Opinion
Civil Action No. 03-cv-00597-EWN-PAC.
November 8, 2005
ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE
WHEREAS, a consolidated class action is pending in the Court entitled In re Ultimate Electronics, Inc. Securities Litigation, Civil Action No. 03-N-597(PAC) (the "Litigation");
WHEREAS, the Settling Parties have made application, pursuant to Rule 23 of the Federal Rules of Civil Procedure, for an order approving the settlement of this action, in accordance with a Stipulation of Settlement dated as of September 15, 2005 (the "Stipulation"), which, together with the Exhibits annexed thereto, sets forth the terms and conditions for a proposed settlement of the Litigation and for dismissal of the Litigation with prejudice and release of claims against the Defendants and Released Persons upon the terms and conditions set forth therein; and the Court has read and considered the Stipulation and the Exhibits annexed thereto; and
WHEREAS, all capitalized terms contained herein shall have the same meanings as set forth in the Stipulation;
NOW THEREFORE, IT IS HEREBY ORDERED:
1. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby certifies, for purposes of effectuating this settlement only, a Settlement Class of all Persons who purchased the common stock of Ultimate Electronics, Inc. ("Ultimate Electronics") during the period between May 1, 2002 and August 26, 2002, inclusive, and including in or traceable to Ultimate Electronics' May 1, 2002 public stock offering. Excluded from the Settlement Class are Defendants, their affiliates and any of their officers or directors or their affiliates, and any members of the immediate families of the Defendants, any entity in which any Defendant has a controlling interest, and the legal representatives, heirs, successors, or assigns of any such excluded party. Also excluded are those Persons who timely and validly request exclusion from the Settlement Class pursuant to the "Notice of Settlement of Class Action" to be sent to the class.
2. With respect to the Settlement Class, this Court finds and concludes that: (a) the Members of the Settlement Class are so numerous that joinder of all Class Members in the class action is impracticable; (b) there are questions of law and fact common to the Settlement Class which predominate over any individual question; (c) the claims of Lead Plaintiff are typical of the claims of the Settlement Class; (d) Lead Plaintiff and its counsel have fairly and adequately represented and protected the interests of the Settlement Class Members; and (e) a class action is superior to other available methods for the fair and efficient adjudication of the controversy, considering: (i) the interests of the Members of the Settlement Class in individually controlling the prosecution of the separate actions, (ii) the extent and nature of any litigation concerning the controversy already commenced by Members of the Settlement Class, (iii) the desirability or undesirability of continuing the litigation of these claims in this particular forum, and (iv) the difficulties likely to be encountered in the management of the class action.
3. The Court does hereby preliminarily approve the Stipulation and the settlement set forth therein as being within the range of reasonableness, subject to further consideration at the Settlement Hearing described below.
4. A hearing (the "Settlement Hearing") shall be held before this Court on January 27, 2006, at 10:00 a.m. before the Honorable Edward W. Nottingham at the United States District Court for the District of Colorado, 901 19th Street, Denver, Colorado, 80294-3589, to determine whether the proposed settlement of the Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable and adequate as to the Settling Parties and the Settlement Class and should be approved by the Court; whether a Judgment as provided in ¶ 1.10 of the Stipulation should be entered herein; whether the proposed Plan of Allocation should be approved; and to determine the amount of fees and expenses that should be awarded to Lead Counsel. The Court may adjourn the Settlement Hearing without further notice to Members of the Settlement Class.
5. The Court approves, as to form and content, the Notice of Settlement of Class Action (the "Notice"), the Proof of Claim and Release form (the "Proof of Claim"), and the Summary Notice for publication (the "Summary Notice") annexed as Exhibits A-1, A-2 and A-3 hereto, and finds that the mailing and distribution of the Notice and publishing of the Summary Notice substantially in the manner and form set forth in ¶¶ 6-7 of this Order meet the requirements of Rule 23 of the Federal Rules of Civil Procedure and due process, and is the best notice practicable under the circumstances and shall constitute due and sufficient notice to all Persons entitled thereto.
6. Gilardi Co. LLC ("Claims Administrator") is appointed to supervise and administer the notice procedure as well as the processing of claims as more fully set forth below:
(a) Not later than November 30, 2005 (the "Notice Date"), Plaintiffs' Settlement Counsel shall cause a copy of the Notice and the Proof of Claim, substantially in the forms annexed as Exhibits A-1 and A-2 hereto, to be mailed by first class mail to all Settlement Class Members who can be identified with reasonable effort;
(b) Not later than December 7, 2005, Plaintiffs' Settlement Counsel shall cause the Summary Notice to be published once in the national edition of Investor's Business Daily; and
(c) At least seven (7) calendar days prior to the Settlement Hearing, Plaintiffs' Settlement Counsel shall serve on Defendants' counsel and file with the Court proof, by affidavit or declaration, of such mailing and publishing.
7. Nominees who purchased the common stock of Ultimate Electronics for the benefit of another Person during the period beginning May 1, 2002 through and including August 26, 2002, shall be requested to send the Notice and the Proof of Claim to all such beneficial owners of such Ultimate Electronics stock within ten (10) days after receipt thereof, or send a list of the names and addresses of such beneficial owners to the Claims Administrator within ten (10) days of receipt thereof in which event the Claims Administrator shall promptly mail the Notice and Proof of Claim to such beneficial owners.
8. All Members of the Settlement Class shall be bound by all determinations and judgments in the Litigation concerning the settlement, including, but not limited to, the releases provided for therein, whether favorable or unfavorable to the Settlement Class.
9. Settlement Class Members who wish to participate in the distribution of the Settlement Fund shall complete and submit Proof of Claim forms in accordance with the instructions contained therein. Unless the Court orders otherwise, all Proof of Claim forms must be submitted no later than ninety (90) days from the Notice Date. Any Settlement Class Member who does not timely submit a Proof of Claim within the time provided for shall be barred from sharing in the distribution of the proceeds of the Settlement Fund, unless otherwise ordered by the Court.
