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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA - SAN FRANCISCO DIVISION
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12 IN RE KLA-TENCOR CORPORATION
Master Case No. C 06-4065 CRB
13 SECURITIES LITIGATION CLASS ACTION
14 STIPULATION OF SETTLEMENT
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17 The Lead Plaintiffs and Defendants as each are hereinafter defined, by and through the
18 undersigned, hereby enter into this Stipulation of Settlement (the "Stipulation") pursuant to the
19 terms and conditions set forth below. This Stipulation is intended to resolve the Released Claims
20 (as defined below) upon and subject to the terms and conditions below, including approval of the 21
United States District Court for the Northern District of California (the "Court") as set forth 22 herein.
23 Introduction
24 A. WHEREAS, currently pending in the Court is a consolidated class action entitled
25 In re KLA-Tencor Corporation Securities Litigation, Master Case No. C 06-4065 CRB,
26 consisting of the actions commenced in the Court with the docket numbers listed below: 27
Case No. 06-4065 CRB 28
Case No. 06-4709 MHP
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Case No. 06-5225 WHA
2 B. The first action, Garber v. KLA-Tencor Corp., et al., Case No. 06-4065 CRB, was
3 filed on June 29, 2006 against KLA and certain individual defendants. The actions listed above
4 were consolidated by order of the Court on or about October 13, 2006;
5 C. In that same Order, the Court appointed the KLA Pension Fund Group, comprised
6 of the Police and Fire Retirement System of the City of Detroit ("PFRS"), the Louisiana
7 Municipal Police Employees' Retirement System ("MPERS"), and the City of Philadelphia Board
8 of Pensions and Retirement ("Philadelphia"), as Lead Plaintiffs and approved Lead Plaintiffs'
9 choice of the law firms of Berman DeValerio Pease Tabacco Burt & Pucillo; Kohn, Swift & Graf,
10 P.C.; Berger & Montague, P.C.; and Trujillo Rodriguez & Richards LLC as Co-Lead Counsel
11 (collectively, "Lead Counsel") in the class action;
12 D. On or about March 6, 2007, Lead Plaintiffs, individually and on behalf of all other
13 persons and entities similarly situated, filed and served a Consolidated Class Action Complaint
14 ("Complaint") against KLA, and against individual defendants Richard P. Wallace, Kenneth L.
15 Schroeder, Kenneth Levy, Jon D. Tompkins, Stephen P. Kaufman, Gary E. Dickerson, Jeffrey L.
16 Hall, John H. Kispert, Lida Urbanek, Michael E. Marks, Edward W. Bamholt, Robert T. Bond,
17 Richard J. Elkus, Jr., H. Raymond Bingham, Dean 0. Morton, Stuart J. Nichols and Robert J.
18 Boehlke (the "Individual Defendants" as defined below) (KLA and the Individual Defendants are
19 referred to collectively herein as the "Defendants" as defined below). The Complaint alleges
20 violations of Sections 10(b) and 14(a) of the Exchange Act and Rules 1 Ob-5 and 14a-9
21 promulgated thereunder against all Defendants; violations of Section 20(a) of the Exchange Act
22 against the Individual Defendants; and violations of Section 20A of the Exchange Act against all
23 Defendants except Boehike.
24 E. On May 21, 2007, seven separate motions to dismiss the Complaint were filed by:
25 (1) KLA; (2) Schroeder; (3) Nichols; (4) Levy; (5) Dickerson; (6) Tompkins; and (7) the
26 remaining Individual Defendants (Wallace, Kaufman, Hall, Kispert, Urbanek, Marks, Barnholt,
27 Bond, Elkus, Bingham, Morton and Boehlke). Lead Plaintiffs filed a consolidated opposition to
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Defendants' motions on September 7, 2007. Defendants filed their respective replies to the
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opposition on October 12, 2007.
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F. On September 7, 2007, Lead Plaintiffs filed a Notice to Voluntarily Dismiss
4 defendant Boehlke from the action without prejudice.
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G. Lead Plaintiffs, through Lead Counsel, have made a substantial investigation into
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the facts and circumstances relevant to the claims alleged in the Complaint. In addition, Lead
7 Plaintiffs have extensively consulted with damages experts with regard to the claims asserted in
8 the Complaint. This Settlement is the result of weeks of intensive mediation, under the aegis of a
9 professional mediator, Jonathan B. Marks of MarksADR. The parties, by their counsel, have
10 conducted extensive discussions and arm's-length negotiations concerning the terms and
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conditions of this Settlement. In connection with the investigation, in addition to studying the
12 public record and interviewing potential witnesses, Lead Plaintiffs and KLA have exchanged
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confirmatory discovery through the mediation process.
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H. Lead Plaintiffs, through Lead Counsel, conducted a thorough investigation of the
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claims asserted in the Litigation. This investigation included, inter alia: (1) interviews with KLA
16 former employees; (2) consultation with accounting experts concerning the amount of damages
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suffered by the Settlement Class; (3) detailed reviews of KLA's public filings, annual reports,
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press releases, and other public statements; (4) review of analysts' reports and articles in the
19 financial press relating to KLA; (5) review of documents produced by KLA in the settlement
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process; and (6) research of the applicable law with respect to the claims asserted in the
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complaints filed in the Litigation, and the potential defenses thereto. In addition, Lead Plaintiffs
22 and their counsel have conducted confirmatory discovery as described in Paragraph G hereof.
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Lead Plaintiffs and their counsel believe that their claims have merit. Yet, they have concluded
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that it is in the best interests of Lead Plaintiffs and the Settlement Class to settle the Class Actions
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(as defined below) on the terms contained in this Stipulation after considering the following
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factors: (1) the substantial financial benefits provided herein for the Settlement Class; (2) the
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attendant risks of litigation; (3) the expense and length of time necessary to prosecute the Class
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Actions through trial; (4) the defenses asserted by and available to the Defendants; (5) the
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uncertainties of the outcome of this complex litigation; (6) the fact that resolution, whenever and
however determined, would likely be subject to appellate review, as a consequence of which it
might be many years until final adjudication of the Class Actions; and (7) the desirability of
permitting the Settlement to be consummated as provided by the terms of this Stipulation.
I. KLA and the Individual Defendants have denied and continue to deny each and all
of the claims and contentions alleged by the Lead Plaintiffs in the litigation. Defendants
expressly have 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 Class Actions. Defendants also have denied and continue to deny, inter alia, the
allegations that the Lead Plaintiffs or the Class have suffered damage, that the price of KLA
securities was artificially inflated by reasons of alleged misrepresentations, non-disclosures or
otherwise, and that the Lead Plaintiffs or the Class were harmed by the conduct alleged in the
Complaint, and Defendants believe that the evidence developed to date supports their position.
Without conceding any infirmity in the defenses asserted or which could be asserted, however,
Defendants consider it desirable that the Class Actions be dismissed on the terms set forth herein
in order to avoid further expense and to dispose of burdensome and protracted litigation.
J. This Stipulation shall in no event be construed or deemed to be evidence of or an
admission or concession on the part of KLA or any Individual Defendant with respect to any
claim or of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the
defenses that KLA and the Individual Defendants have asserted.
K. This Stipulation shall in no event be construed or deemed to be evidence or a
concession by the Lead Plaintiffs of any infirmity in the claims asserted in the Litigation.
L. KLA, the Individual Defendants and Lead Plaintiffs agree that, during the course
of the litigation, the litigants and their respective counsel at all times complied with the
requirements of Rule 11 of the Federal Rules of Civil Procedure. Further, the parties and their
counsel will not deny in any statement made to any media representative that the Litigation is
being settled voluntarily after consultation with competent counsel. The parties and their counsel
agree that the Litigation was resolved in good faith, following arms' length bargaining, confers
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(06-4065 CRB)
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substantial benefits upon the Settlement Class and, based upon their evaluation, is fair, reasonable
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and adequate.
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M. The parties agree that certification of a class, for settlement purposes only, is
4 appropriate in the Class Actions. For purposes of this Settlement, Defendants agree that the
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Settlement Class is so numerous that joinder of all members is impracticable and that there are
6 questions of law and fact common to the Settlement Class. As set forth in the Complaint, the
7 claims of the Lead Plaintiffs are typical of the claims of the Settlement Class. Lead Counsel is
8 experienced in claims of this type and capable of fairly and adequately protecting the interests of
the Settlement Class. Lead Plaintiffs have and will fairly and adequately protect the interests of
the Settlement Class. In light of the Settlement, the parties agree that questions of law or fact
11 common to the Settlement Class predominate over questions affecting individual members, and
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that a class action is superior to other methods for fair and efficient conduct of the Class Actions.
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Nothing in this Stipulation shall serve in any fashion, either directly or indirectly, as evidence or
14 support for certification of a litigation class, and the parties intend that the provisions hereof
15 concerning certification of the Settlement Class shall have no effect whatsoever in the event the
16 Settlement does not become Effective.
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NOW THEREFORE, THE PARTIES TO THIS STIPULATION, THROUGH THE
18 UNDERSIGNED DULY AUTHORIZED REPRESENTATIVES, INTENDING TO BE
19 LEGALLY BOUND HEREBY, STIPULATE AND AGREE THAT, SUBJECT TO APPROVAL
OF THE COURT PURSUANT TO RULE 23(e) OF THE FEDERAL RULES OF CIVIL
21 PROCEDURE, THE CLASS ACTIONS SHALL BE COMPROMISED AND SETTLED AND
22 DISMISSED WITH PREJUDICE UPON AND SUBJECT TO THE FOLLOWING TERMS
23 AND CONDITIONS.
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Certain Definitions
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As used in this Stipulation, exhibits attached hereto and made part hereof, and related
26 documents (unless otherwise indicated), the following terms shall have the following meanings:
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(a) "Authorized Claimant" shall mean a Claimant who files a timely and valid
28 Proof of Claim with required documentation in accordance with the requirements of the Hearing
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Order, Notice and paragraph 20 of this Stipulation and whose claims have been allowed pursuant
2 II to the terms of the Stipulation.
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(b) "Claimant(s)" shall mean any member of the Settlement Class who files a
4 Proof of Claim in connection with this Settlement in such manner and within such time as
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provided in this Stipulation, or as the Court shall prescribe.
