Mark Henning, et al. v. Orient Paper, Inc., et al. 10-CV...

Case 2:

87-R-AJW Document 117 Filed 10/04/12 of 41 Page ID #:2612

EXECUTION COPY

1 UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

----------------------------------------------------X MARK HENNING, ROMAN ZARETSKI, AND CHRISTIAN STILLMARK, No. CV 10-5887-R (AJWx) INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, CLASS ACTION

Plaintiffs, STIPULATION AND AGREEMENT OF

vs. SETTLEMENT

ORIENT PAPER, INC.; ZHENYONG LIU; Hon. Manuel L. Real WINSTON C. YEN; DAHONG ZHOU; JING HAO; DREW BERNSTEIN; DAVIS Hearing Date: November 5, 2012 ACCOUNTING GROUP, P.C., and EDWIN Time: 10:00 a.m. REECE DAVIS Judge: Hon Manuel L. Real

Courtroom: 8 -- 2nd floor

15 Defendants .

16

17 ----X

18

19 STIPULATION AND AGREEMENT OF SETTLEMENT

20 This Stipulation and Agreement of Settlement (the "Stipulation") dated

21 October 3, 2012 is hereby submitted to the Court pursuant to Rule 23 of the

22 Federal Rules of Civil Procedure. Subject to the approval of the Court, this

23 Stipulation is entered into among Lead Plaintiffs, Mark Henning, Roman Zaretsk

24 and Christian Stillmark (collectively, the "Lead Plaintiffs"), on behalf o

25 themselves and the putative class (collectively, "Plaintiffs"); and Orient Paper, Inc

2

3

4

5

6

7

8

9

10

11

12

13

14

26 0

27 EAST\49946692.1

Stipulation and Agreement of Settlement--No. CV 10-5887-R (AJWx)

28

Case 2:


EXECUTION COPY

1 ("Orient Paper"), Zhenyong Liu ("Liu"), Winston C. Yen ("Yen"), Dahong Zh

2 ("Zhou"), Jing Hao ("Hao"), and Drew Bernstein ("Bernstein") (the "Orient Pap

3 Defendants", or the "Settling Defendants"), by and through their respecti

4 counsel.

5

1. WHEREAS, a class action complaint styled Henning v. Orient Paper,

6 Inc. , 10-CV-5887-VBF-AJWx alleging violations of federal securities laws agains

7 the Orient Paper Defendants and Defendants Davis Accounting Group, P.C

8 ("DAG"), and Defendant Edwin Reece Davis ("E. Davis") (the "Davis

9 Defendants") was filed in the United States District Court for the Central Distric

10 of California (the "Court");

11

2. WHEREAS, by Order dated November 18, 2010, Judge Fai

12 appointed Messrs. Henning, Zaretski, and Stillmark as Lead Plaintiffs;

13

3. WHEREAS, on January 28, 2011, the Lead Plaintiffs filed the

14 operative consolidated Amended Complaint alleging: (Count 1) violations o

15 Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") agains

16 the Settling Defendants and Defendants DAG and E. Davis; and (Count 2

17 violations of Section 20(a) of the Exchange Act against Defendants Liu, Yen

18 Zhou, Hao, Bernstein and E. Davis;

19

4. WHEREAS, by order dated July 20, 2011, Judge Fairbank denied

20 Settling Defendants' Motion to Dismiss that the Settling Defendants had previou

21

filed;

22

5. WHEREAS, on October 14, 2011, Lead Plaintiffs moved to certify

23 class of persons who purchased Orient Paper shares between March 27, 2009, an

24 August 13, 2010 (the "Class") and to appoint themselves as representatives of th

25 Class (the "Motion for Class Certification");

26 1

27 EAST\49946692.1


28

Case 2: 87-R-AJW Document 117 Filed 10/04/12 of 41 Page ID #:2614

EXECUTION COPY

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7. WHEREAS, on March 9, 2012, this case was transferred to

Honorable Manuel L. Real, United States District Judge;

8. WHEREAS, on April 2, 2012, Lead Plaintiff Christian Stillm

withdrew his request to be appointed as a class representative because of he

unexpected work responsibilities requiring him to reside overseas for an exten

period of time;

9. WHEREAS, on April 9, 2012, Defendants filed an opposition to

Motion for Class Certification;

10. WHEREAS, in recognition of the attendant risks and costs of

continued litigation and the benefits of resolving this litigation, the parties hereto

desire to settle and resolve any and all actual or potential claims by, between, or

among Plaintiffs, on the one hand, and the Settling Defendants, on the other hand,

arising out of or relating to the subject matter of this action (the “Litigation”),

which includes but is not limited to the following allegations by Plaintiffs:

• The claim that purchases from Orient Paper's largest supplier should

have been recognized as related party transactions pursuant to the

federal securities laws through August of 2010;

• The claim that Orient Paper overstated its revenues by 25-50% in

2009 and 2010;

• The claim that Orient Paper knowingly employed an unlicensed

auditor.

The Settling Defendants deny any wrongdoing whatsoever, and this Stipulation

shall in no event be construed as, or be deemed to be evidence of, an admission or

28

EAST\49946692.1 27

2


Case 2:


EXECUTION COPY

1 concession on the part of any Settling Defendant with respect to any actual or

2 potential claim, liability, wrongdoing, or damage whatsoever, or any infirmity in

3 the defenses that the Settling Defendants have asserted. This Stipulation also shall

4 not be construed as or be deemed to be a concession by the Lead Plaintiffs of any

5 infirmity in the claims asserted in the Litigation. The parties to this Stipulation

6 (the "Settling Parties") wish to settle and compromise any dispute regarding the

7 Litigation or its subject matter, including but not limited to whether the Litigation

8 was filed by the Lead Plaintiffs and defended by the Settling Defendants in good

9 faith and with adequate basis in fact under Rule 11 of the Federal Rules of Civil

10 Procedure. The Settling Parties agree that the Litigation is being voluntarily settle

11 after advice of counsel and that the terms of the Settlement are fair, adequate, and

12 reasonable;

13

11. WHEREAS, Lead Plaintiffs' Counsel has conducted an investigation

14 relating to the claims and the underlying events and transactions alleged in the

15 Litigation. Lead Plaintiffs' Counsel has analyzed the facts and the applicable law

16 with respect to the claims of the Lead Plaintiffs against Defendants and the

17 potential defenses thereto, which in the Lead Plaintiffs' judgment have provided an

18 adequate and satisfactory basis for the evaluation of an agreement to settle, as

19 described herein;

20

12. WHEREAS, counsel for the Lead Plaintiff and counsel for the Settli

21 Defendants participated in two full-day mediation conferences with The Honorable

22 Daniel H. Weinstein (Ret.). At and following the mediations, the participants

23 engaged in extensive arm's-length negotiations with each other, such negotiations

24 bearing fruit in this Stipulation;

25

26 3

27 EAST\49946692.1


28

Case 2:


EXECUTION COPY

1

13. WHEREAS, based upon the investigation conducted by Lead

2 Plaintiffs' Counsel, Lead Plaintiffs' Counsel has concluded that the terms and

3 conditions of this Stipulation are fair, reasonable, and adequate to Plaintiffs, and in

4 their best interests, and Lead Plaintiffs have agreed to settle the claims asserted in

5 the Litigation pursuant to the terms and conditions of this Stipulation, after

6 considering: (a) the substantial benefits that Plaintiffs will receive from settlement

7 of the Litigation; (b) the attendant risks of litigation; and (c) the desirability of

8 permitting the Settlement to be consummated as provided by the terms of this

9 Stipulation;

10

14. AND WHEREAS, the Settling Defendants conditionally stipulate, for

11 the limited purposes of this Stipulation and the creation of a settlement class, that

12 the Litigation shall be certified for class treatment under Rule 23 of the Federal

13 Rules of Civil Procedure and that the stipulated settlement class consists of

14 Settlement Class Members, as defined below. The Settling Defendants' conditi

15 stipulation as to the creation of a settlement class is contingent upon the execution

16 of this Stipulation by the Settling Parties and its final approval by the Court. If this

17 Stipulation is for any reason not finally approved, or is otherwise terminated, the

18 Settling Defendants reserve their rights to assert any and all available objections

19 and defenses to certification of any class:

