New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement

8/9/2019 New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement

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Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 1 of 3 Page ID#:10808

1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP

2 BLAIR A. NICHOLAS (Bar No. 178428)

2ZET

blblaw.coargm3 LIZH LIN (Bar No. 174663)

([email protected] )4 NIKI L. MENDOZA (Bar No. 214646)

W

[email protected] (Bar No. 211114)

([email protected] )6TAKEO A. KELLAR (Bar No. 234470)

(takeok@blbglaw. com )7 12481 High Bluff Drive, Suite 300

San Diego, CA 921308 Tel: (858 793-0070

Fax: (8583 793-03239and-

SALVATO@

RE J. GRAZI )ANO

10 LAUREN A. MeMILLEN1 1 ^[email protected])285 Avenue of the Am ericas

12 New York, NY 10019Tel: (212) 554-1400

13 Fax: (212) 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State T eachers’ Retirement System

15

16NITED STATES DISTRICT COURT

17ENTRA L DISTRICT OF CALIFORNIA

18IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)

19Lead Case)

20OTICE OF UNOPPOSED

1OTION AND UNOPPOSED

MOTION FOR PRELIMINARY

2PPROVAL OF SETTLEMENTS

3ate: August 30, 2010

24ime: 10:00 a.m.

Courtroom: 325udge: Hon. Dean D. Pregerson

26

27

28

NOTICE OF MOTION

Case No. 2:07-cv-00931-DDP (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 2 of 3 Page ID#:10809

1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

2LEASE TAKE NOTICE that, on August 30, 2010, at 10:00 a.m. or as soon

3 thereafter as counsel may be heard, Lead Plaintiff New York State Teachers’

4 Retirement System (“NYSTRS”), and plaintiffs Carl Larson and Charles Hooten

5 (collectively, “Plaintiffs”) will and hereby do move this Court before the

6 Honorable Dean D. Pregerson, United States District Judge, at the United States

7 Courthouse, 312 North Spring Street, Courtroom 3, Los Angeles, California 90012,

8 for an Order, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure,

9 granting Plaintiffs’ unopposed motion for preliminary approval of the proposed

10 Settlements of this action and related relief. Please also note that Plaintiffs intend

11 to seek to shorten time to hear the unopposed motion for preliminary approval of

12 the Settlements. In the event the motion to shorten time is not granted, the

13 unopposed motion for preliminary approval of Settlements shall be heard as

14 noticed on August 30, 2010, at 10:00 a.m.

15his motion is premised on the accompanying memorandum of points and

16 authorities, the Stipulations of Settlement submitted herewith, and all prior papers

17 and proceedings in this action.

18he parties have agreed upon a form of [Proposed] Order Preliminarily

19 Approving Settlements And Providing For Notice (“Preliminary Approval Order”),

20 and exhibits thereto, which is submitted herewith.

21

22 Dated: July 30, 2010espectfully submitted,

23ERNSTEIN LITOWITZ BERGER

24GROSSMANN LLP

25s/ Salvatore J. Graziano

26ALVATORE J. GRAZIANO

27LAIR A. NICHOLASELIZABETH LIN

28IKI L. MENDOZA

1OTICE OF MOTION




Case 2:07-cv-00931-DDP-FMO Document 484 Filed 07/30/10 Page 3 of 3 Page ID#:10810ENJAMIN GALDSTONTAKEO A. KELLAR

22481 H igh Bluff Drive, Suite 300San Diego, CA 92130

3el: (858) 793-0070Fax: (858) 793-0323

4and-

SALVATO RE J. GRAZIANO5AUREN A. MCMILLEN

1285 Avenu e of the Americas6ew York, NY 10019

Tel: (212) 554-14007ax: (212) 554-1444

8ead Counsel for Lead Plaint ffThe N ew Y ork S tate Teachers Retirem enty stem and the Class

0ARVIN L. FRANK

1 1urray, Frank & Sailer LLP275 M adison Avenue

12ew York, NY 10016Tel: (212) 682-1818

13ax: (212) 682-1892

14Counsel for Plaintiff Carl Larson

15

16EFFREY ZWERLINGZw erling, Schachter & Z werling, LLP

171 Madison AvenueNew Y ork, NY 1001018el: (212) 223-3900

19ax: (212) 371-5969

20ounsel f or Plaintiff Charles Ho oten

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25

26

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28

2OTICE OF MOTION




Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 1 of 32 Page ID#:10811



2ZET

lairblbglaw.com3 LIZH LIN (Bar No. 174663)

([email protected] )4 NIKI L. MENDOZA (Bar No. 214646)

[email protected]

5AMGALDSTON (Bar No. 211114)([email protected] )

6TAKEO A. KELLAR (Bar No. 234470)(takeok@blbglaw. com )

7 12481 High Bluff Drive, Suite 300San Diego, CA 92130

8 Tel: (858 793-0070Fax: (8583 793-0323

9and-SALVATO

@RE J. GRAZI )ANO

10 LAUREN A. MeMILLEN1 1 [email protected])285 Avenue of the Am ericas

12 New York, NY 10019Tel: (212) 554-1400

13 Fax: (212) 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State T eachers’ Retirement System

15



18IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)

19Lead Case)

20LAINTIFFS’ MEMOR ANDUM

1F POINTS AND AUTH ORITIESIN SUPPORT OF UNOPPOSED

2OTION FOR PRELIMINARYAPPROVAL OF SETTLEMENTS

23

24ate: August 30, 2010

Time: 10:00 a.m.25ourtroom: 3

26udge: Hon. Dean D. Pregerson

27

28

PRELIMINARY APPROVAL MOTION




Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 2 of 32 Page ID#:10812ABLE OF CONTENTSage

3 TABLE OF AUTHORITIESii4 I. PRELIMINARY STATEMENT5 II. OVERVIEW OF THE LITIGATION6. The Consolidated Complaints And

Defendants’ Motions To Dismiss7 B.iscovery8 C. KPMG’s Motion For Summary Judgment9D. The Extensive Negotiations Leading To The

10ettlements11 III. THE SETTLEMENTS12. Summary Of The Settlements13.easons For The Settlements14 IV. THE PROPOSED SETTLEMENTS WARRANT

PRELIMINARY APPROVAL15A. Factors To Be Considered By The Court In

16he Preliminary Approval Of C lass ActionSettlements

171 .he Settlements W ere Vigorousl

18egotiated And A re Supported WyExperienced Counsel119

2.he Substantial Benefits Obtained For20he Class, Especially In Light Of

Serious Risks Of Lesser Or No21ecovery, Support Approval Of T he

Settlements2223.he Stage Of The Proceedings And

23iscovery Completed SupportApproval Of The S ettlements424

B.he Class Should Be C ertified For25ettlement Purposes426.umerosity527.ommonality628.ypicality7-i-RELIMINARY APPROVAL MOTION





1.dequacy82.omm on Questions Of LawPredominate And A Class Action Is

3he Superior Method Of Adjudication84.he Proposed P lan Of A llocation Is Fair

And Reasonable95D. The Notice To The Class Is Adequate26

V. CONCLUSION47

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-ii-RELIMINARY APPROVAL MOTION




Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 4 of 32 Page ID#:10814ABLE OF AUTHOR ITIESASESAGE( S)

3n re A pplied M icro Circuits Corp. Sec. L itig.,003 U.S. Dist. LE XIS 14 492 (S.D. Cal. July 10, 2003)85

B lack ie v. B arrack,524 F.2d 891 (9th Cir. 197 5)56Class Plaintiff s v . S eattle,

7955 F.2d 126 8 (9th Cir. 1992),10,20

Conn . Ret. Plans and Trust Funds v . A m gen, Inc.,8009 U.S. Dist. LEX IS 7 16 53 (C.D. Cal. Aug. 12, 2009)69n re Consol. Pinnacle W . Sec. L itig.,

01 F.3d 194 (9th Cir. 1995)111 In re Cooper Cos., Inc. Sec. L itig.,254 F.R.D. 6 28 (C.D. Cal. 2009)912 Crossen v . CV Therapeutics,

3005 W L 1910928 (N.D. C al. Aug. 10, 2005)714Duk es v. W al-M art, Inc.

509 F.3d 116 8 (9th C,ir. 2007 )815 In re Em ulex C orp. Sec. L itig. ,

610 F.R.D. 717 (C.D. Cal. 2002)0In re First Capital HoldingsCorp. Fin. Prods. Sec. Litig

7,

1992 U.S.-Dist. LE XIS 14 337 (C.D. Cal. June 10, 1992)218 Fulford v. Lo itech, Inc.,

9010 U.S.-Dist. LE XIS 2904 2 (N.D. Cal. Mar. 5, 2010)1Glass v. UB S Fin. Servs. Inc.,031 Fed. Ap px. 452 (9th Cir. 2009) (unpubl.)0,22

21 Harris v. Palm Springs A lpine Estates, Inc.,

229 F.2d 909 (9th Cir. 196 4)523In re Heritage B ond L itig.,

2005 WL 1594403 (C.D . Cal. June 10, 2005)

224 In re Im m une Response Sec. Liti

597 F. Supp. 2d 1166 (S.D. Caf. 2007)426In re Juniper N etw orks S ec. Litig.,

26 4 F.R.D. 584 (N.D. Cal. 2009)5, 16, 17

27 K irk orian v. B orelli

895 F. Supp. 449 (N.D. C al. 1988)2-iii-RELIMINARY APPROVAL MOTION





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





1 TATUTES AND R ULES

2 15 U.S.C.A. §78u-4(a)(7)(A)-(F)33 Fed. R. Civ. P. 23assim

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-v -RELIMINARY APPROVAL MOTION





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 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 8 of 32 Page ID#:10818he proposed Settlements were reached only after extensive litigation and

2 negotiations – including more than eleven in-person mediation sessions and

3 numerous negotiations over the course of more than one year – overseen by an

4 experienced mediator, the Honorable Daniel Weinstein (Ret.) (the “Mediator”),

5 and with the active participation of the Court-appointed Lead Plaintiff NYSTRS,

6 whose General Counsel or Associate General Counsel personally attended each of

7 the mediation sessions. The proposed Settlements represent an outstanding result

8 for Plaintiffs and the Class, particularly in light New Century’s bankruptcy and the

9 risks to the Class if the action continued, including the risks of establishing

10 Defendants’ liability and the Class’s full amount of damages trial and the risks that

11 there would be significantly less funds available to satisfy any judgment or post-

12 trial settlement.

13y this Motion, Lead Plaintiff respectfully requests that the Court

14 preliminarily approve the Settlements, based on Lead Plaintiff’s evaluation of the

15 facts and applicable law, and its recognition of the substantial risks and expense of

16 continued litigation. At the Final Settlement Hearing, the Court will have before it

17 more extensive motion papers submitted in support of the proposed Settlements,

18 and will then make an ultimate determination of whether the Settlements are fair,

19 reasonable, and adequate under all of the circumstances surrounding the action. At

20 this juncture, Lead Plaintiff requests only that the Court grant preliminary approval

21 of the Settlements so that Notice of the Settlements may be sent to the Class and

22 the Final Settlement Hearing may be scheduled.

23

245 Zona, Marilyn A. Alexander, David Einhorn, and William J. Popejoy; (ii)

26 “Underwriter Defendants,” including Bear, Stearns & Co. Inc., Deutsche Bank

Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities

27 LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.;

28 and (iii) KPMG LLP (“KPMG”). New Century was not named as a defendant due

to its filing of bankruptcy.






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






1 oral arguments on the Defendants’ motions to dismiss. On December 3, 2008, the

2 Court issued an order denying Defendants’ motions to dismiss.

3.iscoveryollowing the Court’s December 3, 2008 denial of the Defendants’ motions

5 to dismiss, the discovery stay imposed by the Private Securities Litigation Reform

6 Act of 1995 (“PSLRA”) was automatically lifted. Plaintiffs served dozens of

7 requests for production of documents and subpoenas. Following numerous meet

8 and confers over discovery disputes, including the filing of several discovery

9 motions, Plaintiffs ultimately obtained over 38 million pages of documents from

10 the parties and non-parties in this action.

11mong other things, Plaintiffs received over 35 million pages of documents

12 from the New Century Liquidating Trust, over 2.8 million pages from Defendant

13 KPMG, over 600,000 pages from the Underwriter Defendants, and approximately

14 half a million pages of documents from various third parties. Plaintiffs also

15 produced documents to Defendants, including trade confirmations, brokerage

16 statements, investment manuals, and other materials in their possession concerning

17 New Century. Through their review of these documents, the parties were well

18 informed of the strengths and weaknesses of their positions, their ability to prove

19 their claims and defenses, and they entered into the Settlements having taken these

20 factors into consideration.

21. KPMG’s Motion For Summary Judgment

2n January 13, 2010, Defendant KPMG filed a motion for summary

23 judgment, arguing that Plaintiffs could not establish loss causation in this case for

24 any misstatements concerning the Company’s 2005 financial results. On

25 March 15, 2010, Plaintiffs filed their opposition to KPMG’s motion and a related

26 motion to exclude KPMG’s expert on loss causation. On April 14, 2010, KPMG

27 filed its reply brief as well as three motions to exclude Plaintiffs’ experts on loss

28





Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 1 1 of 32 Page ID#:10821

1 causation. KPMG’s motion for summary judgment was pending at the time it

2 reached an agreement in principle to settle with Lead Plaintiff.

3. The Extensive Negotiations Leading To The Settlementshe Settlements are the result of intensive, arm’s-length negotiations

5 between all parties, involving eleven in-person mediation sessions over more than

6 a one-year time period, as well as extensive direct and indirect negotiations

7 between counsel for the parties that occurred before and after those mediations.

8 Settlement negotiations occurred while litigation was ongoing, including the

9 briefing and discovery related to KPMG’s summary judgment motion, and

10 Plaintiffs’ review of over 38 million pages of documents. The negotiations were

11 particularly complex due to the parties’ disputes over the claims and defenses in

12 the action, New Century’s bankruptcy, the number of defendants in this case, and

13 the existence of claims that were made against certain of the Defendants by the

14 New Century Liquidating Trustee (the “Trustee”), plaintiffs in the related action

15 Kodiak Warehouse LLC, et al. v. Brad A. Morrice, et al., Case No. 08-1265-DD P-

16 FMO (“Kodiak”), and the Securities & Exchange Commission (“SEC”). In the

17 end, the parties were able to reach global settlements on all claims, including not

18 only those claims alleged in the instant class action, but also the claims brought by

19 the Trustee, Kodiak, and the SEC which was necessary to achieve a settlement

20 here.

21he negotiations commenced on March 11, 2009, when Plaintiffs and

22 certain of the Defendants participated in in-person mediation sessions before the

23 Honorable Daniel Weinstein. The mediations took place over three separate days,

24 on March 11, 12, and 24, 2009, followed by additional negotiations facilitated by

25 the Mediator on March 31, 2009, and May 8, 2009. A second in-person mediation

26 session took place over two days on June 25 and 26, 2009, followed by calls with

27 the Mediator on July 29, 2009, and August 18, 2009. A third in-person mediation

28 session took place on September 14, 2009, followed by a conference call on






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





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.






1 other payments to resolve the other claims brought against these Defendants by the

2 SEC, the Trustee, and Kodiak). 5

3. Reasons For The Settlementslaintiffs entered into the Settlements with a thorough understanding of the

5 strengths and weaknesses of the claims asserted in this action. This understanding

6 is based on Lead Counsel’s prosecution of the action, which included, among other

7 things: (a) drafting of detailed complaints after review and analysis of the SEC

8 filings, press releases and other public statements relating to New Century, media

9 and news reports about New Century, publicly available trading data relating to the

10 price and volume of New Century securities, the Examiner’s Report, and other

11 information; (b) interviews with numerous former employees of New Century; (c)

12 extensive briefing on Defendants’ various motions to dismiss and KPMG’s motion

13 for summary judgment; (d) review and analysis of over 38 million pages of

14 documents produced by Defendants and third parties; (e) consultation with loan

15 underwriting, accounting and damages experts; and (f) the drafting of mediation

16 statements and numerous mediation letters and preparing for and participating in

17 numerous mediation sessions and extensive negotiations. Based on the foregoing,

18 Lead Plaintiff has entered into the Settlements with an in-depth understanding of

19 the strengths and weaknesses of Lead Plaintiff’s claims and damages.

20lthough Lead Plaintiff and Lead Counsel believe that the claims asserted

21 against Defendants have merit, they also recognize that there are serious risks as to

22

235The Global Settlement Stipulation provides for a total of $91,102,331.51 in cash

24 and $944,029.49 in other consideration to be paid to resolve all of the claims

25 against the New Century officers and directors by the Class, the SEC, the Trustee

26 and Kodiak. The Global Settlement Stipulation further provides an agreed-to

allocation of these payments to the Class and the plaintiffs in the other pending

27 actions. The Class is receiving over 70% of the amount paid by the New Century

28 officer and director Defendants in the Global Settlement Stipulation, or

$65,07 7 ,088 in cash.






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






1 lawsuit must be limited to the extent necessary to reach a reasoned judgment that

2 the agreement is not the product of fraud or overreaching by, or collusion between,

3 the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable

4 and adequate to all concerned.”Officers for Justice v. Civil Serv. Comm’n,

6885 F.2d 615, 625 (9th Cir. 1982).

6n considering whether to grant preliminary approval of class action

7 settlements, courts make a preliminary evaluation of the fairness of the settlements

8 prior to issuing notice to the class and prior to holding a final settlement hearing.

9 The general standard by which courts are guided when deciding whether to grant

10 preliminary approval of a class action settlement is whether the proposed

11 settlement falls within the range of what could be found “fair, adequate and

12 reasonable,” so that notice may be given to the proposed class and a hearing for

13 final approval can be scheduled. Class Plaintiff s, 955 F.2d at 1276 .

14t this point, the Court need not answer the ultimate question: whether the

15 Settlements are fair, reasonable and adequate. When the Court makes this ultimate

16 determination at a later point, the Court will be asked to review the following

17 factors: the strength of Plaintiffs’ case; the risk, expense, complexity, and likely

18 duration of further litigation; the risk of maintaining class action status throughout

19 the trial; the amount offered in the Settlements; the extent of discovery completed,

20 and the stage of the proceedings; and the experience and views of counsel. S ee

21 T orrisi v . Tucso n Elec. Powe r Co., 8 F.3d 1370, 1376 (9th Cir. 1993).

22he parties here request only that the Court take the first step in the

23 settlement approval process and grant preliminary approval of the proposed

24 Settlements. The proposed Settlements, which provide approximately $125 million

25 in cash for distribution to eligible Class Members before deduction of Court-

26 awarded fees and expenses, are unquestionably beneficial to the Class. Given the

27 complexities of this action and the continued risks if the parties were to proceed,

28

-10-RELIMINARY APPROVAL MOTION





1 the Settlements represent a reasonable resolution and eliminate the risk that the

2 Class might recover less or nothing at all.

3s outlined in the proposed Preliminary Approval Order, if the Court grants

4 preliminary approval, Lead Plaintiff, through the Claims Administrator, will notify

5 Class Members of the Settlements by mailing the Notice and Proof of Claim to

6 Class Members. The Notice advises Class Members of the essential terms of the

7 Settlements, information regarding Lead Counsel’s fee and expense application,

8 and the proposed plan for allocating the Settlement proceeds among Class

9 Members. The Notice also sets forth the procedure for objecting to the

10 Settlements, Plan of Allocation or the request for an award of attorneys’ fees and

11 expenses; sets out the procedure for opting out of the Class; and provides specifics

12 on the date, time, and place of the Final Settlement Hearing. The proposed

13 Preliminary Approval Order further requires Lead Plaintiff to cause the Summary

14 Notice to be published once in the national edition of The Wall Street Journal an d

15 over the PR Newswire. Because the Notice and Summary Notice fairly apprise

16 Class Members of their rights with respect to the Settlements, they represent the

17 best notice practicable under the circumstances.

18s summ arized below, and as w ill be detailed further in a subsequent m otion

19 for final approval of the Settlements, a preview of the factors considered by courts

20 in granting final approval of class action settlements demonstrates that these

21 Settlements are well within the range of possible approval.

22.he Settlements W ere Vigorously NegotiatedAnd Are Supported By Experienced Counel

23

24here is an initial presumption that the proposed settlement is fair and

25 reasonable when it is the result of arm’s-length negotiations. See Fulford v.

26 Logitech, Inc., 2010 U.S. Dist. LEXIS 29042, at *6 (N.D. Cal. Mar. 5, 2010)

27 (citing In re Consol. Pinnacle W. Sec. Litig., 51 F.3d 194, 197 n.6 (9th Cir. 1995)).

28 In addition, courts recognize that the opinion of experienced counsel






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






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.





Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 20 of 32 Page ID#:10830.he Stage Of The P roceedings And Discovery

Complete Support Approval Of The Settlements2

3he stage of the proceedings and discovery completed are additional factors

4 considered by courts when determining the fairness of settlements.See Hanlon v.

5Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Here, prior to the execution

6 of the Settlement Stipulations, Lead Counsel conducted a thorough investigation of

7 the facts and circumstances, having interviewed dozens of witnesses and searched

8 through and analyzed large amounts of the over 38 million pages of documents

9 obtained through discovery. At the time the Settlements were reached, Lead

10 Plaintiff had briefed the opposition to Defendant KPMG’s motion for summary

11 judgment, which was pending before this Court. There can be no question that at

12 the time the Settlements were reached, Lead Counsel had a clear view of the

13 strengths and weaknesses of the Class’s claims. Additionally, Lead Plaintiff, an

14 institutional investor, monitored this case throughout the course of the litigation

15 and participated in the negotiations of the Settlements. Thus, the proposed

16 Settlements are the product of serious, informed, non-collusive negotiations, are

17 well within the range of possible approval, and do not have any obvious

18 deficiencies. For these and all of the foregoing reasons, the Court should grant

19 preliminary approval of the Settlements and direct that notice of the Settlements be

20 given to members of the Class.

21.he Class Should Be CertifiedFor Settlement Purposes

22

23he parties have stipulated that the Court may, for settlement purposes only,

24 certify the Class and appoint Plaintiffs as the Class Representatives, and Lead

25 Counsel as the Class Counsel. See Stipulations, ¶2. The Ninth Circuit has long

26 recognized that class actions may be certified for the purpose of settlement only.

27 See Hanlon, 150 F.3d 1011. Classes for the purpose of settlement are recognized

28






1 under the general scheme of Rule 23, provided that the class is eventually

2 determined to meet the certification requirements under Rule 23. Id .ederal Rule of Civil Procedure 23(a) sets forth four prerequisites to class

4 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of5 representation. In addition, the class must meet one of the three requirements in

6 Rule 23(b).

7ourts have generally found securities claims to be particularly well-suited

8 for class action status because they allow for the policies behind the securities laws

9 to be enforced in circumstances where there are numerous investors with small

10 individual claims that otherwise would effectively be barred from litigation. See

11 Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir. 1975). This action is no exception

12 and, as explained below, the parties agree that, for purposes of the Settlements, the

13 Class should be certified as satisfying each of the requirements set forth in Rule 23.

14.umerosity

5ule 23(a)(1) requires that the class be so numerous that joinder of all class

16 members is impracticable. For purposes of Rule 23(a)(1), “[i]mpracticable does

17 not mean impossible, only that it would be difficult or inconvenient to join all

18 members of the class.” In re Juniper Networks Sec. Litig., 264 F.R.D. 584, 588

19 (N.D. Cal. 2009) (citing Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909,

20 913-14 (9th Cir. 1964)). “Numerosity does not presume a strict numerical cut-off.

21 Courts have certified classes whose membership sizes range from less than one

22 hundred to over one hundred thousand.” In re VeriSign Inc. Sec. Litig., 2005 U.S.

23 Dist. LEXIS 10438, at *12 (N.D. Cal. Jan. 13, 2005). “In cases involving

24 securities traded on national stock exchanges, numerosity is practically a given.”

25 Id.; see also Juniper, 264 F.R.D. at 588 (“Some courts have assumed that the

26 numerosity requirement is met in securities fraud suits involving nationally traded

27 stocks.”). Mathematical computation of class size is not a prerequisite for class

28 certification, and the court may use common sense assumptions to support a






1 finding of numerosity when the class is obviously large. See Schwartz v. Harp,

2 108 F.R.D. 279, 281-82 (C.D. Cal. 1985) (“A failure to state the exact number in

3 the proposed class does not defeat class certification.”).

4

ere, millions of shares of New Century securities were traded during the5 Class Period. In addition, beneficial holders of New Century securities are

6 believed to number in the thousands and are geographically located throughout the

7 United States, making joinder of all Class Members impractical. Thus, the

8 numerosity element is satisfied.

9.ommonality

0he commonality requirement is satisfied where, as here, there are

11 “questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). There

12 need be only one issue common to class members. Hanlon, 150 F.3d at 1019.

13 Generally, courts have liberally construed the commonality prerequisite, requiring

14 only that “the named plaintiffs share at least one question of fact or law with the

15 grievances of the proposed class.” Siemer v. Assocs. First Capital Corp., 2000

16 U.S. Dist. LEXIS 21244, at *32 (D. Ariz. Dec. 13, 2000). “[A] few factual

17 variations among the class grievances will not defeat commonality so long as class

18 members’ claims arise from ‘shared legal issues’ or ‘a common core of salient

19 facts.’” Conn. Ret. Plans and Trust Funds v. Amgen, Inc., 2009 U.S. Dist. LEXIS

20 71653, at *13 (C.D. Cal. Aug. 12, 2009).

21ere, questions which are common to the proposed Class include, among

22 others: (i) whether the federal securities laws were violated by Defendants’

23 alleged acts; (ii) whether the Company’s publicly disseminated releases and

24 statements during the Class Period omitted and/or misrepresented material facts;

25 (iii) whether the prices of New Century securities during the Class Period were

26 artificially inflated due to the alleged material nondisclosures and/or

27 misrepresentations; and (iv) whether members of the Class have sustained damages

28 and, if so, what is the appropriate measure of damages. In short, because the core








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






1 other available methods, as required by Rule 23(b)(3). To ensure that the class

2 action is more efficient than individual actions, Rule 23(b) requires that common

3 issues predominate over issues that are particular to a class representative.

4 Generally, common questions will predominate over any differences between5 individual class members “[w]hen ‘a common nucleus of misrepresentations,

6 material omissions and market manipulations [exists].’” In re Cooper Cos., Inc.

7Sec. Litig., 254 F.R.D. 628, 639-40 (C.D. Cal. 2009). Further, the superiority of

8 class actions to address securities fraud has been consistently upheld. Id. at 642.

9he predominance test is met in this action and a class action is superior to

10 other available methods. The same set of operative facts applies to each Class

11 Member – each Class Member purchased and/or acquired New Century securities

12 during the Class Period at prices alleged to be artificially inflated as a result of

13 Defendants’ false and misleading statements and/or omissions, and was allegedly

14 harmed when the undisclosed facts came to light. If Plaintiffs and each of the

15 Class Members were to bring individual actions, they would each be required to

16 prove the same wrongdoing by Defendants to establish liability. Accordingly, the

17 foregoing, the requirements of Rule 23(a) and (b) are satisfied and there are no

18 issues which would prevent the Court from certifying the Class for settlement

19 purposes and appointing Plaintiffs as class representatives. See Hanlon, 150 F.3d

20 at 1022 (citing 7A Charles Alan Wright, Arthur R. Miller and Mary Kay Kane,

21 Federal Practice & Procedure § 177 8 (2d ed. 1986)) ; see also LDK, 255 F.R.D. at

22 530; In re Emulex Corp. Sec. Litig., 210 F.R.D. 717, 721 (C.D. Cal. 2002)

23 (granting motion for class certification where “[t]he predominant questions of law

24 or fact at issue in this case are the alleged misrepresentation[s] Defendants made

25 during the Class Period and are common to the class”).

26. The Proposed Plan Of Allocation Is Fair And Reasonable

7plan of allocation should be approved if it is fair, reasonable and adequate.

28 In re Omnivision Techs., 559 F. Supp. 2d 1036, 1045 (N.D. Cal. 2008); Class






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;






1 (2) the degree of inflation varied throughout the Class Period and decreased with

2 each partial disclosure of adverse information; and (3) the value of the Recognized

3 Loss Amount varies depending on when the claimant bought and/or sold the New

4 Century securities.5he Plan of Allocation also recognizes differences among the claims

6 applicable to the various settling defendants. First, Securities Act claims were

7 brought (and could only be brought) only on behalf of the Preferred Shares, and

8 not on behalf of the other securities, and only against the Underwriter Defendants.

9 Thus, as explained in the Notice, the net settlement amount being paid by the

10 Underwriter Defendants ($15 million) will be distributed only to Authorized

11 Claimants who purchased Preferred Shares, whereas the net settlement amounts

12 being paid by KPMG and the New Century officers and directors will be

13 distributed to all Authorized Claimants who otherwise have a Recognized Loss

14 Claim under the Plan of Allocation. Second, in the view of experienced Lead

15 Counsel and Lead Plaintiff’s damages consultant, in light of the speculative and

16 derivative nature of options securities, the relative risks of prevailing at trial on

17 behalf of purchasers of Call Options and sellers of Put Options were greater than

18 the risks of prevailing on the claims on behalf of purchasers of common stock and

19 Preferred Shares. Taking this factor into account, the Plan of Allocation allocates a

20 limit of 10% of the overall disbursements from the KPMG and New Century

21 director and officer settlements to Call Options and Put Options, representing a

22 50% discount to what those securities would otherwise potentially receive on a pro

23 rata basis. Differences of this nature among class members are common in

24 securities litigation and are commonly addressed by a plan of allocation in class

25 actions. See Glass, 331 Fed. Appx. at 455 (affirming plan for distributing

26 settlement proceeds that treats various class members differently based on

27 differences in recoverable damages); see also In re Oracle Sec. Litig., 1994 W L

28 502054, at *1 (N.D. Cal. June 18, 1994) (finding it is “reasonable to allocate more






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.






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.






1 whom they acted as nominee purchaser of New Century securities. In addition,

2 Lead Counsel intends to publish a Summary Notice (substantially in the form of

3 Exhibit A-3 to the proposed Preliminary Approval Order) in the national edition of

4

The W all Street Journal and over the PR N ewsw ire and provide a link to the Notice5 and the Proof of Claim form, as well as other case documents, on the website

6 created by the Claims Administrator specifically for these Settlements.

7he proposed notice program fulfills the requirements of due process and

8 satisfies Rule 23(e) because it alerts and informs those members of the Class who

9 can be identified through reasonable efforts of the information set forth above.

10 See, e.g., In re Portal Software, Inc. Sec. Litig., 2007 WL 4171201, at *1 (N.D.

11 Cal. Nov. 26, 2007) (approving similar notice regimen); In re Immune Response

12 Sec. Litig., 497 F. Supp. 2d 1166, 1170 (S.D. Cal. 2007); see also Rodriguez v. W .

13 Publ’g Corp., 563 F.3d 948, 962 (9th Cir. 2009) (“Notice is satisfactory if it

14 ‘generally describes the terms of the settlement in sufficient detail to alert those

15 with adverse viewpoints to investigate and to come forward and be heard’”)

16 (citations omitted); Silber v. Mabon, 18 F.3d 1449, 1452-54 (9th Cir. 1994)

17 (approving notice sent by first class mail as the “best notice practicable”).

18 V. CONCLUSION

19or all of the above reasons, Lead Plaintiff respectfully requests that this

20 unopposed motion for preliminary approval of Settlements be granted. A proposed

21 schedule of settlement events is attached hereto as Exhibit 1.

22 Dated: July 30, 2010espectfully submitted,

23ERNSTEIN LITOWITZ BERGER

& GROSSMANN LLP24

25/s/ Salvatore J. Graziano

26ALVATORE J. GRAZIANO

27LAIR A. NICHOLAS

28LIZABETH LINNIKI L. MENDOZA





Case 2:07-cv-00931-DDP-FMO Document 484-1 Filed 07/30/10 Page 31 of 32 Page ID#:10841ENJAMIN GALDSTONTAKEO A. KELLAR

22481 High B luff Drive, Suite 300San Diego, CA 92130

3el: (858) 793-0070Fax: (858) 793-0323

4 -and-5

SALVATO RE J. GRAZIANO6AUREN A. MCMILLEN

1285 Avenu e of the Americas7ew York, NY 10019

Tel: (212) 554-14008ax: (212) 554-1444

9ead Counsel for Lead Plaint ffThe N ew Y ork S tate Teachers Retirem ent

0y stem and the Class

11

12ARVIN L. FRANKMurray, Frank & S ailer LLP

137 5 Madison AvenueNew Y ork, NY 10016

14el: (212) 682-1818

15ax: (212) 682-1892

16ounsel for Plaintiff Carl Larson

1718EFFREY ZWERLING

Zw erling, Schachter & Z werling, LLP191 Madison Avenue

20ew York, NY 10010Tel: (212) 223-3900

21ax: (212) 371-5969

22ounsel f or Plaintiff Charles H ooten

23

24

25

26

27

28






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




EXHIBIT 1

TO UNOPPOSED MOTION FOR PRELIMINARY

APPROVALOF SETTLEMENTS

1 -ROPOSED SCHEDULECase No. 2:07-cv-00931-DDP (FM Ox)




PROPOSED SCHEDULE

If the Court grants preliminary approval of the proposed Settlements, the

parties respectfully subm it the following sc hedule for the C ourt's consideration:

Eventime for Complianceeadline if

preliminaryapproval grantedAug. 30, 2010

Deadline for m ailing thebusiness days after theeptember 7, 2010Notice to Class Mem bersntry of the Preliminary

("Notice Date")pproval Order

(Preliminary A pproval

Order, ¶6a)

De adline for publishingbusiness days after the September 14, 2010

Summary Noticeotice Date (Preliminary

Approval Order, ¶6b)Filing of briefs in support of8 days before the Finalctober 12, 2010

final approval of thepproval Hearing

Settlements, Plan ofPreliminary Approval

Allocation, and Leadrder, ¶11)

Counsel's fee and expense

requestReceipt Deadline for Requests 21 calendar days beforectober 18, 2010

for Exclusions and Objections the Final Approval

Hearing (PreliminaryApproval Order, T¶ 12,

19)

Filing of reply m emoranda incalendar days beforeovember 1, 2010response to any o bjections tohe Final Approval

the Settlementsearing

Final Approval Hearing00 days following filing November 8, 2010

of Stipulations0:00 a.m.

(Preliminary Approval

Order, ¶ 10)

Deadline for submitting Proofs 120 calendar daysanuary 5, 2011

of Claimollowing the Notice

Date (Preliminary

Approval Oder, ¶16)

-2-ROPOSED SCHEDULE

Case No. 2:07-ev-00931-DDP (FM Ox)




EXHIBIT 2TO UNOPPOSED MOTION FOR PRELIMINARY

APPROVAL OF SETTLEMENTS

-1 -

Case No. 2:07-cv-0093 1 -DDP (FM Ox)




1

2

3

4

5

6

7

8

STIPULATION OF GLOBA L SETTLEMENT9ITH NEW CENTURY OFFICERS AND DIRECTORS

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

D/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FM Ox)




1his Stipulation of Settlement (all capitalized terms are defined in parag raph

2below) is entered into as of July 23, 2010, between and among: Class Plaintiffs

3on behalf of themselves and the Class), the Trustee, and Kodiak, on the one hand;

4 and Class Individual Defendants, Trustee Litigation Defendants, Kodiak Litigation

5Defendants, and David Kenneally, on the other hand, by and through their

6 respective counsel to resolve the following actions:

7 Avi Gold v. Brad A. Morrice et al., a/k/a, In re New Century, Case

8o. 2:07-cv-00931-DDP-FMO (C.D. Cal.);

• The New Century Liquidating Trust and Reorganized New Century

9arehouse Corporation v. Robert K Cole, et al. (In re New Century

10RS Holdings, Inc.), Case No. 09-50882-KJC (Bankr. D. Del.); and

• Kodiak Warehouse LL C, et al. v . Brad A. Morrice, et al., Case No. 08-

11265-DDP-FMO (C.D. Cal.)

12

This Stipulation will be subm itted in the Con solidated Class A ction pursuant13

to Rule 23 of the Fede ral Rules of C ivil Procedure, and is subject to the approval of1 4

the Consolidated Class Action Court. This Stipulation embodies a global15

settlement among the Parties, and is intended by the Parties to settle all Settled16

C lass Claims, all Settled Trustee C laims, and all Settled Kodiak C laims against the17

Settling Individuals. The settlement of the Trustee Litigation and the Kodiak18

subject to the approval of the courts hearing such litigations, but

19

both settleme nts are conditioned upo n the occurrence of the Effective Da te.20

WHEREAS:21

A.ew Century was founded in 1995 and operated through its22

subsidiaries as a m ortgage finance company from 1995 through 2007;23

B.n February 7, 2007, New Century announced publicly that it needed24

to restate its earnings for the first three qua rters of 2006 ;25

C.

eginning on or about February 8, 2007, securities class action

26complaints were filed in the United States District Court for the Central District of

27California and the actions w ere conso lidated into the Co nsolidated C lass Action by

28order dated June 26 , 2007;

-1 -/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FM Ox)




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)




1. On November 7, 2008, Kodiak commenced the Kodiak Litigation;

2.ollowing a hearing, by Order dated December 3, 2008, the

3 Conso lidated C lass Action Co urt substantially denied Class D efendants' motions to

4ismiss;

5

.

eginning on January 26, 2009, Class Defendants answered the

6econd Amended C lass Complaint;

7

.

n April 1, 2009, the Trustee commenced the Trustee Litigation in the

8 Bankruptcy Court against the Trustee Litigation Defendants for alleged breach of

9iduciary duty, waste of corporate assets, unjust enrichment, and claims under

10 Chapter 5 of the Bankruptcy Code;

1 1

.

ursuant to successive stipulations and orders of the Bankruptcy

12Co urt, the parties to the Trustee Litigation agreed to a forbearanc e of discovery an d

13any other litigation activity and to an extension of the time for the Trustee

14 Litigation Defendants to move, answer or otherwise respond to the complaint in

15 the Trustee Litigation to allow the parties the opportunity to explore a consensual

16 resolution of the Trustee Litigation;

1 7.he Parties have participated in mediation sessions and additional

18 discussions before the Honorable Daniel Weinstein, and subsequently were able to

19 reach agreements in principle to settle the Officer And Director Litigations, on the

20 erms set forth in this Stipulation;

21.he Settling Individuals deny any wrongdoing whatsoever and this

22Stipulation shall in no event be construed or deemed to be evidence of or an

23admission or concession on the part of any Settling Individual with respect to any

24claim or of any fault or liability or wrongdoing or damage whatsoever, or any

25nfirmity in the defenses that the Settling Individuals have or could have asserted.

26The Officer And Director Litigations are being settled voluntarily after receiving

27 ufficient advice o f counse l, and the P arties believe tha t the tenns of the Settleme nt

28are fair, adequate and reasonable. This Stipulation shall not be construed or

-3 -/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FMO x)




1 deemed to be a concession by any Plaintiff of any infirmity in the claims asserted

2n the Officer And D irector Litigations;

3.ounsel for Plaintiffs have each conducted an extensive investigation

4nd/or thorough discovery relating to its respective clients' (or client's) claims and

5he underlying events and transactions alleged in the Officer And Director

6 Litigations. Such counsel has each analyzed the evidence it has adduced through

7discovery or otherwise and has researched the applicable law with respect to the

8laims asserted and the potential defenses thereto;

9.ased upon their investigation and/or discovery as set forth above,

10Plaintiffs and their counsel have each concluded that the terms and conditions of

11 this Stipulation are fair, reasonable and adequate including, with respect to Class

12 Plaintiffs and their counsel, to the other members of the Class, and in their best

13 interests, and each agreed to settle its claims in the Officer And Director Litigations

14 pursuant to the terms and provisions of this Stipulation, after considering (1) the

15benefits that the Plaintiffs will receive from the Settlement, (2) the attendant risks

16 of litigation, and (3) the desirability of permitting the Settlement to be

17consum mated a s provided by the terms of this Stipulation; and

18

.

he recitals and prefatory phrases and paragraphs set forth above are

1 9 incorporated in full and made part of this Stipulation.

20OW THEREFORE, without any admission or concession on the part of

21Plaintiffs of any lack of merit of the Officer And Director Litigations whatsoever,

22and without any admission or concession of any liability or wrongdoing or lack of

23merit in the defenses whatsoever by the Settling Individuals, it is hereby

24STIPUL ATED AN D A G REED , by and among the Parties, through their respective

25counsel, subject where applicable to approval of the Consolidated Class Action

26Court pursuant to FRCP 23(e), in consideration of the benefits flowing to the

27Pa rties from the Se ttleme nt, that all Settled Claims as a gainst the Release d Officers

28And Directors and all Settling Individuals' Claims as against the Class Plaintiffs

-4 -/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)




1and all other Class Members, the Trust, the Trustee, Alan M. Jacobs individually,

2he Debtors, the Debtors' Estates, the Plan Advisory Committee, and Kodiak shall

3be compromised, settled, released and dismissed with prejudice, upon and subject

4o the following terms and conditions:

5

EFINITIONS

6

.

s used in this Stipulation, the following terms have the following

7 meanings:

8)Amended Class Complaint" means the amended consolidated

9class action com plaint filed by the Class P laintiffs in the Con solidated Class Ac tion

10Court.

11

)

Authorized Claimant" means a Class Member who submits a

12timely and valid Proof of Claim Form and all required documentation to the

13Claims Administrator, in accordance with the requirements established by the Plan

14 of Allocation approved by the Consolidated Class Action Court, that is approved

15or payment from the Class Ne t Settlement Fund.

1 6)Bankruptcy C ode" means Title 1 1 o f the United States Code.

1 7)Bankruptcy Court" means the United States Bankruptcy Court

18for the District of Delaware before which the Debtors filed for bankruptcy and

1 9 hich is hea ring the Trustee Litigation.

20

)

Claim" means a completed and signed Proof of Claim Form

21submitted to the Claims Administrator in accordance with the instructions on the

22Proof of Claim Form.

23)Claim Form" or "C laim F orm and Re lease" or "Proof of Claim

24Form" means the form, substantially in the form attached hereto as Exhibit 2 to

25Exhibit A, that a Claimant or Class M emb er must com plete should that Claimant or

26Class M embe r seek to share in a distribution of the C lass Net Settlement Fund.

27

28

-5 -/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FM Ox)




)

Claimant" means a person or entity that submits a Claim Form

2o the Claims Administrator seeking to share in the proceeds of the Class Net

3 Settlement Fund.

4)Claims Administrator" means the firm of Analytics

5ncorporated.

6

)

Class" means all persons and entities who purchased or

7therwise acquired New Century common stock, New Century Series A Preferred

8Stock, New Century Series B Preferred Stock, and/or New Century call options

9nd/or who sold New Century put options, during the time period from May 5,

1.02005, through and including March 13, 2007, either in the Offerings, pursuant to a

11registration statement, or in the market, and who, upon disclosure of certain facts

12alleged in the Complaint, were injured thereby. Excluded from the Class are (a)

13 Class Defendants; (b) members of the immediate families of the Class Individual

14Defendants; (c) the subsidiaries and affiliates of Class Defendants; (d) any person

15or entity who was a partner, executive officer, director or controlling person of

16 New Century (including any of its subsidiaries or affiliates) or of any Class

17 Defendant; (e) any entity in which any Class Defendant has a controlling interest;

18and (f) the legal representatives, heirs, successors and assigns of any such excluded

19party. Also excluded from the Class are any persons who exclude themselves by

20 iling a request for exclusion in accordance with the requirements set forth in the

21Notice.

22)Class Defendants" means the Underwriter Defendants, KPMG

23and the Class Individual Defendants.

24

)

Class Distribution Order" means an order entered by the

25Consolidated Class Action Court authorizing and directing that the Class Net

26Settleme nt Fund be distributed, in whole or in part, to Authorized Claimants.

27)Class Escrow Account" means an account maintained to hold

28he C lass Settlement F und, which shall be controlled exclusively by L ead C ounsel,

-6 -/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FM Ox)




1hall be deemed to be in the custody of the Consolidated Class Action Court, and

2hall remain subject to the jurisdiction of the C onsolidated Class A ction Cou rt until

3uch time as the funds are distributed or returned pursuant to the terms of this

4tipulation and /or further order of the C onsolidated Class A ction Court.

5

) "Class Individual Defendants" means Robert K. Cole, Brad A.

6 Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael

7M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A.

8 Zona, M arilyn A. Alexander, David Einhorn, and William J. Popej oy.

9)Class Member" means a person or entity that is a member of

10 the Class and does not exclude himself, herself or itself by filing a request for

11 xclusion in accordance with the requireme nts set forth in the No tice.12

)

Class Net Settlement Fund" means the Class Settlement Fund

13 ess: (i) any Taxes; (ii) any Notice and Administration Costs associated with the

14Consolidated Class Action; (iii) any attorneys' fees awarded by the Consolidated

15Class A ction C ourt; and (iv) any Litigation Ex penses aw arded by the C onsolidated

16Class Action Court.

1 7)Class Officer And Director Settlement Amount" means the

18um of $6 5 ,077,088 which shall be paid into the Class Escrow A ccount as set forth

19 in paragraph 11 c below.

20)Class Period" means the period from May 5, 2005, through

21and including M arch 13, 200 7.

22)Class Plaintiffs" means Lead Class Plaintiff New York State

23Teachers' Retirement System and plaintiffs Carl Larson and Charles Hooten, on

24behalf of themselves and the Class.

25

)

Class Plaintiffs' Counsel" means Lead Counsel and all other

26ounsel who, at the direction and under the supervision of L ead C ounsel, represent

27Class M embers in the Consolidated C lass Action.

28

-7 -/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)




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)




1 f/k/a NC Residual II Corporation), a Delaware limited partnership; NC Residual

2II Corporation, a D elaware corporation; NC Residual IV Co rporation, a Delaware

3orporation; New Century R.E.O. Corp., a California corporation; New Century

4 R.E.O. II Corp., a California corporation; New Century R.E.O. III Corp., a

5California corporation; New Century Mortgage Ventures, LLC (d/b/a Summit

6Resort Lending, Total Mortgage Resource, Select Mortgage Group, Monticello

7Mortgage Services, Ad Astra Mortgage, Midwest Home Mortgage, TRATS

8Financial Services, Elite Financial Services, and Buyers Advantage Mortgage), a

9Delaware limited liability company; NC Deltex, LLC, a Delaware limited liability

10 company; NCoral, L.P., a Delaware limited partnership; and New Century

11Warehouse Corporation, a California corporation.12

a) "Debtors' Estates" means the bankruptcy estates of the Debtors

13created as a result of the Debtors' petitions under Chapter 11 of Title 11 of the

14United States Bankruptcy Code.

15b) "Distribution Defendants" means Kevin M. Cloyd, Stergios

16Theologides, Joseph F. Ecluoth, Jr., Brad A. M orrice and Patti M. Do dge.

17c) "Dodge Credit" means a $45,000 credit for Patti M. Dodge

18 representing the release of her affirmative claims, including a priority claim, under

19 this Stipulation.

2 0d) "Effective Date" means the date on which all the following

21shall have occurred: (a) payment of the monies into the Global Escrow Account

22has been made pursuant to paragraph 9a below; (b) the Consolidated Class Action

23Court has entered the Officer And Director Judgment, substantially in the form

24annexed hereto as Exhibit B, which has become Final; (c) the Consolidated Class

25Action Court has entered the KPMG Judgment and the Underwriter Judgment,

26which have become Final; (d) a judgment has been entered by the court in the

27separate action entitled Securities and Exchange Commission a Morrice, et al.,

28SAC V 09-01 426 (C.D . Cal. Santa Ana); and (e) notices of dismissal with prejudice

-9 -/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FM Ox)




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)




k) "Global Officer And Director Settlement Amount" means the

2um of $92,046,361 as set forth in paragraph 9 below, as Settlement of the

3Co nsolidated Class A ction, the Trustee L itigation, and the Ko diak Litigation.

41 )Insurance Carriers" means the following insurance carriers

5 who issued the indicated policies of insurance ("Policies") to New Century and/or

6 its various subsidiaries, affiliates, directors, officers and other "Insureds" or

7 "Assureds" as defined in the Policies:

81) American Specialty Lines Insurance Co.pursuant to policy number 672-43-8 5;

9(2) ACE American Insurance Company

1 0ursuant to policy numbers DU XG 216120A 002 and DOX G21661338001;

1 1(3) Those Underwriters at Lloyd's of London

12

nd Companies subscribin to Policy

numbers FD06 04467 and FD004994;1 3

(4) Axis Reinsurance Company, pursuant to1 4olicy numbers RNN 72718 3 and RNN

727184;1 5

(5 )tarr Excess Liability Insurance Com pany,1 6td., pursuant to policy num ber 41 21)07 ;

1 76) XL Specialty Insurance Co. pursuant to

policy number ELU092906-06;1 8

(7 )

iberty Mutual Insurance C ompany

1 9

ursuant to policy number 0735p5 1-01 6;

208) Navigators Insurance Compa pursuant toy yDolicy numbers NY06DOL I 577NV and

21Y06DOL149583NV;

229) Arch Insurance Company pursuant to policynumber AID0016066-00;

23(10) Continental Casualty Company pursuant to

24

olicy number 38935 5; and

25

11) The Hartford (Twin City Fire Insurance

Co.),pursuant to policy number 00 DA26

234015-06.

27 "Insurance Carriers" also includes the present, former and future parents, divisions,

28 subsidiaries and affiliates of the insurance carriers listed above, and any of their

-11-/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FM Ox)




1past, present or future owners, assigns, administrators, directors, partners,

2principals, officers, employees, agents, receivers, trustees, attorneys, insurers,

3 reinsurers, and their respective predecessors, successors and assigns, and

4epresentatives of any of them, and all persons acting by, through, under or in

5concert with any of them with respect to their respective Policies. Insurance

6Carriers and Policies do not include Philadelphia Indemnity Insurance Company

7nder policy number PHSD219056.

8m) "Kodiak" means Kodiak Warehouse LLC, Kodiak Warehouse

9 JPM Capital LLC, Kodiak CDO1 Ltd., Kodiak CDO Management LLC, and

10Kodiak Funding LP.

1 1

n) "Kodiak Litigation" means the action Kodiak Warehouse LLC,

12et al. v. Brad A . Morrice, et al. (Case No. 08-1265-DDP-FMO) commenced on

13November 7, 2008, against the Kodiak Litigation Defendants by Kodiak in the

14United States D istrict Court for the Ce ntral District of C alifornia.

1 5o) "Kodiak Litigation Defendants" means Robert K. Cole, Brad A.

16M orrice, Estate of E dward G otschall, Patti M. D odge, and Jeffrey D . G oldberg.

17p) "Kodiak Settlement Amount" means the sum of $6,000,000

18which shall be paid to K odiak as set forth below in paragraph 11 a.

1 9

q) "KPMG" means KPMG LLP.

20r) "KPMG Judgment" means a judgment entered in the

21Consolidated Class Action Court which, among other things, includes a release by

22KPMG and the other Released Auditor Parties of any and all claims and causes of

23action of every nature and de scription, whether known or Unknow n C laims a gainst

24any of the Settling Individuals, whether arising under federal, state, common or

25oreign law, that arise out of or relate in any way to the institution, prosecution, or

26settlement of the claims which were asserted in the Officer And Director

2 7 itigations, or that arise out of or relate in any way to New Century (including any

2 8 f its subsidiaries and a ffiliates), the Trust, the Trustee, the D ebtors, or the D ebtors'

-12-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMO x)




1 Estate, except for (1) an allowed priority claim in the amount of $5,000 pursuant to

2proof of claim no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against

3Debtors' Estates and (ii) any and all claims arising out of or in connection with the

4defense and subse quent settlement of the Schroeder v. N ew Century Holdings, Inc.

5Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity

6 Arbitration, including, but not limited to (a) claims for benefits under any

7nsurance programs or policies to which the Settling Individuals are entitled, (b)

8 claims for advancement, indemnification, contribution, reimbursement or other

9 payments whether based on law, the Debtors' certificate or articles of

10ncorporation, bylaws, or other contract or agreement.

1 1

s) "Lead Class Plaintiff' means the New York State Teachers'

12Retirement System.

1 3

t)

Lead Counsel" means the law f-nn of Bernstein Litowitz

14Berger & G rossmann LLP.

1 5u) "Litigation. Expenses" means the costs and expenses incurred

16 by Class Plaintiffs' Counsel in connection with commencing and prosecuting the

17Consolidated Class Action, for which Lead Counsel intends to apply to the

18Consolidated Class Action Court for reimbursement from the Class Settlement

19 Fund.

20v) "New Century" means New Century Financial Corporation.

21w) "Notice" means the Notice of Pendency of Class Action and

22Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees

23and Reimbursement of Litigation Expenses, substantially in the form attached

24hereto as Ex hibit 1 to E xhibit A, which is to be sent to mem bers of the C lass.

25

x) "Notice and Administration Costs" means the costs, fees and

26expenses that are incurred by the Claims Administrator and Lead Counsel in

27connection with (i) providing notice to the Class; and (ii) administering the claims

28process in connec tion with the Conso lidated Class A ction.

-13-/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FM Ox)




1y) "Offerings" means the public offerings pursuant to which New

2Century Series A and B Preferred Stock were offered to the public in June 2005

3nd August 2006 .

4z) "Officer And Director Judgment' means the judgment,

5ubstantially in the form attached hereto as Exhibit B, to be entered pursuant to

6 Rule 54(b) of the Federal Rules of Civil Procedure approving the Settlement.

7

aa) "Officer And Director Litigations" means the Consolidated

8Class A ction, Trustee Litigation, and Ko diak Litigation.

9bb) "Parties" means the Plaintiffs and the Settling Individuals.

10cc) "Philadelphia Indemnity Arbitration" means the claims filed

11 with the American Arbitration Association by the Trustee against Philadelphia

12ndemnity Insurance C ompany to pay and indemnify, in accordance with the terms

13of the applicable insurance policy, New Century, its successor-in-interest, the New

14Century Liquidating Trust, and Harold A. Black, Fredric J. Forster, Donald E.

15Lange, and Michael M. Sachs, the full amount of defense costs that each have

16 incurred in the defense and subsequent settlement of S chroeder v. N ew Century

17Holdings, Inc. (Adversary Proceeding No. 07-51598 (KJC)), and to pay and

I s eimburse their other insurable losses as agree d to in said insurance policy.

1 9

dd) "Plaintiffs" means Class Plaintiffs, the Trustee, and Kodiak.

20ee) "Plan Advisory Committee" means the post confirmation

21committee, and its current and former members in their capacity as such, formed in

22accordance with Second Amended Joint Chapter 11 Plan of Liquidation of the

23Debtors and the Official Committee of Unsecured Creditors dated as of April 23,

242008 , and modified as of September 30, 2009.

25

ff) "Plan of Allocation" means the proposed plan of allocation of

26he C lass Net Settlement Fund set forth in the Notice.

27gg) "Preliminary Approval Order" means the order, substantially in

28 the form attached hereto as Exhibit A, to be entered by the Consolidated Class





1Action Court preliminarily approving the Global Officer And Director Settlement

2 and directing notice to be provided to the Class.

3hh) "Released Auditor Parties" means KPMG and its affiliates,4 heirs, predecessors, successors, assigns, partners, employees and agents.

5

ii) "Released Officers And Directors" means: (i) the Settling

6 Individuals; and (ii) all directors, officers, employees, and other natural persons

7affiliated with New Century (including any of its subsidiaries and affiliates)

8ncluded in the definition of "Assured" or "Insured" as defined in the Policies and

9 any and all of their respective heirs, executors, administrators, predecessors,

10 successors and assigns, employees, agents and retained professionals. "Released

11 Officers And Directors" does not include KPMG or the Underwriter Defendants.1 2

jj) "Released Underwriter Parties" means the Underwriter

1 3efendants and any and all of their respective parent companies, subsidiaries,

14affiliates, heirs, executors, administrators, predecessors, successors and assigns,

15 and any and all of their current and former officers, directors, employees, agents

16 and attorneys. "Released Underwriter Parties" does not include any Defendants

17 other than the Underwriter Defendants..

1 8

d^,) "Second Amended Class Complaint" or "Complaint" means the

19econd amended consolidated class action complaint filed by the Class Plaintiffs in

20 the Consolidated Class Action Court on or about April 30, 2008.

211 1 )Securities Ac t" means the Securities Act of 1933.

22mm) "Series A Preferred Stock" means New Century 9.125%

23 Series A Cumulative Redeemable Preferred Stock.

24

nn) "Series B Preferred Stock" means New Century 9.75% Series B

25 Cumulative Redeemable Preferred Stock.

26

00) "Settled Claims" means the Settled Class Claims, Settled

27 Trustee Claims, and Settled Kodiak Claims, but does not include claims relating to

28 the enforcement of the Settlement.

- 15 -/O STIPULATION O F SETTLEMENTCase No. 2;07-ev-00931-DDP (FMO x)




pp) "Settled Class Claims" means any and all claims and causes of

2 action of every nature and description, whether known or Unknown Claims,

3whether a rising under fede ral, state, comm on or foreign law, that Class P laintiffs or

4 any other member of the Class (a) asserted in the Consolidated Class Action, or (b)

5ould have a sserted in any forum that arise out of or are based upo n the allegations,

6ransactions, facts, matters or occurrences, representations or omissions involved,

7et forth, or referred to in the Consolidated Class Action, and that arise out of or

8elate to the purchase of New Century common stock, New Century Series A

9Preferred Stock, New Century Series B Preferred Stock, and/or New Century call

10options and/or the sale of New Century put options during the Class Period.

11Settled Class Claims does not include claims relating to the enforcement of the

12Settlement.

13

qq) "Settled Kodiak Claims" means any and all claims and causes

14of action of every nature and description, whether known or Unknown Claims,

15whether arising under federal, state, common or foreign law, that Kodiak (a)

16asserted in the Kodiak Litigation, or b) could have asserted in any forum that arise

17out of or are based up on the allegations, transac tions, facts, matters or occurren ces,

18 representations or omissions involved, set forth, or referred to in the Kodiak

19Litigation, or that arise out of or relate in any way to New Century (including any

20of its subsidiaries and affiliates), the Debtors or the Debtors' Estates. Settled

21Kodiak Claims does not include claims relating to the enforcement of the

22Settlement.

23rr) "Settled Trustee Claims" means any and all claims and causes

24of action of every nature and description, whether known or Unknown Claims,

25whether arising under federal, state, common or foreign law, that the Trustee (a)

26asserted in the Trustee Litigation; (b) could have asserted in any forum that arise

27out of or are based up on the allegations, transac tions, facts, matters or occurren ces,

28epresentations or omissions involved, set forth or referred to in the Trustee

-16-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FM Ox)




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)




1vv) "Settling Individuals' Claims" means any and all claims and

2auses of action of every nature and description, whether known or Unknown

3Claims, whether arising under federal, state, common or foreign law, that arise out

4f or relate in any way to the institution, prosecution, or settlement of the claims

5which were asserted in the Officer And Director Litigations against the Settling

6 Individuals, or that arise out of or relate in any way to New Century (including any

7f its subsidiaries and a ffiliates), the Tnist, the Trustee, the D ebtors, or the D ebtors'

8Estates, except for (i) an allowed priority claim in the amount of $5,000 pursuant

9 to proof of claim no. 2385 filed by Fredric J. Forster in the Bankruptcy Court

10against Debtors' Estates and (ii) any and all claims arising out of or in connection

11with the defense and subsequent settlement of the Schroeder a New Century

12Holdings, Inc. (Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia

13ndemnity Arbitration, including, but not limited to (a) claims for benefits under

14any insuranc e program s or policies to which the Se ttling Individuals are entitled, or

15 b) claims for advancement, indemnification, contribution, reimbursement or other

16 payments whether based on law, the Debtors' certificate or articles of

17ncorporation, bylaws, or other contract or agreement. Settling Individuals' Claims

18does no t include claims relating to the enforcem ent of the Settlement.

19

ww)"Stipulation" or "Stipulation of Settlement" means this

20Stipulation of Settlement.

21xx) "Summary Notice" means the publication notice, substantially

22n the form a ttached he reto as Ex hibit 3 to Exh ibit A, to be published as set forth in

23 he Preliminary Approval Order.

24

yy) "Supplemental Agreement" means the supplemental agreement

25between Lead Class Plaintiff and the Class Individual Defendants referenced in

26paragraph 39-40 below.

27zz) "Taxes" means: (1) all federal, state and/or local taxes of any

28kind on any income earned by the funds contained in the Global Escrow Account

-1 8 -/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-00931-DDP (FM Ox)




1 nd/or Class Escrow Account; and (ii) the reasonable expenses and costs incurred

2 by Lead Counsel in connection with determining the amount of, and paying, any

3axes owed on the interest earned on the funds in the Global Escrow Account

4nd/or Class Escrow Account (including, without limitation, reasonable expenses

5f tax attorneys and accountants).

6

aaa) "Trust" means the New Century Liquidating Trust and

7Reorganized New Century Warehouse C orporation.

8bbb) "Trustee" means Alan M. Jacobs, as Liquidating Trustee of the

9New Century Liquidating Trust and Plan Administrator of the Reorganized New

10 Century Warehouse Corporation.

1 1

ccc) "Trustee Litigation" means the adversary proceeding T he N ew

12Ce ntury Liquidating Trust and R eorganized N ew C entury W arehouse Corp. by and

13hrough Alan M. Jacobs, Liquidating Trustee and Plan Administrator v. Robert K

14Cole, et al. (In re New Century TRS Holdings, Inc) (Adv. Proc. No. 09-50882

15KJC)) commenced on April 1, 2009, against the Trustee Litigation Defendants by

16he Trustee in the Bankruptcy Co urt.

17ddd) "Trustee Litigation Defendants" mea ns Robert C. C ole, Brad A.

18Morrice, the Estate of Edward Gotschall, Marilyn A. Alexander, Harold A. Black,

19Fredric J. Forster, Donald E. Lange, William J. Popejoy, Michael M. Sachs,

20Richard A. Zona, David Einhom, Patrick Flanagan, Kevin M. Cloyd, Patti M.

21D odge, Joseph F. Eckroth, Jr., and Stergios Theologides.

22eee) "Trustee Settlement Amount" means the sum of $20,969,273

23which sh all be paid to the Trustee as se t forth below in paragraph l lb.

24

fff) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now

25 known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray

26& Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,

27M organ Stanley & Co., Inc., and Jefferies & Com pany, Inc.

28

-19-/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FM Ox)




1

ggg) "Underwriter Judgment" means a judgment entered in the

2Consolidated Class Action Court which, among other things, includes a release by

3Underwriter Defendants and the other Released Underwriter Parties of each and

4every claim against any of the Settling Individuals, whether arising under federal,

5tate, common or foreign law, arising out of or based upon the allegations,

6ransactions, facts, matters or occurrences, representations or omissions involved,

7et forth, or referred to in the Conso lidated Class Action.

8hhh) "Unknown Claims" means any and all Settled Claims that (i)

9 Class Plaintiffs or any Class Member; (ii) the Trustee; or (iii) Kodiak does not

10 know or suspect to exist in his, her or its favor at the time of the release of the

11 Released Officers And Directors and the Insurance Carriers, and any Settling

12ndividuals' Claims that any Settling Individual does not know or suspect to exist

13n his, her or its favor, which if known by him, her or it might have affected his,

14her or its decision(s) with respect to the Settlement. With respect to any and all

15Settled Claims a nd Settling Individuals' Claims, the Pa rties stipulate and agree that

16 upon the Effective Date, the Class Plaintiffs and each Class Member, the Trustee,

17Kodiak, and the Settling Individuals shall expressly waive and each shall be

18deemed to have waived, and upon the Consolidated Class Action Court's issuance

19 of the Officer And Director Judgment shall have expressly waived, any and all

20provisions, rights and benefits conferred by any law of any state or territory of the

21United States, or principle of common law, that is similar, comparable, or

22equivalent to Cal. Civ. Code § 1 5 42, which provides;

2 3general release does not extend to claims which the

24

reditor does not know or suspect to exist in his or her

25

avor at the time of e xecuting the release, which if known

26

y him or her must have materially affected his or her

27ettleme nt with the debtor.

