Case3: 02-cv-00870-BEN-RBB Document827 Filed 02/09/2009 ...securities.stanford.edu/filings-documents/1024/... · Case3: 02-cv-00870-BEN-RBB Document827 Filed 02/09/2009 Page4of31

Case 3 : 02-cv-00870-BEN-RBB Document 827 Filed 02/09/2009 Page 1 of 31

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF CALIFORNIA

IN RE PEREGRINE SYSTEMS, INC. Case No. 02-CV-0870-BEN (RBB)SECURITIES LITIGATION

This Document Relates to: ALL ACTIONS

STIPULATION AND AGREEMENT OFSETTLEMENT WITH DEFENDANTS STEPHEN P. GARDNER, MATTHEW C.

GLESS, FREDERIC B. LUDDY AND RICHARD T. NELSON

This Stipulation and Agreement of Settlement dated as of December 22 , 2008 is

submitted pursuant to Rule 23 of the Federal Rules of Civil Procedure. Capitalized terms used in

this Stipulation shall have the meanings given to them in the "Definitions" section unless

otherwise defined. The Settlement set forth in this Stipulation is subject to approval by the

Court. This Stipulation is entered into among the Loran Group (as defined herein), Waga (as

defined herein), the Class (as defined herein ), and Stephen P. Gardner, Matthew C. Gless,

Frederic B. Luddy, and Richard T. Nelson (the "Settling Defendants").

WHEREAS:

A. Beginning in May 2002, class action complaints alleging violations of the federal

securities laws were filed in the Court against Peregrine and other defendants. The other

defendants include former directors of Peregrine, former strategic alliance partners of Peregrine,

and Peregrine's former auditor. The class actions were consolidated pursuant to an Order of the

Court entered on July 23, 2002. By Order dated January 30, 2003, the Court appointed the Loran

Group as the Lead Plaintiff for securities fraud claims arising under Sections 10(b) and 20(a) of

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the Securities Exchange Act of 1934 ("1934 Act") and Heywood Waga as Lead Plaintiff for

claims on behalf of persons who held shares of either Harbinger Corporation ("Harbinger") or

Remedy Corporation ("Remedy") and who acquired Peregrine registered common stock in

connection with Peregrine's acquisition of these companies (the "Subclasses"). The claims on

behalf of the members of the Subclasses are for violation of Sections I 1 and 15 of the Securities

Act of 1933 ("1933 Act") and Section 14(a) of the 1934 Act. The Court further appointed the

law firm of Gold Bennett Cera & Sidener LLP as Lead Counsel for the Section 10(b) claims and

the law firms of Abraham Fruchter & Twersky LLP, and Stull, Stull & Brody as Lead Counsel

for the claims brought on behalf of the Harbinger and Remedy Subclasses. These firms are

collectively referred to herein as "Lead Counsel";

B. On March 18, 2003, Lead Plaintiffs filed a Consolidated Class Action Complaint

for Violations of the Federal Securities Laws (the "Consolidated Complaint"). Because

Peregrine had filed for bankruptcy in September 2002, it was no longer named as a defendant in

the Consolidated Complaint. The Consolidated Complaint generally alleged that certain

defendants disseminated a series of materially false and misleading statements in public filings,

press releases, shareholder reports, audit opinions, and communications with securities analysts

during the Class Period that caused Peregrine securities to trade at artificially inflated prices,

thereby causing damage to purchasers of Peregrine securities. As to the Harbinger and Remedy

Subclasses, the Consolidated Complaint alleged that certain defendants signed registration

statements that contained false and misleading statements;

C. The Court, in an Order dated November 21, 2003, granted in part and denied in

part, motions to dismiss filed by various defendants, including certain of the Settling Defendants.

Specifically, the Court dismissed the Sections 10(b), 12(a)(2), 14(a), and 20(a) claims against the

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Settling Defendants without prejudice and with leave to amend, and declined to dismiss the

Section I I claims against certain of the Settling Defendants;

D. On April 5, 2004, Lead Plaintiffs filed a First Amended Consolidated Class

Action Complaint for Violations of the Federal Securities Laws (the `Complaint"). The

Complaint alleges, among other things, that certain of the Settling Defendants in connection with

their roles at Peregrine violated Sections 10(b), 14(a), and 20(a) of the 1934 Act, and Rule 10b-5

promulgated thereunder , 17 C.F.R. § 240.10b- 5, and as to the Harbinger and Remedy Subclasses,

the Complaint alleges that certain defendants signed registration statements that contained false

and misleading statements and violated Sections 11 and 15 of the 1933 Act, during the Class

Period;

E. The Court, in an Order dated March 30, 2005, sustained all claims alleged under

the 1934 Act against defendants Gardner and Gless and dismissed all claims alleged under the

1934 Act against defendants Luddy and Nelson. At the Loran Group's request, the Court entered

a judgment on January 6, 2006 on the dismissed claims to allow for an appeal to the Ninth

Circuit Court of Appeals. The appeal was argued on November 6, 2007, but no decision has

been issued. Claims under Sections I 1 of the 1933 Act against certain of the Settling Defendants

were stayed pending resolution of the foregoing appeal.

F. Lead Plaintiffs asserted claims against Peregrine in Peregrine's bankruptcy case

on behalf of the Settlement Class Members. As part of the settlement agreement negotiated by

Lead Plaintiffs with Peregrine, Peregrine agreed to assign, and in its plan of reorganization did

assign, all of its claims for wrongdoing in connection with its financial failure, to the Peregrine

Litigation Trust, with the Settlement Class Members to receive all proceeds recovered by the

Peregrine Litigation Trust.

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G. The Peregrine Litigation Trust acting through a Trustee filed the lawsuit

captioned Peregrine Litigation Trust v. Aloores , et al., San Diego County Superior Court, Case

No. GIC 788659 ("the PLT Action"), against certain former officers and directors of Peregrine

and other parties allegedly related to said former officers and directors ' roles at Peregrine,

including the Settling Defendants;

H. The demurrers of the Settling Defendants in the PLT Action were sustained

without leave to amend on May 3, 2007, and the demurrer ruling in the PLT Action is currently

the subject of an appeal before Division One of the Fourth Appellate Division of the State of

California, 4th Civil No. D051347 ("the PLT Appeal").

The Settling Defendants are named as defendants in the Class Action and the PLT

Action (hereinafter collectively "the Actions"). The Settling Defendants deny any wrongdoing

alleged, or which could have been alleged in the Class Action and/or the PLT Action, and neither

this Stipulation nor any actions taken to obtain approval of the Settlement shall be construed or

deemed to be evidence of or an admission or concession on the part of the Settling Defendants

with respect to any claim or of any fault or liability or wrongdoing or damage whatsoever, or any

infirmity in the defenses that the Settling Defendants have asserted. The parties to this

Stipulation recognize, however, that the Class Action has been filed by Lead Plaintiffs and the

PLT Action has been brought for the benefit of the Class and the Class Action has been defended

by the Settling Defendants in compliance with the requirements of Federal Rule of Civil

Procedure 11(b). The Class Action is being voluntarily settled on the terms set forth herein and

the parties hereto believe that the terms of this Settlement are fair, adequate and reasonable. This

Stipulation shall not be construed or deemed to be a concession by Lead Plaintiffs of any

infirmity in the claims asserted in the Class Action;

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Case 3:02-cv-00870-BEN-RBB Document 827 Filed 02/09/2009 Page 5 of 31

Lead Plaintiffs' Counsel have conducted an investigation relating to the claims

and the underlying events and transactions alleged in the Class Action. Lead Plaintiffs' Counsel

have examined the filings by Peregrine with the U.S. Securities and Exchange Commission

before, during and after the Class Period which relate to the allegations in the Class Action.

Lead Plaintiffs' Counsel have also inspected hundreds of thousands of documents obtained from

Peregrine as a result of the settlement of Lead Plaintiffs' claims against Peregrine;

K. Lead Plaintiffs, by their counsel, have conducted discussions and arm's length

negotiations with counsel for the Settling Defendants with respect to a compromise and

settlement of the Class Action with a view to settling the issues in dispute and achieving the best

relief possible consistent with the interests of the Class;

L. Lead Plaintiffs' Counsel analyzed the evidence adduced during their factual

investigation. Lead Plaintiffs' Counsel also researched the applicable law with respect to the

claims of Lead Plaintiffs and the Class against the Settling Defendants and the potential defenses

thereto;

M. Lead Plaintiffs and the Settling Defendants realize that the continued litigation of

the claims would entail substantial risk, effort and expense and Lead Plaintiffs and the Settling

Defendants believe that the claims in the Class Action are best settled on the terms as set forth

herein.

N. Based upon their investigation as set forth above, Lead Plaintiffs ' Counsel have

concluded that the terms and conditions of this Stipulation are fair, reasonable and adequate to

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

made in the Class Action, as against the Settling Defendants, pursuant to the terms and

provisions of this Stipulation, after considering (a) the substantial benefits that Lead Plaintiffs

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and the members of the Class will receive from this Settlement, (b) the attendant risks of

litigation, and (c) the desirability of permitting the Settlement to be consummated as provided by

the terms of this Stipulation.

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

Plaintiffs of any lack of merit of the claims asserted in the Class Action whatsoever, and without

any admission or concession of any liability or wrongdoing or lack of merit in the defenses

asserted by the Settling Defendants,

It is hereby STIPULATED AND AGREED, by and among the parties to this

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

23(e) of the Federal Rules of Civil Procedure, in consideration of the benefits flowing to the

parties hereto from the Settlement, that all Released Claims as against the Settling Defendants

shall be compromised, settled, released and dismissed with prejudice, upon and subject to the

following terms and conditions:

DEFINITIONS

As used in this Stipulation, the following terms shall have the following

meanings:

a. "Actions" means the Class Action and the PLT Action collectively.

b. "Authorized Claimant" means any Settlement Class Member whose claim

for recovery is allowed by the Court.

c. "Class Action" means the lawsuit captioned In re Peregrine Systems, Inc.,

Securities Litigation, United States District Court for the Southern District of California,

Case No. 02-CV-0870-BEN (RBB), currently stayed, with some claims asserted therein

on appeal to the United States Court of Appeals for the Ninth Circuit, Docket No.

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06-55197 ("the Class Action Appeal").

d. "Complaint" means the First Amended Consolidated Class Action

Complaint for Violation of the Federal Securities Laws filed in the Class Action on or

about April 4, 2004.

e. "Class" and "Class Members" means, for the purposes of this Stipulation

only, a class consisting of all Persons (including Lead Plaintiffs) who purchased or

otherwise acquired Peregrine common stock during the Class Period and who were

injured thereby, and two Subclasses consisting of all Persons who held shares of

Harbinger Corporation and who acquired Peregrine registered common stock in

connection with Peregrine's acquisition of Harbinger Corporation, which was

consummated on or about June 16, 2000, and all persons who held shares of Remedy

Corporation and who acquired Peregrine registered common stock in connection with

Peregrine's acquisition of Remedy Corporation, which was consummated on or about

August 27, 2001. Excluded from the Class are: defendants in the Class Action, members

of the immediate families (parents, spouses, siblings and children) of each of the

individual defendants, any person, firm, trust, corporation, or entity in which any

defendant has a controlling interest, the officers, directors, parents, subsidiaries and

affiliates of Peregrine, and the legal representatives, heirs, successors in interest or

assigns of any such excluded party. Also excluded from the 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 or putative Settlement Class

Members who have previously released the Settling Defendants in connection with

Peregrine-related claims.

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f. "Class Period" means the period of time from July 22, 1999 through May

3, 2002, inclusive.

g. "Court" means the United States District Court for the Southern District of

California.

h. "Effective Date of Settlement" or "Effective Date" means the date upon

which the Settlement contemplated by this Stipulation shall become effective, as set forth

in paragraph 22 below.

i. "Final Order and Judgment" means the proposed order to be entered

approving the Settlement, which is attached hereto as Exhibit B.

j. "Lead Plaintiffs" means the group consisting of David Levy, Leighton

Powell, David Schenkel, John Virden, Conrad Willemse, Bill Holman, Bob Benesko,

Michael Slavitch, Richard Maheu, and Mark Rollins (hereinafter the "Loran Group")

who were appointed as Lead Plaintiffs for the claims arising under Section 10(b) of the

1934 Act, and Heywood Waga (hereinafter "Waga"), who was appointed as Lead

Plaintiff for the claims arising under Section 11 of the 1933 Act.

k. "Lead Plaintiffs' Counsel" means Lead Plaintiffs' counsel for the Loran

Group, Gold Bennett Cera & Sidener LLP, and Lead Plaintiffs' Counsel for Waga, Stull,

Stull & Brody and Abraham Fruchter & Twersky LLP, who were appointed pursuant to

the Order of the District Court dated January 30, 2003.

"Non-Settling Defendants" means KPMG LLP, BearingPoint , Inc. and

Larry Rodda.

M. "Notice" means the Second Notice of Pendency of Class Action and

Hearing on Proposed Partial Settlement, attached hereto as Exhibit 1 to Exhibit A.

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n. "Parties" means Lead Plaintiffs, the Class and the Settling Defendants.

o. "Peregrine" or the "Company" means Peregrine Systems, Inc.

p. "Plaintiffs" means, collectively, Lead Plaintiffs and the Class.

q. "Plan of Allocation of Settlement Proceeds" or "Plan of Allocation"

means the plan previously approved by the Court on November 15, 2006, for the

allocation and distribution of the net settlement proceeds to Authorized Claimants.

r. "Preliminary Approval Order" means the proposed Order Preliminarily

Approving the Settlement and Providing for Notice, which is attached hereto as Exhibit

A.

s. "PLT Action" means the lawsuit captioned Peregrine Litigation Trust v.

