Joint Notice of Funds to Compensate Certain Investors of Puda Coal

Transcription

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE COMMISSION,
PLAINTIFF,
15cv2304 (DLC)
v.
MACQUARIE CAPITAL (USA) INC., ET AL.,
DEFENDANTS.
In re: PUDA COAL SECURITIES INC.
11cv2598 (DLC)
LITIGATION
Joint Notice of Funds to Compensate Certain Investors
of Puda Coal Common Stock and Options
PLEASE READ THIS JOINT NOTICE CAREFULLY. IF YOU SATISFY THE ELIGIBILITY CRITERIA
DESCRIBED BELOW, YOU MAY BE ENTITLED TO A RECOVERY.
A FEDERAL COURT AUTHORIZED THIS JOINT NOTICE.
I. If you purchased Puda Coal, Inc. (“Puda Coal”) common stock in the December 8, 2010 secondary public offering
(“Secondary Offering”) and held any of the Puda Coal stock you purchased in that offering until after April 7,
2011, you may be entitled to receive compensation from two distributions in two separate proceedings:
A. Fair Fund: a Fair Fund established by the Court pursuant to Section 308(a) of the Sarbanes–Oxley Act of
2002, as amended, in SEC v. Macquarie Capital (USA) Inc., et al., No. 15cv2304 (S.D.N.Y.) (DLC) (“Fair
Fund ”); and
B. Class Action Settlements: Funds paid to settle claims in the class action lawsuit (“Class Action”) In re Puda
Coal Securities Inc. Litigation, No. 11cv2598 (S.D.N.Y.) (DLC) (“Class Action Settlements”).1
II. If you purchased Puda Coal common stock, purchased Puda Coal call options, or sold Puda Coal put options
during the period December 8, 2010 through and including April 11, 2011, you may be eligible to receive a
payment from the Class Action Settlements, even if you did not purchase Puda Coal common stock in the
Secondary Offering.
On the following pages is important information regarding your eligibility to a recovery from the Fair Fund and/or
the Class Action Settlements and instructions for submitting a Claim Form for each distribution.
The Differences Between the Two Proceedings
The Class Action Settlements compensate those who purchased Puda Coal common stock, purchased Puda Coal call
options, or sold Puda Coal put options during the period December 8, 2010 through and including April 11, 2011. The
Fair Fund distribution only compensates those who purchased Puda Coal common stock in the Secondary Offering.
Note that even if you decide to “opt-out” of participating in the Class Action Settlements, you may still participate in
the Fair Fund if you submit a Claim Form.
The following capitalized terms in this Joint Notice refer to the Class Action Settlements and not the Fair Fund: “Settlement,” “Settlements,”
“Settlement Class,” “Settlement Class Members,” “Settlement Fund,” “Net Settlement Fund,” “Settlement Class Period,” “Class Members,”
“Class Action Plaintiffs,” “Class Action Settlements,” “Settling Plaintiffs,” “Settling Defendants,” “Settling Parties,” and “Settling Hearing.”
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Questions? Visit www.pudacoalfund.com, email [email protected]
or call 877-276-7324
1
Filing a Claim for One or Both of the Proceedings
There are separate Proofs of Claim for each proceeding. You do not need to file your trade documentation twice
but you do need to file two claims if you want to participate in both distributions. The Proof of Claim Forms have
been included with this Joint Notice as Exhibits C and D. Please be sure to provide your complete name and mailing
address on the Proof of Claim.
There are eligibility rules that apply to each distribution. The rules are described in the respective Distribution Plans
and Plans of Allocation, which can be found at www.pudacoalfund.com. If you have any questions, please contact
Epiq Class Action & Claims Solutions, Inc. (“Epiq” or “Distribution Agent/Administrator”) at the email address or
telephone number listed at the bottom of each page of this Joint Notice. Copies of important documents relating to the
Fair Fund and the Class Action Settlements are also available on the website, www.pudacoalfund.com.
All Proofs of Claim must be signed and submitted to the address provided below, postmarked no later than
May 13, 2016. Claims postmarked after May 13, 2016 will not be eligible to participate in the distribution of
the Fair Fund or the Class Action Settlements.
Macquarie Capital Fair Fund / Puda Coal Securities Litigation
PO Box 2838
Portland, OR 97208-2838
The Deadlines
Fair Fund
Deadline to File a Claim
May 13, 2016
Class Action Settlements
Deadline to File a Claim
May 13, 2016
Background to the Fair Fund and Class Action Settlements
The Fair Fund and the Class Action Settlements arise out of the following events. Puda Coal’s former Chairman Ming
Zhao (“Zhao”) is accused of executing a fraudulent scheme in 2009 by transferring Puda Coal’s 90% ownership
interest in its primary operating subsidiary, Shanxi Puda Coal, to himself, rendering Puda Coal an empty shell.
Subsequently, Puda Coal concealed the transfer and represented to investors that it continued to own Shanxi Puda
Coal. The unlawful transfer was publicly revealed in April 2011.
Puda Coal is a U.S. issuer of securities. It engaged in a $108 million Secondary Offering on December 8, 2010.
Macquarie Capital (USA) Inc. (“Macquarie”) and Brean Murray, Carret & Co. (“Brean”) (together, the “Underwriters”)
served as Underwriters for the Secondary Offering. Lawrence S. Wizel and C. Mark Tang (the “U.S. Directors”)
were serving as the U.S. Directors for Puda Coal. An investigative report prepared for Macquarie during the due
diligence it conducted for the Secondary Offering uncovered the fact that Puda Coal no longer owned Shanxi Puda
Coal. Despite that report, the Offering Documents for the Secondary Offering continued to describe Shanxi Puda
Coal as owned by Puda Coal.
As a result of a Securities and Exchange Commission (“SEC”) investigation of Puda Coal and the Secondary
Offering, Macquarie agreed to pay $15,000,000 into the Fair Fund and to pay the costs of administering the Fair
Fund distribution. The Fair Fund is to be distributed to Puda Coal investors harmed as a result of purchasing Puda
stock in the Secondary Offering.
The SEC has also sued Zhao and Liping Zhu (“Zhu”), Puda Coal’s CEO. Default judgments have been entered against
both of these individual defendants; neither one of the individual defendants thus far has paid any of the amounts
ordered to be paid.
The Class Action complaint asserts securities law claims against Puda Coal, Zhao, Macquarie, Brean, the U.S.
Directors, Moore Stephens Hong Kong and Moore Stephens, P.C. (the “Auditor Defendants”), and three additional
Puda Coal Officers. The parties participating in the Class Action have engaged in extensive discovery of the facts
underlying the Class’s claims and expert discovery. In settlement of the Class Action, Macquarie has agreed to pay
$7.4 million; Brean has agreed to pay $1.2 million, and the U.S. Directors have agreed to pay $100,000 and assign
certain claims against their insurance company, PICC. These Class Action Settlements collectively provide a fund
of $8.7 million.
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In the Class Action, the Court has entered defaults against Puda Coal and Zhao, dismissed the claims against the
Auditor Defendants on summary judgment, and dismissed the claims against the three additional Puda Coal Officers
because they reside in China and could not be found and served with the complaint. The Class Action Plaintiffs are
appealing the dismissal of the claims against the Auditor Defendants.
Who Is Eligible to Participate in the Fair Fund?
Any person or entity that purchased Puda Coal common stock in the Secondary Offering, and held any of those
Secondary Offering shares through the close of trading on April 7, 2011, may be eligible for compensation from the
Fair Fund subject to certain eligibility limitations described in the Distribution Plan. You must file a claim in the Fair
Fund distribution if you want to participate in the Fair Fund distribution.
If you did not purchase shares of Puda Coal in the Secondary Offering you are not eligible for compensation from the
Fair Fund, but you may still be eligible to receive compensation from the Class Action Settlements.
Who Is Eligible to Participate in the Class Action Settlements?
The Court has preliminarily certified in the Class Action a Settlement Class that consists of those persons or entities
that purchased Puda common stock or call options or sold Puda put options during the period from December 8, 2010
through and including April 11, 2011 (the “Settlement Class Period”).
If you are eligible to receive compensation from both the Fair Fund and the Class Action Settlements, your Recognized
Loss, as calculated by the rules that govern the distributions of the Class Action Settlements, will be reduced by the
amount of money you receive from the Fair Fund.
You must file a claim in each distribution if you want to participate; therefore, you must file a claim in both distributions
if you wish to participate in both the Fair Fund and Class Action Settlements.
How Much Will My Payment Be?
For complete information on how payments will be calculated for those who file Claim Forms, please review the
Plans of Allocation for the Fair Fund and for the Class Action. The Plan of Allocation for the Fair Fund is attached
as Exhibit A to this Joint Notice and the Plan of Allocation for the Class Action Settlements is attached as Exhibit
B to this Joint Notice. Both the Fair Fund and the Class Action Plans of Allocation are also available on the website,
www.pudacoalfund.com. The amount of compensation will vary based on the exact dates of transactions in Puda
Coal common stock during the relevant period, the number of shares of Puda Coal common stock purchased in the
Secondary Offering and held, and the total dollar value of eligible claims submitted to the Fair Fund and the Class
Action Settlements. Distribution payments shall only be made to Eligible Claimants whose total payment for a claim
exceeds $10.00.
Other Information
This is not a solicitation from a lawyer. Section 21(d)(4) of the Securities Exchange Act of 1934 (“Exchange Act”)
prohibits the use of funds disgorged in an action brought by the SEC “as payment for attorneys’ fees or expenses
incurred by private parties seeking distribution of the disgorged funds.”
Special Notice to Securities Brokers and Other Nominees:
If you purchased Puda Coal common stock or call options, or sold Puda Coal put options during the period from
December 8, 2010 through and including April 11, 2011, for the beneficial interest of an individual or entity other than
yourself, then within TEN (10) DAYS OF YOUR RECEIPT OF THIS JOINT NOTICE, you must either:
1.
Provide to Epiq the name and last known address of each individual or entity for whom or which you
purchased/held the eligible securities during such time period; or
2.
Request additional copies of this Joint Notice Packet, and within 10 days, mail the Joint Notice
Packet to the beneficial owners of the eligible securities.
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You are entitled to reimbursement for your reasonable expenses actually incurred in providing notice, provided an
invoice is timely submitted to Epiq. All communications concerning the foregoing should be addressed to Epiq at the
address below:
Macquarie Capital Fair Fund / Puda Coal Securities Litigation
PO Box 2838
Telephone: 877-276-7324
Email: [email protected]
ADDITIONAL NOTICE OF CLASS ACTION SETTLEMENTS
The Lead Plaintiffs in the Class Action are Salomón Querub, Howard Pritchard and Hotel Ventures LLC (“Lead
Plaintiffs”).2 The Court in charge of this case still has to decide whether to approve each of the Settlements, which
will be considered independently of one another. The portion of the Settlement Fund attributable to each defendant’s
payment will be available for distribution to the Settlement Class only if the settlement is approved as to that specific
defendant, and that approval is upheld following any appeals.
YOUR LEGAL RIGHTS AND OPTIONS IN THE CLASS ACTION SETTLEMENTS
Submit a Claim Form No This is the only way to get a payment from any of the proposed Settlements. A copy
Later than May 13, 2016. of the Claim Form is enclosed, and is also available at www.pudacoalfund.com.
Exclude Yourself from any Get no payment from the Settlement(s) that you have excluded yourself from.
This is the only option that allows you to be part of any other lawsuit against the
of the Settlements no
later than May 13, 2016. defendants about the legal claims in this case.
Object to one or more of
the Settlements no later
than May 13, 2016.
Write to the Court about why you do not like any of the Settlements.
Attend the Hearing on
June 17, 2016.
Speak in Court about the fairness of the Settlements.
Do Nothing.
Receive no payment, give up your rights and be bound by the Settlements and
judgments that will be entered by the Court.
Even if you fall within the Settlement Class definition, you are not a member of the Settlement Class if you: (a) are
one of the Defendants; (b) were a partner, executive officer, director, controlling person, subsidiary, or affiliate of any
Defendant during the Settlement Class Period; (c) are a member of any Defendant’s immediate family; (d) a Person
in which any Defendant has a Controlling Interest; and/or (e) are a legal representative, heir, estate, administrator,
predecessor, successor or assign of any of the foregoing Excluded Persons. Also excluded from the Settlement Class
is any Person that files a valid and timely request for exclusion in accordance with the requirements set forth in this
Joint Notice.
Plaintiffs’ financial experts have opined that the recoverable damages on behalf of all Class Members against the
Settling Defendants collectively range between a minimum of $52.9 million and as much as $92.2 million. Each of
the Settling Defendants disputes the existence of any damages.
Each of the Settling Defendants is entering into their Settlement to avoid the substantial burden, expense and
uncertainty inherent in complex securities cases. All are entering into their Settlement without admitting any liability
to the Class Action Plaintiffs or the other Settlement Class Members. The Settling Parties disagree on, among other
things: (a) the amount of inflation in the securities’ prices, if any, caused by the alleged misrepresentations and
omissions; and (b) the percent of responsibility, if any, of each of the Settling Defendants.
For purposes of this Notice, “Plaintiffs” means, collectively, Steven Weissmann and Trellus Management Company LLC (the “Additional
Named Plaintiffs”) and Lead Plaintiffs.
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The claims in the Class Action involve numerous complex legal and factual issues, many of which require expert
testimony. The Class Action Plaintiffs recommend acceptance of the Settlements since the Settlements eliminate
litigation risk and guarantee some recovery to Settlement Class Members in addition to the compensation provided
by the Fair Fund.
This Notice does not express any opinion by the Court concerning the merits of the claims and defenses of the parties
to the Class Action.
How Much Will Be Distributed to
Investors from the Class Action Settlements?
If the Class Action Settlements are approved by the Court, after certain deductions (including the costs of notice
and administration, taxes, any attorneys’ fees and litigation expenses, as well the amount of any Reimbursement
Award to the Class Action Plaintiffs granted by the Court), the balance of the Settlement Fund, plus accrued interest,
will be distributed to eligible members of the Settlement Class who have timely submitted a Claim Form (the “Net
Settlement Fund”). If only one or more of the Settlements is approved, then the Settlement Fund will consist only of
the amount paid for the Settlement(s) approved.
Your share of the Net Settlement Fund will depend on several factors, including: how many Settlement Class Members
submit valid Claim Forms; the total Recognized Losses represented by the valid Claim Forms; the number of shares
of Puda common stock or call options that you purchased or put options that you sold during the Settlement Class
Period; how much you paid for the shares; when you purchased; and if you sold your shares and, if so, for how much.
The method by which the Claims Administrator will determine your share of the Net Settlement Fund is described
in Exhibit B. Defendants are not entitled to get back any portion of the Settlement Fund if and when their Settlement
becomes effective.
Plaintiffs’ damages expert has opined that approximately 12.7 million shares of Puda common stock have been
damaged as a result of the allegedly wrongful conduct. Thus, assuming that the owners of all affected shares elect
to participate, the average per share recovery from the combined Settlement Fund would be approximately $0.68
per damaged share. After payment of the requested legal fees, expenses and Reimbursement Awards, the Settlement
Fund would be approximately $0.31 per damaged share. Option traders should review the Plan of Distribution, set out
in Exhibit B, for their personal recovery.
What Rights Are Being Compromised as
Against the Class Action Settling Defendants?
Unless you exclude yourself from a Settlement, you will remain in the Settlement Class for that Settlement. That
means that you and all other Settling Class Members will release (agreeing never to sue, continue to sue, or be part of
any other lawsuit) against that defendant as well as their current, former, or future affiliates for, among other things,
any claims arising from or concerning your purchase, sale or ownership of Puda Securities.
A complete description of the releases provided for in each of the Settlements, including the claims being released
and the persons and entities who are being released, is set forth in the separate Stipulations of Settlement which are
available for you to review at www.pudacoalfund.com.
If you sign the Claim Form, you are agreeing to a release of the claims identified in the separate Stipulations of
Settlement. That means you will accept a share in the Net Settlement Fund as sole compensation for any losses you
have suffered in the acquisition and sale of Puda securities (supplemented only by any funds you may be entitled to
receive from the Fair Fund).
If a settlement is approved, the Class Action will be dismissed against the defendant(s) for all time.
Excluding Yourself from the Class Action Settlements
To exclude yourself from one or more of the Settlements, you must send a request for exclusion by mail to the Claims
Administrator saying that you want to be excluded from one or more of the Settlements reached in In re Puda Coal
Securities Inc. et al. Litigation. You must include: (a) your name, address, telephone number; (b) your Social Security
Number or Taxpayer Identification Number; (c) the number of Puda common shares, call options or put options
purchased or otherwise acquired, or disposed of during the Settlement Class Period; (d) the dates of each such
purchase or acquisition of each Puda common share and the price or other consideration paid for each such share; (e)
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the date of each such sale or other disposal of any Puda common shares (or put/call options) during the Settlement
Class Period and the price or other consideration received for each such share; and (f) the number of Puda shares
held at the close of trading on December 7, 2010 (i.e., immediately before the commencement of the Class Period).
You must state clearly that you are seeking to be excluded and identify the Settlement(s) for which you are seeking
exclusion. Any request for exclusion must also be signed by the Person requesting exclusion. Your exclusion request
must be received no later than May 13, 2016. Mail your request to both of the following:
Puda Coal Securities Litigation
PO Box 2838
Lionel Z. Glancy
Glancy Prongay & Murray LLP
1925 Century Park East, Ste. 2100
Los Angeles, CA 90067
You cannot exclude yourself by telephone or by e-mail. If you do not exclude yourself in the manner described above,
you will be bound by all of the orders and judgments entered by the Court regarding the Settlements. You must
exclude yourself even if you already have a pending case against the Underwriters or U.S. Directors based on the
claims being released, if you wish to be able to continue that case.
If you ask to be excluded from one or more of the Settlements, you will not be eligible to get any payment from that
Settlement(s) and you cannot object to that Settlement(s) or the Class Action Plan of Allocation and/or the motion for
an award of attorneys’ fees or reimbursement of litigation expenses in connection with that Settlement(s).
The Lawyers Representing You in the Class Action Settlements
The Court has appointed the law firms The Rosen Law Firm P.A. and Glancy Prongay & Murray LLP as Plaintiffs’
Counsel to represent Plaintiffs and all other Settlement Class Members in the Class Action. If you have any questions
about the proposed Class Action Settlements, you may contact Plaintiffs’ Counsel using the contact information at
the end of this Notice.
If you want to be represented by your own lawyer, you may hire one at your own expense. Such counsel must file a
notice of appearance on your behalf.
Plaintiffs’ Counsel have not received any payment for their services in pursuing the claims asserted in the Class
Action, nor been reimbursed for their out-of-pocket expenses. Lead Plaintiffs intend to request that the Court award
Plaintiffs’ Counsel attorneys’ fees equal to one-third of the Settlement Fund, as well as reimbursement of up to $2.1
million of out-of-pocket litigation expenses.
In addition, Lead Plaintiffs intend to ask the Court for an award for their work in prosecuting the Class Action in the
amount of $7,500 each (the “Reimbursement Award”). Plaintiffs are also entitled to share in the proceeds of the Net
Settlement Fund in the same manner as any other Class Member.
The Court will determine whether these awards are warranted and the amount thereof. Any such payments will be
paid out of the Settlement Fund.
The Hearing Regarding the Class Action Settlements
A hearing has been scheduled on the proposed Class Action Settlements for June 17, 2016 at 11:00 am, before the
Honorable Denise Cote in the United States District Court for the Southern District of New York, United States
Courthouse, 500 Pearl Street, New York, New York 10007 (the “Settlement Hearing”). At the Settlement Hearing,
the Court will determine whether: (a) to grant final certification of the Settlement Class solely for purposes of the
Settlements; (b) the Macquarie Settlement is fair, reasonable, and adequate; (c) the Brean Settlement is fair, reasonable
and adequate; (d) the U.S. Directors Settlement is fair, reasonable and adequate, (e) to award Plaintiffs’ Counsel
attorneys’ fees and reimbursement of litigation expenses; (f) the Plan of Allocation should be adopted; and/or (g) the
Reimbursement Award to the Lead Plaintiffs should be granted. The Court can also consider any other matters that
it may wish to address. If there are objections, the Court will consider them.
The Court will consider the Brean Settlement, the Macquarie Settlement and the U.S. Directors Settlement independent
of, and separately from, each other. Approval of any one or more Settlement is not contingent upon approval of
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any other Settlement. Thus, you can decide to exclude yourself from, or object to, one or two, or all three of the
Settlements. However, the proposed Plan of Allocation is the same for each Settlement and a single application for
attorneys’ fees and reimbursement of expenses to Plaintiffs’ Counsel has been filed covering all of the Settlements.
If the Court approves one or more of the Settlements, payments to eligible claimants will be made after any appeals
are resolved, and after completion of claims processing.
Please note that the date of the Settlement Hearing is subject to change without further notice. If you plan to attend
the hearing, you should check with Plaintiffs’ Counsel to be sure no change to the date and time of the Settlement
Hearing has been made.
The Court has the authority to make certain modifications to the Settlements and the Plan of Allocation without
further notice to Class Members.
How Do I Tell the Court That I Don’t Like
One or All of the Class Action Settlements?
If you are a Settlement Class Member and you do not exclude yourself, you can object to any of the Settlements,
or any part of them, including the application for attorneys’ fees and for reimbursement of litigation expenses, and
give reasons why you think the Court should not approve it. Objections must be in writing. To object, you must file a
written objection with the Court saying that you object to the proposed Settlement(s), or the specific portion thereof
to which you are objecting, in the case captioned, In re Puda Coal Securities, Inc. Litigation, No. 11cv2598 (S.D.N.Y.)
(DLC).
Your written objection must be sent to both the Court and to Plaintiffs’ Counsel and must be received by them no
later than May 13, 2016:
Clerk of the U.S. District Court for the Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, NY 10007-1312
Attn. In re Puda Coal Securities Litigation, 11cv2598
Lionel Z. Glancy
Glancy Prongay & Murray LLP
1925 Century Park East, Ste. 2100
Attn. In re Puda Coal Securities Litigation, 11cv2598
Counsel for Lead Plaintiffs will forward your objection to the lawyers for the Settling Defendants.
Any objection must include: (a) the full name, address and telephone number of the objecting Settlement Class Member
and identify the Settlement(s) to which you are objecting; (b) a list and documentation of all of the Settlement Class
Member’s transactions involving Puda common stock (or put/call options) during the Settlement Class Period; (c) a
written statement of all grounds for the objection; (d) copies of any documents upon which the objection is based; (e)
a statement of whether you intend to appear at the Settlement Hearing; (f) a list of other cases in which you or your
counsel have appeared either as settlement objectors or as counsel for objectors in the preceding five years; and (g)
the objector’s signature, even if represented by counsel. If you intend to appear at the Settlement Hearing through
counsel, the objection must also state the identity of all attorneys who will appear on your behalf at the Settlement
Hearing.
If you submit an objection, you are submitting yourself to the jurisdiction of the Court with respect to the subject
matter of the Settlements, including, but not limited to, the releases that will be contained in the final judgments.
Any member of the Settlement Class who does not object in the manner provided above will be deemed to have
waived all objections.
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Do I Have to Come to the Class Action Settlement Hearing?
No. Class Action Plaintiffs’ Counsel will answer any questions the Court might have. But you are welcome to come
at your own expense. If you send an objection, you do not have to come to the Court to talk about it. As long as you
mailed your written objection so that it was received by the deadline, the Court will consider it when it considers
whether to approve the Settlements.
CONCLUSION
Getting More Information About Either the
Class Action Settlements or About the Fair Fund
This Joint Notice contains only a summary of the proposed Fair Fund distribution and Class Action Settlements.
The complete Fair Fund Distribution Plan and Fair Fund Plan of Allocation approved by the Court are available at
www.pudacoalfund.com.
The complete Settlements, including the scope of the claims being released by Class Members who do not opt-out of
the Settlements, are set out in the separate Stipulations governing each of the Settlements. You may obtain copies of
the Stipulations at www.pudacoalfund.com.
You can also call the Claims Administrator toll free with questions about either the Fair Fund or the Class Action
Settlements at 877-276-7324.
With respect to the Class Action Settlements, you may also contact representatives of Class Action Plaintiffs’ Counsel:
Lionel Z. Glancy, Glancy Prongay & Murray LLP, 1925 Century Park East, Suite 2100, Los Angeles, CA 90067, (T)
(310) 201-9150, (F) (310) 432-1495, [email protected].
PLEASE DO NOT CALL OR WRITE THE COURT REGARDING THIS NOTICE.
BY ORDER OF THE COURT
Hon. Denise Cote
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Dated: March 9, 2016
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Case 1:11-cv-02598-DLC-HBP Document 556 Filed 10/17/15 Page 1 of 40
IN RE PUDA COAL SECURITIES INC.
ET AL. LITIGATION
Case No: 1:11-CV-2598 (DLC)
CLASS ACTION
AMENDED STIPULATION OF SETTLEMENT
317800.2 1
This Amended Stipulation of Settlement, dated October 16, 2015 (the “Stipulation”), is
made and entered into by and among the following Settling Parties to the above-titled litigation
(the “Litigation” or the “Action”): (i) Lead Plaintiffs Salomon Querub, Howard Pritchard, and
Hotel Ventures LLC and named plaintiffs Trellus Management Company LLC (“Trellus”) and
Steven Weissmann, on behalf of themselves and all others similarly situated (“Plaintiffs”), and
(ii) Defendant Brean Murray, Carret & Co. (the “Settling Defendant” or “Brean Murray”)
(collectively, the “Settling Parties”) by and through their counsel of record in the Litigation. The
Stipulation is intended by the Settling Parties to fully, finally, and forever resolve, discharge,
release, and settle the Released Claims (as defined herein), upon and subject to the terms and
conditions thereof and subject to the approval of the United States District Court for the Southern
District of New York (the “Court”).
I.
THE LITIGATION
This Stipulation concerns a federal securities class action on behalf of the following three
certified Classes:

Section 10(b) Class: Those persons or entities who purchased Puda Coal, Inc. (“Puda”
or the “Company”) common stock or call options on Puda common stock or sold put
options on Puda common stock during the period commencing December 8, 2010,
through the market close on April 7, 2011 (the “Class Period”), who did not sell those
securities prior to April 8, 2011, and who were damaged thereby;

Section 11 Class: Those persons or entities who purchased Puda shares pursuant or
traceable to the public offering of Puda shares on or about December 8, 2010 (the
“December Offering”), and who were damaged thereby; and

Section 12 Class: Those persons or entities who purchased Puda shares directly in the
December Offering from either Brean Murray or Macquarie Capital (USA) Inc.
(“Macquarie”), or whose purchase of Puda shares was directly solicited by Puda,
Ming Zhao, Macquarie, or Brean Murray, and who were damaged thereby.
On December 6, 2011, the Court issued an order consolidating various individual actions,
appointing Salomon Querub, Howard Pritchard and Hotel Ventures LLC as Lead Plaintiffs, and
317800.2 2
approving Lead Plaintiffs’ selection of The Rosen Law Firm P.A. and Glancy Binkow &
Goldberg LLP (now Glancy Prongay & Murray LLP) as Co-Lead Counsel.
On February 9, 2012, Plaintiffs filed a Corrected Consolidated Complaint against Puda;
Ming Zhao, Liping Zhu, and Qiong Laby Wu (the “Officer Defendants”); Brean Murray and
Macquarie (the “Underwriter Defendants”); Moore Stephens International Ltd. (“MSIL”), Moore
Stephens Hong Kong (“MSHK”), and Moore Stephens, P.C. (“MSPC”) (together, MSHK and
MSPC are the “Auditor Defendants”); and Jianfei Ni (“Ni”), C. Mark Tang (“Tang”), and
Lawrence Wizel (“Wizel”) (together, Tang and Wizel are the “U.S. Director Defendants”).
Plaintiffs asserted claims under Section 10(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) against Puda, the Officer Defendants, the Auditor Defendants, and MSIL;
Section 20(a) of the Exchange Act against the Officer Defendants; Section 11 of the Securities
Act of 1933 (the “Securities Act”) against all Defendants; Section 12(a)(2) of the Securities Act
against Puda and the Underwriter Defendants; and Section 15 of the Securities Act against the
Officer Defendants, Ni, and the U.S. Director Defendants.
On June 1, 2012, the U.S. Director Defendants, Brean Murray, Macquarie, and MSPC
each filed motions to dismiss. On September 24, 2012, MSHK and MSIL also filed motions to
dismiss. On March 18, 2013, the Court entered an Order denying Brean Murray’s, Macquarie’s
MSPC’s, and MSHK’s motions to dismiss in their entirety; granting the U.S. Director
Defendants’ motion to dismiss as to the Section 20 and Section 15 claims but otherwise denying
their motion; and granting MSIL’s motion to dismiss in its entirety.
On May 29 and 30, 2013, the Underwriter Defendants, the U.S. Director Defendants, and
Auditor Defendants filed motions for summary judgment on the issue of Plaintiffs’ standing to
bring claims under the Securities Act.
317800.2 3
On May 13, 2013, Trellus filed a motion to intervene in this case for all purposes,
including to assert claims under the Securities Act on behalf of the Class. On April 7, 2014, the
Court granted Trellus’s motion to intervene.
On June 10, 2013, the parties participated in the first of two in-person mediation sessions
before the Honorable Daniel Weinstein (Ret.). In connection with this mediation, parties
exchanged detailed mediation statements.
On July 1, 2013, Plaintiffs filed a motion for class certification.
By order dated October 1, 2013, the Court granted Plaintiffs’ class certification motion
and granted the Underwriter Defendants’, U.S. Director Defendants’, and Auditor Defendants’
motions for summary judgment. The Court also denied Trellus’s motion to intervene effectively
disposing of Plaintiffs’ Securities Act claims and dismissing the Underwriter Defendants and
U.S. Director Defendants from the case.
On January 6, 2014, Plaintiffs filed a motion to amend the consolidated amended
complaint.
On February 2, 2014, Trellus filed a motion for an indicative ruling pursuant to Fed. R.
Civ. P. 62.1(a)(3) requesting, inter alia, that the Court inform the Second Circuit that it intended
on granting Trellus’s underlying 60(b) motion and would permit Trellus to intervene in this case.
By order dated February 21, 2014, the Court granted the motion to amend or correct the
complaint. The Court also granted Trellus’s motion for an indicative ruling, permitting Trellus
to intervene in this case.
On February 28, 2014, the Consolidated Amended Complaint for Violation of the Federal
Securities Laws was filed against all Defendants.
317800.2 4
On April 21, 2014, Plaintiffs filed a Second Amended Complaint, which asserted claims
under Section 10(b) of the Exchange Act and Sections 11 and 12(a)(2) of the Securities Act
against the Underwriter Defendants, among other claims.
On May 20, 2014, Brean Murray filed a motion to dismiss the Section 10(b) claim, and
on May 21, 2014, Macquarie filed a motion to dismiss the Section 10(b), Section 11, and Section
12(a)(2) claims. By order dated July 14, 2014, the Court denied the Underwriter Defendants’
motions to dismiss in their entirety.
On August 14, 2014, Macquarie filed an answer to the Second Amended Complaint.
Shortly thereafter, on August 22, 2014, Brean Murray filed its answer to the Second Amended
Complaint.
On September 10, 2014, the parties participated in their second in-person mediation
session before the Honorable Daniel Weinstein (Ret.). As with the first mediation, parties
exchanged detailed mediation statements.
On October 1, 2014, Plaintiffs filed another class certification motion. After the
Underwriter Defendants and the U.S. Director Defendants filed their papers opposing Plaintiffs’
motion in part, the parties filed a stipulation on class certification. On January 12, 2015, the
Court entered the stipulated order.
In April 2015, Plaintiffs reached a resolution with Brean Murray that would, if approved
by the Court, resolve all claims against Brean Murray in the Action on the terms and conditions
set forth in the Stipulation of Settlement entered into by and between Plaintiffs and Brean
Murray, dated July 20, 2015, and subsequently amended on October 16, 2015.
On September 30, 2015, Plaintiffs and Macquarie agreed in principle to a resolution of
the claims asserted by Plaintiffs against Macquarie in this Action, subject to Court approval and
317800.2 5
the execution of customary settlement documentation, which agreement of settlement is
memorialized in a separate stipulation. The Macquarie settlement is independent of this
Settlement.
II.
THE SETTLING DEFENDANT’S DENIALS OF WRONGDOING AND
LIABILITY
The Settling Defendant has denied and continues to deny that it committed any violation
of the federal securities laws or other laws, and maintains that its conduct was at all times proper
and in compliance with all applicable provisions of law. Settling Defendant denies specifically
each and all of the claims and contentions alleged by Plaintiffs in the Litigation, along with all
charges of wrongdoing or liability against it arising out of any of the conduct, statements, acts, or
omissions alleged, or that could have been alleged, in the Litigation. Settling Defendant also has
denied and continues to deny, inter alia, the allegations that it made a materially false statement
or had any intent to make one; the allegation that the Settlement Class has suffered damages; the
allegation that the price of Puda stock was artificially inflated by reasons of alleged
misrepresentations, non-disclosures or otherwise; or that the Settlement Class was harmed by the
conduct that was or could have been alleged in the Litigation. Settling Defendant denies having
ever received or otherwise having knowledge or information of or concerning the document at
issue in this case known as the “Kroll Report” at any time prior to the disclosure of the Kroll
Report in this case by Macquarie.
In addition, Settling Defendant maintains that it has
meritorious defenses to all claims alleged in the Litigation.
As set forth below, this Stipulation shall in no event be construed or deemed to be
evidence of an admission or concession on the part of Settling Defendant with respect to any
claim or allegation of any fault, liability, wrongdoing, or damage whatsoever, or any infirmity in
the defenses that Settling Defendant has, or could have, asserted. Settling Defendant’s decision
317800.2 6
to settle the Litigation was based on the conclusion that the proposed Settlement would eliminate
the burden, distraction, and expense associated with further litigation. The provisions contained
in this Stipulation, any documentation that may be required to obtain the Court’s preliminary and
final approval of the Settlement, or any press release or other statement or report by the Settling
Parties, shall not be offered or deemed as, written to suggest, or received in any proceeding as a
presumption, concession, admission, or evidence of any fault, liability, or wrongdoing as to any
facts or claims that have been, or could have been, asserted in the Litigation, or any other actions
or proceedings.
III.
CLAIMS OF PLAINTIFFS AND BENEFITS OF SETTLEMENT
Plaintiffs believe that the claims asserted in the Litigation have merit and that the
evidence developed to date supports those claims. Plaintiffs and their counsel, however,
recognize and acknowledge the expense and length of continued proceedings necessary to
prosecute the Litigation against the Settling Defendant through the conclusion of expert
discovery, summary judgment, trial, potential post-trial proceedings, and appeals. Plaintiffs also
have taken into account the uncertain outcome and the risk in connection with Settling
Defendant’s anticipated summary judgment motions or other pre-trial and post-trial motions, and
a jury trial, especially in complex actions such as this Litigation, as well as the difficulties and
delays inherent in such litigation. Plaintiffs also are mindful of the inherent problems of proof
and possible defenses related to the securities law violations asserted in the Litigation. Lead
Counsel believe that the Settlement set forth in this Stipulation confers substantial benefits upon
the Settlement Class. Based on their evaluation, Plaintiffs and Lead Counsel have determined
that the Settlement set forth in this Stipulation is in the best interests of the Settlement Class, and
that the Settlement provided for herein is fair, reasonable and adequate.
317800.2 7
IV.
TERMS OF THE STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among
Plaintiffs (for themselves and on behalf of the Settlement Class Members) and the Settling
Defendant, by and through their counsel of record, that, subject to the approval of the Court, the
Litigation and the Released Claims shall be finally and fully compromised, settled, and released,
and the claims against Settling Defendant in the Litigation shall be dismissed with prejudice
(with respect to Settling Defendant only), upon and subject to the terms and conditions of the
Stipulation, as follows:
1.
Definitions
1.1.
“Authorized Claimant” means any Settlement Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation.
1.2.
“Claims Administrator” means the firm of Gilardi & Co. LLC.
1.3.
“Class Period” means the period commencing on December 8, 2010, and ending
on April 11, 2011, inclusive.
1.4.
“Effective Date” means the first date by which all of the events and conditions
specified in ¶ 7.1 of the Stipulation have been met and have occurred.
1.5.
“Escrow Account” means an interest bearing escrow account controlled by the
Escrow Agent.
1.6.
“Escrow Agent” means The Huntington National Bank and its successor(s).
1.7.
“Final” means when the last of the following with respect to the Order and Final
Judgment, substantially in the form of Exhibit B attached hereto, shall occur: (i) the expiration of
three (3) business days after the time for the filing of any motion to alter or amend the Order and
Final Judgment under Federal Rule of Civil Procedure 59(e) has passed without any such motion
317800.2 8
having been filed; (ii) the expiration of the time for the filing or noticing of any appeal from the
Order and Final Judgment without any appeal having been filed; and (iii) if such motion to alter
or amend is filed or if an appeal is filed or noticed, then immediately after the determination of
that motion or appeal so that the Order and Final Judgment is no longer subject to any further
judicial review or appeal whatsoever, whether by reason of affirmance by court of last resort,
lapse of time, voluntary dismissal of the appeal or otherwise, and in such a manner as to permit
the consummation of the Settlement in accordance with the terms and conditions of this
Stipulation. For purposes of this paragraph, an appeal shall include any petition for a writ of
certiorari or other writ that may be filed in connection with the approval or disapproval of this
Settlement, but shall not include any appeal that concerns only the issue of attorneys’ fees and
expenses or the Plan of Allocation of the Settlement Fund. Any proceeding or order, or any
appeal or petition for a writ of certiorari pertaining solely to any plan of distribution and/or
application for attorneys’ fees, costs, or expenses shall not in any way delay or preclude the
Order and Final Judgment from becoming Final.
1.8.
“Lead Counsel” means Glancy Prongay & Murray LLP and The Rosen Law Firm,
P.A., or their respective successor(s).
1.9.
“Notice” means the Notice of (a) Pendency of Class Action, (b) Proposed
Settlements of Claims Against Macquarie and Brean, and (c) Hearing on Proposed Settlements,
Plan of Allocation and Motion for Attorneys’ Fees and Reimbursement of Litigation Expenses,
that is to be sent to Settlement Class Members, and which shall be substantially in the form
attached as Exhibit A-1 to the Macquarie Stipulation.
1.10.
317800.2 “Notice Order” means the order described in ¶ 3.1 hereof.
9
1.11.
“Order and Final Judgment” means the judgment to be rendered by the Court,
substantially in the same form attached hereto as Exhibit B.
1.12.
“Person” means a natural person, individual, corporation, limited liability
corporation, professional corporation, limited liability partnership, partnership, limited
partnership, limited liability company, association, joint stock company, estate, legal
representative, trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and all of their respective spouses, heirs,
beneficiaries, executors, administrators, predecessors, successors, representatives, or assignees.
1.10.
“Plaintiffs” means Lead Plaintiffs Salomon Querub, Howard Pritchard, and Hotel
ventures LLC and named plaintiffs Trellus Management Company LLC and Steven Weissmann,
on behalf of themselves and all others similarly situated.
1.13.
“Plaintiffs’ Counsel” means any counsel who have appeared for Plaintiffs in the
Litigation, including Lead Counsel, Pomerantz LLP, and any liaison counsel.
1.14.
“Plan of Allocation” means the plan or formula of allocation of the Settlement
Fund, which will be proposed to the Court, whereby the Settlement Fund shall be distributed to
Authorized Claimants after payment of expenses of notice and administration of the Settlement,
Taxes and Tax Expenses, and such attorneys’ fees, costs, expenses, and interest as may be
awarded by the Court. Any Plan of Allocation is not part of the Stipulation, and Settling
Defendant and the Released Parties shall have no responsibility or liability whatsoever with
respect to the administration of the Plan of Allocation, the determination, administration or
calculation of claims, the payment or withholding of Taxes, the distribution of the Settlement
proceeds, the administration of the Settlement or any losses incurred in such matters.
317800.2 10
1.15.
“Released Claims” means any and all manner of claims, demands, rights,
liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties,
sanctions, fees, attorneys’ fees, actions, potential actions, causes of action, suits, judgments,
decrees, matters, as well as issues and controversies of any kind, whether known or unknown,
disclosed or undisclosed, accrued or unaccrued, apparent or unapparent, foreseen or unforeseen,
suspected or unsuspected, fixed or contingent, including Unknown Claims (defined below), that
Plaintiffs or any and all members of the Settlement Class ever had, now have, or may have, or
otherwise could, can, or might assert, whether direct, individual, class, representative, derivative,
legal, equitable, or of any other type, against any of the Released Parties, whether based on state,
local, foreign, federal, statutory, regulatory, common, or other law or rule (including, but not
limited to, any claims under federal securities laws or state law), which, now or hereafter, are
based upon, arise out of, relate in any way to, or involve, directly or indirectly, any of the
actions, transactions, occurrences, statements, representations, misrepresentations, omissions,
allegations, facts, practices, events, claims, or any other matters, that were or could have been, or
in the future can or might be alleged, asserted, set forth, or claimed in connection with the
Litigation or the subject matter of the Litigation in any court, tribunal, forum, or proceeding,
including, but not limited to, and without limitation, any and all claims that are based upon, arise
out of, relate in any way to, or involve, directly or indirectly, both to the purchase, sale, and/or
holding of Puda common stock, call options or put options purchased or sold during the Class
Period by Plaintiffs or any member of the Settlement Class and the Settling Defendant’s
statements or omissions and SEC filings during the Class Period which arise out of, relate in any
way to the allegations or subject matter of the Litigation; provided however, that the Released
Claims shall not include (i) the right to enforce the Memorandum of Understanding, dated April
317800.2 11
17, 2015, or this Stipulation; or (ii) the right to enforce any confidentiality agreement to which
the Settling Parties have entered or may enter into in connection with the Litigation.