10. Any Person falling within the definition of the Settlement Class may, upon request, be excluded from the settlement. Any such Person must submit to the Claims Administrator a request for exclusion ("Request for Exclusion"), postmarked no later than January 6, 2006. A Request for Exclusion must state: (1) the name, address, and telephone number of the Person requesting exclusion; (2) the Person's purchases and sales of Ultimate Electronics common stock made during the Class Period, including the dates, the number of shares and the price paid or received per share for each such purchase or sale; and (3) that the Person wishes to be excluded from the Settlement Class. All Persons who submit valid and timely Requests for Exclusion in the manner set forth in this paragraph shall have no rights under the Stipulation, shall not share in the distribution of the Settlement Fund, and shall not be bound by the Stipulation or the Final Judgment.
11. Any Member of the Settlement Class may enter an appearance in the Litigation, at his, her or its own expense, individually or through counsel of his, her or its own choice. All Settlement Class Members who do not enter an appearance will be represented by Plaintiffs' Settlement Counsel.
12. All proceedings in the Litigation are stayed until further order of the Court, except as may be necessary to implement the settlement or comply with the terms of the Stipulation. Pending final determination of whether the settlement should be approved, neither Lead Plaintiff nor any Settlement Class Member, either directly, representatively, or in any other capacity, shall commence or prosecute against any of the Released Persons, any action or proceeding in any court or tribunal asserting any of the Released Claims.
13. Any Member of the Settlement Class may appear and show cause, if he, she or it has any, why the proposed settlement of the Litigation should not be approved as fair, reasonable and adequate, or why a judgment should not be entered thereon, why the Plan of Allocation should not be approved, or why attorneys' fees and expenses should not be awarded to Lead Counsel; provided, however, that no Settlement Class Member or any other Person shall be heard or entitled to contest the approval of the terms and conditions of the proposed settlement, or, if approved, the Judgment to be entered thereon approving the same, or the order approving the Plan of Allocation, or the attorneys' fees and expenses to be awarded to Lead Counsel, unless written objections and copies of any papers and briefs are received by Lerach Coughlin Stoia Geller Rudman Robbins LLP, Ellen Gusikoff Stewart, 401 B Street, Suite 1600, San Diego, California 92101; Dyer Shuman, LLP, Kip B. Shuman, 801 East 17th Avenue, Denver, CO 80218-1417; and Davis Graham Stubbs LLP, Jonathon D. Bergman, 1550 Seventeenth Street, Suite 500, Denver, CO 80202 on or before January 6, 2006; and said objections, papers and briefs are filed with the Clerk of the Court for the District of Colorado, on or before January 6, 2006. Any Member of the Settlement Class who does not make his, her or its objection in the manner provided shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, reasonableness or adequacy of the proposed settlement as set forth in the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to Lead Plaintiff's counsel, unless otherwise ordered by the Court.
14. The passage of title and ownership of the Settlement Fund to the Escrow Agent in accordance with the terms and obligations of the Stipulation is approved. No Person that is not a Settlement Class Member or counsel to the Representative Plaintiffs shall have any right to any portion of, or in the distribution of, the Settlement Fund unless otherwise ordered by the Court or otherwise provided in the Stipulation.
15. All funds held by the Escrow Agent shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.
16. All motions and papers in support of the settlement, the Plan of Allocation, and any application by Lead Counsel for attorneys' fees or reimbursement of expenses shall be filed and served fourteen (14) calendar days prior to the Settlement Hearing.
17. The Defendants, their insurers or their counsel shall not have any responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement of expenses submitted by Lead Counsel, and such matters will be considered separately from the fairness, reasonableness and adequacy of the settlement.
18. At or after the Settlement Hearing, the Court shall determine whether the Plan of Allocation proposed by Plaintiffs' Settlement Counsel and any application for attorneys' fees or reimbursement of expenses shall be approved.
19. All reasonable costs incurred in identifying and notifying Settlement Class Members, as well as in administering the Settlement Fund, shall be paid as set forth in the Stipulation. In the event the settlement is not approved by the Bankruptcy Court, the Court, or otherwise fails to become effective, neither Lead Plaintiff nor any of its counsel shall have any obligation to repay to the Defendants the reasonable and actual costs of class notice and of administration up to $50,000.
20. The Judgment will permanently bar and enjoin Lead Plaintiff and each of the Settlement Class Members from instituting, commencing or prosecuting, either directly, indirectly, representatively or in any other capacity, any and all Released Claims in any forum against the Released Persons.
21. The Court reserves the right to adjourn the date of the Settlement Hearing without further notice to the Members of the Settlement Class, and retains jurisdiction to consider all further applications arising out of or connected with the proposed settlement. The Court may approve the settlement, with such modifications as may be agreed to by the Settling Parties, if appropriate, without further notice to the Settlement Class.
IT IS SO ORDERED.
NOTICE OF SETTLEMENT OF CLASS ACTION EXHIBIT A-1
TO: ALL PERSONS WHO PURCHASED ULTIMATE ELECTRONICS, INC. ("ULTIMATE ELECTRONICS" OR THE "COMPANY") COMMON STOCK DURING THE PERIOD MAY 1, 2002 THROUGH AUGUST 26, 2002, INCLUSIVE, AND INCLUDING IN OR TRACEABLE TO THE COMPANY'S MAY 1, 2002 PUBLIC STOCK OFFERING.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THIS CLASS ACTION AND, IF YOU ARE A SETTLEMENT CLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOUR RIGHTS CONCERNING THE SETTLEMENT AS FURTHER DESCRIBED BELOW. IF YOU ARE A MEMBER OF THE SETTLEMENT CLASS, YOU WILL BE BOUND BY THE RELEASE WHETHER OR NOT YOU SUBMIT A CLAIM AND REGARDLESS OF WHETHER THE CLAIM IS ALLOWED.
All capitalized terms not defined herein shall have the same meanings as set forth in the Stipulation of Settlement dated as of September 15, 2005 (the "Stipulation"), which has been filed with the Court (as defined below).
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District Court for the District of Colorado (the "Court"), and Rule 23 of the Federal Rules of Civil Procedure, that subject to approval by the Court, a settlement in the amount of $1,200,000 in cash has been reached by the Settling Parties that will extinguish the Released Claims against the Released Persons and dismiss the above-captioned action (the "Litigation") against the Defendants (the "Settlement"). The purpose of this Notice is to inform you of the proposed settlement of this class action litigation and of the hearing to be held by the Court to consider the fairness, reasonableness and adequacy of the Settlement. This Notice describes the rights you may have in relation to the Settlement and this class action litigation.
