Srikanth Gudimetla, et al. v. Ambow Education...
Transcript of Srikanth Gudimetla, et al. v. Ambow Education...
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Case 2:12-cv-05062-PSG-AJW Document 89-2 Filed 10/24/14 Page 1 of 93 Page ID #:1999
EXHIBIT 1
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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
CASE No.: 12-cv-5062 PSG BYRON BROWN, TIANQING ZHANG, (AJW) AND ROBERTO SALAZAR, INDIVIDUALLY AND ON BEHALF OF CLASS ACTION ALL OTHERS SIMILARLY SITUATED,
Plaintiffs, STIPULATION AND AGREEMENT OF
vs. SETTLEMENT
AMBOW EDUCATION HOLDING LTD., Courtroom: 880 JIN HUANG, PAUL CHOW, XUEJUN
Judge: Hon. Philip S. Gutierrez
XIE, MARK ROBERT HARRIS, LISA LO, Compl. Filed: June 11, 2012 DANIEL PHILLIPS, TAO SUN AND
Trial Date: N/A
SASHA CHANG
Defendants.
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement (the “Stipulation”) dated
October 24, 2014 is hereby submitted to the Court pursuant to Rule 23 of the
Federal Rules of Civil Procedure. Subject to the approval of the Court, this
Stipulation is entered into among Lead Plaintiff Tianqing Zhang (“Lead Plaintiff”)
and Named Plaintiffs Byron Brown and Roberto Salazar (collectively,
“Plaintiffs”), on behalf of themselves and the putative class; and Ambow
Education Holding Ltd. (“Ambow”), Jin Huang, Paul Chow, Mark Robert Harris,
Daniel Phillips, Tao Sun, Lisa Lo, and Shasha Chang (collectively, “Defendants”),
by and through their respective counsel of record in the litigation.
Stipulation and Agreement of Settlement--No. CV 12-5062-PSG (AJW)
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1 I. LITIGATION AND PLAINTIFFS’ CLAIMS
2
1. WHEREAS a class action complaint styled Brown v. Ambow
3 Education Holding Ltd., et al. , 12-CV-5480-MMS-SSx, alleging violations of
4 federal securities laws was filed in the United States District Court for the Central
5 District of California (the “Court”);
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2. WHEREAS, by Minute Order dated November 19, 2012, the
7 Honorable Philip S. Gutierrez appointed Tianqing Zhang as Lead Plaintiff and the
8 Rosen Law Firm, P.A. as Lead Counsel, consolidated the related cases 12-cv-5480
9 and 12-cv-5062, and ordered that all subsequent papers, pleadings and motions be
10 filed under case 12-cv-5062-PSG (AJW);
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3. WHEREAS, on February 19, 2013, Lead Plaintiff filed the
12 Consolidated Amended Complaint alleging: (First Claim) violations of Section
13 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (the “Exchange
14 Act”) against Ambow, Huang and Chow; (Second Claim) violations of Rule 20(a)
15 of the Exchange Act against Huang and Chow; (Third Claim) violations of Section
16 11 of the Securities Act (the “Securities Act”) against all Defendants; and (Fourth
17 Claim) violations of Section 15 of the Securities Act against Huang and Chow;
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4. WHEREAS, on May 3, 2013, Lead Plaintiff filed the Second
19 Consolidated Amended Complaint (“SAC”) alleging: (First Claim) violations of
20 Section 10(b) and Rule 10b-5 of the Exchange Act against Ambow, Huang and
21 Chow; (Second Claim) violations of Rule 20(a) of the Exchange Act against
22 Huang and Chow; (Third Claim) violations of Section 11 of the Securities Act (the
23 “Securities Act”) against all Defendants; and (Fourth Claim) violations of Section
24 15 of the Securities Act against Huang and Chow;
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5. WHEREAS, on October 7, 2014, Defendants filed motions to dismiss
26 Plaintiffs’ SAC;
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6. WHEREAS, on February 6, 2014, this Court granted Defendants’
2 motions to dismiss as to all claims, with leave to amend;
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7. WHEREAS, on March 17, 2014, Lead Plaintiff filed the Third
4 Amended Complaint (“TAC” or “Complaint”) in this action (the “Litigation”)
5 alleging: (First Claim) violations of Section 10(b) and Rule 10b-5 of the Exchange
6 Act against Ambow, Huang and Chow; (Second Claim) violations of Rule 20(a) of
7 the Exchange Act against Huang and Chow; (Third Claim) violations of Section 11
8 of the Securities Act (the “Securities Act”) against all Defendants; and (Fourth
9 Claim) Section 15 of the Securities Act against Huang and Chow;
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8. WHEREAS, Defendants have each denied and continue to deny each
11 and all of the claims alleged by Plaintiffs in the Litigation; have expressly denied
12 and continue to deny all charges of wrongdoing or liability against them arising out
13 of any of the conduct, statements, acts, or omissions alleged, or that could have
14 been alleged, in the Litigation; have denied and continue to deny, among other
15 allegations, the allegations that Plaintiffs or the putative class have suffered any
16 damage, that Ambow’s Registration Statement in connection with its initial public
17 offering misrepresented the nature of its acquisition of the Changsha Study School,
18 that Ambow inflated its software revenue by improperly recording accounts
19 receivable, or that Ambow engaged in intentionally deceptive accounting practices
20 concerning its allowance for doubtful accounts;
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9. WHEREAS, while Defendants believe that the evidence developed to
22 date supports their position that they acted properly at all times and that the
23 Litigation is without merit, Defendants have concluded that further conduct of the
24 Litigation would be protracted and expensive, and that it is desirable that the
25 Litigation be fully and finally settled in the manner and upon the terms and
26 conditions set forth in this Stipulation;
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10. WHEREAS, in recognition of the attendant risks and costs of
2 continued litigation and the benefits of resolving the Litigation, the parties hereto
3 desire to settle and resolve any and all actual or potential claims by, between, or
4 among Plaintiffs and Settlement Class Members, on the one hand, and Defendants
5 and the Released Parties, on the other hand, arising out of or relating to the subject
6 matter of the Litigation, which includes but is not limited to the following claims:
7 S
The claim that Ambow’s Registration Statement in connection with
8 Initial Public Offering (“IPO”) misrepresented the nature of its
9 acquisition of the Changsha Study School; 10
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The claim that Ambow inflated its software revenue by improperly 11
recording accounts receivable; and 12
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The claim that Ambow engaged in intentionally deceptive accounting
14 practices concerning its allowance for doubtful accounts;
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11. WHEREAS, the parties to this Stipulation (the “Settling Parties”)
16 agree that the Litigation is being voluntarily settled after advice of counsel and that
17 the terms of the Settlement are fair, adequate, and reasonable, and that this
18 Stipulation shall not be construed as or be deemed to be a concession by Plaintiffs
19 of any infirmity in the claims asserted in the Litigation or a concession by any
20 Defendant as to the merit of the claims asserted in the Litigation;
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12. WHEREAS, the Settling Parties wish to settle and compromise any
22 dispute regarding the Litigation or its subject matter, including, but not limited to,
23 whether the Litigation was filed by the Lead Plaintiff and defended by Defendants
24 in good faith and with adequate basis in fact under Rule 11 of the Federal Rules of
25 Civil Procedure;
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13. WHEREAS, Lead Plaintiff’s Counsel has conducted an investigation
27 relating to the claims and the underlying events and transactions alleged in the
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1 Litigation, and Lead Plaintiff’s Counsel has analyzed the facts and the applicable
2 law with respect to the claims of the Lead Plaintiff against Defendants and the
3 potential defenses thereto, which in the Lead Plaintiff’s judgment have provided
4 adequate and satisfactory basis for the evaluation of an agreement to settle, as
5 described herein;
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14. WHEREAS, Lead Plaintiff’s Counsel and Defendants’ counsel
7 participated in two full-day mediation conferences with mediator Hunter Hughes
8 and engaged in extensive arm’s-length negotiations with each other, such
9 negotiations bearing fruit in this Stipulation;
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15. WHEREAS, based upon the investigation conducted by Lead
11 Plaintiff’s Counsel, Lead Plaintiff’s Counsel has concluded that the terms and
12 conditions of this Stipulation are fair, reasonable, and adequate to Plaintiffs, and in
13 their best interests, and Lead Plaintiff has agreed to settle the claims asserted in the
14 Litigation pursuant to the terms and conditions of this Stipulation, after
15 considering: (i) the substantial benefits that Plaintiffs will receive from settlement
16 of the Litigation; (ii) the attendant risks of litigation; and (iii) the desirability of
17 permitting the Settlement to be consummated as provided by the terms of this
18 Stipulation;
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16. WHEREAS, Defendants conditionally stipulate, solely for the limited
20 purposes of this Stipulation and the creation of a settlement class, that the
21 Litigation shall be certified for class treatment under Rule 23 of the Federal Rules
22 of Civil Procedure and that the stipulated settlement class consists of Settlement
23 Class Members, as defined below; and
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17. WHEREAS, Defendants’ conditional stipulation as to the creation of
25 settlement class is contingent upon the execution of this Stipulation by the Settling
26 Parties and its final approval by the Court, and if this Stipulation is for any reason
27 not finally approved, or is otherwise terminated, Defendants reserve their rights to
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1 assert any and all available objections and defenses to certification of any class
2 Lead Plaintiff will not offer Defendants’ conditional stipulation to certification as
3 any evidence in support of a motion to certify a class for trial purposes;
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NOW THEREFORE, without any admission or concession on the part of
5 Lead Plaintiff of any lack of merit in the Litigation whatsoever, and without any
6 admission or concession on the part of Defendants of any liability, wrongdoing, or
7 lack of merit in the defenses asserted in the Litigation whatsoever, it is hereby
8 STIPULATED AND AGREED, by and among the Settling Parties, through their
9 respective attorneys, subject to approval of the Court pursuant to Rule 23(e) of the
10 Federal Rules of Civil Procedure, in consideration of the benefits flowing to the
11 Settling Parties hereto from the Settlement, that any and all claims made, or that
12 could have been made, by Plaintiffs against Defendants in the Litigation shall be
13 compromised, settled, released, and dismissed with prejudice as provided in this
14 Stipulation and Agreement of Settlement, except as hereafter provided, without
15 costs as to Plaintiffs or Defendants, subject to the approval of the Court, upon and
16 subject to the terms and conditions below.
17 II. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
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A. DEFINITIONS
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As used in this Stipulation, the following terms have the meanings
20 specified below:
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1. “Allegedly False and Misleading Statements” means all
22 statements that were challenged as misleading by Plaintiffs in the Litigation,
23 including without limitation: (i) the claim that Defendants misrepresented the
24 nature of the acquisition of the Changsha Study School; (ii) the claim that Ambow
25 inflated its revenues from software sales; and (iii) the claim that Ambow engaged
26 in intentionally deceptive accounting practices concerning its allowance for
27 doubtful accounts;
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2. “Attorneys’ Fees and Expenses” means the portion of the Gross
2 Settlement Fund approved by the Court for payment to Lead Plaintiff’s Counsel,
3 including attorneys’ fees, costs, litigation expenses, and fees and expenses of
4 experts (excluding Notice and Administration Expenses).
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3. “Authorized Claimant” means any Claimant (as defined below)
6 whose claim for recovery has been allowed pursuant to the terms of the Stipulation
7 or by order of the Court.
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4. “Award to Lead and Named Plaintiffs” means any award by the
9 Court to Lead Plaintiff and/or Named Plaintiffs of reasonable costs and expenses
10 (including lost wages) directly relating to the representation of the Settlement Cla
11 pursuant to 15 U.S.C. § 78u-4(a)(4), but does not include Attorneys’ Fees and
12 Expenses or Notice and Administration Expenses.
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5. “Claimant” means any Settlement Class Member who files a
14 Proof of Claim and Release (as defined below) in such form and manner, and
15 within such time, as set forth in this Stipulation, or as the Court shall prescribe.
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6. “Claims Administrator” means the accounting and claims
17 administration firm, Strategic Claims Services, Inc., which Lead Plaintiff’s
18 Counsel requests be appointed by the Court to administer the Settlement and
19 disseminate notice to the Settlement Class.
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7. “Effective Date” means the date on which this settlement
21 becomes “effective,” when (i) all of the conditions set forth below in paragraph
22 L.1. have been satisfied; and (ii) the Court’s Order and Final Judgment,
23 substantially in the form of Exhibit B hereto, becomes “Final.” The Court’s Order
24 and Final Judgment shall be deemed to be “Final” when either of the following has
25 occurred: (i) if an appeal or review is not sought by any person from the Order and
26 Final Judgment, the day following the expiration of the time to appeal or petition
27 from the Order and Final Judgment; or (ii) if an appeal or review is sought from
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1 the Order and Final Judgment, the day after such Order and Final Judgment is
2 affirmed or the appeal or review is dismissed or denied and such Order and Final
3 Judgment is no longer subject to further judicial review.
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8. “Escrow Account” means the interest-bearing account selected
5 by the Escrow Agent. The Escrow Account shall be managed by the Escrow
6 Agent for the benefit of Lead Plaintiff and the Settlement Class until the Effective
7 Date of the Settlement.
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9. “Escrow Agent” means the Claims Administrator or its duly
9 appointed agent(s). The Escrow Agent shall perform the duties as set forth in this
10 Stipulation.
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10. “Gross Settlement Fund” means the Settlement Amount plus all
12 interest earned thereon.
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11. “Lead Plaintiff” means Tianqing Zhang.
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12. “Lead Plaintiff’s Counsel” means The Rosen Law Firm, P.A.
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13. “Named Plaintiffs” means Byron Brown and Roberto Salazar.
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14. “Net Settlement Fund” means the Gross Settlement Fund, less:
17 (i) Attorneys’ Fees and Expenses; (ii) Notice and Administration Expenses; (iii)
18 taxes; (iv) any Award to Lead Plaintiff and/or Named Plaintiffs; and (v) other fees
19 and expenses authorized by the Court.
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15. “Notice and Administration Account” means the account to be
21 established from the Gross Settlement Fund and maintained by Lead Plaintiff’s
22 Counsel. The Notice and Administration Account may be drawn upon by Lead
23 Plaintiff’s Counsel for Notice and Administration Expenses without further order
24 of the Court.
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16. “Notice and Administration Expenses” means all expenses
26 incurred (whether or not paid) in connection with the preparation, printing,
27 mailing, and publication of the notice to the Settlement Class of the proposed
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1 settlement, including any costs charged in the delivery or creation of a list of class
2 members, and all expenses of Settlement administration; provided, however, that
3 none of these expenses shall be deemed to include Attorneys’ Fees and Expenses
4 through the Effective Date. All such Notice and Administration Expenses shall be
5 paid from the Gross Settlement Fund.
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17. “Order and Final Judgment” means the order and judgment
7 entered by the Court, including a bar order pursuant to the Private Securities
8 Litigation Reform Act 15 U.S. Code § 78u–4(f)(7), approving the Settlement and
9 dismissing the Litigation as against Defendants with prejudice and without costs to
10 any party.
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18. “Person” means any individual, corporation, partnership,
12 limited liability company or partnership, limited partnership, professional
13 corporation, association, affiliate, joint stock company, trust, estate, unincorporate
14 association, government, or any political subdivision or agency thereof, any other
15 type of legal or political entity, any legal representative, and, as applicable, their
16 respective spouses, heirs, predecessors, successors, representatives, and assigns.
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19. “Plaintiffs” means the Lead Plaintiff, the Named Plaintiffs and
18 the Settlement Class.
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20. “Plan of Allocation” means the plan for allocating the Net
20 Settlement Fund (as set forth in the Notice of Pendency and Settlement of Class
21 Action (the “Notice”), attached as Exhibit A-1 to the Order of Preliminary
22 Approval of Settlement) to Authorized Claimants after payment of Notice and
23 Administration Expenses, Taxes and Tax Expenses, and Attorneys’ Fees and
24 Expenses. Any Plan of Allocation is not part of the Stipulation and the Released
25 Parties shall have no liability with respect thereto.
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21. “Released Parties” means Defendants, unserved defendant
27 Xuejun Xie (“Unserved Defendant”), and any and all of Defendants’ and Unserved
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Defendant’s current, former, or future employers and the current, former, or future
parents, subsidiaries, affiliates, partners, joint venturers, officers, directors,
principals, shareholders, members, agents (acting in their capacity as agents),
employees, attorneys, trustees, insurers (including each of Defendants’ and
Unserved Defendants’ insurers’ respective businesses, affiliates, subsidiaries,
parents and affiliated corporations, divisions, predecessors, shareholders, partners,
joint venturers, principals, insurers, reinsurers, successors and assigns, and their
respective past, present and future employees, officers, directors, attorneys, and
9 representatives, if any, and all of them), reinsurers, advisors, associates of any of
10 them (“Defendant Associated Entities” and each a “Defendant Associated Entity”),
11 and/or any other individual or entity in which any Defendant, Unserved Defendant,
12 or Defendant Associated Entity has or had a controlling interest or which is or was
13 related to or affiliated with any Defendant, Unserved Defendant, or Defendant
14 Associated Entity, and the current, former, and future legal representatives, heirs,
15 successors-in-interest, or assigns of any Defendant, Unserved Defendant, or
16 Defendant Associated Entity.
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22. “Settled Claims” means any and all claims, debts, demands,
18 liabilities, rights, and causes of action of every nature and description whatsoever
19 (including, but not limited to, any claims for damages, interest, attorneys’ fees,
20 expert or consulting fees, and any other costs, expenses, or liabilities whatsoever),
21 whether based on federal, state, local, statutory or common law, or any other law,
22 rule, or regulation, whether fixed or contingent, accrued or unaccrued, liquidated o
23 unliquidated, at law or in equity, matured or unmatured, whether class or
24 individual in nature, including both known claims and Unknown Claims (as
25 defined below): (i) that have been asserted in the Litigation by the Lead and
26 Named Plaintiffs and/or Settlement Class Members or any of them against any of
27 the Released Parties, including, without limitation, any claim arising out of or
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1 relating to the Allegedly False and Misleading Statements or any of the alleged
2 acts, omissions, representations, facts, events, matters, transactions, or occurrences
3 asserted in or relating to the Litigation, or otherwise alleged, asserted, or contended
4 in the Litigation; or (ii) that relate to the purchase of Ambow securities, including,
5 without limitation, claims for fraud, negligent misrepresentation, or claims based
6 upon or related in any way to the purchase, acquisition, or sale of Ambow
7 securities during the Class Period by the Lead Plaintiff, Named Plaintiffs, or any
8 Settlement Class Member, that were or might have been asserted on behalf of
9 themselves, their heirs, executors, administrators, successors, and assigns against
10 the Released Parties or any of them. Settled Claims also include any and all claims
11 arising out of, relating to, or in connection with the Settlement or resolution of the
12 Litigation against the Released Parties (including Unknown Claims that arise out
13 of, relate to, or are in connection with the Settlement or resolution of the Litigation
14 against the Released Parties), except claims to enforce any of the terms of this
15 Stipulation.
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23. “Settled Defendants’ Claims” means all claims, demands,
17 rights, remedies, liabilities, and causes of action of every nature and description
18 whatsoever, whether based on federal, state, local, statutory, or common law, o
19 any other law, rule, or regulation, including both known and Unknown Claims, tha
20 (i) have been or could have been asserted in the Litigation by Defendants, or any o
21 them, or the successors and assigns of any of them, against any of the Lead and
22 Named Plaintiffs, Settlement Class Members, or any of their attorneys, and (ii
23 arise out of or relate in any way to the institution, prosecution, or Settlement of thi
24 Litigation or the Settled Claims, including but not limited to all claims fo
25 malicious prosecution or sanctions. “Settled Defendants’ Claims” does not includ
26 claims to enforce any of the terms of this Stipulation.