20

NOW THEREFORE, without any admission or concession on the part of the

21 Lead Plaintiffs of any lack of merit in the Litigation whatsoever, and without any

22 admission or concession on the part of the Settling Defendants of any liability,

23 wrongdoing, or lack of merit in the defenses asserted in the Litigation whatsoever,

24 it is hereby STIPULATED AND AGREED, by and among the Settling Parties,

25 through their respective attorneys, subject to approval of the Court pursuant to

26 4

27 EAST\49946692.1


28

Case 2:


EXECUTION COPY

1 Rule 23(e) of the Federal Rules of Civil Procedure, in consideration of the benefits

2 flowing to the Settling Parties hereto from the Settlement, that any and all claims

3 made, or that could have been made, including all Settled Claims (as defined

4 below), by Plaintiffs against the Released Parties (as defined below) shall be

5 compromised, settled, released, and dismissed with prejudice as provided in this

6 Stipulation and Agreement of Settlement, to the extent as hereafter provided,

7 without costs as to Plaintiffs or Defendants, subject to the approval of the Court,

8 upon and subject to the following terms and conditions:

9

A. CERTAIN DEFINITIONS

10

As used in this Stipulation, the following terms have the

11 specified below:

12

1. "Attorneys' Fees and Expenses" means the portion of the Gross

13 Settlement Fund approved by the Court for payment to Lead Plaintiffs' Counsel

14 including attorneys' fees, costs, litigation expenses, and fees and expenses o

15 experts (excluding Notice and Administration Expenses).

16

2. "Authorized Claimant" means any Claimant (as defined below

17 whose claim for recovery has been allowed pursuant to the terms of the Stipulati

18 or by order of the Court.

19

3. "Award to Lead Plaintiffs" means any award by the Court

20 Lead Plaintiffs of reasonable costs and expenses (including lost wages) direc

21 relating to the representation of the Settlement Class pursuant to 15 U.S.C. § 78

22 4(a)(4).

23

4. "Claimant" means any Settlement Class Member who files

24 Proof of Claim and Release (as defined below) in such form and manner, a

25 within such time, as set forth in this Stipulation, or as the Court shall prescribe.

26 5

27 EAST\49946692.1


28

Case 2:


EXECUTION COPY

1

5. "Claims Administrator" means the accounting and claim

2 administration firm, Strategic Claims Services, Inc., that Lead Plaintiffs' Couns

3 requests be appointed by the Court to administer the Settlement and dissemina

4 notice to the Settlement Class.

5

6. "Court" means the United States District Court for the

6 I District of California District.

7

7. "Defendants" means Orient Paper, Inc., Zhenyong Liu, Winston

8 C. Yen, Dahong Zhou, Jing Hao, Drew Bernstein, Davis Accounting Group, P.C.

9 and Edwin Reece Davis.

10

8. "Effective Date" means the date on which all of the conditi

11 set forth below in paragraph K.1. shall have been satisfied and the Court's Orde

12 and Final Judgment, substantially in the form of Exhibit B hereto, becomes "Final.

13 The Court's Order and Final Judgment shall be deemed to be "Final" when either o

14 the following has occurred: (a) if an appeal or review is not sought by any perso

15 from the Order and Final Judgment, the day following the expiration of the time t

16 appeal or petition from the Order and Final Judgment; or (b) if an appeal or review

17 is sought from the Order and Final Judgment, the day after such Order and Fina

18 Judgment is affirmed or the appeal or review is dismissed or denied and such Orde

19 and Final Judgment is no longer subject to further judicial review.

20

9. "Escrow Account" means the interest-bearing account selecte

21 by the Escrow Agent. The Escrow Account shall be managed by the Escrow Agen

22 for the benefit of Lead Plaintiffs and the Settlement Class until the Effective Date

23 of the Settlement.

24

25

26 6

27 EAST\49946692.1


28

Case 2: 87-R-AJW Document 117 Filed 10/04/12 of 41 Page ID #:2619

EXECUTION COPY

10. "Escrow Agent" means the Claims Administrator or its dul

appointed agent(s). The Escrow Agent shall perform the duties as set forth in thi

Stipulation.

11. "Gross Settlement Fund" means the Settlement Amount plus al

interest earned thereon.

12. "Lead Plaintiffs" means Mark Henning, Christian Stillmark and

Roman Zaretski.

13. "Lead Plaintiffs' Counsel" means The Rosen Law Firm, P.A.

14. "Net Settlement Fund" means the Gross Settlement Fund, less

(i) Attorneys' Fees and Expenses; (ii) Notice and Administration Expenses; (iii)

taxes; (iv) any Award to Lead Plaintiffs; and (v) other fees and expenses

authorized by the Court.

15. "Notice and Administration Account" means the account to be

established from the Gross Settlement Fund and maintained by Lead Plaintiffs

Counsel. The Notice and Administration Account may be drawn upon by Lead

Plaintiffs' Counsel for Notice and Administration Expenses without further order

of the Court.

16. "Notice and Administration Expenses" means all expenses

incurred (whether or not paid) in connection with the preparation, printing

mailing, and publication of the Notice to the Settlement Class of the proposed

settlement, and all expenses of Settlement administration; provided, however, tha

none of these expenses shall be deemed to include Attorneys' Fees and Expenses

through the Effective Date. All such Notice and Administration Expenses shall be

paid from the Gross Settlement Fund.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

28

EAST\49946692.1 27

7


Case 2:


EXECUTION COPY

1

17. "Order and Final Judgment" means the order and judgmen

2 entered by the Court, including a Bar Order, approving the Settlement

3 dismissing the Litigation as against the Settling Defendants with prejudice

4 without costs to any party.

5

18. "Orient Paper Defendants" means all Defendants except Davi

6 Accounting Group, P.C., and Edwin Reece Davis.

7

19. "Person" means any individual, corporation, partnership

8 limited liability company or partnership, limited partnership, professiona

9 corporation, association, affiliate, joint stock company, trust, estate, unincorporated

10 association, government, or any political subdivision or agency thereof, any othe

11 type of legal or political entity, any legal representative, and, as applicable, thei

12 respective spouses, heirs, predecessors, successors, representatives, and assigns.

13

20. "Plaintiffs" means the Lead Plaintiffs and the Settlement Class.

14

21. "Plan of Allocation" means the plan for allocating the N

15 Settlement Fund (as set forth in the Notice of Pendency and Settlement of C

16 Action (the "Notice"), attached as Exhibit A-1 to the Order of Prelimi

17 Approval of Settlement) to Authorized Claimants after payment of Notice

18 Administration Expenses, Taxes and Tax Expenses, and Attorneys' Fees

19 Expenses. Any Plan of Allocation is not part of the Stipulation and the Released

20 Parties shall have no liability with respect thereto.

21

22. "Released Parties" means Orient Paper Defendants and any o

22 their current, former, or future parents, subsidiaries, affiliates, partners, join

23 venturers, officers, directors, principals, shareholders, members, agents (acting in

24 their capacity as agents), employees, attorneys, trustees, insurers (including Illinoi

25 National Insurance Company and its respective businesses, affiliates, subsidiaries

26 8

27 EAST\49946692.1


28

Case 2:1 -R-AJW Document 117 Filed 10/04/12 of 41 Page ID #:2621

EXECUTION COPY

1 parents and affiliated corporations, divisions, predecessors, shareholders, partners,

2 join venturers, principals, insurers, reinsurers, successors and assigns, and their

3 respective past, present and future employees, officers, directors, attorneys

4 accountants, auditors, agents and representatives), reinsurers, advisors

5 accountants, associates, and/or any other individual or entity in which any Orien

6 Paper Defendant has or had a controlling interest or which is or was related to o

7 affiliated with any Orient Paper Defendant, and the current, former, and future

8 legal representatives, heirs, successors-in-interest, or assigns of any Orient

9 Defendant.

10

23. "Settled Claims" means any and all claims, debts, demands

11 liabilities, rights, and causes of action of every nature and description whatsoeve

12 (including, but not limited to, any claims for damages, interest, attorneys' fees

13 expert or consulting fees, and any other costs, expenses, or liabilities whatsoever)

14 whether based on federal, state, local, statutory or common law, or any other law

15 rule, or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or

16 unliquidated, at law or in equity, matured or unmatured, whether class or

17 individual in nature, including both known claims and Unknown Claims (as

18 defined below): (i) that have been asserted in the Litigation by the Lead Plainti