28





1Class Plaintiffs, the Trustee, K odiak, and the Settling Individuals acknow ledge, and

2ach Class Member by operation of law shall be deemed to have acknowledged,

3hat the inclusion of "Unknown Claims" in the definitions of Settled Class Claims,

4Settled Trustee Claims, Settled Kodiak Claims, and Settling Individuals' Claims

5was se parately bargained for and was a key eleme nt of the Settlement.

6LASS CERTIFICATION OF CONSOLIDATED CLASS ACTION

7

.

lass Plaintiffs and the Class Individual Defendants stipulate and

8gree to: (a) certification of the Consolidated Class Action as a class action

9 pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure on

10behalf of the Class; (b) appointment of Class Plaintiffs as representatives of the

11Class; and (c) appointment of Lead Counsel as counsel for the Class pursuant to

12Rule 23(g) of the Federal Rules of Civil Procedure. Following execution of this

13Stipulation, Class Plaintiffs, with the consent of the Class Defendants, shall apply

14 to the Consolidated Class Action Court for entry of the Preliminary Approval

15Order, which will certify the Consolidated Class Action to proceed as a class

16action. The Class Defendants shall have the right to withdraw their consent to

17class certification and the appointment of representatives and counsel for the Class

18n the event that the Officer And D irector Judgme nt does not becom e Final.

19ELEASE OF CLAIMS

20.he Parties understand and agree that the obligations incurred

21pursuant to this Stipulation shall be in full and final disposition of the Officer And

22Director Litigations; and, upon the Effective Date, shall fully and finally release

23any and all Settled Claims as against all Released Officers and Directors and the

24nsuranc e Ca rriers and shall also release as a gainst the Class P laintiffs and all other

25Class Members, the Trust, the Trustee, Alan M. Jacobs individually, the Debtors,

26he Debtors' Estates, the Plan Advisory Committee, and Kodiak, any and all

27Settling Individuals' Claims, and shall also fully and finally release other claims as

28et forth below.

-21-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FM Ox)




.

pon the Effective Date, Class Plaintiffs and members of the Class,

2he Trustee, and Kodiak hereby release, waive, discharge and dismiss each and

3very of the Settled Class Claims, Settled Trustee Claims, and Settled Kodiak

4Claims, respectively, as against each and every Re leased Officer And D irector and

5he Insurance Carriers, and shall be deemed by this agreement and/or operation of

6aw to forever be enjoined from prosecuting any or all of the Settled Class Claims,

7Settled Trustee Claims and Settled Kodiak Claims, respectively, against each and

8very Released O fficer And D irector and the Insurance Carriers.

9.pon the Effective Date, the Settling Individuals hereby release,

10waive, discharge and dismiss, and shall be deemed by this agreement and/or

11 operation of law to forever be enjoined from prosecuting each and every of the

12Settling Individuals' Claims against Class Plaintiffs and all other Class Members,

13 the Trust, the Trustee, Alan M. Jacobs individually, the Debtors, the Debtors'

14Estates, the Plan Advisory Committee, and Kodiak, and their respective heirs,

15predeces sors, successors, assigns, employees, agents and retained professionals.

1 6.pon the Effective Date, the .Settling Individuals hereby release,


18operation of law to forever be enjoined from prosecuting each and every Settling

19ndividuals' Claim a gainst KPM G and the other Re leased Auditor Parties, provided

20and conditioned upon the Settling Individuals receiving substantively reciprocal

21 eleases from K PM G and the Released Auditor Parties, and conditioned on KP M G

22being required pursuant to the KPMG Judgment to promptly offer to other former

23New Century officers or directors with whom KPMG has entered into a tolling

24agreement related to New Century substantially similar substantively reciprocal

25eleases.

26

.

pon the Effective Date, the Settling Individuals hereby release,


28operation of law to forever be enjoined from prosecuting any claim against any and

-22-/O STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)




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





1

) David Kenneally shall pay $32,500 pursuant to any prospective

2udgment entered in the SEC A ction; and

3) Two of the Settling Individuals (neither of whom is a Class

4ndividual Defendant) shall pay a com bined total of $109,315 .51 in

5

ash (in allocated amounts agreed upon and communicated to the

6

rustee), which shall be designated as part of the consideration for

7

ettlement of the Trustee Litigation.

8. Upon the Effective Date, an additional $944,029.49 shall be paid as

9ollows:

10) A total of $541,345 shall be released from the DCP Distribution of

1 1

rad M orrice;

12

) A total of $100,000 shall be paid by or on behalf of Patti Dodge as

13

ollows:

1 4. $55,000 shall be released from the DCP Distribution of Patti15odge; and

16. The Dodge Credit shall be applied; and

1 7) A total of $302,684.49 shall be released from the DCP

18

istributions o f three other Settling Individuals (none o f whom is a

1 9

lass Individual Defendant), pursuant to an allocation agreed upon

20mong themselves and communicated to the Trustee, which shall

21e designated as part of the consideration for settlement of the

22rustee Litigation.

230. Upon the Effective Date, and simultaneous with the release by the

24Trustee of the DCP Settlement Contributions pursuant to paragraph 9b, the

25balance, if any, of the DCP Distribution for each Distribution Defendant (after

26deducting such Distribution Defendant's DCP Settlement Contribution) will be

27distributed to each Distribution Defendant, net of taxes withheld by reason of both

28he DCP Settlement Contribution and the balance, if any, of the DCP Distribution.

-24-/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FMO x)




1The Trustee shall issue or cause to be issued a form W-2 or 1099, as appropriate,

2with respect to such distribution (including the DCP Settlement Contribution)

3made to or on behalf of each Distribution Defendant, The Distribution Defendants

4nd Trustee agree that such distributions (including the DCP Settlement

5Contributions) for tax purposes shall be treated as payment of compensation. Each

6Distribution Defendant agrees that the distributions (including the DCP Settlement

7Contributions) will be subject to the appropriate bonus tax rate for all appropriate

8 federal, state and local taxes related to such distributions. All taxes arising from

9he DCP Distributions shall be borne by the Distribution Defendants; the Trustee

10 and the Trust shall have no liability for any taxes associated with these

11distributions.12

1. The settlement funds deposited in the Global Escrow Account

13pursuant to paragraph 9a shall be held until the Effective Date, at which time the

14unds in the Global Escrow Account and the DCP Settlement Contributions shall

15be released and the Global Officer And Director Settlement Amount shall be

16allocated and distributed as follows:

1 7. $6,000,000 of the Global Officer And Director Settlement Amount shall

18

e paid to Kodiak from the Global Escrow Account and designated as

19

onsideration for settlement of Kodiak's claims against the Kodiak

20itigation D efendants in the Kodiak Litigation;

21. $20,969,273 of the Global Officer And Director Settlement Amount shall

22e paid to the Trustee, consisting both of $20,025,243.5 1 from the G lobal

23scrow Account and $944,029.49 from the DCP Settlement

24

ontributions (including the Dodge Credit), and designated as

25

onsideration for the settlement of the Trustee's claims against the

26

rustee Litigation D efendants in the Trustee Litigation; and

27. $6 5 ,077,088 of the G lobal Officer And Director Settlement Am ount shall

28e transferred from the Global Escrow Account into the Class Escrow





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





1Account without further order of the Court in accordance with the Escrow

2Agreement for the G lobal Escrow Account.

3SE OF CLASS SETTLEMENT FUNDS

45. The Class Settlement Fund shall be used to pay: (i) any Taxes payable

5n the Class Settlement Fund; (ii) any Notice and Administration Costs; (iii) any

6 attorneys' fees awarded by the Consolidated Class Action Court; and (iv) any

7Litigation Ex penses aw arded by the C onsolidated C lass Action Court. The balance

8emaining in the Class Settlement Fund, after payment of items (I)-(iv), shall be

9 distributed to Authorized Claimants as provided below.

106. The Escrow Agent shall invest any funds in the Global Escrow

11 Account and the Class Escrow Account in United States Treasury Bills (or a

12 mutual fund invested solely in such instruments) and shall collect and reinvest all

13nterest accrued thereon, except that any residual cash balances of less than

14$100,000 may be invested in money m arket mutual funds com prised exclusively of

15 investments secured by the full faith and credit of the United States.

1 67. The Class Plaintiffs and the Class Defendants agree that the Class

17Settlement Fund is intended to be a Qualified Settlement Fund within the meaning

18 of Treasury Regulation § 1.46813-1 and that Lead Counsel, as administrator of the

19 Class Settlement Fund within the meaning of Treasury Regulation § 1.46813-

20 2(k)(3), shall be solely respo nsible for filing or caus ing to be filed all informa tional

21and other tax returns as may be necessary or appropriate (including, without

22imitation, the returns described in Treasury Regulation § 1.468B-2(k)) for the

23Class Settlement Fund. Such returns shall be consistent with this paragraph and in

24all events shall reflect that all Taxes on the income earned on the Class Settlement

25Fund shall be paid out of the Class Settlement Fund as provided by paragraph 18

26below. Lead Counsel shall also be solely responsible for causing payment to be

27made from the Class Settlement Fund of any Taxes owed with respect to the Class

28Settlement Fund. Upon written request, the Class Individual Defendants will





1provide promptly to Lead Counsel any statements or information required for tax

2purposes, including the statement described in Treasury Regulation § 1.46 8 B-3(e).

3Lead Counsel, as adm inistrator of the Class Se ttlement Fund w ithin the meaning of

4Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as are

5necessary or advisable to carry out this paragraph, including, as necessary, making

6a "relation back election," as described in Treasury Regulation § 1.468B-10), to

7ause the Qualified Settlement Fund to come into existence at the earliest

8llowable date, and shall take or cause to be taken all actions as may be necessary

9 or appropriate in connection therewith.

108. All Taxes on the Class Settlement Fund shall be paid out of the Class

11Settlement Fund, and shall be timely paid by the Escrow Agent pursuant to the

12disbursement instructions to be set forth in the Escrow Agreement between Lead

13 Counsel and the Escrow Agent, and without prior Order of the Consolidated Class

14Action Court. Any tax returns prepared for the Class Settlement Fund (as well as

15he elec tion set forth therein) shall be con sistent with the prev ious paragra ph and in

16all events shall reflect that all Taxes (including any interest or penalties) on the

17ncome earned by the Class Settlement Fund shall be paid out of the Class

18Settlement Fund as provided herein. The Class Settlement Fund shall indemnify

19 and hold all Settling Individuals and Insurance Carriers harmless for any Taxes and

20 elated expenses of any kind whatsoever (including without limitation, taxes

21payable by reason of any such indemnification), if any, payable by the Settling

22ndividuals or the Insurance Carriers by reason of any income earned on the Class

23Settlement Fund. The Settling Individuals and the Insurance Carriers shall notify

24he Escrow Agent promptly if they receive any notice of any claim for Taxes

25elating to the Class Settlement Fund and, for the avoidance of doubt, in such case

26he Settling Individuals and the Insurance Carriers will have no recourse against

27he Trust, Trustee, Alan M. Jacobs individually, the Debtors, the Debtors' Estates,

28he P lan Advisory C ommittee, or Ko diak.





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





11. Lead Counsel may pay from the Global Escrow Account or the Class

2Escrow Account, without further approval from the other Parties or further order of

3he C onsolidated C lass Action Co urt, the N otice a nd A dministration C osts actually

4ncurred. Such amounts will be deducted as expenses from the Class Officer And

5Director Settlement Amount. Such costs and expenses shall include, without

6imitation, the actual costs of publication, printing and mailing the Notice,

7eimbursements to nominee owners for forwarding the Notice to their benefi

8wners of New Century securities, the administrative expenses incurred and fees

9harged by the Claims Administrator in connection with providing Notice and

10 processing the submitted claims, and the fees, if any, of the Escrow Agent. In the

11event that the G lobal Officer A nd D irector Settlement is terminated pursuant to the12erms of this Stipulation, all amounts contributed to the Global Escrow Account

13 shall be returned or repaid to the Settling Individuals, Insurance Carriers and all

14 ther persons and entities who or which contributed to the G lobal Escrow Account

15 n their behalf, less all No tice and Ad ministration C osts paid or incurred, including

16 any related fees, as set forth in paragraph 41 below.

1 7LASS ATTORNEYS' FEES AND LITIGATION EXPENSES

18

2. Lead Counsel will apply to the Consolidated Class Action Court for a

19ollective award of attorneys ' fees to C lass Plaintiffs' Counse l related to settlement

20of the Consolidated Class Action. Lead Counsel also will apply to the

21Conso lidated C lass Action Co urt for reimbursement of Litigation E xpenses, which

22may include reimbursement of the expenses of Class Plaintiffs in accordance with

2315 U.S.C. § 78u-4(a)(4). No other Party shall ta pe any position with respect to

24Lead Counsel's applications or awards discussed in this paragraph. Such matters

25are not the subject of any agreement between the Parties other than what is set

26orth in this Stipulation. Lead Counsel will not calculate attorneys' fees based

27upon, or seek attorneys' fees or expenses with respect to, any disgorgement or

28penalties obtained by the Securities and Exchange C omm ission in the SEC A ction.

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1

3. Any attorneys' fees and Litigation Expenses that are awarded by the

2Conso lidated Class Ac tion C ourt shall be paid from the G lobal Escrow Account to

3Lead Counsel, with the Consolidated Class Action Court's approval, immediately

4upon award, notwithstanding the existence of any timely filed objections thereto,

5r potential for appeal therefrom, or collateral attack on the Settlement or any part

6hereof, subject to Lead Counsel's obligation to pay back any such amount if, as a

7esult of any appeal, further proceeding or successful collateral attack, the

8ttorneys' fee or Litigation Expense award is amended, modified or does not

9become Final, or if the Effective Date does not occur or the Settlement is

10erminated for any reason. Such amounts will be deducted from the Class Officer

11And D irector Settlement A mount. Lead Co unsel shall make the appropriate refund12or repayment in full no later than ten (10) business days after receiving from the

13Settling Individuals' counsel or from a court of appropriate jurisdiction notice of

14 the termination of the Settlement or notice of any reduction of the award of

15attorneys' fees and/or Litigation. Expenses. An award of attorneys' fees and/or

16 Litigation Expenses is not a necessary term of this Stipulation and is not a

17 ondition of this Stipulation.

18

4. Lead Counsel shall have the sole authority to allocate the

19 Consolidated Class Action Court-awarded attorneys' fees among Class Plaintiffs'

20Counsel in a manner which it, in good faith, believes reflects the contributions of

21such counsel to the prosecution and settlement of the Consolidated Class Action.

22The Settling Individuals shall have no responsibility for any such allocation and

23 hall not be liable for any c laims relating to suc h allocation.

24

5. The attorneys' fees and Litigation Expenses discussed herein are

25exclusive of any attorneys' fees or litigation expenses related to the settlement of

26he Trustee Litigation or Kodiak Litigation. Each side and each party in the

27Trustee Litigation and the Kodialc Litigation shall bear his, her or its own

28 attorneys' fees and costs.





1LAIMS ADMINISTRATOR O F THE CLASS SETTLEMENT FUND

26. The Claims Administrator shall administer the process of receiving,

3 reviewing and approving or denying Claims of Class Members under Lead

4Counsel's supervision and subject to the jurisdiction of the Consolidated Class

5Action Court. Other than the Trustee's obligation to provide New Century's

6 shareholder lists, as provided herein, none of the Settling Individuals, nor the

7Trustee, nor Kodiak, shall have any responsibility for, involvement in or liability

8or providing notice to the Class, the administration of the Class claims in the

9Conso lidated Class A ction, or the allocation of the Class N et Settlement F und. The

10Parties and their respective counsel shall cooperate in the administration of the

11Settlement to the extent reasonably nec essary to effectuate its terms.12

7. The allocation of the Class Net Settlement Fund among Authorized

13Claimants shall be subject to a Plan of Allocation to be proposed by Lead Counsel

14and approved by the Consolidated Class Action Court. Class Individual

15De fendants shall take no position with respect to such propose d P lan of Allocation;

16 such Plan of Allocation is a matter separate and apart from the proposed Settlement

17herein, and any decision by the Consolidated Class Action Court concerning the

18Plan of Allocation shall not affect the validity or finality of the proposed

19Settlement.

2 08. The Claims Administrator shall receive Claims and determine first,

21whether the Claim is a valid Claim, in whole or part, and second, each Authorized

22Claimant's pro ratashare of the Class Net Settlement Fund as set forth in the Plan

23of Allocation set forth in the Notice attach ed here to as Exh ibit 1 to E xhibit A, or in

24uch other plan of allocation as the Co nsolidated Class Action Court approve s.

25

9. The Plan of Allocation proposed in the Notice is not a necessary term

26of this Stipulation and it is not a condition of this Stipulation that any particular

27 plan of allocation be approved by the Consolidated Class Action Court.

28

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1

0. Any Class Member who does not submit a valid Claim Form will not

2be entitled to receive any distribution from the Class Net Settlement Fund but will

3therwise be b ound by all of the terms o f this Stipulation and Settleme nt, including

4he terms of the Officer And Director Judgment to be entered in the Consolidated

5Class Action and the releases provided for herein, and will be permanently barred

6 and enjoined from bringing any action, claim, or other proceeding of any bind

7 against any Released Officer And Director concerning any Settled Claim.

81. Lead Counsel shall be responsible for supervising the administration

9f the settlement of the claims in the Consolidated Class Action and disbursement

10of the Class Net Settlement Fund. No other Party shall have any liability,

11obligation or responsibility whatsoever for the administration of the Settlement or

12disbursement of the Class Net Settlement Fund. No other Party shall be permitted

13 o review, contest or object to any Claim Form or any decision of the Claims

14Administrator or Lead Counsel with respect to accepting or rejecting any Claim

15Form o r Claim for payment by a Class M ember. Lead C ounsel shall have the right,

16 but not the obligation, to waive what they deem to be formal or technical defects in

17 any Claim Forms submitted in the interests of achieving substantial justice.

18

2. For purposes of determining the extent, if any, to which a Class

19Member shall be entitled to be treated as an Authorized Claimant, the following

20 onditions shall apply:

2 1.ach Class Member shall be required to submit a Claim Form

22and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,

23supported by such documents as are designated therein, including proof of the

24Claimant's loss, or such other documents or proof as the Claims Administrator or

25Lead Counsel, in their discretion, may deem acceptable, by the date set by the

26Consolidated Class Action Court;

27.ach Claim Form shall be submitted to and reviewed by the

28Claims Administrator, under the supervision of Lead Counsel, who shall determine





1n accordance with this Stipulation the extent, if any, to which each Claim shall be

2 allowed, subject to review by the Consolidated Class Action Court pursuant to

3 subparagraph (d) below;

4.laim F orms that do not mee t the submission requirements may

5be rejected. Prior to rejecting a Claim in whole or in part, the Claims

6 Administrator shall communicate with the Claimant in writing, to give the

7Claimant the chance to remedy any curable deficiencies in the Claim Form

8ubmitted. The Claims Administrator, under the supervision of Lead Counsel,

9hall notify, in a timely fashion and in writing, all Claimants whose Claim the

10Claims Administrator proposes to reject in whole or in part, setting forth the

11 reason s therefor, and shall indicate in such notice that the C laimant who se C laim is

12 to be rejected has the right to a review by the Consolidated Class Action Court if

13he Claimant so desires and complies with the requirements of subparagraph (e)

14 below;

15.f any Claimant whose Claim has been rejected in whole or in

16 part desires to contest such rejection, the Claimant must, within twenty (20) days

17after the date of mailing of the notice required in subparagraph (c) above, serve

18upon the Claims Administrator a notice and statement of reasons indicating the

19Claimant's grounds for contesting the rejection along with any supporting

20documentation, and requesting a review thereof by the Consolidated Class Action

21Court. If a dispute concerning a Claim cannot be otherwise resolved, Lead

22Counsel shall thereafter present the request for review to the Consolidated Class

23Action Court; and

24

.

he administrative determinations of the Claims Administrator

25accepting and rejecting C laims shall be presented to the C onsolidated C lass Action

26Court, on notice to the Class Individual Defendants' counsel, for approval by the

27Co nsolidated Class Action Co urt in the Class D istribution O rder.

28

-34-/O STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FM Ox)




1

3. Each Claimant shall be deemed to have submitted to the jurisdiction

2 of the Consolidated Class Action Court with respect to the Claimant's Claim, and

3 he Claim will be subject to investigation and discovery under the Federal Rules of

4 Civil Procedure, provided that such investigation and discovery shall be limited to

5hat Claimant's status as a Class Member and the validity and amount of the

6Claimant's Claim. No discovery shall be allowed on the merits of this

7Consolidated Class Action or this Settlement in connection with the processing of

8 Claim Forins.

94. Lead Counsel will apply to the Consolidated Class Action Court, on

10 notice to the Class Individual Defendants, for a Class Distribution Order: (i)

11approving the Claims Administrator's administrative determinations concerning

12 the acceptance and rejection of the Claims submitted; (ii) approving payment of

13any additional unpaid or anticipated administration fees and expenses associated

14with the administration of the Settlement from the Class Escrow Account; (iii) if

15 the Effective Date has occurred, directing payment of the Class Net Settlement

16 Fund to A uthorized C laimants from the C lass Escrow A ccount; and (iv) other relief

17 as appropriate.

1 8

5. Payment pursuant to the Class Distribution Order shall be final and

19conclusive against all Class Members. All Class Members whose Claims are not

20 approved by the Consolidated Class Action Court shall be barred from

21 participating in distributions from the Class Net Settlement Fund, but otherwise

22 shall be bound by all of the terms of this Stipulation and the Settlement, including

23 the terms of the Officer And Director Judgment to be entered in this Consolidated

24Class Action and the releases provided for therein, and will be permanently barred

25and enjoined from bringing any action against any and all Released Officers And

26 Directors conc erning any and all of the Settled C laims.

276. All proceedings with respect to the administration, processing and

28determ ination of Claims and the determ ination of all controve rsies relating thereto,





1ncluding disputed questions of law and fact with respect to the validity of Claims,

2hall be subject to the jurisdiction of the C onsolidated Class A ction Court.

3ERMS OF THE JUDGMENT

47. If the Settlement contemplated by this Stipulation is approved by the

5Consolidated Class Action Court, the Parties shall request that the Consolidated

6Class Action Court enter the Officer And Director Judgment, substantially in the

7orm annexed hereto as Exhibit B, pursuant to Rule 54(b) of the Federal Rules of

8 Civil Procedure.

9AIVER OR TERMINATION

108. Within thirty (30) days of. (a) the Consolidated Class Action Court's

11 declining to enter, without leave to resubmit, the Preliminary Approval Order in

12any material respect; (b) the Consolidated Class Action Court's refusal to approve

13 this Stipulation or any material part of it; (c) the Consolidated Class Action Court's

14declining to enter the Officer And D irector Judgment in any material respect; or (d)

15he date upon which the Officer And Director Judgment is modified or reversed in

16any m aterial respect by the C ourt of Appeals or the Supreme Court, the Parties and

17 the Insurance Carriers each shall have the right to terminate the Settlement and this

18Stipulation by providing written notice to all other Parties of an election to do so.

19However, any decision with respect to an application for attomeys' fees or

20Litigation Expenses, or with respect to any plan of allocation, shall not be

21considered m aterial to the Se ttleme nt and shall not be ground s for termination.

229. In addition, if Class Members who purchased or acquired more than a

23certain number of shares during the Class Period properly elect to exclude

24hemselves from the Class in accordance with the requirements for requesting

25exclusion provided in the Notice, as specified in a separate Supplemental

26Agreement Between Class Plaintiff And The Class Individual Defendants, the

27Class Individual De fendants and the Insurance Ca rriers shall have the option, as se t

28out in the Supplemental Agreement, to terminate this Settlement and Stipulation.





1n the event that the option to terminate the Settlement is exercised and not

2withdrawn as se t forth in paragraph 40 be low, the entire Settleme nt set forth herein

3 s terminated, including the settlement of the Consolidated Class Action, the

4Trustee Litigation and the Ko diak Litigation.

5

0. Lead Counsel and the Class Individual Defendants' counsel shall

6 request jointly that the deadline for submitting exclusions from the Class be at least

7wenty-one (21) days prior to the Final Approval Hearing. Copies of all timely

8 requests for exclusion from the Class received by the Claims Administrator (or

9other person designated to receive exclusion requests) shall be provided to Lead

10 Counsel, Class Individual Defendants' counsel, and counsel for the Insurance

11Carriers no later than fifteen (15) days prior to the Final Approval Hearing. If the

12hreshold stated in the Supplemental Agreement is reached, the Class Individual

13Defendants and the Insurance Carriers shall have until 5:00 p.m. PDT of the

14eventh day before the Final Approval Hearing to inform Lead Counse l, in writing,

15hat they elect to exercise their option to terminate the Settlement and this

16 Stipulation. Lead Counsel shall have the right to communicate with the holders of

17such shares and, if a sufficient number of them withdraw in writing their requests

18or exclusion such that the total number of shares purchased. during the Class

19Period represented by the remaining "opt outs" represents less than the threshold,

2 0 he notice of termination shall be deem ed withdrawn.

211. Except as otherwise provided herein, in the event that the Effective

22Date does not occur or the Settlement is terminated, the Parties shall be deemed to

23have reverted to their respective status in the Officer And Director Litigations

24mm ediately prior to M ay 5 , 2010, and, except as otherwise expressly provided, the

25Pa rties sha ll proce ed in all respec ts as if this Stipulation and an y related orders had

26not been entered. If the Effective Date does not occur or the Settlement is

27erminated, the settlement consideration paid under paragraphs 9a2 and 9a3 shall

2 8 e returned in full, and the remaining portion of the Settlement consideration





1 previously paid, less any amounts paid or incurred for Notice and Administration

2Costs actually incurred and paid or payable and/or Taxes paid or owing, shall

3evert to the Insurance Carriers in proportion to the cash amounts each contributed

4o the Global Escrow Account under paragraph 9al, within fourteen (14) business

5ays after written notification of such event by Le ad C ounse l or any of the Settling

6 Individuals to the Escrow Agent, pursuant to the terms of the Escrow Agreement.

7

O ADMISSION OF WRONGDOING

82. This Stipulation, whether or not consummated, and any proceedings

9aken pursuant to it:

10.hall not be offered or received against any of the Released

11 Officers And Directors as evidence of, or construed as, or deemed to be evidence

12of any presum ption, concession, or admission by any o f the Released O fficers And

13D irectors with respect to the truth of any fact alleged by P laintiffs or the validity of

14any claim that was or could have been asserted against any of the Released

15 Officers And Directors in the Officer And Director Litigations or in any litigation,

16or of any liability, negligence, fault, or other wrongdoing of any kind of any of the

17 Released Officers And Directors;

18

.

hall not be offered or received against any of the Released

19Officers And Directors as evidence of a presumption, concession or admission of

20any fault, misrepresentation or omission with respect to any statement or written

21 document approved or made by any of the Released Officers And Directors, or

22against the Plaintiffs or any Class Members as evidence of any infirmity in the

23claims of Plaintiffs or the other Class M emb ers;

24

.


25Officers And Directors, or against the Plaintiffs or any other Class Members, as

26evidence of a presumption, concession or admission with respect to any liability,

27negligence, fault or wrongdoing of any kind, or in any way referred to for any

28other reason as against any of the Released Officers And Directors, in any other





1 ivil, criminal or administrative action or proceeding, other than such proceedings

2as may be necessary to effectuate the provisions of this Stipulation; provided,

3 however, that if this Stipulation is approved by the Consolidated Class Action

4Court, the Settling Individuals, any other Released Officer And Director, or any

5 Class Member may refer to it to effectuate the protection from liability granted

6hem hereunder;

7

.

hall not be construed against any of the Released O fficers And

8Directors, Plaintiffs or any other Class Members as an admission, concession, or

9presumption that the consideration to be given hereunder represents the amount

10which could be or wo uld have been reco vered after trial;

1 1

.

hall not be construed against Plaintiffs or any other Class

12Members as an admission, concession, or presumption that any of their claims are

13without merit or that damages recoverable under the Officer And Director

14Litigations w ould not have e xceeded the Officer And D irector Settlement A mount;

15nd

1 6hall not be construed as or received in evidence as an

17 admission, concession or presumption that class certification is appropriate in this

18Co nsolidated Class Ac tion, exce pt for purposes of this Settlement.

1 9

ISCELLANEOUS PROVISIONS

203. Pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28

21U.S.C. § 171 5 (b), not later than ten (10) days after the G lobal Officer And Director

22Settlement is filed in the Consolidated Class Action Court, Settling Individuals

23shall cause to be served upon the appropriate State official of each State and the

24Attorney General of the United States a CAFA Notice. The Parties will request

25hat, pursuant to 28 U.S.C. § 171 5 (d), the Final Approval Hearing be scheduled for

26no earlier than ninety (90) days following the deadline for Settling Individuals to

27serve the CAFA Notice as stated in this paragraph. Any failure by Settling

28ndividuals to comply with the CAFA Notice requirements will not provide





1grounds for delay of the Final Approval Hearing or entry of the Officer And

2Director Judgment.

34. All of the exhibits attached hereto are hereby incorporated by

4eference a s though fully set forth herein.

5

5. The Settling Individuals and Insurance Carriers each warrant that, as

6o the payments made by or on behalf of him, her or it, at the time of such

7ayment, he, she or it was not insolvent, nor did nor will the payment required to

8be made by or on behalf of him, her or it render him, her or it insolvent, within the

9meaning of and/or for the purposes of the Bankruptcy Code, including §§ 101 and

10 547 thereof. This representation is made by the Settling Individuals and the

11 nsurance C arriers and not by their counsel,12

6. In the event of the entry of a final order of a court of competent

13 jurisdiction determining the transfer of money to the Global Escrow Account or

14 any portion thereof by or on behalf of any of the Settling Individuals or the

15nsurance Carriers to be a preference, voidable transfer, fraudulent transfer or

16similar transaction pursuant to the Bankruptcy Code, and any portion thereof is

17required to be returned, and such amount is not promptly deposited to the Global

18Escrow Account by others, then, at the election of Plaintiffs, Plaintiffs may move

19he Consolidated Class Action Court to vacate the Officer And Director Judgment

20n whole or in part; the Parties shall be restored to their respective positions in the

21Officer And Director Litigations immediately prior to May 5, 2010; and any cash

22amounts in the Global Escrow Account shall be returned as provided in paragraph

2341 above.

24

7. The Parties intend this Settlement to be a final and complete

25esolution of all disputes asserted or which could be asserted by the Plaintiffs, any

26other Class Members and their attorneys against all Released Officers And

27Directors with respect to all Settled Claims. Accordingly, the Parties agree not to

28assert that the Consolidated Class Action, Trustee Litigation, or Kodiak Litigation

-40-/O STIPULATION O F SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FM Ox)




1was brought or defended in bad faith or without a good faith basis. The Parties

2hereto shall assert no claims of any violation of Rule 11 of the Federal Rules of

3Civil Procedure relating to the prosecution, defense, or settlement of the Officer

4And Director Litigations. The Parties agree that the amount paid and the other

5erms of this Settlement were negotiated at arm's-length in good faith by the

6Parties, including a mediation conducted by a professional mediator, and reflect a

7 settlement that was reached voluntarily after consultation with experienced legal

8ounsel.

98. While retaining their rights to deny that the claims asserted in the

10Officer And Director Litigations were meritorious, the Settling Individuals in any

11 statement made to any media representative (whether or not for attribution) will

12 not deny that the Officer And Director Litigations were commenced and

13prosecuted in good faith. Similarly, while retaining their rights to deny that the

14defenses in the Officer And Director Litigations were meritorious, the Class

15Plaintiffs, Trustee, and Kodiak in any statement to any media representative

16 (whether or not for attribution) will not deny that the Officer And Director

17 Litigations were defended in good faith. In all events, the Parties shall refrain from

18any accusations of wrongful or actionable conduct by any Party concerning the

19 prosecution and resolution of the Officer And Director Litigations, and shall not

20 otherwise suggest that the Settlement constitutes an admission of any claim or

21defense alleged.

229. This Stipulation may not be modified or amended, nor may any of its

23provisions be waived except by a writing signed by all signatories hereto or their

24uccessors-in-interest.

25

0. The headings herein are used for the purpose of convenience only and

26are not meant to have legal effect.

271. The administration and consummation of this Settlement as embodied

28n this Stipulation shall be under the authority of the Consolidated Class Action





1Court, and the Consolidated Class Action Court shall retain jurisdiction for the

2urpose of entering orders providing for awards of attorneys' fees and Litigation

3xpense s to Lead C ounsel and en forcing the terms o f this Stipulation as it concerns

4he C onsolidated Ac tion. After the Effective D ate, the Bankruptcy C ourt shall have

5nd retain jurisdiction in the Trustee Litigation for purpos es of enforc ing the terms

6 of this Stipulation as between the Trustee and Trustee Litigation Defendants, and

7 the court hearing the Kodiak Litigation shall have and retain jurisdiction in the

8Kodiak Litigation for purposes of enforcing the terms of this Stipulation as

9 between Kodiak and Kodiak Litigation Defendants.

102. Upon the Effective Date and to the extent not already withdrawn: (a)

11 the Settling Individuals will be deemed to have withdrawn with prejudice the

12claims identified in the schedule annexed hereto as Exhibit C that have been filed

13or scheduled in the Bankruptcy Court against the Debtors' Estates; and (b) Arch

14nsurance Company will be deemed to have withdrawn with prejudice proof of

15claim no. 2329 filed in the Bankruptcy Court against the Debtors' Estates. Upon

16he Effective Date, proof of claim no. 2385 filed by Fredric J. Forster in the

17 Bankruptcy Court against the Debtors' Estate shall be allowed as a priority claim in

18he amount of $5,000.00.

1 9

3. Upon the Effective Date, the notices of dismissal in the Trustee

20Litigation and Kodiak Litigation held by counsel designated by the Kodiak

21Litigation Defendants and the Trustee Litigation Defendants shall be filed in the

22Trustee Litigation and Kodiak Litigation, respectively. If the Effective Date does

23not occur or the Settlement is terminated, the notices of dismissal shall not be filed

24and shall be returned to counsel for Trustee and K odiak, respectively.

25

4. The waiver by one Party of any breach of this Stipulation by any other

26Party shall not be deemed a waiver of any other prior or subsequent breach of this

27Stipulation.

28







1Stipulation and this Settlement, and to use best efforts to promptly agree upon and

2 execute all such other documentation as may be reasonably required to obtain final

3 approval by the Consolidated Class Action Court of the Settlement and to

4ffectuate its terms.

5

2. If any Party is required to give notice to any other Party under this

6 Stipulation, such notice shall be in writing and shall be deemed to have been duly

7given upon receipt of hand delivery or facsimile transmission with confirmation of

8 receipt.

9 DATED AS OF: July 23, 2010ERNSTEIN LITOWITZ IF, ERGER

10GROS MANN ids

11

12

AL ATORE . GRAZIANO13

BIÂIR A, NICHO LAS

14LIZABETH LIN

1 5IKI L. MEN DO ZABENJAMIN GALDSTON

16AI,' EO A. KELL AR124 8 1 High Bluff Drive, Suite 300

17an Diego, CA 921 30Tel: 858 793-0070

1 8ax: (858) 793-032 3-and-

19

ALVATORE J . G RAZIANO

LAUREN A. MCM ILLEN20

285 Avenue of the Americas

New York, NY 100192 1

el: (212) 554-1400

Fax: (212) 554-1444

22

3URRAY, FRANK & SAILER LLPMARV IN L. FRANK275 Madison Avenue, Suite 8 01

24ew York, NY 10016

2 5

el: 212 682-1818Fax; 212 682-1892

26

27

28

-44-/O STIPULATION OF SETTLEMENT





tWERLING, SCHACHTER& ZWERLING LLPFREY C. ZWERLINGE:I

41 Madison Avenue3ew York, NY 10010

T'el:212) 223-3900

4

ax: (212 371 - 5969

5ead C'otinsel for Lead Plaintiff The NewFork State Teachers ' Retirement S i )stem and

6he Class, and Plaintif s Carl Larson andChar les Hooten

7

8 MUS-G, ER, TOLLE;S & OLSLLP

9

9 .

1 1

OHN V. SPIEGEL

^

ATHLEEN M. MCDOW LKEVIN S. ALLR.ED

2

55 South Grand Avenue, 35 t h Floor

13os A . eles, C A 90071-1560Te l: 213 683 -9100

1 4ax: (213) 687-3702

1 5ttorneys f or Defendants Brad A . Moa"rice,Patti A f Dodge, K evin M. Clo d, Patrick

16lana an, Stergios Theologi es, and JosephF, Eclo l oth, Jr.

17

1 . 8

I<.ADDEN, ARPS, SLATE, MEAGHER

1

FL,OM LLP

202 1ACK P. DICANIO

2200 S. Grand Avenue, Suite 3400Los A n e les, CA 90071-3144

2 3el: (2 3) 687-5000Fax: (213) 687-5600

24

Attorneysfor Defendant Estate of Edward

2 5otschall

26

27

28

T...___45 -JO STIPULATION OF SETTLEMENTCase No. 2 :07-cv-00931-DDP (FN40x)




1WERLING , SCHACHTER& ZWERLING LLP

2EFFREY C. ZWERLING41 M adison Avenueew York, NY 1 0010Tel: 212 223-3900

4ax : (212) 371-5 9695ead Coun sel for Le ad Plaintiff The N ew

Y ork State Teachers Retirement S ystem and6he Class, and Plaintiffs Carl Larson and

Charles Hooten7

8UNG ER, TOLLES & OLSON LLP

91 01 1OHN W . SPIEG EL

KATHLEEN M. MCDOW ELL12

EVIN S. ALLRED

h

355 South Grand Avenue, 35 Floor13

os An eles, CA 90071-

Tel:

5 6 0

213 683-910014ax: (213) 687-37 02

15ttorney s for Defendants Brad A . M orrice,Patti M Dodg e, K evin M . Clod, Patrick

1 6lanaggan, S tergios Theo logide, and JosephF. Eckroth, Jr.

17

1 8

KADD EN, ARPS, SLATE, MEAG HER

1 9

FLOM LLP

20

2 1

sAnfeles,

P. DICANIO2 2rand Avenue, Suite 3400

CA 90071 -3144

23el: (2 3) 687-5000Fax: ((213) 687-5600

24A ttorney s or Defendant Estate of Edw ard

2 5otschallf2 6

27

28

-h5-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)




1ATH: & WATKINS LLP

2

34NY A. ABASCAL

ETHAN J. BROWN5

5 5 South G rand Avenue, Suite 100

Los Angeles, CA 90071-156 06

el: (213) 485-1 234

7

ax: (213) 891-8 763

8t torney s for Defend ant Ro bert K . Cole

91 0ROWELL & MORING LLP

1 1

1 2

JOHN CROUCHLEY1 3

15 South Flower Street, 40 ` h Floor

1 4os Angeles, California 90071 -225 8

1 5el: (213) 622-475 0Fax: (213) 622 -2690

16A ttorney s for David Kenn eally

17

18

IBSON D UNN & CRUTCHER LLP

19

20

21ERYL L. YOUNGWAYNE W . SMITH

2216 1 M ichelson Drive

2 3rvine, CA 9261 2Tel: (949) 451-4038

4ax: (949) 451-4220

25t torney s for Defendants M arily n A ,2 6lexander, Harald A . B lack , David E inhorn,

Fredric. J. Forster, Don ald E . Lang e,27ichael M . Sachs , Terrence P. Sandvik , A nd

Richard A . Zona2 8


Case No. 2:07-cv00931-DDP (FMCx)



Case 2:07-cv-00931-DDP-FMO Document 484-3 Filed 07/30/10 Page 50 of 56 Page ID

#:10894

1 LATHAM & WATKINS LLP

2

3ANNY A. ABASCAL......^v,__ .

4

THAN J. BROWN

5

55 South Grand Avenue, Suite 100

Los Angeles, CA 90071-1560

6 {ael: (213) 485-1234

7Fax: (213) 891-8763

i

8ttorneys for Defendant Robert K. Cole

9

1 0ROWELL & MORING LLP1 1

^

J ' 01 CROUCHE Y1 3

1.5 South Flower Street, 40' h Floor

1 4os Angeles, California 90071-2258

15 ;el: (213) 622-4750Fax: (213) 622-2690

16

A ttorney s for David K enneally17

1 8

IBSON DUNK & CRUTCHER LLP

19

j

20

M21 '

RYL L, YOUNG

WAYNE W. SMITH22161 Michelson Drive

23rvine, CA 9261 2Tel: (949) 451-4038

2 4 {ax: (949) 451-4220ij

25ttorneys for cferidants Marily n .A .

26lexander, J-Darold A . Black, David Einhorn,Fredric J, Forster, .Donald L. Lange,

27ichael M. Sachs, Terrence P. Sandvik, A ndRichard A. Zona

28

46-/O STIPULATION OF SETTLEMENT

Case No. 2:.07 -cv-00931-DDP (FMO x)




1ATHAM & WATKINS LLP

2

3

4

ANN Y A. ABASCAL

ETHAN J. BROWN5

55 South G rand Avenue, Suite 100


el: (213) 485-1234

7

ax: (213) 891-876 3

8ttorneys far Defendant Robert K. Cole

9

1 0ROWELL & MORING LLP

11

12

JOHN CROUCHLEY13

15 South Flower Street, 40 t h Floor

1 4os Angeles, California 90071 -225 8

Tel: (213) 622-475015ax: (213) 622-2690

16

A ttorney s for David K enneally17

1 8

GIBS ON D ," & CR C R LLP

19

^....

2 1ERYLJYO

WAYN . S 411

2 2161 Michelson Drive

23rvine, CA 92612Tel: (949) 451-4038

2 4ax: (949) 451-4220

2 5t torney s for Defendants M arily n A .26lexander, Harold A . B lack , David Einhorn,

Fred ric J. Forster, Do nald E. L ange,

27ichael M . Sachs, Terrence P. S andv ik, A ndRichard A . Zona

28

46-/O STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)




RUS MILI SAND & SMITH

4ONALD RUS

2211 Michelson Drive Seventh FloorIrvine CA 926 12.104Tel: (49) 752-7100

6ax: (949) 252-1514

7lttor ney s fbr Def end ant W illiam J; PcpejoJ

8ORR .ISON : FO ERSTER I:..I.,I'

1 0

DAN MA.RMALE.FSKY1 2

AMANTHA. P . G OODM AN

1 3

55 West Fifth Street, Suite 3500

1 4os Angeles, CA 90013-1024

Tel: 213-892-5200

1 . 5ax: 213-892-5454

, 1 6ttorneysf brJqff reyD. Goldberg1 7

. 1 8

-IAHN HE,SSEN ELP

1

20

21OHN P, McCAHEY

MARK S. INTDE LIC,ÀTO22ARIA A. AR ^SOTT

2388 M adison Av enueNew York, N Y 10022

2 4e l : ( 2 1 2 1 ) 478-7420

Fax: (2 t 478-7400

2attorney s fo r° the .Nev i Cen tury Liquidating

26rus t and R eorganized N ew Cen tury

27arehouse Corporation, by and through

..Tan M, Jacobs, Liquidaling Trustee and2. 8lan adm inistrator

-47-IO STIPULATION OF SETTLEMFNTCase Igo, 2V-cv .. 00931-DDP (FMOx)

i




K.C_ 15 .4IIH11 A.ND d: S .1 !11`l l i

2}3

221 1

Michelson Drive, Seventh Floor5

rvine, CA 92612-1043

'1 ej: (949) 752-7100

6

av (949) 252-1514

41torne -l'brDr-. rad arti k'illimn ). I'ojxjoy

t1 `'1. ^ f11 C) 1:; R f I- R LLP

1 t l

11

i WI

I M A L F , I { 'K Y

SAMAN I I = I, '. GO )OMAN13 '

5 5 West 1 " I fth Strect, Suite 3 500

Los Angeles, CA 90013-1024l le1: 213-892-52001 5ax: 213-892-5454

1 .6

1tt rr s c °.1 ;fPey D, Goldberg

1?

iI b k 1 - I i

- 1 1 , S 1 ^ : N I . . 1 . P

101-IN 1 1 . McCA.1 fE '^

. . .

2 2ARK S, INUELIC IyC

MARIA A, ARNO'1 T2 38 8 M a d is o n A v e n u e

New gook NY 10022241el: (21.2)4 -78-7420

2Fax: (212) 478-7100

<Ittor°are^} -^ ,s-^`'rrr• the t"^'ew C.c,na.ra t- .I icit.rccicrîra„2rtisl ct.rrdRe°org aniz ec1Neiv (;'emur),

27ar•c r/rera;a-se C 'otporrat on., k p and dirougla

^ 1 l c a rz M* Jacobs,s, I ^ ic uidating ..'note and2lan pfd adnislrnto r

_a{7-!C) S I-IPULATION OF s[ I l i l"IME 1'

C asi^, No. 2!07,(-v- ,t( 9,', 4-DIX, (}a;MOX)




1US MILIBAND & SMITH

2

3

4ONALD RUS2211 Michelson Drive Seventh Floor5

rvine CA 9261 2-104'3

Tel: (^49) 752-71006

ax: (949) 252-1 51 4

7ttorney s fo r Defendant W illiam J Popejoy

8

9ORRISON & FOERSTER LLP

10

11

DAN MARMALEFSKY1 2

A MA NTHA P . G OODM A N

1 3

5 5 W est Fifth Street, Suite 35 00

Los Angeles, CA 90013-102414el: 213-892-5200

15ax: 213-892-54541 6ttorney s for Jeffrey D. Go ldberg1718 HAHN & HESSEN LLP

19

20n1O P. McCAHEY

22ARK S. INDEL ICATOM ARIA A. ARNO TT

2 388 Madison AvenueNew York, NY 10022

24el: (212_ ) 478-7420Fax: (212) 478-7400

25

A ttorneys f or the N ew Century Liquidat ing2 6rus t and R eorganized N ew Century

2 7arehouse Co rporation, by and th rough

A lan M . Jacobs , L iquidating Trustee and28lan A dm inistrator






1 WINSTON & STRAWN LLP23

TEVEN D . ATLEE333 S. G rand Avenue5

os AnyCA 90071-1543

Tel: (21 6Y5 -18276

ax: (21J) 615-1750

7t torney s for K odiak W arehouse LL C,

K odiak W arehouse JPM Capital LLC ,8odiak CDOI L td ., K odiak CDO9anagemen t LLC , and K odiak Funding LP

0UCKER ELLIS & WEST LLP11

12Agreed to as to paragraph 52 only,

13

ALEC H. BOYD1 435 Ma in Street Suite 7001 5an Francisco, G A 94105

Tel: (415 ) 617 --22321 6ax: (415) 617-2409

1 7ttorneys for Arch Insurance Company

18

19

20

21

22

23

24

25

26

27

28

-48-/O STIPULATION OF SETTLEMENT J

Case No. 2;07-ev-00931-DDP (FMOx)




1INSTON & STRAWN LLP

23

4

TEVEN D . ATLEE

333 S. G rand Avenue5

as Angeles CA 90071-1543

Tel: 213)) 6^5-18276

ax: (213) 615-1750

7t torney s for K odiak W arehouse LLC ,

K odiak W arehouse JPM Capital LLC ,8odiak CDOI Ltd., Kodiak CDO

9anagement LLC, and Kodiak Funding LP

10UCKER ELLIS & WEST LLP

11

12greed o as to 1 graph 52 only,

13

ALEC H. BOYD1 435 Main Street S ite 700

1 5an Francisco Â 94105Tel: (415) 60-2232

1 6ax: (415) 617-2409

1 7t torneys for A rch Insurance C om pany

18

19

20

21

22

23

24

25

26

27

28

-48-/O STIPULATION O F SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)




EXH IBIT A

TO GLOBA L OFFICER AND DIRECTOR STIPULATION





2 BLAIR A. NICHOLAS (Bar No. 178428)blairn blMaw.c

3 LIZA E LINar No. 174663)(elizabethlblb law.com)

4 NIKI L. M NDOZA (Bar No. 214646)

nikim Mplaw.coV5 ENJA

ALDON (Bar No. 211114)

benMlblbqaw.com)6 AA, L

Bar No. 234470)

M81eok

&1 g.h -blbgaw.com)

luff Drive, Suite 300

San Dlego, CA 921308 Tel: 858 793-0070

Fa x: ^85 8^ 793-0323and-SALVATO

T

RE J. GRAZI ANO10 Ls

AUREN b 1M MILLEN

1 1 ^1aurentngb1bgjaw.com)285 Avenue of th e Americas12 New York, NY 10019

Tel: (212) 554-140013 F ax : (212) 55 4-1444

14 Lead Counsel for Lead Plaintiff NewYork State Teach ers ' Retirement System

15

16


18

ENTRAL D ISTRICT O F CALIFORNIA

19

IN RE NEW CENTURY

ase No. 2:07-cv-00931- DDP (FMOx)

20

Lead Case)

21

[PROPOSED] ORDER22RELIMINARILY APPROVING

SETTLEMENTS AND23ROVIDING FOR NOTICE

24

XHIBIT A

25

udge: Hon. Dean D. Pregerson

26728[PROPOSED] ORDER PRELIM. APPROVING

SETTLEMENTS AND PRO VIDING FOR NOTICECase No. 2:07-ev-00931-D DP (FMOx)




HEREAS, Lead Plaintiff New York State Teachers' Retirement System

2 ("Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of

3 themselves and all others similarly situated (collectively with Lead Plaintiff,

4 "Plaintiffs") and the Individual Defendants,' the Underwriter Defendants, 2 and

5 KPMG LLP ("KPMG") (collectively "Defendants") (collectively, with

6 Defendants, the "Parties"), have reached agreements to settle the above-captioned

7 litigation (the "Consolidated Action"), and Plaintiffs have applied to the Court

8 pursuant to Rule 23(e) of the Federal Rules of Civil Procedure for an order

9 preliminarily approving the Settlements in accordance with the Stipulations of

10 Settlement, 3 which, together with the exhibits annexed thereto, set forth the terms

11 and conditions for the proposed Settlements regarding the Consolidated Action,

12

13"Individual Defendants" or "Class Individual Defendants" means Robert K.

14 Cole, Brad A. Morrice, Estate of Edward Gotschall, Patti M. Dodge, Fredric J.

15 Forster, Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P.

Sandvilc, Richard A. Zona, Marilyn A. Alexander, David Einhorn, and William J.16 Popejoy.

172"Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank

18 Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities

LLC, Roth Capital Partners, Morg an Stanley & Co ., Inc., and Jeffries & C o., Inc.193The terms of the proposed settlement with the Underwriter Defendants is set

20 forth in the Stipulation Of Settlement Between Plaintiffs And The Underwriter

Defendants (the "Underwriter Stipulation" or the "Underwriter Settlement"); the

21 terms of the proposed settlement with KPMG is set forth in the Stipulation Of

22 Settlement Between Plaintiffs And KPMG LLP (the "KPMG Stipulation" or

23 "KPMG Settlement"); and the proposed settlement with the Individual Defendants

is set forth in the Stipulation Of Global Settlement With New Century Officers

24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains

proposed settlements in this Consolidated Action, and related Trustee Litigation

26 and Kodiak Litigation (as defined in the Global Officer And Director Stipulation),

27 The Global Officer And Director Stipulation, the Underwriter Stipulation and the

KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations

28 of Settlement," or the "Settlements."

[PROPOSED] ORDER PRELIM. APPROVING4- SETTLEMENTS AND PROVIDING FOR NOTICE

Case No. 2:07-cv-00931-D DP (FMOx)




1 and for dismissal of the Consolidated Action with prejudice as against all of the

2 Defendants and their related parties, upon the terms and conditions set forth

3 therein; and the Court having read and considered the Stipulations and the exhibits

4 annexed thereto;

5

OW, THEREFORE, IT IS HEREBY ORDERE D:

6

.

his order (the "Notice Order" or "Preliminary Approval Order")

7 hereby incorporates by reference the definitions in the Stipulations unless

8 otherwise indicated, and all terms with initial capitalization not otherwise defined

9 herein shall have the same meanings as set forth in the Stipulations. Any

10 inconsistencies between the Stipulations and the Notice of Pendency of Class

11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for

12 Attorneys' Fees and Reimbursement of Litigation Expenses ("Notice") will be

13 controlled by the language of the Stipulations.

4.h e Court he reby preliminarily approves th e Settleme nts as being fair,

15 reasonable and adequate to the Class, pending a final hearing on the Settlements.

16 CLASS CERTIFICATION

7.h e Court h ereby certifies , pursuant to Rules 23(a) and 23(b)(3) of the

18 Federal Rules of Civil Procedure, a Class defined as follows:

19

ll persons and entities who purchased or otherwise acquired New

Century common stock, New Century Series A Preferred stock, New20

entury Series B Preferred Stock, and/or New Century call options

and/or who sold New Century put options, during the time period21rom May 5, 2005, through and including March 13, 2007, either in

the Offerings, pursuant to a registration statement, or in the market,22nd who, upon disclosure of certain facts alleged in the Complaint,

were injured thereby. Excluded from the Class are (a) Defendants; b23embers of the immediate families of the Individual Defendants,, c^

the subsidiaries and affiliates of Defendants; (d) any person or entity24

ho was a partner, executive officer, director or controllinperson of

New Cen

including any of its subsidiaries or affiliates or of any

25

efendant; e) any entity in which any Defendant has a controlling

interest; and (f) the legal representatives heirs, successors and assigns26

f any such excluded p arty. Also excluded from the Class are any

persons who exclude t-Iemselves by filing a request for exclusion In27ccordance with the requirements s et forth In the N otice.

28

[PROPOSED] ORDER PRELIM. APPROVING-2- SETTLEMENTS AND PROVIDING FOR NOTICE





.

he Court finds that the prerequisites for a class action under Rules

2 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been s atisfied in that:

3 (a) the number of Class Members is so numerous that joinder of all members

4 thereof is impracticable; (b) there are questions of law and fact common to the

5 Class; (c) the claims of Lead Plaintiff New York State Teachers' Retirement

6 System ("NYSTRS") and Plaintiffs Carl Larson and Charles Hooten are typical of

7 the claims of the Class they seek to represent; (d) Plaintiffs have fairly and

8 adequately represented the interests of the Class; (e) the questions of law and fact

9 common to the members of the Class predominate over any questions affecting

10 only individual members of the Class; and (f) a class action is superior to other

11 available methods for the fair and efficient adjudication of the controversy.

12

.

ursuant to Rule 23 o f the Federal Rules of Civil Procedure, Plaintiffs

13 are certified as Class Representatives and Lead Counsel Bernstein Litowitz Berger

14 & Grossmann LLP is certified as Class Counsel.

15.he Court appoints the firm of Analytics Incorporated ("Claims

16 Administrator") to supervise and administer the notice procedure as well as the

17 processing of claims as more fully set forth below:

18

.

ithin five (5) business days after entry of this Order, the

19 Claims Administrator shall cause a copy of the Notice and the Proof of Claim and

20 Release (the "Claim Form"), annexed hereto respectively as Exhibits 1 and 2, to be

21 mailed by first-class mail, postage prepaid, to all members of the Class at the

22 address of each such Class Member as set forth in the records of New Century or

23 its transfer agent, or who are identified by further reasonable efforts (the "Notice

24 Date"). Lead Counsel shall, at or before the Settlement Hearing, file with the

25 Court proof of mailing of the Notice and Claim Form; and

26

.

summary notice ("Summary Notice"), annexed hereto as

27 Exhibit 3, shall be published once each in the national edition of The Wall Street

28 Journal and over the PR Newswire within five (5) business days of the mailing of






1 the Notice. Lead Counsel shall, at or before the Settlement Hearing, file with the

2 Court proof of publication of the Summary Notice.

3.he Court approves the form of Notice and Summary Notice

4 (together, the "Notices") and Claim Form, and finds that the procedures established

5 for publication, mailing and distribution of such Notices substantially in the

6 manner and form set forth in paragraph 6 of this Order meet the requirements of

7 Rule 23 of the Federal Rules of Civil Procedure, the Private Securities Litigation

8 Reform Act of 1995, and due process, and constitute the best notice practicable

9 under the circumstances.

10.or the purpose of identifying and providing notice to the Class, the

11 Trustee and the Underwriter Defendants shall provide to the Claims Administrator

12 the information as agreed to in the Global Officer And Director Stipulation and the

13 Underwriter Stipulation, respectively.

14.ominees who purchased or otherwise acquired New Century stock

15 for beneficial owners who are Class Members are directed to: (a) request within

16 fourteen (14) days of receipt of the Notice additional copies of the Notice and the

17 Claim Form from the Claims Administrator for such beneficial owners; or (b) send

18 a list of the names and addresses of such beneficial owners to the Claims

19 Administrator within fourteen (14) days after receipt of the Notice. If a nominee

20 elects to send the Notice to beneficial owners, such nominee is directed to mail the

21 Notice within fourteen (14) days of receipt of the copies of the Notice from the

22 Claims Administrator, and upon such mailing, the nominee shall send a statement

23 to the Claims Administrator confirming that the mailing was made as directed, and

24 the nominee shall retain the list of names and addresses for use in connection with

25 any possible future notice to the Class. Upon full compliance with this Preliminary

26 Approval Order, including the timely mailing of Notice to beneficial owners, such

27 nominees may seek reimbursement of their reasonable expenses actually incurred

28 in complying with this Preliminary Approval Order by providing the Claims






1 Administrator with proper documentation supporting the expenses for which

2 reimbursement is sought and reflecting compliance with these instructions,

3 including timely mailing of the Notice, if the nominee elected or elects to do so.

4 Such properly documented expenses incurred by nominees in compliance with the

5 terms of this Preliminary Approval Order shall be paid from the Settlement Fund.

6 HEARING: RIGHT TO BE HEARD

7

0. There shall be a hearing on [November 8, 2010, or November 15,

8 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the "Settlement

9 Hearing") at which time the Court shall address the fairness, reasonableness and

10 adequacy of the Settlements, the fairness and reasonableness of the Plan of

11 Allocation, and Lead Counsel's application for attorneys' fees and payment of

12 Litigation Expenses. The Settlement Hearing shall be held before this Court at the

13 United States District Court for the Central District of California, 312 North Spring

14 Street, Courtroom 3, 2nd Floor, Los Angeles, California 90012.

151. Papers in support of the Settlements, the Plan of Allocation, and Lead

16 Counsel's application for attorneys' fees and payment of Litigation Expenses shall

17 be filed on or before twenty-eight (28) days prior to the Settlement Hearing.

18

2. Any member of the Class may appear at the Settlement Hearing and

19 show cause why the proposed Settlements embodied in the Stipulations should or

20 should not be approved as fair, reasonable and adequate, and/or to present

21 opposition to the Plan of Allocation or to the application of Lead Counsel for

22 attorneys' fees and payment of Litigation Expenses. However, no Class Member

23 shall be heard or entitled to contest the approval of the terms and conditions of the

24 Settlements, or the terms of the Plan of Allocation or the application by Lead

25 Counsel for an award of attorneys' fees and payment of Litigation Expenses unless

26 that Class Member (1) has served written objections, including the basis therefor, as

27 well as copies of any papers (including proof of all purchases or acquisitions of

28 New Century stock or options during the Class Period) and/or briefs in support of


Case No. 2:07-ev-0093 I -DDP (FMOx)




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


Case No. 2:07-ev-00931-D DP (FMOx)




1 Class Members and to approve the Stipulations and/or Plan of Allocation with

2 modification and without further notice to Class Members.

3 CLAIMS PROCESS

46. In order to be entitled to participate in the Settlements, a Class

5 Member must complete and submit a Claim Form in accordance with the

6 instructions contained therein and/or in the Notice. To be valid and accepted,

7 Claim Forms submitted in connection with the Settlements must be postmarked no

8 later than 120 days after the Notice date (unless by Order of the Court, late-filed

9 Claim Forms are accepted).

107. Any Class Member who does not timely submit a valid Claim Form

11 shall not be entitled to share in the Settlement Fund, unless otherwise ordered by

12 the Court, but nonetheless shall be barred and enjoined from asserting any of the

13 settled claims and shall be bound by any judgment or determination of the Court

14 affecting the Class Members.

158. As set forth in the Stipulations, Defendants and their related parties

16 shall have no responsibility whatsoever for the administration of the Settlements or

17 the disbursement of the Net Settlement Fund and shall not be permitted to review,

18 contest or object to any Claim Form or any decision of the Claims Administrator or

19 Lead Counsel with respect to accepting or rejecting any Claim Form or Claim for

20 payment by a Class Member.

21 REQUEST FOR EXCLUSION FROM THE CLASS

229. Any requests for exclusion must be submitted such that they are

23 received no later than twenty-one (21) days before the date of the Settlement

24 Hearing. To be valid, each request for exclusion must (1) state the name and

25 address of the person or entity requesting exclusion; (ii) state that such person or

26 entity requests exclusion from the Class in In re New Century, 07-CV-00931-DDP

27 (FMOx); (iii) be signed by the person or entity requesting exclusion; (iv) provide a

28 telephone number for that person or entity; and (v) provide the date(s), price(s),


Case No. 2:07-ev-00931-D DP (FMOx)




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.


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.


Case No. 2:07-cv-0093 1 -DD P (FMOx)




1. Only Class Members and Lead Counsel shall have any right to any

2 portion of, or any rights in the distribution of, the settlement funds except as

3 provided in the Stipulations or otherwise ordered by the Court.

42. All funds held by the escrow agent selected by Lead Counsel to

5 maintain the escrow account(s) for the Settlements ("Escrow Agent") shall be

6 deemed and considered to be in custodia legis and shall remain subject to the

7 jurisdiction of the Court until such time as such funds shall be distributed pursuant

8 to the Stipulations and/or further Order of the Court.

93. Lead Counsel or its agents are authorized and directed to prepare any

10 tax returns required to be filed for the escrow account maintained to hold the

11 settlement funds pursuant to the terms of the Stipulations and to cause any Taxes

12 due and owing to be paid from the escrow account(s) without further Order of the

13 Court, and to otherwise perform all obligations with respect to Taxes and any

14 reportings or filings in respect thereof as contemplated by the Stipulations without

15 further Order of the Court.

164. As set forth in the Stipulations, Lead Counsel may pay from the

17 escrow account(s), without further approval from Defendants or further Order of

18 the Court, the costs, fees and expenses that are incurred by the Claims

19 Administrator and Lead Counsel in connection with (i) providing notice to the

20 Class; and (ii) administering the claims process in connection with the

21 Consolidated Action ("Notice and Administration Costs") actually incurred. Such

22 costs and expenses shall include, without limitation, the actual costs of publication,

23 printing and mailing the Notice, reimbursements to nominee owners for forwarding

24 the Notice to their beneficial owners, the administrative expenses incurred and fees

25 charged by the Claims Administrator in connection with providing Notice and


27 event that any of the Settlements are terminated pursuant to the terms of the

28


Case No. 2:07-cv-0093 1 -DD P (FMOx)




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

.


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).


Case No. 2:07-ev-00931-DDP (FMOx)




1 fault or wrongdoing of any kind, or in any way referred to for any other reason as

2 against any of the Released Parties, in any other civil, criminal or administrative

3 action or proceeding, other than such proceedings as may be necessary to

4 effectuate the provisions of the Stipulations; provided, however, that if the

5 Stipulations are approved by the Court, Defendants, any other Released Party, or

6 any Class Member may refer to the Settlements and Stipulations to effectuate the

7 protection from liability granted them hereunder;

8.hall not be construed against any of the Released Parties,

9 Plaintiffs or any other Class Members as an admission, concession, or presumption

10 that the consideration to be given hereunder represents the amount which could be

11 or would have been recovered after trial;

12

.


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


19 Consolidated Action, except for purposes of the Settlements.

20

6. Except as otherwise provided in the Stipulations, there shall be no

21 distribution of any of the net settlement fund for any of the Settlements to any

22 Class Member until a plan of allocation is finally approved and the Court issues a

23 Class Distribution Order.

24 \\

25 1\

26 \\

27

28






1

he Court retains jurisdiction of this Consolidated Action to consider all

2 further applications arising out of or connected with the proposed Settlements, and

3 as otherwise warranted.

4T IS SO ORDERE D.

