid or anticipated administration fees
22and expenses associated with the administration of the Underwriter Settlement
23from the Escrow Account; (iii) if the Effective Date has occurred, directing
24payment of the Net Settlement Fund to Authorized Claimants from the Escrow
25Account; and (iv) other relief as appropriate.
268. Payment pursuant to the Class Distribution Order shall be final and
27conclusive against all Class Members. All Class Members whose Claims are not
28approved by the Court shall be barred from participating in distributions from the
-22-W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 26 of 33 Page ID#:11194
12. In addition, if Class Members who purchased or acquired more than a
2certain number of shares of New Century Series A Preferred Stock and Series B
3Preferred Stock during the Class Period properly elect to exclude themselves from
4he Class in accordance w ith the requirements for requesting exclusion provided in
5he Notice, as specified in a separate supplemental agreement among the Parties
6 (the "Supplemental Agreement"), Underwriter Defendants shall have the option,
7which option must be exercised unanimously amongst them, to terminate this
8Underwriter Settlement and Stipulation.
93. Lead Counsel and Underwriter Defendants' counsel shall request10 jointly that the deadline for submitting exclusions from the Class be at least
11
wenty-one (21) days prior to the Final Approval Hearing. Copies of all timely12 requests for exclusion from the Class received by the Claims Administrator (or
13other person designated to receive exclusion requests) shall be provided to Lead
14Coun sel and Underw riter Defendants' coLU lsel no later than fifteen (15) d ays prior
15o the Final Approval Hearing. If the threshold stated in the Supplemental
16Agreement is reached, Underwriter Defendants shall have until 5:00 p.m. PDT of
17he seventh day before the Final Approval Hearing to inform Lead Counsel, in
18writing, that they unanimously elect to exercise their option to terminate the
19Underwriter Settlement and this Stipulation. Lead Counsel shall have the right to
20communicate with the holders of such shares and, if a sufficient number of them
21withdraw in writing their requests for exclusion such that the total number of
22 shares purchased during the Class Period represented by the remaining "opt outs"
23 epresents less than the threshold, the notice of termination shall be deemed
24withdrawn.
254. Except as otherwise provided herein, in the event that the Underwriter
26Settlement is terminated, the Parties shall be deemed to have reverted to their
27 espective status in this Consolidated Action immediately prior to May 5, 2010,
28and, except as otherwise expressly provided, the Parties shall proceed in all
-24-W STIPULATION OF SETTLEMENT
Case No. 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 31 of 33 Page ID#:11199
14. The administration and consummation of this Underwriter Settlement
2as embodied in this Stipulation shall be under the authority of the Court, and the
3Court shall retain jurisdiction for the purpose of entering orders providing for
4awards of attorneys' fees and Litigation Expenses to Lead Counsel and enforcing
5he terms of this Stipulation.
65. The waiver by one Party of any breach of this Stipulation by any other
7Party shall not be deemed a waiver of any other prior or subsequent breach of this
8Stipulation.
96. This Stipulation and its exhibits constitute the entire agreement among
10the Parties hereto concerning this Underwriter Settlement, and no representations,
11
warranties, or inducements have been made by any Party hereto concerning this12Stipulation and its exhibits other than those contained and memorialized in such
13documents.
147. This Stipulation may be executed in one or more original and/or faxed
15counterparts. All executed counterparts and each of them shall be deemed to be
16one and the same instrument provided that counsel for the signatories of this
17Stipulation shall exchange among themselves copies of original signed
18 ounterparts.
1 98. This Stipulation shall be binding upon, and inure to the benefit of, the
20 uccessors and assigns of the Pa rties hereto.
219.he construction, interpretation, operation, effect and validity of this
22Stipulation, and all documents necessary to effectuate it, shall be governed by the
23nternal laws of the State of California without regard to conflicts of laws, except
24to the extent that federal law requires that federal law go vern.
250. This Stipulation shall not be construed more strictly against one Party
26han another merely by virtue of the fact that it, or any part of it, may have been
27prepared by counsel for one of the P arties, it being recognized that it is the result of
28
-29-W STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 3 of 113 Page ID#:11204
1HEREAS, Lead Plaintiff New York State Teachers' Retirement System
2 ("Lead Plaintiff"), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 "Plaintiffs") and the Individual Defendants,' the Underwriter Defendants, 2 and
5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with
6 Defendants, the "Parties"), have reached agreements to settle the above-captioned
7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court
8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order
9 preliminarily approving the Settlements in accordance with the Stipulations of
10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms
11 and conditions for the proposed Settlements regarding the Consolidated Action,
12
13"Individual Defendants" or "Class Individual Defendants" means Robert K.
14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.
Sandvik, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.
16 Popej oy.
172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank
LLC, Roth Ca pital Partners, Morg an Stanley & C o., Inc. , and Jeffries & Co., Inc.193 The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the
21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of
22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants
is set forth in the Stipulation Of Global Settlement With New Century Officers
24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations
28 of Settlement," or the "Settlements."
[PROPOSED] ORDER PRELIM. APPROVING-1- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 4 of 113 Page ID#:11205
1 and for dismissal of the Consolidated Action with prejudice as against all of the
2 Defendants and their related parties, upon the terms and conditions set forth
3 therein; and the Court having read and considered the Stipulations and the exhibits
4 annexed thereto;
5OW, THEREFORE, IT IS HEREBY ORDERED :
6.his order (the "Notice Order" or "Preliminary Approval Order")
7 hereby incorporates by reference the definitions in the Stipulations unless
8 otherwise indicated, and all terms with initial capitalization not otherwise defined
9 herein shall have the same meanings as set forth in the Stipulations. Any
0nconsistencies between the Stipulations and the Notice of Pendency of Class11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for
12 Attorneys' Fees and Reimbursement of Litigation Expenses ("Notice") will be
13 controlled by the language of the Stipulations.
14.he Court hereby preliminarily approves the Settlements as being
15 reasonable and adequate to the Class, pending a final hearing on the Settlements.
16CLASS CERTIFICATION
7.he Co urt hereb y cert ifies , pursuant to Rules 23(a) a nd 23(b)(3) of the
18 Federal Rules of Civil Procedure, a Class defined as follows:
19ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New
20entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
21rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
22nd who, upon disclosure of certain facts alleged in the Complaint,were injured thereby. Excluded from the Class are (a) Defendants;b
23embers of the immediate families of the Individual Defendants; ^c)the subsidiaries and affiliates of Defendants; (d) any person or entity
24ho was a partner, executive officer, director or controlling erson ofNew Centur (including any of its subsidiaries or affiliates or of any
25efendant; (ye) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives heirs, successors and assigns
26f any such excluded party. Also excluded from the Class are anypersons who exclude themselves by filing a request for exclusion in
27cco rdance w ith the requirem ents set forth In the No tice.
28
[PROPOSED] ORDER PRELIM. APPROVING-2- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 5 of 113 Page ID#:11206.he Court finds that the prerequisites for a class action under Rules
2 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in that:
3 (a) the number of Class Members is so numerous that joinder of all members
4 thereof is impracticable; (b) there are questions of law and fact common to the
5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement
6ystem NYSTRS and Plaintiffs Carl Larson and Charles Hooten areypical of
7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and
8 adequately represented the interests of the Class; (e) the questions of law and fact
9 common to the members of the Class predominate over any questions affecting
10 only individual members of the Class; and (f) a class action is superior to other
11 available methods for the fair and efficient adjudication of the controversy.12.ursuant to Rule 23 of the Fe deral Rules o f Civil Proc edure, Plaintiffs
1.3 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
14 & Grossmann LLP is certified as Class Counsel.
15.he Court appoints the firm of Analytics Incorporated ("Claims
16 Administrator") to supervise and administer the notice procedure as well as the
17 processing of claims as more fully set forth below:8.ithin five (5) business days after entry of this Order, the
19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
20 Release (the "Claim Fonn"), annexed hereto respectively as Exhibits 1 and 2, to be
21 mailed by first-class mail, postage prepaid, to all members of the Class at the
22 address of each such Class Member as set forth in the records of New Century or
23 its transfer agent, or who are identified by further reasonable efforts (the "Notice
24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the
25 Court proof of mailing of the Notice and Claim Form; and
26.summary notice ("Summary Notice"), annexed hereto as
27 Exhibit 3, shall be published once each in the national edition of The Wall Street
28 Journal and over the PR Newswire within five (5) business days of the mailing of
[PROPOSED] ORDER PRELIM. APPROVING-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case N o. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 8 of 113 Page ID#:11209
1 his, her or its position upon the following counsel such that it is received on or
2 before twenty-one (21) days prior to the Settlement Hearing: Salvatore J.
3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &
5 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
6 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th
7 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
8 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
9 objections, papers and briefs with the Clerk of the United States District Court for
10 the Central District of California on or before twenty-one (21) days before the
11 Settlement Hearing. Any Class Member who does not make his, her or its
12 objection in the manner provided for herein shall be deemed to have waived such
13 objection and shall forever be foreclosed from making any objection to the fairness
14 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
15 Allocation or to the application by Lead Counsel for an award of attorneys' fees
16 and payment of Litigation Expenses unless otherwise ordered by the Court. The
17 manner in which a notice of objection should be prepared, filed and delivered shall
18 be stated in the Notice.
193. If approved, all Class Members will be bound by the proposed
20 Settlements provided for in the Stipulations, and by any judgment or determination
21 of the Court affecting Class Members, regardless of whether or not a Class
22 Member submits a Claim Form.
234. Any member of the Class may enter an appearance in the
24 Consolidated Action, at their own expense, individually or through counsel of their
25 own choice. If they do not enter an appearance, they will be represented by Lead
26 Counsel.
275. The Court reserves the right to adjourn or continue the Settlement
28 Hearing, or any adjournment or continuance thereof, without any further notice to
[PROPOSED] ORDER PRELIM. APPROVING-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case N o. 2:07-ev-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 9 of 113 Page ID#:11210
1 Class Members and to approve the Stipulations and/or Plan of Allocation with
2 modification and without further notice to Class Members.
3 CLAIMS PROCESS
46.n order to be entitled to participate in the Settlements, a Class
5 Member must complete and submit a Claim Form in accordance with the
6 instructions contained therein and/or in the Notice. To be valid and accepted,
7 Claim Forms submitted in connection with the Settlements must be postmarked no
8 later than 120 days after the Notice date (unless by Order of the Court, late-filed
9 Claim Forms are accepted).
107. Any Class Member who does not timely submit a valid Claim Form
11 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
12 the Court, but nonetheless shall be barred and enjoined from asserting any of the
13 settled claims and shall be bound by any judgment or determination of the Court
14 affecting the Class Members.
158. As set forth in the Stipulations, Defendants and their related parties
16hal l have no responsibi l i ty w hatsoeve r for the adm inistrat ion of the Settlem ents or17 the disbursement of the Net Settlement Fund and shall not be permitted to review,
18 contest or object to any Claim Form or any decision of the Claims Administrator or
19 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
20 payment by a Class Member.
21 REQUEST FOR EXCLUSION FROM THE CLASS
229. Any requests for exclusion must be submitted such that they are
23 received no later than twenty-one (21) days before the date of the Settlement
24 Hearing. To be valid, each request for exclusion must (i) state the name and
25 address of the person or entity requesting exclusion; (ii) state that such person or
26 entity requests exclusion from the Class in In re New Century, 07-CV-0093 I -DDP
27 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
28 telephone number for that person or entity; and (v) provide the date(s), price(s),
[PROPOSED] ORDER PRELIM. APPROVING-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 10 of 113 Page ID#:11211
1 and number(s) of shares of all purchases, acquisitions, and sales of New Century
2 Securities during the Class Period. Requests for exclusion will not be valid if they
3 do not include the information set forth above and are not received within the time
4 stated above, unless the Court otherwise determines. Copies of all timely requests
5 for exclusion from the Class received by the Claims Administrator (or other person
6 designated to receive exclusion requests) shall be provided to Lead Counsel and
7 Individual Defendants' Counsel, counsel for the Insurance Carriers (as defined in
8 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for
9 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
10 Hearing. All persons who submit valid and timely requests for exclusion in the
11 manner set forth in this paragraph shall have no rights under the Stipulations, shall
12 not share in the distribution of the Net Settlement Fund, and shall not be bound by
13 the Stipulations or any final judgment.
140. As set forth in the Stipulations, Defendants and their related parties
15 shall have no responsibility or liability whatsoever with respect to the Plan of
16 Allocation or Lead Counsel's application for an award of attorneys' fees and
17 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel's
18 application for an award of attorneys' fees and payment of Litigation Expenses will
19 be considered separately from the fairness, reasonableness and adequacy of the20 Settlements. At or after the Settlement Hearing, the Court will determine whether
21 Lead Counsel's proposed Plan of Allocation should be approved, and the amount
22 of attorneys' fees and Litigation Expenses to be awarded to Lead Counsel. Any
23 appeal from any orders relating to the Plan of Allocation or Lead Counsel's
24 application for an award of attorneys' fees and Litigation Expenses, or reversal or
25 modification thereof, shall not operate to terminate or cancel the Settlements, or
26 affect or delay the finality of the judgment to be entered pursuant to Rule 54(b) of
27 the Federal Rules of Civil Procedure approving the Settlements and the settlement
28 of the Consolidated Action set forth therein.
[PROPOSED] ORDER PRELIM. APPROVING-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-ev-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 1 1 of 113 Page ID#:112121. Only Class Members and Lead Counsel shall have any right to any
2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
42. All funds held by the escrow agent selected by Lead Counsel to
5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
[PROPOSED] ORDER PRELIM. APPROVING-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-ev-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 12 of 113 Page ID#:11213
1 Stipulations, all Notice and Administration Costs paid or incurred, including any
2 related fees, shall not be returned or repaid as set forth in the Stipulations.
35. The Stipulations and Settlements set forth therein, whether or not
4 consummated, and any proceedings taken pursuant to the Stipulations and
5 Settlements:
6.hall not be offered or received against any of the Released
7 PartieS 4 as evidence of, or construed as, or deemed to be evidence of any
8 presumption, concession, or admission by any of the Released Parties with respect
9 to the truth of any fact alleged by PlaintiffS 5 or the validity of any claim that was or
10 could have been asserted against any of the Released Parties in the Consolidated
11 Action, the Trustee Litigation, or the Kodiak Litigation (as defined in the Global
12 Officer And Director Stipulation) or in any litigation, or of any liability,
13 negligence, fault, or other wrongdoing of any kind of any of the Released Parties;
14.hall not be offered or received against any of the Released
15 Parties as evidence of a presumption, concession or admission of any fault,
16 misrepresentation or omission with respect to any statement or written document
17 approved or made by any of the Released Parties, or against the Plaintiffs or any
18 Class Members as evidence of any infirmity in the claims of Plaintiffs or the other
19 Class Members;
20.hall not be offered or received against any of the Released
21 Parties, or against the Plaintiffs or any other Class Members, as evidence of a
22 presumption, concession or admission with respect to any liability, negligence,
23
24 4 Herein "Released Parties" includes: (1) the Released Officers And Directors (as
25 defined in the Global Officer And Director Stipulation); (ii) the Released Auditor
26 Parties (as defined in the KPMG Stipulation); and (iii) the Released Underwriter
Parties (as defined in the Und erw riter Stipulation) .27 5 "Pla intiffs" in this para gra ph 25 include s Class Plaintiffs, the Trustee, and K od iak28 (as defined in the Global Officer And Director Stipulation).
[PROPOSED] ORDER PRELIM. APPROVING-10- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-ev-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 14 of 113 Page ID#:11215
1he Court retains jurisdiction of this Consolidated Action to consider all2 further applications arising out of or connected with the proposed Settlements, and
3 as otherwise warranted.
4T IS SO ORDERED .
5 DATED:6HE HONORAB LE DEAN D. PREGERSON7NITED STATES DISTRICT COU RT JUDGE
8
9
10
1 1
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
[PROPOSED] ORDER PRELIM. APPROVING-12- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No . 2:07-cv-0093 1 -DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
LLC, Roth Capital Partners, Morgan. Stanley & Co., Inc., and Jeffries & Co., Inc.23"Underw riter Defendants") .