19 and/or Settlement Class Members or any of them against any of the Released

20 Parties, including, without limitation, all statements made by any of the Orien

21 Paper Defendants that Plaintiffs allege in the Litigation were false or misleading

22 or any of the alleged acts, omissions, representations, facts, events, matters

23 transactions, or occurrences asserted in or relating to the Litigation, or otherwise

24 alleged, asserted, or contended in the Litigation; or (ii) that relate to the purchase o

25 Orient Paper securities, including, without limitation, claims for fraud, negligen

26 9

27 EAST\49946692.1


28


EXECUTION COPY

1 misrepresentation, or claims based upon or related in any way to the purchase

2 acquisition, or sale of Orient Paper securities during the Class Period by the Lead

3 Plaintiffs or any Settlement Class Member, on behalf of themselves, their heirs

4 executors, administrators, successors, and assigns against the Released Parties o

5 any of them.. Settled Claims also include any and all claims arising out of, relating

6 to, or in connection with the Settlement or resolution of the Litigation against

7 Released Parties (including Unknown Claims that arise out of, relate to, or are i

8 connection with the Settlement or resolution of the Litigation against the Release

9 Parties), except claims to enforce any of the terms of this Stipulation.

10

24. "Settled Defendants' Claims" means all claims, demands, rights

11 remedies, liabilities, and causes of action of every nature and descripti

12 whatsoever, whether based on federal, state, local, statutory, or common law,

13 any other law, rule, or regulation, including both known and Unknown Claims, tha

14 (i) have been or could have been asserted in the Litigation by the Settling

15 Defendants, or any of them, or the successors and assigns of any of them, agains

16 any of the Lead Plaintiffs, Settlement Class Members, or any of their attorneys, and

17 (ii) arise out of or relate in any way to the institution, prosecution, or Settlement o

18 this Litigation or the Settled Claims, including but not limited to all claims fo

19 malicious prosecution or sanctions. "Settled Defendants' Claims" does not incl

20 claims to enforce any of the terms of this Stipulation.

21

25. "Settlement Class" and "Settlement Class Members" mean,

22 purposes of this Settlement, all persons who purchased or otherwise acquired any

23 common stock of Orient Paper during the period from March 27, 2009 through and

24 including August 13, 2010, and were allegedly damaged thereby. Excluded from

25 the Settlement Class are Defendants, and all former officers and directors of Orien

26 10

27 EAST\49946692.1


28


EXECUTION COPY

1 Paper, and such excluded persons' immediate families, legal representatives, heirs,

2 predecessors, successors, and assigns, and any entity in which any excluded person

3 has or had a controlling interest, and any persons who have separately filed actions

4 against one or more of Defendants, based in whole or in part on any claim arising

5 out of or relating to any of the alleged acts, omissions, misrepresentations, facts

6 events, matters, transactions, or occurrences referred to in the Litigation o

7 otherwise alleged, asserted, or contended in the Litigation. Also excluded from the

8 Settlement Class are those persons who file valid and timely requests for exclusion

9 in accordance with the Court's Order of Preliminary Approval of Settlemen

10 ("Preliminary Approval Order") concerning this Stipulation.

11

26. "Settlement Class Distribution Order" means the order entered

12 by the Court, upon application of Lead Plaintiffs' Counsel following the occurrenc

13 of the events identified in paragraph D.13. below, which authorizes the Claim

14 Administrator to distribute the Net Settlement Fund to the Settlement Class.

15

27. "Settlement Class Period" means the period from March 27

16 2009, and August 13, 2010, inclusive.

17

28. "Settlement" means the settlement contemplated by

18 Stipulation.

19

29. "Settlement Amount" means a fund in the amount

20 $2,000,000.00 (Two Million Dollars).

21

30. "Settlement Hearing" means the final hearing to be held by

22 Court to determine: (1) whether the proposed Settlement should be approved

23 fair, reasonable, and adequate; (2) whether all Settled Claims should be dismi

24 with prejudice; (3) whether an order approving the Settlement should be ent

25 thereon; (4) whether the allocation of the Settlement Fund should be approved;

26 11

27 EAST\49946692.1


28


EXECUTION COPY

1 (5) whether the application for an award of Attorneys' Fees and Expenses and

2 Award to Lead Plaintiffs should be approved.

3

31. "Unknown Claims" means (a) any Settled Claim that the Le

4 Plaintiffs or any Settlement Class Member does not know or suspect to exist in his

5 her, or its favor at the time of the release of the Released Parties, which if kno

6 by him, her, or it, might have affected his, her, or its decision(s) with respect to

7 Settlement, including, but not limited to, the decision not to object to

8 Settlement, provided such claim arises out of or relates to the purchase or sale

9 Orient Paper securities, and (b) any Settled Defendants' Claims that any Defendan

10 does not know or expect to exist in his, her, or its favor, which if known by him

11 her, or it might have affected his, her, or its decision(s) with respect to the

12 Settlement. With respect to any and all Settled Claims and Settled Defendants

13 Claims, the Settling Parties stipulate and agree that upon the Effective Date,

14 Settling Parties shall expressly waive, and each of the Settlement Class Mem

15 shall be deemed to have waived and by operation of the Order and Final Judgmen

16 shall have waived, any and all provisions, rights, and benefits conferred by any law

17 of any state or territory of the United States, or principle of common law that i

18 similar, comparable, or equivalent to Cal. Civ. Code § 1542, which provides: "A

19 general release does not extend to claims which the creditor does not know

20 suspect to exist in his or her favor at the time of executing the release, which

21 known by him or her must have materially affected his or her settlement with t

22 debtor."

23

B. SCOPE AND EFFECT OF SETTLEMENT AND RELEASES

24

1. The obligations incurred pursuant to this Stipulation shall be in f

25 and final disposition of the Litigation and any and all Settled Claims as against

26 12

27 EAST\49946692.1


28


EXECUTION COPY

1 Released Parties and any and all Settled Defendants' Claims as against the

2 Plaintiffs, the Settlement Class Members, and their attorneys.

3

2. Pursuant to the Order and Final Judgment, upon the Effective

4 of this Settlement, the Settlement Class Members on behalf of themselves,

5 current and future heirs, executors, administrators, successors, attorneys, insurers

6 agents, representatives, and assigns, and any person they represent, shall, with

7 respect to each and every Settled Claim, release and forever relinquish and

8 discharge, and shall forever be enjoined from prosecuting, all Settled Claims and

9 any and all claims arising out of, relating to, or in connection with the Settlement

10 the Litigation, or the resolution of the Litigation against the Released Parties

11 whether or not such Settlement Class Member executes and delivers the Proof

12 Claim and Release, except claims to enforce any of the terms of this Stipulation

13 Further, all Settlement Class Members on behalf of themselves, their current and

14 future heirs, executors, administrators, successors, attorneys, insurers, agents

15 representatives, and assigns, expressly covenant not to assert any claim or action

16 against any of the Released Parties that: (i) arises out of or relates to the purchase

17 or sale of Orient Paper securities, or (ii) that could have been alleged, asserted, o

18 contended in any forum by the Settlement Class Members or any of them agains

19 any of the Released Parties, arising out of or relating to the purchase or sale o

20 Orient Paper securities, and shall forever be enjoined from commencing

21 instituting, or prosecuting any such claim, so long as such claim relates to

22 purchase or sale of Orient Paper securities.

23

3. The Proof of Claim and Release to be executed by the Settlemen

24 Class Members shall be substantially in the form and content contained in Exhibi

25 A-3 to the Preliminary Approval Order attached hereto as Exhibit A.

26 13

27 EAST\49946692.1


28


EXECUTION COPY

1

4. Pursuant to the Order and Final Judgment, upon the Effective

2 of this Settlement, Defendants shall release and forever discharge each and

3 one of the Settled Defendants' Claims, and shall forever be enjoined

4 prosecuting the Settled Defendants' Claims as against any of the Lead Plaintiffs

5 Settlement Class Members, or their attorneys, including but not limited to claim

6 for malicious prosecution or sanctions.