5 DATED:

HE HONORA BLE DEAN D. PREGERSON

7

NITED STATES DISTRICT COURT JUDGE

8

9

10

1 1

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Case No. 2:07-cv-0093 1 -DDP (FMOx)




EXH IBIT A-1 TO EX HIBIT A

TO GLOBA L OFFICER AND DIRECTOR STIPULATION






UIZAWETairblbglaw.com)LIN (Bar No. 174663)

(elizabethlblbglaw.com)4 NIKI L. M NDOZA (Bar No. 214646)UNJAUkim5ALDON (Bar No. 211114)((ben blbglaw.com

6 TAI- A. KELLA (Bar No. 234470)(takeoklighlbglaw.com )

7

481 luff Drive, Suite 300

San Dieg o, CA 921 308 Tel: (858) 793-0070

Fax: (858) 793-03239and-

SALVATORE J. GRAZIANO10 ([email protected]

LAUREN A. MCM ILLE

1 1 ^[email protected])285 Avenue of th e Americas12 New York, NY 10019

Tel:

12 554-1400

13Fax: (212) 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State Teachers ' Retirement System

15

16


1 8

ENTRAL DISTRICT O F CALIFORNIA

19 IN RE NEW CENTURY

ase No. 2:07-cv-0093 1 - DDP (FMOx)

(Lead Case)20

1OTICE OF PENDENCY OFCLASS ACTION AND PROPOSED

22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING AND

2 3OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT

24

F LITIGATION EXPENSES

25

26


27

28

NOTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931




1 A Feder al Court authoriz ed t his Notice. T his is not a solicitation from a law yer .

2NOTICE OF PENDENCY OF CLASS ACTION: Please be advised that your rights

3may be affected by a class action lawsuit pending in this Court (the

4"Consolidated Action") if, during the period from May 5, 2005, through and

5ncluding March 13, 2007, you purchased or acquired Common Stock,

69.125% Series A Cumulative Redeemable Preferred Stock ("Series A

7Preferred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock

8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of9New Century F inancial Corporation ("New Century" or the "Company").

1 0

11 NOTICE OF SETTLEMENTS: Please also be advised that the Court - appointed

12Lead Plaintiff, New York State Teachers' Retirement System ("Lead

13 Plaintiff") and Plaintiffs Carl Larson and Charles Hooten (collectively

14 "Plaintiffs"), on behalf of the Class (as defined below), have reached three

15proposed settlements ("Settlements") of the Consolidated Action as follows: a

16 ettlem ent with the U nderwriter Defendants' in the amou nt of $15,000,000.00;

17a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;

18and a settlement with the Individual Defendants 2 in which the Class will

19 receive $65,077,088.00. 3 The total cash amount of the Class's recovery equals

201 'Underwriter Defendants" means Bear, Stearns & Co. Inc., Deutsche Bank

22Securities Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co., Inc., JMP Securities

LLC, Roth Capital Partners, Morgan Stanley & Co., Inc., and Jeffries & Co., Inc.

23"Underwriter Defendants ").

24

Individual Defendants" means Robert K. Cole, Brad A. Morrice, Estate of

25Edward Gotschall, Patti M. Dodge, Fredric J. Forster, Michael M. Sachs, Harold

A. Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A.

26Alexander, David Einhorn, and William J. Popejoy. "Defendants" means the

27Underwriter Defendants, the Individual Defendants , and KPMG .

3 The $65,077,088.00 includes funds recovered by the Securities and Exchange28Commission in a civil enforcement action entitled SEC v. Mor rice et al., Case No.

- 1 -OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-0093 t




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




1May 5, 2005, through and including March 13, 2007, either in the Offerings,

2pursuant to a registration statement, or in the market, and who, upon disclosure of

3 certain facts alleged in the Complaint, were injured thereby (the "Class"). (The

4New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock,

5nd/or New Century Call Options and New Century Put Options (as described

6bove) are referred to collectively as "New Century Securities.")

7

.

tatement of the Class's Recovery: Subject to Court approval, and

8 as described more fully below, Plaintiffs, on behalf of the Class, have agreed to

9 settle all claims related to the purchase of New Century Common Stock, Preferred

10 Stock and/or New Century Call Options and/or sales of New Century Put Options

11during the Class Period that were or could have been asserted against Defendants

12and other Released Parties in the Consolidated Action in exchange for total

13settlement payments of $124,827,088.00 (the "Total Settlement Amount") in cash

14 to be deposited into an interest-bearing escrow account (the "Settlement Fund").

15The Net Settlement Fund (the Settlement Fund less Taxes, notice and

16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead

17Counsel) will be distributed in accordance with a plan of allocation (the "Plan of

18 Allocation") that will be approved by the Court and will determine how the Net

19 ettlement Fund sh all be allocated to th e mem bers of the Class . Th e proposed Plan

20 of Allocation is included in this Notice. Assuming that all Class Members

21participate in the Settlements, Lead Plaintiff's damages consultant estimates that

22he average distribution per damaged share will be approximately $0.69 per share

23of New Century Common Stock, approximately $2.08 per share of New Century

24Preferred Stock, approximately $0.11 per Call Option, and approximately $0.25

25per Put Option, before deduction of Court-approved fees, expenses and costs

26des cribed h erein.

27.tatement of AveraLe Amount of Damages Per Share: The parties

28do not agree on the average amount of damages per share that would be


Case No. 07-00931




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




1

2OUR LEGA L RIGHTS AND OPTIONS IN THE SETTLEMENTS:

3SUBMIT A CLAIM FORM NOhis is the only way to get a payment. If

4LATER TH AN [INSERT]ou wish to obtain a payment as a Class

5

ember, you will need to file a Claim

6Form (which is included with this Notice)

7postmarlced no later than [INSERT].

8EXCLUDE YOURSELF FROMet no payment. This is the only option

9THE CLASS BY SUBMITTING A that allows you to ever be part of any

1 0WRITTEN REQUEST FORther lawsuit against any of th e defendants

1 1 EXCLUSION SO THAT IT ISr other released parties concerning the12

RECEIVEDNO LATER THAN

laims that were, or could have been,

13[INSERT].

ss er ted in th is case .

1 4

15 OBJECT TO THErite to the Court and explain why you

16SETTLEMENTS BYo not like the Settlements, the proposed

17 SUBMITTING WRITTENlan of Allocation, or the request for

18OBJECTIONS SO THAT THEY

ttorneys' fees and reimbursement of

19 ARE RECEIVEDNO LATER

xpenses. You cannot object to the

20THAN [INSERT].

ettlements unless you are a Class

21ember and do not exclude yourself.

22GO TO THE HEARING ONsk to s peak in Court about th e fairness of

23[INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of

24FILE A NOTICE OF INTENTION Allocation, or the request for attorneys'

25TO APPEAR SO TH AT IT ISees and reimbursement of expenses.

26RECEIVEDNO LATER THAN

27INSERT].

28





1 DO NOTHING

et no payment. Remain a Class

2ember. Give up your rights.

3

4HAT THIS NOTICE CONTAINS

5

6Wh y Did I Get Th is Notice?

ag e

7Wh at Is Th is Case A bout? What Has Happened So Far?

ag e

8How D o I Know If I Am Affected By Th e Settlements?ag e

9Wh at Are The L ead Plaintiff 's Reas ons For Th e Settlements?ag e

10

Wh at Migh t Happen If There Were No Settlements?ag e

1 1

How M uch W ill My Payment Be?

ag e

12

13

Wh at Rig h ts Am I Giving Up By Ag reeing To Th e Sett lements?

ag e

14

Wh at Payment Are The Attorneys For The Class Seeking?

1.5How W ill The Lawyers B e Paid?ag e

16 How Do I Participate In The Settlements? What Do I Need To Do?ag e

17Wh at If I Do Not Want To Be A Part Of The Settlements?

1 8 How Do I Exclude Myself?

ag e

19 When And Where Will The Court Decide Whether To Approve

20 The Settlements? Do I Have To Come To The Hearing?

21 May I Speak At The Hearing If I Don't Like The Settlements?ag e

22 What If I Bought Shares On Someone Else's Behalf?ag e23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page

24WHY DID I GET THIS NOTICE?

25

26

6 .

his Notice is being sent to you pursuant to an Order of the United

27

States District Court for the Central District of California (the "Court") because

28

you or someone in your family may have purchased or otherwise acquired or sold-6 -OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




1 New Century Securities during the Class Period. The Court has directed us to send

2ou this Notice because, as a potential Class Member, you have a right to know

3bout your options before the Court rules on the proposed Settlements in this case.

4Additionally, you have the right to understand how a class action lawsuit may

5enerally affect your legal rights. If the Court approves the Settlements, a claims

6 administrator selected by Lead Plaintiff and approved by the Court, will make

7 ayments pursuant to the Settlements after any objections and appeals are resolved.

8.n a class action lawsuit, the Court selects one or more people, known

9 as class representatives, to sue on behalf of all people with similar claims,

10commonly known as the class or the class members. In this Consolidated Action,

11he Court has appointed New York State Teachers' Retirement System to serve as

12"Lead Plaintiff' under a federal law governing lawsuits such as this one, and

13approved Lead Plaintiff's selection of the law firm of Bernstein Litowitz Berger &

14Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated

15Action. Lead Plaintiff New York State Teachers' Retirement System and named

16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class

17action is a type of lawsuit in which the claims of a number of individuals are

18 resolved together, thus providing the class members with both consistency and

19 efficiency. Once the class is certified, the Court must resolve all issues on behalf

20of the class members, except for any persons who choose to exclude themselves

21 rom th e class . (For more information on excluding yourself from th e Class , please

22 ead "What If I Do Not Want To Be A Part Of The Settlements? How Do 1

23Exclude M yself?" located below.)

24

.

he Court in charge of this case is the United States District Court for

25 h e Central District of California, and th e case is kn own as In re New Century. Th e

26Judge presiding over this case is the Honorable Dean D. Pregerson, United States

27District Judge. The people who are suing are called plaintiffs, and those who are

28being sued are called defendants. In this case, the plaintiff is referred to as the


Case No. 07-00931




1Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual

2Defendants, the Underwriter Defendants and KPMG New Century was not named

3as a defendant because New Century has filed a petition for voluntary bankruptcy

4nd the Bankruptcy Code does not permit an action to proceed against a debtor

5wh o h as filed such a petition.

6

.

his Notice explains the lawsuit, the Settlements, your legal rights,

7what benefits are available, who is eligible for them, and how to get them. The

8purpose of this Notice is to inform you of this case, that it is a class action, how

9 you might be affected, and how to exclude yourself from the Class if you wish to

10do so. It also is being sent to inform you of the terms of the proposed Settlements,

11and of a hearing to be held by the Court to consider the fairness, reasonableness,

12and adequacy of the proposed Settlements, the fairness and reasonableness of the

13proposed Plan of Allocation, and the application by Lead Counsel for attorneys'

14 ees and reimbursement of Litig ation Expenses ( the "Settlement Hearing") .

150. The Settlement Hearing will be held on [INSERT] at [INSERT],

16 before th e Honorable Dean D . Pregerson, at the United States Dis tr ict Court for th e

17Central District of California, 31 2 North S pring Street, Courtroom 3, Los A ng eles,

18California 9001 2 to determine:

1 9

.

h eth er this Co ns olidated Action sh ould be finally certified, for

20ettlement purposes only, as a class action under Rules 23(a)

21nd (b) of the Federal Rules of Civil Procedure on behalf of the

22lass ;

23.hether the proposed Settlements are fair, reasonable, and

24

dequate and sh ould be approved by the C ourt;

25

.

hether the claims against defendants and the other released

26

arties should be dismissed with prejudice as set forth in the

27tipulations;28

-8 -OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




1.hether the proposed Plan of Allocation is fair and reasonable

2nd s h ould be approved by the C ourt; and

3.hether Lead Counsel's request for an award of attorneys' fees

4nd reimbursement of Litigation Expenses should be approved

5

y the C ourt.

6

1. This Notice does not express any opinion by the Court concerning the

7merits of any claim in the Consolidated Action, and the Court still has to decide

8whether to approve the Settlements. If the Court approves the Settlements,

9payments to Auth orized Claimants will be mad e after any appeals are resolved, and

10 fter th e completion of all claims proces sing . Please be patient.

1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?

12

3

2. Beginning on or about February 8, 2007, securities class action


15California and the actions were consolidated by Order dated June 26, 20

1 63. On April 2, 2007, New Century and other Debtors filed for

17 bankruptcy in the United States Bankruptcy Court for the District of Delaware

18 `Bankruptcy Court") under Ch apter 1 1 o f Title 1 1 of th e United States Code.

19

4. By Order dated June 26, 2007, the Court appointed the New York

20State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action

21 nd approved its s election of Bernstein Litowitz Berger & Gross mann LLP as Lead

22Counsel for the Class .

235. On September 14, 2007, Plaintiffs filed their Consolidated Class

24Action C omplaint ("Consolidated C omplaint") ass erting claims ag ainst Defendants

25under the Securities Exchange Act of 1934 ("Exchange Act") and the Securities

26Act of 1933 ("Securities Act") on beh alf of the Clas s.

276. Beginning on November 2, 2007, Defendants filed motions to dismiss

28 the Cons olidated Complaint, wh ich Plaintiffs opposed on December 1 4, 2007.


Case No. 07-00931




1

7. By Order dated January 31, 2008, the Court granted the motions to

2 ismiss with leave to amend th e complaint.

38. On March 24, 2008, Plaintiffs filed their Amended Consolidated Class

4 Action Complaint ("Amended Complaint"), alleging claims against Defendants

5 ursuant to the Securities A ct and th e Exch ang e Act.

6

9. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second

7Am ended C onsolidated C lass Action C omplaint ( the "Complaint") , a lleging claims

8g ainst Defendants pursuant to th e Securities Act and the Exchang e Act.

90. Beginning on June 2, 2008, Defendants filed motions to dismiss the

10Com plaint, wh ich Plaintiffs oppos ed on July 7, 2008.

11

1. Following a hearing, by Order dated December 3, 2008, the Court

12 ubstantially denied Defendants ' motions to dismiss .

13

2. Beginning on January 26, 2009, Defendants answered the Complaint.

143. The Parties began discovery in or about April 2009, including filing

15multiple motions to compel and motions for protective order, and serving

16discovery requests and res ponses , and producing voluminous documents .

174. On January 13, 2010, Defendant KPMG filed a motion for summary

18 judgm ent, wh ich Plaintiffs opposed on March 1 5, 201 0.

1 9

5. The Parties have participated in mediation sessions and additional

20discussions before the Honorable Daniel Weinstein, following which the Parties

21were able to reach agreem ents in principle to settle th is Cons olidated Action on the

22erms set forth herein. In connection with the settlement of the Consolidated

23Action, Defendants and other persons also reached agreements to settle the action

24 entitled Kodiak Warehouse LLC, et al. a Brad A. Morrice, et al. (Case No. 08-

251265-DDP-FMO) commenced on November 7, 2008, in the United States District

26Court for the Central District of California (the "Kodiak Litigation") and the

27adversary proceeding entitled The N ew Century L iquidating T rust and R eorganized

28 New Century W arehouse Corp. by and through Alan M. Jacobs, Liquidating

- 10 -OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931



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




1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO

3RECEIVE PROCEEDS FROM THE SETTLEMENTS. IF YOU WISH TO

4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST

5SUBMIT THE ENCLOSED CLAIM FORM POSTMARKED NO LATER

6THAN [INSERT].

7

WHAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?8

98. Lead Plaintiff and Lead Counsel believe that the claims asserted

10against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,

11however, the expense and length of continued proceedings necessary to pursue

12their claims ag ainst Defendants th rough tr ial and appeals , as well as th e difficulties

13in establishing liability for allegations of fraud. Lead Plaintiff and Lead Counsel

14 have taken into account the possibility that the claims asserted in the Complaint

15 might have been dismissed at a later stage, such as in response to motions for

16summary judgment, and have considered issues that would have been decided by a

17 jury in the event of a trial of the Consolidated Action, including whether

18 Defendants acted with an intent to mislead investors, whether the alleged

19 misrepresentations or omissions were material to investors, whether all of the Class

20Members' losses were caused by the alleged misrepresentations or omissions, and

21the amount of damages. Lead Plaintiff and Lead Counsel have considered the

22uncertain outcome and trial and appellate risk in complex lawsuits like this one.

23Lead Plaintiff also considered the available funds to satisfy any verdict at trial

24given the expense and length of continued proceedings necessary to reach a

25succes sful reso lution at trial and on appeal.

26

9. In light of the amount of the Settlements and the immediacy of

27recovery to the Class, Lead Plaintiff and Lead Counsel believe that the proposed

28 Settleme nts are fair, reason able and adequate, and in the bes t interests o f the C lass .

- 12-OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




1Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial

2benefit now, namely $124,827,088.00 in cash (less the various deductions

3escribed in this Notice), as compared to the risk that the claims in the Complaint

4would produce a s imilar, smaller, or no recovery after summ ary judgm ent, trial and

5ppeals, poss ibly years in th e future.

6

0. Defendants have denied the claims asserted against them in the

7 Complaint and deny having engaged in any wrongdoing or violation of law of any

8ind wh atsoever. Defendants h ave agreed to th e Settlements s olely to eliminate th e

9 burden and expense of continued litigation. Accordingly, the Settlements may not

10 be construed as an admission of Defendants' wrongdoing.

1 1

HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?

12

1 3

1. If there were no Settlements and Lead Plaintiff failed to establish any

14essential legal or factual element of its claims, neither Lead Plaintiff nor the other

15members of the Class would recover anything from Defendants. Also, if

16 Defendants were successful in proving any of their defenses, the members of the

17 Class likely would recover substantially less than the amount provided in the

18Settlements , or nothing at all.

1 9

OW MUCH W ILL MY PAYMENT BE?

20

1 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS

22. Pursuant to the respective Stipulations, the Individual Defendants

23have agreed to pay or cause to be paid collectively $65,077,088.00; the

24Underwriter Defendants have agreed to collectively pay $15,000,000.00; and

25 KPMG has agreed to pay $44,750,000.00. Collectively, Defendants have agreed to

26pay a total amount of $1 24,827,088.00 in cash .

273. After approval of the Settlements by the Court, and upon satisfaction

28of the other conditions to the Settlements, and upon issuance of a Class


Case N o, 07-00931




1Distribution Order, the Net Settlement Fund will be distributed to Authorized

2Claimants in accordance with the Plan of Allocation.

34. The Settlement Fund will be distributed as follows:4 (i)o pay all federal, state, and local Taxes on any income earned

5

y th e Settlement Fund and to pay the reasonable costs incurred

6

n connection with determining the amount of, and paying,

7

axes owed by the Settlement Fund (including reasonable

8xpenses of tax attorneys and accountants) ;

9ii)o pay costs and expenses in connection with providing Notice

10o Class Members and administering the Settlements on behalf1 1

f Class M embers;

1 2

iii)

o pay attorneys' fees, with interest on such amount, to the

1 3

xtent allowed by the Court pursuant to Lead Couns

14pplication;

1 5iv)o pay Litigation Expenses incurred in commencing and

16rosecuting the Consolidated Action, with interest on such

1 7oney, to the extent allowed by the Court pursuant to Lead

1 8

ounsel's application; and

19

v)

o compensate Authorized Claimants with the balance of the

20

et Settlement Fund in accordance with the Plan of Allocation,

21ubject to an Order of the Court approving the Settlements andP22h e Plan of Allocation (or such oth er allocation plan as th e Court

23ay approve), and subject to such Order becoming Final

24

meaning tha t the time for appeal or appellate review of th e Order

25

ranting final approval has expired, or, if the Order is appealed,

26

hat the appeal is either decided without causing a material

27hange in the Order or is upheld on appeal and is no longer

28ubject to appellate review) .


Case No. 07-00931




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.


Case No. 07-00931




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




1

0. All Proof of Claim forms must be postmarked or received by [DATE],

2 ddressed as follows:

3n re N ew C entury Securities Litig ation Settlement4/o Analytics, Inc. Claims A dm inistrator

P.O. Box 20045

hanhassen, MN 55317-2004

641. Unless otherwise ordered by the Court, any Class Member who fails

7

to submit a properly completed and signed Proof of Claim within such period as8

may be ordered by the Court shall be forever barred from receiving any payments9

pursuant to th e Stipulation, but will in all oth er respe cts be s ubject to th e provisions10

of the Stipulation and the final judg ments entered by the C ourt.11

42. The Net Settlement Fund shall be distributed to members of the Class1 2

wh o subm it acceptable Proofs of C laim. For purposes of the Plan of Allocation, the1 3

Net Settlement Fund is divided into two components: the "Underwriter Allotment"14

(composed of the settlement fund from the settlement with the Underwriter15

Defendants net of Court-approved fees and expenses), and the "Individual-Auditor16

Allotment" (composed of the settlement funds from the settlement with the17

Individual Defendants and KPMG, net of Court-approved fees and expenses).1 8

Only Class Members who purchased Series A Preferred Stock and/or Series B19

Preferred Stock during th e Class Period and w ere damag ed th ereby may be elig ible20

to receive distributions from the Underwriter Allotment based on those purchases.21

All Class Members (including but not limited to those who purchased Series A22

Preferred Stock and/or Series B Preferred Stock during the Class Period and were23

damaged thereby) may be eligible to receive distributions from the Individual-24

25correcting the misstatement or omission that is the basis for the action is

26dissem inated." 15 U.S.C. §78u-4(e)(1) . $0.87 was the averag e closing price of New

27Century Common Stock during the 90-day period beginning on March 13, 2007,

and ending on June 1 0, 2007.28

- 17-OTICE OF PENDENCY OF CLASS ACTIONCase No. 07-00931




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


Case No. 07-00931



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


Case No. 07-00931




1February 8, 2007, and before or on March 2, 2007, must be held until March 5,

2007, the next trading day after the second corrective disclosure. Finally, a New

3entury Security purchased or otherwise acquired on or after March 5, 2007, must

4 be held until March 13, 2007, the last day of the Class Period. If you did not hold

5New Century Security referred to above which was purchased during the three

6ifferent parts of the Class Period described above and below (see the artificial

7nflation Tables annexed hereto) for both th e New Century Common Stock and the

8New Century Preferred Stock th rough at leas t one of the three corrective disclosure

9ates indicated, the Recognized Loss per share is $0. The Recognized Loss for

10 h ese transactions will be calculated as zero because it h as been determined that the

11artificial inflation between each disclosure and arising from the circumstances

12underlying th e alleg ations of Plaintiffs ' Complaint was co ns tant.

13I. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGNIZED LOSS

14LAIMS FOR NEW CENTURY SECURITIES

158. A Recognized Loss will be calculated for each purchase or sale of

16 New Century Securities that is within the Class Period, listed in the Proof of Claim1 7 orm, and for wh ich adequate documentation is provided.

18

.

uidelines Applicable to th e

Calculations orAll Claims19

20

49. In the event a Class Member has more than one purchase or sale of the

21New Century Securities, all purchases and sales of each type of security shall be

22matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be

23matched first against any New Century Securities held at the beginning of the

24Class Period, and th en ag ainst purch ases in chronological order, beginning w ith the

25earliest purchase made during the Class Period. Purchases and sales of New

26Century Securities shall be deemed to have occurred on the "contract" or "trade"

27date as opposed to the "settlement" or "payment" date. Th e receipt or g rant by g ift ,

28devise or operation of law of New Century Securities during the Class Period shall

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




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.





1

3. For purposes of determining whether a Claimant had an overall

2market gain with respect to his, her, or its Class Period purchases of an individual

3New C entury Security or suffered an overall market loss , th e Claims Ad ministrator

4hall determine the difference between (i) the Total Purchase Amount paid for all

5purchases of that individual New Century Security purchased or acquired during

6he Class Period, (ii) any premiums received from the sale of Put Options, and (iii)

7he sum of the Sales Proceeds received for all of that individual New Century

8ecurity during th e Class Period and the Ho lding Value ascribed to that security for

9ll Securities still held on June 10, 2010. The Holding Value shall be $0.87 per

10share for Common Stock; $8.02 per share for Series A Preferred Stock; and $7.95

11per share for Series B Preferred Stock. This difference will be deemed a

12Claimant's market gain or loss on his, her, or its overall transactions in that

13 individual New Century Security during the Class Period.

44. An Authorized Claimant's gains and losses on a particular New

15Century Security purchased during the Class Period will be netted against each

16other to determine the Authorized Claimant's net Recognized Loss Claim on that

17particular security. In the case of New Century Common Stock and Put and Call

I s ptions on that stock, gains and losses on both the stock and the Options will be

19combined and thereafter netted against each other. However, in all other cases,

20gains and losses will not be netted or aggregated across different eligible New

21Century Securities. For example, an Authorized Claimant's Recognized Loss

22Claim (as calculated under this P lan) on New Century Comm on Stock/Options will

23not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on

24 ny iss ue of New C entury Preferred Stock.

255Class Members who do not submit acceptable Proofs of Claim will

26not share in the settlement proceeds. Class Members who do not submit a request

27 or exclusion and do not submit an acceptable Proof of Claim will nevertheless be

28bound by th e Settlements and the judg ments of the Court.


Case No. 07-00931




1

6. Distributions will be made to Authorized Claimants only after the

2Court has finally approved the Settlements, the Effective Date has occurred and

3fter all claims have been processed. At that time, Lead Plaintiff will file a motion

4or entry of a proposed Class Distribution Order which will, among other things,

5pprove of the distribution to Auth orized Claimants of th e Net Settlement Fund.

6

7. The Individual Defendants, the Underwriter Defendants, and KPMG

7nd their respective counsel, and all other Released Parties shall have no

8esponsibility for, or liability whatsoever, relating to distributions from the

9 Settlement Fund or the Underwriter Allotment or the Individual-Auditor Allotment,

10or with respect to the Plan of Allocation, or the determination, administration,

11 calculation, or payment of any Proof of Claim, or non-performance of the Claims

12Adm inis trator, th e payment or withh olding of Taxes ow ed by a Settlement Fund, or

13ny losses incurred in connection th erewith.

14.omputation Meth odology Relating toRecog nized Loss es for Com mon Stock

15urchases

168. For purposes of developing the Plan of Allocation, the damages

17consultant calculated the amount of artificial inflation in the daily closing market

18 prices for New Century Common Stock during three different portions of th e Class

19 Period. See the annexed Table 2. In computing artificial inflation, the damages

20 consultant considered price changes of New Century Common Stock in regard to

21 certain public announcements regarding New Century and adjusted those price

22 h ang es th at were attributable to market forces unrelated to th e alleg ed fraud.

239. As explained above, Common Stock purchases are not eligible for

24distributions from the Underwriter Allotment, but may be eligible for distributions

25 rom th e Individual-A uditor Allotment.

26

.

ecognized Los s Calculations

270. Recognized Loss Claims will be calculated for the purposes of the

28Settlement as follows :


Case No. 07-00931




.

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 :


Case No. 07-00931




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


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


262, 2007, the following claims for damag es s h all be allowed:


for damages sh all be allowed;28


Case No. 07-00931





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:


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:


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,


Case No. 07-00931




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




1changes that occurred in reaction to certain public announcements regarding New

2Centurynd then made adjustments for changes that were attributable to market

3orces unrelated to the alleged fraud in prices of such Call Options and Put

4Options. Lead Plaintiff's damages consultant then developed formulae (see below)

5 rom wh ich the R ecognized Loss es for New Century Call Options and Put Options

6may be calculated. In addition, the total dollar amount payable to Class Members

7n connection with the acquisition of Call Options and the sale of Put Options

8uring the Class Period is l imited to 1 0% of the Individual-Auditor Allotment. Th is

9imitation reflects the speculative and derivative nature of these securities as

10 compared to New Century Common Stock and New Century Preferred Shares.

1 1

8. With respect to purchases and sales (covers) of New Century Call

12Options during th e period M ay 5, 2005, th rough and including M arch 1 3, 2007, the

13Artificial Inflation per Call Option on a given day shall be the dollar change in the

14 value of Call Options on that day as a result of the inflation in New Century's

15Common Stock share price. The dollar change in the value of Call Options will be

16 calculated using the Black-Scholes option pricing formula (using Black's

17adjustment for dividends and the annualized standard deviation estimated from 46-

18day, historical daily volatility estimates) using the closing share price of New

19Century Common Stock on the transaction date, compared with the Black-Scholes

20call pricing formula value for the Call Option using the uninflated closing share

21price of New Century Common Stock on that same date as determined by: (1) the

22 eported closing share price minus the Common Stock price inflation per share set

23orth in the annexed Table 2 for Call Options initially purchased between May 5,

242005, and March 13, 2007, and (2) the reported closing share price minus the

25Common Stock price inflation per share set forth in the annexed Table 2 for Call

26Options initially sold between May 5, 2005, and March 13, 2007. Once again,

27Black's adjustment for dividends is implemented. Annualized volatility estimates

28are obtained using the daily standard deviations using the returns for that day plus





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:


Case No. 07-00931




1


2ate of purch ase and A rtificial Inflation per Call Option on th e dateof expiration, exercise, or sale, as appropriate; or

32) the difference between the purchase price per Option and the sale

4rice per Option ($0.00 if the C all Option expired worth less ) .

5d) For Call Options which were purchased or acquired between March 5,

6

007, and March 12, 2007, and (1) expired on or after March 13, 2007;

(2) were exercised on or after March 1 3, 2007; or 3) w ere sold (position7

losed out) on or after March 13, 2007, the Recognized Loss Claim

8sh all be that num ber of Options multiplied by th e less er of.

91) the Artificial Inflation per Call Option on the date of purchase, or1 02) the difference between the purchase price per Option and the sale

price per Option ($0.00 if the C all Option expired worth less ) .

1 1

12

9. With respect to purchases (covers) and sales of Put Options during the

13period M ay 5, 2005, through and including March 13, 2007, the Artificial Inflation

14per Option on a given day shall be the dollar change in the value of Put Options on

15hat day as a result of the inflation in New Century's Common Stock share price.

16The dollar change in the value of Put Options will be calculated using the Black-

17Sch oles put option pricing formula (using Black's adjustment for dividends and the

18annualized standard deviation estimated from 46-day historical daily volatility

19 estimates) using the closing share price of New Century Common Stock on the

20 ransaction date, compared with the Black-Scholes put pricing formula value for

21 he Put Option using the uninflated share closing share price of New Century

22Common Stock on that same date as determined by: (1) the reported closing share

23price minus the Common Stock price inflation per share set forth in the annexed

24Table 2 for Put Options subsequently purchased between May 5, 2005, and March

2513, 2007, and (2) the reported closing share price minus the Common Stock price

26nflation per share set forth in the annexed Table 2 for Put Options initially sold

27between May 5, 2005, and March 13, 2007. Once again, Black's adjustment for

28 dividends is implemented. Annualized volatility estimates are obtained using the


Case No. 07-00931




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 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




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


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


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


Case No. 07-00931



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.


Case No. 07-00931




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


Case No. 07-00931




1employees, agents and retained professionals (other than KPMG or the

2Underwriter Defendants) .

38. Pursuant to the KPMG Stipulation, Plaintiffs and members of the

4 lass w ill be deemed by operation of law to h ave released, waived, disch arged and

5ismissed each and every Settled Claim, and shall forever be enjoined from

6 prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled


8 ature and des cription, wh ether know n or Unknown, wh ether aris ing under federal,

9 state, common or foreign law, that Plaintiffs or any other member of the Class (a)

10 asserted in the Complaint, or (b) could have asserted in any forum that arise out of

11 or are based upon the allegations, transactions, facts, matters or occurrences,

12 epresentations or omissions involved set forth or referred to in the Complaint,

13nd th at arise out of or relate to the purch ase of N ew C entury Com mon Stock, New

14Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or

15New Century Call Options and/or the sale of New Century Put Options during the

16 Class Period. "Settled Claims" does not include claims relating to the enforcement

17of the Settlements. "Released Auditor Party" means KPMG and any and all of its

18partners, principals, officers, directors, employees, agents, attorneys and affiliates.

1 9 "Released Auditor Parties" does not include any Defendants other than KPMG

209. Pursuant to the Underwriter Stipulation, Plaintiffs and members of the

21Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,

22heirs, executors, administrators, predecessors, successors and assigns, and any and

23all of their current and former officers, directors, employees, agents and attorneys

24shall be deemed by operation of law to have released, waived, discharged and

25dismissed each and every Settled Claim, and shall forever be enjoined from

26prosecuting any or all Settled Claims, against any Released Underwriter Party.

27"Settled Claim" in this paragraph means any and all claims and causes of action of

28 every nature and description, whether lu-iown or Unknown, whether arising under


Case No. 07-00931





2Class (a) asserted in the Complaint, or (b) could have asserted in any forum that

3 arise out of or are based upon the allegations, transactions, facts, matters or

4occurrences, representations or omissions involved, set forth, or referred to in the

5 Complaint, and that arise out of or relate to the purchase of New Century Common

6Stock, New Century Series A Preferred Stock, New Century Series B Preferred

7Stock and/or New Century all Options and/or the sale of New Century Put

Y

8Options during the Class Period. "Settled Claims" does not include claims relating

9o the enforcement of the Settlements. "Released Underwriter Party" means the

10Underwriter Defendants and any and all of their respective parent companies,

11subsidiaries, affiliates, heirs, executors, administrators, predecessors, successors

12and assigns, and any and all of their current and former officers, directors,

13 employees, agents and attorneys. "Released Underwriter Parties" does not include

14 any Defendants other than the Underwriter Defendants.

1 50. "Released Parties" means the Released Officers And Directors, the

16Released A uditor Parties, and th e Released Underwriter Parties.

171. "Unknown Claims" means any and all claims that Lead Plaintiff or

18any Class Member does not know or suspect to exist in his, her or its favor at the

19 ime of the release of the Released Parties, which if known by him, her or it might

20have affected his, her or its decision(s) with respect to the Settlements. With

21 espect to any and all settled claims, the Lead Plaintiff shall expressly waive, and

22each Class Member shall be deemed to have waived, and by operation of the

23Judgment shall have expressly waived, any and all provisions, rights and benefits

24conferred by any law of any state or territory of the United States, or principle of

25common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,

26wh ich provides:

27general release does not extend to claims which the creditor

28oes not know or suspect to exist in his or her favor at the time of


Case No. 07-00931




1xecuting the release, which if known by him or her must have

2aterially affected his or her settlement with the debtor.

32. Lead Plaintiff and Class Members by operation of law shall be

4deemed to have acknowledged that the inclusion of "Unknown Claims" in the

5definition of Settled Claims and Settled Class Claims was separately bargained for

6 nd was a key element of th e Settlements .

93. As specified in the Stipulations, the Judgments will also provide that

8he Released Auditor Parties, the Released Underwriter Parties, and the Released

9Officers And Directors will release certain claims against Lead Plaintiff and the

10 Class. In addition, certain Defendants and other persons and entities will also

11elease claims against each other and other persons and entities as set forth in the

12 Stipulations.

13WHA T PAYMENT ARE THE ATTORNEY S FOR THE CLASS SEEKING?

14OW W ILL THE LAWYE RS BE PAID?

1564. Lead Counsel has not received any payment for its services in

17 pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel

18been reimbursed for its out-of-pocket expenses. Before final approval of the

19Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'

20 fees from the Settlement Fund in an amount not to exceed 12% of the Settlement

21Amount, plus interest from the date of funding at the same rate as earned by the

22Settlement Fund. Lead Counsel will not calculate attorneys' fees based upon, or

23seek attorneys' fees or expenses with respect to, any disgorgements or penalties

24obtained by the Securities and Exchange Commission in the SEC Action. At the

25same time, Lead Counsel also intends to apply for the reimbursement of Litigation

26Expenses not to exceed $4.5 million, plus interest from the date of funding at the

27 same rate as earned by the Settlement Fund. Included in Lead Counsel's overall

28 request for reimbursement of Litigation Expenses will be a request for an award to


Case No. 07-00931




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.


Case No. 07-00931




16. As a Class Member, you are represented by Lead Plaintiff and Lead

2Counsel, unless you enter an appearance through counsel of your own choice at

3your own expense. You are not required to retain your own counsel, but if you

4 choose to do so, such counsel must file a notice of appearance on your behalf and

5must serve copies of his or her notice of appearance on the attorneys listed in the

6 section entitled, "When and Where Will the Court Decide Whether to Approve the

7ettlements ?," below.

87. If you do not wish to remain a Class Member, you may exclude

9ourself from the Class by following the instructions in the section entitled, "What

10 f 1 Do Not Want To Be A Part Of The Class And The Settlements? How Do I

11Exclude Mys elf?," below.1 28. If you wish to object to the Settlements or any of the terms of the

13Settlements, the proposed Plan of Allocation, or Lead Counsel's application for

14 attorneys' fees and reimbursement of Litigation Expenses, and if you do not

15exclude yourself from the Class, you may present your objections by following the

16 instructions in the section entitled, "When and Where Will the Court Decide

17Wh eth er to Approve the Settlements?," below.

1 8

HAT IF I DO NOT W ANT TO BE A PART OF THE SETTLEMEN TS?

1 9

OW D O I EXCLUDE MYSELF?

2019. Each Class Member will be bound by all determinations and

22 judgments in this lawsuit, including those concerning the Settlements, whether

23favorable or unfavorable, unless such person or entity mails, by first-class mail (or

24its equivalent outside the U.S.), or otherwise delivers a written Request for

25Exclusion from the Class, addressed to In re New Century Securities Litigation

26Settlement, c/o Analytics, Inc., Claims A dm inistrator, P.O. Box 2004, Ch anh ass en,

27MN 55317-2004. The exclusion request must be received no later than

28[INSERT]. You will not be able to exclude yourself from the Class after that date.


Case No. 07-00931




1Each request for exclusion must (i) state the name and address of the person or

2ntity requesting exclusion; (ii) state that such person or entity requests exclusion

3rom the Class in In re New Century, 2:07-CV-0093 I -DDP; (iii) be signed by the

4 person or entity requesting exclusion; (iv) provide a telephone number for that

5person or entity; and (v) provide the date(s), price(s), and number(s) of shares of

6all purchases, acquisitions, and sales of New Century Securities during the Class

7Period. Requests for exclusion will not be valid if they do not include the

8nformation set forth above and are not received within the time stated above,

9 unless the Court otherwise determines.

1000. If you do not want to be part of the Class, you must follow these

11 instructions for exclusion even if you have pending, or later file, another lawsuit,

12 rbitration, or other proceeding relating to any Settled Claims .

13

01. If a person or entity requests to be excluded from the Class, that

14 person or entity will not receive any benefit provided for in th e Settlements.

1502. The Individual Defendants, Insurance Carriers, Underwriter

16Defendants or KPMG may terminate the Settlements if requests for exclusion are

1 7 eceived from potential Class Members representing over a certain amount of

18shares as stated in Supplemental Agreements. The three settlement agreements are

19 closely related and, if one of the three Settlements should not become final for any

20 eason, it could affect the finality and enforceability of th e oth er Settlements.

21HEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE22

THE SETTLEMENTS?23

24

O I HAVE TO COME TO THE HEARING?

MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE SETTLEMENTS?25

26

03. If you do not wish to object in person to the proposed Settlements,

27 proposed Plan of Allocation, and/or the application for attorneys' fees and

28 reimbursement of Litigation Expenses, you do not need to attend the Settlement


Case No. 07-00931




1 Hearing. You can object to or participate in the Settlements without attending the

2ettlement Hearing.

3104. The Settlement Hearing will be held on [INSERT] before the

4Honorable Dean D. Pregerson, at the United States District Court for the Central

5District of California, 312 North Spring Street, Courtroom 3, Los Angeles,

6California 9001 2. The Court reserves the r ig h t to approve the Settlements , the Plan

7f Allocation or the request for attorneys' fees and reimbursement of Litigation

8Expenses at or after the Settlement Hearing without further notice to the members

9f the Class. The Settlements will become effective only if all three Settlements

10 re approved by the C ourt.

1 1

05. Any Class Member who does not submit a valid exclusion that is

12received no later than [INSERT] may object to the Settlements, the Plan of

13Allocation, or Lead Counsel's request for an award of attorneys' fees and

14 reimbursement of Litigation Expenses. Objections or oppositions must be in

15writing. You must file any written objection or opposition, together with copies of

16all other papers (including proof of all transactions in New Century Securities

17during the Class Period) and briefs, with the Clerk's Office at the United States

18District Court for the Central District of California at the address set forth below

19onor before[INSERT]. You must also serve the papers

20on Lead Counsel for the Class at the address set forth below so that the papers are

21received on or before [NSERT].

22

23 Clerk's Officeead Coun sel for the Class

24 UNITED STATESERNSTEIN LITOWITZ BERGER

25DISTRICT COURT

GROSSMANN LLP

FOR THE CENTRAL

alvatore J. Graziano, Es q.

26DISTRICT OF CALIFORNIA

285 Avenue of th e Americas

27Clerk of th e Courtew York , NY 1 001931 2 N. Spring Street

28Los Ang eles , California 9001 2


Case No. 07-00931




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




1 an award of attorneys' fees and reimbursement of Litigation Expenses, and if you

2ave filed and served a timely written objection as described above, you also must

3otify the above counsel on or before [INSERT4 concerning your intention to appear. Persons who intend to object and desire to

5resen t evidence at th e Settlemen t Hearing m ust include in th eir written objections

6 the identity of any witnesses they may call to testify and exhibits they intend to

7ntroduce into evidence at the h earing.

809. You are not required to hire an attorney to represent you in making

9written objections or in appearing at the Settlement Hearing. If you decide to hire

10an attorney, which will be at your own expense, however, he or she must file a

11notice of appearance with the Court and serve it on Lead C ounsel so that th e notice12s received on or before [INSERT].

13

10. The Settlement Hearing may be adjourned by the Court without

14urther written notice to the Class. If you intend to attend the Settlement Hearing,

15you sh ould confirm the date and time with Lead Couns el.

16 Unless the Court orders otherwise, any Class Member who does not object in

17 the manner described above will be deemed to have waived any objection and

18 shall be forever foreclosed from making any objection to the proposed

19 Settlemen ts, the proposed Plan of A llocation, or Lead Counsel's request for an

20award of attorneys' fees and reimbursement of Litigation Expenses. Class

21Members do not need to appear at the hearing or take an other action topg22indicate their approval.

23HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?24

25

11. If you purchased or otherwise acquired or sold New Century

26Securities during the Class Period for the beneficial interest of a person or

27organization other than yourself, you must either (1) send a copy of this Notice to

28 the beneficial owner of such New Century Securities, postmarked no later than


Case No. 07-00931




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


Case No. 07-00931




1 In re New Century Securities Litigation

alvatore J. Graziano, Es q.

2ettlementERNSTEIN LITOWITZ BERGERc/o Analytics, Inc.GROSSMANN LLP

3laims Administrator285 Avenue of th e Americas4.O. Box 200 4ew York , NY 1 0019

Chanhassen, MN 55317-2004866 ) 648 -25245

laims Adm [email protected]

6ead Counsel

DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE7

CLERK OF COURT8

REGARDING TH IS NOTICE.9

10

11

Dated:y Order of the Clerk of CourtUnited States D istrict Court

12

or th e Ce ntral District of California

1 3

14

1 5

16

17

18

19

20

21

22

23

24

25

26

27

28





1Table 13

4

5

6

ssuer /

iquidation

hare in

hare in

7

nderlying

USIPypessue DatePreference

at enderwriter Individual

AllotmentAuditor

8llotment

Preferred Stock

9New Century 64352D200/15/200525.00.125%Series A

10

11referred StockNew Century 6435EV207

/15/2006

25.00

.750%

12

eries B

13

New Century 6435EV108 Common Stock14

15New Centuryariousall Option

16 New Centuryariousut Option178

19

20

21

22

23

24

25

26

27

28


Case No. 07-00931




12able 2

3nflation per Share for Common Stock Shares Purch ased betwee nMay 5, 2005, and March 1 3, 2007

5

6eriodegin Datend datenflation

1

-May-05

-Feb-07

5.21

7

-Feb-07

-Mar-07

1.09

3-Mar-072-Mar-07.6 983-Mar-07o the present.00

9

10

1 1

12

13

14

15

1 6

17

18

19

20

21

22

23

24

25

26

27

28


Case No. 07-00931




12

3able3Comm on Stock PSLR A 90-Day Look-Back L oss Limitation Calculations

5

verageverage

Closinglosinglosinglosing6

aterice ($ )

rice ($)

aterice ($ )

rice ($)

7

3Mar2007.84.847Apr2007.86.1 9

84Mar2007.6 7.760Apr2007.89.1 8

15Mar2007.35.951May2007.85.1 76Mar2007.34.302May2007.83.1 619Mar2007.1 7.473May2007.80.1 5

100Mar2007.6 9.514May2007.72.1 4

21Mar2007.6 7.537May2007.59.1 21 1

2Mar2007

.56

.54

8May2007

.58

.1 1

12

3Mar2007

.00

.59

9May2007

.53

.1 0

26Mar2007

.56

.59

0May2007

.43

.08

1 3

7Mar2007

.41

.57

1May2007

.43

.06

28Mar2007.1 1.534May2007.41.05

149Mar2007.03.495May2007.37.03

30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01

163Apr2007.01.408May2007.39.99

04Apr2007.00.381May2007.44.98

175Apr2007.26.372May2007.43.97

09Apr2007

.1 4

.36

3May2007

.47

.9 6

18

0Apr2007

.09

.34

4May2007

.45

.95

11Apr2007

.98

.33

5May2007

.47

.94

19

2Apr2007

.89

.31

9May2007

.46

.93

203Apr2007.86.290May2007.45.92

16Apr2007.98.271May2007.44.92

217Apr2007.00.261Jun2007.44.91

18Apr2007.99.254JLm2007.43.9 0

229Apr2007.93.245Jun2007.43.89

20Apr2007.96.236Jun2007.45.88

233Apr2007.96.227Jun2007.44.88

24Apr2007.92.21un2007.44.8724

5Apr2007

.96

.20

un2007

.44

.87

256Apr2007

.94

.20

0Jun2007

.44

.87

26

27

2848OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




12able 4

3nflation per Share for Series A Preferred Shares Purchased betw een

5

ay 5, 2005, and March 1.3, 2007

6

eriod

egin Date

nd date

nflation

1

-May-05

-Feb-07

5.10

7-Feb-07-Mar-070.48

8-Mar-072-Mar-07.48

43-Mar-07o the present009

10

11

12

13

Table 5145nflation per Share for Series B Preferred Shares Purchased betw een

16ay 5, 2005, and M arch 13, 2007


18

-May-05

-Feb-07

5.41

2

-Feb-07

-Mar-07

1.18

19

-Mar-07

2-Mar-07

.03

4

3-Mar-07

o the present

00

20

21

22

23

24

25

26

27

2849OTICE OF PENDENCY OF CLASS A CTION

Case No. 07-00931




1

23abe64referred Stock, Series A, PSLRA 90-Day Look-Back Loss

Limitation Calculations5Average

verage

6

losing

losing

losing

losing

Date

rice ($) price ($)

ate

rice ($) price ( $ )

7

-Mr-2007.45.457-Apr-2007.27.45

84-Mar-2007.20.330-Apr-2007.45.48

95-Mar-2007.9 5.531-May-2007.00.52

16-Mar-20070.00.152-May-2007.80.56

109-Mar-2007.25.373-May-2007.80.59

20-Mar-2007.5 0.394-May-2007.75.6 2

1 1

1-Mar-2007

.75

.44

7-May-2007

.25

.6 6

12

2-Mar-2007

.85

.49

8-May-2007

.00

.70

23-Mar-2007

.77

.6 4

9-May-2007

.70

.72

13

6-Mar-2007

.9 2

.6 6

0-May-2007

.23

.73

147-Mar-2007.40.461-May-2007.73.73

28-Mar-2007.10.264-May-2007.50.75

159-Mar-2007.20.105-May-2007.00.7830-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.83173-Apr-2007.55.9 18-May-2007.83.85

04-Apr-2007

.10

.9 2

1-May-2007

.50

.88

18

5-Apr-2007

.25

.9 4

2-May-2007

.50

.9 2

19

9-Apr-2007

.6 5

.9 2

3-May-2007

.10

.9 4

10-Apr-2007

.50

.9 0

4-May-2007

.25

.9 7

201-Apr-2007.6 0.895-May-2007.10.9 9

12-Apr-2007.45.879-May-2007.25.01213-Apr-2007.00.830-May-2007.20.03

226-Apr-2007.05.801-May-2007.14.05

17-Apr-2007.70.751-Jun-2007.75.06

2 38-Apr-2007.30.704-Jun-2007.25.07

24

9-Apr-2007

.10

.6 4

5-Jun-2007

.10

.0720-Apr-2007

.15

.59

6-Jun-2007

.45

.06

25

3-Apr-2007

.6 0

.52

7-Jun-2007

.00

.04

24-Apr-2007

.00

.47

8-Jun-2007

.87

.02

26

5-Apr-2007

.25

.43

9-Jun-2007

.87

.02

2716-Apr-2007.37.430-Jun-2007.87.0228


Case No. 07-00931




1able7referred Stock, Series S, PSLRA 90-Day Look-Sack L oss

Limitation CalculationsAverageverage

5

losing

losing

losing

losing

Date

rice ($) price ($)

aterice ($) price ($)

613-Mar-2007

.32

.32

7-Apr-2007

.06

.35

74-Mar-2007

.35340-Apr-2007

.40.38

5-Mar-2007.89.521-May-2007.70.42

16-Mar-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.6 5.48

20-Mar-2007.6 0.424-May-2007.6 1,5101-Mar-2007.00.507-May-2007.45.56

1

2-Mar-2007

.10

.588-May-2007

.88

.6 023-Mar-2007

.50

.6 8

9-May-2007

.70

.6 2

2

6-Mar-2007

.9 0

.70

0-May-2007

.53

.6 4

3

7-Mar-2007

.6 5

.51

1-May-2007

.05

.6 5

28-Mar-2007

.80.29

4-May-2007

.45.6 7

49-Mar-2007.25.135-May-2007.78.70

30-Mar-2007.40.016-May-2007.00.7252-Apr-2007.00.9 47-May-2007.20.76

63-Apr-2007.25.9 08-May-2007.88.7804-Apr-2007.00.9 01-May-2007.50.8175-Apr-2007.45.9 32-May-2007.75.83

8

9-Apr-2007

.50

.91

3-May-2007

.25

.86

10-Apr-2007

.03

.87

4-May-2007

.25

.89

9

1-Apr-2007

.05

.83

5-May-2007

.10

.9 1

12-Apr-2007

.9 0

.79

9-May-2007

.30

.9 4

03-Apr-2007.80.740-May-2007.00.9 6

16-Apr-2007.76.701-May-2007.6 5.9 9

17-Apr-2007.15.6 41-Jun-2007.85.00

28-Apr-2007.00.584-Jun-2007.6 0.01

39-Apr-2007.00.525-Jun-2007.6 0.00

20-Apr-2007.05.476-Jun-2007.50.00

4

3-Apr-2007

.9 0

.41

7-Jun-2007

.9 0

.9 8

24-Apr-2007

.00

.37

8-Jun-2007

.25

.9 5

5

5-Apr-2007

.20

.33

9-Jun-2007

.25

.9 5

66-Apr-2007

.25

.33

0-Jun-2007

.25

.95

27

28





1 Table S

2able 8 has been abbreviated for example purposes. For a complete table, visit

3ttp://www.newcenturysettlement.com/Forms/Table 8.pdf.

4f you do not have access to the Internet, please contact the Claims Administrator

5t 1-866-308-7615 to have a co mailed toopyyouY

6Maxin7axinax Miniskiskaxinax

Maturityxer.loseloseolaolareereeallallutin Put

8atericericericeilityilityateatenflat.nflat.nflat.nflation

97-Mar-072.505.163.21.98.88.05.050.690.510.00$0.18

21-Apr-072.505.163.21.98.88.05.050.640.49$0.05$0.20

109-May-

072.505.163.21.98.88.05.050.620.51$0.07$0.19

118-Aug-072.50

5.16

3.21.98.88

.05

.05

0.62

0.54$0.08

$0.15

129-Jan-08

2.50

5.16

3.21.98.88

.05

.05

0.63

0.59$0.06

$0.11

17-Jan-09

2.50

5.16

3.21.98.88

.05

.05

0.66

0.64$0.04

$0.05

137-Feb-075.0019.7517.21.93.88.05.0511.0911.080.00$0.01

17-Mar-075.0019.753.21.98.88.05.0511.080.03$0.01$1.40

141-Apr-075.0015.853.21.98.95.05.059.410.22$0.20$2.29

159-May-

075.0019.753.21.98.88.05.0510.860.30$0.19$2.30

168-Aug-075.0019.753.21.98.88.05.0510.460.42$0.16$3.00

19-Jan-085.0019.753.21.98.88.05.059.870.51$0.11$4.20

177-Jan-09

5.00

19.75

3.21

.98

.88

.05.058.940.61$0.06$3.44

187-Feb-077.5019.7517.21.93.88

.05

.0511.09

9.59

0.00

$1.50

17-Mar-077.5019.75

3.21.98.88

.05

.0510.75

0.00$0.34

$3.87

19

1-Apr-077.5015.85

3.21.98.95

.05

.05

7.070.10$0.36

$4.69

209-May-

077.5019.753.21.98.88.05.059.970.18$0.31$4.56

218-Aug-077.50 $19.753.21.98.88.05.059.380.33$0.23$4.90

19-Jan-087.5019.753.21.98.88.05.058.750.46$0.16$5.63

227-Jan-097.5019.753.21.98.88.05.057.950.59$0.08$4.50

2310.0

17-Feb-0719.7517.21.93.88.05.059.007.10$1.14$3.99

24

10.0

17-Mar-07

19.75

3.21.98.88

.05

.05

9.10

0.00$0.64

$6.33

25

10.0

21-Apr-07

18.77

3.21.98.93

.05

.05

7.98

0.05$0.48

$6.82

269-May-10.0

0719.753.21.98.88.05.058.540.11$0.41$6.51

2710.0

18-Aug-0719.753.21.98.88.05.058.110.27$0.29$6.40

2810.0

19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70


Case No. 07-00931




110.0

17-Jan-0919.753.21.98.88.05.057.140.57$0.09$5.31

212.5

17-Feb-07$19.7517.21.93.88.05.056.504.60$3.63$6.49

312.5

17-Mar-07$19.753.21.98.88.05.056.800.00$0.68$8.50

412.5

21-Apr-07

$18.77

3.21.98.93

.05

.05

6.05

0.02$0.55

$8.45

5

9-May-

12.5

07

19.75

3.21.98.88

.05

.05

6.95

0.08$0.48

$8.00

612.5

18-Aug-0719.753.21.98.88.05.056.870.15$0.34$7.54

712.5

89-Jan-0819.753.21.98.88.05.056.720.39$0.23$7.51

$12.5

97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95$15.0

107-Feb-07$19.7517.21.93.88.05.054.002.16$6.12$8.93

$15.0117-Mar-07$19.753.21.98.88.05.054.700.00$0.69$9.97

$15.0

121-Apr-07

$18.77

3.21.98.93

.05

.05

4.35

0.01$0.60

$9.54

19-May-

15.0

13719.753.21.98.88.05.055.400.05$0.53$9.05

$15.0

148-Aug-07$19.753.21.98.88.05.055.760.10$0.38$8.40

$15.0

159-Jan-0819.753.21.98.88.05.055.890.20$0.25$8.14

$15.0

167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47

$17.5

177-Feb-0719.7517.21.93.88.05.051.700.48$8.61$10.61

$17.5

18

7-Mar-07

19.75

3.21.98.88

.05

.05

2.95

0.00$0.69$10.69

$17.5

191-Apr-07

18.77

3.21.98.93

.05

.05

3.02

0.01$0.63$10.21

19-May-17.5

20719.753.21.98.88.05.053.900.04$0.56$9.76

2117.5

18-Aug-0719.753.21.98.88.05.054.500.10$0.41$9.03

2217.5

19-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63

2317.5

17-Jan-0919.753.21.98.88.05.055.400.40$0.13$6.90

2420.017-Feb-07

$42.1017.21.93.21

.05

.0519.93

0.04$5.28$17.39

2520.0

17-Mar-07

$30.84

3.21.98.23

.05

.0510.64

0.00$0.69$15.54

2620.0

21-Apr-07$18.773.21.98.93.05.051.750.00$0.65$10.60

279-May-20.0

07$30.603.21.98.24.05.059.320.03$0.59$16.74

2 820.0

18-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25


Case No. 07-00931



Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 70 of 1 17 Page ID#:10970120.0

1 9 - J a n - 0 851.223.21. 9 8. 2 1. 0 5.0419.940 . 1 5$0.30$18.65

22 0 . 0

17-Jan-0942.103.21.98.21.05.059.250.25$0.14$16.72

322.5

17-Feb-07$42.1017.21.93.21.05.0517.530.00$7.68$19.88

42 2 . 5

17-Mar-07

30.84

3 . 2 1

. 9 8

. 2 3

. 0 5

. 0 5

8.16

0.00

$0.69

$18.0352 2 . 5

21-Apr-0718.773.21. 9 8

. 9 3. 0 5. 0 50.900.00$0.66

$10.82

69-May-2 2 . 5

0 739.693.21. 9 8.21. 0 5. 0 514.130.02$0.61$21.23$ 2 2 . 588 - A u g - 0 7$34.443 . 2 1. 9 8. 2 1. 0 5. 0 57.530.10$0.47$21.41$25.097-Feb-0742.1017.21.93.21.05.0515.100.0010.11$22.30

$25.0

107-Mar-0730.843.21.98.23.05.055.700.00$0.69$20.49

$ 2 5 . 0

111-Apr-0718.773.21.98.93.05.050.400.00$0.67$10.94

19-May-25.0

12742.10

3.21.98.21

.05

.0513.69

0.02$0.63$23.07

$25.0

138-Aug-07

34.443.21.98.21.05.055.440.10$0.49$23.05

$25.0

149-Jan-0851.223.21.98.21.05.0416.720.15$0.33$21.93

$30.0157-Feb-0747.8217.21.93.21.05.0514.260.0010.95$25.03

$30.0

167-Mar-07$30.843.21. 9 8. 2 3. 0 5. 0 51.640.00$0.69$24.29

$30.0171-Apr-07$18.773.21.98.93.05.050.250.00$0.68$11.05

19-May-30.0187$42.10

3.21.98.21

.05

.05

9.35

0.01$0.65$24.86

$30.0198-Aug-07

$34.44

3.21.98.21

.05

.05

2.38

0.09$0.52$24.73

$30.0209-Jan-0853.003.21.98.19.05.0313.640.15$0.36$23.81

213 0 . 0

17-Jan-0947.823.21.98.21.05.058.450.03$0.17$21.29

2235.017-Feb-0747.8217.21.93.21.05.0510.360.0011.09$25.21

2335.017-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 50.120.00$0.69$25.18

249-May -35.00 742.103.21. 9 8

.21. 0 5. 0 55.830.01$0.66

$25.19

2535.0

1 8 - A u g - 0 734.443.21. 9 8

.21. 0 5. 0 50.880.04$0.55$25.13

2635.0

1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 54.610.03$0.38$24.72

2740.01 7 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 57.360.0011.09$25.21

2840.0

17-Mar-07$30.843.21.98.23.05.050.050.00$0.69$25.21


Case No. 07-00931




19-May-40.00 742.103.21. 9 8. 2 1. 0 5. 0 53.430.00$0.67$25.21

24 0 . 0

1 8 - A u g - 0 734.443.21. 9 8. 2 1. 0 5. 0 50.500.00$0.57$25.20

34 0 . 0

19-Jan-0853.003.21.98.19.05.038.650.00$0.40$25.06

440.0

1 7 - J a n - 0 9

47.82

3.21

. 9 8

. 2 1

. 0 5

. 0 5

5.52

0.00

$0.19

$23.29545.01 7 - F e b - 0 747.82

17.21

. 9 3

. 2 1. 0 5. 0 55.110.00

11.09$25.21

645.017-Mar-0730.843,21.9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21

79-May -45.0

8742.103.21. 9 8. 2 1. 0 5.051.900.00$0.68$25.21

$45.0

98 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5.050.300.00$0.58$25.21

$45.0

109-Jan-08$42.103.21.98.21.05.052.100.00$0.42$25.17

$50.01 17 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5.053.470.0011.09$25.21

19-May-50.0

12742.10

3.21.98.21

.05

.05

0.98

0.00$0.68$25.21

$50.0

138 - A u g - 0 734.443.21. 9 8. 2 1. 0 5. 0 50.250.00$0.60$25.21

$50.0

149 - J a n - 0 853.003.21. 9 8. 1 9. 0 5. 0 35.320.00$0.43$25.20$50.0

157 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18

$55.01 67 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21

19-May-55.017742.103.21. 9 8. 2 1. 0 5. 0 50.400.00$0.68$25.21

$55.0189 - J a n - 0 851.223.21. 9 8

. 2 1. 0 5.054.150.00$0.45$25.21

$60.01 97 - F e b - 0 747.8217.21

. 9 3

. 2 1. 0 5.051.350.001 1 . 0 9$25.21

$60.0209 - J a n - 0 8$53.003.21. 9 8. 1 9. 0 5.033.240.00$0.46$25,21

2160.0

1 7 - J a n - 0 947.823.21. 9 8. 2 1. 0 5.052.500.00$0.23$24.71

2270.0

1 9 - J a n - 0 853.003.21. 9 8. 1 9.05. 0 31.900.00$0.48$25.21

2370.0

17-Jan-0947.823.21.98.21.05.051.730.00$0.24$24.96

24

25

26

27

28

-55-OTICE OF PENDENCY OF CLASS A CTION

Case No. 07-00931




EXHIBIT A-2 TO EXH IBIT A

TO GLO BAL OFFICER AND DIRECTOR STIPULATION




1BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP


MZAWETirblbglaw.com )LIN (Bar No. 174663)

(elizabethl(a^ blb law.com )4NIKI L. MENDO ZA (Bar No. 214646 )

mkim Mplaw.coV5 ENJAALDON (Bar No. 211114)bblbglaw.com

6

. KELLA (Bar No. 234470)

takeokffigh

blbglaw. com )7

481


San Diego, CA 9 21308 Tel: (858) 793-0070

Fax: (858) 793-0323and-SALVATOR E J. GRA ZIANO

10sgraziano(a^blbglaw.com )LAUR EN A. MC;MILLEN

11 [email protected] )285 A venue of the Americas12 New York, NY 10019

Tel: (212) 554-140013Fax: (212) 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State Teachers' R etirement System

15

16

7NITED STATES DISTRICT COUR T

1.8

ENTRA L DISTR ICT OF CALIFORN IA

19 N RE NEW CENTURY

ase No. 2:07-cv-00931-DD P (FM Ox)

(Lead Case)20

1ROOF OF CLAIM AND

22ELEASE

23

4


25

6

ROOF OF CLAIM AND RELEASE

27

28EADLINE FOR SUBMISSION2010.




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




1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in

2he Complaint, were injured thereby (the "Class"). (The New Century common

3tock, Series A Preferred Stock, Series B Preferred Stock, and/or New Century call

4ptions and New Century put options are referred to collectively as "New Century

5ecurities.")

6

.

Class Member" means any person who is included in the definition

7 of the Class and who did not timely submit a proper request for exclusion in

8accordance with the requirements set forth in the Notice. Excluded from the Class

9are certain persons or entities excluded by definition pursuant to the Court's

10 preliminary approval of the Settlements.' Also excluded from the Class are any

11persons or entities who exclude themselves by filing a request for exclusion in

12 ccordance w ith the requirements set forth in the Notice.

13

.

Authorized Claimant" means a Class Member who submits a timely

14 and valid Proof of Claim form to the Claims Administrator, in accordance with the

15 requirements established by the Court, that is approved for payment from the Net

16Settlement Fund.

1 7. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR

18 SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR

19EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.

20YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE

21 SETTLEMENTS IF YOU ARE NOT A CLASS MEMBER. THUS, IF YOU FILE

22

23 he following persons are excluded from the Class: (a) the Underwriter24Defendants, the Individual Defendants, and KPMG ("Defendants"); (b) members

25of the immediate families of the Individual Defendants; (c) the subsidiaries and

affiliates of Defendants; (d) any person or entity who was a partner, executive

26officer, director or controlling person of New Century (including any of its

27 subsidiaries or affiliates) or of any Defendant; (e) any entity in which any

Defendant has a controlling interest; and (f) the legal representatives, heirs,28 uccessors and assigns of any such excluded party.

2




1 A VALID REQUEST FOR EXCLU SION IN A TIMELY M ANNER , ANY PROO F

2OF CLAIM THAT YOU SUBMIT, OR THA T MAY BE SUBMITTED ON YOUR

3EHALF, WILL NOT BE ACCEPTED.

