NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION

Transcription

1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION X In re TECO ENERGY, INC. : SECURITIES LITIGATION : Case No. 8:04-CA-1948-T-27EAJ : : This Document Relates To: : : ALL ACTIONS. : X NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION TO: ALL PERSONS WHO PURCHASED THE PUBLICLY TRADED SECURITIES OF TECO ENERGY, INC. ( TECO ) BETWEEN OCTOBER 30, 2001 AND FEBRUARY 4, PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION. PLEASE NOTE THAT IF YOU ARE A CLASS MEMBER, YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SET- TLEMENT DESCRIBED IN THIS NOTICE. TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUBMIT A VALID PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE OCTOBER 25, This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Middle District of Florida, Tampa Division (the Court ). The purpose of this Notice is to inform you of the pendency and proposed settlement of this class action litigation and of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the settlement. This Notice 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 describes the rights you may have in connection with the settlement and what steps you may take in relation to the settlement and this class action litigation. The proposed settlement creates a fund in the amount of $17,350, in cash (the Settlement Fund ) 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 and type of TECO publicly traded securities you purchased during the period October 30, 2001 to February 4, 2003 and the timing of your purchases and any sales. Depending on the number of eligible shares purchased by Class Members who elect to participate in the settlement and when those shares were purchased and sold, the estimated average distribution per share of TECO common stock will be approximately $0.28 before deduction of Court-approved fees and expenses. To see how claims for losses in TECO common stock, Mandatorily Convertible Equity Security Units, and options will actually be calculated, see Section VIII, Plan of Allocation beginning at page 5 below. Lead Plaintiffs and 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 disagree include: (1) the appropriate economic model for determining the amount by which the price of TECO publicly traded securities was allegedly artificially inflated (if at all) during the Class Period; (2) the amount by which the price of TECO publicly traded securities was allegedly artificially inflated (if at all) during the Class Period; (3) the effect of various market forces influencing the trading price of TECO publicly traded securities 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 TECO publicly traded securities 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 TECO publicly traded securities at various times during the Class Period; (6) the extent to which the various allegedly adverse material facts that Lead Plaintiffs alleged were omitted influenced (if at all) the trading price of TECO publicly traded securities at various times during the Class Period; and (7) whether the statements made or facts allegedly omitted were material, false, misleading or otherwise actionable under the securities laws. The Lead Plaintiffs believe that the proposed settlement is a good recovery and is in the best interests of the Class. Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that the Class would not have prevailed on any of their claims, in which case the Class would receive nothing. The amount of damages recoverable by the Class was and is challenged by Defendants. Recoverable damages in this case are limited to losses caused by conduct actionable under applicable law and, had the Litigation gone to trial, Defendants would have asserted that any losses of Class Members were caused by non-actionable market, industry or general economic factors. Defendants would also assert that throughout the Class Period the uncertainties and risks associated with the purchase of TECO publicly traded securities were fully and adequately disclosed. 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 Class, nor have they been reimbursed for their out-of-pocket expenditures. If the settlement is approved by the Court, counsel for the plaintiffs will apply to the Court for attorneys fees of 28.5% of the Settlement Fund and expenses not to exceed $400, to be paid from

2 the Settlement Fund. If the amount requested is approved by the Court, the average cost per share will be $0.09. In addition, each of the Lead Plaintiffs may seek up to $5, each in their time and expenses incurred in representing the Class. For further information regarding this settlement you may contact a representative of Plaintiffs Lead Counsel: Rick Nelson, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 655 West Broadway, Suite 1900, San Diego, CA 92101, Telephone: 800/ I. NOTICE OF HEARING ON PROPOSED SETTLEMENT A hearing (the Settlement Hearing ) will be held on October 3, 2007, at 10:00 a.m., before the Honorable James D. Whittemore, United States District Judge, Middle District of Florida, Tampa Division, at the Sam M. Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, Florida. The purpose of the Settlement Hearing will be to determine: (1) whether the settlement consisting of $17,350, in cash should be approved as fair, reasonable and adequate to the Members of the Class (as defined below); (2) whether the proposed plan to distribute the settlement proceeds (the Plan of Allocation ) is fair, reasonable and adequate; (3) whether the application by plaintiffs counsel for an award of attorneys fees and expenses should be approved and the expenses of the Lead Plaintiffs reimbursed; and (4) whether the Litigation should be dismissed with prejudice. The Court may adjourn or continue the Settlement Hearing without further notice to the Class. II. DEFINITIONS USED IN THIS NOTICE 1. Authorized Claimant means any Class Member whose claim for recovery has been allowed pursuant to the terms of the Stipulation. 