7

C. THE SETTLEMENT CONSIDERATION

8

1. Subject to the terms of this Stipulation, the sum of $2,000,000

9 (Two Million Dollars) shall be paid into the Escrow Account within ten (10

10 business days after the Court issues the Preliminary Approval Order. Tha

11 payment shall constitute the Settlement Amount. The Settlement Amount shall be

12 paid exclusively by the Orient Paper Defendants.

13

2. The Gross Settlement Fund, net of any Taxes (as defined below

14 on the income thereof and any Tax Expenses (as defined below), shall be used to

15 pay: (i) the Notice and Administration Expenses as authorized by this Stipulation

16 (ii) Attorneys' Fees and Expenses authorized by the Court; (iii) any Award to Lead

17 Plaintiffs authorized by the Court; and (iv) other fees and expenses authorized by

18 the Court. The balance of the Gross Settlement Fund remaining after the above

19 payments shall be the Net Settlement Fund, which shall be distributed to the

20 Authorized Claimants in accordance with this Stipulation.

21

3. Any sums required to be held in escrow hereunder shall be held

22 the Escrow Agent for the benefit of the Lead Plaintiffs and the Settlement Cl

23 until the Effective Date. Until the date the Order and Final Judgment is entered,

24 payments made from the Settlement Fund shall require the signature of

25 authorized representative of both the Escrow Agent and Defendants' counsel. Af

26 14

27 EAST\49946692.1


28


EXECUTION COPY

1 the Order and Final Judgment is entered, payments made from the Settlement

2 shall require only the signature of an authorized representative of the Es

3 Agent and shall not require the signature of Defendants' counsel’s authoriz

4 representative. All funds held by the Escrow Agent shall be deemed to be

5 custodia legis and shall remain subject to the jurisdiction of the Court until suc

6 time as the funds shall be distributed or returned pursuant to this Stipulation and/

7 further order of the Court. Other than amounts disbursed for providing notice

8 the Settlement Class, customary administration costs, and Taxes and Tax Expenses

9 and the Attorneys Fee and Expenses (which shall be paid to Lead Plaintiffs

10 Counsel within two business days after the Court executes an order awarding such

11 fees and expenses), the Settlement Fund shall not be distributed until the Effective

12 Date. The Escrow Agent shall not disburse the Gross Settlement Fund, or

13 portion thereof, except as provided in this Stipulation, or upon Order of the Court.

14

4. The Escrow Agent shall invest any funds in excess of $150,000 i

15 short-term United States Treasury Securities (or a mutual fund invested solely i

16 such instruments), and shall collect and reinvest all interest accrued thereon.

17 funds held in escrow in an amount of less than $150,000 may be held in a

18 account insured to the extent possible by the FDIC. Interest earned on the m

19 deposited into the Escrow Account shall be part of the Gross Settlement Fund.

20

5. The Notice and Administration Expenses shall be paid from the

21 Gross Settlement Fund. In order to pay Notice and Administration Expenses

22 $100,000 shall be withdrawn from the Gross Settlement Fund and deposited into a

23 Notice and Administration Account upon the entry of the Preliminary

24 Order. Any monies from the Notice and Administration Fund that remain

25 administration shall be returned to the Net Settlement Fund. The Notice

26 15

27 EAST\49946692.1


28


EXECUTION COPY

1 Administration Account may be drawn upon by Lead Plaintiffs' Counsel for Notice

2 and Administration Expenses only after Court approval for each specific payment.

3 The Notice and Administration Account shall be administered solely by the

4 Escrow Agent. Any taxes or other expenses incurred in connection with the Notice

5 and Administration Account shall be paid from the Notice and Administration

6 Account or from the remainder of the Gross Settlement Fund. The Release

7 Parties shall not have any obligation for payment of taxes or other expense

8 associated with the Notice and Administration Account. Notice an

9 Administration Expenses in excess of $100,000 shall not be paid out of the Gros

10 Settlement Fund until after the Effective Date. In no event shall an amount mor

11 than the Settlement Amount be paid for Notice and Administration Expenses, an

12 in no event shall the Released Parties be responsible to pay any amount for Notic

13 and Administration Expenses.

14

6. The Settling Defendants shall have access to all records of

15 Escrow Account, and upon request made to the Escrow Agent, shall receive

16 of all records of disbursements, deposits, and statements of accounts.

17

7. After the Effective Date, the Released Parties shall have no interes

18 in the Gross Settlement Fund or in the Net Settlement Fund. The Released P

19 shall not be liable for the loss of any portion of the Settlement Fund, nor have a

20 liability, obligation, or responsibility for the payment of claims, taxes, legal fees,

21 any other expenses payable from the Gross Settlement Fund.

22

D. ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL

23

AWARDS, AND DISTRIBUTION OF NET SETTLEMENT FUND

24

1. The Claims Administrator shall administer and calculate

25 claims that shall be allowed and oversee distribution of the Net Settlement

26 16

27 EAST\49946692.1


28


EXECUTION COPY

1 under the supervision of Lead Plaintiffs' Counsel, and subject to appeal to, and

2 jurisdiction of, the Court. The Released Parties shall have no liability, obligation

3 or responsibility for the administration of the Gross Settlement Fund or Ne

4 Settlement Fund, or for the distribution of the Net Settlement Fund.

5

2. Except as otherwise provided below, on and after the Effecti

6 Date, the Gross Settlement Fund shall be applied as follows:

7 a. To the extent not paid from the Notice a

8 Administration Account, to pay following an order of the Court approving a

9 such payment, the expenses incurred in connection with providing notice

10 Settlement Class Members, administering and distributing the Net Settlement Fu

11 to Settlement Class Members, processing Proofs of Claim, processing requests f

12 exclusion, escrow fees and costs, and any applicable taxes;

13

b. Subject to the approval and further order(s) of th

14 Court, the Net Settlement Fund shall be allocated to Authorized Claimants as s

15 forth in paragraph F. below.

16 c. After the Claims Administrator calculates

17 recognized losses of each Authorized Claimant, Lead Plaintiffs' Counsel shall file

18 motion for distribution of the Settlement Fund with the Court listing eac

19 Authorized Claimant, the amount of each claim that Lead Plaintiffs' Couns

20 believes should be allocated and distributed to each such Authorized Claiman

21 accounting for all Notice and Administration Expenses, and requesting C

22 approval to distribute the Settlement Fund to the Authorized Claimants and

23 any further Notice and Administration expenses.

24

3. Each Settlement Class Member wishing to participate in th

25 Settlement shall be required to submit a Proof of Claim and Release (i

26 17

27 EAST\49946692.1


28


EXECUTION COPY

1 substantially the form set forth in Exhibit A-3 hereto, which inter alia releases a

2 Settled Claims against all Released Parties), signed under penalty of perjury by th

3 beneficial owner(s) of the securities that are the subject of the Proof of Claim an

4 Release, or by someone with documented authority to sign for the benefici

5 owners and supported by such documents as specified in the instruction

6 accompanying the Proof of Claim and Release.

7

4. All Proofs of Claim must be postmarked or received within

8 time prescribed in the Preliminary Approval Order unless otherwise ordered by

9 Court. Any Settlement Class Member who fails to submit a properly comple

10 Proof of Claim within such period as shall be authorized by the Court shall

11 forever barred from receiving any payments pursuant to this Stipulation or

12 the Net Settlement Fund (unless Lead Plaintiffs' Counsel in its discretion d

13 such late filing to be a formal or technical defect, or unless by Order of the Court

14 later submitted Proof of Claim by such Settlement Class Member is approved), b

15 will in all other respects be subject to the provisions of this Stipulation and Ord

16 and Final Judgment, including, without limitation, the release of the Settled Claim

17 and dismissal of the Litigation. Provided that it is received before the motion

18 the Settlement Class Distribution Order is filed, a Proof of Claim shall be

19 to have been submitted when posted if received with a postmark indicated on

20 envelope and if mailed by first-class mail and addressed in accordance with

21 instructions thereon. In all other cases, the Proof of Claim shall be deemed to h

22 been submitted when actually received by the Claims Administrator.