Moores, et al., San Diego County Superior Court, Case No. GIC 788659 currently on

appeal to Division One of the Fourth Appellate Division of the State of California, 4th

Civil No. D05 1347 ("the PLT Appeal")

"Recognized Loss" shall have the same meaning as that term is used in the

Notice.

U. "Released Claims" means all claims, rights, demands, suits, matters, issues

or causes of action, whether known or unknown, fixed or contingent, foreseen or

unforeseen, against the Settling Defendants, whether under state or federal law, including

the federal securities laws, and whether directly, indirectly, representatively, derivatively

or in any other capacity, in connection with, based upon, arising out of, or relating to any

claim that has been or could have been raised in the Class Action or the acts, facts or

events alleged in the Actions, including the claims against the Settling Defendants

asserted in the PLT Action. Released Claims as used herein also specifically includes

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claims which the Plaintiffs do not know or suspect to exist in their favor at the time of

this Stipulation which, if known by them, might affect the Settlement and the releases

herein, or might affect their decision not to object to, or opt out of, the Settlement. With

respect to any and all claims released herein, the Parties agree that, effective upon the

Effective Date, Plaintiffs expressly waive and relinquish, shall be deemed to have, and by

operation of the Final Order and Judgment shall have, expressly waived and relinquished,

and the Settling Defendants expressly waive and relinquish, to the fullest extent permitted

by law, the provisions, rights, and benefits of § 1542 of the California Civil Code, which

provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS ORHER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICHIF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTEDHIS OR HER SETTLEMENT WITH THE DEBTOR

Additionally, the Parties expressly waive, upon the Effective Date and by operation of the

Final Order and Judgment shall have waived, any and all provisions, rights and benefits

conferred by any law of the United States or of any state or territory of the United States

or of any other country, whether statutory, code, or common law, which is similar,

comparable or equivalent to § 1542 of the California Civil Code. The Parties may

hereafter discover facts in addition to or different from those which they now know or

believe to be true with respect to the subject matter of the claims released herein, but

hereby stipulate and agree that they do settle and release, and shall be deemed to have,

and upon the Effective Date and by operation of the Final Order and Judgment shall have,

settled and released all claims described herein, whether known or unknown, suspected or

unsuspected, contingent or non-contingent, whether or not concealed or hidden, which

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now exist, or heretofore have existed, upon any theory of law or equity now existing or

coming into existence in the future, without regard to the subsequent discovery or

existence of such different or additional facts. The Parties acknowledge that the

foregoing waiver was bargained for and is a material term and condition of the

Settlement.

v. "Request(s) for Exclusion" means a written request for exclusion from the

Settlement Class as described in the Notice which provides all information requested in

the Notice, is signed by the person or entity seeking exclusion or their counsel, and is

made within the time period specified in the Notice.

w. "Settling Defendants" means Stephen P. Gardner, Matthew C. Gless,

Frederic B. Luddy and Richard T. Nelson.

X. "Settling Defendants' Claims" means any and all claims of the Settling

Defendants relating to the institution or prosecution of the Class Action and/or the PLT

Action, against any of the Lead Plaintiffs, Plaintiffs, Settlement Class Members, or their

attorneys.

Y. "Settlement" means the settlement contemplated by this Stipulation.

"Settlement Class" means a class certified for settlement purposes only

pursuant to Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure consisting o£

All Persons (including Lead Plaintiffs) who purchased or otherwise acquiredPeregrine common stock during the Class Period and who were injured thereby,and two subclasses ("Subclasses") consisting of all Persons who held shares ofHarbinger Corporation and who acquired Peregrine registered common stock inconnection with Peregrine's acquisition of Harbinger Corporation, which wasconsummated on or about June 16, 2000, and all persons who held shares ofRemedy Corporation and who acquired Peregrine registered common stock inconnection with Peregrine's acquisition of Remedy Corporation, which wasconsummated on or about August 27, 2001. Excluded from the Class are:Defendants in the Class Action, members of the immediate families (parents,

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spouses, siblings and children) of each of the individual Defendants, any person;firm, trust, corporation, or entity in which any Defendant has a controllinginterest, the officers, directors, parents, subsidiaries and affiliates of Peregrine,and the legal representatives, heirs, successors in interest or assigns of any suchexcluded party. Also excluded from the Class are any putative Class Memberswho exclude themselves by filing a Request for Exclusion in accordance with therequirements set forth in the Notice, or putative Class members who havepreviously released the Settling Defendants in connection with Peregrine-relatedclaims.

aa. "Settling Defendants' Counsel" means the law firms of Bergeson LLP,

Vance & Blair , LLP, Paul Hastings Janofsky & Walker, LLP, and McKenna Long &

Aldridge LLP,

bb. "Settlement Hearing" means the hearing prescribed by Rule 23(e)(2) of

the Federal Rules of Civil Procedure.

ce. "Stipulation" means this Stipulation and Agreement of Settlement with the

Settling Defendants.

dd. "1934 Act" means the Securities Exchange Act of 1934.

ee. "1933 Act" means the Securities Act of 1933.

CLASS CERTIFICATION

2. The Parties stipulate, solely for purposes of the Settlement, to certification of the

Settlement Class.

3. The Parties further stipulate to the appointment of the Lead Plaintiffs as

representatives of the Settlement Class and to the appointment of Lead Plaintiffs' Counsel as

Class Counsel, such stipulations being solely for settlement purposes.

4. If the Effective Date does not occur for any reason, each of the Settling

Defendants reserves the right to contest certification of any class in the Class Action. The

execution of this Stipulation and any actions taken to secure approval thereof shall not be used

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by Lead Plaintiffs in any way to support their request for certification of a class other than in

connection with the Settlement.

SCOPE AND EFFECT OF SETTLEMENT

5. The obligations incurred pursuant to this Stipulation shall be in full and final

disposition of the Class Action, as against each of the Settling Defendants only, and any and all

Released Claims, as well as any and all Settling Defendants' Claims. The Class Action shall not

be dismissed or settled with respect to the Non-Settling Defendants by operation of this

Stipulation or the Settlement.

6. (a) Upon the Effective Date of the Settlement, Lead Plaintiffs, the Class on behalf

of themselves, and their respective predecessors, successors, affiliates, heirs, executors,

administrators, successors and assigns, and any persons they represent, shall, by operation of the

Final Order and Judgment, with respect to each and every Released Claim, release and be

deemed to release and forever discharge, and shall forever be enjoined from prosecuting, any

Released Claims against the Settling Defendants including without limitation the Class Action

and the PLT Action. Such release and injunction will extend to the Settling Defendants and their

attorneys, agents, insurers, trusts, trustees, estates, representatives, heirs, assigns, and successors

in interest.

(b) Upon the Effective Date of the Settlement, the Settling Defendants shall, by

operation of the Final Order and Judgment, release and be deemed to release and forever

discharge each and every of the Settling Defendants' Claims, and shall forever be enjoined from

prosecuting the Settling Defendants' Claims.

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THE SETTLEMENT CONSIDERATION

7. Settling Defendant Luddy shall pay One Hundred Thousand Dollars ($100,000)

and Settling Defendant Nelson shall pay Twenty-Five Thousand Dollars ($25,000) into an

agreed upon escrow account within ten (10) days of entry of the Preliminary Approval Order.

Settling Defendants Gardner and Gless shall not be required to pay any cash in light of their

current financial condition and, as to Gardner, the fact that forfeitures obtained from him in the

criminal case captioned United States of'America v. Gardner, et al., Criminal Case No.

04CR2605W (S.D. Cal.) may be distributed , at the request of the United States Attorney, to

Authorized Claimants. Defendant Gardner takes no position regarding the United States

Attorney's use or distribution of the forfeited assets. Settling Defendants Gardner and Gless

shall also be required, consistent with their rights in connection with the criminal cases pending

against them and to the extent their respective criminal counsel indicates it is advisable, to

cooperate with Lead Plaintiffs ' Counsel in pursuing the claims against the Non-Settling

Defendants. Such cooperation shall include providing relevant documents in their possession,

custody and control, as well as interviews and testimony upon request therefore from Lead

Plaintiffs' Counsel. Under no circumstances shall Settling Defendants Luddy and Nelson be

required to pay more than the amounts as specified above in consideration of the Settlement.

Lead Plaintiffs' Counsel shall provide wire instructions for the deposit of the Cash Settlement

Amount into escrow.

8. (a) The Cash Settlement Amount shall be held in escrow pending further order of

the Court. All funds comprising the Cash Settlement Amount shall be deemed to be in the

custody of the Court and shall remain subject to the jurisdiction of the Court until such time as

the funds shall be distributed or returned to those Settling Defendants that provided the funds,

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pursuant to this Stipulation and/or further order of the Court. The Parties hereto agree that the

Cash Settlement Amount is intended to be a Qualified Settlement Fund within the meaning of

Treasury Regulation § 1.468B-1 and that Gilardi & Co., LLC, as administrator of the Settlement

Fund within the meaning of Treasury Regulation §1.468B-2(k)(3), shall be responsible for

filing tax returns for the Settlement Fund and paying from the Settlement Fund any Taxes

owed with respect to the Settlement Fund . Gilardi & Co., LLC is hereafter referred to as the

"Claims Administrator." Settling Defendants' Counsel agree to provide promptly to the Claims

Administrator the statement described in Treasury Regulation § 1.468B-3(e).

(b) All (i) taxes on the income of the Cash Settlement Amount and (ii) expenses

and costs incurred in connection with the taxation of the Cash Settlement Amount (including,

without limitation, expenses of tax attorneys and accountants) (collectively "Taxes") shall be

paid out of the Cash Settlement Amount, shall be considered to be a cost of administration of the

Settlement and shall be timely paid from the Cash Settlement Amount without prior order of the

Court.

ADMINISTRATION

9. The Settling Defendants shall have no responsibility for the administration of the

Settlement, or liability for costs associated with provision of the notice to the Class, and shall

have no liability to the Lead Plaintiffs or the Class in connection with such administration. The

Settling Defendants shall cooperate in the administration of the Settlement to the extent

reasonably necessary to effectuate its terms.

ATTORNEYS' FEES AND EXPENSES

10. (a) Lead Plaintiffs' Counsel intend to apply to the Court for an award from the

Cash Settlement Amount of attorneys' fees, and will also request reimbursement of expenses,

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plus interest thereon, from the proceeds of this Settlement at the same time as final approval of

the Settlement is requested. The Settling Defendants will take no position on Lead Plaintiffs'

Counsel's prospective fee application or request for reimbursement of expenses. Such attorneys'

fees, expenses, and interest as are awarded by the Court shall only be paid from the Cash

Settlement Amount to Lead Plaintiffs' Counsel after the occurrence of the Effective Date as

provided in paragraph 22 hereof.

(b) Any order or proceedings relating to the fee and expense applications or any

appeal from any order relating thereto or reversal or modification thereof shall not operate to

terminate or cancel this Stipulation or the Settlement or affect the finality of any final judgment

approving the Stipulation or the Settlement of the Class Action.

DISTRIBUTION TO AUTHORIZED CLAIMANTS

11. In connection with the distribution of the settlement funds generated by this

Settlement, the Claims Administrator shall determine each Settlement Class Member's share of

the settlement funds based upon the Plan of Allocation.

12. (a) Each Authorized Claimant shall be allocated a pro rata share of the cash

portion of the settlement funds based on his or her Recognized Loss compared to the total

Recognized Loss of all Authorized Claimants and consistent with the Plan of Allocation. This is

not a claims-made settlement. The Settling Defendants shall not be entitled to get back any of

the settlement consideration once the Settlement becomes Final. The Settling Defendants shall

have no involvement in reviewing or challenging claims.

(b) Any order or proceedings relating to the Plan of Allocation or any appeal from

any order relating thereto or modification thereof shall not operate to terminate or cancel this

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Stipulation or the Settlement or affect the entry of any final judgment approving the Stipulation

or the Settlement of the Class Action.

ADMINISTRATION OF THE SETTLEMENT

13. Any member of the Class who has not timely submitted a valid Proof of Claim as

and when required by the Court, will be barred from receiving any distribution of the proceeds of

this Settlement. Any member of the Settlement Class who does not submit a valid Request for

Exclusion in connection with this Settlement will otherwise be bound by all of the terms of this

Stipulation and the Settlement, including the terms of the Final Order and Judgment to be entered

in the Class Action and the releases provided for herein, and will be barred from bringing any

action against the Settling Defendants concerning the Released Claims, even if such member of

the Settlement Class has not submitted a Proof of Claim.

14. Lead Plaintiffs' Counsel shall be responsible for supervising the administration of

the Settlement and allocation of the Net Settlement Fund by the Claims Administrator. Except

for their obligation to pay the Cash Settlement Amount, the Settling Defendants shall have no

liability, obligation or responsibility for any administration of the Settlement or allocation of the

Net Settlement Fund. Lead Plaintiffs' Counsel shall have the right, but not the obligation, to

waive what they deem to be formal or technical defects in any Proofs of Claim submitted in the

interests of achieving substantial justice.