The proposed settlement creates a fund in the amount of $1,200,000 in cash and will include interest that accrues on the fund prior to distribution. Your recovery from this fund will depend on a number of variables, including the number of shares of Ultimate Electronics common stock you purchased during the period May 1, 2002 through August 26, 2002 (the "Class Period"), and the timing of your purchases and any sales. Depending on the number of eligible shares purchased by Settlement Class Members who elect to participate in the distribution of the Settlement Fund and when those shares were purchased and sold, the estimated average distribution per share will be approximately $0.22 before deduction of Court-approved fees and expenses.
Lead Plaintiff and the Defendants do not agree on the average amount of damages per share that would be recoverable if Lead Plaintiff were to have prevailed on each claim alleged. The issues on which the parties would likely disagree include: (1) the appropriate economic model for determining the amount by which Ultimate Electronics common stock was allegedly artificially inflated (if at all) during the Class Period; (2) the amount by which Ultimate Electronics common stock was allegedly artificially inflated (if at all) during the Class Period; (3) the effect of various market forces influencing the trading price of Ultimate Electronics common stock at various times during the Class Period; (4) the extent to which external factors, such as general market and industry conditions, influenced the trading price of Ultimate Electronics common stock at various times during the Class Period; (5) the extent to which the various matters that Lead Plaintiff alleged were materially false or misleading influenced (if at all) the trading price of Ultimate Electronics common stock at various times during the Class Period; (6) the extent to which the alleged nondisclosure of the various allegedly adverse material facts that Lead Plaintiff alleged were omitted influenced (if at all) the trading price of Ultimate Electronics common stock at various times during the Class Period; and (7) whether the statements made or the omissions alleged were material, false, misleading or otherwise actionable under the securities laws.
Lead Plaintiff believes that the proposed settlement is a good recovery and is in the best interests of the Settlement Class. There are significant risks associated with continuing to litigate and proceeding to trial. For example, the Settlement Class faced the possibility that all or many of the claims in this case could have been disposed of pursuant to the Defendants' motion for summary judgment before trial or the Court could have denied Lead Plaintiff's Motion for Class Certification. In addition, there was a danger that the Settlement Class would not have prevailed on their claims against the Defendants even if those claims eventually went to trial, in which case the Settlement Class would receive nothing. Further, had the case proceeded to trial and assuming Lead Plaintiff established liability of the Defendants, the amount of damages recoverable by Settlement Class Members would have been subject to vigorous attack by the Defendants. Recoverable damages are limited to losses caused by conduct actionable under applicable securities laws and, had the Litigation gone to trial, Defendants would have tried to prove that all or most of the losses (if any) of Settlement Class Members were caused by non-actionable market, industry or other general economic factors. Finally, Ultimate Electronics has filed for bankruptcy protection, severely limiting its ability to fund any judgment after further litigation. The proposed settlement eliminates the risk of continued litigation and provides an immediate and certain recovery for Settlement Class Members.
Lead Plaintiff's counsel have not received any payment for their services in prosecuting this Litigation on behalf of Lead Plaintiff and the Settlement Class Members. If the Settlement is approved by the Court, counsel for Lead Plaintiff will apply to the Court for attorneys' fees of 25% of the Settlement Fund. Counsel also plan to seek reimbursement of out-of-pocket expenses not to exceed $150,000 incurred by them from the settlement proceeds. If the amount requested by counsel is approved by the Court, the average cost per share would be approximately $0.08.
This Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations in the Litigation or the merits of the claims or defenses asserted. This Notice is to advise you of the proposed settlement and of your rights in connection therewith.
I. HEARING ON THE PROPOSED SETTLEMENT
A settlement hearing will be held on _________, 2005, at __:__ __.m., before the Honorable Edward W. Nottingham, United States District Judge, at the United States District Court for the District of Colorado, 901 19th Street, Denver, Colorado, 80294-3589 (the "Settlement Hearing"). The purpose of the Settlement Hearing will be to determine: (1) whether the settlement consisting of $1,200,000 in cash plus accrued interest should be approved as fair, reasonable and adequate to each of the Settling Parties; (2) whether the proposed plan to distribute the settlement proceeds (the "Plan of Allocation") is fair, reasonable and adequate; (3) whether the application by Lead Plaintiff's counsel for an award of attorneys' fees and expenses should be approved; (4) whether costs and expenses should be awarded to Lead Plaintiff pursuant to 15 U.S.C. § 78u-4(a)(4); and (5) whether the Litigation should be dismissed with prejudice. The Court may adjourn or continue the Settlement Hearing without further notice to the Settlement Class.
For further information regarding the Settlement, you may contact Shareholder Relations, Lerach Coughlin Stoia Geller Rudman Robbins LLP, 401 B Street, Suite 1600, San Diego, California, 92101, Telephone: 619/231-1058, or Dyer Shuman, LLP, 801 East 17th Avenue, Denver, CO 80218-1417, Telephone: 303/861-3003.
II. DEFINITIONS
As used in this Notice, the following terms have the meanings specified below:
1. "Defendants" means Ultimate Electronics, J. Edward McEntire, William J. Pearse, David J. Workman, Alan E. Kessock, Robert W. Beale, Randall F. Bellows and Larry D. Strutton.
2. "Lead Plaintiff" means Alaska Electrical Pension Fund.
3. "Person" means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees.
4. "Plaintiffs' Settlement Counsel" or "Lead Counsel" means: Lerach Coughlin Stoia Geller Rudman Robbins LLP, Ellen Gusikoff Stewart, 401 B Street, Suite 1600, San Diego, CA 92101 and Dyer Shuman, LLP, Kip B. Shuman, 801 East 17th Avenue, Denver, CO 80218-1417.
5. "Related Parties" means each of a Defendant's current and former employees, agents, directors, officers, attorneys, legal representatives, predecessors, successors, parents, subsidiaries, divisions, partners, members, financial advisors, accountants, lenders, investment bankers, underwriters, joint ventures, assigns, executors, administrators, insurers, reinsurers, spouses, heirs, related or affiliated entities, any entity in which any Defendant and/or any member of an individual Defendant's immediate family has a controlling interest, any members of any individual Defendant's immediate families, any trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/or member(s) of his family or any person acting on behalf of any Defendant.