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of25 Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the
27 Underw riter Defendants, the Individual Defenda nts, and KPMG .
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
-1 -OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 18 of 113 Page ID#:11219
1$124 9 827 9 088.00.he terms of the Settlements are set forth in the
2tipulations.4
3This Notice explains important rights you may have, including your possible
4eceipt of cash from the Settlements. Your legal rights will be affected
5whether or not you act. Please read this Notice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8Plaintiff alleges that Defendants made false and misleading statements and/or
9 omitted material information to investors during the Class Period. Defendants
10deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12 regarding claims against the Individual Defendants, the Underwriter Defendants,
13 and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15of Class Mem be rs ag ainst the Defenda nts and the other appl ica ble Relea sed Part ies
16as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
1s Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20 Options and/or who sold New Century Put Options, during the time period from
212 09-1426-DDP, commenced on December 7, 2009, in the United States District
23 Court for the Central District of California (the "SEC Action").
4ll capitalized terms that are not defined herein shall have the meaning24
ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement');
Stipulat ion Of Sett lem ent Betw een Plaintiffs And The Underw riter Defenda nts ( the27"Underwriter Stipulation" or "Underwriter Settlement'); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement').
-2 -OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 19 of 113 Page ID#:11220
1 May 5, 2005, through and including March 13, 2007, either in the Offerings,
2ursuant to a registration statement, or in the market, and who, upon disclosure of
3ertain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,
5nd/or New Century Call Options and New Century Put Options (as described
6 above) are referred to collectively as "New Century Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8as described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9 settle all claims related to the purchase of New Century Common Stock, Preferred
10Stock and/or New Century Call Options and/or sales of New Century Put Options
11during the Class Period that were or could have been asserted against Defendants
12and other Released Parties in the Consolidated Action in exchange for total
1 3ettlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash14o be deposited into an interest-bearing escrow account (the "Settlement Fund").
15 The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19Set tl em ent Fund sha l l be a l loca ted to the m em bers of the Class. The proposed Plan
20of Allocation is included in this Notice. Assuming that all Class Members
21participate in the Settlements, Lead Plaintiff's damages consultant estimates that
22he average distribution per damaged share will be approximately $0.69 per share
23of New Century Common Stock, approximately $2.08 per share of New Century
24referred Stock, approximately $0.11 per Call Option, and approximately $0.2525per Put Option, before deduction of Court-approved fees, expenses and costs
26described he rein.
27.tatement of Average Amount of Damages Per Share: The parties
28do not agree on the average amount of damages per share that would be
-3 -OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 20 of 113 Page ID#:112211 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (1) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5w hether the price o f New Century shares w as infla ted as the resul t of any a l leg edly
6 false or misleading public statements or omissions by Defendants; and (iii) whether
7he decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was
9w rongful ly w ithheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead C ounsel
11 will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14 Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated
16 Action, in an amount not to exceed $4.5 million, plus interest from the date of
17unding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26ega rding the Settlem ents should b e directed to Mr. Graziano at Be rnstein Litow itz
27Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
28 (866) 648-2524, b lbg@b lbg law .com .
-4 -OTICE OF PENDENCY OF CLASS ACTION
Case No , 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 26 of 113 Page ID#:11227
17. By Order dated January 31, 2008, the Court granted the motions to
2ism iss with leave to am end the com plaint .
38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class
4Action Complaint ("Amended Complaint"), alleging claims against Defendants
5 ursuant to the Securi ties Act and the Exc hange Act .
69. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second
7 m ended Co nsol ida ted Class Act ion C om pla int (the "Com pla int" ) , a l l eg ing c l a ims8 against Defendants pursuant to the Securities Act and the Exchange Act.
90. Beginning on June 2, 2008, Defendants filed motions to dismiss the
10 Co m plaint, w hich Plaintiffs oppo sed on July 7, 2008.
1 11. Following a hearing, by Order dated December 3, 2008, the Court1 2ubstantia l ly denied D efendants ' mo tions to dism iss .132. Beginning on January 26, 2009, Defendants answered the Complaint.
143. The Parties began discovery in or about April 2009, including filing
15 multiple motions to compel and motions for protective order, and serving
16discovery requests and responses, and produc ing volum inous docum ents .
174. On January 13, 2010, Defendant KPMG filed a motion for summary
18 judgm ent, w hich Plaintiffs opposed on M arch 15, 2010.
1 95. The Parties have participated in mediation sessions and additional
20discussions before the Honorable Daniel Weinstein, following which the Parties
21w ere ab le to reach ag reem ents in principle to set t le this Consol idated Ac tion o n the
22erms set forth herein. In connection with the settlement of the Consolidated
23Action, Defendants and other persons also reached agreements to settle the action
24entitled Kodiak Warehouse LLC, et al. v Brad A. Morrice, et al. (Case No. 08-
251265-DDP-FMO) commenced on November 7, 2008, in the United States District
26Court for the Central District of California (the "Kodiak Litigation") and the
27 dversary procee ding enti tled The N ew Century L iquidating T rust and R eorganized
28New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating
-10-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 27 of 113 Page ID#:11228
1Trustee and Plan Administrator v. Robert K. Cole et al. (In re New Century TRS
2Holdings, Inc.) (Adv. Proc. No. 09-50882 (KJC)) commenced on April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlem ent Hearing to c onsider whe ther to g rant final approval to the Settlem ents .
7
$OW DO I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?
9107. If you are a member of the Class, you are subject to the Settlements
11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14New Century Call Options and/or who sold New Century Put Options, during the
15t im e period from Ma y 5, 2005, through a nd including Ma rch 13, 2007, ei ther in the
1 6 Offerings, pursuant to a registration statement, or in the market, and who, upon17disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director
21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded party. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27Do I Exclude Myself?," belo w ) .
28
-11-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 32 of 113 Page ID#:1123318. The proposed Plan of Allocation provides for distribution of the Net
2et tlem ent Fund to Authorized Claim ants as fo l low s:
3I.UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the
5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6eparate Claim Form signed under penalty of perjury and supported by such
7 documents as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (1) each
9laimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B Preferred Stock, or Put/Call Options as of the close of the
11market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12 ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
1 8 ee if claimant's Section 10(b) Recognized Loss Claims will be limited by
19calculations relating to the 90-day look back rules of the Private Securities20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this t it le in which the plaintiff seeks to e stabl ish dam ag es by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27he difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
-16-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 34 of 113 Page ID#:11235
1 Auditor Al lotm ent . Put ano ther wa y, the Underw riter Al lotm ent w ill be distr ibuted
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;3 hereas the Individual-Auditor Al lotm ent w ill be distributed to a l l Class Mem be rs
4who submit valid Claim Forms, regardless of the type of New Century Security
5urchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7 Stock and Series B Preferred Stock, and not on behalf of purchasers or sellers of8 other Securities.93. The Claims Administrator shall determine each Authorized Claimant's
10pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
I 1separately establ ished for ea ch c la ss of securi t ies show n in Table 1 annexe d hereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13 Recognized Loss Claim formula is not intended to be an estimate of the amount
14 hat a Class Member might have been able to recover after a trial; nor is it an
15 estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17 Underwriter Allotment and the Individual-Auditor Allotment will be
18proport ionately a l loc ated to the Authorized Claim ants .
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20be calculated by the Claims Administrator in consultation with Lead Counsel in
21ccordance with the provisions of this Plan of Allocation. Factors generally
22onsidered in developing the Plan o f Al locat ion, include, am ong others: ( i) the t ime
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28 so, when it was sold; and (iv) the artificial inflation in the price of New Century
-18-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 35 of 113 Page ID#:11236
1Securities at different times during the Class Period attributable to Defendants'
2 alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead
4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6during the Class Period, and based on the assumption that Plaintiffs could
7 dequa tely al lege a nd prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9Class Member who submits an acceptable Proof of Claim can claim under the
10 Settlements for the purpose of making pro rata allocations of the cash from the
11Underw riter Al lotm ent and the Individual-Auditor Al lotm ent to Class Mem bers for
12 their respective class of Securities. The Plan of Allocation is not a formal damage
13nalysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations14 hat the prices of Ne w Century Securi t ies w ere art ific ia l ly infla ted during the Cla ss
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
17corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18March 13, 2007, removed artificial inflation from the prices of New Century
19Securities.
206. The Plan of Allocation covers the following New Century Securities:
21 i ) Com m on Stoc k; ( ii ) Series A Preferred Stock; ( i ii ) Series B Preferred Stock; and
22 iv) Ca l l and Put Options on Co m m on Stock .
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
-19-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 36 of 113 Page ID#:11237
1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,
22007, the next trading day after the second corrective disclosure. Finally, a New
3Century Security purchased or otherwise acquired on or after March 5, 2007, must
4 be held until March 13, 2007, the last day of the Class Period. If you did not hold
5a New Century Security referred to above which was purchased during the three
6 different parts of the Class Period described above and below (see the artificial
7nf la t ion Tab les annexed hereto ) for both the New Century Com m on Stock and the
8New Century Preferred Stock throug h at least one of the three correc t ive disc losure
9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for
10 hese transact ions wil l be ca lc ulated as zero bec ause i t has bee n determ ined that the
11 artificial inflation between each disclosure and arising from the circumstances12underlying the a l legat ions of Plaintiffs' Com plaint w as co nstant .
13 I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS
1 4LAIMS FOR NEW CENTURY SEC URITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16 New Century Securities that is within the Class Period, listed in the Proof of Claim
17 orm , and for w hich adequate docum entat ion is provided.
18.uidelines Applica ble to theCalculat ions of Al l Claim s
1 949. In the event a Class Member has more than one purchase or sale of the
20
21
New Century Securities, all purchases and sales of each type of security shall be
22
matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23
matched first against any New Century Securities held at the beginning of the
24
Class Period, and then ag ainst purchases in chrono log ica l order, beg inning w ith the
25
earliest purchase made during the Class Period. Purchases and sales of New
26
Century Securities shall be deemed to have occurred on the "contract" or "trade"
27
date as oppo sed to the "set tlem ent" or "paym ent" date. The receipt or grant by g ift ,
devise or operat ion of law of New Century Securi ties during the Class Period shal l28
not be deemed a purchase or sale of these New Century Securities for the-20-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 38 of 113 Page ID#:11239
13. For purposes of determining whether a Claimant had an overall
2arket gain with respect to his, her, or its Class Period purchases of an individual3New Century Security or suffered an overal l m arket loss, the Claim s Adm inistrator
4 hall determine the difference between (1) the Total Purchase Amount paid for all
5urchases of that individual New Century Security purchased or acquired during
6he Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7 the sum of the Sales Proceeds received for all of that individual New Century
8ecuri ty during the Class Period and the Holding V alue a scribed to that securi ty for
9ll Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11per share for Series B Preferred Stock. This difference will be deemed a12Claimant's market gain or loss on his, her, or its overall transactions in that
13ndividual New Century Security during the Class Period .
144. An Authorized Claimant's gains and losses on a particular New15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17 particular security. In the case of New Century Common Stock and Put and Call
18Options on that stock, gains and losses on both the stock and the Options will be
19 combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22Cla im (as ca l cu la ted under this P lan) on N ew Century Com m on Stock/Opt ions w i ll
23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24 ny issue of New Century Preferred Stoc k.
255. Class Members who do not submit acceptable Proofs of Claim will
26not share in the settlement proceeds. Class Members who do not submit a request
27 or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bo und by the Settlem ents and the judgm ents of the Co urt.
-22-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 40 of 113 Page ID#:11241
1.alculat ion o f Recog nized Lo ss for NewCentury Com m on Stock Purchases
2
31. Calculation of Recognized Loss Claims for New Century Common
Stock shares shal l be a s fo l low s:4
52. For shares purchased on or between May 5, 2005, through February 7,
2007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:6
(a) For each share sold on or before February 7, 2007, no Recognized
7l a im s for dam ages sha ll be a l lowe d;8b) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
1 0ereto, less the inflation per share at the time of sale as set forth in Table 2;
and
1 1
123. For shares purchased on or between February 8, 2007, through March
132, 2007, the fol low ing c la ims for dam ag es shal l be a l low ed:
14a) For each share sold on or before March 2, 2007, no Recognized Claims
for dama ges sha l l be a l low ed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,
1 6he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,
1 7
ess the infla t ion pe r share a t the t im e o f sa le as set forth in Table 2; a nd18
194. For shares purchased on or between March 5, 2007, through March
2012, 2007, the fol low ing c la ims for dam ag es shal l be a l low ed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or dam ages sha l l be a l low ed;22b) For each share sold on or after March 13, 2007, the allowed damages
23hall be the inflation per share at the time of purchase for the applicable
date o f purchase a s set forth in Tab le 2, annexed hereto.
24
255. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Com m on Stock c l a im s , the Recognized Loss Cla ims for dam ages for such
27 shares purchased during the Class Period shall be further limited (as provided for
28under the PSLRA) to the sm al lest of the fol low ing:
-24-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 42 of 113 Page ID#:11243
1b)For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicable
date o f purchase as set forth in Tab le 4, annexed hereto.3
40. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 under the PSLRA) to the smallest of the following:
7a) the difference between the price paid and the price received (out-of-pocketinvestm ent loss) i f sold o n or b efore June 10, 2007;8b) the difference between the price paid (excluding all fees and commissions)9nd the average closing price as set forth in Table 6 annexed hereto if sold
be tw een M arch 13, 2007 and June 10, 2007; and1 0c) the difference between the price per share paid and $8.02 per share if the
1 1hares w ere sold a f ter June 10, 2007, or w ere held unti l the c urrent date.
1 2.alculat ion of Recog nized Lossfor New Century Series B Preferred StockPurchases
13
1 41. Calculation of Recognized Loss Claims for New Century Series B
15 Preferred Stock shares shall be as follows:
162. For shares purchased on or between May 5, 2005, through February 7,
17 2007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:
1 8a) For each share sold on or before February 7, 2007, no RecognizedCla im s for dam ages sha ll be a l lowed;
1 9b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in2 1able 5, annexed hereto, less the inflation per share at the time of sale
22s set forth in Table 5; and
2 33. For shares purchased between February 8, 2007, through March 2,
242007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:
2 5a) For each share sold on or before March 2, 2007, no Recognized Claims
26or dam ages sha l l be a l low ed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
28urchase for the applicable date of purchase as set forth in Table 5,-26-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 44 of 113 Page ID#:11245
1changes that occurred in reaction to certain public announcements regarding New
2Century and then made adjustments for changes that were attributable to market
3 orces unrelated to the alleged fraud in prices of such Call Options and Put
4Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5 rom w hich the Reco gnized Lo sses for New Century Ca l l Opt ions and Put Opt ions
6may be calculated. In addition, the total dollar amount payable to Class Members
7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9 limitation reflects the speculative and derivative nature of these securities as
10 om pared to New Century Com m on Stock and New Century Preferred Shares.
1 18. With respect to purchases and sales (covers) of New Century Call12Options during the period Ma y 5, 2005, through and including M arch 13, 2007, the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15Common Stock share price. The dollar change in the value of Call Options will be
16 calculated using the Black-Scholes option pricing formula (using Black's
17 djustm ent for dividends and the annua l ized standard deviat ion est im ated from 46-
18day, historical daily volatility estimates) using the closing share price of New
19 Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22 eported closing share price minus the Common Stock price inflation per share set
23orth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
27Black's adjustment for dividends is implemented. Annualized volatility estimates
28are obtained using the daily standard deviations using the returns for that day plus
-28-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 45 of 113 Page ID#:11246
i the previous 45-day stock returns, which are then annualized using a 252-trading
2 ay approac h.
3
4a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007; or (3) w ere so ld (pos i tion c losed out ) o n or b etwe en February
108, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
num ber o f Options m ultipl ied b y the lesser of :
11
121) the difference between Artificial Inflation per Call Option on the
date o f purchase a nd Artific ia l Infla t ion per Cal l Option o n the da te13f expiration, exe rcise, or sale, as appro priate; o r
142) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Ca l l Option expired w orthless) .15
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
isate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor
1 9hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the2 1ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) t im es num ber o f Options (100) , for a tota l of$880.00; assuming that the difference between the purchase price and the
23ale price w as greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
28ptions m ultiplied by the lesser of-
-29-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 48 of 113 Page ID#:11249
1
21) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put Option e xpired w orthless), as appropriate; or(2) the difference, multiplied by minus one, between the sale price per
5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired worthless) .
7d) For Put Options which w ere so ld betw een Ma rch 5, 2007, and Ma rch 12,
S007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9f ter Ma rch 13, 2007, the Reco gnized Loss Claim shal l be that numb er of
10ptions m ultiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,12 m ul tipl ied b y m inus one; or
(2) the difference, multiplied by minus one, between the sale price per13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired worthless) .
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1610.he put inflation for this option on March 6, 2007, was
1 7$0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18ptions after March 13, 2007, when Put inflation was zero. The Recognized1 9oss Claim for this investor will be $68 (negative of the Put inflation on the
sale date), assuming that the difference in purchase price of the Put option20nd sale price of the Put option w as grea ter than $0.68 per Put option.
21III.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25w il l b e made .
261. The determination of the price paid and the price received for a
27part icular securi ty shal l be exclusive o f a l l co m m issions, taxes, fees and charge s .