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(c) "Class" or "Settlement Class" shall mean Lead Plaintiffs and all Persons
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and entities in any capacity (whether individual, class, representative, legal, equitable or
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otherwise) who purchased or otherwise acquired securities of KLA (including without limitation
9 common stock and call options) during the Settlement Class Period either directly or by dividend
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re-investment, and their respective executors, administrators, representatives, agents, attorneys,
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successors, heirs and/or assigns. Excluded from the Settlement Class are the Defendants; all
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individuals who are either current executive officers and/or directors, or who served as executive
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officers and/or directors of KLA at any time during the Settlement Class Period; members of the
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immediate families and heirs, successors or assigns of the foregoing; and any firm, trust,
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corporation, or other entity in which any Defendant has a controlling interest. Also excluded
16 from the Settlement Class are persons who request exclusion from the Settlement Class pursuant
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to the terms of this Stipulation or order of the Court. The parties will request that the Court
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certify the Settlement Class for purposes of this Settlement only.
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(d) "Class Actions" shall mean the actions identified in paragraphs A, B and D
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of this Stipulation, and all other related actions asserting similar or related claims filed in or
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transferred to the Court that were or will be consolidated for all purposes pursuant to the
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Scheduling Order prior to entry of the Hearing Order. The "Litigation" or the "Action" shall
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mean the Class Actions, collectively and individually.
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(e) "Class Escrow Agent" shall mean City National Bank, which shall serve as
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escrow agent until the Effective Date only.
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(f) "Class Escrow Funds" shall mean the funds deposited into an interest
27 bearing account at such financial institution as KLA and Lead Plaintiffs may agree, and with the
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Class Escrow Agent pursuant to the terms and conditions of this Stipulation.
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(g) "Member(s) of the Settlement Class" or "Settlement Class Member(s)"
2 shall mean a Person or Persons who are members of the Settlement Class.
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(h) "Class Notice" or "Notice" shall mean the Notice of Pendency and
4 Proposed Settlement of Class Action, substantially in the form annexed hereto as Exhibit A-i to
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the Hearing Order.
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(i) "Complaint" shall mean the Consolidated Amended Class Action
7 Complaint served and filed on or about March 6, 2007.
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(j) "Defendants" shall mean KLA and the Individual Defendants, as defined
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below.
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(k) "Effective Date" shall mean the date determined pursuant to paragraph 5 of
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the Stipulation.
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(1) "Federal Court" or "Court" shall mean the United States District Court for
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the Northern District of California.
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(m) "Final Judgment" or "Judgment" shall mean the Final Judgment and Order
15 of Dismissal with Prejudice to be entered in the Class Actions pursuant to paragraph 26 of this
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Stipulation, substantially in the form of Exhibit B hereto.
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(n) "Gross Settlement Fund" shall mean the Settlement Fund, plus any income,
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interest, or net gains, if any, and less any losses, if any, from the investment of the Settlement
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Fund.
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(o) "Hearing Order" shall mean the Order Preliminarily Approving Settlement
21 and Providing for Notice scheduling the Settlement Fairness Hearing and authorizing notice to the
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Settlement Class of such a hearing to be entered by the Court pursuant to paragraph 25 of the
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Stipulation, substantially in the form of Exhibit A annexed hereto.
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(p) "Individual Defendants" shall mean Richard P. Wallace, Kenneth L.
25 Schroeder, Kenneth Levy, Jon D. Tompkins, Stephen P. Kaufman, Gary E. Dickerson, Jeffrey L.
26 Hall, John H. Kispert, Lida Urbanek, Michael E. Marks, Edward W. Barnholt, Robert T. Bond,
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Richard J. Elkus, Jr., H. Raymond Bingham, Dean 0. Morton, Stuart J. Nichols and Robert J.
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Boehike.
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(q) "KLA" shall mean KLA-Tencor Corporation.
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(r) "Settled Defendants' Claims" shall mean any and all purported claims by
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KLA and the Individual Defendants against Lead Plaintiffs and Lead Counsel arising out of,
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relating to or in connection with the institution, prosecution, assertion, settlement or resolution of
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the Class Action or the Settled Class Claims including any Unknown Claims.
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(s) "KLA Counsel" shall mean the law firm of Morgan, Lewis & Bockius
7 LLP, which represents KLA.
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(t) "Lead Counsel" or "Plaintiffs' Lead Counsel" shall mean the firms of
9 Berman DeValerio Pease Tabacco Burt & Pucillo; Kohn, Swift & Graf, P.C.; Berger &
10 Montague, P.C.; and Trujillo Rodriguez & Richards LLC.
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(u) "Lead Plaintiffs" shall mean the KLA Pension Fund Group, comprised of
12 the Police and Fire Retirement System of the City of Detroit ("PFRS"), the Louisiana Municipal
13 Police Employees' Retirement System ("MPERS"), and the City of Philadelphia Board of
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Pensions and Retirement ("Philadelphia").
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(v) "Plaintiffs' Liaison Counsel" shall mean the firm of Berman DeValerio
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Pease Tabacco Burt & Pucillo.
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(w) "Net Class Settlement Fund" shall mean the Gross Settlement Fund less all
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attorneys' and other fees, litigation costs, and expenses as approved by the Court, taxes and
19 expenses that are paid out of the Gross Settlement Fund in connection with the Settlement of the
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Class Actions.
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(x) "Person" shall mean an individual, corporation, partnership, limited
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partnership, association, joint stock company, estate, legal representative, trust, unincorporated
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organization, and any other type of legal entity, and their respective executors, administrators,
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representatives, agents, attorneys, heirs, successors, and/or assigns.
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(y) "Proof of Claim" shall collectively mean the Proof of Claim and Release,
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substantially in the form annexed hereto as Exhibit A-2 to the Hearing Order.
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(z) "Related Parties" means each of a Defendant's past or present directors,
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officers, employees, partners, insurers, co-insurers, reinsurers, controlling shareholders, attorneys,
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accountants or auditors, personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated entities, any
entity in which a Defendant has a controlling interest, any member of any Individual Defendant's
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immediate family, or any trust of which any Individual Defendant is the settlor or which is for the
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benefit of any Individual Defendant's family.
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(aa) "Released Persons" means each and all of the Defendants and each of their
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Related Parties.
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(bb) "Settled Class Claims" or "Released Claims" shall mean any and all
claims, demands, rights, actions or causes of action, liabilities, damages, losses, obligations,
10 judgments, suits, fees, expenses, costs, matters and issues of any kind or nature whatsoever,
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whether known or unknown, contingent or absolute, suspected or unsuspected, disclosed or
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undisclosed, hidden or concealed, matured or unmatured, that have been, could have been, or in
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the future can or might be asserted in the Class Action or in any court, tribunal or proceeding
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(including, but not limited to, any claims arising under federal or state statutory or common law
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relating to alleged fraud, breach of any duty, negligence, violations of the federal securities laws
16 or otherwise) by or on behalf of Lead Plaintiffs or any member of the Settlement Class, against
17 the "Released Persons," whether or not any such Released Persons were named, served with
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process or appeared in the Class Action, arising out of, or relating in any manner to the
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allegations, facts, events, acquisitions, matters, acts, occurrences, statements, representations,
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misrepresentations, omissions, or any other matter, thing or cause whatsoever, or any series
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thereof, through and including the Effective Date of this settlement, which have been or could
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have been alleged in the Class Action or which are embraced, involved, set forth in, referred to, or
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otherwise related in any way to: (i) the Class Actions and any of the Complaints therein, or any
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amendment thereto; (ii) the fiduciary obligations of any of the Defendants or Released Persons to
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Lead Plaintiffs or the Settlement Class; (iii) the negotiations in connection with the Class Action,
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or any amendment thereto; (iv) the disclosures or disclosure obligations of Defendants or
27 Released Persons in connection with the Class Action; or (v) the stock option grants that KLA
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determined through its restatement (as reflected in KLA's Form 10-K filed with the U.S.
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Securities and Exchange Commission on January 29, 2007) had incorrect measurement dates,
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were retroactively priced, or were otherwise improperly granted. The Settled Class Claims
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include Unknown Claims. Nothing herein is intended to release the exclusively derivative claims
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asserted on behalf of KLA in the following pending derivative suits: (i) consolidated case In re
5 KLA-Tencor Shareholder Derivative Litigation, Case No. 06-CV-03445 JW, pending in the
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United States District Court for the Northern District of California; and (ii) Rabin v. Barnholt,
7 No. 1-06 CV 064841 (filed June 2, 2006), pending in the California Superior Court for Santa
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Clara County; and (iii) Langford v. Barnholt, No. 2295-VCL (filed July 21, 2006), pending in the
9 Delaware Court of Chancery for New Castle County (with respect to the derivative claims
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asserted therein only). The Settled Class Claims exclude claims arising exclusively out of the
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Employee Retirement Income Security Act ("ERISA").
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(cc) "Settlement Administrator" or "Claims Administrator" shall mean Heffler,
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Radetich & Saitta LLP, the firm retained to administer the Settlement.
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(dd) "Settlement Class Period" shall mean the period from and including June
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30, 2001, through January 29, 2007, inclusive.
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(cc) "Settlement Fairness Hearing" shall mean the hearing to be held by the
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Court for the purposes set forth in paragraph 25 of the Stipulation.
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(ft) "Settlement Fund" or "Gross Settlement Fund" shall mean sixty-five
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million dollars ($65,000,000) and all interest earned thereon and any gain by virtue of investment
20 of such funds.
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(gg) "Settlement Fund Escrow Account" shall mean the Escrow Account
22 established by the Class Escrow Agent to hold the Settlement Fund.
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(hh) "Settling Parties" or "Parties" shall mean, collectively, KLA, the Individual
24 Defendants and the Lead Plaintiffs on behalf of themselves and the Settlement Class Members.
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(ii) "Stipulation of Settlement" or "Stipulation" shall mean this Stipulation of
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Settlement, including the exhibits attached hereto.
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(jj) "Summary Notice" shall mean the Summary Notice describing the
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settlement of this Litigation and the hearing on the Settlement, substantially in the form annexed
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hereto as Exhibit A-3 to the Hearing Order.
(kk) "Unknown Claims" means any claims which the releasing party does not
know or suspect to exist in his, her or its favor at the time of the release of the released persons
which, 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 or to seek
exclusion from this Settlement. With respect to any and all Released Claims, the Settling Parties
stipulate and agree that, upon the Effective Date, the Lead Plaintiffs 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 Plaintiffs shall expressly 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, which is similar, comparable or equivalent to California Civil Code
§ 1542. The Lead Plaintiffs and Settlement Class Members may hereafter discover facts in
addition to or different from those which he, she or it now knows or believes to be true with
respect to the subject matter of the Released Claims, but each 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, which 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 which is negligent, 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.