1.16.
“Released Parties” means, whether or not each or all of the following persons or
entities were named in the Action or any related suit, (i) the Settling Defendant; (ii) any person
or entity in which Settling Defendants has, had, or will have a controlling interest; and (iii) the
Settling Defendant’s past or present direct or indirect family members, spouses, heirs, trusts,
trustees, executors, estates, administrators, beneficiaries, distributees, foundations, agents,
employees, fiduciaries, partners, general partners, limited partners, partnerships, joint ventures,
affiliated investment funds, affiliated investment vehicles, affiliated investment managers,
affiliated investment management companies, member firms, corporations, parents, subsidiaries,
divisions, affiliates, associated entities, principals, officers, directors, managing directors,
members, managers, predecessors, predecessors-in-interest, successors, successors-in-interest,
assigns, bankers, underwriters, brokers, dealers, lenders, attorneys, insurers, co-insurers,
reinsurers, and associates of each and all of the foregoing; provided however, that Released
Parties shall not include any other defendant named in the Litigation.
1.17.
“Settlement” means the settlement of the Litigation as set forth in this
Stipulation.
1.18.
“Settlement Amount” means the principal amount of One Million Two Hundred
Thousand U.S. Dollars ($1,200,000.00 USD), to be paid pursuant to ¶ 2.1 of this Stipulation,
plus any interest that may accrue thereon after Settling Defendant has paid the principal amount
pursuant to ¶ 2.1 of this Stipulation. Such amount is paid as consideration for full and complete
settlement of all the Released Claims. Neither Settling Defendant nor the Released Parties shall
have any obligation whatsoever to pay any amount over and above the Settlement Amount.
317800.2 12
1.19.
“Settlement Class” or “Class” means those Persons who during the Settlement
Class Period: (a) purchased or otherwise acquired Puda common stock, (b) purchased or
otherwise acquired call options on Puda common stock, and/or (b) sold or otherwise disposed of
put options on Puda common stock. Excluded from the Settlement Class are: (a) the Defendants;
(b) any Person who was a partner, executive officer, director, controlling person, subsidiary, or
affiliate of any Defendant during the Settlement Class Period; (c) members of the Defendants’
immediate families; (d) any Person in which any Defendant has a Controlling Interest; and (e)
the legal representatives, heirs, estates, administrators, predecessors, successors or assigns of any
of the foregoing excluded Persons. Also excluded from the Settlement Class is any Person who
or which properly excludes himself, herself or itself by filing a valid and timely request for
exclusion in accordance with the requirements set forth herein and in the Notice. The Settling
Parties have agreed to request that the Court use this definition to replace the class definition
contained in the January 12, 2015 Order.
1.20.
“Settlement Class Member” or “Settlement Class Members” mean any Person
who falls within the definition of the Settlement Class as set forth in ¶ 1.19 of this Stipulation.
1.21.
“Settlement Fund” means the interest-bearing Escrow Account controlled by the
Escrow Agent into which Settling Defendant shall deposit or cause its insurance carriers to pay
or deposit the Settlement Amount on behalf of Settling Defendant.
1.22.
“Settlement Hearing” means the hearing to determine whether the proposed
Settlement embodied by this Stipulation is fair, reasonable, and adequate to the Settlement Class,
and whether the Court should (1) enter an Order and Final Judgment approving the proposed
Settlement, (2) approve the Plan of Allocation of Settlement proceeds, and (3) determine an
317800.2 13
award of attorneys’ fees and expenses to Plaintiffs’ Counsel and reasonable costs and expenses
to Plaintiffs directly relating to their representation of the Settlement Class.
1.23.
“Settling Defendant” means Brean Murray, Carret & Co. and its successor(s).
1.24.
“Settling Defendant’s Released Claims” means all claims and causes of action of
every nature and description, whether known or unknown, contingent or absolute, mature or
immature, discoverable or undiscoverable, whether concealed or hidden, suspected or
unsuspected, whether arising under federal, state, common or foreign law, which now exist or
heretofore have existed, that have been or could have been asserted in the Litigation or any
forum by the Released Parties against the Plaintiffs or Plaintiffs’ Counsel that arise out of or
relate in any way to the institution, prosecution, or settlement of the claims in the Litigation,
except for claims relating to (i) enforcement of the Memorandum of Understanding, dated April
17, 2015, or this Stipulation; or (ii) any confidentiality agreement to which the Settling Parties
have entered or may enter into in connection with the Action.
1.25.
“Settling Parties” means, collectively, the Settling Defendant and Plaintiffs on
behalf of themselves and each of the Settlement Class Members.
1.26.
“Stipulation” means this Stipulation of Settlement, including the recitals and
Exhibits hereto.
1.27.
“Taxes” means all taxes (including any estimated taxes, interest or penalties)
arising with respect to the income earned by the Settlement Fund as described in ¶ 2.9.
1.28.
“Tax Expenses” means expenses and costs incurred in connection with the
calculation and payment of taxes or the preparation of tax returns and related documents
including, without limitation, expenses of tax attorneys and/or accountants and mailing and
distribution costs relating to filing (or failing to file) the returns described in ¶ 2.9.
317800.2 14
1.29.
“Unknown Claims” means any claim that Plaintiffs or any Settlement Class
Member does not know or suspect exists in his, her, or its favor at the time of the release of the
Released Claims as against the Released Parties, including, without limitation, those claims
which, if known, might have affected the decision to enter into the Memorandum of
Understanding, dated April 17, 2015, or this Stipulation. With respect to any of the Released
Claims, the Settling Parties stipulate and agree that upon final approval of the Settlement,
Plaintiffs shall expressly and each Settlement Class Member shall be deemed to have waived,
relinquished, and released any and all provisions, rights, and benefits conferred by or under
California Civil Code § 1542 or any law of the United States or any state of the United States, or
principle of common law, which is similar, comparable, or equivalent to California Civil Code §
1542, which provides:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor.
Plaintiffs acknowledge, and the Settlement Class Members by operation of law shall be deemed
to have acknowledged, that they may discover facts in addition to or different from those now
known or believed to be true with respect to the Released Claims, but that it is the intention of
Plaintiffs, and by operation of law the Settlement Class Members, to completely, fully, finally,
and forever extinguish any and all Released Claims, known or unknown, suspected or
unsuspected, which now exist, or previously existed, or may hereafter exist, and without regard
to the subsequent discovery of additional or different facts. Plaintiffs acknowledge, and the
Settlement Class Members by operation of law shall be deemed to have acknowledged, that the
inclusion of “Unknown Claims” in the definition of “Released Claims” was separately bargained
317800.2 15
for and was a material element of the Settlement and was relied upon by the Settling Defendants
in entering into the Memorandum of Understanding, dated April 17, 2015, and this Stipulation.
2.
The Settlement
a.
2.1.
The Settlement Fund
In consideration of the terms of this Stipulation, the Settling Defendant agrees to
cause the payment of $1,200,000.00 USD (the “Settlement Amount”) to be paid or deposited into
the Settlement Fund (by wire or check). The Settlement Amount shall be paid in two
installments. No later than the earlier of (i) ten (10) business days following the Court’s entry of
an order preliminarily approving the Settlement, or (ii) July 24, 2015, Settling Defendant shall
deposit $600,000.00 USD into an interest bearing Escrow Account that shall be established and
maintained by Plaintiffs. The remaining balance of $600,000.00 USD shall be deposited into the
Escrow Account no later than seven (7) days before the date that Plaintiffs’ papers in support of
final approval of the Settlement are due to be filed with the Court.
2.2.
The two installment deposits of the Settlement Amount are the only payments to
be made by or on behalf of Settling Defendant and the Released Parties in connection with this
Settlement. As set forth below, all fees, costs, and expenses incurred by or on behalf of Plaintiffs
and the Settlement Class associated with the Settlement, including, but not limited to, Taxes, Tax
Expenses, administrative costs and costs of providing notice of the Settlement to Settlement
Class Members, any award of attorneys’ fees and expenses to Lead Counsel or Plaintiffs’
Counsel shall be paid from the Settlement Fund, and in no event shall Settling Defendant or the
Released Parties bear any additional responsibility or liability for any such fees, costs or
expenses.
317800.2 16
b.
2.3.
The Escrow Agent
The Escrow Agent will invest the Settlement Fund created pursuant to ¶ 2.1
hereof only in instruments backed by the full faith and credit of the United States Government or
fully insured by the United States Government or an agency thereof, and will reinvest the
proceeds of these instruments as they mature in similar instruments at their then-current market
rates. All risks related to the investment of the Settlement Fund in accordance with the guidelines
set forth in this paragraph shall be borne by the Settlement Fund, and neither Settling Defendant
nor the Released Parties shall have any responsibility for or liability whatsoever with respect to
the maintenance, investment, or distribution of the Settlement Fund, the actions of the Escrow
Agent, or any transactions executed by the Escrow Agent.
2.4.
The Escrow Agent shall not disburse the Settlement Fund except as provided by:
(i) this Stipulation; or (ii) an order of the Court.
2.5.
Subject to further order(s) and/or directions as may be made by the Court, the
Escrow Agent is authorized to execute such transactions on behalf of the Settlement Class
Members as are consistent with the terms of this Stipulation. The Released Parties shall have no
responsibility for or liability whatsoever with respect to the actions of the Escrow Agent, or any
transaction executed by the Escrow Agent.
2.6.
All funds held by the Escrow Agent shall be deemed and considered to be in
custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such
time as such funds shall be distributed or returned pursuant to the Stipulation and/or further
order(s) of the Court.
2.7.
Notwithstanding the fact that the Effective Date has not yet occurred, the Escrow
Agent may pay from the Settlement Fund, without further order of the Court, the costs and
317800.2 17
expenses, up to $100,000.00 USD, reasonably and actually incurred in connection with providing
notice to members of the Settlement Class, mailing the Notice and Proof of Claim and Release
form and publishing notice (such amount shall include, without limitation, the actual costs of
publication, printing and mailing the Notice, and reimbursement to nominee owners for
forwarding notice to their beneficial owners), and the administrative expenses incurred and fees
charged by the Claims Administrator in connection with providing notice and processing the
submitted claims (“Notice and Administration Costs”). In the event that the Settlement does not
become final, any actual notice or administrative costs paid or incurred for the above purposes
shall not have to be returned or repaid to Settling Defendant or their insurers by Plaintiffs, the
Settlement Class or Lead Counsel. Other than amounts disbursed for providing notice to the
Settlement Class, customary administration costs, and Taxes and Tax Expenses, and the Fee and
Expense Award (which shall be paid to Plaintiffs’ Lead Counsel immediately following the
Court’s execution of an order awarding such fees and expenses), the Settlement Fund shall not be
distributed until the Effective Date of the Settlement, as set forth in ¶ 7.1.
2.8.
It shall be Lead Counsel’s sole responsibility to disseminate the Notice and Proof
of Claim and Release form to the Settlement Class in accordance with this Stipulation and as
ordered by the Court. Settlement Class Members shall have no recourse as to the Released
Parties with respect to any claims they may have that arise from any failure of the notice process.
c.
2.9.
Taxes
(a) The Settling Parties and their counsel agree that the Settlement Fund is
intended to be and should be treated as being at all times a “qualified settlement fund” within the
meaning of Treasury Regulation § 1.468B-1. In addition, the Escrow Agent shall timely make
such elections as necessary or advisable to carry out the provisions of this ¶ 2.9, including the
317800.2 18
“relation-back election” (as defined in Treasury Regulation § 1.468B-1(j)(2)) back to the earliest
permitted date. Such elections shall be made in compliance with the procedures and requirements
contained in such Treasury Regulations promulgated under § 1.468B of the Internal Revenue
Code of 1986, as amended (the “Code”). It shall be the responsibility of the Escrow Agent to
timely and properly prepare and deliver the necessary documentation for signature by all
necessary parties, and thereafter to cause the appropriate filing to occur.
(b) For the purpose of § 1.468B of the Code and the Treasury Regulations promulgated
thereunder, the Escrow Agent shall be designated as the “administrator” of the Settlement Fund.
The Escrow Agent shall timely and properly file all informational and other tax returns necessary
or advisable with respect to the Settlement Fund (including, without limitation, the returns
described in Treasury Regulation §1.468B-2(k)). Such returns (as well as the election described
in ¶ 2.9(a) hereof) shall be consistent with this ¶ 2.9 and in all events shall reflect that all Taxes
as defined in ¶ 1.19 above (including any estimated Taxes, interest, or penalties) on the income
earned by the Settlement Fund shall be paid out of the Settlement Fund as provided in ¶ 2.9(c)
hereof.
(c) All: (i) Taxes (including any estimated Taxes, interest, or penalties) arising with
respect to the income earned by the Settlement Fund, including any Taxes or tax detriments that
may be imposed upon Settling Defendant or the Released Parties with respect to any income
earned by the Settlement Fund for any period during which the Settlement Fund does not qualify
as a “qualified settlement fund” for federal or state income tax purposes; and (ii) Tax Expenses,
and costs incurred in connection with the operation and implementation of this ¶ 2.9 (including,
without limitation, expenses of tax attorneys and/or accountants and mailing and distribution
costs and expenses relating to filing (or failing to file) the returns described in this ¶ 2.9), shall be
317800.2 19
paid out of the Settlement Fund. In no event shall Settling Defendant or the Released Parties
have any responsibility for or liability whatsoever with respect to the Taxes or the Tax Expenses.
The Escrow Agent shall indemnify and hold Settling Defendant, its counsel, and the Released
Parties harmless for Taxes and Tax Expenses (including, without limitation, Taxes payable by
reason of any such indemnification). Further, Taxes and Tax Expenses shall be treated as, and
considered to be, a cost of administration of the Settlement Fund and shall be timely paid by the
Escrow Agent out of the Settlement Fund without prior order from the Court, and the Escrow
Agent shall be obligated (notwithstanding anything herein to the contrary) to withhold from
distribution to Authorized Claimants any funds necessary to pay such amount, including the
establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that
may be required to be withheld under Treasury Regulation § 1.468B-2(1)(2)); neither Settling
Defendant nor its counsel or the Released Parties are responsible therefor, nor shall they have
any liability with respect thereto. The Settling Parties hereto agree to cooperate with the Escrow
Agent, each other, and their tax attorneys and accountants to the extent reasonably necessary to
carry out the provisions of this ¶ 2.9.
(d) Settling Defendant and the Released Parties shall have no responsibility for or
liability whatsoever with respect to Taxes (including the payment or withholding of Taxes), Tax
Expenses, costs and expenses reasonably and actually incurred in connection with providing
notice to the Settlement Class, locating Settlement Class Members, assisting with the filing of
claims, administering and distributing the Net Settlement Fund to Authorized Claimants,
processing Proof of Claim and Release forms, or paying escrow fees and costs, nor shall they
have any responsibility for or liability whatsoever for any claims with respect thereto.
317800.2 20
d.
2.10.
Termination of Settlement
In the event that the Stipulation is not approved, or is terminated or canceled, or
fails to become effective for any reason, including, without limitation, in the event the Order and
Final Judgment is reversed or vacated following any appeal taken therefrom, or is successfully
collaterally attacked, the Settlement Amount, including any interest accrued thereon, less
expenses actually incurred or due and owing from the Settlement Fund for the Notice and
Administration Costs of the Settlement, shall be refunded by wire transfer in accordance with the
instructions to be provided by counsel for Settling Defendant.
2.11.
Any of the Settling Parties shall have the right to terminate the Settlement and this
Stipulation by providing written notice of their election to do so to all other Settling Parties
within fifteen (15) days of: (a) the Court’s denial of Plaintiffs’ motion for preliminary approval
of the Settlement in any material respect without leave to amend and resubmit; (b) the Court’s
refusal to approve this Stipulation and Settlement or any material part of it without leave to
amend and resubmit; (c) the Court’s declining to enter final judgment in any material respect
without leave to amend and resubmit; (d) Settling Defendant’s failure to timely make payment of
their respective contribution of the Settlement Fund into the Escrow Account; or (e) the date
upon which the final judgment is modified or reversed in any material respect by the Court of
Appeals or the Supreme Court. Any decision with respect to any Fee and Expense Application,
or with respect to any Plan of Allocation, shall not be considered material to this Stipulation and
Settlement and shall not be grounds for termination. In the event that this Stipulation is
terminated, the Settlement Amount, including any interest accrued thereon, less expenses
actually incurred or due and owing from the Settlement Fund for the Notice and Administration
317800.2 21
Costs of the Settlement pursuant to ¶ 2.7 above, shall be refunded by wire transfer in accordance
with the instructions to be provided by counsel for Settling Defendant.
3.
Notice Order and Settlement Hearing
3.1.
Promptly after execution of the Stipulation, the Settling Parties shall submit the
Stipulation together with its Exhibits to the Court and shall apply for entry of the Notice Order,
substantially in the form and content of Exhibit A attached hereto, requesting, inter alia, the
preliminary approval of the Settlement set forth in the Stipulation, conditional certification of the
Settlement Class for settlement purposes, approval for the mailing of the Notice and the Proof of
Claim and Release form, substantially in the forms of Exhibit A-1 and A-2 attached to the
Macquarie Stipulation, and approval of the publication of a Summary Notice, substantially in the
form of Exhibit A-3 attached to the Macquarie Stipulation, or such other substantially similar
form agreed to by the Settling Parties. The Notice shall include the general terms of the
Settlement as set forth in the Stipulation, the proposed Plan of Allocation, the general terms of
the Fee and Expense Application as defined in ¶ 6.1, and the date of the Settlement Hearing.
3.2.
Plaintiffs will request that the Court hold a hearing (the “Settlement Hearing”)
and finally approve the Settlement of the Litigation as set forth herein. At or after the Settlement
Hearing, Plaintiffs also will request that the Court approve the proposed Plan of Allocation and
the Fee and Expense Application.
3.3.
Except for their obligation to pay or cause payment of the principal amount of the
Settlement Amount into the Settlement Fund as set forth herein, Settling Defendant and the
Released Parties shall have no responsibility for, obligation or liability whatsoever with respect
to the administration of the Plan of Allocation, the determination, administration or calculation
317800.2 22
of claims, the payment or withholding of Taxes, the distribution of Settlement proceeds, the
administration of the Settlement, as defined below, or any losses incurred in such matters.
4.
Releases
4.1.
Upon the Effective Date, Plaintiffs, each and all of the Settlement Class Members
and anyone claiming through or on behalf of any of them (including, without limitation, their
predecessors, successors, agents, representatives, attorneys, and affiliates, and their heirs,
executors, administrators, successors, and assigns of each of them, in their capacity as such),
shall be deemed to have, and by operation of the Order and Final Judgment shall have, fully,
finally, and forever waived, remised, released, relinquished, and discharged all Released Claims
(including, without limitation, Unknown Claims) against the Released Parties, regardless of
whether such Settlement Class Member executes and delivers the Proof of Claim and Release
form.
4.2.
Upon the Effective Date, Plaintiffs, each and all of the Settlement Class Members
and anyone claiming through or on behalf of any of them (including, without limitation, their
predecessors, successors, agents, representatives, attorneys, and affiliates, and their heirs,
executors, administrators, successors, and assigns of each of them, in their capacity as such), are
forever barred and enjoined from asserting, commencing, instituting, maintaining, prosecuting,
or continuing to prosecute any action or proceeding, whether direct, individual, class,
representative, derivative, legal, equitable, or of any other type, and whether based on state,
local, foreign, federal, statutory, regulatory, common, or other law or rule, in any court of law or
equity, arbitration, tribunal, administrative forum, or other forum of any kind, concerning any of
the Released Claims against any or all of the Released Parties.
317800.2 23
4.3.
The Proof of Claim and Release to be executed by Settlement Class Members
shall release all Released Claims against the Released Parties and shall be substantially in the
form contained in Exhibit A-2 attached to the Macquarie Stipulation.
4.4.
Upon the Effective Date, each of the Released Parties shall be deemed to have,
and by operation of the Order and Final Judgment shall have, fully, finally, and forever released,
relinquished, and discharged Plaintiffs, and each and all of the Settlement Class Members, and
Plaintiffs’ Counsel from Settling Defendant’s Released Claims, and shall forever be enjoined
from prosecuting such claims, except for claims relating to the enforcement of the Settlement or
any confidentiality agreement to which the Settling Parties have entered or may enter into in
connection with the Litigation.
5.
Administration and Calculations of Claims, Final Awards, and Supervision
and Distribution of Settlement Fund
5.1.
The Claims Administrator, subject to such supervision and direction of the Court
and Lead Counsel as may be necessary or as circumstances may require, shall administer and
calculate the claims submitted by Settlement Class Members and shall oversee distribution of the
Net Settlement Fund (defined below) to Authorized Claimants.
5.2.
The Settlement Fund shall be applied as follows:
(a)
To pay all the costs and expenses described in ¶ 2.7 above;
(b)
To pay the Taxes and Tax Expenses described in ¶ 2.9 above;
(c)
To pay Plaintiffs’ Counsel’s attorneys’ fees, expenses, and costs with
interest thereon, if and to the extent allowed by the Court (the “Fee and Expense Award”); and
(d)
To distribute the valance of the Settlement Fun (the “Net Settlement
Fund”) to Authorized Claimants as allowed by the Stipulation, the Plan of Allocations, or the
Court.
317800.2 24
5.3.
Upon the Effective Date and thereafter, and in accordance with the terms of the
Stipulation, the Plan of Allocation, or such further approval and further order(s) of the Court as
may be necessary or as circumstances may require, the Net Settlement Fund shall be distributed
to Authorized Claimants, subject to and in accordance with the following:
(a)
Each Settlement Class Member shall be required to submit a Proof of
Claim and Release form, substantially in a form approved by the Court, supported by such
documents as are designated therein, including proof of the transactions claimed, or such other
documents or proof as the Claims Administrator, in its discretion, may deem acceptable;
(b)
All Proof of Claim and Release forms must be submitted by the date
specified in the Notice unless such period is extended by order of the Court. Except as otherwise
ordered by the Court, any Settlement Class Member who fails to submit a Proof of Claim and
Release form by such date shall be forever barred from receiving any payment pursuant to this
Stipulation, but shall in all other respects be bound by all of the terms of this Stipulation and the
Settlement, including the terms of the Order and Final Judgment to be entered in the Litigation
and the releases provided for herein, and will be barred from bringing any action against the
Released Parties concerning the Released Claims. A Proof of Claim and Release form shall be
deemed to have been submitted when posted, if received with a postmark indicated on the
envelope and if mailed by first-class mail and addressed in accordance with the instructions
thereon. In all other cases, the Proof of Claim and Release form shall be deemed to have been
submitted when actually received by the Claims Administrator. Notwithstanding the foregoing,
Lead Counsel may, in their discretion, accept for processing late submitted claims so long as the
distribution of the Net Settlement Fund to Authorized Claimants is not materially delayed but
shall have no liability for declining to accept any late-submitted claims;
317800.2 25
(c)
Each Proof of Claim and Release form shall be submitted to and reviewed
by the Claims Administrator, who shall determine in accordance with this Stipulation and the
approved Plan of Allocation the extent, if any, to which each claim shall be allowed, subject to
review by the Court pursuant to subparagraph (e) below;
(d)
Proof of Claim and Release forms that do not meet the submission
requirements may be rejected. Prior to rejection of a Proof of Claim and Release form, the
Claims Administrator shall make reasonable efforts to communicate with the claimant in order to
remedy the curable deficiencies in the Proof of Claim and Release form submitted. The Claims
Administrator shall notify, in a timely fashion and in writing, all claimants whose Proof of Claim
and Release forms it proposes to reject in whole or in part, setting forth the reasons therefor, and
shall indicate in such notice that the claimant whose claim is to be rejected has the right to a
review by the Court if the claimant so desires and complies with the requirements of
subparagraph (e) below;
(e)
If any claimant whose claim has been rejected in whole or in part desires
to contest such rejection, the claimant must, within twenty (20) days after the date of mailing of
the notice required in subparagraph (d) above, serve upon the Claims Administrator a notice and
statement of reasons indicating the claimant’s grounds for contesting the rejection, along with
any supporting documentation, and requesting a review thereof by the Court. If a dispute
concerning a claim cannot be otherwise resolved, Lead Counsel shall thereafter present the
request for review to the Court; and
(f)
The Claims Administrator shall calculate the claims of Authorized
Claimants in accordance with the Plan of Allocation. Following the Effective Date, the Claims
Administrator shall send to each Authorized Claimant his, her or its pro rata share of the Net
317800.2 26
Settlement Fund. No distributions will be made to Authorized Claimants who would otherwise
receive a distribution of less than $10.00.
(g)
A Settlement Class Member seeking exclusion from the Settlement Class
shall be requested to provide the information identified in the Notice to the Claims Administrator
(in the manner and on the schedule set forth therein and in the Preliminary Approval Order),
including, without limitation, the following: (a) name, address, telephone number; (b) Social
Security Number or Taxpayer Identification Number; and (c) a list stating the number of shares
of Puda common stock purchased and sold during the Settlement Class Period, and the dates and
prices of each such purchase and sale. Any request for exclusion must also be signed by the
Person requesting exclusion. All Persons who submit valid and timely requests for exclusion in
the manner forth in the Notice shall have no rights under the Stipulation or the Settlement and
shall not be bound by the Final Order and Judgment. Unless otherwise ordered by the Court, any
Settlement Class Member who does not submit a timely written request for exclusion shall be
bound by the terms of this Stipulation, including without limitation, the Releases provided for
herein.
5.4.
Except for their obligation to pay or cause payment of the Settlement Fund into
the Escrow Account as set forth herein, Settling Defendant and the Released Parties shall have
no responsibility for or liability whatsoever with respect to the investment or distribution of the
Settlement Fund, administration of the Plan of Allocation, the determination, administration, or
calculation of claims, the payment or withholding of Taxes or Tax Expenses, or any losses
incurred in connection therewith.
5.5.
No Person shall have any claim against Plaintiffs, the Escrow Agent, Plaintiffs’
Counsel, the Claims Administrator, Settling Defendant, the Released Parties, or counsel for
317800.2 27
Settling Defendant based on distributions made substantially in accordance with the Stipulation
and the Settlement contained herein, the Plan of Allocation, or further order(s) of the Court.
5.6.
Settling Defendant shall not have a reversionary interest in the Net Settlement
Fund. If there is any balance remaining in the Net Settlement Fund after six (6) months from the
date of distribution of the Net Settlement Fund (whether by reason of tax refunds, uncashed
checks, or otherwise), then, after the Claims Administrator has made reasonable and diligent
efforts to have Settlement Class Members who are entitled to participate in the distribution of the
Net Settlement Fund cash their distributions, any balance remaining shall be re-distributed on a
pro rata basis among Authorized Claimants who negotiated the checks sent to them in the initial
distribution and who would receive a minimum of $10.00. These redistributions shall be repeated
until the balance remaining in the Net Settlement Fund is de minimis and any remainder shall
thereafter be donated to an appropriate non-profit organization selected by Lead Counsel as
approved by the Court.
5.7.
It is understood and agreed by the Settling Parties that any proposed Plan of
Allocation of the Net Settlement Fund including, but not limited to, any adjustments to an
Authorized Claimant’s claim set forth therein, is not a part of this Stipulation and is to be
considered by the Court separately from the Court’s consideration of the fairness,
reasonableness, and adequacy of the Settlement set forth in the Stipulation, and any order or
proceeding relating to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation or affect the finality of the Court’s Order and Final Judgment approving the
Stipulation and the Settlement set forth therein, or any other orders entered pursuant to the
Stipulation. Settlement Class Members and Settling Defendant shall be bound by the terms of
this Stipulation, irrespective of whether the Court disapproves or modifies the Plan of Allocation.
317800.2 28
The time to appeal from approval of the Settlement shall commence upon the entry of the
Court’s Order and Final Judgment approving the Stipulation regardless of whether a Plan of
Distribution has been approved.
6.
Plaintiffs’ Counsel’s Attorneys’ Fees and Expenses
6.1.
Lead Counsel may submit an application or applications (the “Fee and Expense
Application”) to the Court for distributions to Plaintiffs’ Counsel from the Settlement Fund for:
(a) an award of attorneys’ fees from the Settlement Fund; (b) payment of expenses and costs
incurred in connection with prosecuting the Litigation; (c) any interest on such costs and
expenses at the same rate and for the same periods as earned by the Settlement Fund; (d) the
request by Plaintiffs for reasonable costs and expenses; and (e) an award to Lead Plaintiffs for
reimbursement of their expenses and lost wages in connection with serving as a Lead Plaintiff.
The portion of Lead Counsel’s application for attorneys’ fees (but not expenses) shall not exceed
one-third of the Settlement Fund. Settling Defendant shall take no position with respect to Lead
Counsel’s requested attorneys’ fees and expenses or a request by Plaintiffs for reimbursement of
his reasonable costs and expenses directly relating to their representation of the Settlement Class.
6.2.
The attorneys’ fees, expenses, and costs, as awarded by the Court, shall be paid to
Lead Counsel from the Settlement Fund, as ordered, immediately after the Court executes an
order awarding such fees and expenses, notwithstanding the existence of any objections thereto,
or potential for appeal therefrom, or collateral attack on the Settlement or any part thereof. Lead
Counsel shall thereafter allocate, subject to the conditions below, the attorneys’ fees amongst
Plaintiffs’ Counsel in a manner in which they in good faith believe reflects the contributions of
such counsel to the prosecution and settlement of the Litigation.
317800.2 29
6.3.
The Settling Parties further agree that the denial, in whole or in part, of any Fee
and Expense Application by Lead Counsel shall in no way affect the enforceability, validity or
finality of the Settlement or this Stipulation, nor shall any order or proceeding relating solely to
an award of attorneys’ fees and expenses, or any appeal from any order relating thereto, affect or
delay the finality of the final judgment approving the Settlement.
6.4.
In the event that the Effective Date does not occur, or the Order and Final
Judgment or the order making the Fee and Expense Award is reversed or modified, or the
Stipulation is canceled or terminated for any other reason, and in the event that the Fee and
Expense Award has been paid to any extent, then Plaintiffs’ Counsel shall be severally obligated
to repay to the Escrow Account the reversed portion of the fees and expenses, with interest, less
any Notice and Administration Costs referred to in ¶ 2.7 actually paid or incurred. Each such
Plaintiffs’ Counsel’s law firm, as a condition of receiving such fees and expenses, on behalf of
itself and each partner, shareholder or member of it, agrees that the law firm and its partners,
shareholders, and/or members are subject to the jurisdiction of the Court for the purposes of
enforcing the provisions of this paragraph.
6.5.
Settling Defendant shall have no obligation to pay any fees, expenses, costs, or
interest that the Court may award to Plaintiffs’ Counsel or Plaintiffs. Settling Defendant and the
Released Parties shall have no responsibility for, and no liability whatsoever with respect to, any
payment to Lead Counsel, Plaintiffs, Plaintiffs’ Counsel or any other counsel or Person who
receives payment from the Settlement Fund.
6.6.
Settling Defendant and the Released Parties shall have no responsibility for, and
no liability whatsoever with respect to, the allocation among Plaintiffs’ Counsel, and/or any
317800.2 30
other Person who may assert some claim thereto, of any Fee and Expense Award that the Court
may make in the Litigation.
7.
Conditions of Settlement, Effect of Disapproval, Cancellation or Termination
7.1.
The Effective Date of the Stipulation shall be conditioned on the occurrence of all
the following events:
(a)
Defendants have made or caused the contributions to be made to the
Settlement Fund, as required by ¶ 2.1 above;
(b)
The Court has entered the Notice Order, as required by ¶ 3.1 above;
(c)
The Settling Defendant has not exercised its option to terminate the
Stipulation pursuant to ¶ 7.4 hereof;
(d)
The Court has approved this Stipulation, following notice to the
Settlement Class Members and the Settlement Hearing, as prescribed by Rule 23 of the Federal
Rules of Civil Procedure;
(e)
The Court has entered the Order and Final Judgment, or a judgment
substantially in the form of Exhibit B attached hereto; and
(f)
The Order and Final Judgment has become Final, as defined in ¶ 1.7
above.
7.2.
This is not a claims-made settlement. As of the Effective Date, Settling Defendant
shall not have any right to the return of the Settlement Fund or any portion thereof for any
reason. Upon the occurrence of all of the events referenced in ¶ 7.1 above, any and all remaining
interest or right of Settling Defendant in or to the Settlement Fund, if any, shall be absolutely and
forever extinguished. If all of the conditions specified in ¶ 7.1 are not met, then this Stipulation
317800.2 31
shall be cancelled and terminated subject to ¶ 7.5 hereof unless Lead Counsel and counsel for
Settling Defendant mutually agree in writing to proceed with the Settlement.
7.3.
The Settling Parties shall have the right to terminate the Settlement and this
Stipulation by providing written notice of their election to do so to all other Settling Parties
within fifteen (15) days of: (a) the Court’s denial of Plaintiffs’ motion for preliminary approval
of the Settlement in any material respect without leave to amend and resubmit; (b) the Court’s
refusal to approve this Stipulation and Settlement or any material part of it without leave to
amend and resubmit; (c) the Court’s declining to enter final judgment in any material respect
without leave to amend and resubmit; or (d) the date upon which the final judgment is modified
or reversed in any material respect by the Court of Appeals or the Supreme Court. No order of
the Court or modification or reversal on appeal of any order of the Court concerning the Plan of
Allocation or the amount of any fees, costs, expenses, and interest awarded by the Court to Lead
Counsel, Plaintiffs’ Counsel or Plaintiffs shall constitute grounds for cancellation or termination
of the Settlement. If Settling Defendant fails to timely make payment of the Settlement Fund into
the Escrow Account, then Plaintiffs may at their sole discretion move for an order enforcing the
Settlement or terminating the Settlement, but such non-payment by Settling Defendant is not a
basis for Settling Defendant to terminate the Settlement.
7.4.
If prior to the Settlement Hearing, the aggregate number of shares of Puda
securities purchased during the Class Period by Persons who would otherwise be members of the
Settlement Class, but who request exclusion from the Settlement Class, exceeds the sum
specified in a separate supplemental agreement (“Supplemental Agreement”) between the
Settling Parties, Settling Defendant shall have the option to terminate the Stipulation in
accordance with the procedures set forth in the Supplemental Agreement. The Supplemental
317800.2 32
Agreement and all of its terms are hereby incorporated into this Stipulation (and vice versa);
however, the Supplemental Agreement will not be filed with the Court unless and until a dispute
among the Settling Parties concerning its interpretation or application arises. If the Court requires
disclosure of the Supplemental Agreement and/or any of its terms for any reason, including for
purposes of approving the Settlement, the Settling Parties shall jointly move to preserve the
confidentiality of the Supplemental Agreement, particularly the threshold aggregate number of
shares, to the fullest extent possible and in accordance with the practices of the Court. Copies of
all requests for exclusion received and copies of all written revocations of requests for exclusion
received shall be sent to counsel for Settling Defendant and to Lead Counsel within a reasonable
time of receipt by the Claims Administrator, and in any event not less than fourteen (14) days
prior to the Settlement Hearing.
7.5.
In the event that the Settlement set forth in the Stipulation is terminated or fails to
become effective for any reason, the Settling Parties shall be restored to their respective positions
in the Litigation as of April 17, 2015 and shall proceed in all respects as if the Memorandum of
Understanding, dated April 17, 2015 and this Stipulation had not been executed and/or entered.
In such event, the terms and provisions of the Stipulation, with the exception of ¶¶ 2.9, 6.4, 7.5,
7.6, 8.1, 8.2, 9.3, 9.5, and 9.6 hereof, shall have no further force and effect with respect to the
Settling Parties, and any judgment or order entered by the Court in accordance with the terms of
the Stipulation shall be treated as vacated, nunc pro tunc.
7.6.
If the Effective Date does not occur, or if the Stipulation is terminated pursuant to
its terms, the Settlement Fund (including accrued interest), less Notice and Administration Costs,
Taxes, and Tax Expenses that have been incurred or disbursed pursuant to ¶¶ 2.7 and 2.9, shall
be refunded pursuant to written instructions from Settling Defendant’s counsel. At the request of
317800.2 33
counsel for Settling Defendant, the Escrow Agent or its designee shall apply for any tax refund
owed on the Settlement Fund and pay the proceeds at the written direction of Settling
Defendant’s counsel.
7.7.
The Settling Parties have agreed that the Macquarie settlement is not a condition
to this Settlement or to entry of the Final Order and Judgment and is to be considered by the
Court separately from and independently of the Court’s consideration of the question whether the
Settlement is fair, reasonable, adequate and in the best interests of the Settlement Class. Any
orders or proceedings relating to the Macquarie settlement, or any appeal from any order or
proceedings relating thereto, shall not: (a) operate to modify, terminate or cancel this Settlement;
(b) affect or delay the validity or finality of the Final Order and Judgment or any other orders
entered by the Court giving effect to this Stipulation; (c) affect or delay the Effective Date; (d)
provide any ground or otherwise permit any Person (including Plaintiffs and the other Settlement
Class Members), or any of their counsel, to cancel, terminate or withdraw from the Stipulation or
the Settlement; and/or (e) affect or delay the validity of the Settlement.
8.
No Admission of Wrongdoing
8.1.
Settling Defendant’s execution of this Stipulation does not constitute an
admission by any Settling Defendant or the Released Parties: (i) of any wrongdoing, violation of
law, or liability whatsoever; or (ii) that recovery could be had in any amount should the
Litigation not be settled. Settling Defendant denies any and all wrongdoing and liability and
maintains that its conduct was at all times legal and proper. Settling Defendant enters into this
Settlement solely because the proposed Settlement would eliminate the burden, distraction, and
expense associated with further litigation. The provisions contained in the Memorandum of
Understanding, dated April 17, 2015, this Stipulation, any documentation that may be required to
317800.2 34
obtain the Court’s preliminary and final approval of the Settlement, or any press release or other
statement or report by the Settling Parties, shall not be offered or deemed as, written to suggest,
or received in any proceeding as a presumption, concession, admission, or evidence of any fault,
liability, or wrongdoing as to any facts or claims asserted in the Action, or any other actions or
proceedings.
8.2.
Plaintiffs’ execution of this Stipulation does not constitute an admission by
Plaintiffs: (i) of the lack of any wrongdoing, violation of law, or liability on behalf of any
Defendant whatsoever; or (ii) that recovery could not be had should the Litigation not be settled.
Neither this Stipulation, nor any term hereof, may be offered or received into evidence in any
proceeding or used in any manner as an admission or concession by Plaintiffs that Settling
Defendant or any other Defendant has not engaged in any wrongdoing or that their conduct was
at all times legal and proper.
9.
Bar And Judgment Reduction Order
9.1.
This Stipulation of Settlement is conditioned upon the entry by the Court of a
Final Bar and Judgment Reduction Order substantially in the form of Exhibit C, attached hereto.
10.
Miscellaneous Provisions
10.1.
The Settling Parties: (a) acknowledge that it is their intent to consummate this
Stipulation; and (b) agree to cooperate to the extent reasonably necessary to effectuate and
implement all terms and conditions of the Stipulation and to exercise their best efforts to
accomplish the foregoing terms and conditions of the Stipulation.
10.2.
This Stipulation, the Exhibits attached hereto, and the Supplemental Agreement
constitute the entire agreement between the Settling Parties as to the subject matter hereof and
supersede any prior or contemporaneous written or oral agreements or understandings between
317800.2 35
the Settling Parties. No representations, warranties, or inducements have been made to any party
concerning the Stipulation, its Exhibits, or the Supplemental Agreement other than the
representations, warranties, and covenants contained and memorialized in such documents.
10.3.
Except as otherwise provided for herein, each Settling Party shall bear his, her or
its own costs.
10.4.
The Settling Parties intend this Settlement to be a final and complete resolution of
all disputes between them with respect to the Litigation. The Settlement compromises all claims
that were contested and shall not be deemed an admission by any Settling Party as to the merits
of any claim or defense. The Settling Parties agree that the amount paid to the Settlement Fund
and the other terms of the Settlement were negotiated in good faith by the Settling Parties, and
reflect a settlement that was reached voluntarily after consultation with competent legal counsel.
The Settling Parties reserve their right to rebut, in a manner that such party determines to be
appropriate, any contention made in any public forum that the Litigation was brought or
defended in bad faith or without a reasonable basis.
10.5.
This Stipulation, whether or not consummated, and any negotiations, discussions,
or proceedings in connection herewith shall not be:
(a)
Offered or received against Settling Defendant or the Released Parties as
evidence of or construed as or deemed to be evidence of any presumption, concession, or
admission by Settling Defendant or the Released Parties of the truth of any fact alleged by the
Settlement Class Members, the validity of any claim that has been or could have been asserted in
the Litigation, the deficiency of any defense that has been or could have been asserted in the
Litigation, or of any liability, negligence, fault, or wrongdoing of Settling Defendant or the
Released Parties;
317800.2 36
(b)
evidence of a presumption, concession, admission of any fault, misrepresentation, or omission
with respect to any statement or written document approved or made by Settling Defendant or
the Released Parties;
(c)
evidence of a presumption, concession, or admissibility of any liability, negligent, fault, or
wrongdoing, or in any way referred to for any other reason as against any of the parties to the
Stipulation, in any other civil, criminal, or administrative action or proceeding other than such
proceedings as may be necessary to effectuate the provisions of this Stipulation; provided,
however, that Settling Defendant or the Released Parties may file the Stipulation and/or the
Order and Final Judgment in any action that may be brought against them in order to support a
defense or counterclaim based on principles of res judicata, collateral estoppel, release, good
faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue
preclusion or similar defense or counterclaim. In addition, nothing contained in this paragraph
shall prevent this Stipulation (or any agreement or order relating thereto) from being used,
offered, or received in evidence in any proceeding to approve, enforce, or otherwise effectuate
the Stipulation (or any agreement or order relating thereto) or the Order and Final Judgment, or
to enforce or effectuate provisions of this Settlement, the Order and Final Judgment, or the
Proofs of Claim and Release as to Settling Defendant and the Released Parties; or
(d)
Construed against Settling Defendant or the Released Parties as an
admission or concession that the consideration to be given hereunder represents the amount
which could be or would have been recovered after trial.