28
-32-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 49 of 113 Page ID#:112502. The Court has reserved jurisdiction to modify, amend, or alter the Plan2 of Allocation without further notice, or to allow, disallow or adjust the claim of any
3Class Member on equitable grounds, to ensure a fair and equitable distribution of
4 funds. No person shall have any claim against the Plaintiffs or their counsel or any5claims administrator or other agent designated by Plaintiffs or their counsel, or
6 against Defendants or their counsel, based on distributions made substantially in
7ccordance with the Stipulations and the Settlements contained therein, the Plan of
8Alloc ation, or further orders of the Co urt.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Underw riter Al lotm ent or Individual-Auditor Al lotm ent, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13 pursuant to , Proofs of Cla im, for the paym ent or w i thholding o f Taxes ow ed b y the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 or acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
174. The Court has reserved jurisdiction to allow, disallow, or adjust on
18 quitable grounds the Claim of any Class Memb er.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 urther notice to the Cla ss.
23WHA T RIGHTS AM I GIVING UP BY AGREEING T4 THE SETTLEMENTS?
24256. If the Settlements are approved, the Court will enter judgments (the
26"Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28 Plaintiff and a l l other Class Mem bers w ill provide releases as described belo w .
-33-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 50 of 113 Page ID#:11251
17. Pursuant to the Global Officer And Director Stipulation, Plaintiffs and
2m em bers of the Class w i ll be deem ed by opera t ion of l aw to have re leased, wa ived,
3discharged and dismissed each and every Settled Class Claim as against each and
4every Released Officer And Director and the Insurance Carriers (as defined in the
5Global Officer And Director Stipulation), and shall be deemed to forever be
6njoined from prosecuting any or all of the Settled Class Claims against each and
7very Released Officer And Director and the Insurance Carriers. "Settled Class
8Claim" in this paragraph means any and all claims and causes of action of every
9ature and description, whether known or Unknown Claims, whether arising under
10 ederal, state, common or foreign law, that Plaintiffs or any other member of the
11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any12forum that arise out of or are based upon the allegations, transactions, facts,
13m atters or oc currences, representat ions o r om issions involved, set forth, or referred
14 to in the Co nsol idated Action, and that arise out of or rela te to the purchase o f New
15Century Common Stock, New Century Series A Preferred Stock, New Century
16Series B Preferred Stock, and/or Ne w Century Cal l Options and/o r the sa le o f New
1 7 entury Put Options during the Class Period. Settled Class Claims does not
18nclude claims relating to the enforcement of the Settlement. "Released Officers
19And Directors" in this paragraph means (i) the Individual Defendants, David
20Kenneally, Kevin Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F.
21Eckroth, Jr., and Jeffrey D. Goldberg, and any of their respective heirs, executors,
22administrators, predecessors, successors, assigns, employees, agents and retained
23professionals; and (ii) all directors, officers, employees, and other natural persons
24affiliated with New Century (including any of its subsidiaries and affiliates)
25ncluded in the definition of "Assured" or "Insured" as defined in the Policies
26defined in the Global Officer And Director Stipulation) and any and all of their
27 espective heirs, executors, administrators, predecessors, successors and assigns,
28
-34-OTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 51 of 113 Page ID#:11252
1employees, agents and retained professionals (other than KPMG or the
2 nderwri ter D efendants) .
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4l a ss w i ll be dee m ed by o pera tion of l aw to have re leased, w a ived, d ischarged a nd
5ismissed each and every Settled Claim, and shall forever be enjoined from
6prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8nature and description, w hether know n or Unknow n, w hether aris ing under federa l ,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11or are based upon the allegations, transactions, facts, matters or occurrences,12 representations or omissions involved, set forth, or referred to in the Complaint,
13 nd tha t a rise o ut of or re la te to the purchase of Ne w Century Com m on Stock , New
14 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
15 New Century Call Options and/or the sale of New Century Put Options during the
16Class Period. "Settled Claims" does not include claims relating to the enforcement
17 of the Settlements. "Released Auditor Party" means KPMG and any and all of its
18partners, principals, officers, directors, employees, agents, attorneys and affiliates.
19 "Released Auditor Parties" does not include any Defendants other than KPM
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22heirs, executors, administrators, predecessors, successors and assigns, and any and
23all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25dismissed each and every Settled Claim, and shall forever be enjoined from
26prosecuting any or all Settled Claims, against any Released Underwriter Party.
2 7 Settled Claim" in this paragraph means any and all claims and causes of action of
2 8 very nature and description, whether known or Unknown, whether arising under
-35-OTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 56 of 113 Page ID#:11257
1Each request for exclusion must (i) state the name and address of the person or
2ntity requesting exclusion; (ii) state that such person or entity requests exclusion
3rom the Class in In re N ew Century, 2:07-CV -0093 I -DDP; (iii) be signed by the
4 person or entity requesting exclusion; (iv) provide a telephone number for that
5person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6 allurchases, acquisitions, and sales of New Century Securities during the ClassY7eriod. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1000. If you do not want to be part of the Class, you must follow these
11 instructions for exclusion even if you have pending, or later file, another lawsuit,12 rbi tra t ion, or o ther proc eeding rela t ing to a ny Sett led C laims.
1301. If a person or entity requests to be excluded from the Class, that
14 person or e ntity w ill not rece ive any b enefi t provided for in the Sett lem ents .
1502. The Individual Defendants, Insurance Carriers, Underwriter
16 Defendants or KPMG may terminate the Settlements if requests for exclusion are
17 received from potential Class Members representing over a certain amount of
18shares as stated in Supplemental Agreements. The three settlement agreements are19 closely related and, if one of the three Settlements should not become final for any
20 reaso n, it co uld affect the finality and enfo rcea bility of the other Settlem ents.
21THER TO APPROVE22
THE SETTLEMENTS?23
24O I HAVE TO COME TO THE HEARING?
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27proposed Plan of Allocation, and/or the application for attorneys' fees and
28 reimbursement of Litigation Expenses, you do not need to attend the Settlement
-40-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 60 of 113 Page ID#:112611 fourteen (14) days after you receive this Notice, or (ii) provide the names and
2addresses of such persons no later than fourteen (14) days after you receive this
3 Notice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5hoose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you
7 must retain the list of names and addresses for use in connection with any possible
8 uture notice to the Class. If you choose the second option, the Claims9 Administrator will send a copy of the Notice to the beneficial owner. Upon full
10 compliance with these directions, such nominees may seek reimbursement of their
11 reasonable expenses actually incurred, by providing the Claims Administrator with
12 proper documentation supporting the expenses for which reimbursement is sought.
13Copies of this Notice may also be obtained from the settlement website
14w w w .new centuryse tt lem ent. com o r Lead Counse l 's w ebs it e , ww w .b lbg l aw . com ., or
15by calling toll-free 1-866-308-7615.
16 CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
1 7
QUESTIONS?18912. This Notice contains only a summary of the terms of the proposed
20 Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.newcenturysettlement.com , including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
-44-OTICE OF PENDENCY OF CLASS ACTION
Case No . 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 74 of 113 Page ID#:11275
1GENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3 Pendency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4nd Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6nd the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8 Consolidated Action, how the Class Members are affected by the Settlements, and
9he manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11ontains the definitions of m any of the defined term s ( which are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14you have read and that you understand the Notice.
1 5. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTMARKED ON OR BEFORE
18
ADDRESSED TO:
19
n re N ew Century Securities Litigation Settlement
20c/o Analytics, Inc. Claims Administrator
P.O. Box 200421hanhassen, MN 55317-2004
22-866-308 -7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27Preferred Stock"), and/or New Century call options and/or who sold New Century
28 put options, during the time period from May 5, 2005, through March 13, 2007,
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 76 of 113 Page ID#:11277
1A VALID REQUEST FOR EXCLUSION IN A TIMELY MA NNER, ANY PROOF
2OF CLAIM THAT YOU SUBMIT, OR THAT MAY BE SUBMITTED ON YOUR3BEHALF, WILL NOT BE ACCEPTED.
4.o recover as a Class Member, you must complete and sign this Proof
5f Claim and mail it to the Claims Administrator postmarked on or before
6
010. If you fail to file a timely, properly addressed, and
7ompleted Proof of Claim, your claim may be rejected, and you may be precluded
8from receiving any d istribution from the Settlements.
9.ubmission of this Proof of Claim does not ensure that you will share
10 in the proceeds of the Settlements. Distributions to Class Members from the
11 Settlements are governed by the Plan of Allocation approved by the Court. The12 proposed Plan of Allocation, which is subject to the Court's approval, is included
13 in the Notice.
14.f you have questions concerning the Proof of Claim, or need
15dditional copies of the Proof of Claim or the Notice, you may contact the Claims
16 Administrator, at In re New Century Securities Litigation Settlement, c/o Analytics,
17 nc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by
18 toll-free phone at (866) 308-7615, or you may download the documents from Lead
1 9 ounsel's website, www.blbglaw.com, or the website maintained by the Claims
20Administrator for this Settlement, www.neweenturysettlement.com .
210. If you are a Class Member and you do not, or someone acting on your
22behalf does not, submit a timely request for exclusion from the Class, and if the
23Court approves the Settlements, you will be bound by the terms of any orders and
24udgments that the Court enters. You will be bound by such orders and judgments
25whether or not you subm it a Proof of Claim.
26
1. You are required to submit genuine and sufficient documentation for
27all your purchases and sales of New Century Securities from May 5, 2005,
28hrough and including March 13, 2007, as well as genuine and sufficient
3
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 83 of 113 Page ID#:11284
1rade Date(s) (List
2ronologically)umber ofurchaseotal
Month/Day/Yearhares Purchased Price Per Share Purchase Price*
3excluding com missions, transfer taxes or other fees.8
9ii) State the total number of shares of New Century Series A Preferred10 Stock the Claimant purchased during the period between March 14, 2007, through
11and including June 10, 2007. If none, write "zero" or "0." (NOTE: These
12purchases, which are not in the Class Period, are not included in the calculation of
13Recognized Loss Amount.
his information is needed by the Claims
14Administrator for purposes of the overall evaluation of the Claim.)
1 56. Sales: List all sales of New Century Series A Preferred Stock
1 7ade during the period from May 5, 2005, through and including
1 8
une 10, 2007. Be sure to attach the required documentation.
1 9
rade Date(s) (L istChronologically)
umber of
ales
otal
20onth/Day/Year
hares Sold
rice Per Share
ales Price*
2 12
23
24
25 *excluding com missions, transfer taxes or other fees
26
27
28
1 0
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 84 of 113 Page ID#:11285
1. Unsold Holdings: State the total number of shares of New
2entury Series A Preferred Stock the Claimant ow ned at the close
3f the market on March 13, 2007. If none, write "zero" or "0." If
4ther than zero, be sure to attach the required documentation.
5
6
. Ending Position For 90-Day Look Back: State the total number
7
f shares of New Century Series A Preferred Stock the Claimant
8wned at the close of the market on June 10, 2007. If none, write
9zero" or "0." If other than zero, be sure to attach the required
10ocumentation.
1 1
12IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS
13IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR
14NAME ON THE COPY AND CHECK THIS BOX
15
1 6F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY7OT BE REVIEWED18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE19 REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED
STOCKI)20
21. Beginning Holdings: State the number of shares of New Century
22eries B Preferred Stock the Claimant owned as of the close of
23he market on May 4, 2005. If none, write "zero" or "0." If other
24
han zero, be sure to attach the required documentation.
25
26
. Purchases:
271) List all purchases of New Century Series B Preferred Stock made during
28he period from May 5, 2005, through and including March 13, 2007. (NOTE: Ifi i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 93 of 113 Page ID#:11294
1Me mber, on be half of themselves, for good a nd sufficient consideration, the receipt
2 nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4y operation of law to have released, waived, discharged and dismissed each and
5
6nd the Insurance Carriers (as defined in the Global Officer And Director
7 Stipulation), and shall be deemed to forever be enjoined from prosecuting any or
8ll of the Settled Class Claims against each and every Released Officer And
9 irector and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10any and all claims and causes of action of every nature and description, whether
11known or Unknown Claims, whether arising under federal, state, common or12foreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20relating to the enforcement of the Settlement. "Released Officers And Directors"
21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
2 0
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 94 of 113 Page ID#:11295
1xecutors, administrators, predecessors, successors and assigns, employees, agents
2nd retained professionals (other than KPM G or the Underwriter Defendants) .
3PMG Release
4(we) understand and acknowledge that, without further action by anyone,
5n and after entry of the KPMG Judgment and occurrence of the Effective Date of
6he KPMG Settlement, each Class Member, on behalf of themselves, for good and
7ufficient consideration, the receipt and adequacy of which are hereby
8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on
9 behalf of, such Class Member, will be deemed by operation of law to have
to released, waived, discharged and dismissed each and every Settled Claim, and
11hall forever be enjoined from prosecuting any or all Settled Claims, against any12 Released Auditor Party. "Settled Claim" in this paragraph means any and all
13 claims and causes of action of every nature and description, whether known or
14Unknown, whether arising under federal, state, common or foreign law, that
15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)
16ould have asserted in any forum that arise out of or are based upon the a llegations,
17 ransactions, facts, matters or occurrences, representations or omissions involved,
18et forth, or referred to in the Complaint, and that arise out of or relate to the
19 purchase of New Century Common Stock, New Century Series A Preferred Stock,
20New Century Series B Preferred Stock, and/or New Century Call Options and/or
21he sale of New Century Put Options during the Class Period. "Settled Claims"
22does not include claims relating to the enforcement of the Settlements. "Released
23Auditor Party" means KPMG and any and all of its partners, principals, officers,
24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"
25 oes not include any Defendants other than KPMG .
26
27
28
21
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
6predecessors, successors and assigns, and any and all of their current and former
7fficers, directors, employees, agents and attorneys, for good and sufficient
8onsideration, the receipt and adequacy of which are hereby acknowledged,
9whe ther or not a Proof of Claim is executed and de livered by, or on behalf of, such
10 Class Member, will be deemed by operation of law to have released, waived,
I1discharged and dismissed each and every Settled Claim, and shall forever be12enjoined from prosecuting any or all Settled Claims, against any Released
13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted17n any forum that arise out of or are based upon the allegations, transactions, facts,
18ma tters or occurrences, representations or omissions involved, set forth, or referred
19 to in the Complaint, and that arise out of or relate to the purchase of New Century
20Common Stock, New Century Series A Preferred Stock, New Century Series B
21Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22Put Options during the Class Period. "Settled Claims" does not include claims
23elating to the enforcement of the Settlements. "Released Underwriter Party"
24means the Underwriter Defendants and any and all of their respective parent
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 101 of 113 Page ID#:11302
1
NITED STATES DISTRICT COURT
2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDP ( FM Ox)
4Lead Case)
5
SUMMARY NOTICE
78TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
1 1
("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13 PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE
15 TIME PERIOD FROM MAY 5 9 2005, THROUGH MARCH 13, 2007,
16 INCLUSIVE:
17 YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil
18 Procedure and an Order of the United States District Court for the Central District
of California (i) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class"),
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).
he total cash amount of the Settlements equals
$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 at
on
2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
28 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
1
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 102 of 113 Page ID#:11303
1 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonable, and adequate; (3) whether the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 xpenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are entitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 106 of 113 Page ID#:113071his matter came before the Court for hearing pursuant to the Order
2 Preliminarily Approving Settlements and Providing for Notice ("Preliminary
3 Approval Order" or "Notice Order"), on the application of Lead Plaintiff New
4 York State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl
5 Larson and Charles Hooten (collectively "Plaintiffs") for approval of the
6 settlement between Plaintiffs and the Underwriter Defendants set forth in the
7 Stipulation Of Settlement Between Plaintiffs And The Underwriter Defendants
g (the "Underwriter Stipulation" or "Underwriter Settlement"). Full and adequate
9 notice having been given to the Class as required in the Court's Order, and the
10 Court having considered all papers filed and proceedings held herein and otherwise
11 being fully informed in the premises and good cause appearing therefor,
12
OW , THEREFOR E, IT IS HEREBY ORDERE D THAT:
13
.
his Judgment incorporates by reference the definitions in the
14 Underwriter Stipulation, and all capitalized terms used, but not defined herein,
15 shall have the same meanings as in the Underwriter Stipulation.
16.his Court has jurisdiction over the subject ma tter of the Consolidated
17 Action and over all Parties to the Consolidated Action, including all members of
18 the Class.