2. Claims Administrator means the firm of RSM McGladrey, Inc. 3. Class means all Persons who purchased TECO Energy, Inc. publicly traded securities between October 30, 2001 and February 4, Excluded from the Class are: (a) such Persons or entities who submit valid and timely requests for exclusion from the Class; (b) such Persons or entities who are or were: one of the Defendants; family members of any of the Defendants; any entity in which Defendants have or had a Controlling Interest (provided that this exclusion shall not be construed to apply to employee benefit plans and trusts); the legal representatives, heirs, executors, successors, or assigns of any Person or entity excluded pursuant to this subsection; or any current or former directors or officers of TECO Energy, Inc. or TECO Power Services, Inc. 4. Class Member or Member of the Class mean a Person who falls within the definition of the Class as set forth in paragraph 3 above. 5. Class Period means the period commencing on October 30, 2001 through February 4, 2003, inclusive. 6. Defendants means TECO, Robert D. Fagan and Gordon L. Gillette. 7. Lead Plaintiffs means NECA-IBEW Pension Fund, Monroe County Employees Retirement System, John Marder and Charles Korpak. 8. Person means an individual, corporation, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees. 9. Plaintiffs Lead Counsel means Lerach Coughlin Stoia Geller Rudman & Robbins LLP, David J. George, Robert J. Robbins, 120 East Palmetto Park Road, Suite 500, Boca Raton, FL 33432; Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Keith F. Park, 655 West Broadway, Suite 1900, San Diego, CA Plan of Allocation means a plan or formula of allocation of the Settlement Fund whereby the Settlement Fund shall be distributed to Authorized Claimants after payment of expenses of notice and administration of the settlement, Taxes and Tax Expenses and such attorneys fees, costs, expenses and interest as may be awarded by the Court. Any Plan of Allocation is not part of the Stipulation and neither Defendants nor their Related Parties shall have any responsibility or liability with respect thereto. 11. Related Parties means, with respect to the Defendants: Defendants, their present and former parents, subsidiaries, divisions, and affiliates (as defined in 17 C.F.R (b)), the present and former employees, members, partners, principals, officers and directors of each of them, the present and former attorneys, advisors, trustees, administrators, fiduciaries, consultants, representatives, accountants and auditors, insurers (including, but not limited to, Associated Electric and Gas Insurance Services Limited, or AEGIS ) and agents of each of them, and the predecessors, estates, heirs, executors, trusts, trustees, administrators, successors, and assigns of each of them, and any Person which is or was related to or affiliated with any of the foregoing or in which any of the foregoing Persons has or had a Controlling Interest and the present and former employees, members, partners, principals, officers and directors, attorneys, advisors, trustees, administrators, fiduciaries, consultants, representatives, accountants and auditors, insurers, and agents of each of them. 12. Released Claims means all claims, demands, rights, liabilities, allegations or causes of action of every nature and description, known and unknown (including, but not limited to, Unknown Claims as defined below), that were asserted or could have been asserted in this Action against the Released Persons (including, but not limited to, all claims under the 1933 Act, the 1934 Exchange Act, any other federal or state statute, common law, or the law of any foreign jurisdiction) arising out of or related in any way to the purchase or sale of, or the exercise or failure to exercise options with respect to, TECO securities. 13. Released Persons means each and all of the Defendants and their Related Parties. 14. Settling Parties means, collectively, the Defendants and the Lead Plaintiffs on behalf of themselves and the Members of the Class. 15. Unknown Claims means any Released Claims which the Lead Plaintiffs or any Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons 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 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 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: 2

3 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 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 The Lead Plaintiffs and 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 the Lead Plaintiffs shall expressly and each 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. The Lead Plaintiffs acknowledge, and the Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part. III. THE LITIGATION On and after August 25, 2004, actions were filed in the United States District Court for the Middle District of Florida, Tampa Division as securities class actions on behalf of purchasers of TECO Energy, Inc. publicly traded securities during a defined period of time. These actions were consolidated for all purposes by an order filed November 23, The consolidated actions are referred to herein collectively as the Litigation or Action. On February 1, 2005, NECA-IBEW Pension Fund, Monroe County Employees Retirement System, John Marder and Charles Korpak were appointed Lead Plaintiffs. The operative complaint in the Litigation is the Amended Consolidated Class Action Complaint for Securities Fraud (the Complaint ), filed May 10, The Complaint alleges violations of 10(b) and 20(a) of the Securities Exchange Act of 1934 ( Exchange Act ) and Rule 10b-5 promulgated thereunder on behalf of a class of purchasers of TECO publicly traded securities. Lead Plaintiffs and Defendants engaged in settlement discussions at various points throughout the pendency of the lawsuit. Prior to that time, both Plaintiffs Lead Counsel and Defendants had engaged consultants who prepared a comprehensive analysis of loss causation and damage issues. This required an extensive review of information gleaned from analyst reports regarding TECO, as well as analysis of factors impacting TECO stock on key dates. Plaintiffs Lead Counsel and Defendants also consulted experts regarding the value of settlements in securities class actions brought under