4.o recover as a Class Member, you must complete and sign this Proof

5f Claim and mail it to the Claims Administrator postmarked on or before

6

010. If you fail to file a timely, properly addressed, and

7ompleted Proof of Claim, your claim may be rejected, and you may be precluded

8rom receiving any distribution from the Settlements.

9.ubmission of this Proof of Claim does not ensure that you will share

10 in the proceeds of the Settlements. Distributions to Class Members from the

11Settlements are governed by the Plan of Allocation approved by the Court. The

12proposed Plan of Allocation, which is subject to the Court's approval, is included

13n the Notice.

14.f you have questions concerning the Proof of Claim, or need

15 dditional copies of the Proof of Claim or the Notice, you may contact the Claims

16Adm inistrator, at In re New Century Se curities Litigation Settlement, c/o Analytics,

17 nc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by

18oll-free phone at (866) 308-7615, or you may download the documents from Lead

1 9 Counsel's website, www.blbglaw.com, or the website maintained by the Claims

20Adm inistrator for this Settlemen t, www .newcenturysettlement.com .

210. If you are a Class Member and you do not, or someone acting on your

22behalf does not, submit a timely request for exclusion from the Class, and if the

23Court approves the Settlements, you will be bound by the terms of any orders and

24udgments that the Court enters. You will be bound by such orders and judgments

25whether or not you subm it a Proof of Claim.

26

1. You are required to . submit genuine and sufficient documentation for

27all your purchases and sales of New Century Securities from May 5, 2005,

28 hrough and including March 13, 2007, as well as genuine and sufficient

3




1 ocumentation for all sales of New Century Common Stock and Preferred Stock

2 etween March 14, 2007, through and including June 10, 2007. You are also

3equired to submit genuine and sufficient documentation reflecting your positions

4n New Century Cominon Stock and Preferred Stock as of the close of the market

5n March 13, 2007, and as of the close of the market on June 10, 2007.

6Documentation may be photocopies of stockbrokers' confirmation slips or

7 stockbrokers' monthly statements (reflecting your opening and closing balances for

8he m onths specified on the actual claim form, and in which transactions during the

9 Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR

10POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT

11 CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE

12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF

13YOUR CLAIM. DO NOT SEND ORIGINAL STOCK CER TIFICATES.

142. All joint purchasers must each sign this Proof of Claim.

153. Agents, executors, administrators, guardians, and trustees must

16complete and sign the Proof of Claim on behalf of persons represented by them,

17 and they must:

18

a)

xpressly state the capacity in which they are acting;

1 9

b) identify the name, account number, Social Security Number (or

20axpayer identification number), address and telephone number

21f the beneficial owner of (or other person or entity on whose

22ehalf they are acting with respect to) the New Century

23ecurities; and

24

c)

urnish herewith evidence of their authority to bind to the Proof

25

f Claim the person or entity on whose behalf they are acting.

26

Authority to complete and sign a Proof of Claim cannot be

27stablished by stockbrokers demonstrating only that they have

28

4




1

iscretionary authority to trade stock in another person's

2ccounts.)34. By submitting a signed Proof of Claim, you will be swearing that you:

4a) own(ed) the New Century Securities you have listed in the

5

roof of Claim; or

6

b) are expressly authorized to act on behalf of the owner thereof.

75. By submitting a signed Proof of Claim, you will be swearing to the

8 truth of the statements contained therein and the genuineness of the documents

9 attached thereto, subject to penalties of perjury under the laws of the United States

10of America. The making of false statements, or the submission of forged or

11 raudulent documentation, will result in the rejection of your claim and may

12 ubject you to civil liability or crim inal prosecution.

13 NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large

14 numbers of transactions may request, or may be requested, to submit information

15 regarding their transactions in electronic files. All Claimants MUST submit a

16 manually signed paper Proof of Claim form listing all their transactions, whether or

17not they also submit electronic copies. If you wish to file your claim

18 lectronically, you must contact the Claims Administrator at 1-866-308-7615, or

19 visit its settlement website www.newcenturysettlement.com to obtain the required

20ile layout. No electronic files will be considered to have been properly submitted

21unless the Claims Administrator issues to the Claimant a written paper

22 clilowledgment of receipt and acceptance of electronically submitted data.

23

24

25

26

27

28

5




1In re New Century

2PART I: CLAIMANT IDENTIFICATION

3 Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name

5 treet Address

7

itytateip Code

9Daytime)10 Area Codeelephone Num ber

11Evening)12 Area Code

elephone Num ber

1 3

14 Social Security Number or

axpayer Identification Number

15

16 Record Owner's Name (if different from beneficial owner listed above)

17

Check appropriate box (check only one box):18

19ElIndividual/Sole Proprietor

3Joint Owners

1Pension Plan

20qorporation

artnership

rust

21qR Ather22

23 (describe:24NOTE: Separate Proofs of Claim should be submitted for each separate legal

25 ntity (e.g., a claim from Joint Owners should not include separate transactions of

26 just one of the Joint Owners; an Individual should not combine his or her IRA

27 ransactions with transactions made solely in the Individual's name). Conversely,

28 single Proof of Claim submitted on behalf of one legal entity should include all

6




1 transactions made by that entity, no matter how many separate accounts that entity

2as (e.g., a corporation with multiple brokerage accounts should include all

3ransactions made in New Century Securities during the Class Period on one Proof

4 of Claim, no matter how many accounts the transactions were made in). If you

5 equire additional room to list your transactions, please be sure to include yo ur full

6name and the last four digits of your social security number or Tax ID number on

7ach additional sheet. Check here if additional transactions are included on

8dditional schedules. ART II:EW CENTURY COMMON STOCK

10. BeL inninL Holdings: State the number of shares of New Century

1 1

ommon Stock the Claimant owned as of the close of the market

12

n May 4, 2005. If none, write "zero" or "0." If other than zero,

13

e sure to attach the required documen tation.

14

15. Purchases:

1 61) List all purchases of New Century Common Stock made during the

17period from May 5, 2005, through and including March 13, 2007. (NOTE: If you

18acquired your New Century Common Stock during this period other than by an

19 open-market purchase, please provide a complete description of the terms of the

20cquisition on a separate page.) Be sure to attach the required docum entation.

21rade Date(s) (List

22hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*

234

5

6

7*excluding com missions, transfer taxes or other fees.28

7




1ii) State the total number of shares of New Century Common Stock the

2Claimant purchased during the period between March 14, 2007, through and

3 including June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,

4 hich are not in the Class Period, are not included in the calculation of Recog nized

5Loss. This information is needed by the Claims Administrator for purposes of the

6 verall evaluation of the Claim.)

7

. Sales: List all sales of New C entury Comm on Stock m ade during

8he period from May 5, 2005, through and including

9une 10, 200 7. Be sure to attach the required documentation.

1.0rade Date(s) (List

11

hronologically)umber ofalesotal

Month/Day/Year

hares Sold

rice Per Share

ales Price*

12

3

456*excluding com missions, transfer taxes or other fees17

1 8

. Unsold Holdinl4s: State the total number of shares of New

1 9

entury Common Stock the Claimant owned at the close of the

20market on March 13 2007. If none write "zero" or "0." If other

21than zero, be sure to attach the required documentation.

22

23. EndinL Position For 90-Day Look Back: State the total number

24

f shares of New Century Common Stock the Claimant owned at

25

he close of the market on June 10, 2007. If none, write "zero" or

26

0."

f other than zero, be sure to attach the required

27ocumentation.

28

8




1F YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS

2IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR

34NAME ON THE COPY AND CHECK THIS BOX q5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

6NOT BE REVIEWED

7

8PART III: NEW CENTURY 9.125% SERIES A CUMULATIVE

REDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED

9 TOCK")

1 0

A. Beminnins! Holdings: State the number of shares of New C entury

11Series A Preferred Stock the Claimant owned as of the close of

1 2the market on May 4, 2005. If none, write "zero" or "0." If other

13than zero, be sure to attach the required documentation.

1 4

1 5B. Purchases:

1 6(i) List all purchases of New Century Series A Preferred Stock made during

1 7

the period from May 5, 2005, through and including March 13, 2007. (NOTE: If18

you acquired your New Century Series A Preferred Stock during this period in an19

Offering or otherwise or other than by an open-market purchase, please provide a20

com plete description of the terms of the acquisition on a separate pag e.) Be sure to21attach the required documen tation.222 3

24

2 5

2 6

2 7

2 8

9




1rade Date(s) (List2hronologically)umber ofurchaseotal

Month/Day/Yearhares Purchased Price Per Share Purchase Price*345

6

excluding com missions, transfer taxes or other fees.8

9ii) State the total number of shares of New Century Series A Preferred

10 Stock the Claimant purchased during the period between March 14, 2007, through

11and including June 10, 2007. If none, write "zero" or "0." (NOTE: These

12purchases, which are not in the Class Period, are not included in the calculation of

13Recognized Loss Amount.

his information is needed by the Claims

14Administrator for purposes of the overall evaluation of the Claim.)

156o Sales: List all sales of New Century Series A Preferred Stock

1 7ade during the period from May 5, 2005, through and including

1 8

une 10, 200 7. Be sure to attach the required documentation.

1 9rade Date(s) (ListChronologically)

umber of

ales

otal

20onth/Day/Year

hares Sold

rice Per Share

ales Price*

2 1$$2

23

24

25 *excluding com missions, transfer taxes or other fees

26

27

28

10




1

. Unsold Holdinits: State the total number of shares of New

2entury Series A Preferred Stock the Claimant owned at the close

3f the market on March 13, 2007. If none, write "zero" or "0." If

4ther than zero, be sure to attach the required documentation.

5

6. Ending Position For 90-Day L ook Back: State the total number

7

f shares of New Century Series A Preferred Stock the Claimant

8wned at the close of the market on June 10, 2007. If none, write

9zero" or "0." If other than zero, be sure to attach the required

10ocumentation.

1 1

12IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS


14 NAME ON THE COPY AND CHECK THIS BOX q15

16 IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17 NOT BE REVIEWED

18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE

19 REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED

STOCK")2021. Bel4innint! Holdings: State the number of shares of New Century

22eries B Preferred Stock the Claimant owned as of the close of

23he market on May 4, 2005. If none, write "zero" or "0." If other

24

han zero, be sure to attach the required documentation.

25

26. Purchases:

271) List all purchases of New Century Series B Preferred Stock made during

28he period from May 5, 2005, through and including March 13, 2007. (NOTE: If

1 1




1 ou acquired your New Century Series B Preferred Stock during this period in an

2Offering or otherwise or other than by an open-market purchase, please provide a

3 om plete description of the terms of the acquisition on a separate pag e.) Be sure to

4ttach the required docum entation.

5rade Date(s) (List

6Chronologically)

umber of

urchase

otal

Month/Day/Year

hares Purchased Price Per Share Purchase Price*

7

81 01 *excluding commissions, transfer taxes or other fees.

1 2

3

ii) State the total number of shares of New Century Series B Preferred

14Stock the Claimant purchased during the period between March 14, 2007, through



17Recognized Loss. This information is needed by the Claims Administrator for

18 purposes of the ov erall evaluation of the C laim.)

1 9

. Sales: List all sales of New Century Series B Preferred Stock

20

ade during the period from May 5, 2005, through and including

2 1une 10, 200 7. Be sure to attach the required documentation.

22rade Date(s) (ListChronologically)umber ofalesotal

23onth/Day/Yearhares Soldrice Per Shareales Price*

24

$

5

26

$

728 excluding com missions, transfer taxes or other fees

12




1 D. Unsold Holdinjjs: State the total number of shares of New

2entury Series B Preferred Stock the C laimant ow ned at the close



5

6. EndinL Position For 90-Day Look Back: State the total number

7

f shares of New Century Series B Preferred Stock the Claimant


9zero" or "0." if other than zero, be sure to attach the required10ocumentation.11

12

13 IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS

14 IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR

15NAME ON THE COPY AND CHECK THIS BOX q16 IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17NOT BE REVIEWED

18

1 9

20

21

22

23

24

25

26

27

28

1 3




1 PART V: NEW CENTURY CALL OPTIONS

2. BeL inning Holdinus: List all Call Option contracts on New

3entury Common Stock open as of the close of the market on

4ay 4, 2005:

5

umber of Call

trike Price for

6

ption Contracts

xpiration Month

all Option

osition: Short

Open

nd Year

ontract

r Long

7

10

1 1

. Purchases: List all Call Option contracts on New Century

12

ommon Stock that you purchased or acquired during the period

13

rom May 5, 2005, through and including March 13, 2007. Be

14ure to attach the required documentation.

15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call

1 6hronologically)ontractshareonth andption

1 7onth/Day/Yearurchasedearontract

18

$

9

20$$21

22. Sales: List all Call Option contracts on New Century Common

23tock that you sold during the period from May 5, 2005, through

24

nd including March 13, 2007. Be sure to attach the required

25

ocumentation.

26

27

28

1 4




1

ales Date(s)

remium

2Listumber ofrice Perxpirationtrike Price forChronologically)ptionhareonth andall Option3Month/Day/Year Contracts Soldearontract

4$$$7

8D. Exercised Calls: List all Call Option contracts on New Century

9mon Stock that you exercised during the period from May 5,10

005, through and including March 13, 2007. Be sure to attach

11 the required documentation.12

Strike13

rice for

14xpiration

all

umber of Call Result:

Month andptionption Contracts Rec'd Shares15ate Exercisedea rontract Exercisedr Cash?

16

17

19

0

. Expired Calls: List all Call Option contracts on New Century

21ommon Stock that expired worthless during the period from

22ay 5, 2005, through and including March 13, 2007. Be sure to

23ttach the required documentation.

24

25

26

27

28

1 5




1ate Contracts

trike Price

2Expired (Listumber ofer Call

Chronologically)xpired Option Expiration Monthption3onth/Day/Yearontractsnd Yearontract46

7

8F. Unsold/Unexpired Calls: List Call Option contracts on New

9Century Common Stock that were open as of the close of the

1 0arket on March 13, 2007.

1 1

1 2Strike Price

1 3umber of Call

er Call

1 4ption Contracts

osition: Short or Expiration Month

ption

Openongnd Yearontract1 56

7

1 s

1 9

20

2 1

2 2

2 3

24

2 5

2 6

2 7

2 8

1 6




1PART VI: NEW CENTURY PUT OPTIONS

2. Be2innin2 Holdings: List all Put Option contracts on New


4ay 4, 2005:

5

umber of Put

trike Price for

6

ption Contracts

xpiration Month

ut Option

osition: Short

Open

nd Year

ontract

r Long

7

8910

1 1

. Sales: List all Put Option contracts on New Century Common

12

tock that you sold (wrote) during the period from May 5, 2005,

13

hrough and including March 13, 2007. Be sure to attach the

1 4

equired documentation.

15ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for

16Chronologically)ptionhareonth andut Option

17Month/Day/Year Contracts Soldearontract

1 8

19

20$$122

23

24

25

26

27

2 8

1 7




1

. Purchases: List all Put Option contracts on New Century

2ommon Stock that you purchased or acquired during the period

3rom May 5, 2005, through and including March 13, 2007. Be


5urchase Date(s) Number of Put Premium

6

List

ption

rice Per

xpiration

trike Price per

Chronologically)

ontracts

hare

onth and

ut Option

7 onth/Day/Year

urchased

ear

ontract

8$011

12D. Exercised Puts: List all Put Option contracts on New Century

13Common Stock that you exercised during the period from May 5,

14005, through and including March 13, 2007. Be sure to attach15

the required documentation.1 6trikeumber of Putesult:17xpirationrice for Option Contracts Delivered

1 8

onth and Put Option Exercised

hares or

Date Exercised

ear

ontract

aid?

19

20

21

22

23

24

. Expired Puts: List all Put Option contracts on New Century

25

ommon Stock that expired worthless during the period from

26

ay 5, 2005, through and including March 13, 2007. Be sure to


28

1 8




1ate Contracts2xpired (Listumber oftrike Price for

Chronologically)xpired Putxpiration M onthut Option3onth/Day/Yearontractsnd Yearontract

46

7

8F. Unexpired Puts: List Put Option contracts on New Century9ommon Stock open as of the close of the market on March 13,

102007.

1 1

umber of

trike Price for

1 2

nexpired Put


ut Option

1 3

ptions Contracts

ong

nd Year

ontract

141 5

16YOU MUST READ THE FOLLOWING RELEASE AND SIGN ON PAGE

17ELEASE OF CLAIMS

18 Definitions

1 9

efined terms not already defined herein have the meanings given them in

20 the respective Stipulations of Settlement (described in the Notice) (the

21 "Stipulations").

22

23

24The Releases

25

fficer and Director Release

26

(we) understand and acknowledge that, without further action by anyone,

27 on and after entry of the Global Officer And Director Judgment and occurrence of

28 the Effective Date of the Global Officer And Director Settlement, each Class

19




1Member, on behalf of themselves, for good and sufficient consideration, the receipt

2and adequacy of which are hereby acknowledged, whether or not a Proof of Claim

3s executed and delivered by, or on behalf of, such Class Member, will be deemed

4y operation of law to have released, waived, discharged and dismissed each and

5very Settled Class Claim as ag ainst each and every R eleased Officer And D irector

6nd the Insurance Carriers (as defined in the Global Officer And Director

7 Stipulation), and shall be deemed to forever be enjoined from prosecuting any or

8 all of the Settled Class Claims against each and every Released Officer And

9 Director and the Insurance Carriers. "Settled Class Claim" in this paragraph means

10ny and all claims and causes of action of every nature and description, whether

11known or Unknown Claims, whether arising under federal, state, common or

12 oreign law, that Plaintiffs or any other member of the Class (a) asserted in the

13Consolidated Action, or (b) could have asserted in any forum that arise out of or

14are based upon the allegations, transactions, facts, matters or occurrences,

15 epresentations or omissions involved, set forth, or referred to in the Consolidated

16Action, and that arise out of or relate to the purchase of New Century Common

17 Stock, New Century Series A Preferred Stock, New Century Series B Preferred

18 Stock, and/or New Century Call Options and/or the sale of New Century Put

19 Options during the Class Period. Settled Class Claims does not include claims

20elating to the enforcement of the Settlement. "Released Officers And Directors"

21 n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin

22Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey

23D. Goldberg, and any of their respective heirs, executors, administrators,

24predecessors, successors, assigns, employees, agents and retained professionals;

25 nd (ii) all directors, officers, employees, and other natural persons affiliated with

26New Century (including any of its subsidiaries and affiliates) included in the

27definition of "Assured" or "Insured" as defined in the Policies (defined in the

28Global Officer And Director Stipulation) and any and all of their respective heirs,

2 0




1xecutors, administrators, predecessors, successors and assigns, employees, agents

2nd retained professionals (other than KPM G or the Underw riter Defendants).

3PMG R elease

4(we) understand and acknowledge that, without further action by anyone,

5n and after entry of the KPMG Judgment and occurrence of the Effective Date of

6he KPMG Settlement, each Class Member, on behalf of themselves, for good and

7ufficient consideration, the receipt and adequacy of which are hereby

8cknow ledged, whether or not a Proof of Claim is executed and delivered by, or on

9 behalf of, such Class Member, will be deemed by operation of law to have

10released, waived, discharged and dismissed each and every Settled Claim, and

11 shall forever be enjoined from prosecuting any or all Settled Claims, against any

12Released Auditor Party. "Settled Claim" in this paragraph means any and all

13claims and causes of action of every nature and description, whether known or

14Unknown, whether arising under federal, state, common or foreign law, that

15Plaintiffs or any other member of the Class (a) asserted in the Complaint, or (b)

16 ould have asserted in any forum that arise out of or are based upon the allegations,

17 ransactions, facts, matters or occurrences, representations or omissions involved,

18 et forth, or referred to in the Complaint, and that arise out of or relate to the

19 purchase of New Century Common Stock, New Century Series A Preferred Stock,

20 New Century Series B Preferred Stock, and/or New Century Call Options and/or

21 he sale of New Century Put Options during the Class Period. "Settled Claims"

22does not include claims relating to the enforcement of the Settlements. "Released

23Auditor Party" means KPMG and any and all of its partners, principals, officers,

24directors, employees, agents, attorneys and affiliates. "Released Auditor Parties"

25 oes not include any Defendants other than KPM G.

26

27

28

21




1nderwriter Release


3 on and after entry of the Underwriter Judgment and occurrence of the Effective

4Date of the Underwriter Settlement, each Class Member, on behalf of themselves,

5heir parent companies, subsidiaries, affiliates, heirs, executors, administrators,

6 predecessors, successors and assigns, and any and all of their current and former

7officers, directors, employees, agents and attorneys, for good and sufficient

8 consideration, the receipt and adequacy of which are hereby aclalowledged,

9 hether or not a Proof of Claim is exec uted and delivered by , or on behalf of, such

10Class Member, will be deemed by operation of law to have released, waived,

11discharged and dismissed each and every Settled Claim, and shall forever be

12enjoined from prosecuting any or all Settled Claims, against any Released

13Underwriter Party. "Settled Claim" in this paragraph means any and all claims and

14causes of action of every nature and description, whether known or Unknown,

15whether arising under federal, state, common or foreign law, that Plaintiffs or any

16 ther mem ber of the Class (a) asserted in the Com plaint, or (b) could have asserted

17n any forum that arise out of or are based upon the allegations, transactions, facts,18 matters or occurrences, representations or omissions involved, set forth, or referred

19o in the Complaint, and that arise out of or relate to the purchase of New Century

20Common Stock, New Century Series A Preferred Stock, New Century Series B

21Preferred Stock, and/or New Century Call Options and/or the sale of New Century

22Put Options during the Class Period. "Settled Claims" does not include claims

23 elating to the enforcement of the Settlements. "Released Underwriter Party"

24means the Underwriter Defendants and any and all of their respective parent

25companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,

26 uccessors and assigns, and any and all of their current and former officers,

27directors, employees, agents and attorneys. "Released Underwriter Parties" does

28 ot include any Defendants other than the Underwriter Defendants.

22




1

2IGNATURE AND CERTIFICATIONS

3y signing and submitting this Proof of Claim, the Claimant or the person

4who represents the Claimant certifies, as follows:

5

. that the Claima nt is a Class M em ber, as defined in the Notice;

6

. that I (we) have read and understand the contents of the Notice and the

7

roof of Claim;

8. that I (we) are not acting for any of the Defendants, nor am I (are we)

9uch a Defendan t or otherwise excluded from the Class;

10. that I (we) have not filed a request for exclusion from the Class and that I

1 1

we) do not k now of any request for exclusion from the Class filed on m y

12

our) behalf with respect to my (our) transactions in New Century

13

ecurities;

14. that I (we) own(ed) the New Century Securities identified in the Proof of

15laim, or that, in signing and subm itting this Proof of Claim, 1 (w e) have

16he authority to act on behalf of the owner(s) thereof,

17. that Claimant may be entitled to receive a distribution from the Net

18

ettlement Fund;

19

. that Claimant desires to participate in the Settlements described in the

20otice and agrees to the terms and con ditions thereof;

21. that I (we) submit to the jurisdiction of the United States District Court

22or the Central District of California for purposes of investigation and

23iscovery under the Federal Rules of Civil Procedure with respect to this

24

roof of Claim;

25

. that 1 (we) agree to furnish such additional information with respect to

26

his Proof of Claim as the parties, the Claims Administrator or the Court

27ay require;

28

2 3




10.that I (we) waive trial by jury, to the extent it exists, and agree to the

2ourt's summary disposition of the determination of the validity or

3mount of the claim ma de by this Proof of Claim; and

41. that I (we) certify that I am (we are) not subject to backup withholding

5

nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue

6

ode.

7

OTE: If you have been notified by the Internal Revenue Service that you are

8ubject to backup withholding, please strike the language that you are not

9ubject to backup withholding in the certification above. The Internal Revenue

10ervice does not require your consent to any provision other than the

1 1

ertification required to avoid back up w ithholding.

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 4




1declare, under penalty of perjury under the laws of the United States of

2America, that the statements made and answers given in this Proof of Claim are

3rue and correct and that the documents submitted herewith are true and genuine.

4

5

Signature of Claimant

7Print Name of C laimantate Signed

9

10Signature of Joint Claimant, if any

1 1

12Print Nam e of Joint Claimant, if any

ate Signed

13

14 If Claim ant is other than an individual , or is not the p erson comp let ing this

15form , the follow ing also m ust he provid ed:

16

17Signature of Person Completing Form

18

19 Print Name of Person Completing Form

ate Signed

20

21Capacity of P erson Signing (Ex ecutor, President, Trustee, etc.)

22

23

24

25

26

27

28

25




1EMINDER C HECKLIST

2lease sign the Proof of Claim on page _.

3f this Claim is being made on beh alf of Joint Claim ants, then both must sign.

4lease rememb er to attach supporting documents.

5

f you mov e, please send your new a ddress to:

6n re New Century Securities Litigation Settlement

7/o Analytics, Inc., Claims A dm inistrator

P.O. Box 2004

8hanhassen, MN 55317-2004

9-866-308-7615

1 0

DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.1 1

1 2

eep a copy of your Proof of Claim and all documentation submitted for your

13 ecords.4he Claims Administrator will acknowledge receipt of your Proof of

15laim by mail within 60 days. Your Proof of Claim is not deemed

fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 60 days, please call

1 7he Claims Adm inistrator toll free at (866) 308-76 1 5.

18

19ACCUR ATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT

20F TIME.

2 1HANK YOU FOR YOUR PATIENCE

22

23

24

25

26

27

28

26









1

NITED STATES DISTRICT COUR T


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




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




1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE

2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and

3 Claim Form, may be made to Lead Counsel:

4

BERNSTEIN LITOWITZ BERGE R5 GROSSMANN LLP

alvatore J. Graziano

1285 A venue of the Americas

7

ew York, New York 10019

8elephone: (866) 648-2524

9

10 Dated:2010y Order of the Clerk of the CourtUnited States District Court

1 1

or the Cen tral District of California

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3




EXHIBIT B




Case 2:07-cv-00931-DDP-FMO Document 484-4 Filed 07/30/10 Page 105 of 1 17 Page ID#:11005

1

2

3

45

6

7

8

9NITED STATES DISTR ICT COURT

10ENTRAL DISTRICT OF CALIFORNIA


ase No. 2:07-cv-00931-DDP (FM Ox)

12

Lead Case)

13

41 5PROPOSED] OFFICER AND DIRECTOR FINAL JUDGMENT AND

16RDER O F DISMISSAL WITH PR EJUDICE

17

1 8

19

20

21

22

23

2425

26

27

28




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




efendants; (d) any person or entity who was a partner, executiveofficer, director or controllingerson of New Century (includin any

2f its subsidiaries or affiliates or of any Class Defendant; (e anentity in which any Class Defendant has a controlling interest; and ( I

3he legal representatives, heirs successors and assigns of any suchexcluded party. Also excluded from the Class are any persons who

4xclude themselves by filing a request for exclusion in accordancewith the requirements set forth in the Notice, as listed on Exhibit 1

5

nnexed hereto.

6

7

.

he Court also affirms its findings in the Preliminary Approval Order

8 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal

9 Rules of Civil Procedure have been satisfied in that: (a) the number of Class

10 Members is so numerous that joinder of all members thereof is impracticable; (b)

11 there are questions of law and fact common to the Class; (c) the claims of Lead

12 Class Plaintiff and Class Plaintiffs Carl Larson and Charles Hooten are typical of

13 the claims of the Class they seek to represent; (d) Class Plaintiffs have fairly and




17 available methods for the fair and efficient adjudication of the controversy.

18

.

ursuant to Rule 23 of the Federal Rules of Civil Procedure, the

19 Court affirms its certification of Class Plaintiffs as the Class representatives and

20 Lead Counsel Bernstein Litowitz Berger & Grossmann LLP as the Class counsel.

21.ursuant to Federal Rule of Civil Procedure 23, this Court hereby

22 approves the Global Officer And Director Settlement set forth in the Global

23 Officer And Director Stipulation and finds that the Global Officer And Director

24 Settlement is, in all respects, fair, reasonable, adequate and entered into in good

25 faith within the meaning of California Code of Civil Procedure § 877. The Court

26 further finds that the Global Officer And Director Settlement set forth in the

27 Global Officer And Director Stipulation is the result of arm's-length negotiations

28 between experienced counsel representing the interests of the Parties.

2




1 Acco rdingly, the Global Officer And Director Settlement embo died in the Global

2 Officer And Director Stipulation is hereby finally approved in all respects. The

3 Parties are hereby directed to perform its terms.

4

.

ursuant to and in compliance with R ule 23 of the Federal R ules of5 Civil Procedure, the Court hereby finds that due and adequate notice of these

6 proceedings was directed to all persons and entities who are Class Members,

7 advising them of the Global Officer And Director Settlement, the Plan of

8 Allocation, and Lead Counsel's intent to apply for attorneys' fees and

9 reimbursement of Litigation Expenses associated with the Consolidated Class

10 Action, and of their right to object thereto, and a full and fair opportunity was

11 accorded to all persons and entities who are Class Members to be heard with

12 respect to the foregoing matters. Thus, it is hereby determined that all Class

13 M embers w ho did not timely and properly elect to exclude themselves by written

14 com munication postmarked or otherwise delivered on or before the date set forth

15 in the Notice and the Preliminary Approval Order, are bound by this Judgment.

16.he Con solidated Class Action and all claims contained therein are17 dismissed w ith prejudice as to the Class Individual Defendants.

1 8

.

he Parties are to bear their own costs, except as otherwise provided

19 in the Global Officer And D irector Stipulation.

20

0. Upon the Effective Date, the Settled Claims shall be discharged as

21 against each and every R eleased Officer And Director and the Insurance Carriers,

22 and P laintiffs shall be deemed to forev er be enjoined from prosec uting any or all

23 of the Settled Claims against each and every Released Officer And Director and

24 the Insurance Carriers.25

1. Upon the Effective Date, the Settling Individuals' Claims as against

26 Class Plaintiffs and all other Class Members, the Trust, the Trustee, Alan M.

27 Jacobs individually, the Debtors, the Debtors' Estates, the Plan Advisory

28 Committee, and Kodiak, and their respective heirs, predecessors, successors,

3




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




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



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,


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




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




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




1

26. There is no just reason for delay in the entry of this Judgment and

3 imm ediate entry by the Clerk of the Court is expressly directed.

4

T IS SO ORDERED,

5

6 DATED:

HE HONORABLE DEAN D. PREGERSON8NITED STATES DISTRICT COUR T JUDGE

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EXHIBIT C




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EXHIBIT 3TO UNOPPOSED MOTION FOR PRELIMINARY


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UNITED STATES DISTRICT COURT8

CENTRA L DISTRICT OF CALIFORN IA9

IN RE NEW CENTURYase No. 2:07-cv-0093 1 -DDP (FMOx)1 0Lead Case)

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15TIPULATION OF SETTLEM ENTBETWEEN PLAINTIFFS AND KPMG LLP

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KPMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)




1his Stipulation of Settlement (the "Stipulation") is submitted pursuant to

2Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the

3ourt, this Stipulation is entered into between and amo ng Lea d Plaintiff New York

4State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl Larson

5and Charles Hooten (collectively "Plaintiffs"), Plaintiffs in the above-captioned

6onsolidated class action (the "Co nsolidated Action"), on behalf of themselves and

7he Class (as hereinafter defined), and defendant KPMG LLP ("KPMG")

8(collectively, with Plaintiffs, the "Parties"), by and through their respective

9 counsel. The KPMG Settlement is intended to settle all Settled Claims (as defined

10below) against KPM G and all other Released A uditor Parties (as defined below).

1 1HEREAS:12.ll terms with initial capitalization not otherwise defined herein shall

13have the meanings ascribed to them in ¶1 herein.

1 4.eginning on or about February 8, 2007, securities class action


16California against certain of the Defendants; and the actions were consolidated by

17 Order dated June 26, 2007;

18.y Order dated June 26, 2007, the Court appointed the New York

19 State Teachers' Retirement System as Lead Plaintiff for the Consolidated Action

20 nd approved its selection of B ernstein Litowitz B erger & Grossma nn LLP as L ead

21Counsel for the Class;

22.n September 14, 2007, Plaintiffs filed their Consolidated Class

23Action Com plaint ("Conso lidated C omp laint") asserting claims against Defendan ts


25Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased

26or otherwise acquired New Century Financial Corporation ("New Century" or the

27 "Company") common stock; New Century 9.125% Series A Cumulative

28Redeemable Preferred Stock ("Series A Preferred Stock"); New Century 9.75%

-1 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-00931-DDP (FMOx)




1 Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock");

2nd/or New Century call options and/or who sold New Century put options during

3 the time period from May 5, 2005, through and including, March 13, 2007, either

4n the Offerings, pursuant to a registration statement, or in the market, and who,

5 upon disclosure of certain facts, were injured thereby;

6.eginning on November 2, 2007, Defendants filed motions to dismiss

7he Consolidated Com plaint, which Plaintiffs opposed on D ecember 1 4, 2007;

8.y Order dated January 31, 2008, the Court granted the motions to

9ismiss with leave to am end the co mplaint;

10.n M arch 24, 2008 , Plaintiffs filed their Am ended C onsolidated Class

11Action Complaint ("Amended Complaint"), alleging claims against Defendants

12pursuant to the Securities Act and the E xchange Act;

1 3.n April 30, 2008, Plaintiffs filed their Second Amended

14Consolidated Class Action Complaint (the "Complaint"), alleging claims against

15 Defendants pursuant to the Securities Act and the Exchange Act;

16.eginning on June 2, 2008, Defendants filed motions to dismiss the

17Com plaint, which Plaintiffs opposed o n July 7, 2008 ;

is.ollowing a hearing, by Order dated December 3, 2008, the Court

19 ubstantially d enied D efendants' motions to d ismiss;

20.eginning on January 26 , 2009, Defendants answered the C omplaint;

21.he Parties began discovery in or about April 2009, including filing


23discovery requests, responses and v oluminous docume nts;

24. On January 13, 2010, KPMG filed a motion for summary judgment,

25which Plaintiffs opposed on M arch 15, 201 0;

26.he Parties have participated in mediation sessions and additional

27discussions before the Honorable Da niel W einstein, and subsequen tly were able to

28

-2 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)




1 each agreements in principle to settle this Consolidated Action on the terms set

2orth herein;

3.PMG denies any wrongdoing whatsoever and this Stipulation shall

4n no event be construed or deemed to be evidence of or an admission or

5oncession on the part of KPMG with respect to any claim or of any fault or

6 iability or wrongdoing o r dam age w hatsoever, or any infirmity in the defense s that

7KPMG has asserted. The Parties recognize, however, that the litigation has been

8iled by Plaintiffs and defended by KPMG in good faith and in compliance with

9Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled

10after receiving advice of counsel, and that the terms of the settlement are fair,

11 adequate and reasonable. This Stipulation shall not be construed or deemed to be a

12oncession by any plaintiff of any infirmity in the claims asserted in the action;

13.ead Counsel represents that it has conducted an extensive

14nvestigation and thorough discovery relating to the claims and the underlying

15events and transactions alleged in the Complaint. Lead Counsel represents that it

16has analyzed the evidence adduced through discovery and has researched the

17 pplicable law w ith respect to the claims of P laintiffs and the o ther mem bers of the

18Class (as defined herein) and the potential defenses thereto;

1 9.ased upon their investigation and discovery as set forth above,

20Plaintiffs and Lead Counsel have concluded that the terms and conditions of this

21Stipulation are fair, reasonable and ad equate to Plaintiffs and the o ther mem bers of

22he Class, and in their best interests, and have agreed to settle the claims raised in

23 he ac tion pursuant to the terms and p rovisions of this Stipulation, after considering

241) the benefits that the Class will receive from the KPMG Settlement, (2) the

25attendant risks of litigation, and (3) the desirability of permitting the KPMG

26Settlement to be consumm ated as provided by the terms of this Stipulation;


28Plaintiffs of any lack of me rit of the action wha tsoever, and w ithout any adm ission





1 or concession of any liability or wrongdoing or lack of merit in the defenses

2whatsoever by the Released Auditor Parties (as defined herein), it is hereby

3STIPULA TED AN D A GREE D, by and among the Parties, through their respective

4attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal

5Rules of Civil Procedure, in consideration of the benefits flowing to the Parties

6hereto from the KPMG Settlement, that all Settled Claims (as defined below) as

7 against the Released Auditor Parties (as defined below) and all Released Parties'

8Claims (as defined below) shall be compromised, settled, released and dismissed

9with prejudice, upon and subject to the following terms and conditions:

1 0EFINITIONS

11.s used in this Stipulation, the following terms have the following12meanings:

13)Authorized Claimant" means a Class Member who submits a

1.4timely and valid Proof of Claim Form and all required documentation to the

15Claims Ad ministrator, in accordan ce with the requirements established by the Plan

16of Allocation approved by the Court, that is approved for payment from the Net

17 Settlement Fund.

18)CAFA Notices" means proper notices of settlement, sent by

19 KPMG to the appropriate Federal official and the appropriate State official of each

20state in which a class me mbe r resides, pursuant to the Class Action Fairness Act of

212005 ("CAFA"), 28 U .S.C. § 171 5(b).

22)Claim" means a completed and signed Proof of Claim Form


24Proof of Claim Form .

25)Claim Form" or "Claim Form and Release" or "Proof of Claim


27Exhibit A, that a Claimant or C lass Memb er must com plete should that Claimant or

28Class Mem ber seek to share in a distribution of the Net Settlement Fund.

-4 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DD P (FMOx)




1)Claimant" means a person or entity that submits a Claim Form

2 to the Claims Administrator seeking to share in the proceeds of the Net Settlement

3Fund.


5ncorporated.

6)Claims Aga inst Directors And O fficers" mean s those claims as

7efined in paragraph 6 .

8)Class" means all persons and entities who purchased or

9 otherwise acquired New Century common stock, New Century Series A Preferred

10 Stock, New Century Series B Preferred Stock, and/or New Century call options

11and/or who sold New Century put options, during the time period from May 5,

122005, through and including March 13, 2007, either in the Offerings (as defined

13herein), pursuant to a registration statement, or in the market, and who, upon

14disclosure of certain facts alleged in the Complaint, were injured thereby.

15 Excluded from the Class are (a) Defendants; (b) members of the immediate

16families of Individual Defen dants; (c) the subsidiaries and affiliates of De fendants;

17 d) any person or entity who was a partner, executive officer, director or controlling

18person of New Century (including any of its subsidiaries or affiliates) or of any

1 9 ther Defendant; (e) any entity in which any Defendant has a controlling interest;

20and (f) the legal representatives, heirs, successors and a ssigns of any such e xcluded

21party. Also excluded from the Class are any persons who exclude themselves by

22filing a request for exclusion in accordance with the requirements set forth in the

23Notice.

24)Class Distribution Orde r" means an order entered by the Co urt

25authorizing and directing that the Net Settlement Fund be distributed, in whole or

26 n part, to Authorized C laimants.

27

28

-5 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DD P (FMOx)





2he Class and does not exclude himself, herself or itself by filing a request for

3xclusion in ac cordance w ith the requirements set forth in the No tice.


5nd including March 1 3, 2007.

6)Complaint" means the Second Amended Consolidated Class

7Action Complaint filed by Plaintiffs in the Consolidated Action, on or about April

80, 2008 .

9)Court" means the United States District Court for the Central

1.0 District of California.

1 1)Defendants" means the Underwriter Defendants, KPMG, and

1 2he Individual Defendants.1 3)Debtors" means New Century Financial Corporation (f/k/a

14New Century REIT, Inc.), a Maryland corporation; New Century TRS Holdings,

15nc. (f/k/a New Century Financial Corporation), a Delaware corporation; New

16Century Mortgage Corporation (f/k/a JBE Mortgage) (d/b/a NCMC Mortgage

17Corporate, New Cen tury Corporation, and New C entury Mortgage Ventures, LLC),

18a California corporation; NC Capital Corporation, a California corporation;

19 Home1.23 Corporation (f/k/a The Anyloan Corporation, 1800anyloan.com, and

20Anyloan.com ), a California corporation; New Century Credit Corporation (f/k/a

21Worth Funding Incorporated), a California corporation; NC Asset Holding, L.P.

22f/k/a NC Residual II Corporation), a Delaware limited partnership; NC Residual

23 II Corporation, a Delaware corporation; NC Residual IV Corporation, a Delaware

24corporation; New Century R.E.O. Corp., a California corporation; New Century

25R.E.O. II Corp., a California corporation; New Century R.E.O. III Corp., a

26California corporation; New Century Mortgage Ventures, LLC (d/b/a Summit

27Resort Lending, Total Mortgage Resource, Select Mortgage Group, Monticello

28Mortgage Services, Ad Astra Mortgage, Midwest Home Mortgage, TRATS





1Financial Services, Elite Financial Services, and Buyers Advantage Mortgage), a

2Delaware limited liability company; NC Deltex, LLC, a Delaware limited liability

3company; NCoral, L.P., a Delaware limited partnership; and New Century4Warehouse Corporation, a C alifornia corporation.

5)Debtors' Estates" means the bankruptcy estates of the Debtors

6 created as a result of the Debtors' petitions under Chapter 11 of Title 11 of the

7United States Bankruptcy Code.

8)Effective Date" means the date on which all the following

9hall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)

10payment of the KPMG Settlement Amount has been made pursuant to ¶9 below;

11 c) ninety (90) days have elapsed since the deadline for KPMG to serve the CAFA12Notices; (d) KPMG and the other Released Auditor Parties have been released

13 rom any and all claims and causes of action of every nature and description,

14whether known or Unlmown Claims, by the Settling Individuals whether arising

15under federal, state, common or foreign law, that arise out of or relate in any way

16 to the institution, prosecution, or settlement of the claims which were asserted in

17he Consolidated Action, the Trustee Litigation or the Kodiak Litigation, or that

18arise out of or relate in any way to New Century (including any of its subsidiaries

19and affiliates), the Trust, the Trustee, the Debtors, or the Debtors' Estates, except

20 or (1) a n allowed priority claim in the am ount of $5,000 p ursuant to proof of claim

21no. 2385 filed by Fredric J. Forster in the Bankruptcy Court against Debtors'

22Estates and (ii) any and all claims arising out of or in connection with the defense

23and subsequent settlement of the Schroeder a New Century Holdings, Inc.

24Adversary Proceeding No. 07-51598(KJC)) and the Philadelphia Indemnity

25Arbitration, including, but not limited to (I) claims for b enefits under any insurance

26programs or policies to which the Settling Individuals are entitled, (II) claims for

2 7 dvancement, indemnification, contribution, reimbursement or other payments

28whether based on law, the Debtors' certificate or articles of incorporation, bylaws,

-7 -PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 I -DDP (FMOx)




1or other contract or agreement; (e) KPMG and the other Released Auditor Parties

2have been released from each and every claim by the Underwriter Defendants

3rising under federal, state, common or foreign law, arising out of or based upon

4he allegations, transactions, facts, matters or occurrences, representations or

5omissions involved, set forth, or referred to in the Consolidated Action; (f) the

6 Court has approved the KPMG Settlement, following notice to the Class and a

7earing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure; and

8 (g) the Court has entered the KPMG Judgment, substantially in the form annexed

9 hereto as Exhibit B, which has become Final. KPMG shall have the right to waive

10 ome or all of the conditions in subsections (d) and (e) of this subparagraph, but in

11such event, KPMG shall be required to promptly offer to the Settling Individuals

12and to the Underwriter Defendants substantively reciprocal releases substantively

13similar to the reciprocal releases identified below in paragraphs 6 and 7. In the

14 event that KPMG receives the releases from the Settling Individuals stated in

15subsection (d), KPMG shall be required to promptly offer to other former New

16 Century officers or directors with whom KPMG has entered into a tolling

17agreement related to New Century substantially similar substantively reciprocal

18releases.

19)Escrow Account" means an account maintained to hold the

20 Settlement Fund, which shall be controlled exclusively by Lead Counsel and

21deemed to be in the custody of the Court and shall remain subject to the

22 jurisdiction of the Court until such time as the funds are distributed or returned

23pursuant to the terms of this Stipulation and/or further order of the Court.

24)Escrow Agent" means The Huntington National Bank to serve

25 s escrow agent.

26)Escrow Agreement" means the agreement among Lead

27Counsel and the Escrow Agent setting forth the terms under which the Escrow

28Agent shall maintain the Escrow A ccount.





1)Final" when referring to an order or judgment means: (i) that

2he time for appeal or appellate review of the order or judgment has expired; or

3ii) if there has been an appeal, (a) that the appeal has been decided without

4ausing a material change in the order or judgment; or (b) that the order or

5udgment has been upheld on appeal and is no longer subject to appellate review

6y further appe al or writ of certiorari.

7)Individual Defendants" means Robert K. Cole, Brad A.

8Morrice, the Estate of Edward F. Gotschall, Patti M. Dodge, Fredric J. Forster,

9 Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,

10Richard A. Zona, M arilyn A. A lexander, David Einhorn, and W illiam J. Pop ejoy.

1 1) "Kodiak" means Kodiak Warehouse LLC, Kodiak Warehouse

12JPM Capital LLC, Kodiak CDO1 Ltd., Kodiak CDO Management LLC, and

13Kodiak Funding LP.

14) "KPMG" means KPMG LLP.

15)KPMG Judgment" means the final judgment, substantially in

16he form attached hereto as Exhibit B, to be entered pursuant to Rule 54(b) of the

17Federal Rules of Civil Procedure approving the KPM G Settlement.

18)KPMG Settlement" means the proposed settlement as set forth

19 in this Stipulation.

20a) "KPMG Settlement Amount" means the sum of $44,750,000.0021 n cash which KPMG shall pay or cause to be paid into the Escrow Account as set

22orth in ¶9 below.

23b) "Kodiak Litigation" means the action K odiak W arehouse LL C,

24et al. a Brad A. Morrice, et al. (Case No. 08-1265-DDP-FMO) commenced on

25Novem ber 7, 2008 , against Robert K. Cole, B rad A. M orrice, the Estate of Edw ard

26 F, Gotschall, Patti M. Dodge, and Jeffrey D. Goldberg by Kodiak in the United

27States District Court for the Central District of California.

28





1c) "Lead Counsel" means the law firm of Bernstein Litowitz

2B erger & Grossmann LLP.

3d) "Lead Plaintiff' means the New York State Teachers'

4Retirement System.

5e) "Litigation Expenses" means the costs and expenses incurred

6by Plaintiffs' Counsel in connection with commencing and prosecuting the

7Consolidated Action, for which Lead Counsel intends to apply to the Court for

8 eimbursement from the Settlement Fund .

9f)Net Settlement Fund" means the Settlement Fund (as defined

10below) less: (i) any Taxes; (ii) any Notice and Administration Costs; (iii) any

11attorneys' fees awarded by the Court; and (iv) any Litigation Expenses awarded by12he Court.

13g) "Notice" means the Notice of Pendency of Class Action and

14 Proposed Settlement, Settlement Fairness Hearing and Motion for Attorneys' Fees


16hereto as Exhibit 1 to Exhibit A, which is to be sent to m embers of the C lass.

1 7h) "Notice and Administration Costs" means the costs, fees and

18expenses that are incurred by the Claims Administrator and Lead Counsel in

19connection w ith (i) providing notice to the Class; and (ii) adm inistering the Claims

20process.

21i)Offerings" means the public offerings pursuant to which New

22Century Series A and B Preferred Stock were offered to the public in June 2005

23 nd August 2006 .

24j)Other Former O fficers" means D avid Kenneally, Kevin C loyd,

25Patrick Flanagan, Stergios Theologides, and Joseph F. Eckroth, Jr.

26k) "Parties" means KPMG and Plaintiffs, on behalf of themselves

27 nd the Class Mem bers.

28

-10-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-00931-DDP (FMOx)




11 )Philadelphia Indemnity Arbitration" means the claims filed

2 with the American Arbitration Association by the Trustee against Philadelphia

3 Indemnity Insurance Company to pay and indemnify, in accordance with the terms

4 f the applicable insurance p olicy, New C entury, its successor-in-interest, the New

5Century Liquidating Trust, and Harold A. Black, Fredric J. Forster, Donald E.

6Lange, and Michael M. Sachs, the full amount of defense costs that each have

7ncurred in the defense and subsequent settlement of S chroeder v . N ew Century

8Holdings, Inc. (Adversary Proceeding No. 07-51598 (KJC)), and to pay and

9 eimburse their other insurable losses as agreed to in said insurance policy.

10m) "Plaintiffs" means Lead Plaintiff, Carl Larson and Charles

11 Hooten.12n) "Plaintiffs' Counsel" means Lead Counsel and all other counsel

13who, at the direction and under the supervision of Lead Counsel, represent Class

14Mem bers in the Consolidated Action.

15o) "Plan of Allocation" means the proposed plan of allocation of

16 he N et Settlement Fun d set forth in the N otice.

1 7p) "Preliminary Approval Order" or "Notice Order" means the

18proposed order, substantially in the form attached hereto as Exhibit A, to be entered

19 by the Court preliminarily approving the KPMG Settlement and directing notice be

20provided to the C lass.

21q) "Released Auditor Parties" means KPMG and any and all of its


23"Released Auditor Parties" does not include any Defendants other than KPMG

24r)Released P arties' Claims" means any and a ll claims and causes

25of action of every nature and description, whether known or unknown, whether

26arising under federal, state, common or foreign law, that arise out of or relate in

27any way to the institution, prosecution, or settlement of the claims against KPMG

28

-11-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DD P (FMOx)




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


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)




1 predecessors, successors and assigns, employees, agents and retained professionals

2other than the Underw riter Defendants).

3x) "Summary Notice" means the publication notice, substantially

4n the form a ttached hereto as E xhibit 3 to Exhibit A, to be pu blished as set forth in

5he Preliminary Approval Order.

6y) "Taxes" means: (i) all federal, state and/or local taxes of any

7ind on any income earned by the Settlement Fund; and (ii) the reasonable

8xpenses and costs incurred by Lead Counsel in connection with determining the

9mount of, and paying, any taxes owed by the Settlement Fund (including, without10 imitation, reasonable expenses of tax attorneys and accountants).

1 1z) "Trust" means the New Century Liquidating Trust and12Reorganized New Century W arehouse Corporation.

13aa) "Trustee" means Alan M. Jacobs, as Liquidating Trustee of the

14New Century Liquidating Trust and Plan Administrator of the Reorganized New

15Century Warehouse C orporation.

16bb) "Trustee Litigation" means the adversary proceeding The New

17Century Liquidating Trust and Reorganized New Century Warehouse Corp. by and

18hrough Alan M. Jacobs, Liquidating Trustee and Plan Administrator (In re New

19Century TRS Holdings, Inc.) (Adv. Proc. No. 09-58 8 2 (KJC)) commenced on April

20 11 2009, against Robert C. Cole, Brad A. Morrice, Susan K. Gotschall, as Executor

21of the Estate of Edward F. Gotschall, Marilyn A. Alexander, Harold A. Black,

22Frederic J. Forster, Donald E. Lange, William J. Popejoy, Michael M. Sachs,

23Richard A. Zona, David Einhorn, Patrick Flanagan, Kevin M. Cloyd, Patti M.

24Dodge, Joseph F. Eckroth, Jr., Stergios Theologides, and EG Enterprises, in the

25United States D istrict Court for the D istrict of Delaware.

26cc) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now

27known as J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray

28





1 & Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,

2Morgan S tanley & Co., Inc., and Jefferies & Com pany, Inc.

3dd) "Unknown Claims" means any and all Settled Claims that

4 Plaintiffs or any Class Member does not know or suspect to exist in his, her or its

5avor at the time of the release of the Released Auditor Parties, and any Released

6 Parties' Claims that any Released Auditor Party does not know or suspect to exist

7n his, her or its favor, which if known by him, her or it might have affected his,

8 her or its decision(s) with respect to the KPMG Settlement. With respect to any

9 nd all Settled Claims and Released Parties' Claims, the Parties stipulate and agree

10 that upon the Effective Date, the Plaintiffs and the Released Auditor Parties shall

11expressly waive, and each Class Member shall be deemed to have waived, and by

12operation of the KPMG Judgment shall have expressly waived, any and all

13provisions, rights and benefits conferred by any law of any state or territory of the

14 United States, or principle of common law, that is similar, comparable, or

15 quivalent to Cal. Civ. Code § 154 2, which provides:

1 6general release does not extend to claims which the

17reditor does not know or suspect to exist in his or her

1 8avor at the time of exec uting the release, which if known

19y him or her must have materially affected his or her

20ettlement w ith the debtor.

21Plaintiffs and the Released Auditor Parties acknowledge, and Class Members by

22operation of law shall be deemed to have acknowledged, that the inclusion of

23"Unknown Claims" in the definition of Settled Claims and Released Parties'

24Claims was separately bargained for and was a key element of the KPMG

25Settlement.

26LASS CERTIFICATION

27.he Pa rties stipulate and agree to: (a) certification of the C onsolidated

28Action as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules





1 f Civil Procedure on be half of the Class; (b) appointme nt of Plaintiffs as the Class

2Representatives; and (c) appointment of Lead Counsel as Class Counsel pursuant

3 o Rule 23(g) of the Federal Rules of Civil Procedure. Following execution of this

4 Stipulation, Plaintiffs, with the consent of KPMG, shall apply to the Court for entry

5f the Preliminary Approval Order, which will certify the Consolidated Action to

6 proceed as a class action. The Parties shall have the right to withdraw from the

7agreem ent to stipulate and ag ree to class certification and the appointme nt of Class

8Represen tatives and Class Co unsel in the event that the KP M G Settlement does not

9 become Final.

1 0ELEASE OF CLAIMS

1 1.he obligations incurred pursuant to this Stipulation shall be in full

12and final disposition of the C onsolidated A ction against KPM G; an d shall frilly and

13 inally release any and all Settled Claims as against all Released Auditor Parties

14nd shall also release as against the Plaintiffs and all other Class Me mbe rs any and

15all Released Parties' Claims, and shall also fully and finally release other claims as

16 et forth below.

1 7.ursuant to the KPMG Judgment, upon the Effective Date, Plaintiffs

18and members of the Class shall be deemed by operation of law to have released,

19 waived, discharged and dismissed each and every Settled Claim, and shall forever

20be enjoined from prosecuting any or all Settled Claims, against any Released

21Auditor Party.

22.ursuant to the KPMG Judgment, upon the Effective Date, KPMG

23 nd each of the other Released A uditor Parties, on behalf of themselves, their heirs,

24xecutors, administrators, predecessors, successors and assigns, shall be deem ed b y

25operation of law to have released, waived, discharged and dismissed each and

26every one of the Released Parties' Claims, and shall forever be enjoined from

27prosecuting any or all of the Released Parties' Claims, against Plaintiffs and their

28 mployees, agents and attorneys, and all other Class Members.

-15-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DDP (FMOx)





2and the other Released Auditor Parties hereby release, waive, discharge and

3ismiss, and shall be deemed by this agreement and/or operation of law to forever

4be enjoined from prosecuting any and all claims and causes of action of every

5ature and description, whether known or Unknown Claims against any of the

6Settling Individuals, whether arising under federal, state, common or foreign law,

7 that arise out of or relate in any way to the institution, prosecution, or settlement of

8the claims which were asserted in the Consolidated Action, the Trustee Litigation

9or the Kodiak Litigation, or that arise out of or relate in any way to New Century

10 (including any of its subsidiaries and affiliates), the Trust, the Trustee, the Debtors,

11or the Debtors' Estates, except for (i) an allowed priority claim in the amount of

12$5,000 pursuant to proof of claim no. 2385 filed by Fredric J. Forster in the

13B ankruptcy C ourt against Debtors' Estates and (ii) any and a ll claims arising out of

14or in connection with the defense and subsequent settlement of the S chroeder v.

15N ew Century H oldings, Inc. (Adversary Proceeding No. 07-51598(KJC)) and the

16Philadelphia Indemnity Arbitration, including, but not limited to (a) claims for

17 benefits under any insurance programs or policies to which the Settling Individuals

1 8 re entitled, (b) claims for advancement, indemnification, contribution,

19 reimbursement or other payments whether based on law, the Debtors' certificate or

20articles of incorporation, bylaws, or other contract or agreement ("Claims Against

21Directors And Officers"), provided and conditioned upon KPMG and the other

22Released Auditor Parties receiving substantively reciprocal releases from the

23Settling Individuals.his release does not include claims relating to the

24nforcement of the S ettlement.


26 and the Released Auditor Parties shall be deemed by operation of law to have

2 7 eleased, waived, discharged and dismissed, and shall be forever enjoined from

28prosecuting, each and every claim against the Underwriter Defendants and the





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.


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





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)



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)




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.


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





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.


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,





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)



Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 25 of 37 Page ID#:11042LAIMS ADMINISTRATOR

23. The Claims Administrator shall administer the process of receiving,

3 eviewing and approving or denying Claims under Lead Counsel's supervision and

4ubject to the jurisdiction of the Court. KPMG shall not have any responsibility

5or, involvement in or liability for providing notice to the Class, the administration

6of the KPMG Settlement, the allocation of the Settlement proceeds, or the

7 eviewing or challenging of Claims of members of the Class. The allocation of

8he Net Settlement Fund among Authorized Claimants shall be subject to a Plan of

9Allocation to be proposed by Lead Counsel and approved by the Court. KPMG

10shall take no position with respect to such proposed Plan of Allocation; such Plan

11of Allocation is a matter separate and apart from the proposed Settlement between

12 KPMG and Plaintiffs, and any decision by the Court concerning the Plan of

13Allocation shall not affect the validity or finality of the proposed Settlement.

144. The Claims Administrator shall receive Claims and determine first,

15 whether the Claim is a valid Claim, in whole or part, and second, each Authorized

16 Claimant's pro rata share of the Net Settlement Fund as set forth in the Plan of

17Allocation set forth in the Notice attached hereto as Exhibit 1 to Exhibit A, or in

18such other plan of allocation as the Court approves.

195. The Plan of Allocation proposed in the Notice is not a necessary tern

20of this Stipulation and it is not a condition of this Stipulation that any particular

21plan of allocation be approved by the Court.


23be entitled to receive any distribution from the Net Settlement Fund but will

24otherwise be bound by all of the terns of this Stipulation and KPMG Settlement,

25ncluding the terms of the Judgment to be entered in the Consolidated Action and

26 he releases provided for herein, and will be perm anently barred and en joined from

27bringing any action, claim, or other proceeding of any kind against any Released

28Auditor Party concerning any S ettled C laim.






2 of the Settlement and disbursement of the Net Settlement Fund. Neither KPMG,

3 nor any other Released Auditor Party, shall have any liability, obligation or

4 responsibility whatsoever for the administration of the KPMG Settlement or

5 disbursement of the Net Settlement Fund. Neither KPMC^ nor any other Released

6Aud itor Party, shall be permitted to review, contest or object to any C laim Form o r

7ny decision of the Claims Administrator or Lead Counsel with respect to

8ccepting or rejecting any Claim Form or Claim for payment by a Class Member.

9 Lead Counsel shall have the right, but not the obligation, to waive what they deem

10 to be formal or technical defects in any Claim Forms submitted in the interests of

11

chieving substantial justice.1 28. For purposes of determining the extent, if any, to which a Class


14 conditions shall apply:

1 5aach Class Member shall be required to submit a Claim Form

16 and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,

17 releasing all Released Claims against the Released Auditor Parties and supported

1 8 y such documents as are designated therein, including proof of the Claimant's

19 loss, or such other documents or proof as the Claims Administrator or Lead

2 0 ounsel, in their discretion, may de em acceptable, by the date set by the Court;

2 1.ach Claim Form shall be submitted to and reviewed by the

22 Claims Administrator, under the supervision of Lead Counsel, who shall determine

23 in accordance with this Stipulation the extent, if any, to which each Claim shall be

24 allowed, subject to review by the Court pursuant to subparagraph (d) below;

2 5.laim Forms that do not meet the submission requirements may


27 Administrator shall communicate with the Claimant in writing, to give the

28 Claimant the chance to remedy any curable deficiencies in the Claim Form





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;


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


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)




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.



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.


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)




1 ach of the Parties shall have the right to terminate the KPMG Settlement and this

2Stipulation by providing written notice to the other Party of an election to do so.

3However, any decision with respect to an application for attorneys' fees or

4Litigation Expenses, or with respect to any plan of allocation, shall not be

5onsidered material to the KPMG Settlement and shall not be grounds for

6 ermination.


8ertain number of shares of New Century common stock during the Class Period

9 properly elect to exclude themselves from the Class in accordance with the

10equirements for requesting exclusion provided in the Notice, as specified in a11separate supplemental agreement among the Parties (the "Supplemental

12Agreement"), KPMG shall have the option to terminate this KPMG Settlement and

13Stipulation.

146, Lead Counsel and KPMG's counsel shall request jointly that the

15deadline for submitting exclusions from the Class be at least twenty-one (21) days

16prior to the Final Approval Hearing. Copies of all timely requests for exclusion

1 7 rom the C lass received by the Claims Ad ministrator (or other person designated to

18 eceive exclusion requests) shall be provided to Lead Counsel and KPMG's

19 counsel no later than fifteen (15) days prior to the Final Approval Hearing. If the

20hreshold stated in the Suppleme ntal Agreemen t is reached, KPM G shall have until

215:00 p.m. PDT of the seventh day before the Final Approval Hearing to inform

22Lead Counsel, in writing, that it elects to exercise its option to terminate the

23KPMG Settlement and this Stipulation. Lead Counsel shall have the right to

24communicate with the holders of such shares and, if a sufficient number of them

25withdraw in writing their requests for exclusion such that the total number of

26shares purchased during the Class Period represented by the remaining "opt outs"

27 epresents less than the threshold, the notice of termination shall be deemed

28withdrawn.

-27-PMG STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FMOx)




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


18aken pursuant to it:


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;


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





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;


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


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


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


20without merit or that damages recoverable under the Complaint would not have

21 xceeded the KPM G Settlement Amount; and


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





1other theory of claim preclusion or issue preclusion or similar defense or

2ounterclaim.

3ISCELLANEOUS PROVISIONS


5eference as though fully set forth herein.

61. KPMG warrants that, as to the payments made by or on behalf of it, at

7 he time of such payment, it was not insolvent, nor did nor will the payment

8 required to be made by or on behalf of it render it insolvent, within the meaning of

9and/or for the purposes of the United States Bankruptcy Code, including §§ 101

10 nd 547 thereof. This representation is made by K PM G and n ot by its counsel.

1 12. If a case is commenced in respect of KPMG (or any insurance carrier

12contributing to the KPMG Settlement Amount) under Title 11 of the United States

13 Code (Bankruptcy), or a trustee, receiver, conservator, or other fiduciary is

14appointed under any similar law, and in the event of the entry of a final order of a

15 ourt of comp etent jurisdiction determining the transfer of money to the S ettleme nt

16 Fund or any portion thereof by or on behalf of KPMG to be a preference, voidable

17 ransfer, fraudulent transfer or similar transaction and any portion thereof is

18 equired to be returned, and such amount is not promptly deposited to the

1 9 ettlement Fund by others, then, at the election of Lead Counsel, the Parties shall

20ointly move the Court to vacate and set aside the releases given and the Judgment

21entered in favor of KPMG and the other Released Auditor Parties pursuant to this

22Stipulation, which releases and Judgment shall be null and void; the Parties shall

23be restored to their respective positions in the litigation immediately prior to May

245, 2010; and any cash amounts in the Settlement Fund shall be returned as

25provided in Paragraph 37 above.

263. The Parties intend this KPMG Settlement to be a final and complete

27 esolution of all disputes asserted or which could be asserted by the Plaintiffs, any

28other Class Members and their attorneys against all Released Auditor Parties with





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.






2re not meant to have legal effect.

38. The administration and consummation of this KPMG Settlement as

4mbodied in this Stipulation shall be under the authority of the Court, and the

5Court shall retain jurisdiction for the purpose of entering orders providing for

6wards of attorneys' fees and Litigation Expenses to Lead Counsel and enforcing

7he terms of this Stipulation.


9 Party shall not be deemed a waiver of any other prior or subsequent breach of this

10Stipulation.

1 10. This Stipulation and its exhibits constitute the entire agreement among

12he Parties hereto concerning this KPMG Settlement, and no representations,

13warranties, or inducements have been made by any Party hereto concerning this

14 Stipulation and its exhibits other than those contained and memorialized in such

15documents.