19
.
he Court hereby affirms its certification in the Preliminary Approval
20 Order pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
21 Procedure, of a Class defined as follows:
22ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New
23entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period
24
rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,
25
nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;b
26
embers of the immediate families of the Individual Defendants; ^c)
the subsidiaries and affiliates of Defendants; (d) any person or entity
27ho was a partner, executive officer, director or controlling erson of
New Centur (including any of its subsidiaries or affiliates or of any
28efendant; (ye) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives, heirs, successors and assigns
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 107 of 113 Page ID#:11308
f any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filling a request for exclusion in2ccordance with the requirements set forth in the Notice, as listed on
Exhibit 1 annexed hereto.3
4
5
.
he Court also affirms its findings in the Preliminary Approval Order6 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal
Rules of Civil Procedure have been satisfied in that: (a) the number of Class7
Members is so numerous that joinder of all members thereof is impracticable; (b)8
there are questions of law and fact common to the Class; (c) the claims of New9
York State Teachers' Retirement System ("NYSTRS") and Plaintiffs Carl Larson10
and Charles Ho oten are typical of the claims of the C lass they seek to represent; (d)
1 112 Plaintiffs have fairly and adequately represented the interests of the Class; (e) the
13 questions of law and fact common to the members of the Class predominate over
14 any questions affecting only individual members of the Class; and (f) a class action
15 is superior to other available methods for the fair and efficient adjudication of the
16 controversy.
17.ursuant to Rule 23 of the Federal Rules of Civil Procedure, the
18 Court affirms its certification of Plaintiffs as Class Representatives and Lead
19 Counsel Bernstein Litowitz Berger & Grossmann LLP as Class Counsel.
6.
ursuant to Federal Rule of Civil Procedure 23, this Court hereby
2021 approves the Underwriter Settlement set forth in the Underwriter Stipulation and
22 finds that the Underwriter Settlement is, in all respects, fair, reasonable, and
23 adequate to the Lead Plaintiff, the Class and each of the Class Members. The
Court further finds that the Underwriter Settlement set forth in the Underwriter2425 Stipulation is the result of arm's-length negotiations between experienced counsel
26 representing the interests of the Parties. Accordingly, the Underwriter Settlement
27 embodied in the Underwriter Stipulation is hereby finally approved in all respects.
28 The Parties are hereby directed to perform its terms.
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 110 of 113 Page ID#:11311
1 Proposed Settlement. Settlement Fairness Hearing and Motion for Attorneys' Fees
2 and Reimbursement of Expenses ("Notice") and the publication of the Summary
3 Notice as provided for in the Preliminary Approval Order constituted the best
4 notice practicable under the circumstances, including individual notice to all
5 members of the Class who could be identified through reasonable effort. Said
6 notice provided the best notice practicable under the circumstances of those
7 proceedings and of the matters set forth therein, including the proposed
8 Underwriter Settlement set forth in the Underwriter Stipulation, to all persons
9 entitled to such notice, and said notice fully satisfied the requirements of Federal
10 Rule of Civil Procedure 23, the Private Securities Litigation Reform Act of 1995,
11 due process, and any other applicable law.
12
5. The Court hereby finds and concludes that the formula for the
13 calculation of the claims which is set forth in the Plan of Allocation proposed by
14 Lead Plaintiff provides a fair and equitable basis upon which to allocate the
15 proceeds of the Settlements' among the Class Members with due consideration
16 having been given to administrative convenience and necessity.
176. The Court hereby finds and concludes that the Plan of Allocation
18 proposed by Lead Plaintiff is, in all respects, fair and equitable to the Class.
19 Accordingly, the Court hereby approves the Plan of Allocation proposed by Lead
20 Plaintiff.
217. Any order entered regarding any attorneys' fees and for expense
223Settlements" herein includes the settlements as set forth in the Underwriter
24 Stipulation, the Stipulation of Settlement Between Plaintiffs and KPMG LLP25 ("KPMG Settlement" or "KPMG Stipulation"), and the Stipulation of Global
Settlement w ith New Century Officer and Directors ("G lobal Officer And Director26 Settlement" or "Global Officer And Director Stipulation") (collectively
27 "Settlements" or "Stipulations"). The Plan of Allocation sets forth a plan for
allocating to Class Members the funds allocated to the Class from all three of the
28 Settlements.
5
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 2 of 103 Page ID#:11316HEREAS, Lead Plaintiff New York State Teachers’ Retirement System
2 (`Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of
3 themselves and all others similarly situated (collectively with Lead Plaintiff,
4 `Plaintiffs') and the Individual Defendants, 1
the Underwriter Defendants,2
and5 KP MG LLP (`KPMG ') (collectively `Defendants') (collectively, with Defendants, the
6 `Parties'), have reached agreements to settle the above-captioned litigation (the
7 `Consolidated Action'), and Plaintiffs have applied to the Court pursuant to Rule
8 23(e) of the Federal Rules of Civil Procedure for an order preliminarily approving
9 the Settlements in accordance with the Stipulations of Settlement, 3 which, together
10 with the exhibits annexed thereto, set forth the terms and conditions for the
11 proposed Settlements regarding the Consolidated Action, and for dismissal of the
12 Consolidated Action with prejudice as against all of the Defendants and their
134 1 Individual Defendants' or `Class Individual Defendants' means Robert K. Cole,
15 Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster,
Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,
16 Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J. Popejoy.
17 2 `Underwriter Defendants' means Bear, Stearns & Co. Inc., Deutsche Bank18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities
LLC , Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set
20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter
21 Defendants (the`Underwriter Stipulatiori'or the`Underwriter Settlement'); the terms
of the proposed settlement with KPMG is set forth in the Stipulation Of Settlement22 Between Plaintiffs And KPMG LLP (the `KPMG Stipulation' or `KPMG
23 Settlement'); and the proposed settlement with the Individual Defendants is set
forth in the Stipulation Of Global Settlement With New Century Officers And24 Directors (the `Global Officer And Director Settlement' or `Global Officer And
25 Director Stipulation'). The Global Officer And Director Stipulation contains
proposed settlements in this Consolidated Action, and related Trustee Litigation
26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation).
27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the
KPMG Stipulation are referred to collectively as the `Stipulations,' `Stipulations of28 Settlement,' or the `Settlements.'
[PROPOSED] ORDE R PRELIM. APPROVING-1- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 3 of 103 Page ID#:11317
1 related parties, upon the terms and conditions set forth therein; and the Court
2 having read and considered the Stipulations and the exhibits annexed thereto;
3OW, THEREFORE, IT IS HEREBY ORDERE D:
4.
his order (the `Notice Order” or `Preliminary Approval Order”) hereby5 incorporates by reference the definitions in the Stipulations unless otherwise
6 indicated, and all terms with initial capitalization not otherwise defined herein shall
7 have the same meanings as set forth in the Stipulations. Any inconsistencies
8 between the Stipulations and the Notice of Pendency of Class Action and Proposed
9 Settlements, Settlement Fairness Hearing, and Motion for Attorneys’ Fees and
10 Reimbursement of Litigation Expenses (`Notice”) will be controlled by the language
11 of the Stipulations.
12.he Court hereby preliminarily approves the Settlements as being fair,
13 reasonable and adequate to the Class, pending a final hearing on the Settlements.
14 CLASS CER TIFICATION
5.he Court hereby certifies, pursuant to Rules 23(a) and 23(b) (3) of the
16 Federal Rules of Civil Procedure, a Class defined as follows:
17ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New18entury Series B Preferred Stock, and/or New Century call options
and/or who sold New Century put options, duringt he time period19rom May 5, 2005, through and including March 13, 2007, either in
the Offerings, pursuant to a registration statement, or in the market,20nd who, upon disclosure of certain facts alleged in the Complaint,
were injured thereby. Excluded from the Class are (a) Defendants;21embers of the immediate families of the Individual Defendants; ^C3
the subsidiaries and affiliates of Defendants; (d) any person or entity22ho was a partner, executive officer, director or controlling erson of
New Century (including any of its subsidiaries or affiliates or of any23efendant; (e) any entity in which any Defendant has a controlling
interest; and (f) the legal representatives heirs, successors and assigns24f any such excluded party. Also excluded from the Class are any
persons who exclude themselves by filing a request for exclusion in25ccordance with the requirements set forth in the-Notice.
26.he Court finds that the prerequisites for a class action under Rules
27 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in that:
28 (a) the number of Class Members is so numerous that joinder of all members
[PROPOSED] ORDE R PRELIM. APPROVING-2- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 4 of 103 Page ID#:11318
1 thereof is impracticable; (b) there are questions of law and fact common to the
2 Class; (c) the claims of Lead Plaintiff New York State Teachers’ Retirement System
3 (`NYSTRS”) and Plaintiffs Carl Larson and Charles Hooten are typical of the claims
4 of the Class they seek to represent; (d) Plaintiffs have fairly and adequately5 represented the interests of the Class; (e) the questions of law and fact common to
6 the members of the Class predominate over any questions affecting only individual
7 members of the Class; and (f) a class action is superior to other available methods
8 for the fair and efficient adjudication of the controversy.
9.ursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs
10 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger
11 & Grossmann LLP is certified as Class Counsel.
12.he Court appoints the firm of Analytics Incorporated (`Claims
13 Administrator”) to supervise and administer the notice procedure as well as the
14 processing of claims as more fully set forth below:
15.ithin five (5) business days after entry of this Order, the
16 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and
17 Release (the `Claim Form”), annexed hereto respectively as Exhibits 1 and 2, to be
18 mailed by first-class mail, postage prepaid, to all members of the Class at the
19 address of each such Class Member as set forth in the records of New Century or
20 its transfer agent, or who are identified by further reasonable efforts (the `Notice
21 Date”). Lead Counsel shall, at or before the Settlement Hearing, file with the Court
22 proof of mailing of the Notice and Claim Form; and
23.summary notice (`Summary Notice”), annexed hereto as
24 Exhibit 3, shall be published once each in the national edition of The Wall Street
25Journal and over the PR Newswire within five (5) business days of the mailing of
26 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the
27 Court proof of publication of the Summary Notice.
28
[PROPOSED] ORDE R PRELIM. APPROVING-3- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 5 of 103 Page ID#:11319.he Court approves the form of Notice and Summary Notice
2 (together, the “Notices”) and Claim Form, and finds that the procedures established
3 for publication, mailing and distribution of such Notices substantially in the
4 manner and form set forth in paragraph 6 of this Order meet the requirements of5 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation
6 Reform Act of 1995, and due process, and constitute the best notice practicable
7 under the circumstances.
8.or the purpose of identifying and providing notice to the Class, the
9 Trustee and the Underwriter Defendants shall provide to the Claims Administrator
10 the information as agreed to in the Global Officer And Director Stipulation and the
11 Underwriter Stipulation, respectively.
12.ominees who purchased or otherwise acquired New Century stock
13 for beneficial owners who are Class Members are directed to: (a) request within
14 fourteen (14) days of receipt of the Notice additional copies of the Notice and the
15 Claim Form from the Claims Administrator for such beneficial owners; or (b) send
16 a list of the names and addresses of such beneficial owners to the Claims
17 Administrator within fourteen (14) days after receipt of the Notice. If a nominee
18 elects to send the Notice to beneficial owners, such nominee is directed to mail the
19 Notice within fourteen (14) days of receipt of the copies of the Notice from the
20 Claims Administrator, and upon such mailing, the nominee shall send a statement
21 to the Claims Administrator confirming that the mailing was made as directed, and
22 the nominee shall retain the list of names and addresses for use in connection with
23 any possible future notice to the Class. Upon full compliance with this Preliminary
24 Approval Order, including the timely mailing of Notice to beneficial owners, such
25 nominees may seek reimbursement of their reasonable expenses actually incurred
26 in complying with this Preliminary Approval Order by providing the Claims
27 Administrator with proper documentation supporting the expenses for which
28 reimbursement is sought and reflecting compliance with these instructions,
[PROPOSED] ORDE R PRELIM. APPROVING-4- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 7 of 103 Page ID#:11321
1 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
2 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &
3 Olson, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560; John
4 S. Durrant, Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, 25th5 Floor, Los Angeles, CA 90071; and Michael L. Rugen, Sidley Austin LLP, 555
6 California St., Suite 2000, San Francisco, CA 94104-1715; and (ii) filed said
7 objections, papers and briefs with the Clerk of the United States District Court for
8 the Central District of California on or before twenty-one (21) days before the
9 Settlement Hearing. Any Class Member who does not make his, her or its
10 objection in the manner provided for herein shall be deemed to have waived such
11 objection and shall forever be foreclosed from making any objection to the fairness
12 or adequacy of the Settlements as incorporated in the Stipulations, to the Plan of
13 Allocation or to the application by Lead Counsel for an award of attorneys’ fees and
14 payment of Litigation Expenses unless otherwise ordered by the Court. The
15 manner in which a notice of objection should be prepared, filed and delivered shall
16 be stated in the Notice.
173. If approved, all Class Members will be bound by the proposed
18 Settlements provided for in the Stipulations, and by any judgment or determination
19 of the Court affecting Class Members, regardless of whether or not a Class
20 Member submits a Claim Form.
214. Any member of the Class may enter an appearance in the
22 Consolidated Action, at their own expense, individually or through counsel of their
23 own choice. If they do not enter an appearance, they will be represented by Lead
24 Counsel.
255. The Court reserves the right to adjourn or continue the Settlement
26 Hearing, or any adjournment or continuance thereof, without any further notice to
27 Class Members and to approve the Stipulations and/or Plan of Allocation with
28 modification and without further notice to Class Members.
[PROPOSED] ORDE R PRELIM. APPROVING-6- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 8 of 103 Page ID#:11322
1CLAIMS PROCESS6. In order to be entitled to participate in the Settlements, a Class
3 Member must complete and submit a Claim Form in accordance with the
4 instructions contained therein and/or in the Notice. To be valid and accepted,5 Claim Forms submitted in connection with the Settlements must be postmarked no
6 later than 120 days after the Notice date (unless by Order of the Court, late-filed
7 Claim Forms are accepted).
87. Any Class Member who does not timely submit a valid Claim Form
9 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by
10 the Court, but nonetheless shall be barred and enjoined from asserting any of the
11 settled claims and shall be bound by any judgment or determination of the Court
12 affecting the Class Members.
138. As set forth in the Stipulations, Defendants and their related parties
14 shall have no responsibility whatsoever for the administration of the Settlements or
15 the disbursement of the Net Settlement Fund and shall not be permitted to review,
16 contest or object to any Claim Form or any decision of the Claims Administrator or
17 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for
18 payment by a Class Member.
19 REQUEST FOR EXCLUSION FROM THE CLASS
09. Any requests for exclusion must be submitted such that they are
21 received no later than twenty-one (21) days before the date of the Settlement
22 Hearing. To be valid, each request for exclusion must (i) state the name and
23 address of the person or entity requesting exclusion; (ii) state that such person or
24 entity requests exclusion from the Class in In re New Century, 07-CV -0093 1 -DDP
25 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a
26 telephone number for that person or entity; and (v) provide the date(s), price(s),
27 and number(s) of shares of all purchases, acquisitions, and sales of New Century
28 Securities during the Class Period. Requests for exclusion will not be valid if they
[PROPOSED] ORDE R PRELIM. APPROVING-7- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 9 of 103 Page ID#:11323
1 do not include the information set forth above and are not received within the time
2 stated above, unless the Court otherwise determines. Copies of all timely requests
3 for exclusion from the Class received by the Claims Administrator (or other person
4 designated to receive exclusion requests) shall be provided to Lead Counsel and5 Individual Defendants’ Counsel, counsel for the Insurance Carriers (as defined in
6 the Global Officer And Director Stipulation), counsel for KPMG, and counsel for
7 the Underwriter Defendants, no later than fifteen (15) days prior to the Settlement
8 Hearing. All persons who submit valid and timely requests for exclusion in the
9 manner set forth in this paragraph shall have no rights under the Stipulations, shall
10 not share in the distribution of the Net Settlement Fund, and shall not be bound by
11 the Stipulations or any final judgment.
120. As set forth in the Stipulations, Defendants and their related parties
13 shall have no responsibility or liability whatsoever with respect to the Plan of
14 Allocation or Lead Counsel’s application for an award of attorneys’ fees and
15 payment of Litigation Expenses. The Plan of Allocation and Lead Counsel’s
16 application for an award of attorneys’ fees and payment of Litigation Expenses will
17 be considered separately from the fairness, reasonableness and adequacy of the
18 Settlements. At or after the Settlement Hearing, the Court will determine whether
19 Lead Counsel’s proposed Plan of Allocation should be approved, and the amount of
20 attorneys’ fees and Litigation Expenses to be awarded to Lead Counsel. Any appeal
21 from any orders relating to the Plan of Allocation or Lead Counsel’s application for
22 an award of attorneys’ fees and Litigation Expenses, or reversal or modification
23 thereof, shall not operate to terminate or cancel the Settlements, or affect or delay
24 the finality of the judgment to be entered pursuant to Rule 54(b) of the Federal
25 Rules of Civil Procedure approving the Settlements and the settlement of the
26 Consolidated Action set forth therein.
27
28
[PROPOSED] ORDE R PRELIM. APPROVING-8- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 10 of 103 Page ID#:113241. Only Class Members and Lead Counsel shall have any right to any
2 portion of, or any rights in the distribution of, the settlement funds except as
3 provided in the Stipulations or otherwise ordered by the Court.
