UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING

Transcription

1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re COMPLETE MANAGEMENT INC. SECURITIES LITIGATION 99 Civ (NRB) This Document Relates To: All Matters NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING TO: ALL PERSONS OR ENTITIES WHO PURCHASED OR OTHERWISE ACQUIRED COMMON STOCK OR DEBENTURES OF COMPLETE MANAGEMENT INC. ( CMI ) DURING THE PERIOD FROM MAY 1, 1996 THROUGH AUGUST 13, 1998, INCLUSIVE (THE SETTLEMENT CLASS PERIOD ). EXCLUDED FROM THE SETTLEMENT CLASS ARE DEFENDANTS, ANY PRESENT OR FORMER OFFICERS AND DIRECTORS OF COMPLETE MANAGEMENT INC. AND/OR ANY OF ITS SUBSIDIARIES, MEMBERS OF THEIR IMMEDIATE FAMILIES AND THEIR LEGAL REPRESENTATIVES, HEIRS, SUCCESSORS, OR ASSIGNS, AND ANY ENTITY IN WHICH ANY OF THE INDIVIDUAL DEFENDANTS HAS, OR HAS HAD, A CONTROLLING INTEREST. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION. IF YOU ARE A SETTLEMENT CLASS MEMBER, YOU MAY BE ENTITLED TO RECEIVE BEN- EFITS BY FILING A PROOF OF CLAIM FORM, BUT IF YOU HAVE ANY OTHER CLAIMS AGAINST DEFENDANTS OR CMI, YOU MAY BE DEEMED TO RELEASE SUCH CLAIMS IF YOU REMAIN A MEMBER OF THE SETTLEMENT CLASS EVEN IF YOU DO NOT YOU FILE A CLAIM FORM; YOU SHOULD CONSULT AN ATTORNEY. PLEASE SEE SECTION XII BELOW FOR DETAILS. DEADLINE FOR FILING CLAIMS: If you are a member of the Settlement Class as defined above and wish to participate in the Settlement, you must file a proof of claim, on the form accompanying this Notice, postmarked no later than June 10, DEADLINE FOR REQUESTING EXCLUSION FROM THE SETTLEMENT CLASS: Requests for exclusion from the Settlement Class must be sent to the Claims Administrator, postmarked no later than April 25, SECURITIES BROKERS AND OTHER NOMINEES: Please see Instructions in Section IX below. YOU ARE HEREBY NOTIFIED, as a member of a proposed Settlement Class (defined herein) that the Court has determined that this lawsuit should proceed as a class action for purposes of settlement only. YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil Procedure, and an Order of the United States District Court for the Southern District of New York (the Court ), that a Settlement of the above-captioned action (the Litigation ) in the amount of $10.15 million (Ten Million, One Hundred Fifty Thousand Dollars) in cash (the Settlement or the Settlement Fund ) has been reached with all Defendants in the action, including Steven Rabinovici, David Jacaruso, Arthur L. Goldberg, Joseph M. Scotti, Dennis Shields, Manus O Donnell, Claire A. Cardone, Lawrence W. Shields, M.D., Prudential Securities Incorporated ( Prudential ), Arthur Andersen LLP ( Andersen ), National Securities Corporation ( National ) and Commonwealth Associates L.P. ( Commonwealth ) (collectively Defendants ), which

2 Settlement is subject to approval by the Court. If approved, the Settlement will result: (1) in the payment of the Settlement Fund, after certain deductions described below, to eligible Settlement Class Members who file timely and valid Proof of Claim and Release forms and evidence a recognized loss; and (2) in the dismissal of the above-referenced action and the release of the Released Claims as against the Defendants and certain related persons and entities. 1 YOU ARE FURTHER NOTIFIED, pursuant to a Court Order, dated February 10, 2003, that a hearing (the Settlement Hearing ) will be held on May 16, 2003 at 10:00 a.m. before the Honorable Naomi Reice Buchwald, United States District Judge, United States District Court, located at 500 Pearl Street, Room 2270, New York, NY , to consider: (1) whether to approve a Class for Settlement purposes only; (2) whether the Settlement described above should be approved by the Court as fair, reasonable and adequate; (3) whether the Litigation should be dismissed on the merits with prejudice and judgment should be entered releasing claims against the Defendants, as set forth in the Stipulation of Settlement (the Stipulation ) dated as of February 7, 2003, on file with the Court; (4) whether the proposed Plan of Allocation of Settlement proceeds (described in Section VII (C) of this Notice) should be approved; (5) whether the Court should approve the application of the putative representatives of the Settlement Class ( Plaintiffs ) and Plaintiffs Co-Lead Counsel for the payment of attorneys fees and reimbursement of costs and expenses; and (6) whether the Court should award reasonable costs and expenses to certain Plaintiffs representing the Settlement Class and incurred in connection with this Litigation. I. SUMMARY OF NOTICE 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, or the fairness or adequacy of the Settlement. This Notice is to advise you of the pendency and settlement of the Litigation and of your rights in connection with the Settlement. A. Statement of Plaintiffs Recovery Pursuant to the Settlement described herein, a Settlement Fund in the amount of $10.15 million (Ten Million, One Hundred Fifty Thousand Dollars) in cash will be established. The Settlement Fund, less Courtapproved costs for notice and administration, is being held in escrow and is currently earning interest. Plaintiffs estimate that there were approximately 15,000,000 shares of Complete Management Inc. ( CMI ) common stock and 69,000 CMI convertible debentures (each at a face value of $1,000) purchased and/or acquired during the period of May 1, 1996 through August 13, 1998, inclusive (the Settlement Class Period ), which were allegedly damaged as a result of the purported acts or omissions described below. Plaintiffs estimate that the average recovery per damaged share or debenture under the Settlement will be approximately $0.45 per share and $27.50 per debenture before the deduction of attorneys fees, costs and expenses, as approved by the Court. An individual Settlement Class Member may receive more or less than this average amount, depending on the number of claims filed, when the shares and/or debentures were purchased during the Settlement Class Period and, if sold, when they were sold, and the amounts awarded by the Court for attorneys fees, costs and expenses. A Settlement Class Member s distribution from the Settlement Fund will occur as summarized herein and as more fully provided for in the Stipulation. B. Parties Positions and Reasons for Settlement The Plaintiffs believe that the claims asserted in the Litigation have merit and that the evidence developed to date supports the claims asserted. Defendants have denied and continue to deny each and all of the claims and contentions alleged by the Plaintiffs in the Litigation and do not believe any evidence supports 1 All capitalized terms are defined in Section II below unless otherwise indicated. 2