317800.2 37
10.6.
Except as otherwise provided for herein, all agreements made and orders entered
during the course of the Litigation relating to the confidentiality of information shall survive this
Stipulation.
10.7.
All of the Exhibits to the Stipulation are material and integral parts hereof and are
fully incorporated herein by this reference.
10.8.
The Stipulation may be amended or modified only by a written instrument signed
by or on behalf of all Settling Parties or their respective successors-in-interest.
10.9.
Each counsel or other Person executing the Stipulation or any of its Exhibits on
behalf of any party hereto hereby warrants that such Person has the full authority to do so.
10.10. The Stipulation may be executed in one or more counterparts. All executed
counterparts and each of them shall be deemed to be one and the same instrument. A complete
set of executed counterparts shall be filed with the Court.
10.11. The Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the Settling Parties.
10.12. The Court shall retain jurisdiction with respect to implementation and
enforcement of the terms of the Stipulation, and the Settling Parties submit to the jurisdiction of
the Court for purposes of implementing and enforcing the Settlement embodied in the
Stipulation.
10.13. The waiver by one party of any breach of this Stipulation by any other party shall
not be deemed a waiver by any other party or a waiver of any other prior or subsequent breach of
this Stipulation.
10.14. The Stipulation and the Exhibits attached hereto and the Supplemental Agreement
shall be considered to have been negotiated, executed, and delivered, and to be wholly
317800.2 38
performed, in the State of New York, and the rights and obligations of the parties to the
Stipulation shall be construed and enforced in accordance with, and governed by, the internal,
substantive laws of the State of New York without giving effect to that State’s choice-of-law
principles.
10.15. The headings herein are used for the purpose of convenience only and are not
meant to have legal effect.
10.16. Pending approval of the Court of the Stipulation and its Exhibits, all proceedings
in this Litigation shall be stayed with respect to the Settling Defendant only and all Settlement
Class Members shall be barred and enjoined from prosecuting any of the Released Claims
against any of the Released Parties.
10.17. This Stipulation shall not be construed more strictly against one party than
another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel
for one of the Settling Parties, it being recognized that it is the result of arm’s-length negotiations
between the Settling Parties and the Settling Parties have contributed substantially and materially
to the preparation of this Stipulation.
317800.2 39
et al. LITIGATION
CASE NO: 1:11-CV-2598 (DLC)
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement, dated October 16, 2015 (the
“Stipulation”), is made and entered into, through their counsel, by and between Lead Plaintiffs
Salomón Querub, Howard Pritchard and Hotel Ventures LLC (collectively, “Lead Plaintiffs”), on
behalf of themselves, the Additional Named Plaintiffs and the class of Persons defined below,
and Defendant Macquarie Capital (USA) Inc. (“Macquarie”).
Subject to the terms and
conditions set forth herein and the Court’s approval pursuant to Rule 23 of the Federal Rules of
Civil Procedure, the settlement embodied in this Stipulation is intended by the Settling Parties to:
(a) be in full and final disposition of the Action with respect to the claims asserted against
Macquarie; and (b) fully, finally and forever resolve, discharge, dismiss and settle each and
every one of the Released Claims against each and every one of the Released Persons.
WHEREAS,
A.
Beginning on April 14, 2011, eleven putative class action lawsuits were filed in
this Court against Puda as well as certain other Persons, captioned, Goldstein v. Puda Coal, Inc.,
No. 11 Civ. 2598; Tallant v. Puda Coal, Inc., No. 11 Civ. 2608; Weissmann v. Puda Coal, Inc.,
No. 11 Civ. 2609; Alexander v. Zhao, No. 11 Civ. 2657; Rosenberger v. Puda Coal, Inc., No. 11
Civ. 2660; Korach v. Puda Coal, Inc., No. 11 Civ. 2666; Kendall v. Puda Coal, Inc., No. 11 Civ.
2695; LaDuca v. Puda Coal, Inc., No. 11 Civ. 4266; Burquist v. Puda Coal, Inc., No. 11 Civ.
5189; Thumith v. Puda Coal, Inc., No. 11 Civ. 5190; and Lin v. Puda Coal, Inc., No. 11 Civ.
5259 (these actions are collectively referred to herein as the “Individual Actions”). Although
each of the Individual Actions was brought against Puda, they varied with respect to the other
named defendants.
B.
All of the Individual Actions alleged a fraudulent scheme orchestrated by Puda’s
former Chairman, Ming Zhao (“Zhao”), to mislead investors as to the true ownership of Puda’s
primary operating subsidiary, Shanxi Puda Coal (“Shanxi Coal”), which was revealed in April
2011. Although Puda represented in public filings throughout the relevant period that it owned
90% of Shanxi Coal, the Complaints alleged that Zhao had secretly transferred Puda’s interest in
the subsidiary first to himself and then to an unrelated private equity fund with no consideration
to the Company. There were no allegations in any of the Individual Actions, or in the currently
operative Complaint, that Macquarie was aware of Zhao’s conduct at the time it was perpetrated,
or that Macquarie played any role in Zhao’s actions.
C.
By Memorandum and Order dated December 6, 2011, the Court consolidated the
Individual Actions, captioned In re Puda Coal Securities, Inc. et al. Litigation, No. 11 Civ. 2598
(BSJ). The Court appointed Salomón Querub, Howard Pritchard and Hotel Ventures LLC as
Lead Plaintiffs, and approved the selection of The Rosen Law Firm, P.A. and Glancy Binkow &
Goldberg LLP as Co-Lead Counsel.
D.
On January 27, 2012, Lead Plaintiffs filed a consolidated class action complaint,
subsequently corrected on February 9, 2012, adding Steven Weissman, Thomas Rosenberger,
and Sal LaDuca as named plaintiffs. This complaint, among other things, asserted Section 11
and Section 12(a)(2) claims (the “1933 Act Claims”) against Macquarie and Brean Murray,
Carret & Co. LLC (“Brean,” and together with Macquarie, the “Underwriters”) arising out of a
follow-on public offering of Puda common stock conducted in December 2010 (the “December
2
Offering”). Macquarie and Brean served as the sole underwriters for the December Offering.
The claims against the Underwriters were brought in Mr. Rosenberger’s name alone. This
complaint did not assert any 1934 Exchange Act claims against the Underwriters. Claims were
also asserted against: (a) Moore Stephens Hong Kong, Moore Stephens, P.C. (the “Auditor
Defendants”), and Moore Stephens International Ltd.; (b) Jianfei Ni, Zhao, Qiong Laby Wu,
Liping Zhu and Yao Zhao; and (c) C. Mark Tang and Lawrence Wizel (the “U.S. Directors”).
E.
On June 1, 2012, Macquarie filed a motion to dismiss the February 9, 2012
complaint on grounds that, among other things, Mr. Rosenberg did not have standing to assert a
Section 12(a)(2) claim. On August 8, 2012, Plaintiffs filed opposition papers and, on September
14, 2012, Macquarie filed reply papers. On October 3, 2012, the litigation was reassigned to
Judge Katherine Forrest. On March 18, 2013, the Court denied Macquarie’s motion.
F.
On March 15, 2013, the clerk of the Court entered certificates as to Puda and
Zhao (collectively, the “Defaulted Defendants”), certifying that the Defaulted Defendants had
been served copies of the summons and complaint and had not filed an answer or otherwise
moved with respect to the complaint. Plaintiffs subsequently filed a motion for default judgment
as to these two defendants.
G.
On April 12, 2013, Macquarie filed its answer to the complaint, asserting a
number of defenses and affirmative defenses, including, among others, that the claims were
barred because it had acted properly and in compliance with all of its obligations, that the
Plaintiffs lacked standing to maintain any claims against Macquarie, that any injury or damages
suffered by the putative class were the responsibility of other Persons and invoking the statutory
due diligence defense contained in the 1933 Act.
3
H.
On May 13, 2013, Plaintiffs and Trellus filed a motion for Trellus to intervene as
an additional named plaintiff in the Action. On May 29, 2013, certain of the defendants,
including Macquarie, filed motions for summary judgment on the ground that Mr. Rosenberger
lacked standing to bring the 1933 Act Claims against them. Discovery relating to these motions
was conducted between May 15, 2013 and September 17, 2013. On August 22, 2013, Plaintiffs
filed their opposition papers and, on September 19, 2013, the Underwriters filed reply papers.
I.
On June 26, 2013, certain of the defendants, including Macquarie, filed their
papers in opposition to the motion to intervene, and Plaintiffs and Trellus filed reply papers on
July 12, 2013. On September 27, 2013, the Court heard oral argument on both the summary
judgment and intervention motions. The Court, in an Opinion and Order dated October 1, 2013,
denied the motion to intervene and granted the motions for summary judgment, dismissing all
claims against Macquarie – as well as the 1933 Act claims against the U.S. Directors and the
Auditor Defendants – leaving the Defaulted Defendants and the Auditor Defendants as the only
remaining defendants in the Action. On October 28, 2013, Trellus filed an appeal from the
Court’s order to the United States Court of Appeals for the Second Circuit.
J.
On October 22, 2013, in connection with their claims against the remaining
defendants, Plaintiffs issued a non-party subpoena to Macquarie seeking documents relating to
the December Offering. Macquarie produced documents responsive to the subpoena; included in
the production was a report prepared by Kroll for Macquarie in connection with the due
diligence on the December Offering, that Plaintiffs subsequently alleged contained information
that contradicted Puda’s public statements (including those made in connection with the
December Offering) that Puda owned 90% of Shanxi Coal.
4
K.
On January 6, 2014, Plaintiffs filed a motion to amend the then-operative
complaint to add a Section 10(b) claim. On February 4, 2014, Trellus filed a motion pursuant to
Fed. R. Civ. P. 62.1(a)(3), seeking an indicative ruling from the Court prior to the Court of
Appeals’ hearing of the appeal of the October 1, 2013 decision. On February 21, 2014, the Court
granted Trellus’s motion, signaling that it would permit Trellus to join the litigation.
L.
On April 7, 2014, the Court “deem[ed] Trellus’s motion for an indicative ruling to
be a motion to vacate pursuant to Rule 60(b)” and granted that motion. The Court also vacated
the portion of its October 1, 2013 opinion denying Trellus’s motion for intervention and granted
Trellus’s motion to become a party plaintiff “pursuant to several Federal Rules of Civil
Procedure, including Rules 15, 17, 19, and 21.”
M.
On April 21, 2014, Plaintiffs filed a second consolidated amended and
supplemental complaint (the “Complaint”), which remains the operative pleading in the Action.
The Complaint asserts claims under Section 11 (against all defendants), claims under Section 12
(against Puda and the Underwriters), control person claims under Sections 15 and 20(a) (against
certain of Puda’s former officers and directors) as well as claims under Section 10(b) (against
Puda, Wu, Zhu, Zhao, the Auditor Defendants and the Underwriters).
N.
On May 21, 2014, Macquarie moved to dismiss the Section 10(b) claim on
grounds that Plaintiffs had not pled facts establishing that Macquarie (as opposed to Puda) made
any of the allegedly false and misleading statements at issue as required by the Supreme Court’s
decision in Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011).
Macquarie also sought dismissal of the 1933 Act claims, including for the reasons previously
argued in connection with the motions resolved in the Court’s October 1, 2013 ruling. On June
19, 2014, Plaintiffs filed opposition papers and, on July 2, 2014, Macquarie filed its reply papers.
5
On July 14, 2014, the Court issued an Opinion and Order denying Macquarie’s motion to
dismiss.
O.
Following the completion of fact and expert discovery pertaining to the claims
asserted by Plaintiffs against them – which included the production of over 40,000 pages of
documents, ten fact depositions and six expert depositions, the Auditor Defendants filed motions
for summary judgment. On July 26, 2014, the Court granted the Auditor Defendants’ motions
for summary judgment on all claims brought against them. Plaintiffs have filed an appeal of the
Court’s June 8, 2015 final order dismissing those claims.
P.
On August 14, 2014, Macquarie filed its answer to the Complaint, setting forth
many of the same defenses asserted in its answer to the prior pleading (including its statutory due
diligence defense to the 1933 Act claims) as well as a myriad of defenses to the Section 10(b)
claim, including that: (i) Plaintiffs could not prove that Macquarie acted with scienter or that
Macquarie made any of the allegedly false statements under Janus; and (ii) even if Plaintiffs
could prove liability, the recovery against Macquarie would be limited to its putative percentage
of responsibility, if any, for the alleged damages suffered by Plaintiffs and the other putative
class members consistent with the Private Securities Litigation Reform Act of 1995 (the
“PSLRA”).
Q.
On November 7, 2014, Quinn Emanuel Urquhart & Sullivan, LLP (“Quinn
Emanuel”) entered a formal appearance as counsel for Zhao and notified the Court of Zhao’s
intent to contest the motion for a default judgment against him. By orders dated November 17,
2014, and November 20, 2014, respectively, the Court entered a default judgment against Puda,
and denied Plaintiffs’ motion for a default judgment against Zhao insofar as Zhao complied with
certain enumerated conditions, including various discovery obligations. Zhao subsequently
6
produced documents relating to Puda and the allegations in the Complaint concerning his
transactions involving Shanxi Coal.
R.
On January 12, 2015, the Court entered an Order Regarding Class Certification,
based upon a stipulation of the parties, that, among other things: (i) certified a Section 11 class
against Puda, Zhao, Brean, Macquarie and the U.S. Directors; (ii) certified a Section 12 class
against Puda, Zhao, and the Underwriters; (iii) certified a Section 10(b) class against the
Underwriters, consisting of those persons or entities who purchased Puda common stock (or call
options) or sellers of put options on Puda common stock between December 8, 2010 through the
market close on April 7, 2011 “who did not sell those securities prior to April 8, 2011” and who
“were damaged thereby”; and (iv) excluded from each class “all defendants, other officers and
directors of Puda (past and present) and members of all of their immediate families, entities in
which any and all such excluded persons hold any ownership interest, and all heirs, successors or
assigns of any of the foregoing.” In connection with the Settlement, the Settling Parties have
agreed to request that this stipulated order be altered under Rule 23(c)(1)(C) and that the
Settlement Class definition set forth herein be employed in its stead.
S.
On February 17, 2015, Quinn Emanuel moved to withdraw as Zhao’s attorney,
and Zhao subsequently filed an affidavit indicating that that he would “not participate in or
otherwise continue the defense of” the claims against him. On April 1, 2015, the Court granted
Quinn Emanuel’s motion to withdraw (conditioned on its continuing to serve as agent for
service) and entered a default judgment against Zhao.
T.
Between January 22, 2015 and September 9, 2015 the remaining parties engaged
in merits discovery. Macquarie cumulatively produced approximately 59,000 pages of
documents and Brean approximately 72,000 pages, including documents relating to the due
7
diligence conducted in connection with the December Offering. In addition, third parties who
were retained in connection with the December Offering were subpoenaed by Plaintiffs and also
provided documents: (i) Kroll (which had prepared the report discussed above); and (ii)
Morrison & Foerster (which had served as Underwriters’ counsel in the December Offering).
Several other third parties were also subpoenaed. In total, third parties produced approximately
83,000 pages of documents.
U.
As part of fact discovery, Plaintiffs took the depositions of six former or current
Macquarie personnel who had worked on the December Offering, including those who led the
due diligence effort, as well as the deposition of the individual who led Brean’s involvement in
the December Offering. In addition, Plaintiffs took the depositions of three Morrison & Foerster
attorneys who had worked with the Underwriters on the December Offering as well as a
representative of Kroll concerning the preparation of the report it provided Macquarie. Plaintiffs
also re-took the depositions of former directors Tang and Wizel.
V.
In April 2015, Plaintiffs separately reached a resolution with Brean that would, if
approved by the Court, resolve all claims against Brean in the Action on the terms and conditions
set forth in the Stipulation of Settlement entered into by and between Plaintiffs and Brean, dated
July 20, 2015, as amended on October 16, 2015 (the “Brean Settlement”). The Brean Settlement
is independent of this Settlement.
W.
Following the close of fact discovery through September 9, 2015, the parties
engaged in expert discovery. Plaintiffs proffered expert reports on: (i) underwriter due diligence;
(ii) materiality, loss causation, and per share damages for purchasers of Puda common stock; and
(iii) aggregate damages. Macquarie submitted expert reports on both underwriter due diligence
8
and damages and the U.S. Directors submitted an expert report on due diligence. The parties
took a total of five expert depositions in connection with these reports.
X.
On July 29, 2015, Macquarie moved for partial summary judgment on the Section
10(b) claim, arguing that based on the record evidence adduced in discovery, no finder of fact
could reasonably conclude that Macquarie was the “maker” of the allegedly false statements at
issue. Plaintiffs filed their opposition on September 3, 2015 and Macquarie filed its reply on
September 23, 2015.
Y.
The Securities and Exchange Commission (the “SEC”) engaged in its own
investigation of Puda. On February 22, 2012, the SEC filed an action against Zhao and Zhu,
asserting claims, among others, for violations of Sections 10(b), 14(a) and 13(b)(5) of the
Exchange Act arising from Zhao’s and Zhu’s “fraudulent scheme to deceive public investors”
that continued even after the April 2011 internet reports.
Z.
As part of its investigation, the SEC subpoenaed documents from Macquarie and
took depositions and/or conducted interviews of twelve current or former employees of
Macquarie. Plaintiffs were provided with copies of these transcripts as well as many of the
documents Macquarie provided the SEC relating to the due diligence for the December Offering.
AA.
On March 27, 2015, the SEC announced that it had filed a complaint against
Macquarie (and one current and one former employee of the firm) arising out of its work on the
December Offering, asserting claims under the Securities Act of 1933. In addition, the SEC
announced that Macquarie had agreed to settle the SEC’s charges by paying $15,000,000
(consisting of $10,728,525 in disgorgement and $1,271,475 in prejudgment interest thereon, and
a civil penalty in the amount of $3,000,000) and further agreeing to cover the costs of “setting up
a Fair Fund to compensate investors who suffered losses after purchasing shares in the public
9
offering by Puda Coal” that Macquarie had underwritten in December 2010. In settling the
matter, Macquarie did not admit or deny the SEC’s allegations. On August 12, 2015, the Court
granted the SEC’s motion to establish a Fair Fund for those investors from the amounts
deposited with the SEC by Macquarie and appointed a tax administrator for that fund. The SEC
subsequently moved for the appointment of a distribution agent to facilitate the development and
administration of a distribution plan for payments to investors.
BB.
Periodically during the litigation, Co-Lead Counsel and Macquarie’s Counsel
engaged in discussions concerning a potential resolution of the claims asserted against
Macquarie in the Action. In addition to numerous telephone conversations between counsel, two
in-person mediation sessions were conducted before the Honorable Daniel Weinstein (Ret.), one
on June 10, 2013 and one on September 10, 2014 (both of which entailed the exchange of
detailed and substantive mediation statements). During these sessions, counsel engaged in
extensive substantive discussions regarding the merits of the claims asserted, the defenses
proffered in response thereto, the evidence adduced in discovery, potential damages theories
should liability be proved as well as the likelihood of recoveries by the Plaintiffs. In addition to
these two formal sessions, counsel for the Settling Parties also employed the services of the
mediator to facilitate their periodic telephonic negotiations. While these efforts did not result in
a settlement, the Settling Parties agreed to continue their dialogue.
CC.
As a result of their ongoing arm’s-length negotiations, including the two in-person
mediation sessions referenced above, on September 30, 2015, Lead Plaintiffs and Macquarie
agreed in principle to a resolution of the claims asserted by Plaintiffs against Macquarie in this
Action, subject to Court approval and the execution of customary settlement documentation,
which agreement of settlement is memorialized in this Stipulation.
10
DD.
Lead Plaintiffs, through their counsel, have conducted an investigation into the
merits of the claims and defenses asserted by the Settling Parties in this Action as well as the
underlying events surrounding the December Offering. Co-Lead Counsel has analyzed the
evidence obtained through the extensive party and non-party discovery in this Action described
above, consulted with experts (both as to the merits and potential damages recovery), reviewed
and assessed publicly-available records and researched the applicable law. This investigation
has provided Lead Plaintiffs and Co-Lead Counsel with an informed and detailed basis upon
which to assess the relative strengths and weaknesses of the Settling Parties’ respective positions
in the Action. Lead Plaintiffs’ understanding has been enhanced by their detailed settlement
discussions with counsel for Macquarie.
EE.
Based on their direct oversight of the prosecution of this Action since inception,
their extensive factual investigation and their legal analysis of the claims against Macquarie in
the Action and Macquarie’s defenses to those claims, as well as their analysis of the potential
damages that could be recovered from Macquarie if the Settlement Class were to prevail, Lead
Plaintiffs and Co-Lead Counsel have concluded that the terms and conditions of the Settlement
and this Stipulation are fair, reasonable and adequate to Plaintiffs and the other Settlement Class
Members, and are in each of those Person’s best interests. In making this determination, Lead
Plaintiffs and Co-Lead Counsel have considered, among other things, the following: (a) the
substantial benefits that Settlement Class Members will receive from the resolution of the Action
against Macquarie; (b) the attendant risks of litigation as well as the expense and length of
continued proceedings necessary to prosecute the Action through trial; (c) the uncertainty
surrounding the damages that could be recovered by Plaintiffs from Macquarie on their Section
10(b) claim because of, among other things, the PSLRA’s proportionate liability scheme; and (d)
11
the desirability of permitting the Settlement to be consummated as provided by the terms of this
Stipulation. The Settlement and this Stipulation shall in no event be construed as, or deemed to
be, evidence of or a concession by Plaintiffs or any other Settlement Class Member of any
infirmity in the claims asserted in the Action.
FF.
Macquarie has denied Plaintiffs' allegations and is not admitting any wrongdoing
in connection with the Settlement. Macquarie is entering into this Settlement and Stipulation to
avoid the substantial burden, expense, inconvenience and distraction of continued litigation and
to resolve each of the Released Plaintiff Claims as against each of the Released Defendant
Persons. The Settlement and this Stipulation shall in no event be construed as, or deemed to be,
evidence of an admission or concession on the part of Macquarie with respect to any claim or
factual allegation or of any fault, liability, wrongdoing, or damage whatsoever made in the
Action or of any infirmity in the defenses that it has or could have asserted in the Action.
a.
The Settling Parties recognize that the Action has been filed and prosecuted by
Plaintiffs in good faith and defended by Macquarie in good faith and further that the Settlement
Amount paid and the other terms of the Settlement set forth herein were negotiated at arm’slength, in good faith and reflect a settlement that was reached voluntarily after consultation with
experienced legal counsel.
b.
This Stipulation (together with the exhibits hereto) has been duly executed by the
undersigned signatories on behalf of their respective clients and reflects the final and binding
agreement between the Settling Parties.
NOW THEREFORE, without any concession by Plaintiffs that the claims being
resolved herein lack merit, and without any concession by Macquarie of any liability or
wrongdoing or the lack of merit of any of its defenses as asserted in this Action, it is hereby
12
STIPULATED AND AGREED by and between Lead Plaintiffs (on behalf of
themselves, the Additional Named Plaintiffs and the other Settlement Class Members) and
Macquarie, through their respective attorneys, that, in consideration of the benefits flowing to the
Settling Parties by the Settlement, all claims asserted in the Action by Plaintiffs and all other
Settlement Class Members against Macquarie shall be finally and fully settled, compromised,
discharged, released and dismissed with prejudice, and further that each and every one of the
Released Claims shall be finally and fully settled, compromised, discharged, released and
dismissed with prejudice as to each and every one of the Released Persons, in the manner and on
the terms and conditions stated below, subject to Court approval following a Settlement Hearing
to be held pursuant to Rule 23 of the Federal Rules of Civil Procedure.
1.
Definitions
The following terms shall have the following meanings for the purpose of this
Stipulation, the exhibits to this Stipulation and the Supplemental Agreement (in the event of any
inconsistency between the definitions set forth below and any definitions contained in any other
document related to the Settlement, the definitions set forth below shall control):
1.1
“Action” means the consolidated action captioned In re Puda Coal Sec. Inc. et al.
Litig., No. 11 Civ. 2598 (DLC), pending in the United States District Court for the Southern
District of New York.
1.2
“Additional Named Plaintiffs” means, collectively, Steven Weissmann and
Trellus Management Company LLC.
1.3
“Additional Plaintiffs’ Counsel” means, collectively, Pomerantz LLP, Kaplan Fox
and Kilsheimer LLP and Kirby McInerney LLP.
13
1.4
“Authorized Claimant” means any Settlement Class Member who submits a
timely and valid Proof of Claim Form to the Claims Administrator pursuant to the terms of this
Stipulation and the Notice, who is not otherwise excluded from the Settlement Class.
1.5
“CAFA Notice” means a notice of the proposed Settlement in compliance with
the requirements of the Class Action Fairness Act, 28 U.S.C. § 1711, et seq. (“CAFA”), to be
served upon the appropriate State official of each State in which a Settlement Class Member
resides and the Attorney General of the United States.
1.6
“Claims Administrator” means Gilardi & Co. LLC, the firm to be retained by Co-
Lead Counsel, subject to Court approval, which shall provide all notices approved by the Court,
process Proof of Claim Forms and administer the Settlement Fund and the distribution of the Net
Settlement Fund to Authorized Claimants in accordance with the terms and conditions set forth
in this Stipulation, the Plan of Allocation, the Class Distribution Order and any other orders of
the Court relating thereto.
1.7
“Class Distribution Order” means an order of the Court approving the Claims
Administrator’s administrative determinations concerning the acceptance and rejection of the
claims submitted in accordance with this Stipulation and approving any fees and expenses not
previously applied for, including the fees and expenses of the Claims Administrator, and, if the
Effective Date has occurred, directing payment of the Net Settlement Fund to approved
Authorized Claimants.
1.8
“Co-Lead Counsel” means, collectively, The Rosen Law Firm, P.A. and Glancy
Prongay & Murray LLP (the successor firm to Glancy Binkow & Goldberg LLP).
1.9
“Controlling Interest” means an interest in a Person where such interest is
sufficient to allow the interest holder directly or indirectly to direct or cause the direction of the
14
management and policies of the Person, whether through ownership of the voting shares, by
contract or otherwise.
1.10
“Court” means the United States District Court for the Southern District of New
York in which the Action is pending.
1.11
“Defendants” means, collectively, Macquarie and the Non-Settling Defendants.
1.12
“Effective Date” with respect to the Settlement means the first date upon which
all of the events and conditions specified in ¶ 8.1 of this Stipulation have occurred and been met
(or have been waived in a writing signed by the party that is waiving the event and condition).
1.13
“Escrow Account” means the interest-bearing account maintained by the Escrow
Agent to hold the Settlement Fund, which account, subject to the Court’s supervisory authority,
shall be under the control of Co-Lead Counsel and which is to be managed consistent with the
provisions of this Stipulation and any orders of the Court relating thereto.
1.14
“Escrow Agent” means The Huntington National Bank, the financial institution
designated by Co-Lead Counsel to receive, hold, invest and disburse the Settlement Amount
pursuant to the terms of this Stipulation and the Escrow Agreement.
1.15
“Escrow Agreement” means the agreement between Co-Lead Counsel and the
Escrow Agent setting forth the terms under which the Escrow Agent shall maintain the Escrow
Account in accordance with the terms and conditions of the Stipulation, the Escrow Agreement
and any orders of the Court relating thereto.
1.16
“Final Order and Judgment” means the order to be entered in the Action if the
Court approves the Settlement, and which shall be substantially in the form attached hereto as
Exhibit B.
15
1.17
“Litigation Expenses” means costs and expenses incurred by Plaintiffs’ Counsel
in connection with commencing, prosecuting and resolving the Action for which Co-Lead
Counsel intends to apply to the Court for reimbursement and which are to be paid from the
Settlement Fund, and not by any of the Released Defendant Persons.
1.18
“Macquarie’s Counsel” means the law firm of Weil, Gotshal & Manges LLP.
1.19
“Net Settlement Fund” means the Settlement Fund less: (a) any Court approved
attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel; (b) Notice and Administration
Expenses; (c) any required Taxes; (d) any Court approved Reimbursement Award to Lead
Plaintiffs; and (e) any other fees or expenses that are allowed under this Stipulation and approved
by the Court incurred in connection with the administration of the Settlement.
1.20
“Non-Settling Defendants” means any Person, other than Macquarie, who: (a)
currently is a named defendant in the Action; and/or (b) was previously a named defendant in the
Action but was dismissed, or is in the process of being dismissed, for any reason, whether by
settlement, judgment or otherwise. “Non-Settling Defendants” specifically includes, without
limitation, Puda, the Auditor Defendants, Brean, the Defaulted Defendants and the U.S. Director
Defendants.
1.21
“Notice and Administration Expenses” means all costs, fees and expenses
incurred by the Claims Administrator in connection with: (a) the preparation, printing and
mailing of the Notice, publishing the Summary Notice; and (b) administering the Settlement
including administering the claims process, reviewing and processing claims, managing the
Escrow Account, allocating and distributing the Net Settlement Fund to Authorized Claimants,
applying the Court-approved plan of allocation, corresponding with Settlement Class Members
and the fees and costs of the Claims Administrator and the Escrow Agent.
16
1.22
Settlements of Claims Against Macquarie and Brean, and (c) Hearing on Proposed Settlements,
Plan of Allocation and Motion for Attorneys’ Fees and Reimbursement of Litigation Expenses to
Plaintiffs’ Counsel, that is to be sent to Settlement Class Members, and which shall be
substantially in the form attached hereto as Exhibit A-1.
1.23
1.24
“Plaintiffs’ Counsel” means, collectively, Co-Lead Counsel and Additional
Plaintiffs’ Counsel.
1.25
“Plaintiffs” means, collectively, Lead Plaintiffs and the Additional Named
Plaintiffs.
1.26
“Plan of Allocation” means the proposed plan that Co-Lead Counsel will submit
to the Court for approval upon notice to the Settlement Class to be utilized for distribution of the
Net Settlement Fund to Authorized Claimants in a manner consistent with the terms of this
Stipulation that will be contained in the Notice, or such other plan of allocation as the Court may
approve.
1.27
“Preliminary Approval Order” means the proposed order to be entered by the
Court preliminarily approving the Settlement and directing notice thereof to the Settlement
Class, and which shall be substantially in the form attached hereto as Exhibit A.
17
1.28
“Proof of Claim Form” or “Claim Form” means the proof of claim form and
release to be mailed to Settlement Class Members, as approved by the Court, which Settlement
Class Members shall be required to complete and return to the Claims Administrator in order to
substantiate their entitlement to a share of the Net Settlement Fund, and which shall be
1.29
“Puda” means Puda Coal, Inc. and its predecessors and subsidiaries, including,
but not limited to, Shanxi Puda Coal Group Co., Ltd. (“Shanxi Coal”).
1.30
“Reimbursement Award” means the reimbursement award to Lead Plaintiffs that
Co-Lead Counsel intends to apply to the Court for and which is to be paid from the Settlement
Fund, and not by any of the Released Defendant Persons.
1.31
“Released Claims” means, collectively, all of the Released Plaintiff Claims and
all of the Released Defendant Claims.
1.32
“Released Defendant Claims” means any and all claims and causes of action of
every nature and description, whether such are known or Unknown (as that term is employed and
defined in ¶ 5.4 below), whether arising under federal, state, common or foreign law, that were
or could have been asserted by any or all of the Releasing Defendant Persons against any or all
of the Released Plaintiff Persons and that arise out of or relate in any way to the institution,
prosecution or settlement of the Action, except for claims relating to the enforcement of the
Settlement. Nothing in this definition of “Released Defendant Claims” is intended to, or should
be construed as prohibiting or limiting Macquarie from: (a) proceeding with any claims asserted
by Macquarie in Macquarie Capital (USA) Inc. v. Morrison & Foerster LLP, Index No.
650988/2015 (Supreme Court of the State of New York, New York County); (b) asserting
against a Person other than a Released Plaintiff Person a claim relating to, or arising out of, the
18
December Offering or Puda that is not precluded by ¶ 7.3(b) hereof, and/or (c) from taking any
action to enforce or effectuate the terms and provisions of this Stipulation, the Settlement, the
Preliminary Approval Order and/or the Final Order and Judgment.
1.33
“Released Defendant Persons” means each and all of the following: (a) Macquarie
and each of its respective past and/or present successors-in-interest, predecessors, affiliates,
subsidiaries, general partners, divisions, groups, parents, limited partners and any Person in
which any of these Persons has a Controlling Interest (the “Defendant Releasees”); and (b) each
and every one of the Defendant Releasees’ respective past and/or present employees, officers,
partners, directors, executives, representatives, agents, managing directors, consultants
(including Kroll), counsel (including Morrison & Foerster LLP), insurers, reinsurers, principals,
members, managers, families, stockholders, heirs, executors, trustees, personal representatives,
estates, administrators, predecessors, divisions, successors and assigns in their capacities as such.
Nothing in this definition of “Released Defendant Persons” is intended to release any claims
asserted in the Action by Plaintiffs (or any other Settlement Class Member) against any NonSettling Defendant.
1.34
“Released Persons” means, collectively, all of the Released Plaintiff Persons and
all of the Released Defendant Persons.
1.35
“Released Plaintiff Claims” means: (a) any and all claims, demands, rights,
liabilities, losses, duties, damages, suits, actions, causes of action, potential actions, obligations,
interests, debts, judgments, penalties, sanctions, fees, decrees, matters, issues and controversies
of any kind, nature and description whatsoever; (b) whether disclosed or undisclosed, accrued or
unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, perfected
or not perfected, choate or inchoate, suspected or unsuspected, liquidated or not liquidated, fixed
19
or contingent, ripened or unripened, including both known claims and any Unknown Claims (as
that term is employed and defined in ¶ 5.4 below); (c) whether direct or derivative, whether at
law or in equity, based upon any legal or equitable theory, whether contractual, common law or
statutory, whether arising under federal, state, common or foreign law, whether based on
allegedly intentional, negligent, reckless or otherwise improper conduct; (d) that previously
existed, currently exist, exist as of the date of the Court’s approval of the Settlement or that may
arise in the future; (e) that are, were or could have been asserted by any of the Releasing Plaintiff
Persons against any or all of the Released Defendant Persons in the Action, in any other federal
or state court, tribunal, arbitration, proceeding, administrative agency or other forum in the
United States or elsewhere, whether asserted as claims, cross-claims, counterclaims or thirdparty claims; (f) that are, in any way, based upon, arise out of, relate to, concern, implicate or
involve (in whole or in part) either: (i) any of the facts, matters, occurrences, conduct, activities,
securities offerings (including the December Offering), behavior, allegations, representations,
omissions, events, transactions, decisions, actions (or failures to act) or any series thereof, that
were alleged, asserted, raised, set forth, referred to, made, mentioned, claimed, embraced,
involved in, referred to, in whole or in part, in the Action (including, without limitation, in the
Complaint or in any of the complaints filed in the Individual Actions), or (ii) the purchase,
acquisition, disposition or sale of, or other transaction in, any and all publicly-traded Puda
common stock (including, but not limited to, Puda call options or Puda put options) during the
Settlement Class Period, including without limitation, claims that arise out of or relate to any
disclosures, SEC filings, press releases, registration statements, offering memoranda, other
public statements by Puda during the Settlement Class Period or otherwise made in connection
with the December Offering; provided, however, that nothing in this definition or Stipulation
20
shall prevent any Person from seeking to obtain a recovery through the Fair Fund established in
connection with the separate proceeding by the SEC captioned SEC v. Macquarie Capital (USA)
Inc., C.A. No. 15-CV-02304 (S.D.N.Y.). For avoidance of doubt, nothing in this definition of
“Released Plaintiff Claims” is intended to release any of the claims that have already been
asserted against the already named defendants in the action captioned In re Puda Coal, Inc.
Stockholders Litigation, C.A. 6476-CB, currently pending in the Delaware Court of Chancery.
1.36
“Released Plaintiff Persons” means, collectively, Plaintiffs, Plaintiffs’ Counsel,
each and every Settlement Class Member, any other counsel any Settlement Class Member
retained or employed in this Action (including those prior to the consolidation of the individual
cases) and each of their past and/or present employees, officers, partners, directors, managing
directors, representatives, affiliates, agents, attorneys, insurers, reinsurers, principals, members,
managers, families, stockholders, heirs, executors, trustees, personal representatives, estates,
administrators, predecessors, divisions, successors and assigns in their capacities as such.
1.37
“Releases” means all of the releases and liability protections set forth in Section 5
of the Stipulation, as well as those set forth in ¶¶ 7.2, 7.4, 7.5 and 7.6.
1.38
“Releasing Defendant Persons” means Macquarie, and each of its successors in
interests, predecessors, parents, divisions, groups, assigns, affiliates, and subsidiaries.
1.39
“Releasing Persons” means, collectively, all of the Releasing Plaintiff Persons and
all of the Releasing Defendant Persons.
1.40
“Releasing Plaintiff Persons” means Plaintiffs and each and every Settlement
Class Member, on behalf of themselves and each and all of their respective successors in interest,
predecessors, representatives, trustees, counsel, executors, affiliates, subsidiaries, immediate
family, administrators, agents, heirs, estates, assigns or transferees, immediate and remote, in
21
their capacities as such, and any other Person who has the right, ability, standing or capacity to
assert, prosecute or maintain on behalf of any Settlement Class Member any of the Released
Plaintiff Claims (or to obtain the proceeds of any recovery therefrom), whether in whole or in
part. A Person is a “Releasing Plaintiff Person” regardless of whether or not that Person: (a)
actually submits a Claim Form; (b) seeks or obtains a distribution from the Net Settlement Fund;
(c) is entitled to receive such a distribution or payment under the Plan of Allocation; and/or (d)
has objected to the Settlement, the Plan of Allocation, the application for an award of attorneys’
fees and reimbursement of Litigation Expenses to Plaintiffs’ Counsel or the application for a
Reimbursement Award to Lead Plaintiffs.
1.41
“Settlement Amount” means seven million four hundred thousand dollars
($7,4000,000).
1.42
otherwise acquired call options on Puda common stock, and/or (c) sold or otherwise disposed of
22
1.43
“Settlement Class Member” or “Class Member” means any Person that falls
within the definition of the Settlement Class as defined in ¶ 1.42 and who or which is not
excluded therefrom.
1.44
“Settlement Class Period” or “Class Period” means the period beginning on
December 8, 2010 through and including April 11, 2011.
1.45
“Settlement Fund” means the Settlement Amount (together with all interest
earned thereon) to be held in the Escrow Account pursuant to, and in accordance with, the
1.46
“Settlement Hearing” means the final hearing to be held by the Court to
determine, among other things, whether the Settlement is fair, reasonable and adequate and in the
best interests of the Settlement Class and should be approved as described in the Notice and the
Preliminary Approval Order.
1.47
“Settlement” means the settlement between the Settling Parties contemplated by,
and memorialized in, this Stipulation on the terms and conditions contained herein.
1.48
“Settling Parties” means, collectively, Macquarie and the Plaintiffs on behalf of
themselves and each of the other Settlement Class Members.
1.49
“Summary Notice” means the summary notice of both the proposed Settlement
and the proposed Brean Settlement to be published as set forth in the Preliminary Approval
Order and which shall be substantially in the form attached hereto as Exhibit A-3.
1.50
“Supplemental Agreement” is defined in ¶ 9.3 of this Stipulation.
23
1.51
“Taxes” means Taxes” means all taxes (including any estimated taxes, interest or
penalties) arising with respect to the income earned by the Settlement Fund. For purposes of ¶
2.7, Taxes includes the expenses and costs incurred in connection with the calculation and
payment of taxes or the preparation of tax returns and related documents including, without
limitation, expenses of tax attorneys and/or accountants and mailing and distribution costs
relating to filing (or failing to file) the returns described therein.
1.52
2.
“Unknown Claims” shall have the meaning as set forth in ¶ 5.4 of this Stipulation.
Payment Of The Settlement Amount And The Obligations Of The Released
Defendant Persons
2.1
In consideration of the full and complete settlement of all claims asserted against
them in this Action and in consideration of the Releases provided for herein, Macquarie shall
pay, or cause to be paid on its behalf, the Settlement Amount by check or wire transfer into the
Escrow Account by the later of: (i) ten (10 ) business days after the Preliminary Approval Order
is entered by the Court, and (ii) ten (10) business days after Co-Lead Counsel provides to
Macquarie’s Counsel wire transfer, check mailing instructions and such other account
information necessary for this payment to be made.