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1
24. “Settlement Class” and “Settlement Class Members” mean, for
2 purposes of this Settlement, all persons who purchased or otherwise acquired
3 Ambow’s American Depository Shares (“ADS”) during the period from its initial
4 public offering on August 5, 2010, through and including February 27, 2013, and
5 held such ADS through at least May 16, 2012, and were damaged by Defendants’
6 alleged misconduct. Excluded from the Settlement Class are Defendants, and all
7 former officers and directors of Ambow, and such excluded persons’ immediate
8 families, legal representatives, heirs, predecessors, successors, and assigns, and any
9 entity in which any excluded person has or had a controlling interest, Ambow’s
10 predecessors and any persons who have separately filed actions against one or
11 more of Defendants, based in whole or in part on any claim arising out of or
12 relating to any of the alleged acts, omissions, misrepresentations, facts, events,
13 matters, transactions, or occurrences referred to in the Litigation or otherwise
14 alleged, asserted, or contended in the Litigation. Also excluded from the
15 Settlement Class are those persons who file valid and timely requests for exclusion
16 in accordance with the Court’s Order of Preliminary Approval of Settlement
17 (“Preliminary Approval Order”) concerning this Stipulation.
18
25. “Settlement Class Distribution Order” means the order entered
19 by the Court, upon application of Lead Plaintiff’s Counsel following the
20 occurrence of the events identified in paragraph E.13. below, which authorizes the
21 Claims Administrator to distribute the Net Settlement Fund to the Settlement
22 Class.
23
26. “Settlement Class Period” means the period from August 5,
24 2010, to February 27, 2013, inclusive.
25
27. “Settlement” means the settlement contemplated by this
26 Stipulation.
27
28
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1
28. “Settlement Amount” means a fund in the amount of
2 US$1,500,000.00 (One and One Half Million U.S. Dollars).
3
29. “Settlement Hearing” means the final hearing to be held by the
4 Court to determine: (i) whether the proposed Settlement should be approved as
5 fair, reasonable, and adequate; (ii) whether all Settled Claims should be dismissed
6 with prejudice; (iii) whether an order approving the Settlement should be entered
7 thereon; (iv) whether the allocation of the Settlement Fund should be approved;
8 and (v) whether the application for an award of Attorneys’ Fees and Expenses and
9 an Award to Lead and Named Plaintiffs should be approved.
10
30. “Settling Parties” means, collectively, the Lead Plaintiff,
11 Named Plaintiffs, and Defendants.
12
31. “Unknown Claims” means (i) any Settled Claim that the Lead
13 Plaintiff or any Settlement Class Member does not know or suspect to exist in his,
14 her, or its favor at the time of the release of the Released Parties, which if known
15 by him, her, or it, might have affected his, her, or its decision(s) with respect to the
16 Settlement, including, but not limited to, the decision not to object to the
17 Settlement, provided such claim arises out of or relates to the purchase or sale of
18 the Company’s securities, and (ii) any Settled Defendants’ Claims that any
19 Defendant does not know or expect to exist in his, her, or its favor, which if known
20 by him, her, or it might have affected his, her, or its decision(s) with respect to the
21 Settlement. With respect to any and all Settled Claims and Settled Defendants’
22 Claims, the Settling Parties stipulate and agree that, upon the Effective Date, the
23 Settling Parties shall expressly waive, and each of the Settlement Class Members
24 shall be deemed to have waived, and by operation of the Order and Final Judgment
25 shall have, expressly waived any and all provisions, rights, and benefits conferred
26 by any law of any state or territory of the United States, or principle of common
27 law that is similar, comparable, or equivalent to Cal. Civ. Code § 1542, which
28
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1 provides: “A general release does not extend to claims which the creditor does
2 not know or suspect to exist in his or her favor at the time of executing the
3 release, which if known by him or her must have materially affected his or her
4 settlement with the debtor. ”
5
B. SCOPE AND EFFECT OF SETTLEMENT AND RELEASES
6
1. The obligations incurred pursuant to this Stipulation shall be in
7 full and final disposition of the Litigation and any and all Settled Claims as against
8 all Released Parties by the Lead Plaintiff, Named Plaintiffs, or any Settlement
9 Class Member, on behalf of themselves, their heirs, executors, administrators,
10 successors, and assigns and any and all Settled Defendants’ Claims as against the
11 Lead Plaintiff, Named Plaintiffs, the Settlement Class Members, and their
12 attorneys.
13
2. The Settling Parties may hereafter discover facts in addition to or
14 different from those which he, she, or it now knows or believes to be true with
15 respect to the subject matter of the Settled Claims, but pursuant to the Order and
16 Final Judgment, upon the Effective Date of this Settlement, the Settlement Class
17 Members on behalf of themselves, their current and future heirs, executors,
18 administrators, successors, attorneys, insurers, agents, representatives, and assigns,
19 and any person they represent, shall, with respect to each and every Settled Claim,
20 release and forever relinquish and discharge, and shall forever be enjoined from
21 commencing, instituting, prosecuting, or continuing to prosecute all Settled Claims
22 and any and all claims arising out of, relating to, or in connection with the
23 Settlement, the Litigation, or the resolution of the Litigation against the Released
24 Parties, whether or not such Settlement Class Member executes and delivers the
25 Proof of Claim and Release, except claims to enforce any of the terms of this
26 Stipulation. Further, all Settlement Class Members on behalf of themselves, their
27 current and future heirs, executors, administrators, successors, attorneys, insurers,
28
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1 agents, representatives, and assigns, expressly covenant not to assert, or suggest or
2 assist in the assertion of, any claim or action against any of the Released Parties
3 that: (i) arises out of or relates to the purchase or sale of the Company’s securities,
4 or (ii) that could have been alleged, asserted, or contended in any forum by the
5 Settlement Class Members or any of them against any of the Released Parties,
6 arising out of or relating to the purchase or sale of the Company’s securities, and
7 shall forever be enjoined from commencing, instituting, or prosecuting, or
8 suggesting or assisting in commencing, instituting, or prosecuting any such claim,
9 so long as such claim relates to the purchase or sale of the Company’s securities.
10 The Settling Parties acknowledge, and the Settlement Class Members shall be
11 deemed by operation of the Final Judgment to have acknowledged, that the
12 foregoing waiver was separately bargained for and is a key element of the
13 Settlement of which this release is a part.
14
3. The Proof of Claim and Release to be executed by the Settlement
15 Class Members shall release all Settled Claims against the Released Persons and
16 shall be substantially in the form and content contained in Exhibit A-3 to the
17 Preliminary Approval Order attached hereto as Exhibit A.
18
4. Pursuant to the Order and Final Judgment, upon the Effective
19 Date of this Settlement, Defendants shall release and forever discharge each and
20 every one of the Settled Defendants’ Claims, and shall forever be enjoined from
21 prosecuting the Settled Defendants’ Claims as against any of the Lead and Named
22 Plaintiffs, Settlement Class Members, or their attorneys, including, but not limited
23 to, claims for malicious prosecution or sanctions.
24
C. THE SETTLEMENT CONSIDERATION
25
1. Subject to the terms of this Stipulation, Ambow shall pay or
26 cause to be paid the sum of U.S.$1,500,000 (One and One Half Million U.S.
27 Dollars) into the Escrow Account as provided in this paragraph. The sum of
28
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1 U.S.$100,000 (One Hundred Thousand U.S. Dollars) shall be paid into the Escrow
2 Account within ten (10) business days after the Court issues the Preliminary
3 Approval Order. The balance of U.S.$1,400,000 (One Million and Four Hundred
4 Thousand U.S. Dollars) shall be paid into the Escrow Account within ninety (90)
5 business days after the Court issues the Preliminary Approval Order. If Lead
6 Plaintiff’s Counsel has not provided all required funding information and a tax
7 identification number before the Court issues the Preliminary Approval Order, the
8 ten (10) days and ninety (90) days referenced in this paragraph shall not begin to
9 run until Lead Plaintiff’s Counsel provides the required funding information and
10 tax identification number.
11
2. The Gross Settlement Fund, net of any Taxes (as defined below)
12 on the income thereof and any Tax Expenses (as defined below), shall be used to
13 pay: (i) the Notice and Administration Expenses as authorized by this Stipulation;
14 (ii) Attorneys’ Fees and Expenses authorized by the Court; (iii) any Award to Lead
15 Plaintiff and Named Plaintiffs authorized by the Court; and (iv) other fees and
16 expenses authorized by the Court. The balance of the Gross Settlement Fund
17 remaining after the above payments shall be the Net Settlement Fund, which shall
18 be distributed to the Authorized Claimants in accordance with this Stipulation.
19
D. THE ESCROW AGENT
20
1. Any sums required to be held in escrow hereunder shall be held
21 by the Escrow Agent for the benefit of the Lead Plaintiff, Named Plaintiffs and the
22 Settlement Class until they are distributed or returned pursuant to this Stipulation
23 and/or further order of the Court.
24
2. Subject to the further Order(s) and/or directions as may be made
25 by the Court, or as provided in the Stipulation, the Escrow Agent is authorized to
26 execute such transactions as are consistent with the terms of the Stipulation.
27
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1
3. Until the date the Order and Final Judgment is entered, all
2 payments made from the Gross Settlement Fund shall require the signature of an
3 authorized representative of both the Escrow Agent and Defendants’ counsel.
4 After the Order and Final Judgment is entered, a signature of a Defendants’
5 counsel authorized representative is not required.
6
4. All funds held by the Escrow Agent shall be deemed to be in
7 custodia legis and shall remain subject to the jurisdiction of the Court until such
8 time as the funds shall be distributed or returned pursuant to this Stipulation and/or
9 further order of the Court. Other than amounts disbursed for providing notice to
10 the Settlement Class, customary administration costs, and Taxes and Tax
11 Expenses, and the Attorneys’ Fees and Expenses (which shall be paid to Lead
12 Plaintiff’s Counsel within two business days after the Court executes an order
13 awarding such fees and expenses), the Settlement Fund shall not be distributed
14 until the Effective Date.
15
5. The Escrow Agent shall not disburse the Gross Settlement Fund,
16 or any portion thereof, except as provided in this Stipulation, upon Order of the
17 Court, or with the written agreement of Defendants’ counsel.
18
6. The Escrow Agent shall invest any funds in excess of
19 US$150,000 in short-term United States Treasury Securities (or a mutual fund
20 invested solely in such instruments) backed by the Full Faith & Credit of the
21 United States Government or an Agency thereof, or fully insured by the United
22 States Government or an Agency thereof and shall reinvest the proceeds of these
23 instruments as they mature in similar instruments at their then-current market rates.
24 Any funds held in escrow in an amount of less than US$150,000 may be held in a
25 bank account insured to the extent possible by the FDIC. Interest earned on the
26 money deposited into the Escrow Account shall be part of the Gross Settlement
27 Fund. All risks related to the investment of the Gross Settlement Fund in
28
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1 accordance with the investment guidelines set forth in this paragraph shall be
2 by the Gross Settlement Fund.
3
7. The Notice and Administration Expenses shall be paid from the
4 Gross Settlement Fund. In order to pay Notice and Administration Expenses,
5 US$100,000 shall be withdrawn from the Gross Settlement Fund and deposited
6 into a Notice and Administration Account following entry of the Preliminary
7 Approval Order. Any monies from the Notice and Administration Fund that
8 remain after administration shall be returned to the Net Settlement Fund for
9 distribution to Class Members. The Notice and Administration Account may be
10 drawn upon by Lead Plaintiff’s Counsel for Notice and Administration Expenses
11 only after Court approval for each specific payment. The Notice and
12 Administration Account shall be administered solely by the Escrow Agent. Any
13 taxes or other expenses incurred in connection with the Notice and Administration
14 Account shall be paid from the Notice and Administration Account or from the
15 remainder of the Gross Settlement Fund. Defendants and the Released Parties
16 shall not have any obligation for payment of taxes or other expenses associated
17 with the Notice and Administration Account. Notice and Administration Expenses
18 in excess of US$100,000 shall not be paid out of the Gross Settlement Fund until
19 after the Effective Date. In no event shall an amount more than the Settlement
20 Amount be paid under this Stipulation, and in no event shall Defendants be
21 responsible to pay any amount under this Stipulation, except as expressly provided
22 herein.
23
8. Defendants shall have access to all records of the Escrow
24 Account, and upon request made to the Escrow Agent, shall receive copies of all
25 records of disbursements, deposits, and statements of accounts.
26
9. After the Effective Date, Defendants shall have no interest in the
27 Gross Settlement Fund or in the Net Settlement Fund. Defendants and the other
28
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1 Released Parties shall not be liable for the loss of any portion of the Gross
2 Settlement Fund or the Net Settlement Fund, nor have any liability, obligation, or
3 responsibility for the payment of claims, taxes, legal fees, or any other expenses
4 payable from the Gross Settlement Fund or the Net Settlement Fund.
5
E. ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL
6
AWARDS, AND DISTRIBUTION OF NET SETTLEMENT FUND
7
1. The Claims Administrator, subject to such supervision and
8 direction of the Court as may be necessary or as circumstances may require, shall
9 administer and calculate the claims that shall be allowed and oversee distribution
10 of the Net Settlement Fund, under the supervision of Lead Plaintiff’s Counsel, and
11 subject to appeal to, and jurisdiction of, the Court. Defendants shall have no
12 liability, obligation, or responsibility for the administration of the Gross Settlement
13 Fund or Net Settlement Fund, or for the distribution of the Gross Settlement Fund
14 or the Net Settlement Fund.
15
2. Except as otherwise provided below, on and after the Effective
16 Date, the Gross Settlement Fund shall be applied as follows:
17 a. To the extent not paid from the Notice and Administration
18 Account, to pay following an order of the Court approving any such payment, the
19 expenses incurred in connection with providing notice to Settlement Class
20 Members, administering and distributing the Net Settlement Fund to Settlement
21 Class Members, processing Proofs of Claim, processing requests for exclusion,
22 escrow fees and costs, and any applicable taxes;
23
b. Subject to the approval and further order(s) of the Court, the
24 Net Settlement Fund shall be allocated to Authorized Claimants as set forth in
25 paragraph G. below.
26 c. After the Claims Administrator calculates the recognized
27 losses of each Authorized Claimant, Lead Plaintiff’s Counsel shall file a motion
28
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distribution of the Settlement Fund with the Court listing each Authorized
Claimant, the amount of each claim that Lead Plaintiff’s Counsel believes should
be allocated and distributed to each such Authorized Claimant, accounting for all
Notice and Administration Expenses, and requesting Court approval to distribute
the Net Settlement Fund to the Authorized Claimants and pay any further Notice
and Administration expenses.
3. Each Settlement Class Member wishing to participate in the
Settlement shall be required to submit a Proof of Claim and Release (in
9 substantially the form set forth in Exhibit A-3 hereto, which inter alia releases all
10 Settled Claims against all Released Parties), signed under penalty of perjury by the
11 beneficial owner(s) of the securities that are the subject of the Proof of Claim and
12 Release, or by someone with documented authority to sign for the beneficial
13 owners and supported by such documents as specified in the instructions
14 accompanying the Proof of Claim and Release.
15
4. All Proofs of Claim must be postmarked or received within the
16 time prescribed in the Preliminary Approval Order unless otherwise ordered by the
17 Court. Any Settlement Class Member who fails to submit a properly completed
18 Proof of Claim within such period as shall be authorized by the Court shall be
19 forever barred from receiving any payments pursuant to this Stipulation or from
20 the Net Settlement Fund (unless Lead Plaintiff’s Counsel in its discretion deems
21 such late filing to be a minor formal or technical defect, or unless by Order of the
22 Court a later submitted Proof of Claim by such Settlement Class Member is
23 approved), but will in all other respects be subject to the provisions of this
24 Stipulation and Order and Final Judgment, including, without limitation, the
25 release of the Settled Claims and dismissal of the Litigation. Provided that it is
26 received before the motion for the Settlement Class Distribution Order is filed, a
27 Proof of Claim shall be deemed to have been submitted when posted if received
28
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1 with a postmark indicated on the envelope and if mailed by first-class mail and
2 addressed in accordance with the instructions thereon. In all other cases, the Proof
3 of Claim shall be deemed to have been submitted when actually received by the
4 Claims Administrator.
5
5. Each Proof of Claim shall be submitted to the Claims
6 Administrator who shall determine, under the supervision of Lead Plaintiff’s
7 Counsel, in accordance with this Stipulation and any applicable orders of the
8 Court, the extent, if any, to which each claim shall be allowed, subject to appeal to
9 the Court.