23

5. Each Proof of Claim shall be submitted to the Clai

24 I Administrator who shall determine, under the supervision of Lead Plaintiffs

25 Counsel, in accordance with this Stipulation and any applicable orders of

26 18

27 EAST\49946692.1


28


EXECUTION COPY

1 Court, the extent, if any, to which each claim shall be allowed, subject to appeal to

2 the Court. No later than seven (7) days prior to disbursement of the Net Settlemen

3 Fund, Lead Plaintiffs' Counsel shall provide the Settling Defendants with a list

4 Proofs of Claim received by the Claims Administrator indicating which Proofs

5 Claim have been allowed by the Claims Administrator.

6

6. Following notice to the Orient Paper Defendants’ counsel

7 Lead Plaintiffs' Counsel shall have the right, but not the obligation, to waive wha

8 they deem to be formal or technical defects in any Proofs of Claim filed, where

9 doing so is in the interest of achieving substantial justice.

10

7. Proofs of Claim that do not meet the filing requirements

11 be rejected. Prior to rejection of a Proof of Claim, the Claims Administrator sh

12 communicate with the Claimant in order to remedy curable deficiencies in

13 Proof of Claim submitted. The Claims Administrator, under the supervision

14 I Lead Plaintiffs' Counsel, shall notify in a timely fashion and in writing,

15 Claimants whose Proofs of Claim they propose to reject in whole or in part, settin

16 forth the reasons thereof, and shall indicate in such notice that the Claimant whos

17 claims are to be rejected has the right to review by the Court if the Claimant

18 desires and complies with the requirement of paragraph D.8. below.

19

8. If any Claimant whose claim has been rejected in whole or

20 part desires to contest such rejection, the Claimant must, within twenty (20) da

21 after the date of mailing of the notice required by paragraph D.7. above, serve u

22 the Claims Administrator a notice and statement of reasons indicating

23 Claimant's ground for contesting the rejection along with any C

24 documentation, and requesting a review thereof by the Court. If a di

25

26 19

27 EAST\49946692.1


28


EXECUTION COPY

1 concerning a claim cannot be otherwise resolved, Lead Plaintiffs' Counsel

2 thereafter present the request for review to the Court.

3

9. The administrative determination of the Claims Admi

4 accepting and rejecting claims shall be presented to the Court, on notice to

5 Settling Defendants' Counsel, for approval by the Court in the Settlement C

6 Distribution Order.

7

10. Each Claimant shall be deemed to have submitted to

8 jurisdiction of the Court with respect to the Claimant's claim, and the claim will

9 subject to investigation and discovery under the Federal Rules of Civil

10 provided that such investigation and discovery shall be limited to that

11 status as a Settlement Class Member and the validity and amount of the

12 claim. No discovery shall be allowed on the merits of the Litigation or Settlemen

13 in connection with processing of the Proofs of Claim.

14

11. Payment pursuant to this Stipulation shall be deemed final

15 conclusive against all Settlement Class Members. All Settlement Class

16 whose claims are not approved by the Court shall be barred from participating i

17 distributions from the Net Settlement Fund, but are otherwise bound by all of th

18 terms of the Order and Final Judgment to be entered in the Litigation and

19 releases provided for herein, and will be barred from bringing any action agains

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 o

24 law and fact with respect to the validity of claims, shall be subject to the

25 jurisdiction of the Court.

26 20

27 EAST\49946692.1


28


EXECUTION COPY

1

13. The Net Settlement Fund shall be distributed to A

2 Claimants by the Claims Administrator upon application to the Court by Lea

3 Plaintiffs' Counsel for a Settlement Class Distribution Order only after all of th

4 following having occurred: (i) the Effective Date; (ii) all claims have bee

5 processed, and all Claimants whose claims have been rejected or disallowed, i

6 whole or in part, have been notified and provided the opportunity to be he

7 concerning such rejection or disallowance; (iii) all objections with respect to

8 rejected or disallowed claims have been resolved by the Court, and all appe

9 therefrom have been resolved or the time therefor has expired; (iv) all matters wi

10 respect to Attorneys' Fees and Expenses, costs, and disbursements have

11 resolved by the Court, and all appeals therefrom have been resolved or the

12 therefor has expired; and (v) all costs of administration have been paid.

13

14. If any funds remain in the Net Settlement Fund by reason

14 uncashed checks or otherwise, then, after the Claims Administrator has

15 reasonable and diligent efforts to have Settlement Class Members who are enti

16 to participate in the distribution of the Net Settlement Fund cash their di

C

17 checks, any balance remaining in the Net Settlement Fund one (1) year after

18 initial distribution of such funds shall be re-distributed, after payment of

19 unpaid costs or fees incurred in administering the Net Settlement Fund for such

20 distribution, to Settlement Class Members who have cashed their checks and w

21 would receive at least $10.00 from such re-distribution. If any funds shall

22 in the Net Settlement Fund six months after such re-distribution, then such balanc

23 shall be contributed to the Legal Aid Foundation of Los Angeles or any not-for

24 profit successor of it.

25

26 21

27 EAST\49946692.1


28


EXECUTION COPY

1

15. Before the Effective Date, Lead Plaintiffs' Counsel shall

2 with the Court a declaration under penalty of perjury describing how notice of

3 Settlement was given to the Settlement Class and listing the names and addres

4 of all persons to whom individual notice of the Settlement was mailed.

5

E. TAX TREATMENT

6

1. The Parties agree to treat the Gross Settlement Fund as being a

7 all times a qualified settlement fund within the meaning of Treasury Regulation §

8 1.468B-1 and Section 468B of the Internal Revenue Code, as amended, for the

9 taxable years of the Gross Settlement Fund, beginning with the date it is crea

10 In addition, the Escrow Agent and, as required, the Settling Parties, shall joi

11 and timely make such elections as are necessary or advisable to carry out th

12 provisions of this paragraph, including the "relation-back election" (as defined i

13 Treas. Reg. § 1.468B-1(j)(2)) back to the earliest permitted date. Such election

14 shall be made in compliance with the procedures and requirements contained i

15 such regulations. It shall be the responsibility of Lead Plaintiffs' Counsel to timel

16 and properly prepare and deliver the necessary documentation for signature by

17 necessary parties, and thereafter to cause the appropriate filing to occur.

18

2. For purposes of Section 468B of the Internal Revenue Code,

19 amended, and the regulations promulgated thereunder, the "administrator" shall

20 Lead Plaintiffs' Counsel. Lead Plaintiffs' Counsel shall timely and properly file

21 tax returns necessary or advisable with respect to the Gross Settlement Fund, a

22 make all required tax payments, including deposits of estimated tax payments i

23 accordance with Treas. Reg. § 1.468B-2(k). Such returns (as well as the electio

24 described in paragraph E.1. hereof) shall be consistent with this paragraph an

25 reflect that all taxes (including any interest or penalties) on the income earned b

26 22

27 EAST\49946692.1


28


EXECUTION COPY

1 the Gross Settlement Fund shall be paid out of the Gross Settlement Fund

2 provided in paragraph E.3. hereof.

3

3. All (i) taxes (including any interest or penalties) arising wit

4 respect to the income earned by the Gross Settlement Fund, including any taxes o

5 tax detriments that may be imposed upon the Settling Defendants with respect t

6 any income earned by the Gross Settlement Fund for any period during which th

7 Gross Settlement Fund does not qualify as a qualified settlement fund for Federa

8 or state income tax purposes ("Taxes"); and (ii) expenses and costs incurred i

9 connection with the operation and implementation of this paragraph (including

10 without limitation, expenses of tax attorneys and/or accountants, and mailing

11 distribution costs and expenses relating to filing (or failing to file) the ret

12 described in this paragraph) ("Tax Expenses"), shall be paid out of the G

13 Settlement Fund. In all events, the Released Parties shall have no liability

14 Taxes or the Tax Expenses, and Lead Plaintiffs and Lead Plaintiffs' Counsel agree

15 to indemnify and hold the Released Parties harmless for Taxes and Tax Expenses

16 Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost

17 administration of the Settlement and shall be timely paid by the Escrow Agent

18 of the Gross Settlement Fund without prior order from the Court. The Escr

19 Agent shall be obligated (notwithstanding anything herein to the contrary)

20 withhold from distribution to the Settlement Class Members any funds necessary

21 pay such Taxes and Tax Expenses, including the establishment of adequ

22 reserves for any Taxes and Tax Expenses (as well as any amounts that may

23 required to be withheld under Treas. Reg. § 1468B-2(l)(2)). The Released Parti

24 shall have no responsibility or liability therefor. The Settling Parties hereto agr

25 to cooperate with the Escrow Agent, each other, and their tax attorneys a

26 23

27 EAST\49946692.1


28


EXECUTION COPY

1 accountants to the extent reasonably necessary to carry out the provisions of this

2 paragraph.