2.2
Other than the obligation of Macquarie to pay the Settlement Amount consistent
with the terms of this Stipulation, and as otherwise expressly set forth in this Stipulation, the
Released Defendant Persons shall have no further or other responsibility, liability or obligations
to Plaintiffs or any other Released Plaintiff Person (including any of their counsel) with respect
to the Released Plaintiff Claims. Except as otherwise expressly provided herein, the Released
Defendant Persons shall have no obligation to pay for, responsibility of any kind for, or any
liability whatsoever to any Person in connection with, any of the following: (a) the
administration of the Settlement; (b) the Plan of Allocation and its interpretation, administration
24
and implementation; (c) the allocation, disbursement, administration or distribution of the Net
Settlement Fund; (d) the dissemination of the Notice, Proof of Claim Form, and Summary Notice
to the Settlement Class Members; (e) the processing, reviewing, challenging or determination of
claims; (f) any payment of attorneys’ fees or Litigation Expenses to Plaintiffs’ Counsel that may
be awarded by the Court; (g) any fee and/or expense allocation among Plaintiffs’ Counsel and/or
any other Person who may assert a claim thereto; (h) paying any Taxes due; (i) investing the
Settlement Amount; (j) the Settlement Fund, including its management and administration; (k)
establishing, administering or maintaining the Escrow Account; (l) filing elections or other
required statements or tax returns (or paying or withholding the costs associated herewith) with
respect to any Taxes; (m) any tax liability that a Settlement Class Member may incur as a result
of the Settlement; (n) any Reimbursement Award that may be ordered by the Court; and/or (o)
the Brean Settlement.
2.3
The Settlement Fund shall be applied as follows and only as follows and then only
in accordance with the provisions of this Stipulation and any orders of the Court:
(a)
to pay the Notice and Administration Expenses pursuant to, and in
accordance with, the terms and conditions of this Stipulation and any orders of the Court relating
thereto;
(b)
to pay any attorneys’ fees and Litigation Expenses awarded by the Court
to Plaintiffs’ Counsel pursuant to, and in accordance with, the terms and conditions set forth in
Section 6 herein;
(c)
to pay any Reimbursement Award that may be approved by the Court to
Lead Plaintiffs;
(d)
to pay any other fees, costs and expenses approved by the Court;
25
(e)
to pay the Taxes pursuant to, and in accordance with, the terms and
conditions set forth in ¶ 2.7 herein; and
(f)
to distribute the balance of the Settlement Fund (the “Net Settlement
Fund”) to Authorized Claimants following the Effective Date pursuant to, and in accordance
with, the terms and conditions set forth in this Stipulation (as provided in the Court-approved
Plan of Allocation) and the Class Distribution Order.
2.4
Except as otherwise provided, the Settlement Fund and Net Settlement Fund shall
remain in the Escrow Account until the Effective Date unless the Stipulation is terminated
pursuant to Section 9 herein, the Settlement is not approved and/or the Effective Date otherwise
does not occur. After the Effective Date, the Net Settlement Fund shall be distributed to
Authorized Claimants by the Claims Administrator pursuant to, and in accordance with, the
Class Distribution Order after all claims have been processed and all claimants whose claims
have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to communicate with the Claims Administrator concerning such rejection or
disallowance as provided for herein.
2.5
After the Effective Date, Co-Lead Counsel may pay from the Settlement Fund, at
the appropriate time and only as expressly permitted herein, all reasonable costs and expenses
associated with the administration of the Settlement, including, without limitation, the actual
costs of identifying and notifying Settlement Class Members, printing and mailing the Notice,
publishing the Summary Notice, reimbursing nominee owners for forwarding the Notice to their
beneficial owners, the administration expenses incurred and fees charged by the Claims
Administrator and any other Notice and Administration Expenses. Notwithstanding the fact that
the Effective Date has not yet occurred, Co-Lead Counsel may pay from the Escrow Account the
26
Notice and Administration Expenses reasonably necessary and actually incurred, up to $100,000
as well as Taxes without further order of the Court. No other amounts shall be disbursed from
the Escrow Fund prior to the Effective Date, except upon written order of the Court following
notice to Macquarie’s Counsel.
2.6
All funds held by the Escrow Agent shall be deemed and considered to be in the
custody of the Court and shall remain subject to the jurisdiction of the Court until such time as
the funds are distributed or returned pursuant to this Stipulation and/or further orders of the
Court. Subject to the Court’s jurisdiction, the Settlement Fund shall be maintained by the
Escrow Agent in a manner consistent with the provisions of this Stipulation and the Escrow
Agreement. All interest earned on the Settlement Fund shall be for the benefit of the Settlement
Class if the Effective Date occurs.
2.7
The following provisions shall govern the administration of the Escrow Account:
(g)
the Escrow Agent shall maintain the Settlement Fund in a segregated
escrow account not available to creditors of the Escrow Agent or with respect to residual
amounts of less than $100,000 in an account as set forth in subparagraph (b) below and shall not
disburse any amounts therefrom except as authorized by this Stipulation and/or any orders of the
Court;
(h)
The Escrow Agent will invest the Settlement Fund only in instruments
backed by the full faith and credit of the United States Government or fully insured by the
United States Government or an agency thereof. The Escrow Agent shall collect and reinvest all
interest and proceeds accrued thereon and will reinvest the proceeds as they mature in similar
instruments at their then-current market rates. Any interest that accrues on the amount held in
escrow will become part of the Settlement Fund. Any residual cash balances of less than
27
$100,000 may be invested, without further approval from Lead Plaintiffs and Co-Lead Counsel,
in an interest-bearing account insured by the FDIC or money market mutual funds comprised
exclusively of investments secured by the full faith and credit of the United States Government
or fully insured by the United States Government;
(i)
all payments for Notice and Administration Expenses, Taxes, the
Reimbursement Award and any attorneys’ fees and Litigation Expenses awarded by the Court
shall be paid, only at the appropriate time and as permitted herein and/or by Order of the Court,
from the Settlement Fund and not by Plaintiffs, Plaintiffs’ Counsel, the Settlement Class
Members, Macquarie, the other Released Defendant Persons or Macquarie’s Counsel. There
shall be no liability on the part of any Settlement Class Member or Released Defendant Persons
(or any of their counsel) for any such fees, costs and/or expenses;
(j)
Lead Plaintiffs intend to structure the Escrow Account so that it will
qualify as a “Qualified Settlement Fund” within the meaning of Section 468B of the Internal
Revenue Code and the Regulations promulgated thereunder, including Treasury Regulation
§ 1.468B-1. Co-Lead Counsel shall act as administrators of the Qualified Settlement Fund
within the meaning of Treasury Regulation § 1.468B-2(k)(3).
Co-Lead Counsel, as
administrators of the Settlement Fund within the meaning of Treasury Regulation § 1.468B2(k)(3), shall timely make such elections as are necessary or advisable to carry out this
subparagraph, including the relation-back election (as defined in Treasury Regulation § 1.468B1(j)) to cause the Qualified Settlement Fund to come into existence at the earliest permitted date.
(k)
all Taxes shall be paid out of the Settlement Fund. Co-Lead Counsel or its
agents, as administrators of the Settlement Fund within the meaning of Treasury Regulation
§ 1.468B-2(k)(3), shall be responsible for timely filing tax returns and any relevant tax filings
28
and documentation relating thereto for the Settlement Fund and timely paying from the
Settlement Fund any Taxes owed with respect to the Settlement Fund. Notwithstanding anything
in this Stipulation to the contrary, the Claims Administrator is to withhold from distribution to
Settlement Class Members any funds necessary to pay such amounts, including the establishment
of adequate reserves for any Taxes, and any amounts required to be withheld under Treasury
Regulation § 1.468B-2(1)(2);
(l)
any tax returns prepared for the Settlement Fund (as well as the election
set forth therein) shall be consistent with the previous subparagraph, and in all events shall
reflect that all Taxes (including any interest or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided herein. Macquarie (and the other
Released Defendant Persons) shall have no liability or responsibility for any Taxes. Macquarie
(and the other Released Defendant Persons) shall notify Co-Lead Counsel promptly if they
receive any notice of any claim for Taxes relating to the Settlement Fund; and
(m)
The Settling Parties hereto agree to cooperate with the Escrow Agent, each
other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the
provisions of this Paragraph.
3.
Preliminary Court Approval And Notice To Settlement Class Members
3.1
As soon as practicable following execution of this Stipulation, Lead Plaintiffs
shall apply to the Court for approval of the Preliminary Approval Order (which shall be
substantially in the form attached as Exhibit A to this Stipulation), inter alia: (a) requesting
preliminary approval of the Settlement as set forth in this Stipulation; (b) requesting approval for
the mailing of the Notice and publication of the Summary Notice; (c) setting forth the procedures
by which Settlement Class Members may object to the Settlement, seek exclusion therefrom or
file a Proof of Claim Form to obtain a distribution from the Net Settlement Fund; (d) setting a
29
date for the Settlement Hearing, to be held after the Notice is mailed and the Summary Notice is
published, to consider whether to approve the Settlement and whether the Final Order and
Judgment (substantially in the form of Exhibit B attached hereto) should be entered into, inter
alia, dismissing the Action with prejudice as against Macquarie and containing the Releases set
forth herein. Counsel for Macquarie shall not oppose the application, provided it is otherwise
consistent with the terms of this Stipulation, and shall cooperate in good faith with the Lead
Plaintiffs in connection therewith (Co-Lead Counsel shall provide drafts of the Notice, Summary
Notice and Proof of Claim Form to Macquarie’s Counsel for its review two (2) business days
prior to their dissemination).
3.2
If the Preliminary Approval Order is granted by the Court, Co-Lead Counsel will
cause the Claims Administrator, on a schedule to be set by the Court, to: (a) mail the Notice to
those members of the Settlement Class whose addresses may be identified through reasonable
effort; (b) publish the Summary Notice on one occasion in the national edition of Investors’
Business Daily and via PR Newswire within ten (10) days of the mailing of the Notice; and (c)
otherwise provide such notice in the form or manner as may be ordered by the Court.
3.3
From the date of this Stipulation through and including final approval of the
Settlement by the Court, including the final dismissal of the Action, Plaintiffs and their counsel
agree that, other than for those matters necessary to implement and effectuate the Settlement
itself: (a) to stay the Action as it relates to their claims against Macquarie; (b) not to take any
steps to prosecute any of the Released Plaintiff Claims against any of the Released Defendant
Persons; and/or (c) not to initiate or participate in any proceedings arising out of, based upon or
concerning any of the Released Plaintiff Claims against any of the Released Defendant Persons.
Lead Plaintiffs, and their counsel, shall also cooperate, to the extent reasonably necessary, with
30
any efforts by Macquarie to prevent, stay, seek dismissal of, or oppose entry of any interim or
final relief in favor of any Settlement Class Member in any litigation or proceeding that asserts
any of the Released Plaintiff Claims against any of the Released Defendant Persons or which
challenges the Settlement (whether or not such matter has previously been filed). If any action is
filed or prosecuted in any court asserting any of the Released Plaintiff Claims against any of the
Released Defendant Person, Plaintiffs and their counsel shall cooperate, to the extent reasonably
necessary, with Macquarie’s efforts to obtain the dismissal or withdrawal of such litigation,
including where appropriate joining in any motion to dismiss or demurrer to such litigation;
provided, however, that Plaintiffs’ obligations under this Paragraph shall end if the Court does
not approve the Settlement or if the Effective Date otherwise does not occur.
4.
Administration Of The Settlement Fund And Distribution Of The Settlement Fund
To Authorized Claimants
4.1
Co-Lead Counsel is responsible for disseminating Notice of the Settlement and
supervising the administration of the Settlement and the distribution of the Net Settlement Fund,
subject to the jurisdiction of the Court and in the manner provided for herein. The Claims
Administrator shall assist Co-Lead Counsel in connection with the administration of the
Settlement, including: (a) the printing, labeling and mailing of the Notice and the publication of
the Summary Notice; (b) the administration, processing and determination of claims; (c) the
distribution of the Net Settlement Fund; and (d) all other appropriate tasks to be performed to
effectuate the Settlement as directed by Co-Lead Counsel.
4.2
The distribution of the Net Settlement Fund to Settlement Class Members shall be
subject to the Plan of Allocation, which Lead Plaintiffs shall propose, subject to approval by the
Court following notice to the Settlement Class Members. Macquarie shall not take any position
on the Plan of Allocation, provided it is not inconsistent with the terms of this Stipulation.
31
4.3
The Plan of Allocation is not a necessary term or part of the Settlement or this
Stipulation and it is not a condition of this Stipulation (or to entry of the Final Order and
Judgment) that any particular plan of allocation be approved by the Court. The Court is to
consider the Plan of Allocation separately from, and independently of, the Court’s consideration
of the question of whether the proposed Settlement is fair, reasonable and adequate and in the
best interests of the Settlement Class.
Any orders or proceedings relating to the Plan of
Allocation (or any other such plan of allocation as may be approved by the Court) as well as any
appeal therefrom (or appellate ruling) shall not: (a) operate to modify, terminate or cancel this
Settlement; (b) affect or delay the validity or finality of the Final Order and Judgment or any
other orders entered by the Court giving effect to this Stipulation; (c) affect or delay the Effective
Date; (d) provide any ground or otherwise permit any Person (including Plaintiffs and the other
Settlement Class Members), or any of their counsel, to cancel, terminate or withdraw from the
Stipulation or the Settlement; and/or (e) affect or delay the validity of the Settlement.
4.4
Each Settlement Class Member who desires to share in the Net Settlement Fund is
a “Claimant” and must submit a fully completed and signed Proof of Claim Form together with
the documentation required thereby to the Claims Administrator in the manner, at the address
and by the deadline stated on the Proof of Claim Form and the Notice unless otherwise ordered
by the Court. Each Settlement Class Member who submits a valid, timely Proof of Claim Form
that is accepted in whole or in part is an “Authorized Claimant.” Each Authorized Claimant that
is determined to have a “Recognized Loss” (as that term will be defined in the Plan of
Allocation) shall be allocated a pro rata share of the Net Settlement Fund based on the amount
of his, her or its “Recognized Loss” in accordance with the Court-approved Plan of Allocation if
their claim is accepted for payment by the Court.
32
4.5
For purposes of determining the extent, if any, to which a Settlement Class
Member shall be entitled to be treated as an Authorized Claimant, the following conditions shall
apply:
(n)
each Settlement Class Member shall be required to submit a Proof of
Claim Form signed under penalty of perjury and supported by such documents as are designated
therein, including proof of the Claimant’s loss or such other documents or proof as Co-Lead
Counsel at their discretion may deem acceptable subject to the approval of the Court;
(o)
all Proof of Claim Forms must be submitted by the date specified thereon
unless such period is extended by the Court. Any Settlement Class Member who fails to do so
will not be entitled to receive any of the proceeds of the Settlement Fund (unless, by order of the
Court, a later submitted Proof of Claim Form by such Settlement Class Member is approved),
but shall in all other respects be bound by the terms of this Stipulation and the Final Order and
Judgment. A Proof of Claim Form shall be deemed to have been submitted when posted, if
received with a postmark indicated on the envelope and if mailed first-class postage prepaid and
addressed in accordance with the instructions thereon, provided that it is received before the
motion for the Class Distribution Order is filed. In all other cases, the Proof of Claim Form shall
be deemed to have been submitted when actually received by the Claims Administrator;
(p)
each Proof of Claim Form shall be submitted to and reviewed by the
Claims Administrator who shall determine in accordance with this Stipulation and under the
supervision of Co-Lead Counsel the extent, if any, to which each claim shall be allowed subject
to review by the Court pursuant to ¶ 4.6 below;
(q)
a Proof of Claim Form that does not meet the submission requirements
may be rejected. Prior to rejection of a Proof of Claim Form, the Claims Administrator shall
33
communicate with the Claimant in order to afford the Claimant the opportunity to remedy any
curable deficiencies contained therein. The Claims Administrator under Co-Lead Counsel’s
supervision shall notify in a timely fashion and in writing all Claimants whose claim they
propose to reject in whole or in part, setting forth the reasons therefor and indicating that such
Person has the right to judicial review by the Court if such Claimant so desires and if such
Claimant complies with the requirements of ¶ 4.5 (e) below; and
(r)
if any Claimant who is notified by the Claims Administrator that the
Claims Administrator intends to reject his, her or its claim in whole or in part desires to contest
such rejection, such Claimant must within twenty (20) calendar days after the date of mailing of
the Notice required in ¶ 3.2 above serve upon the Claims Administrator a notice and statement of
reasons indicating the Claimant’s grounds for contesting the rejection along with any supporting
documentation and specifically requesting a review thereof by the Court. If the dispute cannot
be resolved to the satisfaction of the Claimant, then Co-Lead Counsel shall present the claim for
review to the Court.
4.6
Co-Lead Counsel will apply to the Court, on notice to Macquarie’s Counsel, for a
Class Distribution Order approving the Claims Administrator’s administrative determinations
concerning the acceptance and rejection of the claims submitted and approving any fees and
expenses not previously applied for (including the fees and expenses of the Claims
Administrator) and, if the Effective Date has occurred, directing distribution of the Net
Settlement Fund to Authorized Claimants. If any funds remain in the Net Settlement Fund by
reason of uncashed distribution checks or otherwise, then, after the Claims Administrator has
made reasonable and diligent efforts to have Settlement Class Members who are entitled to
34
participate in the distribution of the Net Settlement Fund cash their distributions, any balance
remaining in the Net Settlement Fund shall be distributed as set forth in the Plan of Allocation.
4.7
This is not a claims-made settlement. As of the Effective Date, Macquarie shall
not have any right to the return of the Settlement Fund or any portion thereof irrespective of the
number of Proof of Claim Forms filed, and/or the amounts to be paid to Authorized Claimants
from the Net Settlement Fund.
4.8
By submitting a Proof of Claim Form, each Settlement Class Member shall be
deemed to have submitted to the jurisdiction of the Court with respect to his, her or its claim and
this Settlement, and the claim will be subject to investigation and discovery under the Federal
Rules of Civil Procedure, provided that such investigation and discovery shall be limited to that
Claimant’s status as a Settlement Class Member and the validity and amount of the claim. In
connection with the processing of the Proof of Claim Forms, no discovery shall be allowed on
the merits of the Action or of the Settlement.
4.9
Payment pursuant to the terms of this Stipulation shall be deemed final and
conclusive against Plaintiffs and all other Settlement Class Members. Regardless of whether
such person submits a Proof of Claim Form, seeks or obtains a payment or distribution from the
Settlement Fund or is entitled to a payment under the Plan of Allocation): any Settlement Class
Member: (a) who does not timely submit a valid Proof of Claim Form or has its claim rejected or
not otherwise approved by the Court, (b) shall be deemed to have waived its right to share in the
Settlement Fund, and shall forever be barred from participating in distributions therefrom, but
(c) otherwise shall be bound by all of the terms of the Settlement and this Stipulation and all
determinations, judgments and orders in the Action relating thereto, including the terms of the
Final Order and Judgment to be entered in the Action (including the Releases provided for
35
therein, whether favorable or unfavorable to the Settlement Class), and will be barred from
bringing any action against the Released Defendant Persons concerning the Released Plaintiff
Claims. Any Person that is not a Settlement Class Member (including, without limitation, those
who validly exclude themselves from the Settlement Class) shall not have any right to any share
of the Net Settlement Fund or to receive distributions therefrom.
4.10
A Settlement Class Member seeking exclusion from the Settlement Class shall be
requested to provide the information identified in the Notice to the Claims Administrator (in the
manner and on the schedule set forth therein and in the Preliminary Approval Order), including,
without limitation, the following: (a) name, address, telephone number; (b) Social Security
Number or Taxpayer Identification Number; and (c) a list stating the number of shares of Puda
common stock purchased and sold during the Settlement Class Period, and the dates and prices
of each such purchase and sale. Any request for exclusion must also be signed by the Person
requesting exclusion. All Persons who submit valid and timely requests for exclusion in the
manner forth in the Notice shall have no rights under the Stipulation or the Settlement and shall
not be bound by the Final Order and Judgment. Unless otherwise ordered by the Court, any
herein.
4.11
No Person shall have any claim against Plaintiffs, Plaintiffs’ Counsel, Macquarie,
the other Released Defendant Persons or Macquarie’s Counsel based on the administration of the
Settlement, including, without limitation, the processing of claims and distributions made in
accordance with this Stipulation, the Settlement, the Plan of Allocation and/or the
implementation of the Class Distribution Order.
36
4.12
All proceedings with respect to the administration, processing and determination
of claims described in this Stipulation and the determination of all controversies relating thereto,
including disputed questions of law and fact with respect to the validity of claims, shall be
subject to the jurisdiction of the Court.
5.
The Releases
5.1
The obligations incurred pursuant to this Stipulation shall be in full and final
dismissal, discharge, settlement and disposition of: (a) the Action with respect to Macquarie; and
(b) each and every one of the Released Claims by each and every one of the Releasing Persons
against each and every one of the Released Persons.
5.2
As of the Effective Date, each and every one of the Releasing Plaintiff Persons
(regardless of whether or not that Person actually submits a Claim Form, seeks or obtains a
distribution from the Net Settlement Fund, is entitled to receive such a distribution under the
Plan of Allocation or has objected to the Settlement, the Plan of Allocation, the application for an
award of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel and/or the application for
a Reimbursement Award to Lead Plaintiffs) shall: (a) have, and by operation of law and the Final
Order and Judgment be deemed to have, completely, fully, finally, and forever dismissed,
released, relinquished and discharged with prejudice each and every one of the Released
Defendant Persons from each and every one of the Released Plaintiff Claims; (b) forever and
permanently be barred and enjoined by operation of law and the Final Order and Judgment from
filing, commencing, intervening in, participating in (as a class member or otherwise), instituting,
maintaining, prosecuting, seeking relief in (including filing an application or motion for
preliminary or permanent injunctive relief) or receiving any recovery, remedy, benefits or other
relief from any other lawsuit, action, arbitration, other proceeding or order in any jurisdiction
that asserts, is based on, arises from or relates in any way to any or all of the Released Plaintiff
37
Claims against any or all of the Released Defendant Persons; and (c) have, and by operation of
law and the Final Order and Judgment be deemed to have, covenanted not to sue any or all of the
Released Defendant Persons with respect to each and every one of the Released Plaintiff Claims.
Nothing in this Paragraph (or any other provision of this Stipulation) however: (a) is intended to
release any claims asserted by Plaintiffs (or any other Settlement Class Member) against any of
the Non-Settling Defendants in the Action; (b) is intended to release any claims asserted by
Plaintiffs (or any other Settlement Class Member) in the action captioned In re Puda Coal, Inc.
Stockholders Litigation, C.A. 6476-CB, currently pending in the Delaware Court of Chancery; or
(c) shall prohibit an eligible Settlement Class Member from seeking to obtain a recovery through
the Fair Fund established in connection with the separate proceeding by the SEC captioned SEC
v. Macquarie Capital (USA) Inc., C.A. No. 15-CV-02304 (S.D.N.Y.).
5.3
As of the Effective Date, each and every one of the Releasing Defendant Persons
shall: (a) have, and by operation of law and the Final Order and Judgment be deemed to have,
completely, fully, finally, and forever dismissed, released, relinquished and discharged with
prejudice each and every one of the Released Plaintiff Persons from each and every one of the
Released Defendant Claims; (b) forever and permanently be barred and enjoined by operation of
law and the Final Order and Judgment from filing, commencing, intervening in, participating in
(as a class member or otherwise), instituting, maintaining, prosecuting, seeking relief in
(including filing an application or motion for preliminary or permanent injunctive relief) or
receiving any recovery, remedy, benefits or other relief from any other lawsuit, action,
arbitration, other proceeding or order in any jurisdiction that asserts, is based on, arises from or
relates in any way to any or all of the Released Defendant Claims against any or all of the
Released Plaintiff Persons; and (c) have, and by operation of law and the Final Order and
38
Judgment be deemed to have, covenanted not to sue any or all of the Released Plaintiff Persons
with respect to each and every one of the Released Defendant Claims. Nothing in this Paragraph
(or any other provision of this Stipulation) is intended to, or should be construed or interpreted
as, releasing, limiting, or otherwise affecting or impacting: (a) Macquarie’s ability to proceed
with any claims asserted by Macquarie in Macquarie Capital (USA) Inc. v. Morrison & Foerster
LLP, Index No. 650988/2015 (Supreme Court of the State of New York, New York County);
and/or (b) any claim Macquarie may assert against a Person other than a Released Plaintiff
Person relating to, or arising out of, the December Offering or Puda that is not precluded by ¶
7.3(b) hereof.
5.4
With respect of the use of the term “Unknown” in connection with the Released
Claims:
(s)
(i) Plaintiffs specifically acknowledge (and the other Releasing Plaintiff
Persons shall be deemed by operation of law and the Final Order and Judgment to have
acknowledged) that the term “Unknown Claims” in the definition of Released Plaintiff Claims
shall mean all claims that each of the Releasing Plaintiff Persons does not know or suspect to
exist at the time of the release of the Released Plaintiff Claims against the Released Defendant
Persons, but which, if known by it/her/him, might affect its/her/his decision with respect to the
Settlement (including the decision to object or not to object to the Settlement); and (ii)
Macquarie specifically acknowledges (and the other Releasing Defendant Persons shall be
deemed by operation of law and the Final Order and Judgment to have acknowledged) that the
term “Unknown Claims” in the definition of Released Defendant Claims shall mean all claims
that each of the Releasing Defendant Persons does not know or suspect to exist at the time of the
39
release of the Released Defendant Claims against the Released Plaintiff Persons, but which, if
known by it/her/him, might affect its/her/his decision with respect to the Settlement;
(t)
(i) Plaintiffs expressly acknowledge (and the other Releasing Plaintiff
acknowledged) that they may hereafter discover facts in addition to or different from those that
they now know or believe to be true with respect to the subject matter of the Released Plaintiff
Claims but that it is nevertheless their intention to fully, finally and forever settle and release the
Released Plaintiff Claims without regard to the subsequent discovery of any such additional or
different facts; and (ii) Macquarie expressly acknowledges (and the other Releasing Defendant
acknowledged) that it may hereafter discover facts in addition to or different from those that
it/she/he now knows or believes to be true with respect to the subject matter of the Released
Defendant Claims but that it is nevertheless their intention to fully, finally and forever settle and
release the Released Defendant Claims without regard to the subsequent discovery of any such
additional or different facts; and
(u)
the Settling Parties expressly acknowledge (and the other Releasing
acknowledged) that the inclusion of “Unknown Claims” in the definition of the Released Claims
was separately bargained for and was a key element of the Settlement, and with respect to the
Released Claims the Settling Parties expressly waive and relinquish, and the other Releasing
Persons shall be deemed to have waived and relinquished, and by operation of law and the Final
Order and Judgment shall have specifically waived and relinquished: (i) any and all provisions,
40
rights and benefits conferred under Section 1542 of the California Civil Code, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
and (ii) any and all provisions or rights conferred by any law of any state or territory of the
United States or principle of common law, which is similar, comparable or equivalent to Section
1542 of the California Civil Code.
5.5
All Settlement Class Members shall be bound by the terms of the Releases set
forth in this Stipulation whether or not any individual such Person actually submits a Claim
Form, seeks or obtains a distribution from the Net Settlement Fund, is entitled to receive such a
distribution under the Plan of Allocation or has objected to the Settlement, the Plan of Allocation
and/or any application for an award of attorneys’ fees and Litigation Expenses to Plaintiffs’
Counsel.
5.6
Notwithstanding the foregoing, the Released Claims do not include claims to
enforce the Final Order and Judgment, the Stipulation, the Settlement or any other orders or
judgments the Court may enter during the Action in connection with the Settlement, and any or
all of its terms, including, but not limited to, the Releases.
6.
Attorneys’ Fees And Litigation Expenses Incurred By Plaintiffs
6.1
Co-Lead Counsel intends to apply to the Court for an award of attorneys’ fees and
reimbursement of Litigation Expenses to Plaintiffs’ Counsel as well as a Reimbursement Award
to Lead Plaintiffs in connection with the Settlement, which shall be paid out of the Settlement
Fund and only out of the Settlement Fund. Macquarie will take no position on Co-Lead
41
Counsel’s applications, provided that they are not inconsistent with the terms of this Stipulation.
Notwithstanding any other provision of this Stipulation, no attorneys’ fees or Litigation
Expenses shall be paid to Plaintiffs’ Counsel and no Reimbursement Award shall be paid to Lead
Plaintiffs in the absence of entry of the Final Order and Judgment by the Court.
6.2
Any attorneys’ fees and Litigation Expenses awarded by the Court (as well as any
Reimbursement Award to Lead Plaintiffs) shall be paid from the Settlement Fund and not by
Macquarie (or the other Released Defendant Persons). The Settlement Fund shall be the sole
source of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel (as well as the
Reimbursement Award to Lead Plaintiffs) in connection with the Settlement. No Settlement
Class Member, or their counsel, shall have any recourse against Macquarie (or any of the other
Released Defendant Persons) for any such attorneys’ fees, Litigation Expenses or the
Reimbursement Award. Macquarie (and the other Released Defendant Persons) shall have no
responsibility for and no liability whatsoever with respect to any payment of attorneys’ fees and
Litigation Expenses made to Plaintiffs’ Counsel or for any Reimbursement Award paid to Lead
Plaintiffs.
6.3
Subject to Court approval, any attorneys’ fees or Litigation Expenses awarded by
the Court: (a) shall be paid to Plaintiffs’ Counsel within five (5) business days of the later of the:
(i) Court order awarding the attorneys’ fees and reimbursement of Litigation Expenses; and (ii)
entry of the Final Order and Judgment (provided it contains the Releases described in this
Stipulation), notwithstanding the existence of any timely filed objections thereto, potential for
appeal therefrom, or collateral attack on the Settlement or any part thereof, (b) subject to
Plaintiffs’ Counsel’s obligation to make refunds or repayments to the Settlement Fund (plus
accrued interest thereon at the same net rate as is earned by the Settlement Fund in the Escrow
42
Account) if and when: (i) as the result of any appeal and/or further proceedings on remand or
successful collateral attack, the attorneys’ fee or Litigation Expense award is reduced, vacated or
reversed; (ii) the Effective Date does not occur; (iii) the Stipulation is terminated or cancelled for
any reason; (iv) the Settlement is voided by any party; (v) the award order does not become final;
and/or (vi) the Settlement is not approved or is reversed or modified by any court.
Any
Reimbursement Award to Lead Plaintiffs shall be paid at the time the Net Settlement Fund is
paid to Authorized Claimants.
6.4
Plaintiffs’ Counsel shall refund and repay the full amount of any award of
attorneys’ fees or Litigation Expenses that is reversed, or the amount by which any such award is
reduced or modified, within fifteen (15) business days of the date of the event requiring the
refund and repayment as set forth in ¶ 6.3 herein. The refund and repayment shall include
interest at the same net rate earned by the Settlement Fund. As a condition of receiving
attorneys’ fees and Litigation Expenses, on behalf of itself of and each shareholder, each of
Plaintiffs’ Counsel agrees that it and its partners and/or shareholders are subject to the
jurisdiction of the Court for the purpose of enforcing the refund and repayment obligations set
forth in this Stipulation. Without limitation, each of Plaintiffs’ Counsel (and its partners and/or
shareholders) agrees that the Court may, upon application of Macquarie and notice to Co-Lead
Counsel, summarily issue orders enforcing this provision.
6.5
Plaintiffs’ Counsel’s refund and repayment obligations under this Stipulation shall
be joint and several among the various law firms and any Person who was an equity partner of
the various law firms representing Plaintiffs at the time the attorneys’ fees or Litigation Expenses
are paid. Co-Lead Counsel shall notify Macquarie’s Counsel at least three (3) business days
before the release of any monies from the Escrow Account to Plaintiffs’ Counsel for attorneys’
43
fees and Litigation Expenses. In the event that Plaintiffs’ Counsel does not comply with the
obligation to repay those funds within the specified time period, Plaintiffs’ Counsel shall pay any
expenses or fees (including attorneys’ fees) incurred by Macquarie in connection with enforcing
this obligation. The obligations in ¶¶ 6.3 – 6.5 shall survive, and remain in full force and effect
and be binding in all respects on the Settling Parties and their counsel, even if the Stipulation is
terminated, the Settlement is not approved and/or the Effective Date does not occur. Co-Lead
Counsel shall be responsible for ensuring the compliance of Plaintiffs’ Counsels with respect to
the obligations in ¶ 6.5 hereof.
6.6
The procedures for, and the Court’s decision regarding, the applications for
attorneys’ fees and Litigation Expenses to be paid Plaintiffs’ Counsel and a Reimbursement
Award to Lead Plaintiffs are not conditions of the Settlement or to entry of the Final Order and
Judgment.
The request for attorneys’ fees and Litigation Expenses (as well as any
Reimbursement Award to Lead Plaintiffs) are to be considered by the Court separately from and
independently of the Court’s consideration of the question whether the Settlement is fair,
reasonable, adequate and in the best interests of the Settlement Class. Any orders or proceedings
relating to any request for attorneys’ fees and Litigation Expenses (as well as any
Reimbursement Award to Lead Plaintiffs) or any appeal from any order or proceedings relating
thereto shall not: (a) operate to modify, terminate or cancel this Settlement; (b) affect or delay
the validity or finality of the Final Order and Judgment or any other orders entered by the Court
giving effect to this Stipulation; (c) affect or delay the Effective Date; (d) provide any ground or
otherwise permit any Person (including Plaintiffs and the other Settlement Class Members), or
any of their counsel, to cancel, terminate or withdraw from the Stipulation or the Settlement;
and/or (e) affect or delay the validity of the Settlement.
44
6.7
Co-Lead Counsel shall be responsible for allocating the attorneys’ fees and
Litigation Expenses awarded by the Court among all counsel representing Plaintiffs and any
other Settlement Class Member in a manner in which they in good faith believe reflects the
contribution of each such counsel to the prosecution and resolution of the Action. Macquarie
(and the other Released Defendant Persons) shall have no responsibility for or liability
whatsoever with respect to the allocation of attorneys’ fees and Litigation Expenses among
Plaintiffs’ Counsel and/or any other Person who may assert some claim thereto.
6.8
Co-Lead Counsel shall be responsible for allocating any Reimbursement Award
granted by the Court among the Lead Plaintiffs in a manner in which they in good faith believe
reflects the contribution of each such Person to the prosecution and resolution of the Action.
Macquarie (and the other Released Defendant Persons) shall have no responsibility for or
liability whatsoever with respect to the allocation of the Reimbursement Award among the Lead
Plaintiffs and/or any other Person who may assert some claim thereto.
7.
Terms Of The Judgment
7.1
If the Settlement contemplated by this Stipulation is approved by the Court, Co-
Lead Counsel and Macquarie’s Counsel shall jointly request that the Court enter a Final Order
and Judgment which shall be substantially in the form attached hereto as Exhibit B. The
proposed Final Order and Judgment shall contain, inter alia, each of the provisions set forth in
this Paragraph.
7.2
Releases. The Proposed Final Order and Judgment shall contain, and the Settling
Parties agree to the entry by the Court of, the Releases provided for in Section 5 of this
Stipulation.
45
7.3
Bar Order. The proposed Final Order and Judgment shall contain, and the
Settling Parties agree to the entry by the Court of, a Bar Order that contains the following
provisions:
(a) except as provided in subparagraphs (c) and (d), permanently barring and
enjoining any and all Persons from commencing, prosecuting or asserting against any of the
Releasing Defendant Persons any claim for contribution arising out of the Action;
(b) except as provided in subparagraphs (c) and (d), permanently barring and
enjoining the Releasing Defendant Persons from commencing, prosecuting or asserting against
any Person a claim for contribution arising out of the Action, other than a Person whose liability
has been extinguished by this Settlement through a Release or otherwise;
(c) for the avoidance of doubt, nothing in subparagraphs (a) and (b) above, and,
nothing in the Stipulation or the Final Order and Judgment, shall bar, preclude, release, prevent,
limit, impact and/or otherwise affect in any respect, the following: (i) any claims asserted by
Macquarie in Macquarie Capital (USA) Inc. v. Morrison & Foerster LLP, Index No.
650988/2015 (Supreme Court of the State of New York, New York County); (ii) any other claim
for any other injury to Macquarie that Macquarie has, may have or may assert in the future
against any Person (other than the Released Plaintiff Persons) relating to Puda that is not
precluded by ¶ 7.3(b) hereof, (iii) any action by any of the Released Persons to enforce or
effectuate the terms and provisions of this Stipulation, the Settlement, the Preliminary Approval
Order and/or the Final Order and Judgment, including, without limitation, the Releases provided
for herein;
(d) in accordance with 15 U.S.C. § 78u-4(f)(7)(B), a judgment reduction
provision to the effect that any final verdict or judgment that may be obtained by or on behalf of
46
the Settlement Class or a Settlement Class Member against Macquarie shall be reduced by the
greater of: (i) an amount that corresponds to the percentage of responsibility of Macquarie for
common damages; or (ii) the amount paid by or on behalf of Macquarie to the Settlement Class
for common damages; and
(e) notwithstanding the foregoing, nothing in this provision shall apply to claims
that may be asserted by any Persons who timely and validly opt out of this Settlement and do not
revoke their request for exclusion within the applicable time period.
7.4
Permanent Injunction. The proposed Final Order and Judgment shall contain,
and the Settling Parties agree to the entry by the Court of, a provision that forever and
permanently bars and enjoins: (a) each of the Releasing Plaintiff Persons from filing,
commencing, prosecuting, intervening in, participating in (as class members or otherwise),
instituting, maintaining, prosecuting, seeking relief in (including filing an application or motion
for preliminary or permanent injunctive relief) or receiving any recovery, remedy, benefits or
other relief from, any other lawsuit, arbitration or other proceeding or order in any jurisdiction
that asserts, is based upon, arises out of, or relates in way to any or all of the Released Plaintiff
Claims against any or all of the Released Defendant Persons; and (b) the Releasing Defendant
Persons from filing, commencing, prosecuting, intervening in, participating in (as class members
or otherwise), instituting, maintaining, prosecuting, seeking relief in (including filing an
application or motion for preliminary or permanent injunctive relief) or receiving any recovery,
remedy, benefits or other relief from, any other lawsuit, arbitration or other proceeding or order
in any jurisdiction that asserts, is based upon, arises out of, or relates in any way to the Released
Defendant Claims against any or all of the Released Plaintiff Persons.
47
7.5
The proposed Final Order and Judgment shall contain, and the Settling Parties
agree to the entry by the Court of, language providing that nothing in ¶ 7.4 or otherwise in the
Final Order and Judgment shall bar, prohibit or limit: (a) a Settlement Class Member from
proceeding with any of the claims that have already been asserted against the already named
defendants in In re Puda Coal, Inc. Stockholders Litigation, C.A. 6476-CB, currently pending in
the Delaware Court of Chancery; (b) an eligible Settlement Class Member from seeking to obtain
a recovery through the SEC Fair Fund process established in connection with the proceeding
captioned SEC v. Macquarie Capital (USA) Inc., C.A. No. 15-CV-02304 (S.D.N.Y.); (c)
Macquarie from proceeding with any claims asserted by Macquarie in Macquarie Capital (USA)
Inc. v. Morrison & Foerster LLP, Index No. 650988/2015 (Supreme Court of the State of New
York, New York County); (d) Macquarie from asserting against a Person other than a Released
Plaintiff Person a claim relating to, or arising out of, the December Offering or Puda that is not
precluded by ¶ 7.3(b) hereof, and/or (e) bar any action by any of the Released Persons to enforce
or effectuate the terms and provisions of this Stipulation, the Settlement, the Preliminary
Approval Order and/or the Final Order and Judgment, including, without limitation, the Releases
provided for herein.
7.6
agree to the entry by the Court of, a provision requiring that any final verdict or judgment that
may be obtained by or on behalf of the Settlement Class or a Settlement Class Member against a
Non-Settling Defendant(s) shall be reduced by the greater of: (a) an amount that corresponds to
the percentage of responsibility of Macquarie for common damages; or (b) the amount paid by or
on behalf of Macquarie to the Settlement Class for common damages.
48
7.7
agree to the entry by the Court of, a provision as to the Settling Parties’ Rule 11 compliance
pursuant to Section 21D(c)(1) of the Exchange Act, as amended by the PSLRA, 15 U.S.C. § 78u4(c)(1).
8.
The Effective Date
8.1
The Effective Date of the Settlement shall be the first date by which all of the
following events and conditions have occurred and been met (or have been waived in a writing
signed by the Person that is waiving the event and condition):
(v)
this Stipulation and such other documentation as may be required to obtain
final Court approval of this Stipulation, in a form satisfactory to the Settling Parties, have been
duly executed;
(w)
the Court has entered the Preliminary Approval Order (substantially in the
form annexed hereto as Exhibit A);
(x)
the Settlement Amount has been deposited in the Escrow Account in
accordance with the provisions of this Stipulation;
(y)
approval by the Court of the Settlement, following notice to the Settlement
Class and a hearing;
(z)
expiration of the time for Macquarie to exercise its option to terminate the
Stipulation under the Supplemental Agreement described in ¶ 9.3 herein without the exercise of
that option;
({)
entry of the Final Order and Judgment substantially in the form attached
hereto as Exhibit B (and without removing or making any modifications or changes to the
Releases);
49
(|)
expiration of the time for the filing or noticing of any Appeal from the
Final Order and Judgment (and including any extensions of time) without any Appeal having
been filed, other than those appeals and proceedings set forth in ¶ 4.3 or ¶ 6.3 herein;
(})
if there is an Appeal or Appeals with respect to the Final Order and
Judgment (other than those appeals and proceedings specified in ¶ 4.3 or ¶ 6.3), the date of
dismissal of the Appeal or final affirmance on Appeal of the Final Order and Judgment (such
that the order represents a final and binding determination of all issues within its scope) and the
expiration of all deadlines for any further judicial review thereof (whether by motions for
reconsideration, petitions for certiorari or other mechanism), and the conclusion of all
proceedings ordered on remand and all proceedings arising out of any subsequent Appeal or
Appeals following a decision on remand (and, if certiorari is granted, the date of final
affirmance of the Final Order and Judgment pursuant to the writ); and
(~)
no Person has given notice of its election to terminate this Stipulation and
the Settlement pursuant to ¶¶ 9.1, 9.3 or 9.5 herein, and the time for doing so has expired.