similar circumstances. Early in 2007, the parties agreed that a mediator would be helpful in working toward a settlement. On February 16, 2007, Plaintiffs Lead Counsel and counsel for Defendants attended a mediation conference before retired California Superior Court Judge Daniel Weinstein. Lead Plaintiffs and Defendants exchanged comprehensive mediation statements, and the parties each submitted an appendix of exhibits. Both parties made presentations to Judge Weinstein, including evidence and legal arguments, and after arm s-length negotiations facilitated by Judge Weinstein, the Settling Parties executed a Term Sheet on February 27, 2007, which constituted a binding agreement to settle the Action. Negotiations between the Settling Parties concerning the terms of the Stipulation of Settlement continued until it was signed in June As a result of his involvement in the extensive negotiation process, Judge Weinstein has signed a Statement by the Mediator, which states as follows: I am a former California Superior Court Judge for the City of San Francisco and a member of JAMS, where I specialize in mediating complex civil disputes. I was retained by the parties in In re TECO Energy, Inc. Securities Litigation, a class action pending in the United States District Court for the Middle District of Florida, to attempt to mediate a settlement of the Action. Prior to the scheduled mediation, the Parties submitted confidential mediation statements and documentation supporting their respective positions, including relevant briefs and court orders. I presided over the mediation between the Parties that was held on February 16, 2007 at the offices of Holland and Knight LLP. The issues in this case were complex and novel, and I met first jointly and then separately with each side to discuss the strengths and weaknesses of their respective positions and the risks of litigation in an effort to bridge the differences between the Parties. The discussions during this mediation session were vigorous on both sides, and ultimately resulted in a settlement of $17,350,000 plus interest. In my opinion, the proposed Settlement is the result of vigorous arm s length negotiations by both sides. I believe, based on my extensive discussions with the Parties and the information made available to me both before and during the mediation, that the settlement was negotiated in good faith and is reasonable. Based on my involvement with the mediation, including extensive briefing regarding damages and the discussions of the relative value of certain claims, I also believe that the proposed Plan of Allocation, which I have reviewed, is reasonable. IV. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT The Lead Plaintiffs believe that the claims asserted in the Litigation have merit and that the evidence developed to date supports the claims. However, counsel for the Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and through 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 the 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 securities law violations 3

4 asserted in the Litigation. Counsel for the Lead Plaintiffs believe that the settlement set forth in the Stipulation confers substantial benefits upon the Class. 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 Class. V. DEFENDANTS STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY The Defendants have denied and continue to deny each and all of the claims and contentions alleged in the Litigation. The 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 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 TECO publicly traded securities was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, or that the Lead Plaintiffs or the Class were harmed by the conduct alleged in the Complaint. Furthermore, the Defendants believe that the lawsuit had no merit and that the Lead Plaintiffs and the Class would have been unable to prove their claims. In the event of a summary judgment motion or at trial, Defendants believe that the evidence would have shown that all of TECO s allegedly false statements were in fact truthful predictions about TECO s business. In Defendants view, all of the statements cited as being false by Lead Plaintiffs were about the future, reflecting TECO s hopes about the growth of its merchant power investments. They were not statements about TECO s current status, and all statements were accompanied by warnings that they were predictions only, and might not come true. Moreover, the information about TECO s merchant power business that Lead Plaintiffs claim caused the decline in the value of TECO s stock had already been disclosed to the market by research analysts on multiple occasions but none of these disclosures caused a fall in the price of TECO stock. Defendants believe that Lead Plaintiffs would have been unable to explain why later, nearly identical disclosures caused a price decline. Finally, in Defendants view, these prior disclosures would have defeated Lead Plaintiffs damage arguments Defendants believe that the economic evidence would have demonstrated that Lead Plaintiffs did not suffer any damages due to Defendants allegedly false statements. Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Litigation. The Defendants have, therefore, determined that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in the Stipulation. VI. TERMS OF THE PROPOSED SETTLEMENT The Defendants have paid or caused to be paid into an escrow account, pursuant to the terms of the Stipulation of Settlement dated as of February 27, 2007 (the Stipulation ), cash in the amount of $17,350, which has been earning and will continue to earn interest for the benefit of the Class. A portion of the settlement proceeds will be used for certain administrative expenses, including 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. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to counsel for plaintiffs as attorneys fees and for the attorneys and the Lead Plaintiffs expenses. The balance of the Settlement Fund (the Net Settlement Fund ) will be distributed according to the Plan of Allocation described below to Class Members who submit valid and timely Proof of Claim and Release forms. VII. THE RIGHTS OF CLASS MEMBERS If you are a Class Member, you may receive the benefit of, and you will be bound by the terms of, the proposed settlement described in this Notice, upon approval of it by the Court. If you are a Class Member, you have the following options: 1. You may file a Proof of Claim and Release as described below. If you choose this option, you will remain a Class Member, you will share in the proceeds of the proposed settlement if your claim is timely and valid and if the proposed settlement is finally approved by the Court, and you will be bound by the Judgment and release described below. 2. If you do not wish to be included in the Class and you do not wish to participate in the proposed settlement described in this Notice, you may request to be excluded. To do so, you must so state in writing postmarked no later than September 7, You must set forth: (a) your name, address and telephone number; (b) the number of shares of TECO publicly traded securities purchased and the number of shares sold during the Class Period and the dates and prices of such purchase(s) and/or sale(s); and (c) that you wish to be excluded from the Class. The exclusion request should be addressed as follows: TECO Securities Litigation Claims Administrator c/o RSM McGladrey, Inc. P.O. Box 1367 Blue Bell, PA NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST. 3. If you validly request exclusion from the Class: (a) you will be excluded from the Class, (b) you will not share in the proceeds of the settlement described herein, (c) you will not be bound by any judgment entered in the Litigation, and (d) you will not be precluded, by reason of your decision to request exclusion from the Class, from otherwise prosecuting an individual claim, if timely, against Defendants based on the matters complained of in the Litigation. 4. If you do not request in writing to be excluded from the Class as set forth in paragraph 2 above, you will be bound by any and all determinations or judgments in the Litigation in connection with the settlement entered into or approved by the Court, whether favorable or unfavorable to the Class, and you shall be deemed to have, and by operation of the Judgment shall have, fully released all of the Released Claims against the Released Persons, whether or not you submit a valid Proof of Claim and Release form. 5. You may do nothing at all. If you choose this option, you will not share in the proceeds of the settlement, but you will be bound by any judgment entered by the Court, and you shall be deemed to have, and by operation of the Judgment shall have, 4

5 fully released all of the Released Claims against the Released Persons. 6. If you are a Class Member, you may, but are not required to, enter an appearance through counsel of your own choosing at your own expense. If you do not do so, you will be represented by Plaintiffs Lead Counsel: Lerach Coughlin Stoia Geller Rudman & Robbins LLP, David J. George, 120 East Palmetto Park Road, Suite 500, Boca Raton, FL 33432; Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Keith F. Park, 655 West Broadway, Suite 1900, San Diego, CA VIII. PLAN OF ALLOCATION The Net Settlement Fund will be distributed to Class Members who submit valid, timely Proof of Claim and Release forms ( Authorized Claimants ) under the Plan of Allocation described below. The Plan of Allocation provides that you will be eligible to participate in the distribution of the Net Settlement Fund only if you have a net loss on all transactions in TECO publicly traded securities during the Class Period. For purposes of determining the amount an Authorized Claimant may recover under the Plan of Allocation, Plaintiffs Lead Counsel have consulted with their damage consultants and the Plan of Allocation reflects an assessment of the damages that they believe could have been recovered had Lead Plaintiffs prevailed at trial. 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 the percentage of the Net Settlement Fund that each Authorized Claimant s claim bears to the total of the claims of all Authorized Claimants. Payment in this manner shall be deemed conclusive against all Authorized Claimants. A claim will be calculated as follows: The Plan of Allocation was developed based on event study analyses adjusted to reflect the Court s ruling on the Defendants Motions to Dismiss and the terms of the settlement. It is estimated that a total of 82 million common shares and million Mandatorily Convertible Equity Security Units (in the form of 9.5% equity units at $25 per unit) have been damaged as a result of the Lead Plaintiffs claims. Damages for TECO Energy Mandatorily Convertible Equity Security Units ( Units ) Claims for damages shall be available for all Persons that purchased their Mandatorily Convertible Equity Security Units in the offering or purchased in the open market between January 11 and August 30, 2002 and sold or continued to hold their Units on or after August 13, For Units purchased on or between January 11 and August 30, 2002, and sold on or between August 13 and November 29, 2002, the claim for Units shall be as the lesser of: (i) the inflation per unit at the time of purchase (which is determined based on the percentage inflation appropriate for the date of purchase, as set forth in Table 1 below, times the purchase price, excluding fees and commissions) minus the inflation per unit at the time of sale (which is determined based on the percentage inflation appropriate for the date of sale, as set forth in Table 1 below, times the sale price, excluding fees and commissions); or (ii) the purchase price minus the selling price. For Units purchased on or between January 11 and August 30, 2002, and not sold or held until after November 29, 2002, the damage claim per unit shall be defined as the inflation per unit at the time of purchase (which is determined based on the percentage inflation appropriate for the date of purchase, as set forth in Table 1 below, times the purchase price, excluding fees and commissions). Table 1: Inflation Percentages for Mandatorily Convertible Equity Security