3

F. ALLOCATION OF NET SETTLEMENT FUND

4

1. The Plan of Allocation is based upon Lead Plaintiffs' Counsel

5 assessment of the merits and the relative strengths and weaknesses, includi

6 recoverable damages, of the claims of the Settlement Class Members.

7

2. The Settling Defendants do not and shall not take any positi

8 as to the proposed Plan of Allocation.

9

3. The Released Parties shall have no responsibility for and

10 obligations or liabilities of any kind whatsoever in connection with the

11 determination, administration, calculation, or payment of claims to Settlemen

12 Class Members.

13

4. The Settling Defendants shall have no involvement in

14 solicitation of, or review of Proofs of Claim, or involvement in the administratio

15 process itself, which shall be conducted by the Claims Administrator in accordanc

16 with this Stipulation and the Order and Final Judgment to be entered by the Cour

17 No Claimant or Authorized Claimant shall have any claim against the Release

18 Parties or their counsel based on, or in any way relating to, the distributions from

19 either the Gross Settlement Fund or the Net Settlement Fund.

20

5. No Authorized Claimant shall have any claim against Lead

21 Plaintiffs' Counsel or the Claims Administrator based on, or in any way relating to

22 the distributions from the Net Settlement Fund that have been made substantially in

23 accordance with this Stipulation and any applicable orders of the Court.

24

6. Any change in the allocation of the Net Settlement

25 ordered by the Court shall not affect the validity or finality of this Settlement.

26 24

27 EAST\49946692.1


28


EXECUTION COPY

1

G. OBLIGATIONS OF AND LIMITATIONS OF LIABILITY OF

2

ESCROW AGENT

3

The Escrow Agent shall not be responsible for the payment of a

4 sums due to Authorized Claimants or other Persons, except to the extent

5 maintaining account of and properly paying sums as required by this Stipulation

6 the limited extent that such sums have been delivered into the Escrow Account

7 Notice and Administration Account as required by this Stipulation. The Escr

8 Agent shall be liable only for acts of gross negligence or willful misconduct.

9

H. LEAD PLAINTIFFS' COUNSEL'S REQUEST FOR AN AWARD

10

OF ATTORNEYS' FEES AND EXPENSES

11

1. Lead Plaintiffs' Counsel intends to submit an application to

12 Court, on notice to counsel for the Settling Defendants, for the payment

13 Attorneys' Fees and Expenses, including: (i) an award of attorneys' fees up to

14 third of the Settlement Amount; (ii) reimbursement of litigation costs

15 expenses, plus interest, including fees and expenses of experts, incurred i

16 connection with the prosecution of the Litigation; and (iii) an Award to

17 Plaintiffs (for reimbursement of time and expenses).

18

2. Any attorneys' fees and costs and Award to Lead

19 awarded by the Court shall be paid from the Gross Settlement Fund within

20 business days after the Court executes an order awarding such fees and expenses

21 Lead Plaintiffs' Counsel may thereafter allocate the attorneys' fees among othe

22 Plaintiffs' counsel in a manner in which Lead Plaintiffs' Counsel in good faith

23 believe reflects the contributions of such counsel to the initiation, prosecution,

24 resolution of the Litigation. If, and when, as a result of any appeal and/or fu

25 proceedings on remand, or successful collateral attack, the Attorneys' Fee

26 25

27 EAST\49946692.1


28


EXECUTION COPY

1 Expense award is overturned or lowered, or if the settlement is terminated or is

2 approved by the Court, or if there is an appeal and any order approving t

3 settlement does not become final and binding upon the Class, then, within five (

4 business days from receiving notice from Defendants' counsel or from a court

5 appropriate jurisdiction, Lead Plaintiffs' Counsel shall refund to the Settlemen

6 Fund such fees and expenses previously paid to them from the Settlement Fund

7 plus interest thereon at the same rate as earned on the Settlement Fund in

8 amount consistent with such reversal or modification. Each such Plaintiffs

9 counsel's law firm receiving fees and expenses, as a condition of receiving suc

10 fees and expenses, on behalf of itself and each partner and/or shareholder of i

11 agrees that the law firm and its partners and/or shareholders are subject to

12 jurisdiction of the Court for the purpose of enforcing the provisions of thi

13 paragraph.

14

3. Lead Plaintiffs' Counsel waives the right to make an additi

15 application or applications for payment from the Gross Settlement Fund for fee

16 and expenses incurred after the Settlement Hearing. The other Settling Partie

17 shall take no position on any application concerning Lead Plaintiffs' Counsel

18 request or award of attorneys' fees and reimbursement of expenses, or Award t

19 Lead Plaintiffs.

20

4. It is agreed that the procedure for and the allowance

21 disallowance by the Court of any applications by Lead Plaintiffs' Counsel fo

22 Attorneys' Fees and Expenses, including fees for experts and consultants to be paid

23 out of the Gross Settlement Fund, and any order or proceeding relating thereto

24 shall not operate to terminate or cancel this Stipulation or affect its finality, and

25

26 26

27 EAST\49946692.1


28


EXECUTION COPY

1 shall have no effect on the terms of this Stipulation or on the enforceability of this

2 Settlement.

3

I. THE PRELIMINARY APPROVAL ORDER

4

1. Promptly after execution of this Stipulation, the Settlin

5 Defendants and Lead Plaintiffs shall submit the Stipulation together with i

6 exhibits to the Court and shall jointly apply for entry of a Preliminary Approv

7 Order in connection with settlement proceedings substantially in the form annexe

8 hereto as Exhibit A, providing for, among other things, preliminary approval of

9 Settlement and notice to the Settlement Class of the Settlement Hearing. T

10 Preliminary Approval Order (Exhibit A hereto) to be submitted to the Court

11 contain exhibits substantially in the form set forth in: (i) the Notice of Pend

12 and Settlement of Class Action (the "Notice") (Exhibit A-1 to the Prelimi

13 Approval Order); (ii) the Summary Notice of Pendency and Settlement of C

14 Action ("Summary Notice") (Exhibit A-2 to the Preliminary Approval Order);

15 (iii) the Proof of Claim and Release (Exhibit A-3 to the Preliminary Appr

16 Order).

17

2. The Released Parties are not liable or responsible for

18 method of, or representations made in, the Notice or the Summary Notice.

19

J. ORDER AND FINAL JUDGMENT TO BE ENTERED BY THE

20

COURT APPROVING THE SETTLEMENT

21

1. The Settling Defendants and Lead Plaintiffs shall seek to ha

22 the Court enter an Order and Final Judgment substantially in the form of Exhibit

23 hereto.

24

25

26 27

27 EAST\49946692.1


28


EXECUTION COPY

1

K. CONDITIONS OF SETTLEMENT

2

1. The Effective Date of the Settlement shall be conditioned upon

3 occurrence of ALL of the following events:

4 a. The Court shall enter the Preliminary Approval Order in

5 material respects, as required by paragraph I. above;

6

b. No party shall have exercised within the required ti

7 period any right to terminate the Settlement as permitted by paragraph L below;

8 c. The Court shall enter the Order and Final Judgment in

9 material respects, as required by paragraph J. above;

10

d. The Court's Order and Final Judgment, substantially in t

11 form of Exhibit B, shall have become "Final," as defined in paragraph A.10.; and

12 e. The sum of $2,000,000 (Two Million Dollars) shall ha

13 been paid, as set forth in paragraph C.1. above.

14

2. Upon occurrence of ALL of the events referenced in paragr

15 K.1. above, Lead Plaintiffs shall have, and each and all of the members of

16 Settlement Class shall hereby be deemed to have, and by operation of the

17 and Final Judgment shall have, fully, finally, and forever, released, settled,

18 discharged, in accordance with the terms of paragraph B. above, the

19 Parties from and with respect to the Settled Claims, whether or not such

20 of the Settlement Class execute and deliver a Proof of Claim.

21

3. Upon occurrence of ALL of the events referenced in parag

22 K.1. above, the obligation of the Escrow Agent to return funds from the G

23 Settlement Fund to the Orient Paper Defendants pursuant to paragraph L.4. or

24 other provision hereof shall be absolutely and forever extinguished.