8.2
Notwithstanding anything in this Stipulation, the Effective Date (and the
effectiveness of the Settlement) does not depend in any way upon the resolution of any orders,
proceedings, rulings, consideration, appeals or other matters solely concerning, relating to, based
upon or arising out of: (a) Court approval of the Plan of Allocation; (b) any application for an
award of attorneys’ fees or reimbursement of Litigation Expenses to Plaintiffs’ Counsel
(including the allocation of such fees among counsel); (c) the Court’s findings and conclusions
pursuant to Section 21D(c)(1) of the Exchange Act, 15 U.S.C. § 78u-4(c)(1); (d) the separate
Brean Settlement; and/or (e) any Reimbursement Award.
50
8.3
Upon the Effective Date, any and all interests and rights of Macquarie in or to the
Settlement Fund shall be absolutely and forever extinguished. Without limiting any of the
foregoing, Macquarie shall have, in its sole discretion, the option to terminate the Settlement in
its entirety in the event that the Final Order and Judgement does not provide for the dismissal
with prejudice of the Action against it.
8.4
The Settling Parties have agreed that the Brean Settlement is not a condition to
this Settlement or to entry of the Final Order and Judgment and is to be considered by the Court
separately from and independently of the Court’s consideration of the question whether the
Settlement is fair, reasonable, adequate and in the best interests of the Settlement Class. Any
orders or proceedings relating to the Brean Settlement, or any appeal from any order or
proceedings relating thereto, shall not: (a) operate to modify, terminate or cancel this Settlement;
(b) affect or delay the validity or finality of the Final Order and Judgment or any other orders
entered by the Court giving effect to this Stipulation; (c) affect or delay the Effective Date; (d)
provide any ground or otherwise permit any Person (including Plaintiffs and the other Settlement
Class Members), or any of their counsel, to cancel, terminate or withdraw from the Stipulation or
the Settlement; and/or (e) affect or delay the validity of the Settlement.
9.
Termination
9.1
No Settling Party shall have any obligation whatsoever to proceed under any
terms or conditions other than substantially in the form provided and agreed to herein.
Macquarie and Lead Plaintiffs shall each have the unilateral right to terminate the Settlement and
this Stipulation by providing written notice of their election to do so to counsel to the other
within ten (10) business days of any of the following events (“Termination Notice”):
( )
the Court’s declining to enter the Preliminary Approval Order
substantially in the form attached hereto as Exhibit A or modifying it in any material respect;
51
( )
the Court’s refusal to approve the Settlement as set forth in this Stipulation
or the Court’s modification of it in any material respect (including, without limitation, by
removing or making any modifications or changes to the Releases);
( )
the Court’s modification of the Settlement as set forth in the Stipulation in
any material respects (including, without limitation, by removing or making any modifications or
changes to the Releases);
(‚)
the Court’s declining to enter the Final Order and Judgment substantially
in the form attached hereto as Exhibit B or the Court’s modification of the Final Order and
Judgment in any material respect (including, without limitation, by removing or making any
modifications or changes to the Releases); and/or
(e)
the date upon which the Final Order and Judgment is vacated, modified
reversed or revised in any material respect by any level of appellate court (including, without
limitation, by removing or making any modifications or changes to the Releases).
9.2
Notwithstanding any other provision or paragraph of this Stipulation: (a) no
ruling, consideration, decision, action or inaction by the Court or any appellate court relating
solely to (i) an award of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel pursuant
to Section 6 herein, (ii) the Plan of Allocation (iii) Court approval of the separate Brean
Settlement, and/or (iv) the Reimbursement Award; shall (b) entitle Lead Plaintiffs, the
Additional Named Plaintiffs or any other Settlement Class Member (or their counsel) to
withdraw from, cancel or terminate the Settlement or this Stipulation.
9.3
In addition to the grounds set forth in ¶ 9.1 above, Macquarie shall have the
unilateral unconditional option to withdraw from the Settlement and terminate the Stipulation if
the Persons requesting exclusion from the Settlement Class meet or exceed the conditions set
52
forth in a confidential supplemental agreement that accompanies this Stipulation (the
“Supplemental Agreement”). The Supplemental Agreement shall not be filed with the Court and
its terms shall not be disclosed in any other manner (other than the statements herein and those in
the Notice attached hereto as Exhibit A-1) unless and until the Court requires the Settling Parties
to file the Supplemental Agreement or disclose its terms or a dispute arises between Lead
Plaintiffs and Macquarie concerning its interpretation or application. In either of those events,
the Supplemental Agreement shall be filed and maintained by the Court under seal. In the event
of an objection to the Settlement based upon the confidentiality of the conditions stated in the
Supplemental Agreement, and notwithstanding anything to the contrary in this Paragraph or the
Supplemental Agreement, Lead Plaintiffs and Macquarie can agree to jointly waive
confidentiality.
9.4
In the event that Macquarie elects to terminate the Stipulation in accordance with
the Supplemental Agreement pursuant to ¶ 9.3 herein and such termination is not nullified in
accordance with the terms of the Supplemental Agreement, the Stipulation shall be terminated
and deemed null and void and the provisions of ¶ 9.6 shall apply.
Notwithstanding the
foregoing, the Stipulation shall not become null and void as a result of the election by Macquarie
to exercise its option to withdraw from the Stipulation pursuant to the Supplemental Agreement
until the conditions set forth in the Supplemental Agreement have been fully satisfied.
9.5
In addition to the grounds set forth in ¶ 9.1 above, Lead Plaintiffs shall have the
right to terminate the Settlement, and thereby, this Stipulation, if the Settlement Amount is not
paid in accordance with ¶ 2.1 herein; provided, however, that Co-Lead Counsel shall have first
provided notice to Macquarie’s Counsel of such failure to make payment and the failure shall not
have been cured within three (3) business days of receipt of such notice. Notwithstanding the
53
foregoing, Plaintiffs shall have the right to collect interest from Macquarie to compensate the
Settlement Class for any delay in payment of the Settlement Amount into the Escrow Account.
9.6
If the Stipulation is terminated in accordance with this provisions of this
Paragraph, the Settlement is not approved by the Court, the Effective Date otherwise does not
occur and/or the Settlement otherwise fails for any reason:
(ƒ)
the Settlement Amount (including any net interest earned thereon), but
less any Notice and Administration Expenses actually incurred or paid in connection with the
Settlement permitted by this Stipulation up to $100,000 and less all Taxes paid or owing, shall be
refunded to Macquarie no later than ten (10) business days after written notification of such
event by Macquarie’s Counsel;
(„)
the Settlement and this Stipulation shall be null, void and without
prejudice and none of its terms shall have any further force or effect or be enforceable;
(…)
the Action shall proceed in all respects as if this Stipulation had not been
entered and all negotiations, discussions, acts, Court orders and other proceedings in connection
therewith treated as if they never existed;
(†)
the Settling Parties shall be deemed to have reverted to their respective
status in the Action as of September 30, 2015;
(‡)
any judgment(s) or order(s) entered by the Court in accordance with the
terms of this Stipulation shall be treated as vacated, nunc pro tunc; and
(ˆ)
the facts and terms of this Stipulation shall not be admissible in any trial of
this Action or any other proceeding.
9.7
The Settling Parties agree that any disputes concerning the termination of the
Settlement pursuant to the Stipulation shall be presented to the Court, which shall have exclusive
54
jurisdiction to resolve and rule as to whether the Settlement and this Stipulation has been
properly terminated.
9.8
Notwithstanding the foregoing, the provisions of and obligations in ¶¶ 2.2, 4.11,
6.3, 6.4, 6.5, 9.6, 10.1, 10.2, 10.3, 12.13, and 12.14 above shall survive and remain in full force
and effect and be binding in all respects on the Settling Parties even if the Stipulation is
terminated, the Settlement is not approved and/or the Effective Date does not occur.
10.
No Admissions
10.1
Whether or not the Settlement is approved by the Court and whether or not the
Settlement is consummated, the facts and terms of the Settlement and this Stipulation (including
all exhibits hereto), as well as all negotiations, discussions, acts performed, agreements, drafts,
documents signed and proceedings in connection with the Settlement:
(‰)
shall not be described as, construed as, interpreted as, or offered or
received against any of the Released Defendant Persons as evidence of and/or deemed to be
evidence of any presumption, concession or admission by them as to: (i) the truth of any fact
alleged in the Complaint; (ii) the validity of any claim that has been or could have been asserted
in the Action or in any other litigation; (iii) the deficiency of any defense that has been or could
have been asserted in the Action or in any other litigation; and/or (iv) any liability, negligence,
misconduct, inaction, fault, or wrongdoing of any sort on their part as alleged in the Complaint;
(Š)
shall not be described as, construed as, interpreted as or offered or
received against Plaintiffs or any other Settlement Class Member as evidence of any infirmity in
the claims of said Person or that damages recoverable from Macquarie would not have exceeded
the Settlement Amount;
(‹)
shall not be described as, construed as, interpreted as, offered or received
against any of the Settling Parties as an admission or concession that the consideration to be
55
given in the Settlement represents the amount which could be or would have been awarded to
any Settlement Class Member after trial;
(Œ)
shall not be construed, offered, interpreted, deemed or received against
any of the Released Persons in any other civil, criminal, regulatory or administrative action,
litigation or proceeding, except in connection with any action, litigation or proceeding to enforce
the terms of this Stipulation, the Settlement and/or the Final Order and Judgment; and
(e)
shall not be deemed or construed to create any inferences of any damages,
or lack of damages, suffered by Plaintiffs or any of the other Settlement Class Members.
10.2
Notwithstanding the foregoing, any of the Released Persons may file, offer, cite,
refer to or otherwise employ the Stipulation, the Settlement, the Final Order and Judgment (if
entered) and any other orders of the Court: (a) to enforce their terms; (b) to enforce the Releases
upon the Effective Date; and/or (c) to support a defense or counterclaim based on principles of
res judicata, collateral estoppel, release and discharge, good faith settlement, judgment bar or
reduction, any theory of claim preclusion or issue preclusion or any similar defense or
counterclaim, upon the Effective Date.
10.3
The provisions of, and obligations in Section 10 shall survive and remain in full
force and effect and be binding in all respects on the Settling Parties even if the Stipulation is
11.
Representations And Warranties
11.1
Plaintiffs represent and warrant that, at all times relevant to this Action, they were
each a Settlement Class Member, and that, to their knowledge, none of their Released Plaintiff
Claims has been assigned, encumbered, or in any manner transferred in whole or in part.
56
Plaintiffs represent and warrant that they will not attempt, and have not attempted, to assign,
encumber, or in any manner transfer in whole or in part any of the Released Plaintiff Claims.
11.2
Plaintiffs and Macquarie represent and warrant that: (a) they have made such
investigation of the facts pertaining to the Settlement provided for in this Stipulation, and all of
the matters pertaining thereto, as such Party deems necessary and advisable; and (b) they, or a
responsible officer, partner, fiduciary, counsel (including Plaintiffs’ Counsel, and Macquarie’s
Counsel) or other such similar Person thereof, have read this Stipulation and understands the
contents hereof.
11.3
All counsel executing this Stipulation, the Supplemental Agreement, or any
related Settlement documents, represent and warrant that she/he/it has the authority to do so and
that she/he/it has the authority to take appropriate action required or permitted to be taken
pursuant to this Stipulation to effectuate its terms.
11.4
If a case is commenced in respect of Macquarie under title 11 of the United States
Code (Bankruptcy), or a trustee, receiver or conservator is appointed under any similar law, and
in the event of the entry of a final order of a court of competent jurisdiction determining the
transfer of money to the Settlement Fund or any portion thereof by or on behalf of Macquarie to
be a preference, voidable transfer, fraudulent transfer or similar transaction, and any portion
thereof is required to be returned, and such amount is not promptly deposited to the Settlement
Fund by others, then at the election of Lead Plaintiffs, the Settling Parties shall jointly move the
Court to vacate and set aside the Releases and the Final Order and Judgment entered in favor of
Macquarie pursuant to this Stipulation, which Releases and Final Order and Judgment shall be
null and void, the Settling Parties shall be restored to their respective positions as of September
30, 2015, and any cash amounts in the Settlement Fund shall be returned as provided above.
57
12.
12.1
The Stipulation shall be binding when signed by all parties hereto but the
Settlement shall be effective and final only upon occurrence of the Effective Date.
12.2
Plaintiffs’ Counsel and Macquarie’s Counsel agree to: (a) cooperate fully with
each other in seeking Court approval of the Settlement; (b) promptly execute all additional
documentation that may reasonably be required to obtain Court approval; and (c) use their
reasonable best efforts, and to take all such other steps as may be necessary and required, to
effect the consummation of this Stipulation and the Settlement. Without further order of the
Court, the Settling Parties may agree to reasonable extensions of time to carry out any of the
provisions of this Stipulation.
12.3
Plaintiffs and Macquarie, and their respective attorneys, agree not to assert in any
forum that this Action was brought by Plaintiffs or Plaintiffs’ Counsel (or defended by
Macquarie or its counsel), in bad faith or without a reasonable basis. For the purpose of the
Court’s findings and conclusions pursuant to Section 21D(c)(1) of the Exchange Act, as
amended by the PSLRA, the Settling Parties shall assert no claims of any violation of Rule 11 of
the Federal Rules of Civil Procedure relating to the prosecution, defense or settlement of this
Action. The Settling Parties agree that the amount paid and the other terms of this Settlement
were negotiated at arm’s length and in good faith, and reflect a settlement that was reached
voluntarily after consultation with experienced legal counsel.
12.4
This Stipulation, the exhibits hereto and the Supplemental Agreement constitute
the entire agreement and understanding of the Settling Parties, and supersede any prior
agreements or understandings between them with respect to the Settlement. In entering into this
Stipulation, none of the Settling Parties is relying on any promise, warranty, inducement or
representation other than those set forth in this Stipulation and the Settling Parties disclaim the
58
existence of any such promise, warranty, inducement or representation. The Settling Parties
intend this Stipulation to be final and complete resolution of all disputes asserted or which could
have been asserted by the Settling Parties against one another as well as all of the Released
Claims by any of the Releasing Parties against the Released Persons.
12.5
All agreements made and orders entered during the course of this Action relating
to the confidentiality of documents and information shall survive this Stipulation and the
Effective Date pursuant to their terms unless otherwise modified by the Court.
12.6
All of the exhibits attached to this Stipulation as well as the Supplemental
Agreement are material and integral parts hereof and are hereby incorporated by reference as
though fully set forth herein. This Stipulation, including the exhibits to this Stipulation and the
Supplemental Agreement referred to in ¶ 9.3, may not be amended or modified except in a
writing signed by all counsel who has executed this Stipulation. Any condition contained in this
Stipulation may be waived by the party entitled to enforce the condition in a writing signed by
that party or his, her or its counsel. The waiver by any party of any breach of this Stipulation by
any other party shall not be deemed a waiver of the breach by any other party (or a waiver of any
other prior or subsequent breach of this Stipulation by that party or any other party).
12.7
Any failure by a party to insist upon strict performance by any other party of any
of the provisions of this Stipulation shall not be deemed a waiver of any of the other provisions
hereof, and such a party, notwithstanding such failure, shall have the right thereafter to insist
upon the strict performance of any and all of the provisions of this Stipulation to be performed
by such other party.
12.8
If any party is required to give notice to another party under this Stipulation, such
notice shall be in writing and shall be deemed to have been duly given upon receipt of hand
59
delivery or facsimile or email transmission, with confirmation of receipt. Notice shall be
provided as follows:
If to Plaintiffs or Plaintiffs’ Counsel
The Rosen Law Firm PA
275 Madison Avenue, 34th Floor
New York, NY 10016
Tel: (212) 686-1060
Fax: (212) 202-3827
ATTN: Laurence Rosen
Sara Fuks
[email protected]" [email protected]
[email protected]
If to Macquarie or Macquarie’s Counsel:
Weil, Gotshal & Manges LLP
767 5th Avenue
New York, NY 10153
Telephone: (212) 310-8000
Fax: (212) 310-8007
ATTN: Greg A. Danilow
Seth Goodchild
Stefania D. Venezia
Email: [email protected]
[email protected]
[email protected]
12.9
The construction, interpretation, operation, effect and validity of this Stipulation
(and all documents necessary to effectuate it) shall be governed by and construed according to
the internal laws of the State of New York without regard to the conflict of law rules, except to
the extent that federal law requires that federal law governs.
12.10 This Stipulation is the result of arm’s-length negotiations between the Settling
Parties. The Settling Parties have contributed substantially and materially to the preparation of
this Stipulation and this Stipulation shall not be construed more strictly against one party than
another merely by virtue of the fact that the Stipulation or a particular provision or paragraph of
the Stipulation may have been prepared by counsel for a particular party.
60
12.11 The section headings used throughout this Stipulation (and the exhibits) are for
convenience only and shall not affect the interpretation or construction of this Stipulation. This
Stipulation may be executed in one or more counterparts.
12.12 This Stipulation shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the Settling Parties. All Released Persons who are not parties to this
Stipulation are intended third-party beneficiaries of the Settlement and, upon the occurrence of
the Effective Date, are entitled to enforce the terms of the Releases provided under the Final
Order and Judgment.
12.13 The administration and consummation of the Settlement shall be under the
authority of the Court, which shall retain jurisdiction with respect to the implementation and
enforcement of its terms. Any disputes arising out of this Stipulation or the Settlement shall be
filed and litigated exclusively in this Court.
12.14 The Settling Parties agree that the terms of this Stipulation and the fact that it has
been executed are strictly confidential until this Stipulation has been filed with the Court, except
to the extent required by law or as mutually agreed to by the Settling Parties hereto in writing.
While maintaining their own positions as to the merits of claims and defenses asserted in the
Action, the Settling Parties and their counsel agree not to make any public statements, statements
to the media (whether or not for attribution), or any statement published on a public website that:
(a) disparages the business, conduct or reputation of the others; (b) makes any accusations of
wrongful or actionable conduct by the other concerning the prosecution, defense and/or
resolution of the Action; and/or (c) suggests that the Settlement constitutes an admission as to
any claim or defense alleged. The obligations in this Paragraph shall survive and remain in full
61
force and effect and be binding on the Settling Parties even if the Stipulation is terminated, the
Settlement is not approved and/or the Effective Date does not occur.
12.15 Macquarie shall be responsible for the CAFA Notice and shall take steps to
comply with the CAFA requirements in as expeditious a manner as possible so as to not cause
delay in the scheduling of the Settlement Hearing. Any fees or costs incurred in connection with
the preparation and service of the CAFA Notice shall be borne by Macquarie and under no
circumstances will be borne by the Settlement Class Members (or their counsel), or payable from
the Settlement Fund.
12.16 It is understood by the Settling Parties that, except for the matters expressly
represented herein, the facts or law with respect to which this Stipulation is entered into may turn
out to be other than or different from the facts and law now known to each Settling Party or
believed by such party to be true; each party therefore expressly assumes the risk of the facts or
law turning out to be different, and agrees that this Stipulation shall be in all respects effective
and not subject to termination by reason of any such different facts or law.
12.17 This Stipulation may be executed in one or more original, e-mailed and/or faxed
counterparts. All executed counterparts and each of them shall be deemed to be one and the
same instrument. Counsel for each of the Settling Parties will maintain their own respective
signature pages. No Settling Party shall raise the use of e-mail to deliver or transmit a signature
as a defense to the formation or enforceability of this Stipulation, and each Settling Party forever
waives any such defense. A complete set of executed counterparts shall be filed with the Court.
62
et al. LITIGATION
CASE NO: 1:11-CV-2598 (DLC)
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement, dated December 1, 2015 (the
“Stipulation”), is made and entered into, through their counsel, by and between Lead Plaintiffs
Salomón Querub, Howard Pritchard and Hotel Ventures LLC (collectively, “Lead Plaintiffs”), on
behalf of themselves, the Additional Named Plaintiffs and the class of Persons defined below,
and Defendants Lawrence S. Wizel and C. Mark Tang (the “U.S. Directors”).1 Subject to the
terms and conditions set forth herein and the Court’s approval pursuant to Rule 23 of the Federal
Rules of Civil Procedure, the settlement embodied in this Stipulation is intended by the Settling
Parties to: (a) be in full and final disposition of the Action with respect to the claims asserted
against the U.S. Directors; and (b) fully, finally and forever resolve, discharge, dismiss and settle
each and every one of the Released Claims against each and every one of the Released Persons.
WHEREAS,
A.
Beginning on April 14, 2011, eleven putative class action lawsuits were filed in
this Court against Puda as well as certain other Persons, captioned, Goldstein v. Puda Coal, Inc.,
No. 11 Civ. 2598; Tallant v. Puda Coal, Inc., No. 11 Civ. 2608; Weissmann v. Puda Coal, Inc.,
No. 11 Civ. 2609; Alexander v. Zhao, No. 11 Civ. 2657; Rosenberger v. Puda Coal, Inc., No. 11
1
For ease of reference, the Settling Parties have referred to the claims by “Plaintiffs” against the
U.S. Directors throughout this Stipulation, but the only Plaintiff that asserts claims against the
U.S. Directors in the Complaint is Trellus Management Company LLC (“Trellus”).
ACTIVE/84410169.5
Civ. 2660; Korach v. Puda Coal, Inc., No. 11 Civ. 2666; Kendall v. Puda Coal, Inc., No. 11 Civ.
2695; LaDuca v. Puda Coal, Inc., No. 11 Civ. 4266; Burquist v. Puda Coal, Inc., No. 11 Civ.
5189; Thumith v. Puda Coal, Inc., No. 11 Civ. 5190; and Lin v. Puda Coal, Inc., No. 11 Civ.
5259 (these actions are collectively referred to herein as the “Individual Actions”). Although
each of the Individual Actions was brought against Puda, they varied with respect to the other
named defendants.
B.
All of the Individual Actions alleged a fraudulent scheme orchestrated by Puda’s
former Chairman, Ming Zhao (“Zhao”), to mislead investors as to the true ownership of Puda’s
primary operating subsidiary, Shanxi Puda Coal Group Co., Ltd. (“Shanxi Coal”), which was
revealed in April 2011. Although Puda represented in public filings throughout the relevant
period that it owned 90% of Shanxi Coal, the complaints in the Individual Actions alleged that
Zhao had secretly transferred Puda’s interest in Shanxi Coal first to himself and then to an
unrelated private equity fund with no consideration to the Company. There were no allegations
in any of the Individual Actions, or in the currently-operative Complaint, that the U.S. Directors
were aware of Zhao’s conduct at the time it was perpetrated, or that the U.S. Directors played
any role in Zhao’s actions.
C.
By Memorandum and Order dated December 6, 2011, the Court consolidated the
Individual Actions, captioned In re Puda Coal Securities, Inc. et al. Litigation, No. 11 Civ. 2598
(BSJ). The Court appointed Salomón Querub, Howard Pritchard and Hotel Ventures LLC as
Lead Plaintiffs, and approved the selection of The Rosen Law Firm, P.A. and Glancy Binkow &
Goldberg LLP as Co-Lead Counsel.
D.
On January 27, 2012, Lead Plaintiffs filed a consolidated class action complaint,
subsequently corrected on February 9, 2012, adding Steven Weissman, Thomas Rosenberger,
2
ACTIVE/84410169.5
and Sal LaDuca as named plaintiffs. This complaint, among other things, asserted Section 11
and Section 15 claims under the Securities Act of 1933 (the “1933 Act Claims”) against the U.S.
Directors arising out of a follow-on public offering of Puda common stock conducted in
December 2010 (the “December Offering”), and a Section 20(a) control person claim against the
U.S. Directors under the Securities Exchange Act of 1934 (“1934 Act”). Claims were also
asserted against: (a) Macquarie Capital (USA) Inc. (“Macquarie”) and Brean Murray, Carret &
Co. LLC (“Brean,” and together with Macquarie, the “Underwriters”); (b) Moore Stephens Hong
Kong, Moore Stephens, P.C. (the “Auditor Defendants”), and Moore Stephens International Ltd.;
and (c) Jianfei Ni, Zhao, Qiong Laby Wu and Liping Zhu.
E.
On June 1, 2012, the U.S. Directors moved to dismiss the February 9, 2012
complaint. On August 8, 2012, Plaintiffs filed opposition papers and, on September 14, 2012,
the U.S. Directors filed reply papers. On October 3, 2012, the litigation was reassigned to Judge
Katherine Forrest. On March 18, 2013, the Court granted the U.S. Directors’ motion to dismiss
the Section 20(a) claim, but denied their motion to dismiss the 1933 Act Claims.
F.
On March 15, 2013, the clerk of the Court entered certificates as to Puda and
Zhao (collectively, the “Defaulted Defendants”), certifying that the Defaulted Defendants had
been served copies of the summons and complaint and had not filed an answer or otherwise
moved with respect to the complaint. Plaintiffs subsequently moved for default judgment as to
these two defendants.
G.
On May 13, 2013, Plaintiffs and Trellus moved for Trellus to intervene as an
additional named plaintiff in the Action. On May 29, 2013, certain of the defendants, including
the U.S. Directors, moved for summary judgment on the ground that Mr. Rosenberger lacked
3
ACTIVE/84410169.5
standing to bring the 1933 Act Claims against them. Discovery relating to these motions was
conducted between May 15, 2013 and September 17, 2013.
H.
On August 8, 2013, the U.S. Directors produced approximately14,000 pages of
documents.
I.
On June 26, 2013, certain of the defendants, including the U.S. Directors, filed
their papers in opposition to the motion to intervene, and Plaintiffs and Trellus filed reply papers
on July 12, 2013. On September 27, 2013, the Court heard oral argument on both the summary
judgment and intervention motions. The Court, in an Opinion and Order dated October 1, 2013,
denied the motion to intervene and granted the motions for summary judgment, dismissing all
claims against the U.S. Directors and the Underwriters, leaving the Defaulted Defendants and the
Auditor Defendants as the only remaining defendants in the Action. On October 28, 2013,
Trellus filed an appeal from the Court’s order to the United States Court of Appeals for the
Second Circuit.
J.
On October 22, 2013, in connection with their claims against the remaining
defendants, Plaintiffs issued a non-party subpoena to Macquarie seeking documents relating to
the December Offering. Macquarie produced documents responsive to the subpoena; included in
the production was a report prepared by Kroll for Macquarie in connection with the due
diligence on the December Offering, that Plaintiffs subsequently alleged contained information
that contradicted Puda’s public statements (including those made in connection with the
December Offering) that Puda owned 90% of Shanxi Coal.
K.
On January 6, 2014, Plaintiffs filed a motion to amend the then-operative
complaint to add a Section 10(b) claim against the Underwriters (but not against the U.S.
Directors). On February 4, 2014, Trellus filed a motion pursuant to Fed. R. Civ. P. 62.1(a)(3),
4
ACTIVE/84410169.5
seeking an indicative ruling from the Court prior to the Court of Appeals’ hearing of the appeal
of the October 1, 2013 decision. On February 21, 2014, the Court granted Trellus’s motion,
signaling that it would permit Trellus to join the litigation.
L.
On April 7, 2014, the Court “deem[ed] Trellus’s motion for an indicative ruling to
be a motion to vacate pursuant to Rule 60(b)” and granted that motion. The Court also vacated
the portion of its October 1, 2013 opinion denying Trellus’s motion for intervention and granted
Trellus’s motion to become a party plaintiff “pursuant to several Federal Rules of Civil
Procedure, including Rules 15, 17, 19, and 21.”
M.
On April 21, 2014, Plaintiffs filed a second consolidated amended and
supplemental complaint (the “Complaint”), which remains the operative pleading in the Action.
The Complaint asserts claims under Section 11 (against all Defendants, including the U.S.
Directors); Section 12 (against Puda and the Underwriters); control person claims under Sections
15 against the U.S. Directors and other Puda former officers and directors; control person claims
under Section 20(a) (against certain of Puda’s former officers but not against the U.S. Directors);
as well as claims under Section 10(b) (against Puda, Wu, Zhu, Zhao, the Auditor Defendants and
the Underwriters).
N.
Following the completion of fact and expert discovery pertaining to the claims
asserted by Plaintiffs against the Auditor Defendants—which included the production of over
40,000 pages of documents, ten fact depositions and six expert depositions— the Auditor
Defendants filed motions for summary judgment. On July 26, 2014, the Court granted the
Auditor Defendants’ motions for summary judgment dismissing all claims brought against them.
Plaintiffs have filed an appeal of the Court’s June 8, 2015 final order dismissing those claims.
5
ACTIVE/84410169.5
O.
On June 2, 2014, the U.S. Directors filed their answer to the Complaint asserting
various defenses, including the statutory defenses of due diligence and reasonable reliance
contained in the 1933 Act. On August 8, 2014, the U.S. Directors produced approximately 800
pages of additional documents to the Plaintiffs.
P.
On November 7, 2014, Quinn Emanuel Urquhart & Sullivan, LLP (“Quinn
Emanuel”) entered a formal appearance as counsel for Zhao and notified the Court of Zhao’s
intent to contest the motion for a default judgment against him. By orders dated November 17,
2014, and November 20, 2014, respectively, the Court entered a default judgment against Puda,
and denied Plaintiffs’ motion for a default judgment against Zhao insofar as Zhao complied with
certain enumerated conditions, including various discovery obligations. Zhao subsequently
produced documents relating to Puda and the allegations in the Complaint concerning his
transactions involving Shanxi Coal.
Q.
On January 12, 2015, the Court entered an Order Regarding Class Certification,
based upon a stipulation of the parties, that, among other things: (i) certified a Section 11 class
against Puda, Zhao, Brean, Macquarie, and the U.S. Directors; (ii) certified a Section 12 class
against Puda, Zhao, and the Underwriters; (iii) certified a Section 10(b) class against the
Underwriters, consisting of those persons or entities who purchased Puda common stock (or call
options) or sellers of put options on Puda common stock between December 8, 2010 through the
market close on April 7, 2011 “who did not sell those securities prior to April 8, 2011” and who
“were damaged thereby”; and (iv) excluded from each class “all defendants, other officers and
directors of Puda (past and present) and members of all of their immediate families, entities in
which any and all such excluded persons hold any ownership interest, and all heirs, successors or
6
ACTIVE/84410169.5
assigns of any of the foregoing.” In connection with the Settlement, the Settling Parties agree
that the Settlement Class definition set forth herein should be employed in its stead.
R.
On February 17, 2015, Quinn Emanuel moved to withdraw as Zhao’s attorney,
and Zhao subsequently filed an affidavit indicating that that he would “not participate in or
otherwise continue the defense of” the claims against him. On April 1, 2015, the Court granted
Quinn Emanuel’s motion to withdraw (conditioned on its continuing to serve as agent for
service) and entered a default judgment against Zhao.
S.
Between January 22, 2015 and September 9, 2015 the remaining parties engaged
in merits discovery. Macquarie cumulatively produced approximately 59,000 pages of
documents and Brean approximately 72,000 pages, including documents relating to the due
diligence conducted in connection with the December Offering. In addition, third parties who
were retained in connection with the December Offering were subpoenaed by Plaintiffs and also
provided documents: (i) Kroll (which had prepared the report discussed above); and (ii)
Morrison & Foerster (which had served as Underwriters’ counsel in the December Offering).
Several other third parties were also subpoenaed. In total, third parties produced approximately
83,000 pages of documents.
T.
As part of fact discovery, Plaintiffs took the depositions of six former or current
Macquarie personnel who had worked on the December Offering, including those who led the
due diligence effort, as well as the deposition of the individual who led Brean’s involvement in
the December Offering. In addition, Plaintiffs took the depositions of three Morrison & Foerster
attorneys who had worked with the Underwriters on the December Offering as well as a
representative of Kroll concerning the preparation of the report it provided Macquarie. Plaintiffs
also re-took the depositions of the U.S. Directors.
7
ACTIVE/84410169.5
U.
In April 2015, Plaintiffs reached a resolution with Brean that would, if approved
by the Court, resolve all claims against Brean in the Action on the terms and conditions set forth
in the Stipulation of Settlement entered into by and between Plaintiffs and Brean, dated July 20,
2015, as amended on October 16, 2015 (the “Brean Settlement”).
V.
Following the close of fact discovery through September 9, 2015, the parties
engaged in expert discovery. Plaintiffs proffered expert reports on: (i) underwriter due diligence;
(ii) materiality, loss causation, and per share damages for purchasers of Puda common stock; and
(iii) aggregate damages. The U.S. Directors submitted an expert report on due diligence, and
Macquarie submitted expert reports on both underwriter due diligence and damages. The parties
took a total of five expert depositions in connection with these reports.
W.
On July 29, 2015, Macquarie moved for partial summary judgment on the Section
10(b) claim, arguing that no finder of fact could reasonably conclude that Macquarie was the
“maker” of the allegedly false statements at issue. On August 4, 2015, the U.S. Directors moved
for summary judgment on all claims against them, arguing that they had conducted adequate due
diligence, they had reasonably relied on auditors’ and Chinese counsel’s representations that
Puda maintained a 90% ownership interest in Shanxi Coal, they had never seen the Kroll Report,
and they did not know about Zhao’s fraud until Alfred Little’s April 8, 2011 article. On
September 3, 2015, Plaintiffs filed papers in opposition to both motions. The U.S. Directors filed
a reply on September 9, 2015 and Macquarie filed a reply on September 23, 2015.
X.
Meanwhile, the Securities and Exchange Commission (the “SEC”) engaged in its
own investigation of Puda. On February 22, 2012, the SEC filed an action against Zhao and
Zhu, asserting claims, among others, for violations of Sections 10(b), 14(a) and 13(b)(5) of the
8
ACTIVE/84410169.5
1934 Act arising from Zhao’s and Zhu’s “fraudulent scheme to deceive public investors” that
continued even after the April 2011 internet reports.
Y.
As part of its investigation, the SEC subpoenaed documents from Macquarie and
took depositions and/or conducted interviews of twelve current or former employees of
Macquarie. Plaintiffs were provided with copies of these transcripts as well as many of the
documents Macquarie provided the SEC relating to the due diligence for the December Offering.
Z.
On March 27, 2015, the SEC announced that it had filed a complaint against
Macquarie (and one current and one former employee of the firm) arising out of its work on the
December Offering, asserting claims under the 1933 Act. In addition, the SEC announced that
Macquarie had agreed to settle the SEC’s charges by paying $15,000,000 (consisting of
$10,728,525 in disgorgement and $1,271,475 in prejudgment interest thereon, and a civil penalty
in the amount of $3,000,000) and further agreeing to cover the costs of “setting up a Fair Fund to
compensate investors who suffered losses after purchasing shares in the public offering by Puda
Coal” that Macquarie had underwritten in December 2010. In settling the matter, Macquarie did
not admit or deny the SEC’s allegations. On August 12, 2015, the Court granted the SEC’s
motion to establish a Fair Fund for those investors from the amounts deposited with the SEC by
Macquarie and appointed a tax administrator for that fund. The SEC subsequently moved for the
appointment of a distribution agent to facilitate the development and administration of a
distribution plan for payments to investors.
AA.
On September 30, 2015, Plaintiffs reached a resolution with Macquarie that
would, if approved by the Court, resolve all claims against Macquarie in the Action on the terms
and conditions set forth in the Stipulation of Settlement entered into by and between Plaintiffs
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and Macquarie, dated October 16, 2015 (the “Macquarie Settlement”). On October 16, 2015,
Plaintiffs moved for preliminary approval of the Brean Settlement and the Macquarie Settlement.
BB.
On October 20, 2015, the Court dismissed all claims against Defendants Liping
Zhu, Qiong Laby Wu, and Jianfei Ni for lack of service.
CC.
Periodically during the litigation, Co-Lead Counsel and the U.S. Directors’
Counsel engaged in discussions concerning a potential resolution of the claims asserted against
the U.S. Directors in the Action. In addition to numerous telephone conversations between
counsel, two in-person mediation sessions were conducted before the Honorable Daniel
Weinstein (Ret.), one on June 10, 2013 and one on September 10, 2014 (both of which entailed
the exchange of detailed and substantive mediation statements). During these sessions, counsel
engaged in extensive substantive discussions regarding the merits of the claims asserted, the
defenses proffered in response thereto, the evidence adduced in discovery, potential damages
theories should liability be proved as well as the likelihood of recoveries by the Plaintiffs. In
addition to these two formal sessions, counsel for the Settling Parties also employed the services
of the mediator to facilitate their periodic telephonic negotiations. While these efforts did not
result in a settlement, the Settling Parties agreed to continue their dialogue.
DD.
As a result of their ongoing arm’s-length negotiations, including the two in-person
mediation sessions referenced above, on October 27, 2015, Lead Plaintiffs and the U.S. Directors
agreed in principle to a resolution of Plaintiffs’ claims against the U.S. Directors in this Action,
subject to Court approval and the execution of customary settlement documentation, which
agreement of settlement is memorialized in this Stipulation.
EE.
As former Puda directors, the U.S. Directors are named insureds under three
insurance policies: (i) a primary layer through Federal Insurance Company, part of the Chubb
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Group (“Chubb”); (ii) a first excess layer through the People’s Insurance Company of China
(“PICC”) based in Beijing; and (iii) a second excess layer through HCC. The PICC policy states
that it becomes the operative primary layer of insurance upon exhaustion of the Chubb policy,
and the HCC policy states that HCC has no obligation to pay defense costs or other loss unless
and until the PICC layer is exhausted. The Chubb policy was exhausted in May 2014.
FF.
On or about May 5, 2011, the U.S. Directors’ Counsel caused notice of the
Individual Actions to be provided to PICC. On August 6, 2014, after the Chubb policy had been
exhausted, U.S. Directors’ Counsel formally demanded that PICC provide coverage for the U.S.
Directors’ defense costs in this Action from June 2014 onward. On October 9, 2014, the U.S.
Directors’ Counsel received an email from PICC’s Chinese counsel, the AnJie Law Firm, which
attached a letter dated September 30, 2014, stating that PICC denied coverage of the claims in
this Action against the U.S. Directors, despite the fact that Chubb accepted coverage of those
claims on the underlying policy. The PICC letter stated that the claims “do not fall under the
coverage of the Policy in accordance with PRC laws and provisions of the Policy,” without any
further explanation. PICC and the AnJie Law Firm have ignored numerous attempts by the U.S.
Directors’ Counsel to reach them by email or telephone about this wrongful denial of coverage.
GG.
Lead Plaintiffs, through their counsel, have conducted an investigation into the
merits of the claims and defenses asserted by the Settling Parties in this Action as well as the
underlying events surrounding the December Offering. Co-Lead Counsel has analyzed the
evidence obtained through the extensive party and non-party discovery in this Action described
above, consulted with experts (both as to the merits and potential damages recovery), reviewed
and assessed publicly-available records and researched the applicable law. This investigation
has provided Lead Plaintiffs and Co-Lead Counsel with an informed and detailed basis upon
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which to assess the relative strengths and weaknesses of the Settling Parties’ respective positions
in the Action. Lead Plaintiffs’ understanding has been enhanced by their detailed settlement
discussions with the U.S. Directors’ Counsel.
HH.
Based on their direct oversight of the prosecution of this Action since inception,
their extensive factual investigation and their legal analysis of the claims against the U.S.
Directors in the Action and the U.S. Directors’ defenses to those claims, as well as their analysis
of the potential damages that could be recovered from the U.S. Directors if the Settlement Class
were to prevail, Lead Plaintiffs and Co-Lead Counsel have concluded that the terms and
conditions of the Settlement and this Stipulation are fair, reasonable and adequate to Plaintiffs
and the other Settlement Class Members, and are in each of those Person’s best interests. In
making this determination, Lead Plaintiffs and Co-Lead Counsel have considered, among other
things, the following: (a) the substantial benefits that Settlement Class Members will receive
from the resolution of the Action against the U.S. Directors; (b) the attendant risks of litigation as
well as the expense and length of continued proceedings necessary to prosecute the Action
through trial; (c) the uncertainty surrounding the damages that could be recovered by Plaintiffs
from the U.S. Directors in light of their limited personal assets, the exhaustion of their primary
layer of insurance coverage through Chubb, the difficulties in obtaining insurance coverage from
PICC, and the overall limit on statutory Section 11 damages recoverable from outside directors
such as the U.S. Directors; and (d) the desirability of permitting the Settlement to be
consummated as provided by the terms of this Stipulation. The Settlement and this Stipulation
shall in no event be construed as, or deemed to be, evidence of or a concession by Plaintiffs or
any other Settlement Class Member of any infirmity in the claims asserted in the Action.
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II.
The U.S. Directors have denied Plaintiffs’ allegations and are not admitting any
wrongdoing in connection with the Settlement. The U.S. Directors are entering into this
Settlement and Stipulation to avoid the substantial burden, expense, inconvenience and
distraction of continued litigation and to resolve each of the Released Plaintiff Claims as against
each of the Released Defendant Persons. The Settlement and this Stipulation shall in no event be
construed as, or deemed to be, evidence of an admission or concession on the part of the U.S.
Directors with respect to any claim or factual allegation or of any fault, liability, wrongdoing, or
damage whatsoever made in the Action or of any infirmity in the defenses that they have or
could have asserted in the Action.
a.