15. For purposes of determining the extent, if any, to which a Settlement Class

Member shall be entitled to be treated as an "Authorized Claimant," the following conditions

shall apply.

a. Each Settlement Class Member will be required to submit a Proof of

Claim supported by such documents as are designated therein, including proof of the Settlement

#120092 17


Class Member's loss, or such other documents or proof as Lead Plaintiffs' Counsel, in their

discretion, may deem acceptable;

b. All Proofs of Claim shall be submitted in a timely fashion pursuant to such

schedule as may be set by Order of the Court. Any Settlement Class Member who fails to

submit a timely Proof of Claim, and who does not submit a valid Request for Exclusion in

connection with this Settlement, shall be forever barred from receiving any payment pursuant to

this Stipulation (unless, by Order of the Court , a later submitted Proof of Claim by such

Settlement Class Member is approved), but shall in all other respects be bound by all of the terms

of this Settlement including the terms of the Final Order and Judgment to be entered in the Class

Action and the releases provided for herein, and will be barred from bringing any action against

the Settling Defendants concerning the Released Claims;

c. Each Proof of Claim will be submitted to and reviewed by a Claims

Administrator, under the supervision of Lead Plaintiffs' Counsel, who shall determine the extent,

if any, to which each claim shall be allowed, subject to review by the Court pursuant to

subparagraph (e) below;

d. Proofs of Claim that do not meet the submission requirements may be

rejected. Prior to rejection of a Proof of Claim, the Claims Administrator will communicate with

the Settlement Class Member in order to remedy curable deficiencies in the Proof of Claim

submitted. The Claims Administrator, under supervision of Lead Plaintiffs' Counsel, will notify,

in a timely fashion and in writing, all Settlement Class Members whose Proofs of Claim they

propose to reject in whole or in part, setting forth the reasons therefore, and shall indicate in such

notice that the Settlement Class Member whose claim is to be rejected has the right to a review

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by the Court if the Settlement Class Member so desires and has complied with the relevant

requirements;

e. The administrative determinations of the Claims Administrator accepting

and rejecting claims shall, at a time to be determined in the future, be presented to the Court for

approval.

16. The Proof of Claim shall include a provision that each Settlement Class Member

shall be conclusively deemed to have submitted to the jurisdiction of the Court with respect to

the Settlement Class Member's claim and the enforcement of the release provided for therein.

17. Payment pursuant to this Stipulation and Court approval shall be deemed final and

conclusive against all Settlement Class Members. All Settlement Class Members whose claims

may not be approved by the Court and who do not submit a valid Request for Exclusion in

connection with this Settlement shall be barred from participating in distributions from the Net

Settlement Fund, but otherwise shall be bound by all of the terms of this Stipulation and the

Settlement , including the terms of the Final Order and Judgment to be entered in the Class

Action and the releases provided for herein , and will be barred from bringing any action against

the Settling Defendants concerning the Released Claims.

18. All proceedings with respect to the administration, processing and determination

of claims described by paragraph 15 of this Stipulation and the determination of all controversies

relating thereto, including disputed questions of law and fact with respect to the validity of

claims, shall be subject to the jurisdiction of the Court, and the Settling Defendants shall have no

role with regard thereto.

19. The Net Settlement Fund shall be distributed to Authorized Claimants, subject to

Court Approval, by the Claims Administrator only after the Effective Date and at a time subject

#120092 19


to the discretion of Lead Plaintiffs' Counsel, and after: (i) all Claims have been processed, and

all Claimants whose Claims have been rejected or disallowed, in whole or in part, have been

notified and provided the opportunity to be heard concerning such rejection or disallowance; (ii)

all objections with respect to all rejected or disallowed claims have been resolved by the Court;

(iii) all matters with respect to attorneys' fees, costs, and disbursements have been resolved by

the Court, all appeals therefrom have been resolved or the time therefore has expired; and (iv) all

costs of administration have been paid. Any funds remaining which have not been claimed by

Authorized Claimants shall, after a reasonable period of time, be donated to a charity of Lead

Plaintiffs' Counsel's choice.

PRELIMINARY APPROVAL ORDER

20. Promptly after this Stipulation has been fully executed, Lead Plaintiffs' Counsel

shall apply to the Court for entry of the Preliminary Approval Order.

FINAL ORDER AND JUDGMENT

21. The parties shall jointly request that the Court enter a Final Order and Judgment,

and this Stipulation and Agreement of Settlement shall not become effective until such time as a

Final Order and Judgment substantially in such form (with only such changes as may be agreed

to by Lead Plaintiffs and the Settling Defendants) is entered and becomes final, as provided in

paragraph 22 hereof. The parties hereto agree that they will seek entry of the Final Order and

Judgment as soon as practicable.

EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

22. The Effective Date of Settlement as to any Settling Defendant shall be the date

when all of the following conditions have occurred:

a. the Court has entered the Preliminary Approval Order;

#120092 L0


b. each Settling Defendant has timely deposited his portion of the Cash

Settlement Amount;

c. the Court has approved the Settlement, following Notice to the Class and a

Settlement Hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure and the

Preliminary Approval Order;

d. the Court has entered a Final Order and Judgment, in all material respects

in the form agreed to by the Parties (with only such changes in form as may be accepted by Lead

Plaintiffs and the Settling Defendants), and the expiration of any time for appeal or review of

such Final Order and Judgment, or, if any appeal is filed and not dismissed, after such Final

Order and Judgment is upheld on appeal in all material respects and is no longer subject to

review upon appeal or review by writ of certiorari; and

e. dismissal with prejudice has been entered in the PLT Appeal as to all

Respondents therein and the expiration for any time for appeal or review of such order of final

judgment or dismissal, or, if any appeal therefrom is filed and not dismissed, such dismissal has

been upheld on appeal in all material respects and is no longer subject to review upon appeal or

review by writ of certiorari;

f. withdrawal or termination has not occurred pursuant to paragraph 23.

23. The Settling Defendants and Lead Plaintiffs shall each have the right to terminate

the Settlement and this Stipulation by providing written notice of their election to do so

("Termination Notice") to the other party hereto within thirty (30) days of (a) the Court's

declining to enter the Preliminary Approval Order in any material respect; (b) the Court's refusal

to approve this Stipulation or any material part of it or to enter the Final Order and Judgment in

any material respect; or (c) the date upon which the Final Order and Judgment is modified or

#120092 21


reversed in any material respect. In addition, Defendants Luddy and Nelson shall each

individually have the option to terminate this Settlement (as to their individual selves) if the

Stipulation and Agreement of Settlement with Defendants John J. Moores, Charles E. Noell III,

Norris van den Berg, Richard A. Hosley II, Christopher A. Cole, and Rodney T. Dammeyer

dated as of March 21, 2008 ("Director Settlement") is terminated pursuant to paragraph 23

thereof. If the Effective Date of the Director Settlement fails to occur for any reason other than

termination pursuant to paragraph 23 thereof, Lead Plaintiffs herein shall have the option to

terminate this Settlement with Defendants Luddy and/or Nelson.

24. Except as otherwise provided herein , in the event the Settlement is terminated or

the Effective Date fails to occur for any reason, then all parties whose rights are affected by this

Stipulation shall be deemed to have reverted to their respective status in the Class Action as of

December 22, 2008 and, except as otherwise expressly provided, the parties shall proceed in all

respects as if this Stipulation and any related orders had not been entered, and any portion of the

Cash Settlement Amount previously paid by any terminating Settling Defendant(s), together with

any interest earned thereon, less any Taxes paid or due with respect to such income, shall be

returned to the Settling Defendant(s) who paid such amounts, by wire transfer, within ten (10)

business days of the event causing termination or non-compliance with the conditions to

effectiveness of the Settlement.

NO ADMISSION OF WRONGDOING

25. This Stipulation, whether or not consummated, and any proceedings taken

pursuant to it:

a. shall not be offered or received against the Settling Defendants or against

the Lead Plaintiffs or the Class as evidence of or construed as or deemed to be evidence of any

#120092 22


presumption, concession, or admission by the Settling Defendants or by any of the Lead

Plaintiffs or the Class with respect to the truth of any fact alleged by Plaintiffs or the validity of

any claim that had been or could have been asserted in the Class Action or in any litigation, or

the deficiency of any defense that has been or could have been asserted in the Class Action or in

any litigation, or of any liability, negligence, fault, or wrongdoing of the Settling Defendants or

in support of a motion for class certification;

b. shall not be offered or received against the Settling Defendants as

evidence of a presumption, concession or admission of any fault, misrepresentation or omission

with respect to any statement or written document approved or made by the Settling Defendants,

or against the Lead Plaintiffs or the Class as evidence of any infirmity in the claims of Lead

Plaintiffs or the Class;

c. shall not be offered or received against the Settling Defendants, or against

the Plaintiffs as evidence of a presumption, concession or admission with respect to any liability,

negligence, fault or wrongdoing, or in any way referred to for any other reason as against any of

the parties to this Stipulation, in any other civil, criminal or administrative action or proceeding,

other than such proceedings as may be necessary to effectuate the provisions of this Stipulation;

provided, however, that if this Stipulation is approved by the Court, the Settling Defendants may

use its provisions to effectuate the liability protection granted them hereunder;

d. shall not be construed against the Settling Defendants or the Lead

Plaintiffs or the Class as an admission or concession that the consideration to be given hereunder

represents the amount which could be or would have been recovered after trial; and

e. shall not be construed as or received in evidence as an admission,

concession or presumption against the Lead Plaintiffs or the Class or any of them that any of

#120092 23


their claims are without merit or that damages recoverable in the Class Action would not have

exceeded the Cash Settlement Amount.

BAR ORDER

26. It is the intention of the parties to this Stipulation that the Settlement documented

herein eliminate all further risk and liability of the Settling Defendants relating to the Released

Claims. Accordingly, the parties agree that as of the Effective Date:

a. (a) In accordance with paragraph 6 hereof, Plaintiffs and each person in

the Settlement Class, whether or not that person is an Authorized Claimant and whether or not

that person receives a distribution under the Plan of Allocation will release and be deemed to

release the Settling Defendants from all Released Claims.

b. In accordance with paragraph 21 hereof, the Final Order and Judgment

shall provide for the dismissal of the Released Claims with prejudice as to the Settling

Defendants pursuant to Fed . R. Civ. P. 54(b).

c. The Final Order and Judgment shall, in accordance with Section 4(f) of

the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4(f)(7)(A), bar,

extinguish, discharge and satisfy all claims for contribution against the Settling Defendants,

which claims shall be discharged as a matter of law thereunder. Such bar order shall

permanently bar, enjoin and restrain all persons from commencing, prosecuting or asserting any

claim against the Settling Defendants, however styled, whether legal or equitable, whether

arising under state, federal or common law, whether for indemnification, contribution or

otherwise denominated, where the claim is based upon, arises out of or relates to the claims in

the Class Action including, without limitation, any claim in which a Non-Settling Defendant

seeks to recover from the Settling Defendants (1) any amounts a Non-Settling Defendant has

#120092 24


paid, becomes liable to pay or may become liable to pay (whether in cash or other form of

consideration) in the Class Action, and (2) any costs, fees, expenses or attorneys' fees that a Non-

Settling Defendant incurred or may incur in the Class Action. Nothing in this paragraph shall be

construed to divest any Non-Settling Defendant of the right to obtain an appropriate judgment

reduction or settlement credit available to such Non-Settling Defendant under any applicable

statutory or common law rule.

MISCELLANEOUS PROVISIONS

27. If there is a conflict between this Stipulation and any exhibit to this Stipulation,

the language of this Stipulation shall be controlling.

28. The parties to this Stipulation intend the Settlement to be a final and complete

resolution of all disputes asserted or which could be asserted by the Lead Plaintiffs or the Class

against the Settling Defendants with respect to the Released Claims. Accordingly, Lead

Plaintiffs and the Settling Defendants agree that the Class Action was brought by Lead Plaintiffs

and defended by the Settling Defendants in compliance with the requirements of Fed. R. Civ. P.

11(b). The parties have no claims of any violation of Rule 11 of the Federal Rules of Civil

Procedure relating to the prosecution, defense, or settlement of the Class Action by any of the

Lead Plaintiffs, the Class or the Settling Defendants or their counsel. The parties agree that the

amount paid and the other terms of the Settlement were negotiated at arm's length in good faith

by the parties, and reflect a settlement that was reached voluntarily after consultation with

experienced legal counsel.

29. This Stipulation may not be modified or amended, nor may any of its provisions

be waived except by a writing signed by all parties hereto or their successors-in-interest.

#120092 25


30. The headings herein are used for the purpose of convenience only and are not

meant to have legal effect.

31. The administration and consummation of the Settlement as embodied in this

Stipulation shall be under the authority of the Court and the Court shall retain jurisdiction for the

purpose of entering orders providing for awards of attorneys' fees and expenses to Lead

Plaintiffs' Counsel and enforcing the terms of this Stipulation.

32. The waiver by any one party of any breach of this Stipulation by any other party

shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation or a

waiver by any other party.

33. This Stipulation and related documents constitute the entire agreement among the

parties hereto concerning the Settlement of the Class Action as to the Settling Defendants, and no

representations , warranties , or inducements have been made by any party hereto concerning this

Stipulation other than those contained and memorialized in such documents.

34. This Stipulation may be executed in one or more facsimile counterparts. All

executed counterparts and each of them shall be deemed to be one and the same instrument

provided that counsel for the parties to this Stipulation shall exchange among themselves original

signed counterparts.

35. This Stipulation shall be binding upon, and inure to the benefit of, the parties

hereto, and the successors and assigns of the parties hereto.

36. The construction, interpretation, operation, effect and validity of this Stipulation,

and all documents necessary to effectuate it, shall be governed by the laws of the State of

California without regard to conflicts of laws, except to the extent that federal law requires that

federal law govern.

#120092 26


37. This Stipulation shall not be construed more strictly against one party than

another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel

for one of the parties, it being recognized that it is the result of arm's-length negotiations

between the parties and all parties have contributed substantially and materially to the

preparation of this Stipulation.

38. All counsel and any other person executing this Stipulation warrant and represent

that they have the full authority to do so and that they have the authority to take appropriate

action required or permitted to be taken pursuant to the Stipulation to effectuate its terms.