3 Plaintiffs claims and contentions. However, Plaintiffs and Defendants recognize and acknowledge the inherent difficulties, expense, and length of continued proceedings necessary to see the Litigation through trial and possible appeals, and have determined that the Settlement set forth in the Stipulation is in the best interests of all parties involved. The Plaintiffs further recognize that had this Litigation not settled as to Andersen, that Andersen s dire and worsening financial condition could have prevented any recovery from Andersen. C. Potential Outcome of the Case In addition to disagreeing about the potential for proving the liability of Defendants, the parties disagree on the average amount of damages per share that would be recoverable even if the Plaintiffs prevailed on each claim alleged. The determination of damages is a complicated and uncertain process, typically involving conflicting expert opinions. Factors which would be considered in the determination of damages include, among others: (1) whether any of the alleged misrepresentations (misstatements or omitted information) caused the price of CMI stock or debentures to be artificially inflated during the Settlement Class Period; (2) whether the disclosure of any alleged misrepresentations was related to the drop in the price of CMI stock or debentures during or after the Settlement Class Period; (3) the appropriate economic model for determining the amount by which CMI stock or debentures was artificially inflated (if at all) during the Settlement Class Period; (4) the effect of various market forces influencing the trading price of CMI stock or debentures at various times during the Settlement Class Period; and (5) the extent to which external factors, such as general market and industry conditions, influenced the trading price of CMI stock or debentures during the Settlement Class Period. D. Statement of Attorneys Fees and Costs Sought Plaintiffs Co-Lead Counsel intend to apply for an award of attorneys fees in an amount up to % of the Settlement Fund, as well as reimbursement for costs and expenses incurred in the prosecution of the Litigation of approximately $600,000 (Six Hundred Thousand Dollars). Plaintiffs Co-Lead Counsel also intend to apply to the Court for the reimbursement of reasonable expenses from the Settlement Fund of certain Plaintiffs to the extent permissible by law, in an amount not to exceed $5,000 (Five Thousand Dollars) for any one of the Plaintiffs, or $25,000 (Twenty-Five Thousand Dollars) in aggregate for all of the Plaintiffs. The fees and expenses of Plaintiffs and Plaintiffs Counsel, if granted, would be approximately $0.18 (Eighteen Cents) on average per common share and $10.72 (Ten Dollars, Seventy-Two Cents) on average per convertible debenture. E. Identification of Plaintiffs Lawyers Any questions regarding the Settlement should be directed to the following Co-Lead Counsel for the Plaintiffs and the Settlement Class: Michael D. Braun Andrew M. Schatz Timothy J. Burke Jeffrey S. Nobel STULL, STULL & BRODY SCHATZ & NOBEL, P.C Wilshire Boulevard 23rd Floor 330 Main Street Los Angeles, CA Hartford, CT (310) (860) Joseph H. Weiss James E. Tullman WEISS & YOURMAN 551 Fifth Avenue Suite 1600 New York, NY (212)