6. "Released Claims" shall collectively mean all claims (including "Unknown Claims" as defined below), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, whether or not concealed or hidden, asserted or that might have been asserted, including, without limitation, claims for negligence, gross negligence, fraud, breach of duty of care and/or duty of loyalty, breach of fiduciary duty or violations of any state or federal statutes, rules or regulations, by any Lead Plaintiff or Settlement Class Member against the Released Persons arising out of, based upon or related to the purchase of Ultimate Electronics common stock by any Settlement Class Member during the Class Period and the facts, transactions, events, occurrences, acts, disclosures, representations, statements, omissions or failures to act which were or could have been alleged in the Litigation or in any forum. Released Claims also includes any and all claims arising out of, relating to, or in connection with the settlement or resolution of the Litigation between the Settling Parties but does not include any claim to enforce the terms of the Stipulation.
7. "Released Persons" means each and all of the Defendants and their Related Parties.
8. "Settlement Class" means all Persons who purchased the common stock of Ultimate Electronics during the period from May 1, 2002 through August 26, 2002, inclusive, and includes all persons who purchased common stock in or traceable to the Company's May 1, 2002 public stock offering. Excluded from the Settlement Class are Defendants, their affiliates and any of their officers or directors or their affiliates, and any members of the immediate families of the Defendants, any entity in which any Defendant has a controlling interest, and the legal representatives, heirs, successors, or assigns of any such excluded party. Also excluded are those Persons who timely and validly request exclusion from the Settlement Class pursuant to this Notice.
9. "Settlement Class Member" or "Member of the Settlement Class" means a Person who falls within the definition of the Settlement Class.
10. "Settlement Fund" means the principal amount of One Million Two Hundred Thousand Dollars ($1,200,000), plus any interest that may accrue thereon, as provided for herein.
11. "Settling Parties" means, collectively, each of the Defendants and their Related Parties and Lead Plaintiff on behalf of itself and the Members of the Settlement Class.
12. "Unknown Claims" means any Released Claims that Lead Plaintiff or any Settlement Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons that if known by him, her or it, might have affected his, her or its settlement with and release of the Released Persons, or might have affected his, her or its decision not to object to this settlement or not to exclude himself, herself or itself from the Settlement Class. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, Lead Plaintiff shall expressly and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits of California Civil Code § 1542, which provides:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
Lead Plaintiff shall expressly waive, and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived, any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, that is similar, comparable or equivalent to California Civil Code § 1542. Lead Plaintiff and the Settlement Class Members may hereafter discover facts in addition to or different from those that any of them now knows or believes to be true with respect to the subject matter of the Released Claims, but Lead Plaintiff shall expressly and each Settlement Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, that now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct that is negligent, reckless, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Lead Plaintiff acknowledges, and the Settlement Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part.
III. THE LITIGATION
On April 7, 2003, the following action was filed in the United States District Court, for the District of Colorado: Howard Fisher v. McEntire, et. al., Civil Action No. 03-N-0597(PAC).
On July 3, 2003, the Court appointed the Alaska Electrical Pension Fund as Lead Plaintiff and approved its selection of Co-Lead Counsel. At that time, the Court also renamed the action In re: Ultimate Electronics, Inc. Securities Litigation, Civil Action No. 03-N-597(PAC) (referred to herein as "Litigation").
The operative complaint in the Litigation is the Amended Class Action Complaint for Violation of the Federal Securities Laws (the "Complaint"), alleging violations of §§ 11 and 15 of the Securities Act of 1933 and §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
In January 2005, Ultimate Electronics, Inc. filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware.
IV. CLAIMS OF LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT
Lead Plaintiff believes that the claims asserted in the Litigation have merit and the evidence developed to date supports the claims asserted. However, counsel for Lead Plaintiff recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and appeals. Counsel for Lead Plaintiff also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this Litigation, as well as the difficulties and delays inherent in such litigation. Counsel for Lead Plaintiff also are mindful of the inherent problems of proof under and possible defenses to the violations asserted in the Litigation. Counsel for Lead Plaintiff believe that the settlement set forth in the Stipulation confers substantial benefits upon the Settlement Class. Based on their evaluation, counsel for Lead Plaintiff have determined that the settlement set forth in the Stipulation is in the best interests of Lead Plaintiff and the Settlement Class.
V. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY
The Defendants have denied and continue to deny each and all of the claims and contentions alleged by Lead Plaintiff in the Litigation. The Defendants have expressly denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that Lead Plaintiff or the Settlement Class have suffered damage or that Lead Plaintiff or the Settlement Class were harmed by the conduct alleged in the Litigation.
Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like this Litigation. The Defendants have, therefore, determined that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in the Stipulation.
VI. ORDER CERTIFYING A SETTLEMENT CLASS FOR PURPOSES OF SETTLEMENT
The Court certified a Settlement Class for settlement purposes only, as defined above.
VII. PARTICIPATION IN THE SETTLEMENT CLASS
If you fall within the definition of the Settlement Class, you will be bound by any judgment entered with respect to the settlement in the Litigation whether or not you file a Proof of Claim and Release. If you choose, you may enter an appearance individually or through your own counsel at your own expense.
TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND (AS DEFINED BELOW), YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES THIS NOTICE. The Proof of Claim and Release must be postmarked on or before ________, 2006, and delivered to the Claims Administrator at the address below. Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim and Release, you will be barred from receiving any payments from the Net Settlement Fund (as defined below), but will in all other respects be bound by the provisions of the Stipulation (as defined above) and the Judgment (as defined below).
VIII. EXCLUSION FROM THE SETTLEMENT CLASS
You may request to be excluded from the Settlement Class. To do so, you must mail a written request to:
Ultimate Electronics Securities Litigation Claims Administrator c/o Gilardi Co. LLC P.O. Box 8040 San Rafael, CA 94912-8040
The request for exclusion must state: (1) your name, address, and telephone number; (2) all purchases and sales of Ultimate Electronics common stock made during the Class Period, including the dates, the number of Ultimate Electronics shares and price paid or received per share for each such purchase or sale; and (3) that you wish to be excluded from the Settlement Class. TO BE VALID, A REQUEST FOR EXCLUSION MUST STATE ALL OF THE FOREGOING INFORMATION. YOUR EXCLUSION REQUEST MUST BE POSTMARKED ON OR BEFORE ________, 2005. If you submit a valid and timely request for exclusion, you shall have no rights under the Settlement, shall not share in the distribution of the Net Settlement Fund (as defined below), and shall not be bound by the Stipulation or the Judgment (as defined below).