39. Lead Plaintiffs' Counsel and the Settling Defendants' Counsel agree to cooperate

reasonably with one another in seeking Court approval of the Preliminary Approval Order, the

Stipulation and the Settlement, and to promptly agree upon and execute all such other

documentation as may be reasonably required to obtain final approval by the Court of the

Settlement.

DATED. Decembers 2008 GOLD BENNETT CERA. & SIDENER LLP

By-Solomon A . Cera

Attorneys for Section 10(b) Lead PlaintiffThe Loran Group

DAT1 D: December v, 2008

ABIT:

:

TW'ERSKY LLP

By: I '0" ^ -^_,.

Lawrence D. Levis

#120092 27


DATED; December ----, 2008 STULL, STULL & BRODY

By:Howard T. Longman

Attorneys for Section L 1 Lead PlaintiffHeywood Waga

DATED: December"„_, 2008 BERGESON LLP

By: Co A la p dCaroline cIntyre

Attorneys for Stephen P. Gardner

DATED: December -, 2008 VANCE & BLAIR, LLP

By.Thomas L. Vance

Attorneys for Matthew C. Gless

DATED: December _, 2008 PAUL HASTINGS JANOFSKY& WALKER, LLP

By:Christopher H. McGrath

Attorneys for Frederic B. Luddy

DATED: December -, 2008 McKENNA LONG & ALDRIDGE LLP

By:Christian D. Humphreys

Attorneys for Richard T. Nelson

#120092 28


DATED: December -, 2008 STULL, STULL & BRODY


Attorneys for Section 11 Lead PlaintiffHeywood Waga

DATED: December ___, 2008 BERGESON LLP

By:Caroline McIntyre


DATED: December,^; 2008 VANCE & BLAIR, LLP

By:Thomas L. Vance


DATED: December__, 2008 PAUL HASTINGS JANOFSKY& WALKER, LLP



DATED: December_, 2008 McKENNA LONG & ALDRIDGE LLP

By.Christian D. Humphreys


#120092 28


DATED: December_, 2008



DATED: DecemberA 2008

DATED: December-, 2008

STULL, STULL & BRODY


Attorneys for Section 1 I Lead PlaintiffHeywood Waga

BERGESON LLP



VANCE & BLAIR, LLP

Thomas L. Vance


By:

PAUL HASTINGS OFSKY& WALK . LP

By:Christopher H. Mc

Attorneys for Frederic B.

McKENNA LONG & ALDRIDGE LLP

By:Christian D. Humphreys


#120092 28


DATED: December , 2008 STULL, STULL & BRODY


Attorneys for Section 1 I Lead PlaintiffHeywood Waga

DATED: December_, 2008 BERGESON LLP



DATED: December -, 2008 VANCE & BLAIR, LLP

By:Thomas L. Vance


DATED: December _, 2008 PAUL HASTINGS JANOFSKY& WALKER, LLP



DATED: December, 2008 McKENNA LONG &%ALDDIDGE LLPi I

71Y

ChfistiahIr urn eYs i


#120092 28

Case 3:02-cv-00870-BEN-RBB Document 827-2 Filed 02/09/2009 Page 1 of 27

EXHIBIT 1



IN RE PEREGRINE SYSTEMS, INC.SECURITIES LITIGATION

Case No. 02-CV-0870- BEN (RBB)

This Document Relates to:ALL ACTIONS

SECOND NOTICE OF PENDENCY OF CLASS ACTION ANDHEARING ON ADDITIONAL PROPOSED PARTIAL SETTLEMENTS

TO: ALL PERSONS WHO PURCHASED OR ACQUIRED PEREGRINE SYSTEMS, INC.SECURITIES DURING THE PERIOD FROM JULY 22, 1999 THROUGH MAY 3,2002, INCLUSIVE, INCLUDING ALL PERSONS WHO OWNED SHARES OFHARBINGER CORP. OR REMEDY CORP. STOCK AND EXCHANGED THOSESHARES FOR PEREGRINE SHARES.

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTSMAY BE AFFECTED BY PROCEEDINGS IN THIS ACTION. IF YOU ARE ASETTLEMENT CLASS MEMBER, AS DEFINED HEREIN, YOU MAY BE ENTITLED TORECEIVE A CASH BENEFIT PURSUANT TO THE PROPOSED PARTIAL SETTLEMENTSDESCRIBED IN THIS NOTICE.

EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SUBMITTEDPOSTMARKED ON OR BEFORE [55 DAYS AFTER DATE OF PRELIMINARYAPPROVAL ORDER].

SECURITIES BROKERS AND OTHER NOMINEES: PLEASE SEE INSTRUCTIONS ONPAGE _ HEREIN.

#120595


I. SUMMARY OF SETTLEMENT AND RELATED MATTERS

This Notice of Pendency of Class Action and Hearing on Proposed Partial

Settlements (the "Notice") is given 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 California (the

"Court") dated , 2009. The purpose of this Notice is to inform you of additional

proposed settlements (collectively referred to as the "Settlement") in the aggregate principal

amount of $56,075,000, which will affect your rights in this Class Action relating to Peregrine

Systems, Inc. ("Peregrine"). Final approval of the Settlement will be considered at a hearing to

be held by the Court to consider its fairness, reasonableness, and adequacy. This Notice

describes your rights under the Settlement and what steps you may take in relation to this Class

Action. Capitalized terms used in this Notice have the meanings given to them in the

"Definitions" section below unless otherwise defined. The Settlement discussed herein relates to

claims against the following defendants , who were former outside directors of Peregrine: John J.

Moores, Charles E. Noell III, Norris van den Berg, Richard A. Hosley II, Christopher A. Cole,

and Rodney F. Dammeyer (at times collectively referred to as the "Outside Director Settling

Defendants"); and the following defendants who were former officers of Peregrine : Stephen P.

Gardner, Matthew C. Gless, Frederic B . Luddy, and Richard T. Nelson ( at times collectively

referred to as the "Officer Settling Defendants"). The Outside Director Settling Defendants and

the Officer Settling Defendants are collectively referred to as the "Settling Defendants." The

Class previously settled claims against Peregrine in connection with Peregrine 's Bankruptcy

Court proceedings . Prior settlements were also reached with defendants Arthur Andersen LLP,

Douglas S. Powanda, William D . Savoy and Thomas G. Watrous . These prior settlements,

approved by the Court, were described in a previous notice dated July 31, 2006. This Notice is

#120595

Case 3 : 02-cv-00870-BEN-RBB Document 827-2 Filed 02/09/2009 Page 4 of 27

not an expression of any opinion by the Court as to the merits of any claims or any defenses

asserted by any party in this Class Action or as to the fairness or adequacy of the Settlement.

H. STATEMENT OF PLAINTIFFS' RECOVERY

2. The Settlement, if finally approved, will consist of $56,075,000 plus

approximately $5,000,000 which is being held by the Peregrine Litigation Trust, resulting in a

Settlement Fund of approximately $61,075,000. The Settlement Fund will be available for

distribution to Settlement Class Members, subject to deduction for costs of notice and

administration, and for attorneys' fees, costs and expenses as approved by the Court. Attorneys'

fees equal to 20% of the Settlement Fund and expenses of up to $500,000 are being requested.

Your recovery from these funds will depend on a number of variables, including the number and

timing of Peregrine shares you purchased, whether they were acquired on the open market or

through an exchange of shares, and the number of claims submitted. It is estimated that if all

eligible Peregrine securities purchasers or exchangers covered by this Settlement were to file

claims to share therein , then the average recovery per damaged share of common stock under the

Settlement would be $0.11 per share (before the deduction of any Court-awarded attorneys' fees

and expenses).

III. STATEMENT OF POTENTIAL OUTCOME OF CASE

The Lead Plaintiffs (defined hereinafter) and the Settling Defendants disagree as

to both liability and damages and do not agree on the average amount of damages per share, if

any, that would be recoverable if Lead Plaintiffs were to prevail on the claims alleged against the

Settling Defendants. In addition to the numerous risks of litigation and liability issues on which

the parties disagree, the damage-related issues on which the parties disagree include: (a) whether

#120595 2


any affirmative misstatements were made by any Settling Defendant; (b) whether the alleged

misstatements or omissions were made intentionally, recklessly, negligently, or innocently; (c)

the appropriate economic model for determining the amount by which Peregrine's securities

were allegedly artificially inflated (if at all) during the Class Period (defined below); (d) the

amount by which Peregrine's securities were allegedly artificially inflated (if at all) during the

Class Period; (e) the effect of various market forces influencing the trading price of Peregrine's

securities at various times during the Class Period; (f) the extent to which external factors, such

as general market and industry conditions, influenced the trading price of Peregrine's securities

at various times during the Class Period; (g) the extent to which the various matters that Lead

Plaintiffs allege were materially false or misleading influenced (if at all) the trading price of

Peregrine's securities at various times during the Class Period; (h) the extent to which the

various allegedly adverse material facts that Lead Plaintiffs allege were omitted influenced (if at

all) the trading price of Peregrine's securities at various times during the Class Period; and (i)

whether any statements made or facts allegedly omitted were material or otherwise actionable

under the federal securities laws. Under the relevant securities laws, a claimant's recoverable

damages are limited to the losses attributable to the alleged fraud or material misrepresentations

or omissions. Losses which resulted from factors other than the alleged fraud or material

misrepresentations or omissions are not compensable under the federal securities laws.

4. Lead Counsel believe that there was a substantial risk that Lead Plaintiffs and the

Settlement Class might not have recovered anything from the Settling Defendants in light of the

status of the litigation, the absence of insurance to satisfy the claims asserted in the Class Action

not exhausted by defense costs, and the defenses asserted to the claims. Absent the Settlement,

#120595


Lead Plaintiffs could have recovered nothing or substantially less than the settlement amount

herein described.

The Settling Defendants deny that they are liable to the Lead Plaintiffs or the

Settlement Class and deny that Lead Plaintiffs or the Settlement Class have suffered any

damages.

IV. STATEMENT OF ATTORNEYS ' FEES AND REIMBURSEMENT OFEXPENSES SOUGHT

6. Lead Counsel intend to apply for fees equal to 20% of the Settlement Fund (an

average of $0.03 per damaged share). This amount is based on the recommendation of the

retired federal Magistrate Judge who served as a mediator for various settlement negotiations in

this Action. Lead Counsel have expended considerable time and effort in the prosecution of this

litigation on a contingent fee basis, and have advanced the expenses of the litigation, with the

expectation that if they were successful in obtaining a recovery for the Settlement Class they

would be compensated for their efforts from such recoveries. In this type of litigation, it is

customary for counsel to be awarded a percentage of the common fund they have created as their

attorneys' fees. Lead Counsel are not seeking a fee on the amounts distributed in connection

with assets forfeited by Defendant Gardner to the United States government.

7. Lead Counsel are also seeking reimbursement of expenses in an amount not to

exceed $500,000 incurred in this litigation from April 30, 2006 through the date on which final

approval of the Settlement is granted.

V. REASONS FOR THE SETTLEMENT

8. The principal reason for the Settlement is the immediate substantial cash benefit

to be made available to Settlement Class Members if the Settlement is finally approved and

#120595 4


becomes effective. This benefit must be compared to the risk that no recovery might be achieved

from the Settling Defendants in view of the current status of the litigation, the significant delay

that may arise from continued litigation against these defendants, and the possibility that some or

all of the Settling Defendants might ultimately be found not liable to Lead Plaintiffs and/or the

Settlement Class.

VI. BACKGROUND OF THE LITIGATION

9. Peregrine at all times during the Class Period was a publicly traded company

headquartered in San Diego, California that developed and marketed software products, and

whose stock was traded on NASDAQ.

10. Beginning in May 2002, class action complaints alleging violations of the federal

securities laws were filed in the Court against Peregrine and other defendants. The other

defendants include former officers and directors of Peregrine, former strategic alliance partners

of Peregrine, and Peregrine's former auditor. The class actions were consolidated pursuant to an

Order of the Court entered on July 23, 2002. By Order dated January 30, 2003, the Court

appointed the Loran Group as the Lead Plaintiff for securities fraud claims arising under Sections

10(b) and 20(a) of the Securities Exchange Act of 1934 (" 1934 Act") and Heywood Waga as

Lead Plaintiff for claims on behalf of persons who held shares of either Harbinger Corporation

("Harbinger") or Remedy Corporation ("Remedy") and who acquired Peregrine registered

common stock in connection with Peregrine's acquisition of these companies (the "Subclasses").

The claims on behalf of the members of the Subclasses are for violation of Sections 11 and 15 of

the Securities Act of 1933 and Section 14(a) of the 1934 Act. The Court further appointed the

law firm of Gold Bennett Cera & Sidener LLP as Lead Counsel for the Sections 10(b) and 20(a)

claims and the law firms of Abraham Fruchter & Twersky LLP, and Stull, Stull & Brody as Lead

#120595


Counsel for the claims brought on behalf of the Harbinger and Remedy Subclasses (collectively

referred to as "Lead Counsel").

11. On March 18, 2003, Lead Plaintiffs tiled a Consolidated Class Action Complaint

for Violations of the Federal Securities Laws (the "Consolidated Complaint"). The Consolidated

Complaint generally alleged that certain defendants disseminated a series of materially false and

misleading statements in public filings, press releases, shareholder reports, audit opinions, and

communications with securities analysts during the Class Period that caused Peregrine securities

to trade at artificially inflated prices, thereby causing damage to purchasers of Peregrine

securities. As to the Harbinger and Remedy Subclasses, the Consolidated Complaint alleged that

certain defendants signed registration statements that contained false and misleading statements.

12. The Court, in an Order dated November 21, 2003, granted in part and denied in

part motions to dismiss tiled by various defendants, including certain of the Settling Defendants.