4
2. All funds held by the escrow agent selected by Lead Counsel to5 maintain the escrow account(s) for the Settlements (“Escrow Agent”) shall be
6 deemed and considered to be in custodia legis and shall remain subject to the
7 jurisdiction of the Court until such time as such funds shall be distributed pursuant
8 to the Stipulations and/or further Order of the Court.
93. Lead Counsel or its agents are authorized and directed to prepare any
10 tax returns required to be filed for the escrow account maintained to hold the
11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes
12 due and owing to be paid from the escrow account(s) without further Order of the
13 Court, and to otherwise perform all obligations with respect to Taxes and any
14 reportings or filings in respect thereof as contemplated by the Stipulations without
15 further Order of the Court.
164. As set forth in the Stipulations, Lead Counsel may pay from the
17 escrow account(s), without further approval from Defendants or further Order of
18 the Court, the costs, fees and expenses that are incurred by the Claims
19 Administrator and Lead Counsel in connection with (i) providing notice to the
20 Class; and (ii) administering the claims process in connection with the
21 Consolidated Action (“Notice and Administration Costs”) actually incurred. Such
22 costs and expenses shall include, without limitation, the actual costs of publication,
23 printing and mailing the Notice, reimbursements to nominee owners for forwarding
24 the Notice to their beneficial owners, the administrative expenses incurred and fees
25 charged by the Claims Administrator in connection with providing Notice and
26 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the
27 event that any of the Settlements are terminated pursuant to the terms of the
28
[PROPOSED] ORDE R PRELIM. APPROVING-9- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 12 of 103 Page ID#:11326
1 fault or wrongdoing of any kind, or in any way referred to for any other reason as
2 against any of the Released Parties, in any other civil, criminal or administrative
3 action or proceeding, other than such proceedings as may be necessary to
4 effectuate the provisions of the Stipulations; provided, however, that if the5 Stipulations are approved by the Court, Defendants, any other Released Party, or
6 any Class Member may refer to the Settlements and Stipulations to effectuate the
7 protection from liability granted them hereunder;
8.hall not be construed against any of the Released Parties,
9 Plaintiffs or any other Class Members as an admission, concession, or presumption
10 that the consideration to be given hereunder represents the amount which could be
11 or would have been recovered after trial;
12.hall not be construed against Plaintiffs or any other Class
13 Members as an admission, concession, or presumption that any of their claims are
14 without merit or that damages recoverable under the Consolidated Action, the
15 Trustee Litigation and the Kodiak Litigation would not have exceeded the amount
16 of the Settlements; and
17.hall not be construed as or received in evidence as an
18 admission, concession or presumption that class certification is appropriate in this
19 Consolidated Action, except for purposes of the Settlements.
206. Except as otherwise provided in the Stipulations, there shall be no
21 distribution of any of the net settlement fund for any of the Settlements to any
22 Class Member until a plan of allocation is finally approved and the Court issues a
23 Class Distribution Order.
24 \\
25 \\
26 \\
27
28
[PROPOSED] ORDE R PRELIM. APPROVING-11- SETTLEMENTS AND PROVIDING FOR NOTICE
Case No. 2:07-cv-00931-DDP (FMOx)
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 17 of 103 Page ID#:11331
1 A Feder al Court authorized this Notice. This is not a solicitation from a law ver .2NOTICE OF PENDENCY OF CLASS ACTION: Please be ad vised that yo ur rights
3may be affected by a class action lawsuit pending in this Court (the
4Consolidated Action") if, during the period from May 5, 2005, through and
5ncluding March 13, 2007, you purchased or acquired Common Stock,
6.125% Series A Cumulative Redeemable Preferred Stock ("Series A
7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock
8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of
9ew Centu ry Financial Corporation ("New Century" or the "Com pany").
1 0
11 NOTICE OF SETTLEMENTS: Please also be advised that the Court -appointed12Lead Plaintiff, New York State Teachers' Retirement System ( "Lead
13 Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively
14 "Plaintiffs"), on behalf of the Class (as defined below), have reached three
15proposed settlements ("Settlements") of the Consolidated Action as follows: a
16 settlement with the Underwriter Defendants' in the amount of $15,000,000.00;17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;
18and a settlement with the Individual Defendants 2 in which the Class will
19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals
201 'Underwriter Defendants" means Bea r, Stearns & Co . Inc., Deutsche Bank
LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.23"Underwriter Defendants").
24Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of25 Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold
A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.
26Alexander, David Einhorn, and William J. Popej oy. "Defendants" means the
27 Underwriter Defendants, the Individual Defendants, and KPMG.
3 The $65,077,088.00 includes funds recovered by the Securities and Exchange
28 Commission in a civil enforcement action entitled SEC v. Morrice et al., Case No.
-1-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 18 of 103 Page ID#:11332
1 124 9 82 7 9 088.00.he terms of the Settlements are set forth in the
2Stipulations.4
3 This Notice explains important rights you may have, including your possible
4receipt of cash from the Settlements. Your legal rights will be affected
5 whether or not you act. Please read this Notice carefully!
6
7.escription of the Consolidated Action and the Class: Lead
8 Plaintiff alleges that Defendants made false and misleading statements and/or
9omitted material information to investors during the Class Period. Defendants
10deny all allegations, and deny that investors were damaged as a result of any such
11 alleged statements or omissions. This Notice relates to three proposed Settlements
12egarding claims against the Individual Defendants, the Underwriter Defendants,
13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed
14Settlements, if approved by the Court, will resolve all claims and potential claims
15 of Class Members against the Defendants and the other applicable Released Parties
16 as identified below), and will provide relief to all persons and entities who
17 purchased or otherwise acquired New Century Common Stock, Series A Preferred
18 Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred
19 Stock are collectively referred to as "Preferred Stock"), and/or New Century Call
20Options and/or who sold New Century Put Options, during the time period from
21209-1426-DDP, commenced on December 7, 2009, in the United States District
23Court for the C entral District of California (the "SE C Action").4
ll capitalized terms that are not defined herein shall have the meaning24ascribed to them in the Stipulations. "Stipulations" means the Stipulation Of
25Global Settlement With New Century Officers And Directors (the "Global Officer
26And Director Stipulation" or "Global Officer And Director Settlement");
Stipulation O f Settlement Between Plaintiffs An d T he U nderwriter D efendants (the27"Underwriter Stipulation" or "Underwriter Settlement"); and Stipulation Of
28Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or
"KPMG Settlement").
-2-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 19 of 103 Page ID#:11333
1May 5, 2005, through and including March 13, 2007, either in the Offerings,
2ursuant to a registration statement, or in the market, and who, upon disclosure of
3certain facts alleged in the Complaint, were injured thereby (the "Class"). (The
4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,5nd/or New Century Call Options and New Century Put Options (as described
6 above) are referred to collectively as "New Century Securities.")
7.tatement of the Class's Recovery: Subject to Court approval, and
8s described more fully below, Plaintiffs, on behalf of the Class, have agreed to
9ettle all claims related to the purchase of New Century Common Stock, Preferred
10 Stock and/or New Century Call Options and/or sales of New Century Put Options
11during the Class Period that were or could have been asserted against Defendants
12 and other Released Parties in the Consolidated Action in exchange for total
13 settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash
14o be deposited into an interest-bearing escrow account (the "Settlement Fund").
15The Net Settlement Fund (the Settlement Fund less Taxes, notice and
16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead
17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of
18Allocation") that will be approved by the Court and will determine how the Net
19Settlement Fund shall be allocated to the mem bers of the Class. The propo sed Plan
20of Allocation is included in this Notice. Assuming that all Class Members
21participate in the Settlements, Lead Plaintiff's damages consultant estimates that22 the average distribution per damaged share will be approximately $0.69 per share
23 of New Century Common Stock, approximately $2.08 per share of New Century
24Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25
25per Put Option, before deduction of Court-approved fees, expenses and costs
26described herein.
27.tatement of Average Amount of Damages Per Share: The parties
28do not agree on the average amount of damages per share that would be
-3-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 20 of 103 Page ID#:11334
1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any
2hares or Options of New Century Securities were damaged as Plaintiffs have
3lleged. The parties disagree on, among other things: (i) whether the statements
4hallenged in this Consolidated Action were materially false and misleading; (ii)
5 whether the price of New Century shares was inflated as the result of any allegedly
6alse or misleading public statements or omissions by D efendants; and (iii) whether
7 the decline in the price of New Century shares alleged in the Consolidated Action
8 esulted from the disclosure of any information that Plaintiffs allege was
9 wrongfully withheld.
10.tatement of Attorneys' Fees and Expenses Sought: Lead Counsel
11will apply to the Court for an award of attorneys' fees from the Settlement Fund in12an amount not to exceed 12% of the Total Settlement Amount with interest from
13he date of funding at the same rate as earned by the Settlement Fund. In addition,
14Lead Counsel also will apply for the reimbursement of Litigation Expenses paid or
15ncurred in connection with the prosecution and resolution of the Consolidated
16 Action, in an amount not to exceed $4.5 million, plus interest from the date of
17 funding at the same rate as earned by the Settlement Fund. If the Court approves
18Lead Counsel's fee and Litigation Expense application, Lead Plaintiff's damages
19 consultant estimates that the average cost per damaged share will not exceed
20approximately $0.11 per share of Common Stock, approximately $0.32 per share
21of Preferred Stock, approximately $0.02 per Call Option, and approximately $0.04
22per Put Option.
23.dentification of Attorneys' Representatives: Lead Plaintiff and the
24Class are being represented by Salvatore J. Graziano, Esq., of Bernstein Litowitz
25Berger & Grossmann LLP, the Court-appointed Lead Counsel. Any questions
26 egarding the Settlements should be directed to Mr. G raziano at Bernstein Litowitz
27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 23 of 103 Page ID#:11337
1 New Century Securities during the Class Period. The Court has directed us to send
2ou this Notice because, as a potential Class Member, you have a right to know
3 about your options before the Court rules on the proposed Settlements in this case.
4 Additionally, you have the right to understand how a class action lawsuit may
5enerally affect your legal rights. If the Court approves the Settlements, a claims
6dministrator selected by Lead Plaintiff and approved by the Court, will make7payments pursuant to the Settlements after any objections and appeals are resolved.
8.n a class action lawsuit, the Court selects one or more people, known
9s class representatives, to sue on behalf of all people with similar claims,
10 commonly known as the class or the class members. In this Consolidated Action,
11he Court has appointed New York State Teachers' Retirement System to serve as
12"Lead Plaintiff' under a federal law governing lawsuits such as this one, and
13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &
14 Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated
15Action. Lead Plaintiff New York State Teachers' Retirement System and named
16plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class
17action is a type of lawsuit in which the claims of a number of individuals are
18 resolved together, thus providing the class members with both consistency and
19efficiency. Once the class is certified, the Court must resolve all issues on behalf
20of the class members, except for any persons who choose to exclude themselves
21rom the class. (For m ore information on excluding y ourself from the Class, please
22ead "What If 1 Do Not Want To Be A Part Of The Settlements? How Do I23Ex clude Myself?" located below.)
24.he Court in charge of this case is the United States District Court for
25he Cen tral District of California, and the case is know n as In re New Century. The
26Judge presiding over this case is the Honorable Dean D. Pregerson, United States
27District Judge. The people who are suing are called plaintiffs, and those who are
2 8being sued are called defendants. In this case, the plaintiff is referred to as the
-7 -OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 25 of 103 Page ID
#:11339
1.hether the proposed Plan of Allocation is fair and reasonable
2nd should be approved by the Cou rt; and
3.hether Lead Counsel's request for an award of attorneys' fees
4nd reimbursement of Litigation Expenses should be approved
5
y the Court.
61. This Notice does not express any opinion by the Court concerning the7 merits of any claim in the Consolidated Action, and the Court still has to decide
8 whether to approve the Settlements. If the Court approves the Settlements,
9 payments to Authorized Claimants will be made after any appeals are resolved, and
10 fter the com pletion of all claims processing. Please be patient.
1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Beginning on or about February 8, 2007, securities class action
14 complaints were filed in the United States District Court for the Central District of
15California and the actions were consolidated by Order dated June 26 , 2007 .
163. On April 2, 2007, New Century and other Debtors filed for
17 bankruptcy in the United States Bankruptcy Court for the District of Delaware
1 8 ("Bankruptcy Court") under Chapter 11 of Title 11 of the United States Code.1 94. By Order dated June 26, 2007, the Court appointed the New York
20 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action
21 nd approved its selection of Bernstein Litowitz Berger & Grossm ann LL P as Lead
22Counsel for the Class.
235. On September 14, 2007, Plaintiffs filed their Consolidated Class
24Action Com plaint ("Consolidated Com plaint") asserting claims against Defendan ts25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities
26Act of 1933 ("Securities Act") on behalf of the Class.
276. Beginning on November 2, 2007, Defendants filed motions to dismiss
28 the Consolidated Com plaint, which Plaintiffs opposed on D ecember 14, 2007 .
-9-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 27 of 103 Page ID#:11341
1Trustee and Plan Administrator a Robert K. Cole et al. (In re New Century TRS
2Holdings,v. Proc. No. 09-50882 Km n, Inc .))((C)) commenceded o April 1, 2009 in
3 the Bankruptcy Court (the "Trustee Litigation"), and the SEC Action.
46. On [INSERT], the Court preliminarily approved the Settlements,
5authorized this Notice to be sent to potential Class Members, and scheduled the
6Settlement Hearing to consider whether to grant final approval to the Settlements.
7
8OW DO-I KNOW IF I AM AFFECTED BY THE SETTLEMENTS?907. If you are a member of the Class, you are subject to the Settlements
11unless you timely request to be excluded. The Class consists of all persons and
12entities who purchased or otherwise acquired New Century Common Stock, New
13 Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or
14New Century Call Options and/or who sold New Century Put Options, during the
15 time period from May 5, 2005, through and including March 13, 2007, either in the
16Offerings, pursuant to a registration statement, or in the market, and who, upon
17disclosure of certain facts alleged in the Complaint, were injured thereby.
18Excluded from the Class are (a) Defendants; (b) members of the immediate
19families of the Individual Defendants; (c) the subsidiaries and affiliates of
20Defendants; (d) any person or entity who was a partner, executive officer, director21or controlling person of New Century (including any of its subsidiaries or
22affiliates) or of any Defendant; (e) any entity in which any Defendant has a
23controlling interest; and (f) the legal representatives, heirs, successors and assigns
24of any such excluded party. The Class also does not include those persons and
25entities who timely request exclusion from the Class pursuant to this Notice (see
26"What If I Do Not Want To Participate In The Class And The Settlements? How
27 Do I Exclude My self?," below).
28
-11-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 28 of 103 Page ID#:11342
1 RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT
2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO
3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO
4 BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST
5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER
6THAN [INSERT].HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?8
98. Lead Plaintiff and Lead Counsel believe that the claims asserted
10against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,
11however, the expense and length of continued proceedings necessary to pursue
12their claims against Defendan ts through trial and appeals, as w ell as the difficulties
13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel
14 have taken into account the possibility that the claims asserted in the Complaint15might have been dismissed at a later stage, such as in response to motions for
16summary judgment, and have considered issues that would have been decided by a
17 jury in the event of a trial of the Consolidated Action, including whether
18Defendants acted with an intent to mislead investors, whether the alleged
19misrepresentations o r om issions w ere material to investors, whether all of the Class
20Members' losses were caused by the alleged misrepresentations or omissions, and
21the amount of damages. Lead Plaintiff and Lead Counsel have considered the
22uncertain outcome and trial and appellate risk in complex lawsuits like this one.
23Lead Plaintiff also considered the available funds to satisfy any verdict at trial
24given the expense and length of continued proceedings necessary to reach a
25successful resolution at trial and on appeal.
269. In light of the amount of the Settlements and the immediacy of
27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed
28Settlements are fair, reasonable and adequate, and in the best interests of the Class.-12-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 29 of 103 Page ID#:11343
1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial
2 benefit now, namely $124,827,088.00 in cash (less the various deductions
3 described in this Notice), as compared to the risk that the claims in the Complaint
4ould produ ce a similar, smaller, or no recovery after sum mary judgm ent, trial and
5ppeals, possibly years in the future.