The Settling Parties recognize that the Action has been filed and prosecuted by
Plaintiffs in good faith and defended by the U.S. Directors in good faith and further that the
Settlement Amount paid and the other terms of the Settlement set forth herein were negotiated at
arm’s-length and in good faith and reflect a settlement that was reached voluntarily after
consultation with experienced legal counsel.
b.
This Stipulation (together with the exhibits hereto) has been duly executed by the
undersigned signatories on behalf of their respective clients and reflects the final and binding
agreement between the Settling Parties.
NOW THEREFORE, without any concession by Plaintiffs that the claims being
resolved herein lack merit, and without any concession by the U.S. Directors of any liability or
wrongdoing or the lack of merit of any of their defenses as asserted in this Action, it is hereby
STIPULATED AND AGREED by and between Lead Plaintiffs (on behalf of
themselves, the Additional Named Plaintiffs and the other Settlement Class Members) and the
U.S. Directors, through their respective attorneys, that, in consideration of the benefits flowing to
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the Settling Parties by the Settlement, all claims asserted in the Action by Plaintiffs and all other
Settlement Class Members against the U.S. Directors shall be finally and fully settled,
compromised, discharged, released and dismissed with prejudice, and further that each and every
one of the Released Claims shall be finally and fully settled, compromised, discharged, released
and dismissed with prejudice as to each and every one of the Released Persons, in the manner
and on the terms and conditions stated below, subject to Court approval following a Settlement
Hearing to be held pursuant to Rule 23 of the Federal Rules of Civil Procedure.
1.
Definitions
The following terms shall have the following meanings for the purpose of this
Stipulation, the exhibits to this Stipulation and the Supplemental Agreement (in the event of any
inconsistency between the definitions set forth below and any definitions contained in any other
document related to the Settlement, the definitions set forth below shall control):
1.1
“Action” means the consolidated action captioned In re Puda Coal Sec. Inc. et al.
Litig., No. 11 Civ. 2598 (DLC), pending in the United States District Court for the Southern
District of New York.
1.2
“Additional Named Plaintiffs” means, collectively, Steven Weissmann and
Trellus Management Company LLC.
1.3
“Additional Plaintiffs’ Counsel” means, collectively, Pomerantz LLP, Kaplan Fox
and Kilsheimer LLP and Kirby McInerney LLP.
1.4
“Authorized Claimant” means any Settlement Class Member who submits a
timely and valid Proof of Claim Form to the Claims Administrator pursuant to the terms of this
Stipulation and the Notice, who is not otherwise excluded from the Settlement Class.
1.5
“CAFA Notice” means a notice of the proposed Settlement in compliance with
the requirements of the Class Action Fairness Act, 28 U.S.C. § 1711, et seq. (“CAFA”), to be
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served upon the appropriate State official of each State in which a Settlement Class Member
resides and the Attorney General of the United States.
1.6
“Claims Administrator” means Epiq Systems, Inc., the firm to be retained by Co-
Lead Counsel, subject to Court approval, which shall provide all notices approved by the Court,
process Proof of Claim Forms and administer the Settlement Fund and the distribution of the Net
Settlement Fund to Authorized Claimants in accordance with the terms and conditions set forth
in this Stipulation, the Plan of Allocation, the Class Distribution Order and any other orders of
the Court relating thereto.
1.7
“Class Distribution Order” means an order of the Court approving the Claims
Administrator’s administrative determinations concerning the acceptance and rejection of the
claims submitted in accordance with this Stipulation and approving any fees and expenses not
previously applied for, including the fees and expenses of the Claims Administrator, and, if the
Effective Date has occurred, directing payment of the Net Settlement Fund to approved
Authorized Claimants.
1.8
“Co-Lead Counsel” means, collectively, The Rosen Law Firm, P.A. and Glancy
Prongay & Murray LLP (the successor firm to Glancy Binkow & Goldberg LLP).
1.9
“Controlling Interest” means an interest in a Person where such interest is
sufficient to allow the interest holder directly or indirectly to direct or cause the direction of the
management and policies of the Person, whether through ownership of the voting shares, by
contract or otherwise.
1.10
“Court” means the United States District Court for the Southern District of New
York in which the Action is pending.
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1.11
“Defendants” means, collectively, the U.S. Directors and the Non-Settling
Defendants.
1.12
“Effective Date” with respect to the Settlement means the first date upon which
all of the events and conditions specified in ¶ 8.1 of this Stipulation have occurred and been met
(or have been waived in a writing signed by the party that is waiving the event and condition).
1.13
“Escrow Account” means the interest-bearing account maintained by the Escrow
Agent to hold the Settlement Fund, which account, subject to the Court’s supervisory authority,
shall be under the control of Co-Lead Counsel and which is to be managed consistent with the
1.14
“Escrow Agent” means The Huntington National Bank, the financial institution
designated by Co-Lead Counsel to receive, hold, invest and disburse the Settlement Amount
pursuant to the terms of this Stipulation and the Escrow Agreement.
1.15
“Escrow Agreement” means the agreement between Co-Lead Counsel and the
Escrow Agent setting forth the terms under which the Escrow Agent shall maintain the Escrow
Account in accordance with the terms and conditions of the Stipulation, the Escrow Agreement
and any orders of the Court relating thereto.
1.16
“Final Order and Judgment” means the order to be entered in the Action if the
Court approves the Settlement, and which shall be substantially in the form attached hereto as
Exhibit B.
1.17
“Litigation Expenses” means costs and expenses incurred by Plaintiffs’ Counsel
in connection with commencing, prosecuting and resolving the Action for which Co-Lead
Counsel intends to apply to the Court for reimbursement and which are to be paid from the
Settlement Fund, and not by any of the Released Defendant Persons.
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1.18
“Net Settlement Fund” means the Settlement Fund less: (a) any Court approved
attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel; (b) Notice and Administration
Expenses; (c) any required Taxes; (d) any Court approved Reimbursement Award to Lead
Plaintiffs; and (e) any other fees or expenses that are allowed under this Stipulation and approved
by the Court incurred in connection with the administration of the Settlement.
1.19
“Non-Settling Defendants” means any Person, other than the U.S. Directors, who:
(a) currently is a named defendant in the Action; and/or (b) was previously a named defendant in
the Action but was dismissed, or is in the process of being dismissed, for any reason, whether by
settlement, judgment or otherwise. “Non-Settling Defendants” specifically includes, without
limitation, Puda, the Auditor Defendants, the Underwriters, and the Defaulted Defendants.
1.20
“Notice and Administration Expenses” means all costs, fees and expenses
incurred by the Claims Administrator in connection with: (a) the preparation, printing and
mailing of the Notice, publishing the Summary Notice; and (b) administering the Settlement
including administering the claims process, reviewing and processing claims, managing the
Escrow Account, allocating and distributing the Net Settlement Fund to Authorized Claimants,
applying the Court-approved plan of allocation, corresponding with Settlement Class Members
and the fees and costs of the Claims Administrator and the Escrow Agent.
1.21
Settlements of Claims Against Macquarie, Brean, and U.S. Directors, and (c) Hearing on
Proposed Settlements, Plan of Allocation and Motion for Attorneys’ Fees and Reimbursement of
Litigation Expenses to Plaintiffs’ Counsel, that is to be sent to Settlement Class Members, and
which shall be substantially in the form attached hereto as Exhibit A-1.
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1.22
1.23
“Plaintiffs’ Counsel” means, collectively, Co-Lead Counsel and Additional
Plaintiffs’ Counsel.
1.24
“Plaintiffs” means, collectively, Lead Plaintiffs and the Additional Named
Plaintiffs.
1.25
“Plan of Allocation” means the proposed plan that Co-Lead Counsel will submit
to the Court for approval upon notice to the Settlement Class to be utilized for distribution of the
Net Settlement Fund to Authorized Claimants in a manner consistent with the terms of this
Stipulation that will be contained in the Notice, or such other plan of allocation as the Court may
approve.
1.26
“Preliminary Approval Order” means the proposed order to be entered by the
Court preliminarily approving the Settlement and directing notice thereof to the Settlement
Class, and which shall be substantially in the form attached hereto as Exhibit A.
1.27
“Proof of Claim Form” or “Claim Form” means the proof of claim form and
release to be mailed to Settlement Class Members, as approved by the Court, which Settlement
Class Members shall be required to complete and return to the Claims Administrator in order to
substantiate their entitlement to a share of the Net Settlement Fund, and which shall be
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1.28
“Puda” means Puda Coal, Inc. and its predecessors and subsidiaries, including,
but not limited to, Shanxi Puda Coal Group Co., Ltd. (“Shanxi Coal”).
1.29
“Reimbursement Award” means the reimbursement award to Lead Plaintiffs that
Co-Lead Counsel intends to apply to the Court for and which is to be paid from the Settlement
Fund, and not by any of the Released Defendant Persons.
1.30
“Released Claims” means, collectively, all of the Released Plaintiff Claims and
all of the Released Defendant Claims.
1.31
“Released Defendant Claims” means any and all claims and causes of action of
every nature and description, whether such are known or Unknown (as that term is employed and
defined in ¶ 5.4 below), whether arising under federal, state, common or foreign law, that were
or could have been asserted by any or all of the Releasing Defendant Persons against any or all
of the Released Plaintiff Persons and that arise out of or relate in any way to the institution,
prosecution or settlement of the Action, except for claims relating to the enforcement of the
Settlement. Nothing in this definition of “Released Defendant Claims” is intended to, or should
be construed as prohibiting or limiting the U.S. Directors from: (a) asserting against a Person
other than a Released Plaintiff Person a claim relating to, or arising out of, the December
Offering or Puda that is not precluded by ¶ 7.3(b) hereof, and/or (b) from taking any action to
enforce or effectuate the terms and provisions of this Stipulation, the Settlement, the Preliminary
Approval Order and/or the Final Order and Judgment.
1.32
“Released Defendant Persons” means each and all of the following: (a) the U.S.
Directors and each of their respective past and/or present general partners, limited partners, and
any Person in which any of these Persons has a Controlling Interest (the “Defendant Releasees”);
and (b) each and every one of the Defendant Releasees’ respective past and/or present
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employees, partners, representatives, agents, consultants, counsel, insurers, reinsurers, families,
heirs, executors, trustees, personal representatives, estates, administrators, predecessors, and
assigns in their capacities as such. Nothing in this definition of “Released Defendant Persons” is
intended to release any claims asserted in the Action by Plaintiffs (or any other Settlement Class
Member) against any Non-Settling Defendant.
1.33
“Released Persons” means, collectively, all of the Released Plaintiff Persons and
all of the Released Defendant Persons.
1.34
“Released Plaintiff Claims” means: (a) any and all claims, demands, rights,
liabilities, losses, duties, damages, suits, actions, causes of action, potential actions, obligations,
interests, debts, judgments, penalties, sanctions, fees, decrees, matters, issues and controversies
of any kind, nature and description whatsoever; (b) whether disclosed or undisclosed, accrued or
unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, perfected
or not perfected, choate or inchoate, suspected or unsuspected, liquidated or not liquidated, fixed
or contingent, ripened or unripened, including both known claims and any Unknown Claims (as
that term is employed and defined in ¶ 5.4 below); (c) whether direct or derivative, whether at
law or in equity, based upon any legal or equitable theory, whether contractual, common law or
statutory, whether arising under federal, state, common or foreign law, whether based on
allegedly intentional, negligent, reckless or otherwise improper conduct; (d) that previously
existed, currently exist, exist as of the date of the Court’s approval of the Settlement or that may
arise in the future; (e) that are, were or could have been asserted by any of the Releasing Plaintiff
Persons against any or all of the Released Defendant Persons in the Action, in any other federal
or state court, tribunal, arbitration, proceeding, administrative agency or other forum in the
United States or elsewhere, whether asserted as claims, cross-claims, counterclaims or third-
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party claims; (f) that are, in any way, based upon, arise out of, relate to, concern, implicate or
involve (in whole or in part) either: (i) any of the facts, matters, occurrences, conduct, activities,
securities offerings (including the December Offering), behavior, allegations, representations,
omissions, events, transactions, decisions, actions (or failures to act) or any series thereof, that
were alleged, asserted, raised, set forth, referred to, made, mentioned, claimed, embraced,
involved in, referred to, in whole or in part, in the Action (including, without limitation, in the
Complaint or in any of the complaints filed in the Individual Actions), or (ii) the purchase,
acquisition, disposition or sale of, or other transaction in, any and all publicly-traded Puda
common stock (including, but not limited to, Puda call options or Puda put options) during the
Settlement Class Period, including without limitation, claims that arise out of or relate to any
disclosures, SEC filings, press releases, registration statements, offering memoranda, other
public statements by Puda during the Settlement Class Period or otherwise made in connection
with the December Offering; provided, however, that nothing in this definition or Stipulation
shall prevent any Person from seeking to obtain a recovery through the Fair Fund established in
connection with the separate proceeding by the SEC captioned SEC v. Macquarie Capital (USA)
Inc., C.A. No. 15-CV-02304 (S.D.N.Y.). For avoidance of doubt, nothing in this definition of
“Released Plaintiff Claims” is intended to release any of the claims that have already been
asserted against the already named defendants in the action captioned In re Puda Coal, Inc.
Stockholders Litigation, C.A. 6476-CB, currently pending in the Delaware Court of Chancery.
1.35
“Released Plaintiff Persons” means, collectively, Plaintiffs, Plaintiffs’ Counsel,
each and every Settlement Class Member, any other counsel any Settlement Class Member
retained or employed in this Action (including those prior to the consolidation of the individual
cases) and each of their past and/or present employees, officers, partners, directors, managing
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directors, representatives, affiliates, agents, attorneys, insurers, reinsurers, principals, members,
managers, families, stockholders, heirs, executors, trustees, personal representatives, estates,
administrators, predecessors, divisions, successors and assigns in their capacities as such.
1.36
“Releases” means all of the releases and liability protections set forth in Section 5
of the Stipulation, as well as those set forth in ¶¶ 7.2, 7.4, 7.5 and 7.6.
1.37
“Releasing Defendant Persons” means the U.S. Directors and each of their agents,
executors, and successors;
1.38
“Releasing Persons” means, collectively, all of the Releasing Plaintiff Persons and
all of the Releasing Defendant Persons.
1.39
“Releasing Plaintiff Persons” means Plaintiffs and each and every Settlement
Class Member, on behalf of themselves and each and all of their respective successors in interest,
predecessors, representatives, trustees, counsel, executors, affiliates, subsidiaries, immediate
family, administrators, agents, heirs, estates, assigns or transferees, immediate and remote, in
their capacities as such, and any other Person who has the right, ability, standing or capacity to
assert, prosecute or maintain on behalf of any Settlement Class Member any of the Released
Plaintiff Claims (or to obtain the proceeds of any recovery therefrom), whether in whole or in
part. A Person is a “Releasing Plaintiff Person” regardless of whether or not that Person: (a)
actually submits a Claim Form; (b) seeks or obtains a distribution from the Net Settlement Fund;
(c) is entitled to receive such a distribution or payment under the Plan of Allocation; and/or (d)
has objected to the Settlement, the Plan of Allocation, the application for an award of attorneys’
fees and reimbursement of Litigation Expenses to Plaintiffs’ Counsel or the application for a
Reimbursement Award to Lead Plaintiffs.
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1.40
“Settlement” means the settlement between the Settling Parties contemplated by,
and memorialized in, this Stipulation on the terms and conditions contained herein.
1.41
“Settlement Amount” means the sum of (1) one hundred thousand dollars
($100,000) and (2) all funds that Lead Counsel is able to collect from PICC through the
enforcement of the Stipulated Judgment and/or Assigned Claims against PICC, as set forth in
paragraphs 2.1–2.2 herein.
1.42
otherwise acquired call options on Puda common stock, and/or (c) sold or otherwise disposed of
1.43
“Settlement Class Member” or “Class Member” means any Person that falls
within the definition of the Settlement Class as defined in ¶ 1.42 and who or which is not
excluded therefrom.
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1.44
“Settlement Class Period” or “Class Period” means the period beginning on
December 8, 2010 through and including April 11, 2011.
1.45
“Settlement Fund” means the Settlement Amount (together with all interest
earned thereon) to be held in the Escrow Account pursuant to, and in accordance with, the
1.46
“Settlement Hearing” means the final hearing to be held by the Court to
determine, among other things, whether the Settlement is fair, reasonable and adequate and in the
best interests of the Settlement Class and should be approved as described in the Notice and the
Preliminary Approval Order.
1.47
“Settling Parties” means, collectively, the U.S. Directors and the Plaintiffs on
behalf of themselves and each of the other Settlement Class Members.
1.48
“Summary Notice” means the summary notice of the proposed Settlement, the
proposed Brean Settlement, and the proposed Macquarie Settlement to be published as set forth
in the Preliminary Approval Order and which shall be substantially in the form attached hereto as
Exhibit A-3.
1.49
“Supplemental Agreement” is defined in ¶ 9.3 of this Stipulation.
1.50
“Taxes” means all taxes (including any estimated taxes, interest or penalties)
arising with respect to the income earned by the Settlement Fund. For purposes of ¶ 2.8, Taxes
includes the expenses and costs incurred in connection with the calculation and payment of taxes
or the preparation of tax returns and related documents including, without limitation, expenses of
tax attorneys and/or accountants and mailing and distribution costs relating to filing (or failing to
file) the returns described therein.
1.51
“Unknown Claims” shall have the meaning as set forth in ¶ 5.4 of this Stipulation.
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1.52
2.
“U.S. Directors’ Counsel” means Goodwin Procter LLP.
Payment Of The Settlement Amount And The Obligations Of The Released
Defendant Persons
2.1
In consideration of the full and complete settlement of all claims asserted against
them in this Action and in consideration of the Releases provided for herein, the U.S. Directors
shall:
(a) consent to the entry of a stipulated judgment for settlement purposes only (the
“Stipulated Judgment”), in the total amount of $1.2 million USD, on the Section 11 and 15
claims against the U.S. Directors in Counts I and III of the currently-operative Complaint, which
shall be substantially in the form attached hereto as Exhibit C, subject to the following
conditions: (i) the Stipulated Judgment is solely for settlement purposes, and the U.S. Directors
have denied Plaintiffs’ allegations, have defended this Action vigorously, and have not admitted
any wrongdoing in connection with the Settlement; (ii) the Stipulated Judgment shall not take
effect until after the Court enters the Final Order and Judgment, and after the Effective Date as
set forth in ¶ 8.1 of the Stipulation; (iii) Plaintiffs shall not attempt to enforce or execute on the
Stipulated Judgment against the U.S. Directors, and shall attempt to enforce or execute on the
Stipulated Judgment only against PICC; and (iv) the Stipulated Judgment may not be satisfied
from attaching, executing on, or otherwise acquiring any assets or property of the U.S. Directors
or their families, heirs, estates, agents, executors, successors or assigns;
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(b) assign to the Class all of the U.S. Directors’ claims and rights to payments
from PICC in this Action (the “Assigned Claims”) and agree to provide limited cooperation to
Lead Plaintiffs in pursuing the Assigned Claims, as set forth in detail in the Assignment of
Claims Agreement which shall not take effect until after the Effective Date, and which shall not
be filed with the Court and its terms shall not be disclosed in any other manner (other than the
statements herein and those in the Notice attached hereto as Exhibit A-1) unless and until the
Court requires the Settling Parties to do so, in which case the Assignment of Claims Agreement
shall be filed and maintained by the Court under seal; and
(c) pay one hundred thousand dollars ($100,000) by check or wire transfer into
the Escrow Account no later than ten (10) business days after the later of: (i) the entry of the
Preliminary Approval Order and (ii) Co-Lead Counsel’s provision to the U.S. Directors’ Counsel
of wire transfer, check mailing instructions and such other account information necessary for this
payment to be made.
2.2
Lead Plaintiffs and Lead Counsel, on behalf of the Class and at their sole expense,
shall pursue and attempt to enforce the Stipulated Judgment and Assigned Claims against PICC
and shall use their best efforts to obtain the maximum allowable recovery for the Class from
PICC. The U.S. Directors and U.S. Directors’ Counsel make no representations about the
assignability or enforceability of any claims against PICC, and Lead Plaintiffs and Lead Counsel
recognize and acknowledge that it is possible that no recovery may be obtained from PICC.
Regardless of whether any recovery has been obtained from PICC, Lead Plaintiffs, Lead
Counsel, and the Class expressly agree not to seek to execute on, attach, or otherwise acquire any
of the property or assets of the U.S. Directors and/or their families, heirs, estates, agents,
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executors, successors or assigns of any kind other than by pursuing claims against PICC to
satisfy or recover on the Stipulated Judgment and/or the Assigned Claims.
2.3
Other than the obligations of the U.S. Directors set forth in paragraphs 2.1–2.2
and as otherwise expressly set forth in this Stipulation, the Released Defendant Persons shall
have no further or other responsibility, liability or obligations to Plaintiffs or any other Released
Plaintiff Person (including any of their counsel) with respect to the Released Plaintiff Claims.
Except as otherwise expressly provided herein, the Released Defendant Persons shall have no
obligation to pay for, responsibility of any kind for, or any liability whatsoever to any Person in
connection with, any of the following: (a) the administration of the Settlement; (b) the Plan of
Allocation and its interpretation, administration and implementation; (c) the allocation,
disbursement, administration or distribution of the Net Settlement Fund; (d) the dissemination of
the Notice, Proof of Claim Form, and Summary Notice to the Settlement Class Members; (e) the
processing, reviewing, challenging or determination of claims; (f) any payment of attorneys’ fees
or Litigation Expenses to Plaintiffs’ Counsel that may be awarded by the Court; (g) any fee
and/or expense allocation among Plaintiffs’ Counsel and/or any other Person who may assert a
claim thereto; (h) paying any Taxes due; (i) investing the Settlement Amount; (j) the Settlement
Fund, including its management and administration; (k) establishing, administering or
maintaining the Escrow Account; (l) filing elections or other required statements or tax returns
(or paying or withholding the costs associated herewith) with respect to any Taxes; (m) any tax
liability that a Settlement Class Member may incur as a result of the Settlement; (n) any
Reimbursement Award that may be ordered by the Court; and/or (o) the Brean Settlement or
Macquarie Settlement.
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2.4
The Settlement Fund shall be applied as follows and only as follows and then only
in accordance with the provisions of this Stipulation and any orders of the Court:
(a)
to pay the Notice and Administration Expenses pursuant to, and in
accordance with, the terms and conditions of this Stipulation and any orders of the Court relating
thereto;
(b)
to pay any attorneys’ fees and Litigation Expenses awarded by the Court
to Plaintiffs’ Counsel pursuant to, and in accordance with, the terms and conditions set forth in
Section 6 herein;
(c)
to pay any Reimbursement Award that may be approved by the Court to
Lead Plaintiffs;
(d)
to pay any other fees, costs and expenses approved by the Court;
(e)
to pay the Taxes pursuant to, and in accordance with, the terms and
conditions set forth in ¶ 2.8 herein; and
(f)
to distribute the balance of the Settlement Fund (the “Net Settlement
Fund”) to Authorized Claimants following the Effective Date pursuant to, and in accordance
with, the terms and conditions set forth in this Stipulation (as provided in the Court-approved
Plan of Allocation) and the Class Distribution Order.
2.5
Except as otherwise provided, the Settlement Fund and Net Settlement Fund shall
remain in the Escrow Account until the Effective Date unless the Stipulation is terminated
pursuant to Section 9 herein, the Settlement is not approved and/or the Effective Date otherwise
does not occur. After the Effective Date, the Net Settlement Fund shall be distributed to
Authorized Claimants by the Claims Administrator pursuant to, and in accordance with, the
Class Distribution Order after all claims have been processed and all claimants whose claims
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have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to communicate with the Claims Administrator concerning such rejection or
disallowance as provided for herein.
2.6
After the Effective Date, Co-Lead Counsel may pay from the Settlement Fund, at
the appropriate time and only as expressly permitted herein, all reasonable costs and expenses
associated with the administration of the Settlement, including, without limitation, the actual
costs of identifying and notifying Settlement Class Members, printing and mailing the Notice,
publishing the Summary Notice, reimbursing nominee owners for forwarding the Notice to their
beneficial owners, the administration expenses incurred and fees charged by the Claims
Administrator and any other Notice and Administration Expenses. Notwithstanding the fact that
the Effective Date has not yet occurred, Co-Lead Counsel may pay from the Escrow Account the
Notice and Administration Expenses reasonably necessary and actually incurred, up to $100,000
as well as Taxes without further order of the Court. No other amounts shall be disbursed from
the Escrow Fund prior to the Effective Date, except upon written order of the Court following
notice to U.S. Directors’ Counsel.
2.7
All funds held by the Escrow Agent shall be deemed and considered to be in the
custody of the Court and shall remain subject to the jurisdiction of the Court until such time as
the funds are distributed or returned pursuant to this Stipulation and/or further orders of the
Court. Subject to the Court’s jurisdiction, the Settlement Fund shall be maintained by the
Escrow Agent in a manner consistent with the provisions of this Stipulation and the Escrow
Agreement. All interest earned on the Settlement Fund shall be for the benefit of the Settlement
Class if the Effective Date occurs.
2.8
The following provisions shall govern the administration of the Escrow Account:
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(a)
The Escrow Agent shall maintain the Settlement Fund in a segregated
escrow account not available to creditors of the Escrow Agent or with respect to residual
amounts of less than $100,000 in an account as set forth in subparagraph (b) below and shall not
disburse any amounts therefrom except as authorized by this Stipulation and/or any orders of the
Court;
(b)
The Escrow Agent will invest the Settlement Fund only in instruments
backed by the full faith and credit of the United States Government or fully insured by the
United States Government or an agency thereof. The Escrow Agent shall collect and reinvest all
interest and proceeds accrued thereon and will reinvest the proceeds as they mature in similar
instruments at their then-current market rates. Any interest that accrues on the amount held in
escrow will become part of the Settlement Fund. Any residual cash balances of less than
$100,000 may be invested, without further approval from Lead Plaintiffs and Co-Lead Counsel,
in an interest-bearing account insured by the FDIC or money market mutual funds comprised
exclusively of investments secured by the full faith and credit of the United States Government
or fully insured by the United States Government;
(c)
all payments for Notice and Administration Expenses, Taxes, the
Reimbursement Award and any attorneys’ fees and Litigation Expenses awarded by the Court
shall be paid, only at the appropriate time and as permitted herein and/or by Order of the Court,
from the Settlement Fund and not by Plaintiffs, Plaintiffs’ Counsel, the Settlement Class
Members, the U.S. Directors, the other Released Defendant Persons or U.S. Directors’ Counsel.
There shall be no liability on the part of any Settlement Class Member or Released Defendant
Persons (or any of their counsel) for any such fees, costs and/or expenses;
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(d)
Lead Plaintiffs intend to structure the Escrow Account so that it will
qualify as a “Qualified Settlement Fund” within the meaning of Section 468B of the Internal
Revenue Code and the Regulations promulgated thereunder, including Treasury Regulation
§ 1.468B-1. Co-Lead Counsel shall act as administrators of the Qualified Settlement Fund
within the meaning of Treasury Regulation § 1.468B-2(k)(3). Co-Lead Counsel, as
administrators of the Settlement Fund within the meaning of Treasury Regulation § 1.468B2(k)(3), shall timely make such elections as are necessary or advisable to carry out this
subparagraph, including the relation-back election (as defined in Treasury Regulation § 1.468B1(j)) to cause the Qualified Settlement Fund to come into existence at the earliest permitted date.
(e)
All Taxes shall be paid out of the Settlement Fund. Co-Lead Counsel or
its agents, as administrators of the Settlement Fund within the meaning of Treasury Regulation
§ 1.468B-2(k)(3), shall be responsible for timely filing tax returns and any relevant tax filings
and documentation relating thereto for the Settlement Fund and timely paying from the
Settlement Fund any Taxes owed with respect to the Settlement Fund. Notwithstanding anything
in this Stipulation to the contrary, the Claims Administrator is to withhold from distribution to
Settlement Class Members any funds necessary to pay such amounts, including the establishment
of adequate reserves for any Taxes, and any amounts required to be withheld under Treasury
Regulation § 1.468B-2(1)(2);
(f)
Any tax returns prepared for the Settlement Fund (as well as the election
set forth therein) shall be consistent with the previous subparagraph, and in all events shall
reflect that all Taxes (including any interest or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided herein. The U.S. Directors (and the
other Released Defendant Persons) shall have no liability or responsibility for any Taxes. The
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U.S. Directors (and the other Released Defendant Persons) shall notify Co-Lead Counsel
promptly if they receive any notice of any claim for Taxes relating to the Settlement Fund; and
(g)
The Settling Parties hereto agree to cooperate with the Escrow Agent, each
other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the
provisions of this Paragraph.
3.
Preliminary Court Approval And Notice To Settlement Class Members
3.1
As soon as practicable following execution of this Stipulation, Lead Plaintiffs
shall apply to the Court for entry of the Preliminary Approval Order (which shall be substantially
in the form attached as Exhibit A to this Stipulation), inter alia: (a) requesting preliminary
approval of the Settlement as set forth in this Stipulation; (b) requesting approval for the mailing
of the Notice and publication of the Summary Notice; (d) setting forth the procedures by which
Settlement Class Members may object to the Settlement, seek exclusion therefrom or file a Proof
of Claim Form to obtain a distribution from the Net Settlement Fund; (e) setting a date for the
Settlement Hearing, to be held after the Notice is mailed and the Summary Notice is published,
to consider whether to approve the Settlement and whether the Final Order and Judgment
(substantially in the form of Exhibit B attached hereto) should be entered into, inter alia,
dismissing the Action with prejudice as against the U.S. Directors and containing the Releases
set forth herein. U.S. Directors’ Counsel shall not oppose the application, provided it is
otherwise consistent with the terms of this Stipulation, and shall cooperate in good faith with the
Lead Plaintiffs in connection therewith (Co-Lead Counsel shall provide drafts of the Notice,
Summary Notice and Proof of Claim Form to U.S. Directors’ Counsel for its review two (2)
business days prior to their dissemination).
3.2
If the Preliminary Approval Order is granted by the Court, Co-Lead Counsel will
cause the Claims Administrator, on a schedule to be set by the Court, to: (a) mail the Notice to
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those members of the Settlement Class whose addresses may be identified through reasonable
effort; (b) publish the Summary Notice on one occasion in the national edition of Investors’
Business Daily and via PR Newswire within ten (10) days of the mailing of the Notice; and (c)
otherwise provide such notice in the form or manner as may be ordered by the Court.
3.3
From the date of this Stipulation through and including final approval of the
Settlement by the Court, including the final dismissal of the Action, Plaintiffs and their counsel
agree that, other than for those matters necessary to implement and effectuate the Settlement
itself: (a) to stay the Action as it relates to their claims against the U.S. Directors; (b) not to take
any steps to prosecute any of the Released Plaintiff Claims against any of the Released
Defendant Persons; and/or (c) not to initiate or participate in any proceedings arising out of,
based upon or concerning any of the Released Plaintiff Claims against any of the Released
Defendant Persons. Lead Plaintiffs, and their counsel, shall also cooperate, to the extent
reasonably necessary, with any efforts by the U.S. Directors to prevent, stay, seek dismissal of,
or oppose entry of any interim or final relief in favor of any Settlement Class Member in any
litigation or proceeding that asserts any of the Released Plaintiff Claims against any of the
Released Defendant Persons or which challenges the Settlement (whether or not such matter has
previously been filed). If any action is filed or prosecuted in any court asserting any of the
Released Plaintiff Claims against any of the Released Defendant Person, Plaintiffs and their
counsel shall cooperate, to the extent reasonably necessary, with the U.S. Directors’ efforts to
obtain the dismissal or withdrawal of such litigation, including where appropriate joining in any
motion to dismiss or demurrer to such litigation; provided, however, that Plaintiffs’ obligations
under this Paragraph shall end if the Court does not approve the Settlement or if the Effective
Date otherwise does not occur.
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4.
Administration Of The Settlement Fund And Distribution Of The Settlement Fund
To Authorized Claimants
4.1
Co-Lead Counsel is responsible for disseminating Notice of the Settlement and
supervising the administration of the Settlement and the distribution of the Net Settlement Fund,
subject to the jurisdiction of the Court and in the manner provided for herein. The Claims
Administrator shall assist Co-Lead Counsel in connection with the administration of the
Settlement, including: (a) the printing, labeling and mailing of the Notice and the publication of
the Summary Notice; (b) the administration, processing and determination of claims; (c) the
distribution of the Net Settlement Fund; and (d) all other appropriate tasks to be performed to
effectuate the Settlement as directed by Co-Lead Counsel.
4.2
The distribution of the Net Settlement Fund to Settlement Class Members shall be
subject to the Plan of Allocation, which Lead Plaintiffs shall propose, subject to approval by the
Court following notice to the Settlement Class Members. The U.S. Directors shall not take any
position on the Plan of Allocation, provided it is not inconsistent with the terms of this
Stipulation.
4.3
The Plan of Allocation is not a necessary term or part of the Settlement or this
Stipulation and it is not a condition of this Stipulation (or to entry of the Final Order and
Judgment) that any particular plan of allocation be approved by the Court. The Court is to
consider the Plan of Allocation separately from, and independently of, the Court’s consideration
of the question of whether the proposed Settlement is fair, reasonable and adequate and in the
best interests of the Settlement Class. Any orders or proceedings relating to the Plan of
Allocation (or any other such plan of allocation as may be approved by the Court) as well as any
appeal therefrom (or appellate ruling) shall not: (a) operate to modify, terminate or cancel this
Settlement; (b) affect or delay the validity or finality of the Final Order and Judgment or any
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other orders entered by the Court giving effect to this Stipulation; (c) affect or delay the Effective
Date; (d) provide any ground or otherwise permit any Person (including Plaintiffs and the other
Settlement Class Members), or any of their counsel, to cancel, terminate or withdraw from the
Stipulation or the Settlement; and/or (e) affect or delay the validity of the Settlement.
4.4
Each Settlement Class Member who desires to share in the Net Settlement Fund is
a “Claimant” and must submit a fully completed and signed Proof of Claim Form together with
the documentation required thereby to the Claims Administrator in the manner, at the address
and by the deadline stated on the Proof of Claim Form and the Notice unless otherwise ordered
by the Court. Each Settlement Class Member who submits a valid, timely Proof of Claim Form
that is accepted in whole or in part is an “Authorized Claimant.” Each Authorized Claimant that
is determined to have a “Recognized Loss” (as that term will be defined in the Plan of
Allocation) shall be allocated a pro rata share of the Net Settlement Fund based on the amount
of his, her or its “Recognized Loss” in accordance with the Court-approved Plan of Allocation if
their claim is accepted for payment by the Court.
4.5
For purposes of determining the extent, if any, to which a Settlement Class
Member shall be entitled to be treated as an Authorized Claimant, the following conditions shall
apply:
(n)
each Settlement Class Member shall be required to submit a Proof of
Claim Form signed under penalty of perjury and supported by such documents as are designated
therein, including proof of the Claimant’s loss or such other documents or proof as Co-Lead
Counsel at their discretion may deem acceptable subject to the approval of the Court;
(o)
all Proof of Claim Forms must be submitted by the date specified thereon
unless such period is extended by the Court. Any Settlement Class Member who fails to do so
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will not be entitled to receive any of the proceeds of the Settlement Fund (unless, by order of the
Court, a later submitted Proof of Claim Form by such Settlement Class Member is approved),
but shall in all other respects be bound by the terms of this Stipulation and the Final Order and
Judgment. A Proof of Claim Form shall be deemed to have been submitted when posted, if
received with a postmark indicated on the envelope and if mailed first-class postage prepaid and
addressed in accordance with the instructions thereon, provided that it is received before the
motion for the Class Distribution Order is filed. In all other cases, the Proof of Claim Form shall
be deemed to have been submitted when actually received by the Claims Administrator;
(p)
each Proof of Claim Form shall be submitted to and reviewed by the
Claims Administrator who shall determine in accordance with this Stipulation and under the
supervision of Co-Lead Counsel the extent, if any, to which each claim shall be allowed subject
to review by the Court pursuant to ¶ 4.6 below;
(q)
a Proof of Claim Form that does not meet the submission requirements
may be rejected. Prior to rejection of a Proof of Claim Form, the Claims Administrator shall
communicate with the Claimant in order to afford the Claimant the opportunity to remedy any
curable deficiencies contained therein. The Claims Administrator under Co-Lead Counsel’s
supervision shall notify in a timely fashion and in writing all Claimants whose claim they
propose to reject in whole or in part, setting forth the reasons therefor and indicating that such
Person has the right to judicial review by the Court if such Claimant so desires and if such
Claimant complies with the requirements of ¶ 4.5 (e) below; and
(r)
if any Claimant who is notified by the Claims Administrator that the
Claims Administrator intends to reject his, her or its claim in whole or in part desires to contest
such rejection, such Claimant must within twenty (20) calendar days after the date of mailing of
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the Notice required in ¶ 3.2 above serve upon the Claims Administrator a notice and statement of
reasons indicating the Claimant’s grounds for contesting the rejection along with any supporting
documentation and specifically requesting a review thereof by the Court. If the dispute cannot
be resolved to the satisfaction of the Claimant, then Co-Lead Counsel shall present the claim for
review to the Court.
4.6
Co-Lead Counsel will apply to the Court, on notice to U.S. Directors’ Counsel,
for a Class Distribution Order approving the Claims Administrator’s administrative
determinations concerning the acceptance and rejection of the claims submitted and approving
any fees and expenses not previously applied for (including the fees and expenses of the Claims
Administrator) and, if the Effective Date has occurred, directing distribution of the Net
Settlement Fund to Authorized Claimants. If any funds remain in the Net Settlement Fund by
reason of uncashed distribution checks or otherwise, then, after the Claims Administrator has
made reasonable and diligent efforts to have Settlement Class Members who are entitled to
participate in the distribution of the Net Settlement Fund cash their distributions, any balance
remaining in the Net Settlement Fund shall be distributed as set forth in the Plan of Allocation.
4.7
This is not a claims-made settlement. As of the Effective Date, the U.S. Directors
shall not have any right to the return of the Settlement Fund or any portion thereof irrespective of
the number of Proof of Claim Forms filed, and/or the amounts to be paid to Authorized
Claimants from the Net Settlement Fund.
4.8
By submitting a Proof of Claim Form, each Settlement Class Member shall be
deemed to have submitted to the jurisdiction of the Court with respect to his, her or its claim and
this Settlement, and the claim will be subject to investigation and discovery under the Federal
Rules of Civil Procedure, provided that such investigation and discovery shall be limited to that
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Claimant’s status as a Settlement Class Member and the validity and amount of the claim. In
connection with the processing of the Proof of Claim Forms, no discovery shall be allowed on
the merits of the Action or of the Settlement.
4.9
Payment pursuant to the terms of this Stipulation shall be deemed final and
conclusive against Plaintiffs and all other Settlement Class Members. Regardless of whether
such person submits a Proof of Claim Form, seeks or obtains a payment or distribution from the
Settlement Fund or is entitled to a payment under the Plan of Allocation): any Settlement Class
Member: (a) who does not timely submit a valid Proof of Claim Form or has its claim rejected or
not otherwise approved by the Court, (b) shall be deemed to have waived its right to share in the
Settlement Fund, and shall forever be barred from participating in distributions therefrom, but
(c) otherwise shall be bound by all of the terms of the Settlement and this Stipulation and all
determinations, judgments and orders in the Action relating thereto, including the terms of the
Final Order and Judgment to be entered in the Action (including the Releases provided for
therein, whether favorable or unfavorable to the Settlement Class), and will be barred from
bringing any action against the Released Defendant Persons concerning the Released Plaintiff
Claims. Any Person that is not a Settlement Class Member (including, without limitation, those
who validly exclude themselves from the Settlement Class) shall not have any right to any share
of the Net Settlement Fund or to receive distributions therefrom.
4.10
A Settlement Class Member seeking exclusion from the Settlement Class shall be
requested to provide the information identified in the Notice to the Claims Administrator (in the
manner and on the schedule set forth therein and in the Preliminary Approval Order), including,
without limitation, the following: (a) name, address, telephone number; (b) Social Security
Number or Taxpayer Identification Number; and (c) a list stating the number of shares of Puda
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common stock purchased and sold during the Settlement Class Period, and the dates and prices
of each such purchase and sale. Any request for exclusion must also be signed by the Person
requesting exclusion. All Persons who submit valid and timely requests for exclusion in the
manner forth in the Notice shall have no rights under the Stipulation or the Settlement and shall
not be bound by the Final Order and Judgment. Unless otherwise ordered by the Court, any
herein.
4.11
No Person shall have any claim against Plaintiffs, Plaintiffs’ Counsel, the U.S.
Directors, the other Released Defendant Persons, or U.S. Directors’ Counsel based on the
administration of the Settlement, including without limitation the processing of claims and
distributions made in accordance with this Stipulation, the Settlement, the Plan of Allocation
and/or the implementation of the Class Distribution Order.
4.12
All proceedings with respect to the administration, processing and determination
of claims described in this Stipulation and the determination of all controversies relating thereto,
including disputed questions of law and fact with respect to the validity of claims, shall be
subject to the jurisdiction of the Court.
5.
The Releases
5.1
The obligations incurred pursuant to this Stipulation shall be in full and final
dismissal, discharge, settlement and disposition of: (a) the Action with respect to the U.S.
Directors; and (b) each and every one of the Released Claims by each and every one of the
Releasing Persons against each and every one of the Released Persons.