Specifically, the Court dismissed the Section 10(b), 12(a)(2), 14(a), 15 and 20(a) claims against

certain of the Outside Director Settling Defendants without prejudice and with leave to amend,

and refused to dismiss the Section 11 claims against certain of the Outside Director Settling

Defendants. The motions to dismiss filed by Defendants Nelson and Luddy were granted in their

entirety. The motions to dismiss filed by Defendants Gardner and Gless were granted with

respect to the Section 12(a)(2) and 14 claims, but denied as to the Section 10(b), 11, 15 and 20(a)

claims.

13. On April 5, 2004, Lead Plaintiffs filed a First Amended Consolidated Class

Action Complaint for Violations of the Federal Securities Laws (the "Complaint"). Because

Peregrine had filed for bankruptcy in September 2002, it was no longer named as a defendant in

the Complaint. The Complaint generally alleges that certain defendants disseminated a series of

#120595 6


materially false and misleading statements in public filings, press releases, shareholder reports,

audit opinions, and communications with securities analysts during the Class Period which

caused Peregrine securities to trade at artificially inflated prices, thereby causing damage to

purchasers of Peregrine securities . As to the Harbinger and Remedy Subclasses , the Complaint

alleges that certain defendants signed registration statements that contained false and misleading

statements.

14. The Complaint alleges that material overstatements of the Company' s revenues

and earnings disseminated during the Class Period resulted from the Company's failure to

recognize revenue properly when it was earned under applicable accounting rules and to report

Peregrine's true financial results accurately. Peregrine restated earnings for fiscal years 2000

and 2001. The primary reason for the restatements was the overstatement of revenue.

15. The Complaint further alleges that Lead Plaintiffs and other Class Members

purchased or otherwise acquired Peregrine securities during the Class Period at artificially

inflated prices as a result of certain defendants' dissemination of false and misleading statements

and suffered losses when the truth about Peregrine's financial condition became known and

Peregrine's stock price declined.

16. The Settling Defendants deny all allegations of wrongdoing or liability in the

Class Action. The Settling Defendants (excluding Stephen P. Gardner, Matthew C. Gless, and

Richard T. Nelson) also deny all other accusations of wrongdoing or violations of law, and have

asserted numerous defenses to the claims were this litigation to proceed against them. Stephen

P. Gardner, Matthew C. Gless, and Richard T. Nelson have pled guilty to criminal charges, but

otherwise deny all allegations of wrongdoing or violations of law. The Settlement is not and

shall not be construed or be deemed to be evidence or an admission or a concession on the part

#120595


of the Settling Defendants of any fault or liability or damages whatsoever, and they do not

concede any infirmity in the defenses which they have asserted or intended to assert in the Class

Action.

17. The Court, in an Order dated March 30, 2005, granted in part and denied in part

motions to dismiss filed by various defendants, including certain of the Settling Defendants.

Specifically, the Court dismissed the Sections 10(b) and 20(a) claims against the Settling

Defendants, and refused to dismiss the Sections 11 and 14(a) claims against certain of the

Settling Defendants. Thereafter, the Court entered a Rule 54(b) judgment as to the Section 10(b)

claims in favor of the Settling Defendants and stayed prosecution of the Section 11 claims until

final resolution of an appeal as to the Section 10(b) claims. Lead Plaintiff the Loran Group

appealed the dismissal of the Section 10(b) claims to the Ninth Circuit Court of Appeals. The

appeal was argued on November 6, 2007. If this Settlement is finalized , the appeal will be

withdrawn as to the Settling Defendants. On January 23, 2009, the Ninth Circuit affirmed the

dismissal of the claims against defendants KPMG LLP, BearingPoint , Inc. and Larry Rodda.

VII. BACKGROUND TO THE SETTLEMENT

18. Lead Counsel has conducted an investigation relating to the claims and the

underlying events and transactions alleged in the Complaint. Lead Counsel has examined

relevant filings by Peregrine with the United States Securities and Exchange Commission before,

during and after the Class Period. Further, Lead Counsel was able to obtain access to Peregrine's

business records during the relevant period as a result of Lead Counsel's negotiations with

Peregrine during its Bankruptcy Court proceedings. Based on the foregoing, Lead Counsel

believe that in light of the current status of the litigation against the Settling Defendants, the

Settlement represents a significant and highly beneficial recovery for Settlement Class Members.

#120595


19. Lead Counsel have analyzed the evidence adduced during their factual

investigation and have researched the applicable law with respect to the claims of Lead Plaintiffs

and the Settlement Class against the Settling Defendants and the potential defenses thereto. Prior

to entering into the Settlement described herein, Lead Counsel conducted an extensive

investigation of the claims, including the analysis of hundreds of thousands of documents and e-

mails produced by Peregrine.

20. Lead Plaintiffs, through Lead Counsel, have conducted discussions and arms'

length negotiations with counsel for the Settling Defendants regarding a compromise and

settlement of the Class Action with a view to settling the issues in dispute and achieving the best

relief possible consistent with the interests of the Settlement Class Members. As to the Outside

Director Settling Defendants, the parties were assisted in these efforts by a retired United States

Magistrate Judge serving as a settlement mediator.

21. Lead Plaintiffs and the Settling Defendants realize that the continued litigation of

the claims would entail substantial effort and expense and involve considerable risk and

uncertainty, and believe that the claims in the Class Action as against the Settling Defendants are

best settled as set forth herein.

22. No determination has been made by the Court as to liability or the amount, if any,

of damages suffered by the Class, nor the proper measure of any such damages. The Settlement

will provide a substantial cash benefit for Settlement Class Members and avoid the risk that

liability or damages might not be proven against the Settling Defendants, or that if liability and

damages are proven against them, that any ensuing judgment might not be collectible from them.

Under relevant law, the ultimate liability of these Non-Settling Defendants, if any, may be

reduced by the larger of the amount of the settlement payments or the proportionate

#120595 9


responsibility of the Settling Defendants for any damage ultimately proven to have been incurred

by the Settlement Class.

23. A FINAL DETERMINATION HAS NOT BEEN MADE ON THE MERITS OF

THE LEAD PLAINTIFFS' CLAIMS AGAINST THE SETTLING DEFENDANTS OR THEIR

DEFENSES THERETO. ALTHOUGH THE COURT HAS MADE CERTAIN RULINGS ON

LEAD PLAINTIFFS' CLAIMS, AS DESCRIBED IN PARAGRAPHS 12 AND 17 ABOVE,

THIS NOTICE DOES NOT IMPLY THAT THERE HAS BEEN OR WOULD BE ANY

FINDING OF VIOLATION OF THE LAW OR THAT RECOVERY COULD BE HAD IN

ANY AMOUNT IF THE ACTION WERE NOT SETTLED.

VIII. DEFINITIONS

24. "Actions" means the Class Action and the PLT Action collectively.

25. "Additional Released Parties" means JMI Services, the Avery K. Moores 1994

Trust, Barry A. Moores 1993 Trust, Barry O. Moores 1991 Trust, Benjamin H. Moores 1996

Trust, Melissa K. Moores 1990 Trust, Jennifer Ann Moores Trust, John J. Moores, Jr. Trust,

Anthony K. Moores 1991 Trust, Molly Moores Schulman 1991 Trust, Jason B. Schulman 1990

Trust, Rachel E. Schulman 1990 Trust, Michael & Debra Baas 1990 Trust, Rosanne E. Baas

1990 Trust, Christopher N. Baas 1990 Trust, Seth J. Baas 1990 Trust, Britton L. Baas 1990

Trust, Patrick & Rosario Baas Trust; Clare C. Toner 1992 Trust; David A. Toner 1992 Trust, and

Toni L. Cruse 1994 Trust.

26. "Authorized Claimant" means any Settlement Class member whose Claim for

recovery is allowed by the Court.

#120595 10


27. "Class Action" means the lawsuit captioned In re Peregrine Systems, Inc.,

Securities Litigation, United States District Court for the Southern District of California, Case

No. 02-CV-0870-BEN (RBB).

28. "Class Period" means the period of time from July 22, 1999 through May 3, 2002,

inclusive.

29. "Court" means the United States District Court for the Southern District of

California.

30. "Excluded Settlement Class Members" means any Settlement Class member who

validly requests exclusion from the Settlement, as set forth in this Notice.

31. "Lead Counsel" means the law firms appointed as lead counsel in the Court's

January 30, 2003 Order: Gold Bennett Cera & Sidener LLP as Lead Counsel for the Section

10(b) and 20(a) claims and Abraham Fruchter & Twersky LLP and Stull, Stull & Brody as Lead

Counsel for the claims brought on behalf of the Harbinger and Remedy Subclasses.

32. "Lead Plaintiffs" means the group consisting of David Levy, Leighton Powell,

David Schenkel, John Virden, Conrad Willemse, Bill Holman , Bob Benesko , Michael Slavitch,

Richard Maheu, and Mark Rollins (hereinafter the "Loran Group") who were appointed as Lead

Plaintiffs for the claims arising under Section 10(b) of the 1934 Act, and Heywood Waga

(hereinafter "Waga"), who was appointed as Lead Plaintiff for the claims arising under Section

11 of the 1933 Act.

33. "Person" means an individual or entity, including any corporation (including any

division or subsidiary), partnership, limited partnership, association, joint stock company, estate,

legal representative , trust, unincorporated association , or government or any political subdivision

or agency thereof.

#120595


34. "Plan of Allocation" means the plan, previously approved by the Court on

November 15, 2006, for the allocation and distribution of the Settlement proceeds to Authorized

Claimants.

35. "PLT Action" means the lawsuit captioned Peregrine Litigation Trust v. Moores,

et al., San Diego Superior Court, Case No. GIC 788659, which is currently on appeal to Division

One of the Fourth Appellate Division of the State of California, Civil No. D051347.

36. "Released Claims" means all claims, rights, demands, suits, matters, issues or

causes of action, whether known or unknown, fixed or contingent, foreseen or unforeseen,

against the Settling Defendants and the Additional Released Parties, whether under state or

federal law, including the federal securities laws, and whether directly, indirectly,

representatively, derivatively or in any other capacity, in connection with, based upon, arising

out of, or relating to any claim that has been or could have been raised in the Actions or the acts,

facts or events alleged in the Actions, including the claims against the Settling Defendants and

the Additional Released Parties asserted in the PLT Action. Released Claims also specifically

include claims the Lead Plaintiffs and Settlement Class do not know or suspect to exist in their

favor at the time of the Settlement which, if known by them, might affect the Settlement and the

releases therein, or might affect their decision not to object to, or opt out of, the Settlement.

With respect to any and all claims released herein, the Parties agree that, effective upon the

Effective Date, Plaintiffs expressly waive and relinquish, shall be deemed to have, and by

operation of the Order and Final Judgment shall have, expressly waived and relinquished, and

the Settling Defendants expressly waive and relinquish, to the fullest extent permitted by law, the

provisions, rights, and benefits of § 1542 of the California Civil Code, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS ORHER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH

#120595 12


IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTEDHIS OR HER SETTLEMENT WITH THE DEBTOR.

Additionally, the Parties expressly waive, upon the Effective Date and by operation of the Order

and Final Judgment shall have waived, any and all provisions, rights and benefits conferred by

any law of the United States or of any state or territory of the United States or of any other

country, whether statutory, code, or common law, which is similar, comparable or equivalent to

§ 1542 of the California Civil Code. The Parties may hereafter discover facts in addition to or

different from those which they now know or believe to be true with respect to the subject matter

of the claims released herein, but hereby stipulate and agree that they do settle and release, and

shall be deemed to have, and upon the Effective Date and by operation of the Order and Final

Judgment shall have, settled and released all claims described herein, whether 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, without regard to the subsequent discovery or

existence of such different or additional facts. The Parties acknowledge that the foregoing

waiver was bargained for and is a material term and condition of the Settlement.

37. "Settlement" refers to the agreements to settle claims in the Class Action, which,

if approved, will result in dismissal of the claims in the PLT Action, as set forth in the

Stipulation and Agreement of Settlement with defendants John J. Moores, Charles E. Noell III,

Norris van den Berg, Richard A. Hosley II, Christopher A. Cole, and Rodney F. Dammeyer

dated as of August 8, 2008, and the Stipulation and Agreement of Settlement with Defendants

Stephen P. Gardner, Matthew C. Gless, Frederic B. Luddy, and Richard T. Nelson dated as of

December 22, 2008, both of which are on file with the Court.

38. "Settlement Class" means:

All Persons (including Lead Plaintiffs) who purchased or otherwiseacquired Peregrine common stock during the Class Period and whowere injured thereby, and two subclasses ("Subclasses") consistingof all Persons who held shares of Harbinger Corporation and who

#120595 13


acquired Peregrine registered common stock in connection withPeregrine's acquisition of Harbinger Corporation, which wasconsummated on or about June 16, 2000, and all Persons who heldshares of Remedy Corporation and who acquired Peregrineregistered common stock in connection with Peregrine'sacquisition of Remedy Corporation, which was consummated onor about August 27, 2001.

Excluded from the Settlement Class are: defendants in the Actions, the Additional Released

Parties, members of the immediate families (parents, spouses, siblings and children) of each of

the individual defendants; any person, firm, trust, corporation, or entity in which any defendant

has a controlling interest; the officers, directors, parents, subsidiaries, and affiliates of Peregrine;

and the legal representatives, heirs, successors in interest or assigns of any such excluded party.

Also excluded from the Settlement Class are any putative class members who exclude

themselves by filing a Request for Exclusion in accordance with the requirements set forth in this

Notice, or putative class members who have previously released the Settling Defendants in

connection with Peregrine-related claims.