60. Defendants have denied the claims asserted against them in the
7Complaint and deny having engaged in any wrongdoing or violation of law of any
8 kind whatsoever. Defendants have agreed to the Settlements solely to eliminate the
9urden and expense of continued litigation. Accordingly, the Settlements may not
10be construed as an admission of Defend ants' wrongd oing.
11HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?123 31. If there were no Settlements and Lead Plaintiff failed to establish any14essential legal or factual element of its claims, neither Lead Plaintiff nor the other
15members of the Class would recover anything from Defendants. Also, if
16Defendants were successful in proving any of their defenses, the members of the
17Class likely would recover substantially less than the amount provided in the
18Settlements, or nothing at all.
19HOW MUCH WILL MY PAYMENT BE?
201 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS
22. Pursuant to the respective Stipulations, the Individual Defendants
23have agreed to pay or cause to be paid collectively $65,077,088.00; the
24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and
25KPMG has agreed to pay $44,750,000.00. Collectively, Defendants have agreed to
26pay a total amount of $124,827 ,088.00 in cash.
273. After approval of the Settlements by the Court, and upon satisfaction
28of the other conditions to the Settlements, and upon issuance of a Class
-13-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 32 of 103 Page ID#:113468. The proposed Plan of Allocation provides for distribution of the Net
2ettlement Fund to Authorized Claimants as follows:
3I,UMMARY OF PLAN OF ALLOCATION
49. Each Person claiming to be a Class Member entitled to share in the5Net Settlement Fund ("Authorized Claimant") shall be required to submit a
6 separate Claim Form signed under penalty of perjury and supported by such
7 documents as specified in the Proof of Claim as are reasonably available to the
8Authorized Claimant. Each Proof of Claim must separately set forth: (i) each
9 claimant's opening securities position in New Century Common Stock, Series A
10 Preferred Stock, Series B P referred Stock, or Put/Call Options as of the close of the
11 market on May 4, 2005, the day before the first day of the Class Period; (ii) each
12ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made
13during the Class Period in any such New Century Security; and (iii) each
14claimant's ending securities position in New Century Common Stock, Series A
15Preferred Stock, Series B Preferred Stock, or Put/Call Options, at the close of the
16 market on March 13, 2007, the last day of the Class Period, and, for Common
17 Stock and Preferred Stock, at the close of the market on June 10, 2007, in order to
18see if claimant's Section 10(b) Recognized Loss Claims will be limited by
19 calculations relating to the 90-day look back rules of the Private Securities
20Litigation Reform Act of 1995 ("PSLRA"). In addition, Claimants will be asked in
21the Proof of Claim form to list sales of New Century Common
22Stock and Preferred Stock made during the 90-day look back period of March 13,
232007, to June 10, 2007.5
2455 Pursuant to Section 21(D)(e)(1) of the PSLRA, "in any private action arising
26under this title in w hich the plaintiff seeks to establish d amages by reference to themarket price of a security, the award of damages to the plaintiff shall not exceed
27 the difference between the purchase or sale price paid or received, as appropriate,
28by the plaintiff for the subject security and the mean trading price of that security
during the 90-day period beginning on the date on which the information
-16-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 34 of 103 Page ID#:11348
1 Auditor Allotment. Put another way, the Underwriter Allotment will be distributed
2o only purchasers of Series A Preferred Stock and Series B Preferred Stock;
3whereas the Individual-Auditor Allotment will be distributed to all Class Members—4ho submit valid Claim Forms, regardless of the type of New Century Security
5purchased or sold. This is because claims against the Underwriter Defendants
6were alleged in this Action only on behalf of purchasers of Series A Preferred
7tock and Series B Preferred Stock, and not on behalf of purchasers or sellers of
8ther Securities.
93. The Claims Administrator shall determine each Authorized Claimant's
10pro rata share of the Underwriter Allotment and the Individual-Auditor Allotment
11eparately established for each class of securities show n in T able 1 annexed hereto,12based upon each Authorized Claimant's "Recognized Loss Claim." The
13Recognized Loss Claim formula is not intended to be an estimate of the amount
14hat a Class Member might have been able to recover after a trial; nor is it an
15estimate of the amount that will be paid to Authorized Claimants pursuant to the
16Settlement. The Recognized Loss Claim formula is the basis upon which the
17Underwriter Allotment and the Individual-Auditor Allotment will be
18proportionately allocated to the Authorized Claimants.
1 94. The Recognized Loss for an Authorized Claimant's transactions will
20 be calculated by the Claims Administrator in consultation with Lead Counsel in
21 accordance with the provisions of this Plan of Allocation. Factors generally
22onsidered in developing the P lan of Allocation, include, among others: (i) the time
23period in which a New Century Security was purchased; (ii) whether a Security
24was purchased or acquired on the open market, or as a result of some other type of
25 ransaction, such as pursuant to a registration statement or prospectus, or by gift;
26 iii) whether the Security was held until the end of the Class Period (March 13,
272007), or 90 days thereafter, or whether it was sold during the Class Period, and if
28so, when it was sold; and (iv) the artificial inflation in the price of New Century
-18-OTICE OF PENDENCY O F CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 35 of 103 Page ID#:11349
1 Securities at different times during the Class Period attributable to Defendants'
2alse and misleading statements as alleged in this case, and as calculated by Lead
3laintiff's damages consultant. (Based on the opinions of this consultant, Lead
4Counsel assumed, for purposes of determining the Recognized Loss, that there
5were varied amounts of artificial inflation in prices of New Century Securities
6uring the Class Period, and based on the assumption that Plaintiffs could
7 adequately allege and prove liability for that entire period);
85. The Plan of Allocation generally measures the amount of loss that a
9Class Member who submits an acceptable Proof of Claim can claim under the
10Settlements for the purpose of making pro rata allocations of the cash from the
11Und erwriter Allotment and the Individual-Auditor Allotment to Class Memb ers for12heir respective class of Securities. The Plan of Allocation is not a formal damage
13analysis. The following proposed Plan of Allocation reflects Plaintiffs' allegations
14hat the prices of N ew C entury Securities were artificially inflated d uring the C lass
15Period (May 5, 2005 — March 13, 2007) due to Defendants' allegedly material
16 misrepresentations and/or omissions during the Class Period. Plaintiffs allege that
1 7 orrective disclosures affecting trading on February 8, 2007; March 5, 2007, and
18 March 13, 2007, removed artificial inflation from the prices of New Century
1 9 Securities.
206. The Plan of Allocation covers the following New Century Securities:
211) Com mon Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and
22iv) Call and Put Options on Com mon Stock.
237. A New Century Security must be held through a corrective disclosure
24n order to be eligible for a recovery in the Settlement; that is, a New Century
25Security purchased or otherwise acquired during the first part of the Class Period,
26 rom May 5, 2005 through February 7, 2007, must be held until or beyond
27February 8, 2007, the first trading day after the first corrective disclosure.
28Similarly, a New Century Security purchased or otherwise acquired on or after
-19-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 36 of 103 Page ID#:11350
1February 8, 2007, and before or on March 2, 2007, must be held until March 5,
22007, the next trading day after the second corrective disclosure. Finally, a New
3 Century Security purchased or otherwise acquired on or after March 5, 2007, must
4be held until March 13, 2007, the last day of the Class Period. If you did not hold
5 a New Century Security referred to above which was purchased during the three
6ifferent parts of the Class Period described above and below (see the artificial
7nflation Tables annexed hereto) for both the New Century Common Stock and the
8New Century P referred Stock through at least one of the three corrective disclosure
9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for10hese transactions w ill be calculated as zero because it has been d etermined that the
11 artificial inflation between each disclosure and arising from the circumstances
12underlying the allegations of P laintiffs' Com plaint was con stant.
13 I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS
1 .4LAIMS FOR NEW CENTURY SECURITIES
158. A Recognized Loss will be calculated for each purchase or sale of
16 New Century Securities that is within the Class Period, listed in the Proof of Claim
17orm, and for w hich adequate documentation is provided.
18.uidelines App licable to theCalculations of All Claims
1 9
209. In the event a Class Member has more than one purchase or sale of the
21New Century Securities, all purchases and sales of each type of security shall be
22matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be
23matched first against any New Century Securities held at the beginning of the
24Class Period, and then against purchases in chronological order, beginning w ith the
25earliest purchase made during the Class Period. Purchases and sales of New
26Century Securities shall be deemed to have occurred on the "contract" or "trade"
date as opposed to the "settlement" or "pay ment" date. T he receipt or grant by gift,27devise or operation of law of New Century Securities during the Class Period shall28
not be deemed a purchase or sale of these New Century Securities for the-20-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 38 of 103 Page ID#:113523. For purposes of determining whether a Claimant had an overall
2market gain with respect to his, her, or its Class Period purchases of an individual
3 New Century Security or suffered an overall market loss, the Claims Administrator
4hall determine the difference between (i) the Total Purchase Amount paid for all
5urchases of that individual New Century Security purchased or acquired during
6 the Class Period, (ii) any premiums received from the sale of Put Options, and (iii)
7 the sum of the Sales Proceeds received for all of that individual New Century
8ecurity d uring the Class Period and the Holding V alue ascribed to that security for
9 all Securities still held on June 10, 2010. The Holding Value shall be $0.87 per
10 share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95
11 per share for Series B Preferred Stock. This difference will be deemed a
12Claimant's market gain or loss on his, her, or its overall transactions in that
13 ndividual New C entury Security during the C lass Period.
144. An Authorized Claimant's gains and losses on a particular New
15Century Security purchased during the Class Period will be netted against each
16other to determine the Authorized Claimant's net Recognized Loss Claim on that
17 particular security. In the case of New Century Common Stock and Put and Call
18Options on that stock, gains and losses on both the stock and the Options will be
19 combined and thereafter netted against each other. However, in all other cases,
20gains and losses will not be netted or aggregated across different eligible New
21Century Securities. For example, an Authorized Claimant's Recognized Loss
22laim (as calculated under this Plan) on N ew Cen tury Com mon S tock/Options will23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on
24ny issue of New Century Preferred Stock.
255. Class Members who do not submit acceptable Proofs of Claim will
26not share in the settlement proceeds. Class Members who do not submit a request
27or exclusion and do not submit an acceptable Proof of Claim will nevertheless be
28bound by the Settlements and the judgm ents of the Court.
-22-OTICE OF PENDENCY OF CLASS ACTION
Case No, 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 39 of 103 Page ID#:11353
16. Distributions will be made to Authorized Claimants only after the
2Court has finally approved the Settlements, the Effective Date has occurred and3 after all claims have been processed. At that time, Lead Plaintiff will file a motion
4 for entry of a proposed Class Distribution Order which will, among other things,
5 approve of the distribution to Authorized Claimants of the Net Settlement Fund.
67. The Individual Defendants, the Underwriter Defendants, and KPMG
7and their respective counsel, and all other Released Parties shall have no
8esponsibility for, or liability whatsoever, relating to distributions from the
9 Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,
10 or with respect to the Plan of Allocation, or the determination, administration,
11 calculation, or payment of any Proof of Claim, or non-performance of the Claims
12 Administrator, the payment or withholding of Taxes owed by a Settlement Fund, or
13 any losses incurred in connection therewith.
14.omp utation Method ology Relating toRecognized Losses for Com mon S tock
15urchases
168. For purposes of developing the Plan of Allocation, the damages
17 consultant calculated the amount of artificial inflation in the daily closing market
18 prices for New C entury Com mon Stock during three different portions of the Class
19Period. See the annexed Table 2. In computing artificial inflation, the damages
20 consultant considered price changes of New Century Common Stock in regard to
21 certain public announcements regarding New Century and adjusted those price
22 changes that were attributable to market forces unrelated to the alleged fraud.
2 39. As explained above, Common Stock purchases are not eligible for
24 distributions from the Underwriter Allotment, but may be eligible for distributions
25 from the Individual-Auditor Allotment.
26.ecognized Loss C alculations
270. Recognized Loss Claims will be calculated for the purposes of the
2 8 ettlement as follows:
-23-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 40 of 103 Page ID#:11354
1
.alculation of Recognized Lo ss for NewCentury Common Stock Purchases
2
61. Calculation of Recognized Loss Claims for New Century Common3
Stock shares shall be as follows:4
62. For shares purchased on or between May 5, 2005, through February 7,5
2007 ) the following claims for d amages shall be allowed :6
(a) For each share sold on or before February 7, 2007, no Recognized
Claims for dam ages shall be allowed;gb) For each share sold on or between February 8, 2007, and through March
13, 2007, the allowed damages shall be the inflation per share at the time of9urchase for the applicable date of purchase as set forth in Table 2, annexed
10ereto, less the inflation per share at the time of sale as set forth in Table 2;
and
1 1
123. For shares purchased on or between February 8, 2007, through March
13 2, 2007, the following claims for damages shall be allowed:
1 4a) For each share sold on or before March 2, 2007, no Recognized Claims
for damages shall be allowed;15b) For each share sold on or between March 5, 2007, and March 13, 2007,
16he allowed damages shall be the inflation per share at the time of purchase
for the applicable date of purchase as set forth in Table 2, annexed hereto,17
ess the inflation per share at the time o f sale as set forth in T able 2; and18
194. For shares purchased on or between March 5, 2007, through March
2012, 2007 , the following claims for dam ages shall be allowed:
(a) For each share sold on or before March 12, 2007, no Recognized Claims21or dam ages shall be allowed;
22b) For each share sold on or after March 13, 2007, the allowed damages
shall be the inflation per share at the time of purchase for the applicable23
ate of purchase as set forth in Table 2, annexed hereto.
24
255. In addition to the annexed Table 2 relating to Section 10(b) New
26Century Common Stock claims, the Recognized Loss Claims for damages for such
27shares purchased during the Class Period shall be further limited (as provided for
28under the PSL RA) to the smallest of the following:
-24-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 42 of 103 Page ID#:11356
1b) For each share sold on or after March 13, 2007, the allowed damages
2hall be the inflation per share at the time of purchase for the applicabledate of purchase as set forth in Table 4, annexed here3
40. The Recognized Loss Claims for damages for such Series A Preferred
5Shares purchased during the Class Period shall be further limited (as provided for
6 nder the PSL RA) to the smallest of the following:7a) the difference between the price paid and the price received (out-of-pocket
investment loss) if sold on or before June 10, 2007 ;8b) the difference between the price paid (excluding all fees and commissions)
9nd the average closing price as set forth in Table 6 annexed hereto if soldbetween March 13, 2007 and June 10, 2007; and10c) the difference between the price per share paid and $8.02 per share if the
1 1hares were sold after June 10, 2007 , or were held until the current date.
12.alculation of Recognized Lossfor New C entury Series B P referred Stock
1 3urchases
1471. Calculation of Recognized Loss Claims for New Century Series B
15Preferred Stock shares shall be as follows:
1672. For shares purchased on or between May 5, 2005, through February 7,
17 2007, the following claims for damages shall be allowed:
isa) For each share sold on or before February 7, 2007, no Recognized
Claims for dam ages shall be allowed;1 9b) For each share sold on or between February 8, 2007, and through
20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in
2 1able 5, annexed hereto, less the inflation per share at the time of sale
22s set forth in Table 5; and
233. For shares purchased between February 8, 2007, through March 2,
242007 , the following claims for dam ages shall be allowed:
25a) For each share sold on or before March 2, 2007, no Recognized Claims
26or damages shall be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,
27he allowed damages shall be the inflation per share at the time of
28urchase for the applicable date of purchase as set forth in Table 5,
-26-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 44 of 103 Page ID#:11358
1 changes that occurred in reaction to certain public announcements regarding New
2 entury and then made adjustments for changes that were attributable to market
3orces unrelated to the alleged fraud in prices of such Call Options and Put
4Options. Lead Plaintiff's damages consultant then developed formulae (see below)
5rom which the Recognized Losses for New Century Call Options and Put Options
6may be calculated. In addition, the total dollar amount payable to Class Members7n connection with the acquisition of Call Options and the sale of Put Options
8 during the Class Period is limited to 10% of the Individual-Auditor Allotment. This
9 limitation reflects the speculative and derivative nature of these securities as
10 compared to New Century Common Stock and New Century Preferred Shares.
it8. With respect to purchases and sales (covers) of New Century Call
12Options during the period May 5, 2005 , through and including March 13, 2007 , the
13Artificial Inflation per Call Option on a given day shall be the dollar change in the
14value of Call Options on that day as a result of the inflation in New Century's
15Common Stock share price. The dollar change in the value of Call Options will be
16 calculated using the Black-Scholes option pricing formula (using Black's
17 djustment for dividends and the annualized standard deviation estimated from 46 -
18 day, historical daily volatility estimates) using the closing share price of New
19Century Common Stock on the transaction date, compared with the Black-Scholes
20call pricing formula value for the Call Option using the uninflated closing share
21price of New Century Common Stock on that same date as determined by: (1) the
22eported closing share price minus the Common Stock price inflation per share set
23 orth in the annexed Table 2 for Call Options initially purchased between May 5,
242005, and March 13, 2007, and (2) the reported closing share price minus the
25Common Stock price inflation per share set forth in the annexed Table 2 for Call
26Options initially sold between May 5, 2005, and March 13, 2007. Once again,
27Black's adjustment for dividends is implemented. Annualized volatility estimates
28are obtained using the daily standard deviations using the returns for that day plus
-28-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 45 of 103 Page ID#:11359
1he previous 45-day stock returns, which are then annualized using a 252-trading
2ay approach.