5.2
As of the Effective Date, each and every one of the Releasing Plaintiff Persons
(regardless of whether or not that Person actually submits a Claim Form, seeks or obtains a
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distribution from the Net Settlement Fund, is entitled to receive such a distribution under the
Plan of Allocation or has objected to the Settlement, the Plan of Allocation, the application for an
award of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel and/or the application for
a Reimbursement Award to Lead Plaintiffs) shall: (a) have, and by operation of law and the Final
Order and Judgment be deemed to have, completely, fully, finally, and forever dismissed,
released, relinquished and discharged with prejudice each and every one of the Released
Defendant Persons from each and every one of the Released Plaintiff Claims; (b) forever and
permanently be barred and enjoined by operation of law and the Final Order and Judgment from
filing, commencing, intervening in, participating in (as a class member or otherwise), instituting,
maintaining, prosecuting, seeking relief in (including filing an application or motion for
preliminary or permanent injunctive relief) or receiving any recovery, remedy, benefits or other
relief from any other lawsuit, action, arbitration, other proceeding or order in any jurisdiction
that asserts, is based on, arises from or relates in any way to any or all of the Released Plaintiff
Claims against any or all of the Released Defendant Persons; and (c) have, and by operation of
law and the Final Order and Judgment be deemed to have, covenanted not to sue any or all of the
Released Defendant Persons with respect to each and every one of the Released Plaintiff Claims.
Nothing in this Paragraph (or any other provision of this Stipulation) however: (a) is intended to
release any claims asserted by Plaintiffs (or any other Settlement Class Member) against any of
the Non-Settling Defendants in the Action; (b) is intended to release any claims asserted by
Plaintiffs (or any other Settlement Class Member) in the action captioned In re Puda Coal, Inc.
Stockholders Litigation, C.A. 6476-CB, currently pending in the Delaware Court of Chancery; or
(c) shall prohibit an eligible Settlement Class Member from seeking to obtain a recovery through
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the Fair Fund established in connection with the separate proceeding by the SEC captioned SEC
v. Macquarie Capital (USA) Inc., C.A. No. 15-CV-02304 (S.D.N.Y.).
5.3
As of the Effective Date, each and every one of the Releasing Defendant Persons
shall: (a) have, and by operation of law and the Final Order and Judgment be deemed to have,
completely, fully, finally, and forever dismissed, released, relinquished and discharged with
prejudice each and every one of the Released Plaintiff Persons from each and every one of the
Released Defendant Claims; (b) forever and permanently be barred and enjoined by operation of
law and the Final Order and Judgment from filing, commencing, intervening in, participating in
(as a class member or otherwise), instituting, maintaining, prosecuting, seeking relief in
(including filing an application or motion for preliminary or permanent injunctive relief) or
receiving any recovery, remedy, benefits or other relief from any other lawsuit, action,
arbitration, other proceeding or order in any jurisdiction that asserts, is based on, arises from or
relates in any way to any or all of the Released Defendant Claims against any or all of the
Released Plaintiff Persons; and (c) have, and by operation of law and the Final Order and
Judgment be deemed to have, covenanted not to sue any or all of the Released Plaintiff Persons
with respect to each and every one of the Released Defendant Claims.
5.4
With respect of the use of the term “Unknown” in connection with the Released
Claims:
(a)
Plaintiffs specifically acknowledge (and the other Releasing Plaintiff
acknowledged) that the term “Unknown Claims” in the definition of Released Plaintiff Claims
shall mean all claims that each of the Releasing Plaintiff Persons does not know or suspect to
exist at the time of the release of the Released Plaintiff Claims against the Released Defendant
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Persons, but which, if known by it/her/him, might affect its/her/his decision with respect to the
Settlement (including the decision to object or not to object to the Settlement); and (ii) the U.S.
Directors specifically acknowledge (and the other Releasing Defendant Persons shall be deemed
by operation of law and the Final Order and Judgment to have acknowledged) that the term
“Unknown Claims” in the definition of Released Defendant Claims shall mean all claims that
each of the Releasing Defendant Persons does not know or suspect to exist at the time of the
release of the Released Defendant Claims against the Released Plaintiff Persons, but which, if
known by it/her/him, might affect its/her/his decision with respect to the Settlement;
(b)
Plaintiffs expressly acknowledge (and the other Releasing Plaintiff
acknowledged) that they may hereafter discover facts in addition to or different from those that
they now know or believe to be true with respect to the subject matter of the Released Plaintiff
Claims but that it is nevertheless their intention to fully, finally and forever settle and release the
Released Plaintiff Claims without regard to the subsequent discovery of any such additional or
different facts; and (ii) the U.S. Directors expressly acknowledge (and the other Releasing
Defendant Persons shall be deemed by operation of law and the Final Order and Judgment to
have acknowledged) that they may hereafter discover facts in addition to or different from those
that they now know or believe to be true with respect to the subject matter of the Released
Defendant Claims but that it is nevertheless their intention to fully, finally and forever settle and
release the Released Defendant Claims without regard to the subsequent discovery of any such
additional or different facts; and
(c)
the Settling Parties expressly acknowledge (and the other Releasing
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acknowledged) that the inclusion of “Unknown Claims” in the definition of the Released Claims
was separately bargained for and was a key element of the Settlement, and with respect to the
Released Claims the Settling Parties expressly waive and relinquish, and the other Releasing
Persons shall be deemed to have waived and relinquished, and by operation of law and the Final
Order and Judgment shall have specifically waived and relinquished: (i) any and all provisions,
rights and benefits conferred under Section 1542 of the California Civil Code, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
and (ii) any and all provisions or rights conferred by any law of any state or territory of the
United States or principle of common law, which is similar, comparable or equivalent to Section
1542 of the California Civil Code.
5.5
All Settlement Class Members shall be bound by the terms of the Releases set
forth in this Stipulation whether or not any individual such Person actually submits a Claim
Form, seeks or obtains a distribution from the Net Settlement Fund, is entitled to receive such a
distribution under the Plan of Allocation or has objected to the Settlement, the Plan of Allocation
and/or any application for an award of attorneys’ fees and Litigation Expenses to Plaintiffs’
Counsel.
5.6
Notwithstanding the foregoing, the Released Claims do not include claims to
enforce the Final Order and Judgment, the Stipulation, the Settlement or any other orders or
judgments the Court may enter during the Action in connection with the Settlement, and any or
all of its terms, including, but not limited to, the Releases.
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6.
Attorneys’ Fees And Litigation Expenses Incurred By Plaintiffs
6.1
Co-Lead Counsel intends to apply to the Court for an award of attorneys’ fees and
reimbursement of Litigation Expenses to Plaintiffs’ Counsel as well as a Reimbursement Award
to Lead Plaintiffs in connection with the Settlement, which shall be paid out of the Settlement
Fund and only out of the Settlement Fund. The U.S. Directors will take no position on Co-Lead
Counsel’s applications, provided that they are not inconsistent with the terms of this Stipulation.
Notwithstanding any other provision of this Stipulation, no attorneys’ fees or Litigation
Expenses shall be paid to Plaintiffs’ Counsel and no Reimbursement Award shall be paid to Lead
Plaintiffs in the absence of entry of the Final Order and Judgment by the Court.
6.2
Any attorneys’ fees and Litigation Expenses awarded by the Court (as well as any
Reimbursement Award to Lead Plaintiffs) shall be paid from the Settlement Fund and not by the
U.S. Directors (or the other Released Defendant Persons). The Settlement Fund shall be the sole
source of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel (as well as the
Reimbursement Award to Lead Plaintiffs) in connection with the Settlement. No Settlement
Class Member, or their counsel, shall have any recourse against the U.S. Directors (or any of the
other Released Defendant Persons) for any such attorneys’ fees, Litigation Expenses or the
Reimbursement Award. The U.S. Directors (and the other Released Defendant Persons) shall
have no responsibility for and no liability whatsoever with respect to any payment of attorneys’
fees and Litigation Expenses made to Plaintiffs’ Counsel or for any Reimbursement Award paid
to Lead Plaintiffs.
6.3
Subject to Court approval, any attorneys’ fees or Litigation Expenses awarded by
the Court: (a) shall be paid to Plaintiffs’ Counsel within five (5) business days of the later of the:
(i) Court order awarding the attorneys’ fees and reimbursement of Litigation Expenses; and (ii)
entry of the Final Order and Judgment (provided it contains the Releases described in this
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Stipulation), notwithstanding the existence of any timely filed objections thereto, potential for
appeal therefrom, or collateral attack on the Settlement or any part thereof, (b) subject to
Plaintiffs’ Counsel’s obligation to make refunds or repayments to the Settlement Fund (plus
accrued interest thereon at the same net rate as is earned by the Settlement Fund in the Escrow
Account) if and when: (i) as the result of any appeal and/or further proceedings on remand or
successful collateral attack, the attorneys’ fee or Litigation Expense award is reduced, vacated or
reversed; (ii) the Effective Date does not occur; (iii) the Stipulation is terminated or cancelled for
any reason; (iv) the Settlement is voided by any party; (v) the award order does not become final;
and/or (vi) the Settlement is not approved or is reversed or modified by any court. Any
Reimbursement Award to Lead Plaintiffs shall be paid at the time the Net Settlement Fund is
paid to Authorized Claimants.
6.4
Plaintiffs’ Counsel shall refund and repay the full amount of any award of
attorneys’ fees or Litigation Expenses that is reversed, or the amount by which any such award is
reduced or modified, within fifteen (15) business days of the date of the event requiring the
refund and repayment as set forth in ¶ 6.3 herein. The refund and repayment shall include
interest at the same net rate earned by the Settlement Fund. As a condition of receiving
attorneys’ fees and Litigation Expenses, on behalf of itself of and each shareholder, each of
Plaintiffs’ Counsel agrees that it and its partners and/or shareholders are subject to the
jurisdiction of the Court for the purpose of enforcing the refund and repayment obligations set
forth in this Stipulation. Without limitation, each of Plaintiffs’ Counsel (and its partners and/or
shareholders) agrees that the Court may, upon application of the U.S. Directors and notice to CoLead Counsel, summarily issue orders enforcing this provision.
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6.5
Plaintiffs’ Counsel’s refund and repayment obligations under this Stipulation shall
be joint and several among the various law firms and any Person who was an equity partner of
the various law firms representing Plaintiffs at the time the attorneys’ fees or Litigation Expenses
are paid. Co-Lead Counsel shall notify U.S. Directors’ Counsel at least three (3) business days
before the release of any monies from the Escrow Account to Plaintiffs’ Counsel for attorneys’
fees and Litigation Expenses. In the event that Plaintiffs’ Counsel does not comply with the
obligation to repay those funds within the specified time period, Plaintiffs’ Counsel shall pay any
expenses or fees (including attorneys’ fees) incurred by the U.S. Directors in connection with
enforcing this obligation. The obligations in ¶¶ 6.3 – 6.5 shall survive, and remain in full force
and effect and be binding in all respects on the Settling Parties and their counsel, even if the
Stipulation is terminated, the Settlement is not approved and/or the Effective Date does not
occur. Co-Lead Counsel shall be responsible for ensuring the compliance of Plaintiffs’ Counsels
with respect to the obligations in ¶ 6.5 hereof.
6.6
The procedures for, and the Court’s decision regarding, the applications for
attorneys’ fees and Litigation Expenses to be paid Plaintiffs’ Counsel and a Reimbursement
Award to Lead Plaintiffs are not conditions of the Settlement or to entry of the Final Order and
Judgment. The request for attorneys’ fees and Litigation Expenses (as well as any
Reimbursement Award to Lead Plaintiffs) are to be considered by the Court separately from and
independently of the Court’s consideration of the question whether the Settlement is fair,
reasonable, adequate and in the best interests of the Settlement Class. Any orders or proceedings
relating to any request for attorneys’ fees and Litigation Expenses (as well as any
Reimbursement Award to Lead Plaintiffs) or any appeal from any order or proceedings relating
thereto shall not: (a) operate to modify, terminate or cancel this Settlement; (b) affect or delay
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the validity or finality of the Final Order and Judgment or any other orders entered by the Court
giving effect to this Stipulation; (c) affect or delay the Effective Date; (d) provide any ground or
otherwise permit any Person (including Plaintiffs and the other Settlement Class Members), or
any of their counsel, to cancel, terminate or withdraw from the Stipulation or the Settlement;
and/or (e) affect or delay the validity of the Settlement.
6.7
Co-Lead Counsel shall be responsible for allocating the attorneys’ fees and
Litigation Expenses awarded by the Court among all counsel representing Plaintiffs and any
other Settlement Class Member in a manner in which they in good faith believe reflects the
contribution of each such counsel to the prosecution and resolution of the Action. The U.S.
Directors (and the other Released Defendant Persons) shall have no responsibility for or liability
whatsoever with respect to the allocation of attorneys’ fees and Litigation Expenses among
Plaintiffs’ Counsel and/or any other Person who may assert some claim thereto.
6.8
Co-Lead Counsel shall be responsible for allocating any Reimbursement Award
granted by the Court among the Lead Plaintiffs in a manner in which they in good faith believe
reflects the contribution of each such Person to the prosecution and resolution of the Action. The
U.S. Directors (and the other Released Defendant Persons) shall have no responsibility for or
liability whatsoever with respect to the allocation of the Reimbursement Award among the Lead
Plaintiffs and/or any other Person who may assert some claim thereto.
7.
Terms Of The Judgment
7.1
If the Settlement contemplated by this Stipulation is approved by the Court, Co-
Lead Counsel and U.S. Directors’ Counsel shall jointly request that the Court enter a Final Order
and Judgment which shall be substantially in the form attached hereto as Exhibit B. The
proposed Final Order and Judgment shall contain, inter alia, each of the provisions set forth in
this Paragraph.
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7.2
Releases. The Proposed Final Order and Judgment shall contain, and the Settling
Parties agree to the entry by the Court of, the Releases provided for in Section 5 of this
Stipulation.
7.3
Bar Order. The proposed Final Order and Judgment shall contain, and the
Settling Parties agree to the entry by the Court of, a Bar Order that contains the following
provisions:
(a) except as provided in subparagraphs (c) and (d), permanently barring and
enjoining any and all Persons from commencing, prosecuting or asserting against any of the
Releasing Defendant Persons any claim for contribution arising out of the Action;
(b) except as provided in subparagraphs (c) and (d), permanently barring and
enjoining the Releasing Defendant Persons from commencing, prosecuting or asserting against
any Person a claim for contribution arising out of the Action, other than a Person whose liability
has been extinguished by this Settlement through a Release or otherwise;
(c) for the avoidance of doubt, nothing in subparagraphs (a) and (b) above, and,
nothing in the Stipulation or the Final Order and Judgment, shall bar, preclude, release, prevent,
limit, impact and/or otherwise affect in any respect any action by any of the Released Persons to
enforce or effectuate the terms and provisions of this Stipulation, the Settlement, the Preliminary
Approval Order and/or the Final Order and Judgment, including, without limitation, the Releases
provided for herein;
(d) in accordance with 15 U.S.C. § 78u-4(f)(7)(B), a judgment reduction
provision to the effect that any final verdict or judgment that may be obtained by or on behalf of
the Settlement Class or a Settlement Class Member against any of the Non-Settling Defendants
shall be reduced by the greater of: (i) an amount that corresponds to the percentage of
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responsibility of the U.S. Directors for common damages; or (ii) the amount paid by or on behalf
of the U.S. Directors to the Settlement Class for common damages; and
(e) notwithstanding the foregoing, nothing in this provision shall apply to claims
that may be asserted by any Persons who timely and validly opt out of this Settlement and do not
revoke their request for exclusion within the applicable time period.
7.4
Permanent Injunction. The proposed Final Order and Judgment shall contain,
and the Settling Parties agree to the entry by the Court of, a provision that forever and
permanently bars and enjoins: (a) each of the Releasing Plaintiff Persons from filing,
commencing, prosecuting, intervening in, participating in (as class members or otherwise),
instituting, maintaining, prosecuting, seeking relief in (including filing an application or motion
for preliminary or permanent injunctive relief) or receiving any recovery, remedy, benefits or
other relief from, any other lawsuit, arbitration or other proceeding or order in any jurisdiction
that asserts, is based upon, arises out of, or relates in way to any or all of the Released Plaintiff
Claims against any or all of the Released Defendant Persons; and (b) the Releasing Defendant
Persons from filing, commencing, prosecuting, intervening in, participating in (as class members
or otherwise), instituting, maintaining, prosecuting, seeking relief in (including filing an
application or motion for preliminary or permanent injunctive relief) or receiving any recovery,
remedy, benefits or other relief from, any other lawsuit, arbitration or other proceeding or order
in any jurisdiction that asserts, is based upon, arises out of, or relates in any way to the Released
Defendant Claims against any or all of the Released Plaintiff Persons.
7.5
agree to the entry by the Court of, language providing that nothing in ¶ 7.4 or otherwise in the
Final Order and Judgment shall bar, prohibit or limit: (a) a Settlement Class Member from
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proceeding with any of the claims that have already been asserted against the already named
defendants in In re Puda Coal, Inc. Stockholders Litigation, C.A. 6476-CB, currently pending in
the Delaware Court of Chancery; (b) an eligible Settlement Class Member from seeking to obtain
a recovery through the SEC Fair Fund process established in connection with the proceeding
captioned SEC v. Macquarie Capital (USA) Inc., C.A. No. 15-CV-02304 (S.D.N.Y.); and/or (c)
bar any action by any of the Released Persons to enforce or effectuate the terms and provisions
of this Stipulation, the Settlement, the Preliminary Approval Order and/or the Final Order and
Judgment, including, without limitation, the Releases provided for herein.
7.6
agree to the entry by the Court of, a provision requiring that any final verdict or judgment that
may be obtained by or on behalf of the Settlement Class or a Settlement Class Member against a
Non-Settling Defendant(s) shall be reduced by the greater of: (a) an amount that corresponds to
the percentage of responsibility of the U.S. Directors for common damages; or (b) the amount
paid by or on behalf of the U.S. Directors to the Settlement Class for common damages.
7.7
agree to the entry by the Court of, a provision as to the Settling Parties’ Rule 11 compliance
pursuant to Section 21D(c)(1) of the Exchange Act, as amended by the PSLRA, 15 U.S.C. § 78u4(c)(1).
8.
The Effective Date
8.1
The Effective Date of the Settlement shall be the first date by which all of the
following events and conditions have occurred and been met (or have been waived in a writing
signed by the Person that is waiving the event and condition):
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(a)
this Stipulation and such other documentation as may be required to obtain
final Court approval of this Stipulation, in a form satisfactory to the Settling Parties, have been
duly executed;
(b)
the Court has entered the Preliminary Approval Order (substantially in the
form annexed hereto as Exhibit A);
(c)
the Settlement Amount has been deposited in the Escrow Account in
accordance with the provisions of this Stipulation;
(d)
approval by the Court of the Settlement, following notice to the Settlement
Class and a hearing;
(e)
expiration of the time for the U.S. Directors to exercise their option to
terminate the Stipulation under the Supplemental Agreement described in ¶ 9.3 herein without
the exercise of that option;
(f)
entry of the Final Order and Judgment substantially in the form attached
hereto as Exhibit B (and without removing or making any modifications or changes to the
Releases);
(g)
expiration of the time for the filing or noticing of any Appeal from the
Final Order and Judgment (and including any extensions of time) without any Appeal having
been filed, other than those appeals and proceedings set forth in ¶ 4.3 or ¶ 6.3 herein;
(i)
if there is an Appeal or Appeals with respect to the Final Order and
Judgment (other than those appeals and proceedings specified in ¶ 4.3 or ¶ 6.3), the date of
dismissal of the Appeal or final affirmance on Appeal of the Final Order and Judgment (such
that the order represents a final and binding determination of all issues within its scope) and the
expiration of all deadlines for any further judicial review thereof (whether by motions for
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reconsideration, petitions for certiorari or other mechanism), and the conclusion of all
proceedings ordered on remand and all proceedings arising out of any subsequent Appeal or
Appeals following a decision on remand (and, if certiorari is granted, the date of final
affirmance of the Final Order and Judgment pursuant to the writ); and
(j)
no Person has given notice of its election to terminate this Stipulation and
the Settlement pursuant to ¶¶ 9.1, 9.3 or 9.5 herein, and the time for doing so has expired.
8.2
Notwithstanding anything in this Stipulation, the Effective Date (and the
effectiveness of the Settlement) does not depend in any way upon the resolution of any orders,
proceedings, rulings, consideration, appeals or other matters solely concerning, relating to, based
upon or arising out of: (a) Court approval of the Plan of Allocation; (b) any application for an
award of attorneys’ fees or reimbursement of Litigation Expenses to Plaintiffs’ Counsel
(including the allocation of such fees among counsel); (c) the Court’s findings and conclusions
pursuant to Section 21D(c)(1) of the Exchange Act, 15 U.S.C. § 78u-4(c)(1); (d) the separate
Brean Settlement and/or Macquarie Settlement; and/or (e) any Reimbursement Award.
8.3
Upon the Effective Date, any and all interests and rights of the U.S. Directors in
or to the Settlement Fund shall be absolutely and forever extinguished. Without limiting any of
the foregoing, the U.S. Directors shall have, in their sole discretion, the option to terminate the
Settlement in its entirety in the event that the Final Order and Judgment does not provide for the
dismissal with prejudice of the Action against them.
8.4
The Settling Parties have agreed that the Brean Settlement and/or the Macquarie
Settlement are not a condition to this Settlement or to entry of the Final Order and Judgment and
is to be considered by the Court separately from and independently of the Court’s consideration
of the question whether the Settlement is fair, reasonable, adequate and in the best interests of the
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Settlement Class. Any orders or proceedings relating to the Brean Settlement and/or Macquarie
Settlement, or any appeal from any order or proceedings relating thereto, shall not: (a) operate to
modify, terminate or cancel this Settlement; (b) affect or delay the validity or finality of the Final
Order and Judgment or any other orders entered by the Court giving effect to this Stipulation; (c)
affect or delay the Effective Date; (d) provide any ground or otherwise permit any Person
(including Plaintiffs and the other Settlement Class Members), or any of their counsel, to cancel,
terminate or withdraw from the Stipulation or the Settlement; and/or (e) affect or delay the
validity of the Settlement.
9.
Termination
9.1
No Settling Party shall have any obligation whatsoever to proceed under any
terms or conditions other than substantially in the form provided and agreed to herein. The U.S.
Directors and Lead Plaintiffs shall each have the unilateral right to terminate the Settlement and
this Stipulation by providing written notice of their election to do so to counsel to the other
within ten (10) business days of any of the following events (“Termination Notice”):
(a)
the Court’s declining to enter the Preliminary Approval Order
substantially in the form attached hereto as Exhibit A or modifying it in any material respect;
(b)
the Court’s declining to enter the Stipulated Judgment substantially in the
form attached hereto as Exhibit C or the Court’s modification of it in any material respect;
(c)
the Court’s refusal to approve the Settlement as set forth in this Stipulation
or the Court’s modification of it in any material respect (including, without limitation, by
removing or making any modifications or changes to the Releases);
(d)
the Court’s modification of the Settlement as set forth in the Stipulation in
any material respects (including, without limitation, by removing or making any modifications or
changes to the Releases);
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(e)
the Court’s declining to enter the Final Order and Judgment substantially
in the form attached hereto as Exhibit B or the Court’s modification of the Final Order and
Judgment in any material respect (including, without limitation, by removing or making any
modifications or changes to the Releases); and/or
(f)
the date upon which the Final Order and Judgment is vacated, modified
reversed or revised in any material respect by any level of appellate court (including, without
limitation, by removing or making any modifications or changes to the Releases).
9.2
Notwithstanding any other provision or paragraph of this Stipulation: (a) no
ruling, consideration, decision, action or inaction by the Court or any appellate court relating
solely to (i) an award of attorneys’ fees and Litigation Expenses to Plaintiffs’ Counsel pursuant
to Section 6 herein, (ii) the Plan of Allocation (iii) Court approval of the separate Brean
Settlement, (iv) Court approval of the separate Macquarie Settlement, and/or (v) the
Reimbursement Award; shall (b) entitle Lead Plaintiffs, the Additional Named Plaintiffs or any
other Settlement Class Member (or their counsel) to withdraw from, cancel or terminate the
Settlement or this Stipulation.
9.3
In addition to the grounds set forth in ¶ 9.1 above, the U.S. Directors shall have
the unilateral unconditional option to withdraw from the Settlement and terminate the Stipulation
if the Persons requesting exclusion from the Settlement Class meet or exceed the conditions set
forth in a confidential supplemental agreement that accompanies this Stipulation (the
“Supplemental Agreement”). The Supplemental Agreement shall not be filed with the Court and
its terms shall not be disclosed in any other manner (other than the statements herein and those in
the Notice attached hereto as Exhibit A-1) unless and until the Court requires the Settling Parties
to file the Supplemental Agreement or disclose its terms or a dispute arises between Lead
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Plaintiffs and the U.S. Directors concerning its interpretation or application. In either of those
events, the Supplemental Agreement shall be filed and maintained by the Court under seal. In
the event of an objection to the Settlement based upon the confidentiality of the conditions stated
in the Supplemental Agreement, and notwithstanding anything to the contrary in this Paragraph
or the Supplemental Agreement, Lead Plaintiffs and U.S. Directors can agree to jointly waive
confidentiality.
9.4
In the event that the U.S. Directors elect to terminate the Stipulation in
accordance with the Supplemental Agreement pursuant to ¶ 9.3 herein and such termination is
not nullified in accordance with the terms of the Supplemental Agreement, the Stipulation shall
be terminated and deemed null and void and the provisions of ¶ 9.6 shall apply. Notwithstanding
the foregoing, the Stipulation shall not become null and void as a result of the election by the
U.S. Directors to exercise their option to withdraw from the Stipulation pursuant to the
Supplemental Agreement until the conditions set forth in the Supplemental Agreement have been
fully satisfied.
9.5
In addition to the grounds set forth in ¶ 9.1 above, Lead Plaintiffs shall have the
right to terminate the Settlement, and thereby this Stipulation, if the Settlement Amount is not
paid in accordance with ¶ 2.1 herein; provided, however, that Co-Lead Counsel shall have first
provided notice to U.S. Directors’ Counsel of such failure to make payment and the failure shall
not have been cured within three (3) business days of receipt of such notice. Notwithstanding
the foregoing, Plaintiffs shall have the right to collect interest from the U.S. Directors to
compensate the Settlement Class for any delay in payment of the Settlement Amount into the
Escrow Account.
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9.6
If the Stipulation is terminated in accordance with this provisions of this
Paragraph, the Settlement is not approved by the Court, the Effective Date otherwise does not
occur and/or the Settlement otherwise fails for any reason:
(a)
the Settlement Amount (including any net interest earned thereon), but
less any Notice and Administration Expenses actually incurred or paid in connection with the
Settlement permitted by this Stipulation up to $100,000 and less all Taxes paid or owing, shall be
refunded to the U.S. Directors no later than ten (10) business days after written notification of
such event by U.S. Directors’ Counsel;
(b)
the Settlement and this Stipulation shall be null, void and without
prejudice and none of its terms shall have any further force or effect or be enforceable;
(c)
the Action shall proceed in all respects as if this Stipulation had not been
entered and all negotiations, discussions, acts, Court orders and other proceedings in connection
therewith treated as if they never existed;
(d)
the Settling Parties shall be deemed to have reverted to their respective
status in the Action as of October 27, 2015;
(e)
any judgment(s) or order(s) entered by the Court in accordance with the
terms of this Stipulation shall be treated as vacated, nunc pro tunc; and
(f)
the facts and terms of this Stipulation shall not be admissible in any trial of
this Action or any other proceeding.
9.7
The Settling Parties agree that any disputes concerning the termination of the
Settlement pursuant to the Stipulation shall be presented to the Court, which shall have exclusive
jurisdiction to resolve and rule as to whether the Settlement and this Stipulation has been
properly terminated.
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9.8
Notwithstanding the foregoing, the provisions of and obligations in ¶¶ 2.3, 4.11,
6.3, 6.4, 6.5, 9.6, 10.1, 10.2, 10.3, 12.13, and 12.14 above shall survive and remain in full force
and effect and be binding in all respects on the Settling Parties even if the Stipulation is
10.
No Admissions
10.1
Whether or not the Settlement is approved by the Court and whether or not the
Settlement is consummated, the facts and terms of the Settlement and this Stipulation (including
all exhibits hereto), as well as all negotiations, discussions, acts performed, agreements, drafts,
documents signed and proceedings in connection with the Settlement:
(a)
shall not be described as, construed as, interpreted as, or offered or
received against any of the Released Defendant Persons as evidence of and/or deemed to be
evidence of any presumption, concession or admission by them as to: (i) the truth of any fact
alleged in the Complaint; (ii) the validity of any claim that has been or could have been asserted
in the Action or in any other litigation; (iii) the deficiency of any defense that has been or could
have been asserted in the Action or in any other litigation; and/or (iv) any liability, negligence,
misconduct, inaction, fault, or wrongdoing of any sort on their part as alleged in the Complaint;
(b)
shall not be described as, construed as, interpreted as or offered or
received against Plaintiffs or any other Settlement Class Member as evidence of any infirmity in
the claims of said Person or that damages recoverable from the U.S. Directors would not have
exceeded the Settlement Amount;
(c)
shall not be described as, construed as, interpreted as, offered or received
against any of the Settling Parties as an admission or concession that the consideration to be
given in the Settlement represents the amount which could be or would have been awarded to
any Settlement Class Member after trial;
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(d)
shall not be construed, offered, interpreted, deemed or received against
any of the Released Persons in any other civil, criminal, regulatory or administrative action,
litigation or proceeding, except in connection with any action, litigation or proceeding to enforce
the terms of this Stipulation, the Settlement and/or the Final Order and Judgment; and
(e)
shall not be deemed or construed to create any inferences of any damages,
or lack of damages, suffered by Plaintiffs or any of the other Settlement Class Members.
10.2
Notwithstanding the foregoing, any of the Released Persons may file, offer, cite,
refer to or otherwise employ the Stipulation, the Settlement, the Final Order and Judgment (if
entered) and any other orders of the Court: (a) to enforce their terms; (b) to enforce the Releases
upon the Effective Date; and/or (c) to support a defense or counterclaim based on principles of
res judicata, collateral estoppel, release and discharge, good faith settlement, judgment bar or
reduction, any theory of claim preclusion or issue preclusion or any similar defense or
counterclaim, upon the Effective Date.
10.3
The provisions of, and obligations in Section 10 shall survive and remain in full
force and effect and be binding in all respects on the Settling Parties even if the Stipulation is
11.
Representations And Warranties
11.1
Plaintiffs represent and warrant that, at all times relevant to this Action, they were
each a Settlement Class Member, and that, to their knowledge, none of their Released Plaintiff
Claims has been assigned, encumbered, or in any manner transferred in whole or in part.
Plaintiffs represent and warrant that they will not attempt, and have not attempted, to assign,
encumber, or in any manner transfer in whole or in part any of the Released Plaintiff Claims.
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11.2
Plaintiffs and the U.S. Directors represent and warrant that: (a) they have made
such investigation of the facts pertaining to the Settlement provided for in this Stipulation, and
all of the matters pertaining thereto, as such Party deems necessary and advisable; and (b) they,
or a responsible officer, partner, fiduciary, counsel (including Plaintiffs’ Counsel, and U.S.
Directors’ Counsel) or other such similar Person thereof, have read this Stipulation and
understands the contents hereof.
11.3
All counsel executing this Stipulation, the Supplemental Agreement, or any
related Settlement documents, represent and warrant that she/he/it has the authority to do so and
that she/he/it has the authority to take appropriate action required or permitted to be taken
pursuant to this Stipulation to effectuate its terms.
11.4
If a case is commenced in respect of the U.S. Directors under title 11 of the
United States Code (Bankruptcy), or a trustee, receiver or conservator is appointed under any
similar law, and in the event of the entry of a final order of a court of competent jurisdiction
determining the transfer of money to the Settlement Fund or any portion thereof by or on behalf
of the U.S. Directors to be a preference, voidable transfer, fraudulent transfer or similar
transaction, and any portion thereof is required to be returned, and such amount is not promptly
deposited to the Settlement Fund by others, then at the election of Lead Plaintiffs, the Settling
Parties shall jointly move the Court to vacate and set aside the Releases and the Final Order and
Judgment entered in favor of the U.S. Directors pursuant to this Stipulation, which Releases and
Final Order and Judgment shall be null and void, the Settling Parties shall be restored to their
respective positions as of October 27, 2015, and any cash amounts in the Settlement Fund shall
be returned as provided above.
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12.
12.1
The Stipulation shall be binding when signed by all parties hereto but the
Settlement shall be effective and final only upon occurrence of the Effective Date.
12.2
Plaintiffs’ Counsel and U.S. Directors’ Counsel agree to: (a) cooperate fully with
each other in seeking Court approval of the Settlement; (b) promptly execute all additional
documentation that may reasonably be required to obtain Court approval; and (c) use their
reasonable best efforts, and to take all such other steps as may be necessary and required, to
effect the consummation of this Stipulation and the Settlement. Without further order of the
Court, the Settling Parties may agree to reasonable extensions of time to carry out any of the
provisions of this Stipulation.
12.3
Plaintiffs and the U.S. Directors, and their respective attorneys, agree not to assert
in any forum that this Action was brought by Plaintiffs or Plaintiffs’ Counsel (or defended by the
U.S. Directors or their counsel), in bad faith or without a reasonable basis. For the purpose of
the Court’s findings and conclusions pursuant to Section 21D(c)(1) of the Exchange Act, as
amended by the PSLRA, the Settling Parties shall assert no claims of any violation of Rule 11 of
the Federal Rules of Civil Procedure relating to the prosecution, defense or settlement of this
Action. The Settling Parties agree that the amount paid and the other terms of this Settlement
were negotiated at arm’s length and in good faith, and reflect a settlement that was reached
voluntarily after consultation with experienced legal counsel.
12.4
This Stipulation, the exhibits hereto and the Supplemental Agreement constitute
the entire agreement and understanding of the Settling Parties, and supersede any prior
agreements or understandings between them with respect to the Settlement. In entering into this
Stipulation, none of the Settling Parties is relying on any promise, warranty, inducement or
representation other than those set forth in this Stipulation and the Settling Parties disclaim the
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existence of any such promise, warranty, inducement or representation. The Settling Parties
intend this Stipulation to be final and complete resolution of all disputes asserted or which could
have been asserted by the Settling Parties against one another as well as all of the Released
Claims by any of the Releasing Parties against the Released Persons.
12.5
All agreements made and orders entered during the course of this Action relating
to the confidentiality of documents and information shall survive this Stipulation and the
Effective Date pursuant to their terms unless otherwise modified by the Court.
12.6
All of the exhibits attached to this Stipulation as well as the Supplemental
Agreement are material and integral parts hereof and are hereby incorporated by reference as
though fully set forth herein. This Stipulation, including the exhibits to this Stipulation and the
Supplemental Agreement referred to in ¶ 9.3, may not be amended or modified except in a
writing signed by all counsel who has executed this Stipulation. Any condition contained in this
Stipulation may be waived by the party entitled to enforce the condition in a writing signed by
that party or his, her or its counsel. The waiver by any party of any breach of this Stipulation by
any other party shall not be deemed a waiver of the breach by any other party (or a waiver of any
other prior or subsequent breach of this Stipulation by that party or any other party).
12.7
Any failure by a party to insist upon strict performance by any other party of any
of the provisions of this Stipulation shall not be deemed a waiver of any of the other provisions
hereof, and such a party, notwithstanding such failure, shall have the right thereafter to insist
upon the strict performance of any and all of the provisions of this Stipulation to be performed
by such other party.
12.8
If any party is required to give notice to another party under this Stipulation, such
notice shall be in writing and shall be deemed to have been duly given upon receipt of hand
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delivery or facsimile or email transmission, with confirmation of receipt. Notice shall be
provided as follows:
If to the U.S. Directors or U.S.
Directors’ Counsel:
If to Plaintiffs or Plaintiffs’ Counsel:
The Rosen Law Firm PA
275 Madison Avenue, 34th Floor
New York, NY 10016
Tel: (212) 686-1060
Fax: (212) 202-3827
ATTN: Laurence Rosen
Sara Fuks
[email protected]
[email protected]
12.9
Goodwin Procter LLP
Mary K. Dulka, Esq.
The New York Times Building
620 Eighth Avenue
New York, NY 10018
Tel: (212) 813-8800
Fax: (212) 355-3333
[email protected]
The construction, interpretation, operation, effect and validity of this Stipulation
(and all documents necessary to effectuate it) shall be governed by and construed according to
the internal laws of the State of New York without regard to the conflict of law rules, except to
the extent that federal law requires that federal law governs.
12.10 This Stipulation is the result of arm’s-length negotiations between the Settling
Parties. The Settling Parties have contributed substantially and materially to the preparation of
this Stipulation and this Stipulation shall not be construed more strictly against one party than
another merely by virtue of the fact that the Stipulation or a particular provision or paragraph of
the Stipulation may have been prepared by counsel for a particular party.
12.11 The section headings used throughout this Stipulation (and the exhibits) are for
convenience only and shall not affect the interpretation or construction of this Stipulation. This
Stipulation may be executed in one or more counterparts.
12.12 This Stipulation shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the Settling Parties. All Released Persons who are not parties to this
Stipulation are intended third-party beneficiaries of the Settlement and, upon the occurrence of
62
ACTIVE/84410169.5
the Effective Date, are entitled to enforce the terms of the Releases provided under the Final
Order and Judgment.
12.13 The administration and consummation of the Settlement shall be under the
authority of the Court, which shall retain jurisdiction with respect to the implementation and
enforcement of its terms. Any disputes arising out of this Stipulation or the Settlement shall be
filed and litigated exclusively in this Court.
12.14 The Settling Parties agree that the terms of this Stipulation and the fact that it has
been executed are strictly confidential until this Stipulation has been filed with the Court, except
to the extent required by law or as mutually agreed to by the Settling Parties hereto in writing.
While maintaining their own positions as to the merits of claims and defenses asserted in the
Action, the Settling Parties and their counsel agree not to make any public statements, statements
to the media (whether or not for attribution), or any statement published on a public website that:
(a) disparages the business, conduct or reputation of the others; (b) makes any accusations of
wrongful or actionable conduct by the other concerning the prosecution, defense and/or
resolution of the Action; and/or (c) suggests that the Settlement constitutes an admission as to
any claim or defense alleged. The obligations in this Paragraph shall survive and remain in full
force and effect and be binding on the Settling Parties even if the Stipulation is terminated, the
Settlement is not approved and/or the Effective Date does not occur.
12.15 The U.S. Directors shall be responsible for the CAFA Notice and shall take steps
to comply with the CAFA requirements in as expeditious a manner as possible so as to not cause
delay in the scheduling of the Settlement Hearing. Any fees or costs incurred in connection with
the preparation and service of the CAFA Notice shall be borne by the U.S. Directors and under
63
ACTIVE/84410169.5
no circumstances will be borne by the Settlement Class Members (or their counsel), or payable
from the Settlement Fund.
12.16 It is understood by the Settling Parties that, except for the matters expressly
represented herein, the facts or law with respect to which this Stipulation is entered into may turn
out to be other than or different from the facts and law now known to each Settling Party or
believed by such party to be true; each party therefore expressly assumes the risk of the facts or
law turning out to be different, and agrees that this Stipulation shall be in all respects effective
and not subject to termination by reason of any such different facts or law.
12.17 This Stipulation may be executed in one or more original, e-mailed and/or faxed
counterparts. All executed counterparts and each of them shall be deemed to be one and the
same instrument. Counsel for each of the Settling Parties will maintain their own respective
signature pages. No Settling Party shall raise the use of e-mail to deliver or transmit a signature
as a defense to the formation or enforceability of this Stipulation, and each Settling Party forever
waives any such defense. A complete set of executed counterparts shall be filed with the Court.
64
ACTIVE/84410169.5
PROOF OF SERVICE BY ELECTRONIC POSTING PURSUANT TO SOUTHERN
DISTRICT OF NEW YORK ECF AND LOCAL RULES AND BY MAIL
ON ALL KNOWN NON-REGISTERED PARTIES
I, the undersigned say:
I am not a party to the above case, and am over eighteen years old. On December 1, 2015, I
served true and correct copies of the foregoing document, by posting the document electronically to
the ECF website of the United States District Court for the Southern District of New York, for
receipt electronically by the parties listed on the Court’s Service List.
I affirm under penalty of perjury under the laws of the United States of America that the
foregoing is true and correct. Executed this 1st day of December, 2015, at Los Angeles, California.
s/ Joshua L. Crowell
Joshua L. Crowell
320388.1 PUDA
SDNY CM/ECF Version 5.1.1-
1 of 3
https://ecf.nysd.uscourts.gov/cgi-bin/MailList.pl?802779438704633-L_1_0-1
Mailing Information for a Case 1:11-cv-02598-DLC-HBP
Electronic Mail Notice List
The following are those who are currently on the list to receive e-mail notices for this case.