10
6. Lead Plaintiff’s Counsel shall have the right, but not the
11 obligation, to waive what they deem to be minor formal or technical defects in any
12 Proofs of Claim filed in the interest of achieving substantial justice.
13
7. Proofs of Claim that do not meet the filing requirements may be
14 rejected. Prior to rejection of a Proof of Claim, the Claims Administrator shall
15 communicate with the Claimant in order to remedy curable deficiencies in the
16 Proof of Claim submitted. The Claims Administrator, under the supervision of
17 Lead Plaintiff’s Counsel, shall notify, in a timely fashion and in writing, all
18 Claimants whose Proofs of Claim it proposes to reject in whole or in part, setting
19 forth the reasons thereof, and shall indicate in such notice that the Claimant whose
20 claims are to be rejected has the right to review by the Court if the Claimant so
21 desires and complies with the requirement of subparagraph (8) below.
22
8. If any Claimant whose claim has been rejected in whole or in
23 desires to contest such rejection, the Claimant must, within twenty (20) days after
24 the date of mailing of the notice required by subparagraph (7) above, serve upon
25 the Claims Administrator a notice and statement of reasons indicating the
26 Claimant’s ground for contesting the rejection along with any supporting
27 documentation, and requesting a review thereof by the Court. If a dispute
28
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concerning a claim cannot be otherwise resolved, Lead Plaintiff’s Counsel shall
2
3
4
5
6
7
thereafter present the request for review to the Court.
9. The administrative determination of the Claims Administrator
accepting and rejecting claims shall be presented to the Court, on notice to
Defendants’ Counsel, for approval by the Court in the Settlement Class
Distribution Order.
10. Each Claimant shall be deemed to have submitted to the
jurisdiction of the Court with respect to the Claimant’s claim, and the claim will be
9 subject to investigation and discovery under the Federal Rules of Civil Procedure,
10 provided that such investigation and discovery shall be limited to that Claimant’s
11 status as a Settlement Class Member and the validity and amount of the Claimant’s
12 claim. No discovery shall be allowed on the merits of the Litigation or Settlement
13 in connection with processing of the Proofs of Claim.
14
11. Payment pursuant to this Stipulation shall be deemed final and
15 conclusive against all Settlement Class Members. All Settlement Class Members
16 whose claims are not approved by the Court shall be barred from participating in
17 distributions from the Net Settlement Fund, but are otherwise bound by all of the
18 terms of the Order and Final Judgment to be entered in the Litigation and the
19 releases provided for herein, and will be barred from bringing any action against
20 the Released Parties arising out of or relating to the Settled Claims.
21
12. All proceedings with respect to the administration, processing,
22 and determination of claims described by this paragraph of this Stipulation and the
23 determination of all controversies relating thereto, including disputed questions of
24 law and fact with respect to the validity of claims, shall be subject to the
25 jurisdiction of the Court.
26
13. The Net Settlement Fund shall be distributed to Authorized
27 Claimants by the Claims Administrator upon application to the Court by Lead
28
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Plaintiff’s Counsel for a Settlement Class Distribution Order only after all of the
following having occurred: (i) the Effective Date; (ii) 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 be heard
concerning such rejection or disallowance; (iii) all objections with respect to all
rejected or disallowed claims have been resolved by the Court, and all appeals
therefrom have been resolved or the time therefor has expired; (iv) all matters with
respect to Attorneys’ Fees and Expenses, costs, and disbursements have been
9 resolved by the Court, and all appeals therefrom have been resolved or the time
10 therefor has expired; and (v) all costs of administration have been paid.
11
14. If any funds remain in the Net Settlement Fund by reason of
12 uncashed checks or otherwise, then, after the Claims Administrator has made
13 reasonable and diligent efforts to have Settlement Class Members who are entitled
14 to participate in the distribution of the Net Settlement Fund cash their distribution
15 checks, any balance remaining in the Net Settlement Fund one (1) year after the
16 initial distribution of such funds shall be re-distributed, after payment of any
17 unpaid costs or fees incurred in administering the Net Settlement Fund for such re-
18 distribution, to Settlement Class Members who have cashed their checks and who
19 would receive at least $10.00 from such re-distribution. If any funds shall remain
20 in the Net Settlement Fund six months after such re-distribution, then such balance
21 shall be contributed to a non-sectarian, not-for-profit, 501(c)(3) organization(s)
22 designated by Lead Plaintiffs’ Counsel.
23
15. Before the Effective Date, Lead Plaintiff’s Counsel shall file
24 with the Court a declaration under penalty of perjury describing how notice of the
25 Settlement was given to the Settlement Class and listing the names and addresses
26 of all persons to whom individual notice of the Settlement was mailed.
27
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1
16. Defendants and the other Released Parties shall have no
2 responsibility for, interest in, or liability whatsoever with respect to the distribution
3 of the Gross Settlement Fund or the Net Settlement Fund, the Plan of Allocation,
4 the determination, administration, or calculation of claims, the payment or
5 withholding of Taxes, or any losses incurred in connection therewith. No Person
6 shall have any claim of any kind against the Defendants or the other Released
7 Parties with respect to the matters set forth in paragraph E hereof; and the
8 Settlement Class Members, the Lead Plaintiff, and Lead Plaintiff’s Counsel release
9 the Defendants and the other Released Parties from any and all liability and claims
10 arising from or with respect to the investment or distribution of the Settlement
11 Fund.
12
F. TAX TREATMENT
13
1. The Settling Parties agree to treat the Gross Settlement Fund as
14 being at all times a “qualified settlement fund” within the meaning of Treasury
15 Regulation § 1.468B-1 and Section 468B of the Internal Revenue Code, as
16 amended, for the taxable years of the Gross Settlement Fund, beginning with the
17 date it is created. In addition, the Escrow Agent, and, as required, the Settling
18 Parties, shall jointly and timely make such elections as are necessary or advisable
19 to carry out the provisions of this paragraph, including the “relation-back election”
20 (as defined in Treas. Reg. § 1.468B-1(j)(2)) back to the earliest permitted date.
21 Such elections shall be made in compliance with the procedures and requirements
22 contained in such regulations. It shall be the responsibility of Lead Plaintiff’s
23 Counsel to timely and properly prepare and deliver the necessary documentation
24 for signature by all necessary parties, and thereafter to cause the appropriate filing
25 to occur.
26
2. For purposes of Section 468B of the Internal Revenue Code, as
27 amended, and the regulations promulgated thereunder, the “administrator” shall be
28
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1 the Escrow Agent. The Escrow Agent shall timely and properly file all tax returns
2 necessary or advisable with respect to the Gross Settlement Fund, and make all
3 required tax payments, including deposits of estimated tax payments in accordance
4 with Treas. Reg. § 1.468B-2(k). Such returns (as well as the election described in
5 paragraph F.1. hereof) shall be consistent with this paragraph and reflect that all
6 taxes (including any interest or penalties) on the income earned by the Gross
7 Settlement Fund shall be paid out of the Gross Settlement Fund as provided in
8 paragraph F.3. hereof.
9
3. All (i) taxes (including any interest or penalties) arising with
10 respect to the income earned by the Gross Settlement Fund, including any taxes or
11 tax detriments that may be imposed upon the Released Parties with respect to any
12 income earned by the Gross Settlement Fund for any period during which the
13 Gross Settlement Fund does not qualify as a qualified settlement fund for Federal
14 or state income tax purposes (“Taxes”); and (ii) expenses and costs incurred in
15 connection with the operation and implementation of this paragraph (including,
16 without limitation, expenses of tax attorneys and/or accountants, and mailing and
17 distribution costs and expenses relating to filing (or failing to file) the returns
18 described in this paragraph) (“Tax Expenses”) shall be paid out of the Gross
19 Settlement Fund. In all events, the Released Parties shall have no liability for
20 Taxes or Tax Expenses, and the Escrow Agent, Lead Plaintiff, and Lead Plaintiff’s
21 Counsel agrees to indemnify and hold the Released Parties harmless for Taxes and
22 Tax Expenses. Further, Taxes and Tax Expenses shall be treated as, and
23 considered to be, a cost of administration of the Settlement and shall be timely paid
24 by the Escrow Agent out of the Gross Settlement Fund without prior order from
25 the Court. The Escrow Agent shall be obligated (notwithstanding anything herein
26 to the contrary) to withhold from distribution to Authorized Claimants any funds
27 necessary to pay such Taxes and Tax Expenses, including the establishment of
28
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1 adequate reserves for any Taxes and Tax Expenses (as well as any amounts that
2 may be required to be withheld under Treas. Reg. § 1468B-2(l)(2)). The Released
3 Parties shall have no responsibility or liability for any Taxes or Tax Expenses. The
4 Settling Parties hereto agree to cooperate with the Escrow Agent, each other, and
5 their tax attorneys and accountants to the extent reasonably necessary to carry out
6 the provisions of this paragraph.
7
G. ALLOCATION OF NET SETTLEMENT FUND
8
1. The Plan of Allocation is based upon Lead Plaintiff’s Counsel’s
9 assessment of the merits and the relative strengths and weaknesses, including
10 recoverable damages, of the claims of the Settlement Class Members.
11
2. Defendants do not and shall not take any position as to the
12 proposed Plan of Allocation, and the proposed Plan of Allocation shall not be used
13 by Defendants in any suit, action, proceeding or dispute as evidence of Plaintiff’s
14 legal assessment of any of the Settled Claims.
15
3. The Released Parties shall have no responsibility for and no
16 obligations or liabilities of any kind whatsoever in connection with the
17 determination, administration, calculation, or payment of claims to Settlement
18 Class Members.
19
4. Defendants shall have no involvement in the solicitation of, or
20 review of Proofs of Claim, or involvement in the administration process itself,
21 which shall be conducted by the Claims Administrator in accordance with this
22 Stipulation and the Order and Final Judgment to be entered by the Court. No
23 Claimant or Authorized Claimant shall have any claim against Defendants or any
24 other Released Party based on, or in any way relating to, the distributions from the
25 Gross Settlement Fund or Net Settlement Fund.
26
5. No Authorized Claimant shall have any claim against Lead
27 Plaintiff’s Counsel or the Claims Administrator based on, or in any way relating to,
28
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1 the distributions from the Net Settlement Fund that have been made substantially
2 in accordance with this Stipulation and any applicable orders of the Court.
3
6. Any change in the allocation of the Net Settlement Fund ordered
4 by the Court shall not affect the validity or finality of this Settlement.
5
H. OBLIGATIONS OF AND LIMITATIONS OF LIABILITY OF
6
ESCROW AGENT
7
The Escrow Agent shall not be responsible for the payment of any
8 sums due to Authorized Claimants or other Persons, except to the extent of
9 maintaining account of and properly paying sums as required by this Stipulation to
10 the limited extent that such sums have been delivered into the Escrow Account or
11 Notice and Administration Account as required by this Stipulation. The Escrow
12 Agent shall be liable only for acts of gross negligence or willful misconduct.
13
I. LEAD PLAINTIFF’S COUNSEL’S REQUEST FOR AN AWARD
14
OF ATTORNEYS’ FEES AND EXPENSES
15
1. Lead Plaintiff’s Counsel intends to submit an application to the
16 Court, on notice to counsel for Defendants, for the payment of Attorneys’ Fees and
17 Expenses, including: (i) an award of attorneys’ fees up to one-third of the
18 Settlement Amount; (ii) reimbursement of litigation costs and expenses, plus
19 interest, including fees and expenses of experts, incurred in connection with the
20 prosecution of the Litigation; and (iii) an Award to Lead Plaintiff and the Named
21 Plaintiffs (for reimbursement of time and expenses).
22
2. Any attorneys’ fees and costs and Award to Lead Plaintiff and
23 Named Plaintiffs awarded by the Court shall be paid to Lead Plaintiff’s Counsel
24 from the Gross Settlement Fund within two (2) business days after the Court
25 executes an order awarding such fees and expenses and enters the Judgment. Lead
26 Plaintiff’s Counsel may thereafter allocate the attorneys’ fees among other
27 plaintiffs’ counsel in a manner which Lead Plaintiff’s Counsel in good faith
28
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1 believes reflects the contributions of such counsel to the initiation, prosecution,
2 resolution of the Litigation.
3
3. If, and when, as a result of any appeal and/or further proceedings
4 on remand, or successful collateral attack, the Attorneys’ Fee and Expense award
5 is overturned or lowered, or if the settlement is terminated or is not approved by
6 the Court, or if there is an appeal and any order approving the settlement does not
7 become final and binding upon the Class, then, within five (5) business days from
8 receiving notice from Defendants’ counsel or from a court of appropriate
9 jurisdiction, Lead Plaintiff’s Counsel shall refund to the Settlement Fund such fees
10 and expenses previously paid to them from the Settlement Fund plus interest
11 thereon at the same rate as earned on the Settlement Fund in an amount consistent
12 with such reversal or modification. Each such plaintiffs’ counsel’s law firm
13 receiving fees and expenses, as a condition of receiving such fees and expenses, on
14 behalf of itself and each partner and/or shareholder of it, agrees that the law firm
15 and its partners and/or shareholders are subject to the jurisdiction of the Court for
16 the purpose of enforcing the provisions of this paragraph. Without limitation, Lead
17 Plaintiff’s Counsel agrees that the Court may, upon application of Defendants and
18 notice to Lead Plaintiff’s Counsel, summarily issue orders including, but not
19 limited to, judgments and attachment orders, and may make appropriate findings of
20 or sanctions for contempt, should such law firm fail timely to repay fees and
21 expenses pursuant to this paragraph.
22
4. Lead Plaintiff’s Counsel waives the right to make an additional
23 application or applications for payment from the Gross Settlement Fund for fees
24 and expenses incurred after the Settlement Hearing. The other Settling Parties
25 shall take no position on any application concerning Lead Plaintiff’s Counsel’s
26 request or award of attorneys’ fees and reimbursement of expenses, or Award to
27 Lead and Named Plaintiffs.
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1
5. The procedure for and the allowance or disallowance by the
2 Court of any applications by Lead Plaintiff’s Counsel for attorneys’ fees and
3 expenses, or the expenses of the Lead Plaintiff and Named Plaintiffs, to be paid ou
4 of the Gross Settlement Fund, are not part of the settlement set forth in the
5 Stipulation, and are to be considered by the Court separately from the Court’s
6 consideration of the fairness, reasonableness, and adequacy of the settlement set
7 forth in the Stipulation, and any order or proceeding relating to Lead Plaintiff’s
8 Counsel’s application for attorneys’ fees and expenses, or the Lead Plaintiff’s and
9 Named Plaintiffs’ expense application, or any appeal from any order relating
10 thereto or reversal or modification thereof, shall not operate to terminate or cancel
11 the Stipulation, or affect or delay the finality of the Judgment approving the
12 Stipulation and the settlement of the Litigation set forth therein.
13
6. Defendants and the other Released Parties shall have no
14 responsibility for any payment of attorneys’ fees and expenses to Lead Plaintiff’s
15 Counsel over and above payment out of the Settlement Fund.
16
J. THE PRELIMINARY APPROVAL ORDER
17
1. Promptly after execution of this Stipulation, Lead Plaintiff shall
18 submit the Stipulation together with its exhibits to the Court and shall apply for
19 entry of a Preliminary Approval Order in connection with settlement proceedings
20 substantially in the form annexed hereto as Exhibit A, providing for, among other
21 things, preliminary approval of the Settlement and notice to the Settlement Class o
22 the Settlement Hearing. The Preliminary Approval Order (Exhibit A hereto) to be
23 submitted to the Court shall contain exhibits substantially in the form set forth in:
24 (i) the Notice of Pendency and Settlement of Class Action (the “Notice”) (Exhibit
25 A-1 to the Preliminary Approval Order); (ii) the Summary Notice of Pendency
26 and Settlement of Class Action (“Summary Notice”) (Exhibit A-2 to the
27
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1 Preliminary Approval Order); and (iii) the Proof of Claim and Release (Exhibit A-
2 3 to the Preliminary Approval Order).
3
2. Defendants and other Released Parties are not liable or
4 responsible for the method of, or representations made in, the Notice or the
5 Summary Notice.
6
K. ORDER AND FINAL JUDGMENT TO BE ENTERED BY THE
7
COURT APPROVING THE SETTLEMENT
8
1. Lead Plaintiff shall seek to have the Court enter an Order and
9 Final Judgment substantially in the form of Exhibit B hereto.
10
L. CONDITIONS OF SETTLEMENT
11
1. The Effective Date of the Settlement shall be conditioned upon
12 the occurrence of ALL of the following events:
13 a. The Court shall enter the Preliminary Approval Order in all
14 material respects, as required by paragraph J. above;
15
b. No party shall have exercised within the required time
16 period any right to terminate the Settlement as permitted by paragraph M below;
17 c. The Court shall enter the Order and Final Judgment in all
18 material respects, as required by paragraph K. above;
19
d. The Court’s Order and Final Judgment, substantially in the
20 form of Exhibit B, shall have become “Final,” as defined in paragraph A.9.; and
21 e. The sum of US$1,500,000 (One and One Half Million U.S.
22 Dollars) shall have been paid, as set forth in paragraph C above.
23
2. Upon occurrence of ALL of the events referenced in paragraph
24 L.1. above, Lead Plaintiff shall have, and each and all of the members of the
25 Settlement Class shall hereby be deemed to have, and by operation of the Order
26 and Final Judgment shall have, fully, finally, and forever, released, settled, and
27 discharged, in accordance with the terms of paragraph B. above, the Released
28
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1 Parties from and with respect to the Settled Claims, whether or not such members
2 of the Settlement Class execute and deliver a Proof of Claim.