161. This Stipulation may be executed in one or more original and/or faxed

17counterparts. All executed counterparts and each of them shall be deemed to be

18one and the same instrument provided that counsel for the signatories of this

19 Stipulation shall exchange among themselves copies of original signed

20 ounterparts.

212. This Stipulation shall be binding upon, and inure to the benefit of, the

22uccessors and a ssigns of the Parties hereto.

233. The construction, interpretation, operation, effect and validity of this

24Stipulation, and all documents necessary to effectuate it, shall be governed by the

25nternal laws of the State of California without regard to conflicts of laws, except

26 o the extent that federal law requires that federal law govern.

274. This Stipulation shall not be construed more strictly against one Party

28han another merely by virtue of the fact that it, or any part of it, may have been

-32-PMG STIPULATION OF SETTLEMENTCase No. 2:07-ev-0093 1 -DD P (FMOx)




1 prepared by counsel for one of the Parties, it being recognized that it is the result of

2rm's-length negotiations between the Parties and all Parties have contributed

3 substantially and materially to the preparation of this Stipulation.

45. All counsel and any other person executing this Stipulation and any of

5he exhibits hereto, or any related KPMG Settlement documents, warrant and

6 represent that they have the full authority to do so and that they have the authority

7 toake appropriate action required or permitted to be taken pursuant to the

8 Stipulation to effectuate its terms.

96. Counsel for the Parties agree to cooperate fully with one another in

10seeking C ourt approval of the Preliminary App roval Order, the Stipulation and this

11 KPMG Settlement, and to use best efforts to promptly agree upon and execute all

12such other documentation as may be reasonably required to obtain final approval

13by the C ourt of the Settlement.

147. All of the exhibits to this Stipulation of Settlement are material and

15 integral parts hereof and are fully incorporated herein by this reference.

1 68. This Stipulation of Settlement shall be binding upon and inure to the

1 7 enefit of the successors and assigns of the Parties.

189, The Parties and their respective counsel also agree to keep the

19 nformation disclosed to them in connection with mediation and settlement

20negotiations confidential unless required to publicly disclose such information by

21applicable law, in which case written notice as to the content of any public

22communication shall be provided to the other Party at least three (3) business days

23 prior to disclosure. In the event either of the Parties or their counsel wishes to

24make a voluntary public disclosure regarding the Settlement, its terms, conditions,

25or obligations (other than the fact that this case was resolved by Settlement), such

26Party or counse l shall provide at least three (3) business days' adva nce notice to the

27other Party as to the content of any such public communication. Notwithstanding

28 the foregoing, nothing herein shall preclude Plaintiffs' Counsel or Plaintiffs from





1publicly filing papers, and making statements, in Court in connection with

2 reliminary and final approval of the KPMG Settlement,


4 Stipulation, such notice shall be in writing and shall be deemed to havebeen duly

5 given upon receipt of hand delivery or facsimile transmission with confirmation of

6 receipt. Notice required to be provided to any Party shall be provided to that

7 Party's counsel at the address listed below.

8 DATED AS OF: July 23, 2010ERNSTEIN LITOWITZ BERGER

9GROSSMANN LLP

1 011

V • ORE J. GRAZIANO12

13LAIR A. NICHOL ASELIZAB ETH LIN

14IKI L. MENDOZABENJAMIN GALDSTONTAKEO A. KELLAR

15248 1 H igh Bluff Drive, Suite 300

16an Dieggo CA 92130Tel: 85 793-0070

1 7ax: (8583 793-0323-and-

1 8ALVATORE J . GRAZIANO

LAUREN A. MCMILLEN1 928 5 Avenue of the Americas

New York, NY 1001 920el:(212,) 554-1400

Fax: (212) 554-1444

21URRAY, FRANK & SAILER LLP

22ARVIN L. FRANK275 Madison Avenue, Suite 801

23ew York, NY 1 0016Tel:212 682-1818

24ax: (212 682-1892

25

26

27

28

-34-CPMG STIPULATION OF SETTLEMENT-Case No. 2,07-cv-00931-DD P (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484-5 Filed 07/30/10 Page 37 of 37 Page ID^. f..l:11054

1ead Counsel for Lead Plaintiff The NewY ork S tate Teachers' R etirem ent Sy stem and

2he Class, and Plaintiffs Carl Larson andCharles Hooten

3

4SIDLEY ULP

5

6"Amid

7IC , ELF. RUGEN555alifornia St. Suite 2000

8 San Francisco, CX 94104-1 715Tel; 415-772-1292

9

1 0ttorneys for Defendant KPMG LLP

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-35-PMG STIPULATION OF SETTLEMENT




Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 1 of 114 Page ID#:11055EXHIBIT A

TO KPMG STIPULATION




1 BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)

3 2

lairblbglaw.com)LIZAETH LIN (Bar No. 174663)

(elizabethl^blbglaw.com )4 NIKI L. MEEN DOZA (Bar No. 214646)

nikima blbglaw.com)5 ENJAlÎIN GALDSTON (Bar No. 211114)benkblbglaw.com)

6 A O A. KELLAR (Bar No. 234470)(takeokffighlb law.com)

7481 luff Drive, Suite 300San Diego, CA 92130

8 Tel: (858) 793-0070Fax: (858) 793-0323

9and-SALVATO

( c^RE J. GRAZI )

LNO10

sAUREN . MC1MILLEN

1 1 [email protected])285 Avenue of the Ame ricas12 New York, NY 10019

Tel: 212 554-140013 Fax: 212 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State Teachers' Retirement System

15

16



19

IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)20Lead Case)

21



24XHIBIT A



SETTLEMENTS AND PROVIDING FOR NOTICECase No. 2:07-cv-0093 1 -DDP (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 3 of 114 Page ID#:11057HEREAS, Lead Plaintiff New York State Teachers' Retirement System2 ("Lead Plaintiff'), and Plaintiffs Carl Larson and Charles Hooten, on behalf of


4 "Plaintiffs") and the Individual Defendants,] the Underwriter Defendants, 2 and








12


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.



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







24 And Directors (the "Global Officer And Director Settlement" or "Global Officer

25 And Director Stipulation"). The Global Officer And Director Stipulation contains


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



Case No. 2:07-ev-00931-DDP (FMO x)







4nnexed thereto;5OW, THEREFORE, IT IS HEREBY O RDERED:

6.his order (the "Notice Order" or "Preliminary Approval Order")




10 inconsistencies between the Stipulations and the Notice of Pendency of Class

11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for



14.he C ourt hereby preliminarily approves the Se ttleme nts as being fair,


16 CLASS CERTIFICATION

17.he Court hereby certif ies, pursuant to Rules 23(a) and 23(b)(3) of the


19ll persons and entities who purchased or otherwise acquired NewCentury common stock, New Century Series A Preferred Stock, New

20entury Series B Preferred Stock, and/or New Century call optionsand/or who sold New Century put options, during the time period

21rom May 5, 2005, through and including March 13, 2007, either inthe Offerings, pursuant to a registration statement, or in the market,

22nd who, upon disclosure of certain facts alleged in the Complaint,were injured thereby. Excluded from the Class are (a) Defendants;b

23embers of the immediate families of the Individual Defendants; ^c)the subsidiaries and affiliates of Defendants; (d) any person or entity

24ho was a partner, executive officer, director or controllingperson ofNew Centu (including any of its subsidiaries or affiliate or of any

25efendant; 7e) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives heirs, successors and assigns

26f any such excluded party. Also excluded from the Class are anypersons who exclude themselves by filing a request for exclusion in

27ccordance with the requirements set forth in the N otice.

28


Case No. 2:07-ev-0093 1 -DDP (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 5 of 114 Page ID#:11059.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



6 System ("NYSTRS") and Plaintiffs Carl Larson and Charles Hooten are typical of





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






18.ithin five (5) business days after entry of this Order, the


20 Release (the "Claim Form"), annexed hereto respectively as Exhibits 1 and 2, to be






26.summary notice ("Summary Notice"), annexed hereto as




Case No. 2:07-ev-00931-DD P (FMOx)






3.he Court approves the form of Notice and Summary Notice






9 Linder the circumstances.


















































26 that Class Member (i) has served written objections, including the basis therefor, as








1 his, her or its position upon the following counsel such that it is received on or



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

















22 Member submits a Claim Form.




26 Counsel.




Case No. 2:07-ev-00931-DD P (FMOx)






3 CLAIMS PROCESS

46.n order to be entitled to participate in the Settlements, a Class











1 58. As set forth in the Stipulations, Defendants and their related parties









24 Hearing. To be valid, each request for exclusion must (1) state the name and


26 entity requests exclusion from the Class in In re New Century, 07-CV-0093 I -DDP




Case No, 2:07-ev-00931-DD P (FMOx)





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



























28










5 Settlements:














19 Class Members;




23

24 4 Herein "Released Parties" includes: (i) the Released Officers And Directors (as



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).
















I I or would have been recovered after trial;

12.hall not be construed against Plaintiffs or any other Class












24 1\

25 \\

26 \\

27

28






1he Court retains jurisdiction of this Consolidated Action to consider all



4T IS SO ORDERED .

5 DATED:HE HONORA BLE DEAN D. PREGERSON7NITED STATES DISTRICT CO URT JUDGE

8

9

10

1 1

12

13

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15

16

17

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24

25

26

27

28






EXHIBIT A-1 TO EXHIBIT A

TO KPMG STIPULATION






N1ZAWETairblbglaw.com)

3LIN (Bar No. 174663)elizabethlblbglaw.com

4 NIKI L. M NDOZA (Bar No. 214646)

UNJAM1kimlbglaw.com)5GALDS TON (Bar No. 211114)benblbglaw.com6I. < -Bar No. 234470)

(takeokfflg.,hblb law.com )481 luff Drive, Suite 300

San Diego, CA 921308 Tel:(858) 793-0070

Fax: (858) 793-03239and-

SALVATO RE J. GRAZIANO10 (sgraziano(a^blbglaw.com )

LAUREN A. MCMILLEN

1 1 [email protected])285 Avenue of the Ame ricas12 New York, NY 10019

Tel: 212 554-140013 Fax: 212 554-1444


15

1 6


1 8ENTRA L DISTRICT OF CALIFORNIA

19 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)(Lead Case)

20


22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND2 3OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT

24F LITIGATION EXPENSES

25


27

28

NOTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931



Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 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


4Consolidated Action") if, during the period from May 5, 2005, through and




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



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.


Case No. 07-00931




1 124 9 827 9 088.00.he terms of the Settlements are set forth in the

2Stipulations.4


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").


Case No. 07-00931





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



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").


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


Case No. 07-00931




1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any



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


8 resulted from the disclosure of any information that Plaintiffs allege was

9wrongfully withheld.


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


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





22per Put Option.

23.dentification of Attorneys' Representatives: Lead P laintiff and the



26 egarding the Settlements should be directed to M r. Graziano at Bernstein Litowitz


28 866) 648-2524, [email protected] .


Case No. 07-00931




1

2O U R L E G A L R I G HT S A N D O P T I O N S I N T H E S E T T L E M E N T S :

3S U B M I T A C L A I M F O R M N Ohis is the only way to get a payment. If

4LATER THAN [INSERT]ou wish to obtain a payment as a Class

5ember, you will need to file a Claim

6orm (which is included with this Notice)

7postmarked no later than [INSERT].

8

E X C L U D E Y O U R S E L F F R O Met no payment. This is the only option9

THE CLASS BY SUBMITTING A that allows you to ever be part of any1 0

WRITTEN REQUEST FORther lawsuit against any of the defendants


RECEIVEDNO LATER THANlaims that were, or could have been,13

[INSERT].sserted in this case.14

15O B J E C T T O T H Erite to the Court and explain why you

16 SETTLEMENTS BYo not like the Settlements, the proposed

17SUBMITTING WRITTENlan of Allocation, or the request for

18OBJECTIONS SO THAT THEYttorneys' fees and reimbursement of

19A RE RECEIVED NO LATERxpenses. You cannot object to the

20THAN [INSERT].ettlements unless you are a Class

21ember and do not e xclude yourself.

22GO TO THE HEARING ONsk to speak in C ourt about the fairness of

23[INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of


25T O A P P E A R S O T H A T I T I Sees and reimbursement of expenses.

26RECEIVEDNO LATER THAN

27 [INSERT].

28

-5 -OTICE OF PENDENCY OF CLASS ACT ION

Case No. 07-00931




1 DO NOTHINGet no payment. Remain a Class

2 Member. Give up your rights.


5

6Why Did I Get This Notice?age

7Wh at Is This Case About? What Has Happe ned So Far?age

8How D o I Know If I Am A ffected By The Settlements?age

9Wh at Are The Le ad Plaintiff 's Reasons For The Settlements?age10

Wh at Might Happen If There W ere No Settlements?age

11

How M uch Will My Payment Be?age12

13

What Rights Am I Giving Up By A greeing To The Sett lements?age

14Wh at Payment Are The A ttorneys For The Class Seeking?

15 How Will The Lawyers Be Paid?age

16How D o I Participate In The Settlements? Wh at Do I Nee d To Do?age

17 What If I Do Not Want To Be A Part Of The Settlements?

1 8 How Do I Exclude Myself?ag e

19Whe n And W here Will The Court Decide Whe ther To Approve


21 May I Speak At The Hearing If I Don't Like The Settlements?age

22 What If I Bought Shares On Someone Else's Behalf?age

23 Can I See The Court File? Whom Should I Contact If I Have Questions? Page

24

WH Y DID I GET THIS NOTICE?25

26

6.his Notice is being sent to you pursuant to an Order of the United

27

States District Court for the Central District of California (the "Court") because

28

you or someone in your family may have purchased or otherwise acquired or sold

-6-OTICE OF PENDENCY OF CLASS ACT ION

Case No. 07-00931





2you this Notice because, as a potential Class Member, you have a right to know



5generally affect your legal rights. If the Court approves the Settlements, a claims

6dministrator selected by Lead Plaintiff and approved by the Court, will make

7payme nts pursuant to the Settlem ents after any objections and appeals are resolved.



10 commonly known as the class or the class members. In this Consolidated Action,






16 plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class



19efficiency. Once the class is certified, the Court must resolve all issues on behalf


21 rom the class. (For more information on excluding yourself from the Class, please

22ead "What If I Do Not Want To Be A Part Of The Settlements? How Do I23Exclude M yself?" located below.)

24.he Court in charge of this case is the United States District Court for

25he Central District of California, and the case is known as In re New Century. The





Case No. 07-00931




1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual

2Defendants, the Underwriter Defendants and KPMG New Century was not named

3as a defendant because New Century has filed a petition for voluntary bankruptcy


5wohasfiledsuchapeitio

6.his Notice explains the lawsuit, the Settlements, your legal rights,


8purpose of this Notice is to inform you of this case, that it is a class action, how

9you might be affected, and how to exclude yourself from the Class if you wish to

10 do so. It also is being sent to inform you of the terms of the proposed Settlements,




14 ees and reimbursement of Litigation Expenses (the "Settlement Hearing").

150. The Settlement Hearing will be held on [INSERT] at [INSERT],

16 before the H onorable De an D. Pregerson, at the Unite d States District Court for the

17Central District of California, 312 North Spring S treet, Courtroom 3, Los A ngeles,

18California 90012 to determine:

1 9.hethe r this Consolidated A ction should be finally certif ied, for



22lass;


24dequate and should be approved by th e Court;

25.hether the claims against defendants and the other released

26arties should be dismissed with prejudice as set forth in the

27tipulations;

28


Case No. 07-00931





2nd should be approved by the Court; and



5y the Court.

61. This Notice does not express any opinion by the Court concerning the

7 merits of any claim in the Consolidated Action, and the Court still has to decide

8 whether to approve the Settlements. If the Court approves the Settlements,

9payments to A uthorized Claimants will be made after any appeals are resolved, and

10after the completion of all claims processing. Please be patient.

1 1HAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Begiluling on or about February 8, 2007, securities class action

14 complaints were filed in the United States District Court for the Central District of

15 California and the actions were consolidated by Order dated June 26, 2007.

163. On April 2, 2007, New Century and other Debtors filed for

17bankruptcy in the United States Bankruptcy Court for the District of Delaware

18"Bankruptcy Court") under Chapter 11 of Title 11 of the United States Code .

194. By Order dated June 26, 2007, the Court appointed the New York


21and approved its selection of Bernstein Litowitz Berger & Grossmann LLP as Lead

22Counsel for the Class.


24Action C omplaint ("Consolidated Com plaint") asserting claims against Defend ants


26Act of 1933 ("Securitie s Act") on behalf of the C lass.


28 the Consolidated Com plaint, which Plaintiffs opposed on De cembe r 14, 2007 .


Case No. 07-00931





2ismiss with leave to amend the complaint.



5ursuant to the Se curities Act and the Exchange A ct,


7Am ended Consolidated Class Action Com plaint (the "C omplaint"), alleging claims

8gainst Defendants pursuant to the Securities Act and the Exchange Act.


10Complaint, which Plaintiffs opposed on July 7 , 2008.

1 11. Following a hearing, by Order dated December 3, 2008, the Court

12 ubstantially denied Defendants' motions to dismiss.

1 32. Beginning on January 26, 2009, Defendants answered the Complaint.

1 43. The Parties began discovery in or about April 2009, including filing


16 discovery requests and responses, and producing voluminous documents.


18 judgment, which Plaintiffs opposed on M arch 15, 2010.

1 95. The Parties have participated in mediation sessions and additional


21were able to reach agreeme nts in principle to settle this Consolidated Action on the



24entitled Kodiak W arehouse LLC, et al. a Brad A. Morrice, et al. (Case No. 08-



27adversary proceed ing entitled The New Century Liquidating Trust and Reorganized

28 New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating


Case No. 07-00931




1Trustee and Plan Administrator v Robert K. Cole et al. (In re New Century TRS




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


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





1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT

2YOU ARE A CLASS MEMBER OR THAT YOU ARE ENTITLED TO


4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST


6THAN [INSERT].

7HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?898. Lead Plaintiff and Lead Counsel believe that the claims asserted

10 against Defendants have merit. Lead Plaintiff and Lead Counsel recognize,


12their claims against Defe ndants through trial and appeals, as we ll as the difficulties


14have taken into account the possibility that the claims asserted in the Complaint


16 summary judgment, and have considered issues that would have been decided by a


18Defendants acted with an intent to mislead investors, whether the alleged

19misrepresentations or omissions we re material to investors, whethe r all of the Class






25successful resolution at trial and on appeal.



28 Settlements are fair, reasonable and adequate, and in the best interests of the Class.


Case No. 07-00931




1 Lead Plaintiff and Lead Counsel believe that the Settlements provide a substantial


3 described in this Notice), as compared to the risk that the claims in the Complaint

4would produce a similar, smaller, or no recovery after summary judgment, trial and

5ppeals, possibly years in the future.


7 Complaint and deny having engaged in any wrongdoing or violation of law of any

8ind wh atsoever. Defe ndants have agreed to the Se ttleme nts solely to eliminate the


10be construed as an admission of Defendants' wrongdoing.

1 1HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?



15 members of the Class would recover anything from Defendants. Also, if

16Defendants were successful in proving any of their defenses, the members of the

17Class likely would recover substantially less than the amount provided in the

18Settlem ents, or nothing at all.

1 9OW M UCH WILL MY PAYMENT BE?201 THE PROPOSED PLAN OF ALLOCATION: GENERAL PROVISIONS


23 have agreed to pay or cause to be paid collectively $65,077,088.00; the


25KPM G h as agreed to pay $44,750,000.00. Collectively, Defendants have agreed to

26pay a total amount of $124,827 ,088.00 in cash.




Case No. 07-00931




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


28ubject to appellate revie w).


Case No. 07-00931




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.


23proceeds of the Settleme nts to those Class Mem bers who suffered econom ic losses


25and indu stry factors or Company-spe cific factors not related to the alleged wrongful


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.


Case No. 07-00931




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


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


10Preferred S tock, Series B Prefe rred Stock, or Put/Call Options as of the close of the


12 transaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made


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


19calculations relating to the 90-day look back rules of the Private Securities




232007, to June 10, 2007.5


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,




Case No. 07-00931





2 ddressed as follows:3n re Ne w C entury Securities Litigation Settlement4/o Analytics, Inc. Claims Adm inistrator


6

41. Unless otherwise ordered by the Court, any Class Member who fails7



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



Individual Defendants and KPMG, net of Court-approved fees and expenses).18


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




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


and ending on June 10, 2007 .28


Case No. 07-00931




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


5urchased or sold. This is because claims against the Underwriter Defendants


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




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


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



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



Case No. 07-00931




1 Securities at different times during the Class Period attributable to Defendants'


3laintiff's damages consultant. (Based on the opinions of this consultant, Lead4Counsel assumed, for purposes of determining the Recognized Loss, that there



7 adequately allege and prove liability for that entire period);


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


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


1 9 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.


24in order to be eligible for a recovery in the Settlement; that is, a New Century


26from May 5, 2005 through February 7, 2007, must be held until or beyond




Case No. 07-00931




1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,


3 Century Security purchased or otherwise acquired on or after March 5, 2007, must

4e held until March 13, 2007 5 the last day of the Class Period. If you did not hold

5a New Century Security referred to above which was purchased during the three

6 different parts of the Class Period described above and below (see the artificial

7nflation Tables annexed hereto) for both the New Century Com mon Stock and the

8 New Century Preferred Stock through at least one of the three corrective disclosure

9 dates indicated, the Recognized Loss per share is $0. The Recognized Loss for

10hese transactions will be calculated as zero because it has bee n dete rmined that the

11artificial inflation between each disclosure and arising from the circumstances

12underlying the allegations of Plaintiffs' Complaint w as constant.

13 II. ADDITIONAL CONSIDERATIONS INCALCULATION OF RECOGN IZED LOSS

14LAIMS FOR NEW CENTURY SECURITIES


16New Century Securities that is within the Class Period, listed in the Proof of Claim

17 orm, and for which adequate docume ntation is provided.

18.uidelines Applicable to theCalculations o} All Claims

1 9


21

New Century Securities, all purchases and sales of each type of security shall be

22

matched on a First-In-First-Out ("FIFO") basis by type. Class Period sales will be

23

matched first against any New Century Securities held at the beginning of the

24

Class Period, and then against purchases in chronological order, beginning w ith the

25

earliest purchase made during the Class Period. Purchases and sales of New

26

Century Securities shall be deemed to have occurred on the "contract" or "trade"

27

date as opposed to the "settleme nt" or "payment" date. Th e receipt or grant by gift,

28

devise or operation of law of New Century Securities during the C lass Period shall


Case No. 07-00931




1alculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be

2deemed an assignment of any claim relating to the purchase of such New Century

3Securities unless specifically provided in the instalment of gift or assignment.

4Similarly, the covering purchase of a short sale shall not be deemed a purchase or

5 sale of New Century Securities for the calculation of an Authorized Claimant's



8hare of the Underwriter Allotment and/or Individual-Auditor Allotment based on

9 his, her or its Recognized Loss Claim, as compared to the total Recognized Loss

10 Claims of all Authorized Claimants for their respective class of Securities. Each

11 Authorized Claimant shall be paid an amount determined by multiplying the total

12n the Unde rwriter Allotment and/or Individual-Auditor Allotment for their class of




16 securities. Each Authorized Claimant will receive a pro rata share of the

17 Underwriter Allotment and/or Individual-Auditor Allotment based on his, her or its


1 91. The amount of a Class Member's Recognized Loss as computed




23computation is only a method to weigh Class Members' claims against one another.





28whethe r to opt-out of the Settlements.


Case No. 07-00931






3 New Century Security or suffered an overall market loss, the Claims Administrator

4shall determine the difference between (i) the Total Purchase Amount paid for all

5urchases of that individual New Century Security purchased or acquired during

6 the Class Period, (ii) any premiums received from the sale of Put Options, and (iii)

7he sum of the Sales Proceeds received for all of that individual New Century

8ecurity during the Class Period and the Holding Value ascribed to that security for

9 all Securities still held on June 10, 2010. The Holding Value shall be $0.87 per


11per share for Series B Preferred Stock. This difference will be deemed a


13 individual New Century Security during the Class Period.




17 particular security. In the case of New Century Common Stock and Put and Call

18Options on that stock, gains and losses on both the stock and the Options will be

19combined and thereafter netted against each other. However, in all other cases,



22Claim (as calculated unde r this Plan) on Ne w Ce ntury Common Stock/Options will

23 not offset his, her or its Recognized Loss Claim (as calculated under this Plan) on

24any issue of New C entury Preferred Stock.

255. Class Members who do not submit acceptable Proofs of Claim will

26 not share in the settlement proceeds. Class Members who do not submit a request


28bound by the Settlements and the judgme nts of the Court.


Case No. 07-00931






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.


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,



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.



25 rom the Individual-Auditor A llotment.

26.ecognized Loss Calculations


28 Settlement as follows:


Case No. 07-00931




1.alculation of Recognize d Loss for NewCentury Common Stock Purchases

2


Stock sh ares shall be as follows:4

62. For shares purchased on or between May 5, 2005, through February 7,5

2007 , the following claims for dam ages shall be allowed:6


7laims for damages shall be allowe d;gb) For each share sold on or between February 8, 2007, and through March

13 1 2007, the allowed damages shall be the inflation per share at the time of

9urchase for the applicable date of purchase as set forth in Table 2, annexed


and

1 1


132, 2007, the fo llowing claims for dam ages shall be allowed:


for damage s shall be allowed;1 5b) For each share sold on or between March 5, 2007, and March 13, 2007,



ess the inflation per share at the time of sale as set forth in Table 2; and18



(a) For each share sold on or before March 12, 2007, no Recognized Claims21or damage s shall be allowed;



ate of purchase as set forth in Table 2, annexe d here to.

24


26Century Com mon Stock claims, the Recognized Loss Claims for damages for such

27shares purchased during the Class Period shall be further limited (as provided for

28under the PSL RA) to the smallest of the following:


Case No. 07-00931



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


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


9 Preferred Stock shares shall be as follows:


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;




24


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


Case No. 07-00931






date of purchase as set forth in Table 4, annexe d here to.30. The Recognized Loss Claims for damages for such Series A Preferred


6under the PSLRA) to the smallest of the following:

7 investm ent loss) if sold on or before June 10, 2007;8b) the difference between the price paid (excluding all fees and commissions)


betwe en March 13, 2007 and June 10, 2007; and10c) the difference between the price per share paid and $8.02 per share if the

1 1hares were sold after June 10, 2007, or were h eld until the current date.

12.alculation of Recognize d Lossfor New C entury Series B Preferred Stock

1 3urchases


15Preferred Stock shares shall be as follows:

162. For shares purchased on or between May 5, 2005, through February 7,17 2007 , the following claims for dam ages shall be allowed:

18a) For each share sold on or before February 7, 2007, no Recognized

Claims for damage s shall be allowed;1 9b) For each share sold on or between February 8, 2007, and through

20arch 13, 2007, the allowed damages shall be the inflation per share atthe time of purchase for the applicable date of purchase as set forth in

21able 5, annexed hereto, less the inflation per share at the time of sale

22s set forth in Table 5; and


242007 , the following claims for damages shall be allowed:

2 5a) For each share sold on or before March 2, 2007, no Recognized Claims

26or damage s shall be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,


2 8urchase for the applicable date of purchase as set forth in Table 5,


Case No. 07-00931




1nnexed hereto, less the inflation per share at the time of sale as set

2orth in Table 5; and


42007 , the following claims for dam ages shall be allowed:


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


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)


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


23


24

2005, through and including M arch 13, 2007 ("New C entury Put Options").


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


Case No. 07-00931




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


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


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-





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,




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


Case No. 07-00931




1 the previous 45-day stock returns, which are then annualized using a 252-trading

2ay approach.

3



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,



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


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



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,



28ptions multiplied by the lesser of-


Case No. 07-00931




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


4rice per Option ($0.00 if the Call Option expired w orthless).


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


price per Option ($0.00 if the Call Option expired w orthless).

11


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


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


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



24 Table 2 for Put Options subsequently purchased between May 5, 2005, and March


26inflation per share set forth in the annexed Table 2 for Put Options initially sold


28dividends is implemented. Annualized volatility estimates are obtained using the


Case No. 07-00931




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)


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,


1 0ultiplied by the lesser of:

1 11) the difference, multiplied by minus one, between Artificial



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).



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


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-


Case No. 07-00931







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


1 4ut Option expired w orthless).


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.





25will be made.


27particular security shall be exclusive of all commissions, taxes, fees and charges.

28


Case No. 07-00931



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.


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.


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?


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.


Case No. 07-00931





2members of the Class will be deemed by operation of law to have released, waiv

3ischarged and dismissed each and every Settled Class Claim as against each and

4every Released Officer And Director and the Insurance Carriers (as defined in the


6 enjoined from prosecuting any or all of the Settled Class Claims against each and


8Claim" in this paragraph means any and all claims and causes of action of every

9 nature and description, whether known or Unknown Claims, whether arising under

10federal, state, common or foreign law, that Plaintiffs or any other member of the

11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any

12forum that arise out of or are based upon the allegations, transactions, facts,

13matters or occurrences, representations or om issions involved, set forth, or referred

14 to in the C onsolidated Action, and that arise out of or relate to the purchase of N ew


16 Series B Preferred Stock, and/or New Century Call Options and/or the sale of New


18include claims relating to the enforcement of the Settlement. "Released Officers

19 And Directors" in this paragraph means (1) the Individual Defendants, David






25included in the definition of "Assured" or "Insured" as defined in the Policies

26(defined in the Global Officer And Director Stipulation) and any and all of their

27respective heirs, executors, administrators, predecessors, successors and assigns,

28


Case No. 07-00931




1mployees, agents and retained professionals (other than KPMG or the

2Underwriter D efendants).


4 lass will be de eme d by operation of law to have released, waived, discharged and

5 dismissed each and every Settled Claim, and shall forever be enjoined from

6 prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled


8ature and description, whe ther known or Unknow n, whether arising under federal,


10asserted in the Complaint, or (b) could have asserted in any forum that arise out of

11or are based upon the allegations, transactions, facts, matters or occurrences,

12 representations or omissions involved, set forth, or referred to in the Complaint,

13and that arise out of or relate to the purchase of Ne w Ce ntury Common Stock, Ne w


15 New Century Call Options and/or the sale of New Century Put Options during the


17 of the Settlements. "Released Auditor Party" means KPMG and any and all of its

18 partners, principals, officers, directors, employees, agents, attorneys and affiliates.

19 "Released Auditor Parties" does not include any Defendants other than KPMG.








27"Settled Claim" in this paragraph means any and all claims and causes of action of

28every nature and description, whether known or Unknown, whether arising under


Case No. 07-00931




1ederal, state, common or foreign law, that Plaintiffs or any other member of the


3rise out of or are based upon the allegations, transactions, facts, matters or

4 occurrences, representations or omissions involved, set forth, or referred to in the

5Com plaint, and that arise out of or relate to the purchase of N ew C entury Comm on


7Stock, and/or New Century Call Options and/or the sale of New Century Put


9 to the enforcement of the Settlements. "Released Underwriter Party" means the




13employees, agents and attorneys. "Released Underwriter Parties" does not include

14any Defendants other than the Underwriter Defendants.

150. "Released Parties" means the Released Officers And Directors, the

16 Released Auditor Parties, and the Released Underwriter Parties.

171. "Unknown Claims" means any and all claims that Lead Plaintiff or


19 time of the release of the Released Parties, which if known by him, her or it might


21respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and


23 Judgment shall have expressly waived, any and all provisions, rights and benefits


25common law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,

26which provides:




Case No. 07-00931



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.




6 nd was a key e lement of the Settlements.




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?



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


25ame time, Lead Counsel also intends to apply for the reimbursement of Litigation


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


Case No. 07-00931




1 Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for

2 reimbursement of their reasonable costs and expenses (including lost wages)


4 amount of the awards.

5OW DO I PARTICIPATE IN THE SETTLEMENTS?

6HAT DO I NEED TO DO?785. If you purchased or otherwise acquired New Century Common Stock,


10and/or New Century Call Options and/or sold New Century Put Options, during the

11 period from May 5, 2005, through and including March 13, 2007, either in the

12Offerings, pursuant to a registration statement, or in the market, and were injured

13 upon disclosure of certain facts alleged in the Complaint, and you are not excluded



16Settlements if approved by the Court, and by any judgme nt or determination of the



19Settlements. A Claim Form is included with this Notice, or you may go to the

20website maintained by the Claims Administrator for the Settlements to download a

21copy of the Claim Form or request that a Claim Form be mailed to you. The

22website is www.newee ntuT-ysettlement.com . You may also request a Claim Form

23by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be

24 downloaded from Lead Counsel's website at www.blbglaw.com. Those who

25exclude themselves from the Class, and those who do not submit timely and valid

26Claim Forms wi th adequate supporting documentation, will not be e ntitled to share


28n, New Ce ntury Securities, as they may be ne eded to document your Claim.

-38-OTICE OF PENDENCY OF CLASS ACT IONCase No. 07-00931






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


6section entitled, "When and Where Will the Court Decide Whether to Approve the

7ettleme nts?," below.


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


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



26Settlement, c/o A nalytics, Inc., Claims A dministrator, P.O. Box 2004, Chanhassen,


28 [INSERT]. You will not be able to exclude yourself from the Class after that date.


Case No. 07-00931




1 Each request for exclusion must (i) state the name and address of the person or


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




11instructions for exclusion even if you have pending, or later file, another lawsuit,12arbitration, or other procee ding relating to any Settled C laims.


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


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



27proposed Plan of Allocation, and/or the application for attorneys' fees and

28reimbursement of Litigation Expenses, you do not need to attend the Settlement


Case No, 07-00931




1earing. You can object to or participate in the Settlements without attending the

2 ettlement Hearing.304. The Settlement Hearing will be held on [INSERT] before the



6 California 90012. The Court reserves the right to approve the Settlements, the Plan


8Expenses at or after the Settlement Hearing without further notice to the members

9 of the Class. The Settlements will become effective only if all three Settlements

10 are approved by the Court.

1 105. Any Class Member who does not submit a valid exclusion that is

12received no later than [INSERT] may object to the Settlements, the Plan of

13Allocation, or Lead Counsel's request for an award of attorneys' fees and



16all other papers (including proof of all transactions in New Century Securities


18District Court for the Central District of California at the address set forth below

19on or before [NSERT]. You must also serve the papers


21received on or before [NSERT].

22

23Clerk's Officeead C ounsel for the Class

24UNITED STATESERNSTEIN LITOWITZ BERGER

25DISTRICT COURTGROSSMANN LLPFOR THE CENTRALalvatore J. G raziano, Esq.

26DISTRICT OF CALIFORNIA285 Avenue of the Ame ricas27Clerk of the Courtew Y ork, NY 10019

312 N. Spring Street28Los Ange les, California 90012


Case No. 07-00931




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


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


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


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




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


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


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



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


Case No. 07-00931



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


7must retain the list of names and addresses for use in connection with any possible


9Administrator will send a copy of the Notice to the beneficial owner. Upon full


11easonable expenses actually incurred, by providing the Claims Ad ministrator with12proper documentation supporting the expenses for which reimbursement is sought.


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


Case No. 07-00931




1n re N ew C entury Securities Litigationalvatore J. Graziano, Esq.2ettlementERNSTEIN LITOWITZ BERGER

c/o A nalytics, Inc.GROSSMANN LLP3laims Administrator285 Avenue of the Ame ricas4.O. Box 2004ew York, NY 10019

Chanhassen, MN 55317-2004866) 648-25245la ims [email protected] Counsel

D O N O T C A L L O R W R IT E T H E C O U R T O R T H E O F F I C E O F T H E7

C L E R K O F C O U R T8

R E G A R D I N G T H I S N O T I C E .9

1 0

11

Dated:y Order of the C lerk of CourtUnited S tates District Court

1 2or the Ce ntral District of California

1 3

1 4

1 5

1 6

1 7

1 8

1 9

20

2 1

2 2

2 3

24

2 5

2 6

2 7

2 8


Case No. 07-00931




12able 1

3

4

5

6ssuer /iquidationhare inhare in

Underlyingreferencenderwriter Individual7USIPyp essue Dateate

AllotmentAuditor

Allotment8

Preferred Stock


10

11referred StockNew Century 6435EV207/15/200625.00,750%12eries B

13ew Century 6435EV108 Corrunon Stock14

15New Centuryariousall Option

16 New Centuryariousut Option178

19

2021

22

23

24

25

26

27

28


Case No. 07-00931




1

2able 2

3nflation per Share for Common Stock Sh ares Purchased betwee nMay 5, 2005, and March 13, 2007

5

6eriodegin Datend datenflation1-May-05-Feb-075.21

7-Feb-07-Mar-071.09

3-Mar-072-Mar-07.69


1112

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Case No. 07-00931




123abe34

Com mon Stock PSL RA 90-Day Look-Back L oss Limitat ion Calculat ions

5verageverageClosinglosinglosinglosing

6aterice (S)rice ($)aterice ($)rice ($ )

713Mar2007.8 4.847Apr2007.8 6.19

84Mar2007.67.7 60Apr2007.8 9.18

15Mar2007.35.951May2007.8 5.17

96Mar2007.34.302May2007.83.16

19Mar2007.17.473May2007.8 0.15100Mar2007.69.514May2007.7 2.14

111Mar2007.67.537May2007.59.12

22Mar2007.56,548May2007.58.11

123Mar2007.00.599May2007.53.10

26Mar2007.56.59OMay2007.43.08

137Mar2007.41.57lMay2007.43.06

28Mar2007.11.534May2007.41.05

149Mar2007.03.495May2007.37.03

30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01

163Apr2007.01.408May2007.39.99

04Apr2007.00.381May2007.44.98

175Apr2007.26.372May2007.43.97

09Apr2007.14.363May2007.47.9618OApr2007.09.344May2007.45.95

1lApr2007.98.335May2007.47.94192Apr2007.8 9.319May2007.46.93

203Apr2007.8 6.290May2007.45.92

16Apr2007.98.271May2007.44.92

217Apr2007.00.261Jun2007.44.91

1SApr2007.99.254Jun2007.43.90

229Apr2007.93.245Jun2007,43.8 9

20Apr2007.96.236Jun2007.45.8 8

233Apr2007.96.227Jun2007.44.8 8

24Apr2007.92.21

8Jun2007

.44

.8 7245Apr2007.96.209JLm2007.44.8 7

256Apr2007.94.200JLm2007.44.87

26

27

28


Case No. 07-00931




1

2able 4


5ay 5, 2005, and March 13, 2007


1-May-05-Feb-075.10

7-Feb-07-Mar-070.48

8-Mar-072-Mar-07.48


10

1 1

12

13Table 5

145nflation per Share for Series B Preferred Shares Purchased betw een

16ay 5, 2005, and M arch 13, 2007


18-May-05-Feb-075.41

2-Feb-07-Mar-071.18

19-Mar-072-Mar-07.03


21

22

23

24

25

26

27

28


Case No. 07-00931




1

2

3abe64referred Stock, Series A, PSLRA 90-Day Look-Back Loss

Limitation Calculations5Averageverage

6losinglosinglosinglosingDaterice ($)rice ($)aterice ($ )rice ($)13-Mar-2007.4 5.4 57-Apr-2007.27.4 5

84-Mar-2007.20.330-Apr-2007.4 5.4 8

95-Mar-2007.9 5.5 31-May-2007.00.5 2

16-Mar-20070.00.152-May-2007.80.5 6

109-Mar-2007.25.373-May-2007.80.5 9

20-Mar-2007.5 0.394-May-2007.75.6 2

1 11.-Mar-2007.75.4 47-May-2007.25.6 6

122-Mar-2007.85.4 98-May-2007.00.70

23-Mar-2007.77.6 49-May-2007.70.7 2136-Mar-2007.9 2.6 60-May-2007.23.73

147-Mar-2007.4 0.4 61-May-2007.73.73

28-Mar-2007.10.264-May-2007.5 0.75

159-Mar-2007.20.105-May-2007.00.7 8

30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.83

173-Apr-2007.5 5.918-May-2007.83.85

04-Apr-2007.10.9 21-May-2007.5 0.88185-Apr-2007.25.9 42-May-2007.5 0.9 2

199-Apr-2007.6 5.9 23-May-2007.1 0.9 4

10-Apr-2007.5 0.9 04-May-2007.25.9 7

201-Apr-2007.6 0.895-May-2007.10.9 9

12-Apr-2007.4 5.879-May-2007.25.01213-Apr-2007.00.830-May-2007.20.03

226-Apr-2007.05.801-May-2007.1 4.05

17-Apr-2007.70.751-Jun-2007.75.0 6238-Apr-2007.30.704-Jun-2007.25.07

249-Apr-2007.10.6 45-Jun-2007.10.0720-Apr-2007.15.5 96-Jun-2007.4 5.06

253-Apr-2007.6 0.5 27-Jun-2007.00.0 4

24-Apr-2007.0 0.4 78-Jun-2007.87.0 2265-Apr-2007.25.4 39-Jun-2007.87.0 2

276-Apr-2007.37.4 30-Jun-2007.87.0228


Case No. 07-00931




1

2able7referred Stock, Series B, PSLRA 90-Day Loo k-Back Loss

Limitation Calculationsverageverage

5losinglosinglosinglosingDaterice ($) price ($)aterice ($) price ($ )

613-Mar-2007.32.327-Apr-2007.06.35

74-Mar-2007.35.340-Apr-2007.40.385-Mar-2007.89.521-May-2007.70.42

-Mr-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48

-Mr-2007.60.424-May-2007.6 1.5 101-Mar-2007.00.507-May-2007.45.56

12-Mar-2007

.10

.58

8-May-2007

.88

.60-Mr-2007.50.689-May-2007.70.6226-Mar-2007.90.700-May-2007.53.64

37-Mar-2007.65.5 11-May-2007.05.65

-Mr-2007.80.294-May-2007.45.67149-Mar-2007.25.135-May-2007.78.70

-Mr-2007.40.016-May-2007.00.7252-Apr-2007.00.947-May-2007.20.76

63-Apr-2007.25.908-May-2007.88.78Apr-2007.00.901-May-2007.50.8175-Apr-2007.45.932-May-2007.75.83

89-Apr-2007.50.9 13-May-2007.25.86

-Apr-2007.03.874-May-2007.25.89

91-Apr-2007.05.835-May-2007.10.9 1

Apr-2007.90.799-May-2007.30.9403-Apr-2007.80.740-May-2007.00.96

216-Apr-2007.76.701-May-2007.65.99

Apr-2007.15.641-Jun-2007.85.00

228-Apr-2007.00.584-Jun-2007.60.01

239-Apr-2007.00.525-Jun-2007.60.00

-Apr-2007.05.476-Jun-2007.50.00

43-Apr-2007.90.4 17-Jun-2007.90.98

Apr-2007.00.378-Jun-2007.25.9555-Apr-2007.20.339-Jun-2007.25.95

266-Apr-2007.25.330-Jun-2007.25.9527

28


Case No, 07-00931




1able 8

2Table 8 has been abbreviated for example purposes. For a complete table, visit

3ttp://www.newcenturysettlement.com/Fonns/Table 8.pdf.


5t 1-866 -308-7615 to have a copy m ailed to you.

6

M axin7a xinax Minis kis kaxinaxMatur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Pu t

8a ter icer icer i c eil ityi l itya t ea tenf lat.nf lat.nf lat.nflat ion

97-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510.00$0.18

21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0.05$0.20

109-May-

0 72.505.163.21. 9 8. 8 8. 0 5. 0 50.620.51$0.07$0.19

118 - A u g - 0 72.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.54$0.08$0.151 9 - J a n - 0 82.505.163.21. 9 8. 8 8. 0 5. 0 50.630.59$0.06$0.11

127 - J a n - 0 92.505.163.21. 9 8. 8 8. 0 5. 0 50.660.64$0.04$0.05

137 - F e b - 0 75.0019.7517.21. 9 3. 8 8. 0 5. 0 511.0911.080.00$0.01

17-Mar-075.0019.753.21. 9 8. 8 8. 0 5. 0 511.080.03$0.01$1.40141-Apr-075.0015.853.21. 9 8. 9 5. 0 5. 0 59.410.22$0.20$2.29

159-May-075.0019.753.21.98.88.05.0510.860.30$0.19$2.30

168-Aug-075.0019.753.21.98.88.05.0510.460.42$0.16$3.00

19-Jan-085.0019.753.21.98.88.05.059.870.51$0.11$4.20

177 - J a n - 0 95.0019.753.21. 9 8. 8 8. 0 5. 0 58.940.61$0.06$3 .44

187 - F e b - 0 77.5019.7517.21. 9 3. 8 8. 0 5. 0 511.099.590.00$1.50

17-Mar-077.5019.753.21. 9 8. 8 8. 0 5. 0 510.750.00$0.34$3.87191-Apr-077.5015.853.21. 9 8. 9 5. 0 5. 0 57.070.10$0.36$4 .69

209-May-

0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.970.18$0.31$4 .56

218 - A u g - 0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90

1 9 - J a n - 0 87.5019.753.21. 9 8. 8 8. 0 5. 0 58.750.46$0.16$5 .63

227 - J a n - 0 97.5019.753.21. 9 8. 8 8. 0 5. 0 57.950.59$0.08$4 .50

2310.01 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 59.007.10$1.14$3.99

$10.0247-Mar-0719.753.21. 9 8. 8 8. 0 5. 0 59.100.00$0.64$6 .332510.021-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 57.980.05$0.48$6.82

269-May-10.0

0 719.753.21. 9 8. 8 8. 0 5. 0 58.540.11$0.41$6 .51

2710.0

1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5. 0 58.110.27$0.29$6 .40

2810.0

19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70


Case No. 07-00931




110.0

1 7 - J a n - 0 919.753.21. 9 8. 8 8. 0 5.057.140.57$0.09$5 .31

212.5

1 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 56 .504.60$3 .63$6 .4931 2 . 5

17-Mar-0719.753 . 2 1, 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.5041 2 . 5

21-Apr-07

18.77

3.21

. 9 8

. 9 3

. 0 5

. 0 5

6 . 0 5

0.02

$0.55

$8.4559-May-1 2 . 50719.753.21.98

.88.05.056.950.08$0.48$8.00

612.5

1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5. 0 56.870.15$0.34$7 .54712.5

89 - J a n - 0 819.753.21. 9 8, 8 8. 0 5. 0 56.720.39$0.23$7.51

$12.5

97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95$15.0

107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54.002.16$6.12$8.93

$15.0

117-Mar-0719.753.21.98.88.05.054.700.00$0.69$9.97

$15.0

121-Apr-07$18.773.21.98

.93.05.054.350.01$0.60$9.54

19-May-15.0

137$19.753.21.98.88.05.055.400.05$0.53$9.05

$15.0

148-Aug-0719.753.21.98.88.05.055.760.10$0.38$8.40

$15.0

159-Jan-08 19.753.21.98.88.05.055.890.20$0.25$8.14

$15.0

167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47

$17.5177-Feb-0719.7517.21.93.88.05.051.700.48$8.61$10.61

$17.5187-Mar-0719.753.21.98

.88.05.052.950.00$0.69

$10.69

$ 1 7 . 5

191-Apr-0718.773.21.98.93.05.053.020.01$0.63$10.21

19-May-17.520719.753.21.98.88.05.053.900.04$0.56$9.76

2117.5

18-Aug-0719.753.21.98.88.05.054.500.10$0.41$9.03

221 7 . 519-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63

2317.5

17-Jan-09$19.753.21.98.88.05.055.400.40$0.13$6.90

2420.017-Feb-07$42.10

17.21

.93

.21.05.05

19.930.04$5.28

$17.39

2520.0

17-Mar-0730.843.21.98.23.05.0510.640.00$0.69$15.54262 0 . 021-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60

279-May-20.0

0 730.603 . 2 1. 9 8. 2 4. 0 5. 0 59.320.03$0.59$16.74

282 0 . 018-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25


Case No. 07-00931



Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 70 of 1 14 Page ID#:1112412 0 . 01 9 - J a n - 0 851.223 . 2 1. 9 8. 2 1. 0 5.0419.940 . 1 5$0.30$18.65

220.01 7 - J a n - 0 942.103 . 2 1. 9 8. 2 1. 0 5. 0 59.250.25$0.14$16.72

32 2 . 51 7 - F e b - 0 7$42.10 $17.21. 9 3. 2 1. 0 5. 05 $ 1 7 . 5 30.00$7 .68$19.88

42 2 . 517-Mar-07

$30.84

3.21

. 9 8. 2 3

. 0 5

. 0 58.16

0.00

$0.69$18.0352 2 . 521-Apr-0718.773 . 2 1. 9 8. 9 3. 0 5. 0 50.900.00$0.66$10.82

69-May-2 2 , 57739 .6 93 .21.98.2 1.0 5.0 514 .130.02$ 0 .6 1$21.23

$ 2 2 . 5

88 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 57.530.10$0.47$21.41

$25.097 - F e b - 0 7$42.1017.21. 9 3. 2 1. 0 5. 0 515.100.0010.11$22.30

$25.0

1 07-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 55 .700.00$0.69$20.49

$25.0

1 11 -Ap r -0 718,773 .21.98.9 3.05.0 50.400.00$ 0 .6 7$10.94

19-May-25.012742.103 . 2 1. 9 8. 2 1. 0 5. 0 513.690 . 0 2$0,63$23.07

$25.0

1 38-Aug-073 4 . 4 43 .21.98.2 1.0 5.0 55 . 4 40.10$ 0 .4 9$23.05

$25.0

1 49-Jan -0851 .223 .21.98.2 1.0 5.04 $16.720.15$ 0 . 33$21.93

3001 57-Feb-07$47.8217.21.9 3.2 1.0 5.0 514 .260.0010.95$25.03

$30.0

167 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 51.640.00$ 0 .6 9$24.29

$30.01 71 -Ap r -0 718.773 .21.9 8.9 3.0 5.0 50.250.00$ 0 .6 8$11.05

19-May-30.018742.103.21. 9 8. 2 1. 0 5. 0 59.350.01$0.65$24.86

$30.01 98-Aug-07$34.443 .21.9 8.2 1.0 5.0 52 .3 80.09$ 0 . 5 2$24.73

$30.0209-Jan -08$53.003 .21.9 8.1 9.0 5.0 31 3 . 6 40.15$ 0 . 3 6$23.81

2130.0

17-Jan -094 7 .8 23 .21.9 8.2 1.0 5.0 58 .4 50.03$0 .17$21.29

2235 .01 7 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5. 0 510.360.0011.09$25.21

2335 .0

17-Mar-0730.843 . 2 1. 9 8. 2 3. 0 5. 0 50.120.00$0.69$25,18

249-May-35 .00742.103 .21.98.2 1.0 5.0 55 .8 30.01$ 0 .6 6$25.19

2535 .0

1 8 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 50.880.04$0.55$25.13

2635 .0

1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 54 .610.03$0.38$24.72

2740.01 7 - F e b - 0 7$47.8217.21. 9 3. 2 1. 0 5. 0 57.360.0011.09$25.21

2840.01 7 - M a r - 0 730 .843 .21.98.2 3.0 5.0 50.050.00$ 0 .6 9$25.21


Case No. 07-00931




19-May-40.00 742.103 . 2 1. 9 8. 2 1. 0 5. 0 53.430.00$0.67$25.21240.018-Aug-073 4 . 4 43 .21.98.2 1.0 5.0 50.500.00$ 0 . 5 7$25.20

34 0 . 01 9 - J a n - 0 853.003 . 2 1. 9 8. 1 9. 0 5. 0 38.650.00$0.40$25.06

440.0

1 7 - J a n - 0 9

47.82

3 . 2 1

. 9 8

. 2 1

. 0 5

. 0 5

5 .52

0.00

$0.19

$23.29545 .01 7 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5.055.110.0011.09$25.21

645 .0

1 7 -Mar - 0 730.843 . 2 1. 9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21

79-May-45 .0

8742 .103 .21.9 8.2 1.0 5.0 51.900.00$ 0 .6 8$25.21

$45 .0

98 - A u g - 0 7$34.443.21. 9 8.21. 0 5. 0 50.300.00$0.58$25.21

$45 .0

109-Jan -08$42.103 .21.9 8.2 1.0 5.0 52.100.00$ 0 .4 2$25.17

500117 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 53 .470.0011.09$25.21

19-May-50.0

12742.103.21. 9 8.21. 0 5. 0 50.980.00$0.68$25.21

$50.0

138-A u g -0 73 4 . 4 43 .21.9 8.2 1.0 5.0 50,250.00$ 0 .6 0$25.21

$50.0

149 - J a n - 0 853.003 . 2 1. 9 8. 1 9. 0 5. 0 35 .320.00$0.43$25.20

$50.0

157 - J a n - 0 947.823 . 2 1. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18

$55 .0167 - F e b - 0 747.821 7 . 2 1. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21

19-May-55 .017742.103 . 2 1. 9 8. 2 1.05. 0 50.400.00$0.68$25.21

$55 .0189-Jan -0851 .223 .21.98.2 1.0 5.0 54 .150.00$ 0 . 4 5$25.21

600197 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 51.350.0011.09$25.21$60.0209 - J a n - 0 853.003.21. 9 8.19. 0 5. 0 33.240.00$0.46$25.21

2160.01 7 - J a n - 0 947.823 . 2 1. 9 8.21. 0 5. 0 52.500.00$0.23$24.71

2270.01 9 - J a n - 0 853.003 . 2 1. 9 8.19. 0 5.031.900.00$0.48$25.21

2370.017-Jan-094 7 .8 23 .21.9 8.2 1.0 5.0 51.730.00$0 .24$24.96

24

25

26

27

28






TO KPMG STIPULATION





2 BLAIR A. NICHOLAS (Bar No. 178428)blairn blbglaw.com)

3 LIZA ETH LIN (Bar No. 174663)elizabethl blbglaw.com4NIKI L. M NDOZA (Bar No. 214646)

UNJAMPGALDSkimlaw.com5ON (Bar No. 211114)((bent^((,, blbglaw.com)

6 TAa% A. KELLAR (Bar No. 234470)

M81eok

&,g hblbgaw.com)

7luff Drive, Suite 300San Diego, CA 92130

8 Tel: (858) 793-0070Fax: (858) 793-0323

9and-SALVATO

I

RE J. GRAZI ANO

10 LAUREN bMCM )LLEN

1 1 ^[email protected] )285 A venue of the Americas12 New York, NY 10019

Tel: 212 554-140013 Fax: ^212^ 554-1444


15

16

1 7NITED STATES DISTRICT COURT

1 8ENTRAL DISTRICT OF CALIFORNIA

19 N RE NEW CENTURYase No. 2:07-cv-00931-DDP (FM Ox)(Lead Case)

20

1ROOF OF CLAIM AND

22ELEASE23


25

6ROOF OF CLAIM AND RELEASE

27







3endency of Class Action and P roposed Settlements, Settlement Fairness Hearing,

4 and Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (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





18 ADDRESSED TO:

1 9n re N ew Century Securities Litigation Settlement

20/o Analytics, Inc. Claims AdministratorP.O. Box 2004


22-866-308-7615





27 Preferred Stock"), and/or New Century call options and/or who sold New Century

28 put options, during the time period from May 5, 2005, through March 13, 2007,

1




1 inclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in


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


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


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.


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


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




1A VALID REQUEST FOR EXCLUSION IN A TIMELY M ANNER, ANY PROOF

2OF CLAIM THAT YOU SUBMIT, OR THAT MA Y BE SUBMITTED ON YOUR

3 BEHALF, WILL NOT BE ACCEPTED.



6 2010. If you fail to file a timely, properly addressed, and

7completed Proof of Claim, your claim may be rejected, and you may be precluded

8rom receiving any d istribution from the Settlements.



11Settlements are governed by the Plan of Allocation approved by the Court. The

12 proposed Plan of Allocation, which is subject to the Court's approval, is included

13 in the Notice.


15dditional copies of the Proof of Claim or the Notice, you may contact the Claims

16Adm inistrator, at In re New Century Secu rities Litigation Settlemen t, c/o Analytics,


18 toll-free phone at (866) 308-7615, or you may download the documents from Lead

19 Counsel's website, www.blbglaw.com , or the website maintained by the Claims

20Adm inistrator for this Settleme nt, www.newcenturysettlement.com . .


22 behalf does not, submit a timely request for exclusion from the Class, and if the

23 Court approves the Settlements, you will be bound by the terms of any orders and

24 judgments that the Court enters. You will be bound by such orders and judgments


261. You are required to submit genuine and sufficient documentation for


28hrough and including March 13, 2007, as well as genuine and sufficient

3




1ocumentation for all sales of New Century Common Stock and Preferred Stock

2 between March 14, 2007, through and including June 10, 2007. You are also


4n New Century Common Stock and Preferred Stock as of the close of the market

5n March 13, 2007, and as of the close of the market on June 10, 2007.

6 Documentation may be photocopies of stockbrokers' confirmation slips or

7stockbrokers' monthly statements (reflecting your opening and closing balances for

8the mon ths specified on the actual claim form , and in which transactions during the

9Class Period occurred). IF SUCH DOCUMENTS ARE NOT IN YOUR

10 POSSESSION, PLEASE OBTAIN COPIES ' OR EQUIVALENT

11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE

12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF

13YOUR CLA IM. DO NOT SEND ORIGINAL STOCK CERTIFICATES.



16 complete and sign the Proof of Claim on behalf of persons represented by them,

17 nd they must:

18a)xpressly state the capacity in which they are ac ting;

1 9b) identify the name, account number, Social Security Number (or




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


28

4




1iscretionary authority to trade stock in another person's

2ccounts.)

34. By submitting a signed Proof of Claim, you will be swearing that you:

4a) owned) the New Century Securities you have listed in the

5roof of Claim; or

6b) are expressly authorized to act on behalf of the owner thereof.


8ruth of the statements contained therein and the genuineness of the documents



11raudulent documentation, will result in the rejection of your claim and may

12 ubject you to civil liability or criminal prosecution.

13NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large

14numbers of transactions may request, or may be requested, to submit information


16ma nually signed paper Proof of C laim form listing all their transactions, wh ether or

17 not they also submit electronic copies.f you wish to file your claim

Is lectronically, you must contact the Claims Administrator at 1-866-308-7615, or

19 visit its settlement website www.newcenturysettlement.com to obtain the required



22 cknowledgm ent of receipt and acceptance of electronically submitted data.

23

24

25

26

27

28

5



Case 2:07-cv-00931-DDP-FMO Document 484-6 Filed 07/30/10 Page 79 of 114 Page ID#:111331n re New Century

2ART I: CLAIMANT IDENTIFICATION


5

6treet Address

7 itytateip Code


11Evening)12

Area Codeelephone Num ber

13

14Social Security Number oraxpayer Identification Num ber

15

16ecord Ow ner's Nam e (if different from beneficial owner listed above)

17

Check approp riate box (check only one box):18

19ElIndividual/Sole ProprietorlJoint Owners1Pension Plan

20qorporationartnershiprust21qRAther22

23(describe:

24NOTE: Separate Proofs of Claim should be submitted for each separate legal

25entity (e.g., a claim from Joint Owners should not include separate transactions of

26 just one of the Joint Owners; an Individual should not combine his or her IRA


28a single Proof of Claim submitted on behalf of one legal entity should include all

6




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


20 acquisition on a separate page.) Be sure to attach the required documentation.

2 1rade Date(s) (List


23245627 excluding com missions, transfer taxes or other fees.28

7




1 (ii) tate the total number of shares of New CenturyY Common Stock the


3ncluding June 10, 2007. If none, write "zero" or "0." (NOTE: These purchases,

4which are no t in the Class Period, are not included in the calculation of Recog nized


6 overall evaluation of the Claim.)

7. Sales: List all sales of New C entury Comm on Stock made during


9une 10, 2007. Be sure to attach the required documentation.


1 1hronologically)umber ofalesotal

Month/Day/Yearhares Soldrice Per Shareales Price*123456 *excluding commissions, transfer taxes or other fees

17

1 8. Unsold Holdings: State the total number of shares of New

1 9entury Common Stock the Claimant owned at the close of the

20arket on March 13, 2007. If none, write "zero" or "0." If other

21han zero, be sure to attach the required documentation.

22

23E. Ending Position For 90-Day Look Back: State the total number

24f shares of New Century Common Stock the Claimant owned at

25he close of the market on June 10, 2007. If none, write "zero" or

260."f other than zero, be sure to attach the required

27ocumentation.

28

8





IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR3

4NAME ON THE COPY AND CHECK THIS BOX q

5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

6NOT BE REVIEWED

7

8 PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED9 TOCK")

10

A. Beginning Holdings: State the number of shares of New Century

11Series A Preferred Stock the Claimant owned as of the close of

12the market on May 4, 2005. If none, write "zero" or "0." If other13

than zero, be sure to attach the required documentation.14

15

B. Purchases:16 (1) List all purchases of New Century Series A P referred Stock m ade during17


you acquired your New Century Series A Preferred Stock during this period in an19


com plete description of the terms of the acquisition on a separate pag e.) Be sure to21

attach the required documen tation.22

23

24

25

26

27

28

9




1rade Date(s) (List2hronologically)umber ofurchaseotal

Month/Day/Yearhares Purchased Price Per Share Purchase Price*


9ii) State the total number of shares of New Century Series A Preferred


11

and including June 10, 2007. If none, write "zero" or "0." (NOTE: These


13Recognized Loss Amount.his information is needed by the Claims


156. Sales: List all sales of New Century Series A Preferred Stock


1 8une 10, 2007. Be sure to attach the required documentation.

1 9rade Date(s) (ListChronologically)umber ofalesotal


2 12$$3$4


26

27

28

10




1 D. Unsold Holdings: State the total number of shares of New

2entury Series A Preferred Stock the Claimant ow ned at the close



5

6. Ending Position For 90-Day Look Back: State the total number

7f shares of New Century Series A Preferred Stock the Claimant

8wned at the close of the market on June 10, 2007. If none, write9zero" or "0." If other than zero, be sure to attach the required

10ocumentation,

1 1


13 IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR

14 NAME ON THE COPY AND CHECK THIS BOX

15

16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17NOT BE REVIEWED

18 PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE

19REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED

STOCK")

20

21. Beizinnim Holdings: State the number of shares of New Century




25

26. Purchases:



1 1




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


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.



24$5

26

2728excluding com missions, transfer taxes or other fees

12




1. Unsold Holdings: State the total number of shares of New

2entury Series B Preferred Stock the Claimant owned at the close



5


7f shares of New Century Series B Preferred Stock the Claimant



10ocumentation.

11

12



15NAME ON THE COPY AND CHECK THIS BOX

16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17 NOT BE REVIEWED

18

19

20

21

22

23

24

25

26

27

28

13




1PART V: NEW CENTURY CALL OPTIONS

2. Beginning Holdings: List all Call Option contracts on New


4ay 4, 2005:

5umber of Calltrike Price for6ption Contractsxpiration Monthall Optionosition: Short

Opennd Yearontractr Long7810

1. Purchases: List all Call Option contracts on New Century



14ure to attach the required documen tation.

15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call16hronologically)ontractshareonth andption

17onth/Day/Yearurchasedearontract

$

1920$$1


2 3tock that you sold during the period from May 5, 2005, through

24nd including March 13, 2007. Be sure to attach the required

25ocumentation.

26

27

28

1 4




1ales Date(s)remium2Listumber ofrice Perxpirationtrike Price for

Chronologically)ptionhareonth andall Option3Month/Day/Year Contracts Soldearontract

4$$$$8D. Exercised Calls: List all Call Option contracts on New Century

9Common Stock that you exercised during the period from May 5,

1 0005, through and including March 13, 2007. Be sure to attach

1 1 the required documentation.1 2

Strike1 3rice for

1 4xpirationallumber of Call Result:

Month andptionption Contracts Rec'd Shares1 5ate Exercisedearontract Exercisedr Cash?

1 6

1 7

1 8

1 9

20. Expired Calls: List all Call Option contracts on New Century

2 1ommon Stock that expired worthless during the period from



24

25

26

27

28

15




1ate Contractstrike Price2xpired (Listumber ofer Call

Chronologically)xpired Option Expiration Monthption3onth/Day/Yearontractsnd Yearontract

457

8F. Unsold/Unexpired Calls: List Call Option contracts on New

9entury Common Stock that were open as of the close of the

1 0arket on March 13, 2007.