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The Lead Plaintiffs acknowledge, and the Settlement Class Members shall be deemed by
2 operation of the Judgment to have acknowledged, that the foregoing waiver was separately
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bargained for and a key element of the settlement of which this release is a part.
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The Lead Plaintiffs and Defendants, through the undersigned, stipulate and agree:
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Stipulation Of Class Certification
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1. The parties hereto stipulate to the certification, for settlement purposes only, of the
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Settlement Class (as defined above) pursuant to Rules 23(a) and (b)(3) of the Federal Rules of
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Civil Procedure.
We
The Settlement Consideration
to
2. In consideration of the settlement of the claims asserted in this Action, KLA will
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cause to be paid the sum of sixty-five million dollars ($65,000,000.00) in cash in settlement of all
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claims in the Class Actions, with payment to be made as follows: KLA shall cause an initial
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payment of $250,000.00 to be made within ten (10) calendar days after the issuance of the
14 Hearing Order for payment of the reasonable costs and expenses associated with the
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administration of the Settlement as discussed in paragraph 14 below. KLA shall cause the
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remaining $64,750,000.00 to be paid in full on or before thirty (30) calendar days after issuance
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of the Hearing Order. Such funds are to be used solely pursuant to the Stipulation of Settlement,
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including reasonable notice and administration costs, unless returned in accordance with
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paragraph 12 below. This sum is to be deposited into an interest-bearing account (the "Settlement
20 Account") at such financial institution as KLA and the Lead Plaintiffs may agree. The money
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deposited into the Settlement Account and all interest accruing thereon shall be subject to the
22 jurisdiction of the Court and will remain subject to the jurisdiction of the Court until such time as
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it is distributed or returned pursuant to this Stipulation of Settlement. Lead Plaintiffs, through
24 Plaintiffs' Lead Counsel, will enter into a separate Escrow Agreement, with the Class Escrow
25 Agent serving as escrow agent over the Settlement Account. Except as otherwise provided
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herein, KLA shall have no responsibility for the disposition, administration, investment or
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distribution of the Settlement Fund, the determination, administration, calculation or payment of
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claims, the payment or withholding of taxes, or any losses incurred in connection therewith after
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I the Settlement Fund has been transferred to the Class Escrow Agent in accordance with this
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paragraph.
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Application For Hearing Order
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3. Following execution of this Stipulation, the Lead Plaintiffs and Defendants shall
5 promptly request that the Court enter the Hearing Order in the form attached as Exhibit A,
6 granting preliminary approval of the proposed Settlement solely for the purpose of scheduling a
7 Settlement Fairness Hearing and authorizing Lead Counsel to give notice to the Settlement Class
8 of the Settlement Fairness Hearing and of Settlement Class Members' rights to request exclusion
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(opt out) from the Settlement Class or to object.
10 Order And Final Judgment
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4. Lead Plaintiffs and Defendants shall request that the Court enter the Final
12 Judgment substantially in the form annexed hereto as Exhibit B.
13 Effective Date
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5. The Settlement shall not become effective until the Effective Date. The Effective
15 Date means the date on which all of the following preconditions are satisfied, unless the
16 preconditions are expressly waived in writing by the Lead Plaintiffs and KLA: (i) the Settlement
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Consideration provided for in paragraph 2 has been paid; (ii) the Final Judgment, substantially in
18 the form of Exhibit B, has been entered by the Court; (iii) the applicable period to file all appeals
19 from the Final Judgment has expired without the filing of any appeals, or, in the event of any
20 appeal, an order has been entered dismissing the appeal or affirming the appealed Final Judgment,
21 and any time period for further appeal, including a petition for a writ of certiorari, has expired.
22 The Effective Date shall not be delayed if an appeal is taken from or review is sought of any Final
23 Judgment if such appeal or petition for review solely challenges (i) the Fee and Expense Award
24 (as defined in paragraph 28), (ii) the allocation of the Fee and Expense Award among counsel
25 representing the Settlement Class, and/or (iii) the allocation of the Net Class Settlement Fund
26 among Settlement Class Members. Upon the Effective Date, the Settlement shall be binding and
27
final ("Effective").
28
I -SF/7650746.10 13 STIPULATION OF SETTLEMENT
(06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page15 of 45
1
Scope And Effect Of Settlement
2
6. The obligations incurred pursuant to this Stipulation shall be in full and final
3
disposition of the Class Actions and any and all Settled Class Claims as against all Released
4
Persons and any and all Settled Defendants' Claims.
5
7. By operation of the Final Judgment, upon the Effective Date of this Settlement,
6
Lead Plaintiffs and every other Settlement Class Member shall fully, finally and forever release,
7 discharge and relinquish, and shall forever be enjoined from prosecuting, each and every one of
8 the Settled Class Claims, including all Unknown Claims, against each and every one of the
9 Released Persons. The Lead Plaintiffs and all Settlement Class Members shall be bound by the
10 releases set forth in the Stipulation of Settlement and Final Judgment.
11
8. By operation of the Final Judgment, upon the Effective Date of this Settlement,
12
Defendants and the Related Parties shall release and forever discharge each and every of the
13
Settled Defendants' Claims, and shall forever be enjoined from prosecuting the Settled
14
Defendants' Claims. Defendants and the Related Parties shall be bound by the release set forth in
15 paragraph 27(b). With respect to any and all Settled Defendants' Claims, the Settling Parties
16
stipulate and agree that, upon the Effective Date, Defendants and the Related Parties shall
17 expressly be deemed to have, and by operation of the judgment shall have, expressly waived the
18 provisions, rights and benefits of California Civil Code § 1542.
19
Termination Of Stipulation
20
9. Concurrently with the execution of this Stipulation, Lead Counsel, KLA, and KLA
21
Counsel are executing a confidential supplemental agreement (the "Supplemental Agreement"),
22 the substance of which provides that, if Settlement Class Members exceeding certain maximum
23 parameters deliver timely and otherwise valid requests for exclusion of the Settlement, then KLA
shall, at its sole option, have the right to terminate this Stipulation. The parameters sufficient to
25
trigger the option to terminate this Stipulation are set forth in the Supplemental Agreement as are
26 provisions regarding the withdrawal of requests for exclusion and the effect of such withdrawals
27 on KLA's rights. The Supplemental Agreement may be examined in camera if so requested by
28 the Court. In the event of a withdrawal from this Stipulation pursuant to the Supplemental
STIPULATION OF SETTLEMENT I -SF/7650746.10 14 (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page16 of 45
Agreement, this Stipulation shall become null and void and of no further force and effect and the
2 provisions of paragraphs 10, 11 and 12 shall apply.
10. KLA has provided confirmatory discovery through the mediator, Jonathan B.
4
Marks, in the context of the mediation, and subject to the parties' contractual and statutory
5 mediation confidentiality obligations, pursuant to a separate Confidentiality Stipulation and
6 Protective Order agreed upon by the parties and entered by the Court on March 7, 2008. Any and
7 all documents and information received or provided through such confirmatory discovery may
not be disclosed outside the mediation or to anyone other than the participants in the mediation,
9 may not be used for any purpose other than to assist in Plaintiffs' Lead Counsel's determination
10 that the Settlement is fair and reasonable to the Class, and shall be returned or destroyed promptly
11
(a) upon the date this Settlement is terminated or does not become effective for any reason,
12
including any court order declining approval of the Settlement; or (b) upon the Effective Date.
13
11. In the event that the preconditions to the Effective Date set out in paragraph 5
14
hereof are not satisfied, or if this Stipulation is terminated under paragraph 9, this Stipulation
15 shall be deemed null and void with the exception of paragraphs J, K, M, 10, 11, 12, 15(c), 28, 37,
16
38, and 44, and shall have no further force and effect with respect to any party, and neither the
17
Stipulation, the Exhibits hereto, nor the settlement negotiations shall be used or referred to in any
18 action or proceeding for any purpose.
19
12. In the event that the preconditions to the Effective Date set out in paragraph 5
20
hereof are not satisfied, or if this Stipulation is terminated under paragraph 9, then the parties to
21 this Stipulation shall be deemed to have reverted to their respective status in the Class Actions as
22 of the date and time immediately prior to the execution of the Memorandum of Understanding. In
23 that event, the parties shall proceed in all respects as if this Stipulation and any related orders had
24 not been entered, and the Settlement Fund in full, including any earnings thereon or investments
25 thereof made in accordance with paragraph 31 below, together with any interest earned thereon,
26 less any taxes due with respect to such income or amounts paid pursuant to paragraphs 15 and 36
27 below, and less any amounts expended or owed in connection with providing notice, publication
28 of the Summary Notice and costs and fees of the Claims Administrator based on its services
I -SF/7650746.10 15 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page17 of 45
rendered up to the time of termination, shall be returned in full by the Class Escrow Agent to
2
KLA within ten (10) business days of notice to the Parties of such termination or failure to obtain
3
final judicial approval or reversal on appeal. Lead Plaintiffs, Lead Counsel, and the Settlement
4
Class shall not be responsible for any expenses previously incurred pursuant to paragraphs 14, 15,
5
35 and 36 below, including expenses incurred in connection with notification of the Settlement
6
Class and the administration of the Settlement Fund, and they shall not be obligated to reimburse
7
any Person contributing funds to the Settlement Fund for such expenses. In addition, any
8
expenses set forth in paragraphs 14, 15 and 36 already incurred and chargeable based upon
9
services rendered by the time of such termination or cancellation but which have not been paid,
10 shall be paid by the Class Escrow Agent from the Gross Settlement Fund in accordance with the
11
terms of this Stipulation prior to the balance being refunded in accordance with this paragraph.
12
Administration Of The Settlement
13
13. The Settlement Administrator shall administer the Settlement under Plaintiffs'
14 Lead Counsel's supervision and subject to the jurisdiction of the Court. KLA, KLA Counsel, and
15
the Individual Defendants and their counsel shall have no role in or responsibility for
Iri administering the Settlement or reviewing or challenging claims submitted, and shall have no
17
liability to any Person in connection with such administration. Notwithstanding the foregoing,
18
KLA shall promptly provide or cause to be provided to the Settlement Administrator the
19 Company's transfer records showing names and addresses of record transferees of KLA common
20
stock during the Settlement Class Period for the purpose of giving direct mail notices to said
21
Settlement Class Members. Counsel for all Parties shall endeavor to make suitable arrangements
22
for the return or destruction (at the election of the non-producing party) of all discovery materials
23 produced by KLA or KLA Counsel (or made available for review by Plaintiffs' Lead Counsel)
24 promptly upon final approval and expiration of the time for appeal of the Order and Final
25
Judgment with respect to the Settlement.