IX. TERMS OF THE PROPOSED SETTLEMENT
A settlement has been reached in the Litigation between Lead Plaintiff and the Defendants which is embodied in the Stipulation on file with the Court. Defendants will pay or cause to be paid into an escrow account, cash in the amount of $1,200,000 which will earn interest for the benefit of the Settlement Class. The attorneys for Lead Plaintiff, on the basis of, among other things, a thorough investigation of the facts and the law relating to the acts, events and conduct complained of and the subject matter of the Litigation, have concluded that the proposed settlement is fair to and in the best interests of the Settlement Class.
A portion of the settlement proceeds will be used for certain administrative expenses, including the costs of printing and mailing this Notice, the cost of publishing a newspaper notice, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. A portion of the settlement proceeds may also be used for the reimbursement of time and expenses of Lead Plaintiff as provided by 15 U.S.C. § 78u-4(a)(4) of the Exchange Act, if and to the extent allowed by the Court. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to counsel for Lead Plaintiff as attorneys' fees and for reimbursement of out-of-pocket expenses.
X. PLAN OF ALLOCATION
Subject to the approval by the Court of the Plan of Allocation described below, the balance of the Settlement Fund (the "Net Settlement Fund"), shall be distributed to Settlement Class Members who submit valid, timely Proof of Claim forms ("Authorized Claimants") as follows:
Each Person claiming to be an Authorized Claimant shall be required to submit a separate Proof of Claim and Release form signed under penalty of perjury and supported by such documents as specified in the Proof of Claim as are reasonably available to the Authorized Claimant.
All Proof of Claim forms must be postmarked or received by ___________, 2006. Unless otherwise ordered by the Court, any Settlement Class Member who fails to submit a Proof of Claim within such period, or such other period as may be ordered by the Court, shall be forever barred from receiving any payments pursuant to the Stipulation, but shall in all other respects be subject to the provisions of the Stipulation and the Final Judgment entered by the Court.
To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant's claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid that percentage of the Net Settlement Fund that each Authorized Claimant's claim is of the total of the claims of all Authorized Claimants. A "claim" will be computed as follows:
1. For shares of Ultimate Electronics common stock purchased on May 1, 2002 through August 26, 2002, and
(a) sold prior to August 27, 2002, the claim per share is the lesser of (i) Purchase Price per share less the Sales Price per share; or (ii) the Purchase Price per share less $2.27;
(b) retained at the end of August 26, 2002, the claim per share is the Purchase Price less $2.27 (the closing price on August 27, 2002).
The date of purchase or sale is the "contract" or "trade" date as distinguished from the "settlement" date. For the purpose of calculating the recovery per share, the purchase price per share ("Purchase Price") and the sales price per share ("Sales Price") are defined as the actual per share transaction price net of any commissions paid.
For Settlement Class Members who held shares at the beginning of the Class Period or made multiple purchases or sales during the Class Period, the first-in, first-out ("FIFO") method will be applied to such holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of shares during the Class Period will be matched, in chronological order, first against shares held at the beginning of the Class Period. The remaining sales of shares during the Class Period will then be matched, in chronological order, against shares purchased during the Class Period.
A Settlement Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Settlement Class Member had a net loss, after all profits from transactions in Ultimate Electronics common stock during the Class Period are subtracted from all losses. However, the proceeds from sales of shares which have been matched against shares held at the beginning of the Class Period will not be used in the calculation of such net loss.
The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Settlement Class Member on equitable grounds.
Payment pursuant to the Plan of Allocation set forth above shall be conclusive against all Authorized Claimants. No Person shall have any claim against Plaintiffs' Settlement Counsel or any claims administrator or Defendants or their counsel based on distributions made substantially in accordance with the Stipulation and the Settlement contained therein, the Plan of Allocation, or further orders of the Court.
XI. CONDITIONS FOR SETTLEMENT
The Settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Judgment by the Court, as provided for in the Stipulation; (2) expiration of the time to appeal from or alter or amend the Judgment (below); and (3) the dismissal with prejudice of the Litigation against the Defendants.
XII. DISMISSAL AND RELEASES
If the proposed settlement is approved, the Court will enter a Judgment. The Judgment will dismiss the Litigation with prejudice as to all Defendants and release, relinquish and discharge all released claims against the Released Persons.
The Judgment will provide that all Settlement Class Members who do not validly and timely request to be excluded from the Settlement Class shall be deemed to have released and forever discharged all Released Claims against all Released Persons.
XIII. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES
Banks, brokerage firms, institutions, and other Persons who are nominees who purchased the common stock of Ultimate Electronics for the beneficial interest of other Persons as of any day from May 1, 2002 through and including August 26, 2002, are requested within ten (10) days of receipt of this Notice, to (1) provide the Claims Administrator with the names and addresses of such beneficial purchasers, or to (2) forward a copy of this Notice to each such beneficial purchaser and provide the Claims Administrator with written confirmation that this Notice has been so forwarded. The Claims Administrator offers to pay your reasonable costs and expenses of complying with this provision upon submission of appropriate documentation. Additional postage pre-paid copies of the Notice may be obtained from the Claims Administrator for forwarding to such beneficial owners. All such correspondence to Plaintiff's Settlement Counsel should be addressed as follows:
Ultimate Electronics Securities Litigation Claims Administrator c/o Gilardi Co. LLC P.O. Box 8040 San Rafael, CA 94912-8040
XIV. ATTORNEYS' FEES AND EXPENSES OF PLAINTIFF'S COUNSEL
To date, Lead Counsel have not received any payment for their services in conducting this Litigation on behalf of Lead Plaintiff and the Members of the Settlement Class, nor have counsel been reimbursed for their out-of-pocket expenses. Lead Counsel will apply to the Court at or after the Settlement Hearing, for an award of attorneys' fees of 25% of the Settlement Fund plus reimbursement of litigation expenses that were advanced in connection with the Litigation not to exceed $150,000 plus interest on the award at the same rate and for the same period as earned on that portion of the Settlement Fund. In addition, Lead Plaintiff may seek compensation for its time expended and expenses incurred in prosecuting the Litigation on behalf of the Settlement Class. Such sums as may be granted by the Court will be paid from the Settlement Fund. Settlement Class Members are not personally liable for any fees or expenses awarded by the Court.