Joseph Alexander Baratta
[email protected]
Jeffrey Philip Campisi
[email protected]
Jason Canales
[email protected],[email protected]
Michael Barry Carlinsky
Albert Yong Chang
[email protected],[email protected],[email protected],[email protected]
Michael Vincent Cibella
[email protected]
Joshua Lon Crowell
[email protected]
Greg A. Danilow
[email protected],[email protected],[email protected],[email protected],[email protected],[email protected]
Lauren Dickie
[email protected]
Dana S. Douglas
[email protected]
Mary Kathryn Dulka
William Bernard Federman
[email protected],[email protected],[email protected]
Frederic Scott Fox , Sr
[email protected]
Sara Esther Fuks
[email protected]
Lionel Z. Glancy
[email protected],[email protected],[email protected],[email protected],[email protected]
Seth Goodchild
Mark Holland
[email protected]
D. Seamus Kaskela
[email protected]
David E Kovel
Louis Carey Ludwig
[email protected]
Matthew M. Madden
Ottavio Vincenzo Mannarino
[email protected]
Brian James Massengill
12/1/2015 5:31 PM
2 of 3
Justin Adam McCarty
[email protected]
Jonathan Craig Medow
[email protected]
Joshua N. Mitchell
[email protected]
Juan P. Morillo
[email protected]
Robert Vincent Prongay
Andrei V. Rado
Laurence Matthew Rosen
[email protected]
David Avi Rosenfeld
Kevin F. Ruf
[email protected]
Rushank Raj Shah
[email protected]
Yu Shi
[email protected]
Richard Mark Strassberg
Jennifer Elizabeth Traystman
[email protected]
Curtis Victor Trinko
[email protected]
John Brandon Walker
[email protected]
Minyao Wang
[email protected]
Michael Jonathan Wernke
[email protected]
John S. Williams
[email protected]
Robert S. Wolf
[email protected],[email protected],[email protected]
Kathryn Schaefer Zecca
[email protected]
Maryana Zubok
[email protected],[email protected],[email protected],[email protected],[email protected]
Manual Notice List
The following is the list of attorneys who are not on the list to receive e-mail notices for this case (who therefore require manual noticing). You may wish to use your
mouse to select and copy this list into your word processing program in order to create notices or labels for these recipients.
Adriene
O. Bell
Kessler Topaz Meltzer & Check, LLP (PA)
280 King of Prussia Road
Radnor, PA 19087
Samuel Blankenship
,
Michael
Goldberg
Glancy Binkow & Goldberg, LLP (CA)
12/1/2015 5:31 PM
3 of 3
1925 Century Park East, Suite 2100
Michael
Marc Goldberg
Glancy Binkow & Goldberg LLP
1801 Avenue of the Stars
Suite 311
Myron
Harris
South 106-Park Tower Place
22nd & Benjamin Franklin Pkwy
Philadelphia, PA 19130
David
M. Promisloff
Kessler Topaz Meltzer & Check, LLP
280 King of Prussia Road
Radnor, PA 19087
12/1/2015 5:31 PM
Exhibit A
THE PLAN OF ALLOCATION FOR THE FAIR FUND
Calculation of Eligible Loss Amount per Share
For shares of Puda Coal common stock not purchased in the Secondary Offering, the Eligible Loss Amount per share
is $0.00.
For shares of Puda Coal common stock purchased in the Secondary Offering and:
a. Sold before the close of trading on April 7, 2011, the Eligible Loss Amount per share is $0.00;
b. Sold between the opening of trading on April 8, 2011 and the close of trading on April 30, 2012, the
Eligible Loss Amount per share is $12.00 minus the sales price per share;
c. Held as of the close of trading on April 30, 2012, the Eligible Loss Amount per share is $12.00.
Pro Rata Calculation
Should the Total Eligible Loss Amount of all Eligible Claimants exceed the Net Fair Fund, the Distribution Agent
will distribute funds to the Eligible Claimants based upon a pro rata distribution formula. The Distribution Agent
shall determine each Eligible Claimant’s pro rata share of the Fair Fund based upon each Eligible Claimant’s Total
Eligible Loss Amount divided by the Total Eligible Loss Amounts of all Eligible Claimants.
Use of “FIFO” Methodology for Computation of Eligible Losses for Eligible Claimants Who Made Multiple
Transactions in Eligible Securities
For Potentially Eligible Claimants who held shares before the Secondary Offering and/or made multiple purchases,
acquisitions or sales of the Eligible Securities after the Secondary Offering, the sales of shares after the Secondary
Offering will be matched in chronological order first against the claimant’s closing position on the day before the
Secondary Offering, until that day’s closing position has been exhausted; then remaining sales after the Secondary
Offering will be matched in chronological order against purchases or acquisitions made in the Secondary Offering
until all such shares have been exhausted. Purchases and sales of eligible securities shall be deemed to have occurred
on the “contract” or “trade” date as opposed to the “settlement” or “payment” date.
Computation of the Eligible Loss Amount for Each Eligible Claimant
The Eligible Loss Amount will be calculated for each Eligible Security that was purchased in the Secondary Offering,
listed in the Proof of Claim Form, and for which adequate documentation is provided. The Total Eligible Loss
Amount for each Eligible Security is calculated by multiplying the number of shares by the appropriate Eligible Loss
Amount per share as calculated in the formula above. An Eligible Claimant’s Total Eligible Loss Amount equals the
sum of Eligible Loss Amounts for all shares purchased in the Secondary Offering.
O7621 v.02 03.02.2016
1
Exhibit B
THE PROPOSED PLAN OF ALLOCATION FOR THE CLASS ACTION
The Claims Administrator shall determine each Authorized Claimant’s pro rata share of the Net Settlement Fund
based upon each Authorized Claimant’s Recognized Loss calculated using the Court-approved Plan of Allocation
(the “Plan”). The Recognized Loss formula below is not intended to estimate the amount a Settlement Class Member
might have been able to recover after a trial; nor to estimate the amount that will be paid to Authorized Claimants
pursuant to the Settlements, but rather is the basis upon which the Net Settlement Fund will be proportionately
allocated to the Authorized Claimants.
Any authorized Claimant who receives any funds from the Fair Fund shall have their Recognized Loss
reduced by the amount of money received from the Fair Fund.
If, as expected, the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized
Loss of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement
Fund that each Authorized Claimant’s Recognized Loss bears to the total of the Recognized Losses of all Authorized
Claimants — i.e., the Authorized Claimant’s pro rata share of the Net Settlement Fund. Payment in this manner shall
be deemed conclusive against all Authorized Claimants.
Based on the foregoing, each Authorized Claimant’s Recognized Loss will be calculated as follows:
Puda Coal Common Stock
For each share of Puda Coal common stock purchased or otherwise acquired during the period December 8, 2010
through April 11, 2011, and:
a. sold prior to April 8, the Recognized Loss per share is zero.
b. sold within the period April 8, 2011 through and including September 2, 2011, the Recognized Loss per share
is the lesser of:
i.
$12.04 per share; or
ii.
the purchase price per share less the sales price per share.
c. retained beyond September 2, 2011 but sold before November 30, 2011, the Recognized Loss per share is the
lesser of:
i.
$12.04 per share;
ii.
the difference between the purchase price and the sales price; or
iii.
the purchase price per share less the price per share identified in Table-1 for the date the share(s) were
sold.1 Table-1 is available for review at www.pudacoalfund.com.
d. retained on November 30, 2011, the Recognized Loss per share is the lesser of:
i.
the difference between the purchase price per share and $0.59 per share.
Call Options
For call options on Puda Coal common stock purchased or otherwise acquired from December 8, 2010 to April 11,
2011, inclusive, and:
a. closed (through sale, exercise or expiration) before the close of trading on April 7, 2011, the Recognized Loss
per call option is zero.
b. sold after the close of trading on April 11, 2011 but before the close of trading on November 30, 2011, the
Recognized Loss per call option is the difference between the price paid for the call option less the proceeds
received from the sale of the call option contract;
Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, “in any private action arising under this chapter
in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall
not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the subject security and the
mean trading price of that security during the 90-day period beginning on the date on which the information correcting the misstatement or
omission that is the basis for the action is disseminated to the market.” $0.59 was the mean (average) daily closing trading price of Puda Coal
common stock during the 90-day period beginning on September 2, 2011 and ending on November 30, 2011.
1
O7631 v.01 03.03.2016
1
c. expired after the close of trading on April 7, 2011 but before the close of trading on November 30, 2011, the
Recognized Loss per call option is the purchase price of the call option minus the value of the call option on
the date of expiration. The value of the call option on the date of expiration will be the closing stock price
at date of expiration (or next available trading date), minus the strike price (if less than 0 the value is 0); or
d. if the call option was held unexpired at least through November 30, 2011, the Recognized Loss will be the
purchase price minus the holding value of the call option. The holding value of the call option will be $0.59
minus the strike price (if less than 0 the value is 0).
For call options on Puda Coal common stock written (sold) from December 8, 2010 to April 11, 2011, inclusive, the
claim per call option is zero.
Put Options
For put options on Puda Coal common stock written from December 8, 2010 to April 11, 2011,2 inclusive, and:
a. closed (through purchase, assignment or expiration) before the close of trading on April 7, 2011, the
Recognized Loss per put option is zero;
b. purchased after the close of trading on April 11, 2011 but before the close of trading on November 30,
2011, the Recognized Loss per put option is the difference between the sale price for the put option less the
purchase price of the put option contract;
c. expired after the close of trading on April 7, 2011 but before the close of trading on November 30, 2011, the
Recognized Loss per put option is the value of the put option on the date of expiration minus the sale price of
the put option. The value of the put option on the date of expiration will be the closing stock price at date of
expiration (or next available trading date), minus the strike price (if less than 0 the value is 0); or
d. if the put option was held unexpired at least through November 30, 2011, the Recognized Loss will be the
holding value of the put option minus the sale price of the put option. The holding value of the put option will
be $0.59 minus the strike price (if less than 0 the value is 0).
For put options on Puda Coal common stock purchased or otherwise acquired from December 8, 2010 to April 11,
2011, inclusive, the claim per put option is zero.
In the event a Settlement Class Member has more than one purchase or sale of Puda common stock during the
Settlement Class Period, all purchases and sales within the Settlement Class Period shall be matched on a First-In,
First-Out (“FIFO”) basis. Settlement Class Period sales will be matched first against any holdings at the beginning of
the Settlement Class Period, and then against purchases in chronological order, beginning with the earliest purchase
made during the Settlement Class Period.
A purchase or sale of Puda common stock will be deemed to have occurred on the “contract” or “trade” date as
opposed to the “settlement” or “payment” date. All purchase and sale prices shall exclude any fees and commissions.
The receipt or grant by gift, devise, or operation of law of Puda securities during the Settlement Class Period will
not be deemed a purchase or sale for the calculation of a claimant’s Recognized Loss, nor will it be deemed an
assignment of any claim relating to the purchase of such shares unless specifically provided in the instrument of gift
or assignment. The receipt of Puda common stock during the Settlement Class Period in exchange for securities of
any other corporation or entity shall not be deemed a purchase or sale of Puda common stock.
To the extent that a claimant had a gain from his, her, or its overall transactions in Puda securities during the
Settlement Class Period, the value of the claim will be zero. Shares held before the beginning of the Settlement Class
Period and uncovered short sales are excluded from the calculation of overall gain or loss. For shares purchased
during the Settlement Class Period and held through November 30, 2011, a value of $0.59 will be applied as the
holding value for the purpose of calculating an overall loss or gain. If a Settlement Class Member had a net market
loss in his, her or its trading in Puda securities during the Settlement Class Period, the Settlement Class Member’s
net Recognized Loss shall be limited to the Settlement Class Member’s net market loss. The date of covering a “short
sale” is deemed to be the date of purchase of shares. The date of a “short sale” is deemed to be the date of sale of
shares. The Recognized Loss on “short sales” is zero. In the event that a claimant has an opening short position
in Puda common stock, the earliest Settlement Class Period purchases shall be matched against such opening short
position and not be entitled to a recovery until that short position is fully covered.
Payment under this Plan of Allocation will be considered conclusive against the Authorized Claimant.
2
Excludes those options that expired before April 7, 2011, the date of the first price reaction to the alleged corrective disclosure.
O7632 v.01 03.03.2016
2
Exhibit C
SEC V MACQUARIE FAIR FUND PROOF OF CLAIM FORM
IMPORTANT: This Proof of Claim Form is only for the Fair Fund. If you wish to participate in the Class
Action also, you must file a separate Class Action Proof of Claim Form. If you decide to “opt-out” of participating
in the Class Action settlements, you may still participate in the Fair Fund. However, if you did not purchase shares of
Puda Coal in the Secondary Offering, you are not eligible for the Fair Fund.
Deadline to File a Fair Fund Claim: May 13, 2016
Mail your completed claim form and documentation to:
Macquarie Capital Fair Fund
PO Box 2838
Before completing this form, please read the detailed instructions on page 4. When filling out this form, type or print
in the boxes below in CAPITAL LETTERS; do not use red ink, pencils, or staples.
PART I:
CLAIMANT IDENTIFICATION
Beneficial Owner’s First Name
MI
Beneficial Owner’s Last Name
Co-Beneficial Owner’s First Name
MI
Co-Beneficial Owner’s Last Name
Entity Name (if claimant is not an individual)
Representative or Custodian Name (if different from Beneficial Owner(s) listed above)
Address 1 (street name and number)
Address 2 (apartment, unit or box number)
City
State
ZIP/Postal Code
Foreign Country (only if not USA)
Social Security Number
–
Taxpayer Identification Number
–
OR
–
Telephone Number (home)
–
Exemption from FATCA
reporting code (if any):
Telephone Number (work)
–
–
–
Email address
Account Number (if filing for multiple accounts, file a separate Proof of Claim for each account):
Claimant Account Type (check appropriate box):
Individual (includes joint owner accounts)
Pension Plan
Corporation
Estate
IRA/401K
Other
01-CA8813
O7641 v.03 03.04.2016
1
Trust
(please specify)
YOU MUST SUBMIT DOCUMENTATION TO SUPPORT THE INFORMATION BELOW. FAILURE TO
PROVIDE PROPER DOCUMENTATION MAY RESULT IN THE REJECTION OF YOUR CLAIM.
PART II: SCHEDULE OF TRANSACTIONS IN PUDA COMMON STOCK
A.
INITIAL HOLDINGS OF PUDA COMMON STOCK:
Provide the total number of shares of Puda common stock held as of the close of trading on December 7, 2010:
•
B.
PURCHASES OF PUDA COMMON STOCK IN THE SECONDARY OFFERING:
List the shares of Puda common stock purchased in the Secondary Offering on or about December 8, 2010. Be sure
to attach documentation.
Trade Date
(MMDDYY)
Number of Shares
Purchased or Acquired
Purchase Price per
Share
●
*Excluding taxes, fees, and commissions
Total Purchase Price*
●
●
C.
PURCHASES AND ACQUISITIONS OF PUDA COMMON STOCK:
List all purchases and acquisitions of shares of Puda common stock from December 8, 2010 through April 30, 2012
(that were NOT purchases pursuant to the Secondary Offering). Be sure to attach documentation.
Trade Date
(MMDDYY)
Number of Shares
**P=Purchase, R=Receipt (transfer in)
Purchase Price per
Share
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Transaction
Type
(P/R)**
D.
SALES OR DISPOSITIONS OF PUDA COMMON STOCK:
List all sales or dispositions of shares of Puda common stock from December 8, 2010 to April 30, 2012.
Trade Date
(MMDDYY)
Number of Shares
Sold or Delivered
**S=Sale, D=Delivery (transfer out)
Sale Price per Share
Total Sale Price*
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Transaction
Type
(S/D)**
E.
UNSOLD HOLDINGS OF PUDA COMMON STOCK:
Provide the total number of shares of Puda common stock held as of the close of trading on April 30, 2012:
•
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS, PLEASE PHOTOCOPY THIS
PAGE, WRITE YOUR NAME ON THE COPY, AND CHECK THIS BOX:
02-CA8813
O7642 v.03 03.04.2016
2
PART III:
RELEASE
I attest that:
1. I have provided accurate records pertaining to all transactions in Puda common stock during the period from
December 8, 2010 through April 30, 2012.
2. I am not and/or have not been:
a. A director or officer of Puda during the period from December 8, 2010 through the present; or an affiliate,
assign, creditor, heir, distributee, spouse, parent, dependent child, or controlled entity of the foregoing
persons, entities, or Respondent;
b. A person who, as of the claims filing deadline, has been the subject of criminal charges related to the
violations found in this case or any related Commission action;
c. The Administrator, its employee, or a person assisting the Administrator in its role as the Administrator;
d. An affiliate, assign, creditor, heir, distribute, spouse, parent, dependent child, or controlled entity of any of
the foregoing persons or entities described in (a)-(c) above; or
e. An assignee of another person’s right to obtain a recovery in the Commission’s action against Puda, provided,
however, that this provision shall not be construed to exclude those persons who obtained such a right by gift,
inheritance or devise.
3. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to
be issued to me), and
4. I am not subject to backup withholding because: i) I am exempt from backup withholding; ii) I have not been
notified by the Internal Revenue Service (“IRS”) that I am subject to backup withholding as a result of a failure to
report all interest or dividends; or iii) the IRS has notified me that I am no longer subject to backup withholding.
(NOTE: If you have been notified by the IRS that you are subject to backup withholding, you must cross out this
item), and
5. I am a U.S. citizen or other U.S. person, and
6. The Foreign Account Tax Compliant Act (“FATCA”) code(s) entered on this form (if any) indicating that I am
exempt from FATCA reporting is (are) correct.
Certification:
I (We) declare under penalty of perjury under the laws of the United States of America that the foregoing information
supplied by the undersigned is true and correct. The Internal Revenue Service does not require your consent
to any provision of this document other than the certifications in the box above, which are required to avoid
backup withholding.
Executed this
day of
, in
,
(Month / Year)(City) (State / Country)
Date
Signature of Claimant
–
MM
.
–
DD
YY
Print Name of
Claimant
Date
Signature of Joint
Claimant, if any
MM
Print Name of Joint
Claimant
03-CA8813
O7643 v.03 03.04.2016
–
3
–
DD
YY
PROOF OF CLAIM INSTRUCTIONS
A. This Proof of Claim and Release (“Proof of Claim Form”) has been sent to you because you may be a Potentially
Eligible Claimant in this matter. Please make sure you complete the requested information in Part I in its entirety. To
participate, you must complete and sign this Proof of Claim Form and provide supporting documents for any eligible
transactions you claim. If you fail to file a properly addressed Proof of Claim Form and supporting documents, your
claim may be rejected, and you may be determined to be ineligible for any payment in this matter.
B. Submission of this Proof of Claim Form does not assure that you will share in the proceeds of the Fair Fund created
in this matter. Your share will depend on the number of Potentially Eligible Claimants filing eligible claims and will
be subject to a $10.00 Minimum Distribution Amount.
C. YOU MUST COMPLETE AND SUBMIT YOUR PROOF OF CLAIM FORM BY MAIL POSTMARKED ON
OR BEFORE MAY 13, 2016, ADDRESSED TO THE DISTRIBUTION AGENT AS LISTED BELOW.
D. If you are NOT a Potentially Eligible Claimant, as defined in the Distribution Plan Notice, DO NOT submit a Proof
of Claim Form.
E. Use the section of this form entitled “Claimant Information” to identify each owner of record. THIS PROOF
OF CLAIM FORM MUST BE FILED BY THE ACTUAL BENEFICIAL OWNER(S) OR THE LEGAL
REPRESENTATIVE OF SUCH OWNER(S) OF SHARES UPON WHICH THIS CLAIM IS BASED.
F. Use the section of this form entitled “Schedule of Transactions” to supply all required details of your transaction(s).
If you need more space or additional schedules, attach separate sheets giving all of the required information in
substantially the same form. Sign and print or type your name on each additional sheet.
G. Complete a separate Proof of Claim Form for each account in which you qualify.
H. Provide all of the requested information with respect to shares of the Puda common stock that you acquired at any
time on or between December 8, 2010 and April 30, 2012, inclusive, whether such transactions resulted in a profit or
a loss. Failure to report all such transactions may result in the rejection of your claim.
I. List each transaction in chronological order, by trade date, beginning with the earliest. You must accurately provide
the month, day, and year of each transaction you list.
J. Documentation of your transactions must be attached to your claim. Failure to provide this documentation could
delay verification of your claim or result in rejection of your claim.
K. The above requests are designed to provide the minimum amount of information necessary to process the simplest
claims. The Distribution Agent may request additional information as required to efficiently and reliably calculate
your losses.
Proof of Claim Forms must be postmarked no later than May 13, 2016 and mailed to Macquarie Capital Fair
Fund, PO Box 2838, Portland, OR 97208-2838.
ATTENTION NOMINEES AND BROKERAGE FIRMS: If you are filing claim(s) electronically on behalf of
beneficial owners, detailed instructions are available on the website at www.pudacoalfund.com along with the
formatted electronic filing template. You may also send an email to [email protected] requesting this
information.
Reminder Checklist
1. Sign the Certification section of the Proof of Claim and Release on page 3.
2. Remember to attach supporting documentation.
3. Do not send original documents.
4. Keep a copy of your Proof of Claim Form and all documents submitted for your records.
5. If you desire an acknowledgment of receipt of your Proof of Claim Form, send your Proof of Claim Form by
Certified Mail, Return Receipt Requested.
6. If you move, please send the Distribution Agent your new address.
7. Remember to supply your Social Security Number or Tax Identification Number (or the foreign equivalents of such
identifying information) and any joint owners Social Security Number(s) if applicable. If you are not a U.S. citizen,
please include a copy of your passport or other identification.
ACCURATE CLAIMS PROCESSING CAN TAKE A SIGNIFICANT
AMOUNT OF TIME. THANK YOU FOR YOUR PATIENCE.
04-CA8813
O7644 v.03 03.04.2016
4
Exhibit D
Puda Securities Litigation
Claims Administrator
PO Box 2838
PROOF OF CLAIM AND RELEASE FOR THE CLASS ACTION
THIS PROOF OF CLAIM MUST BE POSTMARKED NO LATER THAN MAY 13, 2016.
I.
GENERAL INSTRUCTIONS
A. It is important that you completely read and understand the notice of proposed settlements (“the Notice”)
that accompanies this Proof of Claim and Release Form (“Claim Form”), including the Plan of Allocation.
The Notice contains the definitions of many of the defined terms (which are indicated by initial capital
letters) used in this Claim Form. By signing and submitting this Claim Form, you will be certifying that
you have read and that you understand the Notice, including the terms of the Releases described in the
Class Action Stipulations of Settlement available for your review at www.pudacoalfund.com as well as
the Plan of Allocation described in the Notice.
B. By submitting this Claim Form, you will be making a request to share in the proceeds of the Settlements
described in the Notice. If you request exclusion from one of the Settlements, you will not be eligible to
receive a payment from that Settlement.
C. TO BE ELIGIBLE TO RECEIVE A DISTRIBUTION, YOU MUST MAIL YOUR COMPLETED
AND SIGNED CLAIM FORM TO THE CLAIMS ADMINISTRATOR BY FIRST-CLASS MAIL,
POSTAGE PREPAID, POSTMARKED BY MAY 13, 2016, ADDRESSED AS FOLLOWS:
Puda Securities Litigation
Claims Administrator
PO Box 2838
D. IF YOU FAIL TO FILE THIS CLAIM FORM BY THE DEADLINE OR FAIL TO COMPLETE
IT ACCURATELY YOUR CLAIM MAY BE REJECTED AND YOU MAY BE PRECLUDED
FROM ANY RECOVERY FROM THE SETTLEMENT FUND CREATED.
E. This Claim Form is directed to all those Persons who during the period beginning on December 8,
2010 through and including April 11, 2011 (the “Settlement Class Period”): (a) purchased or otherwise
acquired Puda common stock, (b) purchased or otherwise acquired call options on Puda common stock,
and/or (c) sold or otherwise disposed of put options on Puda common stock (the “Settlement Class,” the
members of which are referred to herein as “Settlement Class Members”).
F. IF YOU ARE NOT A SETTLEMENT CLASS MEMBER, YOU MAY NOT, DIRECTLY OR
INDIRECTLY, PARTICIPATE IN THE SETTLEMENT RECOVERY OBTAINED FROM THE
DEFENDANTS IN THE CLASS ACTION, YOU WOULD BE A SETTLEMENT CLASS MEMBER,
BUT FOR YOUR REQUEST TO BE EXCLUDED FROM THE SETTLEMENT CLASS IN
CONNECTION WITH THE SETTLEMENTS DESCRIBED IN THE ACCOMPANYING NOTICE,
YOU ALSO MAY NOT DIRECTLY OR INDIRECTLY PARTICIPATE IN THE SETTLEMENTS.
G. All Settlement Class Members will be bound by the terms of the final orders and judgments entered in
connection with the Settlements described in the Notice, if the Settlements are each approved WHETHER
OR NOT A CLAIM FORM IS SUBMITTED, unless a valid request for exclusion from the Settlement
Class is received by May 13, 2016. These final orders and judgments will include the Releases described
in the separate Stipulations governing each of the Settlements. You may obtain copies of the Stipulations
at www.pudacoalfund.com.
H. You may only participate in the Settlements described in the Notice if you are a member of the Settlement
Class and if you complete and return this Claim Form as specified below. If you fail to file a timely,
properly addressed, and completed Claim Form, your claim may be rejected and you may be precluded
from receiving any proceeds from the Settlements.
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I. Submission of this Claim Form does not guarantee that you will share in the proceeds of the Class
Action Settlements.
J. Use Section II of this Claim Form to provide the personal information about you that is required to
process your claim. Failure to fully complete this Section may result in the rejection of your claim.
Use Sections III-V of this Claim Form entitled “PUDA TRANSACTIONS” to supply all required details
of your transaction(s) in Puda common stock or call options on Puda common stock or put options on
Puda common stock. On the schedules, provide all of the requested information with respect to all
purchases and other acquisitions (including free receipts) of Puda common stock from December 8, 2010
through November 30, 2011, as well as all sales (including free deliveries) of Puda common stock (or call
or put options) from December 8, 2010 through November 30, 2011. If you need more space, follow the
instructions set forth in that section. Failure to report all transactions during the requested periods
may result in the rejection of your claim.
K. You are required to submit genuine and sufficient documentation for all your transactions in Puda
common stock (or call or put options) and holdings as of November 30, 2011. Documentation may consist
of copies of brokerage confirmations or monthly statements. IF SUCH DOCUMENTS ARE NOT IN
YOUR POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT CONTEMPORANEOUS
DOCUMENTS FROM YOUR BROKER. FAILURE TO SUPPLY THIS DOCUMENTATION MAY
RESULT IN REJECTION OF YOUR CLAIM. DO NOT SEND ORIGINAL DOCUMENTS. Please
keep a copy of all documents that you send to the Claims Administrator.
L. Submit one single Claim Form for all of the Settlements. There is no need to submit one Claim Form
for each settlement. Please note that the Class Action Settlements are not conditioned in any way on
one another and that it is possible that the Court can approve less than all of them. If you have excluded
yourself from any of the Settlements, please indicate the Settlement(s) for which you are submitting
the Claim Form. In other words, please specify the Settlement in which you seek to obtain recovery. If
you have excluded yourself from any of the Settlements, the Releases (and certifications) contained in
the Settlement(s) from which you have excluded yourself will not apply but you will be subject to the
Releases contained in the Settlement in which you are seeking to obtain recovery.
M. Separate Claim Forms should be submitted for each separate legal entity (e.g., a claim from joint owners
should not include separate transactions of just one of the joint owners, and an individual should not
combine his or her IRA transactions with transactions made solely in the individual’s name). Conversely,
a single Claim Form should be submitted on behalf of one legal entity including all transactions made by
that entity on one Claim Form, no matter how many separate accounts that entity has (e.g., a corporation
with multiple brokerage accounts should include all transactions made in all accounts on one Claim
Form).
N. All joint beneficial owners must each sign this Claim Form. If you purchased or acquired Puda common
stock or call options on Puda common stock or sold put options on Puda common stock during the
Settlement Class Period and held the securities in your name, you are the beneficial owner as well as
the record owner. If, however, you purchased or acquired Puda common stock or call options on Puda
common stock or sold put options on Puda common stock during the Settlement Class Period and the
securities were registered in the name of a third party, such as a nominee or brokerage firm, you are the
beneficial owner of these securities, but the third party is the record owner.
O. For short-sale transactions, the date of covering a “short sale” is deemed to be the date of purchase of
Puda common stock, and the date of a “short sale” is deemed to be the date of sale of Puda common
stock.
P. Agents, executors, administrators, guardians, and trustees must complete and sign the Claim Form on
behalf of persons represented by them, and they must:
(i) expressly state the capacity in which they are acting;
(ii) identify the name, account number, Social Security Number (or Taxpayer Identification Number),
address and telephone number of the beneficial owner of (or other Person on whose behalf they are
acting with respect to) the Puda common stock; and
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(iii) furnish herewith evidence of their authority to bind to the Claim Form the Person on whose
behalf they are acting. (Authority to complete and sign a Claim Form cannot be established by
stockbrokers demonstrating only that they have discretionary authority to trade stock in another
person’s accounts.)
Q. By submitting a signed Claim Form, you will be swearing to the truth of the statements contained therein
and the genuineness of the documents attached thereto, subject to penalties of perjury under the laws of
the United States of America. The making of false statements, or the submission of forged or fraudulent
documentation, will result in the rejection of your claim and may subject you to civil liability or criminal
prosecution.
R. NOTICE REGARDING ELECTRONIC FILES: Certain claimants with large numbers of transactions
may request, or may be requested, to submit information regarding their transactions in electronic files.
All claimants MUST submit a manually signed paper Claim Form, whether or not they also submit an
electronic copy. If you wish to file your claim electronically, you must contact the Claims Administrator
at [email protected], or visit www.pudacoalfund.com to obtain the required file layout. No
electronic files will be considered to have been properly submitted unless the Claims Administrator
issues to the claimant an acknowledgment of receipt and acceptance of electronically submitted data.
S. If you have questions concerning the Claim Form, or need additional copies of either the Claim Form or
the Notice, you may contact the Claims Administrator Epiq, at the above address or by toll-free phone at
877-276-7324, or you may download the documents from www.pudacoalfund.com.
II.
CLAIMANT IDENTIFICATION
Beneficial Owner’s First Name
MI
Beneficial Owner’s Last Name
Co-Beneficial Owner’s First Name
MI
Co-Beneficial Owner’s Last Name
Entity Name (if claimant is not an individual)
Representative or Custodian Name (if different from Beneficial Owner(s) listed above)
Street Address
City
State
Foreign Province
Area Code
Foreign Country
Telephone Number (Daytime)
–
ZIP Code
Area Code
–
Telephone Number (Evening)
–
–
Last 4 digits of Claimant’s Social Security Number/Taxpayer Identification Number
Email address
Account Number (account which traded in Puda securities, if multiple write “multiple”)
Claimant Account Type (check appropriate box):
Individual/Sole Proprietor
Joint Owners
Pension Plan
Corporation
Partnership
Trust
IRA
Other (describe:
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)
III.
PUDA TRANSACTIONS – COMMON STOCK
A.
INITIAL HOLDINGS OF PUDA COMMON STOCK:
Provide the total number of shares of Puda common stock held as of the close of trading on December 7, 2010:
•
B.
PURCHASES AND ACQUISITIONS OF PUDA COMMON STOCK:
List all purchases and acquisitions of shares of Puda common stock from December 8, 2010 to November 30, 2011.
Be sure to attach the required documentation.
Trade Date
(MMDDYY)
Number of Shares
*Excluding taxes, fees and commissions
** P=Purchase, R=Receipt (transfer in)
Purchase Price per
Share
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Transaction
Type
(P/R)**
C.
SALES OR DISPOSITIONS OF PUDA COMMON STOCK:
List all sales or dispositions of shares of Puda common stock from December 8, 2010 to November 30, 2011.
Trade Date
(MMDDYY)
Number of Shares
Sold or Delivered
*Excluding taxes, fees and commissions
** S=Sale, D=Delivery (transfer out)
D.
Sale Price per Share
Total Sale Price*
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Transaction
Type
(S/D)**
UNSOLD HOLDINGS OF PUDA COMMON STOCK:
Provide the total number of shares of Puda common stock held as of the close of trading on November 30, 2011:
•
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PLEASE PHOTOCOPY THIS
PAGE, WRITE YOUR NAME ON THE COPY AND CHECK THIS BOX.
IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES MAY NOT BE REVIEWED.
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C.
B.
IV.
A.
Expiration
(MMYY)
●
●
●
●
Strike Price
Exercised Date
(MMDDYY)
Number of
Contracts
Expiration
(MMYY)
●
●
●
●
●
●
●
Purchase Price Per
Contract
●
Strike Price
●
●
●
●
Amount Paid
Exercised
“E” or
Expired
“X”
Exercise Date
(MMDDYY)
Date of Sale
(MMDDYY)
Number of
Contracts
Expiration
(MMYY)
●
●
●
●
●
●
●
Sale Price Per
Contract
●
Strike Price
●
●
●
●
Total Sale Price
Sales of call options on Puda common stock in which call options were purchased on or before April 11, 2011 (include all such sales no matter when
they occurred):
Date of Purchase
(MMDDYY)
Purchases (from December 8, 2010 to April 11, 2011, inclusive) of call options on Puda common stock:
Number of
Contracts
Exercised
“E” or
Expired
“X”
PUDA TRANSACTIONS - CALL OPTIONS
At the beginning of trading on December 8, 2010 the following call options on Puda common stock were owned:
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Number of
Contracts
Expiration
(MMYY)
●
●
●
●
Strike Price
At the close of trading on November 30, 2011 the following call options on Puda common stock were open:
B.
Expiration
(MMYY)
●
●
●
●
Strike Price
Date of Sale
(MMDDYY)
Number of
Contracts
Expiration
(MMYY)
●
●
●
●
●
●
●
Sale Price Per
Contract
●
Strike Price
Total
●
●
●
●
Assignment Date
(MMDDYY)
Sales (from December 8, 2010 to April 11, 2011, inclusive) of put options on Puda common stock:
Number of
Contracts
At the beginning of trading on December 8, 2010 the following put options on Puda common stock were owned: A.
Assigned
“A” or
Expired
“X”
PUDA TRANSACTIONS - PUT OPTIONS
V.
Assigned
“A” or
Expired
“X”
Assignment Date
(MMDDYY)
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PLEASE PHOTOCOPY THE APPROPRIATE PAGE(S), WRITE
YOUR NAME ON THE COPY AND CHECK THIS BOX:
D.
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Number of
Contracts
Expiration
(MMYY)
●
●
●
●
●
●
●
Purchase Price
Per Contract
●
Strike Price
Number of
Contracts
Expiration
(MMYY)
●
●
●
●
Strike Price
At the close of trading on November 30, 2011 the following put options on Puda common stock were open:
Date of Purchase
(MMDDYY)
Total
●
●
●
●
Purchases of put options on Puda common stock in which put options were sold (written) on or before April 11, 2011 (include all such purchases no
matter when they occurred):
*
*
YOUR SIGNATURE ON PAGE 9 WILL CONSTITUTE YOUR ACKNOWLEDGMENT OF THE RELEASES DESCRIBED ON PAGES 8–9
BELOW.
YOU MUST ALSO READ THE RELEASE AND CERTIFICATION BELOW AND SIGN ON PAGE 9 OF THIS CLAIM FORM.
*
IF YOU REQUIRE ADDITIONAL SPACE, ATTACH EXTRA SCHEDULES IN THE SAME FORMAT AS ABOVE. PRINT THE BENEFICIAL
OWNER’S FULL NAME AND TAXPAYER IDENTIFICATION NUMBER ON EACH ADDITIONAL PAGE.
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PLEASE PHOTOCOPY THE APPROPRIATE PAGE(S), WRITE
YOUR NAME ON THE COPY AND CHECK THIS BOX:
D.
C.
VI.
RELEASE OF CLAIMS IN THE CIVIL CASES
1.
Definitions
For the purpose of the Proof of Claim and Releases, terms not defined herein shall have the meanings
provided for them in the Stipulations of Settlement available at www.pudacoalfund.com.
2.
Statement of Claim and Release
a.
By submitting this signed Proof of Claim and Release, you will be certifying under penalty
of perjury that you: own(ed) the subject Puda securities you have listed in the Proof of Claim and Release; or are
expressly authorized to act on behalf of the owner thereof.
b.
By submitting this signed Proof of Claim and Release, you will be certifying the truth of the
statements contained therein and the genuineness of the documents attached thereto, subject to penalties of perjury
under the laws of the United States of America. The making of false statements, or the submission of forged or
fraudulent documentation, will result in the rejection of your claim and may subject you to civil liability or criminal
prosecution.
c.
By submitting this signed Proof of Claim and Release, the Claimant or the person who
represents the Claimant certifies as follows:
i. that Claimant(s) is/are a Class Member(s), as defined in the Notice;
ii. that I/we have read and understand the contents of the Notice and the Proof of Claim and
Release;
iii. that I am/we are not acting for any of the Defendants, nor am I/are we such Defendant(s)
or otherwise excluded from the Class;
iv. that I/we have not filed a Request for Exclusion from the Class and that I/we do not
know of any Request for Exclusion from the Class filed on my/our behalf with respect to
my/our transactions in the Subject Securities;
v. that I/we own(ed) the subject Puda securities identified in this Proof of Claim and
Release, or that, in signing and submitting this Proof of Claim and Release, I/we have
the authority to act on behalf of the owner(s) thereof;
vi. that Claimant(s) may be entitled to receive a distribution from the Net Settlement Fund;
vii.that Claimant(s) desire(s) to participate in the Settlement described in the Notice and
agree(s) to the terms and conditions thereof;
viii.that I/we submit to the jurisdiction of the United States District Court for the Southern
District of New York for purposes of investigation and discovery under the Federal
Rules of Civil Procedure with respect to this Proof of Claim and Release;
ix. that I/we agree to furnish such additional information with respect to this Proof of Claim
and Release as the Parties or the Court may require;
x. that I/we waive trial by jury, to the extent it exists, and agree to the Court’s summary
disposition of the determination of the validity or amount of the claim made by this
Proof of Claim and Release;
xi. that I (we) acknowledge that I (we) will be bound by and subject to the terms of any
judgment(s) and any other orders of the Court that may be entered in the Action;
xii.that I (we) have read the Releases described in the Stipulations, and understand that I
(we) am (are) granting each and every one of those Releases;
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xiii.that, with respect to the Macquarie Settlement, I (we) hereby acknowledge full and
complete satisfaction of, and do, hereby fully, finally and forever dismiss, release,
relinquish and discharge with prejudice each and every one of the Released Defendant
Persons with respect to each and every one of the Released Plaintiff Claims, as described
in the Notice and as those terms are defined in the Macquarie Stipulation;
xiv.that, with respect to the Brean Settlement, I (we) hereby acknowledge full and complete
satisfaction of, and do, hereby fully, finally and forever dismiss, release, relinquish and
discharge with prejudice each and every one of the Released Parties with respect to each
and every one of the Released Claims as described in the Notice and as those terms are
defined in the Brean Stipulation;
xv. that, with respect to the U.S. Directors Settlement, I (we) hereby acknowledge full
and complete satisfaction of, and do, hereby fully, finally and forever dismiss, release,
relinquish and discharge with prejudice each and every one of the Released Defendant
Persons with respect to each and every one of the Released Plaintiff Claims, as described
in the Notice and as those terms are defined in the U.S. Directors Stipulation; and
xvi.I/We certify that I am/we are NOT subject to backup withholding under the provisions
of Section 3406(a)(1)(c) of the Internal Revenue Code.
If you have been notified by the IRS that you are subject to backup withholding, please strike out the word
“NOT” in the certification above.
UNDER PENALTY OF PERJURY, I (WE) CERTIFY THAT ALL OF THE INFORMATION PROVIDED BY ME
(US) ON THIS FORM IS TRUE, CORRECT, AND COMPLETE, AND THAT THE DOCUMENTS SUBMITTED
HEREWITH ARE TRUE AND CORRECT COPIES OF WHAT THEY PURPORT TO BE.
Date
Signature of claimant
–
MM
–
DD
YY
Print name here
Date
Signature of joint
claimant, if any
–
MM
–
DD
YY
Print your name here
If the claimant is other than an individual, or is not the person completing this form, the following also must be
provided:
Signature of person
signing on behalf of
claimant
Date
–
MM
–
DD
YY
Print your name here
Capacity of person signing on behalf of claimant, if other than an individual, e.g., executor, president, custodian, etc.
THIS CLAIM FORM MUST BE SUBMITTED NO LATER THAN MAY 13, 2016 AND MUST BE MAILED TO:
Puda Coal, Inc. Securities Litigation
PO Box 2838
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9
A Claim Form received by the Claims Administrator shall be deemed to have been submitted when posted,
if mailed by May 13, 2016 with a postmark indicated on the envelope, mailed First Class, addressed in accordance
with the above instructions. In all other cases, a Claim Form shall be deemed to have been submitted when actually
received by the Claims Administrator.
REMINDER CHECKLIST:
1. Please sign the above release and certification. If this Claim Form is being submitted on behalf of joint claimants,
then both must sign.
2. Remember to attach only copies of acceptable supporting documentation.
3. Please do not highlight any portion of the Claim Form or any supporting documents.
4. Do not send original stock certificates or documentation. These items cannot be returned to you by the Claims
Administrator.
5. Keep copies of the completed Claim Form and documentation for your own records.
6. The Claims Administrator will acknowledge receipt of your Claim Form by mail, within 60 days. Your claim
is not deemed filed until you receive an acknowledgement postcard. If you do not receive an acknowledgement
postcard within 60 days, please call the Claims Administrator toll free at 877-276-7324.
7. If your address changes in the future, or if this Claim Form was sent to an old or incorrect address, please send
the Claims Administrator written notification of your new address. If you change your name, please inform the
Claims Administrator.
8. If you have any questions or concerns regarding your claim, please contact the Claims Administrator at the above
address or at [email protected], or visit www.pudacoalfund.com.
9. Please notify the Claims Administrator of any change of address.
10. You should be aware that it will take a significant amount of time to fully process all of the Claim Forms after a
plan of allocation is approved by the Court. Please be patient.
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Joint Notice of Funds to Compensate Certain Investors of Puda Coal

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