34
(a) For Call Options which (1) expired on or prior to February 7, 2007; (2)
were exercised prior to February 7, 2007; or (3) were sold (position
5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.
7b) For Call Options which were purchased or acquired between May 5,
8005, and February 7, 2007, and (1) expired on or after February 8,
2007; (2) were exercised on or between February 8, 2007, and March
93, 2007 ; or (3) were sold (position closed out) o n or between February
10, 2007, and March 13, 2007, the Recognized Loss Claim shall be that
number of Options multiplied by the lesser of:
1 1
121) the difference between Artificial Inflation per Call Option on the
date of purchase an d A rtificial Inflation per Call Option on the date13f expiration, exercise, or sale, as appropriate; or
1 42) the difference between the purchase price per Option and the sale
price per Option ($0.00 if the Call Option expired w orthless).1 5
16n example at this point might be useful. Suppose on February 6, 2007, an
investor purchases 100 Call Options (long one contract) with a March 17,
1 7007 maturity and exercise price of $20. The Call Option inflation on this
1 8ate is $10.40 from Table 8 annexed hereto. Hence, this investor paid
$10.40 too much for the Call Option on February 6, 2007. This investor19
hen sells these Call Options on February 9, 2007, when the Call Option
20nflation was $1.60 (see Table 8). Thus, this investor received $1.60 too
much for the Call Option on February 9, 2007. For this investor, the21ecognized Loss Claim is the difference in call price inflation on these two
22ates ($10.40 - $1.60, or $8.80) times number of Op tions (100), for a total. of$880.00; assuming that the difference between the purchase price and the
23ale price was greater than $8.80.
24(c) For Call Options which were purchased or acquired between February
25, 2007, and March 2, 2007, and (1) expired on or after March 5, 2007,
262) were exercised on or between March 5, 2007, and March 13, 2007;
or 3) were sold (position closed out) on or between March 5, 2007, and27arch 13, 2007, the Recognized Loss Claim shall be that number of
2 8ptions multiplied by the lesser of:
-29-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 47 of 103 Page ID#:11361
1 daily standard deviations using the returns for that day plus the previous 45-day
2tock returns, which are then annualized u sing 252 trading day approach.
3a) For Put Options which (1) expired on or prior to February 7, 2007; (2)
4ere exercised prior to February 7, 2007; or 3) were purchased (positionclosed out) prior to February 7, 2007, the Recognized Loss Claim shall
5e zero.
6 7007, and (1) expired on or after February 8, 2007; (2) were exercised on
8or between February 8, 2007, and March 13, 2007; or 3) were purchased
(position closed out) on or between February 8, 2007, and March 13,
9007, the Recognized Loss Claim shall be that number of Options
1 0ultiplied by the lesser o£
11
1) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
12er Put Option on the date of expiration, exercise, or purchase
1 3$0.00 if the Put O ption expired worthless), as app ropriate; or(2) the difference, multiplied by minus one, between the sale price per
14ut Option and the purchase price of the Put Option ($0.00 if the
15ut Option expired w orthless).
16n example at this point might be useful. Suppose on February 6, 2007, an
1 7nvestor sells 100 Put Options (short one contract) with a March 17, 2007
maturity and exercise price of $20. The Put inflation on this date is -$14.2218rom Table 8. Hence, this investor received $14.22 too little for the Put
1 9ption on February 6, 2007. This investor purchases (closes) these Put
Options on February 9, 2007, when the Put inflation was -$9.07 (see Table20). Thus, this investor paid $9.07 too little for the Call Option on February
21, 2007. For this investor, the Recognized Loss Claim is the difference in
purchase inflation and sale inflation on these two dates (-$9.07 - (-$14.22)225.15) times number of Put Options, 100 for a total of $515.00; assuming
2 3hat the difference between the P ut purchase price and the Put sale price wasgreater than $5.15.
24
25c) For Put Options which were initially sold between February 8, 2007, andMarch 2, 2007, and (1) expired on or after March 5, 2007; (2) were
26xercised on or between March 5, 2007 and March 13, 2007; or 3) were
27urchased (position closed out) on or between March 5, 2007, and March13, 2007, the Recognized Loss Claim shall be that number of Options
28ultiplied by the lesser of-
-31-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 48 of 103 Page ID#:11362
121) the difference, multiplied by minus one, between Artificial
Inflation per Put Option on the date of sale and Artificial Inflation
3er Put Option on the date of expiration, exercise, or purchase
4$0.00 if the Put O ption expired worthless), as app ropriate; or(2) the difference, multiplied by minus one, between the sale price per
5ut Option and the purchase price of the Put Option ($0.00 if the
6ut Option expired w orthless).
7d) For Put Options which were sold between March 5, 2007, and March 12,
8007, and (1) expired on or after March 13, 2007; (2) were exercised on
or after March 13, 2007; or 3) were purchased (position closed out) on or9fter March 13, 2007, the Recognized Loss Claim shall be that number of
10ptions mu ltiplied by the lesser of:
1 11) the Artificial Inflation per Put Option on the date of sale,12ultiplied by m inus one; or
(2) the difference, multiplied by minus one, between the sale price per13ut Option and the purchase price of the Put Option ($0.00 if the
1 4ut Option expired wo rthless).
15nother example might be helpful here. Suppose on March 6, 2007, an
investor sold 100 Put options (short one contract) with an exercise price of1 610.he put inflation for this option on March 6, 2007, was
1 7$ 0.68. Hence, this investor received $68 too little for selling these 100
options. Further suppose that this investor purchased (covered) 100 Put18
ptions after March 13, 2007, when Put inflation was zero. The Recognized
1 9oss Claim for this investor will be $68 (negative of the Put inflation on thesale date), assuming that the difference in purchase price of the Put option
20nd sale price of the Put option was greater than $0.6 8 per Put option.
21IIl.OTHER PROVISIONS OF THE PLAN
220. A payment to any Class Member that would amount to less than
23$10.00 in total will not be included in the calculation of the distribution of the
24Underwriter Allotment and Individual-Auditor Allotment, and no such payment
25will be made.
261. The determination of the price paid and the price received for a
27particular security shall be exclusive of all comm issions, taxes, fees and charges.
28
-32-OTICE OF PENDENCY OF CLASS ACTION
Case No, 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 49 of 103 Page ID#:11363
12. The Court has reserved jurisdiction to modify, amend, or alter the Plan
2 of Allocation without further notice, or to allow, disallow or adjust the claim o f any
3Class Member on equitable grounds, to ensure a fair and equitable distribution of
4unds. No person shall have any claim against the Plaintiffs or their counsel or any
5laims administrator or other agent designated by Plaintiffs or their counsel, or
6 against Defendants or their counsel, based on distributions made substantially in
7 ccordance with the Stipulations and the Settlements contained therein, the Plan of
8Allocation, or further orders of the Cou rt.
93. The Defendants and their counsel shall have no involvement in, or
10 responsibility for, or liability whatsoever for the distribution of the Settlement
11Fund or the Underw riter Allotment or Individual-Auditor Allotment, for the Plan of12Allocation, for the determination, administration and calculation of, or payment
13pursuant to, Proofs of Claim, for the payment or w ithholding of Tax es owed b y the
14 Settlement Fund, the Underwriter Allotment or Individual-Auditor Allotment, or
15 or acts or omissions of the Escrow Agent or any losses incurred in connection
16 therewith.
174. The Court has reserved jurisdiction to allow, disallow, or adjust on
18quitable grounds the Claim of any C lass Member.
195. The Plan of Allocation set forth herein is the plan that is being proposed
20by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may
21approve this plan as proposed or it may modify the Plan of Allocation without
22 further notice to the Class.
23WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?
2456. If the Settlements are approved, the Court will enter judgments (the
26 "Judgments"). The Judgments will dismiss with prejudice the claims against the
27Defendants and other related persons and entities and will provide that Lead
28Plaintiff and all other Class Members will provide releases as described below.
-33-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 51 of 103 Page ID#:11365
1employees, agents and retained professionals (other than KPMG or the
2 Underwriter Defendants).
38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the
4 Class will be deemed by operation of law to have released, waived, discharged and
5 dismissed each and every Settled Claim, and shall forever be enjoined from
6prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled
7 Claim" in this paragraph means any and all claims and causes of action of every
8nature and description, whether know n or Unk nown , whether arising under federal,
9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)
10 asserted in the Complaint, or (b) could have asserted in any forum that arise out of
11 or are based upon the allegations, transactions, facts, matters or occurrences,
12 representations or omissions involved, set forth, or referred to in the Complaint,
13 and that arise out of or relate to the purchase of New Century Common Stock, New
14entury Series A Preferred Stock, New Century Series B Preferred Stock, and/or15 New Century Call Options and/or the sale of New Century Put Options during the
16 Class Period. "Settled Claims" does not include claims relating to the enforcement
7f the Settlements. "Released Auditor Party" means KPMG and any and all of its18 partners, principals, officers, directors, employees, agents, attorneys and affiliates.
19 "Released Auditor Parties" does not include any Defendants other than KPMG.
209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the
21 Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,
22 heirs, executors, administrators, predecessors, successors and assigns, and any and
23 all of their current and former officers, directors, employees, agents and attorneys
24shall be deemed by operation of law to have released, waived, discharged and
25 dismissed each and every Settled Claim, and shall forever be enjoined from
26 prosecuting any or all Settled Claims, against any Released Underwriter Party.
27 "Settled Claim" in this paragraph means any and all claims and causes of action of
28 every nature and description, whether known or Unknown, whether arising under
-35-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 52 of 103 Page ID#:11366
1ederal, state, common or foreign law, that Plaintiffs or any other member of the
2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that
3 arise out of or are based upon the allegations, transactions, facts, matters or
4occurrences, representations or omissions involved, set forth, or referred to in the
5Com plaint, and that arise out of or relate to the purchase of New Cen tury Com mon
6 Stock, New Century Series A Preferred Stock, New Century Series B Preferred
7 Stock, and/or New Century Call Options and/or the sale of New Century Put
8Options during the Class Period. "Settled Claims" does not include claims relating9 to the enforcement of the Settlements. "Released Underwriter Party" means the
10 Underwriter Defendants and any and all of their respective parent companies,11 subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors
12 and assigns, and any and all of their current and former officers, directors,
13 employees, agents and attorneys. "Released Underwriter Parties" does not include
14 any Defendants other than the Underwriter Defendants.
1 50. "Released Parties" means the Released Officers And Directors, the
16Released Auditor Parties, and the Released Underwriter Parties.
1 71. "Unknown Claims" means any and all claims that Lead Plaintiff or
18ny Class Member does not know or suspect to exist in his, her or its favor at the
19ime of the release of the Released Parties, which if known by him, her or it might
20 have affected his, her or its decision(s) with respect to the Settlements. With
21 respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and
22 each Class Member shall be deemed to have waived, and by operation of the
23 Judgment shall have expressly waived, any and all provisions, rights and benefits
24 conferred by any law of any state or territory of the United States, or principle of
25 common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,
26 which provides:
27general release does not extend to claims which the creditor
28oes not know or suspect to exist in his or her favor at the time of
-36-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 53 of 103 Page ID#:11367
1xecuting the release, which if known by him or her must have
2aterially affected h is or her sett lement w ith the de btor.2. Lead Plaintiff and Class Members by operation of law shall be
4deemed to have acknowledged that the inclusion of "Unknown Claims" in the
5definition of Settled Claims and Settled Class Claims was separately bargained for
6 nd w as a key element of the Settlements.
73. As specified in the Stipulations, the Judgments will also provide that
8he Released Auditor Parties, the Released Underwriter Parties, and the Released
9Officers And Directors will release certain claims against Lead Plaintiff and the
10Class. In addition, certain Defendants and other persons and entities will also
1 1
ms against each other and other persons and entities as set forth in the12
Stipulations.
13 WHAT PAYMENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?
14OW WILL THE LAW YERS BE PAID?
1564. Lead Counsel has not received any payment for its services in
17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel18been reimbursed for its out-of-pocket expenses. Before final approval of the
19Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'20 ees from the Settlement Fund in an amount not to exceed 12% of the Settlement
21Amount, plus interest from the date of funding at the same rate as earned by the
22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or
23 seek attorneys' fees or expenses with respect to, any disgorgements or penalties
24 obtained by the Securities and Exchange Commission in the SEC Action. At the
25 same time, Lead Counsel also intends to apply for the reimbursement of Litigation
26Expenses not to exceed S4.5 million, plus interest from the date of funding at the
27same rate as earned by the Settlement Fund. Included in Lead Counsel's overall
28request for reimbursement of Litigation Expenses will be a request for an award to
-37-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 54 of 103 Page ID#:11368
1Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for
2eimbursement of their reasonable costs and expenses (including lost wages)
3irectly related to their representation of the Class. The Court will determine the
4mount of the awards.
5OW DO I PARTICIPATE IN THE SETTLE MENTS?6HAT DO I NEED TO DO?7
5. If you purchased or otherwise acquired New Century Common Stock,
9New Century Series A Preferred Stock, New Century Series B Preferred Stock,
10 and/or New C entury Call Options and/or sold New C entury Put Options, during the
11 period from May 5, 2005, through and including March 13, 2007, either in the12fferings, pursuant to a registration statement, or in the market, and were injured
13upon disclosure of certain facts alleged in the Complaint, and you are not excluded
14 by the definition of the Class and you do not elect to exclude yourself from the
15Class, then you are a Class Member. You will be bound by the proposed
16 Settlements if approved by the Court, and by any judgment or determination of the
17 Court affecting the Class. If you are a Class Member, you must submit a Claim
18Form and supporting documentation to establish your entitlement to share in the
19 Settlements. A Claim Form is included with this Notice, or you may go to the
20 website maintained by the Claims Administrator for the Settlements to download a
21 copy of the Claim Form or request that a Claim Form be mailed to you. The
22 website is ww w.neween turysettlement.com . You may also request a Claim Form
23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be
24downloaded from Lead Counsel's website at www.blbglaw.com. Those who
25 exclude themselves from the Class, and those who do not submit timely and valid
26 Claim Form s with adequate suppo rting docu mentation, will not be entitled to share
27 in the Settlements. Please retain all records of your ownership of, or transactions
28in, New Century Securities, as they may be needed to document yo ur Claim.
-38-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 55 of 103 Page ID#:11369
16. As a Class Member, you are represented by Lead Plaintiff and Lead
2 ounsel, unless you enter an appearance through counsel of your own choice at
3our own expense. You are not required to retain your own counsel, but if you
4hoose to do so, such counsel must file a notice of appearance on your behalf and5must serve copies of his or her notice of appearance on the attorneys listed in the
6ection entitled, "When and Where Will the Court Decide Whether to Approve the
7ettlements?," below.
87. If you do not wish to remain a Class Member, you may exclude
9 yourself from the Class by following the instructions in the section entitled, What
10 f I Do Not Want To Be A Part Of The Class And The Settlements? How Do I
11Ex clude Myself?," below.128. If you wish to object to the Settlements or any of the terms of the
13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for
14attorneys' fees and reimbursement of Litigation Expenses, and if you do not
15 xclude yourself from the Class, you m ay present your ob jections by following the
16 nstructions in the section entitled, "When and Where Will the Court Decide
17Wh ether to Approve the Settlements?," below.
isHAT IF I DO NOT WANT TO BE A PART OF THE SETTLEME NTS?19OW DO I EXCLUDE MYSELF?2019. Each Class Member will be bound by all determinations and
22judgments in this lawsuit, including those concerning the Settlements, whether
23 favorable or unfavorable, unless such person or entity mails, by first-class mail (or
24its equivalent outside the U.S.), or otherwise delivers a written Request for
25Exclusion from the Class, addressed to In re New Century Securities Litigation
26Settlement, c/o An alytics, Inc., Claims A dm inistrator, P.O. Box 2004, C hanhassen,
27MN 55317-2004. The exclusion request must be received no later than
28[INSERT]. You will not be able to exclude yourself from the Class after that date.