25

26 28

27 EAST\49946692.1


28


EXECUTION COPY

1

L. RIGHTS OF TERMINATION AND EFFECTS THEREOF

2

1. The Settling Defendants and Lead Plaintiffs shall each have

3 right to terminate the Settlement and this Stipulation by providing written notice o

4 their election to do so ("Termination Notice") to all other counsel of the Settlin

5 Parties within thirty (30) days after the date on which any of the following occurs:

6 a. the Court issues an order declining to enter the Preliminar

7 Approval Order in any material respect;

8

b. the Court issues an order declining to approve 0

9 Stipulation or any material part of it;

10 c. the Court declines to enter the Order and Final Judgment

11 all material respects as required by paragraph J. above;

12

d. the Order and Final Judgment is modified or reversed in

13 material respect by a Court of Appeals or the United States Supreme Court; or

14 e. in the event that the Court enters an order and final judgmen

15 in a form other than that provided above (an "Alternative Judgment") and none o

16 the Settling Parties elects to terminate this Settlement, the date that such

17 Alternative Judgment is modified or reversed in any material respect by a Court o

18 Appeals or the Supreme Court.

19

2. If prior to the Settlement Hearing, (i) Persons who otherwise

20 would be Settlement Class Members have filed with the Court valid and timely

21 requests for exclusion ("Requests for Exclusion") from the Settlement Class i

22 accordance with the provisions of the Preliminary Approval Order and the notic

23 given pursuant thereto, and such Persons in the aggregate purchased stock durin

24 the Settlement Class Period in an amount greater than the amounts specified in

25 separate Supplemental Agreement between the parties (the "Supplement

26 29

27 EAST\49946692.1


28


EXECUTION COPY

1 Agreement"), or (ii) Persons file lawsuits alleging fraud in connection with th

2 purchase of more than the number of Orient Paper shares specified in th

3 Supplemental Agreement, then the Settling Defendants and Lead Plaintiffs eac

4 shall have the option to terminate this Stipulation and Settlement in stri

5 accordance with the requirements and procedures set forth in the Supplement

6 Agreement ("Opt-out Termination Option"). The Supplemental Agreement sha

7 not be filed with the Court unless and until a dispute among the parties concernin

8 its interpretation or application arises. Copies of all Requests for Exclusio

9 received, together with copies of all written revocations of Requests for Exclusio

10 shall be delivered to the Settling Defendants no later than fourteen (14) days pri

11 to the Settlement Hearing. The required procedure for and consequences

12 exercising an Opt-out Termination Option are as follows:

13 a. To exercise the Opt-out Termination Option, a Settli

14 Defendant or Lead Plaintiff must serve written notice, signed by the

15 respective counsel, upon counsel for the other Settling Parties, not less than s

16 (7) days before the Settlement Hearing;

17

b. If a Settling Defendant or Lead Plaintiff exercises the

18 out Termination Option as provided herein, this Stipulation shall be null and

19 and the provisions of paragraph L. hereof shall apply.

20

3. If the Settlement Amount payable pursuant to paragraph C.1. o

21 this Stipulation is not paid, then the Lead Plaintiffs, in their sole discretion, may

22 elect, at any time prior to the Court's entering the Order and Final Judgment, (a) to

23 terminate the Settlement by providing written notice to the Settling Parties; or (b

24 to enforce the terms of the Settlement and this Stipulation and seek a judgmen

25 effecting the terms herein.

26 30

27 EAST\49946692.1


28


EXECUTION COPY

1

4. Upon termination of the Stipulation pursuant to the terms of t

2 Stipulation, the Escrow Agent shall refund the Gross Settlement Fund, le

3 amounts already expended for notice to the Settlement Class pursuant to the term

4 of the Stipulation, to the Orient Paper Defendants within ten (10) business da

5 thereafter (the "Returned Settlement Amount").

6

5. If this Stipulation is terminated pursuant to its terms, and at th

7 request of any Settling Defendant or Lead Plaintiff, the Escrow Agent or hi

8 designee shall apply for any tax refund owed to the Gross Settlement Fund and pa

9 the percentage of the proceeds of the tax refund, after deduction of any fees an

10 expenses incurred in connection with such application(s) for refund, to the Orien

11 Paper Defendants.

12

6. If this Stipulation is terminated pursuant to its terms, all of

13 Settling Parties shall be deemed to have reverted to their respective status prior

14 the execution of this Stipulation, and they shall proceed in all respects as if thi

15 Stipulation had not been executed and the related orders had not been entered

16 preserving in that event all of their respective claims and defenses in the Litigati

17 and shall revert to their respective positions in the Litigation, except that t

18 provisions of paragraphs E.1-3., G, L.5-7., M.10-11., and M.13. shall survi

19 termination.

20

7. No order of the Court or modification or reversal of any order

21 the Court concerning the Plan of Allocation or the amount of any attorneys' fees

22 costs, and expenses awarded by the Court shall constitute grounds for cancellati

23 or termination of the Stipulation.

24

25

26 31

27 EAST\49946692.1


28


EXECUTION COPY

1

M. MISCELLANEOUS PROVISIONS

2

1. The Settling Parties: (a) acknowledge that it is their intent

3 consummate the Settlement contemplated by this Stipulation; (b) agree

4 cooperate to the extent necessary to effectuate and implement all terms a

5 conditions of this Stipulation; and (c) agree to exercise their best efforts and to

6 in good faith to accomplish the foregoing terms and conditions of the Stipulation.

7

2. The Settling Parties acknowledge and warrant as follows:

8 a. By executing this Stipulation, each of the Settling Partie

9 represents that they have carefully read and fully understand this Stipulation and i

10 final and binding effect;

11

b. By executing this Stipulation, each of the Settling Part

12 represents that they have the right, legal capacity, power and authority to enter i

13 this Stipulation and to perform their obligations hereunder, without the conse

14 approval, or authorization of any person, board, entity, tribunal, or other

15 or governmental authority;

16 c. By executing this Stipulation, each of the Settling Partie

17 represents that the execution and delivery of this Stipulation and the performanc

18 of each and every obligation in this Stipulation do not and will not result in

19 breach of or constitute a default under, or require any consent under, any duty

20 relationship, contract, agreement, covenant, promise, guarantee, obligation or

21 instrument to which the executing Settling Party is a party or by which

22 executing Settling Party is bound or affected.

23

d. By executing this Stipulation, each of the Settling Parties

24 represents that there is no demand for monetary, non-monetary, or injunctive relief,

25 or any civil, criminal, administrative, or arbitration proceeding for monetary, non

26 32

27 EAST\49946692.1


28


EXECUTION COPY

1 monetary, or injunctive relief known or suspected to exist against them that

2 affect this Stipulation or their ability to enter into, execute or perform each

3 every obligation in this Stipulation.

4 e. By executing this Stipulation, each of the Settling P

5 represents that no representations or promises of any kind or character have be

6 made by any other Settling Party, Released Party, or anyone else to induce t

7 execution of this Stipulation except as expressly provided herein.

8

f. By executing this Stipulation, each of the Settling Parti

9 represents that this Stipulation is fair and is executed voluntarily, with fu

10 knowledge of the consequences and implications of the obligations

11 herein.

12 g. By executing this Stipulation, each of the Settling P

13 represents that this Stipulation is not the result of any fraud, duress, or undu

14 influence, and that they have not assigned, transferred, or conveyed or purported to

15 assign, transfer, or convey, voluntarily, involuntarily or by operation of law, any o

16 all of their respective rights and claims.

17

h. By executing this Stipulation, each of the Settling Partie

18 represents that they have had the opportunity to be represented by counsel of thei

19 choice that is duly licensed to practice in the State of California throughout th

20 negotiations which preceded the execution of this Stipulation and in connection

21 with the preparation and execution of this Stipulation.

22

i. By executing this Stipulation, each of the Settling Parti

23 represents that they have been afforded sufficient time and opportunity to revie

24 this Stipulation with advisors and counsel of their choice.

25

26 33

27 EAST\49946692.1


28


EXECUTION COPY

1

3. All of the exhibits attached hereto are hereby incorporated

2 reference as though fully set forth herein.