39. "Settlement Fund" means all funds deposited in an escrow account by the Settling

Defendants, including accumulated interest or other earnings, less any costs, expenses, reserves,

taxes, or attorneys' fees paid therefrom (as authorized by the Stipulation or by Court Order) and

the balance of funds held by the Peregrine Litigation Trust, which totaled approximately

$5,000,000 as of January 31, 2009. The funds from the PLT are being included in the Settlement

Fund in accordance with an Order of the Bankruptcy Court as conceived and structured by Lead

Counsel.

40. "Settling Defendants" means, collectively, John J. Moores, Charles E. Noell III,

Norris van den Berg, Richard A. Hosley II, Christopher A. Cole, Rodney F. Dammeyer, Stephen

P. Gardner, Matthew C. Gless, Frederic B. Luddy, and Richard T. Nelson.

#120595 14


IX. TERMS OF THE PROPOSED SETTLEMENTS

41. In full and complete resolution of the claims which have or could have been

asserted against the Settling Defendants in the Class Action and of the additional claims

described in paragraph 44 below, and subject to the terms and conditions of the Settlement,

which is on file with the Court and available for inspection, the Settling Defendants have paid or

will pay $56,075,000 in cash into an escrow account as follows:

(a) Settling Defendant Dammeyer paid $950,000 into escrow on August 21,

2008.

(b) Settling Defendants Moores, Noell, van den Berg, Hosley, and Cole paid

$5,000,000 into escrow on October 10, 2008, paid $22,500,000 into escrow on January 5, 2009,

and will pay $27,500,000 into escrow on or before October 31, 2009. The October 31, 2009

payment obligation is reflected in a promissory note from defendant John J. Moores and Rebecca

Ann Moores jointly as individuals and as Trustees of the John and Rebecca Ann Moores Family

Trust, which may be prepaid at any time and will be secured by the security and agreements set

forth in paragraph 7(a)(4)(D) of the Stipulation and Agreement of Settlement. Simple interest

shall accrue on the outstanding balance starting November 3, 2008. From November 3, 2008

through March 31, 2009, the rate of interest shall be the six-month Treasury bill rate in effect on

November 3, 2008; beginning March 31, 2009, the rate of interest shall be four percent (4%) per

annum.

(c) Settling Defendant Luddy will pay One Hundred Thousand Dollars

($100,000) into an agreed upon escrow account, half of such amount within ten (10) days of

entry of an order granting preliminary approval of the Officer Settling Defendants' settlement

and the other half five days before the final approval hearing.

#120595 15


(d) Settling Defendant Nelson will pay Twenty-Five Thousand Dollars

($25,000) into an agreed upon escrow account within ten (10) days of entry of an order granting

preliminary approval of the Officer Settling Defendants' settlement.

(e) Settling Defendants Gardner and Gless will not be required to pay any

cash in light of their current financial condition. In January 2009, Gardner filed for bankruptcy

protection. Gardner previously forfeited to the United States government certain assets pursuant

to his guilty plea in the criminal case captioned United States v. Gardner, et al., Criminal Case

No. 04CR2605W (S.D. Cal.). These assets consist of approximately $1,354,684.44 in cash and

three parcels of real property located in Maine. It is anticipated that some amount of these

previously-forfeited assets will be distributed to the Authorized Claimants in accordance with the

Plan of Allocation. Such distribution will need to be approved at a later date by the U.S.

Department of Justice and the federal district court overseeing Gardner's criminal case. No

attorneys' fees will be claimed on any amounts so distributed. As to Gless, he has provided Lead

Counsel with a financial statement showing essentially no assets. Settling Defendants Gardner

and Gless will also be required, consistent with their rights in connection with the criminal cases

pending against them and to the extent their respective criminal counsel indicates it is advisable,

to cooperate with Lead Counsel in pursuing any remaining claims. Such cooperation may

include providing relevant documents in their possession, custody and control, as well as

interviews and testimony upon request from Lead Counsel.

In addition to resolving the claims against the Settling Defendants in the Class Action, the

Settlement will, if finally approved, also release the claims brought against the Settling

Defendants and certain Additional Released Parties in the PLT Action. Such actions would

#120595 16


resolve claims that Lead Plaintiffs asserted against Peregrine in Peregrine's bankruptcy case on

behalf of the Settlement Class members.

42. The Settling Defendants deny the wrongdoing alleged, or that could have been

alleged in both the Class Action and the PLT Action. The Settlement shall not be construed as

evidence or an admission by the Settling Defendants regarding any claim, fault, liability,

wrongdoing, or damage, or of any infirmity in the defenses that the Settling Defendants have

asserted.

43. If the Settlement is approved by the Court, all claims which have or could have

been asserted in the Actions against the Settling Defendants or the Additional Released Parties

will be released and dismissed on the merits, with prejudice, as to all Settlement Class members.

All Persons, except Excluded Settlement Class Members, will be forever barred from

prosecuting the Actions, or any other action raising any Settled Claims against the Settling

Defendants or the Additional Released Parties.

44. The Settlement will become effective once, among other things, a final judgment

is entered in the Class Action approving the Settlement, the PLT Action is dismissed with

prejudice, and neither order is subject to appeal and the entire settlement amount has been

deposited into escrow account by the Settling Defendants.

X. NOTICE OF SETTLEMENT FAIRNESS HEARING

45. NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civil

Procedure and an Order of the Court dated , 2009, that a hearing will be held

before the Honorable Roger T. Benitez, in the United States Courthouse, 880 Front Street, Fourth

Floor, Courtroom 3, San Diego , CA 92101-8900, at _:_, on , 2009 (the

"Settlement Fairness Hearing") to determine whether the Settlement is fair, reasonable and

#120595 17


adequate, and to consider the application of Lead Counsel for an award of attorneys' fees and

reimbursement of expenses.

46. The Court, by its Order Preliminarily Approving Settlements and Providing for

Notice, dated , 2009, has, for settlement purposes , certified (a) a Settlement Class

consisting of all persons who purchased Peregrine securities during the period from July 22,

1999 through May 3, 2002, inclusive; (b) a subclass consisting of all persons who held shares of

Harbinger stock and who acquired Peregrine registered common stock in connection with

Peregrine's acquisition of Harbinger on or about June 16, 2000; and (c) a subclass consisting of

all persons who held shares of Remedy stock and who acquired Peregrine registered common

stock in connection with Peregrine's acquisition of Remedy on or about August 27, 2001.

Excluded from the Settlement Class are: (i) all defendants in the Class Action; (ii) all members

of the immediate families (parents, spouses, siblings and children) of such defendants; (iii) the

Additional Released Parties; (iv) any entity affiliated with any defendant in the Class Action or

with any member of the immediate family of such defendant , including without limitation any

entity in which any such defendant or any member of the immediate family of such defendant

has a controlling interest; (v) the officers, directors, parents, subsidiaries and affiliates of

Peregrine ; (vi) the legal representatives , heirs, successors in interest and assigns of any of the

foregoing; and (vii) with respect to the Settling Defendants, any Person who has previously

released them from claims relating to Peregrine.

XI. DISTRIBUTION OF SETTLEMENT PROCEEDS

47. In addition to the $56,075,000 total settlement consideration, an additional

amount of approximately $5,000,000, which is being held by the Peregrine Litigation Trust,

together with the interest earned thereon, less all taxes, approved costs, fees and expenses shall

#120595 18


be distributed to members of the Settlement Class and Subclasses who previously filed

acceptable Proofs of Claim ("Authorized Claimants") pursuant to the Notice dated July 31, 2006.

The Proof of Claim forms previously submitted by Settlement Class Members have been

processed by the Claims Administrator and will be used to determine the amount of each

Authorized Claimant's recovery. The Allowed Losses previously calculated by the Claims

Administrator will be used to determine each Authorized Claimant's pro rata share of the money

recovered. If you did not previously file a Proof of Claim and wish to do so at this time, you

may download the form at www.gilardi.com. Any such newly filed Proofs of Claim must be

submitted by no later than [55 days after date of Preliminary Approval Order].

48. Each Authorized Claimant shall receive, on a pro rata basis, that share of the

Settlement Fund that the Authorized Claimant ' s "Recognized Loss" bears to the total

Recognized Losses of all Authorized Claimants as calculated pursuant to the Plan of Allocation

of Settlement Proceeds previously approved by the Court on November 15, 2006.

49. Checks will be issued to Authorized Claimants as soon as possible after the Court

has finally approved the Settlement. It is possible that there will be two separate distributions in

light of the staggered dates of the Settlement payments.

XII. THE RIGHTS OF SETTLEMENT CLASS MEMBERS

50. The Court has certified a Settlement Class allowing the Settlement to proceed for

the benefit of the members of the Settlement Class. If you purchased Peregrine securities and/or

received them in an exchange for Harbinger or Remedy shares during the period from July 22,

1999 through May 3, 2002, inclusive, then you are a Settlement Class Member. However, if you

previously released claims against any of the Settling Defendants relating to Peregrine, you are

#120595 19


not entitled to any share of the settlement proceeds paid by them. Settlement Class Members

have the following options pursuant to Rule 23(c)(2) of the Federal Rules of Civil Procedure:

(a) If you wish to remain a member of the Settlement Class, you do not have

to do anything at this time. Settlement Class Members will be represented by Lead Plaintiffs and

Lead Counsel, unless you enter an appearance through counsel of your own choice at your own

expense. You are not required to retain your own counsel, but if you choose to do so, such

counsel must file an appearance on your behalf on or before [55 days after date of Preliminary

Approval Order], and must serve copies of such appearance on the attorneys listed in paragraph

55 below.

(b) If you do not wish to remain a member of the Settlement Class, you may

exclude yourself from the Settlement Class by following the instructions in paragraph 53 below.

Persons who exclude themselves from the Settlement Class will NOT be entitled to receive any

share of the Settlement proceeds and will not be bound by the Settlement.

(c) If you object to the Settlement, or to Lead Counsel's application for fees or

expenses, and if you do not exclude yourself from the Settlement Class, you may present your

objections by following the instructions in paragraph 55 below.

51. IF YOU ARE A SETTLEMENT CLASS MEMBER AND YOU DO NOT

PROPERLY EXCLUDE YOURSELF FROM THE SETTLEMENT CLASS, YOU WILL BE

BOUND BY THE SETTLEMENT, INCLUDING RELEASES, AND THE FINAL

JUDGMENT OF THE COURT DISMISSING THIS ACTION AGAINST THE SETTLING

DEFENDANTS. IF YOU EXCLUDE YOURSELF, YOU WILL NOT BE BOUND BY THE

JUDGMENT BUT YOU WILL NOT BE ENTITLED TO ANY SHARE OF THE NET

SETTLEMENT FUND.

#120595 20


XIII. EXCLUSION FROM THE SETTLEMENT

52. Each Member of the Settlement Class shall be bound by all determinations and

judgments in this Class Action concerning the Settlement, whether favorable or unfavorable,

unless such Person shall mail, by first class mail, a written request for exclusion from the

Settlement Class, postmarked no later than [55 days after date of Preliminary Approval Order],

addressed to In re Peregrine Systems, Inc. Securities Litigation Exclusions, c/o Gilardi & Co.

LLC, Claims Administrator , Post Office Box 8040, San Rafael , CA 94912-8040. No Person

may be excluded from the Settlement Class after that date. In order to be valid, each such

request for exclusion must set forth the name and address of the Person requesting exclusion,

must state that such Person "requests exclusion from the Settlement Class in In re Peregrine

Systems, Inc. Securities Litigation," and must be signed by such Person. Persons requesting

exclusion must also provide: (1) for every purchase or acquisition of Peregrine stock during the

Class Period, the date of the purchase or acquisition, the purchase or acquisition price, and the

number of shares purchased or acquired; and (2) for every sale of Peregrine stock during the

Class Period, the date of the sale, the sale price, and the number of shares sold. Persons

requesting exclusion should indicate whether any or all of their Peregrine shares were acquired in

connection with the Harbinger or Remedy mergers. Persons requesting exclusion are also

requested to provide a telephone number. The request for exclusion shall not be effective unless

it provides the required information and is made within the time stated above, or the exclusion is

otherwise accepted by the Court.

XIV. RIGHTS IN CONNECTION WITH SETTLEMENT FAIRNESS HEARING

53. At the Settlement Fairness Hearing, the Court will determine whether finally to

approve the Settlement and to dismiss the Class Action and the claims of the Settlement Class

#120595 21


Members as against the Settling Defendants only, including a release of all claims in the PLT

Action. If the Settlement is approved, an additional hearing will be held to determine whether

the application of Lead Counsel for attorneys' fees and expenses shall be approved. These

hearings may be adjourned from time to time by the Court without further written notice to the

Settlement Class Members.

54. At the Settlement Fairness Hearing, any Settlement Class Member who has not

properly submitted a Request for Exclusion from the Settlement Class may appear in person or

by counsel and be heard to the extent allowed by the Court in opposition to the fairness,

reasonableness and adequacy of the Settlement or the application for attorneys' fees and

reimbursement of expenses; provided, however, that in no event shall any person be heard in

opposition thereto and in no event shall any paper or brief submitted by any such person be

accepted or considered by the Court, unless, on or before [55 days after date of Preliminary

Approval Order], such person (a) files with the Clerk of the Court notice of such person's

intention to appear, showing proof of such person's membership in the Settlement Class, and

providing a statement that indicates the basis for such opposition , along with any documentation

in support of such objection, and (b) simultaneously serves copies of such notice, proof,

statement and documentation, together with copies of any other papers or briefs such person files

with the Court, in person or by mail upon each of the following: Solomon B . Cera, Esq., Gold

Bennett Cera & Sidener LLP, 595 Market Street , Suite 2300, San Francisco , CA 94105-2835;

Howard T. Longman, Esq., Stull Stull & Brody, 6 East 45th Street, New York, NY 10017; and

Lawrence D. Levit, Esq., Abraham Fruchter & Twersky LLP, One Penn Plaza, Suite 2805, New

York, NY 10119-0165, on behalf of Lead Plaintiffs ; and Harry A. Olivar, Jr., Esq ., Quinn

Emanuel Urquhart Oliver & Hedges, LLP, 865 South Figueroa Street, 10th Floor, Los Angeles,

#120595 22


California 90017, on behalf of Defendants John J. Moores and JMI Services, Inc.; Robin C.