4 II. DEFINITIONS USED IN THIS NOTICE As used in this Notice, the following terms have the meanings specified below: A. Authorized Claimant means a Settlement Class Member who submits a timely and valid Proof of Claim form to the Claims Administrator. B. Claims Administrator means the firm of Berdon LLP which shall administer the Settlement. C. Effective Date of Settlement or Effective Date means the date upon which the Settlement contemplated by the Stipulation shall become effective, as set forth in Section XI in the Stipulation. D. Escrow Agent means the firm of Stull, Stull & Brody or its successors. E. Escrow Account means the account established by the Escrow Agent to hold Settlement funds. F. Plaintiffs Counsel means Plaintiffs Co-Lead Counsel and all of the other attorneys representing Plaintiff listed at the end of the Stipulation. G. Plaintiffs Co-Lead Counsel means the law firms of Stull, Stull & Brody, Schatz & Nobel, P.C., and Weiss & Yourman. H. Released Claims means any and all claims, rights or causes of action or liabilities whatsoever, whether based on agreements, federal, state, local, statutory or common law or any other law, rule or regulation, including both known and Unknown Claims, whether direct or derivative, that have been or could have been asserted in any forum by, or on behalf of, the Settlement Class or any members thereof against the Released Parties, in connection with, or which arise out of, or relate in any way to any transaction in CMI securities, or which relate in any way to the allegations, transactions, facts, matters, occurrences, representations or omissions involved, set forth or referred to in the Litigation, including but not limited to, those claims included in the Litigation. I. Released Parties means Steven Rabinovici, David Jacaruso, Arthur L. Goldberg, Joseph M. Scotti, Dennis Shields, Manus O Donnell, Claire A. Cardone, Lawrence W. Shields, M.D., CMI, Prudential, Andersen, Andersen Worldwide SC, National and Commonwealth, the respective past or present subsidiaries, parents, member firms, related entities, divisions and affiliates, the past and present insurers, reinsurers, attorneys, accountants, representatives of any of them, affiliates, successors and predecessors of each of the foregoing and all present and former members, partners, principals, administrators, executors, officers, directors, shareholders, agents, employees, attorneys, advisors, investment advisors, insurers, auditors and accountants of any of them and any person, firm, trust, corporation, officer, director or other individual or entity in which any of them has a controlling interest or which is otherwise related to any of them, and their respective legal representatives, heirs, administrators, executors, successors in interest or assigns. J. Settlement means the settlement contemplated in the Stipulation. K. Settlement Class and Settlement Class Members means, for the purposes of the Settlement, the Stipulation and this Notice only, the class, approved for purposes of Settlement only, consisting of all persons who purchased the common stock and/or debentures of CMI during the Settlement Class Period. Excluded from the Settlement Class are any and all of the Defendants in this action, members of their immediate families, any person, firm, trust, corporation, entity in which any individual Defendant has a controlling interest, the officers, directors, parents, subsidiaries and affiliates of CMI, and the legal representatives, heirs, successors in interest or assigns of any such excluded party. Also excluded from the Settlement Class are any putative Settlement Class Members who exclude themselves by filing a request for exclusion in accordance with the requirements set forth in the Notice. L. Settlement Class Period means, for the purposes of this Settlement only, the period of time from May 1, 1996 through August 13, 1998, inclusive. 4

5 M. Unknown Claims means any Released Claims which any Plaintiff or Settlement Class Member does not know, or suspect, to exist in his, her or its favor at the time of the release of the Released Parties which, if known by him, her or it, might have affected his, her or its settlement with and release of the Released Parties, or might have affected his, her or its decision not to object to this Settlement. With respect to any and all Released Claims, the Parties have stipulated and agreed that, upon the Date of the Final Judgment for this Litigation, the Plaintiffs shall expressly, and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, waived and relinquished, to the fullest extent permitted by law, the provisions, rights, and benefits of Section 1542 of the California Civil Code, which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDI- TOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATE- RIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. The Plaintiffs and the Settlement Class Members, upon the Date of the Final Judgment for this Litigation, shall be deemed to have, and by operation of the Judgment shall have, 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 Section 1542 of the California Civil Code. By reference to the California Civil Code and any similar, comparable, or equivalent statutory law or common law principle, the Parties have not conceded or agreed that California, or any other such code, law or principle, is applicable to the Litigation. Plaintiffs and Settlement Class Members may hereafter discover facts in addition to, or different from, those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but Plaintiffs and each Settlement Class Member, upon the Date of the Final Judgment for this Litigation, 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 Parties have acknowledged, and each Settlement Class Member will acknowledge, that the foregoing waiver was bargained for and is a key element of the Settlement of which the Release, to be given or deemed to be given, by or on behalf of each Settlement Class Member, is a part. III. COMMENCEMENT OF THE LITIGATION AND NATURE OF THE ACTION On February 5, 1999, and thereafter, approximately five actions had been commenced against Complete Management Inc. ( CMI ), Steven Rabinovici, David Jacaruso, Arthur L. Goldberg, Joseph M. Scotti, Dennis Shields, Manus O Donnell, Claire A. Cardone, Lawrence W. Shields, M.D., National, Commonwealth, Prudential and Andersen. Thereafter, the actions were consolidated under the caption In re Complete Management Inc. Securities Litigation 99-Civ (NRB) (the Litigation or Action ). On December 3, 1999, the Court appointed lead plaintiffs and the law firms of Stull, Stull & Brody, Weiss & Yourman and Schatz & Nobel P.C. as Co-Lead Counsel for the Class. On March 15, 2000, Plaintiffs filed a Consolidated Amended Complaint (the CAC ); In the CAC, Plaintiffs brought this class action seeking recovery under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933 on behalf of themselves and all others who purchased the common stock and/or debentures of CMI from May 1, 1996 to August 13, 1998, inclusive (the Class Period ). Plaintiffs brought this action to recover damages allegedly suffered by the Class as a result of Defendants alleged securities laws violations; 5