26
14. Prior to the Effective Date, Lead Counsel may expend from the Settlement Fund,
27 without further approval from KLA or the Court, up to $250,000.00 (two hundred and fifty
28
thousand dollars) to pay the reasonable costs and expenses associated with the administration of
I -SF/7650746 10 16 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page18 of 45
I the Settlement, including without limitation, the costs of identifying Settlement Class Members
2 and effecting mailed Notice and publication of the Summary Notice. Such amounts shall include,
3 without limitation, the actual costs of publication, printing and mailing the Notice,
4 reimbursements to nominees for forwarding of the Notice to their beneficial owners, and the
5 administrative expenses incurred and fees charged by the Settlement Administrator in connection
6 with providing Notice and processing the submitted claims.
7
15. Subject to the limitations set forth in Paragraph 14, upon transfer of all or any
8 portion of the Settlement Fund to the Class Escrow Agent in accordance with paragraph 2(a)
9
hereof:
10
(a) The Settlement Fund may be utilized for reasonable actual out-of-pocket
ii costs for settlement administration, including:
12
(i) Printing and mailing of the Notice and Proof of Claim and Release
13
to the Settlement Class;
14
Publication of the Summary Notice;
15
The Settlement Administrator's costs and fees for services
16 performed in connection with the establishment of and administration of the Settlement Fund;
17
(iv) Costs to reimburse brokers or nominees in connection with
18
dissemination of the Notice to the Settlement Class;
19
(v)
Costs associated with the processing and administration of claims
20 and requests for exclusion;
21
(vi) Preparation and filing of any elections required by this Stipulation
22 and the costs of calculating and preparing necessary documents in connection with taxes and
23 payment of any taxes due on the Settlement Fund that are paid pursuant to paragraph 36 below;
24
(vii) The cost of identifying and locating members of the Settlement
25
Class; and
26
(viii) Escrow fees and costs.
27
(b) The Class Escrow Agent shall maintain accurate records of all expenditures
28 made for the purposes enumerated in this paragraph 15.
I -SF/7650746. 10 17 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page19 of 45
1
(c) In the event the Stipulation is terminated, any and all administrative costs
2 set forth in subparagraph (a) above, as well as all expenses, which were expended prior to
3
termination, shall be borne by KLA.
4
(d) Plaintiffs' Lead Counsel may apply to the Court, on notice to the parties to
5 this Stipulation, for interim payments to the Settlement Administrator for services performed by it
6
in connection with the administration of the Settlement, which interim fees will be payable out of
7 the Settlement Fund.
8
Distribution To Authorized Claimants
9
16. The Settlement Administrator shall determine each Authorized Claimant's pro rata
10 share of the cash in the Net Class Settlement Fund based upon each Authorized Claimant's claim
11
(specific details about the Plan of Allocation are described in the Notice annexed hereto as
12
Exhibit A-i to Exhibit A, or in such other Plan of Allocation as the Court approves).
13
17. The Plan of Allocation proposed in the Notice is not a necessary term of this
14
Stipulation and it is not a condition of this Stipulation that the proposed Plan of Allocation be
15 approved. Defendants will not have any responsibility for, nor any involvement with, the Plan of
16
Allocation and will take no position with respect to such proposed Plan of Allocation or such
17 other plan as may be approved by the Court.
18
18. Each Authorized Claimant shall be allocated a share of the cash in the Net Class
19 I Settlement Fund in accordance with the Plan of Allocation. Defendants will not have any
20
involvement in reviewing or challenging claims. KLA shall not be entitled to the return of any of
21
the Net Class Settlement Fund once the Effective Date occurs. No Person shall have any claim
22 against Lead Plaintiffs, Plaintiffs' Lead Counsel, the Claims Administrator or any other agent
23
designated by Lead Counsel based on distribution determinations or claim rejections made
24 substantially in accordance with this Stipulation and the Settlement contained therein, the Plan of
25
Allocation, or further orders of the Court. If, after distribution of the Net Settlement Class Fund,
26
there is a balance remaining, which Plaintiffs' Lead Counsel determines is too small to distribute
27
to the Settlement Class, Plaintiffs' Lead Counsel shall file a motion seeking an order to donate the
28 II remaining funds to an appropriate 501 (c)(3) charitable organization selected by Lead Plaintiffs
STIPULATION OF SETTLEMENT I -SF/7650746. 10 18 (06-4065 CRB)
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1
through their counsel and agreed to by KLA.
2
Claims Administration
3
19. Lead Counsel shall be responsible for supervising the administration of the
4 Settlement and disbursement of the Net Class Settlement Fund by the Settlement Administrator.
5
KLA, the Individual Defendants and their counsel, and KLA Counsel shall have no liability,
6 obligation or responsibility for the administration of the Settlement or disbursement of the Net
7
Class Settlement Fund. Lead Counsel shall have the right, but not the obligation, to waive what
8 they deem to be technical defects in any Proof of Claim submitted in the interest of achieving
9
substantial justice.
10
20. For purposes of determining the extent, if any, to which a Settlement Class
11 Member shall be entitled to be treated as an "Authorized Claimant," the following conditions
12 shall apply:
13
(a) Each Settlement Class Member shall be required to submit a Proof of
14 Claim (substantially in the form attached as Exhibit A-2 to Exhibit A), supported by such
15
documents as are designated therein, including proof of the Claimant's loss, or such other
16 documents or proof as is deemed acceptable by the Claims Administrator and Lead Counsel;
17
(b) All Proofs of Claim must be submitted by the date specified in the Notice
18 unless such period is extended by Lead Counsel pursuant to the order of the Court or by the
19 Court. Any Settlement Class Member who fails to submit a Proof of Claim by such date shall be
20
forever barred from receiving any payment pursuant to this Stipulation (unless, by order of the
21
Court, an acceptance of a later submitted Proof of Claim by such Settlement Class Member is
22 approved), but shall in all other respects be bound by all of the terms of this Stipulation and the
23
Settlement including the terms of the Final Judgment to be entered in the Class Actions and the
24 releases provided for herein, and will be barred from bringing any action against the Released
25
Persons concerning the Settled Class Claims. Provided that it is actually received no later than
26 thirty (30) days after the final date for submission of Proofs of Claim, a Proof of Claim shall be
27 deemed to have been submitted when posted, if received with a postmark indicated on the
28 envelope and if mailed first-class postage prepaid and addressed in accordance with the
I-SF/7650746. 10 19 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page21 of 45
instructions thereon. In all other cases, the Proof of Claim shall be deemed to have been
2
submitted when actually received by Lead Counsel or their designee;
3
(c) Each Proof of Claim shall be submitted to and reviewed by the Settlement
4 Administrator, under the supervision of Lead Counsel, who shall determine in accordance with
5
this Stipulation the extent, if any, to which each claim shall be allowed, subject to review by the
6 Court pursuant to subparagraph (f) below;
7
(d) Proofs of Claim that do not meet the filing requirements may be rejected.
8
Prior to rejection of a Proof of Claim, the Settlement Administrator shall communicate with the
Claimant in order to afford him, her or it the opportunity to remedy any curable deficiencies in
10 the Proof of Claim submitted. The Settlement Administrator, under supervision of Lead Counsel,
11
shall notify, in a timely fashion and in writing, all Claimants whose Proofs of Claim they propose
12
to reject in whole or in part, setting forth the reasons therefor, and shall indicate in such notice
13
that the Claimant whose claim is to be rejected has the right to a review by the Court if the
14 Claimant so desires and complies with the requirements of subparagraph (e) below;
15
(e) If any Claimant whose claim has been rejected in whole or in part desires
16 to contest such rejection, the Claimant must, within twenty (20) days after the date of mailing of
17
the notice required in subparagraph (d) above, serve upon the Settlement Administrator a notice
18
and statement of reasons indicating the Claimant's grounds for contesting the rejection along with
19 any supporting documentation, and requesting a review thereof by the Court. If a dispute
20 concerning a claim cannot be otherwise resolved, Lead Counsel shall thereafter present the
21
request for review to the Court; and
22
(f) The administrative determinations of the Settlement Administrator
23
accepting and rejecting claims shall be presented to the Court, on notice to KLA Counsel, for
24
approval by the Court in the Class Distribution Order (as defined in paragraph 30).
25
21. Each Claimant shall be deemed to have submitted to the jurisdiction of the Court
26
with respect to the Claimant's claim, and the claim will be subject to investigation and discovery
27
under the Federal Rules of Civil Procedure, provided that such investigation and discovery shall
28 be limited to that Claimant's status as a Settlement Class Member and the validity and amount of
1-5F/7650746.lO 20 STIPULATION OF SETTLEMENT (06-4065 CR11)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page22 of 45
I
the Claimant's claim. No discovery shall be allowed on the merits of the Class Actions or the
2
Settlement in connection with processing of the Proofs of Claim.
3
22. Payment pursuant to this Stipulation shall be deemed final and conclusive against
4 all Settlement Class Members. All Settlement Class Members who do not submit a claim or
5 whose claims are not approved by the Court shall be barred from participating in distributions
6
from the Settlement Fund, but otherwise shall be bound by all of the terms of this Stipulation and
7 the Settlement, including the terms of the Final Judgment to be entered in the Class Actions and
8
the releases provided for herein, and will be barred from bringing any action against the Released
9
Persons concerning the Settled Class Claims.
10
23. All proceedings with respect to the administration, processing and determination
11 of claims described in this Stipulation and the determination of all controversies relating thereto,
12
including disputed questions of law and fact with respect to the validity of claims, shall be subject
13
to the jurisdiction of the Court.
14
24. The Net Class Settlement Fund shall be distributed to Authorized Claimants by the
15
Settlement Administrator only after the Effective Date, and after: (i) all Proofs of Claim have
16 been processed, and all Claimants whose claims have been rejected or disallowed, in whole or in
17 part, have been notified and provided the opportunity to be heard concerning such rejection or
18
disallowance; (ii) all objections with respect to all rejected or disallowed claims not otherwise
19 resolved have been resolved by the Court, and all appeals therefrom have been resolved or the
20
time therefor has expired; (iii) all matters with respect to attorneys' fees, costs, and disbursements
21
have been resolved by the Court, all appeals therefrom have been resolved or the time therefor
22
has expired; and (iv) all costs of administration and Taxes (as defined in paragraph 35) on the
23
Settlement Fund have been paid.