3
3. Notwithstanding anything to the contrary in this Stipulation,
4 Defendants reserve their indemnification and advancement rights and defenses
5 under Ambow’s bylaws, Ambow’s articles of incorporation, their agreements,
6 Delaware law, California law, Federal or any other applicable authority.
7
4. Upon occurrence of ALL of the events referenced in paragraph
8 L.1. above, the obligation of the Escrow Agent to return funds from the Gross
9 Settlement Fund to Defendants pursuant to paragraph M.4. or any other provision
10 hereof shall be absolutely and forever extinguished.
11
M. RIGHTS OF TERMINATION AND EFFECTS THEREOF
12
1. Defendants and Lead Plaintiff shall each have the right to
13 terminate the Settlement and this Stipulation by providing written notice of their
14 election to do so (“Termination Notice”) to all other counsel of the Settling Parties
15 within thirty (30) days after the date on which any of the following occurs:
16 a. the Court issues an order declining to enter the Preliminary
17 Approval Order in any material respect;
18
b. the Court issues an order declining to approve this
19 Stipulation or any material part of it;
20 c. the Court declines to enter the Order and Final Judgment in
21 all material respects as required by paragraph K. above;
22
d. the Order and Final Judgment is modified or reversed in any
23 material respect by a Court of Appeals or the United States Supreme Court; or
24 e. in the event that the Court enters an order and final i
25 in a form other than that provided above (an “Alternative Judgment”) and none of
26 the Settling Parties elects to terminate this Settlement, the date that such
27
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Alternative Judgment is modified or reversed in any material respect by a Court of
Appeals or the Supreme Court.
2. If prior to the Settlement Hearing, (i) Persons who otherwise
would be Settlement Class Members have filed with the Court valid and timely
requests for exclusion (“Requests for Exclusion”) from the Settlement Class in
accordance with the provisions of the Preliminary Approval Order and the notice
given pursuant thereto, and such Persons in the aggregate purchased stock during
the Settlement Class Period in an amount greater than the amounts specified in a
9 separate Supplemental Agreement between the parties (the “Supplemental
10 Agreement”), or (ii) Persons file lawsuits alleging fraud in connection with the
11 purchase of more than the number of Ambow shares specified in the Supplemental
12 Agreement, then Defendants shall have the option to terminate this Stipulation and
13 Settlement in strict accordance with the requirements and procedures set forth in
14 the Supplemental Agreement (“Opt-out Termination Option”). The Supplemental
15 Agreement shall not be filed with the Court unless and until a dispute among the
16 parties concerning its interpretation or application arises, and in that event, the
17 Supplemental Agreement shall be filed and maintained by the Court under seal.
18 Copies of all Requests for Exclusion received, together with copies of all written
19 revocations of Requests for Exclusion, shall be delivered to Defendants’ counsel
20 no later than fourteen (14) days prior to the Settlement Hearing. The required
21 procedure for and consequences of exercising an Opt-out Termination Option are
22 as follows:
23 a. To exercise the Opt-out Termination Option, a Defendant
24 must serve written notice, signed by the party’s respective counsel, upon counsel
25 for the other Settling Parties, not less than seven (7) days before the Settlement
26 Hearing; and
27
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2
3
4
5
6
7
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1
b. If a Defendant exercises the Opt-out Termination Option as
2 provided herein, this Stipulation shall be null and void, and the provisions of
3 paragraph M. hereof shall apply.
4
3. If the Settlement Amount payable pursuant to paragraph C.1. of
5 this Stipulation is not timely paid (and payment is not excused pursuant to the
6 express terms of this Stipulation), the Lead Plaintiff, in its sole discretion, may
7 elect, at any time prior to the Court’s entering the Order and Final Judgment, to (i)
8 terminate the Settlement by providing written notice to the Settling Parties that
9 Ambow has ten (10) days to pay or caused to be paid the full Settlement Amount;
10 or (ii) enforce the terms of the Settlement and this Stipulation and seek a judgment
11 effecting the terms herein.
12
4. Upon termination of the Stipulation pursuant to the terms of the
13 Stipulation, the Escrow Agent shall refund the Gross Settlement Fund, less
14 amounts expended for Notice and Administration Expenses to the Settlement Class
15 pursuant to the terms of the Stipulation, to Defendants within ten (10) business
16 days thereafter (the “Returned Settlement Amount”).
17
5. If this Stipulation is terminated pursuant to its terms, and at the
18 request of any Defendant or Lead Plaintiff, the Escrow Agent or his designee shall
19 apply for any tax refund owed on the Gross Settlement Fund and pay the proceeds,
20 after deduction of any fees and expenses incurred in connection with such
21 application(s) for refund, to Defendants.
22
6. If this Stipulation is terminated pursuant to its terms, all of the
23 Settling Parties shall be restored to their respective positions prior to the execution
24 of this Stipulation, and they shall proceed in all respects as if this Stipulation had
25 not been executed and the related orders had not been entered, preserving in that
26 event all of their respective claims and defenses in the Litigation. In such event,
27 the terms and provisions of the Stipulation, with the exception of paragraphs D.5.,
28
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1 F.1-3., H, M.5-7., N.11-13., N.15., and N.18. shall have no further force and effect
2 with respect to the Settling Parties and shall not be used in this Litigation or in any
3 other proceeding for any purpose, and any judgment or order entered by the Court
4 in accordance with the terms of the Stipulation shall be treated as vacated, nunc
5
tunc .
6
7. No order of the Court or modification or reversal on appeal of
7 any order of the Court concerning the Plan of Allocation or the amount of any
8 attorneys’ fees, costs, expenses, and interest awarded by the Court to any of
9 Plaintiffs’ Counsel or expenses to the Lead Plaintiff or awards to Plaintiffs shall
10 constitute grounds for cancellation or termination of the Stipulation.
11
N. MISCELLANEOUS PROVISIONS
12
1. The Settling Parties: (i) acknowledge that it is their intent to
13 consummate the Settlement contemplated by this Stipulation; (ii) agree to
14 cooperate to the extent necessary to effectuate and implement all terms and
15 conditions of this Stipulation; and (iii) agree to exercise their best efforts and to act
16 in good faith to accomplish the foregoing terms and conditions of the Stipulation.
17
2. The Settling Parties acknowledge and warrant as follows:
18 a. By executing this Stipulation, each of the Settling P
19 represents that they have carefully read and fully understand this Stipulation and i
20 final and binding effect;
21
b. By executing this Stipulation, each of the Settling P
22 represents that they have the right, legal capacity, power and authority to enter i
23 this Stipulation and to perform their obligations hereunder, without the conse
24 approval, or authorization of any person, board, entity, tribunal, or other regulat
25 or governmental authority;
26 c. By executing this Stipulation, each of the Settling P
27 represents that the execution and delivery of this Stipulation and the performanc
28
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1 of each and every obligation in this Stipulation do not and will not result in
2 breach of or constitute a default under, or require any consent under, any duty
3 relationship, contract, agreement, covenant, promise, guarantee, obligation or
4 instrument to which the executing Settling Party is a party or by which the
5 executing Settling Party is bound or affected;
6
d. By executing this Stipulation, each of the Settling Parties
7 represents that there is no demand for monetary, non-monetary, or injunctive relief,
8 or any civil, criminal, administrative, or arbitration proceeding for monetary, non
9 monetary, or injunctive relief known or suspected to exist against them that would
10 affect this Stipulation or their ability to enter into, execute or perform each and
11 every obligation in this Stipulation.
12 e. By executing this Stipulation, each of the Settling P
13 represents that no representations or promises of any kind or character have be
14 made by any other Settling Party, Released Party, or anyone else to induce t
15 execution of this Stipulation except as expressly provided herein;
16
f. By executing this Stipulation, each of the Settling Parti
17 represents that this Stipulation is fair and is executed voluntarily, with fu
18 knowledge of the consequences and implications of the obligations
19 herein;
20 g. By executing this Stipulation, each of the Settling P
21 represents that this Stipulation is not the result of any fraud, duress, or undu
22 influence, and that they have not assigned, transferred, or conveyed or purported to
23 assign, transfer, or convey, voluntarily, involuntarily or by operation of law, any o
24 all of their respective rights and claims;
25
h. By executing this Stipulation, each of the Settling Partie
26 represents that they have had the opportunity to be represented by counsel of thei
27 choice that is duly licensed to practice in the State of California throughout th
28
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1 negotiations which preceded the execution of this Stipulation and in
2 with the preparation and execution of this Stipulation; and
3
i. By executing this Stipulation, each of the Settling P
4 represents that they have been afforded sufficient time and opportunity to re
5 this Stipulation with advisors and counsel of their choice.
6
3. All of the exhibits attached hereto are hereby incorporated by
7 reference as though fully set forth herein.
8
4. This Stipulation may be amended or modified only by a written
9 instrument signed by counsel for Defendants, or their successors-in-interest.
10
5. This Stipulation, the exhibits attached hereto, and the agreements
11 referred to herein constitute the entire agreement between Plaintiffs, on the one
12 hand, and Defendants, on the other hand, and no representations, warranties, or
13 inducements have been made by Plaintiffs to Defendants or Defendants to
14 Plaintiffs concerning this Stipulation or its exhibits, other than the representations,
15 warranties, and covenants contained and memorialized in such documents.
16
6. Except as otherwise provided herein, each Settling Party shall
17 bear its own costs. Lead Plaintiff’s Counsel’s Attorneys’ Fees and Expenses,
18 subject to Court approval, shall be paid only out of the Gross Settlement Fund, and
19 Defendants and the other Released Parties shall have no obligation with respect to
20 the payment of said Attorneys’ Fees and Expenses.
21
7. Lead Plaintiff’s Counsel, on behalf of the Settlement Class, is
22 expressly authorized to take all appropriate action required or permitted to be ta
23 by the Settlement Class pursuant to this Stipulation to effectuate its terms and is
24 also expressly authorized to enter into any modifications or amendments to this
25 Stipulation on behalf of the Settlement Class.
26
8. The persons signing this Stipulation represent that they are
27 authorized to do so on behalf of their respective clients.
28
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1
9. This Stipulation may be executed in one or more original,
2 photocopied, or facsimile counterparts. All executed counterparts and each of
3 them shall be deemed to be one and the same instrument. The Settling Parties shall
4 exchange among themselves original signed counterparts of this Stipulation, and a
5 complete set of executed counterparts of this Stipulation shall be filed with the
6 Court.
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10. This Stipulation shall be binding upon, and inure to the benefit
8 of, the successors, assigns, executors, administrators, heirs, and legal
9 representatives of the Settling Parties. No assignment shall relieve any party
10 hereto of any obligations hereunder.
11
11. All terms of this Stipulation and all exhibits hereto shall be
12 governed and interpreted according to the laws of the State of California without
13 regard to its rules of conflicts of law, except to the extent that federal law requires
14 that federal law governs, and in accordance with the laws of the United States.
15
12. The Lead and Named Plaintiffs, on behalf of themselves and
16 each member of the Settlement Class, and the other Settling Parties hereby
17 irrevocably submit to the jurisdiction of the Court for any suit, action, proceeding,
18 or dispute arising out of or relating to this Stipulation, the applicability of this
19 Stipulation, or the enforcement of this Stipulation. The administration and
20 consummation of the Settlement as embodied in this Stipulation shall be under the
21 authority of the Court, and the Court shall retain jurisdiction for the purpose of
22 entering orders providing for awards of Attorneys’ Fees and Expenses to Lead
23 Plaintiff’s Counsel, Awards to Lead Plaintiff, and enforcing the terms of this
24 Stipulation.
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13. All agreements made and orders entered during the course of
26 the Litigation relating to the confidentiality of information shall survive this
27 Stipulation.
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1
14. None of the Settling Parties shall be considered to be the drafter
2 of this Stipulation or any provision hereof for purposes of any statute, case law, or
3 rule of interpretation or construction that would or might cause any provision to be
4 construed against the drafter hereof. Because of the arm’s-length negotiations that
5 preceded the execution of this Stipulation, all Settling Parties have contributed
6 substantially and materially to the preparation of this Stipulation.
7
15. Neither this Stipulation, nor the fact of the Settlement, is
8 admission or concession by any Defendant or any other Released Party of
9 liability or wrongdoing whatsoever. This Stipulation shall not constitute a finding
10 of the validity or invalidity of any claims in the Litigation or of any wrongdoing by
11 any Defendant named therein or any other Released Party. This Stipulation, the
12 fact of settlement, the settlement proceedings, the settlement negotiations, and any
13 related documents, shall not be used or construed as an admission of any fault
14 liability, or wrongdoing by any Defendant or any other Released Party in any civil
15 criminal, or administrative proceeding in any court, administrative agency, or othe
16 tribunal. The Defendants and any other Released Party may file the Stipulation
17 and/or Judgment in any action that may be brought against them to support a
18 defense or counterclaim based on principles of res judicata, collateral estoppel
19 release, good faith settlement, judgment bar or reduction, or any other theory o
20 claim preclusion or issue preclusion or similar defense or counterclaim.
21
16. The Settling Parties intend the Settlement to be a final and
22 complete resolution of all claims and disputes asserted or that could be asserted by
23 the Settlement Class Members against the Released Parties with respect to the
24 Settled Claims. Accordingly, unless the Court’s Order and Final Judgmen
25 approving the Settlement does not become Final, the Settling Parties agree not
26 assert in any forum that the Litigation was brought by Lead Plaintiff or defend
27 by Defendants in bad faith or without a reasonable basis. Additionally, the Settli
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1 Parties shall not assert any claims of any violation of Rule 11 of the Federal
2 of Civil Procedure relating to the prosecution, defense, or settlement of
3 Litigation. The Settling Parties agree that the amount paid and the other terms o
4 the Settlement were negotiated at arm’s-length in good faith by the Settling Parties
5 and reflect a settlement that was reached voluntarily after consultation with
6 experienced legal counsel. The Settling Parties reserve their right to rebut, in
7 manner that such party determines to be appropriate, any contention made in an
8 public forum that the Litigation was brought or defended in bad faith or without
9 reasonable basis.
10
17. The headings in this Stipulation are used for purposes
11 convenience and ease of reference only and are not meant to have any legal
12 nor are they intended to influence the construction of this Stipulation in any way.
13
18. The waiver of one Settling Party of any breach of this Stipulati
14 by any other Settling Party shall not be deemed a waiver of any other breach of this
15 Stipulation. The provisions of this Stipulation may not be waived except by a
16 writing signed by the affected Settling Party or counsel for that Settling Party. No
17 failure or delay on the part of any Settling Party in exercising any right, remedy
18 power, or privilege under this Stipulation shall operate as a waiver thereof or o
19 any other right, remedy, power, or privilege of such Settling Party under this
20 Stipulation; nor shall any single or partial exercise of any right, remedy, power, or
21 privilege under this Stipulation on the part of either Settling Party operate as a
22 waiver thereof or of any other right, remedy, power, or privilege of such Settling
23 Party under this Stipulation, or preclude further exercise thereof or the exercise o
24 any other right, remedy, power, or privilege.
25
19. The Settling Parties agree that nothing contained in thi
26 Stipulation shall cause any Settling Party to be the agent or legal representative o
27 the other Settling Party for any purpose whatsoever, nor shall this Stipulation b
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1 deemed to create any form of business organization between the Settling Parties,
2 nor is any Settling Party granted any right or authority to assume or create any
3 obligation or responsibility on behalf of the other Settling Party, nor shall either
4 Settling Party be in any way liable for any debt of the other Settling Party as a
5 result of this Stipulation except as explicitly set forth herein.
6
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8 THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK
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20. IN WITNESS WHEREOF, the Settling Parties
intending to be legally bound hereby, have caused this Stipulation to be ex
by their duly authorized attorneys, as of the day and year first above written.
THE ROSE LAW FIRM, P.A.
Laurence M. Rosen, Esq. 355 S. Grand Avenue, Suite 2450 Los Angeles, CA 90071 Tel: (213) 714-2860
Attorneys for Plaintiffs
SHEARMAN & STERLING LLP
— giatt'ail'qrp Stephei( D. Hibbard Four Embarcadero Center, Suite 3800 San Francisco, California 94111 (415)616-1100
Attorneys for Defendants Ambow Education Holding, Ltd, Jin Huang, Paul Chow and Shasha Chang
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O'MELVENY & MYERS LLP
Seth Aronson 400 South Hope Street, 181h Floor Los Angeles, California 90071 (213) 430-6000
Attorneys for Defendants Mark Robert Harris, Daniel Phillips and Tao Sun
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EXHIBIT A
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UNITED STATES DISTRICT COURT 3 CENTRAL DISTRICT OF CALIFORNIA
4 WESTERN DIVISION 5
6 BYRON BROWN, TIANQING ZHANG, 7 AND ROBERTO SALAZAR,
8 I NDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
9
10 Plaintiffs,
11 vs. 12
AMBOW EDUCATION HOLDING LTD., 13 JIN HUANG, PAUL CHOW, XUEJUN 14 XIE, MARK ROBERT HARRIS, LISA LO,
DANIEL PHILLIPS, TAO SUN AND 15
SASHA CHANG, 16
17 Defendants.
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CASE No.: 12-cv-5062 PSG (AJW)
CLASS ACTION
[PROPOSED] ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE
Hearing Date: TBD Hearing Time: TBD Courtroom: 880 Judge: Hon. Philip S. Gutierrez Compl. Filed: June 11, 2012 Trial Date: N/A
0 28
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1
WHEREAS, a consolidated action is pending before this Court styled Brown
2 v. Ambow Education Holding Ltd., et al. , 12-cv-5062-PSG (AJW) (the
3 “Litigation”);
4
WHEREAS, (i) lead plaintiff Tianqing Zhang (“Lead Plaintiff”) and named
5 plaintiffs Byron Brown and Roberto Salazar (collectively, “Plaintiffs”) on behalf of
6 themselves and the putative class, and (ii) Ambow Education Holding Ltd. 7 (“Ambow”), Jin Huang, Paul Chow, Mark Robert Harris, Daniel Phillips, Tao Sun, 8 Lisa Lo, and Shasha Chang (collectively, “Defendants”) have entered, by and 9 through their respective counsel, into a settlement of the claims asserted in the
10 Litigation, the terms of which are set forth in a Stipulation and Agreement of 11
Settlement, dated October 24, 2014 (the “Stipulation”), which is subject to review 12
under Rule 23 of the Federal Rules of Civil Procedure and which, together with the 13
exhibits annexed thereto, set forth the terms and conditions for the proposed 14
settlement of the claims alleged in the Third Amended Complaint (the 15
“Complaint”) filed in the Litigation; and the Court having read and considered the 16
17 Stipulation, the proposed Notice of Pendency and Proposed Settlement of Class
18 Action (“Notice”), the proposed Summary Notice of Pendency and Proposed Class
19 Action Settlement (“Summary Notice”), the proposed Plan of Allocation of the Net
20 Settlement Fund among Settlement Class Members, the proposed form of the Proof
21 of Claim and Release (“Proof of Claim”), the proposed form of Order and Final
22 Judgment, and submissions made relating thereto, and finding that substantial and
23 sufficient grounds exist for entering this Order; and
24 WHEREAS, all defined terms herein have the same meanings as set forth in
25 the Stipulation.