1 1

12trike Price13umber of Caller Call

14ption Contractsosition: Short or Expiration MonthptionOpenongnd Yearontract

1567

18

19

2021

22

23

24

25

26

27

28

1 6





2. Beginning Iloldims: List all Put Option contracts on New


4ay 4, 2005:

5umber of Puttrike Price for6ption Contractsxpiration Monthut Optionosition: Short

Opennd Yearontractr Long7891 0

1 1. Sales: List all Put Option contracts on New Century Common

1 2tock that you sold (wrote) during the period from May 5, 2005,

13hrough and including March 13, 2007. Be sure to attach the

1 4equired documentation.

1 5ales Date(s)remium(Writing) (List Number of Put Price Perxpirationtrike Price for

16 Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract

1 81 9$$0$$21

22

23

24

25

26

27

28

1 7




1. Purchases: List all Put Option contracts on New Century


3rom May 5, 2005, through and including March 13, 2007. Be4ure to attach the required docum entation.


6(Listptionrice Perxpirationtrike Price per

Chronologically)ontractshareonth andut Option7Month/Day/Yearurchasedearontract

8$0

1 1


1 3ommon Stock that you exercised during the period from May 5,14005, through and including March 13, 2007. Be sure to attach

15he required documentation.1 6trikeumber of Putesult:17xpirationrice for Option Contracts Delivered

1 8onth and Put Option Exercisedhares orDate Exercisedearontractaid?

19

20

21

22

23

24. Expired Puts: List all Put Option contracts on New Century




28

1 8





Chronologically)xpired Putxpiration Monthut Option3onth/Day/Yearontractsnd Yearontract

46

$8 F. Unexpired Puts: List Put Option contracts on New Century

9ommon Stock open as of the close of the market on March 13,10

007.

1 1umber oftrike Price for12nexpired Putosition: Short or Expiration Monthut Option

13ptions Contractsongnd Yearontract

1415

16YOU MUST READ THE FOLLOW ING RELEASE AND SIGN ON PAGE

1 7ELEASE OF CLAIMS

18 Definitions

1 9efined terms not already defined herein have the meanings given them in

20the respective Stipulations of Settlement (described in the Notice) (the

21"Stipulations").

22

23

24The Releases

25fficer and Director Release


27on and after entry of the Global Officer And Director Judgment and occurrence of


1 9




1Member, on behalf of themselves, for good and sufficient consideration, the receipt

2nd adequacy of which are hereby acknowledged, whether or not a Proof of Claim


4 y operation of law to have released, waived, discharged and dismissed each and

5very Settled Class Claim as against each and every R eleased Officer And Director



8all of the Settled Class Claims against each and every Released Officer And


10any and all claims and causes of action of every nature and description, whether

11known or Unknown Claims, whether arising under federal, state, common or

12foreign law, that Plaintiffs or any other member of the Class (a) asserted in the



15 representations or omissions involved, set forth, or referred to in the Consolidated






21n this paragraph means (i) the Individual Defendants, David Kenneally, Kevin

22 Cloyd, Patrick Flanagan, Stergios Theologides, Joseph F. Eckroth, Jr., and Jeffrey



25nd (ii) all directors, officers, employees, and other natural persons affiliated with




20




1 executors, administrators, predecessors, successors and assigns, employees, agents

2nd retained professionals (other than KP MG or the Underwriter Defendants).

3PMG Release


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


8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on


10eleased, waived, discharged and dismissed each and every Settled Claim, and

11hall forever be enjoined from prosecuting any or all Settled Claims, against any




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"




25 oes not include any Defendants other than KPMG .

26

27

28

2 1




1nderwriter Release


3n and after entry of the Underwriter Judgment and occurrence of the Effective



6predecessors, successors and assigns, and any and all of their current and former

7fficers, directors, employees, agents and attorneys, for good and sufficient

8 consideration, the receipt and adequacy of which are hereby acknowledged,

9whe ther or not a Proof of Claim is executed and de livered by, or on behalf of, such

to Class Member, will be deemed by operation of law to have released, waived,

11discharged and dismissed each and every Settled Claim, and shall forever be

12enjoined from prosecuting any or all Settled Claims, against any Released




16 other member of the Class (a) asserted in the Complaint, or (b) could have asserted

17n any forum that arise out of or are based upon the allegations, transactions, facts,


19o in the Complaint, and that arise out of or relate to the purchase of New Century




23elating to the enforcement of the Settlements. "Released Underwriter Party"



26uccessors and assigns, and any and all of their current and former officers,


28ot include any Defendants other than the Underwriter Defendants.

22




1



4 ho represents the Claimant certifies, as follows:

5. that the Claimant is a Class Mem ber, as defined in the Notice;

6. that I (we) have read and understand the contents of the Notice and the

7roof of Claim;

8. that I (we) are not acting for any of the Defendants, nor am 1 (are we)


1 0. that I (we) have not filed a request for exclusion from the Class and that 1

1 1we) do not know of any request for exclusion from the Class filed on my12our) behalf with respect to my (our) transactions in New Century

13ecurities;


15laim, or that, in signing and submitting this Proof of Claim, I (we) have

16he authority to act on behalf of the owner(s) thereof;


18ettlement F und;

19. that Claimant desires to participate in the Settlements described in the

20otice and agrees to the terms and con ditions thereof;




24roof of Claim;

25. that I (we) agree to furnish such additional information with respect to

26his Proof of Claim as the parties, the Claims Administrator or the Court

27ay require;

28

23






3moun t of the claim m ade by this Proof of Claim; and

41.that I (we) certify that I am (we are) not subject to backup withholding5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue

6ode.

7OTE: If you have been notified by the Internal Revenue Service that you are



10ervice does not require your consent to any provision other than the

1 1ertification required to avo id backup w ithholding.12

13

14

15

16

17

18

19

20

21

2223

24

25

26

27

28

24







45ignature of Claimant67Print Name of Claimantate Signed

9

10 Signature of Joint Claimant, if any

1 1

12Print Nam e of Joint Claimant, if anyate Signed

1 3

14If Claim ant is other than an individual, or is not the p erson comp let ing this

15form , the fol low ing also m ust be p rovided :

16

17Signature of Person Completing Form

18

19 Print Name of Person Completing Formate Signed

20

21Capacity of Pe rson Signing (Executor, President, Trustee, etc.)

2223

24

25

26

27

28

25




1EMINDER C HECKLIST

2lease sign the Proof of Claim on page

3f this Claim is being m ade on behalf of Joint Claimants, then both must sign.

4lease rememb er to attach supporting documents.

5f you mov e, please send your new add ress to:

6n re New Century Securities Litigation Settlement7/o Analytics, Inc., Claims Ad ministrator


9-866 -308-7615

1 0

DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUMENTS.

1 1

1 2eep a copy of your Proof of Claim and all documentation submitted for your

13ecords.

4he Claims Administrator will acknowledge receipt of your Proof of

1 5 Claim by mail within 60 days. Your Proof of Claim is not deemed


1 7he Claims Adm inistrator toll free at (866 ) 308-7615.

1 8

1 9ACCURATE CL AIMS PROCESSING TAKES A SIGNIFICANT AMOUNT

20F TIME.

21HANK YOU FOR YOUR PATIENCE

22

23

24

25

26

27

28

2 6





TO KPMG STIPULATION




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


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







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


26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action



1




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.





g Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of

10 Litigation Expenses ("Notice"); and (2) Proof Of Claim And Release ("Claim




15 wu'w.newcentu.rysettlement.com. If you are a Class Member, in order to be








23 will be bound by any judgment entered in the Consolidated Action,





28

2




1 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and

3 Claim Form, may be made to Lead Counsel:

4

BERNSTEIN LITOWITZ BERGE R5 GROSSMANN LLPalvatore J. Graziano

1285 A venue of the Americas7ew York, New Y ork 100198elephone: (866) 648-2524

9


1 . 1or the Cen tral District of California12

13

1415

16

17

18

19

20

21

22

23

24

25

26

27

28

3




EXHIBIT B

TO KPMG STIPULATION




12

3

4

5

6

7



11 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)

12Lead Case)

1345PROPOSED] KPMG FINAL JUDGMENT AND

16RDER OF DISMISSAL WITH PREJUDICE

17

18

19

20

21

22

23

24

25

26

2728KPMG JUDGMENT





1his matter came before the Court for hearing pursuant to the Order



4 York State Teachers' Retirement System ("Lead Plaintiff') and Plaintiffs Carl

5 Larson and Charles Hooten (collectively "Plaintiffs") for approval of the

6 settlement between Plaintiffs and KPMG LLP ("KPMG") set forth in the

7 Stipulation Of Settlement Between Plaintiffs and KPMG LLP (the "KPMG

g Stipulation" or "KPMG Settlement"). Full and adequate notice having been given

9 to the Class as required in the Court's Order, and the Court having considered all

10 papers filed and proceedings held herein and otherwise being fully informed in the

11 premises and good cause appearing therefor,

12 NOW , THEREFORE, IT IS HEREBY ORD ERED THA T:13.his Judgment incorporates by reference the definitions in the KPMG

14 Stipulation, and all capitalized terms used, but not defined herein, shall have the

15 same meanings as in the KPMG Stipulation.

16 2.his Court has jurisdiction over the subject m atter of the Consolidated

17

Action and over all Parties to the Consolidated Action, including all members of

18 the Class.

19.he Court hereby affirms its certification in the Preliminary Approval



22ll persons and entities who purchased or otherwiseacquired NewCentury common stock, New Century Series A Preferred Stock, New




26embers of the immediate families of the Individual Defendants; k c )the subsidiaries and affiliates of Defendants; (d) any person or entity

27ho was a partner, executive officer, director or controllin person ofNew Centu (including any of its subsidiaries or affiliates or of any

28efendant; e) any entity in which any Defendant has a controllinginterest; and (f) the legal representatives, heirs, successors and assigns

1PMG JUDGMENT




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)



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)




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.


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.


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





1 way to New Century (including any of its subsidiaries and affiliates), the Debtors

2 or the Debtors' Estates, against Kodiak, provided and conditioned upon KPMG

3 receiving a substantially reciprocal release from Kodiak.

44. Upon the Effective Date, this Final Judgment And Order Of

5 Dismissal With Prejudice constitutes the final discharge of all obligations to the

6 Plaintiffs of KPMG arising out of the Consolidated Action. All future claims for

7 contribution arising out of the Consolidated Action by any person or entity against

8 KPMG or by KPMG against any other person or entity, other than a person whose

9 liability has been extinguished by this Settlement, are barred pursuant to 15 U.S.C.

10 § 78u-4(f)(7)(A).

115. The distribution of the Notice of Pendency of Class Action and


13 and Reimbursement of Expenses ("Notice") and the publication of the Summary





18 proceedings and of the matters set forth therein, including the proposed KPMG

19 Settlement set forth in the KPMG Stipulation, to all persons entitled to such notice,

20 and said notice fully satisfied the requirements of Federal Rule of Civil Procedure

21 23, the Private Securities Litigation Reform Act of 1995, due process, and any

22 other applicable law.



25 Lead Plaintiff provides a fair and equitable basis upon which to allocate the

26

27

28

5PMG JUDGMENTCase No. 2:07-cv-00931-DDP (FM Ox)





2 having been given to administrative convenience and necessity.


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)





2 approved or made by any of the Released Auditor Parties, or against the Plaintiffs

3r any Class M em bers as evidence of any infirmity in the claims of Plaintiffs or the4 other Class Members;

5.hall not be offered or received against any of the Released Auditor




9 against any of the Released Auditor Parties, in any other civil, criminal or


11 necessary to effectuate the provisions of this Stipulation; provided, however, that if

12 this Stipulation is approved by the Court, KPMG, any other Released Auditor

13 Party, or any Class Member may refer to it to effectuate the protection from

14 liability granted them hereunder;

15.hall not be construed against any of the Released Auditor Parties,




19.hall not be construed against Plaintiffs or any other Class Members

20 as an admission, concession, or presumption that any of their claims are without

21 merit or that damages recoverable under the Complaint would not have exceeded

22 the KPMG Settlement Amount; and

23.hall not be construed as or received in evidence as an admission,

24 concession or presumption that class certification is appropriate in this

25 Consolidated Action, except for purposes of this KPMG Settlement.

260. The KPMG Stipulation may be filed in an action to enforce or

27 interpret the terms of the KPMG Stipulation, the KPMG Settlement contained

28 therein, and any other documents executed in connection with the performance of

7PMG JUDGMENTCase No. 2:07-ev-00931-DDP (FM Ox)




1 the agreements embodied therein. The Released Auditor Parties, and/or any Class

2 Member, may file the Stipulation and/or this Final Judgment And Order Of

3 Dismissal With Prejudice in any action that may be brought against them in order

4 to support a defense or counterclaim based on the principles of res judicata,

5 collateral estoppel, full faith and credit, release, good faith settlement, judgment

6 bar, or reduction or any other theory of claim preclusion or issue preclusion or

7 similar defense or counterclaim.



10 jurisdiction over: (a) implementation of this KPMG Settlement and any award or

11 distribution of the settlement fund. including interest earned thereon; (b) the

12 allowance, disallowance or adjustment of any Class Member's claim on equitable

13 grounds and any award or distribution of the settlement fund; (c) disposition of the

14 settlement fund; (d) hearing and determining applications for attorneys' fees and

15 Litigation Expenses in the Consolidated Action; (e) enforcing and administering

16 this Judgment; (f) all parties hereto for the purpose of construing, enforcing and

17 administering the KPMG Stipulation; and (g) other matters related or ancillary to

18 the foregoing.

192. The Court finds that during the course of the Consolidated Action, the

20 Parties and their respective counsel at all times complied with the requirements of

21 Federal Rule of Civil Procedure 11.

223. In the event that the KPMG Settlement does not become effective in

23 accordance with the terms of the KPMG Stipulation or the Effective Date does not

24 occur, or in the event that the settlement fund, or any portion thereof, is returned to

25 KPMG, then this Final Judgment And Order Of Dismissal With Prejudice shall be

26 rendered null and void to the extent provided by and in accordance with the

27 KPMG Stipulation and shall be vacated and, in such event, all orders entered and

28 releases delivered in connection herewith shall be null and void to the extent

8PMG JUDGMENT





1 provided by and in accordance with the KPMG Stipulation.

24. Without further Order of the Court, the Parties may agree to

3 reasonable extensions of time to carry out any of the provisions of the KPMG

4 Stipulation.


6 immediate entry by the Clerk of the Court is expressly directed.

7

ST IS SO ORDERED,

9

10ATED:1HE HONORABLE DEAN D . PREGERSON

12NITED STATES DISTRICT COURT JUDGE

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9PMG JUDGMENT





EXHIBIT 4

TO UNOPPOSED MOTION FOR PRELIMINARY


-1-Case No. 2:07-cv-00931-DDP (FMOx)




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UNITED STATES DISTRICT COURT8

CENTRAL DISTRICT OF CALIFORNIA9

IN RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)1 0Lead Case)

1 1

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1 5TIPULATION OF SETTLEMENT BETW EENPLAINTIFFS AND THE UNDER WRITER DEFENDANTS

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UW STIPULATION OF 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


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


-1-W STIPULATION OF SETTLEMENT





1Act of 1933 ("Securities Act") on behalf of all persons and entities who purchased

2or otherwise acquired New Century Financial Corporation ("New Century" or the

3"Company") common stock; New Century 9.125% Series A Cumulative

4Redeemable Preferred Stock ("Series A Preferred Stock"); New Century 9.75%

5Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock");

6 and/or New Century call options and/or who sold New Century put options during

7he time period from May 5 , 2005 , through and including March 13, 2007, either in

8 the Offerings, pursuant to a registration statement, or in the market, and who, upon

9 isclosure of certain facts, were injured thereby;

10.eginning on November 2, 2007, Defendants filed motions to dismiss

11 he Con solidated Com plaint, which Plaintiffs opposed on December 14 , 2007;12.y Order dated January 31, 2008, the Court granted the motions to

13dismiss with leave to amend the complaint;

14.n M arch 24, 2008, Plaintiffs filed their Amended Con solidated C lass


16pursuant to the Securities Act and the E xchange Act;

17.ursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second

18Am ended Consolidated Class Action Com plaint (the "Com plaint"), alleging claims

19 against Defendants pursuant to the Securities Act and the Exchange Act;

20.eginning on June 2, 2008, Defendants filed motions to dismiss the

21Com plaint, which Plaintiffs opposed on July 7, 2008;

22.ollowing a hearing, by Order dated December 3, 2008, the Court

23 ubstantially denied Defendants' motions to dismiss;

24.eginning on January 26, 2009, Defendan ts answered the Com plaint;

25.he Parties began discovery in or about April 2009, including filing


27discovery requests, responses and voluminous d ocuments;

28





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)




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;


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


25Proof of Claim Form .

26)Claim Form" or "Claim Form and Release" or "Proof of Claim


28

-4-W STIPULATION OF SETTLEMENTCase No, 2:07-cv-009 3 1 -DDP (FMOx)




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.


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.


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






2he Class and does not exclude himself, herself or itself by filing a request for

3xclusion in accordanc e with the requiremen ts set forth in the Notice.


5nd including March 13, 2007.

6)Complaint" means the Second Amended Consolidated Class

7Action Complaint filed by Plaintiffs in the Consolidated Action, on or about April

80, 2008.

9)Court" means the United States District Court for the Central

10District of California.

1 1) "Defendants" means the Underwriter Defendants, KPMG, and

12 the Individual Defendants.

13)Effective Date" means the date on which all the following

14shall have occurred: (a) the Court has entered the Preliminary Approval Order; (b)

15payment of the Underwriter Settlement Amount has been made pursuant to 1 1 8

16below; (c) notice has been provided to the Class, and the Underwriters have not

17exercised any right to terminate this Underwriter Stipulation and Settlement

18pursuant to the Supplemental Agreement described in ¶32 below; (d) the Court has

19approved the Underwriter Settlement, following a hearing, as prescribed by

20Rule 23 of the Federal Rules of Civil Procedure; (e) the Court has entered the

21Underwriter Judgment, substantially in the form annexed hereto as Exhibit B,

22which has become Final; and (f) the Court has entered the Officer And Director

23 udgment and KPMG Judgment, which have become Final.

24)Escrow Account" means an account maintained to hold the

25Settlement Fund, which shall be controlled exclusively by Lead Counsel and

26deemed to be in the custody of the Court and shall remain subject to the

2 7 urisdiction of the Court until such time as the funds are distributed or returned

28pursuant to the teens of this Stipulation and /or further order of the C ourt.






1)Escrow Agent" means the financial institution selected by

2Lead C ounsel to serve as escrow agent.

3)Escrow Agreement" means the agreement among Lead

4Counsel and the Escrow Agent setting forth the terms under which the Escrow

5Agent shall maintain the E scrow Account.

6)Final" when referring to an order or judgment means: (i) that

7he time for appeal or appellate review of the order or judgment has expired; or

8 (ii) if there has been an appeal, (a) that the appeal has been decided without

9causing a material change in the order or judgment; or (b) that the order or

10 judgment has been upheld on appeal and is no longer subject to appellate review

11 by further appeal or writ of certiorari.

12)Individual Defendants" means Robert K. Cole, Brad A.

13Morrice, the Estate of Edward F. Gotschall, Patti M. Dodge, Fredric J. Forster,

14Michael M. Sachs, Harold A. Black, Donald E. Lange, Terrence P. Sandvik,

15Richard A. Zona, M arilyn A. A lexander, David Einhorn, and William J. Popej oy.

1 6)K PMG" means KPMG LLP.

17)KPMG Judgment" means a judgment entered by the Court

18 which, among other things, includes a release by KPMG and the other Released

19Auditor Parties of each and every claim against the Underwriter Defendants and

20 he other Released Underwriter Parties, arising under federal, state, common or

21 oreign law, arising out of or based upon the allegations, transactions, facts, matters

22or occurrences, representations or omissions involved, set forth, or referred to in

23 he Consolidated Action.

24)Lead Counsel" means the law firm of Bernstein Litowitz

25B erger & Grossmann LLP.

26) "Lead Plaintiff' means the New York State Teachers'

27Retirement System.

28


Case No. 2;07-cv-00931-DDP (FMOx)




1)Litigation Expenses" means the costs and expenses incurred

2by Plaintiffs' Counsel in connection with commencing and prosecuting the

3Consolidated Action, for which Lead Counsel intends to apply to the Court for

4eimbursement from the Settlement Fund .

5)Net Settlement Fund" means the Settlement Fund less: (i) any

6Taxes; (ii) any Notice and Administration Costs; (iii) any attorneys' fees awarded

7 by the Court; and (iv) any Litigation Expenses awarded by the Court.

8)Notice" means the Notice of Pendency of Class Action and



11

hereto as Exhibit 1 to Exh ibit A, which is to be sent to members of the Class.12a) "Notice and Administration Costs" means the costs, fees and

13 expenses that are incurred by the Claims Administrator and Lead Counsel in

14connection with (1) p roviding notice to the C lass; and (ii) administering the Claims

15process.

16b) "Offerings" means the public offerings pursuant to which New

17 Century Series A and B Preferred Stock were offered to the public in June 2005

18 and A ugust 2006, respectively.

1 9c) "Officer And Director Judgment" means a judgment entered by

20 he Court which, among other things, includes a release by the Individual

21Defendants of each and every claim against the Underwriter Defendants and the

22Released Underwriter Parties whether arising under federal, state, common or

23 oreign law, arising out of or based upon the allegations, transactions, facts, matters

24or occurrences, representations or omissions involved, set forth, or referred to in

25he Consolidated Action.

26d) "Parties" means the Underwriter Defendants and Plaintiffs, on

27behalf of themselves and the C lass M embers.

28





Case 2:07-cv-00931-DDP-FMO Document 484-7 Filed 07/30/10 Page 11 of 33 Page ID#:111791e) "Plaintiffs" means Lead Plaintiff, Carl Larson and Charles

2Hooten.

3f)Plaintiffs' Counsel" means Lead Counsel and all other counsel

4who, at the direction and under the supervision of Lead Counsel, represent Class

5Mem bers in the Consolidated Action.

6g) "Plan of Allocation" means the proposed plan of allocation of

7 the Net Settlement Fund set forth in the Notice.8h) "Preliminary Approval Order" or "Notice Order" means the

9 order, substantially in the form attached hereto as Exhibit A, to be entered by the

10Court preliminarily approving the Underwriter Settlement and directing notice beI 1 provided to the Class.

12i)Released Auditor Parties" means KPMG and any and all of its


14Released Auditor Parties" does not include any Defendants other than K PM G.

15j)Released Parties' Claims" m eans any and all claims and causes

16of action of every nature and description, whether known or Unknown, whether

17arising under federal, state, common or foreign law, that arise out of or relate in

I8any way to the institution, prosecution, or settlement of the claims against the

19 Underwriter Defendants. "Released Parties' Claims" does not include claims

20 elating to the enforcement of the Underwriter Settlement.

21k) "Released Underwriter Parties" means the Underwriter

22Defendants and any and all of their respective parent companies, subsidiaries,

23affiliates, heirs, executors, administrators, predecessors, successors and assigns,

24and any and all of their current and former officers, directors, employees, agents

25and attorneys. "Released Underwriter Parties" does not include any Defendants

26other than the Underwriter Defendants.

271 )Settled Claims" means any and all claims and causes of action

2 8 f every nature and description, whether known or Unknown, whether arising






1 under federal, state, comm on or foreign law, that Plaintiffs or any other m ember of

2he Class (a) asserted in the Complaint, or (b) could have asserted in any forum

3hat arise out of or are based upon the allegations, transactions, facts, matters or


5Complaint, and that arise out of or relate to the purchase of New Century common

6tock, New Century Series A Preferred Stock, New Century Series B Preferred

7tock, and/or New Century call options and/or the sale of New Century pu t options

8uring the Class Period. Additionally, "Settled Claims" does not include claims

9 relating to the enforcement of the Underwriter Settlement.

10m) "Settlement Fund" means the Underwriter Settlement Amount,

11

and any and all interest earned thereon.12n) "Settlement Hearing" means the hearing set by the Court under

13Rule 23(e)(1)(c) of the Federal Rules of Civil Procedure to consider approval of

14he Underwriter Settlement.

15o) "Settling Individuals" means the Individual Defendants, Jeffrey

16D. Goldberg, Patrick Flanagan, Kevin M. Cloyd, Joseph F. Eckroth, Jr., and

17Stergios Theologides.

1 8p) "Summary Notice" means the publication notice, substantially

19 in the form attached hereto as Exhibit 3 to Exhibit A, to be published as set forth in

20 he Preliminary Approval Order.

21q) "Taxes" means: (1) all federal, state and/or local taxes of any

22kind on any income earned by the Settlement Fund; and (ii) the reasonable

23expenses and costs incurred by Lead Counsel in connection with determining the

24amou nt of, and paying, any taxes owed b y the Settlement Fun d (including, without

25 imitation, reasonable expenses of tax attorneys and accountants).

26r) "Underwriter Judgment" means the final judgment,

27ubstantially in the form attached hereto as Exhibit B, to be entered pursuant to

28






1Rule 54(b) of the Federal Rules of Civil Procedure approving the Underwriter

2Settlement.

3s) "Underwriter Settlement" means the proposed settlement as set

4orth in this Stipulation.

5t)Underwriter Settlement Amount" means the sum of

6$1500,000.00 in cash which the Underwriter Defendants shall pay or cause to be

7paid into the Escrow A ccount as set forth in ¶8 below.

8u) "Underwriter Defendants" means Bear, Stearns & Co. Inc., now

9 known as J.P. Morgan. Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray

10 & Co., Stifel, Nicolaus & Co., Inc., JMP Securities LLC, Roth Capital Partners,

11 Morgan Stanley & Co., Inc., and Jefferies & Com pany, Inc.1 2v) "Unknown Claims" means any and all Settled Claims that

13Plaintiffs or any Class Member does not know or suspect to exist in his, her or its

14avor at the time of the release of the Released Underwriter Parties, and any

15Released Parties' Claims that any Released Underwriter Party does not know or

16 suspect to exist in his, her or its favor, which if known by him, her or it might have

1 7 ffected his, her or its decision(s) with respect to the U nderwriter Settlement. W ith

18respect to any and all Settled Claims and Released Parties' Claims, the Parties

19 stipulate and agree that upon the Effective Date, the Plaintiffs and the Released

20Underwriter Parties shall expressly waive, and each Class Member shall be

21deemed to have waived, and by operation of the Underwriter Judgment shall have

22expressly waived, any and all provisions, rights and benefits conferred by any law

23of any state or territory of the United States, or principle of common law, that is

24imilar, comparable, or equivalent to Cal. Civ. Cod e § 15 42, which provides:

25general release does not extend to claims which the

26reditor does not know or suspect to exist in his or her

27avor at the time of execu ting the release, which if known

28






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






1.ursuant to the Underwriter Judgment, upon the Effective Date,

2Plaintiffs and members of the Class, on behalf of themselves, their parent



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.


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


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







2 Underwriter Defendants and the Released Underwriter Parties shall be deemed by

3 operation of law to have released, waived, discharged and dismissed each and

4 every claim, and shall forever be enjoined from prosecuting any claim, against

5 KPMG and the other Released Auditor Parties arising under federal, state, common

6 or foreign law, arising out of or based upon the allegations, transactions, facts,


8o in the Consolidated Action, conditioned upon the Underwriter Defendants and10 KPMG and the other Released Auditor Parties.

1 1HE SETTLEMENT CONSIDERATION1 2.ithin ten (10) calendar days after entry of the Preliminary Approval

13Order, Plaintiffs shall provide cou nsel for the Und erwriter Defendants w ith a duly-

14 authorized W-9 and effective wire instructions. Within twenty (20) calendar days

15 after entry of the Preliminary Approval Order, or within ten (10) calendar days of

16 eceipt of Plaintiffs' duly-authorized W-9 and effective wire instructions as set

17 forth in this paragraph, whichever is later, the Underwriter Defendants shall pay or

1 8 cause to be paid into the Escrow Account a total of $15,000,000.00 in cash (the

19 "Underwriter Settlement Amount").

20.f any portion of the Underwriter Settlement Amount is not paid into

21 the Escrow Account in the timeframe as designated above in ^8, Plaintiffs have the

22 option to: (i) terminate the Underwriter Settlement; or (ii) require that the

23Underwriter Defendants pay or cause to be paid interest at the rate of 5% per

24 annum from the time the payments are due until deposited, which interest shall be

25 paid at the time the funds are subsequently paid into the Escrow Account.

2 6SE OF SETTLEMENT FUNDS

270. The Settlement Fund shall be used to pay: (i) any Taxes; (ii) any

28Notice and Administration Costs; (iii) any attorneys' fees awarded by the Court;






1and (iv) any Litigation Expenses awarded by the Court. The balance remaining in

2he Settlement Fund, after payment of items (I)-(iv), shall be distributed to

3Authorized Claimants as provided below.

41. The Net Settlement Fund shall be distributed to Authorized Claimants

5 as provided herein. Except as provided herein or pursuant to orders of the Court,

6 the Net Settlement Fund shall remain in the Escrow Account prior to the Effective

7Date. All funds held by the Escrow Agent shall be deemed to be in the custody of

8he Court and shall remain subject to the jurisdiction of the Court until such time as

9he funds shall be distributed or returned pursuant to the terms of this Stipulation

10 and/or further order of the Court. The Escrow Agent shall invest any funds in the

11Escrow Account in United States Treasury Bills (or a mutual fund invested solely

12n such instruments) and shall collect and reinvest all interest accrued thereon,

13except that any residual cash balances of less than $100,000 may be invested in

14money market mutual funds comprised exclusively of investments secured by the

15 full faith and cred it of the United States.

162. The Parties hereto agree that the Settlement Fund is intended to be a

17Qualified Settlement Fund within the meaning of Treasury Regulation § 1.468B-1

18and that Lead Coun sel, as administrator of the Settlement F und w ithin the meaning

19of Treasury Regulation § 1.468B-2(k)(3), shall be solely responsible for filing or

20causing to be filed all informational and other tax returns as may be necessary or

21appropriate (including, without limitation, the returns described in Treasury

22Regulation § 1.468B-2(k)) for the Settlement Fund. Such returns shall be

23consistent with this paragraph and in all events shall reflect that all Taxes on the

24ncome earned on the Settlement Fund shall be paid out of the Settlement Fund as

25provided by Paragraph 13 below. Lead Counsel shall also be solely responsible for

26causing payment to be made from the Settlement Fund of any Taxes owed with

27 espect to the Settlement Fund. Upon written request, the Underwriter Defendants

28will provide promptly to Lead Counsel any statements or infonnation required for

-15-W STIPULATION OF SETTLEMENTCase No. 2:07-cv-0093 1 -DDP (FMOx)




1 ax purposes, including the statement described in Treasury Regulation § 1.468B-

2 (e). ead C ounsel, as administrator of the Settlement Fund within the meaning of

3Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as are

4necessary or advisable to carry out this paragraph, including, as necessary, making

5a "relation back election," as described in Treasury Regulation § 1.468B-10), to

6cause the Qualified Settlement Fund to come into existence at the earliest

7 allowable date, and shall take or cause to be taken all actions as may be necessary

8r appropriate in connection therewith.

93. All Taxes shall be paid out of the Settlement Fund, and shall be timely

10paid by the Escrow Agent pursuant to the disbursement instructions to be set forth

11in the Escrow Agreement, and without prior Order of the Court. Any tax returns

12prepared for the Settlement Fund (as well as the election set forth therein) shall be

13consistent with the previous paragraph and in all events shall reflect that all Taxes

14(including any interest or penalties) on the income earned by the Settlement Fund

15shall be paid out of the Settlement Fund as provided herein. The Settlement Fund

16shall indemnify and hold all Released Underwriter Parties harmless for any Taxes

1 7 nd related expenses of any kind whatsoever (including without limitation, taxes

18payable by reason of any such indemnification), if any, payable by Underwriter

19 Defendants by reason of any income earned on the Settlement Fund. The

20Underwriter Defendants shall notify the Escrow Agent promptly if they receive any

21notice of any claim for Taxes relating to the Settlement Fund.

224. This is not a claims-made settlement. Once the Effective Date occurs,

23neither the Underwriter Defendants, their insurance carriers, nor any other

24Released Underwriter Parties nor any other person or entity that contributed to the

25Settlement Fund on their behalf, will have the right or ability to get back any of the

26Und erwriter Settlement Am ount or any interest accrued thereon, irrespective of the

27number of Claims filed, the collective amount of losses of Authorized Claimants,

28






1he percentage of recovery of losses, or the amounts to be paid to Authorized

2Claimants from the Net Settlement Fund .


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)




16. Lead Counsel may pay from the Escrow Account, without further

2approval from the Underwriter Defendants or other Defendants or further order of

3 he Court, the Notice and Administration Costs actually incurred. Such costs and

4expenses shall include, without limitation, the actual costs of publication, printing

5nd mailing the Notice, reimbursements to nominee owners for forwarding the

6Notice to their beneficial owners of New Century securities, the administrative

7expenses incurred and fees charged by the Claims Administrator in connection

8with providing Notice and processing the submitted claims, and the fees, if any, of

9he Escrow Agent. In the event that the Underwriter Settlement is terminated

10 pursuant to the terms of this Stipulation, all Notice and Administration Costs paid

11or incurred, including any related fees, shall not be returned or repaid to

12 Underwriter Defendants or any other person or entity who or which contributed to

13 he Settlement Fund on their behalf.

14TTORNEYS' FEES AND LITIGATION EXPENSES

1 57. Lead Counsel will apply to the Court for a collective award of

16attorneys' fees to Plaintiffs' Counsel. Lead Counsel also will apply to the Court for

17 reimbursement of Litigation Expenses, which may include reimbursement of the

18expenses of Plaintiffs in accordance with 15 U.S.C. § 78u-4(a)(4). Neither

19 Underwriter Defendants, nor any other Released Underwriter Party, shall take any

20position with respect to Lead Counsel's applications or awards discussed in this

21paragraph. Such m atters are not the subject of any agreement between U nderwriter

22Defend ants and P laintiffs other than what is set forth in this Stipulation.


24Court shall be paid to Lead Counsel, with the Court's approval, immediately upon

25award, notwithstanding the existence of any timely filed objections thereto, or

26potential for appeal therefrom, or collateral attack on the Underwriter Settlemen t or

27any part thereof, subject to Lead C ounsel's obligation to pay back any such am ount

28f, as a result of any appeal, further proceeding or successful collateral attack, the






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





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.


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.


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





1he right, but not the obligation, to waive w hat they deem to be formal or technical

2defects in any Claim Forms submitted in the interests of achieving substantial

3 ustice.

45. For purposes of determining the extent, if any, to which a Class


6onditions shall apply:

7.ach Class Member shall be required to submit a Claim Form

8 and Release, substantially in the form attached hereto as Exhibit 2 to Exhibit A,

9upported by such documents as are designated therein, including proof of the

10Claimant's loss, or such other documents or proof as the Claims Administrator or

11

Lead Counsel, in their discretion, may deem acceptable, by the date set by the12Court;

13.ach Claim Form shall be submitted to and reviewed by the

14Claims Ad ministrator, under the supervision of Lead Coun sel, who shall determine

15n accordance with this Stipulation the extent, if any, to which each Claim shall be

16 allowed, subject to review by the Court pursuant to subparagraph (d) below;

17.laim F orms that do no t meet the submission requirements may


19Administrator shall communicate with the Claimant in writing, to give the

20Claimant the chance to remedy any curable deficiencies in the Claim Form

21submitted. The Claims Administrator, under the supervision of Lead Counsel,

22shall notify, in a timely fashion and in writing, all Claimants whose Claim the

23Claims Administrator proposes to reject in whole or in part, setting forth the

24easons therefor, and shall indicate in such notice that the Claimant w hose C laim is

25o be rejected has the right to a review by the Court if the Claimant so desires and

26complies with the requirements of subparagraph (e) below;


28part desires to contest such rejection, the Claimant must, within twenty (20) days





1 after the date of mailing of the notice required in subparagraph (c) above, serve


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.



28approved by the Court shall be barred from participating in distributions from the






1Net Settlement Fund, but otherwise shall be bound by all of the terms of this

2Stipulation and the U nderwriter Settlement, including the terms of the Jud gmen t to

3be entered in this Consolidated Action and the releases provided for therein, and

4will be permanently barred and enjoined from bringing any action against any and

5ll Released Underwriter Parties concerning any and all of the Settled Claims.


7etermination o f C laims and the determination of all controversies relating thereto,

8including disputed questions of law and fact with respect to the validity of Claims,

9hall be subject to the jurisdiction of the Court.

1 0ERMS OF THE JUDGMENT

11

0. If the Underwriter Settlement contemplated by this Stipulation is12approved by the Court, Lead Counsel and Underwriter Defendants' counsel shall

13 request that the Court enter an Underwriter Judgment, substantially in the form

14annexed hereto as Exhibit B, pursuant to Rule 54(b) of the Federal Rules of Civil

15Procedure.

1 6AIVER OR TERM INATION

171. Within thirty (30) days of: (a) the Court's declining to enter, without

18leave to resubmit, the Preliminary Approval Order in any material respect; (b) the

19Court's refusal to approve this Stipulation or any material part of it; (c) the Court's

20declining to enter the U nderwriter Judgm ent in any m aterial respect; or (d) the date

21upon which the Underwriter Judgment is modified or reversed in any material

22respect by the Court of Appeals or the Supreme Court, the Parties each shall have

23he right to terminate the Underwriter Settlement and this Stipulation by providing

24 written notice to all other Parties of an election to do so. However, any decision

25 with respect to an application for attorneys' fees or Litigation Expenses, or with

26respect to any plan of allocation, shall not be considered material to the

27Underwriter Settlement and shall not be grounds for termination.

28







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






1 respects as if this Stipulation and any related orders had not been entered, and any

2ortion of the U nderwriter Settlement consideration previously paid (including an y

3 and all interest, income, or other investment return actually accrued), less any

4mounts paid or incurred for Notice and Administration Costs actually incurred

5nd paid or payable and/or Taxes paid or owing, shall revert to the person(s)

6 making the deposits, within fourteen (14) business days after written notification of

7uch event by Lead Counsel to the Escrow Agent, pursuant to the terms of the

8scrow Agreement.

9O ADMISSION OF WRONGDOING


11taken pursuant to it:12.hall not be offered or received against any of the Released

13Underwriter Parties as evidence of, or construed as, or deemed to be evidence of

14any presumption, concession, or admission by any of the Released Underwriter

15Parties with respect to the truth of any fact alleged by Plaintiffs or the validity of


17Underwriter Parties in this Consolidated Action or in any litigation, or of any

18 iability, negligence, fault, or other wrongdoing of any kind of any of the Released

19 Underwriter Parties;


21Underwriter Parties as evidence of a presumption, concession or admission of any

22ault, misrepresentation or omission with respect to any statement or written

23docum ent approved or mad e by any of the Released Underw riter Parties, or against

24he Plaintiffs or any Class Members as evidence of any infirmity in the claims of

25Plaintiffs or the other Class Members;

2 6.hall not be offered or received against any of the Released

27Underwriter Parties, or against the Plaintiffs or any other Class Members, as

28evidence of a presumption, concession or admission with respect to any liability,

-25-w STIPULATION OF SETTLEMENT





1negligence, fault or wrongdoing of any kind, or in any way referred to for any

2other reason as against any of the Released Underwriter Parties, in any other civil,

3riminal or administrative action or proceeding, other than such proceedings as

4 may be necessary to effectuate the provisions of this Stipulation; provided,

5owever, that if this Stipulation is approved by the Cou rt, Underwriter Defendants,

6ny other Released Underwriter Party, or any Class Member may refer to it to

7 effectuate the protection from liability granted them hereunder;

8.hall not be construed against any of the Released Underwriter

9 Parties, Plaintiffs or any other Class Members as an admission, concession, or

10presumption that the consideration to be given hereunder represents the amount

11which could b e or w ould have b een recovered after trial;12.hall not be construed against Plaintiffs or any other Class


14without merit or that damages recoverable under the Complaint would not have

15exceeded the Un derwriter Settlement Am ount; and



1 8 onsolidated Action, except for purposes of this Underwriter Settlement.

1 9AFA NOTICE

206. Pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28

21U.S.C. § 1715(b), not later than ten (10) days after the proposed Underwriter

22Settlement is filed in the Court, Underwriter Defendants shall cause to be served

23upon the appropriate State official of each State and the Attorney General of the

24United States a CA FA Notice The P arties will request that, pursuant to 28 U.S.C. §

251.715(d), the Final Approval Hearing be scheduled for no earlier than ninety (90)

26days following the deadline for Underwriter Defendants to serve the CA FA N otice

27as stated in this paragraph. Any failure by Underwriter Defendants to comply with28






1the CAFA Notice requirements will not provide grounds for delay of the Final

2Approval Hearing or entry of the Un derwriter Judgment.

3ISCELLANEOUS PROVISIONS


5 eference as though fully set forth herein.

68. Underwriter Defendants each warrant that, as to the payments made

7by or on behalf of it, at the time of such payment, it was not insolvent, nor did nor

8will the payment required to be made by or on behalf of it render it insolvent,

9 within the meaning of and/or for the purposes of the United States Bankruptcy

10 Code, including §§ 101 and 547 thereof. This representation is made by

11 Underwriter Defendants and no t by their counsel.129. If a case is commenced in respect of any Underwriter Defendant (or

13any insurance carrier contributing to the Underwriter Settlement Amount) under

14 Title 11 of the United States Code (Bankruptcy), or a trustee, receiver, conservator,

15or other fiduciary is appointed under any similar law, and in the event of the entry

16of a final order of a court of competent jurisdiction determining the transfer of

17money to the Settlement Fund or any portion thereof by or on behalf of any of the

18Und erwriter Defendants to be a preference, voidable transfer, fraudulent transfer or

19 similar transaction and any portion thereof is required to be returned, and such

20 amount is not promptly deposited to the Settlement Fund by others, then, at the

21election of Lead Coun sel, the Parties shall jointly m ove the C ourt to vacate and set

22aside the releases given and the Judgment entered in favor of Underwriter

23Defendan ts and the other Released U nderwriter Parties pursuant to this Stipulation,

24which releases and Judg ment shall be null and vo id; the Parties shall be restored to

25heir respective positions in the litigation immediately prior to May 5, 2010; and

26any cash amounts in the Settlement Fund shall be returned as provided in

27Paragraph 34 above.

28






10. The Parties intend this Underwriter Settlement to be a final and

2complete resolution of all disputes asserted or which could be asserted by the

3Plaintiffs, any other Class Members and their attorneys against all Released

4Underwriter Parties with respect to all Settled Claims. Accordingly, the Parties

5gree not to assert in any forum that this Consolidated Action was brought or

6efended in bad faith or without a reasonable basis. The Parties hereto shall assert

7no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure

8relating to the prosecution, defense, or settlement of this Consolidated Action. The

9 Parties agree that the amount paid and the other terms of this Settlement were

10negotiated at arm's-length in good faith by the Parties, including a mediation

11conducted by a professional mediator, the Hon. Daniel Weinstein of JAMS (the

12"Mediator"), and reflect a settlement that was reached voluntarily after

13consultation with experienced legal counsel.

141. While retaining their rights to deny that the claims asserted in the

15Consolidated Action were meritorious, Underwriter Defendants in any statement

16mad e to any m edia representative (whether or not for attribution) will not deny that

17he Consolidated Action was com menced and prosecuted in good faith and is being

1 8 ettled voluntarily after consultation with competent legal counsel. In all events,

19 the Parties shall refrain from any accusations of wrongful or actionable conduct by

20any Party concerning the prosecution and resolution of the Consolidated Action,

21and shall not otherwise suggest that the Settlement constitutes an admission of any

22claim or defense alleged.

232. This Stipulation may not be modified or amended, nor may any of its

24provisions be waived except by a writing signed by all signatories hereto or their

25 uccessors-in-interest.


2 7 re not meant to have legal effect.

28






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.


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





1rm's-length negotiations between the Parties and all Parties have contributed

2 substantially and materially to the preparation of this Stipulation.31. All counsel and any other person executing this Stipulation and any of

4 the exhibits hereto, or any related Underwriter Settlement documents, warrant and

5 represent that they have the full authority to do so and that they have the authority

6o take appropriate action required or permitted to be taken pursuant to the

7 Stipulation to effectuate its terms.

82. Counsel for the Parties agree to cooperate fully with one another in

9seeking Court approval of the Preliminary Approval Order, the Stipulation and this

10 Underwriter Settlement, and to use best efforts to promptly agree upon and. execute

11 all such other documentation as may be reasonably required to obtain final12approval by the Court of the Settlement.


14 Stipulation, such notice shall be in writing and shall be deemed to have been duly

15 given upon receipt of hand delivery or facsimile transmission with confirmation of16 receipt.17DATED AS OF: July 23, 2010ERNSTE 13OW '^^ ERGER

18. GRQL1 9/ r

20SALV , TORE J " RAZIANO

2 1LAIR A. N CIIOLASELIZABETH LIN

22IKI L, MENDOZABENJAMIN GALDSTON

23AKEO A. KELLAR12481 Nigh Bluff Drive, Suite 300

24an Diego, CA 92130Tel:(858) 793-0070

25ax: (858) 793-0323-and-

26ALVATORE J. GRAZIANOLAUREN A. MCMILLEN

27285 Avenue of the AmericasNew York, NY 10019

2 8el: (212) 554-1400Fax: (212) 554-1444

-30-w STIPULATION OF SETTLEMENTCase No. 2;07-cv-00931-DDP (FMOx)




1

MURRAY, FRANK & SAILER. LLP2ARVIN L. FRANK

275 Madison Avenue Suite 8013ew York, NY 1001

Tel;212 682-18184a x : (21282-1892

5WERLING, SCHACHTER& ZWERLING LLP

6EFFREY C. ZWERLING41 Madison Avenue

7ew York, NY 10010Tel:212 223-3900

8ax: (212) 371-5969ead Counsel for Lead Plaintiff The NewY ork S tate .Te achers' R etirem ent Sy stem and

10he Class, and . Plaintif fs Carl Larson andCharles .Hooten

11

1 2AUL, HASTINGS, JANOFSK Y1 3WALK ER LLP

14

15A

16ILLIAM S1 IV A

JOHNS. D ' v, T1 715 South Flower Street, 25^ b Floor

Los An eles, CA 900711 8e l:3 683-6000

F ax : (213) 627-070519

A ttorneys for Def endants Bear Stearns &20o. Inc., now kn ow n as J.P. M organ2 1ecurities Inc., Deutsche Barak Securities

Inc., Jefferies & Com pany Inc., JM P22ecurities LL C, .Morgan ,S tanley ch i Co. Inc.,

2 3iper Jaffray & Co., Roth Capital Partners

24L C, Sti fel Nicolaus & C o. Inc.

25

26

27

28

-31-ff STIPULATION OF SBTTLEM NTCase No. 2:07-cv-00931-DDP (FMOx)




EXHIBIT A

TO UNDERWRITER STIPULATION



Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 2 of 113 Page ID#:112031 BERNSTEIN LITOWITZ BERGER

& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)

NIZAVETairnblbglaw.com)

3LIN (Bar No. 174663)(elizabetNINDOZAlbgglaw. com )

4 NIKI L.Bar No . 214646)

UNJAMIkimlbglaw.com)5GALDSTON (Bar No. 211114)(ben %blbglaw.com)

6 A. KELLAR (Bar No. 234470)

M81eok c rb l bg l aw . com )gh B luff Drive, Suite 300

San Diego , CA 921308 Tel:(858) 793-0070

Fax: (858) 793-0323and-SALVATORE J. GRAZIANO

10 sgrazianoa b lbMLLEN

. com )LAUREN 1 . M

11 ([email protected])1285 Avenue of the Am erica s12 New York, NY 10019

Tel: 212 554-140013 Fax: ^212^ 554-1444

14 Lead Counse l or Lea d Plaintiff NewYo rk State Teache rs ' Retirem ent System

15

16

7NITED STATES DISTRICT CO URT

18ENTRAL D ISTRICT OF C ALIFORNIA

19

IN RE NEW CENTURYase No . 2:07-cv-00931-DD P (FMOx)20Lead Case )

21



24XHIBIT A



SETTLEMENTS AND PROVIDING FOR NOTICECase No . 2:07-cv-0093 1 -DDP (FMOx)




1HEREAS, Lead Plaintiff New York State Teachers' Retirement System

2 ("Lead Plaintiff"), and Plaintiffs Carl Larson and Charles Hooten, on behalf of


4 "Plaintiffs") and the Individual Defendants,' the Underwriter Defendants, 2 and








12


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.



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







24 And Directors (the "Global Officer And Director Settlement" or "Global Officer25 And Director Stipulation"). The Global Officer And Director Stipulation contains




KPMG Stipulation are referred to collectively as the "Stipulations," "Stipulations



Case No . 2:07-cv-0093 1 -DDP (FMOx)







4 annexed thereto;

5OW, THEREFORE, IT IS HEREBY ORDERED :

6.his order (the "Notice Order" or "Preliminary Approval Order")




0nconsistencies between the Stipulations and the Notice of Pendency of Class11 Action and Proposed Settlements, Settlement Fairness Hearing, and Motion for



14.he Court hereby preliminarily approves the Settlements as being


16CLASS CERTIFICATION

7.he Co urt hereb y cert ifies , pursuant to Rules 23(a) a nd 23(b)(3) of the






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





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:




6ystem NYSTRS and Plaintiffs Carl Larson and Charles Hooten areypical of





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




17 processing of claims as more fully set forth below:8.ithin five (5) business days after entry of this Order, the


20 Release (the "Claim Fonn"), annexed hereto respectively as Exhibits 1 and 2, to be






26.summary notice ("Summary Notice"), annexed hereto as




Case N o. 2:07-cv-00931-DDP (FMOx)





2ourt proof of publ icat ion of the Sum m ary Notice.3.he Court approves the form of Notice and Summary Notice



























Case N o. 2;07-cv-00931-DDP (FMOx)






3 including timely hailing of the Notice, if the nominee elected or elects to do so.























26 that Class Member (1) has served written objections, including the basis therefor, as




Case No. 2:07-cv-009 3 1 -DDP (FMOx)






3 Graziano, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the4 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &






















26 Counsel.




Case N o. 2:07-ev-00931-DDP (FMOx)






3 CLAIMS PROCESS

46.n order to be entitled to participate in the Settlements, a Class












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,







24 Hearing. To be valid, each request for exclusion must (i) state the name and


26 entity requests exclusion from the Class in In re New Century, 07-CV-0093 I -DDP









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



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







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.


Case No . 2:07-ev-0093 1 -DDP (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 1 1 of 113 Page ID#:112121. Only Class Members and Lead Counsel shall have any right to any



























28










5 Settlements:


7 PartieS 4 as evidence of, or construed as, or deemed to be evidence of any


9 to the truth of any fact alleged by PlaintiffS 5 or the validity of any claim that was or










19 Class Members;




23

24 4 Herein "Released Parties" includes: (1) the Released Officers And Directors (as



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).





























24 1\

25 \\

26 1\

27

28


Case N o. 2:07-cv-00931-DDP (FMOx)




1he Court retains jurisdiction of this Consolidated Action to consider all2 further applications arising out of or connected with the proposed Settlements, and


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





Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 15 of 113 Page ID#:11216EXH IBIT A-1 TO EXH IBIT A

TO UNDERW RITER STIPULATION






UIZairn(a^blbglaw.com

3BETH LIN âr No. 174663(elizabetNINDOZAlbglaw.com)

4 NIKI L.Bar No . 214646)

UJAMlaw.coVm5N GALDSTON (Bar No. 211114)(ben: # blbglaw.com)

6 TA 4 * A. KELLAR (Bar No. 234470)takeok&1g

1 , hb l bg l a w . c om )

7481 luff Drive, Suite 30 0San Diego , CA 92130

8 Tel: 858 793-0070Fax: ^858^ 793-0323

9and-SALVATO

i

RE J. GRAZI ANO1 0AUREN MCM )LLEN

1 1 ^[email protected])285 Avenue of the Am ericas12 New York, NY 10019

Tel: : 212 554-140013 Fax: ^212^ 554-1444

14 LeadCounsel for Lead Plaintiff NewYo rk State Teache rs ' Retirem ent System

15

16

7NITED STATES DISTRICT CO URT

1 8ENTRAL D ISTRICT OF C ALIFORNIA

19 IN RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)(Lead Case )

20


22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND

23OTION FOR ATTORNEYS'FEES AND REIMBURSEMENT


25


27

28

NOTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931




1A Federal Court authorized t his Notice. This is not a sol icitat ion from a lawy er.

2NOTICE OF PENDENCY OF CLASS ACTION: Please be advised that your rights



5 including March 13, 2007, you purchased or acquired Common Stock,


7referred Stock"), 9.75% Series B Cumulative Redeemable Preferred Stock

8("Series B Preferred Stock"), and/or Call Options and/or sold Put Options of

9ew Century Financial Corporation ( "New Century" or the "Company").

1 0

11NOTICE OF SETTLEMENTS: Please also be advised that the Court - appointed12Lead Plaintiff, New York State Teachers' Retirement System ("Lead

13 Plaintiff') and Plaintiffs Carl Larson and Charles Hooten (collectively

14"Plaintiffs"), on behalf of the Class (as defined below), have reached three

15 proposed settlements ("Settlements") of the Consolidated Action as follows: a

16ettlem ent with the U nderwriter Defendants' in the amoun t of $15,000,000.00;

17 a settlement with KPMG LLP ("KPMG") in the amount of $44,750,000.00;



201 'Underw riter Defendants" means Bear, Stearns & C o. Inc., Deutsche Bank


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



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.


Case No . 07-00931




1$124 9 827 9 088.00.he terms of the Settlements are set forth in the

2tipulations.4


4eceipt of cash from the Settlements. Your legal rights will be affected

5whether or not you act. Please read this Notice carefully!

6


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


12 regarding claims against the Individual Defendants, the Underwriter Defendants,

13 and KPMG (collectively "Defendants") in the Consolidated Action. The proposed


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


1s Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred


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


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


"KPMG Settlement').


Case No . 07-00931




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.")


8as described more fully below, Plaintiffs, on behalf of the Class, have agreed to


10Stock and/or New Century Call Options and/or sales of New Century Put Options


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



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



Case No . 07-00931



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


3lleged. The parties disagree on, among other things: (1) whether the statements


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


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


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





22per Put Option.




26ega rding the Settlem ents should b e directed to Mr. Graziano at Be rnstein Litow itz


28 (866) 648-2524, b lbg@b lbg law .com .


Case No , 07-00931




1

2OUR LEG AL RIGHTS AND OPTIONS IN THE SETTLEME NTS:

3SUBMIT A CLAIM FORM NOhis is the only way to get a payment. If

4LATER THAN [INSERT]ou wish to obtain a payment as a Class5ember, you will need to file a Claim6

Form (which is included with this Notice)


8EXCLUDE YOURSELF FROMet no payment. This is the only option


10WRITTEN REQUEST FORther law suit aga inst any of the de fendants


RECEIVED NO LATER THANlaims that were, or could have been,13

[INSERT].sserted in this ca se.145OBJECT TO THErite to the Court and explain why you


17SUBMITTING WRITTENlan of Allocation, or the request for


19 ARE RECEIVED NO LATERxpenses. You cannot object to the

20 THAN [INSERT].ettlements unless you are a Class

21em ber and do not exc lude yourse lf .

22GO TO THE HEARING ONsk to speak in Court ab out the fairness of

23 INSERT] AT [INSERT], ANDhe Settlements, the proposed Plan of



26RECEIVED NO LATER THAN

27 INSERT].

28


Case No . 07-00931




1DO NOTHINGet no payment. Remain a Class


3

4HAT THIS NOTICE CONTAINS5

6Why D id I Get This Notice?ag e

7What Is This Case Ab out? What Has Ha ppened So Far?ag e

8 How Do I Know If I Am Affected By The Settlements?age

9Wha t Are The Lea d Plaintiff 's Reaso ns For The Sett lem ents?age10

Wha t Might Happen If There Were No Settlem ents?age

ll

How Much Wil l My Payment Be?ag e1 213 What Rights Am I Giving Up By Agreeing To The Settlements?ag e

14Wha t Paym ent Are The Attorneys For The Class Seeking?

15 How Will The Lawyers Be Paid?ag e

16 How Do I Participate In The Settlements? What Do I Need To Do?ag e

17What If I Do Not W ant To Be A Part Of The Sett lem ents?

18 How Do I Exclude Myself?ag e


20The Settlements? Do I Have To Come To The Hearing?

21Ma y I Speak A t The Hearing If I Do n' t Like The Sett lem ents?age

22Wha t If I Bo ught Shares On Som eo ne Else 's Behalf?ag e

23Can I See The Court File? Whom Should I Contact If I Have Questions? Page

24WHY DID I GET THIS NOTICE?

2 5


27 States District Court for the Central District of California (the "Court") because

28 you or someone in your family may have purchased or otherwise acquired or sold


Case No . 07-00931




1New Century Securities during the Class Period. The Court has directed us to send

2you this Notice because, as a potential Class Member, you have a right to know




6dministrator selected by Lead Plaintiff and approved by the Court, will make

7 payments pursuant to the Settlements after any objections and appeals are resolved.




11 the Court has appointed New York State Teachers' Retirement System to serve as

12 "Lead Plaintiff' under a federal law governing lawsuits such as this one, and



15 Action. Lead Plaintiff New York State Teachers' Retirement System and named

16plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class

17 action is a type of lawsuit in which the claims of a number of individuals are

Is esolved together, thus providing the class members with both consistency and

19 efficiency. Once the class is certified, the Court must resolve all issues on behalf

20 of the class members, except for any persons who choose to exclude themselves

21 rom the c lass . (For m ore inform ation on excluding yourself from the Class, please

22read "What If I Do Not Want To Be A Part Of The Settlements? How Do I

23Exclude Myself?" loc ated below . )


25he Ce ntra l Distric t of Cal ifornia , and the case is know n as In re New Century. The





Case No . 07-00931




1 Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual

2 efendants, the Underw riter Defendants and KPMG. New Century w as not nam ed

3s a defendant because New Century has filed a petition for voluntary bankruptcy


5 who has filed such a petition.



8 purpose of this Notice is to inform you of this case, that it is a class action, how

9you might be affected, and how to exclude yourself from the Class if you wish to


11 and of a hearing to be held by the Court to consider the fairness, reasonableness,


13 proposed Plan of Allocation, and the application by Lead Counsel for attorneys'

14 ees and reim bursem ent of Lit iga t ion Expenses (the "Settlem ent Hearing") .

1 50. The Settlement Hearing will be held on [INSERT] at [INSERT],

16befo re the Hono rable D ean D . Pregerson, a t the United States Distric t Court for the

17 entra l Distr ic t o f Cal ifornia , 312 No rth Spring Street , Co urtroo m 3, Los Ang eles,

1 8 California 90012 to determine:

19.hether this Co nsol idated Ac tion should b e f inal ly cert if ied, for



22lass;


24dequate and should be approved b y the Co urt;



27tipulations;

28


Case No . 07-00931





2nd should be a pproved b y the Co urt; and



5y the Court.61. This Notice does not express any opinion by the Court concerning the

7merits of any claim in the Consolidated Action, and the Court still has to decide

8whether to approve the Settlements. If the Court approves the Settlements,

9 payments to Authorized Claimants will be made after any appeals are resolved, and

10 f ter the com plet ion o f a l l c la im s proc essing. Please be pa tient .

11 WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?1232. Beginning on or about February 8, 2007, securities class action


15California a nd the act ions w ere co nsol idated b y Order dated June 26, 2007.


17bankruptcy in the United States Bankruptcy Court for the District of Delaware

18 `Bankruptcy Co urt" ) under Chapter 11 of Tit le 11 o f the United States Co de.

1 94. By Order dated June 26, 2007, the Court appointed the New York


21 nd approved i ts select ion of Bernstein Litow itz Berger & Gro ssma nn LLP as Lead

22Counsel for the Cla ss.


24Action Com pla int ( "Consol ida ted Co m pla int" ) asser ting c l a ims aga ins t Defendants


26Act of 1933 ("Securi ties Act") on beha lf of the Class.


28 the Consol idated Com plaint , w hich Plaintiffs opposed o n Dec em ber 14, 2007.


Case No . 07-00931





2ism iss with leave to am end the com plaint .



5 ursuant to the Securi ties Act and the Exc hange Act .


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.


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 .


18 judgm ent, w hich Plaintiffs opposed on M arch 15, 2010.



21w ere ab le to reach ag reem ents in principle to set t le this Consol idated Ac tion o n the



24entitled Kodiak Warehouse LLC, et al. v Brad A. Morrice, et al. (Case No. 08-



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


Case No . 07-00931




1Trustee and Plan Administrator v. Robert K. Cole et al. (In re New Century TRS




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



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.



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



24of any such excluded party. The Class also does not include those persons and



27Do I Exclude Myself?," belo w ) .

28


Case No . 07-00931




1RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT



4BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MU


6THAN [INSERT].

7HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEM ENTS?8




12their c la im s ag ainst Defendants through tr ia l and a ppeals , as w el l as the diff icul t ies


14 have taken into account the possibility that the claims asserted in the Complaint





19m isrepresentat ions or o m issions w ere m ateria l to investors , w hether a l l of the Class






25 successful resolution at trial and on appeal.



28Sett lem ents are fa ir , reasona ble a nd ade quate, and in the best interests of the Class .


Case No . 07-00931






3described in this Notice), as compared to the risk that the claims in the Complaint

4 would produce a similar, smaller, or no recovery after summary judgment, trial and

5ppeals, possibly yea rs in the future.


7Complaint and deny having engaged in any wrongdoing or violation of law of any

8kind w hatsoeve r . De fendants have agree d to the Sett lem ents solely to el im inate the


10e construed as an admission of Defendants' wrongdoing.

1 1HAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENTS?






18Settlem ents, or nothing a t a l l .

19HOW MUCH WILL MY PAYMENT BE?





25KPM G has ag reed to pay $44,750,000.00. Col lect ively, Defendants have a greed to

26pay a tota l am ount of $124,827,088.00 in ca sh.




Case No . 07-00931




1Distribution Order, the Net Settlement Fund will be distributed to Authorized

2 laim ants in acc ordance w ith the Plan of Allocat ion.

34. The Settlement Fund will be distributed as follows:

4i)o pay all federal, state, and local Taxes on any income earned

5y the Settlem ent Fund and to pay the reasona ble c osts incurred



8xpenses of tax at torneys and ac co untants) ;

9ii)o pay costs and expenses in connection with providing Notice

10o Class Members and administering the Settlements on behalf

1 1f Class Mem bers;12iii)o pay attorneys' fees, with interest on such amount, to the

13xtent allowed by the Court pursuant to Lead Counsel's

14pplication;

15iv )o pay Litigation Expenses incurred in commencing and


17oney, to the extent allowed by the Court pursuant to Lead


19v)o compensate Authorized Claimants with the balance of the

20et Settlement Fund in accordance with the Plan of Allocation,

21ubject to an Order of the Court approving the Settlements and

22he Plan o f Al locat ion (or such other a l loca t ion plan a s the Court


24m eaning that the tim e for appeal or appellate review of the Order

25ranting f inal a pproval has expired, or , i f the O rder is appealed,

26hat the appeal is either decided without causing a material27hange in the Order or is upheld on appeal and is no longer

28ubject to appellate review) .

44-OTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931




15.ach person wishing to participate in the distribution must timely

2ubm it a va l id Cla im Form es tab l i shing m em bership in the C lass, and inc luding a l l

3equired documentation, postmarked no later thanto the

4ddress set forth in the Claim Form that acco m panies this No tice. Unless the Court

5therw ise orders, any Class Mem ber w ho fai ls to subm it a Claim Form postmarked no

6ater thanhal l be forever ba rred from receiving paym ents pursuant to

7he Settlements set forth in the Stipulations but will in all other respects remain a



1 06. Payment pursuant to the Plan of Allocation approved by the Court

11 shall be conclusive against all Authorized Claimants. No person shall have any






17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of




21 herew ith, exc ept as otherw ise provided in the Stipulations.


23 proceeds of the Settlements to those Class Members who suffered economic losses


25 nd industry factors or Com pany-specif ic fac tors not rela ted to the a l lege d w rongful


27 nalysis undertaken to that end, including a review of publ ic ly avai lable inform ation

28 egarding New Century and a nalysis regarding the stock price m ovem ents.