24
Hearing Order
25
25. Promptly following execution of this Stipulation, Lead Plaintiffs and Defendants
26 shall and hereby do request that the Court enter a Hearing Order in substantially the form annexed
27
hereto as Exhibit A, which is incorporated in this Stipulation by this reference, providing for a
28
Settlement Fairness Hearing to approve the Settlement of these Class Actions with respect to the
I -SF/7650746.10 21 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page23 of 45
1
Defendants pursuant to this Stipulation and for the entry of a Final Judgment substantially in the
2
form of Exhibit B attached hereto. All proceedings in the Class Action shall be stayed until the
3
Settlement-related proceedings are concluded.
4
Final Jud2ment To Be Entered By The Court
5
26. Upon approval by the Court of the Settlement set forth in this Stipulation, the
6
Settling Parties shall request that the Court enter a Final Judgment substantially in the form of
7
Exhibit B hereto, which is incorporated in this Stipulation by this reference.
8
27. (a) In addition to such effect as the Final Judgment shall have under law, on
9 and after the Effective Date, each and every Lead Plaintiff and the Settlement Class (and any
10
member thereof) shall be deemed to have, and by operation of law shall have, fully, finally and
11
forever released, relinquished and discharged all Settled Class Claims against the Defendants and
12
the Released Persons, whether or not such Lead Plaintiff or Settlement Class Member executes
13
and delivers a Proof of Claim and Release. Thereafter the only claims of the Lead Plaintiffs
14
and/or the Settlement Class (or any member thereof) shall be to enforce the terms of the
15
Settlement or the Final Judgment.
16
(b) Upon the Effective Date, Defendants and the Related Parties shall release,
17
shall be deemed to have released and by operation of the Final Judgment shall have, fully, finally
18
and forever released Lead Plaintiffs, all members of the Settlement Class, Plaintiffs' Lead
19
Counsel, and all other counsel for Plaintiffs from all claims arising out of the instituting,
20
prosecution, settlement or resolution of the Class Actions, provided, however, that Defendants
21
and the Released Parties shall retain the right to enforce in the Court the terms of this Stipulation.
22
(c) As their contribution towards the Settlement of the Class Actions, and
23
conditioned upon the Settlement becoming Effective, the Individual Defendants shall, if and
24 when requested by KLA, release or assign to KLA or its designee (as directed by KLA) any
25
insurance claims arising from the Class Actions that the Individual Defendants may have under
26
any insurance policy procured by KLA; provided, however, that this Paragraph 27(c) shall not
NVA
apply to the Individual Defendants' insurance claims arising from (i) the Derivative Actions; (ii)
any other litigation other than the Class Actions; or (iii) existing or future claims of Class
I -SF17650746. 10 22 STIPULATION OF SETTLEMENT
AW
(06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page24 of 45
Members, if any who opt out of this Settlement. Upon the Effective Date, each of the Defendants
2 shall be deemed a "settling covered person" entitled to the protections and benefits of the Private
3
Securities Litigation Reform Act of 1995, 15. U.S.C. § 78u-4(f)(7)(A), and shall by virtue of the
4 Settlement be finally and forever discharged (i) of all obligations to the Settlement Class
5 Members arising out of the Class Actions; and (ii) of any and all past, present or future claims for
6 contribution arising out of the Class Actions, or the Settlement thereof, by KLA, any Individual
7
Defendant, or any other Person.
8
Attorneys' Fees And Expenses
9
28. In connection with the Settlement Fairness Hearing, Plaintiffs' Lead Counsel may
10 apply for and receive an award of attorneys' fees and reimbursement of expenses from the
11 Settlement Fund in such amounts as may be approved by the Court; and any cash amount
12
included in such award shall be paid to Plaintiffs' Lead Counsel upon entry of an order of the
13 Court approving such fees and expenses and upon final approval of the Settlement award by the
14 District Court (the "Fee and Expense Award"). In the event the Settlement is reversed on appeal
15 or reconsideration, Plaintiffs' Lead Counsel shall return any such fees and expenses or costs
16 consistent with the court order or appeal or reconsideration within ten (10) days of a demand by
17 KLA; KLA shall be entitled to enforce this provision in this Court. In the event that the award of
18 attorneys' fees and reimbursement of expenses is reduced on appeal or reconsideration, the
19
difference shall be returned to the Gross Settlement Fund for distribution pursuant to the terms
20 hereto. Further, if attorneys' fees, expenses or costs are disbursed from the Settlement Fund prior
21 to the Effective Date of the Settlement, each of Plaintiff's Lead Counsel shall, prior to receiving
22 such disbursement, cause their law firms and each equity partner, shareholder, or member within
23 their law firms to execute a guaranty in KLA' s favor, enforceable by motion to the Court, for the
24 amount of the disbursement. The award of attorneys' fees is not a necessary term of this
25 Stipulation and it is not a condition of this Stipulation that Lead Counsel's petition for attorneys'
26 fees and expenses be approved by the Court. The procedure for and the allowance or
27 disallowance by the Court of any application by Lead Counsel for attorneys' fees, costs and
28 expenses to be paid out of the Gross Settlement Fund, are not part of the Settlement set forth in
I -SF/7650746. 10 23 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page25 of 45
1 this Stipulation, and are to be considered by the Court separately from the Court's consideration
2 of the fairness, reasonableness and adequacy of the Settlement set forth in this Stipulation, and
3 any order or proceedings relating to the fee and expense application, or any appeal from any order
4 relating thereto or reversal or modification thereof, shall not operate to terminate or cancel this
5
Stipulation, or affect or delay the finality of the Final Judgment approving this Stipulation and the
6
Settlement of the Class Actions set forth herein.
7
29. KLA, the Individual Defendants and their counsel, the Released Persons and the
8
Related Parties, and KLA Counsel shall have no responsibility for, and no liability whatsoever
9 with respect to the allocation amongst Lead Counsel, and/or any other person who may assert
10 some claim thereto, of any Fee and Expense Award that the Court may make in the Litigation.
11
Lead Counsel shall have the sole authority to allocate the Court-awarded attorneys' fees amongst
12 those Counsel who have assisted in the prosecution of the Litigation and/or any other person or
13
firm who may assert some claim thereto. Defendants will take no position with respect to Lead
14
Counsel's application for attorneys' fees and reimbursement of expenses.
15
Administrative Expenses
16
30. Lead Counsel will apply to the Court, on notice to KLA's Counsel, for an order
17
(the "Class Distribution Order") approving the Settlement Administrator's administrative
18
determinations concerning the acceptance and rejection of the claims submitted herein and
19 approving any fees and expenses not previously applied for, including the fees and expenses of
20
the Settlement Administrator, determining that the Effective Date has occurred and directing
21 payment of the Net Class Settlement Fund to Authorized Claimants.
22
Class Escrow Agent
23
31. The Class Escrow Agent, at the direction and supervision of Lead Counsel, shall
24
invest and, if and when necessary, reinvest the Settlement Fund in United States Treasury Bills
25 with maturities of six (6) months or less and may keep a balance of two hundred and fifty
26
thousand dollars ($250,000.00) or less in one or more federally insured bank(s).
27
32. All funds held by the Class Escrow Agent pursuant to this Stipulation shall be
28 I deemed and considered to be in legal custody of the Court. Such funds, except for the payment of
STIPULATION OF SETTLEMENT I -SF/7650746.10 24 (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page26 of 45
I reasonable settlement administration costs, taxes and tax return preparation costs and those
2 expenses permitted by paragraphs 15 and 36 as provided herein, shall be distributed only upon
3 application to the Court by Lead Counsel, with notice to counsel for all parties, and upon the
4
further order of the Court.
5
33. The Class Escrow Agent may act in reliance upon any instrument or signature
6 believed by it in good faith to be genuine and may assume that any person purporting to give
7 notice or receipt or advice, or to make any statement or execute a document in connection with
8 the provisions of this Stipulation, has been duly authorized to do so. The Class Escrow Agent
9 shall in no event have any liability in connection with its investment or reinvestment in good faith
10 of any funds held hereunder, in accordance with the terms hereof, including without limitation
11 any liability for any delays in the investment or reinvestment of the funds, or any loss of interest
12 or income incident to such delays, or for any losses resulting from any investment due to
13
fluctuations in market values.
14
34. The Class Escrow Agent agrees to treat the Settlement Fund as being at all times
15 one or more Qualified Settlement Funds within the meaning of Treas. Reg. Section 1.468B-1. In
16 addition, the Class Escrow Agent shall timely make the elections as are necessary or advisable to
17 carry out the provisions of Treas. Reg. Section 1.468B-5(b)(2) and the relation-back election (as
18 defined in Treas. Reg. Section 1 .468B-1(j)(2)(ii)) back to the earliest permitted date. Such
19 elections shall be made in compliance with the procedures and requirements contained in such
20 regulations. It shall be the responsibility of the Class Escrow Agent timely and properly to
21 prepare and to deliver the necessary documentation for signature by all necessary parties, and to
22 cause the appropriate filing to occur under Treas. Reg. Sections 1.468B-5(b)(2) and 1.46813-
23 1 0)(2). KLA and KLA Counsel shall cooperate in providing such information, signatures and
24
forms as may be required for such filings.
25
35. The Class Escrow Agent shall timely and properly file all informational and other
26 tax returns necessary or advisable with respect to the Settlement Fund, if any (including without
27 limitation the returns described in Treas. Reg. Section 1.468B-2(k)). Such returns (as well as the
28 elections described in paragraph 34) shall reflect that all taxes (including any interest or penalties)
1 -SF/7650746.10 25 STIPULATION OF SETTLEMENT
(06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page27 of 45
1 on the income earned by the Settlement Fund ("Taxes") shall be paid out of the Settlement Fund
2
as provided herein.