26 NOW, THEREFORE, IT IS HEREBY ORDERED, this
day of
27 2014, that:
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1. The Court does hereby preliminarily approve the Stipulation and the
2 settlement set forth therein, subject to further consideration at the Settlement
3 Hearing described below.
4
2. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil
5 Procedure and for the purposes of the Settlement only, the Court preliminarily
6 certifies a Settlement Class, defined as: “All persons or entities who purchased or 7 otherwise acquired Ambow’s American Depository Shares (“ADS”) during the 8 period from its initial public offering on August 5, 2010, through and including 9 February 27, 2013, and held such ADS shares through at least May 16, 2012.”
10 Excluded from the Settlement Class are:
11 (a) Defendants, present and former officers and/or directors of
12 Ambow and the members of such persons’ immediate families and their legal
13 representatives, heirs, successors and assigns, any entity in which any excluded
14 person has or had a controlling interest, Ambow’s predecessors; and
15 (b) Those persons who file valid and timely requests for exclusion
16
17 in accordance with this Order; and
18 (c) Any persons who have separately filed actions against one or
19 more of Defendants, based in whole or in part on any claim arising out of or
20 relating to any of the alleged acts, omissions, misrepresentations, facts, events,
21 matters, transactions or occurrences referred to in the Litigation or otherwise
22 alleged, asserted or contended in the Litigation.
23 3. The Court finds, preliminarily and for purposes of the Settlement
24 only, that the prerequisites for a class action under Rules 23(a) and (b)(3) of the
25 Federal Rules of Civil Procedure have been satisfied in that: (a) the number of
26 Settlement Class Members is so numerous that joinder of all members of the
27 Settlement Class is impracticable; (b) there are questions of law and fact common
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to the Settlement Class Members; (c) the claims of the Lead and Named Plaintiffs
2 are typical of the claims of the Settlement Class they seek to represent; (d) the
3 Lead Plaintiff and Named Plaintiffs will fairly and adequately represent the
4 interests of the Settlement Class; (e) the questions of law and fact common to the
5 members of the Settlement Class predominate over any questions affecting only
6 individual members of the Settlement Class; and (f) a class action is superior to 7 other available methods for the fair and efficient adjudication of the Litigation.
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, 9 preliminarily and for the purposes of the Settlement only, Lead Plaintiff and
10 Named Plaintiffs are certified as the class representatives on behalf of the 11
Settlement Class and the Lead Plaintiff’s Counsel previously selected by Lead 12
Plaintiff and appointed by the Court is hereby appointed as Lead Counsel for the 13
Settlement Class. 14
5. A hearing (the “Settlement Hearing”) pursuant to Federal Rule of 15
Civil Procedure 23(e) shall be held before the Court on _____________ 20__ at 16
17 .m. for the following purposes:
18 (a) to finally determine whether the Litigation satisfies the
19 applicable prerequisites for class action treatment under Federal Rules of Civil
20 Procedure 23(a) and (b);
21 (b) to finally determine whether the Settlement is fair, reasonable
22 and adequate to the Settlement Class and should be approved by the Court;
23 (c) to finally determine whether the Order and Final Judgment as
24 provided under the Stipulation should be entered, dismissing the Complaint on the
25 merits and with prejudice, and to determine whether the release by the Settlement
26 Class of the Released Parties as set forth in the Stipulation, should be ordered,
27 along with a permanent injunction barring efforts to bring any claims extinguished
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1 by the release;
2
(d) to finally determine whether the proposed Plan of Allocation
3 for the distribution of the Net Settlement Fund is fair and reasonable and should be
4 approved by the Court;
5
(e) to consider the application of Lead Plaintiff’s Counsel for an
6 award of Attorneys’ Fees and Expenses and reimbursement of expenses to Lead 7 Plaintiff and Named Plaintiffs;
8 (f) to consider any Settlement Class Member’s objections to the 9 Settlement, whether submitted previously in writing or presented orally at the
10 Settlement Hearing by Settlement Class Members (or by counsel on their behalf); 11
and
12 (g) to rule upon such other matters as the Court may deem
13 appropriate.
14
6. The Court reserves the right to adjourn the Settlement Hearing to a 15
later date and to approve the Settlement with or without modification and with or 16
17 without further notice of any kind. The Court further reserves the right to enter its
18 Order and Final Judgment approving the Settlement and dismissing the Complaint,
19 on the merits and with prejudice, regardless of whether it has approved the Plan of
20 Allocation or awarded Attorneys’ Fees and Expenses.
21 7. The Court reserves the right to approve the Settlement with such
22 modifications as may be agreed upon or consented to by the Settling Parties and
23 without further notice to the Settlement Class where to do so would not impair
24 Settlement Class Members’ rights in a manner inconsistent with Federal Rule of
25 Civil Procedure 23 and due process of law.
26 8. The Court approves the form, substance and requirements of (a) the
27 Notice, (b) the Summary Notice, and (c) the Proof of Claim, all of which are
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1 exhibits to the Stipulation.
2
9. Lead Plaintiff’s Counsel has the authority to enter into the Stipulation
3 on behalf of the Settlement Class and is authorized to act on behalf of the
4 Settlement Class Members with respect to all acts or consents required by or that
5 may be given pursuant to the Stipulation or such other acts that are reasonably
6 necessary to consummate the Settlement.
7
10. Strategic Claims Services is appointed and approved as the Claims 8 Administrator for the Settlement to supervise and administer the notice procedure 9 and the processing of claims.
10 11. Lead Plaintiff’s Counsel, through the Claims Administrator, shall 11
cause the Notice and the Proof of Claim, substantially in the forms annexed hereto, 12
to be mailed, by first-class mail, postage prepaid, within twenty-eight (28) calendar 13
days of the entry of this Order, to all Settlement Class Members who can be 14
identified with reasonable effort by the Claims Administrator. 15
12. Lead Plaintiff’s Counsel are authorized to establish a Notice and 16
17 Administration Account (as defined in the Stipulation) of US$100,000 (One
18 Hundred Thousand Dollars) to be used for reasonable out-of-pocket costs in
19 connection with providing notice of the Settlement to the Settlement Class and for
20 other reasonable out-of-pocket administrative expenses. After the Effective Date,
21 no additional amounts may be transferred from the Gross Settlement Fund to the
22 Notice and Administration Account without further approval by the Court.
23 13. Within twenty (20) calendar days of entry of this Order, Ambow shall
24 provide to the Claims Administrator, in a usable electronic format, transfer records
25 which indicate the legal owners of Ambow ADS currently or during the Settlement
26 Class Period
27 14. Lead Plaintiff’s Counsel, through the Claims Administrator, shall also
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1 make all reasonable efforts to give notice to nominee owners such as brokerage
2 firms and other persons or entities who purchased Ambow ADS during the
3 Settlement Class Period. Such nominee purchasers are directed to forward copies
4 of the Notice and Proof of Claim to their beneficial owners or to provide the
5 Claims Administrator with lists of the names and addresses of the beneficial
6 owners and the Claims Administrator is ordered to send the Notice and Proof of 7 Claim promptly to such beneficial owners. Additional copies of the Notice shall 8 be made available to any record holder requesting same for the purpose of 9 distribution to beneficial owners, and such record holders shall be reimbursed from
10 the Gross Settlement Fund, upon receipt by the Claims Administrator of proper 11
documentation, for the reasonable expense of sending the Notice and Proof of 12
Claim to beneficial owners. 13
15. Lead Plaintiff’s counsel shall, at or before the Settlement Hearing, 14
serve upon Defendants’ Counsel, and file with the Court, proof of mailing of the 15
Notice and Proof of Claim, both to Settlement Class Members and to nominees. 16
17 16. Lead Plaintiff’s Counsel, through the Claims Administrator, shall
18 cause the Summary Notice to be published electronically once on the
19 GlobeNewswire and in print once in the Investor’s Business Daily within ten (10)
20 calendar days after the entry of this Order. Lead Plaintiff’s Counsel shall, at or
21 before the Settlement Hearing, serve upon Defendants’ counsel and file with the
22 Court proof, by affidavit or declaration, of publication of the Summary Notice.
23 17. The forms and methods set forth herein of notifying the Settlement
24 Class of the Settlement and its terms and conditions meet the requirements of due
25 process and Rule 23 of the Federal Rules of Civil Procedure, Section 21D(a)(7) of
26 the Exchange Act, 15 U.S.C. 78u-4(a)(7), as amended by the Private Securities
27 Litigation Reform Act of 1995; constitute the best notice practicable under the
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circumstances; and constitute due and sufficient notice to all persons and entities
entitled thereto. No Settlement Class Member will be relieved from the terms of
the Settlement, including the releases provided for therein, based upon the
contention or proof that such Settlement Class Member failed to receive actual or
adequate notice.
18. In order to be entitled to participate in recovery from the Net
Settlement Fund after the Effective Date, each Settlement Class Member shall take
the following action and be subject to the following conditions: 9 (a) A properly completed and executed Proof of Claim must be
10 submitted to the Claims Administrator, at the Post Office Box indicated in the 11
Notice, postmarked no later than seventy-five (75) calendar days from the date of 12
this Order. Such deadline may be further extended by Order of the Court. Each 13
Proof of Claim shall be deemed to have been submitted when legibly postmarked 14
(if properly addressed and mailed by first-class mail) provided such Proof of Claim 15
is actually received by no later than thirty (30) calendar days before the filing of a 16
17 motion for an Order of the Court approving distribution of the Net Settlement
18 Fund. Any Proof of Claim submitted in any other manner shall be deemed to have
19 been submitted when it was actually received by the Administrator at the address
20 designated in the Notice.
21 (b) The Proof of Claim submitted by each Settlement Class
22 Member must satisfy the following conditions: (i) it must be properly filled out,
23 signed, and submitted in a timely manner in accordance with the provisions of the
24 preceding subparagraph; (ii) it must be accompanied by adequate supporting
25 documentation for the transactions reported therein, in the form of broker
26 confirmation slips, broker account statements, an authorized statement from the
27 broker containing the transactional information found in a broker confirmation sli
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or such other documentation as is deemed adequate by the Claims Administrator o
2 Lead Plaintiff’s Counsel; (iii) if the person executing the Proof of Claim is acting
3 in a representative capacity, a certification of his current authority to act on behalf
4 of the Settlement Class Member must be provided with the Proof of Claim; and
5 (iv) the Proof of Claim must be complete and contain no material deletions or
6 modifications of any of the printed matter contained therein and must be signed 7 under penalty of perjury.
(c) Once the Claims Administrator has considered a timely 9 submitted Proof of Claim, it shall determine whether such claim is valid, deficient
10 or rejected. For each claim determined to be either deficient or rejected, the 11
Claims Administrator shall send a deficiency letter or rejection letter as 12
appropriate, describing the basis on which the claim was so determined. Persons 13
who timely submit a Proof of Claim that is deficient or otherwise rejected shall be 14
afforded a reasonable time (at least seven (7) calendar days before the date of the 15
Settlement Hearing) to cure such deficiency if it shall appear that such deficiency 16
17 may be cured.
18 (d) For the filing of and all determinations concerning their Proof
19 of Claim, each Settlement Class Member shall submit to the jurisdiction of the
20 Court.
21 19. All Settlement Class Members who do not submit valid and timely
22 Proofs of Claim will be forever barred from receiving any payments from the Net
23 Settlement Fund, but will in all other respects be subject to and bound by the
24 provisions of the Stipulation and the Order and Final Judgment, if entered.
25 20. Settlement Class Members shall be bound by all determinations and
26 judgments in the Litigation, whether favorable or unfavorable, unless such persons
27 request exclusion from the Settlement Class in a timely and proper manner, as
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hereinafter provided. A Settlement Class Member wishing to request exclusion
2 from the Settlement Class shall mail such request, in written form, by first-class
3 mail, postage prepaid, or otherwise deliver it, so that it is received no later than
4 thirty (30) calendar days prior to the Settlement Hearing to the addresses listed in
5 the Notice. Such request for exclusion shall clearly indicate (i) the name, address,
6 phone number, and e-mail contact information (if any) of the person seeking 7 exclusion; (ii) each of the person’s purchases of Ambow ADS made pursuant
and/or traceable to Ambow’s IPO during the Settlement Class Period, including the 9 dates of purchase, the number of ADS shares purchased, and the price paid or
10 received per share for each such purchase; (iii) state that the sender specifically 11
requests to be excluded from the Settlement Class; and (iv) must be signed by such 12
person. The request for exclusion shall not be effective unless it provides the 13
required information, is legible, and is made within the time stated above, or the 14
exclusion is otherwise accepted by the Court. Lead Plaintiff’s Counsel may 15
contact any person or entity filing a request for exclusion, or their attorney if one is 16
17 designated, to discuss the exclusion.
18 21. Settlement Class Members who submit valid and timely requests for
19 exclusion from the Settlement Class as set forth in paragraph 20 shall have no
20 rights under the Stipulation, shall not be entitled to receive any payment out of the
21 Net Settlement Fund, and shall not be bound by the Stipulation, or the Order and
22 Final Judgment entered in the Litigation.
23 22. The Court will consider comments and/or objections to the
24 Settlement, the Plan of Allocation, or the application for Attorneys’ Fees and
25 Expenses and any payment to Lead Plaintiff and Named Plaintiffs, only if such
26 comments or objections and any supporting papers include the following
27 information: (1) name, address, and telephone number of the Settlement Class
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Member, (2) all grounds for the objection, including any legal support known to
Settlement Class Member or their counsel, (3) the name, address, and telephone
number of all counsel who represent the Settlement Class Member, including
former or current counsel who may be entitled to compensation in connection with
the objection, (4) a statement confirming whether they plan to appear at the
Settlement Hearing, (5) the name, address, and telephone number of any counsel
that will appear at the Settlement Hearing, and (6) the number of times a
Settlement Class Member filed an objection in the previous five years and the
nature of each objection to each case in which a Settlement Class Member filed an
objection in the previous five years. All comments or objections must be served by
hand or sent by first-class mail and received at least twenty (20) calendar days
prior to the Settlement Hearing, upon each of the following:
SETTLEMENT CLASS COUNSEL:
Laurence M. Rosen, Esq. THE ROSEN LAW FIRM, P.A. 355 South Grand Avenue, Suite 2450 Los Angeles, CA 90071
COUNSEL FOR DEFENDANTS AMBOW EDUCATION HOLDING, LTD., JIN HUANG, PAUL CHOW, AND SHASHA CHANG:
Stephen D. Hibbard, Esq. SHEARMAN & STERLING LLP Four Embarcadero Center, Suite 3800 San Francisco, California 94111
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1 COUNSEL FOR DEFENDANTS MARK ROBERT HARRIS, DANIEL
2 PHILLIPS, AND TAO SUN:
3 Seth Aronson, Esq.
4 O’MELVENY & MYERS LLP 5 400 South Hope Street, 18th Floor
6 Los Angeles, California 90071
7 [Lisa Lo/Counsel for Lisa Lo]
8
9 and the objector has (by that same date) filed said objections, papers, and briefs,
10 showing due proof of service upon counsel identified above, with the Clerk of the
11 Court, U.S. District Court, Central District of California, 255 East Temple Street
12 Los Angeles, California 90012. Attendance at the Settlement Hearing is not
13 necessary but persons wishing to be heard orally in opposition to the Settlement,
14 the Plan of Allocation, and/or the application for Attorneys’ Fees and Expenses are 15 required to indicate in their written objection (or in a separate writing that is 16 submitted in accordance with the deadline and after instruction pertinent to the 17 submission of a written objection) that they intend to appear at the Settlement 18 Hearing and identify any witnesses they may call to testify or exhibits they intend 19
to introduce into evidence at the Settlement Hearing. Class Members do not need 20
to appear at the Settlement Hearing or take any other action to indicate their 21
approval. 22
23. Any Class Member who does not object in the manner prescribed 23
above shall be deemed to have waived all such objections and shall forever be 24
25 foreclosed from making any objection to the fairness, adequacy, or reasonableness
26 of the Settlement, the Order and Final Judgment to be entered approving the
27 Settlement, the Plan of Allocation, or the application for an award of Attorneys'
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1 Fees and Expenses and a payment to Lead and/or Named Plaintiffs, unless
2 otherwise ordered by the Court.
3
24. All funds held by the Escrow Agent shall be deemed and considered
4 to be in custodia legis of the Court, and shall remain subject to the jurisdiction of
5 the Court, until such time as such funds shall be distributed or returned pursuant to
6 the Stipulation and/or further order(s) of the Court.