Gibbs, Esq ., Gibbs & Bruns LLP, 1 100 Louisiana , Suite 5300, Houston , TX 77002, on behalf of

Defendants Charles E. Noell III, Richard A. Hosley 11, and Norris van den Berg; Leighton M.

Anderson, Esq., Bewley, Lassleben & Miller, LLP, 13215 East Penn Street, Suite 510, Whittier,

CA 90602-1797, on behalf of Defendant Christopher A. Cole; Phillip L. Stern , Esq., Neil , Gerber

& Eisenberg LLP, 2 North LaSalle Street, 22nd Floor, Chicago, IL 60602, on behalf of

Defendant Rodney F. Dammeyer; Christopher H. McGrath, Esq., Paul Hastings Janofsky &

Walker, LLP, 4747 Executive Drive, 12th Floor, San Diego , CA 92121, on behalf of Defendant

Frederic B. Luddy; Christian D. Humphreys, Esq., McKenna Long & Aldridge, LLP, Symphony

Towers, 750 B Street, Suite 3300, San Diego, CA 92101-8105, on behalf of Defendant Richard

T. Nelson; Caroline McIntyre, Esq., Bergeson, LLP, 303 Almaden Blvd, Suite 500, San Jose, CA

95110-2712, on behalf of Defendant Stephen P. Gardner; and Thomas L. Vance, Esq., Vance &

Blair, LLP , 853 Camino Del Mar, Suite 202, Del Mar, CA 92014, on behalf of Defendant

Matthew C. Gless.

XV. FURTHER INFORMATION

55. For a more detailed statement of the matters involved in this Class Action,

reference is made to the pleadings, to the Stipulations of Settlement, to the Orders entered by the

Court and to the other papers filed in the Class Action, which may be inspected at the Office of

the Clerk of the Court, United States District Court, Southern District of California, 880 Front

Street , Suite 4290, San Diego , CA 92101-8900, during regular business hours.

56. Further information regarding the Settlement referred to in this Notice may also

be obtained by contacting Lead Counsel: Solomon B. Cera, Esq., Gold Bennett Cera & Sidener

LLP, 595 Market Street, Suite 2300 , San Francisco , CA 94105 , (415) 777-2230; Howard T.

#120595 23


Longman, Esq., Stull Stull & Brody, 6 East 45th Street, New York, NY 10017, (212) 687-7230;

and Lawrence D. Levit, Esq., Abraham Fruchter & Twersky LLP, One Penn Plaza, Suite 2805,

New York, NY 101 19-0165, (212) 279-5050.

XVI. SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES

56. If you purchased or acquired securities of Peregrine Systems, Inc. during the

period from July 22, 1999 through May 3, 2002, inclusive for the beneficial interest of a person

or organization other than yourself, the Court has directed that, within seven days of your receipt

of this Notice, you either (a) provide to the Claims Administrator the name and last known

address of each person or organization for whom or which you purchased or acquired such

Peregrine securities during such time period or (b) request additional copies of this Notice, which

will be provided to you free of charge, and within seven days mail the Notice directly to the

beneficial owners of Peregrine securities. If you choose to follow alternative procedure (b), the

Court has directed that, upon such mailing, you send a statement to the Claims Administrator

confirming that the mailing was made as directed. You are entitled to reimbursement from the

Settlement Fund of your reasonable expenses actually incurred in connection with the foregoing,

including reimbursement of postage expense and the cost of ascertaining the names and

addresses of beneficial owners. Those expenses will be paid upon request and submission of

appropriate supporting documentation. All communications concerning the foregoing should be

addressed to the Claims Administrator:

In re Peregrine Systems, Inc. Securities Litigationc/o Gilardi & Co. LLCP.O. Box 8040San Rafael, CA 94912-8040(800) 654-5763www.gilardi.com

DO NOT CONTACT THE COURT.

#120595 24

Case 3:02-cv-00870-BEN-RBB

Dated : February_, 2009

Document 827-2 Filed 02/09/2009 Page 27 of 27

By Order of the CourtClerk of the Court

#120595 25


EXHIBIT 2



Case No . 02-CV-0870-BEN (RBB)IN RE PEREGRINE SYSTEMS, INC.SECURITIES LITIGATION

This Document Relates to:ALL ACTIONS

SECOND SUMMARY NOTICE OF PENDENCY OFCLASS ACTION AND HEARING ON PROPOSED SETTLEMENTS

TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SECURITIES OFPEREGRINE SYSTEMS, INC. FROM JULY 22, 1999 THROUGH MAY 3, 2002,INCLUSIVE, INCLUDING ALL PERSONS WHO OWNED SHARES OFHARBINGER CORP. OR REMEDY CORP. STOCK AND EXCHANGED THOSESHARES FOR PEREGRINE SHARES (THE "CLASS").

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil

Procedure and an Order of the Court dated , 2009, that the above-captioned action has

been certified as a class action for settlement purposes and that additional settlements of

$56,075,000 have been proposed with regard to defendants John J. Moores, Charles E. Noell III,

Norris van den Berg, Richard A. Hosley II , Christopher A. Cole, Rodney F . Dammeyer, Stephen

P. Gardner, Matthew C. Gless, Frederic B. Luddy, and Richard T. Nelson. A hearing will be held

before the Honorable Roger T. Benitez, in the United States District Court for the Southern

District of California, 880 Front Street, Courtroom 3, 4"' Floor, San Diego, California 92101-

8900, at _:_, on , 2009 to determine whether the proposed settlements should be

approved by the Court as fair, reasonable, and adequate and to consider the application of

Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses. In addition to settling the

#119554 -1-


above-captioned action, the proposed Settlements will release all claims that have been, or could

have been, brought against the Settling Defendants and Additional Released Parties in Peregrine

Litigation Trust v. Moores, San Diego Superior Court, Case No. GIC 788659, which is currently

on appeal in the California Court of Appeal.

IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHTS

WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT

FUNDS. If you have not yet received the full printed Second Notice of Pendency of Class

Action and Hearing on Additional Proposed Partial Settlements (the "Notice"), you may obtain a

copy by identifying yourself as a member of the Settlement Class and by calling or writing to:

In re Peregrine Systems, Inc. Securities Litigationc/o Gilardi & Co. LLCClaims AdministratorP.O. Box 8040San Rafael, California 94912-8040(800) 654-5763www.gilardi.com

Inquiries, other than requests for the Notice, may be made to Lead Plaintiff's Counsel:

Solomon B. Cera, Esq.Gold Bennett Cera & Sidener LLP595 Market Street, Suite 2300San Francisco, California 94105

Lawrence D. Levit, Esq.Abraham Fruchter & Twersky LLPOne Penn Plaza, Suite 2805New York, New York 10119-0165

Howard T. Longman, Esq.Stull Stull & Brody6 East 45' StreetNew York, New York 10017

The recovery of each Settlement Class member will be based on the Allowed Loss

determined from the Proof of Claim forms previously submitted to the Claims Administrator. To

exclude yourself from the Settlement Class you must submit a request for exclusion, postmarked

#119554 -2-


no later than [55 dates after date of Preliminary Approval Order], setting forth certain

information ordered by the Court and described in the Notice. If you are a Settlement Class

member and do not exclude yourself you will be bound by the final orders and judgments of the

Court.

PLEASE DO NOT CONTACT THE COURT.

By Order of The Court

#119554 -3-


EXHIBIT 3

0 3:02-cv-00870-BEN-RBB Document 827-4 Filed 02/09/2009 Page 2 of 12

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

IN RE PEREGRINE SYSTEMS, INCSECURITIES LITIGATION

This Document Relates to:

ALL ACTIONS.

Master File No. 02-CV-0870-BEN (RBB)

CLASS ACTION

FINAL ORDER AND JUDGMENTDISMISSING ACTION AGAINSTDEFENDANTS STEPHEN P. GARDNER,MATTHEW C. GLESS, FREDERIC B.LUDDY, AND RICHARD T. NELSON,CONFIRMING RELEASES, ANDBARRING CERTAIN CLAIMS

Judge: Honorable Roger T. Benitez

#119822, FINAL ORDER AND JUDGMENT DISMISSING ACTION AGAINST GARDNER, GLESS, LUDDY ANDNELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMSCase No. 02-CV-0870-BEN (RBB)

3:02-cv-00870-BEN-RBB Document 827-4 Filed 02/09/2009 Page 3 of 12

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#119822,

By Stipulation and Agreement of Settlement dated as of December 22, 2008 (the

"Stipulation"), Lead Plaintiffs and defendants Stephen P. Gardner, Matthew C. Gless, Frederic B.

Luddy, and Richard T. Nelson (the "Settling Defendants") have entered into a settlement of this

Class Action. By Order dated , 2009 (the "Preliminary Approval Order"), this Court:

(a) preliminarily approved the Settlement; (b) certified, for settlement purposes only, the

Settlement Class identified in the Stipulation; and (c) provided for notice to be disseminated to the

Settlement Class members. On , 2009, this Court held a final hearing to consider

whether to approve the Settlement under the provisions of Rule 23 of the Federal Rules of Civil

Procedure. Due and adequate notice of the hearing was given to Settlement Class members and all

parties in the Class Action. The Court has considered the Stipulation, all papers filed and

proceedings had herein, and all oral and written comments received regarding the Settlement, and

has reviewed the entire record in the Class Action.

NOW, THEREFORE, GOOD CAUSE APPEARING, IT IS HEREBY ORDERED,

^ ADJUDGED AND DECREED that:

1. Definitions . For purposes of this Judgment, the Court adopts all defined terms set

forth in the Stipulation.

2. Jurisdiction . The Court has jurisdiction over the subject matter of the Class

Action, Lead Plaintiffs, and the Settling Defendants.

3. Requirements of Class Action Satisfied . With respect to the Settlement Class,

the Court finds and concludes that: (a) the Settlement Class members are so numerous that joinder

of all Settlement Class members in the Class Action is impracticable; (b) questions of law and fact

common to the Settlement Class predominate over any individual questions; (c) the claims of Lead

Plaintiffs are typical of the claims of the Settlement Class; (d) Lead Plaintiffs and Plaintiffs'

Counsel have, at all times, fairly and adequately represented and protected the interests of the

Settlement Class members; and (e) a class action is superior to other available methods for the fair

and efficient adjudication of the controversy, considering: (i) the interests of the Settlement Class

members in individually controlling the prosecution of the separate actions; (ii) the extent and

nature of any litigation concerning the controversy already commenced by Settlement Class

FINAL ORDER AND JUDGMENT DISMISSING ACTION AGAINST GARDNER, GLESS, LUDDY ANDNELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMSCase No . 02-CV-0870-BEN (RBB)


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#119822

I members; (iii) the desirability or undesirability of continuing the litigation of these claims in this

particular forum; and (iv) the difficulties likely to be encountered in the management of the Class

Action.

4. Adequacy of Notice. The Court finds that the distribution of the Second Notice of

Pendency of Class Action and Hearing on Additional Proposed Partial Settlements and the

publication of the summary notice (as provided for in the Preliminary Approval Order) constituted

the best notice practicable under the circumstances to apprise the Settlement Class members of the

terms of the proposed Settlement and their rights. Settlement Class members were given an

opportunity to present their objections, if any, to the Stipulation. The Court finds that the

provision of notice to Settlement Class members fully met the requirements of Rule 23 of the

Federal Rules of Civil Procedure, federal law, due process, the United States Constitution, and any

other applicable law.

5. Requests for Exclusion from Settlement . The Court finds that all Settlement

Class members have been provided with an adequate opportunity to exclude themselves from the

Settlement Class by requesting exclusion though the procedures set forth in the Notice. The Court

further finds that the persons identified in Exhibit 1 hereto ("Excluded Settlement Class

Members"), and no other persons or entities, have submitted a valid Request for Exclusion as

defined in the Stipulation.

6. Approval of Settlement . The Court approves the Settlement, including the

releases, the amount of the settlement consideration, and all other Settlement terms as fair, just,

reasonable, and adequate to all of the Settlement Class members within the meaning of Rule 23 of

the Federal Rules of Civil Procedure. Lead Plaintiffs and the Settling Defendants are directed to

exercise their best efforts to consummate the Settlement as set forth in the Stipulation.

7. Dismissal of Class Action Atainst Certain Defendants and Injunction Against

Further Prosecution of Released Claims . The Class Action and all claims contained therein,

and all other Released Claims are dismissed with prejudice in favor of the Settling Defendants and

against Lead Plaintiffs and all other Settlement Class members, except Excluded Settlement Class

Members. In accordance with Section 4(1) of the Private Securities Litigation Reform Act of

FINAL ORDER AND JUDGMENT DISMISSING DEFENDANTS GARDNER, GLESS, LUDDY, ANDNELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMSCase No. 02-CV-0870-BEN (RBB) -2-

Ca40 3:02-cv-00870-BEN-RBB Document 827-4 Filed 02/09/2009 Page 5 of 12

#119822

1 1995, 15 U.S.C. § 78u-4(f)(7)(A), all claims for contribution against the Settling Defendants are

2 barred, extinguished, discharged and satisfied as a matter of law. All persons are permanently

3 barred, enjoined, and restrained from commencing, prosecuting or asserting any claim against the

4 Settling Defendants, however styled, whether legal or equitable, whether arising under state,

5 federal or common law, whether for indemnification, contribution or otherwise denominated,

6 where the claim is based upon, arises out of or relates to the facts underlying the claims in the

7 Class Action including, without limitation, any claim in which a Non-Settling Defendant seeks to

8 recover from the Settling Defendants (1) any amounts a Non-Settling Defendant has paid,

9 becomes liable to pay or may become liable to pay (whether in cash or other form of

10 consideration) in the Class Action, and (2) any costs, fees, expenses or attorneys' fees that a Non-

11 Settling Defendant incurred or may incur in the Class Action. This bar extends to the Settling

12 Defendants' attorneys, agents, insurers, trusts, trustees, estates, employers, employee benefit plans,

13 representatives, heirs, marital community and assigns. Nothing in this paragraph shall be

14 construed to divest any Non-Settling Defendant of the right to obtain an appropriate judgment

15 reduction or settlement credit available to such Non-Settling Defendant under any applicable

16 statutory or common law rule.