6 On October 19, 1999 Defendant CMI commenced bankruptcy proceedings (In re Complete Management, Inc., Case No. 99 B (RLB) (S.D.N.Y.)) and pursuant to 11 U.S.C. 362, the action was automatically stayed against CMI; On or about March 31, 2000 all remaining Defendants moved to dismiss the CAC. After extensive briefing by both sides, on March 30, 2001 the District Court, issued an Opinion and Order denying Defendants motions to dismiss the case; Subsequent to the Court s denial of Defendants motions to dismiss, the parties engaged in extensive discovery; The Defendants have each denied the material allegations recited in the CAC and deny having engaged in wrongdoing or violation of any law; and With the assistance of the Honorable Milton Pollack, Plaintiffs and Defendants, by their counsel, have conducted arm s-length negotiations, in an attempt to settle the issues in dispute. The Settlement proposed in the Stipulation was achieved after intense arm s-length negotiations and after extensive discovery was conducted by all parties. During these negotiations, the parties presented, among other things, their respective views regarding the merits of the Litigation including, the defenses, the claims and the damages sought in the Litigation. The parties ultimately reached a final Settlement. IV. PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATION The Litigation was aggressively litigated by all parties. Counsel for the Plaintiffs conducted extensive research and investigation during the prosecution of the Litigation which included: (1) the review of over a million pages of documents relating to both party and third-party discovery; (2) consultation with experts and consultants; (3) the review of thousands of pages of public filings, annual reports and other public statements, including press releases and articles about CMI; (4) researching the applicable law with respect both to the claims asserted in the original Complaint and claims subsequently asserted in the CAC, and the potential defenses thereto; (5) briefing motions to dismiss as well as numerous motions to compel the production of documents from Defendants and various third parties; and (6) extensive Class discovery, including the depositions of the proposed Class representatives in connection with Plaintiffs motion for class certification. V. CLAIMS OF PLAINTIFFS AND BENEFITS OF SETTLEMENT Plaintiffs believe that the claims asserted in the Litigation have merit and that the evidence developed to date supports the claims asserted. However, the Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against Defendants through trial and through appeals. The 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. In addition, Plaintiffs also recognize the inherent problems of proof under, and possible defenses to, the federal securities law violations asserted in the Litigation, including the defenses alleged by Defendants in the pleadings filed therein and the financial infirmity of certain Defendants. The Plaintiffs and Plaintiffs Co- Lead Counsel believe that the Settlement set forth in the Stipulation confers substantial benefits upon the Settlement Class and each of the Settlement Class Members. Based on their evaluation, the Plaintiffs and Plaintiffs Co-Lead Counsel have determined that the Settlement set forth in the Stipulation is in the best interests of the Settlement Class and each of the Settlement Class Members. 6

7 VI. THE DEFENDANTS STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY Defendants have denied, and continue to deny, each and every claim and contention alleged by the Plaintiffs in the Litigation. Defendants expressly have denied, and continue to deny, all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Litigation. Defendants also have denied, and continue to deny, among other things: (1) the allegations that the Plaintiffs or the Settlement Class have suffered damage; (2) that the price of CMI securities was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise; or that (3) the Plaintiffs or the Settlement Class were harmed by the conduct alleged in the Consolidated Amended Complaint in the Litigation. Defendants believe that the claims asserted in the Litigation do not have merit, and that the evidence developed to date does not support the claims asserted. Nonetheless, Defendants have concluded that the 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 in order to limit further expense, inconvenience and distraction, and to dispose of burdensome and protracted litigation. Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Litigation. 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. VII. PROPOSED SETTLEMENT A Settlement has been reached in the Litigation between the Plaintiffs, on behalf of themselves and the Members of the Settlement Class, and the Defendants, which is embodied in the Stipulation on file with the Court. The following description of the Settlement is only a summary, and reference is made to the text of the Stipulation, on file with the Court, for a full statement of its provisions: A. The Settlement Fund consists of the principal amount of $10.15 million (Ten Million, One Hundred Fifty Thousand Dollars) in cash, plus interest. B. Upon approval of the Settlement by the Court, and when the Judgment has become final and all other conditions to the Settlement are satisfied, including those set forth in Section XI of the Stipulation, the Settlement Fund shall be distributed as follows: 1. To pay all the costs and expenses reasonably and actually incurred in connection with providing notice to the Members of the Settlement Class, locating Settlement Class Members, soliciting Settlement Class claims, assisting with the filing of claims, administering and distributing the Net Settlement Fund to the Settlement Class, processing Proof of Claim and Release forms and paying escrow fees and costs, if any; 2. To pay Plaintiffs Counsels fees, expenses and costs as discussed above; 3. To pay any award ordered by the Court to any Plaintiff for reasonable costs and expenses (including lost wages) directly relating to the representation of the Class, provided that no Plaintiff will seek more than $5,000 (Five Thousand Dollars), and the aggregate amount sought by all Plaintiffs will not exceed $25,000 (Twenty-Five Thousand Dollars); 4. To pay the Taxes and Tax Expenses (defined in paragraph 2.6(c) of the Stipulation) owed by the Settlement Fund; and 5. To pay to Settlement Class Members their pro rata share of the Net Settlement Fund (defined below) pursuant to the Plan of Allocation set forth below. C. Plan of Allocation Subject to the approval and further Order(s) of the Court as may be necessary, the balance of the Settlement Fund (the Net Settlement Fund ) shall be distributed to Authorized Claimants pursuant to the following Plan of Allocation: 7