7
25. The Court reserves the right to adjourn the Settlement Hearing or any 8 adjournment thereof without any further notice other than entry of an Order on the 9 Court’s docket, and to approve the Settlement without further notice to the Class.
10 26. All papers in support of the Settlement, the Plan of Allocation and 11
application for Attorneys’ Fees or Expenses or a payment to Lead and/or Named 12
Plaintiffs shall be filed and served thirty (30) calendar days before the Settlement 13
Hearing. 14
27. Any submissions filed in response to any objections or in further 15
support of the Settlement, the Plan of Allocation, and any application for 16
17 Attorneys’ Fees or Expenses or a payment to Lead Plaintiff and/or Named
18 Plaintiffs shall be filed no later than ten (10) calendar days prior to the Settlement
19 Hearing.
20 28. Neither the Defendants, any other Released Parties nor the
21 Defendants’ counsel shall have any responsibility for the Plan of Allocation or any
22 application for Attorneys’ Fees or Expenses submitted by Lead Plaintiff’s Counsel
23 or the Lead Plaintiff, and such matters will be considered separately from the
24 fairness, reasonableness, and adequacy of the settlement. Any order or proceeding
25 relating to the Fee and Expense Application, or the Lead Plaintiff and Named
26 Plaintiffs’ expense application, or any appeal from any order relating thereto or
27 reversal or modification thereof, shall not operate to terminate or cancel the
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Stipulation, or affect or delay the finality of the Judgment approving the
Stipulation and the settlement of the Litigation set forth therein.
29. At or after the Settlement Hearing, the Court shall determine whether
the Plan of Allocation that Lead Plaintiff’s Counsel proposes, and any application
for Attorneys’ Fees or Payment of expenses, shall be approved.
30. Neither the Stipulation, nor any of its terms or provisions, nor any of
the negotiations or proceedings connected with it, shall be construed as an
admission or concession by the Defendants or Released Parties of the truth of any 9 of the allegations in the Litigation, or of any liability, fault, or wrongdoing of any
10 kind. 11
31. Pending final determination of whether the Settlement should be 12
approved, all Class Members, and each of them, and anyone acting or purporting to 13
act for any of them, shall be enjoined from prosecuting, attempting to prosecute, or 14
assisting others in the prosecution of, any Settled Claims. In addition, the 15
Litigation is stayed. 16
17 32. In the event the Settlement is not consummated pursuant to its terms,
18 the Stipulation, except as otherwise provided therein, including any amendment(s)
19 thereto, and this Order, shall be null and void, of no further force or effect, and
20 without prejudice to any Settling Party, and may not be introduced as evidence or
21 referred to in any action or proceedings by any person or entity, and each party
22 shall be restored to his, her or its respective position as it existed before the
23 execution of the Stipulation, pursuant to the terms of the Stipulation. In such
24 event, the terms and provisions of the Stipulation, with the exception of paragraphs
25 D.5., F.1-3., H, M.5-7., N.11-13., N.15., and N.18., shall have no further force and
26 effect with respect to the Settling Parties and shall not be used in this Litigation or
27 in any other proceeding for any purpose, and any judgment or order entered by the
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1 Court in accordance with the terms of the Stipulation shall be treated as vacated,
2 nunc pro tunc .
3
33. The Court retains exclusive jurisdiction over the action to consider all
4 further matters arising out of, or relating to, the Settlement, including by way of
5 illustration and not limitation, any dispute concerning any Proof of Claim filed by
6 any Class Member and any future requests by one or more of the Parties that the 7 Final Order and Judgment, the Release and/or the permanent injunction set forth in 8 the Stipulation be enforced. 9
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11 Dated:
2014 12
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14 HON. PHILIP S. GUTIERREZ
UNITED STATES DISTRICT JUDGE 15
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Exhibit A-i
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
BYRON BROWN, TIANQING ZHANG, AND ROBERTO SALAZAR, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
Plaintiffs,
vs.
AMBOW EDUCATION HOLDING LTD., JIN HUANG, PAUL CHOW, XUEJUN XIE, MARK ROBERT HARRIS, LISA LO, DANIEL PHILLIPS, TAO SUN AND SASHA CHANG
Defendants.
CASE No.: 12-cv-5062 PSG (AJW)
CLASS ACTION
NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION
Hon. Philip S. Gutierrez
NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION
If you purchased or otherwise acquired American Depository Shares (“ADS”) of Ambow Education Holding, Ltd. ("Ambow" or the "Company") during the period from August 5, 2010 through and including February 27, 2013 you could get a payment from a class action settlement (the "Settlement").
Under law, a federal court has authorized this notice.
• If approved by the Court, the settlement will provide $1,500,000, plus interest (the "Settlement Amount"), to pay claims of investors who purchased Ambow ADS during the period from its initial public offering on August 5, 2010 through and including February 27, 2013, and held such Ambow ADS through at least May 16, 2012 (the "Class Period").
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• The Settlement represents an average recovery of $.09 per share of Ambow ADS for the 17.2 million shares outstanding as of February 27, 2013, the end of the Class Period. A share may have been traded more than once during the Class Period. This estimate solely reflects the average recovery per outstanding share of Ambow ADS. The indicated average recovery per share will be the total average recovery for all purchasers of that share. This is not an estimate of the actual recovery per share you should expect. Your actual recovery will depend on the aggregate losses of all Class Members, the date(s) you purchased and sold Ambow, and the total number and amount of claims filed.
• Attorneys for the Lead Plaintiff ("Class Counsel") intend to ask the Court to award them fees of $375,000 or twenty-five percent (25%) of the Settlement Amount, reimbursement of litigation expenses of no more than $115,000 and an award to the Lead and the two Named Plaintiffs not to exceed $1,500 each. Collectively, the attorneys' fees and expenses are estimated to average $.03 per share of Ambow ADS. If approved by the Court, these amounts will be paid from the Settlement Fund.
• The approximate recovery, after deduction of attorneys' fees and expenses approved by the Court, is an average of $.06 per share of Ambow ADS. This estimate is based on the assumptions set forth in the preceding paragraph. Your actual recovery, if any, will vary depending on your purchase price and sales price, and the number and amount of claims filed.
• The Settlement resolves the lawsuit concerning whether Ambow and its officers and directors made false and misleading statements, in violation of federal securities laws, based upon the allegations set forth in the Consolidated Third Amended Complaint, including that: (1) Ambow’s Registration Statement in connection with its Initial Public Offering (“IPO”) allegedly misrepresented the nature of its acquisition of the Changsha Study School (2) Ambow allegedly inflated its software revenue by improperly recording accounts receivable and (3) Ambow allegedly engaged in intentionally deceptive accounting practices concerning its allowance for doubtful accounts. Defendants Ambow, Jin Huang, Paul Chow, Shasha Chang, Tao Sun, Mark Robert Harris and Daniel Phillips (collectively, the "Defendants") deny all allegations of misconduct.
• Your legal rights will be affected whether you act or do not act. If you do not act, you may permanently forfeit your right to recover on this claim. Therefore, you should read this notice carefully.
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YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT
SUBMIT A CLAIM FORM The only way to get a payment. NO LATER THAN ________ __9 2014 EXCLUDE YOURSELF Get no payment. This is the only option that allows NO LATER THAN you to be part of any other lawsuit against the _______ __9 2014 Defendants about the legal claims in this case.
OBJECT NO LATER THAN Write to the Court about why you do not like the _______ __9 2014 settlement.
GO TO A HEARING ON Speak in Court about the fairness of the settlement. _______ __9 2014 DO NOTHING Get no payment. Give up rights.
INQUIRIES
Please do not contact the Court regarding this notice. All inquiries concerning this Notice,
the Proof of Claim form, or any other questions by Class members should be directed to:
Ambow Education Holding, Ltd. Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
or
THE ROSEN LAW FIRM, P.A. 355 South Grand Avenue, Suite 2450
Los Angeles, CA 90071 Tel.: 213-785-2610 Fax: 213-226-4684
COMMON QUESTIONS AND ANSWERS CONCERNING THE SETTLEMENT
1. Why did I get this Notice?
You or someone in your family may have acquired Ambow ADS during the Class Period.
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2. What is this lawsuit about?
The case is known as Gudimetla v. Ambow Education Holding Ltd., et al, Case No. 12-
CV-5062-PSG (AJWx) (the "Litigation"), and the Court in charge of the case is the
United States District Court for the Central District of California.
The Class Action involves whether the Defendants violated the federal securities laws
because the Company allegedly made false and misleading statements to the investing
public as set out in the complaint, including that: (1) Ambow’s Registration Statement in
connection with its Initial Public Offering (“IPO”) misrepresented the nature of its
acquisition of the Changsha Study School (2) Ambow allegedly inflated its software
revenue by improperly recording accounts receivable and (3) Ambow engaged in
intentionally deceptive accounting practices concerning its allowance for doubtful
accounts. The Defendants deny they did anything wrong. The Settlement resolves all of
the claims in the Class Action against the Defendants.
3. Why is this a class action?
In a class action, one or more persons and/or entities, called Lead Plaintiffs, sue on behalf
of all persons and/or entities who have similar claims. All of these persons and/or entities
are referred to collectively as a Class, and these individual persons and/or entities are
known as Class Members. One court resolves all of the issues for all Class Members,
except for those Class Members who exclude themselves from the Class.
4. Why is there a Settlement?
Lead Plaintiff and the Defendants do not agree regarding the merits of Lead Plaintiff’s
allegations with respect to liability or the average amount of damages per share that
would be recoverable if Lead Plaintiff were to prevail at trial on each claim. The issues
on which the Lead Plaintiff and the Defendants disagree include: (1) whether the
Defendants made false and misleading statements; (2) whether the Defendants made
these statements with the intent to defraud the investing public; (3) whether the
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statements were the cause of the Class Members' alleged damages; and (4) the amount of
damages, if any, suffered by the Class Members.
This matter has not gone to trial and the Court has not decided in favor of either Lead
Plaintiff or the Defendants. Instead, Lead Plaintiff and the Defendants have agreed to
settle the Class Action. The Lead Plaintiff and Class Counsel believe the settlement is
best for all Class Members because of the risks associated with continued litigation and
the nature of the defenses raised by the Defendants. Even if Plaintiffs win at trial, and
also withstand the Defendants' inevitable challenge on appeal, Plaintiffs might not be able
to collect some, or all, of the judgment.
5. How do I know if I am part of the Class settlement?
To be a Class Member, you must have purchased or otherwise acquired Ambow ADS
during the period from August 5, 2010 through and including February 27, 2013 and held
such Ambow ADS through at least May 16, 2012.
6. Are there exceptions to being included?
Yes. Excluded from the Class are the Defendants, and all former officers and directors of
Ambow, and the members of such excluded persons' immediate families, legal
representatives, heirs, predecessors, successors, and assigns, and any entity in which any
excluded person has or had a controlling interest, and any persons who have separately
filed actions against one or more of the Defendants, based in whole or in part on any
claim arising out of or relating to any of the alleged acts, omissions, misrepresentations,
facts, events, matters, transactions, or occurrences referred to in the Litigation or
otherwise alleged, asserted, or contended in the Litigation. Also, if you exclude yourself
from the Class, as described below, you are not a part of the Class.
7. What does the Settlement provide?
a. What is the Settlement Fund?
The proposed Settlement calls for the Defendants to create a Settlement Fund (the
"Settlement Fund") in the amount of $1,500,000. The Settlement is subject to Court
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approval. Also, subject to the Court's approval, a portion of the Settlement Fund will be
used to pay Lead Plaintiff’s attorneys' fees and reasonable litigation expenses and any
award to Lead and Named Plaintiffs. A portion of the Settlement Fund also will be used
to pay taxes due on interest earned by the Settlement Fund, if necessary, and any notice
and claims administration expenses permitted by the Court. After the foregoing
deductions from the Settlement Fund have been made, the amount remaining (the "Net
Settlement Fund") will be distributed to Class Members who submit valid claims.
b. What can you expect to receive under the proposed Settlement?
Your share of the Net Settlement Fund will or may depend on: (i) the number of claims
filed; (ii) the dates you purchased and sold Ambow ADS; (iii) the prices of your
purchases and sales; (iv) the amount of administrative costs, including the costs of notice;
and (v) the amount awarded by the Court to Lead and Named Plaintiffs and Class
Counsel for attorneys' fees, costs, and expenses.
PLAN OF ALLOCATION OF THE NET SETTLEMENT FUND
The Plan of Allocation is a matter separate and apart from the proposed Settlement, and
any decision by the Court concerning the Plan of Allocation shall not affect the validity or
finality of the proposed Settlement. The Court may approve the Plan of Allocation with or
without modifications agreed to among the parties, or another plan of allocation, without further
notice to Settlement Class Members. Any orders regarding a modification of the Plan of
Allocation will be posted to the Settlement Administrator’s website, www.strategicclaims.net .
The Settlement Administrator shall determine each Authorized Claimant’s pro rata share
of the Net Cash Settlement Amount based upon each Authorized Claimant’s Recognized Claim.
Please Note : The Recognized Claim formula, set forth below, is not intended to be an estimate
of the amount of what a Settlement Class Member might have been able to recover after a trial,
nor is it an estimate of the amount that will be paid to Authorized Claimants pursuant to the
Settlement. The Recognized Claim formula is the basis upon which the Net Cash Settlement
Amount will be proportionately allocated to the Authorized Claimants. To the extent there are
sufficient funds remaining in the Net Cash Settlement Amount, each Authorized Claimant will
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receive an amount equal to the Authorized Claimant’s Recognized Claim. If, however, the Net
Cash Settlement Amount is not sufficient to pay the total Recognized Claim of each Authorized
Claimant, then each Authorized Claimant shall be paid the percentage of the Net Cash
Settlement Amount that each Authorized Claimant’s Recognized Claim bears to the total
Recognized Claims of all Authorized Claimants ( i.e. , “pro rata share”). No distribution will be
made on a claim where the potential distribution amount is less than ten dollars ($10.00) in cash.
If any of the Net Cash Settlement Amount remains by reason of uncashed checks, or
otherwise, after the Settlement Administrator has made reasonable and diligent efforts to have
Authorized Claimants who are entitled to participate in the distribution of the Net Cash
Settlement Amount cash their distribution checks, then any balance remaining in the Net
Settlement Fund six (6) months after the initial distribution of such funds shall be used: (i) first,
to pay any amounts mistakenly omitted from the initial distribution to Authorized Claimants or
to pay any late, but otherwise valid and fully documented claims received after the cut-off date
used to make the initial distribution, provided that such distributions to any late post-distribution
claimants meet all of the other criteria for inclusion in the initial distribution, including the
$10.00 minimum check amount set forth in the Notice; (ii) second, to pay any additional Notice
and Administrative Expenses incurred in administering the Settlement; and (iii) finally, to make
a second distribution to Authorized Claimants who cashed their checks from the initial
distribution and who would receive at least $10.00 from such second distribution, after payment
of the estimated costs or fees to be incurred in administering the Net Cash Settlement Amount
and in making this second distribution, if such second distribution is economically feasible. If
six (6) months after such second distribution, if any, or if such second distribution is not
undertaken, any funds shall remain in the Net Cash Settlement Amount after the Settlement
Administrator has made reasonable and diligent efforts to have Authorized Claimants who are
entitled to participate in this Settlement cash their checks, any funds remaining in the Net Cash
Settlement Amount shall be donated to a non-profit 501(c)(3) organization(s) selected by Lead
Counsel.
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THE BASIS FOR CALCULATING YOUR RECOGNIZED CLAIM (I) Recognized Claim Calculation for American Depository Shares (ADS) Purchased or
Otherwise Acquired during the Class Period:
A) For each ADS sold during the Class Period, Recognized Claim per share will be the lesser of (1) inflation per share upon purchase less inflation per share upon sale (see TABLE A below for the estimated inflation per share during the Class Period); or (2) purchase price per share minus sale price per share.
B) For each share retained as of the close of trading on February 27, 2013, Recognized Claim will be the lesser of (1) inflation per share upon purchase (see TABLE A); or (2) purchase price per share minus $1.16 per share 1 .
(II) Recognized Claim Calculation for ADS Purchased in and Traceable 2 to the August 5, 2010 Initial Public Offering (“IPO”):
A) For each ADS sold during the Class Period, Recognized Claim per share will be the lesser of (1) inflation per share upon purchase less inflation per share upon sale (see TABLE A); or (2) purchase price per share (not to exceed the IPO price of $10.00 per share) minus sale price per share.
B) For each share retained as of the close of trading on February 27, 2013, Recognized Claim will be the lesser of (1) inflation per share upon purchase; or (2) purchase price per share (not to exceed the IPO price of $10.00 per share) minus $1.68 per share3 .
1 Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, "in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed 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" (the “Look Back Period”). Since Ambow ADS were suspended from trading from March 22, 2013 to May 16, 2014 the shortened Look Back Period is February 28, 2013 to March 22, 2013. The mean (average) daily closing trading price of Ambow ADS during this shortened Look Back Period is $1.16 per share.
2 Traceable ADS are shares purchased in the open market after the IPO (August 5, 2010) through and including the end of the 180-day “Lock-Up Period” on January 31, 2011.
3 This is the closing price per share on February 19, 2013, the date of the initial Section 11 lawsuit.
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TABLE A
Period August 5, 2010 to May 15, 2012, inclusive May 16, 2012 May 17, 2012 to May 29, 2012, inclusive May 30, 2012 to July 3, 2012, inclusive July 5, 2012 to July 6, 2012, inclusive July 7, 2012 to July 9, 2012, inclusive July 10, 2012 to February 27, 2013, inclusive
On or after February 28, 2013
Inflation $3.42 per share $2.43 per share $2.13 per share $1.78 per share $0.87 per share $0.44 per share $0.26 per share $0.00 per share
To the extent a claimant had a trading gain or “broke even” from his, her or its overall
transactions in Ambow ADS during the Class Period, the value of the Recognized Claim will be
zero and the claimant will not be entitled to a share of the Net Settlement Fund. To the extent
that a claimant suffered a trading loss on his, her or its overall transactions in Ambow ADS
during the Class Period, but that trading loss was less than the Recognized Claim calculated
above, then the Recognized Claim shall be limited to the amount of the claimant’s actual trading
loss.