Units Period Inflation Percentage January 11 to August 12, % August 12 to August 30, % September 2, 2002 and after 0.0% Additional Unit Claims Although included in the Complaint as pled, Units purchased on or between September 2, 2002 and February 4, 2003 would not be entitled to claim damages given the Court s rulings. However, in return for a release from all Released Claims, such purchasers of Units shall be entitled to assert the following claims: For Units purchased on or between September 2, 2002 and February 4, 2003, and sold on or before February 4, 2003, claimed damages shall equal 4% of the difference between the purchase price and the selling price, excluding fees and commissions. For Units purchased on or between September 2, 2002 and February 4, 2003, and sold on or after February 5, 2003, claimed damages shall equal 4% of the difference between the purchase price, excluding fees and commissions, and $ Damages for Common Stock Damage claims shall be available for all Persons that purchased their shares in the open market on or after December 3, 2001 and on or before August 30, 2002, and sold their shares on or after August 13, 2002, or have continued to hold their shares. Damages per share shall be determined based on the inflation in the share price at the date of purchase minus the inflation in share price at the date of sale. Inflation in the share price shall be determined by the price paid or received in each transaction multiplied times the inflation percentage applicable to the transaction date as set forth in Table 2 below. Table 2 is adjusted to reflect that portion of the declines in the share price that can be explained by identified events other than those that revealed corrective information. Table 2: Inflation as a Percentage of the Share Price During the Rule 10b-5 Class Period Period Inflation Percentage January 11 to August 12, % August 12 to August 30, % September 2, 2002 and after 0.0% Damages per share shall be further limited by the Private Securities Litigation Reform Act of 1995 by the following limitation: if a share was sold prior to November 29, 2002, damages per share shall not exceed the difference between the purchase price and the selling price. Additional Common Stock Claims Although included in the Complaint as pled, common stock purchased on or between October 30 and December 2, 2001 and purchased on or between September 2, 2002 and February 4, 2003 would not be entitled to claim damages given the Court s rulings. However, in return for a release from all Released 5

6 Claims, such purchasers of common stock shall be entitled to assert the following claims: For common stock purchased on or between October 30 and December 2, 2001, and sold on or after August 13, 2002 and on or before February 4, 2003, the claim shall equal 2% of the difference between the purchase price and the selling price, excluding fees and commissions. For common stock purchased on or between October 30 and December 2, 2001, and sold on or after February 5, 2003, claimed damages shall equal 2% of the difference between the purchase price, excluding fees and commissions, and $ For common stock purchased on or between September 2, 2002 and February 4, 2003, and sold on or before February 4, 2003, the claim shall equal 4% of the difference between the purchase price and the selling price, excluding fees and commissions. For common stock purchased on or between September 2, 2002 and February 4, 2003, and sold on or after February 5, 2003, claimed damages shall equal 4% of the difference between the purchase price, excluding fees and commissions, and $ Damages for Options to Purchase Common Stock Damages shall be available for Call Options to purchase TECO Energy common stock that were purchased on or after December 3, 2001 and on or before August 30, 2002, and which had not been sold, covered or expired before August 13, With respect to purchases and sales (covers) of Call Options, the alleged artificial inflation per option on a given day shall be the percentage reduction in the value of Call Options on that day as a result of the inflation in TECO Energy s closing common stock price times the price paid (if purchased) or received (if sold). The percentage reduction in the value of Call Options will be calculated using the Black-Scholes option pricing formula (using the implied volatility for an at-the-money option on that day and one year risk-free U.S. Treasury interest rate) and the closing share price of TECO Energy s common stock on the transaction date compared with the Black-Scholes pricing formula using the uninflated share price of TECO Energy s common stock on that same date. The uninflated share price of TECO Energy s common stock will be determined by reducing the closing share price by the inflation percentage for the transaction day as set forth in Table 2. Damages shall be available for Put Options to sell TECO Energy common stock that were sold on or after December 3, 2001 and on or before August 30, 2002, and which had not been purchased (covered) or expired before August 13, The artificial deflation per option on a given day shall be the percentage increase in the value of Put Options on that day as a result of the inflation in the share price of TECO Energy times the price paid (if purchased) or received (if sold). The amount of deflation in the value of each Put Option will be calculated using the Black-Scholes option pricing formula (using the implied volatility for an at-the-money put option on that day and one year risk-free U.S. Treasury interest rate) and the closing share price of TECO Energy s common stock on the transaction date compared with the Black-Scholes pricing formula using the uninflated share price of TECO Energy s common stock on that same date. The uninflated share price of TECO Energy s common stock will be determined by reducing the closing price of TECO Energy s common stock by the inflation percentage for the transaction day as set forth in Table 2. In order to have a claim for options approved, all transactions involving options between December 3, 2001 and November 30, 2002, must be disclosed and all open option positions or holdings as of December 3, 2001, must be disclosed. For each option transaction/position, the following information shall be provided: (i) the date the position was created or transaction took place (trade date, not settlement date); (ii) the consideration paid or received, excluding any fees or commissions; (iii) the type of option (put or call); (iv) the exercise or strike price of option in dollars per TECO Energy common stock; and (v) the expiration date or date of maturity of the option. Additional Option Claims Although included in the Complaint as pled, Call Options to purchase and Put Options to sell common stock purchased on or between October 30 and December 2, 2001, and purchased on or between September 2, 2002 and February 4, 2003, would not be entitled to claim damages given the Court s rulings. However, in return for a release from all claims, such purchases of options shall be entitled to assert the following claims: For Call Options purchased on or between October 30 and December 2, 2001, and sold on or after August 13, 2002 and on or before February 4, 2003, claimed damages shall equal 5% of the difference between the purchase price and the selling price, excluding fees and commissions. For Call Options purchased on or between October 30 and December 2, 2001, and sold on or after February 5, 2003, claimed damages shall equal 5% of the purchase price, excluding fees and commissions. For Call Options purchased on or between September 2, 2002 and February 4, 2003, and sold on or before February 4, 2003, claimed damages shall equal 10% of the difference between the purchase price and the selling price, excluding fees and commissions. For Call Options purchased on or between September 2, 2002 and February 4, 2003, and sold on or after February 5, 2003, claimed damages shall equal 10% of the purchase price, excluding fees and commissions. For Put Options written (sold) on or between October 30 and December 2, 2001, and then covered (repurchased) or expired on or after August 13, 2002 and on or before February 4, 2003, claimed damages shall equal 5% of the difference between the purchase price and the selling price, excluding fees and commissions. For Put Options written (sold) on or between October 30 and December 2, 2001, and then covered (repurchased) or expired on or after February 5, 2003, claimed damages shall equal 5% of the selling price, excluding fees and commissions. For Put Options written (sold) on or between September 2, 2002 and February 4, 2003, and then covered (repurchased) or expired on or before February 4, 2003, claimed damages shall equal 10% of the difference between the purchase price and the selling price, excluding fees and commissions. For Put Options written (sold) on or between September 2, 2002 and February 4, 2003, and then covered (repurchased) or expired on or after February 5, 2003, claimed damages shall equal 10% of the selling price, excluding fees and commissions. Further Limitations on Damages The claim for damages by any claimant shall not exceed the net losses realized by the claimant on all purchases or sales of common stock, Units or options during the period from December 3, 2001 and November 30, The date of purchase or sale is the contract or trade 6

7 date as distinguished from the settlement date. For Class Members who held TECO securities at the beginning of the Class Period or made multiple purchases or sales during the Class Period, the first-in, first-out ( FIFO ) method will be applied to such holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of shares during the Class Period will be matched, in chronological order, first against securities held at the beginning of the Class Period. The remaining sales of securities during the Class Period will then be matched, in chronological order, against securities purchased during the Class Period. A Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Class Member had a net loss, after all profits from transactions in TECO publicly traded securities during the Class Period are subtracted from all losses. However, the proceeds from sales of securities which have been matched against stock held at the beginning of the Class Period will not be used in the calculation of such net loss. No distributions will be made to Authorized Claimants who would otherwise receive a distribution of less than $ The Court has reserved jurisdiction to allow, disallow or adjust the claim of any 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 Lead Counsel or any claims administrator or Defendants or other person designated by Plaintiffs Lead Counsel or Defendants or Defendants counsel based on distributions made substantially in accordance with the Stipulation and the settlement contained therein, the Plan of Allocation, or further orders of the Court. All Class Members who fail to complete and file a valid and timely Proof of Claim and Release form shall be barred from participating in distributions from the Net Settlement Fund (unless otherwise ordered by the Court), but otherwise shall be bound by all of the terms of the Stipulation, including the terms of any judgment entered and the releases given. IX. PARTICIPATION IN THE SETTLEMENT TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY COM- PLETE 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 October 25, 2007, 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, but will in all other respects be bound by the provisions of the Stipulation and the Judgment. X. DISMISSAL AND RELEASES If the proposed settlement is approved, the Court will enter a Final Judgment and Order of Dismissal with Prejudice ( Judgment ). The Judgment will dismiss the Released Claims with prejudice as to all Defendants. The Judgment will provide that all Class Members shall be deemed to have released and forever discharged all Released Claims (to the extent Members of the Class have such claims) against all Released Persons and that the Released Persons shall be deemed to have released and discharged all Class Members and counsel to the Lead Plaintiffs from all claims arising out of the prosecution and settlement of the Litigation or the Released Claims. XI. APPLICATION FOR FEES AND EXPENSES At the Settlement Hearing, counsel for plaintiffs will request the Court to award attorneys fees of 28.5% of the Settlement Fund, plus expenses not to exceed $400,000.00, which were incurred in connection with the Litigation, plus interest thereon. In addition, Lead Plaintiffs may seek up to $5, each for expenses (including lost wages) they incurred in representing the Class. Such sums as may be approved by the Court will be paid from the Settlement Fund. Class Members are not personally liable for any such fees or expenses. To date, plaintiffs counsel have not received any payment for their services in conducting this Litigation on behalf of the Lead Plaintiffs and Members of the Class, nor have counsel been reimbursed for all of their out-of-pocket expenses. The fee requested by plaintiffs counsel will compensate counsel for their efforts in achieving the Settlement Fund for the benefit of the Class and for their risk in undertaking this representation on a wholly contingent basis. The fee requested is well within the range of fees awarded to plaintiffs counsel under similar circumstances in other litigation of this type. XII. CONDITIONS FOR SETTLEMENT The settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Judgment by the Court, as provided for in the Stipulation; and (2) expiration of the time to appeal from or alter or amend the Judgment. If, for any reason, any one of the conditions described in the Stipulation is not met, the Stipulation might be terminated and, if terminated, will become null and void, and the parties to the Stipulation will be restored to their respective positions as of February 26, XIII. THE RIGHT TO BE HEARD AT THE HEARING Any Class Member who objects to any aspect of the settlement, the Plan of Allocation, or the application for attorneys fees and expenses, may appear and be heard at the Settlement Hearing. Any such Person must submit a written notice of objection, received on or before September 7, 2007, by each of the following: Court: CLERK OF THE COURT UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION Sam M. Gibbons U.S. Courthouse 801 North Florida Avenue Tampa, FL Lead Counsel for Plaintiffs: LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP DAVID J. GEORGE 120 East Palmetto Park Road, Suite 500 Boca Raton, FL LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP KEITH F. PARK 655 West Broadway, Suite 1900 San Diego, CA

8 Counsel for Defendants HOLLAND & KNIGHT LLP TRACY A. NICHOLS 701 Brickell Avenue, Suite 3000 Miami, FL PAUL, WEISS, RIFKIND, WHARTON & GARRISON RICHARD A. ROSEN STEVEN B. ROSENFELD 1285 Avenue of the Americas New York, NY The notice of objection must demonstrate the objecting Person s membership in the Class, including the number of securities of TECO purchased and sold during the Class Period, and contain a statement of the reasons for objection. Only Members of the Class who have submitted written notices of objection in this manner will be entitled to be heard at the Settlement Hearing, unless the Court orders otherwise. XIV. SPECIAL NOTICE TO NOMINEES If you hold or held any TECO securities purchased during the Class Period as nominee for a beneficial owner, then, within ten (10) days after you receive this Notice, you must either: (1) send a copy of this Notice and the Proof of Claim and Release by first class mail to all such Persons; or (2) provide a list of the names and addresses of such Persons to the Claims Administrator: TECO Securities Litigation Claims Administrator c/o RSM McGladrey, Inc. P.O. Box 1367 Blue Bell, PA If you choose to mail the Notice and Proof of Claim and Release yourself, you may obtain from the Claims Administrator (without cost to you) as many additional copies of these documents as you will need to complete the mailing. Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the Notice and Proof of Claim and Release and which would not have been incurred but for the obligation to forward the Notice and Proof of Claim and Release, upon submission of appropriate documentation to the Claims Administrator. XV. EXAMINATION OF PAPERS This Notice is a summary and does not describe all of the details of the Stipulation. For full details of the matters discussed in this Notice, you may review the Stipulation filed with the Court, which may be inspected during business hours, at the office of the Clerk of the Court, at the United States District Court for the Middle District of Florida, Tampa Division, Sam M. Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, Florida or at If you have any questions about the settlement of the Litigation, you may contact Plaintiffs Lead Counsel by writing: LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP KEITH F. PARK 655 West Broadway, Suite 1900 San Diego, CA DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE. DATED: July 12, 2007 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION 8

9 RSM McGladrey Title: TECO Energy PPL # Proof #5 INSTRUCTIONS FOR COMPLETING SUBSTITUTE FORM W-9 Purpose of Form A person who is required to file an information return with the IRS must get your correct taxpayer identification number (TIN) to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. Use Form W-9 only if you are a U.S. person (including a resident alien), to give your correct TIN to the person requesting it (the requester), and, when applicable, to: 1. Certify the TIN you are giving is correct (or you are waiting for a number to be issued), 2. Certify that you are not subject to backup withholding, or 3. Claim exemption from backup withholding if you are a U.S. exempt payee. If you are a foreign person, use the appropriate Form W-8. See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations. Note: If a requester gives you a form other than Form W-9 to request your TIN, you must use the requester s form if it is substantially similar to this Form W-9. What is backup withholding? Persons making certain payments to you must withhold and pay to the IRS 28% of such payments under certain conditions. This is called backup withholding. Payments that may be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding. If you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return, payments you receive will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: 1. You do not furnish your TIN to the requester, or 2. You do not certify your TIN when required (see the Part III instructions on page 2 for details), or 3. The IRS tells the requester that you furnished an incorrect TIN, or 4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or 5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only). Certain payees and payments are exempt from backup withholding. See the Part II instructions and the separate Instructions for the Requester of Form W-9. Penalties Failure to Furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. Misuse of TINs. If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. Specific Instructions Name. If you are an individual, you must generally enter the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage without informing the Social Security Administration of the name change, enter your first name, the last name shown on your social security card, and your new last name. If the account is in joint names, list first and then circle the name of the person or entity whose number you enter in Part I of the form. Sole proprietor. Enter your Individual name as shown on your social security card on the Name line. You may enter your business, trade, or doing business as (DBA) name on the Business name line. Limited liability company (LLC). If you are a single-member LLC (including a foreign LLC with a domestic owner) that is disregarded as an entity separate from its own under Treasury regulations section , enter the owner s name on the Name line. Enter the LLC s name on the Business name line. Caution: A disregarded domestic entity that has a foreign owner must use the appropriate Form W-8. Other entities. Enter your business name as shown on required Federal tax documents on the Name line. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on the Business name line. Part I Taxpayer Identification Number (TIN) Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see How to get a TIN below. If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN. If you are an LLC that is disregarded as an entity separate from its owner (see Limited liability company (LLC) above), and are owned by an individual, enter your SSN (or pre-llc EIN, if desired). If the owner of a disregarded LLC is a corporation, partnership, etc., enter the owner s EIN. Note: See the chart on this page for further clarification of name and TIN combinations. How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration office. Get Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can get Forms W-7 and SS-4 from the IRS by calling TAX-FORM ( ) or from the IRS s Internet Web Site at If you do not have a TIN, write Applied For in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester. Note: Writing Applied For means that you have already applied for a TIN or that you intend to apply for one soon. Part II For U.S. Payees Exempt From Backup Withholding Individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends. For more information on exempt payees, see the separate instructions for the Requester of Form W-9. If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part I, write Exempt in Part II, and sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester the appropriate completed Form W-8. Part III Certification To establish the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 3, and 5 below indicate otherwise. For a joint account, only the person whose TIN is shown in Part I should sign (when required). 1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during You must give your correct TIN, but you do not have to sign the certification. 2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form. 3. Real estate transactions. You must sign the certification. You may cross out item 2 of the certification. 4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you 9 have been notified that you have previously given an incorrect TIN. Other payments include payments made in the course of the requester s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations). 5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified state tuition program payments, IRA or MSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification. Privacy Act Notice Section 6109 of the Internal Revenue Code requires you to give your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA or MSA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states, and the District of Columbia to carry out their tax laws. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 28% of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may also apply. What Name and Number To Give the Requester Give the name and For this type of account: SSN of: 1. Individual The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, the first individual on the account1 3. Custodian account of a minor The minor2 (Uniform Gift to Minors Act) 4. a. The usual revocable The grantorsavings trust (grantor is trustee1 also trustee) b. So-called trust account The actual owner1 that is not a legal or valid trust under state law 5. Sole proprietorship The owner3 Give name and For this type of account: EIN number of: 6. Sole proprietorship The owner3 7. A valid trust, estate, or Legal entity4 pension trust 8. Corporate The corporation 9. Association, club, religious, The organization charitable, educational, or other tax-exempt organization 10. Partnership The partnership 11. A broker or registered The broker or nominee nominee 12. Account with the Department The public entity of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments 1 List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person s number must be furnished. 2 Circle the minor s name and furnish the minor s SSN. 3 You must show your individual name, but you may also enter your business or DBA name. You may use either your SSN or EIN (if you have one). 4 List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Note: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.