Case No . 07-00931



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


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


10 Preferred Stock, Series B Preferred Stock, or Put/Call Options as of the close of the


12 ransaction, i.e., purchase, acquisition, sale, disposal, exercise, or expiration, made




16market on March 13, 2007, the last day of the Class Period, and, for Common


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



232007, to June 10, 2007.5


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,




Case No . 07-00931





2 ddressed as fo l low s:

3n re New Century Securi ties Lit iga t ion Sett lem ent4/o A nalytics , Inc . Claim s Adm inistrator


6

41. Unless otherwise ordered by the Court, any Class Member who fails



pursuant to the Stipulat ion, b ut w ill in a l l other respects b e sub ject to the provisions1 0

of the Stipulat ion and the f inal judgm ents entered by the Court .

1142. The Net Settlement Fund shall be distributed to members of the Class12

w ho subm it acce ptab le Proofs of Cla im. For purposes of the P lan of A l loca t ion, the13


(composed of the • settlement fund from the settlement with the Underwriter15

Defendants net of Court-approved fees and expenses), and the "Individual-Auditor1 6




Preferred Stock dur ing the Class Period and w ere dam age d thereby m ay be e l ig ib le20




damaged thereby) may be eligible to receive distributions from the Individual-

24


26dissem inated," 15 U.S.C. §78u-4(e)(1) . $0.87 w as the averag e c lo sing price of New


and ending o n June 10, 2007.28


Case No . 07-00931




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


5urchased or sold. This is because claims against the Underwriter Defendants


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


17 Underwriter Allotment and the Individual-Auditor Allotment will be

18proport ionately a l loc ated to the Authorized Claim ants .



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



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,


28 so, when it was sold; and (iv) the artificial inflation in the price of New Century


Case No . 07-00931




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


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);


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



17corrective disclosures affecting trading on February 8, 2007; March 5, 2007, and


19Securities.


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 .




26rom May 5, 2005 through February 7, 2007, must be held until or beyond




Case No . 07-00931




1 February 8, 2007, and before or on March 2, 2007, must be held until March 5,


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


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


Case No . 07-00931




1 calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be


3ecurities unless specifically provided in the instrument of gift or assignment.

4 Similarly, the covering purchase of a short sale shall not be deemed a purchase or

5sale of New Century Securities for the calculation of an Authorized Claimant's6Recog nized Loss Cla im .





11Authorized Claimant shall be paid an amount determined by multiplying the total

12n the Underw riter Al lotm ent and/or Individual-Auditor Al lotm ent for their c lass of





17Underw riter Al lotm ent and/or Individual-Auditor Al lotm ent based on his , her or i ts

18Recog nized Loss Cla im .


20 above is not intended to be an estimate of a Class Member's damages, nor of what



23 om puta t ion is only a m ethod to w eigh Class Mem bers ' c l a ims ag a inst one another .





28w hether to o pt-out of the Sett lem ents .


Case No . 07-00931





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


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


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




19 combined and thereafter netted against each other. However, in all other cases,



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.




28bo und by the Settlem ents and the judgm ents of the Co urt.


Case No . 07-00931






3after all claims have been processed. At that time, Lead Plaintiff will file a motion

4or entry of a proposed Class Distribution Order which will, among other things,

5pprove of the distribution to Authorized Claim ants of the N et Sett lem ent Fund.


7nd their respective counsel, and all other Released Parties shall have no

8responsibility for, or liability whatsoever, relating to distributions from the




12Adm inist ra tor , the paym ent or w i thholding o f Taxes ow ed b y a Set t lem ent Fund, or

13 ny losses incurred in connec tion therewith.

14.om puta t ion M ethodology Rela t ing toRecog nized Losses for Com m on Stock

15urchases


17consultant calculated the amount of artificial inflation in the daily closing market

18prices for New Century Com m on Stoc k during three different port ions of the Class

19 Period. See the annexed Table 2. In computing artificial inflation, the damages

20consultant considered price changes of New Century Common Stock in regard to

21certain public announcements regarding New Century and adjusted those price

22 hange s that w ere at tributable to m arket forces unrelated to the a l leged fraud.



2 5 rom the Individual-Auditor Al lotm ent .

26.eco gnized Loss Calculat ions


28Settlem ent as fo l low s:


Case No . 07-00931




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


2007, the fo l low ing c l a im s for dam ages sha l l be a l low ed:6


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


1 0ereto, less the inflation per share at the time of sale as set forth in Table 2;

and

1 1


132, 2007, the fol low ing c la ims for dam ag es shal l be a l low ed:


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,


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


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


date o f purchase a s set forth in Tab le 2, annexed hereto.

24


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:


Case No . 07-00931






1b)For each share sold on or after March 13, 2007, the allowed damages


date o f purchase as set forth in Tab le 4, annexed hereto.3



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



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


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:


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,


28urchase for the applicable date of purchase as set forth in Table 5,-26-OTICE OF PENDENCY OF CLASS ACTION

Case No . 07-00931




1nnexed hereto less the inflationion p er share at the time of sale as set

2orth in Tab le 5; and


4 007, the fo l lowing c l a im s for dama ges sha l l be a l low ed:


6Cla im s for dam ages sha ll be a l lowe d;

(b) For each share sold on or after March 13, 2007, the allowed damages

7hal l be the infla t ion per share a t the tim e o f purcha se for the appl icable

8ate o f purchase as set forth in Tab le 5, annexed hereto.

95. The Recognized Loss Claims for damages for such Series B Preferred


11under the PSLRA) to the sm al lest of the fol low ing:12a) the difference between the price paid and the price received (out-of-pocket

13nvestm ent loss) i f sold o n or b efore June 10, 2007;(b) the difference between the price paid (excluding all fees and commissions)


15etw een M arch 13, 2007, and June 10, 2007; and(c) the difference between the price per share paid and $7.95 per share if the

16hares w ere sold a f ter June 10, 2007, or w ere held unti l the current date.

1 7.alculat ion of Recog nized Loss for

New Century Ca l l and Put Options1 .8

196. The Plan of Allocation covers the following New Century Call and

20

Put Options: New Century Call Options on Common Stock initially purchased or

21

otherwise acquired during the Class Period, on May 5, 2005, up to and including

22


23


2005, through a nd including M arch 13, 2007 ("Ne w Century Put Options") .24


Options and artificial deflation and Recognized Losses as to New Century Put26

27Options were computed in a manner similar to that used with respect to New

Century Common Stock as described above. To determine artificial inflation for28

Call Options, Lead Plaintiff's damages consultant considered securities' price-27-OTICE OF PENDENCY OF CLASS ACTION

Case No . 07-00931




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


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



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





17 djustm ent for dividends and the annua l ized standard deviat ion est im ated from 46-


19 Century Common Stock on the transaction date, compared with the Black-Scholes



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,







Case No . 07-00931




i the previous 45-day stock returns, which are then annualized using a 252-trading

2 ay approac h.

3



5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.




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


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


price per Option ($0.00 if the Ca l l Option expired w orthless) .15




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


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.





28ptions m ultiplied by the lesser of-


Case No . 07-00931





2ate o f purchase and A rtificial Inflation per Call Option on the da teof expiration, exercise, or sale, as appropriate; or


4rice per Option ($0.00 if the Call Option expired w orthless) .


6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) w ere exercised on or af ter March 13, 2007; or 3) w ere sold (posit ion


8hal l be that num ber o f Options m ultipl ied b y the lesser of-



price per Option ($0.00 if the Ca l l Option expired w orthless) .

1 1


13period May 5, 2005, through and including March 13, 2007, the Artificial Inflation




17 Scho les put option pricing form ula (using B lack 's adjustm ent for dividends and the

18 annualized standard deviation estimated from 46-day historical daily volatility

19estimates) using the closing share price of New Century Common Stock on the









28dividends is implemented. Annualized volatility estimates are obtained using the-30-OTICE OF PENDENCY OF CLASS ACTIONCase No . 07-00931






1




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


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


1 4ut Option expired worthless) .


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.





25w il l b e made .


27part icular securi ty shal l be exclusive o f a l l co m m issions, taxes, fees and charge s .

28


Case No . 07-00931



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.



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


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.




22 urther notice to the Cla ss.

23WHA T RIGHTS AM I GIVING UP BY AGREEING T4 THE SETTLEMENTS?


26"Judgments"). The Judgments will dismiss with prejudice the claims against the


28 Plaintiff and a l l other Class Mem bers w ill provide releases as described belo w .


Case No . 07-00931





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




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


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


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







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





2 nderwri ter D efendants) .


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


8nature and description, w hether know n or Unknow n, w hether aris ing under federa l ,


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


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


19 "Released Auditor Parties" does not include any Defendants other than KPM








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






3arise out of or are based upon the allegations, transactions, facts, matters or


5Com pla int , and tha t a r ise out of or re l a te to the purchase of New Century Com m on




9o the enforcement of the Settlements. "Released Underwriter Party" means the




13employees, agents and attorneys. "Released Underwriter Parties" does not include

14any D efendants other than the Underw riter Defendants .150. "Released Parties" means the Released Officers And Directors the

16 Released Auditor Parties, and the Released Underwriter Parties.

1 71. "Unknown Claims" means any and all claims that Lead Plaintiff or


19time of the release of the Released Parties, which if known by him, her or it might


21respect to any and all settled claims, the Lead Plaintiff shall expressly waive, and


23udgment shall have expressly waived, any and all provisions, rights and benefits


25ommon law, that is similar, comparable, or equivalent to Cal. Civ. Code § 1542,

26w hich provides:




Case No . 07-00931





2aterially affected his or her settlement with the debtor.




6nd w as a key elem ent of the Settlem ents .





11 release claims against each other and other persons and entities as set forth in the

12Stipulations.

13WHA T PAYMENT ARE THE ATTORNEYS FOR THE CLASS SEEKING?

14OW W ILL THE LAWY ERS BE PAID?



18 been reimbursed for its out-of-pocket expenses. Before final approval of the

19 Settlements, Lead Counsel intends to apply to the Court for an award of attorneys'

20 fees from the Settlement Fund in an amount not to exceed 12% of the Settlement



23seek attorneys' fees or expenses with respect to, any disgorgements or penalties


25same time, Lead Counsel also intends to apply for the reimbursement of Litigation


27same rate as earned by the Settlement Fund. Included in Lead Counsel's overall

28 request for reimbursement of Litigation Expenses will be a request for an award to


Case No . 07-00931




1Lead Plaintiff and/or named plaintiffs Carl Larson and Charles Hooten for

2 reimbursement of their reasonable costs and expenses (including lost wages)


4 amount of the awards.

5HOW DO I PARTICIPATE IN THE SETTLEMENTS?

6HAT DO I NEED TO DO?75. If you purchased or otherwise acquired New Century Common Stock,


10 and/or New Century Call Options and/or sold New Century Put Options, during the

11 period from May 5, 2005, through and including March 13, 2007, either in the

12 Offerings, pursuant to a registration statement, or in the market, and were injured

13 upon disc losure of certa in facts a l leged in the Co m plaint, and you a re not excluded

14by the definition of the Class and you do not elect to exclude yourself from the

15 Class, then you are a Class Member. You will be bound by the proposed

16Sett lem ents if approved by the Co urt, and b y any judgm ent or determ ination o f the




20 website maintained by the Claims Administrator for the Settlements to download a

21 copy of the Claim Form or request that a Claim Form be mailed to you. The

22 website is www.newcentarysettlement.com. You may also request a Claim Form

23 by calling toll-free 1-866-308-7615. Copies of the Claim Form can also be

24downloaded from Lead Counsel's website at www.blbglaw.com. Those who

25 exclude themselves from the Class, and those who do not submit timely and valid

26 Cla im Form s w i th adequa te suppor ting docum enta tion, wi l l not be e nt it led to share


28 in, New Century Securities, as they may be needed to document your Claim.


Case No . 07-00931






3our own expense. You are not required to retain your own counsel, but if you

4 choose to do so, such counsel must file a notice of appearance on your behalf and


6 section entitled, "When and Where Will the Court Decide Whether to Approve the

7 Settlements?," below.


9 yourself from the Class by following the instructions in the section entitled, "What

10f I Do Not Want To Be A Part Of The Class And The Settlements? How Do I

11Exclude Myself? ," below .128. If you wish to object to the Settlements or any of the terms of the


14 attorneys' fees and reimbursement of Litigation Expenses, and if you do not

15 xclude yourself from the Class, you m ay present your ob ject ions by fol low ing the

16 instructions in the section entitled, "When and Where Will the Court Decide

1 7 hether to A pprove the Set tlem ents?," b elow .

18HAT IF I DO NO T WANT TO BE A PART OF THE SETTLEMENTS?19OW D O I EXCLUDE MYSELF?2019. Each Class Member will be bound by all determinations and

22judgments in this lawsuit, including those concerning the Settlements, whether

23favorable or unfavorable, unless such person or entity mails, by first-class mail (or

24 its equivalent outside the U.S.), or otherwise delivers a written Request for


26Sett lem ent, c /o Analytics , Inc . , Claim s Adm inistrator , P.O. Box 2004, Chanhassen,


28 [INSERT]. You will not be able to exclude yourself from the Class after that date.


Case No . 07-00931




1Each request for exclusion must (i) state the name and address of the person or


3rom the Class in In re N ew Century, 2:07-CV -0093 I -DDP; (iii) be signed by the


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




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.


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?



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


Case No . 07-00931




1Hearing. You can object to or participate in the Settlements without attending the

2Settlement Hearing.

304. The Settlement Hearing will be held on [INSERT] before the



6 California 90012. The Court reserves the right to approve the Settlements, the Plan


8xpenses at or after the Settlement Hearing without further notice to the members

9 of the Class. The Settlements will become effective only if all three Settlements

10 are a pproved b y the Court .

1 105. Any Class Member who does not submit a valid exclusion that is12eceived no later than [INSERT] may object to the Settlements, the Plan of

13 Allocation, or Lead Counsel's request for an award of attorneys' fees and



16 all other papers (including proof of all transactions in New Century Securities


18 District Court for the Central District of California at the address set forth below

19on or before [NSERT]. You must also serve the papers


21receivedonor before[INSERT].

22

23Clerk's Officeead Cou nsel for the Class

24UNITED STATESERNSTEIN LITOWITZ BERGER

25DISTRICT C OURTGROSSMANN LLPFOR THE CENTRALalva tore J. Graziano , Esq.

26DISTRICT OF CALIFORNIA285 Avenue of the Am ericas

27Clerk of the Courtew York , NY 10019312 N. Spring Street

28Los A ngeles, Cal ifornia 90012


Case No . 07-00931




1epresentative Co unsel for Directors and2fficers

3UNGER, TOLLES & OLSON LLP

4a thl een M. McDow el l355 South Grand Avenue , 35th Floo r


6Co unsel for Underw riter Defenda nts

7AUL, HASTINGS, JANO FSKY &WALKER LLP

9i ll iam F. Sul l ivan

toohn S. Durrant515 South Flow er Street , 25 t h Floor

1 Ios Ang eles, CA 9007112

Counsel for KPMG13

4IDLEY AUSTIN LLPMichael L. Rugen

1555 Ca lifornia Stree t, Suite 2000

1 6an Francisco, CA 9410417


19 the number of shares of New Century Securities purchased or otherwise acquired


ob jec t to the Set tl em ents or any aspec t of them , if you a re no t a Class Mem ber o r if21

you excluded yourself from the Class .22


Set tl em ent Hear ing . You m ay not a ppear a t the Set tl em ent Hear ing to present your24



otherwise .27

108. If you wish to be heard orally at the hearing in opposition to the2s

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




1n award of attorneys' fees and reimbursement of Litigation Expenses, and if you

2have filed and served a timely written objection as described above, you also must

3otify the above counsel on or before [INSERT4oncerning your intention to appear. Persons who intend to object and desire to

5present evidence at the Settlement Hearing must include in their written objections

6he identity of any witnesses they may call to testify and exhibits they intend to

7ntroduc e into evidence at the hearing.

809. You are not required to hire an attorney to represent you in making

9 written objections or in appearing at the Settlement Hearing. If you decide to hire


11notice of appea rance w ith the Court and serve it on Lead Co unsel so that the notice12s received on o r before [INSERT].

1 310. The Settlement Hearing may be adjourned by the Court without

14 urther written notice to the Class. If you intend to attend the Settlement Hearing,

15you should confirm the date and t im e w ith Lead Co unsel .

16Unless the Court orders otherwise, any Class Member who does not object in

1 7 the manner described above will be deemed to have waived any objection and

18shall be forever foreclosed from making any objection to the proposed

19 Settlements, the proposed Plan of Allocation, or Lead Counsel's request for an


21Members do not need to appear at the hearing or take any other action to

22indicate their approval.

234HAT IF I BOUGHT SHARES ON SOMEONE ELSE'S BEHALF?



27organization other than yourself, you must either (1) send a copy of this Notice to

28 the beneficial owner of such New Century Securities, postmarked no later than


Case No . 07-00931



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


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


11 reasonable expenses actually incurred, by providing the Claims Administrator with

12 proper documentation supporting the expenses for which reimbursement is sought.


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,






27

28


Case No . 07-00931




1n re New Century Securities Litigationalva tore J. Graziano , Esq.2et t lementERNSTEIN LITOWITZ BERGER

c/o Ana lytics, Inc.GROSSMANN LLP3la ims Administrator285 Avenue of the Am ericas4.O. Box 2004ew York , NY 10019

Chanhassen, MN 55317-2004866) 648-25245laim s Ad m [email protected] Counsel

DO NOT CALL OR W RITE THE COURT OR THE OFFICE OF THE7

CLERK OF COURT8

REGARDING TH IS NOTICE.9

1 0

11 Dated:y Order of the Clerk of Co urtUnited States District Court

12or the Ce ntral District of California

13

14

15

16

17

18

1920

21

22

23

24

25

26

27

28


Case No . 07-00931




12able 1

3

4

5

6 Issuer /iquidationhare inhare in

7nderlyingUSIPyp essue DatePreferencea tenderwriter Individual

AllotmentAuditor

Al lo tmen t8

Preferred Stock

9 New Century 64352D200/15/200525.00.125%Series A

10

11referred Stock

New Century 6435EV207/15/200625.00.750%12eries B

13New Century 6435EV108 Common Stock14

15 New Centuryariousall Option16New Centuryariousut Option178

19

20

21

22

23

24

25

26

27

28


Case No . 07-00931




1

2able 2

3nf la t ion per Share for Com m on Stock Shares Purchased betw eenMa y 5, 2005, and Ma rch 13, 2007

5


7-Feb-07-Mar-071.09

3-Mar-072-Mar-07.6 983-Mar-07o the present.0 09

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Case No . 07-00931




12

3abe34

Common Stock PSLRA 90-Day Look-Back Loss L imitation Calculations


6at erice ( $ )rice ( $ )aterice ( $ )rice ($ )

713Mar2007.8 4.8 47Apr2007.86.1 9

84Mar2007.6 7.760Apr2007.89.18

15Mar2007.35.951May2007.85.1 7

96Mar2007.3 4.302May2007.83.16

19Mar2007.17.473May2007.8 0.15100Mar2007.69.514May2007.72.14

111Mar2007.67.537May2007.5 9.1 2

22Mar2007.56.548May2007.58'll123Mar2007.0 0.599May2007.53.10

26Mar2007.56.59OMay2007.43.08

137Mar2007.41.5 7lMay2007.4 3.0 6

28Mar2007.11.534May2007.41.05

149Mar2007.03.495May2007.37.03

30Mar2007.06.4 66May2007.3 6.0 2152Apr2007.9 1.437May2007.3 6.01

163Apr2007.01.40SMay2007.3 9.9 9

04Apr2007.0 0.381May2007.4 4.98

175Apr2007.26.3 72May2007.43.97

09Apr2007.14.363May2007.47.9 618OApr2007,09.344May2007.45.95

1lApr2007.98.335May2007.47.9 4192Apr2007.89.319May2007.4 6.93

203Apr2007.86.290May2007.45.9 2

16Apr2007.98.271May2007.44.9 2

217Apr2007.00.261Jun2007.44.91

18Apr2007.9 9.254Jun2007.43.9 0

229Apr2007.93.245Jun2007.4 3.8 9

20Apr2007.9 6.236Jun2007.4 5.88

233Apr2O07.9 6.227JLm2007.4 4.8 8

24Apr2007.92.218Jun2007.4 4.8 7245Apr2007.9 6.209Jun2007.4 4.8 7

256Apr2007.9 4.200Jun2007.4 4.87

26

27

28


Case No , 07-00931




1

2able 4


5

ay 5, 2005, and March 13, 2007


1

-May-05

-Feb-07

5.10

7-Feb-07-Mar-070.488-Mar-072-Mar-07.48


10

11

12

13Table 5

14


16ay 5, 2005, and March 13, 2007


18

-May-05

-Feb-07

5.41

2

-Feb-07

-Mar-07

1.18

19

-Mar-07

2-Mar-07

.03

4

3-Mar-07

o the present

00

20

21

22

23

24

25

26

27

2849OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




1

2

3abe64referredo k Series A P LRA -Da Look-Backt c S07oss

Limitation Calculations5Average

verage

6

losing

losing

losing

losing

Date

rice ($) price ($)

ate

rice ($) price ($ )

713-Mar-2007.4 5.4 57-Apr-2007.27.4 5

84-Mar-2007.20.330-Apr-2007.45.4 8

95-Mar-2007.95.531-May-2007.00.52

16-Mar-20070.00.152-May-2007.8 0.56

109-Mar-2007.25.373-May-2007.8 0.59

20-Mar-2007.50.394-May-2007.75.6 2

1 1

1-Mar-2007

.75

.4 4

7-May-2007

.25

.6 6

12

2-Mar-2007

.85

.4 9

8-May-2007

.00

.70

23-Mar-2007

.77

.6 4

9-May-2007

.70

.72

13

6-Mar-2007

.92

.6 6

0-May-2007

.23

.73

147-Mar-2007.4 0.4 61-May-2007.73.73

28-Mar-2007.10.264-May-2007.50.75

159-Mar-2007.20.105-May-2007.00.78

30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.937-May-2007.95.83

173-Apr-2007.55.918-May-2007.83.85

04-Apr-2007

.1 0

.92

1-May-2007

.50

.8 8

18

5-Apr-2007

.25

.94

2-May-2007

.50

.9 2

19

9-Apr-2007

.6 5

.92

3-May-2007

.10

.9 4

10-Apr-2007

.5 0

.90

4-May-2007

.25

.9 7

201-Apr-2007.6 0.8 95-May-2007.10.9 9

12-Apr-2007.4 5.8 79-May-2007.25.01213-Apr-2007.0 0.830-May-2007.20.03

226-Apr-2007.05.8 01-May-2007.14.05

17-Apr-2007.70.751-Jun-2007.75.06238-Apr-2007.30.704-Jun-2007.25.07

24

9-Apr-2007

.10

.6 4

5-Jun-2007

.10

.0720-Apr-2007

.15

.5 9

6-Jun-2007

.4 5

.06

25

3-Apr-2007

.6 0

.52

7-Jun-2007

.00

.04

24-Apr-2007

.00

.4 7

8-Jun-2007

.8 7

.02

26

5-Apr-2007

.25

.4 3

9-Jun-2007

.8 7

.02

276-Apr-2007.37.4 30-Jun-2007.8 7.02

28


Case No. 07-00931




1

2able7referred Stock, Series B, PS LRA 90-Day Look-Back Loss

Limitation Calculations4

Averageverage

5

losing

losing

losing

losing

Date

rice ($) price ($)

ate

rice ($) price ( $ )

6

13-Mar-2007

.32

.32

7-Apr-2007

.06

.35

74-Mar-2007

.35.340-Apr-2007

.40.38

5-Mar-2007.89.521-May-2007.70.42

-Mr-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48

-Mr-2007.60.424-May-2007.6 1.5101-Mar-2007.00.507-May-2007.45.56

1

2-Mar-2007.10.588-May-2007.88.60

-Mr-2007

.50

.68

9-May-2007

.70

.62

2

6-Mar-2007

.90

.70

0-May-2007

.53

.64

3

7-Mar-2007

.65

.51

1-May-2007

.05

.65

-Mr-2007

.80.294-May-2007

.45.67

49-Mar-2007.25.135-May-2007.78.70

-Mr-2007.40.016-May-2007.00.7252-Apr-2007.00.947-May-2007.20.76

63-Apr-2007.25.908-May-2007.88.78

Apr-2007.00.901-May-2007.50.8 1

75-Apr-2007.45.932-May-2007.75.83

8

9-Apr-2007

.50

.91

3-May-2007

.25

.86

-Apr-2007

.03

.87

4-May-2007

.25

.89

9

1-Apr-2007

.05

.83

5-May-2007

.10

.9 1

Apr-2007

.90.799-May-2007

.30.94

03-Apr-2007.80.740-May-2007.00.96

216-Apr-2007.76.701-May-2007.65.99

Apr-2007.15.641-Jun-2007.85.00

28-Apr-2007.00.584-Jun-2007.60.01

239-Apr-2007.00.525-Jun-2007.60.00

-Apr-2007.05.476-Jun-2007.50.00

4

3-Apr-2007

.90

.4 1

7-Jun-2007

.90

.98

Apr-2007

.00

.37

8-Jun-2007

.25

.95

25

5-Apr-2007

.20

.33

9-Jun-2007

.25

.95

66-Apr-2007

.25

.33

0-Jun-2007

.25

.95

27

28


Case No. 07-00931




1able 8

2 Table 8 has been abbreviated for example purposes. For a complete table, visit

3ttp://www.newcenturysettlement.com/Forms/Table 8.pdf.

4 If you do not have access to the Internet, please contact the Claims Administrator

5t 1-866 -308-7615 to have a copy m ailed to you.

6in

7axinax Minis kis ka xinaxMatur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Pu t

8a tericericer i c eil ityil itya tea tenf lat.nf lat.nf lat.nflat ion

97-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510.00$0.18

21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0 .05$0.20

109-May-

0 72.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.51$0 .07$0.19

1 18 - A u g - 0 7

2 . 5 05.163 . 2 1

. 9 8

. 8 8. 0 5. 0 50.620.54

$0 .08$0.15

1 9 - J a n - 0 82.505.163 . 2 1

. 9 8

. 8 8. 0 5. 0 50.630.59

$0 .06$0.11

127 - J a n - 0 92.505.163.21

. 9 8

. 8 8. 0 5. 0 50.660.64

$0 .04$0.05

137-Feb-075.0019.7517.21.93.88.05.0511.0911.080.00$0.01

17-Mar-075.0019.753.21.98.88.05.0511.080.03$0.01$1.40141-Apr-075.0015.853.21.98.95.05.059.410.22$0.20$2.29

159-May-

0 75 .0019.753.21. 9 8.88. 0 5.0 510.860.30$0.19$2.30

168 - A u g - 0 75 .0019.753.21. 9 8. 8 8. 0 5. 0 5 $ 1 0 . 4 60.42$0.16$3 .00

1 9 - J a n - 0 85 .0019.753.21. 9 8. 8 8. 0 5. 0 59.870.51$0.11$4.2017

7 - J a n - 0 95 .0019.753.21. 9 8. 8 8. 0 5. 0 58.940.61$0 .06$3 .44

187-Feb-077.5019.7517.21.93.88

.05

.0511.09

9.59

0.00

$1.50

17-Mar-077.5019.75

3.21.98.88

.05

.0510.75

0.00$0.34

$3.87

191-Apr-077.5015.85

3.21.98.95

.05

.05

7.07

0.10$0.36

$4.69

209-May-

0 77.5019.753.21. 9 8. 8 8. 0 5.0 59.970.18$0.31$4 .56

218 - A u g - 0 77.5019.753.21, 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90

19-Jan-087.5019.753.21.98.88.05.058.750.46$0.16$5.63

227-Jan-097.5019.753.21.98.88.05.057.950.59$0.08$4.50

$ 1 0 . 0237-Feb-0719.7517.21.93.88.05.059.007,10$1.14$3.99

2410.017-Mar-07

19.75

3.21.98.88

.05

.05

9.10

0.00$0.64

$6.33

2510.0

21-Apr-0718.773.21

. 9 8. 9 3. 0 5.0 57.980 . 0 5

$0 .48$6.82

26

9-May-10.0

0 719.753.21. 9 8. 8 8. 0 5.0 58.540.11$0 .41$6.51

2710.0

1 8 - A u g - 0 719.753.21. 9 8. 8 8. 0 5.0 58.110.27$0.29$6.402810.0

19-Jan-0819.753.21.98.88.05.057.680.42$0.20$6.70-52-OTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




110.01 7 - J a n - 0 919.753 . 2 1. 9 8. 8 8. 0 5. 0 57.140.57$0 .09$5 .31

21 2 . 5

1 7 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 56.504.60$3.63$6.4931 2 . 5

17-Mar-0719.753 . 2 1. 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.50

41 2 . 5

21-Apr-07

18.77

3.21

. 9 8

. 9 3

. 0 5

. 0 5

6.05

0.02

$0.55

$8.4559-May-12.5

0 719.753.21

. 9 8. 8 8. 0 5. 0 56.950.08

$0 .48$8.00

61 2 . 5

1 8 - A u g - 0 7$19.753.21. 9 8. 8 8. 0 5. 0 56.870 . 1 5$0 .34$7.54

$ 1 2 . 5

1 9 - J a n - 0 819.753.21. 9 8. 8 8. 0 5. 0 56.720.39$0.23$7.51g

12.597 - J a n - 0 919.753.21. 9 8. 8 8. 0 5. 0 56.460.55$0.10$5 .95

$15.0

107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54 .002.16$6.12$8.93

$15.0

1 17-Mar-07$19.753.21. 9 8.88. 0 5. 0 54.700.00$0.69$9.97

$15.0

121-Apr-0718.773.21

. 9 8. 9 3. 0 5. 0 54.350.01

$0.60$9.54

19-May-15.0

13719.753.21. 9 8. 8 8. 0 5. 0 55.400 . 0 5

$0 .53$9.05

$15.0

148-Aug-0719.753.21.98.88.05.055.760.10$0.38$8.40

$15.0

159-Jan-0819.753.21.98.88.05.055.890.20$0.25$8.14

$15.0

167-Jan-0919.753.21.98.88.05.055.890.45$0.12$6.47

$ 1 7 . 5177 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 51.700.48$8.61$10.61

$ 1 7 . 5187-Mar-0719.753.21

. 9 8. 8 8. 0 5. 0 52.950.00

$0.69

$10.69

$17.5191-Apr-07

18.77

3.21.98.93

.05

.05

3.02

0.01$0.63$10.21

19-May-17.5207$19.753.21.98.88.05.053.900.04$0.56$9.76

211 7 . 5

1 8 - A u g - 0 7$19.753.21. 9 8.88.0 5. 0 54 .500.10$0 .41$9.03

221 7 . 5

19-Jan-0819.753.21.98.88.05.055.170.20$0.28$8.63

231 7 . 5

17-Jan-0919.753.21.98.88.05.055.400.40$0.13$6.90

24

20.0

17-Feb-07

42.1017.21.93.21

.05

.0519.93

0.04$5.28$17.39

25

20.0

17-Mar-0730.843,21

. 9 8. 2 3. 0 5. 0 510.640.00

$0.69$15.54

2620.0

21-Apr-0718.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60

279-May-20.00 730.603.21. 9 8.24. 0 5. 0 59.320.03$0 .59$16.74

2820.0

18-Aug-0730.603.21.98.24.05.057.790.05$0.44$18.25


Case No. 07-00931



Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 70 of 1 13 Page ID#:11271

120.0

1 9 - J a n - 0 851.223 . 2 1. 9 8. 2 1. 0 5.0 419.940.15$0 .30$18.65

22 0 . 0

17-Jan-0942 .103 .21.9 8.2 1.0 5.0 59.250 .25$ 0 . 1 4$16.72

322.5

17-Feb-07$42.1017.21.9 3.2 1.0 5.0 517.530 . 0 0$7 .68$19.88

422.5

1 7 - M a r - 0 7

$30.84

3 .21

.9 8

.2 3

.0 5

.0 5

8.16

0 . 0 0

$ 0 .6 9

$18.0352 2 . 5

21-Apr-0718.773 . 2 1

. 9 8. 9 3. 0 5. 0 50.900.00

$0.66$10.82

69-May-2 2 . 5

0 73 9 .6 93 .21.9 8.2 1.0 5.0 514.130 . 0 2$ 0 .6 1$21.23

$22.5

88 - A u g - 0 73 4 . 4 43 .21.9 8.2 1.0 5.0 57.530 .10$ 0 . 4 7$21.41

$25.097-Feb-0742 .1017.21.9 3.2 1.0 5.0 515.100 . 0 010.11$22.30

$25.0

107 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 55 .7 00 . 0 0$ 0 .6 9$20.49

$25.0

111 - A p r - 0 7$18.773 .21.9 8.9 3.0 5.0 50 . 4 00 . 0 0$ 0 .6 7$10.94

19-May-25.0

12742.103 .21

.9 8.2 1.0 5.0 513.690 . 0 2

$ 0 .6 3$23.07

$25.0

138 - A u g - 0 7$34.443 .21.9 8.2 1.0 5.0 55 . 4 40 .10$ 0 . 4 9$23.05

$25.0

149 - J an - 0 8$51.223 .21.9 8.2 1.0 5.04 $16.720 .15$ 0 . 3 3$21.93

$30 .0157-Feb-07$47.8217.21.9 3.2 1.0 5.0 514.260 . 0 010 .95$25.03

$30.0

167 - M a r - 0 7$30.843 .21.9 8.2 3.0 5.0 51.640 . 0 0$ 0 .6 9$24.29

$30.0171 - A p r - 0 718.773 .21.9 8.9 3.0 5.0 50 .250 . 0 0$ 0 .6 8$11.05

19-May-30.018742.103 .21

.9 8.2 1.0 5.0 59 . 3 50 . 0 1

$ 0 .6 5$24.86

$ 3 0 . 0198 - A u g - 0 73 4 . 4 43 .21.9 8.2 1.0 5.0 52.380 . 0 9$ 0 . 5 2$24.73

$30.0209 - J an - 0 85 3 . 0 03 .21.9 8.1 9.0 5.0 313.640 .15$ 0 . 3 6$23.81

2130.0

17-Jan-0947.823 .21.9 8.2 1.0 5.0 58.450 . 0 3$ 0 .1 7$21.29

2235 .017-Feb-0747.8217.21.9 3.2 1.0 5.0 51 0 . 3 60 . 0 011.09$25.21

2335 .0

1 7 - M a r - 0 73 0 .8 43 .21.9 8.2 3.0 5.0 50 .120 . 0 0$ 0 .6 9$25.18

249-May-35 .00 742.103.21

. 9 8. 2 1. 0 5. 0 55.830.01

$0.66$25.19

2535 .0

1 8 - A u g - 0 7$34.443.21

. 9 8. 2 1. 0 5.0 50.880 .04

$0 .55$25.13

2635 .0

1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5.0 54.610.03$0 .38$24.72

2740.01 7 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 57.360.0011.09$25.21

2840.0

1 7 - M a r - 0 73 0 .8 43 .21.9 8.2 3.0 5.0 50 . 0 50 . 0 0$ 0 .6 9$25.21







EXH IBIT A-2 TO EXH IBIT A

TO UNDERWR ITER S TIPULATION






UIZADETairnblbglaw.com)3LIN (Bar No. 174663)

(elizabethl(a^blbglaw. com )4 NIKI L. MENDOZA (Bar No. 214646)

mkim Mrlaw.coml5 ENJAALDSON (Bar No. 211114)ben ((aa^^blbglaw.com )

6 A, JD A. KELLAR (Bar No. 234470)

(eoklbglaw.com)7


San Diego, CA 921308 Tel: 858 793-0070

Fax: ^858^ 793-0323and-SALVATORE J. GRAZIANO

10 (sgraziano(a^blb law.com)LAUREN A. M MILLEN

1 1 ^[email protected])285 Avenue of the A mericas12 New York, NY 10019

Tel: 212 554-140013 Fax: ^212^ 554-1444


15

16


1 8

ENTRAL DISTRICT OF CALIFORNIA


ase No. 2:07-cv-00931-DDP ( FM Ox)

(Lead Case)20

1ROOF OF CLAIM AND

22ELEASE

23

4


25

6

ROOF OF CLAIM AND RELEASE

27

DEADLINE FOR SUBMISSION2010.28






3 Pendency of Class Action and Proposed Settlements, Settlement Fairness Hearing,

4nd Motion for Attorneys' Fees and Reimbursement of Litigation Expenses (the




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


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


14you have read and that you understand the Notice.

1 5. TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST MAIL



18

ADDRESSED TO:

19

n re N ew Century Securities Litigation Settlement

20c/o Analytics, Inc. Claims Administrator


22-866-308 -7615





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




1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in




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


9 re certain persons or entities excluded by definition pursuant to the Court's

10 preliminary approval of the Settlements.' Also excluded from the Class are any

11persons or entities who exclude themselves by filing a request for exclusion in


13

.

Authorized Claimant" means a Class Member who submits a timely

14nd valid Proof of Claim form to the Claims A dministrator, in accordance w ith the


16Settlement Fund.


18SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR



21SETTLEMENTS_IF YOU ARE NOT A CLASS MEM BER. THUS, IF YOU FILE

223

The following persons are excluded from the Class: (a) the Underwriter





27subsidiaries or affiliates) or of any Defendant; (e) any entity in which any

Defendant has a controlling interest; and (f) the legal representatives, heirs,

28uccessors and assigns of any such excluded party.

2




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.



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.



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.


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,


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 .




24udgments that the Court enters. You will be bound by such orders and judgments


26




3




1 documentation for all sales of New Century Common Stock and Preferred Stock

2etween March 14, 2007, through and including June 10, 2007. You are also


4n New Century Common Stock and Preferred Stock as of the close of the market5n March 13, 2007, and as of the close of the market on June 10, 2007.


7 stockbrokers' monthly statements (reflecting your opening and closing balances for

8he m onths specified on the actual claim form, and in which transactions during the



11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER, FAILURE12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF




16complete and sign the Proof of Claim on behalf of persons represented by them,

17 nd they must:

18

a)

xpressly state the capacity in which they are a cting;

19

b) identify the name, account number, Social Security Number (or




23ecurities; and

24

c) furnish herewith evidence of their authority to bind to the Proof

25

f Claim the person or entity on whose behalf they are acting.

26

Authority to complete and sign a Proof of Claim cannot be


28

4




1

iscretionary authority to trade stock in another person's

2ccounts.)



5

roof of Claim; or

6

b) are expressly authorized to act on behalf of the owner thereof.

7


8ruth of the statements contained therein and the genuineness of the documents

9 ttached thereto, subject to penalties of perjury under the laws o f the United States


11 fraudulent documentation, will result in the rejection of your claim and may12 ubject you to civil liability or criminal prosecution.

13NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large



16ma nually signed paper Proo f of Claim form listing all their transactions, whether or

17 not they also submit electronic copies. If you wish to file your claim

18electronically, you must contact the Claims Administrator at 1-866-308-7615, or

19visit its settlement website www.newcenturysettlement.com to obtain the required



22 cknowledgm ent of receipt and acceptance of electronically submitted data.

23

24

25

26

27

28

5




1In re New Century


3Beneficial Owner's Name (First, Middle, Last) / Joint Owner's Name

5treet Address

7itytateip Code


11(Evening)12

Area Code

elephone Num ber

13

14 Social Security Number or

axpayer Identification Num ber

15

16ecord Ow ner's Name ( if different from beneficial owner listed above)1 7

Check appropriate box ( check only one box):18

q

ndividual/Sole Proprietor

oint Owners

ension Plan

19

20qorporation

artnership

rust

21qRAther22

23

(describe:24NOTE: Separate Proofs of Claim should be submitted for each separate legal


26 ust one of the Joint Owners; an Individual should not combine his or her IRA

27ransactions with transactions made solely in the Individual's name). Conversely,

28a single Proof of Claim submitted on behalf of one legal entity should include all

6




1transactions made by that entity, no matter how many separate accounts that entity

2as (e.g., a corporation with multiple brokerage accounts should include all

3 transactions made in New Century Securities during the Class Period on one Proof

4f Claim, no matter how many accounts the transactions were made in). If you

5equire additional room to list your transactions, please be sure to include you r full

6name and the last four digits of your social security number or Tax ID number on

7ach additional sheet. Check here if additional transactions are included on

8dditional schedules.PART ILNEW CENTURY COMMON STOCK

10. Be2innint! Holdings: State the number of shares of New Century

1 I

ommon Stock the Claimant owned as of the close of the market12

n May 4, 2005. If none, write "zero" or "0." If other than zero,

1 3

e sure to attach the required documentation.

14

15. Purchases:

16i) List all purchases of New Century Common Stock made during the

17period from May 5, 2005, through and including March 13, 2007. (NOTE: If you

18cquired your New Century Common Stock during this period other than by an


20cquisition on a separate page.) B e sure to attach the required documentation.



234

5

6


7




1

ii) State the total number of shares of New Century Common Stock the



4 hich are not in the Class Period, are not included in the calculation of Re cogniz ed


6verall evaluation of the Claim.)

7

. Sales: List all sales of New Century Common Stock made during


9une 10, 2007. Be sure to attach the required documentati

10rade Date(s) (L ist

1 1

hronologically)umber ofalesotal

Month/Day/Year

hares Sold

rice Per Share

ales Price*

12

13

456 *excluding commissions, transfer taxes or other fees

17

1 8

. Unsold Holdings: State the total number of shares of New

1 9

entury Common Stock the Claimant owned at the close of the



22


24

f shares of New Century Common Stock the Claimant owned at

25

he close of the market on June 10, 2007. If none, write "zero" or

26

0."

f other than zero, be sure to attach the required

27ocumentation.

28

s






3


5F YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

6

NOT BE REVIEWED7

8PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED

9 TOCK")

1 0

A. Beainnin$! Holdings: S tate the number of shares of New Century

11 Series A Preferred Stock the Claimant owned as of the close of1 2

the market on May 4, 2005. If none, write "zero" or "0." If other13

than zero, be sure to attach the required documentation.1 4

15

B. Purchases:1 6

(i) List all purchases of New Century Series A Preferred Stock made during1 7


19

you acquired your New Century Series A Preferred Stock during this period in an


com plete description of the terms of the acquisition on a separate pag e.) B e sure to21

attach the required docum entation.22

23

24

25

26

27

28

9




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



13Recognized Loss Amount.

his information is needed by the Claims


1 56. Sales: List all sales of New Century Series A Preferred Stock


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


26

27

28

1 0





2entury Series A Preferred Stock the Claimant ow ned at the close



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



10ocumentation.

1 1



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



24

han zero, be sure to attach the required documentation.

25

26

. Purchases:


28he period from May 5, 2005, through and including March 13, 2007. (NOTE: Ifi i




1ou acquired your New Century Series B Preferred Stock during this period in an


3 complete description of the terms of the acquisition on a separate page.) Be sure to

4 ttach the required docum entation.

5

rade Date(s) (List

6

hronologically)

umber of

urchase

otal

nth/Day/Year

hares Purchased Price Per Share Purchase Price*

7

.01 *excluding com missions, transfer taxes or other fees.

12

1 3(ii) State the total number of shares of New Century Series B Preferred




17Recognized Loss. This information is needed by the Claims Administrator for

18 purposes of the overall evaluation of the C laim.)

1 9

. Sales: List all sales of New Century Series B Preferred Stock

20

ade during the period from May 5, 2005, through and including

21une 10, 2007. B e sure to attach the required docum entation.



24

$

5

$

6

27

28excluding com missions, transfer taxes or other fees

12





2 Century Series B Preferred Stock the Claimant ow ned at the close



5

6

. Ending Position For 90-Day Look Back: State the total number

7

f shares of New Century Series B Preferred Stock the Claimant



10ocumentation.

1 1

12



15 NAME ON THE COPY AND CHECK THIS BOX q16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17 NOT BE REVIEWED

18

19

20

21

22

23

24

25

26

27

28

1 3




1PART V: NEW CENTURY CALL OPTIONS



4ay 4, 2005:

5

umber of Call

trike Price for

6

ption Contracts

xpiration Month

all Option

osition: Short

Open

nd Year

ontract

r Long

7

10

1. Purchases: List all Call Option contracts on New Century

12

ommon Stock that you purchased or acquired during the period

13

rom May 5, 2005, through and including March 13, 2007. Be


15urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call

1 6hronologically)ontractshareonth andption


18

19

$

0

$$122. Sales: List all Call Option contracts on New Century Common


24

nd including March 13, 2007. Be sure to attach the required

25

ocumentation.

26

27

28

14






1ate Contracts

trike Price

2xpired (Listumber ofer CallChronologically)xpired Option Expiration Monthption

3onth/Day/Yearontractsnd Yearontract

4. Unsold/Unexpired Calls; List Call Option contracts on New9entury Common Stock that were open as of the close of the1 0arket on March 13, 2007.

1 1

1 2trike Price1 3umber of Call

er Call

1 4ption Contracts


ption

Openongnd Yearontract1 56

7

1 8

1 9

20

2 1

2 22 3

24

2 5

26

27

2 8

1 6





2. Beiinnin2 Holdings: List all Put Option contracts on New


4ay 4, 2005:

5umber of Put

trike Price for

6ption Contracts

xpiration Month

ut Option

osition: Short

Open

nd Year

ontract

r Long

7

10

llSales: List all Put Option contracts on New Century Common

12

tock that you sold (wrote) during the period from May 5, 2005,

1 3

hrough and including March 13, 2007. Be sure to attach the

1 4equired documentation.


16Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract

$

19

20

$$122

2 3

24

25

26

27

281 7




1

. Purchases: List all Put Option contracts on New Century





6

List

ption

rice Per

xpiration

trike Price per

Chronologically)

ontracts

hare

onth and

ut Option

7Month/Day/Year

urchased

ear

ontract

s$10

1 1


13

ommon Stock that you exercised during the period from May 5,

14005, through and including March 13, 2007. Be sure to attach

15the required documentation.

1 6trikeumber of Putesult:1 7xpirationrice for Option Contracts Delivered

is

onth and Put Option Exercised

hares or

Date Exercised

ear

ontract

aid?

19

20

21

22

23

24

. Expired Puts: List all Put Option contracts on New Century

25

ommon Stock that expired worthless during the period from

26

ay 5, 2005, through and including March 13, 2007. Be sure to


28

1 8





Chronologically)xpired Putxpiration Monthut Option3onth/Day/Yearontractsnd Yearontract

4$8F. Unexpired Puts: List Put Option contracts on New Century

9ommon Stock open as of the close of the market on March 13,1 0

007.

1 1

umber of

trike Price for

1 2nexpired Put


ut Option

1 3

ptions Contracts

ong

nd Year

ontract

1 4

1 5

16YOU MUST RE AD THE FOLLOWING RELEAS E AND SIGN ON PAGE

17ELEASE OF CLAIMS

18 Definitions

1 9

efined terms not already defined herein have the meanings given them in

20 the respective Stipulations of Settlement (described in the Notice) (the

21 "Stipulations").

22

23

24The Releases



27 on and after entry of the Global Officer And Director Judgment and occurrence of


1 9




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



5



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


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



15epresentations or omissions involved, set forth, or referred to in the Consolidated





20relating to the enforcement of the Settlement. "Released Officers And Directors"





25nd (ii) all directors, officers, employees, and other natural persons affiliated with




2 0




1xecutors, administrators, predecessors, successors and assigns, employees, agents

2nd retained professionals (other than KPM G or the Underwriter Defendants) .

3PMG Release





8cknowledged, whether or not a Proof of Claim is executed and delivered by, or on


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



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



21he sale of New Century Put Options during the Class Period. "Settled Claims"





26

27

28

21




1

nderwriter Release


3n and after entry of the Underwriter Judgment and occurrence of the Effective



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




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




23elating to the enforcement of the Settlements. "Released Underwriter Party"





2 8 ot include any Defendants other than the Underwriter Defendants.

22




1



4 who represents the Claimant certifies, as follows:

5

. that the Claimant is a Class Mem ber, as defined in the Notice;

6

. that I (we) have read and understand the contents of the Notice and the

7

roof of Claim;

8. that I (we) are not acting for any of the Defendants, nor am I (are we)



1 1

we) do not know of any request for exclusion from the Class filed on my12

our) behalf with respect to my (our) transactions in New Century

1 3

ecurities;

1 4

. that I (we) own(ed) the New Century Securities identified in the Proof of


16he authority to act on behalf of the owner(s) thereof;


1s

ettlement Fund;

1 9

. that Claimant desires to participate in the Settlements described in the

20 Notice and agrees to the term s and conditions thereof;




24

roof of Claim;

25

. that I (we) agree to furnish such additional information with respect to

26

his Proof of Claim as the parties, the Claims Administrator or the Court

27ay require;

28

2 3




1



3mou nt of the claim m ade by this Proof of Claim; and

41.that I (we) certify that I am (we are) not subject to backup withholding

5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue

6

ode.

7

OTE: If you have been notified by the Internal Revenue Service that you are



1 0ervice does not require your consent to any provision other than the

11

ertification required to avoid b ackup w ithholding.12

13

14

15

16

1718

19

20

21

22

23

24

25

26

27

28

24







4

5

ignature of Claimant

7

rint Name of Claimantate Signed

9

10Signature of Joint Claimant, if any

1 1

12Print Nam e of Joint Claimant, if any

ate Signed

13

14 If Claim ant is other t han an indiv idual, or is not the person com pleting this

15form , the follow ing also m ust be p rovided :

16

17 Signature of Person Completing Form

18

19 Print Name of Person Completing Form

ate Signed

20

21Capacity of Person Signing ( Executor, President, Trustee, etc.)

22

23

24

25

26

27

28

2 5




1EMINDER CHECKLIST

2lease sign the Proof of Claim on pag e

3f this Claim is being m ade on behalf of Joint Claimants, then both must sign.

4lease remembe r to attach supporting documents.

5

f you move , please send your new address to:n re New Century S ecurities Litigation Settlement

7/o Analytics, Inc., Claims Adm inistrator

P.O. Box 20048hanhassen, MN 5 5 3 1 7 - 2 0 0 4

9-866-308-7615

1 0

1 1O NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.

12eep a copy of your Proof of Claim and all documentation submitted for your

13ecords.4he Claims Administrator will acknowledge receipt of your Proof of

15laim by mail within 6 0 days. Your Proof of Claim is not deemed

fully filed until you receive an acknowledgement postcard. If you do1 6ot receive an acknowledgment postcard within 6 0 days, please call

17he C laims Adm inistrator toll free at (866) 308-7615 .

1 8

1 9ACCURATE CLAIMS PROCE S SING TAKES A SIGNIFICANT AMOUNT

20F TIME.

21HANK YOU FOR YOUR PATIENCE

22

23

24

25

26

27

28

26





TO UNDERWR ITER S TIPULATION




1

NITED STATES DISTRICT COURT


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


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"),






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


26 Spring Street, Courtroom 3, Los Angeles, California 90012 at

on

2010, to determine: (1) whether this Consolidated Action



1




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


4 xpenses should be approved.





9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of


















28

2





2REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and3 Claim Form, may be made to Lead Counsel:

4

BERNSTEIN LITOWITZ BERGER5

GROSSMANN LLP

6alvatore J. Graziano

1285 Avenue of the Am ericas7

ew York, New York 10019

8elephone: (866) 648-2524

9


1 1

or the Central D istrict of California

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3




EXHIBIT B

TO UNDERWRITER STIPULATION




12

3

4

5

6

7

8NITED STATES DISTRICT COURTCENTRA L DISTRICT OF CALIFORNIA

9

10N RE NEW CENTURYase No. 2:07-ev- 00931-DDP (FMOx)(Lead Case)

1 1

12

13

141PR OPOS ED] UNDERWR ITER DEFENDANTS FINAL JUDGMENT AND

ORDER OF DIS MISS AL WITH PREJUDICE

15

1617

18

19

20

21

22

23

24

25

26

27

28



Case 2:07-cv-00931-DDP-FMO Document 484-8 Filed 07/30/10 Page 106 of 113 Page ID#:113071his matter came before the Court for hearing pursuant to the Order



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





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




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








1 Proposed Settlement. Settlement Fairness Hearing and Motion for Attorneys' Fees

2 and Reimbursement of Expenses ("Notice") and the publication of the Summary





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



14 Lead Plaintiff provides a fair and equitable basis upon which to allocate the


16 having been given to administrative convenience and necessity.


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




1 application shall in no way disturb or affect this Final Judgment And Order Of

2 Dismissal With Prejudice and shall be considered separate from this Final

3Judgment And Order O Dsmssal Wth Prejudi

48. The Underwriter Stipulation and Underwriter Settlement set forth5 therein, whether or not consummated, and any proceedings taken pursuant to it:

6

.


7 Underwriter Parties as evidence of, or construed as, or deemed to be evidence of

8 any presumption, concession, or admission by any of the Released Underwriter

9 Parties with respect to the truth of any fact alleged by Plaintiffs or the validity of


11 Underwriter Parties in this Consolidated Action or in any litigation, or of any

12 liability, negligence, fault, or other wrongdoing of any kind of any of the Released

13 Underwriter Parties;

14

.


15 Underwriter Parties as evidence of a presumption, concession or admission of any

16 fault, misrepresentation or omission with respect to any statement or written

17 document approved or made by any of the Released Underwriter Parties, or against

18 the Plaintiffs or any Class Members as evidence of any infirmity in the claims of

19 Plaintiffs or the other Class Members;

20

.hall not be offered or received against any of the Released

21 Underwriter Parties, or against the Plaintiffs or any other Class Members, as

22 evidence of a presumption, concession or admission with respect to any liability,

23 negligence, fault or wrongdoing of any kind, or in any way referred to for any

24 other reason as against any of the Released Underwriter Parties, in any other civil,

25 criminal or administrative action or proceeding, other than such proceedings as

26 may be necessary to effectuate the provisions of this Stipulation; provided,

27 however, that if this Stipulation is approved by the Court, Underwriter Defendants,

28

6




1 any other Released Underwriter Party, or any Class Member may refer to it to

2ffectuate the protection from liability granted them hereunder;3.hall not be construed against any of the Released Underwriter

4 Parties, Plaintiffs or any other Class Members as an admission, concession, or


6 which could be or would have been recovered after trial;

7

.



9 without merit or that damages recoverable under the Complaint would not have

10 exceeded the Underwriter Settlement Amount; and

1 1

.

hall not be construed as or received in evidence as an


13 Consolidated Action, except for purposes of this Underwriter Settlement.

14

9.he Underwriter Stipulation may be filed in an action to enforce or

15 interpret the terms of the Underwriter Stipulation, the Underwriter Settlement

16 contained therein, and any other documents executed in connection with the

17 performance of the agreements embodied therein. The Released Underwriter

18 Parties and/or any Class Member may file the Stipulation and/or this Final

19 Judgment And Order Of Dismissal With Prejudice in any action that may be

20 brought against them in order to support a defense or counterclaim based on the

21 principles of res judicata, collateral estoppel, full faith and credit, release, good

22 faith settlement, judgment bar, or reduction or any other theory of claim preclusion

23 or issue preclusion or similar defense or counterclaim.

24



26 jurisdiction over: (a) implementation of this Underwriter Settlement and any award

27 or distribution of the Settlement Fund. including interest earned thereon; (b) the

28 allowance, disallowance or adjustment of any Class Member's claim on equitable




1 grounds and any award or distribution of the Settlement Fund; (c) disposition of

2 the Settlement Fund; (d) hearing and determining applications for attorneys' fees

3 and Litigation Expenses in the Consolidated Action; (e) enforcing and

4 administering this Judgment; (f) all parties hereto for the purpose of construing,

5 enforcing and administering the Underwriter Stipulation; and (g) other matters

6 related or ancillary to the foregoing.

7

1. The Court finds that during the course of the Consolidated Action, the

8 Parties and their respective counsel at all times complied with the requirements of

9 Federal Rule of Civil Procedure 11.

102. In the event that the Underwriter Settlement does not become

11 effective in accordance with the terms of the Underwriter Stipulation or the

12 Effective Date does not occur, or in the event that the Settlement Fund, or any

13 portion thereof, is returned to the Underwriter Defendants, then this Final

14 Judgment And Order Of Dismissal With Prejudice shall be rendered null and void

15 to the extent provided by and in accordance with the Underwriter Stipulation and

16 shall be vacated and, in such event, all orders entered and releases delivered in

17 connection herewith shall be null and void to the extent provided by and in

18 accordance with the Underwriter Stipulation.

19

3. Without further Order of the Court, the parties may agree to

20 reasonable extensions of time to carry out any of the provisions of the Underwriter

21 Stipulation.


23 immediate entry by the Cleric of the Court is expressly directed.

24

T IS SO ORDERED,

25

26 DATED:

7HE HONORABLE DEA N D. PREGERSON28NITED STATES DISTRICT COURT JUDGE

8






2ZETblblaw.coargm

3 LIZH LIN (Bar No. 174663)([email protected] )

4 NIKI L. MENDOZA (Bar No. 214646)

[email protected]

5AMGALDSTON (Bar No. 211114)([email protected] )

6TAKEO A. KELLAR (Bar No. 234470)(takeok@blbglaw. com )

7 12481 High Bluff Drive, Suite 300San Diego, CA 92130

8 Tel: (858 793-0070Fax: (8583 793-0323

9and-SALVATO

@RE J. GRAZI )ANO

10 LAUREN A. MeMILLEN1 1 ^[email protected])285 Avenue of the Am ericas

12 New York, NY 10019Tel: (212) 554-1400

13 Fax: (212) 554-1444

14 Lead Counsel for Lead Plaintiff NewYork State Teachers’ Retirement System

15

16



19IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMO x)

20Lead Case)

21[PROPOSED] ORDER

2RELIMINARILY APPROVINGSETTLEMENTS AND

3ROV IDING FOR NOTICE

24

25Judge: Hon. Dean D. Pregerson

26728

[PROPOSED] ORDE R PRELIM. APPROVINGSETTLE MENTS AND PROVIDING FOR NOTICE




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


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 Ùnderwriter 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


21 Defendants (theÙnderwriter Stipulatiori'or theÙnderwriter 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




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





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,


14 CLASS CER TIFICATION

5.he Court hereby certifies, pursuant to Rules 23(a) and 23(b) (3) of the


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:








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



12.he Court appoints the firm of Analytics Incorporated (`Claims

13 Administrator”) to supervise and administer the notice procedure as well as the


15.ithin five (5) business days after entry of this Order, the


17 Release (the `Claim Form”), annexed hereto respectively as Exhibits 1 and 2, to be



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


25Journal and over the PR Newswire within five (5) business days of the mailing of



28





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


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
































4HEARING: RIGHT TO BE HEARD0. There shall be a hearing on [November 8, 2010, or November 15,

6 2010] [100 days from filing of stipulations], 2010, at 10:00 a.m. (the “Settlement

7 Hearing”) at which time the Court shall address the fairness, reasonableness and


9 Allocation, and Lead Counsel’s application for attorneys’ fees and payment of





14 Counsel’s application for attorneys’ fees and payment of Litigation Expenses shall






20 attorneys’ fees and payment of Litigation Expenses. However, no Class Member



23 Counsel for an award of attorneys’ fees and payment of Litigation Expenses unless

24 that Class Member (i) has served written objections, including the basis therefor, as











2 Americas, New York, NY 10019; Kathleen M. McDowell, Esq., Munger, Tolles &


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








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










24 Counsel.










1CLAIMS PROCESS6. In order to be entitled to participate in the Settlements, a Class


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

















22 Hearing. To be valid, each request for exclusion must (i) state the name and


24 entity requests exclusion from the Class in In re New Century, 07-CV -0093 1 -DDP




28 Securities during the Class Period. Requests for exclusion will not be valid if they






1 do not include the information set forth above and are not received within the time



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







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





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



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
















21 Consolidated Action (“Notice and Administration Costs”) actually incurred. Such







28









4 consummated, and any proceedings taken pursuant to the Stipulations and5 Settlements:














19 Class Members;




23

244Herein `Released Parties' includes: (i) the Released Officers And Directors (as



Parties (as defined in the Underwriter Stipulation).27

5 `Plaintiffs' in this paragraph 25 includes Class Plaintiffs, the Trustee, and Kodiak

28 (as defined in the Global Officer And Director Stipulation).









4 effectuate the provisions of the Stipulations; provided, however, that if the5 Stipulations are approved by the Court, Defendants, any other Released Party, or



















24 \\

25 \\

26 \\

27

28






1he Court retains jurisdiction of this Consolidated Action to consider all



4

T IS SO ORDERED.5 DATED:HE HONORABLE DEAN D. PREGERSON7NITED STATES DISTRICT COURT JUDGE

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28






TABLE OF CONTE NTS TO EXHIBITS TO

ORDER PRELIMINARILY APPROVING SETTLEMENTS

AND PROVIDING FOR NOTICE

EXHIBITITLEA-1otice Of Pendency O f Class Action And Proposed Settlements, Settlement Fairness

Hearing, And Mo tion For Attorneys' Fees And Reimb ursement Of Litigation Ex pensesA-2roof Of Claim And Release

A-3ummyNce








NIZAIETairnblbgglawcom)

3LIN (Bar No. 174663)(elizabethl blbglaw.com)4 NIKI L. MENDOZA (Bar No. 214646)

UNJAkim PGALMONlaw.c5Bar No. 211114)ben blbglaw.com

6 AI. KELLA (Bar No. 234470)(takeokff

ighblbglaw. com )

7 12481luff Drive, Suite 300San Diego, CA 9213 08 Tel: 858 793-0070Fax: 858 793-0323

9and-SALVATORE J . GRAZIANO

to sgrazianoblb law.comLAUREN M MILLE

11 ([email protected])11285 Avenue of the Americas12New York, NY 10019

Tel: 212 554-140013Fax: 212 554-1444

14Lead C ounsel for Lead Plaintiff NewYork State Teachers' Retirement System

1 5

1 6

1 7NITED STATE S DISTRICT COURT


19 IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FM Ox)(Lead Case)

20

21OTICE OF PENDENCY OFCLASS ACTION AND PRO POSED

22ETTLEMENTS, SETTLEMENTFAIRNESS HEARING, AND

23OTION FOR ATTORNEYS'FEES AND REIMBUR SEMENT


2 5


27

28

NOTICE OF PENDENCY OF CLASS ACTION

Case No. 07-00931




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






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;



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


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.


Case No. 07-00931




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


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


12egarding claims against the Individual Defendants, the Underwriter Defendants,

13and KPMG (collectively "Defendants") in the Consolidated Action. The proposed


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


18 Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred


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


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


"KPMG Settlement").






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.")


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



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").


16 administration costs, and attorneys' fees and Litigation Expenses awarded to Lead



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



Case No. 07-00931




1 recoverable if Plaintiffs were to prevail. Defendants deny all liability and that any




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.


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


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


19 consultant estimates that the average cost per damaged share will not exceed



22per Put Option.




26 egarding the Settlements should be directed to Mr. G raziano at Bernstein Litowitz

27 Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019,

28 866 ) 64 8-2524, [email protected] .


Case No. 07-00931




1

2OUR LEGAL RIGHTS AND OPTIONS IN THE SETTLEMENTS:

3SUBMIT A CLAIM FORM NOhis is the only way to eta payment. If4ygpy

LATER TH AN [INSERT]ou wish to obtain a payment as a Class

5ember, you will need to file a Claim

6orm (which is included with this Notice)


sEXCLUDE YOURSELF FROMet no payment. This is the only option


10

WRITTEN REQUEST FORther lawsuit against any of the defendants

11 EXCLUSION SO THAT IT ISr other released parties concerning the12

RECEIVED NO LATER THANlaims that were, or could have been,13

[INSERT].sserted in this case.14

15 OBJECT TO THErite to the Court and explain why y


17 SUBMITTING WRITTENlan of Allocation, or the request for


19 ARE RECEIVEDNO LATERxpenses. You cannot object to the

20 THAN [INSERT].ettlements unless you are a Class

21Member and do not exclude yourself.

22GO TO THE HEARING ONsk to speak in C ourt about the fairness of

23 INSERT] AT [INSERT ], ANDhe Settlements, the proposed Plan of

24 FILE A NOTICE OF INTENTIONAllocation, or the request for attorneys'


26RECEIVED NO LATER THAN

27 [INSERT].