For purposes of calculating your Recognized Claim, the date of purchase, acquisition or
sale is the “contract” or “trade” date and not the “settlement” or “payment” date. The receipt or
grant by gift, inheritance or operation of law of Ambow ADS not be deemed a purchase,
acquisition or sale of Ambow ADS for the calculation of an Authorized Claimant’s Recognized
Claim. The covering purchase of a short sale is not an eligible purchase.
Authorized Claimants, who purchased ADS during the period August 5, 2010 through
and including January 31, 2011, will have their claims calculated under both Sections (I) and (II)
above and their Recognized Claim will be the greater of the two Sections.
For purposes of calculating your Recognized Claim, all purchases, acquisitions and sales
shall be matched on a First In First Out (“FIFO”) basis in chronological order. Therefore, on the
Proof of Claim enclosed with this Notice, you must provide all of your purchases and
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acquisitions of Ambow ADS during the time period from August 5, 2010 through and including
February 27, 2013.
Payment pursuant to the Plan of Allocation approved by the Court shall be conclusive
against all Authorized Claimants. No person shall have any claim against Defendants,
Defendants’ Counsel, Lead Plaintiffs, Lead Counsel or the Settlement Administrator or other
agent designated by Lead Counsel based on the distributions made substantially in accordance
with the Stipulation and the Settlement contained therein, the Plan of Allocation, or further
orders of the Court. Each claimant shall be deemed to have submitted to the jurisdiction of the
Court with respect to the claimant’s Claim Form. All persons involved in the review,
verification, calculation, tabulation, or any other aspect of the processing of the claims submitted
in connection with the Settlement, or otherwise involved in the administration or taxation of the
Settlement Fund or the Net Cash Settlement Amount shall be released and discharged from any
and all claims arising out of such involvement, and all Settlement Class Members, whether or not
they are to receive payment from the Net Cash Settlement Amount, will be barred from making
any further claim against the Net Settlement Fund beyond the amount allocated to them as
provided in any distribution orders entered by the Court.
8. How can I get a payment?
To qualify for a payment, you must send in a form entitled "Proof of Claim and Release"
form. This claim form is attached to this Notice. You may also obtain a claim form on
the Internet at www.strategicclaims.net . Read the instructions carefully, fill out the form,
sign it in the location indicated, and mail the claim form together with all documentation
requested in the form, postmarked no later than ________ __, 2014, to:
Ambow Education Holding, Ltd. Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
The Claims Administrator will process your claim and determine whether you are an
"Authorized Claimant."
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9. What am I giving up to get a payment or stay in the Class?
Unless you exclude yourself, you will remain in the Class. That means that if the
Settlement is approved, you and all Class Members will release (agreeing never to sue,
continue to sue, or be part of any other lawsuit) all claims against the Defendants, any of
their current, former, or future parents, subsidiaries, affiliates, partners, joint venturers,
officers, directors, principals, shareholders, members, agents (acting in their capacity as
agents), employees, attorneys, insurers, reinsurers, advisors, accountants, associates,
and/or any other individual or entity in which any Defendant has a controlling interest or
which is related to or affiliated with any of the Defendants, and the current, former, and
future legal representatives, heirs, successors in interest, or assigns of the Defendants
("Released Parties") in connection with your acquisition of Ambow ADS during the
Class Period, except that you do not release the Released Parties from any claim or action
to enforce the Settlement. It also means that all of the Court's orders will apply to you
and legally bind you. If you sign the claim form, you are agreeing to a "Release of
Claims," which will bar you from ever filing a lawsuit against any Released Party to
recover losses from the acquisition or sale of Ambow ADS during the Class Period,
except to enforce the 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 Ambow ADS during the Class Period.
10. How do I get out of the Settlement?
If you do not want to receive a payment from this Settlement, and you want to keep any
right you may have to sue or continue to sue the Defendants on your own based on the
legal claims raised in this Class Action, then you must take steps to get out of the
Settlement. This is called excluding yourself from – or "opting out" of – the Settlement.
To exclude yourself from the Settlement, you must mail a letter stating you want to be
excluded as a Class Member from Gudimetla v. Ambow Education Holding Ltd., et al,
Case No. 12-CV-5062-PSG (AJWx). Be sure to include your name, address, telephone
number and your signature, along with an accurate list of all of your purchases and sales
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of Ambow ADS. You must mail your exclusion request, postmarked no later than
__, 2014, to:
Ambow Education Holding Ltd., Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
You cannot exclude yourself by telephone or by e-mail. If you ask to be excluded, you
will not receive a settlement payment, and you cannot object to the Settlement. If you
ask to be excluded, you will not be legally bound by anything that happens in this Class
Action.
11. If I do not exclude myself, can I sue the Defendants for the same thing later?
No. Unless you exclude yourself, you give up any right to sue the Defendants for the
claims that this Settlement resolves. If you have a pending lawsuit, speak to your lawyer
in that case immediately, since you may have to exclude yourself from this Class to
continue your own lawsuit.
12. Do I have a lawyer in this case?
The Court has not certified this action as a class action. Until the Court certifies this
action as a class action, you do not have a lawyer unless you actually retain one.
13. How will the lawyers be paid?
Class Counsel have expended considerable time litigating this action on a contingent fee
basis, and have paid for the expenses of the litigation themselves and have not been paid
attorneys' fees in advance of this Settlement. Class Counsel have done so with the
expectation that if they are successful in recovering money for the Class, they will
receive attorneys' fees and be reimbursed for their litigation expenses from the Settlement
Fund, as is customary in this type of litigation. Class Counsel will not receive attorneys'
fees or be reimbursed for their litigation expenses except from the Settlement Fund.
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Therefore, Class Counsel will file a motion asking the Court at the Settlement Hearing to
make an award of attorneys' fees in an amount not to exceed $375,000 for reimbursement
of reasonable litigation expenses not to exceed $115,000, and an award to the Lead and
the two Named Plaintiffs in amounts not to exceed $1,500 each. The Court may award
less than these amounts. Any amounts awarded by the Court will come out of the
Settlement Fund.
14. How do I tell the Court that I do not like the Settlement?
You can tell the Court you do not agree with the Settlement, any part of the Settlement,
or Class Counsel's motion for attorneys' fees, and that you think the Court should not
approve the Settlement, by mailing a letter stating that you object to the Settlement in the
matter of Gudimetla v. Ambow Education Holding Ltd., et al, Case No. 12-CV-5062-
PSG (AJWx). Be sure to include your name, address, telephone number, your signature,
a list of your purchases and sales of Ambow ADS in order to show your membership in
the Class, and all of the reasons you object to the Settlement. Be sure to mail the
objections to the four different places listed below, postmarked no later than _________
__, 2014, so the Court will consider your views:
Clerk of the Court United States District Court Central District of California Edward R. Roybal Federal Building and United States Courthouse 255 East Temple Street Los Angeles, CA 90012
Laurence M. Rosen, Esq. THE ROSEN LAW FIRM, P.A. 355 South Grand Avenue, Suite 2450 Los Angeles, CA 90071 Tel.: 213-785-2610 Fax: 213-226-4684
Lead Counsel for Plaintiffs and the Class
Stephen D. Hibbard, Esq. SHEARMAN & STERLING LLP
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Four Embarcadero Center, Suite 3800 San Francisco, California 94111
Counsel for Defendants Ambow Education Holding, Ltd., Jin Huang, Paul Chow and Shasha Chang
Seth Aronson, Esq. O’MELVENY & MYERS LLP 400 South Hope Street, 18 th Floor Los Angeles, California 90071
Counsel for Defendants Mark Robert Harris, Daniel Phillips, Tao Sun and Sasha Chang
15. What is the difference between objecting and requesting exclusion?
Objecting is simply telling the Court you do not like something about the Settlement.
You can object only if you stay in the Class. Requesting exclusion is telling the Court
you do not want to be part of the Class and Settlement. If you exclude yourself, you
cannot object to the Settlement because it no longer concerns you. If you stay in the
Class and object, but your objection is overruled, you will not be allowed a second
opportunity to exclude yourself.
16. When and where will the Court decide whether to approve the Settlement?
The Court will hold a Settlement Hearing on _____ __, 2014, at __:__ _.m., at the United
States District Court for the Central District of California, 255 East Temple Street, Los
Angeles, CA 90012.
At this hearing, the Court will consider whether the Settlement is fair, reasonable, and
adequate and whether to approve the Settlement. If there are objections, the Court will
consider them, and the Court will listen to people who have asked to speak at the hearing.
The Court may also decide how much to pay Class Counsel for attorneys' fees and
expenses.
17. Do I have to come to the hearing?
No. Class Counsel will answer any questions the Court may have. However, you are
welcome to attend at your own expense. If you send an objection, you do not have to
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come to Court to talk about it. As long as you mail your written objection on time, the
Court will consider it.
18. What happens if I do nothing at all?
If you do nothing, you will not receive a payment from the Settlement. However, unless
you exclude yourself, you will not be able to start a lawsuit, continue with a lawsuit, or be
part of any other lawsuit against the Defendants about the claims made in this case ever
again.
DATED: , 2014.
BY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
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Exhibit A-2
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
BYRON BROWN, TIANQING ZHANG, AND ROBERTO SALAZAR, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
Plaintiffs,
vs.
AMBOW EDUCATION HOLDING LTD., JIN HUANG, PAUL CHOW, XUEJUN XIE, MARK ROBERT HARRIS, LISA LO, DANIEL PHILLIPS, TAO SUN AND SASHA CHANG
CASE No.: 12-cv-5062 PSG (AJW)
CLASS ACTION
SUMMARY NOTICE OF CLASS ACTION SETTLEMENT
Hon. Philip S. Gutierrez
Defendants.
SUMMARY NOTICE OF CLASS ACTION SETTLEMENT
TO: ALL PERSONS WHO PURCHASED AMERICAN DEPOSITORY SHARES (“ADS”) OF AMBOW EDUCATION HOLDING, LTD. DURING THE PERIOD FROM AUGUST 5, 2010 THROUGH FEBRUARY 27, 2013, INCLUSIVE AND HELD SUCH ADS THROUGH AT LEAST MAY 16, 2012.
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District
Court for the Central District of California, that a hearing will be held on __________ at
_.m. in room before the Honorable Philip S. Gutierrez, United States District Judge of the
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Central District of California, 255 East Temple Street, Los Angeles, CA 90012 (the "Settlement
Hearing") for the purpose of determining: (1) whether the proposed Settlement consisting of the
sum of $1,500,000 should be approved by the Court as fair, reasonable, and adequate;
(2) whether the proposed plan to distribute the settlement proceeds is fair, reasonable, and
adequate; (3) whether the application for an award of attorneys' fees of no more than $375,000 or
25% of the Settlement Amount and reimbursement of expenses of not more than $115,000, and
an incentive payment of no more than $1,500 each to lead plaintiff and the two named plaintiffs,
should be approved; and (4) whether the Litigation should be dismissed with prejudice.
If you purchased American Depository Shares (“ADS”) of Ambow Education Holding,
Ltd. during the class period from August 5, 2010 through February 27, 2013, inclusive, and held
such ADS thought at least May 16, 2012 your rights may be affected by the Settlement of this
action. If you have not received a detailed Notice of Pendency and Settlement of Class Action
and a copy of the Proof of Claim and Release, you may obtain copies by writing to Ambow
Education Holding, Ltd. Litigation c/o Strategic Claims Services 600 N. Jackson St., Ste. 3
Media, PA 19063 (866-274-4004 (Tel) 610-565-7985 (Fax); [email protected] ), or going
to the website, www.strategicclaims.net . If you are a member of the Class, in order to share in the
distribution of the Net Settlement Fund, you must submit a Proof of Claim and Release no later
than , 2014, establishing that you are entitled to recovery. Unless you submit a written
exclusion request, you will be bound by any judgment rendered in the Litigation whether or not
you make a claim. If you desire to be excluded from the Class, you must submit a request for
exclusion postmarked no later than ______, 2014, in the manner and form explained in the
detailed Notice to the Claims Administrator.
2
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Any objection to the Settlement, Plan of Allocation, or the Lead Plaintiff's Counsel's
request for an award of attorneys' fees and reimbursement of expenses must be in the manner and
form explained in the detailed Notice and postmarked no later than ______, 2014, to each of the
following:
Clerk of the Court United States District Court Central District of California Edward R. Roybal Federal Building and United States Courthouse 255 East Temple Street Los Angeles, CA 90012
Laurence M. Rosen, Esq. THE ROSEN LAW FIRM, P.A. 355 South Grand Avenue, Suite 2450 Los Angeles, CA 90071 Tel.: 213-785-2610 Fax: 213-226-4684
Lead Counsel for Plaintiffs and the Class
Stephen D. Hibbard, Esq. SHEARMAN & STERLING LLP Four Embarcadero Center, Suite 3800 San Francisco, California 94111
Counsel for Defendants Ambow Education Holding, Ltd., Jin Huang, Paul Chow and Shasha Chang
Seth Aronson, Esq. O’MELVENY & MYERS LLP 400 South Hope Street, 18 th Floor Los Angeles, California 90071
Counsel for Defendants Mark Robert Harris, Daniel Phillips, and Tao Sun
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If you have any questions about the Settlement, you may call or write to Lead Plaintiff’s
Counsel:
Laurence M. Rosen, Esq. THE ROSEN LAW FIRM, P.A. 355 South Grand Avenue, Suite 2450 Los Angeles, CA 90071 Tel.: 213-785-2610 Fax: 213-226-4684
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE
REGARDING THIS NOTICE.
DATED: ______________________________ BY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
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Exhibit A-3
Ambow Education Holding, Ltd. Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
PROOF OF CLAIM AND RELEASE
Deadline for Submission:
IF YOU PURCHASED AMERICAN DEPOSITORY SHARES (“ADS”) OF AMBOW EDUCATION HOLDING LTD. DURING THE PERIOD FROM AUGUST 5, 2010 THROUGH FEBRUARY 27, 2013, INCLUSIVE AND HELD SUCH ADS THROUGH AT LEAST MAY 16, 2012 (THE “CLASS PERIOD”), YOU ARE A “CLASS MEMBER” AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT PROCEEDS.
IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THIS FORM IN ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS.
YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND RELEASE (“PROOF OF CLAIM”) AND MAIL IT BY FIRST CLASS MAIL, POSTMARKED NO LATER THAN _________ TO STRATEGIC CLAIM SERVICES, THE CLAIMS ADMINISTRATOR, AT THE FOLLOWING ADDRESS:
Ambow Education Holding, Ltd. Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
YOUR FAILURE TO SUBMIT YOUR CLAIM BY _______, 2014 WILL SUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOUR RECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF THIS ACTION. DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURT OR TO ANY OF THE PARTIES OR THEIR COUNSEL AS ANY SUCH CLAIM WILL BE DEEMED NOT TO HAVE BEEN SUBMITTED. SUBMIT YOUR CLAIM ONLY TO THE CLAIMS ADMINISTRATOR.
CLAIMANT’S STATEMENT
1. I (we) purchased American Depository Shares (“ADS”) in Ambow Education Holding, Ltd. and was (were) damaged thereby. (Do not submit this Proof of Claim if you did not purchase Ambow ADS during the designated Class Period).
2. By submitting this Proof of Claim, I (we) state that I (we) believe in good faith that I am (we are) a Class Member as defined above and in the Notice of Pendency and Settlement of Class Action (the “Notice”), or am (are) acting for such person(s); that I am (we are) not a Defendant in the Actions or anyone excluded from the Class; that I (we) have read and understand the Notice; that I (we) believe that I am (we are) entitled to receive a share of the Net Settlement Fund, as defined in the Notice; that I (we) elect to participate in the proposed Settlement described in the Notice; and that I (we) have not filed a request for exclusion. (If you are acting in a representative capacity on behalf of a Class Member [e.g., as an executor, administrator, trustee, or other representative], you must submit evidence of your current authority to act on behalf of that Class Member. Such evidence would include, for example, letters testamentary, letters of administration, or a copy of the trust documents.)
3. I (we) consent to the jurisdiction of the Court with respect to all questions concerning the validity of this Proof of Claim. I (we) understand and agree that my (our) claim may be subject to investigation and discovery under the Federal Rules of Civil Procedure, provided that such investigation and discovery shall be limited to my (our) status as
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AMBOW a Class Member(s) and the validity and amount of my (our) claim. No discovery shall be allowed on the merits of the Litigation or Settlement in connection with processing of the Proof of Claim.
4. I (we) have set forth where requested below all relevant information with respect to each purchase of Ambow ADS during the Class Period, and each sale, if any, of such securities. I (we) agree to furnish additional information to the Claims Administrator to support this claim if requested to do so.
5. I (we) have enclosed photocopies of the stockbroker’s confirmation slips, stockbroker’s statements, or other documents evidencing each purchase, sale or retention of Ambow ADS listed below in support of my (our) claim. (IF ANY SUCH DOCUMENTS ARE NOT IN YOUR POSSESSION, PLEASE OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR BROKER BECAUSE THESE DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS YOUR CLAIM.)
6. I (we) understand that the information contained in this Proof of Claim is subject to such verification as the Claims Administrator may request or as the Court may direct, and I (we) agree to cooperate in any such verification. (The information requested herein is designed to provide the minimum amount of information necessary to process most simple claims. The Claims Administrator may request additional information as required to efficiently and reliably calculate your recognized claim. In some cases, the Claims Administrator may condition acceptance of the claim based upon the production of additional information, including, where applicable, information concerning transactions in any derivatives securities such as options.)