The fee requested by Lead Counsel will compensate them for their efforts in achieving the Settlement Fund for the benefit of the Settlement Class, and for their risk in undertaking this case on a contingent basis. If approved by the Court, the fee requested would be within the range of fees awarded to plaintiffs' counsel under similar circumstances in litigation of this type.
XV. RIGHT TO OBJECT TO THE PROPOSED SETTLEMENT
Any Member of the Settlement Class who does not request to be excluded may appear at the Settlement Hearing to show cause why the proposed settlement should not be approved, or the Litigation should not be dismissed with prejudice as against Defendants and to present any opposition to the Plan of Allocation or the application of Lead Counsel for attorneys' fees and expenses; provided, however, that no such Person shall be heard, unless his, her or its objection or opposition is made in writing and is filed, together with copies of all other papers and briefs by him, her or it with the Clerk of the Court, United States District Court for the District of Colorado no later than ________, 2005, and received on or before ________, 2005, by each of:
Counsel for Lead Plaintiff and the Settlement Class
LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP ELLEN GUSIKOFF STEWART 401 B Street, Suite 1600 San Diego, CA 92101
DYER SHUMAN, LLP KIP B. SHUMAN 801 East 17th Avenue Denver, CO 80218-1417Counsel for Defendants
DAVIS GRAHAM STUBBS LLP JONATHON D. BERGMAN 1550 Seventeenth Street, Suite 500 Denver, CO 80202
Unless otherwise ordered by the Court, any Member of the Settlement Class who does not make his, her or its objection or opposition in the manner provided shall be deemed to have waived all objections and opposition to the fairness, reasonableness and adequacy of the proposed settlement, the Plan of Allocation and the request of Lead Plaintiff's counsel for attorneys' fees and expenses.
XVI. EXAMINATION OF PAPERS AND INQUIRIES
This Notice contains only a summary of the terms of the proposed settlement. For a more detailed statement of the matters involved in the Litigation, reference is made to the pleadings, to the Stipulation and to other papers filed in this action, which may be inspected at the Office of the Clerk, United States District Court for the District of Colorado, during business hours of each business day.
If you have any questions about the Settlement, you may contact any of the following representatives for the Plaintiff:
LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP ELLEN GUSIKOFF STEWART 401 B Street, Suite 1600 San Diego, CA 92101
DYER SHUMAN, LLP KIP B. SHUMAN 801 East 17th Avenue Denver, CO 80218-1417
DATED: _________________________
BY ORDER OF THE COURT UNITED STATES DISTRICT COURT DISTRICT OF COLORADO
PROOF OF CLAIM AND RELEASE EXHIBIT A-2
TO: ALL PERSONS WHO PURCHASED ULTIMATE ELECTRONICS, INC. ("ULTIMATE ELECTRONICS" OR THE "COMPANY") COMMON STOCK DURING THE PERIOD MAY 1, 2002 THROUGH AUGUST 26, 2002, INCLUSIVE, AND INCLUDING IN OR TRACEABLE TO THE COMPANY'S MAY 1, 2002 PUBLIC STOCK OFFERING.
If you purchased Ultimate Electronics common stock during the period described above, have not requested exclusion from the Settlement Class, as defined in the Notice of Settlement of Class Action ("Notice"), and are not a Defendant in this Litigation, or a member of the immediate family of any of the individual Defendants, an entity in which any of the Defendants has a controlling interest, or the legal representatives, heirs, successors or assigns of any such excluded party, you should read the accompanying Notice and complete this Proof of Claim and Release form.
IN ORDER TO BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENT DESCRIBED IN THE ACCOMPANYING NOTICE, YOU MUST MAIL YOUR COMPLETED PROOF OF CLAIM AND RELEASE TO THE CLAIMS ADMINISTRATOR POSTMARKED ON OR BEFORE __________, 2006.
I. GENERAL INSTRUCTIONS
1. To recover as a member of the class based on your claims in the action entitled In re Ultimate Electronics, Inc. Securities Litigation, Civil Action No. 03-N-579(PAC) (the "Litigation"), you must complete and, on page 10 hereof, sign this Proof of Claim and Release. If you fail to file a properly addressed (as set forth in paragraph 3 below) Proof of Claim and Release, your claim may be rejected and you may be precluded from any recovery from the Settlement Fund created in connection with the proposed settlement of the Litigation.
2. Submission of this Proof of Claim and Release, however, does not assure that you will share in the proceeds of settlement in the Litigation.
3. YOU MUST MAIL YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE ______, 2006, ADDRESSED AS FOLLOWS:
Ultimate Electronics Securities Litigation Claims Administrator c/o Gilardi Co. LLC P.O. Box 8040 San Rafael, CA 94912-8040
4. If you are NOT a Member of the Settlement Class (as defined in the Notice) DO NOT submit a Proof of Claim and Release form.
5. If you are a Member of the Settlement Class and you did not timely request exclusion in connection with the proposed settlement, you are bound by the terms of any judgment entered in the Litigation, including the releases provided therein, WHETHER OR NOT YOU SUBMIT A PROOF OF CLAIM AND RELEASE AND WHETHER OR NOT THAT CLAIM IS ALLOWED.
II. DEFINITIONS
1. "Defendants" means Ultimate Electronics, J. Edward McEntire, William J. Pearse, David J. Workman, Alan E. Kessock, Robert W. Beale, Randall F. Bellows and Larry D. Sutton.