3
36. All (i) Taxes (including any interest and penalties) arising with respect to the
4 income earned by the Settlement Fund, including any Taxes or tax detriments that may be
5
imposed upon KLA with respect to any income earned by the Settlement Fund, and (ii) expenses
6 and costs incurred in connection with the expense of this paragraph 36 ("Tax Expense") shall be
7 paid out of the Settlement Fund. In all events, KLA shall have no liability or responsibility for
8 any Taxes or Tax Expenses. Taxes and Tax Expenses shall be treated as, and considered to be, a
9 cost of administration of the Settlement and shall be timely paid by the Class Escrow Agent out of
10 the Settlement Fund without prior order of the Court, and the Class Escrow Agent shall be
11 obligated (notwithstanding anything herein to the contrary) to withhold from distribution to
12 Settlement Class Members any funds necessary to pay such amounts including the establishment
13 of adequate reserves for any Taxes and Tax Expenses as well as any amounts required to be
14 withheld under Treas. Reg. 1.468B-2(b)(2). The Escrow Agent shall indemnify and hold each of
15 the Defendants and their Related Parties harmless for Taxes and Tax Expenses (including,
16 without limitation, Taxes payable by reason of any such indemnification). For the purpose of this
17 paragraph 36, references to the Settlement Fund shall include any earnings thereon.
18
Miscellaneous
19
37. This Stipulation and the Settlement are not a concession or admission of
20 wrongdoing or liability by any Person, and shall not be used or construed as an admission of any
21
fault, omission, liability or wrongdoing on the part of any party hereto. Neither this Stipulation,
22 nor the exhibits hereto, nor the fact of settlement, nor any settlement negotiations or discussions,
23 nor the Final Judgment entered as provided above, nor any related document shall be offered or
24 received in evidence for any purpose, including but not limited to as an admission, concession,
25 presumption or inference against any party hereto in any proceeding other than such a proceeding
26 as may be necessary to consummate or enforce this Stipulation and the Settlement. Defendants
27 and/or their Related Parties may file the Stipulation and/or the Final Judgment in any action that
28 may be brought against them in order to support a defense or counterclaim based on principles of
STIPULATION OF SETTLEMENT I -SF17650746. 10 26 (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page28 of 45
1
resjudicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any
2 other theory of claim preclusion or issue preclusion or similar defense or counterclaim, other than
3 with respect to the exclusively derivative claims in the derivative actions identified in the
4
definition of the "Settled Class Claims" above.
5
38. In the event the Settlement does not become final for any reason, Defendants
6 reserve the right to oppose certification of any class in future proceedings and Plaintiffs reserve
7 the right to seek certification, whether for the same or a different class period, subject to the
8 requirements and limitations of Federal Rule of Civil Procedure 23 and other applicable law.
9
39. Subject to the Order of the Court, pending final determination of whether the
10 Settlement should be approved, Lead Plaintiffs and all Members of the Settlement Class are
11 barred and enjoined from commencing, prosecuting, instigating or in any way participating in the
12 commencement or prosecution of any action asserting any Settled Class Claims, either directly,
13 representatively, or in any other capacity, against any Released Person, provided however, that
14 Lead Plaintiffs and all members of the Settlement Class shall retain the right to enforce in the
15
Court the terms of the Stipulation of Settlement.
16
40. Lead Plaintiffs and Lead Counsel shall have no responsibility for any obligations
17 Defendants might have arising under the Class Action Fairness Act, 28 U.S.C. § 1715, to provide
18 notice of the Settlement.
19
41. The parties agree that Mr. Marks shall continue to assist them with any disputes
20 over the terms of the Settlement until such time as the Court grants preliminary approval of the
21
Settlement.
22
42. All counsel and any other person executing this Stipulation and any of the exhibits
23
hereto (the "Exhibits") or any related Settlement documents warrant and represent that they have
24 the full authority to do so. Lead Counsel represents expressly that it is authorized to execute this
25
Stipulation on behalf of Lead Plaintiffs.
26
43. All parties agree to use their best efforts and to cooperate in order to obtain all
27 approvals necessary and to do all things reasonably necessary or helpful to effectuate the
28
Stipulation according to its terms, including the execution of all Exhibits or reasonably related
I-SF/7650746.IO 27 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page29 of 45
1 documents as soon as reasonably possible if such execution is necessary. KLA will provide the
2 Claims Administrator with, or make arrangements for the Claims Administrator to have access to,
3 KLA's transfer records showing the names and most current addresses of record transferees of
4 KLA securities during the Settlement Class Period for the purpose of giving direct mail notices to
5 said Settlement Class Members.
6
44. This Stipulation, all Exhibits hereto and any related Settlement documents shall be
7 governed and interpreted in accordance with the laws of the State of California as they apply to
8 contracts negotiated, made, executed and to be performed entirely within the State of California
9 unless otherwise expressly stated in the Exhibits or other related Settlement documents.
10
45. In the event of any dispute or disagreement with respect to the meaning, effect, or
11 interpretation of the Stipulation, any attached Exhibit or any related Settlement documents, or in
12 the event of a claimed breach of the Stipulation, an attached Exhibit or any related Settlement
13 documents, the parties hereto agree that such dispute will be adjudicated only in the Court or as
14 the parties hereto unanimously otherwise agree.
15
46. This Stipulation, all attached Exhibits and all related Settlement documents
16 represent the entire agreement between the parties hereto, supersede any prior agreements or
17 understandings between the parties with respect to the subject matter hereof, and shall not be
18 modified unless in writing, signed by all parties to this Stipulation.
19
47. The parties have entered into this Stipulation solely upon the representations,
20 covenants and warranties contained and referred to in the Stipulation of Settlement, and no party
21 has placed any reliance on any representations not expressed in this Stipulation.
22
48. This Stipulation, any of the Exhibits hereto and any related Settlement documents
23 maybe amended or modified by a written instrument signed by Lead Counsel, KLA Counsel,
24 and the Individual Defendants' counsel with the consent of the Court and without further notice to
25 the Settlement Class, unless the Court requires such notice.
26
49. This Stipulation, its Exhibits and any related Settlement documents may be
27 executed in one or more actual or telecopied counterparts, all of which together shall be one and
28 the same instrument and all of which shall be considered duplicate originals.
STIPULATION OF SETTLEMENT 28 I -SF/7650746.10 (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page30 of 45
50. This Stipulation, its Exhibits and any related Settlement documents shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, predecessors, successors, affiliates and assigns, and upon
any corporation or other entity into or with which any party hereto may merge or consolidate.
51. In the event that any court is called upon to interpret this Stipulation, any of the
Exhibits hereto or any of the related Settlement documents, no one party or group of parties shall
be deemed to have drafted the Stipulation, any of the Exhibits hereto or any of the related
Settlement documents, but they shall be construed as if all parties hereto jointly prepared them
and any uncertainty or ambiguity shall not be interpreted against any one party, nor may any party
offer in evidence or otherwise use, for purposes of suggesting any interpretation of the
Stipulation, any of the Exhibits hereto or any of the related Settlement documents, any prior drafts
of the Stipulation, any of the Exhibits hereto or any of the related Settlement documents.
52. The Exhibits to the Stipulation and any related Settlement documents are
incorporated in and constitute an integral part of the Stipulation.
Limited Retention Of Jurisdiction
53. The Court shall retain jurisdiction of this Settlement for the purposes of allowing,
disallowing or adjusting the claim of any Claimant on equitable grounds, and, among other
things, of administering this Settlement, resolving any dispute hereunder, awarding Lead
Counsel's attorneys' fees, and reimbursing their expenses and the expenses of Lead Plaintiffs.
DATED: MORGAN, LEWIS & BOCKIUS LLP
Hemann
Attorneys for [ifendants KLA-Tencor Corporation, Edvard W. Barnholt, H. Raymond
25 Bingham, Robeq J. Boehlke, Robert T. Bond,
Richard J. Elkus, Jr., Jeffrey L. Hall, Stephen P. Kaufman, John H. Kispert, Michael E. Marks,
26
Dean 0. Morton, Lida Urbanek and Richard P. Wallace
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Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page31 of 45
1 DATED:________ KLA- TION
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3
4 General Counsel, Corporate Secretary 5
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DATED:_______ BERMAN DEVALERJO PEASE TABACCO BURT & PUCILLO JOSEPH J. TABACCO, JR. CHRISTOPHER T. HEFFELFINGER NICOLE LAVALLEE LESLEY HALE
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DATED:
DATED:
By: Nicole Lavallee
425 California Street,Suite 2100 San Francisco, CA 94104-2205 Telephone: (415) 433-3200 Facsimile: (415) 433-6382
Plaintiffs' Lead Counsel
KOHN, SWIFT & GRAF, P.C. Denis F. Sheils Joseph C. Kohn William E. Hoese One South Broad Street, Suite 2100 Philadelphia, PA 19107 Telephone: (215) 238-1700 Facsimile: (215) 238-1968 Email: [email protected] Email: j!cçn ® kohnswift.com Email: [email protected]
BERGER & MONTAGUE, P.C. Sherrie R. Savett Gary E. Cantor Douglas M. Risen 1622 Locust Street Philadelphia, PA 19103 Telephone: (215) 875-3000 Facsimile: (215) 875-4604 Email: [email protected] Email: [email protected]
1-SF/7650746.10 30 STIPULATION OF SETTLEMENT
(06-4065 CRE)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page32 of 45
KLA-TENCOR CORPORATION
By:_ Its
BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO JOSEPH J. TABACCO, JR. CHRISTOPHER T. HEFFELFINGER NICOLE LAVALLEE LESLEY HALE