7. Upon the occurrence of the Court’s approval of the Settlement, as detailed in the Notice, I (we) agree and acknowledge that my (our) signature(s) hereto shall effect and constitute a full and complete release, remise and discharge by me (us) and my (our) heirs, joint tenants, tenants in common, beneficiaries, executors, administrators, predecessors, successors, attorneys, insurers and assigns (or, if I am (we are) submitting this Proof of Claim on behalf of a corporation, a partnership, estate or one or more other persons, by it, him, her or them, and by its, his, her or their heirs, executors, administrators, predecessors, successors, and assigns) of each of the “Released Parties” of all “Release of Claims,” as defined in the Notice.
8. 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 Proof of Claim form listing all their transactions whether or not they also submit electronic copies. If you wish to file your claim electronically, you must contact the Claims Administrator at 1-866-274-4004 or visit their website at www.strategicclaims.net 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 a written acknowledgment of receipt and acceptance of electronically submitted data.
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AMBOW I. CLAIMANT INFORMATION Name:
Address:
City State ZIP
Foreign Provence Foreign Country
Day Phone Evening Phone
Social Security Number (for individuals): OR Taxpayer Identification Number (for estates, trusts, corporations, etc.)
II. SCHEDULE OF TRANSACTIONS IN AMBOW SECURITIES Purchases: A. Separately list each and every open market purchase of Ambow ADS during the period from August 5,
2010 through February 27, 2013, inclusive, and provide the following information ( must be document Trade Date Total Cost
(List Chronologically) (Excluding Commissions, (Month/Day/Year) Number of Shares Purchased Price per Share Taxes, and Fees)
B. Separately list each and every sale of Ambow ADS during the period from August 5, 2010 through February 27, 2013, inclusive, and provide the following information (must be documented ):
Trade Date Amount Received (List Chronologically) (Excluding Commissions,
(Month/Day/Year) Number of Shares Sold Price per Share Taxes, and Fees)
Ending Holdings: C. State the total number of shares of Ambow ADS owned at the close of trading
on February 27, 2013 long or short ( must be documented). If additional space is needed, attach separate, numbered sheets, giving all required information, substantially in the same format, and print your name and Social Security or Taxpayer Identification number at the top of each sheet. III. SUBSTITUTE FORM W-9
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AMBOW
Request for Taxpayer Identification Number:
Enter taxpayer identification number below for the Beneficial Owner(s). For most individuals, this is your Social Security Number. The Internal Revenue Service (“I.R.S.”) requires such taxpayer identification number. If you fail to provide this information, your claim may be rejected.
Social Security Number (for or Taxpayer Identification Number individuals) (for estates, trusts, corporations, etc.)
______________________________ _______________________________
IV. CERTIFICATION
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 because: (a) I am (We are) exempt from backup withholding, or (b) I (We) have not been notified by the I.R.S. that I am (we are) subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the I.R.S. has notified me (us) that I am (we are) no longer subject to backup withholding.
NOTE: If you have been notified by the I.R.S. that you are subject to backup withholding, please strike out the language that you are not subject to backup withholding in the certification above.
UNDER THE PENALTIES OF PERJURY UNDER THE LAWS OF THE UNITED STATES, I (WE) CERTIFY THAT ALL OF THE INFORMATION I (WE) PROVIDED ON THIS PROOF OF CLAIM AND RELEASE FORM IS TRUE, CORRECT AND COMPLETE.
Signature of Claimant (If this claim is being made on behalf of Joint Claimants, then each must sign):
(Signature)
(Signature)
(Capacity of person(s) signing, e.g. beneficial purchaser(s), executor, administrator, trustee, etc.) Check here if proof of authority to file is enclosed. (See Item 2 under Claimant’s Statement)
Date:
THIS PROOF OF CLAIM MUST BE SUBMITTED NO LATER THAN _______________, 2014 AND MUST BE MAILED TO:
Ambow Education Holding, Ltd. Litigation c/o Strategic Claims Services
600 N. Jackson St., Ste. 3 Media, PA 19063
Tel.: 866-274-4004 Fax: 610-565-7985
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AMBOW [email protected]
A Proof of Claim received by the Claims Administrator shall be deemed to have been submitted when posted, if mailed by _________, 2014 and if a postmark is indicated on the envelope and it is mailed first class and addressed in accordance with the above instructions. In all other cases, a Proof of Claim shall be deemed to have been submitted when actually received by the Claims Administrator.
You should be aware that it will take a significant amount of time to process fully all of the Proofs of Claim and to administer the Settlement. This work will be completed as promptly as time permits, given the need to investigate and tabulate each Proof of Claim. Please notify the Claims Administrator of any change of address.
REMINDER CHECKLIST
• Please be sure to sign this Proof of Claim on page 4. If this Proof of Claim is submitted on behalf of joint claimants, then both claimants must sign.
• Please remember to attach supporting documents. Do NOT send any share certificates. Keep copies of everything you submit.
• Do NOT use highlighter on the Proof of Claim or any supporting documents.
• If you move after submitting this Proof of Claim, please notify the Claims Administrator of the change in your address.
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EXHIBIT B
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1 UNITED STATES DISTRICT COURT
2 CENTRAL DISTRICT OF CALIFORNIA
3 WESTERN DIVISION
4
5 BYRON BROWN, TIANQING ZHANG, 6 AND ROBERTO SALAZAR,
INDIVIDUALLY AND ON BEHALF OF 7 ALL OTHERS SIMILARLY SITUATED, 8
9 Plaintiffs,
10 vs.
11 AMBOW EDUCATION HOLDING LTD.,
12 JIN HUANG, PAUL CHOW, XUEJUN 13 XIE, MARK ROBERT HARRIS, LISA LO,
DANIEL PHILLIPS, TAO SUN AND 14 SASHA CHANG, 15
16 Defendants.
17
18
19
20
21
22
23
24
25
26
27
CASE No.: 12-cv-5062 PSG (AJW)
CLASS ACTION
[PROPOSED] ORDER AND FINAL JUDGMENT
Hon. Philip S. Gutierrez
Hearing date: TBD Hearing Time: TBD Courtroom: 880 Compl. Filed: June 11, 2012 Trial Date: N/A
0 28
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1
On the ____ day of ____________, 20__, this matter came before the Court
2 for hearing pursuant to the Order Preliminarily Approving Settlement and
3 Providing for Notice (“Order”) dated ____________, 20__, on the application of
4 the parties for approval of the settlement set forth in the Stipulation and Agreement
5 of Settlement dated _____, 2014, (the “Stipulation”) to determine: (1) whether the
6 terms and conditions of the Stipulation are fair, reasonable, and adequate for the 7 settlement of all claims asserted by (i) the Settlement Class against (ii) defendants 8 Ambow Education Holding Ltd. (“Ambow”), Jin Huang, Paul Chow, Mark Robert 9 Harris, Daniel Phillips, Tao Sun, Lisa Lo, and Shasha Chang (collectively,
10 “Defendants”) and the other Released Parties, and (2) whether to approve the 11
proposed Plan of Allocation as a fair and reasonable method to allocate the Net 12
Settlement Fund among Settlement Class Members; and
13 The Court having considered all matters submitted to it at the hearing and
14 otherwise;
15 The Notice, substantially in the form approved by the Court in the Court’s
16
17 Order Preliminarily Approving Settlement and Providing For Notice (“Preliminary
18 Approval Order”), was mailed to all reasonably identifiable Settlement Class
19 Members;
20 The Summary Notice, substantially in the form approved by the Court in the
21 Preliminary Approval Order, was published in accordance with that Order and the
22 specifications of the Court; and
23 All defined terms herein have the same meanings as set forth in the
24 Stipulation;
25 NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND
26 DECREED THAT:
27
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1
1. The Court has jurisdiction over the subject matter of the Litigation,
2 Lead Plaintiff, Named Plaintiffs, all Settlement Class Members, and the
3 Defendants.
4
2. The Court finds that the prerequisites for a class action under Rule
5 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in that:
6 (a) the number of Settlement Class Members is so numerous that joinder of all 7 members thereof is impracticable; (b) there are questions of law and fact common 8 to the Settlement Class; (c) the claims of the Lead Plaintiff are typical of the claims 9 of the Settlement Class he seeks to represent; (d) Lead Plaintiff fairly and
10 adequately represents the interests of the Settlement Class; (e) the questions of law 11
and fact common to the members of the Settlement Class predominate over any 12
questions affecting only individual members of the Settlement Class; and (f) a 13
class action is superior to other available methods for the fair and efficient 14
adjudication of this Litigation. The Settlement Class is being certified for 15
settlement purposes only. 16
17 3. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil
18 Procedure, the Court hereby certifies this action as a class action for settlement
19 purposes only, and certifies a Settlement Class, defined as: “All persons or entities
20 who purchased or otherwise acquired Ambow’s American Depository Shares
21 (“ADS”) on August 5, 2010 through and including February 27, 2013, and held
22 such ADS shares through at least May 16, 2012.” Excluded from the Settlement
23 Class are:
24 (a) Defendants, present and former officers and/or directors of
25 Ambow and the members of such persons’ immediate families and their legal
26 representatives, heirs, successors and assigns, any entity in which any excluded
27 person has or had a controlling interest, and Ambow’s predecessors; and
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1
(b) Those persons who file valid and timely requests for exclusion
2 in accordance with the Preliminary Approval Order, a list of whom is attached to
3 this Order as Exhibit A; and
4
(c) Any persons who have separately filed actions against one or
5 more of Defendants, based in whole or in part on any claim arising out of or
6 relating to any of the alleged acts, omissions, misrepresentations, facts, events, 7 matters, transactions, or occurrences referred to in the Litigation, or otherwise 8 alleged, asserted, or contended in the Litigation. 9 4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Lead
10 Plaintiff and Named Plaintiffs are certified as the class representatives and the 11
Lead Plaintiff’s Counsel, which was previously selected by Lead Plaintiff and 12
appointed by the Court, is hereby appointed as Lead Counsel for the Settlement 13
Class. 14
5. The Court hereby finds that the forms and methods of notifying the 15
Settlement Class of the Settlement and its terms and conditions met the 16
17 requirements of due process and Rule 23 of the Federal Rules of Civil Procedure,
18 Section 21D(a)(7) of the Exchange Act, 15 U.S.C. § 78u-4(a)(7), as amended by
19 the Private Securities Litigation Reform Act of 1995; constituted the best notice
20 practicable under the circumstances; and constituted due and sufficient notice to all
21 persons and entities entitled thereto of these proceedings and the matters set forth
22 herein, including the Settlement and Plan of Allocation, to all persons entitled to
23 such notice. No Settlement Class Member is relieved from the terms of the
24 Settlement, including the releases provided for therein, based upon the contention
25 or proof that such Settlement Class Member failed to receive actual or adequate
26 notice. A full opportunity has been offered to the Settlement Class Members to
27 object to the proposed Settlement and to participate in the hearing thereon. The
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1 Court further finds that the notice provisions of the Class Action Fairness Act, 28
2 U.S.C. § 1715, were fully discharged. Thus, it is hereby determined that all
3 members of the Settlement Class are bound by this Order and Final Judgment
4 except those persons listed on Exhibit A to this Order and Final Judgment.
5
6. Pursuant to Federal Rule of Civil Procedure 23, the Court hereby
6 approves the settlement set forth in the Stipulation and finds that:
7
(a) said Stipulation is, in all respects, fair, reasonable, and adequate and 8 in the best interest of the Settlement Class;
9 (b) there was no collusion in connection with the Stipulation;
10 (c) the Stipulation was the product of informed, arm’s-length negotiati 11
among competent, able counsel; and
12 (d) the record is sufficiently developed and complete to have enabled the
13 Lead Plaintiff and the Defendants to have adequately evaluated and considered
14 their positions.
15 7. Accordingly, the Court authorizes and directs implementation and
16
17 performance of all the terms and provisions of the Stipulation, as well as the terms
18 and provisions hereof. The Litigation and the Complaint are hereby dismissed
19 with prejudice and without costs to any party.
20 8. Lead Plaintiff and the Settlement Class Members, on behalf of
21 themselves, their current and former heirs, executors, administrators, successors,
22 attorneys, legal representatives, and assigns, hereby fully, finally, and forever
23 release, relinquish, and forever discharge the Released Parties from any and all
24 Settled Claims, whether or not such Settlement Class Member executes and
25 delivers the Proof of Claim and Release form or shares in the Net Settlement Fund.
26 Lead Plaintiff and the Settlement Class Members, and anyone acting or purporting
27 to act for any of them, are hereby permanently and forever enjoined from
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prosecuting, attempting to prosecute, or assisting others in the prosecution of the
Settled Claims against the Defendants or any other Released Party.
9. Each of the Defendants, including any and all of their respective
successors in interest or assigns, hereby fully, finally, and forever releases,
relinquishes, and forever discharges any and all Settled Defendants’ Claims agains
the Lead Plaintiff and Named Plaintiffs, any of the Settlement Class Members and
any of their counsel, including Lead Counsel for the Settlement Class and any
counsel working under Lead Counsel’s direction. 9 10. Any Plan of Allocation submitted by Lead Plaintiff’s Counsel or any
10 order entered regarding any Attorneys’ Fees and Expenses application shall in no 11
way disturb or affect this Final Judgment and shall be considered separate from 12
this Final Judgment. 13
11. In accordance with 15 U.S.C. § 78u-4(f)(7) and any other applicable 14
law or regulation, any and all claims which are brought by any person or entity 15
against the Defendants (a) for contribution or indemnification arising out of any 16
17 Settled Claim, or (b) where the damage to the claimant is measured by reference to
18 the claimant’s liability to the Lead Plaintiff or Named Plaintiffs or the Settlement
19 Class, are hereby permanently barred and discharged. Any such claims brought by
20 the Defendants against any person or entity (other than persons or entities whose
21 liability to Lead Plaintiffs or the Settlement Class is extinguished by this
22 Judgment) are likewise permanently barred and discharged. Nothing in this Order
23 shall apply to bar or otherwise affect any claim for insurance coverage by any
24 Defendant. Further, nothing in this Order shall apply to bar or otherwise affect any
25 independent claim each Defendant and its affiliates, successors, assigns, executors,
26 administrators, heirs, and legal representatives and other Released Parties who are
27 associated, affiliated or related to any of them (including their respective current,
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1 former, or future employer and their subsidiaries and parent companies) may have
2 against any other Defendant or any Released Parties associated, affiliated or related
3 to any other Defendant.
4
12. The Court finds that all parties and their counsel have complied with
5 each requirement of Rule 11 of the Federal Rules of Civil Procedure as to all
6 proceedings herein.
7
13. Neither this Order and Final Judgment, the Stipulation, nor any of the 8 negotiations, documents, or proceedings connected with them shall be: 9
10 (a) referred to or used against the Defendants or any other Released Party
11 or against the Lead Plaintiff and Named Plaintiffs or the Settlement
12 Class as an admission of, or evidence of, the validity of any Settled
13 Claim, or of wrongdoing or liability of anyone;
14 (b) construed against the Defendants or any other Released Party or
15 against the Lead Plaintiff and Named Plaintiffs or the Settlement
16 Class as evidence of, or an admission or concession that, the
17 consideration to be given hereunder represents the amount which
18 could be or would have been recovered after trial;
19
(c) construed as, or received in evidence as, an admission, concession, or
20 presumption against the Settlement Class or any of them, that any of
21 their claims are without merit or that damages recoverable under the
22
Complaint would not have exceeded the Gross Settlement Fund; or
23
(d) used or construed as an admission of any fault, liability, omission, or
24
wrongdoing by any person or entity, or offered or received in
25 evidence as an admission, concession, presumption, or inference
26 against any of the Defendants or the Released Parties any civil,
27 criminal, or administrative proceeding in any court, administrative
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1 agency, or other tribunal. Defendants and/or the Released Parties may
2
file the Stipulation and/or the Final Judgment from this action in any
3
other action that may be brought against them in order to support a
4
defense or counterclaim based on principles of res judicata, collateral
5 estoppel, release, good faith settlement, judgment bar or reduction, or
6 any theory of claim preclusion or issue preclusion or similar defense
7 or counterclaim.
8 14. Without affecting the finality of this Judgment in any way, this Court 9 hereby retains exclusive jurisdiction over the Defendants and the Settlement Class
10 Members for all matters relating to the Litigation, including the administration, 11
interpretation, effectuation, or enforcement of the Stipulation or Settlement and 12
this Order and Final Judgment, and including any application for fees and expense 13
incurred in connection with administering and distributing the settlement proceeds 14
to the Settlement Class Members. 15
15. Without further order of the Court, Defendants and Lead Plaintiff 16
17 agree to reasonable extensions of time to carry out any of the provisions of the
18 Stipulation.
19 16. There is no just reason for delay in the entry of this Order and Final
20 Judgment and immediate entry by the Clerk of the Court is directed pursuant to
21 Rule 54(b) of the Federal Rules of Civil Procedure.
22 17. The finality of this Order and Final Judgment shall not be affected, in
23 any manner, by rulings that the Court may make on Lead Plaintiff’s Counsel’s
24 application for an award of Attorneys’ Fees and Expenses.
25 18. In the event the Settlement is not consummated pursuant to its terms,
26 the Stipulation, except as otherwise provided therein, including any amendment(s)
27 thereto, and this Order, shall be null and void, of no further force or effect, and
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1 without prejudice to any Settling Party, and may not be introduced as evidence or
2 referred to in any action or proceedings by any person or entity, and each party
3 shall be restored to his, her or its respective position as it existed before the
4 execution of the Stipulation, pursuant to the terms of the Stipulation. In such
5 event, the terms and provisions of the Stipulation, with the exception of paragraphs
6 D.5., F.1-3., H, M.5-7., N.11-13., N.15., and N.18., shall have no further force and 7 effect with respect to the Settling Parties and shall not be used in this Litigation or 8 in any other proceeding for any purpose, and any judgment or order entered by the 9 Court in accordance with the terms of the Stipulation shall be treated as vacated,
10 nunc pro tunc . 11
Dated:
201_ 12
13 HON. PHILIP S. GUTIERREZ
UNITED STATES DISTRICT JUDGE 14
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