3

4. No amendment or modification of this Stipulation shall

4 effective unless in writing and signed by the Settling Parties or their successors-

5 interest.

6

5. This Stipulation, and the exhibits attached hereto, constitute

7 the entire agreement among the Settling Parties, and no representations, warranties

8 or inducements have been made to any Settling Party concerning this Stipulation o

9 its exhibits, other than the representations, warranties, and covenants contained and

10 memorialized in such documents.

11

6. Except as otherwise provided herein, each Settling Party shal

12 I bear its own costs. Lead Plaintiffs' Counsel's Attorneys' Fees and Expenses

13 subject to Court approval, shall be paid only out of the Gross Settlement Fund, an

14 the Released Parties shall have no obligation with respect to the payment of sai

15 Attorneys' Fees and Expenses.

16

7. Lead Plaintiffs' Counsel, on behalf of the Settlement Class, i

17 expressly authorized to take all appropriate action required or permitted to be take

18 by the Settlement Class pursuant to this Stipulation to effectuate its terms and i

19 also expressly authorized to enter into any modifications or amendments to thi

20 Stipulation on behalf of the Settlement Class.

21

8. The persons signing this Stipulation represent that they

22 authorized to do so on behalf of their respective clients.

23

9. This Stipulation may be executed in one or more original

24 photocopied, or facsimile counterparts. All executed counterparts and each o

25 them shall be deemed to be one and the same instrument. The Settling Parties shal

26 34

27 EAST\49946692.1


28


EXECUTION COPY

1 exchange among themselves original signed counterparts of this Stipulation, and

2 complete set of executed counterparts of this Stipulation shall be filed with th

3 Court.

4

10. This Stipulation shall be binding upon, and inure to the benefi

5 of, the successors, assigns, executors, administrators, heirs, and lega

6 representatives of the Settling Parties. No assignment shall relieve any party

7 hereto of any obligations hereunder.

8

11. All terms of this Stipulation and all exhibits hereto shall

9 governed and interpreted according to the laws of the State of California wi

10 regard to its rules of conflicts of law, except to the extent that federal law

11 that federal law governs, and in accordance with the laws of the United States.

12

12. The Lead Plaintiffs, on behalf of themselves and each

13 of the Settlement Class, and the other Settling Parties hereby irrevocably submit

14 the jurisdiction of the Court for any suit, action, proceeding, or dispute arising o

15 of or relating to this Stipulation, the applicability of this Stipulation, or t

16 enforcement of this Stipulation. The administration and consummation of t

17 Settlement as embodied in this Stipulation shall be under the authority of t

18 Court, and the Court shall retain jurisdiction for the purpose of entering order

19 providing for awards of Attorneys' Fees and Expenses to Lead Plaintiffs' Counsel

20 Awards to Lead Plaintiffs, and enforcing the terms of this Stipulation.

21

13. None of the Settling Parties shall be considered to be

22 drafter of this Stipulation or any provision hereof for purposes of any statute, cas

23 law, or rule of interpretation or construction that would or might cause an

24 provision to be construed against the drafter hereof. Because of the arm's-lengt

25

26 35

27 EAST\49946692.1


28


EXECUTION COPY

1 negotiations that preceded the execution of this Stipulation, all Settling P

2 have contributed substantially and materially to the preparation of this Stipulation.

3

14. Neither this Stipulation, nor the fact of the Settlement, is a

4 admission or concession by any Settling Defendant of any liability or wrongdoi

5 whatsoever. This Stipulation shall not constitute a finding of the validity

6 invalidity of any claims in the Litigation or of any wrongdoing by any Defendan

7 named therein. This Stipulation, the fact of settlement, the settlement proceedings

8 the settlement negotiations, and any related documents, shall not be used o

9 construed as an admission of any fault, liability, or wrongdoing by any person o

10 entity.

11

15. The Settling Parties intend the Settlement to be a final

12 complete resolution of all claims and disputes asserted or that could be asserted by

13 the Settlement Class Members against the Released Parties with respect to the

14 Settled Claims. Accordingly, unless the Court's Order and Final Judgmen

15 approving the Settlement does not become Final, the Settling Parties agree not to

16 assert in any forum that the Litigation was brought by Lead Plaintiffs or defended

17 by the Settling Defendants in bad faith or without a reasonable basis. Additionally

18 the Settling Parties shall not assert any claims of any violation of Rule 11 of the

19 Federal Rules of Civil Procedure relating to the prosecution, defense, or settlemen

20 of the Litigation. The Settling Parties agree that the amount paid and the other

21 terms of the Settlement were negotiated at arm's-length in good faith by the

22 Settling Parties, and reflect a settlement that was reached voluntarily after

23 consultation with experienced legal counsel.

24

25

26 36

27 EAST\49946692.1


28


EXECUTION COPY

1

16. The headings in this Stipulation are used for purposes

2 convenience and ease of reference only and are not meant to have any legal eff

3 nor are they intended to influence the construction of this Stipulation in any way.

4

17. The waiver of one Settling Party of any breach of thi 5

Stipulation by any other Settling Party shall not be deemed a waiver of any othe 6

breach of this Stipulation. The provisions of this Stipulation may not be waive 7

except by a writing signed by the affected Settling Party or counsel for that Settlin 8

Party. No failure or delay on the part of any Settling Party in exercising any right 9

remedy, power, or privilege under this Stipulation shall operate as a waiver thereo 10

or of any other right, remedy, power, or privilege of such Settling Party under thi 11

Stipulation; nor shall any single or partial exercise of any right, remedy, power, o 12

privilege under this Stipulation on the part of any Settling Party operate as a waive 13

thereof or of any other right, remedy, power, or privilege of such Settling Part 14

under this Stipulation, or preclude further exercise thereof or the exercise of an 15

other right, remedy, power, or privilege. 16

17

18. The Settling Parties agree that nothing contained in thi

18 Stipulation shall cause any Settling Party to be the agent or legal representative o

19 another Settling Party for any purpose whatsoever, nor shall this Stipulation be

20 deemed to create any form of business organization between the Settling Parties

21 nor is any Settling Party granted any right or authority to assume or create any

22 obligation or responsibility on behalf of any other Settling Party, nor shall any

23 Settling Party be in any way liable for any debt of another Settling Party as a resul

24 of this Stipulation except as explicitly set forth herein.

25

26 37

27 EAST\49946692.1


28


EXECUTION COPY

1

2 THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26 38

27 EAST\49946692.1


28


EXECUTION COPY

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN WITNESS WHEREOF, the Settling Parties hereto, intending to be l

bound hereby, have caused this Stipulation to be executed, by their duly auth

attorneys, as of the day and year first above written.

THE ROSEN LAW FIRM, P.A.

_/s/____________________________ Laurence M. Rosen, Esq. Jonathan Horne, Esq. 275 Madison Avenue, 34th Floor New York, New York 10016 (212) 686-1060

Attorneys for Plaintiffs

DLA PIPER LLP (US)

Perrie M. Weiner Robert D. Weber Caryn G. Schechtman 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, CA 90067-6023 310.595.3000

Attorneys for the Orient Paper Defendants

39

Stipulation and Agreement of Settlement--No. CV 10-5887-R (AJWx) EAST\49946692.1

Case 2:10-cv-05887-R-AJW Document 117 Filed 10/04/12 of 41 Page ID #:2652 I EXECUTION COPY

IN WITNESS WHEREOF, the Settling Parties hereto, intending to be legally

bound hereby, have caused this Stipulation to be executed, by their duly

authorized attorneys, as of the day and year first above written.

THE ROSEN LAW FIRM, P.A.

Laurence M. Rosen, Esq. Jonathan Home, Esq. 275 Madison Avenue, 34th Floor New York, New York 10016 (212) 686-1060

Attorneys for Plaintiffs

DLA PIPER LLP (US)

Perrie M. Weiner Robert D. Weber Caryn G. Schechtman 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, CA 90067-6023 310.595.3000

Attorneys for the Orient Paper Defendants

1

2

3

4

5

6

7

8

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

39

27 EAST\49946692. 1 Stipulation and Agreement of Settlement--No. cv 10-5887-R (AJWx)

28

Mark Henning, et al. v. Orient Paper, Inc., et al. 10-CV...

Documents

Transcript of Mark Henning, et al. v. Orient Paper, Inc., et al. 10-CV...