2. "Related Parties" means each of a Defendant's current and former employees, agents, directors, officers, attorneys, legal representatives, predecessors, successors, parents, subsidiaries, divisions, partners, members, financial advisors, accountants, lenders, investment bankers, underwriters, joint ventures, assigns, executors, administrators, insurers, reinsurers, spouses, heirs, related or affiliated entities, any entity in which any Defendant and/or any member of an individual Defendant's immediate family has a controlling interest, any members of any individual Defendant's immediate families, or any trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/or member(s) of his family or any person acting on behalf of a Defendant.
3. "Released Persons" means each and all of the Defendants and their Related Parties.
III. CLAIMANT IDENTIFICATION
1. If you purchased Ultimate Electronics common stock and held the certificate(s) in your name, you are the beneficial purchaser as well as the record purchaser. If, however, you purchased Ultimate Electronics common stock and the certificate(s) were registered in the name of a third party, such as a nominee or brokerage firm, you are the beneficial purchaser and the third party is the record purchaser.
2. Use Part I of this form entitled "Claimant Identification" to identify each purchaser of record ("nominee"), if different from the beneficial purchaser of Ultimate Electronics stock that forms the basis of this claim. THIS CLAIM MUST BE FILED BY THE ACTUAL BENEFICIAL PURCHASER OR PURCHASERS, OR THE LEGAL REPRESENTATIVE OF SUCH PURCHASER OR PURCHASERS, OF ULTIMATE ELECTRONICS STOCK UPON WHICH THIS CLAIM IS BASED.
3. All joint purchasers must sign this claim. Executors, administrators, guardians, conservators and trustees must complete and sign this claim on behalf of persons represented by them and their authority must accompany this claim and their titles or capacities must be stated. The Social Security (or taxpayer identification) number and telephone number of the beneficial owner may be used in verifying the claim. Failure to provide the foregoing information could delay verification of your claim or result in rejection of the claim.
IV. CLAIM FORM
1. Use Part II of this form entitled "Schedule of Transactions in Ultimate Electronics Common Stock" to supply all required details of your transaction(s) in Ultimate Electronics common stock. If you need more space or additional schedules, attach separate sheets giving all of the required information in the same form. Sign and print or type your name on each additional sheet.
2. On the schedules, provide all of the requested information with respect to your holdings at the beginning of the Class Period (as defined below), and all of your purchases and all of your sales of Ultimate Electronics common stock that took place at any time beginning May 1, 2002 through and including August 26, 2002 (the "Class Period"), whether such transactions resulted in a profit or a loss. Failure to report all such transactions may result in the rejection of your claim.
3. List each transaction in the Class Period separately and in chronological order, by trade date, beginning with the earliest. You must accurately provide the month, day and year of each transaction you list.
4. The date of covering a "short sale" is deemed to be the date of purchase of Ultimate Electronics common stock. The date of a "short sale" is deemed to be the date of sale of Ultimate Electronics common stock.
5. Broker confirmations or other documentation of your transactions in Ultimate Electronics common stock should be attached to your claim. Failure to provide this documentation could delay verification of your claim or result in rejection of your claim.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO In re Ultimate Electronics, Inc. Securities Litigation Civil Action No. 03-N-597(PAC) PROOF OF CLAIM Must be Postmarked No Later Than: ________, 2006 Please Type or Print PART I: CLAIMANT IDENTIFICATION______________________________________________________________________ Beneficial Owner's Name (First, Middle, Last)
______________________________________________________________________ Street Address
________________________ _____________________________________ City State Zip Code
________________________ ______________________________________ Foreign Province Foreign Country
________________________ _____________ Individual Social Security Number or Taxpayer Identification Number _____________ Corporation/Other
_______________ _____________________________(work) Area Code Telephone Number
_______________ _____________________________(home) Area Code Telephone Number
____________________________________________________________________ Record Owner's Name (if different from beneficial owner listed above)
PART II: SCHEDULE OF TRANSACTIONS IN ULTIMATE ELECTRONICS COMMON STOCK
A. Number of shares of Ultimate Electronics common stock held at opening of trading on May 1, 2002: ___________
B. Purchases of Ultimate Electronics common stock (May 1, 2002 — August 26, 2002, inclusive):
Trade Date Number of Shares Purchased Total Purchase Price Mo. Day Year
1. ______________ 1. _________________ 1. _________________
2. ______________ 2. _________________ 2. _________________
3. ______________ 3. _________________ 3. _________________
IMPORTANT: Identify by number listed above all purchases in which you covered a "short sale": _________________________
C. Sales of Ultimate Electronics common stock (May 1, 2002 — August 26, 2002, inclusive):
Trade Date Number of Shares Sold Total Sales Price Mo. Day Year
1. ______________ 1. _________________ 1. _________________
2. ______________ 2. _________________ 2. _________________
3. ______________ 3. _________________ 3. _________________
D. Number of shares of Ultimate Electronics common stock held at close of trading on August 26, 2002: ____________
If you require additional space, attach extra schedules in the same format as above. Sign and print your name on each additional page.
YOU MUST READ AND SIGN THE RELEASE ON PAGE 10. FAILURE TO SIGN THE RELEASE MAY RESULT IN A DELAY IN PROCESSING OR REJECTION OF YOUR CLAIM.
V. SUBMISSION TO JURISDICTION OF COURT AND ACKNOWLEDGEMENTS
I submit this Proof of Claim and Release under the terms of the Stipulation of Settlement described in the Notice. I also submit to the jurisdiction of the United States District Court for the District of Colorado with respect to my claim as a Settlement Class Member and for purposes of enforcing the release set forth herein. I further acknowledge that I am bound by and subject to the terms of any judgment that may be entered in the Litigation. I agree to furnish additional information to Plaintiffs' Settlement Counsel or the Claims Administrator to support this claim if required to do so. I have not submitted any other claim covering the same purchases or sales of Ultimate Electronics common stock during the Class Period and know of no other person having done so on my behalf.
VI. RELEASE
1. I (We) hereby acknowledge full and complete satisfaction of, and do hereby fully, finally and forever settle, relinquish, release and discharge from the Released Claims (as defined below) against each and all of the Released Persons.