By: "Nicold-ra-vallee
425 California Seet,Suite 2100 San Francisco, CA 94104-2205 Telephone: (415) 433-3200 Facsimile: (415) 433-6382
Plaintiffs' Lead Counsel
KOHN, SWIFT & GRAF, P.C. Denis F. Sheils Joseph C. Kohn William E. Hoese One South Broad Street, Suite 2100 Philadelphia, PA 19107 Telephone: (215) 238-1700 Facsimile: (215) 238-1968 Email: [email protected] Email: jkohnkohnswift.com Email: [email protected]
BJRGER & MONTAGUE, P.C. Sherrie R. Savett Gary E. Cantor Douglas M. Risen 1622 Locust Street Philadelphia, PA 19103 Telephone: (215).875-3000 Facsimile: (215) 875-4604 Email: [email protected] Email: [email protected]
I DATED:________
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1-SF/7650746. 10 A STIPULATION OF SETTLEMENT
(06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page33 of 45
1 DATED:
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I -SF/7650746. 10
TRUJILLO RODRIGUEZ & RICHARDS LLC Kenneth I. Trujillo Ira Neil Richards Kathryn C. Harr 1717 Arch Street, Suite 3838 Philadelphia, PA 19103 Telephone: (215) 731-9004 Facsimile: (215) 731-9044 Email: [email protected] Email: ira(trr1aw.com Email: [email protected]
Plaintiffs' Lead Counsel
ORRICK, HERRINCTON & SUTCLIFFE WALTER F. BROWN, JR. ROBERT P. VARIAN
By: Robert P. Varian
405 Howard Street San Francisco, CA 94105 Tel. 415-773-5700 Fax: 415-773-5759
Attorneys for Defendant Gary Dickerson
SHEARMAN & STERLING LLP PATRICK D. ROBBINS JEFFREY S. FACTER EMILY V. GRIFFEN
By: Patrick D. Robbins
525 Market Street, Suite 1500 San Francisco, CA 94105 Telephone: (415) 6 16-1 100 Facsimile: (415) 616-1199
Attorneys for Defendant Kenneth Levy
STIPULATION OF SETTLEMENT 31 (06-4065 CR13)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page34 of 45
TRUJILLO RODRIGUEZ & RICHARDS LLC Kenneth I. Trujillo Ira Neil Richards Kathryn C. Harr 1717 Arch Street, Suite 3838 Philadelphia, PA 19103 Telephone: (215) 731-9004 Facsimile: (215) 731-9044 Email: [email protected] Email: ira(trr1aw.com Email: [email protected]
Plaintiffs' Lead Counsel
ORRICK, HERRINGTON & SUTCLIFFE WALTER F. BROWN, JR. ROBERT P. VARIAN
By: Robert P. Varian
405 Howard Street San Francisco, CA 94105 Tel. 415-773-5700 Fax: 415-773-5759
Attorneys for Defendant Gary Dickerson
SHEARMAN & STERLING LLP PATRICK D. ROBBINS JEFFREY S. FACTER EMILY V. GRIFFEN
By: Patrick D. Robbins
525 Market Street, Suite 1500 San Francisco, CA 94105 Telephone: (415) 616-1100 Facsimile: (415) 616-1199
Attorneys for Defendant Kenneth Levy
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1-SF/7650746. 10 31 STIPULATION OF SETTLEMENT (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page35 of 45
LAW OFFICE OF MARK A. BELNICK, LLC MARK A. BELNICK
By Mark A. Belnick
120 West 45th Street, Suite 1700B New York, NY 10036 Telephone: 646-453-2901 Fax: 646-453-2908
CHRISTOPHER D. KERCHER AKIN GUMP STRAUSS HAUER & FELD LLP 590 Madison Avenue New York, NY 10022 Tel 212-872-1000
STEVEN S. KAUFHOLD AKIN GUMP STRAUSS HAUER & FELD LLP 580 California Street, 15th Floor San Francisco, CA 94104 Tel: 415-765-9500 Fax: 415-765-9501
Attorneys for Defendant Stuart J. Nichols
DLA PIPER US LLP SHIRLI FABBRI WEISS DAVID A. PRIEBE
By: Shirli Fabbri Weiss
2000 University Avenue East Palo Alto, California 94303 Telephone: (650) 833-2056 Facsimile: (650) 833-2001
Attorneys for Defendant Kenneth L. Schroeder
1 DATED: 5jq 1
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STIPULATION OF SETTLEMENT. l-SF/7650746.10 (064065 CRB)
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Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page36 of 45
1-SF/7650746. 10
LAW OFFICE OF MARX A. BELNICK, LLC MARK A. BELNICK
By: Mark A. Belnick
120 West 45th Street, Suite 1700B New York, NY 10036 Telephone: 646453-2901 Fax: 646-453-2908
CHRISTOPHER D. KERCHER AKIN GUMP STRAUSS HAUER & FELD LLP 590 Madison Avenue New York, NY 10022 Tel 212-872-1000
STEVEN S. KAUFHOLD AKIN GUMP STRAUSS HAUER & FELD LLP 580 California Street, 15th Floor San Francisco, CA 94104 Tel: 415-765-9500 Fax: 415-765-9501
Attorneys for Defendant Stuart J. Nichols
DLA PIPER US LLP SHIRLI FABBRI WEISS DAVID A. PRIEBE
Shirli Fabbn Weiss 2000 University Avenue East Palo Alto, California 94303 Telephone: (650) 833-2056 Facsimile : (650) 833-2001
Attorneys for Defendant Kenneth L. Schroeder
STIPULATION OF SETTLEMENT 32 (04 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page37 of 45
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DATED:t,L3 3r' HELLEREHRMAN LLP MICHAEL J. SHEPARD WARRINGTON S. PARKER, III
By. Warn Parker
333 Bush reet San Francisco, CA 94104 Telephone: (415) 772-6000 Facsimile: (415) 772-6268
Attorneys for Defendant Jon D. Tompkins
I -S I '7 650740. 0 STIPULATION OF SETTLEMENT
(06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page38 of 45
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA - SAN FRANCISCO DIVISION
IN RE KLA-TENCOR CORPORATION
Master Case No. C 06-4065 CRB SECURITIES LITIGATION
CLASS ACTION
[PROPOSED] ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE
EXHIBIT A
WHEREAS a consolidated class action is currently pending before the court entitled In re
KLA-Tencor Corporation Securities Litigation, Master Case No. C 06-4065 (the "Action").
WHEREAS, the Court has received the Stipulation of Settlement dated as of May
2008 (the "Stipulation"), that was entered into by the Lead Plaintiffs, KLA-Tencor Corporation
("KLA"), and the Individual Defendants, and the Court has reviewed the Stipulation and its
attached Exhibits; and
WHEREAS, the parties having made application, pursuant to Federal Rule of Civil
Procedure 23(e), for an order preliminarily approving the settlement of this Litigation, in
accordance with 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 upon the terms and conditions set forth therein; and the Court having read and
considered the Stipulation and the Exhibits annexed thereto; and
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[PROPOSED] ORDER PRELIMINARILY I -SF/7650748.9
APPROVING SETTLEMENT & PROVIDING FOR NOTICE (06-4065 CRB)
28
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page39 of 45
1
WHEREAS, all defined terms contained herein shall have the same meanings as set forth
2
in the Stipulation;
3
NOW, THEREFORE, IT IS HEREBY ORDERED:
4
1. For purposes of this Settlement only, the Court will certify a Settlement Class
5
defined as: Lead Plaintiffs and all Persons and entities in any capacity (whether individual, class,
6 I representative, legal, equitable or otherwise) who purchased or otherwise acquired securities of
7 KLA (including without limitation common stock and call options) between June 30, 2001
8
through January 29, 2007, inclusive, either directly or by dividend re-investment, and their
9
respective executors, administrators, representatives, agents, attorneys, successors, heirs and/or
10
assigns. Excluded from the Settlement Class are the Defendants; all individuals who are either
11
current executive officers and/or directors, or who served as executive officers and/or directors of
12 KLA at any time during the Settlement Class Period; members of the immediate families and
13
heirs, successors or assigns of the foregoing; and any firm, trust, corporation, or other entity in
14 which any Defendant has a controlling interest. Also excluded from the Settlement Class are
15
persons who request exclusion from the Settlement Class pursuant to the terms of the Stipulation
16
or order of the Court.
17
2. The Court finds that certification of the Settlement Class for settlement purposes
18
only is appropriate because:
19
(a) The Settlement Class is so numerous that joinder of all members is
20
impracticable, satisfying the requirements of Rule 23(a)(1);
21
(b) There are questions of law or fact common to the Settlement Class,
22
satisfying the requirement of Rule 23(a)(2);
23
(c) The claims of the Lead Plaintiffs, the KLA Pension Fund Group,
24
comprised of the Police and Fire Retirement System of the City of Detroit, the Louisiana
25
Municipal Police Employees' Retirement System, and the City of Philadelphia Board of
26
Pensions and Retirement, are typical of the claims of the Settlement Class, satisfying the
27
requirement of Rule 23(a)(3);
28
(d) The representative parties will fairly and adequately protect the interests of
[PROPOSED] ORDER PRELIMINARILY l-SF/7650748.9 2 APPROVING SETTLEMENT & PROVIDING
FOR NOTICE (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page40 of 45
the Settlement Class, satisfying the requirement of Rule 23(a)(4); and
2
(e) Questions of law and fact common to the members of the Settlement Class
3 predominate over questions affecting only individual members and a class action is
4 superior to other methods available for the fair and efficient adjudication of the
5 controversy, satisfying the requirements of Rule 23(b)(3).
6
3. The findings in this Paragraph 2 are for purposes of this Settlement only, and shall
have no force or effect for any other purpose or if the Settlement does not become Effective. The
8
Court does hereby preliminarily approve the Stipulation and the Settlement set forth therein,
9 subject to further consideration at the Settlement Fairness Hearing described below.
10
4. A hearing (the "Settlement Fairness Hearing") shall be held before this Court on
11
2008, at .m., at the United States Courthouse, Courtroom -, 450
12
Golden Gate Avenue, San Francisco, California, to determine whether the proposed Settlement of
13 the Litigation on the terms and conditions provided for in the Stipulation is fair, just, reasonable
14 and adequate to the Settlement Class and should be approved by the Court; whether a Judgment
15 as provided in the Stipulation should be entered herein; whether the proposed Plan of Allocation
16 should be approved; to determine the amount of fees and expenses that should be awarded to
17 Plaintiffs' Lead Counsel; and to determine the amount of expenses to be reimbursed to the Lead
18
Plaintiffs. The Court may adjourn the Settlement Fairness Hearing without further notice to
19 Members of the Settlement Class.
20
5. The Court approves, as to form and content, the Notice of Class Action
21
Certification, Proposed Settlement, Motion for Attorneys' Fees and Expenses and Hearing
22 Thereon (the "Notice"), the Proof of Claim and Release form (the "Proof of Claim"), and
23
Summary Notice for publication annexed as Exhibits A- 1, A-2 and A-3 hereto and finds that the
24 mailing and distribution of the Notice and publishing of the Summary Notice substantially in the
25 manner and form set forth in ¶J 5-6 of this Order meet the requirements of Federal Rule of Civil
26
Procedure 23 and due process, and is the best notice practicable under the circumstances and shall
27 constitute due and sufficient notice to all Persons entitled thereto.
28
6. The firm of
("Claims Administrator") is hereby appointed to
[PROPOSED] ORDER PRELIMINARILY I .SF/7650748.9
3 APPROVING SETTLEMENT & PROVIDING FOR NOTICE (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page41 of 45
1 supervise and administer the notice procedure as well as the processing of claims as more fully
2
set forth below:
3
(a) Plaintiffs' Lead Counsel shall make reasonable efforts to identify all
4 Persons who are Members of the Settlement Class, and not later than , 2008
5
(the "Notice Date"), Plaintiffs' Lead Counsel shall cause a copy of the Notice and the Proof of
6
Claim, substantially in the forms annexed as Exhibits A-i and A-2 hereto, to be mailed by first-
7 class mail to all Settlement Class Members who can be identified with reasonable effort;
8
(b) Not later than , 2008, Plaintiffs' Lead Counsel shall
9 cause the Summary Notice to be published once in The San Jose Mercury News and once in
10 Investor's Business Daily; and
11
(c) At least seven (7) calendar days prior to the Settlement Fairness Hearing,
12
Plaintiffs' Lead Counsel shall cause to be served on KLA Counsel and filed with the Court proof,
13
by affidavit or declaration, of such mailing and publishing.
14
7. KLA shall complete service on the appropriate federal and state government
15
officials of all notices required under the Class Action Fairness Act, 28 U.S.C. § 1715.
16
8. Nominees who purchased securities of KLA for the beneficial ownership of
17
Settlement Class Members during the Settlement Class Period shall send the Notice and the Proof
18
of Claim to all beneficial owners of such KLA securities within ten (10) days after receipt thereof,
19 or send a list of the names and addresses of such beneficial owners to the Claims Administrator
20
within ten (10) days of receipt thereof, in which event the Claims Administrator shall promptly
21
mail the Notice and Proof of Claim to such beneficial owners. Such holders of record shall be
22 reimbursed from the Gross Settlement Fund, upon receipt by the Claims Administrator of proper
23
documentation, for the reasonable expense of providing notice to beneficial owners who are
24 Settlement Class Members out of the Settlement Fund, which expenses would not have been
25
incurred except for the sending of such Notice, subject to further order of this Court with respect
26 to any dispute concerning such compensation.
27
9. All Members of the Settlement Class shall be bound by all determinations and
28 judgments in the Litigation concerning the Settlement, whether favorable or unfavorable to the
[PROPOSED] ORDER PRELIMINARILY I-SF/7650748.9 4 APPROVING SETTLEMENT & PROVIDING
FOR NOTICE (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page42 of 45
1
Settlement Class.
2
10. Settlement Class Members who do not timely and validly effect their exclusion from
3 the Settlement Class shall complete and submit Proof of Claim forms in accordance with the
4
instructions contained therein to obtain a payment. Unless the Court orders otherwise, all Proof
5 of Claim forms must be postmarked no later than ninety (90) days from the Notice Date. Any
6 Settlement Class Member who does not submit a Proof of Claim within the time provided for
7 shall be barred from sharing in the distribution of the proceeds of the Settlement Fund, unless
8 otherwise ordered by the Court. Notwithstanding the foregoing, Plaintiffs' Lead Counsel shall
9 have discretion to accept late-submitted claims for processing by the Claims Administrator so
10
long as the distribution of the Settlement Fund is not materially delayed thereby.
11
11. Any Member of the Settlement Class may enter an appearance in the Litigation, at
12 their own expense, individually or through counsel of their own choice, in which case such
13 counsel must file with the Clerk of the Court and deliver to Plaintiffs' Lead Counsel and KLA
14 Counsel a notice of such appearance. If they do not enter an appearance, they will be represented
15
by Plaintiffs' Lead Counsel.
16
12. Any Person falling within the definition of the Settlement Class may, upon request,
17 be excluded from the Settlement Class. Any such Person must submit to the Claims
18
Administrator a request for exclusion ("Request for Exclusion"), received no later than
19
2008. A Request for Exclusion must: (a) state the name, address, and
20 telephone number of the Person requesting exclusion; (b) identify each of the Person's purchases
21 and sales of KLA securities made during the Settlement Class Period, including the dates of
22 purchase or sale, the number of securities purchased and/or sold, and the price paid or received
23 per share for each such purchase or sale; (c) provide proper evidence of the Person's purchases
24 and sales of KLA securities during the Settlement Class Period; and (d) state that the Person
25 wishes to be excluded from the Settlement Class. All Persons who submit valid and timely
26 Requests for Exclusion in the manner set forth in this paragraph shall have no rights under the
27
Stipulation, shall not share in the distribution of the Net Settlement Fund, and shall not be bound
28
by the Stipulation or the Judgment entered in the Litigation.
[PROPOSED] ORDER PRELIMINARILY I -SF17650748.9
5 APPROVING SETTLEMENT & PROVIDING FOR NOTICE (06-4065 CRB)
Case3:06-cv-04065-CRB Document203-2 Filed05/19/08 Page43 of 45
13. Any Member of the Settlement Class may appear and show cause, if he, she or it has
2 any reasons why the proposed Settlement of the Litigation should or should not be approved as
3
fair, reasonable and adequate, why a judgment should or should not be entered thereon, why the
4 Plan of Allocation should or should not be approved, why attorneys' fees and expenses should or
5
should not be awarded to counsel for the plaintiffs, or why the expenses of the Lead Plaintiffs
6 should or should not be awarded; provided, however, that no Settlement Class Member or any
7
other Person shall be heard or entitled to contest such matters, unless that Settlement Class
8
Member has delivered by hand or sent by first-class mail written objections and copies of any
9
papers and briefs such that they are received on or before fifteen (15) court days prior to the
10
Settlement Fairness Hearing, or on or before 2008, by Joseph J. Tabacco, Jr.
11
of Berman DeValerio Pease Tabacco Burt & Pucillo, 425 California Street, Suite 2100, San
12
Francisco, California 94104, and filed said objections, papers and briefs with the Clerk of the
13
United States District Court for the Northern District of California, on or before
14
2008. Any objection must include: (a) the full name, address, and phone
15
number of the objecting Settlement Class Member; (b) a list of all of the Settlement Class
16 Member's Settlement Class Period transactions in KLA securities, including brokerage
17 confirmation receipts or other competent documentary evidence of such transactions; (c) a written
18
statement of all grounds for the objection accompanied by any legal support for the objection; (d)
19
copies of any papers, briefs, or other documents upon which the objection is based; (e) a list of all
20
persons who will be called to testify in support of the objection; (f) a statement of whether the
21
objector intends to appear at the Settlement Fairness Hearing; (g) a list of other cases in which the
22
objector or the objector's counsel have appeared either as settlement objectors or as counsel for
23
objectors in the preceding five years; and (h) the objector's signature, even if represented by
24
counsel. If the objector intends to appear at the Settlement Fairness Hearing through counsel, the
25
objection must also state the identity of all attorneys who will appear at the Settlement Fairness
26 Hearing. Any Member of the Settlement Class who does not make his, her or its objection in the
27 manner provided shall be deemed to have waived such objection and shall forever be foreclosed
28
from making any objection to the fairness or adequacy of the proposed Settlement as set forth in
[PROPOSED] ORDER PRELIMINARILY l-SF/7650748.9 6 APPROVING SETTLEMENT & PROVIDING
FOR NOTICE (06-4065 CRB)
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1
the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to
2 counsel for the plaintiffs or expenses of the Lead Plaintiffs, unless otherwise ordered by the
3
Court.
4
14. All funds held by the Escrow Agent shall be deemed and considered to be in
5
custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such
6
time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of the
7
Court.
8
15. Plaintiffs' Lead Counsel shall be entitled to withdraw up to $250,000.00 (two
9 hundred and fifty thousand dollars) from the Settlement Fund pursuant to paragraph 14 of the
10
Stipulation of Settlement to pay reasonable expenses of notice and administration of the
11 settlement upon the execution of this Order, subject to final approval of said expenses at the
12
Settlement Fairness Hearing and the other provisions of the Stipulation.
13
16. All papers in support of the Settlement, the Plan of Allocation, and any application
14 by counsel for the plaintiffs for attorneys' fees or reimbursement of expenses or by Lead
15
Plaintiffs for reimbursement of their expenses shall be filed and served seven (7) calendar days
16 prior to the Settlement Fairness Hearing.
17
17. KLA, KLA Counsel, and the Individual Defendants and their counsel shall have no
18 responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement
19 of expenses submitted by plaintiffs' counsel, Lead Counsel or the Lead Plaintiffs, and such
20 matters will be considered separately from the fairness, reasonableness and adequacy of the
21
Settlement.
22
18. At or after the Settlement Fairness Hearing, the Court shall determine whether the
23
Plan of Allocation proposed by Plaintiffs' Lead Counsel, and any application for attorneys' fees
24 or reimbursement of expenses shall be approved.
25
19. All reasonable expenses incurred in identifying and notifying Settlement Class
26
Members, as well as administering the Settlement Fund, shall be paid as set forth in the
27
Stipulation. In the event the Settlement is not approved by the Court, or otherwise fails to
28
become effective, neither the Lead Plaintiffs nor any of their counsel shall have any obligation to
[PROPOSED] ORDER PRELIMINARILY I -SF/7650748.9 7 APPROVING SETTLEMENT & PROVIDING
FOR NOTICE (06-4065 CRB)
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1 repay any amounts incurred or properly disbursed pursuant to ¶fJ 12 or 14 of the Stipulation..
2
20. Neither the Stipulation, nor any of its terms or provisions, nor any of the
3 negotiations or proceedings connected with it, shall be construed as an admission or concession
4 by KLA or the Individual Defendants of the truth of any of the allegations in the Litigation, or of
5 any liability, fault, or wrongdoing of any kind.
6
21. Pending final determination of whether the Settlement should be approved, Lead
7
Plaintiffs, all Settlement Class Members, and anyone who acts or purports to act on their behalf,
8 shall not institute, commence or prosecute any action which asserts Settled Class Claims against
9
any Released Party.
10
22. Pending final determination of whether the Settlement should be approved, all
11 proceedings and all discovery with respect to the Defendants in the Class Actions are stayed
12 pending further order of the Federal Court.
13
23. The Court reserves the right to adjourn the date of the Settlement Fairness Hearing
14 without further notice to the Members of the Settlement Class, and retains jurisdiction to consider
15 all further applications arising out of or connected with the proposed Settlement. The Court may
16 approve the Settlement, with such modifications as may be agreed to by the Settling Parties, if
17 appropriate, without further notice to the Settlement Class.
18
IT IS SO ORDERED.
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21
I Dated: , 2008 THE HONORABLE CHARLES R. BREYER
22
UNITED STATES DISTRICT COURT JUDGE
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I .s/750749
[PROPOSED] ORDER PRELIMINARILY 8 APPROVING SETTLEMENT & PROVIDING
FOR NOTICE (06-4065 CRB)