28


Case No. 07-00931




1DO NOTHINGet no payment. Remain a Class


3


5 Why Did I Get This Notice?age

7What Is This Case About? What Has Happened So Far?age

8 How Do I Know If 1 Am Affected By The Settlements?age

9W hat Are Th e Lead Plaintiff's Reasons For The S ettlements?age10

W hat Might Happen If There W ere No Settlements?age

11How M uch Will My Paym ent Be?age

1 2

13W hat Rights Am I Giving Up By Agreeing To The Settlements?age

14W hat Payment Are The Attorneys For The Class Seeking?

15How W ill The Lawyers Be Paid?age

16How Do I Participate In The Settlements? What Do I Need To Do?age

17 W hat If I Do Not Want To B e A Part Of The Settlements?

18 How Do I Exclude Myself?age



21May I Speak A t The H earing If I Don't Like The Settlements?age

22What If I Bought Shares On Som eone E lse's Behalf?age

23Can I See The Court File? Whom Should I Contact If I Have Questions? Page

24HY DID I GET THIS NOTICE?25


27States District Court for the Central District of California (the "Court") because

28you or someone in your family may have purchased or otherwise acquired or sold


Case No. 07-00931





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


6dministrator selected by Lead Plaintiff and approved by the Court, will make7payments pursuant to the Settlements after any objections and appeals are resolved.


9s class representatives, to sue on behalf of all people with similar claims,





14 Grossmann LLP ("Lead Counsel") to serve as Lead Counsel in the Consolidated


16plaintiffs Carl Larson and Charles Hooten are the Class Representatives. A class



19efficiency. Once the class is certified, the Court must resolve all issues on behalf


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.)


25he Cen tral District of California, and the case is know n as In re New Century. The



2 8being sued are called defendants. In this case, the plaintiff is referred to as the


Case No. 07-00931




1Lead Plaintiff, on behalf of itself and the Class, and Defendants are the Individual

2 efendants, the Underwriter Defendants and KPM G. New Century was not nam ed

3s a defendant because New Century has filed a petition for voluntary banl iptcy


5 ho has filed such a petition.



8 purpose of this Notice is to inform you of this case, that it is a class action, how

9 you might be affected, and how to exclude yourself from the Class if you wish to





14ees and reimbursemen t of Litigation Expen ses (the "Settlement Hearing").

1 50. The Settlement Hearing will be held on [INSERT] at [INSERT],

16before the Hon orable Dean D . Pregerson, at the United States District Court for the

17Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles,

18 California 90012 to determine:

1 9.hether this Consolidated A ction should be finally certified, for



22lass;


24dequate and should be approved by the Court;



27tipulations;

28


Case No. 07-00931




#:11339


2nd should be approved by the Cou rt; and



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 .


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


21 nd approved its selection of Bernstein Litowitz Berger & Grossm ann LL P as Lead

22Counsel for the 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.


28 the Consolidated Com plaint, which Plaintiffs opposed on D ecember 14, 2007 .


Case No. 07-00931





2 dismiss with leave to amend the complaint.



5 pursuant to the Securities Act and the Exchange Act.69. Pursuant to stipulation, on April 30, 2008, Plaintiffs filed their Second

7 Amended Consolidated Class Action Complaint (the "Complaint"), alleging claims

8gainst Defendants pursuant to the Securities Act and the Ex change Act,


10 Complaint, which Plaintiffs opposed on July 7, 2008.

1 11. Following a hearing, by Order dated December 3, 2008, the Court

12 substantially denied Defendants' motions to dismiss.

1 32. Beginning on January 26, 2009, Defendants answered the Complaint.

1 43. The Parties began discovery in or about April 2009, including filing

1.5 multiple motions to compel and motions for protective order, and serving

16 discovery requests and responses, and producing voluminous documents.

1 74. On January 13, 2010, Defendant KPMG filed a motion for summary

18 judgm ent, which Plaintiffs opposed on March 15, 2010 .


20 discussions before the Honorable Daniel Weinstein, following which the Parties

21 were able to reach agreements in principle to settle this Consolidated Action on the

22 terns set forth herein. In connection with the settlement of the Consolidated

23 Action, Defendants and other persons also reached agreements to settle the action

24 entitled Kodiak Warehouse LLC et al. a Brad A. Morrice, et al. (Case No. 08-

25 1265-DDP-FMO) commenced on November 7, 2008, in the United States District

26 Court for the Central District of California (the "Kodialc Litigation") and the

27 adversary proceeding entitled The N ew Century L iquidating T rust and R eorganized

2 8 New Century Warehouse Corp. by and through Alan M. Jacobs, Liquidating


Case No. 07-00931




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



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



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.



20Defendants; (d) any person or entity who was a partner, executive officer, director21or controlling person of New Century (including any of its subsidiaries or



24of any such excluded party. The Class also does not include those persons and



27 Do I Exclude My self?," below).

28


Case No. 07-00931




1 RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THAT



4 BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENTS, YOU MUST


6THAN [INSERT].HAT ARE THE LEAD PLAINTIFF'S REASONS FOR THE SETTLEMENTS?8




12their claims against Defendan ts through trial and appeals, as w ell as the difficulties


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




19misrepresentations o r om issions w ere material to investors, whether all of the Class






25successful resolution at trial and on appeal.



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





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.


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




18Settlements, or nothing at all.

19HOW MUCH WILL MY PAYMENT BE?





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.




Case No. 07-00931




1 Distribution Order, the Net Settlement Fund will be distributed to Authorized

2 laimants in accordance with the Plan of Allocation.

34. The Settlement Fund will be distributed as follows:

41 )o pay all federal, state, and local Taxes on any income earned

5

y the Settlement Fund and to pay the reasonable costs incurred



8xpenses of tax attorneys and accountants);ii)o pay costs and expenses in connection with providing Notice

1 0o Class Members and administering the Settlements on behalf

1 1f Class Members;12iii)o pay attorneys' fees, with interest on such amount, to the

13xtent allowed by the Court pursuant 'to Lead Counsel's

1 4pplication;

15iv)o pay Litigation Expenses incurred in commencing and


17oney, to the extent allowed by the Court pursuant to Lead


1 9v)o compensate Authorized Claimants with the balance of the

20et Settlement Fund in accordance with the Plan of Allocation,

21ubject to an Order of the Court approving the Settlements and

22he Plan of A llocation (or such other allocation plan as the Court


24meaning that the time for appeal or appellate review of the Order

25ranting final approval has expired, or, if the Order is appealed,

26hat the appeal is either decided without causing a material


2 8ubject to appellate review).


Case No. 07-00931




15.ach person wishing to participate in the distribution must timely

2ubmit a valid Claim Form establishing membership in the Class, and including all

3 equired documentation, postmarked no later thanto the

4ddress set forth in the Claim F orm that accom panies this Notice. Unless the Court

5therwise orders, any Class Member w ho fails to submit a Claim Form postm arked no

6 ater thanhall be forever barred from receiving payments pursuant to

7 the Settlements set forth in the Stipulations but will in all other respects remain a



1 06. Payment pursuant to the Plan of Allocation approved by the Court

11shall be conclusive against all Authorized Claimants. No person shall have any






17distribution of the Settlement Fund, the Net Settlement Fund, the Plan of




21herewith, except as otherwise provided in the Stipulations.


23proceeds of the Settlements to those Class Mem bers who suffered econom ic losses


25 nd industry factors or Company-specific factors not related to the alleged wrongful


27 nalysis unde rtaken to that end, including a review o f publicly available information

2 8 regarding New Century and analysis regarding the stock price mo vements.


Case No. 07-00931



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




16 market on March 13, 2007, the last day of the Class Period, and, for Common



19 calculations relating to the 90-day look back rules of the Private Securities




232007, to June 10, 2007.5


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,




Case No. 07-00931





2ddressed as follows:

3n re New C enturyecurities Litigation Settlemen t

4/o An alytics, Inc. Claims Ad ministratorP.O. Box 2004


6

41. Unless otherwise ordered by the Court, any Class Member who fails7

to submit a properly completed and signed Proof of Claim within such period as


pursuant to the Stipulation, but will in all other respects be subject to the provisions10

of the Stipulation and the final judgments entered by the Court.

11 42. The Net Settlement Fund shall be distributed to members of the Class12

who su bmit acceptable Proofs of Claim. For purposes of the Plan of A llocation, the1 3


(composed of the settlement fund from the settlement with the Underwriter1 5




Only Class Members who purchased Series A Preferred Stock and/or Series B1 . 9

Preferred Stock during the Class Period and were dam aged thereby m ay be eligible20






26disseminated." 15 U.S.C. §78u-4(e)(1). $0.87 was the average closing price of New


and ending on June 10, 2007.

28


Case No. 07-00931




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


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





17Underwriter Allotment and the Individual-Auditor Allotment will be

18proportionately allocated to the Authorized Claimants.


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



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,



-18-OTICE OF PENDENCY O F CLASS ACTION

Case No. 07-00931




1 Securities at different times during the Class Period attributable to Defendants'


3laintiff's damages consultant. (Based on the opinions of this consultant, Lead

4Counsel assumed, for purposes of determining the Recognized Loss, that there



7 adequately allege and prove liability for that entire period);


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


14hat the prices of N ew C entury Securities were artificially inflated d uring the C lass



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.


211) Com mon Stock; (ii) Series A Preferred Stock; (iii) Series B Preferred Stock; and

22iv) Call and Put Options on Com mon Stock.




26 rom May 5, 2005 through February 7, 2007, must be held until or beyond




Case No. 07-00931




1February 8, 2007, and before or on March 2, 2007, must be held until March 5,


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


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


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


Case No. 07-00931




1calculation of an Authorized Claimant's Recognized Loss Claim, nor shall it be


3ecurities unless specifically provided in the instrument of gift or assignment.

4 Similarly, the covering purchase of a short sale shall not be deemed a purchase or

5 sale of New Century Securities for the calculation of an Authorized Claimant's






11Authorized Claimant shall be paid an amount determined by multiplying the total

12n the U nderwriter Allotment and/or Ind ividual-Aud itor Allotment for their class of

13 Securities by a fraction, the numerator of which shall be the Claimant's

14 Recognized Loss Claim and the denominator of which shall be the Total

15 Recognized Loss Claims of all Authorized Claimants for the included class of


17Underw riter Allotment and/or In dividual-Auditor Allotment based on his, her or its






23 omp utation is only a method to weigh C lass Memb ers' claims against one another.



26 he value of their Recognized Loss Claim will be zero. Such claimants will, in any


28whether to opt-out of the Settlements.

-21-OTICE OF PENDENCY O F CLASS ACTION

Case No. 07-00931



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


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


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


13 ndividual New C entury Security during the C lass Period.






19 combined and thereafter netted against each other. However, in all other cases,



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.



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.


Case No, 07-00931





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.


7and their respective counsel, and all other Released Parties shall have no

8esponsibility for, or liability whatsoever, relating to distributions from the


10 or with respect to the Plan of Allocation, or the determination, administration,


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


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


2 8 ettlement as follows:


Case No. 07-00931




1

.alculation of Recognized Lo ss for NewCentury Common Stock Purchases

2


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


Claims for dam ages shall be allowed;gb) For each share sold on or between February 8, 2007, and through March



and

1 1




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


ess the inflation per share at the time o f sale as set forth in T able 2; and18


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;



ate of purchase as set forth in Table 2, annexed hereto.

24


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:





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


4nnexed hereto if sold between March 13, 2007 , and June 10, 2007 ; and(c) the difference between the price per share paid and $0.87 per share if the

5hares were sold after June 10, 2007 , or were held until the current date.

6.alculation o f Recognized Lossfor New C entury Series A Preferred Stock

7

urchases



1 07. For shares purchased on or between May 5, 2005, through February 7,

11 2007, the following claims for damages shall be allowed:

12a) Fo r each share sold on or before February 7 , 2007, no R ecognized Claims

13or dam ages shall be allowed;(b) For each share sold on or between February 8, 2007, and through March

143, 2007, the allowed damages shall be the inflation per share at the time

15f purchase for the applicable date of purchase as set forth in Table 4,

annexed hereto, less the inflation per share at the time of sale as set forth16n Table 4; and

17

68. For shares purchased on or between February 8, 2007, through March1 8

2, 2007 , the following claims for dam ages shall be allowed:1 9a) For each share sold on or before March 2, 2007, no Recognized Claims

20or damages shall be allowed;




24


2612, 2007 , the following claims for dam ages shall be allowed:

27a) For each share sold on or before March 12, 2007, no Recognized Claimsfor damages shall be allowed;

28


Case No. 07-00931





2hall be the inflation per share at the time of purchase for the applicabledate of purchase as set forth in Table 4, annexed here3



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


15Preferred Stock shares shall be as follows:


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



242007 , the following claims for dam ages shall be allowed:


26or damages shall be allowed;(b) For each share sold on or between March 5, 2007, and March 13, 2007,


28urchase for the applicable date of purchase as set forth in Table 5,


Case No. 07-00931






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


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


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





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




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,







Case No. 07-00931




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)


5losed out) prior to February 7, 2007, the Recognized Loss Claim shall6e zero.




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


date of purchase an d A rtificial Inflation per Call Option on the date13f expiration, exercise, or sale, as appropriate; or


price per Option ($0.00 if the Call Option expired w orthless).1 5




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



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.





2 8ptions multiplied by the lesser of:


Case No. 07-00931





2ate of purchase and A rtificial Inflation p er Call Option o n the d ateof expiration, exercise, or sale, as appropriate; or


4rice per Option ($0.00 if the Call Option expired w orthless).


6007, and March 12, 2007, and (1) expired on or after March 13, 2007;(2) w ere exercised on or after March 13, 2007 ; or 3) w ere sold (position


8hall be that number of O ptions multiplied by the lesser of-



price per Option ($0.00 if the Call Option expired w orthless).

1 1


13 period May 5, 2005, through and including March 13, 2007, the Artificial Inflation




17 Scholes put option pricing formula (using B lack's adjustment for dividends an d the


19estimates) using the closing share price of New Century Common Stock on the









28dividends is implemented. Annualized volatility estimates are obtained using the





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)


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,


1 0ultiplied by the lesser o£

11




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





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


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-


Case No. 07-00931







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



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


1 4ut Option expired wo rthless).


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




25will be made.


27particular security shall be exclusive of all comm issions, taxes, fees and charges.

28


Case No, 07-00931




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.



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


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.




22 further notice to the Class.

23WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE SETTLEMENTS?


26 "Judgments"). The Judgments will dismiss with prejudice the claims against the


28Plaintiff and all other Class Members will provide releases as described below.


Case No. 07-00931





2 embers of the C lass will be deem ed by operation of law to have released, waived,

3ischarged and dismissed each and every Settled Class Claim as against each and

4very Released Officer And Director and the Insurance Carriers (as defined in the

5 Global Officer And Director Stipulation), and shall be deemed to forever be




9nature and description, whether known or Unknown Claims, whether arising under

10 federal, state, common or foreign law, that Plaintiffs or any other member of the

11Class (a) asserted in the Consolidated Action, or (b) could have asserted in any

12orum that arise out of or are based upon the allegations, transactions, facts,

13matters or o ccurrences, representations o r om issions involved, set forth, or referred

14o in the C onsolidated Action, and that arise out of or relate to the purchase of N ew


16Series B Preferred Stock, and/or New C entury Call Options and/or the sale of New


18include claims relating to the enforcement of the Settlement. "Released Officers

19And Directors" in this paragraph means (i) the Individual Defendants, David







26 defined in the Global Officer And Director Stipulation) and any and all of their

27espective heirs, executors, administrators, predecessors, successors and assigns,

28


Case No. 07-00931





2 Underwriter Defendants).


4 Class will be deemed by operation of law to have released, waived, discharged and


6prosecuting any or all Settled Claims, against any Released Auditor Party. "Settled


8nature and description, whether know n or Unk nown , whether arising under federal,


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


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.


21 Class, on behalf of themselves, their parent companies, subsidiaries, affiliates,

22 heirs, executors, administrators, predecessors, successors and assigns, and any and

23 all of their current and former officers, directors, employees, agents and attorneys



26 prosecuting any or all Settled Claims, against any Released Underwriter Party.

27 "Settled Claim" in this paragraph means any and all claims and causes of action of

28 every nature and description, whether known or Unknown, whether arising under





1ederal, state, common or foreign law, that Plaintiffs or any other member of the


3 arise out of or are based upon the allegations, transactions, facts, matters or


5Com plaint, and that arise out of or relate to the purchase of New Cen tury Com mon



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:




Case No. 07-00931





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



6 nd w as a key element of the Settlements.





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?


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



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


Case No. 07-00931




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,


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



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



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


28in, New Century Securities, as they may be needed to document yo ur Claim.


Case No. 07-00931





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.


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


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



26Settlement, c/o An alytics, Inc., Claims A dm inistrator, P.O. Box 2004, C hanhassen,


28[INSERT]. You will not be able to exclude yourself from the Class after that date.


Case No. 07-00931




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


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



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


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



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


Case No. 07-00931






#:11372

1epresentative Counsel for Directors and2fficers

3UNGER, TOLLES & OLSON LLP4athleen M. M cDowell

355 South Grand A venue, 35th Floor5os Angeles, CA 90071-1560

6

Counsel for Underwriter Defendants7


9illiam F . Sullivan

10John S. Durrant515 South Flower Street, 25 Floorloor

11

os Angeles, CA 9007 1

12

Counsel for KPMG13

14 SIDLEY AUSTIN LLPMichael L. Rugen

1 555 California Street, Suite 2000

1 6an Francisco, CA 94 104

1 7


the number of shares of New Century Securities purchased or otherwise acquired1 9

20

or sold during the Class Period and the price(s) paid and received. You may not

object to the Settlements or any aspect of them, if you are not a Class M ember or if21

you excluded y ourself from the C lass.22


Settlement H earing. You m ay not appear at the Settlement Hearing to present your24



otherwise.27

108. If you wish to be heard orally at the hearing in opposition to the28

approval of the Settlements, the Plan of Allocation, or Lead Counsel's request for


Case No. 07-00931






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


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,






27

28


Case No, 07-00931




1n re New Century Securities Litigationalvatore J. Graziano, Esq.2ettlementERNSTEIN LITOWITZ BE RGER

c/o Analytics, Inc.GROSSMANN LLP3laims Adm inistrator285 Avenue of the Am ericas

4.O. Box 2004ew York, NY 10019Chanhassen, MN 55317-2004866 ) 6 48-2524

5la ims Adm [email protected] Counsel

DO NOT CALL OR W RITE THE COURT OR THE O FFICE OF THE7

CLERK OF COURT8

REGARD ING THIS NOTICE.9

10

1 1Dated:y Ord er of the Clerk of Cou rt

United States D istrict Court12or the Central District of California

13

14

1 5

16

17

18

19

20

21

22

23

24

25

26

27

28


Case No. 07-00931




12able 1

34

5

6ssuer /iquidationhare inhare in7nderlyingUSIPyp essue DatePreferenceatenderwriter Individual

AllotmentAuditor

Allotment8

Preferred Stock


10

11

referred Stock

New Century 6435EV207/15/200625.00.750%12

eries B

13ew Century 6435EV108 Common Stock14

15 New Centuryariousall Option16New Centuryariousut Option178

19

20

21

22

23

24

25

26

27

28


Case No. 07-00931




1

2able 2

34nflation per Share for Comm on Stock Shares Purchased between

May 5, 2005, and M arch 13, 20075


7-Feb-07-Mar-071.09

3-Mar-072-Mar-07.6 9

83-Mar-07o the present.00

9

10

1 1

12

13

14

15

16

17

18

1 9

20

21

22

23

24

25

26

27

28


Case No. 07-00931




1

2

3abe34

Comm on Stock PSLRA 90-Day Look-Back Loss Limitat ion Calculat ions


6aterice ($)rice ($)aterice ($ )rice ($)

713Mar2007.84.847Apr2007.86.19

84Mar2007.6 7.7 60Apr2007.89.18

15Mar2007.35.951May2007.85.17

96Mar2007.34.302May2007.83.16

19Mar2007.17.4731May2007.80.15

100Mar2007.6 9.514May2007.7 2.14

111Mar2007.6 7,537May2007.59.12

22Mar2007.56.548May2007.58.11

123Mar2007.00.599May2007.53.10

26Mar2007,56.59OMay2007.43.081 .37Mar2007.41.571May2007.43.0628Mar2007.11.534May2007.41.05

1 49Mar2007.03.495May2007.37.03

30Mar2007.06.466May2007.36.02152Apr2007.91.437May2007.36.01

163Apr2007.01.40SMay2007.39.99

04Apr2007.00.381May2007.44.98

1 75Apr2007.26.372May2007.43.97

09Apr2007.14.363May2007.47.96180Apr2007.09.344May2007.45.95

11Apr2007.98.335May2007.47.94

192Apr2007.89.319May2007.46.93

13Apr2007.86.290May2007.45.92206Apr2007.98.271May2007.44.92

217Apr2007.00.261 Jun2007.44.91

18Apr2007.99.254Jun2007.43.90

229Apr2007.93.245Jun2007.43.89

20Apr2007.96.236Jun2007.45.88

233Apr2007.96.227Jun2007.44.88

24Apr2007.92.218Jun2007.44.87245Apr2007.96.209Jun2007.44.87

256Apr2007.94.200Jun2007.44.87

26

27

28


Case No. 07-00931




1

2able 4


May 5, 2005, and March 13, 20075


1-May-05-Feb-075.10

7-Feb-07-Mar-070.48

8-Mar-072-Mar-07.4 8


10

1 1

12

13Table 5


16ay 5, 2005, and March 13, 2007

17 Periodegin Datend datenflation

18-May-05-Feb-075.41

2-Feb-07-Mar-071.18

19-Mar-072-Mar-07.03


21

22

23

24

25

26

27

28


Case No. 07-00931




123abe64referred Stock, Series A, PSLRA 90-Day Look-Back Lo ss

Limitation Calculations5 Averageverage6losinglosinglosinglosing

Daterice ($) price ($)aterice ($) price ( $ )

713-Mar-2007.4 5.4 57-Apr-2007.27.45

84-Mar-2007.20.330-Apr-2007.4 5.4 8

95-Mar-2007.9 5.531-May-2007.00.52

16-Mar-20070.00.152-May-2007.8 0.5 6

109-Mar-2007.25.373-May-2007.8 0.59

20-Mar-2007.50.394-May-2007.75.6 2

1 11-Mar-2007.75.4 47-May-2007.25.6 6

122-Mar-2007.85.4 98-May-2007.0 0.70

23-Mar-2007.7 7.6 49-May-2007.7 0.7 2136-Mar-2007.9 2.6 60-May-2007.23.73

147-Mar-2007.4 0.4 61-May-2007.73.73

28-Mar-2007.1 0.2 64-May-2007.5 0.75

159-Mar-2007.2 0.1 05-May-2007.00.78

30-Mar-2007.75.016-May-2007.00.81162-Apr-2007.9 0.9 37-May-2007.9 5.8 3

173-Apr-2007.55.9 18-May-2007.83.8 5

04-Apr-2007.10.9 21-May-2007.50.8 8185-Apr-2007.25.9 42-May-2007.50.9 2

199-Apr-2007.6 5.9 23-May-2007.10.9 4

10-Apr-2007.50.9 04-May-2007.25.9 7

201-Apr-2007.6 0.8 95-May-2007.1 0.9 9

12-Apr-2007.4 5.8 79-May-2007.25.01213-Apr-2007.00.830-May-2007.2 0.03

226-Apr-2007.05.8 01-May-2007.14.05

17-Apr-2007.70.751-Jun-2007.75.06238-Apr-2007.30.704-Jun-2007.25.07

249-Apr-2007

.10

.6 4

5-Jun-2007

.1 0

.0720-Apr-2007.15.596-Jun-2007.4 5.0 6

253-Apr-2007.6 0.5 27-Jun-2007.00.0 4

24-Apr-2007.00.4 78-Jun-2007.8 7.0 2265-Apr-2007.25.4 39-Jun-2007.8 7.0 2

276-Apr-2007.37.4 30-Jun-2007.8 7.0228


Case No. 07-00931




1able7Preferred Stock Series B PSLRA 90-Da Look-Back LossLimitation Calculations

4Averageverage

5losinglosinglosinglosingDaterice ($) price ($)aterice ($) price ($)13-Mar-2007.32.327-Apr-2007.06.35

74-Mar-2007.35.340-Apr-2007.40.38

85 -Mar-2007.89.521-May-2007.70.42

16-Mar-20070.00.142-May-2007.70.459-Mar-2007.35.383-May-2007.65.48

20-Mar-2007.60.424-May-2007.6 1.5101-Mar-2007.00.507-May-2007.45.56

12-Mar-2007.10.588-May-2007.88.60

23-Mar-2007.50.689-May-2007.70.62

26-Mar-2007.90.700-May-2007.53.64

27-Mar-2007.65.511-May-2007.05.6513

28-Mar-2007.80.294-May-2007.45.67

49-Mar-2007.25.135-May-2007.78.70

30-Mar-2007.40.016-May-2007.00.72152-Apr-2007.00.947-May-2007.20.76

63-Apr-2007.25.908-May-2007.88.78

04-Apr-2007.00.901-May-2007.50.8 1

75-Apr-2007.45.932-May-2007.75.83

89-Apr-2007.50.9 13-May-2007.25.86

10-Apr-2007.03.874-May-2007.25.89

91-Apr-2007.05.835-May-2007.10.9 1

12-Apr-2007.90.799-May-2007.30.9403-Apr-2007.80.740-May-2007.00.96

16-Apr-2007.76.701-May-2007.65.99

17-Apr-2007.15.641-Jun-2007.85.00

28-Apr-2007.00.584-Jun-2007.60.01

39-Apr-2007.00.525 -Jun-2007.60.00

20-Apr-2007.05.476-Jun-2007.50.00

43-Apr-2007.90.4 17-Jun-2007.90.98

24-Apr-2007.00.378-Jun-2007.25.9555-Apr-2007.20.339-Jun-2007.25.95

66-Apr-2007.25.330-Jun-2007.25.9527

28





1able 8

2Table 8 has been abbreviated for example purposes. For a complete table, visit

3ttp://www.newcenturysettlement.com/Forms/Table 8.pd£


5t 1-866 -308-7615 to have a copy mailed to you.

6

in7axinax Minis kis ka xinax

Matur i tyx e r .l o s el o s eo lao lar e er e ea lla llu ti n Put8a ter icer icer i c eil ityil itya t ea t enf lat.nf lat.nflat.nflat ion

17-Mar-072.505.163.21. 9 8. 8 8. 0 5. 0 50.690.510 . 0 0$0.18

21-Apr-072.505.163.21. 9 8. 8 8. 0 5. 0 50.640.49$0.05$0.20

109-May-

0 72.505.163.21. 9 8. 8 8. 0 5. 0 50.620.51$0.07$0.19

118 - A u g - 0 7

2.505.163 . 2 1. 9 8. 8 8. 0 5. 0 50.620.54

$0.08$0.15

129 - J a n - 0 82.505.163.21

. 9 8

. 8 8. 0 5. 0 50.630.59

$0.06$0.11

1 7 - J a n - 0 92.505.163.21

. 9 8

. 8 8. 0 5. 0 50.660.64

$0.04$0.05

137 - F e b - 0 7

5 .00 $ 19.7517.21. 9 3. 8 8. 0 5.05 $11.09 $11.080.00$0.01

17-Mar-075.0019.753.21. 9 8. 8 8. 0 5.0511.080.03$0.01$1.40141-Apr-075.0015.853.21. 9 8. 9 5. 0 5. 0 59.410.22$0.20$2.29

159-May-

0 75.0019.753.21. 9 8.88. 0 5. 0 510.860.30$0.19$2.30

168 - A u g - 0 75.0019.753.21. 9 8. 8 8. 0 5. 0 510.460 , 4 2$0.16$3.00

1 9 - J a n - 0 85.001 9 . 7 53.21. 9 8. 8 8. 0 5. 0 59.870 . 5 1$0.11$4.2017

7 - J a n - 0 95.0019,753.21. 9 8. 8 8. 0 5. 0 58.940 . 6 1$0.06$3.44

187 - F e b - 0 7

7.5019.7517.21. 9 3. 8 8. 0 5. 0 511.099.590.00$1.50

17-Mar-077.5019.753.21

. 9 8. 8 8. 0 5. 0 510.750.00

$0.34$3.87

191-Apr-07

7.5015.853.21

. 9 8. 9 5. 0 5. 0 57.070.10

$0.36$4 .69

2019-May-

0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.970.18$0.31$4 .56

218 - A u g - 0 77.5019.753.21. 9 8. 8 8. 0 5. 0 59.380.33$0.23$4.90

1 9 - J a n - 0 87.5019.753.21. 9 8. 8 8. 0 5. 0 58.750.46$0.16$5.63227 - J a n - 0 97.5019.753 . 2 1. 9 8. 8 8. 0 5. 0 57.950.59$0.08$4 .50

$10.0237 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 59.007.10$1.14$3.99

2410.017-Mar-07$19.753.21.98.88.05.059.100.00$0.64$6.33

2510.021-Apr-07$18.773.21

. 9 8. 9 3.05. 0 57.980 . 0 5$0.48$6.82

269-May-10.0

0 719.753.21. 9 8. 8 8.05. 0 58.540.11$0.41$6 .512710.0

1 8 - A u g - 0 719.753 . 2 1. 9 8. 8 8. 0 5. 0 58.110.27$0.29$6 .402810.0

19-Jan-0819.753.21.9 8.88.05.057.680.42$0.20$6.70


Case No. 07-00931




1 0 . 01 7 - J a n - 0 919.753.21. 9 8. 8 8. 0 5. 0 57.140.57$0.09$5.31

21 2 . 51 7 - F e b - 0 719.751 7 . 2 1. 9 3. 8 8. 0 5. 0 56 .504.60$3.63$6 .4931 2 . 517-Mar-0719.753 . 2 1. 9 8. 8 8. 0 5. 0 56.800.00$0.68$8.50

41 2 . 521-Apr-07

18.77

3.21

. 9 8

. 9 3

. 0 5

. 0 5

6.05

0.02

$0.55

$ 8 . 4 559-May-12.5

0 719.753.21

. 9 8. 8 8. 0 5. 0 56.950.08

$0.48$8.00

61 2 . 51 8 - A u g - 0 7$19.753.21. 9 8. 8 8. 0 5. 0 56.870.15$0.34$7.5471 2 . 589-Jan-0819.753.21.98.88.05.056.720.39$0.23$7.51

$ 1 2 . 5

97-Jan-0919.753.21.98.88.05.056.460.55$0.10$5.95

$15.0

107 - F e b - 0 719.7517.21. 9 3. 8 8. 0 5. 0 54.002.16$6.12$8.93

$15.0

117-Mar-0719.753.21. 9 8. 8 8. 0 5. 0 54.700.00$0.69$ 9 . 9 7

$15.0

121-Apr-0718.773.21

. 9 8. 9 3. 0 5. 0 54.350.01

$0.60$9.54

19-May-15.0

137$19.753.21. 9 8.88. 0 5. 0 55 .400.05

$0.53$9.05

$15.0

148 - A u g - 0 7$19.753.21. 9 8.88. 0 5. 0 55.760.10$0.38$8.40

$15.0

159 - J a n - 0 819.753.21. 9 8.88. 0 5. 0 55.890.20$0.25$8.14

$15.0

167 - J a n - 0 9$19.753.21. 9 8.88. 0 5. 0 55.890.45$0.12$6 .47

$17.5177 - F e b - 0 7$19.7517.21. 9 3.88. 0 5. 0 51.700.48$8.61$10.61

$17.5187-Mar-07$19.753.21.98.88.05.052.950.00$0.69$10.69

$17.5191-Apr-0718.773.21.98.93.05.053.020.01$0.63$10.21

19-May-17.5207$19.753.21. 9 8. 8 8. 0 5. 0 53.900.04$0.56$9.76

2117.51 8 - A u g - 0 7 19.753.21.98.88.05.054 .500.10$0.41$9.03

2217.5

1 9 - J a n - 0 819.753.21. 9 8.88. 0 5. 0 55.170.20$0.28$ 8 . 6 3

2317.51 7 - J a n - 0 919.753.21. 9 8.88. 0 5. 0 55 .400.40$0.13$6.90

2420.01 7 - F e b - 0 742.1017.21. 9 3.21. 0 5. 0 519.930.04

$5.28$17.39

2520.0

17-Mar-07$30.843.21

. 9 8. 2 3. 0 5. 0 510.640.00

$0.69$15.54

262 0 . 021-Apr-07$18.773.21. 9 8. 9 3. 0 5. 0 51.750.00$0.65$10.60

279-May-20.0

0 7$30.603.21. 9 8.24. 0 5.059.320.03$0.59$16.74

2820.0

18-Aug-07$30.603.21.98.24.05.057.790.05$0.44$18.25


Case No. 07-00931



Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 70 of 103 Page ID#:1138420.0

19-Jan-0851.223.21.9 8.21.0 5.0 419.940.15$0.30$18.65

220.0

17-Jan-0942 .103.21.98.21.0 5.0 59.250.25$0.14$16 .72

322.5

17-Feb-0742 .1017.21.93.2 1.0 5.0 517.530.00$7 . 6 8$19.88

422.5

1 7 -Ma r -0 730.843.21

.98.2 3.0 5.0 58.160.00

$0 . 6 9$18.03

522.5

2 1 -Ap r -0 718.773.21

.98.93.05.0 50.900.00

$ 0 . 6 6$10.82

69 - M a y -22.5

7739.693.21.98.21.05.0 514.130.02$0 . 6 1$21.23

$22.5

88-A u g -07$34.443.21.98.2 1.0 5.0 57.530.10$0 . 47$21.41

$ 25 . 097-Feb-07$42.10 $17.21.9 3.2 1.0 5.05 $15.100.0010.11$22.30

$ 2 5 . 0

107 - M a r - 0 7$30.843.21.98.2 3.0 5.0 55 .7 00.00$0 . 6 9$20.49

$ 2 5 . 0

111 -Ap r -0 718.773.21.98.9 3.0 5.0 50 .400.00$0 . 6 7$10.94

1 9 - M a y -25 .0

12742 .103.21

.98.2 1.05.0 513.690.02

$ 0 . 6 3

$23.07

$ 2 5 . 0

138-Aug-073 4 . 4 43.21.98.21.05.0 55 . 4 40.10$ 0 . 4 9$23.05

$ 25 . 0

149-Jan-0851.223.21.9 8.2 1.05.0 416.720.15$0.33$21.93

$30.0157-Feb-0747 .8217.21.9 3.2 1.0 5.0 514.260.0010.95$25.03

$30.0

167 - M a r - 0 730.843.21.9 8.2 3.0 5.0 51 .6 40.00$ 0 . 6 9$24.29

$30.0

171 -Ap r -0 718.773.21.9 8.9 3.0 5.0 50.250.00$ 0 . 6 8$11.05

1 9 - M a y -30.0

18742 .103.21

.9 8.2 1.0 5.0 59.350.01

$ 0 . 6 5

$24.86

$30.0198-Aug-073 4 . 4 43.21.9 8.2 1.0 5.0 52.380.09$ 0 . 5 2$247$ 30.0209-Jan-08$53.003.21.9 8.1 9.0 5.03 $13.640.15$0.36$23.81

2130.0

17-Jan-0947 .823.21.9 8.2 1.0 5.0 58 .450.03$0.17$21.29

2235.017-Feb-0747 .8217.21.9 3.2 1.0 5.0 510.360.0011.09$25.21

2335.0

1 7 -Ma r -0 730.843.21.9 8.2 3.0 5.0 50.120.00$ 0 . 6 9$25.18

249 - M a y -35.00742 .103.21

.98.2 1.0 5.0 55 .8 30.01

$ 0 . 6 6

$25.19

2535.0

18-Aug-073 4 . 4 43.21.98.2 1.0 5.0 50.880.04$ 0 . 5 5$25 .13

263 5 .0

19-Jan-0842 .103.21.98.2 1.0 5.0 54 . 6 10.03$0.38$24.72

2740 .017-Feb-0747 .8217.21.9 3.2 1.0 5.0 57.360.0011.09$2 5 .2 1

2840 .0

1 7 -Ma r -0 730.843.21.98.2 3.0 5.0 50.050.00$ 0 . 6 9$25.21


Case No. 07-00931




19-May-40.0

0 742.103.21. 9 8.21. 0 5.053.430.00$0.67$25.21

240.01 8 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5. 0 50.500.00$0.57$25.20

340.0

1 9 - J a n - 0 853.003.21. 9 8.19. 0 5. 0 38.650.00$0.40$25.06

440.0

1 7 - J a n - 0 947.823.21

. 9 8.21. 0 5. 0 55.520.00

$0.19$23.29

545.01 7 - F e b - 0 747.8217.21. 9 3.21. 0 5. 0 55.110.0011.09$25.21

645.0

17-Mar-0730.843.21. 9 8. 2 3. 0 5. 0 50.020.00$0.69$25.21

19-May-45.0

0 742.103.21. 9 8. 2 1. 0 5. 0 51.900.00$0.68$25.21845098-Aug-073 4 . 443.21.9 8.2 1.0 5.0 50.300.00$0 ,58$25.21

$45.0

1 9 - J a n - 0 842.103.21. 9 8. 2 1. 0 5. 0 52.100.00$0.42$25.1710500

117 - F e b - 0 7

47.82

17.21

. 9 3

.21

. 0 5

.05

3.47

0.00

11.09

$25.2119-May-50.0

127$42.103.21

. 9 8.21. 0 5.050.980.00

$0.68$25.21

$50.0

138 - A u g - 0 7$34.443.21. 9 8. 2 1. 0 5.050.250.00$0.60$25.21

$50.0

149-Jan-0853 .003.21.9 8.1 9.0 5.0 35 .3 20.00$0 . 43$25.20

$50.0

157 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 53.680.00$0.21$24.18

$55.0167 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5. 0 52.310.0011.09$25.21

19-May-55.017742.103.21. 9 8. 2 1. 0 5. 0 50.400.00$0.68$25.21

$55.0189 - J a n - 0 851.223.21

. 9 8. 2 1. 0 5.054.150.00

$0.45

$25.21

$60.0197 - F e b - 0 747.8217.21. 9 3. 2 1. 0 5.051.350.0011.09$25.21

$60.0209 - J a n - 0 853.003.21. 9 8. 1 9. 0 5. 0 33.240.00$0.46$25.21

2160.0

1 7 - J a n - 0 947.823.21. 9 8. 2 1. 0 5. 0 52.500.00$0.23$24.71

2270.0

1 9 - J a n - 0 853.003.21. 9 8. 1 9. 0 5.031.900.00$0.48$25.21

2370.017-Jan-0947 .823.21.98.2 1.0 5.0 51.730.00$0 .24$24.96

24

25

26

27

28


Case No. 07-00931




EXHIBIT A-2TO ORDER PRELIMINARILY APPROVING

SETTLEMENTS AND PROVIDNG FOR NOTICE

-1-

Case No. 2:07-cv-00931-DD P (FMOx)



Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 73 of 103 Page ID#:113871 BERNSTEIN LITOWITZ BERGER

& GROSSMANN LLP2 BLAIR A. NICHOLAS (Bar No. 178428)

NIZAVETairnblbglaw.com)LIN (Bar No. 174663)

(elizabethl , blbglaw.com)4 IKI L. MENDOZA (Bar No. 2146 46 )

(mkim blbglaw.com)

5 ENJA IN GALDSTON (Bar No. 211114)

ftblbglaw.com )A. KELLAR (Bar No. 234470)

M81eok (a^blbgaw.com )

7igh Bluff Drive, Suite 300San Diego, CA 9 2130

8 Tel: (858) 793-0070Fax: (858) 793-0323and-SALVATORE J. GRAZIANO

10grazianoblbgglâw.comLAURENT MC MILLE

11 laurenm@blbglaw. com)285 Avenue of the A mericas12 New York NY 10019

Tel: (21^) 554-140013 Fax: (212) 554-1444

14LeadCounsel for Lead Plaintiff NewYork State Teachers' Retirement System

15

16



19 N RE NEW CENTURYase No. 2:07-cv-00931-DD P (FMO x)(Lead Case)

20

1ROOF OF CLAIM AND

22ELEASE23


2 5

6ROOF OF CLAIM AND RELEASE

27




Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 74 of 103 Page ID#:113881ENERAL INSTRUCTIONS


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





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




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





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




1nclusive (the "Class Period"), and who, upon disclosure of certain facts alleged in2he Complaint, were injured thereby (the "Class"). (The New Century common



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


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.


18SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR



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





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




1A VALID REQUEST FOR EX CLUSION IN A TIMELY M ANNER, ANY PROOF

2F CLAIM THAT YOU SUBMIT, OR THAT MAY BE SUBMITTED ON YOUR3EHALF, WILL NOT BE ACCEPTED.



6 2010. If you fail to file a timely, properly addressed, and

7 completed Proof of Claim, your claim may be rejected, and you may be precluded

8rom receiving any distribution from the Settlements.


10in the proceeds of the Settlements. Distributions to Class Members from the

11

Settlements are governed by the Plan of Allocation approved by the Court. The

12proposed Plan of Allocation, which is subject to the Court's approval, is included

13n the Notice.


15 additional copies of the Proof of Claim or the Notice, you may contact the Claims

16 Adm inistrator, at In re New Century Se curities Litigation Settlement, c/o A nalytics,

17 Inc., Claims Administrator, P.O. Box 2004, Chanhassen, MN 55317-2004, or by

18oll-free phone at (866 ) 308-7615, or you may download the documents from Lead

19 Counsel's website, www.blbglaw.com., or the website maintained by the Claims

20Adm inistrator for this Settlemen t, www.neweenturysettlement.com .




24 judgments that the Court enters. You will be bound by such orders and judgments



2 7 all your purchases and sales of New Century Securities from May 5, 2005,


3




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.


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



11CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE12TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF


1 42. All joint purchasers must each sign this Proof of Claim.


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




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


28

4




1iscretionary authority to trade stock in another person's

2ccounts.)



5roof of Claim; or

6b) are expressly authorized to act on behalf of the owner thereof.


8truth of the statements contained therein and the genuineness of the documents



11fraudulent documentation, will result in the rejection of your claim and may12 ubject you to civil liability or criminal prosecution.

13 NOTICE REGARDING ELECTRONIC FILES: Certain Claimants with large



16man ually signed paper Proof of Claim form listing all their transactions, whether or

17 not they also submit electronic copies. If you wish to file your claim

18electronically, you must contact the Claims Administrator at 1-866-308-7615, or

19visit its settlement website www.newcenturysettlement.com to obtain the required



22 cknow ledgment of receipt and acceptance o f electronically submitted data.

23

24

25

26

27

28

5



Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 79 of 103 Page ID#:113931n re New Century



5 treet Address

7 itytateip Code

9Daytime)

10Area Codeelephone Num ber

1 1Evening)12 Area Codeelephone Num ber

13

14Social Security Number oraxpayer Identification Num ber

15

16Record O wner's Nam e (if different from beneficial owner listed above)

17

Check app ropriate box (check only one box):18

19qndividual/Sole Proprietoroint Ownersension Plan

20qorporationartnershiprust

21qIR Ather22

23(describe:

24NOTE: Separate Proofs of Claim should be submitted for each separate legal


26ust one of the Joint Owners; an Individual should not combine his or her IRA


28 single Proof of Claim submitted on behalf of one legal entity should include all

6




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.



2345627

*excluding com missions, transfer taxes or other fees.28

7




1ii) State the total number of shares of New Century Common Stock the



4 hich are not in the Class Pe riod, are not included in the calculation of Recognize d


6 verall evaluation of the C laim.)

7. Sales: List all sales of New Century Common Stock made during


9une 10, 2007. Be sure to attach the required docum entation.

10rade D ate(s) (List

11hronologically)umber ofalesotalMonth/Day/Yearhares Soldrice Per Shareales Price*

123456*excluding com missions, transfer taxes or other fees

17

1 8. Unsold Holdings: State the total number of shares of New

1 9entury Common Stock the Claimant owned at the close of the


2 1han zero, be sure to attach the required documentation.

22

23. Ending Position For 90-Day Look Back; State the total number

24f shares of New Century Common Stock the Claimant owned at

25he close of the market on June 10, 2007. If none, write "zero" or

260."f other than zero, be sure to attach the required

27ocumentation.

28

8





2

IN THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR3


5 IF YOU DONOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

6NOT BE REVIEWED

7

8 PART III: NEW CENTURY 9.125% SERIES A CUMULATIVEREDEEMABLE PREFERRED STOCK ("SERIES A PREFERRED

9STOCK")

1 0

A. Be$!innini! HoldinLs: State the number o f shares of New Century

11 Series A Preferred Stock the Claimant owned as of the close of12

the market on May 4, 2005. If none, write "zero" or "0." If other13

than zero, be sure to attach the required documentation.1 4

1 5B. Purchases:

1 6(i) List all purchases of New Century Series A Preferred Stock made during

17

the period from May 5, 2005, through and including March 13, 2007. (NOTE: If1 8

you acquired your New Century Series A Preferred Stock during this period in an1 9


com plete description of the term s of the acquisition on a separate page.) B e sure to2 1

attach the required documentation.22

23

24

2 5

26

27

28

9




1rade Date(s) (List2hronologically)umber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*

3 excluding comm issions, transfer taxes or other fees.8ii) State the total number of shares of New Century Series A Preferred




13Recognized Loss Amount.his information is needed by the Claims


156. Sales: List all sales of New Century Series A Preferred Stock


18une 10, 2007. B e sure to attach the required docum entation.

1 9rade Date(s) (ListChronologically)umber ofalesotal


212$$$3

24

25 excluding comm issions, transfer taxes or other fees

26

27

28

1 0





2entury Series A Preferred Stock the C laimant ow ned at the close

3 of the market on March 13, 2007. If none, write "zero" or "0." If


5

6. EndinL Position Fo r 90-Day Look Back: State the total number

7f shares of New Century Series A Preferred Stock the Claimant



10ocumentation.

11

12IF YOU NEED ADDITIONAL SPACE TOLIST YOUR TRANSACTIONS

13N THIS SECURITY PLEASE PHOTOCOPY THIS PAGE, WRITE YOUR14NAME ON THE CO PY AND CHECK THIS BOX

1 5

16 IF YOU DONOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17NOT BE REVIEWED

18PART IV: NEW CENTURY 9.75% SERIES B CUMULATIVE

19REDEEMABLE PREFERRED STOCK ("SERIES B PREFERRED

STOCK')20

21. Beginning Holdinus: State the number of shares of New Century




25

26. Purchases:






1you acquired your New Century Series B Preferred Stock during this period in an


3 complete description of the terms of the acquisition on a separate page.) Be sure to

4ttach the required docum entation.

5rade Date(s) (List

6)callhronoloumber ofurchaseotalMonth/Day/Yearhares Purchased Price Per Share Purchase Price*1 0

1 *excluding commissions, transfer taxes or other fees.

12

13ii) State the total number of shares of New Century Series B Preferred




17 Recognized Loss. This information is needed by the Claims Administrator for

18purposes of the overall evaluation of the Claim.)

1 9. Sales: List all sales of New Century Series B Preferred Stock

20made during the period from May 5, 2005, through and including21une 10, 2007. B e sure to attach the required documentation.

22rade D ate(s) (ListChronologically)umber ofalesotal


24$$5

26$728excluding comm issions, transfer taxes or other fees

12





2entury Series B Preferred Stock the Claimant ow ned at the close

3f the market on March 13, 2007. If none, write "zero" or "0." If4ther than zero, be sure to attach the required documentation.

5

6. EndinL Position For 90-Day Lo ok Back: State the total numbe r

7f shares of New Century Series B Preferred Stock the Claimant



10ocumentation.

1 1

12

13IF YOU NEED ADDITIONAL SPACE TOLIST YOUR TRANSACTIONS


15NAME ON THE COPY AND CHECK THIS BOX q16IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY

17 NOT BE REVIEWED

18

1920

21

22

23

24

25

26

27

28

13




1ART V: NEW CENTURY CALL OPTIONS



4ay 4, 2005:

5umber of Calltrike Price for6ption Contractsxpiration Monthall Optionosition: Short

Opennd Yearontractr Long710'

1 1. Purchases: List all Call Option contracts on New Century




1 5urchase Date(s)umber ofremiumtrike Price(Listptionrice Perxpirationor Call

16hronologically)ontractshareonth andption


181920$$1



24nd including March 13, 2007. Be sure to attach the required

25ocumentation.

26

27

28

1 4




1ales Date(s)remium2Listumber ofrice Perxpirationtrike Price for

Chronologically)ptionhareonth andall Option3 Month/Day/Year Contracts Soldearontract

4$$$$7

sExercised Calls: List all Call Option contracts on New Century9ommon Stock that you exercised during the period from May 5,10through and including March 13, 2007. Be sure to attach

1 1 the required documentation.12

Strike13rice for

14xpirationallumber of Callesult:Month andptionption Contracts Rec' d Shares

15ate Exercisedea rontract Exercisedr Cash?

16

17

18

1 9

20. Expired Calls: List all Call Option contracts on New Century




24

25

26

27

28

15



Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 89 of 103 Page ID#:11403ate Contractstrike Price

2xpired (Listumber ofer CallChronologically)xpired Option Expiration Monthption

3onth/Day/Yearontractsnd Yearontract4

5678. Unsold/Unexpired Calls: List Call Option contracts on New

9entury Common Stock that were open as of the close of the1 0arket on March 13, 2007.

11

12

Strike Price1 3umber of Caller Call

1 4ption Contractsosition: Short or Expiration MonthptionOpenongnd Yearontract

.1 567

18

19

20

2 1

22

2 3

24

25

26

27

28

16





2. BeRinnint! Holdings: List all Put Option contracts on New


4ay 4, 2005:5umber of Puttrike Price for6ption Contractsxpiration Monthut Optionosition: Short

Opennd Yearontractr Long71 0

1. Sales: List all Put Option contracts on New Century Common

1 2tock that you sold (wrote) during the period from May 5, 2005,

1 3hrough and including March 13, 2007. Be sure to attach the

1 4required documentation.


16Chronologically)ptionhareonth andut Option17 Month/Day/Year Contracts Soldearontract

1 8$$9$20$$2 1

2 2

2 3

24

2 5

26

27

2 8

17




1. Purchases: List all Put Option contracts on New Century





6Listptionrice Perxpirationtrike Price perChronologically)ontractshareonth andut Option

7 Month/Day/Yearurchasedearontract

8$0$1

1 2D. Exercised Puts: List all Put Option contracts on New Century

13ommon Stock that you exercised during the period from May 5,14005, through and including March 13, 2007. Be sure to attach

15the required documentation.

1 6Strikeumber of Putesult:

1 7xpirationrice for Option Contracts Delivered

1 8onth and Put Option Exercisedhares orDate Exercisedearontractaid?

19

20

21

22

23

24. Expired Puts: List all Put Option contracts on New Century

25ommon Stock that expired worthless during the period from



28

1 8





Chronologically)xpired Putxpiration M onthut Option3onth/Day/Yearontractsnd Yearontract468

F. Unexpired Puts: List Put Option contracts on New Century9

Common Stock open as of the close of the market on March 13,1 0007.

1 1umber oftrike Price for1 2nexpired Putosition: Short or Expiration Monthut Option

13ptions Contractsongnd Yearontract

1415

16 YOU MUST READ THE FOLLOWINGRELEASE AND SIGN ON PAGE ®.

17ELEASE OF CLAIMS

18Definitions

19efined terms not already defined herein have the meanings given them in

20the respective Stipulations of Settlement (described in the Notice) (the

21"Stipulations").

22

23

24The Releases



27on and after entry of the Global Officer And Director Judgment and occurrence of

28the Effective Date of the Global Officer And Director Settlement, each Class

1 9




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



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



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


15epresentations or omissions involved, set forth, or referred to in the Consolidated










25 nd (ii) all directors, officers, employees, and other natural persons affiliated with




2 0




1xecutors, adm inistrators, predece ssors, successors and assigns, employees, agents

2nd retained professionals (other than KP MG or the Underwriter Defendants).

3PMG Release




7 sufficient consideration, the receipt and adequacy of which are hereby

8acknow ledged, whether or not a Proof of C laim is executed and delivered by, or on


10released, waived, discharged and dismissed each and every Settled Claim, and

11shall forever be enjoined from prosecuting any or all Settled Claims, against any





16 ould have asserted in any forum that arise out of or are based up on the allegations,

17 transactions, facts, matters or occurrences, representations or omissions involved,

18et forth, or referred to in the Complaint, and that arise out of or relate to the



21the sale of New Century Put Options during the Class Period. "Settled Claims"





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1nderwriter Release


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



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,


19o in the Complaint, and that arise out of or relate to the purchase of New Centuryp2 0 ommon Stock, New Century Series A Preferred Stock, New Century Series B21 Preferred Stock, and/or New Century Call Options and/or the sale of New Century

22 Put Options during the Class Period. "Settled Claims" does not include claims

23 relating to the enforcement of the Settlements. "Released Underwriter Party"

24 means the Underwriter Defendants and any and all of their respective parent

25 companies, subsidiaries, affiliates, heirs, executors, administrators, predecessors,

26 successors and assigns, and any and all of their current and former officers,

27 directors, employees, agents and attorneys. "Released Underwriter Parties" does

2 8 ot include any Defendants other than the Underwriter Defendants.22




1


3y signing and submitting this Proof of Claim, the Claimant or the person4 ho represents the Claimant certifies, as follows:

5. that the Claimant is a Class Mem ber, as defined in the Notice;

6. that I (we) have read and understand the contents of the Notice and the7roof of Claim;

8. that I (we) are not acting for any of the Defendants, nor am I (are we)uch a Defendan t or otherwise excluded from the Class;


1 1we) do not k now of any request for exclusion from the Class filed on my12our) behalf with respect to my (our) transactions in New Century

13ecurities;



16he authority to act on behalf of the owner(s) thereof,1 7. that Claimant may be entitled to receive a distribution from the Net

18ettlement F und;

1 9. that Claimant desires to participate in the Settlements described in the

20 Notice and agrees to the terms a nd conditions thereof;




24roof of Claim;

25. that I (we) agree to furnish such additional information with respect to

26his Proof of Claim as the parties, the Claims Administrator or the Court

27ay require;

28

23






3mount of the claim m ade by this Proof of Claim; and

4 1l.that I (we) certify that I am (we are) not subject to backup withholding

5nder the provisions of Section 3406(a)(1)(c) of the Internal Revenue

6ode.

7OTE: If you have been notified by the Internal Revenue Service that you are



1 0ervice does not require your consent to any provision other than the

1 1ertification required to avoid bac kup w ithholding.12

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3rue and correct and that the docum ents submitted herewith are true and genuine.

4

5 Signature of Claimant

78

Print Name of Claimantate Signed

9

10 Signature of Joint Claimant, if any

1 1

12 Print Nam e of Joint Claimant, if anyate Signed

1 3

14 f C laimant is other than an individual , or is not the person com plet ing this

15form , the fol lowing also must b e pr ovided:

1 6

17 Signature of Person Completing Form

1 8

19 Print Name of Person Com pleting Formate Signed

20

21 Capacity of Person Signing (Executor, President, Trustee, etc.)

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1EMINDER CHECKLIST

2lease sign the Proof of Claim on page

3f this Claim is being made on behalf of Joint Claiman ts, then both m ust sign.

4lease remembe r to attach supporting docum ents.

5f you move, please send your new address to:

6n re New Century Securities Litigation Settlement

7/o Analytics, Inc., Claims Administrator


91-866-308-7615

10

DO NOT SEND ORIGINALS OF ANY SUPPORTING DOCUM ENTS.11

2eep a copy of your Proof of Claim and all documentation submitted for your

13 records.

4he Claims Administrator will acknowledge receipt of your Proof of

1 5laim by mail within 60 days. Your Proof of Claim is not deemed


1 7he Claims Administrator toll free at (866) 308-7615.

18

19

ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT

20F TIME.

2 1HANK YOU FOR YOUR PATIENCE

2 2

23

2 4

25

2 6

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2 8

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EXHIBIT A-3TO ORDER PRELIMINARILY APPROVING

SETTLEMENTS AND PROVIDNG FOR NOTICE

-1 -





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


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







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


26 Spring Street, Courtroom 3, Los Angeles, California 90012 aton2010, to determine: (1) whether this Consolidated Action


2 8 Rules 23(a) and (b) of the Federal Rules of Civil Procedure on behalf of the Class;

i



Case 2:07-cv-00931-DDP-FMO Document 484-9 Filed 07/30/10 Page 102 of 103 Page ID#: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


4 Expenses should be approved.





9 Fairness Hearing, And Motion For Attorneys' Fees And Reimbursement Of







17 Claim Form no later thanestablishing that you are e ntitled











28

2





2 REGARDING THIS NOTICE. Inquiries, other than requests for the Notice and3 Claim Form, may be made to Lead Counsel:

4

BERNSTEIN LITOWITZ BERGER5GROSSMANN LLP

6alvatore J. Graziano1285 Avenue of the Americas

7ew York, New Y ork 100198elephone: (866) 648-2524

9

10 Dated:2010y Order of the Clerk of the C ourtUnited States District Court

1 1or the Cen tral District of California12

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1BERNSTEIN LITOWITZ BERGER& GROSSMANN LLP

2BLAIR A. NICHOLAS (Bar No. 178428)

32laiblbglaw.com

LIZZETH P. LIN (Bar No. 174663)([email protected] )4NIKI L. MENDO ZA (Bar No. 214646)

([email protected] )5 BENJAMIN GALDSTON (Bar No. 211114)

([email protected] )6 TAKEO A. KELLAR (Bar No. 234470)

([email protected] )7 12481 H igh Bluff Drive, Suite 300

San Diego, CA 921308Tel: (858 793-0070

Fax: (8583 793-03239and-

SALVATO RE J. GRAZIANO10 (sgrazianoblb law.com

LAUREN A. M^MILLE1 1 ^[email protected])

285 Avenue of the Americas12New York, NY 10019

Tel: (212) 554-140013Fax: (212) 554-1444

14Lead C ounsel for Lead Plaintiff the NewYork State Teachers’ Retirement System

15and the C lass

16

UNITED STATES DISTRICT COURT

17

18ENTRAL D ISTRICT OF CALIFORNIA

19IN RE NEW CENTURYase No. 2:07-cv-00931-DDP (FMOx)

20Lead Case)

21ECLARATION OF SERVICE

22

23udge Dean D . Pregerson

24526

27

28

DECLARATION OF SERVICE

Case No. 2:07-cv-00931-DDP (FMO x)



Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 2 of 7 Page ID#:11419ECLARATION OF SERVICE

2, the undersigned, declare:

3.hat I am and was, at all times herein mentioned, a citizen of the United

4tates and a resident of the Coun ty of San D iego, over the age of 18 years, and not a party

5 to the within action; that my business address is 12481 High Bluff Drive, Suite 300, San

6 iego, California 92130 .

7.hat on July 30, 2010, I caused to be served the following documents:

8otice Of Unopposed M otion and Unopposed M otion For Preliminary

9pproval Of Settlements;

*laintiffs' Memorandum Of Points And Authorities In Support Of1 0nopposed Motion For Preliminary Approval Of Settlements (and

1 1xhibits thereto);*Proposed] Order Preliminarily Approving Settlements And Providing

12or Notice (and exhibits thereto);

13tipulation To Shorten Time In Which Plaintiffs' Unopposed Motion

14or Preliminary Approval Of Settlements Will Be Heard;

*Proposed] Order Shortening Time in Which Plaintiffs' Unopposed1 5otion For P reliminary Approval Of Settlements W ill Be Heard; and

16eclaration of Service

17

18 Those attorneys who are registered with the Electronic Case Filing ("ECF")

19 System may access this filing through the Court's system, and notice of this filing

20

will be sent to the parties by operation of the Court's ECF System. Attorneys not

21

registered with the Court's ECF system will be duly and properly served in

accordance with the Federal Rules of Civil Procedure and the Court's Local Rules22

23

(see attached Service List).

3.

declare that I am employed in the office of a member of the bar of24this Court at whose direction the service was made.

25

26Executed on July 30, 2010, at San Diego, California.

27Kayj-f A. M artin

28

-1-ECLARATION OF SERVICE





1ERVICE LISTOUNSEL FOR PLAINTIFF CARL LARSON3

4arvin L. Frank, Esq.

MURRAY , FRANK & SAILER LLP575 M adison Avenue

New York, NY 10016

6el: (212) 682-1818

Fax: (212) 682-1892

[email protected]

8ia ECF

9OUNSEL FOR PLAINTIFF CHARLES H OOTEN

0effery C. Zw erling, Esq.

1 1tephen Brodsky, Esq.ZWERLING, SCHACHTER

12ZWERLING, LLP

41 Mad ison Avenue, 32 n d Floor13ew York, NY 10010

Tel: (212) 223-390014ax: (212) 371-5969

[email protected]

[email protected]

16ia ECF

17COUNSEL FOR DEFENDANTS PATTI M. DODGE, BRAD A. MORRICE, KEVIN

18M. CLOYD, PATRICK FLANAGAN, STERGIOS THEOLOGIDES AND JOSEPH

F. ECKROTH, JR.

19John W . Spiegel, Esq.

20athleen M. McDowell, Esq.

21evin S. Allred, Esq.

MUNGER TOLLES & O LSON, LLP



23el: (213) 683-9100

Fax: (213) [email protected]

[email protected]

[email protected]

26ia ECF

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-2 -ECLARATION OF SERVICE




Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 4 of 7 Page ID#:114211OUNSEL FOR DEFENDANT SUSAN GOTSCHALL, AS REPRESENTATIVE OF

2HE ESTATE OF EDWARD F. GOTSCHALLack P. Dicanio, Esq.

Harriet S. Posner, Esq.4

ila Jones, Esq.5KADD EN, ARPS, SLATE, MEAGHER & FLOM LLP

300 S. Grand Avenue, Suite 3400


Tel: (213) 687-5000

7ax: (213) 687-5600

[email protected]

[email protected]

[email protected]

Via ECF

10

COUNSEL FOR DEFENDANT ROBERT K . COLE1 1

12anny A. Ab ascal, Esq.

Ethan J. Brown, Esq.

13 LATHAM & WATKINS LLP


14os Angeles, CA 90071-15 60

Tel: (213) 485 -123415ax: (213) 891-8763

[email protected]

[email protected]

17ia ECF

18COUNSEL FOR DEFENDANTS MARILYN A. ALEXANDER, HAROLD A.

9LACK, DAVID EINHORN, FREDRIC J. FORSTER, DONALD E. LANGE,

MICHAEL M. SACHS, TERRENCE P. SANDVIK, AND RICHARD A. ZONA

20Matthew E. Lilly, Esq.

21eryl L. Young, Esq.

Wayn e W. Smith, Esq.

22 GIB SON DUNN & CRUTCHER LLP

23161 Michelson Drive

Irvine, CA 9261224el: (949) 451-4038

Fax: (949) 451-4220

[email protected]

[email protected]@gibsondunn.com

27ia ECF

28





Case 2:07-cv-00931-DDP-FMO Document 484-10 Filed 07/30/10 Page 5 of 7 Page ID#:114221OUNSEL FOR DEFE NDANT WILLIAM J. POPEJOY

2Ronald Rus, Esq.

3oel S. Miliband, Esq.

Leo J. Presiado, Esq.

4aurel R. Zaeske, Esq.

5US MILIBAND & SMITH

2211 Michelson Drive, Seventh Floor

6rvine, CA 92612-1043

Tel: (949) 75 2-7100

7ax: (949) 252-15 14

[email protected]@rusmiliband.com

[email protected]

[email protected]

10ia ECF

1OUNSEL FOR DE FENDANTS BE AR, STEARNS & CO., INC., now known as J.P.

2ORGAN SECURITIES, INC., DEUTSCHE BANK SECURITIES, INC.,

JEFFERIES & COMPANY, INC., JMP SECURITIES LLC, MORGAN STANLEY &

3O., INC., PIPER JAFFRAY & CO., ROTH CAPITAL PARTNER S, LLC, AND

STIFEL, NICOLAUS & C OMPA NY, INC.14

W illiam F. Sullivan, Esq.15ohn S. Durrant, Esq.

16leanor K. Mercado, Esq.

PAUL, HASTINGS, JANOFSKY & W ALKER LLP

1715 So uth Flower Street, 25t h

FloorLos Angeles, CA 9007118el: (213) 683-6000

Fax: (213) [email protected]

[email protected]

[email protected]

21ia ECF

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Documents

New Century Investor Lawsuit--$125 Million Dollars (cash)--Proposed Settlement