8 1. Each Person claiming to be an Authorized Claimant shall be required to timely submit a separate Proof of Claim that shall include a general release of all Released Claims, including Unknown Claims, against the Released Parties in the form set forth in the Proof of Claim and Release accompanying this Notice, signed under penalty of perjury and supported by documented proof of all purchases (or acquisitions) and sales (or dispositions) of CMI securities during the Settlement Class Period. 2. All Proof of Claim and Release forms must be sent to the Claims Administrator and postmarked on or before June 10, Unless otherwise ordered by this Court, any Settlement Class Member who fails to submit a Proof of Claim and Release within that 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 will, in all other respects, be subject to the provisions of the Stipulation and the final Judgment entered by the Court. 3. 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 Recognized Loss. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized Loss of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage that each Authorized Claimant s Recognized Loss bears to the total of the Recognized Losses of all Authorized Claimants. 4. A Recognized Loss will be computed as follows: a. For CMI shares (common stock) purchased or acquired during the period of May 1, 1996 through August 13, 1998 (excluding shares purchased in any of the public offerings identified below) the Recognized Loss shall be equal to the amount, including commissions, etc., paid for the shares purchased or acquired by Settlement Class Members during the Settlement Class Period, less: (i) the amount, net of commissions, etc., realized from the sale of any such shares during the Settlement Class Period; or (ii) for those shares held at the close of business on August 13, 1998 (the end of the Settlement Class Period), $1.625 for each share (the market price at the end of the Settlement Class Period). b. For CMI shares purchased in either the December 6, 1996 Offering at $13.75 per share or the February 9, 1998 Offering at $10.75 per share, the Recognized Loss set forth in subparagraph (a) above shall be multiplied by a factor of c. For CMI debentures purchased or acquired during the period of May 1, 1996 through August 13, 1998, the Recognized Loss shall be equal to 1.15 times the amount, including commissions, etc., paid for CMI debentures, less: (i) the amount, net of commissions, etc., realized from the sale of any such debentures during the Settlement Class Period; or (ii) for those debentures held at the close of business on August 13, 1998 (the end of the Settlement Class Period), $ (the market price at the end of the Settlement Class Period) for each of the 8% debentures due August 15, 2003 (those originally issued in the June 1996 Offering) and $ (the market price at the end of the Settlement Class Period) for each of the 8% debentures due December 15, 2003 (those originally issued in the December 1996 Offering). d. For debentures which have been converted to shares, the purchase price shall be the price paid for the debentures as set forth in subparagraph (c) above, and the sale or holding price shall be the price set forth in subparagraph (a) above. e. Purchase/Sale Dates the date of purchase or sale is the contract or trade date and not the settlement date. f. Gains and Losses all profits will be subtracted from all losses to determine the Net Recognized Loss of each Settlement Class Member. g. FIFO in processing claims, the first-in, first-out basis ( FIFO ) will be applied to both purchases and sales. Sales will be matched in chronological order, by trade date, first against the securities held as of the close of trading on April 30, 1996 (the last day before the Settlement Class Period begins) and then against the purchases during the Settlement Class Period. 8