17 8. Release by Lead Plaintiffs and Settlement Class Members. Upon the Effective

18 Date, Lead Plaintiffs fully, finally, and forever release, relinquish and discharge, and each

19 Settlement Class member (except Excluded Settlement Class Members) shall be deemed to have,

20 and by operation of this Judgment shall have, fully, finally, and forever released, relinquished and

21 discharged, each of the Settling Defendants from any and all Released Claims.

22 9. Further Releases by Recipients of Settlement Fund. Only those Settlement

23 Class members that file valid and timely Proofs of Claim and Release in the form prescribed by

24 the Court shall be entitled to receive any distribution from the Settlement Fund, except as may be

25 otherwise ordered by the Court. All Settlement Class members (except Excluded Settlement Class

26 Members) shall, upon entry of this Judgment, be bound by the releases set forth in this Judgment

27 whether or not they executed and submitted a valid and timely Proof of Claim and Release form or

28 receive a distribution of the Settlement Fund.

FINAL ORDER AND JUDGMENT DISMISSING DEFENDANTS GARDNER, GLESS, LUDDY, AND

NELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMS

Case No. 02-CV-0870-BEN (RBB) -3-

#119822

Ca 3:02-cv-00870-BEN-RBB Document 827-4 Filed 02/09/2009 Page 6 of 12

1 10. Release by the Settling Defendants . Upon the Effective Date, the Settling

2 Defendants fully, finally, and forever release, relinquish and discharge each of the Lead Plaintiffs

3 and Settlement Class members from any and all claims that the Settling Defendants may have, or

4 may have had, regarding the commencement, prosecution, assertion, or resolution of the Class

5 Action or the Released Claims including, without limitation, any claims for violation of Rule 11 of

6 the Federal Rules of Civil Procedure. Notwithstanding the foregoing, the Released Claims do not

7 include any claims for violation of the Stipulation.

8 11. Release Includes Unknown Claims . Upon entry of this Judgment, the Released

9 Claims include all claims, rights, demands, suits, matters, issues or causes of action, whether

10 known or unknown, fixed or contingent, foreseen or unforeseen, against the Settling Defendants,

11 whether under state or federal law, including the federal securities laws, and whether directly,

12 indirectly, derivatively or representatively or in any other capacity, in connection with, based

13 upon, arising out of, or relating to any claim that has been or could have been raised in the Class

14 Action or the acts, facts or events alleged in the Class Action. Released Claims also specifically

15 includes claims which the Plaintiffs do not know or suspect to exist in their favor at the time of the

16 Stipulation which, if known by them, might affect the Settlement and the releases in the

17 Stipulation, or might affect their decision not to object to, or opt out of, the Settlement. With

18 respect to any and all claims released, the Parties agree that, upon the Effective Date, Plaintiffs

19 expressly waive and relinquish, shall be deemed to have, and by operation of this Final Order and

20 Judgment shall have, expressly waived and relinquished, and the Settling Defendants expressly

21 waive and relinquish, to the fullest extent permitted by law, the provisions, rights, and benefits of

22 § 1542 of the California Civil Code, which provides:

23

24 A GENERAL RELEASE DOES NOT EXTEND TO CLAIMSWHICH THE CREDITOR DOES NOT KNOW OR SUSPECT

25 TO EXIST IN HIS OR HER FAVOR AT THE TIME OFEXECUTING THE RELEASE, WHICH IF KNOWN BY HIM

26 OR HER MUST HAVE MATERIALLY AFFECTED HIS ORHER SETTLEMENT WITH THE DEBTOR.

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Additionally, the parties waive, upon the Effective Date and by operation of this Final Order and

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

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#119822

the United States or of any state or territory of the United States or of any other country, whether

statutory, code or common law, which are similar, comparable or equivalent to § 1542 of the

California Civil Code. The Parties may hereafter discover facts in addition to or different from

those which they now know or believe to be true with respect to the subject matter of the claims

released, but hereby stipulate and agree that they do settle and release, and shall be deemed to

have, and upon the Effective Date and by operation of this Final Order and Judgment shall have,

settled and released all claims described in the Stipulation, whether 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, without regard to the subsequent discovery or existence of such different or

additional facts. The Parties acknowledge that the foregoing waiver was bargained for and is a

material term and condition of the Settlement.

12. Injunction Barring Claims by the Settling Defendants for Indemnification or

Contribution . Each of the Settling Defendants is permanently barred and enjoined from

instituting or prosecuting against any person or entity in any court, state or federal, or any other

tribunal, any claim, however styled, whether denominated as a claim for indemnification or

contribution or otherwise denominated, whether legal or equitable, known or unknown, foreseen

or unforeseen, matured or unmatured, accrued or unaccrued, whether arising under state law or

federal law, by which said Settling Defendant seeks to recover from any other person or entity any

portion of. (a) any amounts that said Settling Defendant has paid, or in the future pays, or has

become liable to pay, or may become liable to pay (whether in cash or any other form of

consideration) in connection with the Class Action; and/or (b) any costs, expenses, or attorneys'

fees that the Settling Defendants has incurred or may incur in defending the Class Action. All

such claims shall be extinguished, discharged, satisfied and unenforceable. Nothing in this

paragraph shall bar or enjoin any of the Settling Defendants from pursuing claims against any

insurance companies.

FINAL ORDER AND JUDGMENT DISMISSING DEFENDANTS GARDNER, GLESS, LUDDY, AND

NELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMS

Case No. 02-CV-0870-BEN (RBB) -5-

Ca40 3:02-cv-00870-BEN-RBB Document 827-4 Filed 02/09/2009 Page 8 of 12

#119822

1 13. Injunction Barring Claims Against the Settling Defendants for

2 Indemnification or Contribution . To the extent permitted by law, all persons or entities are

3 permanently barred and enjoined from instituting or prosecuting against any Settling Defendant in

4 any court, state or federal, or any other tribunal, any claim, however styled, whether denominated

5 as a claim for indemnification or contribution or otherwise denominated, whether legal or

6 equitable, known or unknown, foreseen or unforeseen, matured or unmatured, accrued or

7 unaccrued, whether arising under state law or federal law, by which such person or entity seeks to

8 recover from any Settling Defendant any portion of. (a) any amounts that such person or entity

9 has paid, or in the future pays, or has become liable to pay, or may become liable to pay (whether

10 in cash or any other form of consideration) in connection with the Class Action; and/or (b) any

11 costs, expenses, or attorneys' fees that such person or entity has incurred or may incur in defending

12 the Class Action. All such claims shall be extinguished, discharged, satisfied and unenforceable.

13 14. Reduction of Judgments against Persons Whose Claims for Indemnification or

14 Contribution against the Settling Defendants Are Barred . In view of the settlement made by

15 the Settling Defendants, all of whom are deemed to be covered persons who entered into a

16 settlement with Lead Plaintiffs within the meaning of 15 U.S.C. § 78u-4(f)(7)(B), any person or

17 entity against whom a final judgment is hereafter obtained, either in the Class Action or in any

18 other action or proceeding by or on behalf of any Settlement Class member (except an Excluded

19 Settlement Class Member) based upon any claim asserted in the Class Action, shall be entitled in

20 said action or proceeding to a reduction in the amount of said judgment in accordance with, or to

21 have the amount of damages in said judgment calculated by reference to, all applicable provisions

22 of federal statutory and common law relating to the proper amounts ofjudgments or damages

23 following a settlement between a plaintiff and less than all of the parties legally liable for

24 plaintiffs injury, including without limitation the provisions of 15 U.S.C. § 78u-4(f)(7)(B).

25 15. No Admission or Evidence. Neither the Stipulation nor the Settlement, nor any

26 act performed or document executed pursuant to, or in connection with, the Stipulation or the

27 Settlement: (a) is, or may be deemed to be, or may be used as, an admission of, or evidence of, the

28 validity of any Settled Claim or of any wrongdoing or liability by the Settling Defendants; (b) is,



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#119822

or may be deemed to be, or may be used as, an admission of, or evidence of, any fault or omission

of the Settling Defendants in any civil, criminal or administrative proceeding in any court,

administrative agency or other tribunal; or (c) shall be offered in evidence by any person or entity

for any purpose except to enforce the Stipulation. Any Settling Defendant may file the Stipulation

and/or this Judgment in any other action that may be brought against them in order to support a

defense or counterclaim based on principles of res judicata, collateral estoppel, release, good faith

settlement, bar order, or judgment reduction or credit, or in support of any theory of claim

preclusion or issue preclusion or similar defense or counterclaim. Lead Plaintiffs, other

Settlement Class members, the Settling Defendants and their respective counsel, may file the

Stipulation in any proceeding brought to enforce any of its terms or provisions.

16. Pleadings in Good Faith. The Court finds that all pleadings and other court

papers filed by Lead Plaintiffs against the Settling Defendants, and all pleadings and other court

papers filed by the Settling Defendants against Lead Plaintiffs, were filed on a good faith basis in

accordance with Rule 11 of the Federal Rules of Civil Procedure, Section 27(c) of the Securities

Act, and Section 21 D(c) of the Exchange Act.

17. Bear Own Costs . Lead Plaintiffs and the Settling Defendants are to bear their own

costs, except as otherwise provided in the Stipulation.

18. Effectiveness of Judgment Not Dependent on Certain Other Rulings . The

effectiveness of this Judgment shall not be affected, in any manner, by rulings that the Court may

make concerning the Plan of Allocation of Settlement Proceeds and/or Plaintiffs' Counsel's

application for an award of attorneys' fees or reimbursement of expenses.

19. Reversal on Appeal. In the event that this Judgment is subsequently vacated,

modified, or reversed on appeal, or in the event the PLT Action is not dismissed pursuant to

paragraph 7(b) above, this Judgment and any order entered by the Court in accordance with the

terms of the Stipulation, including without limitation any order based upon the stipulated

certification of the Settlement Class, shall be vacated, nunc pro tunc; Lead Plaintiffs and the

Settling Defendants shall be restored to their respective positions in the Class Action as of



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#119822

August _, 2008; the Settlement funds shall be returned to the Settling Defendants as provided for

in the Stipulation; and the Class Action shall proceed as though no class had ever been certified.

20. Entry of Separate Judgment. The Court finds that this Judgment comes within

the provisions of Rule 54(b) of the Federal Rules of Civil Procedure and finds that there is no just

reason for delay in entering this Judgment. This Judgment disposes of all claims against the

Settling Defendants, which claims are legally and factually severable from the claims remaining in

the Class Action. Any appellate review of this Judgment will not require the appellate court to

address issues similar to those contained in claims still pending before this Court. Pursuant to

Rule 54(b), the Court directs that this Judgment be entered forthwith in the Class Action as a

separate, final judgment in the Class Action.

21. Reservation of Jurisdiction . The Court reserves exclusive and continuing

jurisdiction over the Class Action, Lead Plaintiffs, and the Settlement Class members for purposes

of supervising the administration and distribution of the Settlement Fund and any other related

matters.

22. Cautions . The captions in the paragraphs of this Judgment are for convenience

only and are not to be used for construction of the meaning of the respective paragraphs.

IT IS SO ORDERED.

Dated: , 2009

Roger T. BenitezJudge of the United States District Court

Presented By:

GOLD BENNETT CERA & SIDENER LLP

By:

Solomon B. Cera595 Market Street, Suite 2300San Francisco , California 94105-2835Telephone : (415) 777-2230Facsimile : (415) 777-5189

Attorneys for Section 10(b) LeadPlaintiff The Loran Group



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STULL, STULL & BRODY

By: a..I{ny

Howard T. Longman6 East 45th Street, 5th FloorNew York, New York 10017Telephone: (212) 687-7230Facsimile : (212) 490-2022

-and-

ABRAHAM FRUCHTER & TWERSKY LLP

tBy: /Sk4A&C^ {^FV, I f

Lawrence D. LevitOne Penn Plaza, Suite 2805New York, New York 10119-0165Telephone: (212) 714-2444Facsimile : (212) 279-3655

Attorneys for Section 11 Lead PlaintiffHeywood Waga

#119822 FINAL ORDER AND JUDGMENT DISMISSING DEFENDANTS GARDNER, GLESS, LUDDY, ANDNELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMSCase No. 02-CV-0870-BEN (RBB) -9-


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EXHIBIT 1

EXCLUDED SETTLEMENT CLASS MEMBERS

#119822 FINAL ORDER AND JUDGMENT DISMISSING DEFENDANTS GARDNER, GLESS, LUDDY, ANDNELSON, CONFIRMING RELEASES, AND BARRING CERTAIN CLAIMSCase No. 02-CV-0870-BEN (RBB)

Documents

Case3: 02-cv-00870-BEN-RBB Document827 Filed 02/09/2009 ...securities.stanford.edu/filings-documents/1024/... · Case3: 02-cv-00870-BEN-RBB Document827 Filed 02/09/2009 Page4of31