2. "Released Claims" shall collectively mean all claims (including "Unknown Claims" as defined below), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, whether or not concealed or hidden, asserted or that might have been asserted, including, without limitation, claims for negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty or violations of any state or federal statutes, rules or regulations, by any Lead Plaintiff or any Settlement Class Member against the Released Persons arising out of, based upon or related to the purchase of Ultimate Electronics common stock by any Settlement Class Member during the Class Period and the facts, transactions, events, occurrences, acts, disclosures, representations, statements, omissions or failures to act which were or could have been alleged in the Litigation or in any forum. Released Claims also includes any and all claims arising out of, relating to, or in connection with the settlement or resolution of the Litigation between the Settling Parties but does not include any claim to enforce the terms of the Stipulation.
3. "Unknown Claims" means any Released Claims that any Lead Plaintiff or Settlement Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons that if known by him, her or it, might have affected his, her or its settlement with and release of the Released Persons, or might have affected his, her or its decision not to object to this settlement or not to exclude himself, herself or itself from the Settlement Class. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, the Lead Plaintiff shall expressly and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits of California Civil Code § 1542, which provides:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
The Lead Plaintiff shall expressly waive, and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived, any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, that is similar, comparable or equivalent to California Civil Code § 1542. Lead Plaintiff and the Settlement Class Members may hereafter discover facts in addition to or different from those that any of them now knows or believes to be true with respect to the subject matter of the Released Claims, but Lead Plaintiff shall expressly and each Settlement Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, that now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct that is negligent, reckless, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Lead Plaintiff acknowledges, and the Settlement Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part.
4. This release shall be of no force or effect unless and until the Court approves the Stipulation of Settlement and the Stipulation becomes effective on the Effective Date.
5. I (We) hereby warrant and represent that I (we) have not assigned or transferred or purported to assign or transfer, voluntarily or involuntarily, any matter released pursuant to this release or any other part or portion thereof.
6. I (We) hereby warrant and represent that I (we) have included information about all of my (our) transactions in Ultimate Electronics common stock that occurred during the Class Period as well as the number of shares of Ultimate Electronics common stock held by me (us) at the opening of trading on May 1, 2002 and at the close of trading on August 26, 2002.
7. 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.
8. Note: If you have been notified by the Internal Revenue Service that you are subject to backup withholding, please strike out the language that you are not subject to backup withholding in paragraph 7 above.
I declare under penalty of perjury under the laws of the United States of America that the foregoing information supplied by the undersigned is true and correct.
Executed this _________ day of ___________________, (Month/Year)
in _____________________, ______________________________. (City) (State/Country)
____________________________________ (Sign your name here)
_____________________________________ (Type or print your name here)
_____________________________________ (Capacity of person(s) signing, e.g., Beneficial Purchaser, Executor or Administrator)
ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT OF TIME. THANK YOU FOR YOUR PATIENCE.
Reminder Checklist:1. Please sign the above release and declaration.
2. Remember to attach supporting documentation, if available.
3. Do not send original stock certificates.
4. Keep a copy of your claim form for your records.
5. If you desire an acknowledgment of receipt of your claim form, please send it Certified Mail, Return Receipt Requested.
6. If you move, please send us your new address.
SUMMARY NOTICE EXHIBIT A-3
TO: ALL PERSONS WHO PURCHASED ULTIMATE ELECTRONICS, INC. ("ULTIMATE ELECTRONICS" OR THE "COMPANY") COMMON STOCK DURING THE PERIOD MAY 1, 2002 THROUGH AUGUST 26, 2002, INCLUSIVE, AND INCLUDING IN OR TRACEABLE TO THE COMPANY'S MAY 1, 2002 PUBLIC STOCK OFFERING.
All capitalized terms not defined herein shall have the same meanings as set forth in the Stipulation of Settlement dated as of September 15, 2005 (the "Stipulation"), which has been filed in the Litigation.
YOU ARE HEREBY NOTIFIED that pursuant to an Order of the United States District Court for the District of Colorado, a hearing will be held on ________, 2005, at __:__ __.m., before the Honorable Edward W. Nottingham, at the United States District Court for the District of Colorado, 901 19th Street, Denver, Colorado, 80294-3589, for the purpose of determining: (1) whether the proposed settlement of the above captioned class action litigation for the sum of $1,200,000 in cash plus any interest that may accrue, which extinguishes claims against the Defendants and Released Persons, should be approved by the Court as fair, reasonable and adequate to the Settling Parties; (2) whether the proposed Plan of Allocation of settlement proceeds is fair, reasonable and adequate; (3) whether the application of Lead Plaintiff's counsel for an award of attorneys' fees and reimbursement of expenses incurred in connection with this class action litigation, together with interest thereon, should be approved; (4) whether costs and expenses should be awarded to Lead Plaintiff pursuant to 15 U.S.C. § 78u-4(a)(4); and (5) whether the class action litigation should be dismissed with prejudice.
If you purchased the common stock of Ultimate Electronics during the period May 1, 2002 through August 26, 2002, inclusive, and including in or traceable to the Company's May 1, 2002 public stock offering, your rights may be affected by this class action litigation and the Settlement thereof. If you have not received a detailed Notice of Settlement of Class Action and a copy of the Proof of Claim and Release form, you may obtain copies by writing to Ultimate Electronics Securities Litigation, c/o Gilardi Co. LLC, P.O. Box 8040, San Rafael, CA 94912-8040. If you are a Settlement Class Member, in order to share in the distribution of the Net Settlement Fund, you must submit a Proof of Claim and Release no later than ______, 2006, establishing that you are entitled to a recovery.
All Members of the Settlement Class who desire to exclude themselves from the Settlement Class must do so by ________, 2005.
Any objection to the settlement must be filed with the Court no later than ________, 2005, and received by the following no later than ________, 2005:
Counsel for Lead Plaintiff and the Settlement Class
LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP ELLEN GUSIKOFF STEWART 401 B Street, Suite 1600 San Diego, CA 92101
DYER SHUMAN, LLP KIP B. SHUMAN 801 East 17th Avenue Denver, CO 80218-1417Counsel for Defendants
DAVIS GRAHAM STUBBS LLP JONATHON D. BERGMAN 1550 Seventeenth Street, Suite 500 Denver, CO 80202
All inquiries regarding this Litigation should be made in writing to Ultimate Electronics Securities Litigation, c/o Gilardi Co. LLC, P.O. Box 8040, San Rafael, CA 94912-8040.
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE REGARDING THIS NOTICE.