9 h. Short Sales the date of covering a short sale is deemed to be the date of purchase of CMI securities. The date of a short sale is deemed to be the date of sale of CMI securities. Securities sold short prior to the Settlement Class Period and purchased or boxed to cover during the Settlement Class Period shall have no Recognized Loss. i. Options where securities were purchased/sold by reason of having exercised an option, the option premium should be incorporated into the price accordingly. j. YOUR CLAIM WILL NOT BE VALID IF YOU DID NOT SUFFER A LOSS. k. The Court has reserved jurisdiction to allow, disallow or adjust the Claim of any Settlement Class Member on equitable grounds. 5. Although the Net Settlement Fund is being allocated among the Settlement Class Members based on the formulas stated above (subject to Court approval), it should not be assumed that an Authorized Claimant s Claim is equal to the amount of damages, if any, which could have been recovered had this Litigation been fully tried instead of settled. The amount of damages which Plaintiffs could prove, if any, is a matter of serious dispute, and the Settlement s use of the formula set forth above does not constitute a concession, finding or admission that liability exists or that any damages could be proven, or that provable damages, if any, would be commensurate with a Claim. No determination has been made by the Court as to liability or whether any Settlement Class Member suffered any damages, or as to the proper measure of any damages. The determination of damages, like the determination of liability, is a complicated and uncertain process, typically involving conflicting expert opinions. During the course of the Litigation, Defendants, in addition to denying any liability, denied that the Settlement Class Members suffered any legally compensable harm. The Settlement avoids the risks to the Settlement Class Members that liability or damages might not have been proven at trial. 6. Payment pursuant to the Plan of Allocation set forth herein shall be deemed conclusive against all Authorized Claimants. No Person shall have any claim against any Plaintiffs counsel, or any Claims Administrator or other agent designated by Plaintiffs Co-Lead Counsel, or against any of the Released Parties 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. Neither Defendants nor Defendants counsel are involved in the Plan of Allocation or take any position with respect thereto. The Released Parties shall have no responsibility for, or any liability whatsoever with respect to, any payment, the timing of any payment, or the failure of any payment, to be made to Plaintiffs Co-Lead Counsel from the Settlement Fund, nor shall the Released Parties have any responsibility for, or any liability whatsoever with respect to, the refunding of, or failure of Plaintiffs Co-Lead Counsel to refund to, the Settlement Fund any money Plaintiffs Co-Lead Counsel may be ordered to refund. The Released Parties shall have no responsibility for, or any liability whatsoever with respect to, the allocation of the Settlement Fund among Plaintiffs Co-Lead Counsel and any other Person who may assert some claim thereto, or for any Fee and Expense Awards that the Court may make in this Litigation. 7. All Settlement Class Members who fail to complete and file a valid and timely Proof of Claim and Release 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. VIII. DISMISSAL AND RELEASES If the Settlement is approved by the Court, the Court will enter a judgment which will: A. Dismiss the Litigation in its entirety as against the Defendants with prejudice and without costs to any party as against any other party; 9

10 B. Adjudge that the Plaintiffs and each Settlement Class Member, except those who both timely and validly request exclusion in accordance with the procedures detailed herein, shall be deemed conclusively to have released the Released Claims and Unknown Claims (described above and in the Stipulation) against the Released Parties. Notwithstanding that the Plaintiffs, or one or more Settlement Class Members, may hereafter discover facts in addition to, or different from, those which the Plaintiffs or Settlement Class Members now know, or believe, to be true with respect to the Litigation and Released Claims, or to the subject matter of the Litigation, which, if known, might have affected his, her, or its settlement with, and release of, the Released Parties, or might have affected his, her or its decision not to object to the Settlement, each of the Plaintiffs and Settlement Class Members shall be deemed, upon the date of the Final Judgment for this Litigation, to have fully, finally and forever settled and released, as against any of the Released Parties, and all Released Claims and Unknown Claims, that have been, or might have been, asserted by the Plaintiffs or Settlement Class Members, or any of them, against Defendants, or any of them, based upon, or related to, the purchase or acquisition of CMI securities by the Plaintiffs or Settlement Class Members during the Settlement Class Period, and the facts, transactions, events, occurrences, acts or omissions which were, or could have been, alleged in the Litigation; C. Bar and permanently enjoin each of the Plaintiffs and the Settlement Class Members from prosecuting the Released Claims (including Unknown Claims) against the Released Parties; and D. Reserve jurisdiction, without affecting the finality of the Judgment entered, over: 1. Implementation of this Settlement and any award or distribution of the Net Settlement Fund, including interest earned or accrued thereon; 2. Disposition of the Settlement Fund; 3. Hearing and determining Plaintiffs Co-Lead Counsel s applications for attorneys fees, costs, interest, and expenses, including fees and costs of experts and/or consultants and the award of reasonable costs and expenses (including lost wages), directly relating to the representation of the Settlement Class, to any Plaintiff serving on behalf of the Settlement Class; 4. Enforcing and administering the Stipulation, including any Releases executed in connection therewith; and 5. Other matters related or ancillary to any of the foregoing. The Stipulation provides that, under certain circumstances, the Settlement may proceed with less than all Defendants participating. Under such circumstances, the failure of the Court to enter an Order dismissing the Litigation as to certain Defendants will not terminate the Settlement as to other Defendants. As part of the Settlement, the Defendants have agreed not to sue Plaintiffs, Plaintiffs Counsel, or any member of the Settlement Class for any claims that arise out of or relate in any way to the institution, prosecution, or settlement of the Litigation. IX. SPECIAL NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES To all banks, brokerage firms, institutions and other Persons that are nominees who purchased or otherwise acquired the common stock or debentures of CMI for the beneficial interest of other Persons during the Settlement Class Period (May 1, 1996 through August 13, 1998, inclusive): within ten (10) days after you receive this Notice and the accompanying Proof of Claim and Release, you must either: (1) provide the Claims Administrator with the names and addresses of such beneficial owners, preferably on computer-generated mailing labels or, electronically, in MS Word or WordPerfect files (label size Avery # 5162), or in an MS Excel data table setting forth (a) title/registration, (b) street address, (c) city/state/zip; or (2) send copies of the Notice and the Proof of Claim and Release to all beneficial owners by first-class mail and provide the Claims Administrator with written confirmation of having done so. Additional copies of the Notice may be requested by contacting: 10