-39-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 56 of 103 Page ID#:11370
1 Each request for exclusion must (i) state the name and address of the person or
2entity requesting exclusion; (ii) state that such person or entity requests exclusion
3 from the Class in In re New Century, 2:07-CV-00931-DDP; (iii) be signed by the
4 person or entity requesting exclusion; (iv) provide a telephone number for that
5 person or entity; and (v) provide the date(s), price(s), and number(s) of shares of
6 all purchases, acquisitions, and sales of New Century Securities during the Class
7 Period. Requests for exclusion will not be valid if they do not include the
8nformation set forth above and are not received within the time stated above,
9 unless the Court otherwise determines.
1 000. If you do not want to be part of the Class, you must follow these
11 instructions for exclusion even if you have pending, or later file, another lawsuit,
12 arbitration, or other proceeding relating to any Settled Claims.
1 301. If aerson or entity requests to be excluded from the Class thatY14person or entity w ill not receive any be nefit provided for in the Settlements.
1 502. The Individual Defendants, Insurance Carriers, Underwriter
16 Defendants or KPMG may terminate the Settlements if requests for exclusion are
17 received from potential Class Members representing over a certain amount of
1 8 shares as stated in Supplemental Agreements. The three settlement agreements are
19 closely related and, if one of the three Settlements should not become final for any
20 reason, it could affect the finality and enforceability of the other Settlements.
21HEN AND WHERE WILL THE COURT DECIDE WHETHE R TO APPROVE
22
THE SETTLEMENTS?23
DO I HAVE TO COME T O THE HEARING?24
MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25
2603. If you do not wish to object in person to the proposed Settlements,
27 proposed Plan of Allocation, and/or the application for attorneys' fees and
28reimbursement of Litigation Expenses, you do not need to attend the Settlement
-40-OTICE OF PENDENCY OF CLASS ACTION
Case No. 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 60 of 103 Page ID#:11374
1ourteen (14) days after you receive this Notice, or (ii) provide the names and
2ddresses of such persons no later than fourteen (14) days after you receive this
3otice to In re New Century Securities Litigation Settlement, c/o Analytics, Inc.
4Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004. If you
5hoose the first option, upon such mailing, you must send a statement to the
6 Claims Administrator confirming that the mailing was made as directed, and you7ust retain the list of names and addresses for use in connection with any possible
8uture notice to the Class. If you choose the second option, the Claims
9Administrator will send a copy of the Notice to the beneficial owner. Upon full
10compliance with these directions, such nominees may seek reimbursement of their
11easonable expenses actually incurred, by providing the C laims Adm inistrator with12 proper documentation supporting the expenses for which reimbursement is sought.
13 Copies of this Notice may also be obtained from the settlement website
14www.newcenturysettlement.com or Lead Counsel's website, www.blbglaw.com, or
15 by calling toll-free 1-86 6 -308-7 6 15.
16CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
17
QUESTIONS?18912. This Notice contains only a summary of the terms of the proposed
20Settlements. More detailed information about the matters involved in the
21Consolidated Action is available at www.newcenturysettlement.com, including,
22among other documents, copies of the Stipulations, Claim Form, the Complaint,
23the Court's Order on the Defendants' motions to dismiss the Consolidated Action
24and the Answers of Defendants. Copies of the Court-filed documents are also
25available for review during regular business hours at the address listed above. All
26inquiries concerning this Notice or the Claim Form should be directed to:
27
28
-44-OTICE OF PENDENCY OF CLASS ACTION
Case No, 07-00931
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 74 of 103 Page ID#:113881ENERAL INSTRUCTIONS
2.t is important that you completely read and understand the Notice of
3endency of Class Action and Proposed Settlements, Settlement Fairness Hearing,
4 and Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the
5 "Notice") that accompanies this Proof of Claim and Release ("Proof of Claim"),
6 and the Plan of Allocation included in the Notice. The Notice and the Plan of
7Allocation describe the proposed settlements ("Settlements") that will resolve this
8Consolidated Action, how the Class Members are affected by the Settlements, and
9 the manner in which the proceeds of the Settlements will be distributed, if the
10Court approves the Settlements and the Plan of Allocation. The Notice also
11ontains the definitions of ma ny of the defined terms (w hich are indicated by initial12capital letters) used in this Proof of Claim unless otherwise stated in this Proof of
13Claim. By signing and submitting the Proof of Claim, you will be certifying that
14 you have read and that you understand the Notice.
15. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL
16 YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE, BY
17FIRST-CLASS MAIL POSTAGE PREPAID, POSTM ARKED ON O R BEFORE
1 8 ADDRESSED TO:
1 9n re N ew Century Securities Litigation Settlement
20/o Analytics, Inc. Claims AdministratorP.O. Box 200421hanhassen, MN 55317-2004
22-866-308-7615
23.his Proof of Claim is directed to all persons who purchased or
24otherwise acquired New Century common stock, New Century 9.125% Series A
25Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), New
26Century 9.75% Series B Cumulative Redeemable Preferred Stock ("Series B
27 Preferred Stock"), and/or New Century call options and/or who sold New Century
28put options, during the time period from May 5, 2005, through March 13, 2007,
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 75 of 103 Page ID#:11389
1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in2he Complaint, were injured thereby (the "Class"). (The New Century common
3tock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call
4ptions and New Century put options are referred to collectively as "New Century
5ecurities.")
6.Class Member" means any person who is included in the definition
7f the Class and who did not timely submit a proper request for exclusion in
8ccordance with the requirements set forth in the Notice. Excluded from the Class
9 are certain persons or entities excluded by definition pursuant to the Court's
10preliminary approval of the Settlements.' Also excluded from the Class are any
11 persons or entities who exclude themselves by filing a request for exclusion in
12 ccordance w ith the requirements set forth in the Notice.
13.Authorized Claimant" means a Class Member who submits a timely
14 nd valid Proof of Claim form to the Claims A dministrator, in accordance w ith the
15equirements established by the Court, that is approved for payment from the Net
16Settlement Fund.
17. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR
18SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR
19 EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.
20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE
21SETTLEMENTS IF YOU A RE NOT A CLASS MEM BER. THUS, IF YOU FILE
223 1The following persons are excluded from the Class: (a) the Underwriter
24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members
25of the immediate families of the Individual Defendants; (c) the subsidiaries and
affiliates of Defendants; (d) any person or entity who was a partner, executive
26officer, director or controlling person of New Century (including any of its
27ubsidiaries or affiliates) or of any Defendant; (e) any entity in which any
Defendant has a controlling interest; and (f) the legal representatives, heirs,28uccessors and assigns of any such excluded party.
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 77 of 103 Page ID#:11391
1documentation for all sales of New Century Common Stock and Preferred Stock
2 etween March 14, 2007, through and including June 10, 2007. You are also
3 equired to submit genuine and sufficient documentation reflecting your positions4 in New Century Common Stock and Preferred Stock as of the close of the market
5on March 13, 2007, and as of the close of the market on June 10, 2007.
6Documentation may be photocopies of stockbrokers' confirmation slips or
7stockbrokers' monthly statements (reflecting your opening and closing balances for
8he mo nths specified on the actual claim form, and in which transactions during the
9Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR
10POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT
11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF
13YOUR CLA IM. DO NOT SEND ORIGINAL STOCK CERTIFICATES.
1 42. All joint purchasers must each sign this Proof of Claim.
153. Agents, executors, administrators, guardians, and trustees must
16 complete and sign the Proof of Claim on behalf of persons represented by them,
17 nd they must:
1 8a)xpressly state the capacity in which they are acting;
1 9b) identify the name, account number, Social Security Number (or
20axpayer identification number), address and telephone number
21f the beneficial owner of (or other person or entity on whose
22ehalf they are acting with respect to) the New Century
23ecurities; and
24c)urnish herewith evidence of their authority to bind to the Proof
25f Claim the person or entity on whose behalf they are acting.
26Authority to complete and sign a Proof of Claim cannot be
27stablished by stockbrokers demonstrating only that they have
28
4
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 80 of 103 Page ID#:11394
1 transactions made by that entity, no matter how many separate accounts that entity
2has (e.g., a corporation with multiple brokerage accounts should include all
3ransactions made in New Century Securities during the Class Period on one Proof4 of Claim, no matter how many accounts the transactions were made in). If you5 equire additional room to list your transactions, please be sure to include your frill
6 ame and the last four digits of your social security number or Tax ID number on
7 ach additional sheet. Check here if additional transactions are included on
8 additional schedules.PART II:EW CENTURY COMMON STOCK
10. Be2inninL HoldinLs: State the number of shares of New Century
1 1ommon Stock the Claimant owned as of the close of the market
12n May 4, 2005. If none, write "zero" or "0." If other than zero,
1 3e sure to attach the required documen tation.
14
15. Purchases:
1 61) List all purchases of New Century Common Stock made during the
17 period from May 5, 2005, through and including March 13, 2007. (NOTE: If you
1 8 cquired your New Century Common Stock during this period other than by an
19open-market purchase, please provide a complete description of the terms of the
20cquisition on a separate page.) Be sure to attach the required documentation.
21rade Date(s) (List
22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*
2345627
*excluding com missions, transfer taxes or other fees.28
7
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
sExercised Calls: List all Call Option contracts on New Century9ommon Stock that you exercised during the period from May 5,10through and including March 13, 2007. Be sure to attach
1 1 the required documentation.12
Strike13rice for
14xpirationallumber of Callesult:Month andptionption Contracts Rec' d Shares
15ate Exercisedea rontract Exercisedr Cash?
16
17
18
1 9
20. Expired Calls: List all Call Option contracts on New Century
2 1ommon Stock that expired worthless during the period from
22ay 5, 2005, through and including March 13, 2007. Be sure to
23ttach the required documentation.
24
25
26
27
28
15
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 93 of 103 Page ID#:11407
1Me mb er, on behalf of themselves, for good and sufficient consideration, the receipt
2nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim
3s executed and delivered by, or on behalf of, such Class Member, will be deemed
4y operation of law to have released, waived, discharged and dismissed each and
5very Settled Class Claim as against each and every Released Officer And Director
6 and the Insurance Carriers (as defined in the Global Officer And Director
7tipulation), and shall be deemed to forever be enjoined from prosecuting any or
8all of the Settled Class Claims against each and every Released Officer And
9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means
10any and all claims and causes of action of every nature and description, whether
11 known or Unknown Claims, whether arising under federal, state, common or12 oreign law, that Plaintiffs or any other member of the Class (a) asserted in the
13 Consolidated Action, or (b) could have asserted in any forum that arise out of or
14are based upon the allegations, transactions, facts, matters or occurrences,
15epresentations or omissions involved, set forth, or referred to in the Consolidated
16Action, and that arise out of or relate to the purchase of New Century Common
17Stock, New Century Series A Preferred Stock, New Century Series B Preferred
18Stock, and/or New Century Call Options and/or the sale of New Century Put
19 Options during the Class Period. Settled Class Claims does not include claims
20elating to the enforcement of the Settlement. "Released Officers And Directors"
21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin
22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey
23D. Goldberg, and any of their respective heirs, executors, administrators,
24predecessors, successors, assigns, employees, agents and retained professionals;
25 nd (ii) all directors, officers, employees, and other natural persons affiliated with
26New Century (including any of its subsidiaries and affiliates) included in the
27definition of "Assured" or "Insured" as defined in the Policies (defined in the
28Global Officer And Director Stipulation) and any and all of their respective heirs,
2 0
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 95 of 103 Page ID#:11409
1nderwriter Release
2(we) understand and acknowledge that, without further action by anyone,
3 on and after entry of the Underwriter Judgment and occurrence of the Effective
4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,5 their parent companies, subsidiaries, affiliates, heirs, executors, administrators,6predecessors, successors and assigns, and any and all of their current and former
7 officers, directors, employees, agents and attorneys, for good and sufficient
8onsideration, the receipt and adequacy of which are hereby acknowledged,
9wh ether or not a Proof of Claim is executed and de livered by, or on behalf of, such
10Class Member, will be deemed by operation of law to have released, waived,
11 discharged and dismissed each and every Settled Claim, and shall forever be
12 enjoined from prosecuting any or all Settled Claims, against any Released
13 Underwriter Party. "Settled Claim" in this paragraph means any and all claims and
14causes of action of every nature and description, whether known or Unknown,
15whether arising under federal, state, common or foreign law, that Plaintiffs or any
16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted
17 in any forum that arise out of or are based upon the allegations, transactions, facts,
18 matters or occurrences, representations or omissions involved, set forth, or referred
19o in the Complaint, and that arise out of or relate to the purchase of New Centuryp2 0 ommon Stock, New Century Series A Preferred Stock, New Century Series B21 Preferred Stock, and/or New Century Call Options and/or the sale of New Century
22 Put Options during the Class Period. "Settled Claims" does not include claims
23 relating to the enforcement of the Settlements. "Released Underwriter Party"
24 means the Underwriter Defendants and any and all of their respective parent
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 101 of 103 Page ID#:11415
1NITED STATES DISTRICT COURT2ENTRAL DISTRICT OF CALIFORNIA
3N RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)4Lead Case)
56 SUMM ARY NOTICE7
8 TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR
9ACQUIRED NEW CENTURY COMMON STOCK; NEW CENTURY
10 9.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
11 ("SERIES A PREFERRED STOCK"); NEW CENTURY 9.75% SERIES B
12 CUMULATIVE REDEEMABLE PREFERRED STOCK ("SERIES B
13PREFERRED STOCK"); AND/OR NEW CENTURY CALL OPTIONS
14 AND/OR WHO SOLD NEW CENTURY PUT OPTIONS DURING THE15 TIME PERIOD FROM MAY 5 9 005, THROUGH MARCH 13, 2007,
16 INCLUSIVE:
17YOU ARE HERE BY N OTIFIED pursuant to Rule 23 of the Federal Rules of Civil18 Procedure and an Order of the United States District Court for the Central District
of California (i) of the pendency of this action (the "Consolidated Action") as a
19 class action on behalf of the persons and entities described above (the "Class")
20 except for certain persons and entities who are excluded from the Class by
definition; and (ii) that three settlements ("Settlements") reached in this
21 Consolidated Action have been proposed that will fully and finally settle all claims
22 against and release all Defendants (i.e., a settlement with the Individual Defendants
in the amount of $65,077,088.00; a settlement with the Underwriter Defendants in23 the amount of $15,000,000.00; and a settlement with KPMG LLP in the amount of
24 $44,750,000.00).he total cash amount of the Settlements equals$124,827,088.00. A hearing will be held before the Honorable Dean D. Pregerson
25 at the United States District Court for the Central District of California, 312 North
26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action
27 should be finally certified, for settlement purposes only, as a class action under
2 8 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;
i
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement
Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 102 of 103 Page ID#:114161 (2) whether the proposed Settlements should be approved by the Court as fair,
2 easonab le, and adequate; (3) whethe r the Plan of Allocation is fair, reasonable andadequate and therefore should be approved in connection with the Settlements; and
3 (3) whether the application of Lead Counsel for attorneys' fees and Litigation
4 Expenses should be approved.
5 IF YOU ARE A MEMBER OF THE CLASS, YOUR RIGHTS WILL BE
6 AFFECTED BY THE SETTLEMENTS, AND YOU MAY BE ENTITLED TO
7 SHARE IN THE SETTLEMENT FUND. If you have not yet received the (1)
g Notice Of Pendency Of Class Action And Proposed Settlements, Settlement
9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of
10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim
11 Form"), you may obtain copies of these documents by contacting: In re New12 Century Securities Litigation Settlement c/o Analytics, Inc. Claims Administrator,
13 P.O. Box 2004, Chanhassen, MN 55317-2004, (866) 308-7615. Copies of the
14 Notice and Claim Form may also be downloaded from: www.blbglaw.com or at
15 www.newcenturysettlement.com . If you are a Class Member, in order to be
16 eligible to share in the distribution of the Net Settlement Fund, you must submit a
17 Claim Form no later thanestablishing that you are e ntitled
18 to a recovery. You will be bound by any judgment entered in the Consolidated
19 Action whether or not you make a Claim.
20 If you desire to be excluded from the Class, you must submit a request for
21 exclusion to be received byin the manner and form explained
22 in the Notice. All Class Members who do not request exclusion from the Class
23 will be bound by any judgment entered in the Consolidated Action.
24 Any objection to the proposed Settlements, Plan of Allocation or application for
25 attorneys' fees and payment of Litigation Expenses must be filed with the Court
26 and delivered to be received by counsel for the parties no later than
27in the manner and form set forth in the Notice.
28
2
8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement