UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION

Transcription

1 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION MARSHA BRODERICK, et al., On Behalf of ) No MRP(AJWx) Themselves and All Others Similarly Situated, ) ) CLASS ACTION Plaintiffs, ) ) vs. ) ) JACK M. MAZUR, et al., ) ) Defendants. ) ) NOTICE OF PARTIAL SETTLEMENT OF CLASS ACTION TO: ALL PERSONS WHO PURCHASED PHP HEALTHCARE CORPORATION ("PHP") COMMON STOCK DURING THE PERIOD JULY 27, 1995 THROUGH NOVEMBER 19, 1998, INCLUSIVE. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED PARTIAL SETTLEMENT OF THIS CLASS ACTION AND, IF YOU ARE A SETTLEMENT CLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOUR RIGHTS CONCERNING THE SETTLEMENT AS FURTHER DESCRIBED BELOW. IF YOU ARE A MEMBER OF THE SETTLEMENT CLASS AND DO NOT SUBMIT A CLAIM, YOU WILL BE BOUND BY THE RELEASE WHETHER OR NOT YOU SUBMIT A CLAIM AND REGARDLESS OF WHETHER THE CLAIM IS ALLOWED. All capitalized terms not defined herein shall have the same meanings as set forth in the Stipulation of Partial Settlement dated as of October 24, 2003 (the "Stipulation"), which has been filed with the Court (as defined below). YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District Court for the Central District of California, Western Division (the "Court"), and Rule 23 of the Federal Rules of Civil Procedure, that a partial settlement in the amount of $4,500,000 in cash, which will extinguish the Released Claims against the Settling Defendants (the "Settlement") of the above-captioned action (the "Litigation") has been reached by the Settling Parties, which settlement is subject to approval by the Court. The partial settlement resolves the claims against the Individual Defendants, Jack M. Mazur, Robert L. Bowles, Jr. and Charles H. Robbins but does not resolve the claims against PricewaterhouseCoopers LLP ("PwC"), who is not a party to this Settlement. A final judgment dismissing Lead Plaintiffs' claims against PwC with prejudice was entered by the Court on January 9, The Settlement is conditioned upon the occurrence of certain events described in the Stipulation, some of which are set forth in Section XI below. The purpose of this Notice is to inform you of the proposed partial settlement of this class action litigation and of the hearing to be held by the Court to consider the fairness, reasonableness and adequacy of the Settlement. This Notice describes the rights you may have in relation to the Settlement and this class action litigation. The proposed partial settlement creates a fund in the amount of $4,500,000 in cash and will include interest that accrues on the fund prior to distribution. Your recovery from this fund will depend on a number of variables, including the number of shares of PHP common stock you purchased during the period July 27, 1995 through November 19, 1998 (the "Class Period") and the timing of your purchases and any sales. Depending on the number of eligible shares purchased by Settlement Class Members who elect to participate in the distribution of the Settlement Fund and when those shares were purchased and sold, the estimated average distribution per share will be approximately $0.16 before deduction of Court-approved fees and expenses. The Lead Plaintiffs and the Settling Defendants do not agree on the average amount of damages per share that would be recoverable if the Lead Plaintiffs were to have prevailed on each claim alleged. The issues on which the parties would likely disagree include: (1) the appropriate economic model for determining the amount by which PHP common stock was allegedly artificially inflated (if at all) during the Class Period; (2) the amount by which PHP common stock was allegedly artificially inflated (if at all) during the Class Period; (3) the effect of various market forces influencing the trading price of PHP common stock at various times during the Class Period; (4) the extent to which external factors, such as general market and industry conditions, influenced the trading price of PHP common stock at various times during the Class Period; (5) the extent to which the various matters that Lead Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of PHP common stock at various times during the Class Period; (6) the extent to which the alleged nondisclosure of the various allegedly adverse material facts that Lead Plaintiffs alleged were omitted influenced (if at all)

2 the trading price of PHP common stock at various times during the Class Period; and (7) whether the statements made or the omissions alleged were material, false, misleading or otherwise actionable under the securities laws. Lead Plaintiffs believe that the proposed settlement is a very good recovery and is in the best interests of the Settlement Class. There are significant risks associated with continuing to litigate and proceeding to trial. For example, the Settlement Class faced the possibility that all or many of the claims in this case could have been disposed of pursuant to the Settling Defendants' motions to dismiss or for summary judgment before trial. In addition, there was a danger that the Settlement Class would not have prevailed on their claims against the Settling Defendants even if those claims eventually went to trial, in which case the Settlement Class would receive nothing. Further, had the case proceeded to trial and assuming the Lead Plaintiffs had been able to establish liability of the Settling Defendants, the amount of damages recoverable by Settlement Class Members would have been subject to vigorous attack by the Settling Defendants. Recoverable damages are limited to losses caused by conduct actionable under applicable securities laws and, had the Litigation gone to trial, Settling Defendants would have tried to prove that all or most of the losses (if any) of Settlement Class Members were caused by non-actionable market, industry or other general economic factors. Moreover, Lead Counsel believe that the Settlement represents the best possible recovery based on the available insurance proceeds and the Settling Defendants' lack of any significant assets to satisfy a monetary judgment. The proposed settlement eliminates these risks and provides an immediate and certain recovery for Settlement Class Members. Lead Plaintiffs' counsel have not received any payment for their services in prosecuting this Litigation on behalf of the Lead Plaintiffs and the Settlement Class Members. If the Settlement is approved by the Court, counsel for the Lead Plaintiffs will apply to the Court for attorneys' fees of 30% of the Settlement Fund. Counsel also plan to seek reimbursement of out-of-pocket expenses not to exceed $300,000 incurred by them from the settlement proceeds. If the amount requested by counsel is approved by the Court, the average cost per share would be approximately $0.05. This Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations in the Litigation or the merits of the claims or defenses asserted. This Notice is to advise you of the proposed settlement and of your rights in connection therewith. I. HEARING ON THE PROPOSED SETTLEMENT A settlement hearing will be held on April 26, 2004, at 10:00 a.m., before the Honorable Mariana R. Pfaelzer, United States District Judge, at the United States District Court for the Central District of California, Western Division, 312 North Spring Street, Los Angeles, California (the "Settlement Hearing"). The purpose of the Settlement Hearing will be to determine: (1) whether the partial settlement consisting of $4,500,000 in cash plus accrued interest should be approved as fair, just, reasonable and adequate to each of the Settling Parties; (2) whether the proposed plan to distribute the settlement proceeds (the "Plan of Allocation") is fair, just, reasonable and adequate; (3) whether the application by Lead Plaintiffs' counsel for an award of attorneys' fees and expenses should be approved; (4) whether costs and expenses should be awarded to Lead Plaintiffs pursuant to 15 U.S.C. 78u-4(a)(4); and (5) whether the Litigation with respect to the Settling Defendants should be dismissed with prejudice. The Court may adjourn or continue the Settlement Hearing without further notice to the Settlement Class. For further information regarding the Settlement, you may contact Rick Nelson, Milberg Weiss Bershad Hynes & Lerach LLP, 401 B Street, Suite 1700, San Diego, California, 92101, Telephone: 619/ II. DEFINITIONS As used in this Notice, the following terms have the meanings specified below: 1. "Defendants" means PHP, PricewaterhouseCoopers LLP, Jack M. Mazur, Robert L. Bowles, Jr. and Charles H. Robbins. 2. "Lead Plaintiffs" means Marsha Broderick, Carolyn Hoffman, Morton Appleton, Harriet and Gerald L. Bloom, Ira Hanna, Milton Robbins, Frances Sharer, John J. Scherer and Mary Winchester. 3. "Master Settlement Agreement" means the agreement between PHP Liquidating, LLC, Lead Plaintiffs, the Commissioner of Banking and Insurance of the State of New Jersey and former officers and directors of PHP and/or its subsidiaries named as defendants in this Litigation, and in (1) an adversary proceeding filed by the PHP Liquidating, LLC in the Bankruptcy Court, captioned PHP Liquidating, LLC v. Mazur, et al., Adversary Proceeding No ("Liquidating and LLC Action"), and (2) a lawsuit filed by the Commissioner of Banking and Insurance of the State of New Jersey captioned, Bakke v. Watson, et al., No. MID-L (N.J. Super. Ct.) ("New Jersey Insurance Commissioner Action"). 4. "Non-Settling Defendant" means PwC. 5. "Person" means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, 2

3 unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees. 6. "Plaintiffs' Settlement Counsel" or "Lead Counsel" mean: Milberg Weiss Bershad Hynes & Lerach LLP, Keith F. Park, Jeffrey D. Light, 401 B Street, Suite 1700, San Diego, CA 92101, Telephone (619) ; Berger & Montague, P.C., Todd S. Collins, 1622 Locust Street, Philadelphia, PA 19103, Telephone (215) ; and Klafter & Olsen LLP, Kurt B. Olsen, 2121 K Street, NW, Suite 800, Washington, DC 20037, Telephone (202) "PwC" means PricewaterhouseCoopers LLP and/or its successor(s). 8. "Released Claims" shall mean any and all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted directly, indirectly, representatively or in any other capacity, in any forum by any Lead Plaintiff or Settlement Class Member, or the successors or assigns of any Lead Plaintiff or Settlement Class Member, whether directly, indirectly, representatively or in any other capacity, against any of the Released Persons, in any capacity for which they served PHP or any of its subsidiaries, which arise out of, or relate in any way to, both the purchase of PHP common stock during the Class Period and the allegations, transactions, facts, events, matters, occurrences, acts, disclosures, statements, representations, omissions or failures to act involved, set forth, alleged, referred to, or that could have been asserted in the Litigation, including, without limitation, claims for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty, arising out of, based upon or related in any way to the Settling Defendants' roles in PHP, the Settling Defendants' relationships with PHP, the Settling Defendants' transactions with PHP, and/or the operations of PHP. Released Claims do not include any claims Lead Plaintiffs or Settlement Class Members may have against PwC or its successor(s). 9. "Released Persons" means the Settling Defendants, PHP, and each of PHP's former directors, officers, employees, partners, members, principals, agents, underwriters, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, solicitors, banks or investment banks, associates, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, related or affiliated entities, any firm, company, trust, partnership, corporation or entity in which PHP or any of the Settling Defendants has an interest, and any trust of which PHP or any of the Settling Defendants is the settlor or which is for the benefit of PHP or any of the Settling Defendants and/or member(s) of his family. Released Persons shall also include the spouses, heirs, family members, and relatives of the Settling Defendants and the former officers and directors of PHP. PwC is not a Released Person. 10. "Representative Plaintiffs" means each of the Lead Plaintiffs and each of the plaintiffs who appeared in the Litigation. 11. "Settlement Class" means all Persons who purchased the common stock of PHP during the period from July 27, 1995 through November 19, 1998, inclusive. Excluded from the Settlement Class are Defendants, their affiliates and any of their officers or directors or their affiliates, and any members of the immediate families of the Settling Defendants, any entity in which any Defendant has a controlling interest; and the legal representatives, heirs, successors, or assigns of any such excluded party. Also excluded are those Persons who timely and validly request exclusion from the Settlement Class pursuant to Section VIII below. 12. "Settlement Class Members" or "Members of the Settlement Class" mean a Person who falls within the definition of the Settlement Class as defined above. 13. "Settlement Fund" means the principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000), plus any interest that may accrue thereon as provided for herein. 14. "Settling Defendants" or "Individual Defendants" mean Jack M. Mazur, Robert L. Bowles Jr. and Charles H. Robbins. 15. "Settling Parties" means, collectively, each of the Settling Defendants and the Lead Plaintiffs on behalf of themselves and the Members of the Settlement Class. III. THE LITIGATION On and after March 9, 1998, the following action was filed in the United States District Court for the Central District of California on behalf of a class of purchasers of the common stock of PHP Healthcare Corporation: Broderick, et al. v. Mazur, et al., No MRP(AJWx). On May 12, 1998, the Broderick Plaintiffs' Group moved for appointment as Lead Plaintiffs under 21D(a)(3)(B) of the Securities Exchange Act of 1934 (the "Exchange Act") and approval of their selection of Milberg Weiss Bershad Hynes & Lerach LLP, Berger & Montague, P.C., and Klafter & Olsen LLP as Lead Counsel pursuant to 21D(a)(3)(B)(v) of the 3

4 Exchange Act. On June 15, 1998, the Court entered an Order appointing the Broderick Plaintiffs' Group as Lead Plaintiffs and approved their selection of Lead Counsel. The operative complaint in the Litigation is the Third Amended Class Action Complaint for Violations of the Federal Securities Laws (the "Complaint") filed on August 13, The Complaint alleges violations of 10(b) and 20(a) and Rule 10b-5 promulgated thereunder on behalf of a class of purchasers of PHP common stock during the period July 27, 1995 through November 19, 1998 against Jack M. Mazur, Robert L. Bowles Jr., Charles H. Robbins and PwC. 1 On January 9, 2003, the Court entered a final judgment dismissing the Complaint with prejudice as to PwC. On November 19, 1998, PHP filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware ("Bankruptcy Court"), pursuant to Chapter 11 of the Bankruptcy Code. Lead Plaintiffs' and the Settlement Class's claims against PHP were extinguished in its bankruptcy proceedings. IV. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT The Lead Plaintiffs believe that the claims asserted in the Litigation have merit and the evidence developed to date supports the claims asserted. However, counsel for the Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Settling Defendants through trial and appeals. Counsel for the Lead Plaintiffs also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this Litigation, as well as the difficulties and delays inherent in such litigation. Counsel for the Lead Plaintiffs also are mindful of the inherent problems of proof under and possible defenses to the violations asserted in the Litigation. Counsel for the Lead Plaintiffs believe that the settlement set forth in the Stipulation confers substantial benefits upon the Settlement Class. Moreover, Lead Counsel believe that the Settlement represents the best possible recovery based on the available insurance proceeds and the Settling Defendants lack of any significant assets to satisfy a monetary judgment. Based on their evaluation, counsel for the Lead Plaintiffs have determined that the settlement set forth in the Stipulation is in the best interests of the Lead Plaintiffs and the Settlement Class. V. SETTLING DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY The Settling Defendants have denied and continue to deny each and all of the claims and contentions alleged by the Lead Plaintiffs in the Litigation. The Settling 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 Litigation. The Settling Defendants also have denied and continue to deny, inter alia, the allegations that the Lead Plaintiffs or the Settlement Class have suffered damage or that the Lead Plaintiffs or the Settlement Class were harmed by the conduct alleged in the Litigation. Nonetheless, the Settling Defendants have concluded that further conduct of the Litigation would be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation. The Settling Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like this Litigation. The Settling Defendants have, therefore, determined that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in the Stipulation. VI. ORDER CERTIFYING A CLASS FOR PURPOSES OF SETTLEMENT The Court certified a Settlement Class for settlement purposes only, as defined above. VII. PARTICIPATION IN THE CLASS If you fall within the definition of the Settlement Class, you will be bound by any judgment entered with respect to the settlement in the Litigation whether or not you file a Proof of Claim and Release. If you choose, you may enter an appearance individually or through your own counsel at your own expense. TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND (AS DEFINED BELOW), YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES THIS NOTICE. The Proof of Claim and Release must be postmarked on or before May 13, 2004, and delivered to the Claims Administrator at the address below. Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim and Release, you will be barred from receiving any payments from the Net Settlement Fund (as defined below), but will in all other respects be bound by the provisions of the Stipulation (as defined above) and the Judgment (as defined below). 1 PwC is not a party to this Settlement. Defendant Bowles filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code but is a party to this Settlement. 4

5 VIII. EXCLUSION FROM THE CLASS You may request to be excluded from the Settlement Class. To do so, you must mail a written request to: PHP Securities Litigation Claims Administrator c/o Gilardi & Co. LLC P.O. Box 8040 San Rafael, CA The request for exclusion must state: (1) your name, address, and telephone number; (2) all purchases and sales of PHP common stock made during the Class Period, including the dates, the number of PHP shares and price paid or received per share for each such purchase or sale; and (3) that you wish to be excluded from the Settlement Class. TO BE VALID, A REQUEST FOR EXCLUSION MUST STATE ALL OF THE FOREGOING INFORMATION. YOUR EXCLUSION REQUEST MUST BE POSTMARKED ON OR BEFORE MARCH 29, If you submit a valid and timely request for exclusion, you shall have no rights under the Settlement, shall not share in the distribution of the Net Settlement Fund (as defined below), and shall not be bound by the Stipulation or the Judgment (as defined below). IX. TERMS OF THE PROPOSED SETTLEMENT A settlement has been reached in the Litigation between the Lead Plaintiffs and the Settling Defendants which is embodied in the Stipulation on file with the Court. The attorneys for the Lead Plaintiffs, on the basis of, among other things, a thorough investigation of the facts and the law relating to the acts, events and conduct complained of and the subject matter of the Litigation, have concluded that the proposed settlement is fair to and in the best interests of the Settlement Class. A portion of the settlement proceeds will be used for certain administrative expenses, including the costs of printing and mailing this Notice, the cost of publishing a newspaper notice, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. A portion of the settlement proceeds may also be used for the reimbursement of time and expenses of Lead Plaintiffs as provided by 15 U.S.C. 78u-4(a)(4) of the Exchange Act, if and to the extent allowed by the Court. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to counsel for the Representative Plaintiffs as attorneys' fees and for reimbursement of out-of-pocket expenses. X. PLAN OF ALLOCATION Subject to the approval by the Court of the Plan of Allocation described below, the balance of the Settlement Fund (the "Net Settlement Fund"), shall be distributed to Settlement Class Members who submit valid, timely Proof of Claim forms ("Authorized Claimants") as follows: (a) Each Person claiming to be an Authorized Claimant shall be required to submit a separate Proof of Claim and Release form signed under penalty of perjury and supported by such documents as specified in the Proof of Claim as are reasonably available to the Authorized Claimant. (b) All Proof of Claim forms must be postmarked or received by May 13, Unless otherwise ordered by the Court, any Settlement Class Member who fails to submit a Proof of Claim within such period, or such other period as may be ordered by the Court, shall be forever barred from receiving any payments pursuant to the Stipulation, but shall in all other respects be subject to the provisions of the Stipulation and the Final Judgment entered by the Court. (c) To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant's claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid that percentage of the Net Settlement Fund that each Authorized Claimant's claim is of the total of the claims of all Authorized Claimants. A "claim" will be computed as follows: 1. For shares of PHP common stock that were purchased between July 27, 1995 through November 19, 1998, and (a) sold from July 27, 1995 through November 19, 1998, the claim per share is the difference between the price paid for the shares of PHP common stock and the amount realized from the sale of any such shares; (b) retained at the end of November 19, 1998, the claim per share is the difference between the price paid for the shares of PHP common stock and $0.12 per share (5-day average closing price November 30, 1998 through December 4, 1998). The date of purchase or sale is the "contract" or "trade" date as distinguished from the "settlement" date. For Settlement Class Members who held shares at the beginning of the Class Period or made multiple purchases or sales during the Class Period, the first-in, first-out ("FIFO") method will be applied to such holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of shares during the Class Period will be matched, in 5

6 chronological order, first against shares held at the beginning of the Class Period. The remaining sales of shares during the Class Period will then be matched, in chronological order, against shares purchased during the Class Period. A Settlement Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Settlement Class Member had a net loss, after all profits from transactions in PHP common stock during the Class Period are subtracted from all losses. However, the proceeds from sales of shares which have been matched against shares held at the beginning of the Class Period will not be used in the calculation of such net loss. The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Settlement Class Member on equitable grounds. Payment pursuant to the Plan of Allocation set forth above shall be conclusive against all Authorized Claimants. No Person shall have any claim against Plaintiffs' Settlement Counsel or any claims administrator or Settling Defendants or Settling Defendants' counsel or Settling Defendants' Insurer based on distributions made substantially in accordance with the Stipulation and the Settlement contained therein, the Plan of Allocation, or further orders of the Court. XI. CONDITIONS FOR SETTLEMENT The Settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Judgment (defined below) by the Court, as provided for in the Stipulation; (2) expiration of the time to appeal from or alter or amend the Judgment; and (3) the partial dismissal with prejudice of the Litigation against the Individual Defendants. The Settlement is also conditioned on court approval of the settlement of two other actions pending against certain former officers and directors of PHP including defendants in this Litigation and approval by the Bankruptcy Court of the Master Settlement Agreement which releases the insurance proceeds to fund this Settlement and the settlement of the other two actions. The settlement of one of those actions, an adversary proceeding filed by PHP Liquidating, LLC on behalf of PHP's bankruptcy estate against certain former officers and directors of PHP, captioned PHP Liquidating, LLC v Mazur, et al., Adversary Proceeding No , has been approved by the Bankruptcy Court and the time to file an appeal has expired. Thus, this condition has been satisfied. In addition, the Bankruptcy Court approved the Master Settlement Agreement and the time to appeal has expired. Thus, this condition has been satisfied. The other lawsuit filed by the Commissioner of Banking and Insurance of the State of New Jersey against certain former officers and directors of PHP, captioned Bakke v. Watson, et al., No. MID-L (N.J. Super. Ct.) still needs to be approved by the court presiding over the lawsuit and after court approval the twenty-day time period for an interlocutory appeal pursuant to New Jersey law must expire. If, for any reason, any one of the conditions described above is not met, the Stipulation might be terminated and the parties to the Stipulation will be restored to their respective positions as of August 10, XII. DISMISSAL AND RELEASES If the proposed settlement is approved, the Court will enter a judgment. The Judgment will dismiss the Released Claims with prejudice as to all the Settling Defendants. The Judgment will provide that all Settlement Class Members who do not validly and timely request to be excluded from the Settlement Class shall be deemed to have released and forever discharged all Released Claims against all Released Persons. XIII. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES Banks, brokerage firms, institutions, and other Persons who are nominees who purchased the common stock of PHP for the beneficial interest of other Persons as of any day from July 27, 1995 through and including November 19, 1998, are requested within ten (10) days of receipt of this Notice, to (1) provide the Claims Administrator with the names and addresses of such beneficial purchasers, or to (2) forward a copy of this Notice to each such beneficial purchaser and provide the Claims Administrator with written confirmation that this Notice has been so forwarded. The Claims Administrator offers to pay your reasonable costs and expenses of complying with this provision upon submission of appropriate documentation. Additional copies of the Notice may be obtained from the Claims Administrator for forwarding to such beneficial owners. All such correspondence to Plaintiffs' Settlement Counsel should be addressed as follows: PHP Securities Litigation Claims Administrator c/o Gilardi & Co. LLC P.O. Box 8040 San Rafael, CA XIV. JUDGMENT TO BE ENTERED If the proposed settlement is approved, the Court will enter a Partial Final Judgment and Order of Partial Dismissal with Prejudice ("Judgment"). The Judgment will dismiss the Released Claims with prejudice as to all Settling Defendants. The 6

7 Litigation will continue against the Non-Settling Defendant. Any final verdict or judgment that may be obtained against the Non-Settling Defendant by or on behalf of the Lead Plaintiffs or the Settlement Class Members may be reduced by a settlement credit consistent with applicable federal law. The Judgment will provide that all Settlement Class Members who have not validly and timely requested to be excluded from the Settlement Class shall be deemed to have released and forever discharged all Released Claims against all Released Persons. XV. ATTORNEYS' FEES AND EXPENSES OF PLAINTIFFS' ATTORNEYS AND LEAD PLAINTIFFS To date, plaintiffs' counsel have not received any payment for their services in conducting this Litigation on behalf of the Lead Plaintiffs and the Members of the Settlement Class, nor have counsel been reimbursed for their out-of-pocket expenses. Lead Counsel will apply to the Court at or after the Settlement Hearing, for an award of attorneys' fees of 30% of the Settlement Fund plus reimbursement of litigation expenses that were advanced in connection with the Litigation not to exceed $300,000 plus interest on the award at the same rate and for the same period as earned on that portion of the Settlement Fund. In addition, the Lead Plaintiffs may seek compensation for their time expended and expenses incurred in prosecuting the Litigation on behalf of the Settlement Class. Such sums as may be granted by the Court will be paid from the Settlement Fund. Settlement Class Members are not personally liable for any fees or expenses awarded by the Court. The fee requested by Lead Counsel will compensate them for their efforts in achieving the Settlement Fund for the benefit of the Settlement Class, and for their risk in undertaking this case on a contingent basis. If approved by the Court, the fee requested would be within the range of fees awarded to plaintiffs' counsel under similar circumstances in litigation of this type. XVI. RIGHT TO OBJECT TO THE PROPOSED SETTLEMENT A hearing will be held before the Honorable Mariana R. Pfaelzer, United States District Judge, at the United States District Court for the Central District of California, Western Division, 312 North Spring Street, Los Angeles, California 90012, at 10:00 a.m. on April 26, 2004, for the purpose of determining: (1) whether the proposed settlement is fair, just, reasonable and adequate and whether it should be approved by the Court; (2) whether the proposed Plan of Allocation is fair, just, reasonable and adequate; (3) whether Lead Counsel's application for an award of attorneys' fees and expenses should be approved; (4) whether costs and expenses should be awarded to Lead Plaintiffs pursuant to 15 U.S.C. 78u-4(a)(4); and (5) whether a Judgment should be entered dismissing the Litigation with prejudice as against the Settling Defendants. The Settlement Hearing may be adjourned from time to time by the Court at the Settlement Hearing or any adjourned session thereof without further notice. Any Member of the Settlement Class who does not request to be excluded may appear at the Settlement Hearing to show cause why the proposed settlement should not be approved, or the Litigation should not be dismissed with prejudice as against the Settling Defendants and to present any opposition to the Plan of Allocation or the application of Lead Counsel for attorneys' fees and expenses; provided, however, that no such Person shall be heard, unless his, her or its objection or opposition is made in writing and is filed, together with copies of all other papers and briefs by him, her or it with the Clerk of the Court, United States District Court for the Central District of California, Western Division, 312 North Spring Street, Los Angeles, California 90012, no later than March 29, 2004, and received on or before March 29, 2004, by each of: Counsel for Plaintiffs MILBERG WEISS BERSHAD BERGER & MONTAGUE, P.C. KLAFTER & OLSEN LLP HYNES & LERACH LLP TODD S. COLLINS KURT B. OLSEN JEFFREY D. LIGHT 1622 Locust Street 2121 K Street, NW, Suite B Street, Suite 1700 Philadelphia, PA Washington, DC San Diego, CA Counsel for Defendants ARNOLD & PORTER ARNOLD & PORTER LATHAM & WATKINS JAMES D. LAYDEN JOHN A. FREEDMAN MICHELE ROSE 777 S. Figueroa Street 555 Twelfth Street, N.W Commerce Park Drive, 44th Floor Washington, DC Suite 200 Los Angeles, CA Reston, VA SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP DARRELL HEIBER 300 South Grand Avenue, Suite 3400 Los Angeles, CA

8 Unless otherwise ordered by the Court, any Member of the Settlement Class who does not make his, her or its objection or opposition in the manner provided shall be deemed to have waived all objections and opposition to the fairness, reasonableness and adequacy of the proposed settlement, the Plan of Allocation and the request of plaintiffs' counsel for attorneys' fees and expenses and expenses of Lead Plaintiffs. XVII. EXAMINATION OF PAPERS AND INQUIRIES This Notice contains only a summary of the terms of the proposed settlement. For a more detailed statement of the matters involved in the Litigation, reference is made to the pleadings, to the Stipulation and to other papers filed in this action, which may be inspected at the Office of the Clerk, United States District Court for the Central District of California, Western Division, 312 North Spring Street, Los Angeles, California 90012, during business hours of each business day. If you have any questions about the Settlement, you may contact any of the following representatives for the plaintiffs: MILBERG WEISS BERSHAD BERGER & MONTAGUE, P.C. KLAFTER & OLSEN LLP HYNES & LERACH LLP TODD S. COLLINS KURT B. OLSEN JEFFREY D. LIGHT 1622 Locust Street 2121 K Street, NW, Suite B Street, Suite 1700 Philadelphia, PA Washington, DC San Diego, CA DO NOT CONTACT THE COURT REGARDING THIS NOTICE. DATED: January 26, 2004 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION 8