11 Claims Administrator In re Complete Management Inc. Securities Litigation c/o Berdon LLP P.O. Box 9014 Jericho, NY Telephone: (800) Fax: (516) Website: You are entitled to the reimbursement of any reasonable expenses actually incurred in connection with the research of records and (1) the generating of labels or electronic media or (2) the mailing of this Notice, upon submission to the Claims Administrator of a written request, together with appropriate supporting documentation. X. APPLICATION FOR ATTORNEYS FEES AND COSTS Plaintiffs Co-Lead Counsel will apply to the Court for an aggregate award of counsel fees of up to thirtythree and one-third percent (33 1 3%) of the Settlement Fund, plus reimbursement of expenses of approximately $600,000, together with interest earned on said sums at the same rate, and for the same periods, as earned by the Settlement Fund. Such awards as may be granted by the Court will be paid from the Settlement Fund. XI. CONDITIONS OF SETTLEMENT The Settlement Hearing will be held on May 16, 2003, at 10:00 a.m., before the Honorable Naomi Reice Buchwald, United States District Judge, United States District Court, located at 500 Pearl Street, Room 2270, New York, NY The Settlement is conditioned upon the occurrence of a number of events, any of which may be waived by the mutual agreement of the Settling Parties. Those events include, among other things: (1) entry of the Final Judgment by the Court, as provided for in the Stipulation; and (2) expiration of the time to appeal from the Final Judgment. If, for any reason, any one of the conditions described in Section XI of the Stipulation is not met, the Stipulation and the Settlement it proposes might be terminated and, if terminated, will become null and void, and the Settling Parties to the Stipulation will be restored to their respective positions prior to the execution of the Stipulation. Likewise, if Defendants exercise their right to withdraw from the Settlement in accordance with the terms of the Stipulation, or if the Settlement is not consummated for any other reason, the Stipulation will become null and void, and the parties will resume their former positions in this action. XII. THE RIGHTS AND OBLIGATIONS OF SETTLEMENT CLASS MEMBERS If you are a Member of the Settlement Class, you may receive the benefit of, and you will be bound by, the terms of the Settlement described in Section VII of this Notice, and recited more fully in the Stipulation, upon approval of the Settlement by the Court. If you are eligible to be a Member of the Settlement Class (that is, if you purchased or otherwise acquired CMI securities during the period of May 1, 1996 through August 13, 1998, inclusive), you have the following options: A. You may file a Proof of Claim and Release. If you choose this option, you will remain a Member of the Settlement Class, you will share in the proceeds of the Settlement, if your claim is timely and validly filed and if the Settlement is finally approved by the Court, and you will be bound by the Judgment and Releases. B. If you do not wish to be included in the Settlement Class, and you do not wish to participate in the Settlement described in this Notice, you may request to be excluded. To do so, you must state in writing that 11

12 you wish to be excluded from the Settlement. Your written request for exclusion must also set forth the name of this Litigation: In re Complete Management Inc. Securities Litigation, Case No.: 99 Civ (NRB); your name, address and telephone number; and the name, address and telephone number of the record owner of CMI securities, if different from your own as the beneficial owner. The exclusion request must also state the amount and description of CMI securities you purchased or otherwise acquired during the Settlement Class Period, including price, and the amount and description of CMI securities you sold during the Settlement Class Period, including price, along with the dates of your purchase(s) and sale(s). The written exclusion request should be sent to: Claims Administrator In Re Complete Management Inc. Securities Litigation c/o Berdon LLP P.O. Box 9014 Jericho, NY To be considered valid, the exclusion request must be postmarked no later than April 25, NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMA- TION DESCRIBED ABOVE IS INCLUDED IN THE REQUEST. C. If you validly request exclusion from the Settlement Class: (1) you will be excluded from the Settlement Class; (2) you will not share in the proceeds of the Settlement described herein; (3) you will not be bound by any judgment entered in the Litigation; and (4) you will not be precluded from otherwise prosecuting an individual claim, if timely, at your own expense against Defendants, based on the matters complained of in the Litigation. D. If you do not request to be excluded from the Settlement Class, you will be bound by any and all determinations or judgments in the Litigation concerning the Settlement entered or approved by the Court, whether favorable or unfavorable to the Settlement Class Members, including, without limitation, the Judgment described above. If you do not exclude yourself from the Settlement Class, you will be deemed to have released all Released Claims which you may have against the Released Parties; if you have filed or intend to file other claims against Defendants, CMI, or other Released Parties, you may need to request exclusion from the Settlement Class to retain such claims, and you should consult your attorney. E. If you do not request to be excluded from the Settlement Class, you may object to the Settlement, the Plan of Allocation and/or the applications of Plaintiffs Co-Lead Counsel for an award of attorneys fees and reimbursement of expenses in the manner set forth below. The filing of a Proof of Claim and Release by a Settlement Class Member does not preclude a Settlement Class Member from objecting to the Settlement, the Plan of Allocation, and/or the fees and expenses applied for by Plaintiffs Co-Lead Counsel. However, if your objection is rejected, you will be bound by the Settlement and the Judgment just as if you had not objected. F. 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 the Judgment, and you will be deemed to have released Defendants and the Released Parties, including CMI, just as if you had filed a Proof of Claim and Release. G. If you are a Member of the Settlement Class, you may, but are not required to, enter an appearance in writing through counsel of your own choosing at your own expense. If you do not do so, you will be represented by Co-Lead Counsel for the Plaintiffs. XIII. THE RIGHT TO BE HEARD AT THE SETTLEMENT HEARING At the Settlement Hearing, the Court will consider whether the Settlement is fair, reasonable and adequate; whether it should be approved by the Court; whether Judgment should be entered dismissing the 12

13 Litigation on the merits and with prejudice as against Defendants; whether the proposed Plan of Allocation is fair and reasonable; and whether Plaintiffs Co-Lead Counsel s applications for attorneys fees and reimbursement of costs and expenses should be approved. However, any objections or opposition must be made in advance, in writing, as set forth below. 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 has not requested exclusion, may appear at the Settlement Hearing to show cause why the Settlement should or should not be approved and the Litigation should or should not be dismissed on the merits with prejudice, and/or to present any opposition to the Plan of Allocation or the applications of Plaintiffs Co-Lead Counsel for fees and expenses. However, no such Person shall be heard, unless his, her, or its objection or statement of support is made in writing and is filed, together with copies of all other papers and briefs to be submitted by him, her, or it with the Court no later than May 2, 2003, and showing due proof of service on: Clerk of the Court U.S. District Court Southern District of New York 500 Pearl Street New York, NY Michael D. Braun Andrew M. Schatz STULL, STULL & BRODY SCHATZ & NOBEL, P.C Wilshire Boulevard Suite Main Street Los Angeles, CA Hartford, CT James E. Tullman WEISS & YOURMAN 551 Fifth Avenue Suite 1600 New York, NY Co-Lead Counsel for Plaintiffs George Wailand James J. Sabella CAHILL GORDON & REINDEL SIDLEY AUSTIN BROWN 80 Pine Street & WOOD LLP New York, NY Seventh Avenue New York, NY Attorneys for Defendant Prudential Attorneys for Defendant Securities Incorporated Arthur Andersen LLP Dennis J. Block CADWALADER, WICKERSHAM & TAFT 100 Maiden Lane New York, NY Attorneys for Defendants Steven Rabinovici, David R. Jacaruso, Arthur L. Goldberg, Joseph M. Scotti, Dennis Shields, Manus O Donnell and Claire A. Cardone 13

14 Gregg M. Mashberg Lawrence D. Bernfeld PROSKAUER ROSE LLP GRAUBARD MILLER 1585 Broadway 600 Third Avenue New York, NY New York, NY Attorneys for Defendant Attorneys for Defendant Lawrence W. Shields Commonwealth Associates L.P. Adam D. Cole GREENBERG & TRAURIG, LP 885 Third Avenue New York, NY Attorneys for Defendant National Securities Corporation Any Member of the Settlement Class, who does not make his, her or its objection or statement of support in the manner provided, shall be deemed to have waived all objections and opposition to the fairness, reasonableness and adequacy of the Settlement, the Plan of Allocation, or to the request of Plaintiffs Co-Lead Counsel for attorneys fees and expenses. XIV. EXAMINATION OF PAPERS AND INQUIRIES For a more detailed statement of the matters involved in the Litigation and the Settlement thereof, reference is made to the pleadings, to the Stipulation and to other papers filed in the Litigation, which may be inspected at the Office of the Clerk of the United States District Court, Southern District of New York, 500 Pearl Street, New York, NY , during the business hours of each business day. Inquiries regarding the Litigation or this Notice should be addressed to: Claims Administrator In Re Complete Management Inc. Securities Litigation c/o Berdon LLP P.O. Box 9014 Jericho, NY Telephone: (800) Fax: (516) Web-site: However, communications which convey confidential information should be sent directly to Plaintiffs Co-Lead Counsel, or to your own attorney. DO NOT CONTACT THE COURT OR THE CLERK S OFFICE REGARDING THIS NOTICE. Dated: February 27, 2003 BY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 14

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